SEC Info - General Mills Inc. - ‘10-Q’ for 8/28/22

Net sales

$

i 4,717.6

$

i 4,539.9

Cost of sales

i 3,269.9

i 2,942.5

Selling, general, and administrative expenses

i 791.4

i 757.4

Divestitures gain, net

( i 430.9)

i -

Restructuring, impairment, and other exit costs (recoveries)

i 1.6

( i 4.3)

Operating profit

i 1,085.6

i 844.3

Benefit plan non-service income

( i 21.7)

( i 29.6)

Interest, net

i 87.7

i 95.9

Earnings before income taxes and after-tax earnings

from

joint ventures

i 1,019.6

i 778.0

Income taxes

i 216.1

i 168.9

After-tax earnings from joint ventures

i 19.8

i 29.1

Net earnings, including earnings attributable to redeemable

and noncontrolling interests

i 823.3

i 638.2

Net earnings attributable to redeemable and

noncontrolling interests

i 3.3

i 11.2

Net earnings attributable to General Mills

$

i 820.0

$

i 627.0

Earnings per share – basic

$

i 1.37

$

i 1.03

Earnings per share – diluted

$

i 1.35

$

i 1.02

See accompanying notes to consolidated financial statements.

5

Consolidated Statements of Comprehensive Income

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions)

Quarter Ended

Net earnings, including earnings attributable to

redeemable and noncontrolling interests

$

i 823.3

$

i 638.2

Other comprehensive income (loss), net of tax:

Foreign currency translation

i 3.8

( i 23.9)

Other fair value changes:

Hedge derivatives

( i 38.3)

i 1.7

Reclassification to earnings:

Foreign currency translation

( i 7.4)

i -

Hedge derivatives

( i 1.4)

i 10.6

Amortization of losses and prior service costs

i 14.1

i 8.4

Other comprehensive loss, net of tax

( i 29.2)

( i 3.2)

Total comprehensive

income

i 794.1

i 635.0

Comprehensive income (loss) attributable to

redeemable and noncontrolling interests

i 2.0

( i 23.5)

Comprehensive income attributable to General Mills

$

i 792.1

$

i 658.5

See accompanying notes to consolidated financial statements.

6

Consolidated Balance Sheets

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions, Except Par Value)

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

i 594.4

$

i 569.4

Receivables

i 1,730.4

i 1,692.1

Inventories

i 2,089.9

i 1,867.3

Prepaid expenses and other current assets

i 719.3

i 802.1

Assets held for sale

i -

i 158.9

Total current

assets

i 5,134.0

i 5,089.8

Land, buildings, and equipment

i 3,358.6

i 3,393.8

Goodwill

i 14,454.6

i 14,378.5

Other intangible assets

i 6,979.4

i 6,999.9

Other assets

i 1,180.6

i 1,228.1

Total assets

$

i 31,107.2

$

i 31,090.1

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

i 3,786.3

$

i 3,982.3

Current portion of long-term debt

i 2,095.4

i 1,674.2

Notes payable

i 991.9

i 811.4

Other current liabilities

i 1,721.9

i 1,552.0

Total current

liabilities

i 8,595.5

i 8,019.9

Long-term debt

i 8,474.6

i 9,134.8

Deferred income taxes

i 2,262.4

i 2,218.3

Other liabilities

i 949.1

i 929.1

Total liabilities

i 20,281.6

i 20,302.1

Stockholders' equity:

Common stock,

i 754.6

shares issued, $

i 0.10

par value

i 75.5

Additional paid-in capital

i 1,146.1

i 1,182.9

Retained earnings

i 19,027.6

i 18,532.6

Common stock in treasury,

at cost, shares of

i 160.3

and

i 155.7

( i 7,676.0)

( i 7,278.1)

Accumulated other comprehensive loss

( i 1,998.4)

( i 1,970.5)

Total stockholders' equity

i 10,574.8

i 10,542.4

Noncontrolling interests

i 250.8

i 245.6

Total equity

i 10,825.6

i 10,788.0

Total liabilities and equity

$

i 31,107.2

$

i 31,090.1

See accompanying notes to consolidated financial statements.

