ITEM 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE OVERVIEW
We are a global packaged foods company. We develop distinctive value-added food products and market them under unique brand
names. We work continuously to improve our core products and to create new products that meet consumers’ evolving needs and
preferences. In addition, we build the equity of our brands over time with strong consumer-directed marketing, innovative new
products, and effective merchandising. We believe our brand-building approach is the key to winning and sustaining leading share
positions in markets around the globe.
Our fundamental financial goal is to generate competitively differentiated returns for our shareholders over the long term. We believe
achieving that goal requires us to generate a consistent balance of net sales growth, margin expansion, cash conversion, and cash
return to shareholders over time.
Our long-term growth objectives are to deliver the following performance on average over time:
•2 to 3 percent annual growth in organic net sales;
•mid-single-digit annual growth in adjusted operating profit;
•mid- to high-single-digit annual growth in adjusted diluted earnings per share (EPS);
•free cash flow conversion of at least 95 percent of adjusted net earnings after tax; and
•cash return to shareholders of 80 to 90 percent of free cash flow, including an attractive dividend yield.
Guided by our purpose to make food the world loves, we are executing our Accelerate strategy to drive sustainable, profitable growth
and top-tier shareholder returns over the long term. The strategy focuses on four pillars to create competitive advantages and win:
boldly building brands, relentlessly innovating, unleashing our scale, and standing for good. We are prioritizing our core markets,
global platforms, and local gem brands that have the best prospects for profitable growth and we are committed to reshaping our
portfolio with strategic acquisitions and divestitures to further enhance our growth profile.
Our consolidated net sales for fiscal 2026decreased5 percent to $18.4 billion. On an organic basis, net sales decreased2 percent
compared to year-ago levels. Operating profit of $886 milliondecreased73 percent. Adjusted operating profit of $2.8 billion
decreased16 percent on a constant-currency basis. Diluted loss per share decreased104 percent to $(0.16). Adjusted diluted EPS of
$3.55decreased16 percent on a constant-currency basis (See the “Non-GAAP Measures” section below for a description of our use of
measures not defined by generally accepted accounting principles (GAAP)).
Net cash provided by operations totaled $2,166 million in fiscal 2026, with a conversion rate that was not meaningful as a percent of
net loss, including earnings attributable to noncontrolling interests. This cash generation supported capital investments totaling $540
million, and our resulting free cash flow was $1,626 million at a conversion rate of 85 percent of adjusted net earnings, including
earnings attributable to noncontrolling interests. We returned cash to shareholders through dividends totaling $1,315 million and net
share repurchases totaling $500 million (See the “Non-GAAP Measures” section below for a description of our use of measures not
defined by GAAP).
In fiscal 2026, while we made meaningful progress in strengthening the remarkability of our brands to position the business for long-
term sustainable growth, this progress came amid a more challenging category and competitive backdrop than we initially expected.
Weak consumer sentiment, heightened uncertainty, and significant volatility weighed on category growth and impacted consumer
purchase patterns, resulting in a slower pace and higher cost of volume recovery than we originally anticipated. We delivered mixed
performance against the three priorities we established at the beginning of the year:
On our priority of returning North America Retail to volume growth, we did not achieve our objective. Organic pound
volume in North America Retail declined 1 percent for the year, driven in part by Nielsen-measured pound volume in our
categories slowing by 1 point versus fiscal 2025. Even so, we grew household penetration and we delivered improved pound
competitiveness, with 65 percent of our U.S. categories holding or growing pound share.
On our priority of accelerating North America Pet growth, we partially achieved our objective. Our Nielsen-measured retail
sales growth improved by 1 point versus our fiscal 2025 trend. However, our organic net sales growth slowed by 3 points,
driven largely by changes in retailer inventory.
On our priority of driving efficiencies to reinvest in growth, we successfully achieved our objectives to generate Holistic
Margin Management (HMM) savings of 5 percent of cost of goods sold and deliver more than $100 million in additional
savings from our global transformation initiative and other efficiency efforts.
A detailed review of our fiscal 2026 performance compared to fiscal 2025 appears below in the section titled “Fiscal 2026
Consolidated Results of Operations.” A detailed review of our fiscal 2025 performance compared to our fiscal 2024 performance is set
forth in Part II, Item 7 of our Form 10-K for the fiscal year ended May 25, 2025, under the caption “Management’s Discussion and
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Analysis of Financial Condition and Results of Operations – Fiscal 2025 Results of Consolidated Operations,” which is incorporated
herein by reference.
In an effort to help address input cost inflation, fund growth investments, and deliver accelerated profit and cash flow growth, we
expect to generate $3 billion in cumulative cost savings in the four years through fiscal 2030. Roughly $2 billion of this target is
expected to be generated through our ongoing HMM productivity program, equating to annual savings of approximately 4 percent of
cost of goods sold. The remaining $1 billion is expected to be generated by our global transformation initiative and other cost
efficiency efforts, including redesigning the supply chain network, further streamlining business processes, and driving improvement
across other elements of its cost base. These efforts will create a more agile and efficient structure that is better fit for future growth.
