MINNEAPOLIS, July 1, 2015 /PRNewswire/ -- General Mills (NYSE:
GIS) today reported results for the fourth quarter and full fiscal
year ended May 31, 2015. Fiscal
2015 was a 53-week year, with the extra week falling in the fourth
quarter.
Fourth Quarter Financial Summary
- Net sales of $4.3 billion
essentially matched year-ago levels. On a constant-currency basis,
fourth-quarter net sales were up 6 percent.
- Total segment operating profit increased 9 percent to
$800 million. In constant currency,
total segment operating profit increased 13 percent.
- Diluted earnings per share (EPS) totaled 30 cents compared to 65
cents a year ago.
- Adjusted diluted EPS of 75
cents rose 12 percent from 67
cents in last year's fourth quarter. On a constant-currency
basis, adjusted diluted EPS increased 18 percent. The extra week
contributed approximately 4 cents to
adjusted diluted EPS.
Fiscal 2015 Financial Summary
- Net sales declined 2 percent to $17.6
billion. On a constant-currency basis, net sales increased 1
percent.
- Total segment operating profit declined 4 percent to
$3.0 billion. In constant currency,
total segment operating profit declined 2 percent.
- Diluted EPS totaled $1.97
compared to $2.83 a year
ago.
- Adjusted diluted EPS, which excludes certain items affecting
comparability of results, totaled $2.86 in fiscal 2015, up 1 percent from
$2.82 a year ago. On a
constant-currency basis, adjusted diluted EPS increased 4
percent.
- Cash returned to shareholders in fiscal 2015 totaled
$2.2 billion, including an 8 percent
increase in dividends paid per share and share repurchases that
reduced average diluted shares outstanding by 4 percent.
Constant-currency net sales, total segment operating profit,
total segment operating profit growth rate in constant currency,
adjusted diluted EPS, and adjusted diluted EPS growth rate in
constant currency are each non-GAAP measures. Please see Note
10 to the Consolidated Financial Statements below for
reconciliation of these measures to the relevant GAAP
measures.
Chairman and Chief Executive Officer Ken
Powell said, "General Mills fiscal 2015 operating
performance was mixed. Our Convenience Stores &
Foodservice segment recorded good sales growth, increased its
operating profit margin, and delivered record profit results.
Our International segment also achieved good margin expansion and
profit growth in constant currency. However, sales and profit
declined for U.S. Retail – our largest operating segment. We
returned our U.S. yogurt business to growth, and our brands gained
share in categories representing 65 percent of our U.S. Retail
measured sales volume, but overall sales trends reflected the
impact of changing consumer food preferences.
"Our actions to respond to evolving consumer food interests –
including bolstering our natural and organic portfolio with the
addition of Annie's – helped strengthen our business performance in
the second half of the year," Powell continued. "This
Consumer First product and marketing focus, combined with our
significant productivity and cost-savings programs, positions
General Mills to deliver stronger growth in 2016."
Fourth Quarter Results
Fourth-quarter net sales of $4.3
billion essentially matched year-ago levels. Pound
volume contributed 3 points of net sales growth, including
incremental contributions from the Annie's organic foods business
acquired in October 2014 and an extra
week in this year's period. Net price realization and mix
also contributed 3 points of growth. These factors were
offset by a 6 point reduction in net sales from foreign currency
exchange effects. On a constant-currency basis, net sales
increased 6 percent. Adjusted gross margin, which excludes
mark-to-market effects and certain other items affecting
comparability, increased 70 basis points due to net price
realization (please see Note 10 below for reconciliation of this
non-GAAP measure). Selling, general, and administrative
expenses declined due to a 6 percent decrease in advertising and
media expense, and savings from restructuring actions (please
see Note 6 for more information on our restructuring
actions). Total segment operating profit increased 9
percent to $800 million. The
company recorded an intangible asset impairment charge of
$260 million, a $79 million charge related to the repatriation of
foreign earnings, and restructuring and project-related charges
totaling $35 million pretax
(please see Note 3, Note 9, and Note 6 below for more
information on these charges). Net earnings attributable
to General Mills totaled $187 million
and diluted EPS totaled 30
cents. Adjusted diluted EPS, which excludes certain
items affecting comparability, totaled 75
cents for the fourth quarter, up 12 percent from
67 cents a year ago. On a
constant-currency basis, fourth-quarter adjusted diluted EPS
increased 18 percent.
Full Year Results
Fiscal 2015 net sales decreased 2 percent to $17.6 billion. Pound volume reduced net
sales growth by 1 percent, including incremental contribution from
the extra week. Net price realization and mix contributed 2
points of net sales growth. This was offset by a 3 point
reduction in net sales growth from foreign currency exchange
effects. On a constant-currency basis, net sales increased 1
percent. Adjusted gross margin declined 70 basis points,
reflecting volume deleverage. Selling, general, and
administrative expenses decreased 4 percent due to a 5 percent
decrease in advertising and media expense, along with savings from
restructuring actions. Total segment operating profit
declined 4 percent to $3.0
billion. Restructuring, impairment, and other exit
costs, along with project-related costs recorded in cost of sales,
totaled $617 million. Fiscal
2015 net earnings attributable to General Mills totaled
$1.2 billion and diluted EPS totaled
$1.97. Adjusted diluted EPS
totaled $2.86 in fiscal 2015, up 1
percent from $2.82 earned last
year. On a constant-currency basis, adjusted diluted EPS
increased 4 percent.
Contributions from the 53rd Week
General Mills estimates that the extra week contributed roughly
1 point of net sales growth in fiscal 2015, and 6 points of net
sales growth in the fourth quarter. Earnings contributed by
the extra week totaled approximately $0.04 per diluted share.
U.S. Retail Segment Results
Fiscal 2015 net sales for General Mills' U.S. Retail segment
declined 1 percent to $10.5 billion,
reflecting lower pound volume. Annie's contributed 1 point of
net sales growth and 1 point of pound volume growth. The
Snacks and Yogurt operating units led U.S. Retail sales performance
for the year. Cereal unit net sales declined, but the
company's brands increased their share of U.S. cereal category
sales. Advertising and media expense was 6 percent below last
year's level. U.S. Retail operating profit declined 7 percent
to $2.2 billion.
Fourth-quarter net sales for the U.S. Retail segment increased 5
percent to $2.5 billion.
Pound volume contributed 3 points to net sales growth, while net
price realization and mix added another 2 points. Segment
operating profit totaled $565
million, 13 percent above year-ago results.
International Segment Results
Fiscal 2015 net sales for General Mills' consolidated
international businesses declined 5 percent to $5.1 billion due to foreign currency exchange
effects. Pound volume essentially matched year-ago levels,
and net price realization and mix contributed 6 points of net sales
growth. Foreign-currency translation effects reduced net
sales growth by 11 points. On a constant-currency basis,
International segment net sales increased 6 percent overall,
including gains of 17 percent in Latin
America, 5 percent in the Asia /
Pacific region, and 5 percent in Europe.
Constant-currency net sales in Canada essentially matched year-ago
levels. Advertising and media expense for the segment
declined 5 percent. International operating profit totaled
$523 million, down 2 percent as
reported but up 9 percent in constant currency (please see Note
10 below for reconciliation of these non-GAAP measures).
In the fourth quarter, International segment net sales totaled
$1.2 billion, down 9 percent compared
to the prior year, as foreign currency exchange effects reduced net
sales growth by 18 points. On a constant-currency basis, net
sales increased 9 percent. Pound volume added 2 points of net
sales growth, while net price realization and mix added 7
points. Fourth-quarter International segment operating profit
totaled $134 million, down 8 percent
as reported but up 12 percent on a constant-currency basis
(please see Note 10 below).
