MINNEAPOLIS, March 21, 2017 /PRNewswire/ -- General Mills
(NYSE: GIS) today reported results for the third quarter ended
February 26, 2017.
"Our third-quarter results finished in line with our
expectations and keep us on track to deliver the guidance we
updated last month," said General Mills Chairman and Chief
Executive Officer Ken Powell.
"Our net sales declined due primarily to gaps in pricing and
promotional activity in key U.S. businesses. Our cost savings
efforts helped us expand our adjusted operating profit margin and
drive growth in adjusted diluted EPS. Looking ahead, we are
highly focused on improving our topline performance while
continuing to expand our margins. We've added support in the
fourth quarter to strengthen key business lines, and we're pursuing
global growth priorities that will further improve our sales trends
beyond fiscal 2017."
General Mills is committed to pursuing its strategy of Consumer
First and leveraging its five global platforms – cereal, snacks,
yogurt, convenient meals, and super-premium ice cream – along with
its new global organizational structure to create market-leading
growth. The company believes that generating a
balance of topline growth and margin expansion, while maintaining
disciplined focus on cash conversion and cash returns, is critical
to delivering top-tier shareholder returns.
¹ Please see Note 7 to the Consolidated Financial Statements
below for reconciliation of this and other non-GAAP measures used
in this release.
Third Quarter Results Summary
- Reported net sales declined 5 percent to $3.79 billion. Organic net sales also declined 5
percent, primarily reflecting volume reductions in the North
America Retail segment partially offset by benefits from positive
net price realization and mix.
- Gross margin increased 60 basis points to 34.5 percent
of net sales, reflecting benefits from cost-savings initiatives and
favorable mark-to-market effects. Adjusted gross margin, which
excludes certain items affecting comparability, increased 20 basis
points to 35.0 percent, driven by cost-savings efforts more than
offsetting the impact of volume deleverage and modest input cost
inflation.
- Operating profit totaled $542
million, down 7 percent from year-ago levels due to higher
restructuring charges related to the recent global
reorganization. Operating profit margin of 14.3 percent was
down 30 basis points. Adjusted operating profit margin increased
100 basis points to 16.9 percent, reflecting higher gross margins,
lower administrative expense, and an 8 percent reduction in media
and advertising expense.
- Total segment operating profit of $662 million was down 2 percent in constant
currency.
- Net earnings attributable to General Mills totaled
$358 million. Diluted EPS of
$0.61 increased 3 percent, driven by
a lower tax rate and 3 percent fewer average diluted shares
outstanding.
- Adjusted diluted EPS, which excludes certain items
affecting comparability of results, totaled $0.72 in the third quarter, up 11 percent from
the prior year. Constant-currency adjusted diluted EPS increased 8
percent.
Nine Month Results Summary
- Reported net sales declined 7 percent to $11.81 billion and organic net sales declined 5
percent.
- Gross margin increased 70 basis points to 35.9 percent
of net sales. Adjusted gross margin increased 40 basis points to
36.4 percent.
- Operating profit totaled $1.96
billion, down 10 percent from the prior year. Operating
profit margin of 16.6 percent was down 60 basis points.
Adjusted operating profit margin increased 110 basis points to 18.6
percent.
- Total segment operating profit of $2.28 billion was down 2 percent in constant
currency.
- Net earnings attributable to General Mills totaled
$1.25 billion. Diluted EPS were
$2.08, down 3 percent from a year
ago.
- Adjusted diluted EPS increased 4 percent to $2.35. Constant-currency adjusted diluted EPS
were also up 4 percent.
Operating Segment Results
In the third quarter of fiscal 2017, General Mills announced a
new global organization structure to streamline its leadership,
enhance global scale, and drive improved operational agility to
maximize its growth capabilities. As a result of this global
reorganization, beginning in the third quarter of fiscal 2017, the
company is reporting results for its four operating segments as
follows: North America Retail; Convenience Stores &
Foodservice; Europe &
Australia; and Asia & Latin America. Net sales by
segment and segment operating profit amounts have been restated to
reflect the new operating segments (please see Note 1 below for
more information on our operating segments).
Components of
Fiscal 2017 Reported Net Sales Growth
|
Third
Quarter
|
Volume
|
Price/Mix
|
Foreign
Exchange
|
Reported
Net Sales
|
North America
Retail
|
(9) pts
|
2 pts
|
--
|
(7)%
|
Convenience Stores
& Foodservice
|
1 pt
|
(2) pts
|
--
|
(1)%
|
Europe &
Australia
|
1 pt
|
1 pt
|
(5) pts
|
(3)%
|
Asia & Latin
America
|
--
|
(3) pts
|
3 pts
|
Flat
|
Total
|
(6) pts
|
1 pt
|
--
|
(5)%
|
Nine Months
|
|
|
|
|
North America
Retail
|
(12) pts
|
4 pts
|
--
|
(8)%
|
Convenience Stores
& Foodservice
|
--
|
(4) pts
|
--
|
(4)%
|
Europe &
Australia
|
(3) pts
|
1 pt
|
(5) pts
|
(7)%
|
Asia & Latin
America
|
--
|
--
|
(1) pt
|
(1)%
|
Total
|
(8) pts
|
2 pts
|
(1) pt
|
(7)%
|
Components of
Fiscal 2017 Organic Net Sales Growth
|
Third
Quarter
|
Organic
Volume
|
Organic
Price/Mix
|
Organic
Net Sales
|
Foreign
Exchange
|
Acquisitions
&
Divestitures
|
Reported
Net Sales
|
North America
Retail
|
(10) pts
|
2 pts
|
(8)%
|
--
|
1 pt
|
(7)%
|
Convenience Stores
& Foodservice
|
1 pt
|
(2) pts
|
(1)%
|
--
|
--
|
(1)%
|
Europe &
Australia
|
1 pt
|
1 pt
|
2%
|
(5) pts
|
--
|
(3)%
|
Asia & Latin
America
|
(3) pts
|
1 pt
|
(2)%
|
3 pts
|
(1) pt
|
Flat
|
Total
|
(7) pts
|
2 pts
|
(5)%
|
--
|
--
|
(5)%
|
|
|
|
|
|
|
|
Nine
Months
|
|
|
|
|
|
|
North America
Retail
|
(9) pts
|
3 pts
|
(6)%
|
--
|
(2) pts
|
(8)%
|
Convenience Stores
& Foodservice
|
--
|
(4) pts
|
(4)%
|
--
|
--
|
(4)%
|
Europe &
Australia
|
(3) pts
|
1 pt
|
(2)%
|
(5) pts
|
--
|
(7)%
|
Asia & Latin
America
|
(4) pts
|
5 pts
|
1%
|
(1) pt
|
(1) pt
|
(1)%
|
Total
|
(7) pts
|
2 pts
|
(5)%
|
(1) pt
|
(1) pt
|
(7)%
|
Fiscal 2017
Segment Operating Profit Growth
|
Third
Quarter
|
% Change as
Reported
|
% Change in
Constant Currency
|
North America
Retail
|
(7)%
|
(7)%
|
Convenience Stores
& Foodservice
|
3%
|
3%
|
Europe &
Australia
|
25%
|
39%
|
Asia & Latin
America
|
302%
|
316%
|
Total
|
(2)%
|
(2)%
|
Nine Months
|
|
|
North America
Retail
|
(5)%
|
(5)%
|
Convenience Stores
& Foodservice
|
8%
|
8%
|
Europe &
Australia
|
(12)%
|
(3)%
|
Asia & Latin
America
|
45%
|
48%
|
Total
|
(3)%
|
(2)%
|
North America Retail Segment
Third-quarter net sales for General Mills' North America Retail
segment totaled $2.50 billion, down 7
percent from the prior year, driven primarily by double-digit
declines in the U.S. Meals & Baking and U.S. Yogurt operating
units. Organic net sales declined 8 percent. Segment
operating profit of $517 million was
down 7 percent due to lower volumes partially offset by benefits
from cost savings initiatives.
