10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

RQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 25, 2019

£TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-01185

________________

GENERAL MILLS, INC.

(Exact name of registrant as specified in its charter)

Delaware	41-0274440
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Number One General Mills Boulevard
Minneapolis, Minnesota	55426
(Address of principal executive offices)	(Zip Code)

(763)764-7600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 par value	GIS	New York Stock Exchange
Floating Rate Notes due 2020	GIS20A	New York Stock Exchange
2.100% Notes due 2020	GIS20	New York Stock Exchange
1.000% Notes due 2023	GIS23A	New York Stock Exchange
1.500% Notes due 2027	GIS27	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes RNo £

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and such files). Yes RNo £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer R

Accelerated filer £

Non-accelerated filer ££

Smaller reporting company£

Emerging growth company £

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)

	Quarter Ended
		Aug. 25, 2019		Aug. 26, 2018
Net sales	$	4,002.5	$	4,094.0
Cost of sales		2,613.0		2,751.2
Selling, general, and administrative expenses		718.9		742.7
Restructuring, impairment, and other exit costs (recoveries)		8.2		(1.4)
Operating profit		662.4		601.5
Benefit plan non-service income		(30.2)		(20.9)
Interest, net		118.7		133.5
Earnings before income taxes and after-tax earnings
from joint ventures		573.9		488.9
Income taxes		67.2		110.7
After-tax earnings from joint ventures		21.8		17.7
Net earnings, including earnings attributable to
redeemable and noncontrolling interests		528.5		395.9
Net earnings attributable to redeemable
and noncontrolling interests		7.9		3.6
Net earnings attributable to General Mills	$	520.6	$	392.3
Earnings per share - basic	$	0.86	$	0.66
Earnings per share - diluted	$	0.85	$	0.65
Dividends per share	$	0.49	$	0.49
See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)

	Quarter Ended
		Aug. 25, 2019		Aug. 26, 2018
Net earnings, including earnings attributable to
redeemable and noncontrolling interests	$	528.5	$	395.9
Other comprehensive income (loss), net of tax:
Foreign currency translation		(3.7)		(106.2)
Other fair value changes:
Hedge derivatives		3.8		7.1
Reclassification to earnings:
Securities		-		(2.0)
Hedge derivatives		(0.6)		0.6
Amortization of losses and prior service costs		19.6		21.9
Other comprehensive income (loss), net of tax		19.1		(78.6)
Total comprehensive income		547.6		317.3
Comprehensive income (loss) attributable to
redeemable and noncontrolling interests		2.2		(4.8)
Comprehensive income attributable to General Mills	$	545.4	$	322.1
See accompanying notes to consolidated financial statements.

Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
		Aug. 25, 2019		May 26, 2019
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	504.8	$	450.0
Receivables		1,710.5		1,679.7
Inventories		1,700.1		1,559.3
Prepaid expenses and other current assets		346.0		497.5
Total current assets		4,261.4		4,186.5
Land, buildings, and equipment		3,668.3		3,787.2
Goodwill		13,983.6		13,995.8
Other intangible assets		7,151.4		7,166.8
Other assets		1,248.5		974.9
Total assets	$	30,313.2	$	30,111.2
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,786.7	$	2,854.1
Current portion of long-term debt		1,391.8		1,396.5
Notes payable		1,296.1		1,468.7
Other current liabilities		1,428.8		1,367.8
Total current liabilities		6,903.4		7,087.1
Long-term debt		11,619.8		11,624.8
Deferred income taxes		1,991.7		2,031.0
Other liabilities		1,554.9		1,448.9
Total liabilities		22,069.8		22,191.8
Redeemable interest		547.8		551.7
Stockholders' equity:
Common stock, 754.6 shares issued, $0.10 par value		75.5		75.5
Additional paid-in capital		1,370.9		1,386.7
Retained earnings		15,218.8		14,996.7
Common stock in treasury, at cost, shares of 150.5 and 152.7		(6,681.8)		(6,779.0)
Accumulated other comprehensive loss		(2,600.6)		(2,625.4)
Total stockholders' equity		7,382.8		7,054.5
Noncontrolling interests		312.8		313.2
Total equity		7,695.6		7,367.7
Total liabilities and equity	$	30,313.2	$	30,111.2
See accompanying notes to consolidated financial statements.

Consolidated Statements of Total Equity and Redeemable Interest
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)


	$.10 Par Value Common Stock
	(One Billion Shares Authorized)
	Issued					Treasury
												Accumulated
					Additional							Other		Non-
					Paid-In					Retained		Comprehensive		controlling		Total		Redeemable
	Shares		Par Amount		Capital	Shares		Amount		Earnings		Loss		Interests		Equity		Interest
Balance as of May 26, 2019	754.6	$	75.5	$	1,386.7	(152.7)	$	(6,779.0)	$	14,996.7	$	(2,625.4)	$	313.2	$	7,367.7	$	551.7
Total comprehensive income										520.6		24.8		2.1		547.5		0.1
Cash dividends declared ($0.49 per share)										(298.5)						(298.5)
Stock compensation plans					18.0	2.2		97.2								115.2
Unearned compensation related to restricted stock unit awards					(66.5)											(66.5)
Earned compensation					28.7											28.7
Decrease in redemption value of redeemable interest					4.0											4.0		(4.0)
Distributions to noncontrolling and redeemable interest holders														(2.5)		(2.5)
Balance as of August 25, 2019	754.6	$	75.5	$	1,370.9	(150.5)	$	(6,681.8)	$	15,218.8	$	(2,600.6)	$	312.8	$	7,695.6	$	547.8

Balance as of May 27, 2018	754.6	$	75.5	$	1,202.5	(161.5)	$	(7,167.5)	$	14,459.6	$	(2,429.0)	$	351.3	$	6,492.4	$	776.2
Total comprehensive income (loss)										392.3		(70.2)		1.8		323.9		(6.6)
Cash dividends declared ($0.49 per share)										(294.2)						(294.2)
Shares purchased								(0.2)								(0.2)
Stock compensation plans					(2.5)	3.0		131.8								129.3
Unearned compensation related to restricted stock unit awards					(65.2)											(65.2)
Earned compensation					28.1											28.1
Increase in redemption value of redeemable interest					(2.0)											(2.0)		2.0
Distributions to noncontrolling and redeemable interest holders														(2.4)		(2.4)
Adoption of revenue recognition accounting requirements										(33.9)						(33.9)
Balance as of August 26, 2018	754.6	$	75.5	$	1,160.9	(158.5)	$	(7,035.9)	$	14,523.8	$	(2,499.2)	$	350.7	$	6,575.8	$	771.6
See accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)

	Quarter Ended
		Aug. 25, 2019		Aug. 26, 2018
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable
and noncontrolling interests	$	528.5	$	395.9
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization		154.1		155.2
After-tax earnings from joint ventures		(21.8)		(17.7)
Distributions of earnings from joint ventures		20.7		29.2
Stock-based compensation		28.8		26.1
Deferred income taxes		(37.2)		28.9
Pension and other postretirement benefit plan contributions		(6.9)		(7.4)
Pension and other postretirement benefit plan costs		(7.8)		1.5
Restructuring, impairment, and other exit costs		4.9		(18.9)
Changes in current assets and liabilities		(84.6)		14.8
Other, net		(6.6)		(0.2)
Net cash provided by operating activities		572.1		607.4
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment		(69.8)		(112.7)
Investments in affiliates, net		(12.5)		0.1
Proceeds from disposal of land, buildings, and equipment		0.3		0.1
Other, net		(1.7)		(27.1)
Net cash used by investing activities		(83.7)		(139.6)
Cash Flows - Financing Activities
Change in notes payable		(170.0)		(189.8)
Payment of long-term debt		(0.1)		(0.2)
Proceeds from common stock issued on exercised options		55.8		73.4
Purchases of common stock for treasury		-		(0.2)
Dividends paid		(298.5)		(294.2)
Distributions to noncontrolling and redeemable interest holders		(2.5)		(2.4)
Other, net		(13.3)		(9.6)
Net cash used by financing activities		(428.6)		(423.0)
Effect of exchange rate changes on cash and cash equivalents		(5.0)		(10.9)
Increase in cash and cash equivalents		54.8		33.9
Cash and cash equivalents - beginning of year		450.0		399.0
Cash and cash equivalents - end of period	$	504.8	$	432.9
Cash Flow from changes in current assets and liabilities:
Receivables	$	(37.4)	$	(48.7)
Inventories		(145.3)		(58.2)
Prepaid expenses and other current assets		148.0		35.4
Accounts payable		(35.8)		17.7
Other current liabilities		(14.1)		68.6
Changes in current assets and liabilities	$	(84.6)	$	14.8
See accompanying notes to consolidated financial statements.

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Background

The accompanying Consolidated Financial Statements of General Mills, Inc. (we, us, our, General Mills, or the Company) have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature, including the elimination of all intercompany transactions and any noncontrolling and redeemable interests’ share of those transactions. Operating results for the quarter ended August 25, 2019, are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2020.

These statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended May 26, 2019. The accounting policies used in preparing these Consolidated Financial Statements are the same as those described in Note 2 to the Consolidated Financial Statements in that Form 10-K with the exception of new requirements adopted in the first quarter of fiscal 2020.

In the first quarter of fiscal 2020, we adopted new accounting requirements for hedge accounting. The new standard amends the hedge accounting recognition and presentation requirements to better align an entity’s risk management activities and financial reporting. The new standard also simplifies the application of hedge accounting guidance. The adoption did not have a material impact on our results of operations or financial position.

In the first quarter of fiscal 2020, we adopted new requirements for the accounting, presentation and classification of leases. This results in certain leases being capitalized as a right of use asset with a related liability on our Consolidated Balance Sheet. We have performed a review of our lease portfolio, implemented lease accounting software, and developed a centralized business process with corresponding controls. We adopted this guidance utilizing the cumulative effect adjustment approach, which required application of the guidance at the adoption date and elected certain practical expedients permitted under the transition guidance, including not reassessing whether existing contracts contain leases and carrying forward the historical classification of those leases. In addition, we elected not to recognize leases with an initial term of 12 months or less on our Consolidated Balance Sheet and to continue our historical treatment of land easements, under permitted elections. This guidance did not have a material impact on retained earnings, our Consolidated Statements of Earnings, or our Consolidated Statements of Cash Flows. See Note 5 to the Consolidated Financial Statements for additional information on the impact to our Consolidated Balance Sheets.

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

(2) Restructuring, Impairment, and Other Exit Costs

Restructuring charges were as follows:

		Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Charges (recoveries) associated with restructuring actions previously announced	$	14.3	$	(1.2)
Total	$	14.3	$	(1.2)

During the first quarter of fiscal 2020, we did not undertake any new restructuring actions. We recorded $14.3 million of restructuring charges for previously announced restructuring actions, compared to a $1.2 million net recovery of restructuring charges in the first quarter of fiscal 2019. The restructuring charges primarily relate to actions to drive efficiencies in targeted areas of our global supply chain. Certain global supply chain actions are subject to union negotiations and works counsel consultations, where required. We expect these actions to be completed by the end of fiscal 2022.

We spent $9.4 million of cash related to restructuring actions previously announced in the first quarter of fiscal 2020 compared to $17.7 million in the same period of fiscal 2019.

Restructuring and impairment charges and project-related costs are recorded in our Consolidated Statements of Earnings as follows:

		Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Restructuring, impairment, and other exit costs (recoveries)	$	8.2	$	(1.4)
Cost of sales		6.1		0.2
Total restructuring charges (recoveries)		14.3		(1.2)
Project-related costs classified in cost of sales	$	-	$	1.2

The roll forward of our restructuring and other exit cost reserves, included in other current liabilities, is as follows:

In Millions
Reserve balance as of May 26, 2019	$	36.5
Fiscal 2020 charges, including foreign currency translation		2.7
Utilized in fiscal 2020		(5.8)
Reserve balance as of Aug. 25, 2019	$	33.4

The reserve balance primarily consists of expected severance payments associated with restructuring actions.

The charges recognized in the roll forward of our reserves for restructuring and other exit costs do not include items charged directly to expense (e.g., asset impairment charges, accelerated depreciation, the gain or loss on the sale of restructured assets, and the write-off of spare parts) and other periodic exit costs are recognized as incurred, as those items are not reflected in our restructuring and other exit cost reserves on our Consolidated Balance Sheets.

(3) Goodwill and Other Intangible Assets

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

In Millions		Aug. 25, 2019		May 26, 2019
Goodwill	$	13,983.6	$	13,995.8
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles		6,586.5		6,590.8
Intangible assets subject to amortization:
Franchise agreements, customer relationships, and other finite-lived intangibles		782.4		786.1
Less accumulated amortization		(217.5)		(210.1)
Intangible assets subject to amortization, net		564.9		576.0
Other intangible assets		7,151.4		7,166.8
Total	$	21,135.0	$	21,162.6

Based on the carrying value of finite-lived intangible assets as of August 25, 2019, annual amortization expense for each of the next five fiscal years is estimated to be approximately $40 million.

The changes in the carrying amount of goodwill during the first quarter of fiscal 2020 were as follows:

In Millions		North America Retail		Pet		Convenience Stores & Foodservice		Europe & Australia		Asia & Latin America		Joint Ventures		Total
Balance as of May 26, 2019	$	6,406.5	$	5,300.5	$	918.8	$	700.4	$	260.2	$	409.4	$	13,995.8
Other activity, primarily foreign
currency translation		1.3		-		-		(7.7)		(3.7)		(2.1)		(12.2)
Balance as of Aug. 25, 2019	$	6,407.8	$	5,300.5	$	918.8	$	692.7	$	256.5	$	407.3	$	13,983.6

The changes in the carrying amount of other intangible assets during the first quarter of fiscal 2020 were as follows:

In Millions		Total
Balance as of May 26, 2019	$	7,166.8
Other activity, primarily foreign currency translation		(15.4)
Balance as of Aug. 25, 2019	$	7,151.4

Our annual goodwill and indefinite-lived intangible assets test was performed as of the first day of the second quarter of fiscal 2019. As a result of lower sales projections in our long-range plans for the businesses supporting the Progresso, Food Should Taste Good, and Mountain High brand intangible assets, we recorded the following impairment charges:

In Millions		Impairment Charge		Fair Value as of Nov. 25, 2018 (a)
Progresso	$	132.1	$	330.0
Food Should Taste Good		45.1		-
Mountain High		15.4		-
Total	$	192.6	$	330.0
(a) Level 3 assets in the fair value hierarchy.

Significant assumptions used in that assessment included our long-range cash flow projections for the businesses, royalty rates, weighted average cost of capital rates, and tax rates.

Our Latin America reporting unit and the Yoki brand intangible asset had fair values that were not substantially in excess of the carrying values. The excess fair value as of the fiscal 2019 test date of the Latin America reporting unit and the Yoki brand intangible asset were as follows:

In Millions		Carrying Value of Intangible Asset	Excess Fair Value as of Fiscal 2019 Test Date
Latin America	$	209.0	7%
Yoki	$	49.1	10%

While having significant coverage as of our fiscal 2019 assessment date, the Pillsbury brand intangible asset and U.S. Yogurt reporting unit had risk of decreasing coverage. We will continue to monitor these businesses for potential impairment.

(4) Inventories

The components of inventories were as follows:

In Millions		Aug. 25, 2019		May 26, 2019
Raw materials and packaging	$	423.5	$	434.9
Finished goods		1,419.3		1,245.9
Grain		74.0		92.0
Excess of FIFO over LIFO cost		(216.7)		(213.5)
Total	$	1,700.1	$	1,559.3

(5) Leases

We determine whether an arrangement is a lease at inception. Our lease portfolio primarily consists of operating lease arrangements for certain warehouse and distribution space, office space, retail shops, production facilitates, rail cars, production and distribution equipment, automobiles, and office equipment. When our lease arrangements include lease and non-lease components, we account for lease components and non-lease components (e.g. common area maintenance) separately based on their relative standalone prices.

Any lease arrangements with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheet, and we recognize lease cost for these lease arrangements on a straight-line basis over the lease term. Many of our lease arrangements provide us with the options to exercise one or more renewal terms or to terminate the lease arrangement. We include these options when we are reasonably certain to exercise them in the lease term used to establish our right of use assets and lease liabilities. Generally, our lease agreements do not include an option to purchase the leased asset, residual value guarantees or material restrictive covenants.

We have certain lease arrangements with variable rental payments. Our lease arrangements for our Häagen-Dazs retail shops often include rental payments that are based on a percentage of retail sales. We have other lease arrangements that are adjusted periodically

In Millions
Fiscal 2020	$	120.0
Fiscal 2021		101.7
Fiscal 2022		85.0
Fiscal 2023		63.8
Fiscal 2024		49.1
After fiscal 2024		63.0
Total noncancelable future lease commitments	$	482.6

The weighted-average remaining lease term and weighted-average discount rate for our operating leases are as follows:



	Aug. 25, 2019
Weighted-average remaining lease term	4.9	years
Weighted-average discount rate	4.2	%

Operating cash flow information and non-cash activity related to our operating leases are as follows:

	Quarter Ended
In Millions	Aug. 25, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	31.8
Right of use assets obtained in exchange for new lease liabilities		3.5

(6) Risk Management Activities

Many commodities we use in the production and distribution of our products are exposed to market price risks. We utilize derivatives to manage price risk for our principal ingredients and energy costs, including grains (oats, wheat, and corn), oils (principally soybean), dairy products, natural gas, and diesel fuel. Our primary objective when entering into these derivative contracts is to achieve certainty with regard to the future price of commodities purchased for use in our supply chain. We manage our exposures through a combination of purchase orders, long-term contracts with suppliers, exchange-traded futures and options, and over-the-counter options and swaps. We offset our exposures based on current and projected market conditions and generally seek to acquire the inputs at as close to our planned cost as possible.

