- Net sales increased 8 percent to $4.5 billion; organic net
sales1 increased 7 percent
- Operating profit increased 27 percent to $827 million;
constant-currency adjusted operating profit increased 5
percent
- Diluted earnings per share (EPS) totaled $0.96, up 30
percent from the prior year; adjusted diluted EPS of $0.82
increased 6 percent in constant currency
- Company provides outlook for full-year organic net sales
growth and adjusted operating profit margin; announces resumption
of share repurchase activity beginning in the fourth quarter ¹
Please see Note 7 to the Consolidated Financial Statements below
for reconciliation of this and other non-GAAP measures used in this
release.
General Mills (NYSE: GIS) today reported results for the third
quarter ended February 28, 2021.
“We continued to execute well and delivered profitable growth in
the third quarter,” said General Mills Chairman and Chief Executive
Officer Jeff Harmening. “We’ve made good progress on our fiscal
2021 priorities, including competing effectively, fueling
investment in our brands and capabilities, and reducing our
leverage. With our balance sheet in a strong position, we have
resumed share repurchase activity in the fourth quarter. We’re
continuing to advance our Accelerate strategy, including
yesterday’s announcement of our proposed divestiture of our
European Yoplait business. Looking ahead, we remain focused on
strengthening our momentum and emerging from the pandemic a
stronger company, even better positioned to drive long-term
shareholder value.”
General Mills is executing its Accelerate strategy to drive
sustainable, profitable growth and top-tier shareholder returns
over the long term. The strategy focuses on four pillars to create
competitive advantages and win: boldly building brands,
relentlessly innovating, unleashing scale, and being a force for
good. The company is prioritizing its core markets, global
platforms, and local gem brands that have the best prospects for
profitable growth and is committed to reshaping its portfolio with
strategic acquisitions and divestitures, including the proposed
divestiture of its European Yoplait operations, to further enhance
its growth profile.
General Mills expects that changes in consumer behaviors driven
by the COVID-19 pandemic will result in ongoing elevated consumer
demand for food at home, relative to pre-pandemic levels. These
changes include more time spent working from home and increased
consumer appreciation for cooking and baking. The company plans to
capitalize on these opportunities, addressing evolving consumer
needs through its leading brands, innovation, and advantaged
capabilities to generate profitable growth.
Proposed Divestiture of European
Yoplait Operations
General Mills announced yesterday that it entered into a
memorandum of understanding to sell its 51 percent controlling
interest in its European Yoplait operations to Sodiaal, a leading
French dairy cooperative, in exchange for full ownership of the
Canadian Yoplait business and a reduced royalty rate for use of the
Yoplait and Liberté brands in the United States and Canada. This
growth- and margin-accretive transaction advances General Mills’
portfolio reshaping efforts within its Accelerate strategy. The
proposed transaction is expected to close by the end of calendar
2021, subject to appropriate labor consultations, regulatory
filings, and other customary closing conditions.
Third Quarter Results
Summary
- Net sales increased 8 percent to $4.5 billion and
organic net sales were up 7 percent, reflecting broad-based market
share gains amid elevated at-home food demand resulting from the
COVID-19 pandemic.
- Gross margin increased 80 basis points to 34.4 percent
of net sales, driven by favorable net price realization and mix and
lower mark-to-market expenses, partially offset by higher input
costs. Adjusted gross margin decreased 90 basis points to 33.0
percent of net sales, driven by higher input costs, including input
cost inflation, costs to secure incremental capacity, and higher
logistics costs, partially offset by favorable net price
realization and mix.
- Operating profit of $827 million was up 27 percent,
primarily driven by higher gross profit dollars and a net gain on
investment activity, partially offset by higher selling, general,
and administrative (SG&A) expenses. Operating profit
margin of 18.3 percent increased 270 basis points. Adjusted
operating profit of $716 million increased 5 percent in constant
currency, driven by higher constant-currency adjusted gross profit
dollars, partially offset by higher SG&A expenses, including
higher investment in capabilities and media. Adjusted operating
profit margin decreased 30 basis points to 15.8 percent.
- Net earnings attributable to General Mills increased 31
percent to $596 million and diluted EPS increased 30 percent
to $0.96, primarily reflecting higher operating profit, partially
offset by higher average diluted shares outstanding. Adjusted
diluted EPS totaled $0.82, up 6 percent in constant currency,
primarily driven by higher adjusted operating profit and lower net
interest expense, partially offset by higher average diluted shares
outstanding.
Nine Month Results
Summary
- Net sales increased 8 percent to $13.6 billion and
organic net sales also increased 8 percent, reflecting positive
pound volume and favorable net price realization and mix.
- Gross margin increased 120 basis points to 35.8 percent
of net sales, driven by favorable net price realization and mix,
lower mark-to-market expenses, and lower restructuring charges
recorded in cost of sales, partially offset by higher input costs.
Adjusted gross margin increased 10 basis points to 34.9 percent of
net sales, driven by favorable net price realization and mix,
partially offset by higher input costs.
- Operating profit of $2.6 billion increased 22 percent,
primarily driven by higher gross profit dollars, partially offset
by higher SG&A expenses, including higher media investment.
Operating profit margin of 19.1 percent was up 220 basis
points. Adjusted operating profit of $2.4 billion increased 11
percent in constant currency, driven by higher constant-currency
adjusted gross profit dollars, partially offset by higher SG&A
expenses, including higher investment in media and capabilities.
Adjusted operating profit margin increased 50 basis points to 17.7
percent.
- Net earnings attributable to General Mills increased 24
percent to $1.9 billion and diluted EPS of $3.10 increased
22 percent, primarily reflecting higher operating profit, higher
after-tax earnings from joint ventures, and lower net interest
expense, partially offset by a higher effective tax rate and higher
average diluted shares outstanding. Adjusted diluted EPS of $2.88
was up 14 percent in constant currency, primarily driven by higher
adjusted operating profit, higher after-tax earnings from joint
ventures, and lower net interest expense, partially offset by
higher average diluted shares outstanding and a higher adjusted
effective tax rate.
Operating Segment
Results
Note: Tables may not foot due to rounding.