Through nine months, North America Retail segment net sales were
down 8 percent to $7.80 billion, with
declines in the U.S. Meals & Baking, U.S. Yogurt, U.S. Cereal,
and Canada operating units.
Organic net sales declined 6 percent. Segment operating
profit totaled $1.80 billion, down 5
percent from a year ago due to lower volumes, currency-driven
inflation on products imported into Canada, and the impact of the Green Giant
divestiture in fiscal 2016, partially offset by benefits from cost
savings initiatives.
Convenience Stores & Foodservice Segment
Third-quarter net sales for General Mills' Convenience Stores
& Foodservice segment were down 1 percent to $448 million, with declines on certain frozen
dough products partially offset by growth for the Focus 6
platforms, including cereal, biscuits, and yogurt. Organic
net sales were also down 1 percent. Segment operating profit
increased 3 percent to $94 million in
the quarter, reflecting benefits from cost savings initiatives and
lower input costs.
Through nine months, Convenience Stores & Foodservice
segment net sales declined 4 percent to $1.38 billion, primarily driven by market index
pricing on bakery flour, partially offset by growth for the Focus 6
platforms, including cereal, yogurt, and biscuits. Organic
net sales also declined 4 percent. Segment operating profit
of $295 million was up 8 percent from
the prior year due to benefits from cost savings initiatives, lower
input costs, and higher grain merchandising earnings.
Europe & Australia
Segment
Third-quarter net sales for General Mills' Europe & Australia segment totaled $424 million, down 3 percent from the prior year
driven by unfavorable foreign currency exchange offsetting growth
in Häagen-Dazs ice cream, Old El Paso Mexican products, and Nature
Valley snacks. Organic net sales increased 2
percent. Segment operating profit of $42 million increased 25 percent as reported and
39 percent in constant currency, reflecting favorable mix and
benefits from cost savings initiatives, partially offset by input
cost inflation.
Through nine months, Europe
& Australia segment net sales
declined 7 percent to $1.34 billion,
reflecting unfavorable foreign currency exchange and declines on
Yoplait yogurt, partially offset by growth in
Häagen-Dazs ice cream, Old El
Paso Mexican products, and Nature Valley
snacks. Organic net sales declined 2 percent. Segment
operating profit of $127 million was
down 12 percent due to unfavorable foreign currency exchange and
input cost inflation, including currency-driven inflation on
products imported into the U.K., partially offset by benefits from
cost savings initiatives. On a constant-currency basis,
segment operating profit declined 3 percent.
Asia & Latin America
Segment
Third-quarter net sales for General Mills' Asia & Latin
America segment totaled $421
million, essentially matching year-ago results.
Favorable foreign currency exchange and growth in
Häagen-Dazs ice cream were offset by the restructuring of
the snacks business in China, the
net impact of divestitures and acquisitions in fiscal 2016, and
declines in Latin America driven
by macro-economic challenges. Organic net sales declined 2
percent. Segment operating profit increased to $10 million from $2.5
million a year ago, reflecting benefits from currency-driven
deflation on raw materials imported into certain markets, as well
as the impact of divestitures in fiscal 2016.
Through nine months, Asia &
Latin America segment net sales
declined 1 percent to $1.29 billion,
due to unfavorable foreign currency exchange and the net impact of
divestitures and acquisitions in fiscal 2016. Organic net
sales increased 1 percent. Segment operating profit totaled
$61 million, up 45 percent as
reported and up 48 percent in constant currency.
Joint Venture Summary
Combined after-tax earnings from the Cereal Partners Worldwide
(CPW) and Häagen-Dazs Japan (HDJ) joint ventures totaled
$11 million in the third quarter,
down 32 percent due primarily to an asset write-off for CPW and
lower volume for HDJ. On a constant-currency basis, after-tax
earnings from joint ventures declined 35 percent.
Third-quarter net sales for CPW grew 4 percent in constant
currency, and constant-currency net sales for HDJ declined 5
percent. Through the first nine months of 2017, after-tax
joint-venture earnings totaled $65
million, flat to last year as reported and down 3 percent in
constant currency.
Other Income Statement Items
Unallocated corporate items totaled $42
million net expense in the third quarter of fiscal 2017,
compared to $78 million net expense
in 2016. Excluding mark-to-market valuation effects and other
items affecting comparability, unallocated corporate items totaled
$22 million net expense in this
year's third quarter compared to $44
million net expense a year ago.
Restructuring, impairment, and other exit costs totaled
$78 million in the quarter compared
to $17 million a year ago. An
additional $28 million of
restructuring and project-related charges were recorded in cost of
sales during the quarter compared to $27
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 third quarter, compared to
$77 million a year ago. The
effective tax rate was 23.0 percent in the third quarter, compared
to 31.0 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 24.7
percent compared to 30.8 percent a year ago.
Cash Flow Generation and Cash Returns
Cash provided by operating activities totaled $1.56 billion through nine months, down 16
percent from the prior year due to changes in trade and advertising
accruals driven by reduced spending and changes in income taxes
payable related to the North American Green Giant divestiture in
fiscal 2016. Capital investments through the first nine
months totaled $475 million.