In fiscal 2027, we plan to continue advancing our Accelerate strategy and improving the remarkability of our brands. Our key
priorities are to strengthen our organic net sales growth, accelerate our enterprise transformation efforts, and drive disciplined capital
allocation and returns. Amid a continued challenging macroeconomic backdrop for consumers, we expect category growth to be
consistent with recent trends and below our long-term growth projections. With our price investments completed in fiscal 2026, our
plans in fiscal 2027 are focused on delivering product innovation and renovation news centered on the benefits that matter most to
today’s consumers, including better-for-you benefits like protein and fiber, bold flavors, and fun and indulgence, all of which should
help support stronger topline growth. We expect to generate at least $750 million in total savings toward the $3 billion target from
HMM, our global transformation initiative, and other cost savings actions, which will help offset our forecast for 4 to 5 percent input
cost inflation as well as our investments in brand remarkability. In addition to these factors, we expect headwinds of approximately 9
points on operating profit and 11 points on EPS in fiscal 2027 from lapping the 53rd week in fiscal 2026, normalizing corporate
incentive expense, and the impact of fiscal 2026 divestitures.
Based on these assumptions, our key full-year fiscal 2027 targets are summarized below:
•Organic net sales are expected to range between down 1.5 percent and up 0.5 percent.
•Adjusted operating profit is expected to be down 8 to 13 percent in constant-currency from the base of $2.8 billion reported in
fiscal 2026.
•Adjusted diluted EPS is expected to be between $3.00 and $3.20 per share, including an immaterial impact from foreign
currency exchange.
•Free cash flow conversion is expected to be approximately 95 percent of adjusted after-tax earnings.
See the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP.
Certain terms used throughout this report are defined in a glossary in Item 8 of this report.
FISCAL 2026 CONSOLIDATED RESULTS OF OPERATIONS
Fiscal 2026 had 53 weeks compared to 52 weeks in fiscal 2025.
In fiscal 2026, net sales decreased5 percent compared to fiscal 2025, including the net impact of the divestitures of our North
American yogurt businesses (Divestitures) and the acquisition of Whitebridge Pet Brands (Acquisition). Organic net sales decreased2
percent compared to fiscal 2025. Operating profit of $886 milliondecreased73 percent compared to fiscal 2025, primarily driven by
impairments of goodwill and other brand intangible assets, a valuation loss related to our held for sale business in Brazil, higher input
costs, and a decrease in contributions from volume growth, partially offset by a divestiture gainrelated to the sale of our United States
yogurt business and favorable net price realization and mix. Operating profit margin of 4.8 percentdecreased1,220 basis points.
Adjusted operating profit of $2,812 milliondecreased16 percent on a constant-currency basis, including the net impact of the
Divestitures and Acquisition, primarily driven by higher input costs and a decrease in contributions from volume growth, partially
offset by favorable net price realization and mix and lower selling, general & administrative (SG&A) expenses. Adjusted operating
profit margin decreased190 basis points to 15.3 percent. Diluted loss per share of $(0.16)decreased104 percent compared to diluted
earnings per share in fiscal 2025. Adjusted diluted earnings per share of $3.55decreased16 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).
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A summary of our consolidated financial results for fiscal 2026 follows:
Net loss attributable to General Mills (87.6) (104) %
Diluted loss per share $(0.16) (104) %
Organic net sales growth rate (a) (2) %
Adjusted diluted earnings per share (a) $3.55 (16) % (16)%
(a)See the “Non-GAAP Measures” section below for our use of measures not defined by GAAP.
Consolidated net sales were as follows:
Contributions from volume growth (a) (8) pts
Net price realization and mix 2 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.
Net sales in fiscal 2026decreased5 percentcompared to fiscal 2025, driven by a decrease in contributions from volume growth,
partially offset by favorable net price realization and mix and favorable foreign currency exchange impacts, and includes the net
impact of the Divestitures and Acquisition.
Components of organic net sales growth are shown in the following table:
Contributions from organic volume growth (a) (1) pt
Organic net price realization and mix (1) pt
Organic net sales growth (2) pts
Foreign currency exchange 1 pt
Divestitures and acquisition (6) pts
Net sales growth (5) 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 in fiscal 2026decreased2 percent compared to fiscal 2025, driven by a decrease in contributions from organic
volume growth and unfavorable organic net price realization and mix.
Cost of salesdecreased$525 million in fiscal 2026 to $12,229 million. The decrease was primarily driven by a $1,009 million
decrease due to lower volume, partially offset by a $506 millionincrease attributable to product rate and mix. We recorded a $48
million net decrease in cost of sales related to mark-to-market valuation of certain commodity positions and grain inventories in fiscal
2026, compared to a net decrease of $16 million in fiscal 2025 (please refer to Note 8 to the Consolidated Financial Statements in Item
8 of this report for additional information). We also recorded $19 million of restructuring charges in fiscal 2026 compared to $9
million of restructuring charges in cost of sales in fiscal 2025 (please refer to Note 4 to the Consolidated Financial Statements in Item
8 of this report for additional information).
Gross margin decreased8 percent in fiscal 2026 compared to fiscal 2025. Gross margin as a percent of net sales of 33.6 percent
decreased100 basis points compared to fiscal 2025.
SG&A expensesdecreased$57 million to $3,388 million in fiscal 2026 compared to fiscal 2025, primarily driven by lower other
administrative costs, including the net impact of the Divestitures and Acquisition, partially offset by increased media and advertising
expenses. SG&A expenses as a percent of net sales in fiscal 2026increased70 basis points compared to fiscal 2025.
