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. Separate groups of employees have similar historical exercise behavior and therefore were aggregated into a single pool for valuation purposes. As of May 31, 2020, the net notional value of foreign exchange derivatives was $967.2 million. General Mills: Publications, including annual report and global responsibility report We cannot guarantee that our costs in relation to these matters, or compliance with environmental laws in general, will not exceed our established liabilities or otherwise have an adverse effect on our business and results of operations. Yes ' No Í. Account balances are written off against the allowance when we deem the amount is uncollectible. We may be unable to maintain our profit margins in the face of a consolidating retail environment. Our Europe & Australia reporting unit had experienced declining business performance, and we continue to monitor this business. The manufacture and sale of consumer and pet food products is highly regulated. 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, snack bars, fruit snacks, savory snacks, and a wide variety of organic products including ready-to-eat cereal, frozen and shelf-stable vegetables, meal kits, fruit snacks, snack bars, and refrigerated yogurt. Exhibit 99 . We evaluated the design and tested the operating effectiveness of internal controls related to the critical audit matter. Our total recognized expense related to defined contribution plans was $90.1 million in fiscal 2020, $52.7 million in fiscal 2019, and $49.2 million in fiscal 2018. Stock-based compensation expense continues to reflect estimated forfeitures. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. While we experienced increased demand for our products in the fourth quarter of fiscal 2020, this increase may moderate or reverse if consumers alter their purchasing habits. Collateral assets are either cash or U.S. Treasury instruments and are held in a trust account that we may access if the counterparty defaults. We believe this measure provides useful information to investors because it is important for assessing our operating profit margin on a comparable year-to-year basis. 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. Print Entire Document Print 2020 Global Responsibility Report Click here to download a printable version of this entire document. As of May 31, 2020, other postretirement benefit plans had benefit obligations of $479.4 million that exceeded plan assets of $248.0 million. Our audits also included performing such other procedures as we considered necessary in the circumstances. Adjusted diluted earnings per share of $3.61 increased 12 percent on a constant-currency basis (see the "Non-GAAP Measures" section below for a description of our use of measures not defined by GAAP). 2 Jul 20 Files SEC. Contributions and Future Benefit Payments. The net amount of pre-tax gains and losses in AOCI as of May 31, 2020, that we expect to be reclassified into net earnings within the next 12 months is a $12.9 million net gain. NOTE 2. Intangible assets subject to amortization: Franchise agreements, customer relationships, Intangible assets subject to amortization. We may be unable to grow our market share or add products that are in faster growing and more profitable categories. We manufacture our products in 13 countries and market them in more than 100 countries. We advertise our products and could be the target of claims relating to alleged false or deceptive advertising under federal, state, and foreign laws and regulations. Fiscal 2020 organic net sales includes growth from the impact of the COVID-19 pandemic. Fiscal 2020 includes 13 months of Pet operating segment results as we changed the Pet operating segment's reporting period from an April fiscal year end to a May fiscal year end to match our fiscal calendar. 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. For further information on our customer credit and product return practices, please refer to Note 2 to the Consolidated Financial Statements in Item 8 of this report. Our segments' operating profit growth rates on a constant-currency basis are calculated as follows: 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. Long-term debt is a Level 2 liability in the fair value hierarchy. Performance share units are settled in common stock and are generally subject to a three year performance and vesting period. We also are a leading supplier of branded and unbranded food products to the North American foodservice and commercial baking industries. Goodwill for each of our reporting units is tested for impairment annually and whenever events or changes in circumstances indicate. 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. During fiscal 2020, customer concentration was as follows: (a) Includes Walmart Inc. and its affiliates. The disclosed impacts attributable to the COVID-19 pandemic on net sales and organic net sales were calculated based upon net sales in excess of our expectations prior to the net increase in demand resulting from the COVID-19 pandemic. We are accordingly subject to a number of risks relating to doing business internationally, any of which could significantly harm our business. In addition, off-balance sheet arrangements were not material as of May 31, 2020. Our finite-lived intangible assets, primarily acquired franchise agreements and customer relationships, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Segment operating profit decreased 20 percent to $337 million in fiscal 2020, compared to $420 million in fiscal 2019, primarily driven by lower contributions from volume growth and unfavorable net price realization and mix. We sponsor a number of defined benefit plans for employees in the United States, Canada, and various foreign locations, including defined benefit pension, retiree health and welfare, severance, and other postemployment plans. Our businesses are organized into five operating segments: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet. The credit facilities contain covenants, including a requirement to maintain a fixed charge coverage ratio of at least 2.5 times. Restricted stock and restricted stock units generally vest and become unrestricted four years after the date of grant. We work with our outside actuaries to determine the timing and amount of expected future cash outflows to plan participants and, using the Aa Above Median corporate bond yield, to develop a forward interest rate curve, including a margin to that index based on our credit risk. If current expectations for growth rates for sales and margins are not met, or other market factors and macroeconomic conditions that could be affected by the COVID-19 pandemic or otherwise were to change, then our indefinite-lived