Dividends paid year-to-date increased 8 percent to
$856 million. During the first
nine months of 2017, General Mills repurchased 25.4 million shares
of common stock for a total of $1.65
billion. Average diluted shares outstanding through
nine months declined 2 percent to 601
million.
Outlook
General Mills reaffirmed its key full-year fiscal 2017
targets:
- Organic net sales are expected to decline approximately
4 percent.
- Constant-currency total segment operating profit growth
is expected to be in a range of down 1 percent to up 1
percent.
- Adjusted operating profit margin is targeted at 18
percent of net sales or higher, which translates to at least 120
basis points of expansion versus year-ago levels.
- Constant-currency adjusted diluted EPS is expected to
increase 5 to 7 percent from the base of $2.92 earned in fiscal 2016. The company
estimates currency translation will have an immaterial impact on
full-year fiscal 2017 adjusted diluted EPS.
General Mills will hold a briefing for investors today,
March 21, 2017, 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
|
|
Nine-Month Period
Ended
|
|
|
Feb.
26,
|
|
|
Feb.
28,
|
|
|
|
|
|
Feb.
26,
|
|
|
Feb.
28,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
%
Change
|
|
|
2017
|
|
|
2016
|
|
%
Change
|
Net sales
|
$
|
3,793.2
|
|
$
|
4,002.4
|
|
(5.2)
|
%
|
|
$
|
11,813.2
|
|
$
|
12,635.2
|
|
(6.5)
|
%
|
Cost of
sales
|
|
2,485.5
|
|
|
2,644.9
|
|
(6.0)
|
%
|
|
|
7,569.1
|
|
|
8,182.5
|
|
(7.5)
|
%
|
Selling,
general, and administrative expenses
|
|
687.6
|
|
|
755.8
|
|
(9.0)
|
%
|
|
|
2,107.9
|
|
|
2,339.7
|
|
(9.9)
|
%
|
Divestitures
loss (gain)
|
|
-
|
|
|
(1.5)
|
|
NM
|
|
|
|
13.5
|
|
|
(200.6)
|
|
NM
|
|
Restructuring,
impairment, and other exit costs
|
|
77.6
|
|
|
16.9
|
|
359.2
|
%
|
|
|
165.5
|
|
|
138.3
|
|
19.7
|
%
|
Operating
profit
|
|
542.5
|
|
|
586.3
|
|
(7.5)
|
%
|
|
|
1,957.2
|
|
|
2,175.3
|
|
(10.0)
|
%
|
Interest,
net
|
|
76.4
|
|
|
77.2
|
|
(1.0)
|
%
|
|
|
225.8
|
|
|
226.3
|
|
(0.2)
|
%
|
Earnings before
income taxes and after-tax
earnings from
joint ventures
|
|
466.1
|
|
|
509.1
|
|
(8.4)
|
%
|
|
|
1,731.4
|
|
|
1,949.0
|
|
(11.2)
|
%
|
Income
taxes
|
|
107.0
|
|
|
157.6
|
|
(32.1)
|
%
|
|
|
511.0
|
|
|
667.7
|
|
(23.5)
|
%
|
After-tax earnings
from joint ventures
|
|
11.1
|
|
|
16.2
|
|
(31.5)
|
%
|
|
|
65.1
|
|
|
65.1
|
|
-
|
%
|
Net earnings,
including earnings attributable
to redeemable
and noncontrolling interests
|
|
370.2
|
|
|
367.7
|
|
0.7
|
%
|
|
|
1,285.5
|
|
|
1,346.4
|
|
(4.5)
|
%
|
Net earnings
attributable to redeemable
and
noncontrolling interests
|
|
12.4
|
|
|
6.0
|
|
106.7
|
%
|
|
|
36.9
|
|
|
28.6
|
|
29.0
|
%
|
Net earnings
attributable to General Mills
|
$
|
357.8
|
|
$
|
361.7
|
|
(1.1)
|
%
|
|
$
|
1,248.6
|
|
$
|
1,317.8
|
|
(5.3)
|
%
|
Earnings per share -
basic
|
$
|
0.62
|
|
$
|
0.61
|
|
1.6
|
%
|
|
$
|
2.12
|
|
$
|
2.20
|
|
(3.6)
|
%
|
Earnings per share -
diluted
|
$
|
0.61
|
|
$
|
0.59
|
|
3.4
|
%
|
|
$
|
2.08
|
|
$
|
2.15
|
|
(3.3)
|
%
|
Dividends per
share
|
$
|
0.48
|
|
$
|
0.44
|
|
9.1
|
%
|
|
$
|
1.44
|
|
$
|
1.32
|
|
9.1
|
%
|
|
|
|
|
Quarter
Ended
|
|
|
Nine-Month Period
Ended
|
|
|
Feb.
26,
|
|
|
Feb.
28,
|
|
Basis
Pt
|
|
|
|
Feb.
26,
|
|
|
Feb.
28,
|
|
Basis
Pt
|
|
Comparisons as a % of
net sales:
|
|
2017
|
|
|
2016
|
|
Change
|
|
|
|
2017
|
|
|
2016
|
|
Change
|
|
Gross
margin
|
|
34.5
%
|
|
|
33.9 %
|
|
60
|
|
|
|
35.9
%
|
|
|
35.2 %
|
|
70
|
|
Selling,
general, and administrative expenses
|
|
18.1
%
|
|
|
18.9 %
|
|
(80)
|
|
|
|
17.8
%
|
|
|
18.5 %
|
|
(70)
|
|
Operating
profit
|
|
14.3
%
|
|
|
14.6 %
|
|
(30)
|
|
|
|
16.6
%
|
|
|
17.2 %
|
|
(60)
|
|
Net earnings
attributable to General Mills
|
|
9.4
%
|
|
|
9.0 %
|
|
40
|
|
|
|
10.6
%
|
|
|
10.4 %
|
|
20
|
|
|
|
Quarter
Ended
|
|
|
Nine-Month Period
Ended
|
Comparisons as a % of
net sales excluding
|
|
Feb.
26,
|
|
|
Feb.
28,
|
|
Basis
Pt
|
|
|
|
Feb.
26,
|
|
|
Feb.