We use derivatives to manage our exposure to changes in commodity prices. We do not perform the assessments required to achieve hedge accounting for commodity derivative positions. Accordingly, the changes in the values of these derivatives are recorded currently in cost of sales in our Consolidated Statements of Earnings.

Although we do not meet the criteria for cash flow hedge accounting, we believe that these instruments are effective in achieving our objective of providing certainty in the future price of commodities purchased for use in our supply chain. Accordingly, for purposes of measuring segment operating performance, these gains and losses are reported in unallocated corporate items outside of segment operating results until such time that the exposure we are managing affects earnings. At that time we reclassify the gain or loss from unallocated corporate items to segment operating profit, allowing our operating segments to realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in unallocated corporate items.

Unallocated corporate items for the quarters ended August 25, 2019 and August 26, 2018 included:

	Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Net loss on mark-to-market valuation of certain commodity positions	$	(20.7)	$	(19.5)
Net loss (gain) on commodity positions reclassified from unallocated corporate items to segment operating profit		11.3		(3.7)
Net mark-to-market revaluation of certain grain inventories		(5.6)		(7.9)
Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items	$	(15.0)	$	(31.1)

As of August 25, 2019, the net notional value of commodity derivatives was $199.3 million, of which $61.2 million related to energy inputs and $138.1 million related to agricultural inputs. These contracts relate to inputs that generally will be utilized within the next 12 months.

The fair values of the derivative positions used in our risk management activities and other assets recorded at fair value were not material as of August 25, 2019, and were Level 1 or Level 2 assets and liabilities in the fair value hierarchy. We did not significantly change our valuation techniques from prior periods.

We offer certain suppliers access to third party services that allow them to view our scheduled payments online. The third party services also allow suppliers to finance advances on our scheduled payments at the sole discretion of the supplier and the third party. We have no economic interest in these financing arrangements and no direct relationship with the suppliers, the third parties, or any financial institutions concerning these services. All of our accounts payable remain as obligations to our suppliers as stated in our supplier agreements. As of August 25, 2019, $1,095.8 million of our total accounts payable were payable to suppliers who utilize these third party services.

(7) Debt

The components of notes payable were as follows:

In Millions		Aug. 25, 2019		May 26, 2019
U.S. commercial paper	$	1,117.3	$	1,298.5
Financial institutions		178.8		170.2
Total	$	1,296.1	$	1,468.7

To ensure availability of funds, we maintain bank credit lines sufficient to cover our outstanding notes payable. Commercial paper is a continuing source of short-term financing. We have commercial paper programs available to us in the United States and Europe. We also have committed, uncommitted, and asset-backed credit lines that support our foreign operations.

The following table details the fee-paid committed and uncommitted credit lines we had available as of August 25, 2019:

In Billions		Facility Amount		Borrowed Amount
Credit facility expiring:
May 2022	$	2.7	$	-
September 2019		0.2		-
Total committed credit facilities		2.9		-
Uncommitted credit facilities		0.7		0.2
Total committed and uncommitted credit facilities	$	3.6	$	0.2

The credit facilities contain covenants, including a requirement to maintain a fixed charge coverage ratio of at least 2.5 times. We were in compliance with all credit facility covenants as of August 25, 2019.

Long-Term Debt

The fair values and carrying amounts of long-term debt, including the current portion, were $13,868.2 million and $13,011.6 million, respectively, as of August 25, 2019. The fair value of long-term debt was estimated using market quotations and discounted cash flows based on our current incremental borrowing rates for similar types of instruments. Long-term debt is a Level 2 liability in the fair value hierarchy.

In the fourth quarter of 2019, we issued €300.0 million principal amount of 0.0 percent fixed-rate notes due January 15, 2020. We may redeem the notes if certain tax laws change and we would be obligated to pay additional amounts on the notes. These notes are senior unsecured obligations that include a change of control repurchase provision. We used the net proceeds, together with cash on hand, to repay our €300.0 million floating rate notes.

In the third quarter of 2019, we repaid $1,150.0 million of 5.65 percent fixed-rate notes with proceeds from commercial paper.

Certain of our long-term debt agreements contain restrictive covenants. As of August 25, 2019, we were in compliance with all of these covenants.

(8) Redeemable and Noncontrolling Interests

We have a 51 percent controlling interest in Yoplait SAS and a 50 percent interest in Yoplait Marques SNC and Liberté Marques Sàrl. Sodiaal International (Sodiaal) holds the remaining interests in each of the entities. On the acquisition date, we recorded the $904.4 million fair value of Sodiaal’s 49 percent euro-denominated interest in Yoplait SAS as a redeemable interest on our Consolidated Balance Sheets. Sodiaal has the ability to put all or a portion of its redeemable interest to us at fair value once per year, up to three times before December 2024. We adjust the value of the redeemable interest through additional paid-in capital on our Consolidated Balance Sheets quarterly to the redeemable interest’s redemption value, which approximates its fair value. Yoplait SAS pays dividends annually if it meets certain financial metrics set forth in its shareholders’ agreement. As of August 25, 2019, the redemption value of the euro-denominated redeemable interest was $547.8 million.

A subsidiary of Yoplait SAS has an exclusive milk supply agreement for its European operations with Sodiaal through July 1, 2021. Net purchases totaled $67.2 million for the quarter ended August 25, 2019, and $53.0 million for the quarter ended August 26, 2018.

During the second quarter of fiscal 2019, Sodiaal made an additional investment of $55.7 million in Yoplait SAS.

On the acquisition dates, we recorded the $281.4 million fair value of Sodiaal’s 50 percent euro-denominated interest in Yoplait Marques SNC and 50 percent Canadian dollar-denominated interest in Liberté Marques Sàrl as noncontrolling interests on our Consolidated Balance Sheets. Yoplait Marques SNC earns a royalty stream through a licensing agreement with Yoplait SAS for the rights to Yoplait and related trademarks. Liberté Marques Sàrl earns a royalty stream through licensing agreements with certain Yoplait group companies for the rights to Liberté and related trademarks. These entities pay dividends annually based on their available cash as of their fiscal year end.

The third-party holder of the General Mills Cereals, LLC (GMC) Class A Interests receives quarterly preferred distributions from available net income based on the application of a floating preferred return rate to the holder’s capital account balance established in the most recent mark-to-market valuation (currently $251.5 million). On June 1, 2018, the floating preferred return rate on GMC’s Class A Interests was reset to the sum of three-month LIBOR plus 142.5 basis points. The preferred return rate is adjusted every three years through a negotiated agreement with the Class A Interest holder or through a remarketing auction.

Our noncontrolling interests contain restrictive covenants. As of August 25, 2019, we were in compliance with all of these covenants.

(9) Stockholders’ Equity

The following tables provide details of total comprehensive income:


		Quarter Ended										Quarter Ended
		Aug. 25, 2019										Aug. 26, 2018
								Noncontrolling		Redeemable								Noncontrolling		Redeemable
		General Mills						Interests		Interest		General Mills						Interests		Interest
In Millions		Pretax		Tax		Net		Net		Net		Pretax		Tax		Net		Net		Net
Net earnings, including earnings attributable to redeemable and noncontrolling interests					$	520.6	$	3.6	$	4.3					$	392.3	$	3.1	$	0.5
Other comprehensive income (loss):
Foreign currency translation	$	2.7	$	-		2.7		(1.5)		(4.9)	$	(96.8)	$	-		(96.8)		(1.3)		(8.1)
Other fair value changes:
Hedge derivatives		2.4		0.7		3.1		-		0.7		7.2		(1.0)		6.2		-		0.9
Reclassification to earnings:
Securities (a)		-		-		-		-		-		(2.6)		0.6		(2.0)		-		-
Hedge derivatives (b)		(0.6)		-		(0.6)		-		-		0.5		-		0.5		-		0.1
Amortization of losses and prior service costs ( c)		25.5		(5.9)		19.6		-		-		26.9		(5.0)		21.9		-		-
Other comprehensive income (loss)	$	30.0	$	(5.2)		24.8		(1.5)		(4.2)	$	(64.8)	$	(5.4)		(70.2)		(1.3)		(7.1)
Total comprehensive income (loss)					$	545.4	$	2.1	$	0.1					$	322.1	$	1.8	$	(6.6)

(a)Gain reclassified from AOCI into earnings is reported in interest, net for securities.(b)Loss (gain) reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.(c)Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.

Accumulated other comprehensive loss balances, net of tax effects, were as follows:

In Millions		Aug. 25, 2019		May 26, 2019
Foreign currency translation adjustments	$	(737.2)	$	(739.9)
Unrealized gain (loss) from:
Hedge derivatives		(16.9)		(19.4)
Pension, other postretirement, and postemployment benefits:
Net actuarial loss		(1,860.4)		(1,880.5)
Prior service credits		13.9		14.4
Accumulated other comprehensive loss	$	(2,600.6)	$	(2,625.4)

(10) Stock Plans

We have various stock-based compensation programs under which awards, including stock options, restricted stock, restricted stock units, and performance awards, may be granted to employees and non-employee directors. These programs and related accounting are described in Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 26, 2019.