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Divestitures gain, net totaled $1,049 million in fiscal 2026primarily related to the sale of our United States yogurt business. In fiscal
2025, we recorded a $96 million divestiture gain related to the sale of our Canada yogurt business (please refer to Note 3 to the
Consolidated Financial Statements in Item 8 of this report).
Restructuring, transformation, impairment, and other exit costs totaled $2,971 million in fiscal 2026 compared to $78 million in
fiscal 2025. In fiscal 2026, we recorded a $1,500 million non-cash goodwill impairment charge related to our North America Pet
reporting unit and$303 million of non-cash impairment charges related to our Nudges, Uncle Toby’s,and True Chews brand
intangible assets (please refer to Note 6 to the Consolidated Financial Statements in Item 8 of this report for additional information).
We recorded a $1,032 million non-cash pre-tax valuation loss related to the planned divestiture of our Brazil business (please refer to
Note 3 to the Consolidated Financial Statements in Item 8 of this report for additional information). Additionally, we recorded $95
million of restructuring charges related to the multi-year organizational initiative to increase the competitiveness of our supply chain
and $60 million of restructuring and transformation charges related to actions previously announced. In fiscal 2025, we approved a
multi-year global transformation initiative to drive increased productivity by enhancing end-to-end business processes, enabled by
targeted organizational actions, and as a result, we recorded $70 million of charges in fiscal 2025. Please refer to Note 4 to the
Consolidated Financial Statements in Item 8 of this report for additional information.
Benefit plan non-service income totaled $58 million in fiscal 2026 compared to $54 million in fiscal 2025, primarily reflecting lower
interest costs, partially offset by lower expected return on plan assets (please refer to Note 14 to the Consolidated Financial Statements
in Item 8 of this report for additional information).
Interest, net for fiscal 2026 totaled $539 million, $14 millionhigher than fiscal 2025, primarily driven by a 53rd week of interest
expense.
Oureffective tax rate for fiscal 2026 was 102.2 percent compared to 20.2 percent in fiscal 2025. The 82.0 percentage point increase
was primarily driven by a non-deductible goodwill impairment charge and unfavorable earnings mix by jurisdiction in fiscal 2026,
partially offset by certain nonrecurring tax benefits in fiscal 2026. Our adjusted effective tax rate was 21.1 percent in fiscal 2026
compared to 20.6 percent in fiscal 2025 (see the “Non-GAAP Measures” section below for a description of our use of measures not
defined by GAAP). The 0.5 percentage point increase was primarily due to unfavorable earnings mix by jurisdiction in fiscal 2026,
partially offset by certain nonrecurring tax benefits in fiscal 2026.
The impacts of the One Big Beautiful Bill Act (OBBBA) are reflected in our results for the fiscal year ended May 31, 2026, and there
was no material impact to our income tax expense. As of the fiscal year ended May 31, 2026, certain provisions of the OBBBA have
impacted the timing of cash tax payments (please refer to Note 15 to the Consolidated Financial Statements in Item 8 of this report for
additional information).
After-tax (loss) earnings from joint ventures was a $76 million after-tax loss in fiscal 2026 compared to $58 million of after-tax
earnings in fiscal 2025. The change primarily reflected our $85 million pre-tax share of a non-cash goodwill impairment charge related
to CPW, driven by downward revisions of future sales and profitability estimates in the Australian market, as well as our share of
losses on the sale of certain assets, also related to CPW. On a constant-currency basis, after-tax loss from joint ventures decreased231
percent (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:
Fiscal 2026 vs. Fiscal 2025 CPW HDJ Total
Contributions from volume growth (a) (5) pts Flat
Net price realization and mix 3 pts 4 pts
Net sales growth in constant currency (3) pts 5 pts (1) pt
Foreign currency exchange 5 pts (1) pt 4 pts
Net sales growth 2 pts 4 pts 2 pts
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
Net earnings attributable to noncontrolling interestsdecreased to $2 million in fiscal 2026 compared to $24 million in fiscal 2025.
Average diluted shares outstanding decreased by 20 million in fiscal 2026 from fiscal 2025 primarily due to share repurchases.
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RESULTS OF SEGMENT OPERATIONS
Our businesses are organized into four operating segments: North America Retail, International, North America Pet, and North
America Foodservice.
The following tables provide the dollar amount and percentage of net sales and operating profit from each segment for fiscal 2026 and
fiscal 2025:
Fiscal Year
In Millions Dollars Percent of Total Dollars Percent of Total
Net Sales
Segment Operating Profit
Net sales of $26 million in fiscal 2026 and $10 million in fiscal 2025 related to businesses managed by our Strategic Growth Office
are included within corporate and other net sales, which is reported separately from segment net sales.
Segment operating profit as reviewed by our executive management excludes unallocated corporate items, net gain or loss on
divestitures, and restructuring, transformation, impairment, and other exit costs that are centrally managed.
NORTH AMERICA RETAIL SEGMENT
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, convenience stores, and e-commerce grocery providers. Our product
categories in this business segment include ready-to-eat cereals, 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 vegetables, meal kits, fruit snacks and snack bars.