28,
|
|
Basis
Pt
|
|
certain
items affecting comparability (a):
|
|
2017
|
|
|
2016
|
|
Change
|
|
|
|
2017
|
|
|
2016
|
|
Change
|
|
Adjusted gross
margin
|
|
35.0
%
|
|
|
34.8 %
|
|
20
|
|
|
|
36.4
%
|
|
|
36.0 %
|
|
40
|
|
Adjusted
operating profit
|
|
16.9
%
|
|
|
15.9 %
|
|
100
|
|
|
|
18.6
%
|
|
|
17.5 %
|
|
110
|
|
Adjusted net
earnings attributable to General
Mills
|
|
11.2
%
|
|
|
9.9 %
|
|
130
|
|
|
|
11.9
%
|
|
|
11.0 %
|
|
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
|
|
|
Nine-Month Period
Ended
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
%
Change
|
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
%
Change
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
Retail
|
$
|
2,499.0
|
|
$
|
2,686.6
|
|
(7.0)
|
%
|
|
$
|
7,804.8
|
|
$
|
8,460.7
|
|
(7.8)
|
%
|
Convenience Stores
& Foodservice
|
|
448.5
|
|
|
453.7
|
|
(1.1)
|
%
|
|
|
1,382.3
|
|
|
1,437.2
|
|
(3.8)
|
%
|
Europe &
Australia
|
|
424.5
|
|
|
439.4
|
|
(3.4)
|
%
|
|
|
1,338.0
|
|
|
1,431.3
|
|
(6.5)
|
%
|
Asia & Latin
America
|
|
421.2
|
|
|
422.7
|
|
(0.4)
|
%
|
|
|
1,288.1
|
|
|
1,306.0
|
|
(1.4)
|
%
|
Total
|
$
|
3,793.2
|
|
$
|
4,002.4
|
|
(5.2)
|
%
|
|
$
|
11,813.2
|
|
$
|
12,635.2
|
|
(6.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
Retail
|
$
|
516.7
|
|
$
|
552.7
|
|
(6.5)
|
%
|
|
$
|
1,795.9
|
|
$
|
1,886.0
|
|
(4.8)
|
%
|
Convenience Stores
& Foodservice
|
|
93.6
|
|
|
90.6
|
|
3.3
|
%
|
|
|
295.4
|
|
|
273.2
|
|
8.1
|
%
|
Europe &
Australia
|
|
42.0
|
|
|
33.6
|
|
25.0
|
%
|
|
|
127.2
|
|
|
143.9
|
|
(11.6)
|
%
|
Asia & Latin
America
|
|
10.0
|
|
|
2.5
|
|
NM
|
|
|
|
61.3
|
|
|
42.2
|
|
45.3
|
%
|
Total segment
operating profit
|
|
662.3
|
|
|
679.4
|
|
(2.5)
|
%
|
|
|
2,279.8
|
|
|
2,345.3
|
|
(2.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate
items
|
|
42.2
|
|
|
77.7
|
|
(45.7)
|
%
|
|
|
143.6
|
|
|
232.3
|
|
(38.2)
|
%
|
Divestitures loss
(gain)
|
|
-
|
|
|
(1.5)
|
|
(100.0)
|
%
|
|
|
13.5
|
|
|
(200.6)
|
|
(106.7)
|
%
|
Restructuring,
impairment, and
other exit
costs
|
|
77.6
|
|
|
16.9
|
|
359.2
|
%
|
|
|
165.5
|
|
|
138.3
|
|
19.7
|
%
|
Operating
profit
|
$
|
542.5
|
|
$
|
586.3
|
|
(7.5)
|
%
|
|
$
|
1,957.2
|
|
$
|
2,175.3
|
|
(10.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Nine-Month Period
Ended
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
Basis Pt
Change
|
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
Basis
Pt
Change
|
|
Segment operating
profit as a
% of net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
Retail
|
|
20.7%
|
|
|
20.6%
|
|
10
|
|
|
|
23.0%
|
|
|
22.3%
|
|
70
|
|
Convenience Stores
& Foodservice
|
|
20.9%
|
|
|
20.0%
|
|
90
|
|
|
|
21.4%
|
|
|
19.0%
|
|
240
|
|
Europe &
Australia
|
|
9.9%
|
|
|
7.6%
|
|
230
|
|
|
|
9.5%
|
|
|
10.1%
|
|
(60)
|
|
Asia & Latin
America
|
|
2.4%
|
|
|
0.6%
|
|
180
|
|
|
|
4.8%
|
|
|
3.2%
|
|
160
|
|
Total segment
operating profit
|
|
17.5%
|
|
|
17.0%
|
|
50
|
|
|
|
19.3%
|
|
|
18.6%
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(In Millions, Except
Par Value)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
|
May 29,
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
899.1
|
|
$
|
782.7
|
|
$
|
763.7
|
Receivables
|
|
|
1,427.5
|
|
|
1,390.9
|
|
|
1,360.8
|
Inventories
|
|
|
1,461.0
|
|
|
1,350.2
|
|
|
1,413.7
|
Prepaid
expenses and other current assets
|
|
|
340.4
|
|
|
401.3
|
|
|
399.0
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
4,128.0
|
|
|
3,925.1
|
|
|
3,937.2
|
|
|
|
|
|
|
|
|
|
|
Land, buildings, and
equipment
|
|
|
3,575.2
|
|
|
3,604.5
|
|
|
3,743.6
|
Goodwill
|
|
|
8,705.8
|
|
|
8,692.4
|
|
|
8,741.2
|
Other intangible
assets
|
|
|
4,499.7
|
|
|
4,509.8
|
|
|
4,538.6
|
Other
assets
|
|
|
761.6
|
|
|
813.6
|
|
|
751.7
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
21,670.3
|
|
$
|
21,545.4
|
|
$
|
21,712.3
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,855.3
|
|
$
|
1,725.6
|
|
$
|
2,046.5
|
Current
portion of long-term debt
|
|
|
604.7
|
|
|
1,103.5
|
|
|
1,103.4
|
Notes
payable
|
|
|
1,942.0
|
|
|
640.3
|
|
|
269.8
|
Other
current liabilities
|
|
|
1,341.5
|
|
|
1,784.3
|
|
|
1,595.0
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
5,743.5
|
|
|
5,253.7
|
|
|
5,014.7
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
7,176.4
|
|
|
7,024.4
|
|
|
7,057.7
|
Deferred income
taxes
|
|
|
1,547.7
|
|
|
1,489.4
|
|
|
1,399.6
|
Other
liabilities
|
|
|
1,930.0
|
|
|
1,687.5
|
|
|
2,087.6
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
16,397.6
|
|
|
15,455.0
|
|
|
15,559.6
|
|
|
|
|
|
|
|
|
|
|
Redeemable
interest
|
|
|
869.2
|
|
|
826.7
|
|
|
845.6
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, 754.6 shares issued, $0.10 par value
|
|
|
75.5
|
|
|
75.5
|
|
|
75.5
|
Additional paid-in capital
|
|
|
1,129.8
|
|
|
1,164.4
|
|
|
1,177.0
|
Retained
earnings
|
|
|
13,008.8
|
|
|
12,514.0
|
|
|
12,616.5
|
Common stock in