intangible assets could become significantly impaired. After the onset of the pandemic, elevated at-home food demand accelerated net sales growth in the fourth quarter in the North America Retail segment, where a significant share of net sales comes from categories that were most impacted by at-home eating, including meals, baking, and cereal. GIS General Mills 10-K 2020 2020 FY Annual report. Summarized financial information about defined benefit pension, other postretirement benefit, and postemployment benefit plans is presented below: Plan assets less than benefit obligation as. Fair value is measured using a discounted cash flow model or other similar valuation model, as appropriate. See the information contained under the section entitled "Environmental Matters" in Item 1 of this report for a discussion of environmental matters in which we are involved. This page shows recent SEC filings related to General Mills, Inc. 763-764-3202, Analysts/Investors: We own our principal executive offices and main research facilities, which are located in the Minneapolis, Minnesota metropolitan area. 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, baking mixes. In most product categories, we compete not only with other widely advertised, branded products, but also with regional brands and with generic and private label products that are generally sold at lower prices. If we are unable to increase productivity to offset these increased costs or increase our prices, we may experience reduced margins and profitability. The fair value estimates are derived from discounted cash flow analyses that require the Company to make judgments about highly subjective matters, including future operating results, including revenue growth rates and operating margins, and an estimate of the discount rates and royalty rates. 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. Click here to find out more & inquire today. Dividends paid in fiscal 2020 totaled $1,196 million, or $1.96 per share, consistent with fiscal 2019. Volatility in the market value of derivatives we use to manage exposures to fluctuations in commodity prices will cause volatility in our gross margins and net earnings. The Pet segment experienced increased demand early in the fourth quarter from stock-up purchasing, which partially unwound by the end of the quarter. See Note 2 for additional information. These fluctuations could cause material variations in our results of operations. 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. Disputes with significant suppliers, including disputes regarding pricing or performance, could adversely affect our ability to supply products to our customers and could materially and adversely affect our sales, financial condition, and results of operations. Our adjusted effective tax rate was 20.7 percent in fiscal 2020 compared to 21.8 percent in fiscal 2019 (see the "Non-GAAP Measures" section below for a description of our use of measures not defined by GAAP). We delivered on the three key priorities we outlined at the beginning of fiscal 2020: First, we accelerated our organic net sales growth ratecompared to our fiscal 2019 performance, driven by strong execution to meet elevated demand during the COVID-19 pandemic, healthy levels of innovation, and a significant increase in capabilities and brand-building investment. Please see Note 17 for a disaggregation of our revenue into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Ten years of annual and quarterly financial statements and annual report data for General Mills (GIS). The failure of third parties on which we rely, including those third parties who supply our ingredients, packaging, capital equipment and other necessary operating materials, contract manufacturers, distributors, contractors, and external business partners, to meet their obligations to us, or significant disruptions in their ability to do so, may negatively impact our operations. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES. Accordingly, the related compensation cost is generally recognized immediately for awards granted to retirement-eligible individuals or over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period. Rates are graded down annually until the ultimate trend rate of 4.5 percent is reached in 2029 for all retirees. Jeff Siemon Click here to find out more & inquire today. Yes Í No ', Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ability to obtain additional financing for working capital, capital expenditures, or general corporate purposes, particularly if the ratings assigned to our debt securities by rating organizations were revised downward; and. In fiscal 2020, net sales increased 5 percent compared to last year and organic net sales increased 4 percent compared to last year. The decrease in other postretirement obligations was primarily driven by a decrease in expected future claims, partially offset by losses due to a decrease in the discount rate. 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 operate numerous manufacturing facilities and maintain many sales and administrative offices, warehouses, and distribution centers around the world. We recognized windfall tax benefits from stock-based payments in income tax expense in our Consolidated Statements of Earnings of $27.3 million in fiscal 2020, $24.5 million in fiscal 2019, and $25.5 million in fiscal 2018. Concerns with the safety and quality of our products could cause consumers to avoid certain products or ingredients. Segment operating profit decreased 74 percent to $19 million in fiscal 2020, compared to $72 million in fiscal 2019, primarily driven by an increase in input costs and lower contributions from volume growth. Fiscal 2020 organic net sales includes growth from the impact of the COVID-19 pandemic. In addition, the new standard requires that only the service cost component of net periodic benefit expense is eligible for capitalization. Scheduled maturities of our marketable securities are as follows: As of May 31, 2020, we had $2.3 million of marketable debt securities and $15.9 million of cash and cash equivalents pledged as collateral for derivative contracts. Our indefinite-lived intangible assets, mainly intangible assets primarily associated with the Blue Buffalo, Pillsbury, Totino's, Yoplait, Old El Paso, Progresso, Annie's, Häagen-Dazs, and Yoki brands, are also tested for impairment annually and whenever events or changes in circumstances indicate that their carrying value may not be recoverable. All expenditures for research and development (R&D) are charged against earnings in the period incurred. For more information on significant customers, please see Note 8 to the Consolidated Financial Statements in Item 8 of this report. 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