MINNEAPOLIS, Sept. 17, 2014 /PRNewswire/ -- General Mills
(NYSE: GIS) today reported results for the first quarter of fiscal
2015, and provided an update on new cost-reduction initiatives
designed to sharpen the company's efficiency and growth focus in
2015 and longer term.
First Quarter Results Summary
- Net sales declined 2 percent to
$4.27 billion. On a constant-currency
basis, net sales declined 1 percent.
- Segment operating profit totaled
$690 million, down 15 percent from
year-ago results as reported and in constant currency
- Diluted earnings per share (EPS) totaled
55 cents compared to 70 cents in last year's first quarter.
- Adjusted diluted EPS totaled 61 cents, down 13 percent from 70 cents in last year's first quarter. Foreign
currency translation did not have a material effect on adjusted
diluted EPS.
Constant-currency net sales, total and constant-currency
segment operating profit, and adjusted diluted EPS are each
non-GAAP measures. Please see Note 7 to the Consolidated
Financial Statements below for reconciliation of these
measures.
General Mills Chairman and Chief Executive Officer Ken Powell said, "Back in June, we said our 2015
plans anticipated first-quarter EPS below year-ago levels.
Our results were driven by sales and profit declines in the U.S.,
where industry trends were weak in the quarter. In addition,
higher merchandising expense for our U.S. Retail businesses in this
period depressed reported net sales and gross margin."
General Mills said year-to-year differences in merchandising
expense phasing are expected to have less impact on subsequent
quarters in 2015. Product innovation and consumer-directed
marketing plans, holistic margin management (HMM) cost savings and
several incremental cost-reduction actions are expected to drive
improved sales and margin performance across the remainder of the
year. The company reaffirmed its constant-currency growth
targets for the full 2015 fiscal year, but acknowledged conditions
in the U.S. market are more challenging than expected.
"We made some important progress in the first quarter," Powell
added. "In U.S. Retail, our Yoplait yogurt business returned
to growth, with volume, sales, and market share gains. Several
other key product lines including Big G cereals, grain bars, and
fruit snacks achieved market share increases. Our Convenience
Stores and Foodservice segment generated sales growth and an 18
percent operating profit increase. And our International
business segment posted 17 percent constant-currency profit growth
with good constant-currency sales gains, notably in Latin America and Europe."
Net sales for the 13 weeks ended August
24, 2014, declined 2 percent to $4.27
billion. Pound volume subtracted 2 points of
growth. Price realization and mix contributed 1 point of net
sales growth, and foreign exchange subtracted 1 point of
growth. Gross margin was below year-ago levels reflecting the
lower net sales and product mix. Advertising and media
expense grew 1 percent from strong year-ago levels. Segment
operating profit totaled $690
million, down 15 percent from last year's
results. Net earnings attributable to General
Mills totaled $345 million and
diluted earnings per share totaled 55
cents. Adjusted diluted EPS, which excludes certain
items affecting comparability, totaled 61
cents compared to 70 cents a
year ago. Foreign exchange translation did not have a
material impact on adjusted diluted EPS results.
General Mills introduced more than 250 new items worldwide
during the first quarter. Significant U.S. Retail launches
included: Cheerios Protein cereal; Chex gluten-free oatmeal
varieties; new flavor varieties of Yoplait Greek and Greek 100
yogurt; Fiber One Streusel snack bars, and Old El Paso Bold stand
and stuff taco kits. International product launches included
Haagen-Dazs Triple Sensations ice cream varieties in Europe, Betty
Crocker dessert mixes in Brazil and new seasonal varieties of
Wanchai Ferry frozen dumplings in
China.
U.S. Retail Segment Results
First-quarter net sales for General Mills' U.S. Retail segment
totaled $2.44 billion, down 5 percent
from the prior year. Price realization and mix subtracted 3
points of net sales growth, primarily reflecting higher
merchandising expense. Pound volume was 2 percent below
year-ago levels. The Snacks, Yoplait and Small Planet
Foods divisions achieved net sales gains in the quarter.