treasury, at cost,
shares of 178.5, 161.0 and 157.8
|
|
|
(7,800.3)
|
|
|
(6,450.2)
|
|
|
(6,326.6)
|
Accumulated other comprehensive loss
|
|
|
(2,350.4)
|
|
|
(2,414.9)
|
|
|
(2,612.2)
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
4,063.4
|
|
|
4,888.8
|
|
|
4,930.2
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
340.1
|
|
|
374.9
|
|
|
376.9
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
4,403.5
|
|
|
5,263.7
|
|
|
5,307.1
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
$
|
21,670.3
|
|
$
|
21,545.4
|
|
$
|
21,712.3
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(Unaudited) (In
Millions)
|
|
Nine-Month
Period
Ended
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
Cash Flows -
Operating Activities
|
|
|
|
|
|
Net
earnings, including earnings attributable to redeemable
|
|
|
|
|
|
and noncontrolling interests
|
$
|
1,285.5
|
|
$
|
1,346.4
|
Adjustments to reconcile net earnings to net cash
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
448.3
|
|
|
441.2
|
After-tax earnings from joint ventures
|
|
(65.1)
|
|
|
(65.1)
|
Distributions of earnings from joint ventures
|
|
43.7
|
|
|
38.6
|
Stock-based compensation
|
|
76.4
|
|
|
71.7
|
Deferred income taxes
|
|
140.1
|
|
|
37.7
|
Tax
benefit on exercised options
|
|
(65.1)
|
|
|
(57.2)
|
Pension and other postretirement benefit plan
contributions
|
|
(34.0)
|
|
|
(35.2)
|
Pension and other postretirement benefit plan costs
|
|
26.9
|
|
|
88.2
|
Divestitures loss (gain)
|
|
13.5
|
|
|
(200.6)
|
Restructuring, impairment, and other exit costs
|
|
141.1
|
|
|
83.0
|
Changes in current assets and liabilities
|
|
(404.0)
|
|
|
206.0
|
Other, net
|
|
(48.6)
|
|
|
(92.2)
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
1,558.7
|
|
|
1,862.5
|
|
|
|
|
|
|
Cash Flows -
Investing Activities
|
|
|
|
|
|
Purchases of land, buildings, and equipment
|
|
(475.2)
|
|
|
(477.6)
|
Acquisitions, net of cash acquired
|
|
-
|
|
|
(84.0)
|
Investments in affiliates, net
|
|
4.8
|
|
|
63.7
|
Proceeds
from disposal of land, buildings, and equipment
|
|
1.2
|
|
|
4.5
|
Proceeds
from divestitures
|
|
17.5
|
|
|
825.8
|
Exchangeable note
|
|
13.0
|
|
|
19.5
|
Other,
net
|
|
14.7
|
|
|
(16.8)
|
|
|
|
|
|
|
Net cash (used) provided by investing activities
|
|
(424.0)
|
|
|
335.1
|
|
|
|
|
|
|
Cash Flows -
Financing Activities
|
|
|
|
|
|
Change
in notes payable
|
|
1,681.3
|
|
|
54.8
|
Issuance
of long-term debt
|
|
750.0
|
|
|
542.9
|
Payment
of long-term debt
|
|
(1,003.0)
|
|
|
(1,000.3)
|
Proceeds
from common stock issued on exercised options
|
|
90.5
|
|
|
103.0
|
Tax
benefit on exercised options
|
|
65.1
|
|
|
57.2
|
Purchases of common stock for treasury
|
|
(1,650.9)
|
|
|
(601.8)
|
Dividends paid
|
|
(856.3)
|
|
|
(794.6)
|
Distributions to noncontrolling and redeemable interest
holders
|
|
(59.5)
|
|
|
(81.7)
|
|
|
|
|
|
|
Net cash used by financing activities
|
|
(982.8)
|
|
|
(1,720.5)
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(16.5)
|
|
|
(28.6)
|
Increase in cash and
cash equivalents
|
|
135.4
|
|
|
448.5
|
Cash and cash
equivalents - beginning of year
|
|
763.7
|
|
|
334.2
|
|
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
|
899.1
|
|
$
|
782.7
|
|
|
|
|
|
|
Cash Flow from
changes in current assets and liabilities:
|
|
|
|
|
|
Receivables
|
$
|
(75.1)
|
|
$
|
(48.7)
|
Inventories
|
|
(42.1)
|
|
|
(89.3)
|
Prepaid
expenses and other current assets
|
|
53.3
|
|
|
(2.6)
|
Accounts
payable
|
|
(100.4)
|
|
|
75.9
|
Other
current liabilities
|
|
(239.7)
|
|
|
270.7
|
|
|
|
|
|
|
Changes in current
assets and liabilities
|
$
|
(404.0)
|
|
$
|
206.0
|
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.
|
|
|
|
In the third quarter
of fiscal 2017, we announced a new global organization structure to
streamline our leadership, enhance global scale, and drive improved
operational agility to maximize our growth capabilities. As a
result of this global reorganization, beginning in the third
quarter of fiscal 2017, we will report results for our four
operating segments as follows: North America Retail; Convenience
Stores & Foodservice; Europe & Australia; and Asia &
Latin America. We have restated our net sales by segment and
segment operating profit amounts to reflect our new operating
segments. These segment changes had no effect on previously
reported consolidated net sales, operating profit, net earnings
attributable to General Mills, or earnings per share.
|
|
|
|
Our North America
Retail operating segment consists of our former U.S. Retail
operating units and our Canada region. Within our North America
Retail operating segment, our former U.S. Meals operating unit and
U.S. Baking operating unit have been combined into one operating
unit: U.S. Meals & Baking. Our Convenience Stores &
Foodservice operating segment was unchanged. Our Europe &
Australia operating segment consists of our former Europe region.