Components of Fiscal 2021
Reported Net Sales Growth
Third Quarter
Volume
Price/Mix
Foreign Exchange
Reported Net Sales
North America Retail
9 pts
--
--
9%
Pet
16 pts
(3) pts
--
14%
Convenience Stores & Foodservice
(7) pts
(3) pts
--
(10)%
Europe & Australia
2 pts
4 pts
9 pts
15%
Asia & Latin America
9 pts
5 pts
(3) pts
12%
Total
5 pts
3 pts
1 pt
8%
Nine Months
North America Retail
12 pts
(1) pt
--
11%
Pet
14 pts
(1) pt
--
13%
Convenience Stores & Foodservice
(9) pts
(3) pts
--
(12)%
Europe & Australia
--
4 pts
6 pts
10%
Asia & Latin America
12 pts
1 pt
(6) pts
8%
Total
5 pts
3 pts
--
8%
Components of Fiscal 2021
Organic Net Sales Growth
Third Quarter
Organic Volume
Organic Price/Mix
Organic Net Sales
Foreign Exchange
Acquisitions &
Divestitures
Reported Net Sales
North America Retail
9 pts
--
9%
--
--
9%
Pet
16 pts
(3) pts
14%
--
--
14%
Convenience Stores & Foodservice
(7) pts
(3) pts
(10)%
--
--
(10)%
Europe & Australia
2 pts
4 pts
7%
9 pts
(1) pt
15%
Asia & Latin America
9 pts
5 pts
14%
(3) pts
--
12%
Total
5 pts
3 pts
7%
1 pt
--
8%
Nine Months
North America Retail
12 pts
(1) pt
11%
--
--
11%
Pet
14 pts
(1) pt
13%
--
--
13%
Convenience Stores & Foodservice
(9) pts
(3) pts
(12)%
--
--
(12)%
Europe & Australia
1 pt
5 pts
5%
6 pts
(1) pt
10%
Asia & Latin America
12 pts
1 pt
13%
(6) pts
--
8%
Total
5 pts
3 pts
8%
--
--
8%
Fiscal 2021 Segment Operating
Profit Growth
Third Quarter
% Change as Reported
% Change in Constant
Currency
North America Retail
14%
14%
Pet
9%
9%
Convenience Stores & Foodservice
(31)%
(31)%
Europe & Australia
33%
24%
Asia & Latin America
48%
18%
Total
9%
8%
Nine Months
North America Retail
15%
15%
Pet
22%
22%
Convenience Stores & Foodservice
(29)%
(29)%
Europe & Australia
46%
40%
Asia & Latin America
47%
24%
Total
12%
12%
North America Retail Segment
Third-quarter net sales for General Mills’ North America Retail
segment increased 9 percent to $2.73 billion, reflecting positive
competitive performance amid elevated demand for food at home due
to the pandemic. Organic net sales increased 9 percent, driven by
higher organic pound volume. Net sales increased 15 percent in U.S.
Meals & Baking, 13 percent in Canada, 9 percent in U.S. Cereal,
and 3 percent in U.S. Yogurt. U.S. Snacks net sales were down 3
percent. Segment operating profit increased 14 percent to $606
million, primarily driven by higher volume, HMM cost savings, and
fixed cost leverage in the supply chain, partially offset by input
cost inflation, costs to secure incremental capacity, and higher
logistics costs.
Through nine months, North America Retail segment net sales
increased 11 percent to $8.36 billion. Organic net sales were also
up 11 percent. The company continued to compete effectively in the
segment, including holding or growing year-to-date market share in
7 of its 10 largest U.S. categories and driving strong share growth
in Canada. Segment operating profit totaled $2.0 billion, up 15
percent from a year ago primarily due to higher volume, HMM cost
savings, and fixed cost leverage in the supply chain, partially
offset by input cost inflation, costs to secure incremental
capacity, unfavorable product mix, and higher media and other
SG&A expenses.
Pet Segment
Third-quarter net sales for the Pet segment increased 14 percent
to $436 million, with positive contributions from volume growth
partially offset by unfavorable net price realization and mix,
including launch investments for the new Tastefuls product line.
The BLUE brand continued to win with pet parents across
sub-segments, including double-digit net sales growth for both dog
food and cat food. Segment operating profit increased 9 percent to
$102 million, primarily driven by higher volume, partially offset
by unfavorable net price realization and mix, higher input costs,
and higher SG&A expenses.
Through nine months, Pet segment net sales increased 13 percent
to $1.29 billion, driven primarily by positive contributions from
volume growth. The BLUE brand continued to gain market share in
measured channels in the first nine months of the year. Segment
operating profit increased 22 percent to $312 million, primarily
driven by higher volume and benefits from HMM cost savings,
partially offset by input cost inflation, higher media investment,
and unfavorable net price realization and mix.
Convenience Stores & Foodservice
Segment
Third-quarter net sales for the Convenience Stores &
Foodservice segment declined 10 percent to $417 million, reflecting
reduced away-from-home food demand related to the pandemic. Lower
consumer traffic and other virus-related restrictions negatively
impacted the segment’s key away-from-home channels including
restaurants, schools, and lodging. Segment operating profit of $64
million was down 31 percent, driven by lower net sales and fixed
cost deleverage in the supply chain.
Through nine months, Convenience Stores & Foodservice net
sales decreased 12 percent to $1.25 billion. Strong operator
partnerships and innovation led to year-to-date market share gains
in measured channels. Segment operating profit of $212 million was
down 29 percent, driven by lower net sales and fixed cost
deleverage in the supply chain.
Europe & Australia Segment
Third-quarter net sales for the Europe & Australia segment
increased 15 percent to $484 million, primarily driven by 9 points
of favorable foreign currency exchange and positive net price
realization and mix. Organic net sales increased 7 percent, led by
growth for Old El Paso Mexican food and Häagen-Dazs ice cream.
Segment operating profit of $29 million was up 33 percent as
reported and up 24 percent in constant currency, primarily driven
by favorable net price realization and mix, higher pound volume,
and lower SG&A expenses, partially offset by higher input
costs.
Through nine months, Europe & Australia net sales increased
10 percent to $1.44 billion, including 6 points of favorable
foreign currency exchange. Organic net sales increased 5 percent.
