The following are P and G financial statements
RATIO ASSIGNMENT ACCTG 231 - SPRING 2020 You have recently come into a little money and have decided to invest it. You have a fairly low tolerance for risk, so have narrowed your selection down to two, long-time stable companies: Proctor and Gamble, a company specializing in personal care, home care, and baby care products. General Mills, a company specializing in packaged foods. In addition to the requirements presented here, you have been provided with the 2019 annual reports of both companies in order to prepare a ratio analysis of each company for its fiscal year 2019. Within each company's annual report are the Consolidated Statements of Earnings and the Consolidated Balance Sheets that you will need to compute the ratios. Requirements To receive full credit you must show your calculations and they are to be based on the formulas used in the textbook for this class (note: ratio formulas can vary slightly from source to source). For your convenience, a handy summary of ratio formulas is presented on pages 678-679 of the text. Evaluate the LIQUIDITY of each company Compute each company's 2019 Current Ratio, and Acid Test ratio (2 points). Explain IN YOUR OWN WORDS (in one or two sentences) which company you rate higher on liquidity (1 points). Evaluate the ASSET MANAGEMENT of each company Compute each company's 2019 A/R Collection period, Average Sale period, Total Asset Turnover. For the A/R Collection period, assume all sales are on credit (3 points). Explain IN YOUR OWN WORDS (in one or two sentences) which company you rate higher on Asset Management (2 points). Evaluate the DEBT MANAGEMENT of each company Compute each company's 2019 Times Interest Earned ratio and Debt to Equity ratio (2 points) Explain IN YOUR OWN WORDS (in one or two sentences) which company you rate higher on Debt Management (2 points). 2. Evaluate the PROFITABILITY of each company Compute each company's 2019 Gross Margin %, Net Profit %, Return on Total Assets and Return on Equity (for simplicity, assume the income tax rate is 30%). (4 points) Explain IN YOUR OWN WORDS (in one or two sentences) which company you rate higher on Profitability (2 points). Choose a company Explain IN YOUR OWN WORDS (in two or three sentence) which company you would prefer to invest in and why. (2 points). Fiscal 2019 Financial Highlights In millions, except per share and profit margin data 52 weeks ended May 26, 2019 Change on a constant- currency basis* 52 weeks ended May 27, 2018 $15,740 % Change Net Sales $16,865 7% 9% Organic Net Sales* Flat Operating Profit $2,516 $2,420 4% 14.9% 15.4% -50 bps Operating Profit Margin Adjusted Operating Profit* $2,858 9% 10% Adjusted Operating Profit Margin* 16.9% $2,613 16.6% $2,131 +30 bps $1,753 -18% Net Earnings Attributable to General Mills Diluted Earnings per Share (EPS) Adjusted Diluted EPS* $2.90 $3.64 -20% $3.11 4% 4% $3.22 605 Average Diluted Shares Outstanding 586 3% Dividends per Share $1.96 $1.96 Flat Consolidated Balance Sheets GENERAL MILLS, INC. AND SUBSIDIARIES (In Millions, Except Par Value) May 26, 2019 May 27, 2018 $ 399.0 1,684.2 1,642.2 398.3 450.0 1,679.7 1,559.3 497.5 4,186.5 3,787.2 13,995.8 7,166.8 974.9 30,111.2 4,123.7 4,047.2 14.065.0 7,445.1 943.0 30,624.0 $ $ $ ASSETS Current assets: Cash and cash equivalents Receivables Inventories Prepaid expenses and other current assets Total current assets Land, buildings, and equipment Goodwill Other intangible assets Other assets Total assets LIABILITIES AND EQUITY Current liabilities: Accounts payable Current portion of long-term debt Notes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other liabilities Total liabilities Redeemable interest Stockholders' equity: Common stock, 754.6 shares issued, $0.10 par value Additional paid-in capital Retained earnings Common stock in treasury, at cost, shares of 152.7 and 161.5 Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests Total equity Total liabilities and equity 2,854.1 1,396.5 1,468.7 1,367.8 7,087.1 11,624.8 2,031.0 1,448.9 22,191.8 551.7 2,746.2 1.600.1 1,549.8 1,445.8 7,341.9 12,668.7 2,003.8 1,341.0 23,355.4 776.2 75.5 1,386.7 14,996.7 (6,779.0) (2,625.4) 7,054.5 313.2 7,367.7 30.111.2 75.5 1,202.5 14,459.6 (7,167.5) (2,429.0) 6,141.1 351.3 6,492.4 30,624.0 $ See accompanying notes to consolidated financial statements. Consolidated Statements of Comprehensive Income GENERAL MILLS, INC. AND SUBSIDIARIES (In Millions) Fiscal