North America Retail net sales were as follows:
Contributions from volume growth (a) (16) pts
Net price realization and mix 5 pts
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 decreased 11 percent in fiscal 2026 compared to fiscal 2025, driven by a decrease in contributions from
volume growth, partially offset by favorable net price realization and mix, both of which include the impact from the Divestitures.
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The components of North America Retail organic net sales growth are shown in the following table:
Contributions from organic volume growth (a) (1) pt
Organic net price realization and mix (2) pts
Organic net sales growth (3) pts
Foreign currency exchange Flat
Divestitures (b) (9) pts
Net sales growth (11) pts
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
(b)Divestiture of the United States yogurt business in the first quarter of fiscal 2026 and the Canada yogurt business in the third quarter of fiscal
2025. Please refer to Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report.
North America Retail organic net sales decreased 3 percent in fiscal 2026 compared to fiscal 2025, driven by unfavorable organic net
price realization and mix and a decrease in contributions from organic volume growth.
Net sales for our North America Retail operating units are shown in the following table:
(a)Upon completion of the United States yogurt business divestiture in fiscal 2026, the former U.S. Morning Foods and Canada operating units
were combined into a new Big G Cereal & Canada operating unit. Please refer to Note 17 to the Consolidated Financial Statements in Part II,
Item 8 of this report.
Segment operating profit decreased 20 percent to $2,189 million in fiscal 2026, including the impact of the Divestitures, compared to
$2,730 million in fiscal 2025, primarily driven by a decrease in contributions from volume growth and higher input costs, partially
offset by favorable net price realization and mix and lower SG&A expenses. Segment operating profit decreased 20 percent on a
constant-currency basis in fiscal 2026 compared to fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this
measure not defined by GAAP).
INTERNATIONAL SEGMENT
Our International operating segment consists of retail and foodservice businesses outside of the United States and Canada. Our product
categories include super-premium ice cream and frozen desserts, meal kits, salty snacks, snack bars, dessert and baking mixes, shelf-
stable vegetables, and pet food products. We also sell super-premium ice cream and frozen desserts directly to consumers through
owned retail shops. Our International 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 are reported in the region or country where the end customer is located.
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International net sales were as follows:
Contributions from volume growth (a) 3 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.
International net sales increased 9 percent in fiscal 2026 compared to fiscal 2025, driven by favorable foreign currency exchange
impacts, an increase in contributions from volume growth, and favorable net price realization and mix.
The components of International organic net sales growth are shown in the following table:
Contributions from organic volume growth (a) 2 pts
Organic net price realization and mix 1 pt
Organic net sales growth 3 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.
International organic net sales increased 3 percent in fiscal 2026 compared to fiscal 2025, driven by an increase in contributions from
organic volume growth and favorable organic net price realization and mix.
Segment operating profit increased 96 percent to $189 million in fiscal 2026 compared to $96 million in 2025, primarily driven by
favorable net price realization and mix and an increase in contributions from volume growth, partially offset by higher input costs and
higher SG&A expenses, including increased media and advertising expenses. Segment operating profit increased 90 percent on a
constant-currency basis in fiscal 2026 compared to fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this
measure not defined by GAAP).
NORTH AMERICA PET SEGMENT
Our North America Pet operating segment includes pet food products sold primarily in the United States and Canada 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, fresh 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, life stages, flavors, product functions, and
textures and cuts for wet and fresh foods.
North America Pet net sales were as follows:
Contributions from volume growth (a) Flat
Net price realization and mix 5 pts
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 Pet net sales increased 6 percent in fiscal 2026 compared to fiscal 2025, driven by favorable net price realization and
mix, which includes the impact of the Acquisition.
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The components of North America Pet organic net sales growth are shown in the following table:
Contributions from organic volume growth (a) (5) pts
Organic net price realization and mix 2 pts
Organic net sales growth (3) pts
Foreign currency exchange Flat
Acquisition (b) 6 pts
Net sales growth 6 pts
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
(b)Acquisition of Whitebridge Pet Brands business in the third quarter of fiscal 2025. Please refer to Note 3 to the Consolidated Financial
Statements in Part II, Item 8 of this report.
North America Pet organic net sales decreased 3 percent in fiscal 2026 compared to fiscal 2025, driven by a decrease in contributions
from organic volume growth, partially offset by favorable organic net price realization and mix.
North America Pet operating profit was essentially flat at $499 million in fiscal 2026, including the impact of the Acquisition,
compared to $501 million in fiscal 2025. Segment operating profit was essentially flat on a constant-currency basis in fiscal 2026
compared to fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
NORTH AMERICA FOODSERVICE SEGMENT
Our North America Foodservice segment consists of foodservice businesses in the United States and Canada. Our major product
categories in our North America Foodservice operating segment are ready-to-eat cereals, snacks, frozen meals, unbaked and fully
baked frozen dough products, baking mixes, and bakery flour. 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, vending, and
supermarket bakeries.
North America Foodservice net sales were as follows:
Contributions from volume growth (a) (4) pts
Net price realization and mix (2) pts
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 Foodservice net sales decreased 6 percent in fiscal 2026 compared to fiscal 2025, driven by a decrease in contributions
from volume growth and unfavorable net price realization and mix, both of which include the impact from the Divestitures.