Advertising and media expense essentially matched year-ago
levels. Segment operating profit totaled $457 million compared to $612 million a year ago, reflecting the
unfavorable price realization, mix, and lower volume.
International Segment Results
First-quarter net sales for General Mills' consolidated
international businesses grew 2 percent to $1.35 billion. Pound volume subtracted 1
point of net sales growth. Price realization and mix added 7
points of net sales growth and foreign exchange subtracted 4 points
of growth. On a constant-currency basis, International
segment net sales rose 6 percent overall, including gains of 20
percent in Latin America, 4
percent in the Asia-Pacific
region, and 4 percent in Europe. Sales in Canada declined 2 percent on a
constant-currency basis, primarily reflecting the exit of select
business lines. International segment operating
profit grew 16 percent to $146
million, despite higher input costs and a 2 percent increase
in advertising and media expense. Segment operating profit
grew 17 percent on a constant-currency basis. (Please see Note 7
below for reconciliation of constant-currency sales and operating
profit, which are non-GAAP measures.)
Convenience Stores and Foodservice Segment Results
First-quarter net sales for the Convenience Stores and
Foodservice segment totaled $473
million, up 1 percent from year-ago results. Pound
volume subtracted 1 point of net sales growth, while price
realization and mix contributed 2 points of growth. Yogurt,
frozen breakfast, and snacks led sales performance in the
quarter. Segment operating profit grew 18 percent to
$87 million.
Joint Venture Summary
Combined after-tax earnings from the Cereal Partners Worldwide
(CPW) and Haagen-Dazs Japan (HDJ) joint ventures totaled
$26 million, up 7 percent from
prior-year results. Constant-currency after tax earnings from
joint ventures grew 5 percent. (Please see Note 7 below
for reconciliation of this non-GAAP measure.)
Constant-currency net sales grew 3 percent for HDJ, and were down 1
percent for CPW.
Corporate Items
Unallocated corporate items totaled $119
million net expense in the first quarter of fiscal 2015,
compared to $74 million net expense a
year earlier. Excluding mark-to-market valuation effects in
both years, unallocated corporate items totaled $70 million net expense this year compared to
$73 million net expense a year
ago.
Net interest expense totaled $78
million in this year's first quarter, compared to
$79 million a year ago. The
first-quarter adjusted effective tax rate was 32.3 percent,
essentially comparable to last year's 32.2 percent rate. (Please
see Note 7 below for reconciliation of this non-GAAP
measure.)
Cash Flow Items
Cash provided by operating activities totaled $329 million in the first quarter. Capital
investments in the period totaled $149
million. Dividends paid increased to $254 million. During the quarter, General
Mills repurchased nearly 9 million shares of common stock at an
aggregate price of $462
million. Average diluted shares outstanding for the
first quarter of 2015 totaled 629 million, down 5 percent from last
year's first-quarter average of 660 million.
New Cost-Reduction Initiatives
In June of this year, General Mills announced it had initiated
several new cost-reduction projects designed to boost
organizational efficiency and sharpen business focus behind the
company's key growth strategies. These initiatives are
incremental to the company's ongoing Holistic Margin Management
(HMM) program, under which the company expects to generate supply
chain cost savings exceeding $400
million in fiscal 2015.
Project Century is a formal review of General Mills' North
American manufacturing and distribution network, with the goals of
streamlining operations and identifying potential capacity
reductions. Today, General Mills said that this initiative is
expected to generate $100 million in
annualized savings by fiscal 2017. Actions associated with
this project are expected to commence in the second quarter of
fiscal 2015. General Mills also has initiated efforts to
further reduce overhead costs. These efforts are targeted to
generate savings of $40 million
pre-tax in fiscal 2015, with additional savings expected in
2016. Charges associated with the North American supply chain
review and overhead reduction projects (primarily asset write-downs
and severance costs) will be excluded from General Mills adjusted
diluted EPS.