Compensation expense related to stock-based payments recognized in the Consolidated Statements of Earnings was as follows:

		Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Compensation expense related to stock-based payments	$	28.8	$	26.2

Compensation expense related to stock-based payments recognized in the Consolidated Statements of Earnings includes amounts recognized in restructuring, impairment, and other exit costs in fiscal 2019.

We recognized windfall tax benefits from stock-based payments in income tax expense in our Consolidated Statements of Earnings of $6.6 million for the first quarter of fiscal 2020 and $5.3 million in the first quarter of fiscal 2019.

As of August 25, 2019, unrecognized compensation expense related to non-vested stock options, restricted stock units, and performance share units was $151.4 million. This expense will be recognized over 28 months, on average.

Net cash proceeds from the exercise of stock options less shares used for withholding taxes and the intrinsic value of options exercised were as follows:

		Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Net cash proceeds	$	55.8	$	73.4
Intrinsic value of options exercised	$	30.2	$	31.9

We estimate the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-pricing models require us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option, excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting the other valuation assumptions is explained in Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 26, 2019.

The estimated fair values of stock options granted and the assumptions used for the Black-Scholes option-pricing model were as follows:


		Quarter Ended
		Aug. 25, 2019			Aug. 26, 2018
Estimated fair values of stock options granted	$	7.10		$	5.35
Assumptions:
Risk-free interest rate		2.0	%		2.9	%
Expected term		8.5	years		8.5	years
Expected volatility		17.4	%		16.3	%
Dividend yield		3.6	%		4.3	%

The total grant date fair value of restricted stock unit awards that vested during the period follows:

		Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Total grant date fair value	$	43.8	$	30.1

(11) Earnings Per Share

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

		Quarter Ended
In Millions, Except per Share Data		Aug. 25, 2019		Aug. 26, 2018
Net earnings attributable to General Mills	$	520.6	$	392.3
Average number of common shares - basic EPS		606.0		598.0
Incremental share effect from: (a)
Stock options		3.1		3.6
Restricted stock, restricted stock units, and other		2.4		1.7
Average number of common shares - diluted EPS		611.5		603.3
Earnings per share - basic	$	0.86	$	0.66
Earnings per share - diluted	$	0.85	$	0.65

(a) Incremental shares from stock options, restricted stock units, and performance share units are computed by the treasury stock method.

Stock options, restricted stock units, and performance share units excluded from our computation of diluted EPS because they were not dilutive were as follows:

	Quarter Ended
In Millions	Aug. 25, 2019	Aug. 26, 2018
Anti-dilutive stock options, restricted stock units, and performance share units	10.1	14.3

(12) Statements of Cash Flows

Our Consolidated Statements of Cash Flows include the following:

	Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Net cash interest payments	$	80.6	$	115.5
Net income tax payments	$	32.1	$	60.5

(13) Retirement and Postemployment Benefits

Components of net periodic benefit expense are as follows:

		Defined Benefit Pension Plans				Other Postretirement Benefit Plans				Postemployment Benefit Plans
		Quarter Ended				Quarter Ended				Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018		Aug. 25, 2019		Aug. 26, 2018		Aug. 25, 2019		Aug. 26, 2018
Service cost	$	23.2	$	23.7	$	2.4	$	2.4	$	2.1	$	1.9

Interest cost		57.6		62.0		6.8		8.3		0.7		0.7
Expected return on plan assets		(112.5)		(111.5)		(10.5)		(10.1)		-		-
Amortization of losses (gains)		26.7		27.5		(0.5)		0.2		0.2		0.1
Amortization of prior service costs (credits)		0.4		0.4		(1.4)		(1.4)		0.1		0.1
Other adjustments		-		-		-		-		2.2		2.8
Net expense (income)	$	(4.6)	$	2.1	$	(3.2)	$	(0.6)	$	5.3	$	5.6

(14) Income Taxes

During the first quarter of fiscal 2020, we reorganized certain wholly owned subsidiaries, including the movement of certain assets between legal entities. As a result of these actions, we recorded a $53.1 million decrease to our deferred income tax liabilities, with a corresponding discrete, non-cash reduction to income taxes in the first quarter of fiscal 2020.

(15) Business Segment and Geographic Information

We operate in the packaged foods industry. Our operating segments are as follows: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet.

Our North America Retail operating segment reflects business with a wide variety of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, and e-commerce grocery providers. Our product categories in this business segment are ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit and savory snacks, and a wide variety of organic products including refrigerated yogurt, nutrition bars, meal kits, salty snacks, ready-to-eat cereal, and grain snacks.

Our major product categories in our Convenience Stores & Foodservice operating segment are ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, and baking mixes. Many products we sell are branded to the consumer and nearly all are branded to our customers. We sell to distributors and operators in many customer channels including foodservice, convenience stores, vending, and supermarket bakeries in the United States.

Our Europe & Australia operating segment reflects retail and foodservice businesses in the greater Europe and Australia regions. Our product categories include refrigerated yogurt, meal kits, super-premium ice cream, refrigerated and frozen dough products, shelf stable vegetables, grain snacks, and dessert and baking mixes. We also sell super-premium ice cream directly to consumers through owned retail shops. Revenues from franchise fees are reported in the region or country where the franchisee is located.

Our Asia & Latin America operating segment consists of retail and foodservice businesses in the greater Asia and South America regions. Our product categories include super-premium ice cream and frozen desserts, refrigerated and frozen dough products, dessert and baking mixes, meal kits, salty and grain snacks, wellness beverages, and refrigerated yogurt. We also sell super-premium ice cream and frozen desserts directly to consumers through owned retail shops. Our Asia & Latin America segment also includes products manufactured in the United States for export, mainly to Caribbean and Latin American markets, as well as products we manufacture for sale to our international joint ventures. Revenues from export activities and franchise fees are reported in the region or country where the end customer or franchisee is located.

Our Pet operating segment includes pet food products sold primarily in the United States in national pet superstore chains, e-commerce retailers, grocery stores, regional pet store chains, mass merchandisers, and veterinary clinics and hospitals. Our product categories include dog and cat food (dry foods, wet foods, and treats) made with whole meats, fruits and vegetables, and other high-quality natural ingredients. Our tailored pet product offerings address specific dietary, lifestyle, and life-stage needs and span different product types, diet types, breed sizes for dogs, lifestages, flavors, product functions and textures, and cuts for wet foods. We are reporting the Pet operating segment results on a one-month lag.

Operating profit for these segments excludes unallocated corporate items, gain or loss on divestitures, and restructuring, impairment, and other exit costs. Unallocated corporate items include corporate overhead expenses, variances to planned domestic employee benefits and incentives, contributions to the General Mills Foundation, asset and liability remeasurement impact of hyperinflationary economies, restructuring initiative project-related costs, and other items that are not part of our measurement of segment operating performance. These include gains and losses arising from the revaluation of certain grain inventories and gains and losses from mark-to-market valuation of certain commodity positions until passed back to our operating segments. These items affecting operating profit are centrally managed at the corporate level and are excluded from the measure of segment profitability reviewed by executive management. Under our supply chain organization, our manufacturing, warehouse, and distribution activities are substantially integrated across our operations in order to maximize efficiency and productivity. As a result, fixed assets and depreciation and amortization expenses are neither maintained nor available for all operating segments.

Our operating segment results were as follows:

		Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Net sales:
North America Retail	$	2,376.1	$	2,387.8
Europe & Australia		454.1		500.7
Convenience Stores & Foodservice		445.0		463.2
Pet		367.8		343.3
Asia & Latin America		359.5		399.0
Total	$	4,002.5	$	4,094.0
Operating profit:
North America Retail	$	559.9	$	548.1
Europe & Australia		27.6		34.5
Convenience Stores & Foodservice		91.1		97.1
Pet		80.9		14.5
Asia & Latin America		10.1		12.2
Total segment operating profit	$	769.6	$	706.4
Unallocated corporate items		99.0		106.3
Restructuring, impairment, and other exit costs (recoveries)		8.2		(1.4)
Operating profit	$	662.4	$	601.5

Net sales for our North America Retail operating units were as follows:

		Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
U.S. Meals & Baking	$	830.6	$	837.5
U.S. Cereal		589.9		584.4
U.S. Snacks		528.2		533.5
U.S. Yogurt and Other		219.2		219.1
Canada		208.2		213.3
Total	$	2,376.1	$	2,387.8

Net sales by class of similar products were as follows:

	Quarter Ended
In Millions		Aug. 25, 2019		Aug. 26, 2018
Snacks	$	869.4	$	887.9
Cereal		685.5		677.1
Convenient meals		569.2		581.9
Yogurt		495.2		514.8
Pet		367.8		343.3
Baking mixes and ingredients		355.7		380.3
Dough		330.6		328.4
Super-premium ice cream		227.2		247.7
Other		101.9		132.6
Total	$	4,002.5	$	4,094.0

During the first quarter of fiscal 2020, we made certain changes in the classification of products and updated fiscal 2019 net sales figures to match the current-year presentation.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

INTRODUCTION

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the MD&A included in our Annual Report on Form 10-K for the fiscal year ended May 26, 2019 for important background regarding, among other things, our key business drivers. Significant trademarks and service marks used in our business are set forth in italics herein. Certain terms used throughout this report are defined in the “Glossary” section below.