7

Consolidated Statements of Total

Equity and Redeemable Interest

GENERAL MILLS, INC. AND SUBSIDIARIES

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

Quarter Ended

Shares

Amount

Shares

Amount

Total equity,

beginning balance

$

i 10,788.0

$

i 9,773.2

Common stock,

i 1

billion shares authorized, $

i 0.10

par value

i 754.6

i 75.5

i 754.6

i 75.5

Additional paid-in capital:

Beginning balance

i 1,182.9

i 1,365.5

Stock compensation plans

i 9.3

i 9.1

Unearned compensation related to stock unit awards

( i 79.0)

( i 68.3)

Earned compensation

i 32.9

i 33.1

Decrease in redemption value of

redeemable interest

i -

i 5.6

Ending balance

i 1,146.1

i 1,345.0

Retained earnings:

Beginning balance

i 18,532.6

i 17,069.8

Net earnings attributable to General Mills

i 820.0

i 627.0

Cash dividends declared ($

i 0.54

and $

i 0.51

per share)

( i 325.0)

( i 312.3)

Ending balance

i 19,027.6

i 17,384.5

Common stock in treasury:

Beginning balance

( i 155.7)

( i 7,278.1)

( i 146.9)

( i 6,611.2)

Shares purchased

( i 6.9)

( i 500.8)

( i 2.5)

( i 150.1)

Stock compensation plans

i 2.3

i 102.9

i 1.1

i 46.3

Ending balance

( i 160.3)

( i 7,676.0)

( i 148.3)

( i 6,715.0)

Accumulated other comprehensive loss:

Beginning balance

( i 1,970.5)

( i 2,429.2)

Comprehensive (loss) income

( i 27.9)

i 31.5

Ending balance

( i 1,998.4)

( i 2,397.7)

Noncontrolling interests:

Beginning balance

i 245.6

i 302.8

Comprehensive income (loss)

i 2.0

( i 8.2)

Distributions to noncontrolling interest holders

( i 1.9)

( i 1.1)

Divestiture

i 5.1

i -

Ending balance

i 250.8

i 293.5

Total equity,

ending balance

$

i 10,825.6

$

i 9,985.8

Redeemable interest:

Beginning balance

$

i -

$

i 604.9

Comprehensive loss

i -

( i 15.3)

Decrease in redemption value of

redeemable interest

i -

( i 5.6)

Ending balance

$

i -

$

i 584.0

See accompanying notes to consolidated financial statements.

8

Consolidated Statements of Cash Flows

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions)

Quarter Ended

Cash Flows - Operating Activities

Net earnings, including earnings attributable to redeemable and noncontrolling

interests

$

i 823.3

$

i 638.2

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

Depreciation and amortization

i 134.3

i 145.8

After-tax earnings from joint ventures

( i 19.8)

( i 29.1)

Distributions of earnings from joint ventures

i 15.5

i 22.6

Stock-based compensation

i 33.5

i 26.8

Deferred income taxes

i 9.2

i 19.6

Pension and other postretirement benefit plan contributions

( i 5.3)

( i 5.4)

Pension and other postretirement benefit plan costs

( i 6.7)

( i 7.2)

Divestitures gain, net

( i 430.9)

i -

Restructuring, impairment, and other exit costs

( i 15.7)

( i 19.5)

Changes in current assets and liabilities, excluding the effects of

acquisitions and divestitures

( i 209.7)

( i 389.5)

Other, net

i 61.1

( i 32.5)

Net cash provided by operating activities

i 388.8

i 369.8

Cash Flows - Investing Activities

Purchases of land, buildings, and equipment

( i 90.9)

( i 104.0)

Acquisition, net of cash acquired

( i 252.1)

( i 1,198.6)

Proceeds from divestitures, net of cash divested

i 610.7

i -

Investments in affiliates, net

i -

i 5.7

Proceeds from disposal of land, buildings, and equipment

i -

i 0.3

Other, net

( i 1.9)

( i 1.3)

Net cash provided (used) by investing activities

i 265.8

( i 1,297.9)

Cash Flows - Financing Activities

Change in notes payable

i 188.0

i 698.7

Issuance of long-term debt

i -

i 582.2

Payment of long-term debt

i -

( i 612.1)