In addition, General Mills recently announced a restructuring
plan to combine certain Yoplait and General Mills operational
facilities in our International segment. Restructuring
expense of $14 million associated
with this project was recorded in the first quarter of fiscal 2015
and is being excluded from adjusted diluted EPS. The project
is expected to generate cost savings of approximately $3 million in fiscal 2015 and a cumulative
$12 million by fiscal 2017.
Outlook
Powell said, "Our number one objective in fiscal 2015 continues
to be accelerating our topline growth. At the same time, we
know we must always be working to reduce costs, streamline
operations and improve efficiency across our worldwide
business. We've got strong plans for both of these
efforts."
General Mills reiterated its full-year growth targets for
2015. Net sales are expected to grow at a mid single-digit
rate in constant currency, including contribution of a 53rd week in
this fiscal year. Segment operating profit also is targeted
to grow at a mid single-digit rate in constant currency.
Benefit of the extra fiscal week will be reinvested to support
increased advertising and digital media initiatives, along with
project expenses related to several key fiscal 2016 product
launches. Adjusted diluted EPS (which excludes mark-to-market
valuation effects, currency devaluation, and restructuring, exit
and other project-related costs) is expected to grow at a high
single-digit rate in constant currency. At current exchange
rates the company estimates a 2-cent
headwind from currency translation in 2015.
General Mills will hold a briefing for investors today,
September 17, 2014, 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; volatility in
the market value of derivatives used to manage price risk for
certain commodities; benefit plan expenses due to changes in plan
asset values and discount rates used to determine plan liabilities;
failure or breach of our information technology systems; foreign
economic conditions, including currency rate fluctuations; and
political unrest in foreign markets and economic uncertainty due to
terrorism or war. The company undertakes no obligation to publicly
revise any forward-looking statement to reflect any future events
or circumstances.
Consolidated
Statements of Earnings and Supplementary Information
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(Unaudited) (In
Millions, Except per Share Data)
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
4,268.4
|
|
$
|
4,372.7
|
|
(2.4)
|
%
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
2,829.7
|
|
|
2,759.7
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expenses
|
|
867.2
|
|
|
875.4
|
|
(0.9)
|
%
|
|
|
|
|
|
|
|
|
|
Restructuring,
impairment, and other
exit
costs
|
|
14.0
|
|
|
2.8
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
557.5
|
|
|
734.8
|
|
(24.1)
|
%
|
|
|
|
|
|
|
|
|
|
Interest,
net
|
|
78.5
|
|
|
78.8
|
|
(0.4)
|
%
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes and after-tax
earnings from
joint ventures
|
|
479.0
|
|
|
656.0
|
|
(27.0)
|
%
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
152.6
|
|
|
212.0
|
|
(28.0)
|
%
|
|
|
|
|
|
|
|
|
|
After-tax earnings
from joint ventures
|
|
26.0
|
|
|
24.1
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
Net earnings,
including earnings attributable
to redeemable
and noncontrolling interests
|
|
352.4
|
|
|
468.1
|
|
(24.7)
|
%
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to redeemable
and
noncontrolling interests
|
|
7.2
|
|
|
8.8
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
$
|
345.2
|
|
$
|
459.3
|
|
(24.8)
|
%
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
|
0.56
|
|
$
|
0.71
|
|
(21.1)
|
%
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
|
0.55
|
|
$
|
0.70
|
|
(21.4)
|
%
|
|
|
|
|
|
|
|
|
|
Dividends per
share
|
$
|
0.41
|
|
$
|
0.38
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
Comparisons as a % of
net sales:
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
|
Basis Pt
Change
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
33.7%
|
|
|
36.9%
|
|
(320)
|
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expenses
|
|
20.3%
|
|
|
20.0%
|
|
30
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
13.1%
|
|
|
16.8%
|
|
(370)
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
|
8.1%
|
|
|
10.5%
|
|
(240)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
Comparisons as a % of
net sales excluding
certain items
affecting comparability (a):
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
|
Basis Pt
Change
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
34.8%
|
|
|
36.9%
|
|
(210)
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
14.5%
|
|
|
16.9%
|
|
(240)
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills
|
|
8.9%
|
|
|
10.6%
|
|
(170)
|
|
|
|
|
|
|
|
|
|
|
(a) See Note 7 for a
reconciliation of this measure not defined by generally accepted
accounting principles (GAAP).
