10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☑

QUARTERLY

REPORT

PURSUANT

SECTION

15(d)

THE

SECURITIES

EXCHANGE

ACT

1934

FOR THE QUARTERLY

PERIOD ENDED

AUGUST 27, 2023

☐

TRANSITION

REPORT

PURSUANT

SECTION

15(d)

THE

SECURITIES

EXCHANGE

ACT

1934

FOR THE TRANSITION PERIOD FROM

Commission file number:

001-01185

________________

GENERAL MILLS, INC.

(Exact name of registrant as specified in its charter)

Delaware

41-0274440

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

Number One General Mills Boulevard

Minneapolis

Minnesota

55426

(Address of principal executive offices)

(Zip Code)

(763)

764-7600

(Registrant’s telephone number,

including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

Common Stock, $.10 par value

GIS

New York Stock Exchange

0.125% Notes due 2025

GIS 25A

New York Stock Exchange

0.450% Notes due 2026

GIS 26

New York Stock Exchange

1.500% Notes due 2027

GIS 27

New York Stock Exchange

3.907% Notes due 2029

GIS 29

New York Stock Exchange

________________

Indicate

check

mark

whether

the

registrant

(1)

has

filed

all

reports

required

filed

Section

15(d)

the

Securities

Exchange Act of 1934

during the preceding 12

months (or for such shorter

period that the registrant

was required to file such

reports),

and (2) has been subject to such filing requirements for the past 90 days.

Yes

☑

☐

Indicate

check

mark

whether

the

registrant

has

submitted

electronically

every

Interactive

Data

File

required

submitted

pursuant to Rule 405

of Regulation S-T (§

232.405 of this chapter) during

the preceding 12 months (or

for such shorter period that

the

registrant was required to submit such files).

Yes

☑

☐

Indicate by check mark

whether the registrant is a

large accelerated filer,

an accelerated filer,

a non-accelerated filer,

smaller reporting

company,

emerging

growth

company.

See

the

definitions

“large

accelerated

filer,”

“accelerated

filer,”

“smaller

reporting

company,” and “emerging

growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

emerging

growth

company,

indicate

check

mark

the

registrant

has

elected

not

use

the

extended

transition

period

for

complying with any new or revised financial accounting standards provided

pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined

in Rule 12b-2 of the Exchange Act).

Yes

☐

☑

Number of

shares of

Common Stock

outstanding

as of

September 13,

2023:

581,279,229

(excluding

173,334,099

shares held

in the

treasury).

General Mills, Inc.

Table of Contents

Page

PART I – Financial Information

Item 1. Financial Statements

Consolidated Statements of Earnings for the quarters ended August 27, 2023 and August 28, 2022

Consolidated Statements of Comprehensive Income for the quarters ended August 27, 2023 and August 28,

2022

Consolidated Balance Sheets as of August 27, 2023 and May 28, 2023

Consolidated Statements of Total Equity for the quarters ended August 27, 2023 and August 28, 2022

Consolidated Statements of Cash Flows for the quarters ended August 27, 2023 and August 28, 2022

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

PART II – Other Information

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 5. Other Information

Item 6. Exhibits

Signatures

PART

FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Statements of Earnings

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions, Except per Share Data)

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Net sales

4,904.7

4,717.6

Cost of sales

3,134.2

3,269.9

Selling, general, and administrative expenses

839.3

791.4

Divestitures gain, net

(430.9)

Restructuring, impairment, and other exit costs

1.2

1.6

Operating profit

930.0

1,085.6

Benefit plan non-service income

(17.0)

(21.7)

Interest, net

117.0

87.7

Earnings before income taxes and after-tax earnings

from

joint ventures

830.0

1,019.6

Income taxes

173.2

216.1

After-tax earnings from joint ventures

23.5

19.8

Net earnings, including earnings attributable to noncontrolling interests

680.3

823.3

Net earnings attributable to noncontrolling interests

6.8

3.3

Net earnings attributable to General Mills

673.5

820.0

Earnings per share – basic

1.15

1.37

Earnings per share – diluted

1.14

1.35

See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions)

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Net earnings, including earnings attributable to noncontrolling interests

680.3

823.3

Other comprehensive (loss) income, net of tax:

Foreign currency translation

(18.1)

3.8

Other fair value changes:

Hedge derivatives

(2.3)

(38.3)

Reclassification to earnings:

Foreign currency translation

(7.4)

Hedge derivatives

0.2

(1.4)

Amortization of losses and prior service costs

9.1

14.1

Other comprehensive loss, net of tax

(11.1)

(29.2)

Total comprehensive

income

669.2

794.1

Comprehensive income attributable to noncontrolling interests

6.9

2.0

Comprehensive income attributable to General Mills

662.3

792.1

See accompanying notes to consolidated financial statements.