The segment held or grew year-to-date market share in France, the
U.K., and Australia, its three largest markets. Segment operating
profit of $118 million was up 46 percent as reported and up 40
percent in constant currency, primarily driven by higher net sales,
including favorable net price realization and mix, partially offset
by higher input costs.
Asia & Latin America
Segment
Third-quarter net sales for the Asia & Latin America segment
increased 12 percent to $456 million, driven by volume growth and
favorable net price realization and mix, partially offset by 3
points of unfavorable foreign currency exchange. Organic net sales
increased 14 percent. Elevated at-home food demand stemming from
the pandemic resulted in strong net sales growth for Yoki meals and
snacks and Kitano seasonings in Brazil and Betty Crocker dessert
mixes in the Middle East. Häagen-Dazs ice cream net sales in Asia
were up double-digits, reflecting the comparison against
pandemic-driven shops closures in the prior-year period. Segment
operating profit of $12 million was up 48 percent as reported and
up 18 percent in constant currency, driven by higher net sales,
partially offset by higher input costs.
Through nine months, Asia & Latin America net sales
increased 8 percent to $1.27 billion, driven by higher volume and
favorable net price realization and mix, partially offset by 6
points of unfavorable foreign currency exchange. Organic net sales
increased 13 percent. Segment operating profit of $62 million was
up 47 percent as reported and up 24 percent in constant currency,
driven by higher net sales and favorable foreign currency exchange,
partially offset by higher input costs and higher SG&A
expenses.
Joint Venture Summary
Third-quarter net sales for Cereal Partners Worldwide (CPW)
increased 5 percent in constant currency, and constant-currency net
sales for Häagen-Dazs Japan (HDJ) were up 1 percent. Combined
after-tax earnings from joint ventures increased 9 percent to $12
million, primarily driven by higher net sales at CPW. Through nine
months, after-tax earnings from joint ventures increased 56 percent
to $90 million, primarily driven by higher net sales at CPW and
HDJ.
Other Income Statement
Items
Unallocated corporate items totaled $24 million net income in
the third quarter of fiscal 2021, compared to $92 million net
expense a year ago. Excluding mark-to-market valuation effects and
other items affecting comparability, unallocated corporate items
totaled $98 million net expense this year compared to $73 million
net expense last year.
Restructuring, impairment, and other exit costs totaled $11
million in the third quarter compared to $6 million a year ago. An
additional $1 million of restructuring and project-related charges
was recorded in cost of sales this year compared to $7 million a
year ago (please see Note 2 below for more information on these
charges).
Net interest expense totaled $106 million in the third quarter
compared to $110 million a year ago, primarily driven by lower
rates, partially offset by a $4 million charge related to a debt
exchange executed in the quarter. The effective tax rate in the
quarter was 21.5 percent compared to 20.7 percent last year (please
see Note 6 below for more information on our effective tax rate).
The adjusted effective tax rate was 21.6 percent compared to 21.0
percent a year ago.
Cash Flow
Generation and Cash Returns
Cash provided by operating activities increased 2 percent to
$2.21 billion through nine months of fiscal 2021, primarily driven
by higher net earnings, partially offset by changes in inventory.
Capital investments totaled $346 million compared to $269 million a
year ago. Dividends paid totaled $932 million in the first nine
months of the year and average diluted shares outstanding increased
1 percent to 620 million.
Outlook
General Mills expects that the COVID-19 pandemic will drive
continued elevated consumer demand for food at home, relative to
pre-pandemic levels, through the remainder of fiscal 2021. The
company expects full-year organic net sales to increase
approximately 3.5 percent, reflecting strong year-to-date growth,
partially offset by a difficult comparison in the fourth quarter
reflecting the initial pandemic-driven surge in at-home food demand
as well as the extra month of results in the Pet segment. On the
bottom line, better-than-expected first-half adjusted operating
profit margin results are now expected to be offset by higher input
cost inflation and higher logistics costs in the second half. As a
result, full-year fiscal 2021 adjusted operating profit margin is
expected to be approximately in line with fiscal 2020 levels,
consistent with the guidance the company outlined at the beginning
of the year.
General Mills will issue pre-recorded management remarks today,
March 24, 2021, at approximately 6:30 a.m. Central time (7:30 a.m.
Eastern time) and will hold a live, webcasted question and answer
session beginning at 8:00 a.m. Central time (9:00 a.m. Eastern
time). The pre-recorded remarks and the webcast will be made
available at www.generalmills.com/investors.