Convenience Stores and Foodservice Segment Results
Fiscal 2015 net sales for the Convenience Stores and Foodservice
segment totaled $2.0 billion, 4
percent above prior-year results. Pound volume added 1 point
of net sales growth, while net price realization and mix added 3
points. The yogurt, frozen breakfast, snacks, and cereal
platforms led net sales growth for the year. Segment
operating profit totaled $353
million, an increase of 15 percent.
In the fourth quarter, Convenience Stores and Foodservice net
sales grew 4 percent to $527 million,
driven by increases in pound volume. Segment operating profit
rose 17 percent to $101 million
reflecting the extra week and favorable business mix.
Joint Venture Summary
Combined after-tax earnings from the Cereal Partners Worldwide
(CPW) and Haagen-Dazs Japan (HDJ) joint ventures in fiscal 2015
declined 6 percent to $84 million,
reflecting unfavorable foreign currency exchange and an asset
impairment charge at CPW in South Africa. Constant-currency
after-tax earnings from joint ventures essentially matched year-ago
levels. Constant-currency net sales declined 2 percent for
CPW but grew 6 percent for HDJ. In the fourth quarter,
after-tax earnings from joint ventures totaled $18 million, up 9 percent as reported and up 23
percent in constant currency (please see Note 10 below for
reconciliation of these non-GAAP measures).
Other Income Statement Items
Unallocated corporate items totaled $414
million net expense in 2015, compared to $258 million net expense in 2014. Excluding
mark-to-market valuation effects and other items affecting
comparability, unallocated corporate items totaled $227 million net expense this year compared to
$245 million net expense a year ago
(please see Note 7 below for more information on unallocated
corporate items).
Restructuring, impairment, and other exit costs totaled
$544 million in 2015 compared to
$4 million in 2014. An
additional $60 million of
restructuring charges and $13 million
of project-related charges were recorded in cost of sales.
Net interest expense in 2015 totaled $315
million, an increase of 4 percent from the prior-year level
reflecting a higher debt level partially offset by a lower average
interest rate. The effective tax rate for 2015 was 33.3
percent, including a charge in the fourth quarter related to the
repatriation of foreign earnings (please see Note 9 below for
more information on our effective tax rate). Excluding
that charge and certain other items affecting comparability of
results, the effective tax rate was 30.5 percent in 2015, compared
to 32.2 percent in fiscal 2014. For the fourth
quarter, the effective tax rate excluding items affecting
comparability was 28.4 percent in 2015 compared to 29.7 percent
last year (please see Note 10 below for reconciliation of these
non-GAAP measures).
Cash Flow Items
Cash provided by operating activities totaled $2.5 billion in 2015, essentially matching the
previous year. Capital investments totaled $712 million, including investments to launch
gluten free Cheerios in the U.S. and Yoplait in China in fiscal 2016. Dividends paid
increased to $1.0 billion.
General Mills repurchased approximately 22 million shares of common
stock in 2015 for a total of $1.2
billion. Average diluted shares outstanding declined 4
percent in 2015 to 619 million.
Update on Cost Savings Initiatives
On June 25, 2015, General Mills
announced Project Compass, a new initiative designed to enable our
International segment to accelerate long-term growth through
increased organizational effectiveness and reduced administrative
expense. The company expects this initiative to generate
$25 to $30 million in savings in
fiscal 2016, and annual savings of $45 to
$50 million by fiscal 2017. The company now
anticipates the combination of Project Compass and the
cost-reduction projects initiated in fiscal 2015 will generate cost
savings of $285 to $310 million in
fiscal 2016 and more than $400
million by fiscal 2017 (please see Note 6 below for more
information).
Outlook
"Where we had consumer-focused news and innovation on our brands
in fiscal 2015, we generated growth," Powell said. "We expect
to expand the impact of our Consumer First strategic focus across
our worldwide operations in fiscal 2016 to generate sustainable
topline growth. Our plans include a strong line-up of core
brand renovation and new product innovation. We will have six
months of incremental contribution from the Annie's business.
And we will drive significant productivity from our ongoing
Holistic Margin Management (HMM) program and our new cost-savings
initiatives." General Mills anticipates the combination of
HMM and cost savings projects will more than offset input cost
inflation, estimated at 2 percent for 2016.
On a constant-currency basis, General Mills fiscal 2016 net
sales are expected to essentially match the 2015 levels that
included a 53rd week. Total segment operating
profit is expected to grow at a low single-digit rate in constant
currency. Constant-currency adjusted diluted EPS is expected
to grow at a mid single-digit rate from the base of $2.86 earned in fiscal 2015. At current
exchange rates, the company estimates a 4-cent headwind to fiscal 2016 adjusted diluted
EPS from currency translation.
General Mills will hold a briefing for investors today,
July 1, 2015, beginning at
8:30 a.m. Eastern time. You may
access the web cast 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
|
(In Millions, Except
per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
|
|
2015
|
|
%
Change
|
|
|
2014
|
|
%
Change
|
|
|
2013
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
17,630.3
|
|
(1.6%)
|
|
$
|
17,909.6
|
|
0.8%
|
|
$
|
17,774.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
11,681.1
|
|
1.2%
|
|
|
11,539.8
|
|
1.7%
|
|
|
11,350.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expenses
|
|
3,328.0
|
|
(4.2%)
|
|
|
3,474.3
|
|
(2.2%)
|
|
|
3,552.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestiture
(gain)
|
|
-
|
|
NM
|
|
|
(65.5)
|
|
NM
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
impairment, and other
exit
costs
|
|
543.9
|
|
NM
|
|
|
3.6
|
|
NM
|
|
|
19.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
2,077.3
|
|
(29.8%)
|
|
|
2,957.4
|
|
3.7%
|
|
|
2,851.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest,
net
|
|
315.4
|
|
4.3%
|
|
|
302.4
|
|
(4.6%)
|
|
|
316.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and after-tax
earnings from
joint ventures
|
|
1,761.9
|
|
(33.6%)
|
|
|
2,655.0
|
|
4.7%
|
|
|
2,534.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
586.8
|
|
(33.6%)
|
|
|
883.3
|
|
19.2%
|
|
|
741.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax earnings
from joint ventures
|
|
84.3
|
|
(5.9%)
|
|
|
89.6
|
|
(9.3%)
|
|
|
98.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings,
including earnings attributable
to redeemable
and noncontrolling interests
|
|
1,259.4
|
|
(32.3%)
|
|
|
1,861.3
|
|
(1.6%)
|
|
|
1,892.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to redeemable
and
noncontrolling interests
|
|
38.1
|
|
3.2%
|
|
|
36.9
|
|
(1.1%)
|
|
|
37.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
$
|
1,221.3
|
|
(33.1%)
|
|
$
|
1,824.4
|
|
(1.7%)
|
|
$
|
1,855.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
|
2.02
|
|
(30.3%)
|
|
$
|
2.90
|
|
1.4%
|
|
$
|
2.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
|
1.97
|
|
(30.4%)
|
|
$
|
2.83
|
|
1.4%
|
|
$
|
2.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per
share
|
$
|
1.67
|
|
7.7%
|
|
$
|
1.55
|
|
17.4%
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
Comparisons as a % of
net sales:
|
|
2015
|
|
Basis Pt
Change
|
|
|
2014
|
|
Basis Pt
Change
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
33.7%
|
|
(190)
|
|
|
35.6%
|
|
(50)
|
|
|
36.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expenses
|
|
18.9%
|
|
(50)
|
|
|
19.4%
|
|
(60)
|
|
|
20.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
11.8%
|
|
(470)
|
|
|
16.5%
|
|
50
|
|
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
|
6.9%
|
|
(330)
|
|
|
10.2%
|
|
(20)
|
|
|
10.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
Comparisons as a % of
net sales excluding
certain items
affecting comparability (a):
|
|
2015
|
|
Basis Pt
Change
|
|
|
2014
|
|
Basis Pt
Change
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross
margin
|
|
34.7%
|
|
(70)
|
|
|
35.4%
|
|
(80)
|
|
|
36.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
|
15.9%
|
|
(30)
|
|
|
16.2%
|
|
(10)
|
|
|
16.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
earnings attributable to General
Mills
|
|
10.0%
|
|
(20)
|
|
|
10.2%
|
|
-
|
|
|
10.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See Note 10 for a
reconciliation of these measures not defined by generally accepted
accounting principles (GAAP).