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
|
Operating Segment
Results and Supplementary Information
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(Unaudited) (In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
|
%
Change
|
Net sales:
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
2,444.3
|
|
$
|
2,584.1
|
|
(5.4)
|
%
|
International
|
|
1,351.1
|
|
|
1,320.8
|
|
2.3
|
%
|
Convenience
Stores and Foodservice
|
|
473.0
|
|
|
467.8
|
|
1.1
|
%
|
Total
|
$
|
4,268.4
|
|
$
|
4,372.7
|
|
(2.4)
|
%
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
457.2
|
|
$
|
611.9
|
|
(25.3)
|
%
|
International
|
|
146.0
|
|
|
125.6
|
|
16.2
|
%
|
Convenience
Stores and Foodservice
|
|
87.3
|
|
|
74.1
|
|
17.8
|
%
|
Total segment
operating profit
|
|
690.5
|
|
|
811.6
|
|
(14.9)
|
%
|
|
|
|
|
|
|
|
|
|
Unallocated corporate
items
|
|
119.0
|
|
|
74.0
|
|
60.8
|
|
Restructuring,
impairment, and
other exit
costs
|
|
14.0
|
|
|
2.8
|
|
NM
|
|
Operating
profit
|
$
|
557.5
|
|
$
|
734.8
|
|
(24.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
|
Basis Pt
Change
|
Segment operating
profit as a
% of net
sales:
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
|
18.7%
|
|
|
23.7%
|
|
(500)
|
|
International
|
|
10.8%
|
|
|
9.5%
|
|
130
|
|
Convenience
Stores and Foodservice
|
|
18.4%
|
|
|
15.8%
|
|
260
|
|
Total segment
operating profit
|
|
16.2%
|
|
|
18.6%
|
|
(240)
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
|
Consolidated
Balance Sheets
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(In Millions, Except
Par Value)
|
|
|
|
|
|
|
|
|
|
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
|
|
May 25,
2014
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
841.2
|
|
$
|
758.9
|
|
$
|
867.3
|
Receivables
|
|
1,623.3
|
|
|
1,637.5
|
|
|
1,483.6
|
Inventories
|
|
1,823.3
|
|
|
1,773.6
|
|
|
1,559.4
|
Deferred
income taxes
|
|
66.6
|
|
|
114.3
|
|
|
74.1
|
Prepaid
expenses and other current assets
|
|
341.1
|
|
|
408.9
|
|
|
409.1
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
4,695.5
|
|
|
4,693.2
|
|
|
4,393.5
|
|
|
|
|
|
|
|
|
|
Land, buildings, and
equipment
|
|
3,907.0
|
|
|
3,789.4
|
|
|
3,941.9
|
Goodwill
|
|
8,608.1
|
|
|
8,615.2
|
|
|
8,650.5
|
Other intangible
assets
|
|
4,967.9
|
|
|
5,003.9
|
|
|
5,014.3
|
Other
assets
|
|
1,194.3
|
|
|
842.9
|
|
|
1,145.5
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
23,372.8
|
|
$
|
22,944.6
|
|
$
|
23,145.7
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
$
|
1,571.3
|
|
$
|
1,425.5
|
|
$
|
1,611.3
|
Current
portion of long-term debt
|
|
855.4
|
|
|
748.0
|
|
|
1,250.6
|
Notes
payable
|
|
1,795.4
|
|
|
1,583.1
|
|
|
1,111.7
|
Other
current liabilities
|
|
1,571.0
|
|
|
1,706.3
|
|
|
1,449.9
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
5,793.1
|
|
|
5,462.9
|
|
|
5,423.5
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
6,669.1
|
|
|
5,913.5
|
|
|
6,423.5
|
Deferred income
taxes
|
|
1,668.6
|
|
|
1,409.6
|
|
|
1,666.0
|
Other
liabilities
|
|
1,600.1
|
|
|
1,868.9
|
|
|
1,643.2
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
15,730.9