Our Asia & Latin America operating segment consists of our
former Asia/Pacific and Latin America regions.
|
|
|
(2)
|
During the second
quarter of fiscal 2017, we sold our Martel, Ohio manufacturing
facility in our Convenience Stores & 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
|
|
|
Nine-Month
Period
Ended
|
In
Millions
|
|
Feb. 26,
2017
|
|
Feb. 28,
2016
|
|
|
Feb. 26,
2017
|
|
Feb. 28,
2016
|
Cost of
sales
|
$
|
16.4
|
$
|
17.3
|
|
$
|
42.8
|
$
|
60.9
|
Restructuring,
impairment, and other exit costs
|
|
77.6
|
|
16.9
|
|
|
165.5
|
|
138.3
|
Total restructuring
charges
|
|
94.0
|
|
34.2
|
|
|
208.3
|
|
199.2
|
Project-related costs
classified in cost of sales
|
$
|
11.5
|
$
|
10.1
|
|
$
|
36.4
|
$
|
39.4
|
In the third quarter of fiscal 2017, we approved restructuring
actions designed to better align our organizational structure with
our strategic initiatives. In connection with these actions,
we expect to eliminate approximately 400 to 600 positions. We
expect to incur approximately $80
million of net expenses relating to these actions, all of
which will be cash. We recorded $73.1
million of restructuring charges in the third quarter of
fiscal 2017 relating to these actions. We expect these actions to
be completed by the end of fiscal 2018.
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 Europe
& Australia 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
$5.7 million of restructuring charges
in the third quarter of fiscal 2017 and $17.7 million in the nine-month period ended
February 26, 2017 relating to this
action. We expect these actions to be completed by the end of
fiscal 2019.
In the first quarter of fiscal 2017, we announced a plan to
restructure certain product lines in our Asia & Latin
America segment. To eliminate excess capacity, we
closed our snacks manufacturing facility in Marília, Brazil and ceased production operations for
meals and snacks at our facility in São Bernardo do Campo,
Brazil. We ceased production of
certain underperforming snack products at our facility in
Nanjing, China. These and other actions will affect
approximately 420 positions in our Brazilian operations and
approximately 440 positions in our Greater China operations. We expect to
incur approximately $38 million of
net expenses of which approximately $4
million will be cash. We recorded $2.3 million of restructuring charges in the
third quarter of fiscal 2017 and $45.6
million in the nine-month period ended February 26, 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 approved a plan to close
our Vineland, New Jersey facility
to eliminate excess soup capacity in our North America Retail
segment. This action will affect approximately 370 positions, and
we expect to incur approximately $65
million of net expenses, of which approximately $18 million will be cash. We recorded
$7.7 million of restructuring charges
in the third quarter of fiscal 2017 and $35.6 million in the nine-month period ended
February 26, 2017 relating to this
action. We expect this action to be completed by the end of fiscal
2019.
In addition, we recorded restructuring charges of $5.2 million in the third quarter of fiscal 2017,
$34.2 million in the third quarter of
fiscal 2016, $36.3 million in the
nine-month period ended February 26,
2017, and $199.2 million in
the nine-month period ended February 28,
2016 relating to other restructuring actions previously
announced.
During the nine-month period ended February 26, 2017, we paid $67.1 million in cash relating to restructuring
initiatives.
In addition to restructuring charges, we recorded $11.5 million of project-related costs in cost of
sales in the third quarter of fiscal 2017 and $36.4 million in the nine-month period ended
February 26, 2017. We expect to
incur approximately $17.1 million of
project-related costs in future periods related to our
restructuring initiatives.
Details of our current restructuring initiatives were as
follows:
|
Nine-Month Period
Ended
|
Fiscal 2016 and
2015
|
Estimated
|
In
Millions
|
Feb. 26,
2017
|
Feb. 28,
2016
|
Total
|
Future
|
Total
|
|
|
Charge
|
Cash
|
Charge
|
Cash
|
Charge
|
Cash
|
Charge
|
Cash
|
Charge
|
Cash
|
Savings
(b)
|
Global
reorganization
|
$73.1
|
$9.2
|
$-
|
$-
|
$-
|
$-
|
$7
|
$71
|
$80
|
$80
|
|
Closure of Melbourne,
Australia plant
|
17.7
|
0.1
|
-
|
-
|
-
|
-
|
16
|
-
|
34
|
-
|
|
Restructuring of
certain international product lines
|
45.6
|
10.6
|
-
|
-
|
-
|
-
|
-
|
(7)
|
38
|
4
|
|
Closure of Vineland,
New Jersey plant
|
35.6
|
1.5
|
-
|
-
|
-
|
-
|
30
|
16
|
65
|
18
|
|
Project
Compass
|
(0.4)
|
11.4
|
52.8
|
29.1
|
54.7
|
36.1
|
-
|
7
|
55
|
55
|
|
Project
Century
|
37.2
|
29.5
|
155.1
|
38.0
|
364.4
|
46.3
|
15
|
66
|
417
|
142
|
|
Project
Catalyst
|
-
|
1.1
|
(8.7)
|
46.9
|
140.9
|
92.8
|
-
|
25
|
141
|
94
|
|
Combination of
certain operational facilities
|
(0.5)
|
3.7
|
-
|
2.2
|
13.3
|
11.0
|
-
|
-
|
13
|
15
|
|
Total restructuring
charges (a)
|
208.3
|
67.1
|
199.2
|
116.2
|
573.3
|
186.2
|
68
|
178
|
843
|
408
|
|
Project-related
costs
|
36.4
|
40.2
|
39.4
|
37.7
|
70.7
|
64.2
|
17
|
20
|
124
|
124
|
|
Restructuring charges
and project-related costs
|
$244.7
|
$107.3
|
$238.6
|
$153.9
|
$644.0
|
$250.4
|
$85
|
$198
|
$967
|
$532
|
$700
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes $42.8
million of restructuring charges recorded in cost of sales during
fiscal 2017 and $60.9 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 $42 million in the third quarter of fiscal 2017
compared to $78 million in the same period in fiscal 2016. In the
third quarter of fiscal 2017, we recorded $16 million of
restructuring charges and $12 million of restructuring initiative
project-related costs in cost of sales compared to $17 million of
restructuring charges and $10 million of restructuring initiative
project-related costs in cost of sales in the same period last
year. In addition, we recorded an $8 million net decrease in
expense related to the mark-to-market valuation of certain
commodity positions and grain inventories in the third quarter of
fiscal 2017 compared to a $7 million net increase in expense in the
same period last year. We also recorded a decrease in incentive
expense in the third quarter of fiscal 2017 compared to the same
period last year.
|
|
|
|
Unallocated corporate
expense totaled $144 million in the nine-month period ended
February 26, 2017, compared to $232 million in the same period last
year. In the nine-month period ended February 26, 2017, we recorded
$43 million of restructuring charges and $36 million of
restructuring initiative project-related costs compared to $61
million of restructuring charges and $39 million of restructuring
initiative project-related costs in the same period last year. In
addition, we recorded a $21 million net decrease in expense related
to the mark-to-market valuation of certain commodity positions and
grain inventories in the nine-month period ended February 26, 2017,
compared to a $3 million net decrease in expense in the same period
a year ago. We also recorded a decrease in incentive expense in the
nine-month period ended February 26, 2017, compared to the same
period last year.