|
|
See accompanying
notes to the consolidated financial statements.
|
Consolidated
Statements of Earnings and Supplementary Information
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(Unaudited) (In
Millions, Except per Share Data)
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
May
31,
2015
|
|
|
May
25,
2014
|
|
%
Change
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
4,298.8
|
|
$
|
4,283.8
|
|
0.4%
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
2,783.3
|
|
|
2,801.4
|
|
(.6%)
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expenses
|
|
825.9
|
|
|
865.9
|
|
(4.6%)
|
|
|
|
|
|
|
|
|
Divestiture
(gain)
|
|
-
|
|
|
(65.5)
|
|
NM
|
|
|
|
|
|
|
|
|
Restructuring,
impairment, and other
exit
costs
|
|
266.0
|
|
|
0.1
|
|
NM
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
423.6
|
|
|
681.9
|
|
(37.9%)
|
|
|
|
|
|
|
|
|
Interest,
net
|
|
79.6
|
|
|
79.4
|
|
0.2%
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and after-tax
earnings from
joint ventures
|
|
344.0
|
|
|
602.5
|
|
(42.9%)
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
164.3
|
|
|
203.7
|
|
(19.3%)
|
|
|
|
|
|
|
|
|
After-tax earnings
from joint ventures
|
|
18.1
|
|
|
16.6
|
|
9.0%
|
|
|
|
|
|
|
|
|
Net earnings,
including earnings attributable
to redeemable
and noncontrolling interests
|
|
197.8
|
|
|
415.4
|
|
(52.4%)
|
|
|
|
|
|
|
|
|
Net earnings
attributable to redeemable
and
noncontrolling interests
|
|
11.0
|
|
|
10.8
|
|
1.8%
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
$
|
186.8
|
|
$
|
404.6
|
|
(53.8%)
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
|
0.31
|
|
$
|
0.66
|
|
(53.0%)
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
|
0.30
|
|
$
|
0.65
|
|
(53.8%)
|
|
|
|
|
|
|
|
|
Dividends per
share
|
$
|
0.44
|
|
$
|
0.41
|
|
7.3%
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
Comparisons as a % of
net sales:
|
|
May
31,
2015
|
|
|
May
25,
2014
|
|
Basis Pt
Change
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
35.3%
|
|
|
34.6%
|
|
70
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expenses
|
|
19.2%
|
|
|
20.2%
|
|
(100)
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
9.9%
|
|
|
15.9%
|
|
(600)
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
|
4.3%
|
|
|
9.4%
|
|
(510)
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
Comparisons as a % of
net sales excluding
certain items
affecting comparability (a):
|
|
May
31,
2015
|
|
|
May
25,
2014
|
|
Basis Pt
Change
|
|
|
|
|
|
|
|
|
Adjusted gross
margin
|
|
35.7%
|
|
|
35.0%
|
|
70
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
|
16.7%
|
|
|
15.7%
|
|
100
|
|
|
|
|
|
|
|
|
Adjusted net
earnings attributable to General Mills
|
|
10.8%
|
|
|
9.9%
|
|
90
|
|
|
|
|
|
|
|
|
(a) See Note 10 for a
reconciliation of these measures not defined by GAAP.
|
|
|
|
|
|
|
|
|
See accompanying
notes to the consolidated financial statements.
|
Operating Segment
Results and Supplementary Information
|
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
|
|
|
2015
|
|
%
Change
|
|
|
2014
|
|
%
Change
|
|
|
2013
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
10,507.0
|
|
(0.9)%
|
|
$
|
10,604.9
|
|
(0.1)%
|
|
$
|
10,614.9
|
|
International
|
|
5,128.2
|
|
(4.8)%
|
|
|
5,385.9
|
|
3.6%
|
|
|
5,200.2
|
|
Convenience
Stores and Foodservice
|
|
1,995.1
|
|
4.0%
|
|
|
1,918.8
|
|
(2.1)%
|
|
|
1,959.0
|
|
Total
|
$
|
17,630.3
|
|
(1.6)%
|
|
$
|
17,909.6
|
|
0.8%
|
|
$
|
17,774.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
2,159.3
|
|
(6.6)%
|
|
$
|
2,311.5
|
|
(3.4)%
|
|
$
|
2,392.9
|
|
International
|
|
522.6
|
|
(2.3)%
|
|
|
535.1
|
|
3.8%
|
|
|
515.4
|
|
Convenience
Stores and Foodservice
|
|
353.1
|
|
14.9%
|
|
|
307.3
|
|
(2.3)%
|
|
|
314.6
|
|
Total segment
operating profit
|
|
3,035.0
|
|
(3.8)%
|
|
|
3,153.9
|
|
(2.1)%
|
|
|
3,222.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate
items
|
|
413.8
|
|
60.1%
|
|
|
258.4
|
|
(26.4)%
|
|
|
351.3
|
|
Divestiture
(gain)
|
|
-
|
|
NM
|
|
|
(65.5)
|
|
NM
|
|
|
-
|
|
Restructuring,
impairment,
and other exit
costs
|
|
543.9
|
|
NM
|
|
|
3.6
|
|
NM
|
|
|
19.8
|
|
Operating
profit
|
$
|
2,077.3
|
|
(29.8)%
|
|
$
|
2,957.4
|
|
3.7%
|
|
$
|
2,851.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
May
31,
2015
|
|
|
May
25,
2014
|
|
%
Change
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
2,549.2
|
|
$
|
2,436.9
|
|
4.6%
|
|
|
International
|
|
1,222.1
|
|
|
1,339.4
|
|
(8.8)%
|
|
|
Convenience
Stores and Foodservice
|
|
527.5
|
|
|
507.5
|
|
3.9%
|
|
|
Total
|
$
|
4,298.8
|
|
$
|
4,283.8
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
565.2
|
|
$
|
501.4
|
|
12.7%
|
|
|
International
|
|
133.9
|
|
|
145.8
|
|
(8.2)%
|
|
|
Convenience
Stores and Foodservice
|
|
100.6
|
|
|
85.9
|
|
17.1%
|
|
|
Total segment
operating profit
|
|
799.7
|
|
|
733.1
|
|
9.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate
items
|
|
110.1
|
|
|
116.6
|
|
(5.6)%
|
|
|
Divestiture
(gain)
|
|
-
|
|
|
(65.5)
|
|
NM
|
|
|
Restructuring,
impairment, and other exit costs
|
|
266.0
|
|
|
0.1
|
|
NM
|
|
|
Operating
profit
|
$
|
423.6
|
|
$
|
681.9
|
|
(37.9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(In Millions, Except
Par Value)
|
|
|
|
|
|
|
|
|
|
|
May 31,
2015
|
|
|
May 25,
2014
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
334.2
|
|
$
|
867.3
|
Receivables
|
|
|
1,386.7
|
|
|
1,483.6
|
Inventories
|
|
|
1,540.9
|
|
|
1,559.4
|
Deferred
income taxes
|
|
|
100.1
|
|
|
74.1
|
Prepaid
expenses and other current assets