Consolidated Balance Sheets

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions, Except Par Value)

Aug. 27, 2023

May 28, 2023

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

490.9

585.5

Receivables

1,791.1

1,683.2

Inventories

2,228.8

2,172.0

Prepaid expenses and other current assets

596.2

735.7

Total current

assets

5,107.0

5,176.4

Land, buildings, and equipment

3,585.2

3,636.2

Goodwill

14,522.0

14,511.2

Other intangible assets

6,965.7

6,967.6

Other assets

1,139.8

1,160.3

Total assets

31,319.7

31,451.7

LIABILITIES

AND EQUITY

Current liabilities:

Accounts payable

3,705.8

4,194.2

Current portion of long-term debt

1,174.6

1,709.1

Notes payable

584.3

31.7

Other current liabilities

1,603.1

1,600.7

Total current

liabilities

7,067.8

7,535.7

Long-term debt

10,523.5

9,965.1

Deferred income taxes

2,085.0

2,110.9

Other liabilities

1,128.0

1,140.0

Total liabilities

20,804.3

20,751.7

Stockholders' equity:

Common stock,

754.6

shares issued, $

0.10

par value

75.5

Additional paid-in capital

1,185.7

1,222.4

Retained earnings

20,163.6

19,838.6

Common stock in treasury,

at cost, shares of

173.4

and

168.0

(8,874.3)

(8,410.0)

Accumulated other comprehensive loss

(2,288.1)

(2,276.9)

Total stockholders' equity

10,262.4

10,449.6

Noncontrolling interests

253.0

250.4

Total equity

10,515.4

10,700.0

Total liabilities and equity

31,319.7

31,451.7

See accompanying notes to consolidated financial statements.

Consolidated Statements of Total

Equity

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions, Except per Share Data)

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Amount

Total equity,

beginning balance

10,700.0

10,788.0

Common stock,

billion shares authorized, $

0.10

par value

754.6

75.5

754.6

75.5

Additional paid-in capital:

Beginning balance

1,222.4

1,182.9

Stock compensation plans

7.3

9.3

Unearned compensation related to stock unit awards

(79.4)

(79.0)

Earned compensation

35.4

32.9

Ending balance

1,185.7

1,146.1

Retained earnings:

Beginning balance

19,838.6

18,532.6

Net earnings attributable to General Mills

673.5

820.0

Cash dividends declared ($

0.59

and $

0.54

per share)

(348.5)

(325.0)

Ending balance

20,163.6

19,027.6

Common stock in treasury:

Beginning balance

(168.0)

(8,410.0)

(155.7)

(7,278.1)

Shares purchased, including $

4.2

million of excise tax

(6.4)

(504.7)

(6.9)

(500.8)

Stock compensation plans

1.0

40.4

2.3

102.9

Ending balance

(173.4)

(8,874.3)

(160.3)

(7,676.0)

Accumulated other comprehensive loss:

Beginning balance

(2,276.9)

(1,970.5)

Comprehensive loss

(11.2)

(27.9)

Ending balance

(2,288.1)

(1,998.4)

Noncontrolling interests:

Beginning balance

250.4

245.6

Comprehensive income

6.9

2.0

Distributions to noncontrolling interest holders

(4.3)

(1.9)

Divestiture

5.1

Ending balance

253.0

250.8

Total equity,

ending balance

10,515.4

10,825.6

See accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flows

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions)

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Cash Flows - Operating Activities

Net earnings, including earnings attributable to noncontrolling interests

680.3

823.3

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization

137.2

134.3

After-tax earnings from joint ventures

(23.5)

(19.8)

Distributions of earnings from joint ventures

15.8

15.5

Stock-based compensation

35.3

33.5

Deferred income taxes

(14.5)

9.2

Pension and other postretirement benefit plan contributions

(7.4)

(5.3)

Pension and other postretirement benefit plan costs

(5.3)

(6.7)

Divestitures gain, net

(430.9)

Restructuring, impairment, and other exit costs

2.4

(15.7)

Changes in current assets and liabilities, excluding the effects of

acquisitions and divestitures

(457.4)

(209.7)

Other, net

15.2

61.1

Net cash provided by operating activities

378.1

388.8

Cash Flows - Investing Activities

Purchases of land, buildings, and equipment

(141.7)

(90.9)

Acquisition, net of cash acquired

(252.1)

Proceeds from divestitures, net of cash divested

610.7

Other, net

6.2

(1.9)

Net cash (used) provided by investing activities

(135.5)

265.8

Cash Flows - Financing Activities

Change in notes payable

551.8

188.0

Proceeds from common stock issued on exercised options

4.5

65.5

Purchases of common stock for treasury

(500.5)