Year 2018 2019 2017 $ 1,786.2 $ 2,163.0 $ 1,701.1 Net earnings, including earnings attributable to redeemable and noncontrolling interests Other comprehensive income (loss), net of tax: Foreign currency translation (82.8) (37.0) 6.3 Net actuarial (loss) income (253.4) 140.1 197.9 Other fair value changes: Securities Hedge derivatives 1.2 (50.8) 0.8 53.3 12.1 Reclassification to earnings: Securities Hedge derivatives Amortization of losses and prior service costs (2.0) 0.9 84.6 0.9 (5.1) 17.4 117.6 19: (25.7) 122.5 Other comprehensive (loss) income, net of tax (240.6) 183.4 355.1 1,545.6 2,346.4 2,056.2 Total comprehensive income Comprehensive (loss) income attributable to redeemable and noncontrolling interests (10.7) 70.5 31.0 Comprehensive income attributable to General Mills $ 1,556.3 $ 2,275.9 $ 2,025.2 See accompanying notes to consolidated financial statements. Consolidated Statements of Cash Flows GENERAL MILLS, INC. AND SUBSIDIARIES (In Millions) Fiscal Year 2018 2019 2017 $ 1,786.2 $ 2,163.0 $ 1,701.1 620.1 (72.0) 86.7 84.9 93.5 (28.8) 6.1 30.0 235.7 618.8 (84.7) 113.2 77.0 (504.3) (31.8) 4.6 603.6 (85.0) 75.6 95.7 183.9 (45.4) 35.7 13.5 117.0 126.0 (7.5) (27.9) 2,807.0 542.1 (182.9) 2,841.0 (194.2) (86.3) 2,415.2 (537.6) (684.4) 0.1 14.3 26.4 (622.7) (8,035.8) (17.3) 1.4 Cash Flows - Operating Activities Net earnings, including earnings attributable to redeemable and noncontrolling interests Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization After-tax earnings from joint ventures Distributions of earnings from joint ventures Stock-based compensation Deferred income taxes Pension and other postretirement benefit plan contributions Pension and other postretirement benefit plan costs Divestitures loss Restructuring, impairment, and other exit costs Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures Other, net Net cash provided by operating activities Cash Flows - Investing Activities Purchases of land, buildings, and equipment Acquisition, net of cash acquired Investments in affiliates, net Proceeds from disposal of land, buildings, and equipment Proceeds from divestitures Exchangeable note Other, net Net cash used by investing activities Cash Flows - Financing Activities Change in notes payable Issuance of long-term debt Payment of long-term debt Proceeds from common stock issued on exercised options Proceeds from common stock issued Purchases of common stock for treasury Dividends paid Investments in redeemable interest Distributions to noncontrolling and redeemable interest holders Other, net Net cash provided (used) by financing activities Effect of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning of year Cash and cash equivalents - end of year Cash Flow from Changes in Current Assets and Liabilities, excluding the effects of acquisitions and divestitures: Receivables Inventories Prepaid expenses and other current assets Accounts payable Other current liabilities Changes in current assets and liabilities 3.3 4.2 17.5 13.0 (0.5) (646.9) (59.7) (556.5) (11.0) (8,685.4) (66.3) 339.1 (1,493.8) 241.4 327.5 6,550.0 (600.1) 99.3 969.9 (601.6) (1,139.7) 962.4 1,072.1 (1,000.0) 112.6 (1,651.5) (1,135.1) (1.1) (1,181.7) 55.7 (38.5) (31.2) (2,176.4) (23.1) 51.0 399.0 450.0 (51.8) (108.0) 5,445.5 31.8 (367.1) 766.1 399.0 (61.0) (46.9) (1,747.4) (18.5) 2.4 763.7 766.1 S $ $ (42.7) 53.7 (114.3) 162.4 (66.6) (7.5) (122.7) 15.6 (10.7) 575.3 84.6 542.1 (69.2) (61.5) 16.6 99.5 (179.6) (194.2) $ S See accompanying notes to consolidated financial statements. Consolidated Statements of Total Equity, and Redeemable Interest GENERAL MILLS, INC. AND SUBSIDIARIES (In Millions, Except per Share Data) $.10 Par Value Common Stock (One Billion Shares Authorized) Issued Treasury Par Additional Paid-In Shares Amount Capital Accumulated Other Comprehensive Loss Non- controlling Interests Retained Earnings Shares Amount Total Equity Redeemable Interest Balance as of May 29, 2016 754.6$ 75.5 S 1,177.0 (157.8) $ (6,326.6) S 12,616.5 S (2,612.2) 5 376. 