Q1 Earnings Fiscal 2023 September 21, 2022 A Reminder on Forward-looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations and assumptions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. In particular, our predic ...

General Mills, Inc. (NYSE:GIS) Q1 2023 Earnings Conference Call September 21, 2022 9:00 AM ET Company Participants Jeff Siemon - Vice President, Investor Relations Jeff Harmening - Chairman and Chief Executive Officer Kofi Bruce - Chief Financial Officer Jon Nudi - Group President, North America Retail Conference Call Participants Andrew Lazar - Barclays David Palmer - Evercore ISI Chris Growe - Stifel Cody Ross - UBS Steve Powers - Deutsche Bank Jason English - Goldman Sachs Bryan Spillane - Bank of Americ ...

General Mills, Inc. (NYSE:GIS) Q4 2022 Results Conference Call June 29, 2022 9:00 AM ET Company Participants Jeff Siemon - VP, IR Jeff Harmening - Chairman and CEO Kofi Bruce - CFO Jon Nudi - Group President, North America Retail Conference Call Participants Andrew Lazar - Barclays Bryan Spillane - Bank of America Robert Moskow - Credit Suisse Michael Lavery - Piper Sandler Cody Ross - UBS Pamela Kaufman - Morgan Stanley Chris Growe - Stifel Tom Palmer - JPMorgan Stephen Powers - Deutsche Bank David Palmer ...

Part I [Business Overview](index=4&type=section&id=Item%201%20Business) General Mills is a global leader in branded consumer foods and natural pet food, operating across five segments and selling products in over 100 countries [Company Overview](index=4&type=section&id=COMPANY%20OVERVIEW) - General Mills is a leading global branded consumer food manufacturer and marketer, selling products through retail stores and providing branded and unbranded foods to North American foodservice and commercial baking industries, also a leader in natural pet food[11](index=11&type=chunk) - The company's operations are divided into five segments: North America Retail, Convenience Stores & Foodservice, Europe & Australia, Asia & Latin America, and Pet[12](index=12&type=chunk) - Key product categories include snacks, ready-to-eat cereals, convenient meals, yogurt, natural pet food, super-premium ice cream, baking mixes and ingredients, and refrigerated and frozen dough[12](index=12&type=chunk) [Customers](index=4&type=section&id=Customers) - Primary customers include grocery stores, mass merchandisers, club stores, natural food chains, drug stores, dollar stores, e-commerce retailers, commercial and non-commercial foodservice distributors and operators, restaurants, convenience stores, and pet specialty stores[14](index=14&type=chunk) - In fiscal year 2021, Walmart and its affiliates accounted for **20% of the company's consolidated net sales** and **29% of North America Retail segment net sales**[14](index=14&type=chunk) [Competition](index=4&type=section&id=Competition) - The packaged food and pet food markets are highly competitive, with competition based on product innovation, quality, price, brand recognition, marketing effectiveness, promotional activities, convenient ordering and delivery, and ability to meet consumer preferences[15](index=15&type=chunk) - The company's main competitive strategies include unique consumer insights, effective customer relationships, superior product quality, innovative advertising, product promotions, product innovation meeting consumer needs, efficient supply chain, and pricing[15](index=15&type=chunk) [Raw materials, ingredients, and packaging](index=5&type=section&id=Raw%20materials%2C%20ingredients%2C%20and%20packaging) - Key raw materials include grains (wheat, oats, corn), dairy products, sugar, fruits, vegetable oils, meats, nuts, vegetables, and other agricultural products, along with significant quantities of paperboard, corrugated, plastic, and metal packaging materials[16](index=16&type=chunk) - Raw material costs are highly volatile, influenced by external conditions such as weather, climate change, product scarcity, commodity market fluctuations, exchange rate fluctuations, trade tariffs, and pandemics[16](index=16&type=chunk) - The company manages risks associated with input price volatility through risk management strategies like forward purchasing and derivatives[16](index=16&type=chunk) [TRADEMARKS AND PATENTS](index=5&type=section&id=TRADEMARKS%20AND%20PATENTS) - The company's products are sold under various valuable trademarks, including Annie's, Betty Crocker, Cheerios, Häagen-Dazs, Pillsbury, Yoplait, which are registered and protected in the U.S. and other jurisdictions[17](index=17&type=chunk) - The company also uses other trademarks under license, such as Reese's Puffs (cereal) and Cinnabon (refrigerated dough)[18](index=18&type=chunk) - The company's cereal joint venture, Cereal Partners Worldwide (CPW) with Nestlé S.A., uses the company's cereal trademarks, and the Häagen-Dazs trademark is licensed to Nestlé and its joint venture HDJ in Japan[19](index=19&type=chunk) - The Yoplait and Liberté trademarks are owned by entities in which the company holds a 50% interest and are licensed to Yoplait SAS, in which the company holds a 51% interest[20](index=20&type=chunk) [SEASONALITY](index=5&type=section&id=SEASONALITY) - Product demand is generally balanced, but refrigerated dough, frozen baked goods, and baking products in the North America Retail segment see stronger demand in the fourth quarter, while Progresso soup demand is higher in autumn and winter[21](index=21&type=chunk) - International Häagen-Dazs ice cream experiences high demand in summer, and baking mixes and dough products see increased demand in winter, but due to seasonal differences between the Northern and Southern Hemispheres, international segment net sales are generally balanced throughout the year[21](index=21&type=chunk) [QUALITY AND SAFETY REGULATION](index=6&type=section&id=QUALITY%20AND%20SAFETY%20REGULATION) - The production and sale of consumer and pet food products are highly regulated in the U.S. by federal agencies such as the FDA, USDA, FTC, OSHA, and EPA, as well as various state, local, and foreign agencies[23](index=23&type=chunk) [ENVIRONMENTAL MATTERS](index=6&type=section&id=ENVIRONMENTAL%20MATTERS) - As of May 30, 2021, the company was involved in two response actions related to releases of hazardous substances or waste and complies with various environmental laws and regulations[24](index=24&type=chunk) - The company believes that the outcome of environmental litigation or compliance with environmental laws and regulations will not have a material adverse effect on capital expenditures, earnings, or competitive position[24](index=24&type=chunk) [HUMAN CAPITAL MANAGEMENT](index=6&type=section&id=HUMAN%20CAPITAL%20MANAGEMENT) - As of May 30, 2021, the company had approximately **35,000 employees globally**, with about **15,000 in the U.S.** and **20,000 internationally**[25](index=25&type=chunk) - The company is committed to recruiting, developing, motivating, and protecting employees, providing training and career development opportunities, and enhancing employee engagement through dialogue and surveys[26](index=26&type=chunk) - The company actively fosters a culture of inclusion and belonging, ensuring its workforce reflects the diversity of consumers it serves, with **41% of executives and directors being women** and **19% being racially or ethnically diverse**[27](index=27&type=chunk) - During the COVID-19 pandemic, the company implemented enterprise-wide response measures, including social distancing, temperature checks, enhanced sanitation, and mask usage, to ensure employee safety and maintain continuous operations of manufacturing and distribution facilities[29](index=29&type=chunk) [INFORMATION ABOUT OUR EXECUTIVE OFFICERS](index=7&type=section&id=INFORMATION%20ABOUT%20OUR%20EXECUTIVE%20OFFICERS) - This section provides detailed information about the company's executive officers as of July 1, 2021, including Richard C. Allendorf (General Counsel and Secretary), Jodi Benson (Chief Innovation, Technology and Quality Officer), Kofi A. Bruce (Chief Financial Officer), and Jeffrey L. Harmening (Chairman of the Board and Chief Executive Officer)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[36](index=36&type=chunk) [WEBSITE ACCESS](index=8&type=section&id=WEBSITE%20ACCESS) - The company's website is https://www.generalmills.com, where investors can access SEC reports such as 10-K, 10-Q, and 8-K for free in the "Investors" section[45](index=45&type=chunk) - General Mills is a leading global branded consumer food manufacturer and marketer, with products sold in over 100 countries through retail stores, foodservice, and commercial baking industries[11](index=11&type=chunk) - The company's operations are divided into five segments: North America Retail, Convenience Stores & Foodservice, Europe & Australia, Asia & Latin America, and Pet[12](index=12&type=chunk) - Key product categories include snacks, ready-to-eat cereals, convenient meals, yogurt, natural pet food, super-premium ice cream, baking mixes and ingredients, and refrigerated and frozen dough[12](index=12&type=chunk) - Walmart and its affiliates accounted for **20% of the company's consolidated net sales** and **29% of North America Retail segment net sales** in fiscal year 2021[14](index=14&type=chunk) - The company owns and protects several valuable trademarks, including Annie's, Betty Crocker, Cheerios, Häagen-Dazs, Pillsbury, and Yoplait[17](index=17&type=chunk) - Product demand is generally balanced, but refrigerated dough, frozen baked goods, and baking products in the North America Retail segment see stronger demand in the fourth quarter, while Progresso soup demand is higher in autumn and winter, and international Häagen-Dazs ice cream and baking products see increased demand in summer and winter, respectively[21](index=21&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A%20Risk%20Factors) The company faces various business, operational, legal, regulatory, and financial economic risks, including the impact of COVID-19, intense market competition, retail consolidation, commodity price volatility, product safety issues, changing consumer preferences, and international business challenges [Business and Industry Risks](index=9&type=section&id=Business%20and%20Industry%20Risks) - The COVID-19 pandemic may lead to decreased sales, economic uncertainty, supply chain disruptions, and increased costs[48](index=48&type=chunk) - Intense market competition, or failure to launch innovative products, could harm market share and profitability[49](index=49&type=chunk)[50](index=50&type=chunk)[57](index=57&type=chunk) - Retail environment consolidation enhances customer purchasing power, potentially negatively impacting the company if it cannot meet demands for profitability and sales growth[52](index=52&type=chunk) - Commodity price volatility for raw materials, packaging, and energy could lead to unexpected cost increases, reducing profit margins if not offset[53](index=53&type=chunk)[54](index=54&type=chunk) - Product safety and quality issues, failure to anticipate changes in consumer preferences and trends, and damage to brand reputation could negatively affect company performance[55](index=55&type=chunk)[56](index=56&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) [Operating Risks](index=11&type=section&id=Operating%20Risks) - Inefficient production could impact profitability due to intense market competition, and failure to reduce costs through productivity improvements or redundancy elimination could weaken competitive position[60](index=60&type=chunk) - Supply chain disruptions (e.g., weather, natural disasters, cyberattacks, pandemics, strikes) could affect product manufacturing and sales capabilities, especially for products from single locations or suppliers[61](index=61&type=chunk) - International operations face risks from political and economic instability, exchange rate fluctuations, tariffs, anti-corruption regulations, Brexit impacts, and restrictions on fund transfers[63](index=63&type=chunk)[64](index=64&type=chunk) - Information technology system failures or security breaches could lead to business interruptions, transaction errors, data loss, legal claims, and lost sales[66](index=66&type=chunk) - Failed merger and acquisition integration could harm financial performance, including increased debt leverage, loss of key employees and customers, assumption of unknown liabilities, and impairment of goodwill or other intangible assets[67](index=67&type=chunk) [Legal and Regulatory Risks](index=12&type=section&id=Legal%20and%20Regulatory%20Risks) - Product adulteration, misbranding, or mislabeling could lead to product recalls and product liability claims, damaging brand reputation[68](index=68&type=chunk) - Failure to comply with laws and regulations regarding food production, packaging, labeling, storage, distribution, quality, and safety could result in litigation, administrative penalties, and product recalls[69](index=69&type=chunk) - Changes in COVID-19 related political conditions (e.g., quarantines, import/export restrictions, price controls, government actions) could adversely affect operations and performance[70](index=70&type=chunk) - Failure to comply with environmental laws and regulations could lead to litigation, administrative penalties, and civil damages, with environmental remediation costs potentially exceeding expectations[71](index=71&type=chunk)[72](index=72&type=chunk) [Financial and Economic Risks](index=13&type=section&id=Financial%20and%20Economic%20Risks) - Fluctuations in derivative market values could lead to volatility in gross margin and net earnings[73](index=73&type=chunk)[74](index=74&type=chunk) - Economic downturns could limit consumer demand, resulting in reduced sales of high-margin products or a shift to lower-margin products[75](index=75&type=chunk) - The company's substantial debt (USD **13.5 billion** as of May 30, 2021) may limit financing options and increase vulnerability to economic downturns[76](index=76&type=chunk) - Global capital and credit market issues could affect liquidity and increase borrowing costs, with the COVID-19 pandemic exacerbating market volatility and pricing uncertainty[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - Securities market volatility, interest rate changes, and other factors could significantly increase the company's fixed-benefit pension, other postretirement, and postemployment benefit costs[81](index=81&type=chunk)[82](index=82&type=chunk) - Changes in assumptions about future business performance or weighted-average cost of capital could negatively impact consolidated operating results and net assets, leading to goodwill or other intangible asset impairment[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - The COVID-19 pandemic may lead to decreased product sales, especially in out-of-home channels, and could increase costs due to worsening economic conditions, supply chain disruptions, and labor shortages[48](index=48&type=chunk) - The packaged food and pet food markets are highly competitive, and failure to compete effectively or introduce innovative products to meet changing consumer demands could harm market share and profitability[49](index=49&type=chunk)[50](index=50&type=chunk)[57](index=57&type=chunk) - Retail environment consolidation enhances customer purchasing power, potentially negatively impacting the company if it cannot meet demands for profitability and sales growth, with Walmart accounting for **20% of consolidated net sales** in fiscal year 2021[52](index=52&type=chunk) - Commodity price volatility for raw materials, packaging, and energy could lead to unexpected cost increases, reducing profit margins if not offset by productivity improvements or price adjustments[53](index=53&type=chunk)[54](index=54&type=chunk) - Product safety and quality issues, failure to anticipate changes in consumer preferences and trends, inability to grow market share or enter high-growth categories, and damage to brand reputation could negatively affect company performance[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) - Supply chain disruptions (e.g., weather, natural