|
|
|
423.8
|
|
|
409.1
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
3,785.7
|
|
|
4,393.5
|
|
|
|
|
|
|
|
Land, buildings, and
equipment
|
|
|
3,783.3
|
|
|
3,941.9
|
Goodwill
|
|
|
8,874.9
|
|
|
8,650.5
|
Other intangible
assets
|
|
|
4,677.0
|
|
|
5,014.3
|
Other
assets
|
|
|
843.6
|
|
|
1,145.5
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
21,964.5
|
|
$
|
23,145.7
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,684.0
|
|
$
|
1,611.3
|
Current
portion of long-term debt
|
|
|
1,000.4
|
|
|
1,250.6
|
Notes
payable
|
|
|
615.8
|
|
|
1,111.7
|
Other
current liabilities
|
|
|
1,589.9
|
|
|
1,449.9
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
4,890.1
|
|
|
5,423.5
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
7,607.7
|
|
|
6,423.5
|
Deferred income
taxes
|
|
|
1,550.3
|
|
|
1,666.0
|
Other
liabilities
|
|
|
1,744.8
|
|
|
1,643.2
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
15,792.9
|
|
|
15,156.2
|
|
|
|
|
|
|
|
Redeemable
interest
|
|
|
778.9
|
|
|
984.1
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, 754.6 shares issued, $0.10 par value
|
|
|
75.5
|
|
|
75.5
|
Additional paid-in capital
|
|
|
1,296.7
|
|
|
1,231.8
|
Retained
earnings
|
|
|
11,990.8
|
|
|
11,787.2
|
Common
stock in treasury, at cost, shares of 155.9 and 142.3
|
|
|
(6,055.6)
|
|
|
(5,219.4)
|
Accumulated other comprehensive loss
|
|
|
(2,310.7)
|
|
|
(1,340.3)
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
4,996.7
|
|
|
6,534.8
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
396.0
|
|
|
470.6
|
|
|
|
|
|
|
|
Total
equity
|
|
|
5,392.7
|
|
|
7,005.4
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
$
|
21,964.5
|
|
$
|
23,145.7
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
|
|
|
Consolidated
Statements of Cash Flows
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(In
Millions)
|
|
Fiscal
Year
|
|
|
2015
|
|
|
2014
|
|
|
(Unaudited)
|
|
|
|
Cash Flows -
Operating Activities
|
|
|
|
|
|
Net
earnings, including earnings attributable to redeemable
and
|
$
|
1,259.4
|
|
$
|
1,861.3
|
noncontrolling interests
|
|
|
|
|
|
Adjustments to reconcile net earnings to net cash
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
588.3
|
|
|
585.4
|
After-tax earnings from joint ventures
|
|
(84.3)
|
|
|
(89.6)
|
Distributions of earnings from joint ventures
|
|
72.6
|
|
|
90.5
|
Stock-based compensation
|
|
106.4
|
|
|
108.5
|
Deferred income taxes
|
|
25.3
|
|
|
172.5
|
Tax
benefit on exercised options
|
|
(74.6)
|
|
|
(69.3)
|
Pension and other postretirement benefit plan
contributions
|
|
(49.5)
|
|
|
(49.7)
|
Pension and other postretirement benefit plan costs
|
|
91.3
|
|
|
124.1
|
Divestiture (gain)
|
|
-
|
|
|
(65.5)
|
Restructuring, impairment, and other exit costs
|
|
531.1
|
|
|
(18.8)
|
Changes in current assets and liabilities, excluding the
effects
of acquisitions
|
|
214.7
|
|
|
(32.2)
|
Other, net
|
|
(137.9)
|
|
|
(76.2)
|
Net cash provided by operating activities
|
|
2,542.8
|
|
|
2,541.0
|
Cash Flows -
Investing Activities
|
|
|
|
|
|
Purchases of land, buildings, and equipment
|
|
(712.4)
|
|
|
(663.5)
|
Acquisitions, net of cash acquired
|
|
(822.3)
|
|
|
-
|
Investments in affiliates, net
|
|
(102.4)
|
|
|
(54.9)
|
Proceeds
from disposal of land, buildings, and equipment
|
|
11.0
|
|
|
6.6
|
Proceeds
from divestiture
|
|
-
|
|
|
121.6
|
Exchangeable note
|
|
27.9
|
|
|
29.3
|
Other,
net
|
|
(4.0)
|
|
|
(0.9)
|
Net cash used by investing activities
|
|
(1,602.2)
|
|
|
(561.8)
|
Cash Flows -
Financing Activities
|
|
|
|
|
|
Change
in notes payable
|
|
(509.8)
|
|
|
572.9
|
Issuance
of long-term debt
|
|
2,253.2
|
|
|
1,673.0
|
Payment
of long-term debt
|
|
(1,145.8)
|
|
|
(1,444.8)
|
Proceeds
from common stock issued on exercised options
|
|
163.7
|
|
|
108.1
|
Tax
benefit on exercised options
|
|
74.6
|
|
|
69.3
|
Purchases of common stock for treasury
|
|
(1,161.9)
|
|
|
(1,745.3)
|
Dividends paid
|
|
(1,017.7)
|
|
|
(983.3)
|
Addition
of noncontrolling interest
|
|
-
|
|
|
17.6
|
Distributions to noncontrolling and redeemable interest
holders
|
|
(25.0)
|
|
|
(77.4)
|
Other,
net
|
|
(16.1)
|
|
|
(14.2)
|
Net cash used by financing activities
|
|
(1,384.8)
|
|
|
(1,824.1)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(88.9)
|
|
|
(29.2)
|
Increase (decrease)
in cash and cash equivalents
|
|
(533.1)
|
|
|
125.9
|
Cash and cash
equivalents - beginning of year
|
|
867.3
|
|
|
741.4
|
Cash and cash
equivalents - end of year
|
$
|
334.2
|
|
$
|
867.3
|
|
|
|
|
|
|
Cash Flow from
Changes in Current Assets and Liabilities,
excluding the
effects of acquisitions:
|
|
|
|
|
|
Receivables
|
$
|
6.8
|
|
$
|
(41.0)
|
Inventories
|
|
(24.2)
|
|
|
(88.3)
|
Prepaid
expenses and other current assets
|
|
(50.5)
|
|
|
10.5
|
Accounts
payable
|
|
145.8
|
|
|
191.5
|
Other
current liabilities
|
|
136.8
|
|
|
(104.9)
|
|
|
|
|
|
|
Changes in current
assets and liabilities
|
$
|
214.7
|
|
$
|
(32.2)
|
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. Certain reclassifications to our previously reported
financial information have been made to conform to the current
period presentation.
|
|
|
|
Beginning in the
first quarter of fiscal 2015, we changed how we assess operating
segment performance to exclude the asset and liability
remeasurement impact of hyperinflationary economies. This impact is
now included in unallocated corporate items. All periods presented
have been changed to conform to this presentation.