|
|
|
(5)
|
Basic and diluted
earnings per share (EPS) were calculated as follows:
|
|
|
|
Quarter
Ended
|
|
|
Nine-Month
Period
Ended
|
In Millions,
Except per Share Data
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
Net earnings
attributable to General Mills
|
|
$
|
357.8
|
|
$
|
361.7
|
|
$
|
1,248.6
|
|
$
|
1,317.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
common shares - basic EPS
|
|
|
580.7
|
|
|
595.6
|
|
|
589.8
|
|
|
599.1
|
Incremental share
effect from: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
7.8
|
|
|
9.6
|
|
|
8.5
|
|
|
9.9
|
Restricted
stock, restricted stock units, and other
|
|
|
2.9
|
|
|
3.3
|
|
|
2.8
|
|
|
3.2
|
Average number of
common shares - diluted EPS
|
|
|
591.4
|
|
|
608.5
|
|
|
601.1
|
|
|
612.2
|
Earnings per share -
basic
|
|
$
|
0.62
|
|
$
|
0.61
|
|
$
|
2.12
|
|
$
|
2.20
|
Earnings per share -
diluted
|
|
$
|
0.61
|
|
$
|
0.59
|
|
$
|
2.08
|
|
$
|
2.15
|
|
|
(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 third quarter of fiscal 2017 was 23.0 percent compared
to 31.0 percent for the third quarter of fiscal 2016. The 8.0
percentage point decrease was primarily due to favorable impacts of
French tax legislation and other favorable discrete tax items that
occurred during the third quarter of fiscal 2017.
|
|
|
(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 North America Retail, Europe & Australia, and
Asia & Latin America segment operating profit growth rates, (7)
constant-currency after-tax earnings from joint ventures growth
rates, (8) earnings comparisons as a percent of net sales excluding
certain items affecting comparability, and (9) 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 100 to 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 $284 million.
|
Diluted EPS excluding certain items affecting comparability and
the related constant-currency growth rates follow:
|
Quarter
Ended
|
|
Nine-Month
Period
Ended
|
|
Fiscal
Year
|
Per Share
Data
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
Change
|
|
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
Change
|
|
|
|
2016
|
Diluted earnings per
share, as reported
|
$
|
0.61
|
|
$
|
0.59
|
3
|
%
|
|
$
|
2.08
|
|
$
|
2.15
|
|
(3)
|
%
|
|
$
|
2.77
|
Mark-to-market
effects (a)(d)
|
|
(0.01)
|
|
|
-
|
|
|
|
|
(0.02)
|
|
|
(0.01)
|
|
|
|
|
|
(0.07)
|
Divestitures
loss (gain), net (c)(d)
|
|
-
|
|
|
-
|
|
|
|
|
0.01
|
|
|
(0.14)
|
|
|
|
|
|
(0.10)
|
Restructuring
charges (b)(d)
|
|
0.11
|
|
|
0.05
|
|
|
|
|
0.24
|
|
|
0.22
|
|
|
|
|
|
0.26
|
Project-related costs (b)(d)
|
|
0.01
|
|
|
0.01
|
|
|
|
|
0.04
|
|
|
0.04
|
|
|
|
|
|
0.06
|
Diluted earnings per
share, excluding
certain
items affecting
comparability
|
$
|
0.72
|
|
$
|
0.65
|
11
|
%
|
|
$
|
2.35
|
|
$
|
2.26
|
|
4
|
%
|
|
$
|
2.92
|
Foreign currency
exchange impact
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
Flat
|
|
|
|
|
Diluted earnings per
share growth,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding certain items affecting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comparability, on a constant-currency basis
|
|
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
4
|
%
|
|
|
|
|
(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 Feb.
26, 2017
|
|
(2)%
|
Flat
|
(2)%
|
Nine-Month Period
Ended Feb. 26, 2017
|
|
(3)%
|
(1)pt
|
(2)%
|
|
|
|
|
|
Constant-currency operating profit growth rates by segment
follows:
|
|
Quarter Ended Feb.
26, 2017
|
|
|
Percentage Change
in
Operating Profit
as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in Operating
Profit on Constant-
Currency Basis
|
North America
Retail
|
|
(7)%
|
Flat
|
(7)%
|
Europe &
Australia
|
|
25
|
(14)pts
|
39
|
Asia & Latin
America
|
|
302%
|
(14)pts
|
316%
|
|
|
|
|
|
|
|
|
Nine-Month Period
Ended Feb. 26, 2017
|
|
|
Percentage Change
in
Operating Profit
as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in Operating
Profit on Constant-Currency
Basis
|
North America
Retail
|
|
(5)%
|
Flat
|
(5)%
|
Europe &
Australia
|
|
(12)
|
(9)pts
|
(3)
|
Asia & Latin
America
|
|
45%
|
(3)pts
|
48%
|
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 Feb.