9 S 5,307.1 S 845.6 Total comprehensive income 1,657.5 367.7 13.8 2,039,0 172 Cash dividends declared ($1.92 per share) (1,135.1) (1,135.1) Shares purchased (1,651.5) (1,651.5) Stock compensation plans (includes income tax benefits of $64.1) (25.4) 55 3.6 215.2 218.8 Uneared compensation related to stock unit awards (78.5) (78.5) 94.9 Eamed compensation 94.9 Increase in redemption value of redeemable interest 75.9 (75.9) (0.2) (75.9) (0.1) Acquisition of interest in subsidiary Distributions to redeemable and noncontrolling interest holders (33.2) (33.2) (27.8) Balance as of May 28, 2017 754.6 75.5 1,120.9 (177.7) (7,762.9) 13,138.9 4,685.5 910.9 (2,244.5) 144.9 357.6 26.9 Total comprehensive income 2,131.0 2,302.8 43.6 Cash dividends declared (S1.96 per share) (1,139.7) (1,139.7) Shares purchased (6016) (6016) (10.9) 227 Shares issued 1,009,0 969.9 (39.1) (57.9) Stock compensation plans 188.0 130.1 Uncarncd compensation related to stock unit awards (58.1) (581) Eamcd compensation 77.0 Decrease in redemption value of redeemable interest 159.7 159.7 (159.7) Distributions to redeemable and noncontrolling interest holders (33.2) (33.2) (18.6) Reclassification of certain income tax effects 329.4 (329.4) Balance as of May 27, 2018 754.6 75.5 1,202.5 (161.5) (7,167.5) 14,459.6 (2,429.0) 776.2 351.3 0.4 6,492.4 1,556.7 Total comprehensive income (less) 1,752.7 (196,4) (11.1) Cash dividends declared ($1.96 per share) (1,181.7) (1,181.7) Shares purchased (1.1) (1.1) Stock compensation plans (96.4) 8.8 389.6 293.2 Uneared compensation related to stock unit awards (71.3) 82.8 (71.3) 82.8 Eamed compensation Increase in investiment in redeemable interest 55.7 Decrease in redemption value of redeemable interest 269.1 269.1 (269.1) Distributions to redeemable and noncontrolling interest holders (38.5) (38.5) Adoption of revenue recognition accounting requirements (33.9) (33.9) Balance as of May 26, 2019 754.6 $ 75.5 $ 1,386.7 (152.7) S (6,779.0) $14,996.7 $ (3,625.4) 313.2 $ 7,367.7$ 551.7 See accompanying notes to consolidated financial statements. FINANCIAL HIGHLIGHTS (UNAUDITED) Amounts in billions, except per share amounts 2019 2018 2017 2016 2015 Net Sales Operating Income Net Earnings Attributable to P&G Net Earnings Margin from Continuing Operations Diluted Net Earnings per Common Share from Continuing Operations $67.7 $5.5 $3.9 5.9% $1.43 $1.43 $4.52 $15.2 $2.90 $66.8 $13.4 $9.8 14.8% $3.67 $3.67 $4.22 $14.9 $2.79 $65.7 $13.8 $15.3 15.7% $3.69 $5.59 $3.92 $12.8 $2.70 $65.3 $13.3 $10.5 15.4% $3.49 $3.69 $3.67 $15.4 $2.66 $70.7 $11.1 $7.0 11.7% $2.84 $2.44 $3.76 $14.6 $2.59 Diluted Net Earnings per Common Share Core Earnings per Share2 Operating Cash Flow Dividends per Common Share Consolidated Balance Sheets 2019 2018 4,239 $ 6,048 2,569 9,281 ,686 4,9514 Amounts in millions; As of June 30 Assets CURRENT ASSETS Cash and cash equivalents Available-for-sale investment securities Accounts receivable INVENTORIES Materials and supplies Work in process Finished goods Total inventories Prepaid expenses and other current assets TOTAL CURRENT ASSETS PROPERTY, PLANT AND EQUIPMENT, NET GOODWILL TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET OTHER NONCURRENT ASSETS TOTAL ASSETS 1,289 612 3,116 5,017 2,218 22,473 21,271 40,273 24,215 6,863 115,095 1,335 588 2,815 4,738 2,046 23,320 20,600 45,175 23,902 5,313 118,310 $ $ $ $ 11,260 9,054 9,697 30,011 20,395 6,899 10,211 67,516 10,344 7,470 10,423 28,237 20,863 6,163 10,164 65,427 Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable Accrued and other liabilities Debt due within one year TOTAL CURRENT LIABILITIES LONG-TERM DEBT DEFERRED INCOME TAXES OTHER NONCURRENT LIABILITIES TOTAL LIABILITIES SHAREHOLDERS' EQUITY Convertible Class A preferred stock, stated value $1 per share (600 shares authorized) Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized) Common stock, stated value $1 per share (10,000 shares authorized; shares issued: 2019 - 4,009.2, 2018 - 4,009.2) Additional paid-in capital Reserve for ESOP debt retirement Accumulated other comprehensive income/(loss) Treasury stock, at cost (shares held: 2019 - 1,504.5, 2018 -1,511.2) Retained earnings Noncontrolling interest TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 928 967 4,009 63,827 (1,146) (14,936) (100,406) 94,918 385 47,579 115,095 4,009 63,846 (1,204) (14,749) (99,217) 98,641 590 5 2,883 118,310 $ $ Consolidated Statements of Comprehensive Income 2019 3,966 2018 9,861 $ 2017 15,411 $ $ (213) (67) (305) (148) 184 (59) Amounts in millions; Years ended June 30 NET EARNINGS OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX Foreign currency translation (net of $78, $(279) and $(186) tax, respectively) Unrealized gains/(losses) on investment securities (net of $0, $0 and $(6) tax, respectively) Unrealized gains on defined benefit retirement plans (net of $22, $68 and $551 tax, respectively) TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX