MINNEAPOLIS, Dec. 20, 2016 /PRNewswire/ -- General Mills
(NYSE: GIS) today reported results for the second quarter ended
November 27, 2016.
"Although we posted disappointing net sales performance in the
second quarter, we delivered good growth in adjusted diluted EPS,
driven by significant expansion in our adjusted operating profit
margin," said General Mills Chairman and Chief Executive Officer
Ken Powell. "Our organic sales
declines reflect the actions we've taken to optimize our spending
and prioritize profitable volume, as well as weakening
food-industry trends in the U.S. We're making targeted
adjustments to our plans in the second half to improve our topline
performance while still delivering our margin expansion and EPS
growth commitments. We remain confident that our strategy of
investing behind Consumer First ideas – while driving strong margin
expansion – will generate long-term sustainable growth, robust cash
flow, and top-tier returns for our shareholders."
¹ Please see Note 7 to the Consolidated Financial Statements
below for reconciliation of this and other non-GAAP measures used
in this release.
Second Quarter Results Summary
- Reported net sales declined 7 percent to $4.1 billion due to lower organic net sales and
the divestiture of the North American Green Giant business.
Organic net sales declined 4 percent, with volume reductions in the
U.S. Retail and International segments partially offset by benefits
from positive net price realization and mix.
- Gross margin increased 220 basis points to 37.0 percent
of net sales, reflecting benefits from cost savings initiatives,
favorable mark-to-market effects, and lower restructuring
expenses. Adjusted gross margin, which excludes certain items
affecting comparability, increased 130 basis points to 36.8
percent, driven by cost savings efforts more than offsetting benign
input cost inflation.
- Operating profit totaled $769
million, down 15 percent from year-ago levels that included
a gain from the divestiture of Green Giant in North America. Operating profit
margin of 18.7 percent was down 180 basis points.
Adjusted operating profit margin increased 160 basis points to 19.6
percent, reflecting higher gross margins and a 20 percent reduction
in media and advertising expense.
- Total segment operating profit of $830 million was down 1 percent. Total
segment operating profit essentially matched year-ago results in
constant currency.
- Net earnings attributable to General Mills totaled
$482 million. Diluted EPS were
$0.80, down 8 percent driven by last
year's gain from the divestiture of Green Giant in North America.
- Adjusted diluted EPS, which excludes certain items
affecting comparability of results, totaled $0.85 in the second quarter, up 4 percent from
the prior year. Constant-currency adjusted diluted EPS
increased 5 percent.
Six Month Results Summary
- Reported net sales declined 7 percent to $8.0 billion and organic net sales declined 4
percent.
- Gross margin increased 70 basis points to 36.6 percent
of net sales. Adjusted gross margin increased 50 basis points
to 37.1 percent.
- Operating profit totaled $1.4
billion, down 11 percent from the prior year.
Operating profit margin of 17.6 percent was down 80 basis
points. Adjusted operating profit margin increased 120 basis
points to 19.4 percent.
- Total segment operating profit of $1.6 billion was down 3 percent. On a
constant-currency basis, total segment operating profit declined 2
percent.
- Net earnings attributable to General Mills totaled
$891 million. Diluted EPS were
$1.47, down 6 percent from a year
ago.
- Adjusted diluted EPS increased 1 percent to $1.63. Constant-currency adjusted diluted
EPS were up 2 percent.
Operating Segment Results
Components of
Reported Net Sales Growth
|
Second
Quarter
|
Volume
|
Price/Mix
|
Foreign
Exchange
|
Reported
Net Sales
|
U.S.
Retail
|
(14) pts
|
5 pts
|
--
|
(9)%
|
International
|
(3) pts
|
--
|
(2) pts
|
(5)%
|
Convenience Stores
& Foodservice
|
--
|
(4) pts
|
--
|
(4)%
|
Total
|
(10) pts
|
3 pts
|
--
|
(7)%
|
Six
Months
|
|
|
|
|
U.S.
Retail
|
(13) pts
|
5 pts
|
--
|
(8)%
|
International
|
(3) pts
|
1 pt
|
(3) pts
|
(5)%
|
Convenience Stores
& Foodservice
|
(1) pt
|
(4) pts
|
--
|
(5)%
|
Total
|
(9) pts
|
3 pts
|
(1) pt
|
(7)%
|
Components of
Organic Net Sales Growth
|
Second
Quarter
|
Organic
Volume
|
Organic
Price/Mix
|
Organic
Net Sales
|
Foreign
Exchange
|
Acquisitions
&
Divestitures
|
Reported
Net Sales
|
U.S.
Retail
|
(10) pts
|
4 pts
|
(6)%
|
--
|
(3) pts
|
(9)%
|
International
|
(3) pts
|
2 pts
|
(1)%
|
(2) pts
|
(2) pts
|
(5)%
|
Convenience Stores
& Foodservice
|
--
|
(4) pts
|
(4)%
|
--
|
--
|
(4)%
|
Total
|
(7) pts
|
3 pts
|
(4)%
|
--
|
(3) pts
|
(7)%
|
Six
Months
|
|
|
|
|
|
|
U.S.
Retail
|
(9) pts
|
4 pts
|
(5)%
|
--
|
(3) pts
|
(8)%
|
International
|
(3) pts
|
2 pts
|
(1)%
|
(3) pts
|
(1) pt
|
(5)%
|
Convenience Stores
& Foodservice
|
(1) pt
|
(4) pts
|
(5)%
|
--
|
--
|
(5)%
|
Total
|
(6) pts
|
2 pts
|
(4)%
|
(1) pt
|
(2) pts
|
(7)%
|
Segment Operating
Profit Growth
|
Second
Quarter
|
% Change as
Reported
|
% Change in
Constant Currency
|
U.S.
Retail
|
2%
|
|
International
|
(22)%
|
(18)%
|
Convenience Stores
& Foodservice
|
6%
|
|
Total
|
(1)%
|
Flat
|
Six
Months
|
|
|
U.S.
Retail
|
(2)%
|
|
International
|
(19)%
|
(15)%
|
Convenience Stores
& Foodservice
|
11%
|
|
Total
|
(3)%
|
(2)%
|
U.S. Retail Segment
Second-quarter net sales for General Mills' U.S. Retail segment
totaled $2.52 billion, down 9 percent
from the prior year with an increase in the Snacks operating unit
more than offset by declines in the other units. Organic net
sales declined 6 percent. Increases in Annie's and
Lärabar natural and organic products, Old El Paso Mexican products, and
Totino's frozen hot snacks were offset by declines in
Yoplait yogurt, Pillsbury refrigerated dough, and
Progresso soup. Segment operating profit increased 2
percent, primarily driven by benefits from cost savings initiatives
and a decrease in media and advertising expense.
