General Mills Reports Fiscal 2013 First Quarter Results
General Mills Reports Fiscal 2013 First Quarter Results
Company Reaffirms Full-year Outlook
Business Wire
MINNEAPOLIS -- September 19, 2012
General Mills (NYSE: GIS) today reported results for the first quarter of
fiscal 2013. The period includes two months of incremental contribution from
the Yoplait International acquisition completed in July 2011, and three months
of results for the Food Should Taste Good, Yoplait Ireland and Parampara Foods
businesses acquired during the final quarter of fiscal 2012.
Fiscal 2013 First Quarter Financial Summary
* Net sales grew 5 percent to $4.05 billion, reflecting contributions from
acquired businesses.
* Segment operating profit grew 6 percent to $769 million.
* Diluted earnings per share (EPS) totaled 82 cents, including a net benefit
from a discrete tax item and higher mark-to-market valuation of certain
commodity positions.
* Adjusted diluted EPS, which excludes certain items affecting
comparability, totaled 66 cents this year and 64 cents in last year’s
first quarter. (Please see Note 8 below for reconciliation of this
non-GAAP measure.)
Net sales for the 13 weeks ended Aug. 26, 2012, grew 5 percent to $4.05
billion. Pound volume contributed 9 points of sales growth, primarily
reflecting acquisitions. Price realization and mix reduced net sales growth by
2 points, and foreign exchange subtracted 2 points of sales growth. Gross
margin as reported was above year-ago levels, but excluding mark-to-market
effects underlying gross margin was 40 basis points below year-ago levels.
(Please see Note 8 below for reconciliation of this non-GAAP measure.) Total
marketing spending in the quarter was weighted toward in-store promotional
support for established brands and new product introductions; advertising and
media expense was 7 percent below year-ago levels. Total segment operating
profit grew 6 percent to $769 million (Please see Note 8 for reconciliation of
this non-GAAP measure). First-quarter net earnings attributable to General
Mills totaled $549 million and diluted earnings per share totaled 82 cents.
These results include a 7-cent per share net benefit from mark-to-market
valuation of certain commodity positions, and a 10-cent net benefit related to
a discrete tax item. These benefits were partially offset by charges totaling
1-cent per share for restructuring actions taken in 2012 and
acquisition-related integration expense. Adjusted diluted EPS, which excludes
the items discussed above, totaled 66 cents in the first quarter of 2013
compared to 64 cents in last year’s first quarter.
Chairman and Chief Executive Officer Ken Powell said this start has the
company on pace to achieve its fiscal 2013 targets. “Results for the first
quarter were broadly consistent with our plans, and included sequential
improvement in our volume and gross margin trends from the fourth quarter of
2012,” he said.
During the first quarter of 2013, General Mills launched more than 100 new
products worldwide. Products making the strongest contributions to net sales
growth in the quarter included new items such as Apple Cinnamon Chex and Fiber
One Nutty Clusters & Almonds cereals, Nature Valley Protein Bars, Green Giant
Seasoned Steamers vegetables, Progresso Recipe Starters cooking sauces and in
Europe, Meringue and Raspberry Fondant Secret Sensations from Häagen Dazs.
Established brands including Honey Nut Cheerios cereal, Totino’s frozen
snacks, Yoplait Greek yogurt, various Pillsbury refrigerated baked goods and
in China, Wanchai Ferry frozen dim sum varieties also contributed strong sales
gains.
U.S. Retail Segment Results
First-quarter net sales for General Mills’ U.S. Retail segment totaled $2.49
billion, down 1 percent from a year earlier. Pound volume reduced net sales
growth by 2 points, and price realization and mix contributed 1 point of net
sales growth. The Snacks, Baking Products, Meals and Small Planet Foods
divisions each recorded net sales gains, while sales for Big G, Frozen Foods
and Yoplait declined. Higher promotional spending in the quarter supported
introductory merchandising of new items and lower merchandised price points
for certain established product lines; advertising and media expense was below
strong year-ago levels. Segment operating profit declined 2 percent to $575
million.