TOTAL COMPREHENSIVE INCOME Less: Total comprehensive income attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE 169 334 140 4,106 (119) 9,742 1,401 1,275 16,686 85 70 109 $ 4,036 $ 9,633 $ 16,601 Consolidated Statements of Shareholders' Equity 3,058 41 9,750 Accumu- lated Other Add- Comp- Total Common Stock itional Reserve for rehensive Non- Share- Dollars in millions: - Preferred Paid-In ESOP Debt Income Treasury Retained controlling holders' shares in thousands Shares Amount Stock Capital Retirement (Loss) Stock Earnings Interest Equity BALANCE JUNE 30, 2016 2,668,074 $4,009 $1,038 $63,714 ($1,290) ($15,907) ($82,176) $87,953 $642 $57,983 Net earnings 15,326 85 15,411 Other comprehensive 1,275 1,275 income/loss) Dividends and dividend equivalents ($2.6981 per share): Common (6,989) (6,989) Preferred, net of tax benefits (247) (247) Treasury stock purchases) (164,866) (14,625) (14,625) Employee stock plans 45,848 2,981 Preferred stock conversions 4,241 (32) 4 28 ESOP debt impacts 81 122 Noncontrolling interest, net (133) (133) BALANCE JUNE 30, 2017 2,553,297 $4,009 $1,006 $63,641 ($1,249) ($14,632) ($93,715) $96,124 $594 $55,778 Net earnings 111 9,861 Other comprehensive (117) income/(loss) (2) (119) Dividends and dividend equivalents ($2.7860 per share): Common (7,057) (7,057) Preferred, net of tax benefits (265) (265) Treasury stock purchases (81,439) (7,004) (7,004) Employee stock plans 21,655 1,469 1,668 Preferred stock conversions 4,580 (39) 6 33 ESOP debt impacts 89 134 Noncontrolling interest, net (113) (113) BALANCE JUNE 30, 2018 2,498,093 $4,009 $967 $63,846 ($1,204) ($14,749) ($99,217) $98,641 $590 $52,883 Impact of adoption of new (326) (200) (27) (553) accounting standards Net earnings 3,897 693,966 Other comprehensive 139 139 i 140 income/loss) Dividends and dividend equivalents ($2.8975 per share): Common (7,256) (7,256) Preferred, net of tax benefits (263) (263) Treasury stock purchases (53,714) (5,003) (5,003) Employee stock plans 55,734 93 3,781 3,874 Preferred stock conversions 4,638 (39) 6 33 ESOP debt impacts 58 99 157 Noncontrolling interest, net (118) (248) (366) BALANCE JUNE 30, 2019 2,504,751 $4,009 $928 $63,827 ($1,146) ($14,936) ($100,406) $94,918 $385 $47,579 () Includes $9,421 of treasury shares received as part of the share exchange in the Beauty Brands transaction (see Note 13). 199 45 Consolidated Statements of Cash Flows 2019 2018 2017 $ 2,569 $ 5,569 $ 8,098 9,861 2,834 15,411 2,820 543 351 (601) (5,490) 395 (1,844) (176) 3,966 2,824 515 (411) (678) 8,345 (276) (239) 1,856 (973) 313 (322) 71 (149) (177) (188) 1,385 2,000 431 14,867 (43) 15,242 162 12,753 (3,347) Amounts in millions; Years ended June 30 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR OPERATING ACTIVITIES Net earnings Depreciation and amortization Loss on early extinguishment of debt Share-based compensation expense Deferred income taxes Gain on sale of assets Goodwill and indefinite-lived intangible impairment charges Change in accounts receivable Change in inventories Change in accounts payable, accrued and other liabilities Change in other operating assets and liabilities Other TOTAL OPERATING ACTIVITIES INVESTING ACTIVITIES Capital expenditures Proceeds from asset sales Acquisitions, net of cash acquired Purchases of short-term investments Proceeds from sales and maturities of short-term investments Cash transferred at closing related to the Beauty Brands divestiture Change in other investments TOTAL INVESTING ACTIVITIES FINANCING ACTIVITIES Dividends to shareholders Change in short-term debt Additions to long-term debt Reductions of long-term debt Treasury stock purchases Impact of stock options and other TOTAL FINANCING ACTIVITIES EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR 394 (3,945) (158) 3,628 (3,717) 269 (109) (3,909) 3,928 (3,384) 571 (16) (4,843) 1,488 (475) (26) (6,685) (62) 27 (3,511) (7,498) (2,215) 2,367 (969) (5,003) 3,324 (9,994) (7,310) (3,437) 5,072 (2,873) (7,004) 1,177 (14,375) (7,236) 2,727 3,603 (4,931) (5,204) 2,473 (8,568) (88) 1,670 4,239 19 (3,000) 2,569 (29) (2,529) 5,569 $ $ $ $ 497 3,064 529 2,830 $ 3 518 ,714 SUPPLEMENTAL DISCLOSURE Cash payments for interest $ Cash payment for income taxes Divestiture of Beauty business in exchange for shares of P&G stock and assumption of debt Assets acquired through non-cash capital leases are immaterial for all periods. (1) Includes early extinguishment of debt costs of $346 and $543 in 2018 and 2017 respectively. 