Proceeds from common stock issued on exercised options

i 65.5

i 7.9

Purchases of common stock for treasury

( i 500.8)

( i 150.1)

Dividends paid

( i 325.0)

( i 312.3)

Distributions to noncontrolling and redeemable interest holders

( i 1.9)

( i 1.1)

Other, net

( i 34.9)

( i 18.2)

Net cash (used) provided by financing activities

( i 609.1)

i 195.0

Effect of exchange rate changes on cash and cash equivalents

( i 20.5)

( i 18.1)

Increase (decrease) in cash and cash equivalents

i 25.0

( i 751.2)

Cash and cash equivalents - beginning of year

i 569.4

i 1,505.2

Cash and cash equivalents - end of period

$

i 594.4

$

i 754.0

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

of

acquisitions and divestitures:

Receivables

$

( i 91.1)

$

( i 145.3)

Inventories

( i 243.3)

( i 116.1)

Prepaid expenses and other current assets

i 79.5

i 39.0

Accounts payable

( i 130.4)

( i 214.9)

Other current liabilities

i 175.6

i 47.8

Changes in current assets and liabilities

$

( i 209.7)

$

( i 389.5)

See accompanying notes to consolidated financial statements.

9

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(Unaudited)

i

(1) Background

The accompanying

Consolidated Financial

Statements of

General Mills,

Inc. (we,

us, our,

General Mills,

or the Company)

have been

prepared in

accordance with

accounting principles

generally accepted

in the

United States

(GAAP) for

interim financial

information

and with

the rules

and regulations

for reporting

on Form

10-Q. Accordingly,

they do

not include

certain information

and disclosures

required

for

comprehensive

financial

statements.

In

the

opinion

of

management,

all

adjustments

considered

necessary

for

a

fair

presentation have

been included

and are

of a

normal recurring

nature, including

the elimination

of all

intercompany transactions

and

any

noncontrolling

and

redeemable

interests’

share

of

those

transactions.

Operating

results

for

the

fiscal

quarter

ended

2022,

are not necessarily indicative of the results that may be expected for the fiscal year

ending May 28, 2023.

These

statements

should

be

read

in

conjunction

with

the

Consolidated

Financial

Statements

and

footnotes

included

in

our

Annual

Report on Form

10-K for the fiscal

year ended May

29, 2022. The

accounting policies used

in preparing these

Consolidated Financial

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

Statements in that Form 10-K.

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

i

(2) Acquisition and Divestitures

During

the first

quarter

of fiscal

2023,

we

acquired

TNT Crust,

a

manufacturer

of high-quality

frozen pizza

crusts

for

regional

and

national pizza

chains, foodservice

distributors, and

retail outlets,

for a

purchase price

of $

i 253.0

million. We

financed the

transaction

with U.S. commercial paper.

We consolidated

the TNT Crust business into

our Consolidated Balance

Sheets and recorded goodwill

of

$

i 154.3

million. The

goodwill is

included in

the North

America Foodservice

segment and

is not

deductible for

tax purposes.

The pro

forma

effects

of

this

acquisition

were

not

material.

We

have

conducted

a

preliminary

assessment

of

the

fair

value

of

the

acquired

assets

and

liabilities

of

the

TNT

Crust

business

and

will

continue

to

review

these

items

during

the

measurement

period.

If

new

information is obtained

about facts and circumstances

that existed at the

acquisition date, the

acquisition accounting will

be revised to

reflect the resulting adjustments to

current estimates of these items.

The consolidated results of the

TNT Crust business are reported

in

our North America Foodservice segment on a one-month lag.

During the

first quarter

of fiscal

2023,

we completed

the sale

of our

Helper main

meals and

Suddenly

Salad side

dishes business

to

Eagle Family Foods Group for $

i 606.8

million and recorded a pre-tax gain of $

i 442.2

million.

During

the

first

quarter

of

fiscal

2022,

we

acquired

Tyson

Foods’

pet

treats

business

for

$

i 1.2

billion

in

cash.

We

financed

the

transaction

with

a

combination

of

cash

on

hand

and

short-term

debt.