26, 2017
|
|
(32)%
|
3 pts
|
(35)%
|
Nine-Month Period
Ended Feb. 26, 2017
|
Flat
|
3 pts
|
(3)%
|
Earnings comparisons as a percent of net sales excluding certain
items affecting comparability follow:
|
Quarter
Ended
|
In
Millions
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
Comparisons as a %
of Net Sales
|
|
Value
|
|
Percent
of
Net
Sales
|
|
|
|
Value
|
|
Percent
of
Net
Sales
|
|
Gross margin as
reported (a)
|
$
|
1,307.7
|
|
34.5
|
%
|
|
$
|
1,357.5
|
|
33.9
|
%
|
Mark-to-market
effects (b)
|
|
(8.2)
|
|
(0.2)
|
%
|
|
|
7.3
|
|
0.2
|
%
|
Restructuring
charges (c)
|
|
16.4
|
|
0.4
|
%
|
|
|
17.3
|
|
0.4
|
%
|
Project-related costs (c)
|
|
11.5
|
|
0.3
|
%
|
|
|
10.1
|
|
0.3
|
%
|
Adjusted gross
margin
|
$
|
1,327.4
|
|
35.0
|
%
|
|
$
|
1,392.2
|
|
34.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as
reported
|
$
|
542.5
|
|
14.3
|
%
|
|
$
|
586.3
|
|
14.6
|
%
|
Mark-to-market
effects (b)
|
|
(8.2)
|
|
(0.2)
|
%
|
|
|
7.3
|
|
0.2
|
%
|
Restructuring
charges (c)
|
|
94.0
|
|
2.5
|
%
|
|
|
34.2
|
|
0.8
|
%
|
Project-related costs (c)
|
|
11.5
|
|
0.3
|
%
|
|
|
10.1
|
|
0.3
|
%
|
Divestitures
gain (d)
|
|
-
|
|
-
|
%
|
|
|
(1.5)
|
|
-
|
%
|
Adjusted operating
profit
|
$
|
639.8
|
|
16.9
|
%
|
|
$
|
636.4
|
|
15.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills as reported
|
$
|
357.8
|
|
9.4
|
%
|
|
$
|
361.7
|
|
9.0
|
%
|
Mark-to-market
effects, net of tax (b)(e)
|
|
(5.1)
|
|
(0.1)
|
%
|
|
|
4.6
|
|
0.1
|
%
|
Restructuring
charges, net of tax (c)(e)
|
|
63.0
|
|
1.7
|
%
|
|
|
26.2
|
|
0.7
|
%
|
Project-related costs, net of tax (c)(e)
|
|
7.4
|
|
0.2
|
%
|
|
|
6.3
|
|
0.1
|
%
|
Divestitures
gain (d)(e)
|
|
-
|
|
-
|
%
|
|
|
(1.5)
|
|
-
|
%
|
Adjusted net earnings
attributable to General Mills
|
$
|
423.1
|
|
11.2
|
%
|
|
$
|
397.3
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine-Month Period
Ended
|
In
Millions
|
|
Feb. 26,
2017
|
|
|
Feb. 28,
2016
|
|
Comparisons as a %
of Net Sales
|
|
Value
|
|
Percent
of
Net
Sales
|
|
|
|
Value
|
|
Percent
of
Net
Sales
|
|
Gross margin as
reported (a)
|
$
|
4,244.1
|
|
35.9
|
%
|
|
$
|
4,452.7
|
|
35.2
|
%
|
Mark-to-market
effects (b)
|
|
(20.7)
|
|
(0.2)
|
%
|
|
|
(3.1)
|
|
-
|
%
|
Restructuring
costs (c)
|
|
42.8
|
|
0.4
|
%
|
|
|
60.9
|
|
0.5
|
%
|
Project-related costs (c)
|
|
36.4
|
|
0.3
|
%
|
|
|
39.4
|
|
0.3
|
%
|
Adjusted gross
margin
|
$
|
4,302.6
|
|
36.4
|
%
|
|
$
|
4,549.9
|
|
36.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as
reported
|
$
|
1,957.2
|
|
16.6
|
%
|
|
$
|
2,175.3
|
|
17.2
|
%
|
Mark-to-market
effects (b)
|
|
(20.7)
|
|
(0.2)
|
%
|
|
|
(3.1)
|
|
-
|
%
|
Restructuring
costs (c)
|
|
208.3
|
|
1.8
|
%
|
|
|
199.2
|
|
1.6
|
%
|
Project-related costs (c)
|
|
36.4
|
|
0.3
|
%
|
|
|
39.4
|
|
0.3
|
%
|
Divestitures
loss (gain) (d)
|
|
13.5
|
|
0.1
|
%
|
|
|
(200.6)
|
|
(1.6)
|
%
|
Adjusted operating
profit
|
$
|
2,194.7
|
|
18.6
|
%
|
|
$
|
2,210.2
|
|
17.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills as reported
|
$
|
1,248.6
|
|
10.6
|
%
|
|
$
|
1,317.8
|
|
10.4
|
%
|
Mark-to-market
effects, net of tax (b)(e)
|
|
(13.0)
|
|
(0.1)
|
%
|
|
|
(2.0)
|
|
-
|
%
|
Restructuring
charges, net of tax (c)(e)
|
|
141.6
|
|
1.1
|
%
|
|
|
135.1
|
|
1.1
|
%
|
Project-related costs, net of tax (c)(e)
|
|
23.3
|
|
0.2
|
%
|
|
|
24.8
|
|
0.2
|
%
|
Divestitures
loss (gain) (d)(e)
|
|
9.2
|
|
0.1
|
%
|
|
|
(89.6)
|
|
(0.7)
|
%
|
Adjusted net earnings
attributable to General Mills
|
$
|
1,409.7
|
|
11.9
|
%
|
|
$
|
1,386.1
|
|
11.0
|
%
|
|
(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
|
|
Nine-Month Period
Ended
|
|
Feb. 26,
2017
|
|
Feb. 28,
2016
|
|
Feb. 26,
2017
|
|
Feb. 28,
2016
|
In Millions
(Except Per Share Data)
|
Pretax
Earnings (a)
|
Income
Taxes
|
|
Pretax
Earnings (a)
|
Income
Taxes
|
|
Pretax
Earnings (a)
|
Income
Taxes
|
|
Pretax
Earnings (a)
|
Income
Taxes
|
As
reported
|
$466.1
|
$107.0
|
|
$509.1
|
$157.6
|
|
$1,731.4
|
$511.0
|
|
$1,949.0
|
$667.7
|
Mark-to-market effects (b)
|
(8.2)
|
(3.1)
|
|
7.3
|
2.7
|
|
(20.7)
|
(7.7)
|
|
(3.1)
|
(1.1)
|
Restructuring charges (c)
|
94.0
|
31.0
|
|
34.2
|
8.0
|
|
208.3
|
66.7
|
|
199.2
|
62.0
|
Project-related costs (c)
|
11.5
|
4.1
|
|
10.1
|
3.8
|
|
36.4
|
13.1
|
|
39.4
|
14.6
|
Divestitures loss (gain) (d)
|
-
|
-
|
|
(1.5)
|
-
|
|
13.5
|
4.3
|
|
(200.6)
|
(111.0)
|
As
adjusted
|
$563.4
|
$139.0
|
|
$559.2
|
$172.1
|
|
$1,968.9
|
$587.4
|
|
$1,983.9
|
$632.2
|
Effective tax
rate:
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
23.0%
|
|
|
31.0%
|
|
|
29.5%
|
|
|
34.3%
|
As
adjusted
|
|
24.7%
|
|
|
30.8%
|
|
|
29.8%
|
|
|
31.9%
|
Sum of adjustment to
income taxes
|
$
|
32.0
|
|
$
|
14.5
|
|
$
|
76.4
|
|
$
|
(35.5)
|
Average number of
common shares - diluted EPS
|
591.4
|
|
|
608.5
|
|
|
601.1
|
|
|
612.2
|
Impact of income tax
adjustments on diluted EPS
excluding certain items affecting comparability
|
$0.05
|
|
|
$0.02
|
|
|
$0.13
|
|
|
$(0.06)
|
|
(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-third-quarter-results-300426841.html
SOURCE General Mills