|
|
|
(2)
|
Beginning with the
second quarter of fiscal 2015, we realigned certain operating units
within our U.S. Retail operating segment. We also changed the name
of our Yoplait operating unit to Yogurt and our Big G operating
unit to Cereal. Frozen Foods transitioned into Meals and Baking
Products. Small Planet Foods transitioned into Snacks, Cereal, and
Meals. The Yogurt operating unit was unchanged. We revised the
amounts previously reported in the net sales percentage change by
operating unit within our U.S. Retail segment. These realignments
had no effect on previously reported consolidated net sales,
operating segments' net sales, operating profit, segment operating
profit, net earnings attributable to General Mills or earnings per
share.
|
|
|
(3)
|
At the end of the
fourth quarter of fiscal 2015, we made a strategic decision to
redirect certain resources supporting our Green Giant business in
our U.S. Retail segment to other businesses within the
segment. Therefore, future sales and profitability
projections in our long range plan for this business
declined. As a result of this triggering event, we performed
an interim impairment assessment of the Green Giant brand
intangible asset as of May 31, 2015 and determined that the fair
value of the brand intangible asset no longer exceeded the carrying
value of the asset. Significant assumptions used in that
assessment included our updated long-range cash flow projections
for the Green Giant business, an updated royalty rate, a
weighted-average cost of capital, and a tax rate. We recorded a
$260 million impairment charge in restructuring, impairment, and
other exit costs in the fourth quarter of fiscal 2015 related to
this asset.
|
|
|
(4)
|
Venezuela is a highly
inflationary economy and, we remeasure the value of the assets and
liabilities of our Venezuelan subsidiary based on the exchange rate
at which we expect to remit dividends in U.S. dollars. In February
2014, the Venezuelan government established a new foreign exchange
market mechanism (SICAD 2) and at that time indicated that it would
be the market through which U.S. dollars would be obtained for the
remittance of dividends. On February 12, 2015, the Venezuelan
government replaced SICAD 2 with a new foreign exchange market
mechanism (SIMADI). We expect to be able to access U.S. dollars
through the SIMADI market. SIMADI has significantly higher foreign
exchange rates than those available through the other foreign
exchange mechanisms. In fiscal 2015, we recorded an $8 million
foreign exchange loss in unallocated corporate items resulting from
the remeasurement of assets and liabilities of our Venezuelan
subsidiary at the SIMADI rate of 199 bolivars per U.S. dollar. Our
Venezuela operations represent less than 1 percent of our
consolidated assets, liabilities, net sales, and segment operating
profit. As of May 31, 2015, we had $0.3 million of non-U.S. dollar
cash balances in Venezuela.
|
|
|
(5)
|
On October 21,
2014, we acquired Annie's, Inc. (Annie's), a publicly traded food
company headquartered in Berkeley, California, for an aggregate
purchase price of $821.2 million, which we funded by issuing debt.
We consolidated Annie's into our Consolidated Balance Sheets and
recorded goodwill of $589.8 million, an indefinite lived intangible
asset for the Annie's brand of $244.5 million and a finite
lived customer relationship asset of $23.9 million. The pro forma
effects of this acquisition were not material.
|
|
|
|
During the fourth
quarter of fiscal 2014, we sold certain grain elevators in our U.S.
Retail segment for $124.0 million in cash and recorded a
pre-tax gain of $65.5 million.
|
|
|
(6)
|
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
classified as follows:
|
|
|
Quarter
Ended
|
|
|
Fiscal
|
In
Millions
|
May 31,
2015
|
|
May 25,
2014
|
|
2015
|
|
2014
|
Cost of
sales
|
$
|
19.1
|
|
$
|
-
|
|
$
|
59.6
|
|
$
|
-
|
Restructuring,
impairment, and other exit costs
|
|
6.0
|
|
|
0.1
|
|
|
283.9
|
|
|
3.6
|
Total restructuring
charges
|
|
25.1
|
|
|
0.1
|
|
|
343.5
|
|
|
3.6
|
Project-related costs
classified in cost of sales
|
$
|
9.7
|
|
$
|
-
|
|
$
|
13.2
|
|
$
|
-
|
|
|
|
During the second
quarter of fiscal 2015, we approved Project Catalyst, a
restructuring plan to increase organizational effectiveness and
reduce overhead expense. In connection with this project, we expect
to eliminate approximately 800 positions primarily in the United
States. We expect to incur approximately $148 million of net
expenses relating to these actions of which approximately $118
million will be cash. These actions were largely completed in
fiscal 2015.
|
|
|
|
|
|
|
|
Project Century
(Century) is a review of our North American manufacturing and
distribution network to streamline operations and identify
potential capacity reductions. In addition to the actions taken at
certain facilities described below, we incurred $17 million of
restructuring charges in fiscal 2015 related to Century of which $6
million was cash.
|
|
|
|
|
|
|
|
As part of Century,
we approved actions in the third quarter of fiscal 2015 to reduce
our refrigerated dough capacity and exit our Midland, Ontario,
Canada and New Albany, Indiana facilities, which support our U.S.
Retail, International, and Convenience Stores and Foodservice
supply chains. The Midland action will affect approximately 100
positions and we expect to incur approximately $21 million of net
expenses relating to this action, of which approximately $12
million will be cash. We recorded $6 million of restructuring
charges relating to this action in fiscal 2015. The New Albany
action will affect approximately 400 positions and we expect to
incur approximately $84 million of net expenses relating to this
action of which approximately $44 million will be cash. We recorded
$51 million of restructuring charges relating to this action in
fiscal 2015. We anticipate these actions will be completed by the
end of fiscal 2018.
|
|
|
|
|
|
|
|
During the second
quarter of fiscal 2015, we approved a restructuring plan to
consolidate yogurt manufacturing capacity and exit our Methuen,
Massachusetts facility in our U.S. Retail and Convenience Stores
and Foodservice supply chains as part of Century. This action
will affect approximately 250 positions. We recorded $44 million of
restructuring charges in fiscal 2015. We expect to incur
approximately $69 million of net expenses relating to this action
of which approximately $18 million will be cash. We expect
this action to be completed by the end of fiscal 2016.
|
|
|
|
|
|
|
|
Also as part of
Century, during the second quarter of fiscal 2015, we approved a
restructuring plan to eliminate excess cereal and dry mix capacity
and exit our Lodi, California facility in our U.S. Retail supply
chain. This action will affect approximately 430 positions. We
recorded $63 million of restructuring charges in fiscal 2015. We
expect to incur approximately $102 million of net expenses relating
to this action of which approximately $41 million will be cash. We
expect this action to be completed by the end of fiscal
2016.
|
|
|
|
|
|
|
|
During the first
quarter of fiscal 2015, we approved a plan to combine certain
Yoplait and General Mills operational facilities within our
International segment to increase efficiencies and reduce
costs. This action will affect approximately 240 positions. We
recorded $13.9 million of restructuring charges in fiscal 2015. We
expect to incur approximately $15 million of net expenses relating
to this action and to make approximately $14 million in cash
payments. We expect this action to be completed by the end of
fiscal 2016.
|
|
|
|
|
|
|
|
In fiscal 2015, we
paid $64 million in cash related to restructuring
initiatives.
|
|
|
|
|
|
|
|
In addition to
restructuring charges, we expect to incur approximately $65 million
of additional project-related costs, which will be recorded in cost
of sales, all of which will be cash. We recorded $13 million in
cost of sales for project-related costs in fiscal 2015.