11,360 RATIO ASSIGNMENT ACCTG 231 - SPRING 2020 You have recently come into a little money and have decided to invest it. You have a fairly low tolerance for risk, so have narrowed your selection down to two, long-time stable companies: Proctor and Gamble, a company specializing in personal care, home care, and baby care products. General Mills, a company specializing in packaged foods. In addition to the requirements presented here, you have been provided with the 2019 annual reports of both companies in order to prepare a ratio analysis of each company for its fiscal year 2019. Within each company's annual report are the Consolidated Statements of Earnings and the Consolidated Balance Sheets that you will need to compute the ratios. Requirements To receive full credit you must show your calculations and they are to be based on the formulas used in the textbook for this class (note: ratio formulas can vary slightly from source to source). For your convenience, a handy summary of ratio formulas is presented on pages 678-679 of the text. Evaluate the LIQUIDITY of each company Compute each company's 2019 Current Ratio, and Acid Test ratio (2 points). Explain IN YOUR OWN WORDS (in one or two sentences) which company you rate higher on liquidity (1 points). Evaluate the ASSET MANAGEMENT of each company Compute each company's 2019 A/R Collection period, Average Sale period, Total Asset Turnover. For the A/R Collection period, assume all sales are on credit (3 points). Explain IN YOUR OWN WORDS (in one or two sentences) which company you rate higher on Asset Management (2 points). Evaluate the DEBT MANAGEMENT of each company Compute each company's 2019 Times Interest Earned ratio and Debt to Equity ratio (2 points) Explain IN YOUR OWN WORDS (in one or two sentences) which company you rate higher on Debt Management (2 points). 2. Evaluate the PROFITABILITY of each company Compute each company's 2019 Gross Margin %, Net Profit %, Return on Total Assets and Return on Equity (for simplicity, assume the income tax rate is 30%). (4 points) Explain IN YOUR OWN WORDS (in one or two sentences) which company you rate higher on Profitability (2 points). Choose a company Explain IN YOUR OWN WORDS (in two or three sentence) which company you would prefer to invest in and why. (2 points). Fiscal 2019 Financial Highlights In millions, except per share and profit margin data 52 weeks ended May 26, 2019 Change on a constant- currency basis* 52 weeks ended May 27, 2018 $15,740 % Change Net Sales $16,865 7% 9% Organic Net Sales* Flat Operating Profit $2,516 $2,420 4% 14.9% 15.4% -50 bps Operating Profit Margin Adjusted Operating Profit* $2,858 9% 10% Adjusted Operating Profit Margin* 16.9% $2,613 16.6% $2,131 +30 bps $1,753 -18% Net Earnings Attributable to General Mills Diluted Earnings per Share (EPS) Adjusted Diluted EPS* $2.90 $3.64 -20% $3.11 4% 4% $3.22 605 Average Diluted Shares Outstanding 586 3% Dividends per Share $1.96 $1.96 Flat Consolidated Balance Sheets GENERAL MILLS, INC. AND SUBSIDIARIES (In Millions, Except Par Value) May 26, 2019 May 27, 2018 $ 399.0 1,684.2 1,642.2 398.3 450.0 1,679.7 1,559.3 497.5 4,186.5 3,787.2 13,995.8 7,166.8 974.9 30,111.2 4,123.7 4,047.2 14.065.0 7,445.1 943.0 30,624.0 $ $ $ ASSETS Current assets: Cash and cash equivalents Receivables Inventories Prepaid expenses and other current assets Total current assets Land, buildings, and equipment Goodwill Other intangible assets Other assets Total assets LIABILITIES AND EQUITY Current liabilities: Accounts payable Current portion of long-term debt Notes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other liabilities Total liabilities Redeemable interest Stockholders' equity: Common stock, 754.6 shares issued, $0.10 par value Additional paid-in capital Retained earnings Common stock in treasury, at cost, shares of 152.7 and 161.5 Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests Total equity Total liabilities and equity 2,854.1 1,396.5 1,468.7 1,367.8 7,087.1 11,624.8 2,031.0 1,448.9 22,191.8 551.7 2,746.2 1.600.1 1,549.8 1,445.8 7,341.9 12,668.7 2,003.8 1,341.0 23,355.4 776.2 75.5 1,386.7 14,996.7 (6,779.0) (2,625.4) 7,054.5 313.2 7,367.7 30.111.2 75.5 1,202.5 14,459.6 (7,167.5) (2,429.0) 6,141.1 351.3 6,492.4 30,624.0 $ See accompanying notes to consolidated financial statements. Consolidated Statements of Comprehensive Income GENERAL MILLS, INC. AND SUBSIDIARIES (In Millions) Fiscal Year 2018 2019 2017 $ 