disasters, cyberattacks, pandemics, strikes) could affect product manufacturing and sales capabilities, especially for products from single locations or suppliers[61](index=61&type=chunk) - International operations face risks from political and economic instability, exchange rate fluctuations, tariffs, anti-corruption regulations, Brexit impacts, and restrictions on fund transfers[63](index=63&type=chunk)[64](index=64&type=chunk) - Information technology system failures or security breaches could lead to business interruptions, transaction errors, data loss, legal claims, and lost sales[66](index=66&type=chunk) - Failed merger and acquisition integration could harm financial performance, including increased debt leverage, loss of key employees and customers, assumption of unknown liabilities, and impairment of goodwill or other intangible assets[67](index=67&type=chunk) - Product adulteration, misbranding, or mislabeling could lead to product recalls and product liability claims, damaging brand reputation[68](index=68&type=chunk) - Fluctuations in derivative market values could lead to volatility in gross margin and net earnings, while economic downturns could limit consumer demand, resulting in reduced sales of high-margin products or a shift to lower-margin products[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - The company's substantial debt (USD **13.5 billion** as of May 30, 2021) may limit financing options and increase vulnerability to economic downturns, with global capital and credit market issues potentially affecting liquidity and increasing borrowing costs[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - Securities market volatility, interest rate changes, and other factors could significantly increase the company's fixed-benefit pension, other postretirement, and postemployment benefit costs[81](index=81&type=chunk)[82](index=82&type=chunk) - Changes in assumptions about future business performance or weighted-average cost of capital could negatively impact consolidated operating results and net assets, leading to goodwill or other intangible asset impairment[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Unresolved Staff Comments](index=14&type=section&id=Item%201B%20Unresolved%20Staff%20Comments) There are no unresolved staff comments in this report - There are no unresolved staff comments in this report[87](index=87&type=chunk) [Properties](index=15&type=section&id=Item%202%20Properties) The company owns its main administrative offices and research facilities in Minneapolis, Minnesota, and operates 46 production facilities globally, along with numerous sales and administrative offices, warehouses, and distribution centers, and 466 Häagen-Dazs ice cream shops worldwide (excluding the U.S. and Canada) - The company owns its main administrative offices and research facilities located in the Minneapolis metropolitan area, Minnesota[89](index=89&type=chunk) - As of May 30, 2021, the company operates **46 production facilities globally**, with **24 in the U.S.**, **4 in Greater China**, **1 in Asia/Middle East/Africa**, **2 in Canada**, **8 in Europe/Australia**, and **7 in Latin America and Mexico**[89](index=89&type=chunk) - The company also operates numerous grain elevators and utilizes approximately **15 million square feet of warehouse and distribution space**, primarily supporting the North America Retail segment[90](index=90&type=chunk) - In the Europe & Australia and Asia & Latin America segments' Häagen-Dazs business, the company operates **466 (all leased) and franchises 392 branded ice cream shops globally** (excluding the U.S. and Canada)[91](index=91&type=chunk) [Legal Proceedings](index=15&type=section&id=Item%203%20Legal%20Proceedings) The company faces various pending or threatened legal proceedings in the ordinary course of business, but as of May 30, 2021, no claims or litigation are deemed to have a material adverse effect on its consolidated financial position or operating results - The company faces various pending or threatened legal proceedings in the ordinary course of business[92](index=92&type=chunk) - As of May 30, 2021, the company believes there are no claims or litigation that are likely to have a material adverse effect on its consolidated financial position or operating results[92](index=92&type=chunk) [Mine Safety Disclosures](index=15&type=section&id=Item%204%20Mine%20Safety%20Disclosures) There are no mine safety disclosures in this report - There are no mine safety disclosures in this report[92](index=92&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=16&type=section&id=Item%205%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock is listed on the New York Stock Exchange under the symbol "GIS," with approximately 26,000 registered holders as of June 15, 2021, and the company repurchased **4,984,305 shares** of common stock at an average price of **$60.35 per share** during the fiscal quarter ended May 30, 2021 - The company's common stock is listed on the New York Stock Exchange under the ticker symbol "GIS"[94](index=94&type=chunk) - As of June 15, 2021, there were approximately **26,000 registered holders** of the company's common stock[94](index=94&type=chunk) Fiscal Year 2021 Fourth Quarter Common Stock Repurchase Information | Period | Total Number of Shares Purchased (a) | Average Price Per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program (b) | Maximum Number of Shares that may yet be Purchased Under the Program (b) | |:---|:---|:---|:---|:---| | March 1, 2021 - April 4, 2021 | 2,126,480 | $58.78 | 2,126,480 | 37,290,922 | | April 5, 2021 - May 2, 2021 | 2,339,540 | $61.14 | 2,339,540 | 34,951,382 | | May 3, 2021 - May 30, 2021 | 518,285 | $63.21 | 518,285 | 34,433,097 | | Total | 4,984,305 | $60.35 | 4,984,305 | 34,433,097 |[95](index=95&type=chunk) - The company's Board of Directors approved an authorization on May 6, 2014, to repurchase up to **100 million shares** of common stock, with no specified expiration date[95](index=95&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%207%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) General Mills achieved strong performance in fiscal year 2021, with consolidated net sales growing **3% to $18.1 billion** and organic net sales up **4%**, while adjusted operating profit increased **2%** and adjusted diluted EPS rose **4%**, driven by its "Accelerate" strategy, debt reduction, and enhanced financial flexibility, though fiscal year 2022 anticipates a **1% to 3% decline in organic net sales** and slight decreases in adjusted operating profit and diluted EPS due to post-pandemic at-home food demand decline and inflationary costs [EXECUTIVE OVERVIEW](index=17&type=section&id=EXECUTIVE%20OVERVIEW) - The company's long-term financial targets are to achieve annual net sales growth of **2% to 3%**, mid-single-digit adjusted operating profit growth, high-single-digit adjusted diluted EPS growth, free cash flow conversion of at least **95%**, and return **80% to 90% of free cash flow to shareholders**[98](index=98&type=chunk) - The company is executing its "Accelerate" strategy to drive sustainable profitable growth by boldly building brands, relentlessly innovating, unleashing scale, and being a force for good[99](index=99&type=chunk) - In fiscal year 2021, the company performed well amidst pandemic uncertainty, achieving strong growth in organic net sales, adjusted operating profit, and adjusted diluted EPS[100](index=100&type=chunk) - The company competed effectively, gaining market share in five global platforms: cereal, pet food, ice cream, snack bars, and Mexican food[100](index=100&type=chunk) - The company reduced its debt leverage, improved financial flexibility, and resumed dividend growth and share repurchase activity in fiscal year 2021[101](index=101&type=chunk) - In fiscal year 2021, the company announced the divestiture of its European Yoplait business and the acquisition of Tyson Foods' pet treats business to reshape its portfolio for growth[102](index=102&type=chunk) Fiscal Year 2021 Consolidated Financial Results | Metric | Fiscal Year 2021 (million USD) | Fiscal Year 2021 vs. Fiscal Year 2020 (%) | |:---|:---|:---|\ | Net sales | 18,127.0 | 3% |\ | Operating profit | 3,144.8 | 6% |\ | Net earnings attributable to General Mills | 2,339.8 | 7% |\ | Diluted EPS | $3.78 | 6% |\ | Organic net sales growth rate | | 4% |\ | Adjusted operating profit | 3,153.2 | 3% |\ | Adjusted diluted EPS | $3.79 | 5% |[103](index=103&type=chunk)[110](index=110&type=chunk) - Fiscal year 2021 net cash provided by operating activities was **$3.0 billion**, capital investments were **$531 million**, free cash flow was **$2.4 billion**, and **$1.2 billion** in dividends and **$301 million** in share repurchases were returned to shareholders[104](index=104&type=chunk) - Fiscal year 2022 outlook: at-home food demand is expected to decline year-over-year but remain above pre-pandemic levels, while out-of-home food demand continues to recover but not fully reach pre-pandemic levels, leading to an overall decline in consumer demand[106](index=106&type=chunk) - Total input cost inflation is projected to be approximately **7%** in fiscal year 2022, which the company plans to offset through HMM cost savings (approximately **4% of cost of sales**) and positive net price realization from strategic revenue management[107](index=107&type=chunk) Fiscal Year 2022 Key Targets | Metric | Fiscal Year 2022 Target | |:---|:---|\ | Organic net sales growth | Expected to decline 1% to 3% |\ | Constant-currency adjusted operating profit growth | Expected to decline 2% to 4% |\ | Constant-currency adjusted diluted EPS growth | Expected to be flat to decline 2% |\ | Free cash flow conversion | Expected to be approximately 95% of adjusted after-tax earnings |[107](index=107&type=chunk) [FISCAL 2021 CONSOLIDATED RESULTS OF OPERATIONS](index=18&type=section&id=FISCAL%202021%20CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) - Net sales grew **3%** in fiscal year 2021, with organic net sales increasing **4%**; operating profit margin rose **50 basis points to 17.3%**, and adjusted operating profit margin increased **10 basis points to 17.4%**[108](index=108&type=chunk)[109](index=109&type=chunk) - Net sales growth was primarily driven by favorable net price realization and product mix, as well as favorable foreign currency exchange rates[111](index=111&type=chunk) - Organic net sales growth was primarily driven by organic volume growth and favorable organic net price realization and product mix[112](index=112&type=chunk) - Cost of sales increased by **$182 million to $11.679 billion**, primarily driven by a **$366 million** increase in product price and mix and a **$43 million** increase in volume[113](index=113&type=chunk) - Gross margin grew **5%**, increasing by **80 basis points to 35.6%** as a percentage of net sales[114](index=114&type=chunk) - Selling, general, and administrative (SG&A) expenses decreased by **$72 million to $3.08 billion**, primarily reflecting favorable net corporate investment activities and reduced administrative expenses, partially offset by increased media and advertising expenses[114](index=114&type=chunk) - Fiscal year 2021 divestiture loss was **$54 million**, primarily from the sale of the Laticínios Carolina business in Brazil[114](index=114&type=chunk) - Restructuring, impairment, and other exit costs totaled **$170 million**, primarily due to approved restructuring actions aimed at aligning organizational structure and resources[115](index=115&type=chunk) - Net interest expense was **$420 million**, a **$46 million decrease** from fiscal year 2020, primarily driven by lower interest rates and a reduced average debt balance[116](index=116&type=chunk) - The effective tax rate for fiscal year 2021 was **22.0%**, up from **18.5%** in fiscal year 2020, primarily due to net benefits from certain wholly-owned subsidiary reorganizations in fiscal year 2020 and non-deductible losses from the Brazil business divestiture in fiscal year 2021[116](index=116&type=chunk) - After-tax earnings from joint ventures increased **29% to $118 million**, primarily driven by net sales growth at CPW and HDJ[117](index=117&type=chunk) Joint Venture Net Sales Growth Composition (Fiscal Year 2021 vs. Fiscal Year 2020) | Metric | CPW | HDJ | Total | |:---|:---|:---|:---|\ | Volume growth contribution | 4 pts | 2 pts | |\ | Net price realization and mix | 1 pt | 4 pts | |\ | Constant-currency net sales growth | 5 pts | 6 pts | 5 pts |\ | Foreign currency exchange rates | 1 pt | 2 pts | 1 pt |\ | Net sales growth | 6 pts | 8 pts | 6 pts |[118](index=118&type=chunk) [RESULTS OF SEGMENT OPERATIONS](index=20&type=section&id=RESULTS%20OF%20SEGMENT%20OPERATIONS) [NORTH AMERICA RETAIL SEGMENT](index=21&type=section&id=NORTH%20AMERICA%20RETAIL%20SEGMENT) - North America Retail segment net sales grew **2%** in fiscal year 2021, primarily driven by favorable net price realization and product mix, as well as volume growth[125](index=125&type=chunk) - Organic net sales grew **4%**, primarily driven by organic volume growth and favorable organic net price realization and product mix[128](index=128&type=chunk) North America Retail Segment Operating Unit Net Sales (million USD) | Operating Unit | Fiscal Year 2021 | Fiscal Year 2021 vs. Fiscal Year 2020 (%) | Fiscal Year 2020 |\ |:---|:---|:---|:---|\ | Meals & Baking | $4,611.6 | 5% | $4,408.5 |\ | Cereal | $2,455.2 | 1% | $2,434.1 |\ | Snacks | $2,048.3 | (2)% | $2,091.9 |\ | Canada | $953.2 | 6% | $897.0 |\ | Yogurt and other | $927.1 | 1% | $919.0 |\ | **Total** | **$10,995.4** | **2%** | **$10,750.5** |[130](index=130&type=chunk) - Segment operating profit was **$2.623 billion**, essentially flat compared to fiscal year 2020, as higher input costs were offset by favorable net price realization and product mix, and volume growth[130](index=130&type=chunk) [EUROPE & AUSTRALIA SEGMENT](index=22&type=section&id=EUROPE%20%26%20AUSTRALIA%20SEGMENT) - Europe & Australia segment net sales grew **8%** in fiscal year 2021, primarily driven by favorable foreign currency exchange rates and net price realization and product mix, partially offset by volume declines[132](index=132&type=chunk) - Organic net sales grew **3%**, primarily driven by favorable organic net price realization and product mix[135](index=135&type=chunk) - Segment operating profit increased **33% to $151 million**, primarily driven by favorable net price realization and product mix, partially offset by higher input costs[136](index=136&type=chunk) [CONVENIENCE STORES & FOODSERVICE SEGMENT](index=23&type=section&id=CONVENIENCE%20STORES%20%26%20FOODSERVICE%20SEGMENT) - Convenience Stores & Foodservice segment net sales declined **4%** in fiscal year 2021, primarily driven by volume declines[138](index=138&type=chunk) - Organic net sales declined **3%**, primarily driven by organic volume declines and unfavorable organic net price realization and product mix[140](index=140&type=chunk) - Segment operating profit declined **9% to $306 million**, primarily driven by higher input costs, unfavorable net price realization and product mix, and volume declines[142](index=142&type=chunk) [PET SEGMENT](index=24&type=section&id=PET%20SEGMENT) - Pet segment net sales grew **2%** in fiscal year 2021, primarily driven by volume growth[144](index=144&type=chunk) - Organic net sales grew **2%**, primarily driven by organic volume growth[146](index=146&type=chunk) - Segment operating profit increased **6% to $415 million**, primarily driven by volume growth, lower SG&A expenses, and favorable net price realization and product mix, partially offset by higher input costs[147](index=147&type=chunk) [ASIA & LATIN AMERICA SEGMENT](index=24&type=section&id=ASIA%20%26%20LATIN%20AMERICA%20SEGMENT) - Asia & Latin America segment net sales grew **10%** in fiscal year 2021, primarily driven by volume growth and favorable net price realization and product mix, partially offset by unfavorable foreign currency exchange rates[150](index=150&type=chunk) - Organic net sales grew **15%**, primarily driven by organic volume growth and favorable organic