|
|
|
14,654.9
|
|
|
15,156.2
|
|
|
|
|
|
|
|
|
|
Redeemable
interest
|
|
959.1
|
|
|
995.9
|
|
|
984.1
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, 754.6 shares issued, $0.10 par value
|
|
75.5
|
|
|
75.5
|
|
|
75.5
|
Additional paid-in capital
|
|
1,237.5
|
|
|
1,189.6
|
|
|
1,231.8
|
Retained
earnings
|
|
11,878.0
|
|
|
11,157.9
|
|
|
11,787.2
|
Common
stock in treasury, at cost,
shares of 149.2, 117.6 and 142.3
|
|
(5,613.8)
|
|
|
(3,928.3)
|
|
|
(5,219.4)
|
Accumulated other comprehensive loss
|
|
(1,374.9)
|
|
|
(1,670.4)
|
|
|
(1,340.3)
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
6,202.3
|
|
|
6,824.3
|
|
|
6,534.8
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
480.5
|
|
|
469.5
|
|
|
470.6
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
6,682.8
|
|
|
7,293.8
|
|
|
7,005.4
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
$
|
23,372.8
|
|
$
|
22,944.6
|
|
$
|
23,145.7
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to consolidated financial statements.
|
Consolidated
Statements of Cash Flows
|
GENERAL MILLS, INC.
AND SUBSIDIARIES
|
(Unaudited) (In
Millions)
|
|
Quarter
Ended
|
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
Cash Flows -
Operating Activities
|
|
|
|
|
|
Net
earnings, including earnings attributable to redeemable
|
|
|
|
|
|
and noncontrolling interests
|
$
|
352.4
|
|
$
|
468.1
|
Adjustments to reconcile net earnings to net cash
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
150.3
|
|
|
151.0
|
After-tax earnings from joint ventures
|
|
(26.0)
|
|
|
(24.1)
|
Distributions of earnings from joint ventures
|
|
24.5
|
|
|
15.0
|
Stock-based compensation
|
|
45.6
|
|
|
41.3
|
Deferred income taxes
|
|
17.4
|
|
|
22.9
|
Tax
benefit on exercised options
|
|
(16.7)
|
|
|
(31.6)
|
Pension and other postretirement benefit plan
contributions
|
|
(12.3)
|
|
|
(12.1)
|
Pension and other postretirement benefit plan costs
|
|
23.1
|
|
|
30.8
|
Restructuring, impairment, and other exit costs
|
|
12.8
|
|
|
(5.6)
|
Changes in current assets and liabilities,
|
|
|
|
|
|
excluding the effects of acquisitions
|
|
(211.2)
|
|
|
(207.9)
|
Other, net
|
|
(30.5)
|
|
|
(66.7)
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
329.4
|
|
|
381.1
|
|
|
|
|
|
|
Cash Flows -
Investing Activities
|
|
|
|
|
|
Purchases of land, buildings, and equipment
|
|
(148.6)
|
|
|
(123.8)
|
Acquisitions, net of cash acquired
|
|
(12.9)
|
|
|
-
|
Investments in affiliates, net
|
|
(33.2)
|
|
|
11.0
|
Proceeds
from disposal of land, buildings, and equipment
|
|
0.3
|
|
|
3.0
|
Other,
net
|
|
(2.8)
|
|
|
(3.4)
|
|
|
|
|
|
|
Net cash used by investing activities
|
|
(197.2)
|
|
|
(113.2)
|
|
|
|
|
|
|
Cash Flows -
Financing Activities
|
|
|
|
|
|
Change
in notes payable
|
|
631.9
|
|
|
985.9
|
Issuance
of long-term debt
|
|
271.3
|
|
|
-
|
Payment
of long-term debt
|
|
(393.4)
|
|
|
(719.9)
|
Proceeds
from common stock issued on exercised options
|
|
17.5
|
|
|
11.7
|
Tax
benefit on exercised options
|
|
16.7
|
|
|
31.6
|
Purchases of common stock for treasury
|
|
(438.8)
|
|
|
(298.2)
|
Dividends paid
|
|