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. Harmening, 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: the impact of the COVID-19 pandemic on our
business, suppliers, consumers, customers, and employees;
disruptions or inefficiencies in the supply chain, including any
impact of the COVID-19 pandemic; 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 tax legislation, 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;
effectiveness of restructuring and cost saving 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. 28,
Feb. 23,
Feb. 28,
Feb. 23,
2021
2020
% Change
2021
2020
% Change
Net sales
$
4,520.0
$
4,180.3
8
%
$
13,603.4
$
12,603.6
8
%
Cost of sales
2,966.1
2,777.1
7
%
8,738.0
8,241.8
6
%
Selling, general, and administrative
expenses
716.3
746.6
(4
)%
2,256.6
2,224.5
1
%
Restructuring, impairment, and other
exit costs
11.0
5.8
90
%
11.9
12.9
(8
)%
Operating profit
826.6
650.8
27
%
2,596.9
2,124.4
22
%
Benefit plan non-service income
(33.4
)
(30.3
)
10
%
(99.6
)
(90.7
)
10
%
Interest, net
106.0
109.8
(3
)%
317.7
347.9
(9
)%
Earnings before income taxes and
after-tax
earnings from joint ventures
754.0
571.3
32
%
2,378.8
1,867.2
27
%
Income taxes
162.0
118.2
37
%
522.2
340.9
53
%
After-tax earnings from joint ventures
11.8
10.8
9
%
89.5
57.5
56
%
Net earnings, including earnings
attributable to
redeemable and noncontrolling
interests
603.8
463.9
30
%
1,946.1
1,583.8
23
%
Net earnings attributable to redeemable
and
noncontrolling interests
8.1
9.8
(17
)%
23.1
28.3
(18
)%
Net earnings attributable to General
Mills
$
595.7
$
454.1
31
%
$
1,923.0
$
1,555.5
24
%
Earnings per share – basic
$
0.97
$
0.75
29
%
$
3.13
$
2.56
22
%
Earnings per share – diluted
$
0.96
$
0.74
30
%
$
3.10
$
2.54
22
%
Quarter Ended
Nine-Month Period
Ended
Feb. 28,
Feb. 23,
Basis Pt
Feb. 28,
Feb. 23,
Basis Pt
Comparisons as a % of net sales:
2021
2020
Change
2021
2020
Change
Gross margin
34.4
%
33.6
%
80
35.8
%
34.6
%
120
Selling, general, and administrative
expenses
15.8
%
17.9
%
(210
)
16.6
%
17.6
%
(100
)
Operating profit
18.3
%
15.6
%
270
19.1
%
16.9
%
220
Net earnings attributable to General
Mills
13.2
%
10.9
%
230
14.1
%
12.3
%
180
Quarter Ended
Nine-Month Period
Ended
Comparisons as a % of net sales
excluding
Feb. 28,
Feb. 23,
Basis Pt
Feb. 28,
Feb. 23,
Basis Pt
certain items affecting comparability
(a):
2021
2020
Change
2021
2020
Change
Adjusted gross margin
33.0
%
33.9
%
(90
)
34.9
%
34.8
%
10
Adjusted operating profit
15.8
%
16.1
%
(30
)
17.7
%
17.2
%
50
Adjusted net earnings attributable to
General Mills
11.2
%
11.4
%
(20
)
13.1
%
12.2
%
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. 28, 2021
Feb. 23, 2020
% Change
Feb. 28, 2021
Feb. 23, 2020
% Change
Net sales:
North America Retail
$
2,726.8
$
2,501.9
9
%
$
8,355.3
$
7,554.1
11
%
Europe & Australia
484.2
421.9
15
%
1,442.6
1,308.9
10
%
Pet
436.3
383.5
14
%
1,288.0
1,140.0
13
%
Asia & Latin America
455.6
408.2
12
%
1,268.3
1,177.3
8
%
Convenience Stores & Foodservice
417.1
464.8
(10
)%
1,249.2
1,423.3
(12
)%
Total
$
4,520.0
$
4,180.3
8
%
$
13,603.4
$
12,603.6
8
%
Operating profit:
North America Retail
$
605.7
$
532.0
14
%
$
2,002.8
$
1,734.4
15
%
Europe & Australia
29.4
22.1
33
%
118.3
81.1
46
%
Pet
102.3
94.0
9
%
311.9
255.7
22
%
Asia & Latin America
12.0
8.1
48
%
62.5
42.6
47
%
Convenience Stores & Foodservice
63.7
92.1
(31
)%
211.6
298.4
(29
)%
Total segment operating profit
$
813.1
$
748.3
9
%
2,707.1
$
2,412.2
12
%
Unallocated corporate items
(24.5
)
91.7
NM
98.3
274.9
(64
)%
Restructuring, impairment, and other exit
costs
11.0
5.8
90
%
11.9
12.9
(8
)%
Operating profit
$
826.6
$
650.8
27
%
$
2,596.9
$
2,124.4
22
%
Quarter Ended
Nine-Month Period
Ended
Feb. 28, 2021
Feb. 23, 2020
Basis Pt Change
Feb. 28, 2021
Feb. 23, 2020
Basis Pt Change
Segment operating profit as a
% of net sales:
North America Retail
22.2
%
21.3
%
90
24.0
%
23.0
%
100
Europe & Australia
6.1
%
5.2
%
90
8.2
%
6.2
%
200
Pet
23.4
%
24.5
%
(110
)
24.2
%
22.4
%
180
Asia & Latin America
2.6
%
2.0
%
60
4.9
%
3.6
%
130
Convenience Stores & Foodservice
15.3
%
19.8
%
(450
)
16.9
%
21.0
%
(410
)
Total segment operating profit
18.0
%
17.9
%
10
19.9
%
19.1
%
80
See accompanying notes to consolidated
financial statements.
Consolidated Balance
Sheets
GENERAL MILLS, INC. AND
SUBSIDIARIES
(In Millions, Except Par
Value)
Feb. 28, 2021
Feb. 23, 2020
May 31, 2020
(Unaudited)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
2,754.2
$
606.9
$
1,677.8
Receivables
1,776.2
1,731.1
1,615.1
Inventories
1,758.8
1,542.1
1,426.3
Prepaid expenses and other current
assets
323.2
428.4
402.1
Total current assets
6,612.4
4,308.5
5,121.3
Land, buildings, and equipment
3,505.5
3,535.0
3,580.6
Goodwill
14,034.6
13,950.8
13,923.2
Other intangible assets
7,148.3
7,108.4
7,095.8
Other assets
1,348.0
1,346.0
1,085.8
Total assets
$
32,648.8
$
30,248.7
$
30,806.7
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,391.6
$
2,931.5
$
3,247.7
Current portion of long-term debt
3,899.8
863.7
2,331.5
Notes payable
184.6
1,174.6
279.0
Other current liabilities
2,113.7
1,726.8
1,633.3
Total current liabilities
9,589.7
6,696.6
7,491.5
Long-term debt
9,766.6
11,589.6
10,929.0
Deferred income taxes
2,006.2
2,027.2
1,947.1
Other liabilities
1,502.4
1,536.6
1,545.0
Total liabilities
22,864.9
21,850.0
21,912.6
Redeemable interest
596.0
538.6
544.6
Stockholders' equity:
Common stock, 754.6 shares issued, $0.10
par value
75.5
75.5
75.5
Additional paid-in capital
1,353.8
1,334.9
1,348.6
Retained earnings
16,655.0
15,360.0
15,982.1
Common stock in treasury, at cost, shares
of 142.8, 148.8 and 144.8
(6,351.3
)
(6,610.8
)
(6,433.3
)
Accumulated other comprehensive loss
(2,842.7
)
(2,584.5
)
(2,914.4
)
Total stockholders' equity
8,890.3
7,575.1
8,058.5
Noncontrolling interests
297.6
285.0
291.0
Total equity
9,187.9
7,860.1
8,349.5
Total liabilities and equity
$
32,648.8
$
30,248.7
$
30,806.7
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. 28, 2021
Feb. 23, 2020
Cash Flows - Operating Activities
Net earnings, including earnings
attributable to redeemable and noncontrolling interests
$
1,946.1
$
1,583.8