International Segment Results
First-quarter net sales for General Mills’ consolidated international
businesses grew 27 percent to reach $1.09 billion. Pound volume contributed 47
points of net sales growth, including 45 points of growth from acquisitions.
Price realization and mix subtracted 11 points of net sales growth, and
foreign currency subtracted 9 points of growth. On a constant-currency basis,
International segment net sales grew 36 percent overall, with gains of 51
percent in Europe and 28 percent in Canada including incremental contributions
from the Yoplait International acquisition. Both Latin America and the Asia /
Pacific region posted 20 percent gains in constant-currency net sales. (Please
see Note 8 below for reconciliation of this non-GAAP measure.) International
segment operating profit grew 56 percent to $126 million, including increased
advertising and media expense.
Bakeries and Foodservice Segment Results
First-quarter net sales for the Bakeries and Foodservice segment totaled $472
million, 2 percent below year-ago results. Pound volume contributed 2 points
of net sales growth, while price realization and mix reduced net sales growth
by 4 points. Segment operating profit grew 10 percent in the quarter to $68
million, reflecting lower wheat costs year-over-year and higher earnings from
grain merchandising.
Joint Venture Summary
Combined after-tax earnings from the Cereal Partners Worldwide (CPW) and
Häagen Dazs Japan (HDJ) joint ventures totaled $23 million. This was below
strong sales-driven performance a year ago, primarily due to higher input
costs and unfavorable foreign currency exchange effects for CPW.
Constant-currency net sales for CPW grew 1 percent in the quarter, and
constant-currency net sales for HDJ were 4 percent above year ago levels.
Corporate Items
Unallocated corporate items totaled $21 million of income in this year’s first
quarter compared to $88 million of expense a year ago. Mark-to-market
valuation of certain commodity positions represented an $82 million net
decrease in expense in the first quarter of 2013 compared to a $38 million net
increase in expense in last year’s first quarter. Excluding these
mark-to-market effects, unallocated corporate items totaled a net $61 million
of expense this year compared to a net $50 million of expense a year ago,
primarily reflecting higher pension expense. Restructuring expenses totaled $9
million in this year’s first quarter. Net interest expense of $83 million was
3 percent below year ago levels, primarily due to changes in debt mix. The
effective tax rate was 22.7 percent in this year’s first quarter, reflecting a
decrease in deferred income tax liabilities. Excluding this discrete tax item,
mark-to-market effects, and restructuring and integration costs, the adjusted
effective tax rate was 31.4 percent in this year’s first quarter compared to
32.4 percent a year ago. (Please see Note 8 below for a reconciliation of this
non-GAAP measure.)
Cash Flow Items
Cash provided by operating activities totaled $489 million in the quarter, up
11 percent from year-ago levels. Capital investments totaled $141 million in
the first quarter of 2013. Dividends paid rose to $218 million, reflecting the
8 percent increase in the dividend rate year-over-year. During the first
quarter, General Mills repurchased approximately 7 million shares of common
stock for a total of $272 million. Average diluted shares outstanding totaled
667 million for the first quarter of 2013, generally in-line with year ago
levels.
Outlook
Powell said, “In our core U.S. market, we are seeing slow improvement in price
and volume trends across our retail food categories. As we move into the
second quarter, we’ll be putting full advertising support behind our new
items, and we have planned strong levels of in-store merchandising across our
product categories. Outside the U.S., our established international businesses
are showing good momentum and, beginning in the second quarter, results will
include incremental contributions from Yoplait Canada and Yoki Alimentos in
Brazil.”
The company reaffirmed its full-year fiscal 2013 EPS guidance of approximately
$2.65, excluding mark-to-market effects, the net tax benefit, and
restructuring and integration costs.
General Mills will hold a briefing for investors today, September 19, 2012,
beginning at 8:30 a.m. Eastern time. You may access the web cast from General
Mills’ internet home page: generalmills.com.