|
|
|
|
|
|
|
|
Restructuring charges
and project-related costs are summarized as follows:
|
|
As
Reported
|
|
Estimated
|
In
Millions
|
Fiscal
2015
|
Fiscal
2014
|
|
Future
|
Total
|
|
|
Charge
|
Cash
|
Charge
|
Cash
|
|
Charge
|
Cash
|
Charge
|
Cash
|
Savings
(b)
|
Total Century
(a)
|
$ 181.8
|
$ 12.0
|
$ -
|
$ -
|
|
$ 111
|
$ 109
|
$ 293
|
$ 121
|
|
Catalyst
|
148.4
|
45.0
|
-
|
-
|
|
-
|
73
|
148
|
118
|
|
International
|
13.9
|
6.5
|
1.0
|
6.0
|
|
1
|
8
|
15
|
14
|
|
Other
|
(0.6)
|
0.1
|
2.6
|
16.4
|
|
-
|
-
|
-
|
-
|
|
Total restructuring
charges (a)
|
343.5
|
63.6
|
3.6
|
22.4
|
|
112
|
190
|
456
|
253
|
|
Project-related
costs
|
13.2
|
9.7
|
-
|
-
|
|
52
|
55
|
65
|
65
|
|
Restructuring charges
and project-related costs
|
$ 356.7
|
$ 73.3
|
$ 3.6
|
$ 22.4
|
|
$ 164
|
$ 245
|
$ 521
|
$ 318
|
|
Future cumulative
annual savings
|
|
|
|
|
|
|
|
|
|
$ 350
|
|
(a) Includes $59.6
million of restructuring charges recorded in cost of sales during
fiscal 2015.
|
(b) Cumulative annual
savings estimated by fiscal 2017. Includes savings from SG&A
cost reduction projects.
|
|
Subsequent to our
fiscal 2015 year end, in the first quarter of fiscal 2016, we
approved Project Compass, a restructuring plan designed to enable
our International segment to accelerate long-term growth through
increased organizational effectiveness and reduced administrative
expense. In connection with this initiative, we expect to
eliminate approximately 675 to 725 positions. We expect to record
total restructuring charges of approximately $57 to $62 million
pre-tax, primarily reflecting one-time employee termination
benefits, of which approximately $54 to $57 million will be
recorded in the first quarter of fiscal 2016. We expect
approximately $54 to $59 million of the total expense will
result in future cash expenditures. These restructuring
actions are expected to be completed by the end of fiscal 2017. We
expect that these actions will generate annual cost savings of
approximately $45 to $50 million, with approximately $25 to $30
million of cost savings being realized in fiscal 2016.
|
|
|
(7)
|
For the fourth
quarter of fiscal 2015, unallocated corporate expense totaled $110
million compared to $116 million in the same period last year. We
recorded $19 million of restructuring charges and $10 million of
restructuring initiative project-related costs in costs of sales in
the fourth quarter of fiscal 2015. We also recorded $8 million of
integration costs resulting from the acquisition of Annie's and an
$1 million foreign exchange loss related to the remeasurement of
assets and liabilities of our Venezuelan subsidiary in the fourth
quarter of fiscal 2015 compared to $62 million in the prior year.
We recorded an $8 million net decrease in expense related to
mark-to-market valuations of certain commodity positions and grain
inventories in the fourth quarter of fiscal 2015, compared to a $6
million net decrease in expense in the fourth quarter of fiscal
2014.
|
|
|
|
For fiscal 2015,
unallocated corporate expense totaled $414 million compared to $258
million last year. In fiscal 2015 we recorded a $90 million net
increase in expense related to mark-to-market valuation of certain
commodity positions and grain inventories, compared to a $49
million net decrease in expense last year. In addition, we recorded
$60 million of restructuring charges, and $13 million of
restructuring initiative project-related costs in cost of sales in
fiscal 2015. We recorded an $8 million foreign exchange loss
related to the remeasurement of assets and liabilities of our
Venezuelan subsidiary compared to $62 million in fiscal 2014. We
also recorded $16 million of integration costs resulting from the
acquisition of Annie's in fiscal 2015.
|
|
|
(8)
|
Basic and diluted
earnings per share (EPS) were calculated as follows:
|
|
|
Quarter
Ended
|
|
Fiscal
Year
|
|
In Millions,
Except per Share Data
|
|
May 31,
2015
|
|
May 25,
2014
|
|
|
2015
|
|
2014
|
|
2013
|
|
Net earnings
attributable to General Mills
|
$
|
186.8
|
$
|
404.6
|
|
$
|
1,221.3
|
$
|
1,824.4
|
$
|
1,855.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
common shares - basic EPS
|
|
599.9
|
|
614.8
|
|
|
603.3
|
|
628.6
|
|
648.6
|
|
Incremental share
effect from: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
10.8
|
|
12.3
|
|
|
11.3
|
|
12.3
|
|
12.0
|
|
Restricted
stock, restricted stock units, and other
|
|
4.2
|
|
5.1
|
|
|
4.2
|
|
4.8
|
|
5.0
|
|
Average number of
common shares - diluted EPS
|
|
614.9
|
|
632.2
|
|
|
618.8
|
|
645.7
|
|
665.6
|
|
Earnings per share -
basic
|
$
|
0.31
|
$
|
0.66
|
|
$
|
2.02
|
$
|
2.90
|
$
|
2.86
|
|
Earnings per share -
diluted
|
$
|
0.30
|
$
|
0.65
|
|
$
|
1.97
|
$
|
2.83
|
$
|
2.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Incremental shares from stock
options and restricted stock units are computed by the treasury
stock method.
|
(9)
|
Our consolidated
effective tax rate for fiscal 2015 of 33.3 percent was consistent
with fiscal 2014. We incurred a 4 percentage point increase in our
fiscal 2015 tax rate related to the repatriation of $606 million of
foreign earnings. We expect to make $24 million in cash tax
payments related to this action. This was offset by changes in
earnings mix by country, certain favorable discrete items, and
favorable state tax rate changes.
|
|
|
(10)
|
We have included ten
measures in this release that are not defined by generally accepted
accounting principles (GAAP): (1) constant-currency net sales
growth rates, (2) diluted EPS excluding certain items
affecting comparability, (3) diluted EPS excluding certain
items affecting comparability growth rate on a constant-currency
basis, (4) total segment operating profit,
(5) constant-currency total segment operating profit growth
rate, (6) constant-currency International segment operating
profit growth rate, (7) constant-currency net sales growth
rate for our International segment in total and by region,
(8) constant-currency after-tax earnings from joint ventures,
(9) earnings comparisons as a percent of net sales excluding
certain items affecting comparability, and (10) effective
income tax rate excluding certain items affecting comparability. We
believe that these measures provide useful supplemental information
to assess our operating performance. 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.
|
|
|
|
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.