CONSOLIDATED RESULTS OF OPERATIONS

First Quarter Results

In the first quarter of fiscal 2020, net sales decreased 2 percent compared to the same period last year, primarily reflecting lower contributions from volume growth across all segments excluding Pet, partially offset by favorable net price realization and mix across all segments. In the first quarter of fiscal 2020, organic net sales decreased 1 percent compared to the same period last year. Operating profit margin of 16.5 percent increased 180 basis points, primarily driven by favorable net price realization and mix across all segments, the purchase accounting inventory adjustment in the first quarter of fiscal 2019 related to our acquisition of Blue Buffalo Products, Inc. (Blue Buffalo), and lower expense related to the mark-to-market valuation of certain commodity positions, partially offset by higher input costs and higher restructuring charges. Adjusted operating profit margin increased 130 basis points to 17.0 percent compared to the same period last year, primarily driven by favorable net price realization and mix across all segments and the purchase accounting inventory adjustment in fiscal 2019, partially offset by higher input costs. Diluted earnings per share of $0.85 increased 31 percent compared to the first quarter of fiscal 2019. Adjusted diluted earnings per share of $0.79 increased 13 percent on a constant-currency basis compared to the first quarter last year. See the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP.

A summary of our consolidated financial results for the first quarter of fiscal 2020 follows:

			Quarter Ended
Quarter Ended Aug. 25, 2019	In millions, except per share		Aug. 25, 2019 vs. Aug. 26, 2018		Percent of Net Sales		Constant-Currency Growth (a)
Net sales	$	4,002.5	(2)	%
Operating profit		662.4	10	%	16.5	%
Net earnings attributable to General Mills		520.6	33	%
Diluted earnings per share	$	0.85	31	%
Organic net sales growth rate (a)			(1)	%
Adjusted operating profit (a)		682.1	6	%	17.0	%	7	%
Adjusted diluted earnings per share (a)	$	0.79	11	%			13	%
(a) See the "Non-GAAP Measures" section below for our use of measures not defined by GAAP.

Consolidated net sales were as follows:

	Quarter Ended
	Aug. 25, 2019		Aug. 25, 2019 vs Aug. 26, 2018		Aug. 26, 2018
Net sales (in millions)	$	4,002.5	(2)	%	$	4,094.0
Contributions from volume growth (a)			(4)	pts
Net price realization and mix			3	pts
Foreign currency exchange			(1)	pt
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.

The 2 percent decrease in net sales in the first quarter of fiscal 2020 reflects lower contributions from volume growth and unfavorable foreign currency exchange, partially offset by favorable net price realization and mix.

Components of organic net sales growth are shown in the following table:

Quarter Ended Aug. 25, 2019 vs.
Quarter Ended Aug. 26, 2018
Contributions from organic volume growth (a)		(4)pts
Organic net price realization and mix		3 pts
Organic net sales growth		(1)pt
Foreign currency exchange		(1)pt
Divestitures		Flat
Net sales growth		(2)pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.

Organic net sales decreased 1 percent in the first quarter of fiscal 2020 driven by lower contributions from organic volume growth, partially offset by favorable organic net price realization and mix.

Cost of sales decreased $138 million from the first quarter of fiscal 2019 to $2,613 million. The decrease was primarily driven by a $115 million decrease due to lower volume, partially offset by a $41 million increase attributable to product rate and mix. We recorded a $15 million net increase in cost of sales related to the mark-to-market valuation of certain commodity positions and grain inventories in the first quarter of fiscal 2020 compared to a net increase of $31 million in the first quarter of fiscal 2019. In addition, we recorded $6 million of restructuring charges in cost of sales in the first quarter of fiscal 2020. In the first quarter of fiscal 2019, we recorded $1 million of restructuring initiative project-related costs in cost of sales (please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report). We recorded a $53 million charge related to the fair value adjustment of inventory acquired in the Blue Buffalo acquisition in the first quarter of fiscal 2019.

Selling, general, and administrative (SG&A) expenses decreased $24 million to $719 million in the first quarter of fiscal 2020 compared to the same period in fiscal 2019, primarily reflecting the impact of lower consumer expenses. SG&A expenses as a percent of net sales in the first quarter of fiscal 2020 decreased 10 basis points compared with the first quarter of fiscal 2019.

Restructuring, impairment, and other exit costs totaled $8 million in the first quarter of fiscal 2020 compared to a $1 million net recovery in the same period last year.

Benefit plan non-service income totaled $30 million in the first quarter of fiscal 2020 compared to $21 million in the same period last year.

Interest, net for the first quarter of fiscal 2020 totaled $119 million, down $15 million from the first quarter of fiscal 2019, driven by lower average debt balances and rates.

The effective tax rate for the first quarter of fiscal 2020 was 11.7 percent compared to 22.6 percent for the first quarter of fiscal 2019. The 10.9 percentage point decrease was primarily due to a net benefit related to the reorganization of certain wholly owned subsidiaries and certain international discrete tax benefits in fiscal 2020. Our adjusted effective tax rate was 20.9 percent in the first quarter of fiscal 2020 compared to 22.7 percent in the first quarter of fiscal 2019 (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP). The 1.8 percentage point decrease in the adjusted effective tax rate was primarily due to certain international discrete tax benefits in fiscal 2020.

After-tax earnings from joint ventures for the first quarter of fiscal 2020 increased 23 percent to $22 million compared to $18 million in the same period in fiscal 2019, primarily driven by our $1 million after-tax share of restructuring charges at Cereal Partners Worldwide (CPW) in fiscal 2020 compared to $5 million in fiscal 2019. On a constant-currency basis, after-tax earnings from joint ventures increased 23 percent, including the impact of CPW restructuring charges (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP). The components of our joint ventures’ net sales growth are shown in the following table:

Quarter Ended Aug. 25, 2019 vs.
Quarter Ended Aug. 26, 2018	CPW		HDJ (a)		Total
Contributions from volume growth (b)	(1)	pt	2	pts
Net price realization and mix	3	pts	4	pts
Net sales growth in constant currency	2	pts	6	pts	3	pts
Foreign currency exchange	(3)	pts	3	pts	(2)	pts
Net sales growth	(1)	pt	9	pts	1	pt
Note: Table may not foot due to rounding.
(a) Häagen-Dazs Japan, Inc

(b) Measured in tons based on the stated weight of our product shipments.

Average diluted shares outstanding increased by 8 million in the first quarter of fiscal 2020 from the same period a year ago due to option exercises.

SEGMENT OPERATING RESULTS

Our businesses are organized into five operating segments: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet. We are reporting the Pet operating segment results on a one-month lag. Please refer to Note 15 of the Consolidated Financial Statements in Part I, Item 1 of this report for a description of our operating segments.

North America Retail Segment Results

North America Retail net sales were as follows:

	Quarter Ended
	Aug. 25, 2019		Aug. 25, 2019 vs Aug. 26, 2018	Aug. 26, 2018
Net sales (in millions)	$	2,376.1	Flat	$	2,387.8
Contributions from volume growth (a)			(1)pt
Net price realization and mix			1 pt
Foreign currency exchange			Flat

Note: Table may not foot due to rounding.

(a)Measured in tons based on the stated weight of our product shipments.

North America Retail net sales were flat in the first quarter of fiscal 2020 compared to the same period in fiscal 2019, driven by favorable net price realization and mix offset by a decrease in contributions from volume growth.

The components of North America Retail organic net sales growth are shown in the following table:


	Quarter Ended
	Aug. 25, 2019
Contributions from organic volume growth (a)	(1)	pt
Organic net price realization and mix	1	pt
Organic net sales growth	Flat
Foreign currency exchange	Flat
Net sales growth	Flat
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.

North America Retail organic net sales were flat in the first quarter of fiscal 2020 compared to the same period in fiscal 2019. This was primarily driven by favorable organic net price realization and mix offset by a decrease in contributions from organic volume growth.

North America Retail net sales percentage change by operating unit are shown in the following table:

	Quarter Ended
	Aug. 25, 2019
U.S. Meals & Baking	(1)	%
U.S. Cereal	1
U.S. Snacks	(1)
Canada (a)	(2)
U.S. Yogurt and Other	Flat
Total	Flat

(a) On a constant-currency basis, Canada net sales decreased 1 percent for the first quarter of fiscal 2020. See the "Non-GAAP Measures" section below for our use of this measure not defined by GAAP.