1,786.2 $ 2,163.0 $ 1,701.1 Net earnings, including earnings attributable to redeemable and noncontrolling interests Other comprehensive income (loss), net of tax: Foreign currency translation (82.8) (37.0) 6.3 Net actuarial (loss) income (253.4) 140.1 197.9 Other fair value changes: Securities Hedge derivatives 1.2 (50.8) 0.8 53.3 12.1 Reclassification to earnings: Securities Hedge derivatives Amortization of losses and prior service costs (2.0) 0.9 84.6 0.9 (5.1) 17.4 117.6 19: (25.7) 122.5 Other comprehensive (loss) income, net of tax (240.6) 183.4 355.1 1,545.6 2,346.4 2,056.2 Total comprehensive income Comprehensive (loss) income attributable to redeemable and noncontrolling interests (10.7) 70.5 31.0 Comprehensive income attributable to General Mills $ 1,556.3 $ 2,275.9 $ 2,025.2 See accompanying notes to consolidated financial statements. Consolidated Statements of Cash Flows GENERAL MILLS, INC. AND SUBSIDIARIES (In Millions) Fiscal Year 2018 2019 2017 $ 1,786.2 $ 2,163.0 $ 1,701.1 620.1 (72.0) 86.7 84.9 93.5 (28.8) 6.1 30.0 235.7 618.8 (84.7) 113.2 77.0 (504.3) (31.8) 4.6 603.6 (85.0) 75.6 95.7 183.9 (45.4) 35.7 13.5 117.0 126.0 (7.5) (27.9) 2,807.0 542.1 (182.9) 2,841.0 (194.2) (86.3) 2,415.2 (537.6) (684.4) 0.1 14.3 26.4 (622.7) (8,035.8) (17.3) 1.4 Cash Flows - Operating Activities Net earnings, including earnings attributable to redeemable and noncontrolling interests Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization After-tax earnings from joint ventures Distributions of earnings from joint ventures Stock-based compensation Deferred income taxes Pension and other postretirement benefit plan contributions Pension and other postretirement benefit plan costs Divestitures loss Restructuring, impairment, and other exit costs Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures Other, net Net cash provided by operating activities Cash Flows - Investing Activities Purchases of land, buildings, and equipment Acquisition, net of cash acquired Investments in affiliates, net Proceeds from disposal of land, buildings, and equipment Proceeds from divestitures Exchangeable note Other, net Net cash used by investing activities Cash Flows - Financing Activities Change in notes payable Issuance of long-term debt Payment of long-term debt Proceeds from common stock issued on exercised options Proceeds from common stock issued Purchases of common stock for treasury Dividends paid Investments in redeemable interest Distributions to noncontrolling and redeemable interest holders Other, net Net cash provided (used) by financing activities Effect of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning of year Cash and cash equivalents - end of year Cash Flow from Changes in Current Assets and Liabilities, excluding the effects of acquisitions and divestitures: Receivables Inventories Prepaid expenses and other current assets Accounts payable Other current liabilities Changes in current assets and liabilities 3.3 4.2 17.5 13.0 (0.5) (646.9) (59.7) (556.5) (11.0) (8,685.4) (66.3) 339.1 (1,493.8) 241.4 327.5 6,550.0 (600.1) 99.3 969.9 (601.6) (1,139.7) 962.4 1,072.1 (1,000.0) 112.6 (1,651.5) (1,135.1) (1.1) (1,181.7) 55.7 (38.5) (31.2) (2,176.4) (23.1) 51.0 399.0 450.0 (51.8) (108.0) 5,445.5 31.8 (367.1) 766.1 399.0 (61.0) (46.9) (1,747.4) (18.5) 2.4 763.7 766.1 S $ $ (42.7) 53.7 (114.3) 162.4 (66.6) (7.5) (122.7) 15.6 (10.7) 575.3 84.6 542.1 (69.2) (61.5) 16.6 99.5 (179.6) (194.2) $ S See accompanying notes to consolidated financial statements. Consolidated Statements of Total Equity, and Redeemable Interest GENERAL MILLS, INC. AND SUBSIDIARIES (In Millions, Except per Share Data) $.10 Par Value Common Stock (One Billion Shares Authorized) Issued Treasury Par Additional Paid-In Shares Amount Capital Accumulated Other Comprehensive Loss Non- controlling Interests Retained Earnings Shares Amount Total Equity Redeemable Interest Balance as of May 29, 2016 754.6$ 75.5 S 1,177.0 (157.8) $ (6,326.6) S 12,616.5 S (2,612.2) 5 376. 