Adjusted diluted EPS, gross margin excluding mark-to-market effects, total
segment operating profit, international sales excluding foreign currency
translation effects, and adjusted effective tax rate are each non-GAAP
measures. Reconciliations of these measures to their relevant GAAP measures
appear in Note 8 to the attached Consolidated Financial Statements.
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 laws and
regulations, including labeling and advertising regulations; 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 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. 26, Aug. 28, % Change
2012 2011
Net sales $ 4,051.0 $ 3,847.6 5.3 %
Cost of sales 2,422.7 2,401.1 0.9 %
Selling, general, and
administrative 839.0 807.5 3.9 %
expenses
Restructuring,
impairment, and other 9.2 0.1 NM
exit costs
Operating profit 780.1 638.9 22.1 %
Interest, net 83.0 85.4 (2.8 ) %
Earnings before income
taxes and after-tax
697.1 553.5 25.9 %
earnings from joint
ventures
Income taxes 158.1 177.5 (10.9 ) %
After-tax earnings 23.1 28.3 (18.4 ) %
from joint ventures
Net earnings,
including earnings
attributable
562.1 404.3 39.0 %
to redeemable and
noncontrolling
interests
Net earnings (loss)
attributable to
redeemable 13.2 (1.3 ) NM
and noncontrolling
interests
Net earnings
attributable to $ 548.9 $ 405.6 35.3 %
General Mills
Earnings per share - $ 0.84 $ 0.63 33.3 %
basic
Earnings per share - $ 0.82 $ 0.61 34.4 %
diluted
Dividends per share $ 0.330 $ 0.305 8.2 %
Quarter Ended
Comparisons as a % of Aug. 26, Aug. 28, Basis Pt
net sales: 2012 2011 Change
Gross margin 40.2 % 37.6 % 260
Selling, general, and
administrative 20.7 % 21.0 % (30 )
expenses
Operating profit 19.3 % 16.6 % 270
Net earnings
attributable to 13.5 % 10.5 % 300
General Mills
Quarter Ended
Comparisons as a % of
net sales excluding
Aug. 26, Aug. 28, Basis Pt
certain items 2012 2011 Change
affecting
comparability (a):
Gross margin 38.2 % 38.6 % (40 )
Operating profit 17.5 % 17.6 % (10 )
Net earnings
attributable to 10.8 % 11.1 % (30 )
General Mills
(a) See Note 8 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. 26, Aug. 28, % Change
2012 2011
Net sales:
U.S. Retail $ 2,493.9 $ 2,510.3 (0.7 ) %
International 1,085.5 856.3 26.8 %
Bakeries and Foodservice 471.6 481.0 (2.0 ) %
Total $ 4,051.0 $ 3,847.6 5.3 %
Operating profit:
U.S. Retail $ 575.1 $ 585.2 (1.7 ) %
International 125.8 80.7 55.9 %
Bakeries and Foodservice 67.7 61.4 10.3 %
Total segment operating profit 768.6 727.3 5.7 %
Unallocated corporate items (20.7 ) 88.3 (123.4 ) %
Restructuring, impairment, and 9.2 0.1 NM
other exit costs
Operating profit $ 780.1 $ 638.9 22.1 %
Quarter Ended
Aug. 26, Aug. 28, Basis Pt
2012 2011 Change
Segment operating profit as a % of
net sales:
U.S. Retail 23.1 % 23.3 % (20 )
International 11.6 % 9.4 % 220
Bakeries and Foodservice 14.4 % 12.8 % 160
Total segment operating profit 19.0 % 18.9 % 10
See accompanying notes to consolidated financial statements.