Segment operating profit increased 2 percent to $560 million in the first quarter of fiscal 2020 compared to $548 million in the same period last year, driven by positive net price realization and mix and lower input costs, partially offset by higher SG&A expenses. Segment operating profit increased 2 percent on a constant-currency basis in the first quarter of fiscal 2020, compared to the same period in fiscal 2019 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).

Europe & Australia Segment Results

Europe & Australia net sales were as follows:

			Quarter Ended
	Aug. 25, 2019		Aug. 25, 2019 vs. Aug. 26, 2018		Aug. 26, 2018
Net sales (in millions)	$	454.1	(9)	%	$	500.7
Contributions from volume growth (a)			(7)	pts
Net price realization and mix			2	pts
Foreign currency exchange			(4)	pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.

Europe & Australia net sales decreased 9 percent in the first quarter of fiscal 2020 compared to the same period in fiscal 2019, driven primarily by a decrease in contributions from volume growth and unfavorable foreign currency exchange partially offset by favorable net price realization and mix.

The components of Europe & Australia organic net sales growth are shown in the following table:


		Quarter Ended
		Aug. 25, 2019
Contributions from organic volume growth (a)		(7)pts
Organic net price realization and mix		2 pts
Organic net sales growth		(5)pts
Foreign currency exchange		(4)pts
Net sales growth		(9)pts

Note: Table may not foot due to rounding.

(a) Measured in tons based on the stated weight of our product shipments.

Europe & Australia organic net sales decreased 5 percent in the first quarter of fiscal 2020 compared to the same period in fiscal 2019, driven by a decrease in contributions from organic volume growth partially offset by favorable organic net price realization and mix.

Segment operating profit decreased 20 percent to $28 million in the first quarter of fiscal 2020 compared to $34 million in the first quarter of fiscal 2019 primarily driven by higher SG&A expenses and input costs, including currency-driven inflation on imported products in certain markets, partially offset by favorable net price realization and mix. Segment operating profit decreased 15 percent on a constant-currency basis in the first quarter of fiscal 2020 compared to the same period in fiscal 2019 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).

Convenience Stores & Foodservice Segment Results

Convenience Stores & Foodservice net sales were as follows:

			Quarter Ended
	Aug. 25, 2019		Aug. 25, 2019 vs Aug. 26, 2018		Aug. 26, 2018
Net sales (in millions)	$	445.0	(4)	%	$	463.2
Contributions from volume growth (a)			(6)	pts
Net price realization and mix			2	pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.

Convenience Stores & Foodservice net sales decreased 4 percent in the first quarter of fiscal 2020 compared to the same period in fiscal 2019, driven by a decrease in contributions from volume growth, partially offset by favorable net price realization and mix.

The components of Convenience Stores & Foodservice organic net sales growth are shown in the following table:


		Quarter Ended
		Aug. 25, 2019
Contributions from organic volume growth (a)		(6)pts
Organic net price realization and mix		2 pts
Organic net sales growth		(4)pts
Net sales growth		(4)pts

Note: Table may not foot due to rounding.

(a) Measured in tons based on the stated weight of our product shipments.

Segment operating profit decreased 6 percent to $91 million in the first quarter of fiscal 2020 compared to $97 million in the same period last year, driven by higher input costs and a decrease in contributions from volume growth, partially offset by favorable net price realization and mix.

Pet Segment Results

			Quarter Ended
	Aug. 25, 2019		Aug. 25, 2019 vs Aug. 26, 2018		Aug. 26, 2018
Net sales (in millions)	$	367.8	7	%	$	343.3
Contributions from volume growth (a)			1	pt
Net price realization and mix			7	pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.

Pet net sales increased 7 percent in the first quarter of fiscal 2020 compared to the same period in fiscal 2019, driven by favorable net price realization and mix and an increase in contributions from volume growth, partially offset by the impact from 7 additional days of results from the month of acquisition in fiscal 2019.

The components of Pet organic net sales growth are shown in the following table:


		Quarter Ended
		Aug. 25, 2019
Contributions from organic volume growth (a)		1 pt
Organic net price realization and mix		7 pts
Organic net sales growth		7 pts
Net sales growth		7 pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.

Segment operating profit increased to $81 million in the first quarter of fiscal 2020 compared to $14 million in the same period last year, primarily driven by a $53 million purchase accounting adjustment related to inventory acquired in the first quarter of fiscal 2019 and favorable net price realization and mix.

Asia & Latin America Segment Results

Asia & Latin America net sales were as follows:

			Quarter Ended
	Aug. 25, 2019		Aug. 25, 2019 vs. Aug. 26, 2018			Aug. 26, 2018
Net sales (in millions)	$	359.5	(10)	%	$	399.0
Contributions from volume growth (a)			(11)	pts
Net price realization and mix			3	pts
Foreign currency exchange			(2)	pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.

Asia & Latin America net sales decreased 10 percent in the first quarter of fiscal 2020 compared to the same period last year, driven primarily by lower contributions from volume growth and unfavorable foreign currency exchange, partially offset by favorable net price realization and mix.

The components of Asia & Latin America organic net sales growth are shown in the following table:


		Quarter Ended
		Aug. 25, 2019
Contributions from organic volume growth (a)		(5)pts
Organic net price realization and mix		1 pts
Organic net sales growth		(3)pts
Foreign currency exchange		(2)pts
Divestitures (b)		(5)pts
Net sales growth		(10)pts

Note: Table may not foot due to rounding.

(a)Measured in tons based on the stated weight of our product shipments.

(b)Impact of the divestiture of our La Salteña business in Argentina and our Yoplait business in China.

Asia & Latin America organic net sales decreased 3 percent in the first quarter of fiscal 2020 compared to the same period in fiscal 2019, primarily driven by lower contributions from organic volume growth, partially offset by favorable organic net price realization and mix.

Segment operating profit decreased 17 percent to $10 million in the first quarter of fiscal 2020 compared to $12 million in the first quarter of fiscal 2019 primarily driven by higher input costs, partially offset by favorable net price realization and mix and lower SG&A expenses. Segment operating profit decreased 11 percent on a constant-currency basis in the first quarter of fiscal 2020 compared to the same period in fiscal 2019 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).

UNALLOCATED CORPORATE ITEMS

Unallocated corporate expense totaled $99 million in the first quarter of fiscal 2020 compared to $106 million in the same period in fiscal 2019. During the first quarter of fiscal 2020, we recorded a $15 million net increase in expense related to the mark-to-market valuation of certain commodity positions and grain inventories compared to a $31 million net increase in expense in the same period last year. We also recorded $10 million of net gains related to valuation adjustments and the loss on the sale of certain corporate investments in the first quarter of fiscal 2020. In addition, we recorded $6 million of restructuring charges in cost of sales during the first quarter of fiscal 2020. In the first quarter of fiscal 2019, we recorded $1 million of restructuring initiative project-related costs in cost of sales. In addition, we recorded $9 million of integration costs related to the acquisition of Blue Buffalo in the first quarter of fiscal 2019.

LIQUIDITY

During the first quarter of fiscal 2020, cash provided by operations was $572 million compared to $607 million in the same period last year. The $35 million decrease was primarily driven by a $99 million change in current assets and liabilities and a $66 million change in deferred income taxes primarily due to a net benefit related to the reorganization of certain wholly owned subsidiaries. The $99 million change in current assets and liabilities was primarily driven by an $87 million change in inventory balances. These were partially offset by a $133 million increase in net earnings.

Cash used by investing activities during the first quarter of fiscal 2020 was $84 million, compared to $140 million for the same period in fiscal 2019. Investments of $70 million in land, buildings and equipment in the first quarter of fiscal 2020 decreased by $43 million compared to the same period a year ago.

Cash used by financing activities during the first quarter of fiscal 2020 was $429 million compared to $423 million in the same period in fiscal 2019. We had $170 million of net debt repayments in the first quarter of fiscal 2020 compared to $190 million of net debt repayments in the same period a year ago. We paid $298 million of dividends in the first quarter of fiscal 2020 compared to $294 million in the same period last year.

As of August 25, 2019, we had $465 million of cash and cash equivalents held in foreign jurisdictions. As a result of the Tax Cuts and Jobs Act (TCJA), the historic undistributed earnings of our foreign subsidiaries were taxed in the U.S. via the one-time repatriation tax in fiscal 2018. We have re-evaluated our permanent reinvestment assertion and have concluded that although earnings prior to fiscal 2018 will remain permanently reinvested, we will no longer make a permanent reinvestment assertion beginning with our fiscal 2018

earnings. We record local country withholding taxes on our international earnings, as applicable. As a result of the transition tax, we may repatriate our cash and cash equivalents held by our foreign subsidiaries without such funds being subject to further U.S. income tax liability.