net price realization and product mix[152](index=152&type=chunk) - Segment operating profit increased by **$67 million to $86 million**, primarily driven by favorable net price realization and product mix, volume growth, and favorable foreign currency exchange rates, partially offset by higher input costs[153](index=153&type=chunk) Fiscal Year 2021 and 2020 Segment Net Sales and Operating Profit | In Millions | 2021 Dollars | 2021 Percent of Total | 2020 Dollars | 2020 Percent of Total |\ |:---|:---|:---|:---|:---|\ | **Net Sales** | | | | |\ | North America Retail | $10,995.4 | 60% | $10,750.5 | 61% |\ | Europe & Australia | 1,981.5 | 11% | 1,838.9 | 10% |\ | Convenience Stores & Foodservice | 1,742.4 | 10% | 1,816.4 | 10% |\ | Pet | 1,732.4 | 10% | 1,694.6 | 10% |\ | Asia & Latin America | 1,675.3 | 9% | 1,526.2 | 9% |\ | **Total Net Sales** | **$18,127.0** | **100%** | **$17,626.6** | **100%** |\ | **Segment Operating Profit** | | | | |\ | North America Retail | $2,623.2 | 73% | $2,627.0 | 75% |\ | Europe & Australia | 151.0 | 4% | 113.8 | 3% |\ | Convenience Stores & Foodservice | 306.0 | 9% | 337.2 | 10% |\ | Pet | 415.0 | 12% | 390.7 | 11% |\ | Asia & Latin America | 85.6 | 2% | 18.7 | 1% |\ | **Total Segment Operating Profit** | **$3,580.8** | **100%** | **$3,487.4** | **100%** |[123](index=123&type=chunk) [UNALLOCATED CORPORATE ITEMS](index=25&type=section&id=UNALLOCATED%20CORPORATE%20ITEMS) - Unallocated corporate items include corporate administrative expenses, employee benefits and incentive differences, General Mills Foundation contributions, impacts of asset and liability revaluation in hyperinflationary economies, costs related to restructuring plan items, and other items not included in segment operating performance measures[154](index=154&type=chunk) - In fiscal year 2021, unallocated corporate expenses decreased by **$297 million to $212 million**, primarily due to a **$139 million** net decrease in mark-to-market valuation of commodity positions and grain inventories, and **$76 million** in net corporate investment activities[155](index=155&type=chunk) [IMPACT OF INFLATION](index=26&type=section&id=IMPACT%20OF%20INFLATION) - The company experienced input cost inflation of **4%** in both fiscal years 2021 and 2020, primarily concentrated in commodity inputs, with an estimated input cost inflation of approximately **7%** for fiscal year 2022[157](index=157&type=chunk) - The company minimizes the impact of inflation through Holistic Margin Management (HMM), strategic revenue management, planning, and operating practices[157](index=157&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=26&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - The company's primary source of liquidity is cash flow from operations, which generated **$6.6 billion** over the past two years, with most returned to shareholders through dividends and share repurchases[158](index=158&type=chunk) - As of May 30, 2021, the company held **$687 million** in cash and cash equivalents in foreign jurisdictions[159](index=159&type=chunk) Cash Flow from Operating Activities (million USD) | In Millions | Fiscal Year 2021 | Fiscal Year 2020 |\ |:---|:---|:---|\ | Net cash provided by operating activities | $2,983.2 | $3,676.2 |[160](index=160&type=chunk) - Fiscal year 2021 cash flow from operating activities was **$2.983 billion**, a **$693 million decrease** from fiscal year 2020, primarily due to a **$950 million** change in working capital assets and liabilities[160](index=160&type=chunk) - Core working capital increased by **6%** in fiscal year 2021, while net sales increased by **3%**, resulting in a net working capital deficit of **$194 million** as of May 30, 2021[161](index=161&type=chunk) Cash Flow from Investing Activities (million USD) | In Millions | Fiscal Year 2021 | Fiscal Year 2020 |\ |:---|:---|:---|\ | Net cash used by investing activities | $(512.8) | $(486.2) |[163](index=163&type=chunk) - Cash used in investing activities was **$513 million** in fiscal year 2021, with capital expenditures of **$531 million**, an increase of **$70 million** from fiscal year 2020[163](index=163&type=chunk) - Capital expenditures are projected to be approximately **3.5% of reported net sales** in fiscal year 2022[164](index=164&type=chunk) Cash Flow from Financing Activities (million USD) | In Millions | Fiscal Year 2021 | Fiscal Year 2020 |\ |:---|:---|:---|\ | Net cash used by financing activities | $(2,715.5) | $(1,941.5) |[165](index=165&type=chunk) - Cash used in financing activities was **$2.715 billion** in fiscal year 2021, including **$961 million** in net debt repayments and **$201 million** paid for debt exchange participation incentives[165](index=165&type=chunk) - Fiscal year 2021 saw **$301 million** in share repurchases (**5 million shares**) and **$1.246 billion** in dividends paid (**$2.02 per share**)[166](index=166&type=chunk) Joint Venture Cash Flow (million USD) | Inflow (Outflow), in Millions | Fiscal Year 2021 | Fiscal Year 2020 |\ |:---|:---|:---|\ | Investments in affiliates, net | $15.5 | $(48.0) |\ | Dividends received | $95.2 | $76.5 |[168](index=168&type=chunk) - As of May 30, 2021, the company had **$2.9 billion** in committed credit facilities (**$2.7 billion** expiring April 2026 and **$200 million** expiring September 2022) and **$600 million** in uncommitted credit facilities[170](index=170&type=chunk) - The company has **$2.464 billion** in long-term debt maturing within the next 12 months and believes cash flow from operations and available short-term and long-term debt financing are sufficient to meet liquidity and capital needs for at least the next 12 months[171](index=171&type=chunk) - The net debt to operating cash flow ratio increased to **3.7** in fiscal year 2021, while the net debt to adjusted EBITDA ratio decreased to **2.9**[172](index=172&type=chunk) - The company holds a **51% controlling interest in Yoplait SAS**, with Sodiaal International holding the remaining interest, and Sodiaal has the right to sell its redeemable interest to the company once annually until December 2024; as of May 30, 2021, the redeemable interest's redemption value was **$605 million**[173](index=173&type=chunk) - In March 2021, the company signed a non-binding memorandum of understanding to sell its **51% controlling interest in its European Yoplait business to Sodiaal** in exchange for full ownership of the Canadian yogurt business and reduced royalty rates for the Yoplait and Liberté brands in the U.S. and Canada[174](index=174&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=29&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) - Critical accounting estimates significantly impact the reported financial position and operating results, including revenue recognition, valuation of long-lived assets, intangible assets, redeemable interests, equity compensation, income taxes, and fixed-benefit pension and other postretirement benefit plans[178](index=178&type=chunk) - The impact of the COVID-19 pandemic on the company's operating results remains uncertain, with at-home food demand expected to decline but remain above pre-pandemic levels in fiscal year 2022, and out-of-home food demand continuing to recover but not fully reaching pre-pandemic levels[179](index=179&type=chunk) - Net revenue recognition deducts variable consideration and consideration payable to customers, including trade promotions and consumer coupon redemptions; trade promotions are recorded based on estimates of participation and performance levels, and inaccurate estimates could materially impact operating results[180](index=180&type=chunk) - The useful lives and impairment review of long-lived assets are based on estimates of undiscounted cash flows, with fair value determined through discounted cash flow models or independent appraisals[181](index=181&type=chunk) - Goodwill and other indefinite-lived intangible assets are tested for impairment annually, with fair value estimates based on discounted cash flow models using inputs such as sales and profit growth rates, discount