International Segment
Second-quarter net sales for General Mills' International
segment totaled $1.10 billion, down 5
percent from the prior year driven primarily by foreign exchange
headwinds and the divestiture of Green Giant in Canada. On a
constant-currency basis, net sales in the Asia/Pacific region were flat, with remaining
regions posting net sales declines. Organic net sales
declined 1 percent. Strong performance on Häagen-Dazs
ice cream in Europe,
Wanchai Ferry frozen meals
and Yoplait yogurt in China, and Old El
Paso Mexican products and Nature Valley grain
snacks in Canada were offset by
declines in Yoplait yogurt in Europe and the impact of snacks restructuring
in China. International segment operating profit declined 22
percent as reported and 18 percent in constant currency, reflecting
currency-driven inflation on products imported into Canada and the U.K., as well as the Green
Giant divestiture.
Convenience Stores and Foodservice Segment
Second-quarter net sales for the Convenience Stores and
Foodservice segment declined 4 percent to $488 million, with increases for the yogurt,
mixes, and cereal platforms offset by market index pricing on
bakery flour. Organic net sales were also down 4
percent. Segment operating profit increased 6 percent in the
quarter, reflecting benefit from cost savings initiatives, lower
input costs, and higher grain merchandising earnings.
Joint Venture Summary
Combined after-tax earnings from the Cereal Partners Worldwide
(CPW) and Häagen-Dazs Japan (HDJ) joint ventures totaled
$30 million, up 28 percent from the
prior year driven by volume increases for both CPW and HDJ.
On a constant-currency basis, after-tax earnings from joint
ventures increased 27 percent. Net sales for CPW grew 3
percent in constant currency, and constant-currency net sales for
HDJ increased 21 percent.
Other Income Statement Items
Unallocated corporate items totaled $19
million net expense in the second quarter of fiscal 2017,
compared to $72 million net expense
in 2016. Excluding mark-to-market valuation effects and other
items affecting comparability, unallocated corporate items totaled
$24 million net expense in this
year's second quarter compared to $42
million net expense a year ago.
Restructuring, impairment, and other exit costs totaled
$29 million in 2017 compared to
$61 million in 2016. An
additional $24 million of
restructuring and project-related charges were recorded in cost of
sales this year compared to $38
million a year ago (please see Note 3 below for more
information on these charges).
Net interest expense totaled $76
million in this year's second quarter, compared to
$74 million a year ago. The
effective tax rate was 32.8 percent in the second quarter, compared
to 37.4 percent last year (please see Note 6 below for more
information on our effective tax rate). Excluding items
affecting comparability, the adjusted effective tax rate was 32.4
percent compared to 32.3 percent a year ago.
Cash Flow Generation and Cash Returns
Cash provided by operating activities totaled $988 million through six months, down 15 percent
from the prior year due to changes in trade and advertising
accruals and changes in income taxes payable. Capital
investments through the first six months totaled $318 million. Dividends paid year-to-date
increased 8 percent to $576
million. During the first half of 2017, General Mills
repurchased 20.5 million shares of common stock for a total of
$1.35 billion. Average diluted
shares outstanding for the first half declined 1 percent to 606
million.
Outlook
General Mills updated its key full-year fiscal 2017 targets as
follows:
- Organic net sales growth is now expected to decline
between 3 and 4 percent, below the previous range of flat to down 2
percent.
- Constant-currency total segment operating profit is now
expected to increase 2 to 4 percent, reduced from previous guidance
of 6 to 8 percent growth due to lower sales expectations.
- The company is maintaining its targets for adjusted
operating profit margin expansion of approximately 150 basis
points and constant-currency adjusted diluted EPS growth of
6 to 8 percent from the base of $2.92
earned in fiscal 2016. The adjusted effective tax rate is now
expected to finish approximately in line with the year-ago rate of
29.8 percent, and average diluted shares outstanding are now
expected to decline 2 percent for the full year; these estimates
are changes from previous guidance of a 100 basis point increase
and a 1 to 2 percent reduction, respectively.
- Currency translation is now expected to reduce full-year
adjusted diluted EPS by 1 cent in
2017.
- The company now expects free cash flow to increase at a
high single-digit rate, up from previous guidance of mid
single-digit growth driven by accelerated progress on core working
capital management.
General Mills will hold a briefing for investors today,
December 20, 2016, beginning at
8:30 a.m. Eastern time. You may
access the webcast from General Mills' internet home page:
generalmills.com.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that are based on our current expectations and assumptions. These
forward-looking statements, including the statements under the
caption "Outlook," and statements made by Mr. Powell, 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 predictions about
future net sales and earnings could be affected by a variety of
factors, including: competitive dynamics in the consumer foods
industry and the markets for our products, including new product
introductions, advertising activities, pricing actions, and
promotional activities of our competitors; economic conditions,
including changes in inflation rates, interest rates, tax rates, or
the availability of capital; product development and innovation;
consumer acceptance of new products and product improvements;
consumer reaction to pricing actions and changes in promotion
levels; acquisitions or dispositions of businesses or assets;
changes in capital structure; changes in the legal and regulatory
environment, including labeling and advertising regulations and
litigation; impairments in the carrying value of goodwill, other
intangible assets, or other long-lived assets, or changes in the
useful lives of other intangible assets; changes in accounting
standards and the impact of significant accounting estimates;
product quality and safety issues, including recalls and product
liability; changes in consumer demand for our products;
effectiveness of advertising, marketing, and promotional programs;
changes in consumer behavior, trends, and preferences, including
weight loss trends; consumer perception of health-related issues,
including obesity; consolidation in the retail environment; changes
in purchasing and inventory levels of significant customers;
fluctuations in the cost and availability of supply chain
resources, including raw materials, packaging, and energy;
disruptions or inefficiencies in the supply chain; effectiveness of
restructuring and cost savings initiatives; volatility in the
market value of derivatives used to manage price risk for certain
commodities; benefit plan expenses due to changes in plan asset
values and discount rates used to determine plan liabilities;
failure or breach of our information technology systems; foreign
economic conditions, including currency rate fluctuations; and
political unrest in foreign markets and economic uncertainty due to
terrorism or war. The company undertakes no obligation to
publicly revise any forward-looking statement to reflect any future
events or circumstances.
Consolidated
Statements of Earnings and Supplementary Information
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(Unaudited) (In
Millions, Except per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Six-Month Period
Ended
|
|
|
Nov.
27,
|
|
|
Nov.
29,
|
|
|
|
|
|
Nov.
27,
|
|
|
Nov.