(500.8)

Dividends paid

(348.5)

(325.0)

Distributions to noncontrolling interest holders

(4.3)

(1.9)

Other, net

(37.2)

(34.9)

Net cash used by financing activities

(334.2)

(609.1)

Effect of exchange rate changes on cash and cash equivalents

(3.0)

(20.5)

(Decrease) Increase in cash and cash equivalents

(94.6)

25.0

Cash and cash equivalents - beginning of year

585.5

569.4

Cash and cash equivalents - end of period

490.9

594.4

Cash Flow from changes in current assets and liabilities, excluding the effects

acquisitions and divestitures:

Receivables

(104.4)

(91.1)

Inventories

(54.3)

(243.3)

Prepaid expenses and other current assets

140.9

79.5

Accounts payable

(443.8)

(130.4)

Other current liabilities

4.2

175.6

Changes in current assets and liabilities

(457.4)

(209.7)

See accompanying notes to consolidated financial statements.

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(Unaudited)

(1) Background

The accompanying

Consolidated Financial

Statements of

General Mills,

Inc. (we,

us, our,

General Mills,

or the Company)

have been

prepared in

accordance with

accounting principles

generally accepted

in the

United States

(GAAP) for

interim financial

information

and with

the rules

and regulations

for reporting

on Form

10-Q. Accordingly,

they do

not include

certain information

and disclosures

required

for

comprehensive

financial

statements.

the

opinion

management,

all

adjustments

considered

necessary

for

fair

presentation have

been included

and are

of a

normal recurring

nature, including

the elimination

of all

intercompany transactions

and

any

noncontrolling

interests’

those

transactions.

Operating

results

for

the

fiscal

quarter

ended

August

27,

2023,

are

not

necessarily indicative of the results that may be expected for the fiscal year ending

May 26, 2024.

These

statements

should

read

conjunction

with

the

Consolidated

Financial

Statements

and

footnotes

included

our

Annual

Report on Form

10-K for the fiscal

year ended May

28, 2023. The

accounting policies used

in preparing these

Consolidated Financial

Statements are the same as those described in Note 2 to the Consolidated Financial

Statements in that Form 10-K with the exception of

new requirements adopted in the first quarter of fiscal 2024.

In the first quarter

of fiscal 2024, we

adopted optional accounting guidance

to ease the burden

in accounting for reference

rate reform.

The new

standard provides

temporary expedients

and exceptions

to existing

accounting requirements

for contract

modifications

and

hedge accounting

related to transitioning

from discontinued

reference rates.

This resulted in

modifying contracts,

where necessary,

apply a new reference rate,

primarily SOFR. The adoption of

this accounting guidance did not

have a material impact on our

results of

operations or financial position.

In the

first quarter

of fiscal

2024, we adopted

new requirements

for enhanced

disclosures related

to supplier

financing programs.

The

new standard requires

disclosure of the

key terms of

the program and

a rollforward of

the related obligation

during the annual

period,

including

the

amount

obligations

confirmed

and

obligations

subsequently

paid.

have

historically

presented

the

key

terms

these programs

and the associated

obligation outstanding

(please see Note

6). The

rollforward requirement

is effective

in fiscal 2025.

The adoption did not have a material impact on our financial statements and related

disclosures.

Certain terms used throughout this report are defined in the “Glossary” section below.

(2) Acquisition and Divestiture

During

the first

quarter

of fiscal

2023,

acquired

TNT Crust,

manufacturer

of high-quality

frozen pizza

crusts

for

regional

and

national pizza

chains, foodservice

distributors, and

retail outlets,

for a

purchase price

of $

253.0

million. We

financed the

transaction

with U.S. commercial paper.

We consolidated

the TNT Crust business into

our Consolidated Balance Sheets

and recorded goodwill

156.7

million. The

goodwill is

included in

the North

America Foodservice

segment and

is not

deductible for

tax purposes.

The pro

forma effects of this acquisition were not material.

During the

first quarter

of fiscal

2023,

we completed

the sale

of our

Helper main

meals and

Suddenly

Salad side

dishes business

Eagle Family Foods Group for $

606.8

million and recorded a pre-tax gain of $

442.2

million.

(3) Restructuring, Impairment, and Other Exit Costs

During the

first quarter

of fiscal 2024,

we did not

undertake any

new restructuring

actions. We

recorded $

9.8

million of restructuring

charges

the first

quarter

of fiscal

2024

and

2.3

million

restructuring

charges

in the

first

quarter

fiscal

2023 for

previously

announced restructuring actions. We

expect these actions to be completed by the end of fiscal 2025.

paid net

7.4

million of

cash in

the first quarter

of fiscal 2024

related to

restructuring actions

previously announced.

paid net

18.0

million of cash in the same period of fiscal 2023.