rates, perpetuity growth assumptions, and market comparable data[182](index=182&type=chunk)[183](index=183&type=chunk) - As of May 30, 2021, the company had **$21.0 billion** in goodwill and indefinite-lived intangible assets, with the Europe & Australia reporting unit and Progresso, Green Giant, and EPIC brand intangible assets at risk of declining coverage[184](index=184&type=chunk)[185](index=185&type=chunk) - The redemption value of redeemable interests is estimated based on significant assumptions such as projected revenue growth and profitability, capital expenditures, depreciation and taxes, exchange rates, and discount rates[187](index=187&type=chunk) - The valuation of equity compensation requires predictive assumptions about future stock price volatility, employee exercise behavior, dividend yield, and forfeiture rates, with the estimated fair value of stock options granted in fiscal year 2021 being **$8.03**[188](index=188&type=chunk)[189](index=189&type=chunk) - Income taxes use a "more likely than not" threshold for recognizing and derecognizing uncertain tax positions, and future changes in judgment will impact current earnings[192](index=192&type=chunk) - The cost and obligation measurements for fixed-benefit pension, other postretirement, and postemployment benefit plans rely on significant assumptions such as long-term rate of return on plan assets, discount rates, and health care cost trend rates[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - The weighted-average expected asset return for all fixed-benefit plans in fiscal year 2021 was **5.72%**, and a **100 basis point reduction** in the expected long-term asset return would increase net pension and postretirement expense by **$72 million** in fiscal year 2022[197](index=197&type=chunk)[198](index=198&type=chunk) - Discount rate assumptions are determined annually and developed using an Aa Above Median corporate bond yield and credit risk margin to construct a forward rate curve; a **100 basis point reduction** in the discount rate would increase net fixed-benefit pension, other postretirement, and postemployment benefit plan expense by approximately **$54 million** in fiscal year 2022[199](index=199&type=chunk)[200](index=200&type=chunk) - The initial health care cost trend rate is assumed to be **6.3% for retirees aged 65 and over** and **6.0% for retirees under 65**, declining annually to an ultimate trend rate of **4.5% by 2029**[202](index=202&type=chunk) - In fiscal year 2021, the company recorded **$4 million** in net fixed-benefit pension, other postretirement, and postemployment benefit plan expense, and as of May 30, 2021, accumulated unrecognized net actuarial losses of **$2.0 billion** in AOCI[204](index=204&type=chunk) [RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS](index=32&type=section&id=RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) - In March 2020, the FASB issued accounting guidance on reference rate reform, providing simplified treatment for contract modifications and hedge accounting to address the transition away from reference rates like LIBOR[206](index=206&type=chunk) [NON-GAAP MEASURES](index=32&type=section&id=NON-GAAP%20MEASURES) - The company includes non-GAAP financial performance measures in its reports, believing they provide useful information to investors and are used for reporting to the Board of Directors and executive management, as well as for incentive compensation measurement[207](index=207&type=chunk) - Organic net sales growth rate is used to measure the underlying performance of net sales, excluding the impacts of foreign currency fluctuations, acquisitions, divestitures, and the 53rd week[208](index=208&type=chunk) - Constant-currency adjusted operating profit growth rate is used to assess comparable year-over-year operating profit performance, excluding the impact of foreign currency fluctuations[210](index=210&type=chunk) - Adjusted diluted EPS and its constant-currency growth rate are used to assess comparable year-over-year earnings performance[213](index=213&type=chunk) - Free cash flow conversion rate is used to assess the company's efficiency in converting earnings to cash and returning cash to shareholders[217](index=217&type=chunk) - Net debt to adjusted EBITDA ratio is used to measure the company's ability to incur additional debt and repay existing debt[221](index=221&type=chunk) - Adjusted operating profit as a percentage of net sales (adjusted operating profit margin) is used to assess comparable year-over-year operating profit margins[224](index=224&type=chunk) - Adjusted effective income tax rate is used to present a comparable year-over-year adjusted effective income tax rate[227](index=227&type=chunk) - Constant-currency after-tax earnings growth rate from joint ventures is used to provide transparency into the underlying performance of joint ventures, excluding the impact of foreign currency fluctuations[230](index=230&type=chunk) - Constant-currency net sales growth rate for the Canada operating unit is used to provide transparency into the underlying performance of the Canada operating unit, excluding the impact of foreign currency fluctuations[232](index=232&type=chunk) - Constant-currency segment operating profit growth rate is used to provide transparency into the underlying performance of segments, excluding the impact of foreign currency fluctuations[234](index=234&type=chunk) - The fiscal year 2022 outlook for organic net sales growth, constant-currency adjusted operating profit, adjusted diluted EPS, and free cash flow are non-GAAP financial measures that cannot be reconciled to the most directly comparable GAAP financial measures due to the inability to reasonably predict factors such as foreign currency exchange rate and commodity price changes[236](index=236&type=chunk) - The company's long-term financial targets are to achieve annual net sales growth of **2% to 3%**, mid-single-digit adjusted operating profit growth, high-single-digit adjusted diluted EPS growth, free cash flow conversion of at least **95%**, and return **80% to 90% of free cash flow to shareholders**[98](index=98&type=chunk) - The company is executing its "Accelerate" strategy to drive sustainable profitable growth by boldly building brands, relentlessly innovating, unleashing scale, and being a force for good[99](index=99&type=chunk) - In fiscal year 2021, the company performed well amidst pandemic uncertainty, achieving strong growth in organic net sales, adjusted operating profit, and adjusted diluted EPS[100](index=100&type=chunk) - The company competed effectively, gaining market share in five global platforms: cereal, pet food, ice cream, snack bars, and Mexican food[100](index=100&type=chunk) - The company achieved cost savings through Holistic Margin Management (HMM) and increased investments in brand building and strategic capabilities such as e-commerce, digital, and data analytics[101](index=101&type=chunk) - The company reduced its debt leverage, improved financial flexibility, and resumed dividend growth and share repurchase activity in fiscal year 2021[101](index=101&type=chunk) - In fiscal year 2021, the company announced the divestiture of its European Yoplait business and the acquisition of Tyson Foods' pet treats business to reshape its portfolio for growth[102](index=102&type=chunk) Fiscal Year 2021 Consolidated Financial Results | Metric | Fiscal Year 2021 (million USD) | Fiscal Year 2021 vs. Fiscal Year 2020 (%) | Percentage of Net Sales (%) | Constant-Currency Growth (%) |\ |:---|:---|:---|:---|:---|\ | Net sales | 18,127.0 | 3% | | |\ | Operating profit | 3,144.8 | 6% | 17.3% | |\ | Net earnings attributable to General Mills | 2,339.8 | 7% | | |\ | Diluted EPS | $3.78 | 6% | | |\ | Organic net sales growth rate | | 4% | | |\ | Adjusted operating profit | 3,153.2 | 3% | 17.4% | 2% |\ | Adjusted diluted EPS | $3.79 | 5% | | 4% |[103](index=103&type=chunk)[110](index=110&type=chunk) - Fiscal year 2021 net cash provided by operating activities was **$3.0 billion**, capital investments were **$531 million**, free