29,
|
|
|
|
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
4,112.1
|
|
$
|
4,424.9
|
|
(7.1)
|
%
|
|
$
|
8,020.0
|
|
$
|
8,632.8
|
|
(7.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
2,592.6
|
|
|
2,884.3
|
|
(10.1)
|
%
|
|
|
5,083.6
|
|
|
5,537.6
|
|
(8.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expenses
|
|
708.1
|
|
|
772.7
|
|
(8.4)
|
%
|
|
|
1,420.3
|
|
|
1,583.9
|
|
(10.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures
loss (gain)
|
|
13.5
|
|
|
(199.1)
|
|
NM
|
|
|
|
13.5
|
|
|
(199.1)
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
impairment, and other
exit
costs
|
|
29.0
|
|
|
61.3
|
|
(52.7)
|
%
|
|
|
87.9
|
|
|
121.4
|
|
(27.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
768.9
|
|
|
905.7
|
|
(15.1)
|
%
|
|
|
1,414.7
|
|
|
1,589.0
|
|
(11.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest,
net
|
|
75.5
|
|
|
73.8
|
|
2.3
|
%
|
|
|
149.4
|
|
|
149.1
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and after-tax
earnings from
joint ventures
|
|
693.4
|
|
|
831.9
|
|
(16.6)
|
%
|
|
|
1,265.3
|
|
|
1,439.9
|
|
(12.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
227.4
|
|
|
311.5
|
|
(27.0)
|
%
|
|
|
404.0
|
|
|
510.1
|
|
(20.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax earnings
from joint ventures
|
|
29.8
|
|
|
23.2
|
|
28.4
|
%
|
|
|
54.0
|
|
|
48.9
|
|
10.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings,
including earnings attributable
to redeemable
and noncontrolling interests
|
|
495.8
|
|
|
543.6
|
|
(8.8)
|
%
|
|
|
915.3
|
|
|
978.7
|
|
(6.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to redeemable
and
noncontrolling interests
|
|
14.0
|
|
|
14.1
|
|
(0.7)
|
|
|
|
24.5
|
|
|
22.6
|
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
$
|
481.8
|
|
$
|
529.5
|
|
(9.0)
|
%
|
|
$
|
890.8
|
|
$
|
956.1
|
|
(6.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
|
0.82
|
|
$
|
0.88
|
|
(6.8)
|
%
|
|
$
|
1.50
|
|
$
|
1.59
|
|
(5.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
|
0.80
|
|
$
|
0.87
|
|
(8.0)
|
%
|
|
$
|
1.47
|
|
$
|
1.56
|
|
(5.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per
share
|
$
|
0.48
|
|
$
|
0.44
|
|
9.1
|
%
|
|
$
|
0.96
|
|
$
|
0.88
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Six-Month Period
Ended
|
|
|
Nov.
27,
|
|
|
Nov.
29,
|
|
Basis
Pt
|
|
|
|
Nov.
27,
|
|
|
Nov.
29,
|
|
Basis
Pt
|
|
Comparisons as a % of
net sales:
|
|
2016
|
|
|
2015
|
|
Change
|
|
|
|
2016
|
|
|
2015
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
37.0
%
|
|
|
34.8 %
|
|
220
|
|
|
|
36.6
%
|
|
|
35.9 %
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expenses
|
|
17.2
%
|
|
|
17.5 %
|
|
(30)
|
|
|
|
17.7
%
|
|
|
18.3 %
|
|
(60)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
18.7
%
|
|
|
20.5 %
|
|
(180)
|
|
|
|
17.6
%
|
|
|
18.4 %
|
|
(80)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
|
11.7
%
|
|
|
12.0 %
|
|
(30)
|
|
|
|
11.1
%
|
|
|
11.1 %
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Six-Month Period
Ended
|
Comparisons as a % of
net sales excluding
|
|
Nov.
27,
|
|
|
Nov.
29,
|
|
Basis
Pt
|
|
|
|
Nov.
27,
|
|
|
Nov.
29,
|
|
Basis
Pt
|
|
certain
items affecting comparability (a):
|
|
2016
|
|
|
2015
|
|
Change
|
|
|
|
2016
|
|
|
2015
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross
margin
|
|
36.8
%
|
|
|
35.5 %
|
|
130
|
|
|
|
37.1
%
|
|
|
36.6 %
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
|
19.6
%
|
|
|
18.0 %
|
|
160
|
|
|
|
19.4
%
|
|
|
18.2 %
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
earnings attributable to General Mills
|
|
12.4
%
|
|
|
11.3 %
|
|
110
|
|
|
|
12.3
%
|
|
|
11.4 %
|
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See Note 7 for a
reconciliation of these measures not defined by generally accepted
accounting principles (GAAP).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Results and Supplementary Information
|
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
|
(Unaudited) (In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Six-Month Period
Ended
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
%
Change
|
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
%
Change
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
2,521.3
|
|
$
|
2,761.9
|
|
(8.7)
|
%
|
|
$
|
4,853.1
|
|
$
|
5,293.1
|
|
(8.3)
|
%
|
International
|
|
1,103.3
|
|
|
1,157.2
|
|
(4.7)
|
%
|
|
|
2,233.1
|
|
|
2,356.2
|
|
(5.2)
|
%
|
Convenience
Stores and Foodservice
|
|
487.5
|
|
|
505.8
|
|
(3.6)
|
%
|
|
|
933.8
|
|
|
983.5
|
|
(5.1)
|
%
|
Total
|
$
|
4,112.1
|
|
$
|
4,424.9
|
|
(7.1)
|
%
|
|
$
|
8,020.0
|
|
$
|
8,632.8
|
|
(7.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
615.4
|
|
$
|
600.4
|
|
2.5
|
%
|
|
$
|
1,209.8
|
|
$
|
1,230.1
|
|
(1.7)
|
%
|
International
|
|
105.9
|
|
|
136.2
|
|
(22.2)
|
%
|
|
|
205.9
|
|
|
253.2
|
|
(18.7)
|
%
|
Convenience
Stores and Foodservice
|
|
109.1
|
|
|
102.8
|
|
6.1
|
%
|
|
|
201.8
|
|
|
182.6
|
|
10.5
|
%
|
Total segment
operating profit
|
|
830.4
|
|
|
839.4
|
|
(1.1)
|
%
|
|
|
1,617.5
|
|
|
1,665.9
|
|
(2.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate
items
|
|
19.0
|
|
|
71.5
|
|
(73.4)
|
%
|
|
|
101.4
|
|
|
154.6
|
|
(34.4)
|
%
|
Divestitures loss
(gain)
|
|
13.5
|
|
|
(199.1)
|
|
NM
|
|
|
|
13.5
|
|
|
(199.1)
|
|
NM
|
|
Restructuring,
impairment, and
other exit
costs
|
|
29.0
|
|
|
61.3
|
|
(52.7)
|
%
|
|
|
87.9
|
|
|
121.4
|
|
(27.6)
|
%
|
Operating
profit
|
$
|
768.9
|
|
$
|
905.7
|
|
(15.1)
|
%
|
|
$
|
1,414.7
|
|
$
|
1,589.0
|
|
(11.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Six-Month Period
Ended
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
Basis Pt
Change
|
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
Basis Pt
Change
|
|
Segment operating
profit as a
% of net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
|
24.4%
|
|
|
21.7%