We

consolidated

Tyson

Foods’

pet

treats

business

into

our

Consolidated Balance

Sheets and

recorded goodwill

of $

i 762.3

million, indefinite-lived

intangible assets

for the

Nudges

,

Top

Chews

,

and

True

Chews

brands

totaling

$

i 330.0

million

in

aggregate,

and

a

finite-lived

customer

relationship

asset

of

$

i 40.0

million.

The

goodwill is included in the Pet segment and is deductible for tax purposes. The

pro forma effects of this acquisition were not material.

/

i

(3) Restructuring, Impairment, and Other Exit Costs

During the

first quarter

of fiscal 2023,

we did not

undertake any

new restructuring

actions. We

recorded $

i 2.3

million of restructuring

charges in the

first quarter of fiscal

2023 and a

$

i 4.1

million net recovery

of restructuring charges

in the first quarter

of fiscal 2022 for

previously announced restructuring actions. We

expect these actions to be completed by the end of

fiscal 2024

.

We

paid net $

i 18.0

million of cash in

the first quarter of

fiscal 2023 related to

restructuring actions previously

announced. We

paid net

$

i 15.4

million of cash in the same period of fiscal 2022.

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

in other current liabilities, is as follows:

i

In Millions

Total

Reserve balance as of May 29, 2022

$

i 36.8

Fiscal 2023 charges, including foreign currency translation

( i 0.4)

Utilized in fiscal 2023

( i 17.1)

Reserve balance as of Aug. 28, 2022

$

i 19.3

/

The reserve balance primarily consists of expected severance payments

associated with restructuring actions.

10

The charges

recognized in

the roll forward

of our reserves

for restructuring

and other

exit costs do

not include

items charged

directly

to expense

(e.g., asset

impairment charges,

accelerated depreciation,

the gain

or loss

on the

sale of

restructured assets,

and the

write-

off

of

spare parts)

and other

periodic

exit costs

are

recognized

as incurred,

as those

items are

not reflected

in our

restructuring

and

other exit cost reserves on our Consolidated Balance Sheets.

i

(4) Goodwill and Other Intangible Assets

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

i

In Millions

Goodwill

$

i 14,454.6

$

i 14,378.5

Other intangible assets:

Intangible assets not subject to amortization:

Brands and other indefinite-lived intangibles

i 6,706.4

i 6,725.8

Intangible assets subject to amortization:

Customer relationships and other finite-lived intangibles

i 402.1

i 400.3

Less accumulated amortization

( i 129.1)

( i 126.2)

Intangible assets subject to amortization, net

i 273.0

i 274.1

Other intangible assets

i 6,979.4

i 6,999.9

Total

$

i 21,434.0

$

i 21,378.4

/

Based on

the carrying

value of

finite-lived intangible

assets as

of August

28, 2022,

annual amortization

expense for

each of

the next

five fiscal years is estimated to be approximately $

i i i i i 20 / / / /

million.

The changes in the carrying amount of goodwill during the first quarter of fiscal 2023

were as follows:

i

In Millions

North

America

Retail

Pet

North

America

Foodservice

International

Joint

Ventures

Total

Balance as of May 29, 2022

$

i 6,552.9

$

i 6,062.8

$

i 648.8

$

i 721.6

$

i 392.4

$

i 14,378.5

Acquisition

i -

i 154.3

i -

i 154.3

Divestiture

i -

( i 0.4)

i -

( i 0.4)

Other activity, primarily

foreign currency translation

( i 3.0)

i -

( i 46.6)

( i 28.2)

( i 77.8)

Balance as of Aug. 28, 2022

$

i 6,549.9

$

i 6,062.8

$

i 803.1

$

i 674.6

$

i 364.2

$

i 14,454.6

/

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

of fiscal 2023 were as follows:

i

In Millions

Total

Balance as of May 29, 2022

$

i 6,999.9

Acquisition

i 3.8

Other activity, primarily

foreign currency translation

( i 24.3)

Balance as of Aug. 28, 2022

$

i 6,979.4

/

Our

annual

goodwill

and

indefinite-lived

intangible

assets

impairment

test

was

performed

on

the

first

day

of

the

second

quarter

of

fiscal

2022,

and

we

determined

there

was

i no

impairment

of

our

intangible

assets

as

their

values

were

substantially

in

excess of the carrying values, except for the

Uncle Toby’s

brand intangible asset.