cash flow was **$2.4 billion**, and **$1.2 billion** in dividends and **$301 million** in share repurchases were returned to shareholders[104](index=104&type=chunk) - The net debt to operating cash flow ratio was **3.7** and the net debt to adjusted EBITDA ratio was **2.9** in fiscal year 2021[104](index=104&type=chunk) - Fiscal year 2022 outlook: at-home food demand is expected to decline year-over-year but remain above pre-pandemic levels, while out-of-home food demand continues to recover but not fully reach pre-pandemic levels, leading to an overall decline in consumer demand[106](index=106&type=chunk) - Total input cost inflation is projected to be approximately **7%** in fiscal year 2022, which the company plans to offset through HMM cost savings (approximately **4% of cost of sales**) and positive net price realization from strategic revenue management[107](index=107&type=chunk) Fiscal Year 2022 Key Targets | Metric | Fiscal Year 2022 Target |\ |:---|:---|\ | Organic net sales growth | Expected to decline 1% to 3% |\ | Constant-currency adjusted operating profit growth | Expected to decline 2% to 4% |\ | Constant-currency adjusted diluted EPS growth | Expected to be flat to decline 2% |\ | Free cash flow conversion | Expected to be approximately 95% of adjusted after-tax earnings |[107](index=107&type=chunk) [CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995](index=41&type=section&id=CAUTIONARY%20STATEMENT%20RELEVANT%20TO%20FORWARD-LOOKING%20INFORMATION%20FOR%20THE%20PURPOSE%20OF%20%22SAFE%20HARBOR%22%20PROVISIONS%20OF%20THE%20PRIVATE%20SECURITIES%20LITIGATION%20REFORM%20ACT%20OF%201995) This report contains or refers to forward-looking statements based on current expectations and assumptions, which are subject to various risks and uncertainties that could cause actual results to differ materially from historical results and current expectations, and investors are cautioned not to place undue reliance on these statements, as factors such as the COVID-19 pandemic, supply chain disruptions, competitive dynamics, economic conditions, product innovation, changing consumer preferences, mergers and acquisitions, legal and regulatory environment, asset impairment, accounting standard changes, product quality and safety issues, advertising and marketing effectiveness, customer purchasing and inventory levels, volatility in supply chain resource costs and availability, derivative market value fluctuations, benefit plan expenses, information technology system failures, and foreign economic conditions and political instability could all impact future performance - This report contains or refers to forward-looking statements based on current expectations and assumptions, which are subject to various risks and uncertainties that could cause actual results to differ materially from historical results and current expectations[239](index=239&type=chunk)[240](index=240&type=chunk) - Factors influencing future performance include the impact of the COVID-19 pandemic, supply chain disruptions, competitive dynamics, economic conditions (inflation rates, interest rates, tax rates), product development and innovation, consumer acceptance, pricing and promotions, mergers and acquisitions or dispositions, changes in the legal and regulatory environment, impairment of goodwill and other assets, changes in accounting standards, product quality and safety issues, changes in consumer demand, advertising and marketing effectiveness, consumer behavior and preferences, retail environment consolidation, customer purchasing and inventory levels, volatility in supply chain resource costs and availability, derivative market value fluctuations, benefit plan expenses, information technology system failures, and foreign economic conditions and political instability[241](index=241&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%207A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from changes in interest rates, foreign currency exchange rates, commodity, and equity prices, which are actively managed through various hedging transactions, and quantified using a Monte Carlo Value-at-Risk (VAR) methodology to estimate the maximum potential fair value loss under normal market conditions; as of May 30, 2021, the VAR estimates for market risk sensitive instruments were **$37.4 million for interest rate instruments**, **$25.6 million for foreign currency instruments**, **$4.2 million for commodity instruments**, and **$2.8 million for equity instruments** - The company faces market risks from changes in interest rates, foreign currency exchange rates, commodity, and equity prices, which are actively managed through various hedging transactions[243](index=243&type=chunk) - The company uses a Monte Carlo Value-at-Risk (VAR) methodology to quantify market risk, estimating the maximum potential fair value loss that could arise from adverse changes in market interest rates, foreign currency exchange rates, commodity prices, and equity prices under normal market conditions[244](index=244&type=chunk) VAR Estimates for Market Risk Sensitive Instruments (million USD) | In Millions | May 30, 2021 | Average During Fiscal 2021 | May 31, 2020 |\ |:---|:---|:---|:---|\ | Interest rate instruments | $37.4 | $64.1 | $78.8 |\ | Foreign currency instruments | $25.6 | $26.7 | $19.3 |\ | Commodity instruments | $4.2 | $4.5 | $2.6 |\ | Equity instruments | $2.8 | $4.3 | $5.0 |[246](index=246&type=chunk) [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208%20Financial%20Statements%20and%20Supplementary%20Data) This section includes General Mills' consolidated financial statements for fiscal years ended May 30, 2021, May 31, 2020, and May 26, 2019, comprising statements of earnings, comprehensive income, balance sheets, total equity and redeemable interest, and cash flows, accompanied by detailed notes, with management and independent registered public accounting firms affirming the fairness of the financial statements and effectiveness of internal controls, and notes detailing accounting policies, acquisitions, divestitures, restructuring costs, joint venture investments, goodwill and intangible assets, leases, financial instruments, debt, redeemable and noncontrolling interests, stockholders' equity, stock plans, earnings per share, retirement benefits, income taxes, commitments and contingencies, and business segment and geographic information [REPORT OF MANAGEMENT RESPONSIBILITIES](index=43&type=section&id=REPORT%20OF%20MANAGEMENT%20RESPONSIBILITIES) - Management is responsible for the fairness and accuracy of the consolidated financial statements and has established internal control systems to provide reasonable assurance that assets are adequately safeguarded and transactions are accurately recorded[248](index=248&type=chunk)[249](index=249&type=chunk) - The Audit Committee regularly meets with management, internal auditors, and the independent registered public accounting firm to review internal controls, audits, and financial reporting matters[250](index=250&type=chunk) [Report of Independent Registered Public Accounting Firm](index=44&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - KPMG LLP issued an unqualified opinion on General Mills' consolidated financial statements as of May 30, 2021, and May 31, 2020, and on the effectiveness of internal control over financial reporting as of May 30, 2021[252](index=252&type=chunk)[253](index=253&type=chunk) - The company changed its lease accounting method, adopting ASU 2016-02, Leases (Topic 842), effective May 27, 2019[254](index=254&type=chunk) - The valuation of goodwill and brand intangible assets was identified as a critical audit matter because assessing audit evidence requires judgment on highly subjective matters such as future operating performance, revenue growth rates, operating profit margins, royalty rates, and discount rates[259](index=259&type=chunk)[260](index=260&type=chunk) [Consolidated Statements of Earnings](index=46&type=section&id=Consolidated%20Statements%20of%20Earnings) Consolidated Statements of Earnings (million USD) | In