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The components of North America Foodservice organic net sales growth are shown in the following table:
Contributions from organic volume growth (a) (2) pts
Organic net price realization and mix 1 pt
Organic net sales growth (1) pt
Foreign currency exchange Flat
Divestitures (b) (7) pts
Net sales growth (6) pts
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
(b)Divestiture of the United States yogurt business in the first quarter of fiscal 2026 and the Canada yogurt business in the third quarter of fiscal
2025. Please refer to Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report.
North America Foodservice organic net sales decreased 1 percent in fiscal 2026 compared to fiscal 2025, driven by a decrease in
contributions from organic volume growth, partially offset by favorable organic net price realization and mix.
Segment operating profit decreased 6 percent to $333 million in fiscal 2026, including the impact from the Divestitures, compared to
$355 million in fiscal 2025, primarily driven by a decrease in contributions from volume growth and higher input costs, partially offset
by favorable net price realization and mix. Segment operating profit decreased 6 percent on a constant-currency basis in fiscal 2026
compared to fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
UNALLOCATED CORPORATE ITEMS
Unallocated corporate items include corporate overhead expenses, variances to planned domestic employee benefits and incentives,
certain charitable contributions, restructuring initiative project-related costs, gains and losses on corporate investments, results from
certain businesses managed by our Strategic Growth Office, 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 by operating segment.
Unallocated corporate expense totaled $402 million in fiscal 2026, compared to $396 million last year. In fiscal 2026, certain
compensation and benefits expenses increased compared to fiscal 2025, including the impact of the 53rd week. We recorded $19
million of restructuring charges in cost of sales in fiscal 2026, compared to $9 million of charges in cost of sales in fiscal 2025.
Additionally, we recorded a $48 million net decrease in expense related to the mark-to-market valuation of certain commodity
positions and grain inventories in fiscal 2026, compared to a $16 million net decrease last year. In fiscal 2026, we also recorded $31
million of transaction costs, primarily related to the Divestitures and the definitive agreement to sell our Brazil business, compared to
$49 million of transaction costs related to the Divestitures and the Acquisition last year.
IMPACT OF INFLATION
We experienced broad-based global input cost inflation of 4 percent in fiscal 2026 and4 percent in fiscal 2025. We expect
approximately4 percent to 5 percentinput cost inflation in fiscal 2027. We attempt to minimize the effects of inflation through HMM,
Strategic Revenue Management (SRM), planning, and operating practices. Our market risk management practices are discussed in
Item 7A of this report.
LIQUIDITY AND CAPITAL RESOURCES
The primary source of our liquidity is cash flow from operations. Over the most recent two-year period, our operations have generated
$5 billion in cash. A substantial portion of this operating cash flow has been returned to shareholders through dividends and share
repurchases. We also use cash from operations to fund our capital expenditures, acquisitions, and debt service. We typically use a
combination of cash, notes payable, and long-term debt, and occasionally issue shares of common stock, to finance significant
acquisitions.
As of May 31, 2026, we had $446 million of cash and cash equivalents in foreign jurisdictions. In anticipation of repatriating funds
from foreign jurisdictions, we record local country withholding taxes on our international earnings, as applicable. We may repatriate
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our cash and cash equivalents held by our foreign subsidiaries without such funds being subject to further U.S. income tax liability.
Earnings prior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested in those jurisdictions.
Cash Flows from Operations
Fiscal Year
Depreciation and amortization 555.2 539.0
After-tax loss (earnings) from joint ventures 76.5 (57.6)
Distributions of earnings from joint ventures 39.0 44.6
Stock-based compensation 79.4 91.7
Pension and other postretirement benefit plan contributions (31.7) (30.8)
Pension and other postretirement benefit plan costs (23.7) (12.7)
Restructuring, transformation, impairment, and other exit costs 2,897.7 74.3
Net cash provided by operating activities $2,166.2 $2,918.2
During fiscal 2026, cash provided by operations was $2,166 million compared to $2,918 million in the same period last year. The
$752 milliondecrease was primarily due to a $671 million change in current assets and current liabilities. The $671 million change in
current assets and current liabilities was primarily driven by a $273 million change in timing of accounts payable, a $228 million
change in prepaid expenses and other current assets, primarily related to timing of receipts for certain non-customer related
receivables, and a $198 million change in other current liabilities, primarily related to changes in interest payment timing and changes
in income taxes payable.
We strive to grow core working capital at or below the rate of growth in our net sales. For fiscal 2026, core working capital net
liability decreased46 percent, compared to a net sales decrease of 5 percent. The core working capital net liability decreased$138
million from $303 million in fiscal 2025 to $165 million in fiscal 2026. The $138 million net liability decrease was primarily due to a
decrease in accounts payable, partially offset by a decrease in accounts receivable in fiscal 2026.
Cash Flows from Investing Activities
Fiscal Year
Purchases of land, buildings, and equipment $(539.9) $(625.3)
Acquisitions, net of cash acquired — (1,419.3)
Investments in affiliates, net (31.8) 13.3
Proceeds from disposal of land, buildings, and equipment 4.8 1.1
Other, net (5.1) (6.5)
Net cash provided (used) by investing activities $1,258.2 $(1,794.9)
In fiscal 2026, cash provided by investing activities was $1,258 million compared to cash used by investing activities of $1,795
million in fiscal 2025. We invested $540 million in land, buildings, and equipment in fiscal 2026, a decrease of $85 million from fiscal
2025.