The excess fair value as of the fiscal 2022 test date of the

Uncle Toby’s

brand intangible asset is as follows:

In Millions

Carrying Value

of

Intangible Asset

Excess Fair Value

as of

Fiscal 2022 Test

Date

Uncle Toby's

$

i 55.0

i 7

%

In

addition,

while

having

significant

coverage

as

of

our

fiscal

2022

assessment

date,

the

Progresso

,

Green

Giant

,

and

EPIC

brand

intangible assets had risk of decreasing coverage. We

will continue to monitor these businesses for potential impairment.

11

i

(5) Inventories

The components of inventories were as follows:

i

In Millions

Raw materials and packaging

$

i 579.6

$

i 532.0

Finished goods

i 1,887.0

i 1,634.7

Grain

i 122.5

i 164.0

Excess of FIFO over LIFO cost

( i 499.2)

( i 463.4)

Total

$

i 2,089.9

$

i 1,867.3

/

i

(6) Risk Management Activities

Many commodities we

use in the

production and distribution

of our products

are exposed to

market price risks.

We

utilize derivatives

to manage price risk for our principal

ingredients and energy costs, including

grains (oats, wheat, and corn), oils

(principally soybean),

dairy products, natural

gas, and diesel fuel.

Our primary objective

when entering into

these derivative contracts

is to achieve

certainty

with

regard

to

the

future

price

of

commodities

purchased

for

use

in

our

supply

chain.

We

manage

our

exposures

through

a

combination of purchase orders, long-term

contracts with suppliers, exchange-traded

futures and options, and over-the-counter

options

and swaps.

We

offset

our exposures

based on

current and

projected market

conditions and

generally seek

to acquire

the inputs

at as

close as possible to or below our planned cost.

We

use derivatives

to manage

our exposure

to changes

in commodity

prices. We

do not

perform the

assessments required

to achieve

hedge

accounting

for

commodity

derivative

positions.

Accordingly,

the

changes

in

the

values

of

these

derivatives

are

recorded

currently in cost of sales in our Consolidated Statements of Earnings.

Although we do

not meet the

criteria for

cash flow hedge

accounting, we believe

that these instruments

are effective

in achieving our

objective of providing certainty

in the future price of commodities purchased

for use in our supply chain.

Accordingly, for

purposes of

measuring

segment

operating

performance,

these

gains

and

losses

are

reported

in

unallocated

corporate

items

outside

of

segment

operating results

until such

time that

the exposure

we are

managing affects

earnings. At

that time

we reclassify

the gain

or loss

from

unallocated

corporate

items

to

segment

operating

profit,

allowing

our

operating

segments

to

realize

the

economic

effects

of

the

derivative without experiencing any resulting mark-to-market volatility,

which remains in unallocated corporate items.

Unallocated corporate items for the quarters ended August 28, 2022, and

August 29, 2021, included:

i

Quarter Ended

In Millions

Net (loss) gain on mark-to-market valuation of certain

commodity positions

$

( i 72.3)

$

i 30.4

Net gain on commodity positions reclassified from

unallocated corporate items to segment operating profit

( i 43.0)

( i 34.7)

Net mark-to-market revaluation of certain grain inventories

( i 59.4)

i 28.4

Net mark-to-market valuation of certain commodity

positions recognized in unallocated corporate items

$

( i 174.7)

$

i 24.1

/

As of August 28, 2022,

the net notional value of commodity

derivatives was $

i 432.6

million, of which $

i 152.4

million related to energy

inputs and

$

i 280.2

million related

to agricultural

inputs. These

contracts relate

to inputs

that generally

will be

utilized within

the next

i 12

months.

The

fair

values

of

the

derivative

positions

used

in

our

risk

management

activities

and

other

assets

recorded

at

fair

value

were

not

material as

of August

28, 2022

and were

Level 1

or Level

2 assets

and liabilities

in the

fair value

hierarchy.

We

did not

significantly

change our valuation techniques from prior periods.

We

offer

certain

suppliers

access

to

third

party

services

that

allow

them

to

view

our

scheduled

payments

online.