|
|
270
|
|
|
|
24.9%
|
|
|
23.2%
|
|
170
|
|
International
|
|
9.6%
|
|
|
11.8%
|
|
(220)
|
|
|
|
9.2%
|
|
|
10.7%
|
|
(150)
|
|
Convenience
Stores and Foodservice
|
|
22.4%
|
|
|
20.3%
|
|
210
|
|
|
|
21.6%
|
|
|
18.6%
|
|
300
|
|
Total segment
operating profit
|
|
20.2%
|
|
|
19.0%
|
|
120
|
|
|
|
20.2%
|
|
|
19.3%
|
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(In Millions, Except
Par Value)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
|
May 29,
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
809.7
|
|
$
|
649.8
|
|
$
|
763.7
|
Receivables
|
|
|
1,382.7
|
|
|
1,461.3
|
|
|
1,360.8
|
Inventories
|
|
|
1,525.5
|
|
|
1,455.0
|
|
|
1,413.7
|
Prepaid
expenses and other current assets
|
|
|
393.6
|
|
|
382.9
|
|
|
399.0
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
4,111.5
|
|
|
3,949.0
|
|
|
3,937.2
|
|
|
|
|
|
|
|
|
|
|
Land, buildings, and
equipment
|
|
|
3,571.3
|
|
|
3,588.4
|
|
|
3,743.6
|
Goodwill
|
|
|
8,679.1
|
|
|
8,602.1
|
|
|
8,741.2
|
Other intangible
assets
|
|
|
4,487.4
|
|
|
4,471.0
|
|
|
4,538.6
|
Other
assets
|
|
|
752.8
|
|
|
879.6
|
|
|
751.7
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
21,602.1
|
|
$
|
21,490.1
|
|
$
|
21,712.3
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,938.3
|
|
$
|
1,704.1
|
|
$
|
2,046.5
|
Current
portion of long-term debt
|
|
|
1,507.6
|
|
|
1,100.2
|
|
|
1,103.4
|
Notes
payable
|
|
|
1,421.7
|
|
|
306.7
|
|
|
269.8
|
Other
current liabilities
|
|
|
1,376.8
|
|
|
1,858.4
|
|
|
1,595.0
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
6,244.4
|
|
|
4,969.4
|
|
|
5,014.7
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
6,542.0
|
|
|
7,416.6
|
|
|
7,057.7
|
Deferred income
taxes
|
|
|
1,506.4
|
|
|
1,409.7
|
|
|
1,399.6
|
Other
liabilities
|
|
|
1,981.8
|
|
|
1,711.8
|
|
|
2,087.6
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
16,274.6
|
|
|
15,507.5
|
|
|
15,559.6
|
|
|
|
|
|
|
|
|
|
|
Redeemable
interest
|
|
|
801.7
|
|
|
817.4
|
|
|
845.6
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, 754.6 shares issued, $0.10 par value
|
|
|
75.5
|
|
|
75.5
|
|
|
75.5
|
Additional paid-in capital
|
|
|
1,179.4
|
|
|
1,155.4
|
|
|
1,177.0
|
Retained
earnings
|
|
|
12,931.8
|
|
|
12,416.0
|
|
|
12,616.5
|
Common
stock in treasury, at cost,
shares of 174.4, 161.3 and 157.8
|
|
|
(7,529.2)
|
|
|
(6,442.9)
|
|
|
(6,326.6)
|
Accumulated other comprehensive loss
|
|
|
(2,476.9)
|
|
|
(2,407.0)
|
|
|
(2,612.2)
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
4,180.6
|
|
|
4,797.0
|
|
|
4,930.2
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
345.2
|
|
|
368.2
|
|
|
376.9
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
4,525.8
|
|
|
5,165.2
|
|
|
5,307.1
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
$
|
21,602.1
|
|
$
|
21,490.1
|
|
$
|
21,712.3
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(Unaudited) (In
Millions)
|
|
Six-Month
Period
Ended
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
Cash Flows -
Operating Activities
|
|
|
|
|
|
Net
earnings, including earnings attributable to redeemable
|
|
|
|
|
|
and noncontrolling interests
|
$
|
915.3
|
|
$
|
978.7
|
Adjustments to reconcile net earnings to net cash
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
301.1
|
|
|
292.5
|
After-tax earnings from joint ventures
|
|
(54.0)
|
|
|
(48.9)
|
Distributions of earnings from joint ventures
|
|
31.9
|
|
|
28.6
|
Stock-based compensation
|
|
56.2
|
|
|
52.7
|
Deferred income taxes
|
|
94.6
|
|
|
(32.7)
|
Tax
benefit on exercised options
|
|
(59.7)
|
|
|
(44.7)
|
Pension and other postretirement benefit plan
contributions
|
|
(22.6)
|
|
|
(22.7)
|
Pension and other postretirement benefit plan costs
|
|
17.9
|
|
|
58.9
|
Divestitures loss (gain)
|
|
13.5
|
|
|
(199.1)
|
Restructuring, impairment, and other exit costs
|
|
71.0
|
|
|
89.8
|
Changes in current assets and liabilities
|
|
(372.3)
|
|
|
57.0
|
Other, net
|
|
(5.3)
|
|
|
(54.1)
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
987.6
|
|
|
1,156.0
|
|
|
|
|
|
|
Cash Flows -
Investing Activities
|
|
|
|
|
|
Purchases of land, buildings, and equipment
|
|
(318.3)
|
|
|
(293.5)
|
Investments in affiliates, net
|
|
(7.7)
|
|
|
11.7
|
Proceeds
from disposal of land, buildings, and equipment
|
|
0.4
|
|
|
1.2
|
Proceeds
from divestitures
|
|
17.5
|
|
|
822.7
|
Exchangeable note
|
|
13.0
|
|
|
-
|
Other,
net
|
|
15.1
|
|
|
(19.1)
|
|
|
|
|
|
|
Net cash (used) provided by investing activities
|
|
(280.0)
|
|
|
523.0
|
|
|
|
|
|
|
Cash Flows -
Financing Activities
|
|
|
|
|
|
Change
in notes payable
|
|
1,164.5
|
|
|
(293.7)
|
Payment
of long-term debt
|
|
(0.1)
|
|
|
(0.3)
|
Proceeds
from common stock issued on exercised options
|
|
77.0
|
|
|
64.5
|
Tax
benefit on exercised options
|
|
59.7
|
|
|
44.7
|
Purchases of common stock for treasury
|
|
(1,349.9)
|
|
|
(549.0)
|
Dividends paid
|
|
(575.5)
|
|
|
(530.9)
|
Distributions to noncontrolling and redeemable interest
holders
|
|
(4.6)
|
|
|
(77.2)
|
Other,
net
|
|
-
|
|
|
0.1
|
|
|
|
|
|
|
Net cash used by financing activities
|
|
(628.9)
|
|
|
(1,341.8)
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(32.7)
|
|
|
(21.6)
|
Increase in cash and
cash equivalents
|
|
46.0
|
|
|
315.6
|
Cash and cash
equivalents - beginning of year
|
|
763.7
|
|
|
334.2
|
|
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
|
809.7
|
|
$
|
649.8
|
|
|
|
|
|
|
Cash Flow from
changes in current assets and liabilities:
|
|
|
|
|
|
Receivables
|
$
|
(45.3)
|
|
$
|
(109.9)
|
Inventories
|
|
(120.7)
|
|
|
(196.2)
|
Prepaid
expenses and other current assets
|
|
(2.3)
|
|
|
18.6
|
Accounts
payable
|
|
(19.9)
|
|
|
56.3
|
Other
current liabilities
|
|
(184.1)
|
|
|
288.2
|
|
|
|
|
|
|
Changes in current
assets and liabilities
|
$
|
(372.3)
|
|
$
|
57.0
|
See accompanying
notes to consolidated financial statements.