(254.4)
|
|
|
(247.5)
|
Distributions to noncontrolling and redeemable interest
holders
|
|
(0.8)
|
|
|
-
|
Other,
net
|
|
(3.1)
|
|
|
(0.9)
|
|
|
|
|
|
|
Net cash used by financing activities
|
|
(153.1)
|
|
|
(237.3)
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(5.2)
|
|
|
(13.1)
|
Increase (decrease)
in cash and cash equivalents
|
|
(26.1)
|
|
|
17.5
|
Cash and cash
equivalents - beginning of year
|
|
867.3
|
|
|
741.4
|
|
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
|
841.2
|
|
$
|
758.9
|
|
|
|
|
|
|
Cash Flow from
Changes in Current Assets and Liabilities,
excluding the
effects of acquisitions:
|
|
|
|
|
|
Receivables
|
$
|
(145.1)
|
|
$
|
(198.5)
|
Inventories
|
|
(237.2)
|
|
|
(241.6)
|
Prepaid
expenses and other current assets
|
|
58.1
|
|
|
27.6
|
Accounts
payable
|
|
42.4
|
|
|
47.1
|
Other
current liabilities
|
|
70.6
|
|
|
157.5
|
|
|
|
|
|
|
Changes in current
assets and liabilities
|
$
|
(211.2)
|
|
$
|
(207.9)
|
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.
|
|
|
|
Beginning in the
first quarter of fiscal 2015, we have 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)
|
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. Approximately 240 positions will be affected by these
actions. We expect to incur approximately $15 million of net
expenses relating to these actions and we recorded $14 million of
expense in the first quarter of fiscal 2015, including $13 million
of severance and $1 million of asset write offs and other
costs. We expect these actions to be completed in fiscal
2016. During the first quarter of fiscal 2014, we recorded
restructuring charges of $3 million related to the International
segment for a productivity and cost savings plan approved in the
fourth quarter of fiscal 2012. In the first quarter of fiscal 2015,
we paid $1 million in cash related to previously announced
restructuring actions.
|
|
|
(3)
|
For the first quarter
of fiscal 2015, unallocated corporate expense totaled $119 million
compared to $74 million in the same period last year. We recorded a
$49 million net increase in expense related to the mark-to-market
valuations of certain commodity positions and grain inventories in
the first quarter of fiscal 2015, compared to a $1 million net
increase in expense in the first quarter of fiscal 2014.
|
|
|
(4)
|
Basic and diluted
earnings per share (EPS) were calculated as follows:
|
|
|
Quarter
Ended
|
In Millions,
Except per Share Data
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
Net earnings
attributable to General Mills
|
$
|
345.2
|
|
$
|
459.3
|
|
|
|
|
|
|
Average number of
common shares - basic EPS
|
|
612.6
|
|
|
643.0
|
Incremental share
effect from: (a)
|
|
|
|
|
|
Stock
options
|
|
12.1
|
|
|
12.8
|
Restricted
stock, restricted stock units, and other
|
|
4.4
|
|
|
4.5
|
Average number of
common shares - diluted EPS
|
|
629.1
|
|
|
660.3
|
Earnings per share -
basic
|
$
|
0.56
|
|
$
|
0.71
|
Earnings per share -
diluted
|
$
|
0.55
|
|
$
|
0.70
|
(a) Incremental shares from stock options and restricted stock
units are computed by the treasury stock method.