CAPITAL RESOURCES

Our capital structure was as follows:

In Millions		Aug. 25, 2019		May 26, 2019
Notes payable	$	1,296.1	$	1,468.7
Current portion of long-term debt		1,391.8		1,396.5
Long-term debt		11,619.8		11,624.8
Total debt		14,307.7		14,490.0
Redeemable interest		547.8		551.7
Noncontrolling interests		312.8		313.2
Stockholders' equity		7,382.8		7,054.5
Total capital	$	22,551.1	$	22,409.4

The following table details the fee-paid committed and uncommitted credit lines we had available as of August 25, 2019:

In Billions		Facility Amount		Borrowed Amount
Credit facility expiring:
May 2022	$	2.7	$	-
September 2019		0.2		-
Total committed credit facilities		2.9		-
Uncommitted credit facilities		0.7		0.2
Total committed and uncommitted credit facilities	$	3.6	$	0.2

We have a 51 percent controlling interest in Yoplait SAS and a 50 percent interest in Yoplait Marques SNC and Liberté Marques Sàrl. Sodiaal International (Sodiaal) holds the remaining interests in each of these entities. We consolidate these entities into our consolidated financial statements. We record Sodiaal’s 50 percent interests in Yoplait Marques SNC and Liberté Marques Sàrl as noncontrolling interests, and its 49 percent interest in Yoplait SAS as a redeemable interest on our Consolidated Balance Sheets. Sodiaal has the ability to put all or a portion of its redeemable interest to us at fair value once per year, up to three times before December 2024. As of August 25, 2019, the redemption value of the redeemable interest was $548 million, which approximates its fair value.

During the second quarter of fiscal 2019, Sodiaal made an additional investment of $56 million in Yoplait SAS.

The third-party holder of the General Mills Cereals, LLC (GMC) Class A Interests receives quarterly preferred distributions from available net income based on the application of a floating preferred return rate to the holder’s capital account balance established in the most recent mark-to-market valuation (currently $252 million). On June 1, 2018, the floating preferred return rate on GMC’s Class A Interests was reset to the sum of three-month LIBOR plus 142.5 basis points. The preferred return rate is adjusted every three years through a negotiated agreement with the Class A Interest holder or through a remarketing auction.

We have an option to purchase the Class A Interests for consideration equal to the then current capital account value, plus any unpaid preferred return and the prescribed make-whole amount. If we purchase these interests, any change in the third-party holder’s capital account from its original value will be charged directly to retained earnings and will increase or decrease the net earnings used to calculate EPS in that period.

To ensure availability of funds, we maintain bank credit lines sufficient to cover our outstanding notes payable. Commercial paper is a continuing source of short-term financing. We have commercial paper programs available to us in the United States and Europe. We also have uncommitted and asset-backed credit lines that support our foreign operations.

Certain of our long-term debt agreements, our credit facilities, and our noncontrolling interests contain restrictive covenants. As of August 25, 2019, we were in compliance with all of these covenants.

We have $1,392 million of long-term debt maturing in the next 12 months that is classified as current, including $500 million of 2.2 percent notes due October 2019, €300.0 million of euro-denominated 0.0 percent notes due January 2020, and €500.0 million of euro-denominated floating-rate notes due January 2020. We believe that cash flows from operations, together with available short- and long-term debt financing, will be adequate to meet our liquidity and capital needs for at least the next 12 months.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

There were no material changes outside the ordinary course of our business in our contractual obligations or off-balance sheet arrangements during the first quarter of fiscal 2020.

SIGNIFICANT ACCOUNTING ESTIMATES

Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 26, 2019. The accounting policies used in preparing our interim fiscal 2020 Consolidated Financial Statements are the same as those described in our Form 10-K with the exception of the new accounting requirements adopted in the first quarter of fiscal 2020 related to hedge accounting and the accounting, presentation, and classification of leases. Please see Note 1 to the Consolidated Financial Statements in Part I, Item 1 of this report for additional information.

Our significant accounting estimates are those that have meaningful impact on the reporting of our financial condition and results of operations. These estimates include our accounting for promotional expenditures, valuation of long-lived assets, intangible assets, redeemable interest, stock-based compensation, income taxes, and defined benefit pension, other postretirement benefit, and postemployment benefit plans. The assumptions and methodologies used in the determination of those estimates as of August 25, 2019, are the same as those described in our Annual Report on Form 10-K for the fiscal year ended May 26, 2019.

Our annual goodwill and indefinite-lived intangible assets test was performed on the first day of the second quarter of fiscal 2019. As a result of lower sales projections in our long-range plans for the businesses supporting the Progresso, Food Should Taste Good, and Mountain High brand intangible assets, we recorded $193 million of impairment charges related to these intangible assets. Significant assumptions used in that assessment included our long-range cash flow projections for the businesses, royalty rates, weighted average cost of capital rates, and tax rates.

Our Latin America reporting unit and the Yoki brand intangible asset had fair values that were not substantially in excess of the carrying values. The excess fair values as of the fiscal 2019 test date of the Latin America reporting unit and the Yoki brand intangible asset were as follows:

In Millions		Carrying Value of Intangible Asset	Excess Fair Value as of Fiscal 2019 Test Date
Latin America	$	209.0	7%
Yoki	$	49.1	10%

NON-GAAP MEASURES

We have included in this report measures of financial performance that are not defined by GAAP. We believe that these measures provide useful information to investors, and include these measures in other communications to investors.

For each of these non-GAAP financial measures, we are providing below a reconciliation of the differences between the non-GAAP measure and the most directly comparable GAAP measure, an explanation of why we believe the non-GAAP measure provides useful information to investors, and any additional material purposes for which our management or Board of Directors uses the non-GAAP measure. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable GAAP measure.

Several measures below are presented on an adjusted basis. The adjustments are either items resulting from infrequently occurring events or items that, in management’s judgment, significantly affect the year-to-year assessment of operating results.

Organic Net Sales Growth Rates

We provide organic net sales growth rates for our consolidated net sales and segment net sales. This measure is used in reporting to our Board of Directors and executive management and as a component of the measurement of our performance for incentive compensation purposes. We believe that organic net sales growth rates provide useful information to investors because they provide transparency to underlying performance in our net sales by excluding the effect that foreign currency exchange rate fluctuations, as well as acquisitions, divestitures, and a 53^rd week, when applicable, have on year-to-year comparability. A reconciliation of these measures to reported net sales growth rates, the relevant GAAP measures, are included in our Consolidated Results of Operations and Results of Segment Operations discussions in the MD&A above.

Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit Margin)

We believe this measure provides useful information to investors because it is important for assessing our operating profit margin on a comparable basis.

Our adjusted operating profit margins are calculated as follows:

	Quarter Ended
		Aug. 25, 2019			Aug. 26, 2018
In Millions		Value	Percent of Net Sales			Value	Percent of Net Sales
Operating profit as reported	$	662.4	16.5	%	$	601.5	14.7	%
Mark-to-market effects (a)		15.0	0.4	%		31.1	0.8	%
Restructuring charges (b)		14.3	0.4	%		(1.2)	-	%
Project-related costs (b)		-	-	%		1.2	-	%
Investment activity, net (c)		(9.5)	(0.2)	%		-	-	%
Acquisition integration costs (d)		-	-	%		8.7	0.2	%
Adjusted operating profit	$	682.1	17.0	%	$	641.3	15.7	%

Note: Table may not foot due to rounding.

(a)See Note 6 to the Consolidated Financial Statements in Part I, Item 1 of this report.

(b)See Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.

(c)Valuation adjustments and the loss on sale of certain corporate investments.

(d)Integration costs resulting from the acquisition of Blue Buffalo in fiscal 2018.

Adjusted Operating Profit Growth on a Constant-currency Basis

We believe that this measure provides useful information to investors because it is the operating profit measure we use to evaluate operating profit performance on a comparable year-to-year basis. Additionally, the measure is evaluated on a constant-currency basis by excluding the effect that foreign currency exchange rate fluctuations have on year-to year comparability given the volatility in foreign currency exchange rates.

Our adjusted operating profit growth on a constant-currency basis is calculated as follows:

		Quarter Ended
		Aug. 25, 2019		Aug. 26, 2018	Change
Operating profit as reported	$	662.4	$	601.5	10	%
Mark-to-market effects (a)		15.0		31.1
Restructuring charges (b)		14.3		(1.2)
Project-related costs (b)		-		1.2
Investment activity, net (c)		(9.5)		-
Acquisition integration costs (d)		-		8.7
Adjusted operating profit	$	682.1	$	641.3	6	%
Foreign currency exchange impact					Flat
Adjusted operating profit growth, on a constant-currency basis					7	%

Note: Table may not foot due to rounding.

(a) See Note 6 to the Consolidated Financial Statements in Part I, Item 1 of this report.

(b) See Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.

(d) Integration costs resulting from the acquisition of Blue Buffalo in fiscal 2018.

Adjusted Diluted EPS and Related Constant-currency Growth Rate

This measure is used in reporting to our Board of Directors and executive management and as a component of the measurement of our performance for incentive compensation purposes. We believe that this measure provides useful information to investors because it is the profitability measure we use to evaluate earnings performance on a comparable year-to-year basis.