During fiscal 2026, we completed the sale of our United States yogurt business for $1,798 million cash. We also received an additional
$6 million of cash related to a sale price adjustment related to the sale of our Canada yogurt business in fiscal 2026. In fiscal 2025, we
completed the sale of our Canada yogurt business for $242 million cash. We also acquired Whitebridge Pet Brands for $1,412 million
cash, net of cash acquired in fiscal 2025.
We expect capital expenditures to be approximately 3 percent of reported net sales in fiscal 2027. These expenditures will fund
initiatives that are expected to fuel growth, support innovative products, and continue HMM initiatives throughout the supply chain.
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Cash Flows from Financing Activities
Fiscal Year
Proceeds from common stock issued on exercised options 0.5 43.0
Purchases of common stock for treasury (500.3) (1,202.9)
Distributions to noncontrolling interest holders (2.1) (21.6)
Net cash used by financing activities $(3,315.0) $(1,180.1)
Financing activities used $3,315 million of cash in fiscal 2026 compared to $1,180 million in fiscal 2025. We had $1,426 million of
net debt payments in fiscal 2026 compared to $1,722 million of net debt issuances in fiscal 2025. For more information on our debt
issuances and payments, please refer to Note 9 to the Consolidated Financial Statements in Item 8 of this report.
During fiscal 2026, we received $1 million of net proceeds from common stock issued on exercised options compared to $43 million
in fiscal 2025.
During fiscal 2026, we repurchased 10 million shares of our common stock for $500 million. During fiscal 2025, we repurchased 19
million shares of our common stock for $1,203 million.
Dividends paid in fiscal 2026 totaled $1,315 million, or $2.44 per share. Dividends paid in fiscal 2025 totaled $1,339 million, or $2.40
per share.
During fiscal 2025, we purchased the outstanding Class A limited membership interests in General Mills Cereals, LLC (GMC Class A
Interests) from the third-party holder for $253 million. For more information, please refer to Note 10 to the Consolidated Financial
Statements in Item 8 of this report.
Selected Cash Flows from Joint Ventures
Selected cash flows from our joint ventures are set forth in the following table:
Fiscal Year
Investments in affiliates, net $(31.8) $13.3
The following table details the credit facilities and lines of credit we had available as of May 31, 2026:
In Millions Borrowing Capacity Borrowed Amount
Committed credit facility expiring October 2029 $2,700.0 $—
Uncommitted credit facilities and lines of credit 774.5 8.4
To ensure availability of funds, we maintain bank credit lines and have commercial paper programs available to us in the United States
and Europe.
Certain of our long-term debt agreements and our credit facilities contain restrictive covenants. We are in compliance with all of these
covenants.
We have $1,054 million of long-term debt maturing in the next 12 months that is classified as current, including €500 million of
floating-rate senior notes due October 22, 2026 and €400.0 million of 1.5 percent fixed-rate senior notes due April 27, 2027. We
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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.
As of May 31, 2026, our total debt, including the impact of derivative instruments designated as hedges, was 83 percent in fixed-rate
and 17 percent in floating-rate instruments, compared to 74 percent in fixed-rate and 26 percent in floating-rate instruments on
May 25, 2025.
CRITICAL ACCOUNTING ESTIMATES
For a complete description of our significant accounting policies, refer to Note 2 to the Consolidated Financial Statements in Item 8 of
this report. Our critical accounting estimates are those that have a meaningful impact on the reporting of our financial condition and
results of operations. These estimates include our accounting for revenue recognition, valuation of long-lived assets, intangible assets,
income taxes, and defined benefit pension, other postretirement benefit, and postemployment benefit plans.
Revenue Recognition
Our revenues are reported net of variable consideration and consideration payable to our customers, including trade promotion,
consumer coupon redemption, and other reductions to the transaction price, including estimated allowances for returns, unsalable
product, and prompt pay discounts. Trade promotions are recorded using significant judgment of estimated participation and
performance levels for offered programs at the time of sale. Differences between the estimated and actual reduction to the transaction
price are recognized as a change in estimate in a subsequent period. Our accrued trade and coupon promotion liabilities were $493
million as of May 31, 2026, and $470 million as of May 25, 2025. Because these amounts are significant, if our estimates are
inaccurate we would have to make adjustments in subsequent periods that could have a significant effect on our results of operations.
Valuation of Long-Lived Assets
We estimate the useful lives of long-lived assets and make estimates concerning undiscounted cash flows to review for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.
Fair value is measured using discounted cash flows or independent appraisals, as appropriate.
Intangible Assets
Goodwill and other indefinite-lived intangible assets are not subject to amortization and are tested for impairment annually and
whenever events or changes in circumstances indicate that impairment may have occurred. Our estimates of fair value for goodwill
impairment testing are determined based on a discounted cash flow model. We use inputs from our long-range planning process to
determine growth rates for sales and profits. We also make estimates of discount rates, perpetuity growth assumptions, market
comparables, and other factors. Additionally, we are required to reconcile the aggregate fair value of our reporting units, adjusted for
debt and other corporate-level items, to our total market capitalization plus a reasonable control premium as of the test date to assess
the discount rates and certain other assumptions utilized in our tests in determining the reasonableness of the fair values of our
intangible assets.