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
454.5
456.4
After-tax earnings from joint ventures
(89.5
)
(57.5
)
Distributions of earnings from joint
ventures
41.9
37.7
Stock-based compensation
69.5
66.0
Deferred income taxes
110.9
1.7
Pension and other postretirement benefit
plan contributions
(25.7
)
(21.7
)
Pension and other postretirement benefit
plan costs
(25.5
)
(23.2
)
Restructuring, impairment, and other exit
costs
5.7
20.6
Changes in current assets and
liabilities
(145.4
)
91.3
Other, net
(134.6
)
4.7
Net cash provided by operating
activities
2,207.9
2,159.8
Cash Flows - Investing Activities
Purchases of land, buildings, and
equipment
(346.4
)
(269.4
)
Investments in affiliates, net
18.1
(40.9
)
Proceeds from disposal of land, buildings,
and equipment
1.8
0.9
Other, net
(5.5
)
4.8
Net cash used by investing activities
(332.0
)
(304.6
)
Cash Flows - Financing Activities
Change in notes payable
(96.9
)
(282.9
)
Issuance of long-term debt
1,576.5
867.8
Payment of long-term debt
(1,159.0
)
(1,396.5
)
Debt exchange participation incentive cash
payment
(201.4
)
-
Proceeds from common stock issued on
exercised options
39.4
109.4
Purchases of common stock for treasury
(0.6
)
(2.8
)
Dividends paid
(932.4
)
(895.4
)
Distributions to noncontrolling and
redeemable interest holders
(47.9
)
(70.4
)
Other, net
(30.4
)
(20.6
)
Net cash used by financing activities
(852.7
)
(1,691.4
)
Effect of exchange rate changes on cash
and cash equivalents
53.2
(6.9
)
Increase in cash and cash equivalents
1,076.4
156.9
Cash and cash equivalents - beginning of
year
1,677.8
450.0
Cash and cash equivalents - end of
period
$
2,754.2
$
606.9
Cash Flow from changes in current assets
and liabilities:
Receivables
$
(119.2
)
$
(60.3
)
Inventories
(302.2
)
2.5
Prepaid expenses and other current
assets
58.8
54.8
Accounts payable
154.7
119.9
Other current liabilities
62.5
(25.6
)
Changes in current assets and
liabilities
$
(145.4
)
$
91.3
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 first quarter of fiscal
2021, we adopted new accounting requirements related to the
measurement of credit losses on financial instruments, including
trade receivables. The new standard and subsequent amendments
replace the incurred loss impairment model with a forward-looking
expected credit loss model, which will generally result in earlier
recognition of credit losses. Our allowance for doubtful accounts
represents our estimate of expected credit losses related to our
trade receivables. We pool our trade receivables based on similar
risk characteristics, such as geographic location, business
channel, and other account data. To estimate our allowance for
doubtful accounts, we leverage information on historical losses,
asset-specific risk characteristics, current conditions, and
reasonable and supportable forecasts of future conditions. Account
balances are written off against the allowance when we deem the
amount is uncollectible. We adopted the requirements of the new
standard and subsequent amendments using the modified retrospective
transition approach, and recorded a decrease to retained earnings
of $6 million after-tax.
(2)
Restructuring and impairment
charges and project-related costs are recorded in our Consolidated
Statements of Earnings as follows:
Quarter Ended
Nine-Month Period
Ended
In Millions
Feb. 28, 2021
Feb. 23, 2020
Feb. 28, 2021
Feb. 23, 2020
Restructuring, impairment, and other exit costs
$
11.0
$
5.8
$
11.9
$
12.9
Cost of sales
0.7
6.6
1.7
24.3
Total restructuring charges
$
11.7
$
12.4
$
13.6
$
37.2
Project-related costs classified in cost of sales
$
-
$
0.4
$
-
$
1.1
In the third quarter of fiscal 2021, we
approved restructuring actions to leverage more efficient and
effective route-to-market models and to optimize our supply chain
in our Asia & Latin America segment. We expect to incur
approximately $21 million of restructuring charges related to these
actions, of which approximately $15 million will be cash. These
charges are expected to consist of approximately $10 million of
severance and $11 million of other costs, primarily asset
write-offs. We recognized $9 million of severance and $3 million of
other costs in the third quarter of fiscal 2021 related to these
actions. We expect these actions to be completed by the end of the
first quarter of fiscal 2022.
(3)
Unallocated corporate items totaled $24
million of income in the third quarter of fiscal 2021 compared to
expense of $92 million in the same period in fiscal 2020. We
recorded a $56 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 2021 compared to a $9
million net increase in expense in the same period last year. We
recorded $59 million of net gains related to valuation adjustments
and the gain on sale of certain corporate investments in the third
quarter of fiscal 2021 compared to $3 million of losses related to
valuation adjustments in the third quarter of fiscal 2020. We
recorded $1 million of restructuring charges in cost of sales in
the third quarter of fiscal 2021 compared to $7 million in the same
period last year. We also recorded an $8 million favorable
adjustment related to a product recall in our international Green
Giant business in the third quarter of fiscal 2021.
Unallocated corporate expense totaled $98
million in the nine-month period ended February 28, 2021, compared
to $275 million in the same period last year. We recorded a $118
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 28, 2021, compared to a $1
million net increase in expense in the same period last year. We
recorded $78 million of net gains related to valuation adjustments
and the gain on sale of certain corporate investments in the
nine-month period ended February 28, 2021, compared to $7 million
of net losses and the loss on sale of certain corporate investments
in the same period last year. In the nine-month period ended
February 28, 2021, we recorded $2 million of restructuring charges
in cost of sales, compared to $24 million of restructuring charges
and $1 million of restructuring initiative project-related costs in
cost of sales in the same period last year.