The

third-party

services also

allow suppliers

to finance

advances on

our scheduled

payments at

the sole

discretion of

the supplier

and the third

party.

We

have no

economic interest

in these

financing arrangements

and no

direct relationship

with the

suppliers, the

third parties,

or any

financial

institutions

concerning

these

services.

All

of

our

accounts

payable

remain

as

obligations

to

our

suppliers

as

stated

in

our

supplier

agreements.

As

of

2022,

$

i 1,413.3

million

of

our

total

accounts

payable

were

payable

to

suppliers

who

utilize

these third-party services. As

of August 29, 2021, $

i 1,312.8

million of our total accounts

payable were payable to suppliers

who utilize

these third-party services.

12

i

(7) Debt

The components of notes payable were as follows:

i

In Millions

U.S. commercial paper

$

i 839.8

$

i 694.8

Financial institutions

i 152.1

i 116.6

Total

$

i 991.9

$

i 811.4

/

To ensure availability

of funds, we maintain bank credit lines and have commercial paper programs

available to us in the United States

and Europe. We also

have committed and asset-backed credit lines that support our foreign

operations.

The following table details the fee-paid committed and uncommitted credit

lines we had available as of August 28, 2022:

i

In Billions

Facility

Amount

Borrowed

Amount

Committed credit facility expiring April 2026

$

i 2.7

$

i -

Uncommitted credit facilities

i 0.6

i 0.2

Total committed

and uncommitted credit facilities

$

i 3.3

$

i 0.2

/

The

credit

facilities

contain

covenants,

including

a

requirement

to

maintain

a

fixed

charge

coverage

ratio

of

at

least

2.5

times.

i We

were in compliance with all credit facility covenants as of August 28, 2022.

Long-Term

Debt

The fair values

and carrying

amounts of long-term

debt, including

the current portion,

were $

i 10,129.1

million and $

i 10,570.0

million,

respectively,

as

of

2022.

The

fair

value

of

long-term

debt

was

estimated

using

market

quotations

and

discounted

cash

flows based

on our

current incremental

borrowing rates

for similar

types of

instruments. Long

-term debt

is a

Level 2

liability in

the

fair value hierarchy.

In

the fourth

quarter

of fiscal

2022,

we repaid

$

i 850.0

million

of

i 3.7

percent

fixed

rate notes

due

i October 17, 2023

, using

proceeds

from the issuance of commercial paper.

In the fourth quarter of fiscal 2022, we issued €

i 250.0

million of

i 0.0

percent fixed-rate notes due

i November 11, 2022

. We used the net

proceeds for general corporate purposes.

In the second quarter of fiscal 2022, we issued €

i 500.0

million of

i 0.125

percent fixed-rate notes due

i November 15, 2025

. We used the

net proceeds to repay a portion of our €

i 500.0

million of

i 0.0

percent fixed-rate notes due

i November 16, 2021

, and for general corporate

purposes.

In the second quarter of fiscal 2022, we issued €

i 250.0

million of floating-rate notes due

i May 16, 2023

. We used the net proceeds

to

repay a portion of our outstanding commercial paper and for general

corporate purposes.

In the second quarter of fiscal 2022, we issued $

i 500.0

million of

i 2.25

percent notes due

i October 14, 2031

. We used the net proceeds

together with proceeds from the issuance of commercial paper,

to repay $

i 1,000.0

million of

i 3.15

percent fixed-rate notes due

i December 15, 2021

.

In the first quarter of fiscal 2022, we issued €

i 500.0

million of floating-rate notes due

i July 27, 2023

. We used the net proceeds to

repay

€

i 500.0

million of

i 0.0

percent fixed-rate notes due

i August 21, 2021

.

In the first quarter of fiscal 2022, we repaid €

i 200.0

million of

i 2.2

percent fixed-rate notes due

i June 24, 2021

, using proceeds from the

issuance of €

i 50.0

million of

i 2.2

percent fixed-rate notes due

i November 29, 2021

, and borrowings under a committed credit facility.

Certain

of

our

long-term

debt

agreements

contain

restrictive

covenants.

i As of August 28, 2022, we were in compliance with all of

these covenants.