We evaluate the useful lives of our other intangible assets, mainly brands, to determine if they are finite or indefinite-lived. Reaching a
determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand,
competition, other economic factors (such as the stability of the industry, known technological advances, legislative action that results
in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance
expenditures, and the expected lives of other related groups of assets. Intangible assets that are deemed to have finite lives are
amortized on a straight-line basis over their useful lives, generally ranging from 4 to 30 years. Our estimate of the fair value of our
brand assets is based on a discounted cash flow model using inputs which include projected revenues from our long-range plan,
assumed royalty rates that could be payable if we did not own the brands, and a discount rate.
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As of May 31, 2026, we had $21 billion of goodwill and indefinite-lived intangible assets. While we currently believe that the fair
value of each intangible exceeds its carrying value, and that those intangibles will contribute indefinitely to our cash flows, materially
different assumptions regarding future performance of our businesses or a different discount rate could result in material impairment
losses and amortization expense. We performed our fiscal 2026 assessment of our intangible assets as of the first day of the second
quarter of fiscal 2026. As a result of lower future sales and profitability projections for the business supporting our Uncle Toby’s brand
intangible asset, we determined that the fair value of the brand intangible asset no longer exceeded its carrying value and recorded a
$53 million non-cash impairment charge.
In addition, we identified a triggering event due to a sustained decline in market capitalization and stock price in the fourth quarter of
fiscal 2026 reflecting heightened macroeconomic uncertainty and lower market multiples in our industry, which caused a related
increase in our discount rates and required an interim impairment assessment. We performed the interim impairment assessment of our
goodwill and other intangible assets as of May 31, 2026, and determined that the fair values of our North America Pet reporting unit
and our Nudges and True Chews brand intangible assets no longer exceeded the carrying values of the respective assets, primarily
driven by an increase in the discount rates. As a result, we recorded $1,750 million of non-cash impairment charges, of which $1,500
million related to the North America Pet reporting unit goodwill and $250 million related to the brand intangible assets, all of which
are included within our North America Pet segment. The $1,500 million goodwill impairment charge is not deductible for tax
purposes.
We recorded impairment charges in restructuring, transformation, impairment, and other exit costs in our Consolidated Statements of
(Loss) Earnings. Our estimates of the fair values were determined based on a discounted cash flow model using inputs which included
our long-range cash flow projections for the businesses, royalty rates, discount rates, and tax rates. These fair values are Level 3 assets
in the fair value hierarchy.
In addition, while having significant coverage as of our May 31, 2026, assessment date, the Blue Buffalo brand intangible asset had
risk of decreasing coverage due to the increase in our discount rates. The Progresso brand intangible asset also had risk of decreasing
coverage. We will continue to monitor applicable businesses for potential impairment. All other reporting unit and intangible asset fair
values were substantially in excess of the carrying values.
Income Taxes
We apply a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, we recognize
the amount of tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. Future changes in
judgment related to the expected ultimate resolution of uncertain tax positions will affect earnings in the period of such change. For
more information on income taxes, refer to Note 15 to the Consolidated Financial Statements in Item 8 of this report.
Defined Benefit Pension, Other Postretirement Benefit, and Postemployment Benefit Plans
We have defined benefit pension plans covering many employees in the United States, Canada, Switzerland, and the United Kingdom.
We also sponsor plans that provide health care benefits to many of our retirees in the United States, Canada, and Brazil. Under certain
circumstances, we also provide accruable benefits, primarily severance and gratuity, to former and inactive employees in the United
States, Canada, Mexico, and other foreign jurisdictions. Refer to Note 14 to the Consolidated Financial Statements in Item 8 of this
report for a description of our defined benefit pension, other postretirement benefit, and postemployment benefit plans.
We recognize benefits provided during retirement or following employment over the plan participants’ active working lives.
Accordingly, we make various assumptions to predict and measure costs and obligations many years prior to the settlement of our
obligations. Assumptions that require significant management judgment and have a material impact on the measurement of our net
periodic benefit expense or income and accumulated benefit obligations include the long-term rates of return on plan assets, the
interest rates used to discount the obligations for our benefit plans, and health care cost trend rates.
Expected Rate of Return on Plan Assets
Our expected rate of return on plan assets is determined by our asset allocation, our historical long-term investment performance, our
estimate of future long-term returns by asset class (using input from our actuaries, investment services, and investment managers), and
long-term inflation assumptions. We review this assumption annually for each plan; however, our annual investment performance for
one particular year does not, by itself, significantly influence our evaluation.
Our historical investment returns (compound annual growth rates) for our United States defined benefit pension and other
postretirement benefit plan assets were 8.0 percent in the 1-year period ended May 31, 2026, and returns of (0.4) percent, 5.0 percent,
5.9 percent, and 5.8 percent for the 5, 10, 15, and 20-year periods ended May 31, 2026.
On a weighted-average basis, the expected rate of return for all defined benefit plans and other postretirement plans was 7.52 percent
and 7.35 percent for fiscal 2026, 7.63 percent and 7.79 percent for fiscal 2025, and 7.13 percent and 7.34 percent for fiscal 2024. For
fiscal 2027, we decreased our weighted-average expected rate of return on plan assets due to an increase in bond asset allocation
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policy for our principal defined benefit pension and other postretirement plans in the United States to 7.40 percent and 7.10 percent,
respectively.