(4)
In the third quarter of fiscal 2021, we
completed an offer to exchange certain series of outstanding notes
for a combination of newly issued notes and cash. Holders exchanged
$604 million of notes previously issued with rates between 4.15
percent and 5.4 percent for $605 million of newly issued 3.0
percent fixed-rate notes due February 1, 2051 and $201 million of
cash, representing a participation incentive.
(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. 28, 2021
Feb. 23, 2020
Feb. 28, 2021
Feb. 23, 2020
Net earnings attributable to General
Mills
$
595.7
$
454.1
$
1,923.0
$
1,555.5
Average number of common shares - basic
EPS
615.0
607.9
614.6
607.1
Incremental share effect from: (a)
Stock options
2.0
2.6
2.6
2.8
Restricted stock units and performance
share units
2.4
2.3
2.4
2.2
Average number of common shares - diluted
EPS
619.4
612.8
619.6
612.1
Earnings per share – basic
$
0.97
$
0.75
$
3.13
$
2.56
Earnings per share – diluted
$
0.96
$
0.74
$
3.10
$
2.54
(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 2021 was 21.5 percent compared to 20.7 percent
for the third quarter of fiscal 2020. The 0.8 percentage point
increase was primarily due to certain nonrecurring discrete tax
benefits in the third quarter of fiscal 2020, partially offset by
favorable changes in earnings mix by jurisdiction in fiscal 2021.
Our adjusted effective tax rate was 21.6 percent in the third
quarter of fiscal 2021 compared to 21.0 percent in the same period
last year (see Note 7 below for a description of our use of
measures not defined by GAAP). The 0.6 percentage point increase
was primarily due to certain nonrecurring discrete tax benefits in
fiscal 2020, partially offset by favorable changes in earnings mix
by jurisdiction in fiscal 2021.
The effective tax rate for the nine-month
period ended February 28, 2021, was 22.0 percent compared to 18.3
percent for the same period last year. The 3.7 percentage point
increase was primarily due to a $53 million net benefit related to
the reorganization of certain wholly owned subsidiaries and certain
nonrecurring discrete tax benefits in fiscal 2020, partially offset
by favorable changes in earnings mix by jurisdiction in fiscal
2021. Our adjusted effective tax rate was 21.9 percent in the
nine-month period ended February 28, 2021, compared to 21.3 percent
in the same period of fiscal 2020 (see Note 7 below for a
description of our use of measures not defined by GAAP). The 0.6
percentage point increase was primarily due to certain nonrecurring
discrete tax benefits in fiscal 2020, partially offset by favorable
changes in earnings mix by jurisdiction in fiscal 2021.
(7)
We have included measures in this release
that are not defined by GAAP. For each of these non-GAAP financial
measures, we are providing below a reconciliation of the
differences between the non-GAAP measure and the most directly
comparable GAAP measure, an explanation of why we believe the
non-GAAP measure provides useful information to investors and any
additional material purposes for which our management or Board of
Directors uses the non-GAAP measure. These non-GAAP measures should
be viewed in addition to, and not in lieu of, the comparable GAAP
measure.
We provide organic net sales growth rates
for our consolidated net sales and segment net sales. This measure
is used in reporting to our Board of Directors and executive
management and as a component of the Board of Directors’
measurement of our performance for incentive compensation purposes.
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, 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.
Also, certain measures in this release are
presented on an adjusted basis. The adjustments are either items
resulting from infrequently occurring events or items that, in
management’s judgment, significantly affect the year-to-year
assessment of operating results.
Our outlook for organic net sales growth
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, acquisitions, divestitures, and a 53rd
week, when applicable. 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 or the timing of acquisitions and
divestitures throughout fiscal 2021. The unavailable information
could have a significant impact on our fiscal 2021 GAAP financial
results.
For fiscal 2021, we currently expect:
foreign currency exchange rates (based on a blend of forward and
forecasted rates and hedge positions), acquisitions, divestitures,
and a 53rd week to reduce net sales growth by approximately 1
percentage point. Restructuring charges and project-related costs
related to actions previously announced to total approximately $24
million.
Adjusted Operating Profit Growth on a
Constant-currency Basis
This measure is used in reporting to our Board of Directors and
executive management and as a component of the measurement of our
performance for incentive compensation purposes. We believe that
this measure provides useful information to investors because it is
the operating profit measure we use to evaluate operating profit
performance on a comparable year-to-year basis. The measure is
evaluated on a constant-currency basis by excluding the effect that
foreign currency exchange rate fluctuations have on year-to-year
comparability given the volatility in foreign currency exchange
rates.
Our adjusted operating profit growth on a constant-currency
basis is calculated as follows:
Quarter Ended
Nine-Month Period
Ended
Feb. 28, 2021
Feb. 23, 2020
Change
Feb. 28, 2021
Feb. 23, 2020
Change
Operating profit as reported
$
826.6
$
650.8
27
%
$
2,596.9
$
2,124.4
22
%
Mark-to-market effects (a)
(55.7)
8.6
(118.0)
1.0
Investment activity, net (b)
(59.3)
3.0
(78.3)
6.7
Restructuring charges (c)
11.7
12.4
13.6
37.2
Project-related costs (c)
-
0.4
-
1.1
Product recall adjustment, net (d)
(7.8)
-
(0.7)
-
Adjusted operating profit
$
715.6
$
675.1
6
%
$
2,413.6
$
2,170.3
11
%
Foreign currency exchange impact
1
pt
1
pt
Adjusted operating profit growth, on a constant-currency basis
5
%
11
%
Note: Table may not foot due to
rounding.
(a) Net mark-to-market valuation of certain commodity positions
recognized in unallocated corporate items. See Note 3. (b)
Valuation adjustments and the gain on sale of certain corporate
investments in fiscal 2021. Valuation adjustments and the loss on
sale of certain corporate investments in fiscal 2020. See Note 3.
(c) Restructuring charges for Asia & Latin America
route-to-market and supply chain optimization actions and
previously announced restructuring actions in fiscal 2021.
Restructuring and project-related charges for previously announced
restructuring actions in fiscal 2020. See Note 2. (d) Net product
recall adjustment related to our international Green Giant
business. See Note 3.