|
|
|
|
|
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
(Unaudited)
|
|
|
(1)
|
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 for annual and interim financial information. In the
opinion of management, all adjustments considered necessary for a
fair presentation have been included and are of a normal recurring
nature.
|
|
|
(2)
|
During the second
quarter of fiscal 2017, we sold our Martel, Ohio manufacturing
facility in our Convenience Stores and Foodservice segment and
simultaneously entered into a co-packing arrangement with the
purchaser. We received $17.5 million in cash, and
recorded a pre-tax loss of $13.5 million.
|
|
|
|
During the second
quarter of fiscal 2016, we sold our North American Green Giant
product lines for $822.7 million in cash, and we recorded a pre-tax
gain of $199.1 million. We received net cash proceeds of $788.0
million after transaction-related costs. After the divestiture, we
retained a brand intangible asset of $30.1 million related to our
continued use of the Green Giant brand in certain markets outside
of North America.
|
|
|
(3)
|
We are currently
pursuing several multi-year restructuring initiatives designed to
increase our efficiency and focus our business behind our key
growth strategies. Charges related to these activities were as
follows:
|
|
|
Quarter
Ended
|
|
|
Six-Month
Period
Ended
|
In
Millions
|
|
Nov. 27,
2016
|
|
Nov. 29,
2015
|
|
|
Nov. 27,
2016
|
|
Nov. 29,
2015
|
Cost of
sales
|
$
|
12.8
|
$
|
21.8
|
|
$
|
26.4
|
$
|
43.6
|
Restructuring,
impairment, and other exit costs
|
|
29.0
|
|
61.3
|
|
|
87.9
|
|
121.4
|
Total restructuring
charges
|
$
|
41.8
|
$
|
83.1
|
|
$
|
114.3
|
$
|
165.0
|
Project-related costs
classified in cost of sales
|
$
|
11.1
|
$
|
16.2
|
|
$
|
24.9
|
$
|
29.3
|
In the second quarter of fiscal 2017, we notified the employees
and their representatives of our decision to close our pasta
manufacturing facility in Melbourne,
Australia in our International segment to improve our margin
structure. This action will affect approximately 350
positions and we expect to incur approximately $34 million of net expenses relating to this
action, most of which will be non-cash. We recorded
$12.0 million in the second quarter
of fiscal 2017 relating to this action. We expect these
actions to be completed by the end of fiscal 2018.
In the first quarter of fiscal 2017, we announced a plan to
restructure certain product lines in our International
segment. To eliminate excess capacity, we will close our
snacks manufacturing facility in Marília, Brazil and cease production operations for
meals and snacks at our facility in São Bernardo do Campo,
Brazil. We will also cease
production of certain underperforming snack products at our
facility in Nanjing, China. These and other actions, which are
subject to appropriate consultation with employees and their
representatives where required by law or practice, will affect
approximately 420 positions in our Brazilian operations and
approximately 440 positions in our Greater China operations. We expect to
incur approximately $46 million of
net expenses of which approximately $8
million will be cash. We recorded $6.9 million of restructuring charges in the
second quarter of fiscal 2017 and $43.3
million in the six-month period ended November 27, 2016 relating to this action.
We expect these actions to be completed by the end of fiscal
2017.
In the first quarter of fiscal 2017, we approved a plan to close
our Vineland, New Jersey facility
to eliminate excess soup capacity in our U.S. Retail segment. This
action will affect approximately 370 positions and we expect to
incur approximately $66 million of
net expense of which approximately $23
million will be cash. We recorded $7.0 million of restructuring charges in the
second quarter of fiscal 2017 and $27.9
million in the six-month period ended November 27, 2016
relating to this action. We expect this action to be completed by
the end of fiscal 2019.
In addition, we recorded restructuring charges of $15.9 million in the second quarter of fiscal
2017, $83.1 million in the second
quarter of fiscal 2016, $31.1 million
in the six-month period ended November 27,
2016, and $165.0 million in
the six-month period ended November 29,
2015 relating to other restructuring actions previously
announced.
During the six-month period ended November 27, 2016 we paid $43.3 million in cash relating to restructuring
initiatives.
In addition to restructuring charges, we recorded $11.1 million of project-related costs in cost of
sales in the second quarter of fiscal 2017 and $24.9 million in the six-month period ended
November 27, 2016. We expect to
incur approximately $29.5 million of
project-related costs in future periods related to our
restructuring initiatives.
Details of our current restructuring initiatives were as
follows:
|
As
Reported
|
|
|
|
|
|
|
|
Six-Month Period
Ended
|
Fiscal 2016 and
2015
|
|
Estimated
|
In
Millions
|
Nov. 27,
2016
|
Nov. 29,
2015
|
Total
|
|
Future
|
Total
|
|
|
Charge
|
Cash
|
Charge
|
Cash
|
Charge
|
Cash
|
|
Charge
|
Cash
|
Charge
|
Cash
|
Savings
(b)
|
Closure of Melbourne,
Australia plant
|
$12.0
|
$-
|
$-
|
$-
|
$-
|
$-
|
|
$22
|
$-
|
$34
|
$-
|
|
Restructuring of
certain International product lines
|
43.3
|
10.4
|
-
|
-
|
-
|
-
|
|
3
|
-
|
46
|
8
|
|
Closure of Vineland,
New Jersey plant
|
27.9
|
1.2
|
-
|
-
|
-
|
-
|
|
38
|
22
|
66
|
23
|
|
Project
Compass
|
1.0
|
8.0
|
53.6
|
25.5
|
54.7
|
36.1
|
|
3
|
14
|
58
|
58
|
|
Project
Century
|
30.1
|
20.6
|
111.2
|
13.1
|
364.4
|
46.1
|
|
42
|
83
|
436
|
150
|
|
Project
Catalyst
|
-
|
0.5
|
0.2
|
35.6
|
140.9
|
92.8
|
|
-
|
25
|
141
|
118
|
|
Combination of
certain operational facilities
|
-
|
2.6
|
-
|
1.0
|
13.9
|
11.0
|
|
1
|
-
|
15
|
12
|
|
Total restructuring
charges (a)
|
114.3
|
43.3
|
165.0
|
75.2
|
573.9
|
186.0
|
|
109
|
144
|
796
|
369
|
|
Project-related
costs
|
24.9
|
28.6
|
29.3
|
27.2
|
70.7
|
64.2
|
|
29
|
32
|
125
|
125
|
|
Restructuring charges
and project-related costs
|
$139.2
|
$71.9
|
$194.3
|
$102.4
|
$644.6
|
$250.2
|
|
$138
|
$176
|
$921
|
$494
|
$620
|
(a) Includes $26.4
million of restructuring charges recorded in cost of sales during
fiscal 2017 and $43.6 million in fiscal 2016.