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Aug. 26, Aug. 28, May 27,
2012 2011 2012
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,508.4 $ 338.2 $ 471.2
Receivables 1,473.5 1,504.0 1,323.6
Inventories 1,808.5 1,788.1 1,478.8
Deferred income taxes 63.2 13.4 59.7
Prepaid expenses and other 363.8 452.7 358.1
current assets
Total current assets 5,217.4 4,096.4 3,691.4
Land, buildings, and equipment 3,603.5 3,565.2 3,652.7
Goodwill 8,207.7 8,301.4 8,182.5
Other intangible assets 4,723.7 4,935.8 4,704.9
Other assets 883.0 994.4 865.3
Total assets $ 22,635.3 $ 21,893.2 $ 21,096.8
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 1,264.9 $ 1,181.9 $ 1,148.9
Current portion of long-term 1,441.1 1,125.9 741.2
debt
Notes payable 1,682.1 1,022.7 526.5
Other current liabilities 1,587.4 1,553.5 1,426.6
Total current liabilities 5,975.5 4,884.0 3,843.2
Long-term debt 5,462.0 5,901.1 6,161.9
Deferred income taxes 1,127.5 1,417.1 1,171.4
Other liabilities 2,125.5 1,777.6 2,189.8
Total liabilities 14,690.5 13,979.8 13,366.3
Redeemable interest 851.6 904.4 847.8
Stockholders' equity:
Common stock, 754.6 shares 75.5 75.5 75.5
issued, $0.10 par value
Additional paid-in capital 1,288.7 1,293.0 1,308.4
Retained earnings 10,289.6 9,396.6 9,958.5
Common stock in treasury, at
cost, shares of 109.8, 110.3 (3,346.1 ) (3,251.1 ) (3,177.0 )
and 106.1
Accumulated other comprehensive (1,662.5 ) (1,014.7 ) (1,743.7 )
loss
Total stockholders' equity 6,645.2 6,499.3 6,421.7
Noncontrolling interests 448.0 509.7 461.0
Total equity 7,093.2 7,009.0 6,882.7
Total liabilities and equity $ 22,635.3 $ 21,893.2 $ 21,096.8
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 26, Aug. 28,
2012 2011
Cash Flows - Operating Activities
Net earnings, including earnings attributable to $ 562.1 $ 404.3
redeemable and noncontrolling interests
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 139.2 125.5
After-tax earnings from joint ventures (23.1 ) (28.3 )
Distributions of earnings from joint ventures 37.0 31.6
Stock-based compensation 38.3 44.5
Deferred income taxes (51.2 ) 22.3
Tax benefit on exercised options (18.1 ) (12.4 )
Pension and other postretirement benefit plan (5.5 ) (3.9 )
contributions
Pension and other postretirement benefit plan 32.6 19.4
costs
Restructuring, impairment, and other exit income (8.6 ) (0.9 )
Changes in current assets and liabilities, (130.5 ) (134.8 )
excluding the effects of acquisitions
Other, net (83.4 ) (26.5 )
Net cash provided by operating activities 488.8 440.8
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment (140.6 ) (132.8 )
Acquisitions, net of cash acquired (31.8 ) (900.1 )
Investments in affiliates, net 7.5 -
Proceeds from disposal of land, buildings, and 0.3 0.3
equipment
Exchangeable note 14.5 (131.6 )
Other, net (3.5 ) 6.5
Net cash used by investing activities (153.6 ) (1,157.7 )
Cash Flows - Financing Activities
Change in notes payable 1,155.9 712.6
Payment of long-term debt (0.4 ) (6.6 )
Proceeds from common stock issued on exercised 39.0 24.0
options
Tax benefit on exercised options 18.1 12.4
Purchases of common stock for treasury (272.5 ) (109.9 )
Dividends paid (217.8 ) (200.3 )
Distributions to noncontrolling and redeemable (29.5 ) -
interest holders
Other, net - (0.3 )
Net cash provided by financing activities 692.8 431.9
Effect of exchange rate changes on cash and cash 9.2 3.6
equivalents
Increase (decrease) in cash and cash equivalents 1,037.2 (281.4 )
Cash and cash equivalents - beginning of year 471.2 619.6
Cash and cash equivalents - end of period $ 1,508.4 $ 338.2
Cash Flow from Changes in Current Assets and
Liabilities, excluding the effects of
acquisitions:
Receivables $ (143.8 ) $ (156.9 )
Inventories (324.0 ) (135.3 )
Prepaid expenses and other current assets (5.4 ) 55.5
Accounts payable 176.9 70.9
Other current liabilities 165.8 31.0
Changes in current assets and liabilities $ (130.5 ) $ (134.8 )
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.