Adjusted Diluted EPS and Related
Constant-currency Growth Rate
This measure is used in reporting to our Board of Directors and
executive management. We believe that this measure provides useful
information to investors because it is the profitability measure we
use to evaluate earnings performance on a comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted
diluted EPS and the related constant-currency growth rate
follows:
Quarter Ended
Nine-Month Period
Ended
Per Share Data
Feb. 28, 2021
Feb. 23, 2020
Change
Feb. 28, 2021
Feb. 23, 2020
Change
Diluted earnings per share, as reported
$
0.96
$
0.74
30
%
$
3.10
$
2.54
22
%
Mark-to-market effects (a)
(0.07)
0.01
(0.15)
-
Investment activity, net (b)
(0.08)
-
(0.10)
-
Restructuring charges (c)
0.02
0.02
0.02
0.05
Product recall adjustment, net (d)
(0.01)
-
-
-
Tax item (e)
-
-
-
(0.09)
CPW restructuring charges (f)
-
0.01
-
0.01
Adjusted diluted earnings per share
$
0.82
$
0.77
6
%
$
2.88
$
2.51
15
%
Foreign currency exchange impact
Flat
1
pt
Adjusted diluted earnings per share growth, on a constant-currency
basis
6
%
14
%
Note: Table may not foot due to
rounding.
(a) Net mark-to-market valuation
of certain commodity positions recognized in unallocated corporate
items. See Note 3.
(b) Valuation adjustments and the
gain on sale of certain corporate investments in fiscal 2021.
Valuation adjustments and the loss on sale of certain corporate
investments in fiscal 2020. See Note 3.
(c) Restructuring charges for
Asia & Latin America route-to-market and supply chain
optimization actions and previously announced restructuring actions
in fiscal 2021. Restructuring charges for previously announced
restructuring actions in fiscal 2020. See Note 2.
(d) Net product recall adjustment
related to our international Green Giant business. See Note 3.
(e) Discrete tax benefit related
to the reorganization of certain wholly owned subsidiaries. See
Note 6.
(f) CPW restructuring charges
related to previously announced restructuring actions.
See our reconciliation below of
the effective income tax rate as reported to the adjusted effective
income tax rate for the tax impact of each item affecting
comparability.
Adjusted Earnings Comparisons as a Percent
of Net Sales
We believe that these measures provide useful information to
investors because they are important for assessing our adjusted
earnings comparisons as a percent of net sales on a comparable
year-to-year basis.
Our adjusted earnings comparisons as a percent of net sales are
calculated as follows:
Quarter Ended
In Millions
Feb. 28, 2021
Feb. 23, 2020
Comparisons as a % of Net Sales
Value
Percent of Net Sales
Value
Percent of Net Sales
Gross margin as reported (a)
$
1,553.9
34.4
%
$
1,403.2
33.6
%
Mark-to-market effects (b)
(55.7
)
(1.2
)%
8.6
0.2
%
Restructuring charges (c)
0.7
-
%
6.6
0.2
%
Project-related costs (c)
-
-
%
0.4
-
%
Product recall adjustment (d)
(7.8
)
(0.2
)%
-
-
%
Adjusted gross margin
$
1,491.2
33.0
%
$
1,418.9
33.9
%
Operating profit as reported
$
826.6
18.3
%
$
650.8
15.6
%
Mark-to-market effects (b)
(55.7
)
(1.2
)%
8.6
0.2
%
Restructuring charges (c)
11.7
0.3
%
12.4
0.3
%
Project-related costs (c)
-
-
%
0.4
-
%
Product recall adjustment (d)
(7.8
)
(0.2
)%
-
-
%
Investment activity, net (e)
(59.3
)
(1.3
)%
3.0
0.1
%
Adjusted operating profit
$
715.6
15.8
%
$
675.1
16.1
%
Net earnings attributable to General Mills as reported
$
595.7
13.2
%
$
454.1
10.9
%
Mark-to-market effects, net of tax (b)(g)
(42.9
)
(0.9
)%
6.6
0.2
%
Restructuring charges, net of tax (c)(g)
9.7
0.2
%
8.7
0.2
%
Project-related costs, net of tax (c)(g)
-
-
%
0.3
-
%
Product recall adjustment, net of tax (d)(g)
(6.9
)
(0.2
)%
-
-
%
Investment activity, net, net of tax (e)(g)
(47.6
)
(1.1
)%
2.3
0.1
%
CPW restructuring charges, net of tax (f)
0.3
-
%
2.9
0.1
%
Adjusted net earnings attributable to General Mills
$
508.4
11.2
%
$
474.8
11.4
%
Note: Table may not foot due to
rounding.
(a) Net sales less cost of sales.
(b) Net mark-to-market valuation
of certain commodity positions recognized in unallocated corporate
items. See Note 3.
(c) Restructuring charges for
Asia & Latin America route-to-market and supply chain
optimization actions and previously announced restructuring actions
in fiscal 2021. Restructuring and project-related charges for
previously announced restructuring actions in fiscal 2020. See Note
2.
(d) Product recall adjustment
related to our international Green Giant business.
(e) Valuation adjustments and the
gain on sale of certain corporate investments in fiscal 2021.
Valuation adjustments of certain corporate investments in fiscal
2020. See Note 3.
(f) CPW restructuring charges
related to previously announced restructuring actions.
(g) See reconciliation of
adjusted effective income tax rate below for tax impact of each
adjustment.