|
(b) Cumulative annual
savings targeted by fiscal 2018. Includes savings from SG&A
cost reduction projects.
|
(4)
|
Unallocated corporate
expense totaled $19 million in the second quarter of fiscal 2017
compared to $72 million in the same period in fiscal 2016. In the
second quarter of fiscal 2017, we recorded $13 million of
restructuring charges and $11 million of restructuring initiative
project-related costs in cost of sales compared to $22 million of
restructuring charges and $16 million of restructuring initiative
project-related costs in cost of sales in the same period last
year. In addition, we recorded a $29 million net decrease in
expense related to the mark-to-market valuation of certain
commodity positions and grain inventories in the second quarter of
fiscal 2017 compared to an $8 million net decrease in expense in
the same period last year.
|
|
|
|
Unallocated corporate
expense totaled $101 million in the six-month period ended November
27, 2016, compared to $155 million in the same period last year. In
the six-month period ended November 27, 2016, we recorded $26
million of restructuring charges and $25 million of restructuring
initiative project-related costs compared to $44 million of
restructuring charges and $29 million of restructuring initiative
project-related costs in the same period last year. In addition, we
recorded a $12 million net decrease in expense related to the
mark-to-market valuation of certain commodity positions and grain
inventories in the six-month period ended November 27, 2016,
compared to a $10 million net decrease in expense in the same
period a year ago.
|
|
|
(5)
|
Basic and diluted
earnings per share (EPS) were calculated as follows:
|
|
|
Quarter
Ended
|
|
Six-Month Period
Ended
|
In Millions,
Except per Share Data
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
Net earnings
attributable to General Mills
|
|
$
|
481.8
|
|
$
|
529.5
|
|
$
|
890.8
|
|
$
|
956.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
common shares - basic EPS
|
|
|
588.8
|
|
|
599.4
|
|
|
594.4
|
|
|
600.8
|
Incremental share
effect from: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
8.1
|
|
|
9.8
|
|
|
8.8
|
|
|
10.1
|
Restricted
stock, restricted stock units, and other
|
|
|
2.8
|
|
|
3.2
|
|
|
2.8
|
|
|
3.2
|
Average number of
common shares - diluted EPS
|
|
|
599.7
|
|
|
612.4
|
|
|
606.0
|
|
|
614.1
|
Earnings per share -
basic
|
|
$
|
0.82
|
|
$
|
0.88
|
|
$
|
1.50
|
|
$
|
1.59
|
Earnings per share -
diluted
|
|
$
|
0.80
|
|
$
|
0.87
|
|
$
|
1.47
|
|
$
|
1.56
|
(a)
|
Incremental shares
from stock options, restricted stock units, and performance
share units are computed by the treasury stock method.
|
(6)
|
The effective tax
rate for the second quarter of fiscal 2017 was 32.8 percent
compared to 37.4 percent for the second quarter of fiscal 2016. The
4.6 percentage point decrease was primarily related to significant
non-deductible expenses related to the Green Giant divestiture in
the second quarter of fiscal 2016.
|
|
|
(7)
|
We have included the
following measures in this release that are not defined by GAAP:
(1) Organic net sales growth rates, (2) diluted EPS excluding
certain items affecting comparability, (3) diluted EPS excluding
certain items affecting comparability growth rates on a
constant-currency basis, (4) total segment operating profit, (5)
constant-currency total segment operating profit growth rates, (6)
constant-currency International segment operating profit growth
rates, (7) constant-currency net sales growth rates for our
International segment, (8) constant-currency after-tax
earnings from joint ventures growth rates, (9) earnings comparisons
as a percent of net sales excluding certain items affecting
comparability, and (10) effective income tax rates excluding
certain items affecting comparability.
|
|
|
|
Organic net sales
growth rates, diluted EPS excluding certain items affecting
comparability and the related growth rate on a constant-currency
basis, and total segment operating profit and related
constant-currency growth rates are used in reporting to our
executive management and as a component of our Board of Directors'
measurement of our performance for incentive compensation
purposes. We believe that these measures provide useful
supplemental information to assess our operating performance.
The adjustments are either items resulting from infrequently
occurring events or items that, in our management's judgment,
significantly affect the period-over-period assessment of operating
results. These measures are reconciled below to the measures
as reported in accordance with GAAP, and should be viewed in
addition to, and not in lieu of, our diluted EPS and operating
performance measures as calculated in accordance with
GAAP.
|
|
|
|
We provide organic
net sales growth rates for our consolidated net sales and segment
net sales. We believe that organic net sales growth rates provide
useful information to investors because they provide transparency
to underlying performance in our net sales by excluding the effect
that foreign currency exchange rate fluctuations, as well as
acquisitions, divestitures, and a 53rd week, when
applicable, have on year-to-year comparability. A reconciliation of
these measures to reported net sales growth rates, the relevant
GAAP measures, are included in our Operating Segment Results
above.
|
|
|
|
Certain measures in
this release are presented excluding the impact of foreign currency
exchange (constant-currency). To present this information, current
period results for entities reporting in currencies other than
United States dollars are translated into United States dollars at
the average exchange rates in effect during the corresponding
period of the prior fiscal year, rather than the actual average
exchange rates in effect during the current fiscal year. Therefore,
the foreign currency impact is equal to current year results in
local currencies multiplied by the change in the average foreign
currency exchange rate between the current fiscal period and the
corresponding period of the prior fiscal year. We believe that
these constant-currency measures provide useful information to
investors because they provide transparency to underlying
performance by excluding the effect that foreign currency exchange
rate fluctuations have on period-to-period comparability given
volatility in foreign currency exchange markets.
|
|
|
|
Our fiscal 2017
outlook for organic net sales growth, constant-currency total
segment operating profit and adjusted diluted EPS, and adjusted
operating profit margin are non-GAAP financial measures that
exclude, or have otherwise been adjusted for, items impacting
comparability, including the effect of foreign currency exchange
rate fluctuations, restructuring charges and project-related costs,
and mark-to-market effects. Our fiscal 2017 outlook for
organic net sales growth also excludes the effect of acquisitions
and divestitures. We are not able to reconcile these
forward-looking non-GAAP financial measures to their most directly
comparable forward-looking GAAP financial measures without
unreasonable efforts because we are unable to predict with a
reasonable degree of certainty the actual impact of changes in
foreign currency exchange rates and commodity prices or the timing
of acquisitions, divestitures and restructuring actions throughout
fiscal 2017. The unavailable information could have a
significant impact on our fiscal 2017 GAAP financial
results.
|
|
|
|
For fiscal 2017, we
currently expect: the impact of foreign currency exchange
rates (based on blend of forward and forecasted rates and hedge
positions), acquisitions, and divestitures to decrease net sales
growth by 200 basis points; foreign currency exchange rates to have
an immaterial impact on total segment operating profit and adjusted
diluted EPS; and total restructuring charges and project-related
costs related to actions previously announced to total $243
million.