Lowering the expected long-term rate of return on assets by 100 basis points would increase our net pension and postretirement
expense by $57 million for fiscal 2027. A market-related valuation basis is used to reduce year-to-year expense volatility. The market-
related valuation recognizes certain investment gains or losses over a five-year period from the year in which they occur. Investment
gains or losses for this purpose are the difference between the expected return calculated using the market-related value of assets and
the actual return based on the market-related value of assets. Our outside actuaries perform these calculations as part of our
determination of annual expense or income.
Discount Rates
We estimate the service and interest cost components of the net periodic benefit expense for our United States and most of our
international defined benefit pension, other postretirement benefit, and postemployment benefit plans utilizing a full yield curve
approach by applying the specific spot rates along the yield curve used to determine the benefit obligation to the relevant projected
cash flows. Our discount rate assumptions are determined annually as of May 31 for our defined benefit pension, other postretirement
benefit, and postemployment benefit plan obligations. 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. This forward interest rate curve is applied to our expected future
cash outflows to determine our discount rate assumptions.
Our weighted-average discount rates were as follows:
Lowering the discount rates by 100 basis points would increase our net defined benefit pension, other postretirement benefit, and
postemployment benefit plan expense for fiscal 2027 by approximately $26 million. All obligation-related experience gains and losses
are amortized using a straight-line method over the average remaining service period of active plan participants or over the average
remaining lifetime of the remaining plan participants if the plan is viewed as “all or almost all” inactive participants.
Health Care Cost Trend Rates
We review our health care cost trend rates annually. Our review is based on data we collect about our health care claims experience
and information provided by our actuaries. This information includes recent plan experience, plan design, overall industry experience
and projections, and assumptions used by other similar organizations. Our initial health care cost trend rate is adjusted as necessary to
remain consistent with this review, recent experiences, and short-term expectations. Our initial health care cost trend rate assumption
is 7.7 percent for retirees age 65 and over and 7.7 percent for retirees under age 65 at the end of fiscal 2026. Rates are graded down
annually until the ultimate trend rate of 4.5 percent is reached in 2034 for all retirees. The trend rates are applicable for calculations
only if the retirees’ benefits increase as a result of health care inflation. The ultimate trend rate is adjusted annually, as necessary, to
approximate the current economic view on the rate of long-term inflation plus an appropriate health care cost premium. Assumed trend
rates for health care costs have an important effect on the amounts reported for the other postretirement benefit plans.
Any arising health care claims cost-related experience gain or loss is recognized in the calculation of expected future claims. Once
recognized, experience gains and losses are amortized using a straight-line method over the average remaining service period of active
plan participants or over the average remaining lifetime of the remaining plan participants if the plan is viewed as “all or almost all”
inactive participants.
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Financial Statement Impact
In fiscal 2026, we recorded an immaterial amount of net defined benefit pension, other postretirement benefit, and postemployment
benefit plan income, compared to $9 million of expense in fiscal 2025 and $11 million of income in fiscal 2024. As of May 31, 2026,
we had cumulative unrecognized actuarial net losses of $2 billion on our defined benefit pension plans and cumulative unrecognized
actuarial net gains of $213 million on our postretirement and postemployment benefit plans. These net unrecognized actuarial losses
will result in increases in our future net pension and postretirement benefit expenses because they currently exceed the corridors
defined by GAAP.
Actual future net defined benefit pension, other postretirement benefit, and postemployment benefit plan income or expense will
depend on investment performance, changes in future discount rates, changes in health care cost trend rates, and other factors related
to the populations participating in these plans.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-06,
amending the accounting for costs related to internal-use software. The ASU removes reference to software development project
stages. Additionally, the ASU requires capitalization of software costs to begin when management has authorized and committed to
funding the software and it is probable that the project will be completed and the software will be used to perform the function
intended. The requirements of the new standard are effective for annual periods beginning after December 15, 2027, and interim
periods within those annual periods, which for us is the first quarter of fiscal 2029. Early adoption is permitted and the amendments
may be applied on a prospective, retrospective, or modified basis. We are in the process of analyzing the impact on our results of
operations and financial position.
In November 2024, the FASB issued ASU 2024-03 requiring additional income statement disclosures. The ASU requires the
disaggregation of specific categories of expenses underlying the line items presented on the income statement. Additionally, the ASU
requires enhanced disclosure of selling expenses. The requirements of the ASU are effective for annual periods beginning after
December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. For us, annual reporting requirements
will be effective for fiscal 2028 and interim reporting requirements will be effective beginning with our first quarter of fiscal 2029.
Early adoption is permitted and the amendments should be applied on a prospective basis. Retrospective application is permitted. We
are in the process of analyzing the impact of the ASU on our related disclosures.
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.
Significant Items Impacting Comparability
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.
The following are descriptions of significant items impacting comparability of our results.
Goodwill and other intangible assets impairments
Non-cash goodwill and other intangible assets impairment charges related to our North America Pet reporting unit goodwill and our
Nudges, Uncle Toby’s, and True Chews brand intangible assets in fiscal 2026. Please refer to Note 6 to the Consolidated Financial
Statements in Item 8 of this report.
Divestitures gain, net
Net divestitures gain primarily related to the sale of our United States yogurt business in fiscal 2026 and Canada yogurt business in