Restructuring and impairment charges and project-related

costs are recorded in our Consolidated Statement of Earnings as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Cost of sales

8.6

0.7

Restructuring, impairment, and other exit costs

1.2

1.6

Total restructuring

charges

9.8

2.3

Project-related costs classified in cost of sales

0.8

The roll forward of our restructuring and other exit cost reserves, included

in other current liabilities, is as follows:

In Millions

Total

Reserve balance as of May 28, 2023

47.7

Fiscal 2024 charges, including foreign currency translation

1.2

Utilized in fiscal 2024

(6.4)

Reserve balance as of Aug. 27, 2023

42.5

The reserve balance primarily consists of expected severance payments

associated with restructuring actions.

The charges

recognized in

the roll forward

of our reserves

for restructuring

and other exit

costs do not

include items

charged

directly

to expense

(e.g., asset

impairment charges,

accelerated depreciation,

the gain

or loss

on the

sale of

restructured assets,

and the

write-

off

spare parts)

and other

periodic

exit costs

are

recognized

as incurred,

as those

items are

not reflected

in our

restructuring

and

other exit cost reserves on our Consolidated Balance Sheets.

(4) Goodwill and Other Intangible Assets

The components of goodwill and other intangible assets are as follows:

In Millions

Aug. 27, 2023

May 28, 2023

Goodwill

14,522.0

14,511.2

Other intangible assets:

Intangible assets not subject to amortization:

Brands and other indefinite-lived intangibles

6,715.0

6,712.4

Intangible assets subject to amortization:

Customer relationships and other finite-lived intangibles

386.9

386.3

Less accumulated amortization

(136.2)

(131.1)

Intangible assets subject to amortization, net

250.7

255.2

Other intangible assets

6,965.7

6,967.6

Total

21,487.7

21,478.8

Based on

the carrying

value of

finite-lived intangible

assets as

of August

27, 2023,

annual amortization

expense for

each of

the next

five fiscal years is estimated to be approximately $

million.

The changes in the carrying amount of goodwill during the first quarter of fiscal 2024

were as follows:

In Millions

North America

Retail

Pet

North America

Foodservice

International

Joint Ventures

Total

Balance as of May 28, 2023

6,542.4

6,062.8

805.6

708.4

392.0

14,511.2

Other activity, primarily

foreign currency translation

0.1

(0.1)

8.2

2.6

10.8

Balance as of Aug. 27, 2023

6,542.5

6,062.8

805.5

716.6

394.6

14,522.0

The changes in the carrying amount of other intangible assets during the first quarter

of fiscal 2024 were as follows:

In Millions

Total

Balance as of May 28, 2023

6,967.6

Amortization, net of foreign currency translation

(1.9)

Balance as of Aug. 27, 2023

6,965.7

Our

annual

goodwill

and

indefinite-lived

intangible

assets

impairment

test

was

performed

the

first

day

the

second

quarter

fiscal

2023,

and

determined

there

was

impairment

our

intangible

assets

their

fair

values

were

substantially

excess of the

carrying values,

except for

the

Uncle Toby’s

brand intangible

asset. In addition,

while having

significant coverage

as of

our fiscal 2023

assessment date, the

Progresso

and

EPIC

brand intangible assets had

risk of decreasing coverage.

will continue to

monitor these businesses for potential impairment.

(5) Inventories

The components of inventories were as follows:

In Millions

Aug. 27, 2023

May 28, 2023

Finished goods

2,093.0

2,066.9

Raw materials and packaging

553.5

572.2

Grain

130.1

133.8

Excess of FIFO over LIFO cost

(547.8)

(600.9)

Total

2,228.8

2,172.0

(6) Risk Management Activities

Many commodities we

use in the

production and distribution

of our products

are exposed to

market price risks.

utilize derivatives

to manage price risk for our principal

ingredients and energy costs, including

grains (oats, wheat, and corn), oils

(principally soybean),

dairy products, natural

gas, and diesel fuel.

Our primary objective

when entering into

these derivative contracts

is to achieve

certainty

with

regard

the

future

price

commodities

purchased

for

use

our

supply

chain.

manage

our

exposures

through

combination of purchase orders, long-term

contracts with suppliers, exchange-traded

futures and options, and over-the-counter

options

and swaps.

offset

our exposures

based on

current and

projected market

conditions and

generally seek

to acquire

the inputs

at as

close as possible to or below our planned cost.

use derivatives

to manage

our exposure

to changes

in commodity

prices. We

do not

perform the

assessments required

to achieve

hedge

accounting

for

commodity

derivative

positions.

Accordingly,

the

changes

the

values

these

derivatives

are

recorded

SEC Form 10-Q filed by General Mills Inc.