|
Diluted EPS excluding certain items affecting comparability and
the related constant-currency growth rates follows:
|
Quarter
Ended
|
|
Six-Month
Period
Ended
|
|
Fiscal
Year
|
Per Share
Data
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
Change
|
|
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
Change
|
|
|
2016
|
Diluted earnings per
share, as reported
|
$
|
0.80
|
|
$
|
0.87
|
(8)
|
%
|
|
$
|
1.47
|
|
$
|
1.56
|
|
(6)
|
%
|
|
$
|
2.77
|
Mark-to-market
effects (a)(d)
|
|
(0.03)
|
|
|
(0.01)
|
|
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
|
|
|
(0.07)
|
Restructuring
charges (b)(d)
|
|
0.05
|
|
|
0.08
|
|
|
|
|
0.13
|
|
|
0.17
|
|
|
|
|
|
0.26
|
Project-related costs (b)(d)
|
|
0.02
|
|
|
0.02
|
|
|
|
|
0.03
|
|
|
0.03
|
|
|
|
|
|
0.06
|
Divestitures
loss (gain), net (c)(d)
|
|
0.01
|
|
|
(0.14)
|
|
|
|
|
0.01
|
|
|
(0.14)
|
|
|
|
|
|
(0.10)
|
Diluted earnings per
share, excluding
certain
items affecting
comparability
|
$
|
0.85
|
|
$
|
0.82
|
4
|
%
|
|
$
|
1.63
|
|
$
|
1.61
|
|
1
|
%
|
|
$
|
2.92
|
Foreign currency
exchange impact
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
|
|
(1)
|
%
|
|
|
|
Diluted earnings per
share growth,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding certain items affecting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comparability, on a constant-currency basis
|
|
|
|
|
|
5
|
%
|
|
|
|
|
|
|
|
2
|
%
|
|
|
|
(a)
|
See Note
4.
|
(b)
|
See Note
3.
|
(c)
|
See Note
2.
|
(d)
|
See reconciliation of
effective income tax rate excluding certain items affecting
comparability below for tax impact of adjustment.
|
A reconciliation of total segment operating profit to the
relevant GAAP measure, operating profit, is included in the
Statements of Operating Segment Results.
Constant-currency total segment operating profit growth rates
follows:
|
|
Percentage Change
in
Total Segment
Operating Profit as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in
Total Segment Operating
Profit on a Constant-
Currency Basis
|
Quarter Ended Nov.
27, 2016
|
|
(1)
|
%
|
(1)
|
pt
|
Flat
|
|
Six-Month Period
Ended Nov. 27, 2016
|
|
(3)
|
%
|
(1)
|
pt
|
(2)
|
%
|
Constant-currency International segment operating profit growth
rates follows:
|
|
Percentage Change
in
International Segment
Operating Profit as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in
International Segment
Operating Profit on Constant-
Currency Basis
|
Quarter Ended Nov.
27, 2016
|
|
(22)
|
%
|
(4)
|
pts
|
(18)
|
%
|
Six-Month Period
Ended Nov. 27, 2016
|
|
(19)
|
%
|
(4)
|
pts
|
(15)
|
%
|
Constant-currency International segment region net sales growth
rates follows:
|
|
Quarter Ended Nov.
27, 2016
|
|
|
Percentage Change
in
Net Sales
as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in
Net Sales on Constant-
Currency Basis
|
Europe
|
|
(7)
|
%
|
(4)
|
pts
|
(3)
|
%
|
Canada
|
|
(8)
|
|
(1)
|
|
(7)
|
|
Latin
America
|
|
2
|
|
4
|
|
(2)
|
|
Asia/Pacific
|
|
(3)
|
|
(3)
|
|
-
|
|
Total
International
|
|
(5)
|
%
|
(2)
|
pts
|
(3)
|
%
|
|
|
|
|
|
|
|
|
|
|
Six-Month Period
Ended Nov. 27, 2016
|
|
|
Percentage Change
in
Net Sales
as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in
Net Sales on Constant-
Currency Basis
|
Europe
|
|
(8)
|
|
(4)
|
pts
|
(4)
|
%
|
Canada
|
|
(6)
|
%
|
(1)
|
|
(5)
|
|
Asia/Pacific
|
|
(3)
|
|
(4)
|
|
1
|
|
Latin
America
|
|
(1)
|
|
(1)
|
|
-
|
|
Total
International
|
|
(5)
|
%
|
(2)
|
pts
|
(3)
|
%
|
Constant-currency after-tax earnings from joint ventures growth
rates follows:
|
|
Percentage Change
in
After-tax Earnings from
Joint Ventures as
Reported
|
Impact of
Foreign
Currency Exchange
|
Percentage Change
in After-
tax Earnings from Joint
Ventures on Constant-
Currency Basis
|
Quarter Ended Nov.