|
|
|
|
|
(5)
|
The effective tax
rate for the first quarter of fiscal 2015 was 31.8 percent compared
to 32.3 percent for the first quarter of fiscal 2014. The 0.5
percentage point decrease was primarily due to favorable audit
settlements in the first quarter of fiscal 2015, offset by the
expiration of certain favorable tax laws.
|
|
|
(6)
|
On September 8, 2014,
we entered into a definitive agreement to acquire all of the
outstanding shares of Annie's Inc., a U.S. producer of branded
organic and natural food products, for $46 per share in cash.
The proposed transaction has an aggregate value of approximately
$820 million. We expect the transaction to close by December
31, 2014.
|
|
|
(7)
|
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 mark-to-market valuation of
certain commodity positions and grain inventories ("mark-to-market
effects") and restructuring costs ("restructuring costs")
(collectively, these 2 items are referred to as "certain items
affecting comparability" in this footnote), (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 rates, (6)
constant currency International segment operating profit growth
rates, (7) constant currency after-tax earnings from joint
ventures, (8) earnings comparisons as a percent of net sales
excluding certain items affecting comparability, (9) constant
currency net sales growth rates for our International segment in
total and by region, and (10) effective income tax rates 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. 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 Aug.
24, 2014
|
|
|
|
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)
|
%
|
(1)
|
|
(1)
|
%
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS excluding
certain items affecting comparability, and the related constant
currency growth rate on a constant currency basis
follows:
|
|
|
|
Quarter
Ended
|
|
|
|
Per Share
Data
|
|
Aug. 24,
2014
|
|
|
Aug. 25,
2013
|
Change
|
|
Diluted earnings per
share, as reported
|
$
|
0.55
|
|
$
|
0.70
|
(21)
|
%
|
|
Mark-to-market
effects (a)
|
|
0.05
|
|
|
-
|
|
|
|
Restructuring
costs (b)
|
|
0.01
|
|
|
-
|
|
|
|
Diluted earnings per
share, excluding
certain
items affecting
comparability
|
$
|
0.61
|
|
$
|
0.70
|
(13)
|
%
|
|
Foreign currency
exchange impact
|
|
|
|
|
|
-
|
%
|
|
Diluted earnings per
share growth,
|
|
|
|
|
|
|
|
|
excluding certain items affecting
|
|
|
|
|
|
|
|
|
comparability, on a constant currency basis
|
|
|
|
|
|
(13)
|
%
|
(a) See Note 3.
|
(b) See Note 2.
|
|
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 Aug.
24, 2014
|
|
|
|
Percentage Change
in Total
Segment Operating Profit as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in Total
Segment Operating Profit on
Constant Currency Basis
|
|
Total Segment
Operating Profit
|
(15)
|
%
|
Flat
|
|
(15)
|
%
|
|
|
|
|
|
|
|
|
|
|
Constant currency
International segment operating profit growth rates
follow:
|
|
|
|
|
|
Quarter Ended Aug.
24, 2014
|
|
|
|
Percentage Change
in
Segment Operating Profit as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in Segment
Operating Profit on Constant
Currency Basis
|
|
International Segment
Operating Profit
|
16
|
%
|
(1)
|
pt
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
Constant currency
International net sales growth rates follow:
|
|
|
|
|
|
Quarter Ended Aug.
24, 2014
|
|
|
|
Percentage Change
in
Net Sales
as
Reported
|
Impact of
Foreign
Currency
Exchange
|
Percentage Change
in
Net Sales on Constant
Currency Basis
|
|
Europe
|
9
|
%
|
5
|
pts
|
4
|
%
|
|
Canada
|
(6)
|
|
(4)
|
|
(2)
|
|
|
Asia/Pacific
|
4
|
|
-
|
|
4
|
|
|
Latin
America
|
(4)
|
|
(24)
|
|
20
|
|
|
Total
International
|
2
|
%
|
(4)
|
pts
|
6
|
%
|
|
Constant currency
after-tax earnings from joint ventures follow:
|
|
|
|
|
|
Quarter Ended Aug.