|
Constant-currency net
sales growth rates follow:
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended May
31, 2015
|
|
|
Percentage
Change
in Net Sales as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage
Change
in Net Sales on
Constant-Currency
Basis
|
Total Net
Sales
|
|
Flat
|
(6)
|
pts
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
May 31, 2015
|
|
|
Percentage
Change
in Net Sales
as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage
Change
in Net Sales on
Constant-Currency
Basis
|
Total Net
Sales
|
|
(2)
|
%
|
(3)
|
pts
|
1
|
%
|
|
Diluted EPS excluding
certain items affecting comparability and the related
constant-currency growth rates follow:
|
|
|
|
|
Quarter
Ended
|
|
|
|
Fiscal
Year
|
|
|
|
|
Per Share
Data
|
|
May 31,
2015
|
|
|
May 25,
2014
|
|
Change
|
|
2015
|
|
|
2014
|
|
Change
|
|
Diluted earnings per
share, as reported
|
$
|
0.30
|
|
$
|
0.65
|
|
(54)%
|
$
|
1.97
|
|
$
|
2.83
|
|
(30)%
|
|
Mark-to-market
effects (a)
|
|
(0.01)
|
|
|
(0.01)
|
|
|
|
|
0.09
|
|
|
(0.05)
|
|
|
|
|
Divestiture
(gain), net (b)
|
|
-
|
|
|
(0.06)
|
|
|
|
|
-
|
|
|
(0.06)
|
|
|
|
|
Tax item
(c)
|
|
0.13
|
|
|
-
|
|
|
|
|
0.13
|
|
|
-
|
|
|
|
|
Acquisition
integration costs (b)
|
|
0.01
|
|
|
-
|
|
|
|
|
0.02
|
|
|
-
|
|
|
|
|
Venezuela
currency devaluation (d)
|
|
-
|
|
|
0.09
|
|
|
|
|
0.01
|
|
|
0.09
|
|
|
|
|
Restructuring
costs (e)
|
|
0.03
|
|
|
-
|
|
|
|
|
0.35
|
|
|
0.01
|
|
|
|
|
Project-related costs (e)
|
|
0.01
|
|
|
-
|
|
|
|
|
0.01
|
|
|
-
|
|
|
|
|
Intangible
asset impairment (f)
|
|
0.28
|
|
|
-
|
|
|
|
|
0.28
|
|
|
-
|
|
|
|
|
Diluted earnings per
share, excluding
certain
items affecting comparability
|
$
|
0.75
|
|
$
|
0.67
|
|
12%
|
$
|
2.86
|
|
$
|
2.82
|
|
1%
|
|
Foreign currency
exchange impact
|
|
|
|
|
|
|
(6)pts
|
|
|
|
|
|
|
(3)pts
|
|
Diluted earnings per
share growth, excluding
certain
items affecting comparability, on a
constant-currency basis
|
|
|
|
|
|
|
18%
|
|
|
|
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See Note 7.
|
|
(b) See Note 5.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) See Note 9.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) See Note 4.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) See Note
6.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) See Note
3.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 follow:
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Fiscal
|
|
|
May 31,
2015
|
|
2015
|
Percentage change in
total segment operating profit as reported
|
|
9
|
%
|
|
(4)
|
%
|
Impact of foreign
currency exchange
|
|
(4)
|
pts
|
|
(2)
|
pts
|
Percentage change in
total segment operating profit on constant-currency
basis
|
|
13
|
%
|
|
(2)
|
%
|
|
|
|
|
|
|
|
Constant-currency
International segment operating profit growth rates
follow:
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Fiscal
|
|
|
May 31,
2015
|
|
2015
|
Percentage change in
International segment operating profit as reported
|
|
(8)
|
%
|
|
(2)
|
%
|
Impact of foreign
currency exchange
|
|
(20)
|
pts
|
|
(11)
|
pts
|
Percentage change in
International segment operating profit on constant-currency
basis
|
|
12
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
Constant-currency
International net sales growth rates follow:
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended May
31, 2015
|
|
|
Percentage
Change
in Net Sales
as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage
Change
in Net Sales on
Constant-Currency
Basis
|
Total
International
|
|
(9)
|
%
|
(18)
|
pts
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
May 31, 2015
|
|
|
Percentage
Change
in Net Sales
as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage
Change
in Net Sales on
Constant-Currency
Basis
|
Total
International
|
|
(5)
|
%
|
(11)
|
pts
|
6
|
%
|
Constant-currency
after-tax earnings from joint ventures follow:
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended May
31, 2015
|
|
|
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
|
Total Joint
Ventures
|
|
9
|
%
|
(14)
|
pts
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
May 31, 2015
|
|
|
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
|
Total Joint
Ventures
|
|
(6)
|
%
|
(6)
|
pts
|
Flat
|
Earnings comparisons
as a percent of net sales excluding certain items affecting
comparability follow:
|
|
|
|
|
|
Quarter
Ended
|
|
In
Millions
|
|
May 31,
2015
|
|
May 25,
2014
|
|
Comparisons as a %
of Net Sales
|
|
Value
|
|
Percent
of
Net
Sales
|
|
|
Value
|
|
Percent
of
Net
Sales
|
|
Gross margin as
reported (a)
|
$
|
1,515.5
|
|
35.3%
|
|
$
|
1,482.4
|
|
34.6%
|
|
Mark-to-market
effects (b)
|
|
(8.3)
|
|
(0.2)%
|
|
|
(5.5)
|
|
(0.1)%
|
|
Venezuela
currency devaluation (e)
|
|
0.3
|
|
-%
|
|
|
22.6
|
|
0.5%
|
|
Restructuring
costs (f)
|
|
19.1
|
|
0.4%
|
|
|
-
|
|
-%
|
|
Project-related costs (f)
|
|
9.7
|
|
0.2%
|
|
|
-
|
|
-%
|
|
Adjusted gross
margin
|
$
|
1,536.3
|
|
35.7%
|
|
$
|
1,499.5
|
|
35.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as
reported
|
$
|
423.6
|
|
9.9%
|
|
$
|
681.9
|
|
15.9%
|
|
Mark-to-market
effects (b)
|
|
(8.3)
|
|
(0.2)%
|
|
|
(5.5)
|
|
(0.1)%
|
|
Divestiture
(gain), net (c)
|
|
-
|
|
-%
|
|
|
(65.5)
|
|
(1.5)%
|
|
Acquisition
integration costs (c)
|
|
8.4
|
|
0.2%
|
|
|
-
|
|
-%
|
|
Venezuela
currency devaluation (e)
|
|
0.8
|
|
-%
|
|
|
62.2
|
|
1.4%
|
|
Restructuring
costs (f)
|
|
25.1
|
|
0.6%
|
|
|
0.1
|
|
-%
|
|
Project-related costs (f)
|
|
9.7
|
|
0.2%
|
|
|
-
|
|
-%
|
|
Intangible
asset impairment (g)
|
|
260.0
|
|
6.0%
|
|
|
-
|
|
-%
|
|
Adjusted operating
profit
|
$
|
719.3
|
|
16.7%
|
|
$
|
673.2
|
|
15.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills as reported
|
$
|
186.8
|
|
4.3%
|
|
$
|
404.6
|
|
9.4%
|
|
Mark-to-market
effects, net of tax (b)
|
|
(5.2)
|
|
(0.1)%
|
|
|
(3.4)
|
|
(0.1)%
|
|
Divestiture
(gain), net of tax(c)
|
|
-
|
|
-%
|
|
|
(36.0)
|
|
(0.8)%
|
|
Tax item
(d)
|
|
78.6
|
|
1.8%
|
|
|
-
|
|
-%
|
|
Acquisition
integration costs, net of tax (c)
|
|
5.2
|
|
0.1%
|
|
|
-
|
|
-%
|
|
Venezuela
currency devaluation, net of tax (e)
|
|
0.8
|
|
-%
|
|
|
57.8
|
|
1.4%
|
|
Restructuring
costs, net of tax (f)
|
|
15.9
|
|
0.4%
|
|
|
0.5
|
|
-%
|
|
Project-related costs, net of tax (f)
|
|
6.1
|
|
0.2%
|
|
|
-
|
|
-%
|
|
Intangible
asset impairment, net of tax (g)
|
|
176.9
|
|
4.1%
|
|
|
-
|
|
-%
|
|
Adjusted net earnings
attributable to General Mills
|
$
|
465.1
|
|
10.8%
|
|
$
|
423.5
|
|
9.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Net sales less cost of
sales.
|
|
|
|
|
|
|
|
(b) See Note 7.