The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted EPS and the related constant-currency growth rate follows:

	Quarter Ended
Per Share Data		Aug. 25, 2019		Aug. 26, 2018	Change
Diluted earnings per share, as reported	$	0.85	$	0.65	31	%
Tax item (a)		(0.09)		-
Mark-to-market effects (b)		0.02		0.04
Restructuring charges (c)		0.02		-
Investment activity, net (d)		(0.01)		-
CPW restructuring charges (e)		-		0.01
Acquisition integration costs (f)		-		0.01
Adjusted diluted earnings per share	$	0.79	$	0.71	11	%
Foreign currency exchange impact					(1)	pt
Adjusted diluted earnings per share growth, on a constant-currency basis					13	%

Note: Table may not foot due to rounding.

(a)See Note 14 to the Consolidated Financial Statement in Part I, Item 1 of this report.

(b)See Note 6 to the Consolidated Financial Statements in Part I, Item 1 of this report.

(c)See Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.

(d)Valuation adjustments and the loss on sale of certain corporate investments.

(e)The CPW restructuring charges are related to initiatives designed to improve profitability and growth that were approved in fiscal 2018 and 2019.

(f)Integration costs resulting from the acquisition of Blue Buffalo in fiscal 2018.

See our reconciliation below of the effective income tax rate as reported to the adjusted effective income tax rate for the tax impact of each item affecting comparability.

Constant-currency After-tax Earnings from Joint Ventures Growth Rates

We believe that this measure provides useful information to investors because it provides transparency to underlying performance of our joint ventures by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given volatility in foreign currency exchange markets.

After-tax earnings from joint ventures growth rate on a constant-currency basis is calculated as follows:

	Percentage Change in After-Tax Earnings from Joint Ventures as Reported		Impact of Foreign Currency Exchange	Percentage Change in After-Tax Earnings from Joint Ventures on Constant-Currency Basis
Quarter Ended Aug. 25, 2019	23	%	Flat	23	%
Note: Table may not foot due to rounding.

Net Sales Growth Rates for Our Canada Operating Unit on Constant-currency Basis

We believe that this measure of our Canada operating unit net sales provides useful information to investors because it provides transparency to the underlying performance for the Canada operating unit within our North America Retail segment by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given volatility in foreign currency exchange markets.

Net sales growth rate for our Canada operating unit on a constant-currency basis are calculated as follows:


	Percentage Change in Net Sales as Reported		Impact of Foreign Currency Exchange		Percentage Change in Net Sales on Constant-Currency Basis
Quarter Ended Aug. 25, 2019	(2)	%	(1)	pt	(1)	%
Note: Table may not foot due to rounding.

Constant-currency Segment Operating Profit Growth Rates

We believe that this measure provides useful information to investors because it provides transparency to underlying performance of our segments by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given volatility in foreign currency exchange markets.

Our segments’ operating profit growth rates on a constant-currency basis are calculated as follows:

	Quarter Ended Aug. 25, 2019
	Percentage Change in Operating Profit as Reported		Impact of Foreign Currency Exchange		Percentage Change in Operating Profit on Constant-Currency Basis
North America Retail	2	%	Flat		2	%
Europe & Australia	(20)	%	(5)	pts	(15)	%
Asia & Latin America	(17)	%	(6)	pts	(11)	%
Note: Table may not foot due to rounding.

Adjusted Effective Income Tax Rate

We believe this measure provides useful information to investors because it presents the adjusted effective income tax rate on a comparable year-to-year basis.

Adjusted effective income tax rates are calculated as follows:

		Quarter Ended
		Aug. 25, 2019				Aug. 26, 2018
In Millions (Except Per Share Data)		Pretax Earnings (a)		Income Taxes		Pretax Earnings (a)		Income Taxes
As reported	$	573.9	$	67.2	$	488.9	$	110.7
Tax item (a)		-		53.1		-		-
Mark-to-market effects (b)		15.0		3.5		31.1		7.2
Restructuring charges (c)		14.3		2.6		(1.2)		(0.3)
Project-related costs (c)		-		-		1.2		0.3
Investment activity, net (d)		(9.5)		(2.2)		-		-
Acquisition integration costs (e)		-		-		8.7		2.0
As adjusted	$	593.7	$	124.2	$	528.7	$	119.9
Effective tax rate:
As reported				11.7%				22.6%
As adjusted				20.9%				22.7%
Sum of adjustment to income taxes			$	57.0			$	9.2
Average number of common shares - diluted EPS				611.5				603.3
Impact of income tax adjustments on adjusted diluted EPS			$	0.09			$	0.02

Note: Table may not foot due to rounding.

(a) See Note 14 to the Consolidated Financial Statements in Part I, Item 1 of this report.

(b) See Note 6 to the Consolidated Financial Statements in Part I, Item 1 of this report.

(d) Valuation adjustments and the loss on sale of certain corporate investments.

(e) Integration costs resulting from the acquisition of Blue Buffalo in fiscal 2018.

This report contains or incorporates by reference forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations and assumptions. We also may make written or oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and in our reports to stockholders.

The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “plan,” “project,” or similar expressions identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those currently anticipated or projected. We wish to caution you not to place undue reliance on any such forward-looking statements.

In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are identifying important factors that could affect our financial performance and could cause our actual results in future periods to differ materially from any current opinions or statements.

Our future results could be affected by a variety of factors, such as: 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, including our acquisition of Blue Buffalo and issues in the integration of Blue Buffalo and retention of key management and employees; unfavorable reaction to our acquisition of Blue Buffalo by customers, competitors, suppliers, and employees; changes in capital structure; changes in the legal and regulatory environment, including tax legislation, labeling and advertising regulations, and litigation; impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets; changes in accounting standards and the impact of significant accounting estimates; product quality and safety issues, including recalls and product liability; changes in consumer demand for our products; effectiveness of advertising, marketing, and promotional programs; changes in consumer behavior, trends, and preferences, including weight loss trends; consumer perception of health-related issues, including obesity; consolidation in the retail environment; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability of supply chain resources, including raw materials, packaging, and energy; disruptions or inefficiencies in the supply chain; effectiveness of restructuring and cost saving initiatives; volatility in the market value of derivatives used to manage price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; failure or breach of our information technology systems; foreign economic conditions, including currency rate fluctuations; and political unrest in foreign markets and economic uncertainty due to terrorism or war.

You should also consider the risk factors that we identify in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended May 26, 2019, which could also affect our future results.

We undertake no obligation to publicly revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The estimated maximum potential value-at-risk arising from a one-day loss in fair value for our interest rate, foreign exchange, commodity, and equity market-risk-sensitive instruments outstanding as of August 25, 2019 was $110 million, $16 million, $3 million, and $2 million, respectively. During the quarter ended August 25, 2019, the interest rate value-at-risk increased by $35 million, the foreign exchange value-at-risk decreased by $1 million, and commodity value-at-risk decreased by $1 million, while equity value-at-risk was flat compared to these measures as of May 26, 2019. The value-at-risk for interest rate positions increased due to higher market volatility. The value-at-risk for foreign exchange positions decreased due to a smaller portfolio and decreased market volatility. The value-at-risk for commodity positions decreased due to a smaller portfolio. For additional information, see Item 7A of Part II of our Annual Report on Form 10-K for the fiscal year ended May 26, 2019.

Item 4. Controls and Procedures.

We, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on our evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of August 25, 2019, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is (1) recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

	Page
PART I – Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings for the quarters ended August 25, 2019 and August 26, 2018	4
Consolidated Statements of Comprehensive Income for the quarters ended August 25, 2019 and August 26, 2018	5
Consolidated Balance Sheets as of August 25, 2019, and May 26, 2019	6
Consolidated Statements of Total Equity and Redeemable Interest for the quarters ended August 25, 2019 and August 26, 2018	7
Consolidated Statements of Cash Flows for the quarters ended August 25, 2019 and August 26, 2018	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33
PART II – Other Information
Item 6. Exhibits	35
Signatures	36

In Millions	Classification	Aug. 25, 2019
Right of use assets (a)	Other assets	$	409.3
Current lease liabilities	Other current liabilities		103.3
Non-current lease liabilities	Other liabilities		318.1

In Millions
Fiscal 2020 (a)	$	92.4
Fiscal 2021		106.2
Fiscal 2022		88.4
Fiscal 2023		65.2
Fiscal 2024		49.9
After fiscal 2024		62.6
Total noncancelable future lease obligations	$	464.7
Less: Interest		(43.3)
Present value of lease obligations	$	421.4

Item 6.	Exhibits.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial Statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended August 25, 2019, formatted in Inline Extensible Business Reporting Language: (i) Consolidated Statements of Earnings; (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Total Equity and Redeemable Interest; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.
104	Cover Page, formatted Inline Extensible Business Reporting Language and contained in Exhibit 101.


	GENERAL MILLS, INC.
	(Registrant)

Date: September 18, 2019	/s/ Kofi A. Bruce
	Kofi A. Bruce
	Vice President, Financial Operations
	(Principal Accounting Officer and Duly Authorized Officer)