(2) At the beginning of fiscal 2013, we realigned certain divisions within our
U.S. Retail operating segment and certain geographic regions within our
International operating segment. These realignments had no effect on
previously reported consolidated net sales, operating segments’ net sales,
operating profit, segment operating profit, net earnings attributable to
General Mills or earnings per share.
(3) On August 1, 2012, we acquired Yoki Alimentos S.A. (Yoki), a privately
held food company headquartered in Sao Bernardo do Campo, Brazil, for an
aggregate purchase price of $940 million, including $89 million of non-cash
consideration for net debt assumed, subject to a purchase price adjustment
based on Yoki’s final pre-acquisition balance sheet. Yoki operates in several
food categories, including snacks, convenient meals, basic foods, and
seasonings. We funded this transaction using cash available in our foreign
subsidiaries and from commercial paper. We report our Brazilian operations on
a one-month lag and will consolidate Yoki’s balance sheet and results of
operations beginning with our second quarter of fiscal 2013. As of August 26,
2012, the $851 million of cash used to fund the acquisition is reported on our
Consolidated Balance Sheets. The pro forma effects of this acquisition were
not material.
(4) In the first quarter of fiscal 2013, we recorded a $9 million
restructuring charge related to a productivity and cost savings plan approved
in the fourth quarter of fiscal 2012. The plan was designed to improve
organizational effectiveness and focus on key growth strategies and included
organizational changes to strengthen business alignment and actions to
accelerate administrative efficiencies across all of our operating segments
and support functions. During the quarter ended August 26, 2012, we recorded
restructuring charges of $7 million related to our International segment, $2
million related to our U.S. Retail segment, and less than $1 million related
to our Bakeries and Foodservice segment. These restructuring actions are
expected to be completed by the end of fiscal 2014.
(5) For the first quarter of fiscal 2013, unallocated corporate items totaled
$21 million of income compared to $88 million of expense in the same period
last year. We recorded an $82 million net decrease in expense related to the
mark-to-market valuations of certain commodity positions and grain inventories
in the first quarter of fiscal 2013, compared to a $38 million net increase in
expense in the first quarter of fiscal 2012. In addition, pension expense
increased $10 million as compared to the same quarter last year.
(6) Basic and diluted earnings per share (EPS) were calculated as follows:
Quarter Ended
In Millions, Except per Share Data Aug. 26, Aug. 28,
2012 2011
Net earnings attributable to General Mills $ 548.9 $ 405.6
Average number of common shares - basic EPS 650.4 647.9
Incremental share effect from: (a)
Stock options 12.4 14.4
Restricted stock, restricted stock units, and other 4.6 4.7
Average number of common shares - diluted EPS 667.4 667.0
Earnings per share - basic $ 0.84 $ 0.63
Earnings per share - diluted $ 0.82 $ 0.61
(a) Incremental shares from stock options and restricted stock units are
computed by the treasury stock method.
(7) The effective tax rate for the first quarter of fiscal 2013 was 22.7
percent compared to 32.1 percent for the first quarter of fiscal 2012. The 9.4
percentage point decrease was primarily related to the restructuring of a
subsidiary during the first quarter of fiscal 2013 which resulted in a $67
million decrease to deferred income tax liabilities related to the tax basis
of the investment in the subsidiary and certain distributed assets, with a
corresponding discrete non-cash reduction to income taxes in the first quarter
of fiscal 2013.
(8) We have included five measures in this release that are not defined by
generally accepted accounting principles (GAAP): (1) diluted earnings per
share excluding mark-to-market valuation of certain commodity positions and
grain inventories (“mark-to-market effects”), restructuring costs reflecting
employee severance expense (“restructuring costs”), and a discrete tax item
related to a subsidiary (“tax item”) (collectively, these three items are
referred to as “certain items affecting comparability” in this footnote), (2)
earnings comparisons as a percent of net sales excluding certain items
affecting comparability, (3) total segment operating profit, (4) net sales
growth rates for our International segment in total and by region excluding
the impact of changes in foreign currency exchange, and (5) 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 earnings per share and operating performance measures as
calculated in accordance with GAAP.