|
|
|
|
|
|
|
|
|
(c) See Note
5.
|
|
|
|
|
|
|
|
|
(d) See Note 9.
|
|
|
|
|
|
|
|
|
(e) See Note
4.
|
|
|
|
|
|
|
|
|
(f) See Note
6.
|
|
|
|
|
|
|
|
|
(g) See Note 3.
|
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
|
In
Millions
|
|
2015
|
|
2014
|
|
Comparisons as a %
of Net Sales
|
|
Value
|
|
Percent
of
Net
Sales
|
|
|
Value
|
|
Percent
of
Net
Sales
|
|
Gross margin as
reported (a)
|
$
|
5,949.2
|
|
33.7%
|
|
$
|
6,369.8
|
|
35.6%
|
|
Mark-to-market
effects (b)
|
|
89.7
|
|
0.5%
|
|
|
(48.5)
|
|
(0.3)%
|
|
Venezuela
currency devaluation (e)
|
|
3.2
|
|
-%
|
|
|
22.6
|
|
0.1%
|
|
Restructuring
costs (f)
|
|
59.6
|
|
0.4%
|
|
|
-
|
|
-%
|
|
Project-related costs (f)
|
|
13.2
|
|
0.1%
|
|
|
-
|
|
-%
|
|
Adjusted gross
margin
|
$
|
6,114.9
|
|
34.7%
|
|
$
|
6,343.9
|
|
35.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as
reported
|
$
|
2,077.3
|
|
11.8%
|
|
$
|
2,957.4
|
|
16.5%
|
|
Mark-to-market
effects (b)
|
|
89.7
|
|
0.5%
|
|
|
(48.5)
|
|
(0.3)%
|
|
Divestiture
(gain), (c)
|
|
-
|
|
-%
|
|
|
(65.5)
|
|
(0.4)%
|
|
Acquisition
integration costs (c)
|
|
16.0
|
|
0.1%
|
|
|
-
|
|
-%
|
|
Venezuela
currency devaluation (e)
|
|
8.0
|
|
-%
|
|
|
62.2
|
|
0.4%
|
|
Restructuring
costs (f)
|
|
343.5
|
|
1.9%
|
|
|
3.6
|
|
-%
|
|
Project-related costs (f)
|
|
13.2
|
|
0.1%
|
|
|
-
|
|
-%
|
|
Intangible
asset impairment (g)
|
|
260.0
|
|
1.5%
|
|
|
-
|
|
-%
|
|
Adjusted operating
profit
|
$
|
2,807.7
|
|
15.9%
|
|
$
|
2,909.2
|
|
16.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills as reported
|
$
|
1,221.3
|
|
6.9%
|
|
$
|
1,824.4
|
|
10.2%
|
|
Mark-to-market
effects, net of tax (b)
|
|
56.5
|
|
0.3%
|
|
|
(30.5)
|
|
(0.2)%
|
|
Divestiture
(gain), net of tax (c)
|
|
-
|
|
-%
|
|
|
(36.0)
|
|
(0.2)%
|
|
Tax item
(d)
|
|
78.6
|
|
0.5%
|
|
|
-
|
|
-%
|
|
Acquisition
integration costs, net of tax (c)
|
|
10.4
|
|
0.1%
|
|
|
-
|
|
-%
|
|
Venezuela
currency devaluation, net of tax (e)
|
|
8.0
|
|
-%
|
|
|
57.8
|
|
0.4%
|
|
Restructuring
costs, net of tax (f)
|
|
213.1
|
|
1.2%
|
|
|
3.6
|
|
-%
|
|
Project-related costs, net of tax (f)
|
|
8.3
|
|
-%
|
|
|
-
|
|
-%
|
|
Intangible
asset impairment, net of tax (g)
|
|
176.9
|
|
1.0%
|
|
|
-
|
|
-%
|
|
Adjusted net earnings
attributable to General Mills
|
$
|
1,773.1
|
|
10.0%
|
|
$
|
1,819.3
|
|
10.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Net sales less cost
of sales.
|
|
|
|
|
|
|
|
|
|
|
(b) See Note 7.
|
|
|
|
|
|
|
|
|
|
|
(c) See Note
5.
|
|
|
|
|
|
|
|
|
|
|
(d) See Note 9.
|
|
|
|
|
|
|
|
|
|
|
(e) See Note
4.
|
|
|
|
|
|
|
|
|
|
|
(f) See Note
6.
|
|
|
|
|
|
|
|
|
|
|
(g) See Note 3.
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of
the effective income tax rate as reported to the effective income
tax rate excluding certain items affecting
comparability:
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Fiscal Year
Ended
|
|
|
May 31,
2015
|
|
May 25,
2014
|
|
May 31,
2015
|
|
May 25,
2014
|
|
In
Millions
|
Pretax
Earnings
(a)
|
Income
Taxes
|
|
Pretax
Earnings
(a)
|
Income
Taxes
|
|
Pretax
Earnings
(a)
|
Income
Taxes
|
|
Pretax
Earnings
(a)
|
Income
Taxes
|
|
As
reported
|
$ 344.0
|
$ 164.3
|
|
$ 602.5
|
$ 203.7
|
|
$ 1,761.9
|
$ 586.8
|
|
$ 2,655.0
|
$ 883.3
|
|
Mark-to-market effects (b)
|
(8.3)
|
(3.1)
|
|
(5.5)
|
(2.1)
|
|
89.7
|
33.2
|
|
(48.5)
|
(18.0)
|
|
Divestiture (gain) (c)
|
-
|
-
|
|
(65.5)
|
(29.5)
|
|
-
|
-
|
|
(65.5)
|
(29.5)
|
|
Tax item
(d)
|
-
|
(78.6)
|
|
-
|
-
|
|
-
|
(78.6)
|
|
-
|
-
|
|
Acquisition integration costs (c)
|
8.4
|
3.2
|
|
-
|
-
|
|
16.0
|
5.6
|
|
-
|
-
|
|
Venezuela currency devaluation (e)
|
0.8
|
-
|
|
62.2
|
4.4
|
|
8.0
|
-
|
|
62.2
|
4.4
|
|
Restructuring costs (f)
|
25.1
|
9.2
|
|
0.1
|
(0.4)
|
|
343.5
|
125.8
|
|
3.6
|
-
|
|
Project-related costs (f)
|
9.7
|
3.6
|
|
-
|
-
|
|
13.2
|
4.9
|
|
-
|
-
|
|
Intangible asset impairment (g)
|
260.0
|
83.1
|
|
-
|
-
|
|
260.0
|
83.1
|
|
-
|
-
|
|
As
adjusted
|
$ 639.7
|
$ 181.7
|
|
$ 593.8
|
$ 176.1
|
|
$ 2,492.3
|
$ 760.8
|
|
$ 2,606.8
|
$ 840.2
|
|
Effective tax
rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
47.8%
|
|
|
33.8%
|
|
|
33.3%
|
|
|
33.3%
|
|
As
adjusted
|
|
28.4%
|
|
|
29.7%
|
|
|
30.5%
|
|
|
32.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Earnings before
income taxes and after-tax earnings from joint ventures.
|
|
(b) See Note 7.
|
|
|
|
|
|
(c) See Note
5.
|
|
|
|
|
|
(d) See Note 9.
|
|
|
|
|
|
(e) See Note 4.
|
|
|
|
|
|
|
|
|
|
(f) See Note
6.
|
|
|
|
|
|
|
|
|
|
(g) See Note 3.
|
|
|
|
|
|
|
|
|
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SOURCE General Mills