Nine-Month Period
Ended
In Millions
Feb. 28, 2021
Feb. 23, 2020
Comparisons as a % of Net Sales
Value
Percent of Net Sales
Value
Percent of Net Sales
Gross margin as reported (a)
$
4,865.4
35.8
%
$
4,361.8
34.6
%
Mark-to-market effects (b)
(118.0
)
(0.9
)%
1.0
-
%
Restructuring charges (c)
1.7
-
%
24.3
0.2
%
Project-related costs (c)
-
-
%
1.1
-
%
Product recall adjustment, net (d)
(0.7
)
-
%
-
-
%
Adjusted gross margin
$
4,748.5
34.9
%
$
4,388.2
34.8
%
Operating profit as reported
$
2,596.9
19.1
%
$
2,124.4
16.9
%
Mark-to-market effects (b)
(118.0
)
(0.9
)%
1.0
-
%
Restructuring charges (c)
13.6
0.1
%
37.2
0.3
%
Project-related costs (c)
-
-
%
1.1
-
%
Product recall adjustment, net (d)
(0.7
)
-
%
-
-
%
Investment activity, net (e)
(78.3
)
(0.6
)%
6.7
0.1
%
Adjusted operating profit
$
2,413.6
17.7
%
$
2,170.3
17.2
%
Net earnings attributable to General Mills as reported
$
1,923.0
14.1
%
$
1,555.5
12.3
%
Mark-to-market effects, net of tax (b)(h)
(90.9
)
(0.7
)%
0.7
-
%
Restructuring charges, net of tax (c)(h)
11.1
0.1
%
29.2
0.2
%
Project-related costs, net of tax (c)(h)
-
-
%
0.9
-
%
Product recall adjustment, net, net of tax (d)(h)
(0.6
)
-
%
-
-
%
Investment activity, net, net of tax (e)(h)
(62.2
)
(0.5
)%
1.6
-
%
CPW restructuring charges, net of tax (f)
2.0
-
%
4.5
-
%
Tax item (g)
-
-
%
(53.1
)
(0.4
)%
Adjusted net earnings attributable to General Mills
$
1,782.5
13.1
%
$
1,539.2
12.2
%
Note: Table may not foot due to
rounding.
(a) Net sales less cost of sales.
(b) Net mark-to-market valuation
of certain commodity positions recognized in unallocated corporate
items. See Note 3.
(c) Restructuring charges for
Asia & Latin America route-to-market and supply chain
optimization actions and previously announced restructuring actions
in fiscal 2021. Restructuring and project-related charges for
previously announced restructuring actions in fiscal 2020. See Note
2.
(d) Net product recall adjustment
related to our international Green Giant business.
(e) Valuation adjustments and the
gain on sale of certain corporate investments in fiscal 2021.
Valuation adjustments and the loss on sale of certain corporate
investments. See Note 3.
(f) CPW restructuring charges
related to previously announced restructuring actions.
(g) Discrete tax benefit related
to the reorganization of certain wholly owned subsidiaries. See
Note 6.
(h) See reconciliation of
adjusted effective income tax rate below for tax impact of each
adjustment.
Constant-currency Segment Operating Profit
Growth Rates
We believe that this measure provides useful information to
investors because it provides transparency to underlying
performance of our segments by excluding the effect that foreign
currency exchange rate fluctuations have on year-to-year
comparability given volatility in foreign currency exchange
markets.
Our segments’ operating profit growth rates on a
constant-currency basis are calculated as follows:
Quarter Ended Feb. 28,
2021
Percentage Change in Operating
Profit as Reported
Impact of Foreign Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency Basis
North America Retail
14
%
Flat
14
%
Europe & Australia
33
%
9
pts
24
%
Pet
9
%
Flat
9
%
Asia & Latin America
48
%
31
pts
18
%
Total segment operating profit
9
%
1
pt
8
%
Nine-Month Period Ended Feb.
28, 2021
Percentage Change in Operating
Profit as Reported
Impact of Foreign Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency Basis
North America Retail
15
%
Flat
15
%
Europe & Australia
46
%
6
pts
40
%
Pet
22
%
Flat
22
%
Asia & Latin America
47
%
23
pts
24
%
Total segment operating profit
12
%
1
pt
12
%
Note: Tables may not foot due to
rounding.
Adjusted Effective Income Tax
Rate
We believe this measure provides useful information to investors
because it presents the adjusted effective income tax rate on a
comparable year-to-year basis.
Adjusted effective income tax rates are calculated as
follows:
Quarter Ended
Nine-Month Period
Ended
Feb. 28, 2021
Feb. 23, 2020
Feb. 28, 2021
Feb. 23, 2020
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
$
754.0
$
162.0
$
571.3
$
118.2
$
2,378.8
$
522.2
$
1,867.2
$
340.9
Mark-to-market effects (b)
(55.7
)
(12.8
)
8.6
1.9
(118.0
)
(27.1
)
1.0
0.2
Investment activity, net (c)
(59.3
)
(11.7
)
3.0
0.7
(78.3
)
(16.1
)
6.7
5.1
Restructuring charges (d)
11.7
2.0
12.4
3.7
13.6
2.5
37.2
8.0
Project-related costs (d)
-
-
0.4
0.1
-
-
1.1
0.2
Product recall adjustment, net (e)
(7.8
)
(0.9
)
-
-
(0.7
)
(0.1
)
-
-
Tax item (f)
-
-
-
-
-
-
-
53.1
As adjusted
$
643.1
$
138.6
$
595.6
$
124.8
$
2,195.5
$
481.4
$
1,913.1
$
407.6
Effective tax rate:
As reported
21.5
%
20.7
%
22.0
%
18.3
%
As adjusted
21.6
%
21.0
%
21.9
%
21.3
%
Sum of adjustment to income taxes
$
(23.4
)
$
6.4
$
(40.8
)
$
66.6
Average number of common
shares - diluted EPS
619.4
612.8
619.6
612.1
Impact of income tax adjustments
on adjusted diluted EPS
$
(0.03
)
$
0.01
$
(0.06
)
$
0.11
Note: Table may not foot due to
rounding.
(a) Earnings before income taxes
and after-tax earnings from joint ventures.
(b) Net mark-to-market valuation
of certain commodity positions recognized in unallocated corporate
items. See Note 3.
(c) Valuation adjustments and the
gain on sale of certain corporate investments in fiscal 2021.
Valuation adjustments and the loss on sale of certain corporate
investments in fiscal 2020. See Note 3.
(d) Restructuring charges for
Asia & Latin America route-to-market and supply chain
optimization actions and previously announced restructuring actions
in fiscal 2021. Restructuring and project-related charges for
previously announced restructuring actions in fiscal 2020. See Note
2.
(e) Net product recall adjustment
related to our international Green Giant business. See Note 3.
(f) Discrete tax benefit related
to the reorganization of certain wholly owned subsidiaries. See
Note 6.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210324005425/en/
(analysts) Jeff Siemon: 763-764-2301
(media) Mollie Wulff: 763-764-6364
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