9 S 5,307.1 S 845.6 Total comprehensive income 1,657.5 367.7 13.8 2,039,0 172 Cash dividends declared ($1.92 per share) (1,135.1) (1,135.1) Shares purchased (1,651.5) (1,651.5) Stock compensation plans (includes income tax benefits of $64.1) (25.4) 55 3.6 215.2 218.8 Uneared compensation related to stock unit awards (78.5) (78.5) 94.9 Eamed compensation 94.9 Increase in redemption value of redeemable interest 75.9 (75.9) (0.2) (75.9) (0.1) Acquisition of interest in subsidiary Distributions to redeemable and noncontrolling interest holders (33.2) (33.2) (27.8) Balance as of May 28, 2017 754.6 75.5 1,120.9 (177.7) (7,762.9) 13,138.9 4,685.5 910.9 (2,244.5) 144.9 357.6 26.9 Total comprehensive income 2,131.0 2,302.8 43.6 Cash dividends declared (S1.96 per share) (1,139.7) (1,139.7) Shares purchased (6016) (6016) (10.9) 227 Shares issued 1,009,0 969.9 (39.1) (57.9) Stock compensation plans 188.0 130.1 Uncarncd compensation related to stock unit awards (58.1) (581) Eamcd compensation 77.0 Decrease in redemption value of redeemable interest 159.7 159.7 (159.7) Distributions to redeemable and noncontrolling interest holders (33.2) (33.2) (18.6) Reclassification of certain income tax effects 329.4 (329.4) Balance as of May 27, 2018 754.6 75.5 1,202.5 (161.5) (7,167.5) 14,459.6 (2,429.0) 776.2 351.3 0.4 6,492.4 1,556.7 Total comprehensive income (less) 1,752.7 (196,4) (11.1) Cash dividends declared ($1.96 per share) (1,181.7) (1,181.7) Shares purchased (1.1) (1.1) Stock compensation plans (96.4) 8.8 389.6 293.2 Uneared compensation related to stock unit awards (71.3) 82.8 (71.3) 82.8 Eamed compensation Increase in investiment in redeemable interest 55.7 Decrease in redemption value of redeemable interest 269.1 269.1 (269.1) Distributions to redeemable and noncontrolling interest holders (38.5) (38.5) Adoption of revenue recognition accounting requirements (33.9) (33.9) Balance as of May 26, 2019 754.6 $ 75.5 $ 1,386.7 (152.7) S (6,779.0) $14,996.7 $ (3,625.4) 313.2 $ 7,367.7$ 551.7 See accompanying notes to consolidated financial statements. FINANCIAL HIGHLIGHTS (UNAUDITED) Amounts in billions, except per share amounts 2019 2018 2017 2016 2015 Net Sales Operating Income Net Earnings Attributable to P&G Net Earnings Margin from Continuing Operations Diluted Net Earnings per Common Share from Continuing Operations $67.7 $5.5 $3.9 5.9% $1.43 $1.43 $4.52 $15.2 $2.90 $66.8 $13.4 $9.8 14.8% $3.67 $3.67 $4.22 $14.9 $2.79 $65.7 $13.8 $15.3 15.7% $3.69 $5.59 $3.92 $12.8 $2.70 $65.3 $13.3 $10.5 15.4% $3.49 $3.69 $3.67 $15.4 $2.66 $70.7 $11.1 $7.0 11.7% $2.84 $2.44 $3.76 $14.6 $2.59 Diluted Net Earnings per Common Share Core Earnings per Share2 Operating Cash Flow Dividends per Common Share Consolidated Balance Sheets 2019 2018 4,239 $ 6,048 2,569 9,281 ,686 4,9514 Amounts in millions; As of June 30 Assets CURRENT ASSETS Cash and cash equivalents Available-for-sale investment securities Accounts receivable INVENTORIES Materials and supplies Work in process Finished goods Total inventories Prepaid expenses and other current assets TOTAL CURRENT ASSETS PROPERTY, PLANT AND EQUIPMENT, NET GOODWILL TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET OTHER NONCURRENT ASSETS TOTAL ASSETS 1,289 612 3,116 5,017 2,218 22,473 21,271 40,273 24,215 6,863 115,095 1,335 588 2,815 4,738 2,046 23,320 20,600 45,175 23,902 5,313 118,310 $ $ $ $ 11,260 9,054 9,697 30,011 20,395 6,899 10,211 67,516 10,344 7,470 10,423 28,237 20,863 6,163 10,164 65,427 Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable Accrued and other liabilities Debt due within one year TOTAL CURRENT LIABILITIES LONG-TERM DEBT DEFERRED INCOME TAXES OTHER NONCURRENT LIABILITIES TOTAL LIABILITIES SHAREHOLDERS' EQUITY Convertible Class A preferred stock, stated value $1 per share (600 shares authorized) Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized) Common stock, stated value $1 per share (10,000 shares authorized; shares issued: 2019 - 4,009.2, 2018 - 4,009.2) Additional paid-in capital Reserve for ESOP debt retirement Accumulated other comprehensive income/(loss) Treasury stock, at cost (shares held: 2019 - 1,504.5, 2018 -1,511.2) Retained earnings Noncontrolling interest TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 928 967 4,009 63,827 (1,146) (14,936) (100,406) 94,918 385 47,579 115,095 4,009 63,846 (1,204) (14,749) (99,217) 98,641 590 5 2,883 118,310 $ $ Consolidated Statements of Comprehensive Income 2019 3,966 2018 9,861 $ 2017 15,411 $ $ (213) (67) (305) (148) 184 (59) Amounts in millions; Years ended June 30 NET EARNINGS OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX Foreign currency translation (net of $78, $(279) and $(186) tax, respectively) Unrealized gains/(losses) on investment securities (net of $0, $0 and $(6) tax, respectively) Unrealized gains on defined benefit retirement plans (net of $22, $68 and $551 tax, respectively) TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX TOTAL