27, 2016
|
|
28
|
%
|
1
|
pts
|
27
|
%
|
Six-Month Period
Ended Nov. 27, 2016
|
|
10
|
%
|
2
|
pts
|
8
|
%
|
Earnings comparisons as a percent of net sales excluding certain
items affecting comparability follows:
|
Quarter
Ended
|
In
Millions
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
Comparisons as a %
of Net Sales
|
|
Value
|
|
Percent
of
Net
Sales
|
|
|
|
Value
|
|
Percent
of
Net
Sales
|
|
Gross margin as
reported (a)
|
$
|
1,519.5
|
|
37.0
|
%
|
|
$
|
1,540.6
|
|
34.8
|
%
|
Mark-to-market
effects (b)
|
|
(29.1)
|
|
(0.7)
|
%
|
|
|
(7.7)
|
|
(0.2)
|
%
|
Restructuring
charges (c)
|
|
12.8
|
|
0.3
|
%
|
|
|
21.8
|
|
0.5
|
%
|
Project-related costs (c)
|
|
11.1
|
|
0.2
|
%
|
|
|
16.2
|
|
0.4
|
%
|
Adjusted gross
margin
|
$
|
1,514.3
|
|
36.8
|
%
|
|
$
|
1,570.9
|
|
35.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as
reported
|
$
|
768.9
|
|
18.7
|
%
|
|
$
|
905.7
|
|
20.5
|
%
|
Mark-to-market
effects (b)
|
|
(29.1)
|
|
(0.7)
|
%
|
|
|
(7.7)
|
|
(0.2)
|
%
|
Restructuring
charges (c)
|
|
41.8
|
|
1.0
|
%
|
|
|
83.1
|
|
1.9
|
%
|
Project-related costs (c)
|
|
11.1
|
|
0.3
|
%
|
|
|
16.2
|
|
0.3
|
%
|
Divestitures
loss (gain) (d)
|
|
13.5
|
|
0.3
|
%
|
|
|
(199.1)
|
|
(4.5)
|
%
|
Adjusted operating
profit
|
$
|
806.2
|
|
19.6
|
%
|
|
$
|
798.2
|
|
18.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills as reported
|
$
|
481.8
|
|
11.7
|
%
|
|
$
|
529.5
|
|
12.0
|
%
|
Mark-to-market
effects, net of tax (b)(e)
|
|
(18.4)
|
|
(0.4)
|
%
|
|
|
(4.9)
|
|
(0.1)
|
%
|
Restructuring
charges, net of tax (c)(e)
|
|
30.3
|
|
0.7
|
%
|
|
|
52.8
|
|
1.2
|
%
|
Project-related costs, net of tax (c)(e)
|
|
7.1
|
|
0.2
|
%
|
|
|
10.3
|
|
0.2
|
%
|
Divestitures
loss (gain) (d)(e)
|
|
9.2
|
|
0.2
|
%
|
|
|
(88.1)
|
|
(2.0)
|
%
|
Adjusted net earnings
attributable to General Mills
|
$
|
510.0
|
|
12.4
|
%
|
|
$
|
499.6
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-Month Period
Ended
|
In
Millions
|
|
Nov. 27,
2016
|
|
|
Nov. 29,
2015
|
|
Comparisons as a %
of Net Sales
|
|
Value
|
|
Percent
of
Net
Sales
|
|
|
|
Value
|
|
Percent
of
Net
Sales
|
|
Gross margin as
reported (a)
|
$
|
2,936.4
|
|
36.6
|
%
|
|
$
|
3,095.2
|
|
35.8
|
%
|
Mark-to-market
effects (b)
|
|
(12.5)
|
|
(0.2)
|
%
|
|
|
(10.4)
|
|
(0.1)
|
%
|
Restructuring
costs (c)
|
|
26.4
|
|
0.3
|
%
|
|
|
43.6
|
|
0.5
|
%
|
Project-related costs (c)
|
|
24.9
|
|
0.4
|
%
|
|
|
29.3
|
|
0.4
|
%
|
Adjusted gross
margin
|
$
|
2,975.2
|
|
37.1
|
%
|
|
$
|
3,157.7
|
|
36.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as
reported
|
$
|
1,414.7
|
|
17.6
|
%
|
|
$
|
1,589.0
|
|
18.4
|
%
|
Mark-to-market
effects (b)
|
|
(12.5)
|
|
(0.1)
|
%
|
|
|
(10.4)
|
|
(0.1)
|
%
|
Restructuring
costs (c)
|
|
114.3
|
|
1.4
|
%
|
|
|
165.0
|
|
1.9
|
%
|
Project-related costs (c)
|
|
24.9
|
|
0.3
|
%
|
|
|
29.3
|
|
0.3
|
%
|
Divestitures
loss (gain) (d)
|
|
13.5
|
|
0.2
|
%
|
|
|
(199.1)
|
|
(2.3)
|
%
|
Adjusted operating
profit
|
$
|
1,554.9
|
|
19.4
|
%
|
|
$
|
1,573.8
|
|
18.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills as reported
|
$
|
890.8
|
|
11.1
|
%
|
|
$
|
956.1
|
|
11.1
|
%
|
Mark-to-market
effects, net of tax (b)(e)
|
|
(7.9)
|
|
(0.1)
|
%
|
|
|
(6.6)
|
|
(0.1)
|
%
|
Restructuring
charges, net of tax (c)(e)
|
|
78.6
|
|
0.9
|
%
|
|
|
109.0
|
|
1.2
|
%
|
Project-related costs, net of tax (c)(e)
|
|
15.9
|
|
0.3
|
%
|
|
|
18.5
|
|
0.2
|
%
|
Divestitures
loss (gain) (d)(e)
|
|
9.2
|
|
0.1
|
%
|
|
|
(88.1)
|
|
(1.0)
|
%
|
Adjusted net earnings
attributable to General Mills
|
$
|
986.6
|
|
12.3
|
%
|
|
$
|
988.9
|
|
11.4
|
%
|
(a)
|
Net sales less cost
of sales.
|
(b)
|
See Note
4.
|
(c)
|
See Note
3.
|
(d)
|
See Note
2.
|
(e)
|
See reconciliation of
effective income tax rate excluding certain items affecting
comparability below for tax impact of adjustment.
|
A reconciliation of the effective income tax rate as reported to
the effective income tax rate excluding certain items affecting
comparability follows:
|
Quarter
Ended
|
|
Six-Month Period
Ended
|
|
Nov. 27,
2016
|
|
Nov. 29,
2015
|
|
Nov. 27,
2016
|
|
Nov. 29,
2015
|
In
Millions
|
Pretax Earnings
(a)
|
Income
Taxes
|
|
Pretax Earnings
(a)
|
Income
Taxes
|
|
Pretax Earnings
(a)
|
Income
Taxes
|
|
Pretax Earnings
(a)
|
Income
Taxes
|
As
reported
|
$693.4
|
$227.4
|
|
$831.9
|
$311.5
|
|
$1,265.3
|
$404.0
|
|
$1,439.9
|
$510.1
|
Mark-to-market effects (b)
|
(29.1)
|
(10.7)
|
|
(7.7)
|
(2.8)
|
|
(12.5)
|
(4.6)
|
|
(10.4)
|
(3.8)
|
Restructuring charges (c)
|
41.8
|
11.5
|
|
83.1
|
30.3
|
|
114.3
|
35.7
|
|
165.0
|
53.9
|
Project-related costs (c)
|
11.1
|
4.0
|
|
16.2
|
5.9
|
|
24.9
|
9.0
|
|
29.3
|
10.8
|
Divestitures loss (gain) (d)
|
13.5
|
4.3
|
|
(199.1)
|
(111.0)
|
|
13.5
|
4.3
|
|
(199.1)
|
(111.0)
|
As
adjusted
|
$730.7
|
$236.5
|
|
$724.4
|
$233.9
|
|
$1,405.5
|
$448.4
|
|
$1,424.7
|
$460.0
|
Effective tax
rate:
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
32.8%
|
|
|
37.4%
|
|
|
31.9%
|
|
|
35.4%
|
As
adjusted
|
|
32.4%
|
|
|
32.3%
|
|
|
31.9%
|
|
|
32.3%
|
Sum of adjustments to
income taxes
|
|
$9.1
|
|
|
$(77.6)
|
|
|
$44.4
|
|
|
$(50.1)
|
Average number of
common shares - diluted EPS
|
|
599.7
|
|
|
612.4
|
|
|
606.0
|
|
|
614.1
|
Impact of income tax
adjustments on diluted EPS
excluding
certain items affecting comparability
|
|
$0.02
|
|
|
$(0.13)
|
|
|
$0.07
|
|
|
$(0.08)
|
(a)
|
Earnings before
income taxes and after-tax earnings from joint ventures.
|
(b)
|
See Note
4.
|
(c)
|
See Note
3.
|
(d)
|
See Note
2.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/general-mills-reports-fiscal-2017-second-quarter-results-300381869.html
SOURCE General Mills