13

i

(8) Redeemable and Noncontrolling Interests

The

third-party

holder

of

the

General

Mills

Cereals,

LLC

(GMC)

Class A

Interests

receives

quarterly

preferred

distributions

from

available net

income based

on the application

of a

floating preferred

return rate

to the

holder’s capital

account balance

established in

the

most

recent

mark-to-market

valuation

(currently

$

i 251.5

million).

On

June 1,

2021,

the

floating

preferred

return

rate

on

GMC’s

Class A Interests

was reset

to the

sum of

i three-month LIBOR

plus

i 160

basis points.

The preferred

return rate

is adjusted

every

i three

years

through a negotiated agreement with the Class A Interest holder or through

a remarketing auction.

During

the

third

quarter

of

fiscal

2022,

we

completed

the

sale

of

our

interests

in

Yoplait

SAS,

Yoplait

Marques

SNC

and

Liberté

Marques

Sàrl

to

Sodiaal

International

(Sodiaal)

in

exchange

for

Sodiaal’s

interest

in

our

Canadian

yogurt

business,

a

modified

agreement for the use of

Yoplait

and

Liberté

brands in the United States and Canada, and cash.

Up to

the date

of the

divestiture, Sodiaal

held the remaining

interests in

each of

the entities.

On the

acquisition date,

we recorded

the

fair

value

of

Sodiaal’s

i 49

percent

euro-denominated

interest

in

Yoplait

SAS

as

a

redeemable

interest

on

our

Consolidated

Balance

Sheets. Sodiaal had

the right to

put all or

a portion of

its redeemable interest

to us at

fair value until

the divestiture closed

in the third

quarter of

fiscal 2022.

In connection

with the

divestiture, cumulative

adjustments made

to the

redeemable

interest related

to the

fair

value put feature were

reversed against additional paid-in

capital, where changes in the

redemption amount were historically recorded,

and the resulting carrying value of the noncontrolling interests were included in

the calculation of the gain on divestiture.

A subsidiary of

Yoplait

SAS had an exclusive

milk supply agreement

for its European operations

with Sodiaal through

November 28,

2021. Net purchases totaled $

i 50.1

million for the quarter ended August 29, 2021.

i Our noncontrolling interests contain restrictive covenants. As of August 28, 2022, we were in compliance with all of these covenants.

/

i

(9) Stockholders’ Equity

The following tables provide details of total comprehensive income:

i

Quarter Ended

General Mills

Noncontrolling

Interests

General Mills

Noncontrolling

Interests

Redeemable

Interest

In Millions

Pretax

Tax

Net

Pretax

Tax

Net

Net earnings, including earnings

attributable to redeemable and

noncontrolling interests

$

i 820.0

$

i 3.3

$

i 627.0

$

i 3.0

$

i 8.2

Other comprehensive (loss) income:

Foreign currency translation

$

( i 48.0)

$

i 53.1

i 5.1

( i 1.3)

$

( i 11.9)

$

i 22.7

i 10.8

( i 11.2)

( i 23.5)

Other fair value changes:

Hedge derivatives

( i 49.8)

i 11.5

( i 38.3)

i -

i 2.8

( i 1.0)

i 1.8

i -

( i 0.1)

Reclassification to earnings:

Foreign currency translation (a)

( i 7.4)

i -

( i 7.4)

i -

Hedge derivatives (b)

( i 1.9)

i 0.5

( i 1.4)

i -

i 12.0

( i 1.5)

i 10.5

i -

i 0.1

Amortization of losses and

prior service costs (c)

i 18.2

( i 4.1)

i 14.1

i -

i 10.8

( i 2.4)

i 8.4

i -

Other comprehensive (loss) income

$

( i 88.9)

$

i 61.0

( i 27.9)

( i 1.3)

$

i 13.7

$

i 17.8

i 31.5

( i 11.2)

( i 23.5)

Total comprehensive income (loss)

$

i 792.1

$

i 2.0

$

i 658.5

$

( i 8.2)

$

( i 15.3)

/

(a)

Gain reclassified from AOCI into earnings is reported in the divestitures gain, net.

(b)

(Gain) loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.

(c)

Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.