Diluted EPS excluding certain items affecting comparability follows:
Quarter Ended
Per Share Data Aug. 26, Aug. 28,
2012 2011
Diluted earnings per share, as reported $ 0.82 $ 0.61
Mark-to-market effects (a) (0.07 ) 0.03
Restructuring costs (b) 0.01 -
Tax item (c) (0.10 ) -
Diluted earnings per share, excluding certain items
affecting $ 0.66 $ 0.64
comparability
(a) See Note 5.
(b) See Note 4.
(c) See Note 7.
Earnings comparisons as a percent of net sales excluding certain items
affecting comparability follows:
Quarter Ended
In Millions Aug. 26, 2012 Aug. 28, 2011
Comparisons as a % of Value Percent of Value Percent of
Net Sales Net Sales Net Sales
Gross margin as $ 1,628.3 40.2 % $ 1,446.5 37.6 %
reported (a)
Mark-to-market effects (81.6 ) (2.0 ) % 37.7 1.0 %
(b)
Adjusted gross margin $ 1,546.7 38.2 % $ 1,484.2 38.6 %
Operating profit as $ 780.1 19.3 % $ 638.9 16.6 %
reported
Mark-to-market effects (81.6 ) (2.0 ) % 37.7 1.0 %
(b)
Restructuring costs 9.0 0.2 % - - %
(c)
Adjusted operating $ 707.5 17.5 % $ 676.6 17.6 %
profit
Net earnings
attributable to $ 548.9 13.5 % $ 405.6 10.5 %
General Mills as
reported
Mark-to-market
effects, net of tax (51.4 ) (1.3 ) % 23.8 0.6 %
(b)
Restructuring costs, 7.5 0.2 % - - %
net of tax (c)
Tax item (d) (66.7 ) (1.6 ) % - - %
Adjusted net earnings
attributable to $ 438.3 10.8 % $ 429.4 11.1 %
General Mills
(a) Net sales less cost of sales.
(b) See Note 5.
(c) See Note 4.
(d) See Note 7.
A reconciliation of total segment operating profit to the relevant GAAP
measure, operating profit, is included in the Statements of Operating Segment
Results.
The reconciliation of International segment and region net sales growth rates
as reported to growth rates excluding the impact of foreign currency exchange
below demonstrates the effect of foreign currency exchange rate fluctuations
from year to year. To present this information, current period results for
entities reporting in currencies other than United States dollars are
converted 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.
Quarter Ended Aug. 26, 2012
Percentage Change Impact of Percentage Change
in Foreign in
Net Sales Currency Net Sales on
as Reported (a) Exchange Constant
Currency Basis
Europe 36 % (15) pts 51 %
Canada 23 (5) 28
Asia/Pacific 17 (3) 20
Latin America 14 (6) 20
Total International 27 % (9) pts 36 %
(a) 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. 26, 2012 Aug. 28, 2011
In Millions Pretax Income Pretax Income
Earnings (a) Taxes Earnings (a) Taxes
As reported $ 697.1 $ 158.1 $ 553.5 $ 177.5
Mark-to-market effects (81.6 ) (30.2 ) 37.7 13.9
(b)
Restructuring costs (c) 9.0 1.5 - -
Tax item (d) - 66.7 - -
As adjusted $ 624.5 $ 196.1 $ 591.2 $ 191.4
Effective tax rate:
As reported 22.7 % 32.1 %
As adjusted 31.4 % 32.4 %
(a) Earnings before income taxes and after-tax earnings from joint ventures.
(b) See Note 5.
(c) See Note 4.
(d) See Note 7.
Contact:
General Mills, Inc.
(analysts) Kris Wenker: 763-764-2607
or
(media) Kirstie Foster: 763-764-6364
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