COMPREHENSIVE INCOME Less: Total comprehensive income attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE 169 334 140 4,106 (119) 9,742 1,401 1,275 16,686 85 70 109 $ 4,036 $ 9,633 $ 16,601 Consolidated Statements of Shareholders' Equity 3,058 41 9,750 Accumu- lated Other Add- Comp- Total Common Stock itional Reserve for rehensive Non- Share- Dollars in millions: - Preferred Paid-In ESOP Debt Income Treasury Retained controlling holders' shares in thousands Shares Amount Stock Capital Retirement (Loss) Stock Earnings Interest Equity BALANCE JUNE 30, 2016 2,668,074 $4,009 $1,038 $63,714 ($1,290) ($15,907) ($82,176) $87,953 $642 $57,983 Net earnings 15,326 85 15,411 Other comprehensive 1,275 1,275 income/loss) Dividends and dividend equivalents ($2.6981 per share): Common (6,989) (6,989) Preferred, net of tax benefits (247) (247) Treasury stock purchases) (164,866) (14,625) (14,625) Employee stock plans 45,848 2,981 Preferred stock conversions 4,241 (32) 4 28 ESOP debt impacts 81 122 Noncontrolling interest, net (133) (133) BALANCE JUNE 30, 2017 2,553,297 $4,009 $1,006 $63,641 ($1,249) ($14,632) ($93,715) $96,124 $594 $55,778 Net earnings 111 9,861 Other comprehensive (117) income/(loss) (2) (119) Dividends and dividend equivalents ($2.7860 per share): Common (7,057) (7,057) Preferred, net of tax benefits (265) (265) Treasury stock purchases (81,439) (7,004) (7,004) Employee stock plans 21,655 1,469 1,668 Preferred stock conversions 4,580 (39) 6 33 ESOP debt impacts 89 134 Noncontrolling interest, net (113) (113) BALANCE JUNE 30, 2018 2,498,093 $4,009 $967 $63,846 ($1,204) ($14,749) ($99,217) $98,641 $590 $52,883 Impact of adoption of new (326) (200) (27) (553) accounting standards Net earnings 3,897 693,966 Other comprehensive 139 139 i 140 income/loss) Dividends and dividend equivalents ($2.8975 per share): Common (7,256) (7,256) Preferred, net of tax benefits (263) (263) Treasury stock purchases (53,714) (5,003) (5,003) Employee stock plans 55,734 93 3,781 3,874 Preferred stock conversions 4,638 (39) 6 33 ESOP debt impacts 58 99 157 Noncontrolling interest, net (118) (248) (366) BALANCE JUNE 30, 2019 2,504,751 $4,009 $928 $63,827 ($1,146) ($14,936) ($100,406) $94,918 $385 $47,579 () Includes $9,421 of treasury shares received as part of the share exchange in the Beauty Brands transaction (see Note 13). 199 45 Consolidated Statements of Cash Flows 2019 2018 2017 $ 2,569 $ 5,569 $ 8,098 9,861 2,834 15,411 2,820 543 351 (601) (5,490) 395 (1,844) (176) 3,966 2,824 515 (411) (678) 8,345 (276) (239) 1,856 (973) 313 (322) 71 (149) (177) (188) 1,385 2,000 431 14,867 (43) 15,242 162 12,753 (3,347) Amounts in millions; Years ended June 30 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR OPERATING ACTIVITIES Net earnings Depreciation and amortization Loss on early extinguishment of debt Share-based compensation expense Deferred income taxes Gain on sale of assets Goodwill and indefinite-lived intangible impairment charges Change in accounts receivable Change in inventories Change in accounts payable, accrued and other liabilities Change in other operating assets and liabilities Other TOTAL OPERATING ACTIVITIES INVESTING ACTIVITIES Capital expenditures Proceeds from asset sales Acquisitions, net of cash acquired Purchases of short-term investments Proceeds from sales and maturities of short-term investments Cash transferred at closing related to the Beauty Brands divestiture Change in other investments TOTAL INVESTING ACTIVITIES FINANCING ACTIVITIES Dividends to shareholders Change in short-term debt Additions to long-term debt Reductions of long-term debt Treasury stock purchases Impact of stock options and other TOTAL FINANCING ACTIVITIES EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR 394 (3,945) (158) 3,628 (3,717) 269 (109) (3,909) 3,928 (3,384) 571 (16) (4,843) 1,488 (475) (26) (6,685) (62) 27 (3,511) (7,498) (2,215) 2,367 (969) (5,003) 3,324 (9,994) (7,310) (3,437) 5,072 (2,873) (7,004) 1,177 (14,375) (7,236) 2,727 3,603 (4,931) (5,204) 2,473 (8,568) (88) 1,670 4,239 19 (3,000) 2,569 (29) (2,529) 5,569 $ $ $ $ 497 3,064 529 2,830 $ 3 518 ,714 SUPPLEMENTAL DISCLOSURE Cash payments for interest $ Cash payment for income taxes Divestiture of Beauty business in exchange for shares of P&G stock and assumption of debt Assets acquired through non-cash capital leases are immaterial for all periods. (1) Includes early extinguishment of debt costs of $346 and $543 in 2018 and 2017 respectively. 11,360