Millions, Except per Share Data | 2021 | Fiscal Year 2020 | 2019 |\ |:---|:---|:---|:---|\ | Net sales | $18,127.0 | $17,626.6 | $16,865.2 |\ | Cost of sales | 11,678.7 | 11,496.7 | 11,108.4 |\ | Selling, general, and administrative expenses | 3,079.6 | 3,151.6 | 2,935.8 |\ | Divestitures loss | 53.5 | - | 30.0 |\ | Restructuring, impairment, and other exit costs | 170.4 | 24.4 | 275.1 |\ | Operating profit | 3,144.8 | 2,953.9 | 2,515.9 |\ | Benefit plan non-service income | (132.9) | (112.8) | (87.9) |\ | Interest, net | 420.3 | 466.5 | 521.8 |\ | Earnings before income taxes and after-tax earnings from joint ventures | 2,857.4 | 2,600.2 | 2,082.0 |\ | Income taxes | 629.1 | 480.5 | 367.8 |\ | After-tax earnings from joint ventures | 117.7 | 91.1 | 72.0 |\ | Net earnings, including earnings attributable to redeemable and noncontrolling interests | 2,346.0 | 2,210.8 | 1,786.2 |\ | Net earnings attributable to redeemable and noncontrolling interests | 6.2 | 29.6 | 33.5 |\ | Net earnings attributable to General Mills | $2,339.8 | $2,181.2 | $1,752.7 |\ | Earnings per share — basic | $3.81 | $3.59 | $2.92 |\ | Earnings per share — diluted | $3.78 | $3.56 | $2.90 |\ | Dividends per share | $2.02 | $1.96 | $1.96 |[265](index=265&type=chunk)[266](index=266&type=chunk) [Consolidated Statements of Comprehensive Income](index=47&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income (million USD) | In Millions | 2021 | Fiscal Year 2020 | 2019 |\ |:---|:---|:---|:---|\ | Net earnings, including earnings attributable to redeemable and noncontrolling interests | $2,346.0 | $2,210.8 | $1,786.2 |\ | Other comprehensive income (loss), net of tax: | | | |\ | Foreign currency translation | 175.1 | (169.1) | (82.8) |\ | Net actuarial income (loss) | 353.4 | (224.6) | (253.4) |\ | Other fair value changes: | | | |\ | Hedge derivatives | (20.7) | 3.2 | 12.1 |\ | Reclassification to earnings: | | | |\ | Securities | - | - | (2.0) |\ | Hedge derivatives Amortization of losses and prior service costs | 13.5 78.9 | 4.1 77.9 | 0.9 84.6 |\ | Other comprehensive income (loss), net of tax | 600.2 | (308.5) | (240.6) |\ | Total comprehensive income | 2,946.2 | 1,902.3 | 1,545.6 |\ | Comprehensive income (loss) attributable to redeemable and noncontrolling interests | 121.2 | 10.1 | (10.7) |\ | Comprehensive income attributable to General Mills | $2,825.0 | $1,892.2 | $1,556.3 |[268](index=268&type=chunk) [Consolidated Balance Sheets](index=48&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (million USD) | In Millions, Except Par Value | May 30, 2021 | May 31, 2020 |\ |:---|:---|:---|\ | **ASSETS** | | |\ | Cash and cash equivalents | $1,505.2 | $1,677.8 |\ | Receivables | 1,638.5 | 1,615.1 |\ | Inventories | 1,820.5 | 1,426.3 |\ | Prepaid expenses and other current assets | 790.3 | 402.1 |\ | **Total current assets** | **5,754.5** | **5,121.3** |\ | Land, buildings, and equipment | 3,606.8 | 3,580.6 |\ | Goodwill | 14,062.4 | 13,923.2 |\ | Other intangible assets | 7,150.6 | 7,095.8 |\ | Other assets | 1,267.6 | 1,085.8 |\ | **Total assets** | **$31,841.9** | **$30,806.7** |\ | **LIABILITIES AND EQUITY** | | |\ | Accounts payable | $3,653.5 | $3,247.7 |\ | Current portion of long-term debt | 2,463.8 | 2,331.5 |\ | Notes payable | 361.3 | 279.0 |\ | Other current liabilities | 1,787.2 | 1,633.3 |\ | **Total current liabilities** | **8,265.8** | **7,491.5** |\ | Long-term debt | 9,786.9 | 10,929.0 |\ | Deferred income taxes | 2,118.4 | 1,947.1 |\ | Other liabilities | 1,292.7 | 1,545.0 |\ | **Total liabilities** | **21,463.8** | **21,912.6** |\ | Redeemable interest | 604.9 | 544.6 |\ | Stockholders' equity: | | |\ | Common stock, 754.6 shares issued, $0.10 par value | 75.5 | 75.5 |\ | Additional paid-in capital | 1,365.5 | 1,348.6 |\ | Retained earnings | 17,069.8 | 15,982.1 |\ | Common stock in treasury, at cost, shares of 146.9 and 144.8 | (6,611.2) | (6,433.3) |\ | Accumulated other comprehensive loss | (2,429.2) | (2,914.4) |\ | **Total stockholders' equity** | **9,470.4** | **8,058.5** |\ | Noncontrolling interests | 302.8 | 291.0 |\ | **Total equity** | **9,773.2** | **8,349.5** |\ | **Total liabilities and equity** | **$31,841.9** | **$30,806.7** |[269](index=269&type=chunk) [Consolidated Statements of Total Equity and Redeemable Interest](index=49&type=section&id=Consolidated%20Statements%20of%20Total%20Equity%20and%20Redeemable%20Interest) Consolidated Statements of Total Equity and Redeemable Interest (million USD) | In Millions, Except per Share Data | 2021 Amount | 2020 Amount | 2019 Amount |\ |:---|:---|:---|:---|\ | Total equity, beginning balance | $8,349.5 | $7,367.7 | $6,492.4 |\ | Common stock, $0.10 par value | 75.5 | 75.5 | 75.5 |\ | Additional paid-in capital, ending balance | 1,365.5 | 1,348.6 | 1,386.7 |\ | Retained earnings, ending balance | 17,069.8 | 15,982.1 | 14,996.7 |\ | Common stock in treasury, ending balance | (6,611.2) | (6,433.3) | (6,779.0) |\ | Accumulated other comprehensive loss, ending balance | (2,429.2) | (2,914.4) | (2,625.4) |\ | Noncontrolling interests, ending balance | 302.8 | 291.0 | 313.2 |\ | Total equity, ending balance | $9,773.2 | $8,349.5 | $7,367.7 |\ | Redeemable interest, ending balance | $604.9 | $544.6 | $551.7 |[271](index=271&type=chunk) [Consolidated Statements of Cash Flows](index=50&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (million USD) | In Millions | 2021 | Fiscal Year 2020 | 2019 |\ |:---|:---|:---|:---|\ | Net cash provided by operating activities | $2,983.2 | $3,676.2 | $2,807.0 |\ | Net cash used by investing activities | $(512.8) | $(486.2) | $(556.5) |\ | Net cash used by financing activities | $(2,715.5) | $(1,941.5) | $(2,176.4) |\ | Effect of exchange rate changes on cash and cash equivalents | $72.5 | $(20.7) | $(23.1) |\ | (Decrease) increase in cash and cash equivalents | $(172.6) | $1,227.8 | $51.0 |\ | Cash and cash equivalents - beginning of year | $1,677.8 | $450.0 | $399.0 |\ | Cash and cash equivalents - end of year | $1,505.2 | $1,677.8 | $450.0 |[272](index=272&type=chunk) [NOTE 1. BASIS OF PRESENTATION AND RECLASSIFICATIONS](index=51&type=section&id=NOTE%201.%20BASIS%20OF%20PRESENTATION%20AND%20RECLASSIFICATIONS) - The consolidated financial statements include the accounts of General Mills and all subsidiaries in which it has a controlling financial interest, with the company's fiscal year ending on the last Sunday in May[274](index=274&type=chunk) - Fiscal years 2021 and 2019 were 52-week periods, while fiscal year 2020 was a 53-week period, and the Pet segment's reporting period changed from an April fiscal year-end to a May fiscal year-end in fiscal year 2020, thus including 13 months of results[275](index=275&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=51&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - Cash and cash equivalents include all investments with original maturities of three months or less[276](index=276&type=chunk) - All inventories in the U.S. (except grain) are valued at the lower of cost or market using the LIFO method; grain inventories are valued at net realizable value, and inventories outside the U.S. are generally valued at the lower of cost or net realizable value using the FIFO method[277](index=277&type=chunk) - Land is recorded at historical cost, while buildings and equipment are recorded at cost and depreciated using the straight-line method, typically over 40 years for buildings and 3 to 10 years for equipment, furniture, and software[278](index=278&type=chunk) - Long-lived assets are reviewed for impairment when indicators of impairment exist, and impairment losses are recognized based on the difference between the fair value and carrying value of the asset group[279](index=279&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually, with fair value estimates based on discounted cash flow models, while finite-lived intangible assets are amortized on a straight-line basis, typically over 4 to 30 years[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) - Lease arrangements are determined at inception, with lease and non-lease compon