24, 2014
|
|
|
|
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
|
7
|
%
|
2
|
pts
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
Earnings comparisons
as a percent of net sales excluding certain items affecting
comparability follow:
|
|
|
|
|
Quarter
Ended
|
|
In
Millions
|
|
Aug. 24,
2014
|
|
Aug. 25,
2013
|
|
Comparisons as a %
of Net Sales
|
|
Value
|
|
Percent
of
Net
Sales
|
|
|
Value
|
|
Percent
of
Net
Sales
|
|
Gross margin as
reported (a)
|
$
|
1,438.7
|
|
33.7
|
%
|
|
$
|
1,613.0
|
|
36.9
|
%
|
|
Mark-to-market
effects (b)
|
|
49.2
|
|
1.1
|
%
|
|
|
0.8
|
|
-
|
%
|
|
Adjusted gross
margin
|
$
|
1,487.9
|
|
34.8
|
%
|
|
$
|
1,613.8
|
|
36.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as
reported
|
$
|
557.5
|
|
13.1
|
%
|
|
$
|
734.8
|
|
16.8
|
%
|
|
Mark-to-market
effects (b)
|
|
49.2
|
|
1.1
|
%
|
|
|
0.8
|
|
-
|
%
|
|
Restructuring
costs (c)
|
|
14.0
|
|
0.3
|
%
|
|
|
2.8
|
|
0.1
|
%
|
|
Adjusted operating
profit
|
$
|
620.7
|
|
14.5
|
%
|
|
$
|
738.4
|
|
16.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to General Mills as reported
|
$
|
345.2
|
|
8.1
|
%
|
|
$
|
459.3
|
|
10.5
|
%
|
|
Mark-to-market
effects, net of tax (b)
|
|
31.0
|
|
0.7
|
%
|
|
|
0.5
|
|
-
|
%
|
|
Restructuring
costs, net of tax (c)
|
|
4.8
|
|
0.1
|
%
|
|
|
2.6
|
|
0.1
|
%
|
|
Adjusted net earnings
attributable to General Mills
|
$
|
381.0
|
|
8.9
|
%
|
|
$
|
462.4
|
|
10.6
|
%
|
|
(a) Net
sales less cost of sales.
|
|
(b) See
Note 3.
|
|
(c) See
Note 2.
|
|
A reconciliation of
the effective income tax rate as reported to the effective income
tax rate excluding certain items affecting comparability
follows:
|
|
|
|
|
Quarter Ended
|
|
|
Aug. 24,
2014
|
|
Aug. 25,
2013
|
|
In
Millions
|
Pretax
Earnings (a)
|
Income
Taxes
|
|
Pretax
Earnings (a)
|
Income
Taxes
|
|
As
reported
|
$ 479.0
|
$ 152.6
|
|
$ 656.0
|
$ 212.0
|
|
Mark-to-market effects (b)
|
49.2
|
18.2
|
|
0.8
|
0.3
|
|
Restructuring costs (c)
|
14.0
|
4.6
|
|
2.8
|
0.2
|
|
As
adjusted
|
$ 542.2
|
$ 175.4
|
|
$ 659.6
|
$ 212.5
|
|
Effective tax
rate:
|
|
|
|
|
|
|
As
reported
|
|
31.8%
|
|
|
32.3%
|
|
As
adjusted
|
|
32.3%
|
|
|
32.2%
|
|
(a)
Earnings before income taxes and after-tax earnings from joint
ventures.
|
|
(b)
See Note 3.
|
|
(c)
See Note 2.
|
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SOURCE General Mills