Accumulated other comprehensive loss balances, net of tax effects,

were as follows:

i

In Millions

Foreign currency translation adjustments

$

( i 593.0)

$

( i 590.7)

Unrealized (loss) gain from hedge derivatives

( i 16.4)

i 23.3

Pension, other postretirement, and postemployment benefits:

Net actuarial loss

( i 1,495.2)

( i 1,513.4)

Prior service credits

i 106.2

i 110.3

Accumulated other comprehensive loss

$

( i 1,998.4)

$

( i 1,970.5)

/

i

(10) Stock Plans

We

have various

stock-based compensation

programs under

which awards,

including stock

options, restricted

stock, restricted

stock

units, and performance

awards, may be granted

to employees and non-employee

directors. These programs

and related accounting

are

14

described in Note

12 to the

Consolidated Financial

Statements included

in our Annual

Report on Form

10-K for the

fiscal year ended

May 29, 2022.

Compensation expense related to stock-based payments recognized

in the Consolidated Statements of Earnings was as follows:

i

Quarter Ended

In Millions

Compensation expense related to stock-based payments

$

i 33.5

$

i 33.6

/

Windfall tax benefits from stock-based payments

in income tax expense in our Consolidated Statements of Earnings were as follows:

Quarter Ended

In Millions

Windfall tax benefits from stock-based payments

$

i 12.8

$

i 4.7

As

of

2022,

unrecognized

compensation

expense

non-vested

stock

options,

restricted

stock

units,

and

performance share units was $

i 166.8

million. This expense will be recognized over

i 26

months, on average.

Net cash proceeds from the exercise of stock options

less shares used for withholding taxes and the intrinsic

value of options exercised

were as follows:

i

Quarter Ended

In Millions

Net cash proceeds

$

i 65.5

$

i 7.9

Intrinsic value of options exercised

$

i 32.0

$

i 5.1

/

i We estimate the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-

pricing models require us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and

dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option,

excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We

also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially

those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting

the other valuation assumptions is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on

Form 10-K for the fiscal year ended May 29, 2022.

The

estimated

fair

values

of

stock

options

granted

and

the

assumptions

used

for

the

Black-Scholes

option-pricing

model

were

as

follows:

i

Quarter Ended

Estimated fair values of stock options granted

$

i 14.16

$

i 8.77

Assumptions:

Risk-free interest rate

i 3.3

%

i 1.5

%

Expected term

i 8.5

years

i 8.5

years

Expected volatility

i 20.9

%

i 20.2

%

Dividend yield

i 3.1

%

i 3.4

%

/

The total grant date fair value of restricted stock unit awards that vested during

the period was as follows:

i

Quarter Ended

In Millions

Total grant date fair

value

$

i 82.0

$

i 69.5

/

15

i

(11) Earnings Per Share

Basic and diluted earnings per share (EPS) were calculated using the following:

i

Quarter Ended

In Millions, Except per Share Data

Net earnings attributable to General Mills

$

i 820.0

$

i 627.0

Average number

of common shares - basic EPS

i 600.2

i 610.4

Incremental share effect from: (a)

Stock options

i 3.3

i 2.1

Restricted stock units and performance share units

i 2.5

i 2.3

Average number

of common shares - diluted EPS

i 606.0

i 614.8

Earnings per share – basic

$

i 1.37

$

i 1.03

Earnings per share – diluted

$

i 1.35

$

i 1.02

/

(a)

Incremental

shares

from

stock

options,

restricted

stock

units,

and

performance

share

units

are

computed

by

the

treasury

stock

method.

Stock

options,

restricted

stock

units,

and

performance

share units

excluded

from

our

computation

of

diluted

EPS

because

they

were not dilutive were as follows

:

i

Quarter Ended

In Millions

Anti-dilutive stock options, restricted stock units, and

performance share units

i 0.8

i 4.6

/

i

(12) Share Repurchases

Share repurchases were as follows:

i

Quarter Ended

In Millions

Shares of common stock

i 6.9

i 2.5

Aggregate purchase price

$

i 500.8

$

i 150.1

/

i

(13) Statements of Cash Flows

Our Consolidated Statements of Cash Flows include the following:

i

Quarter Ended

In Millions