Item 8. Financial Statements and Supplementary Data

REPORT OF MANAGEMENT RESPONSIBILITIES

The management of General Mills, Inc. is responsible for the fairness and accuracy of the consolidated financial statements. The statements have been prepared in accordance with accounting principles that are generally accepted in the United States, using management’s best estimates and judgments where appropriate. The financial information throughout this Annual Report on Form 10-K is consistent with our consolidated financial statements.

Management has established a system of internal controls that provides reasonable assurance that assets are adequately safeguarded and transactions are recorded accurately in all material respects, in accordance with management’s authorization. We maintain a strong audit program that independently evaluates the adequacy and effectiveness of internal controls. Our internal controls provide for appropriate separation of duties and responsibilities, and there are documented policies regarding use of our assets and proper financial reporting. These formally stated and regularly communicated policies demand highly ethical conduct from all employees.

The Audit Committee of the Board of Directors meets regularly with management, internal auditors, and our independent registered public accounting firm to review internal control, auditing, and financial reporting matters. The independent registered public accounting firm, internal auditors, and employees have full and free access to the Audit Committee at any time.

The Audit Committee reviewed and approved the Company’s annual financial statements. The Audit Committee recommended, and the Board of Directors approved, that the consolidated financial statements be included in the Annual Report. The Audit Committee also appointed KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022.

/s/ J. L. Harmening/s/ K. A. Bruce

J. L. HarmeningK. A. Bruce

Chief Executive OfficerChief Financial Officer

June 30, 2021

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors General Mills, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of General Mills, Inc. and subsidiaries (the Company) as of May 30, 2021 and May 31, 2020, the related consolidated statements of earnings, comprehensive income, total equity and redeemable interest, and cash flows for each of the years in the three-year period ended May 30, 2021, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of May 30, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of May 30, 2021 and May 31, 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended May 30, 2021, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 30, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of May 27, 2019 due to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842), and related amendments.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of goodwill and brand intangible assets

As discussed in Note 6 to the consolidated financial statements, the goodwill and brands and other indefinite-lived intangibles balances as of May 30, 2021 were $14,062.4 million and $6,628.1 million, respectively. The impairment tests for these assets, which are performed annually and whenever events or changes in circumstances indicate that impairment may have occurred, require the Company to estimate the fair value of the reporting units to which goodwill is assigned as well as the brands and other indefinite-lived intangible assets. The fair value estimates are derived from discounted cash flow analyses that require the Company to make judgments about highly subjective matters, including future operating results, including revenue growth rates and operating margins, and an estimate of the discount rates and royalty rates.

We identified the assessment of the valuation of certain goodwill and brand intangible assets as a critical audit matter. There was a significant degree of judgment required in evaluating audit evidence, which consists primarily of forward-looking assumptions about future operating results, specifically the revenue growth rates and operating margins, royalty rates and subjective inputs used to estimate the discount rates.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of internal controls related to the valuation of goodwill and brand intangible assets. This included controls related to the assumptions about future operating results and the discount and royalty rates used to measure the reporting units and brands intangible fair values. We performed sensitivity analyses over the revenue growth rates, operating margins, brand royalty rates and discount rates to assess the impact of other points within a range of potential assumptions. We evaluated the revenue growth rates and operating margin assumptions by comparing them to recent financial performance and external market and industry data. We evaluated whether these assumptions were consistent with evidence obtained in other areas of the audit. We involved professionals with specialized skills and knowledge, who assisted in the evaluation of the Company’s discount rates and royalty rates by comparing them against rate ranges that were independently developed using publicly available market data for comparable entities.

/s/ KPMG LLP

We have served as the Company’s auditor since 1928.

Minneapolis, Minnesota

June 30, 2021

Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except per Share Data)
	Fiscal Year
	2021			2020			2019
Net sales	$	18,127.0		$	17,626.6		$	16,865.2
Cost of sales		11,678.7			11,496.7			11,108.4
Selling, general, and administrative expenses		3,079.6			3,151.6			2,935.8
Divestitures loss		53.5			-			30.0
Restructuring, impairment, and other exit costs		170.4			24.4			275.1
Operating profit		3,144.8			2,953.9			2,515.9
Benefit plan non-service income		**(**132.9)			(112.8)			(87.9)
Interest, net		420.3			466.5			521.8
Earnings before income taxes and after-tax earnings from joint ventures		2,857.4			2,600.2			2,082.0
Income taxes		629.1			480.5			367.8
After-tax earnings from joint ventures		117.7			91.1			72.0
Net earnings, including earnings attributable to redeemable and noncontrolling interests		2,346.0			2,210.8			1,786.2
Net earnings attributable to redeemable and noncontrolling interests		6.2			29.6			33.5
Net earnings attributable to General Mills	$	2,339.8		$	2,181.2		$	1,752.7
Earnings per share — basic	$	3.81		$	3.59		$	2.92
Earnings per share — diluted	$	3.78		$	3.56		$	2.90
Dividends per share	$	2.02		$	1.96		$	1.96
See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions)
	Fiscal Year
	2021			2020			2019
Net earnings, including earnings attributable to redeemable and noncontrolling interests	$	2,346.0		$	2,210.8		$	1,786.2
Other comprehensive income (loss), net of tax:
Foreign currency translation		175.1			(169.1)			(82.8)
Net actuarial income (loss)		353.4			(224.6)			(253.4)
Other fair value changes:
Hedge derivatives		**(**20.7)			3.2			12.1
Reclassification to earnings:
Securities		-			-			(2.0)
Hedge derivatives		13.5			4.1			0.9
Amortization of losses and prior service costs		78.9			77.9			84.6
Other comprehensive income (loss), net of tax		600.2			(308.5)			(240.6)
Total comprehensive income		2,946.2			1,902.3			1,545.6
Comprehensive income (loss) attributable to redeemable and noncontrolling interests		121.2			10.1			(10.7)
Comprehensive income attributable to General Mills	$	2,825.0		$	1,892.2		$	1,556.3
See accompanying notes to consolidated financial statements.

Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
	May 30, 2021			May 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	1,505.2		$	1,677.8
Receivables		1,638.5			1,615.1
Inventories		1,820.5			1,426.3
Prepaid expenses and other current assets		790.3			402.1
Total current assets		5,754.5			5,121.3
Land, buildings, and equipment		3,606.8			3,580.6
Goodwill		14,062.4			13,923.2
Other intangible assets		7,150.6			7,095.8
Other assets		1,267.6			1,085.8
Total assets	$	31,841.9		$	30,806.7
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	3,653.5		$	3,247.7
Current portion of long-term debt		2,463.8			2,331.5
Notes payable		361.3			279.0
Other current liabilities		1,787.2			1,633.3
Total current liabilities		8,265.8			7,491.5
Long-term debt		9,786.9			10,929.0
Deferred income taxes		2,118.4			1,947.1
Other liabilities		1,292.7			1,545.0
Total liabilities		21,463.8			21,912.6
Redeemable interest		604.9			544.6
Stockholders' equity:
Common stock, 754.6 shares issued, $0.10 par value		75.5			75.5
Additional paid-in capital		1,365.5			1,348.6
Retained earnings		17,069.8			15,982.1
Common stock in treasury, at cost, shares of 146.9 and 144.8		**(**6,611.2)			(6,433.3)
Accumulated other comprehensive loss		**(**2,429.2)			(2,914.4)
Total stockholders' equity		9,470.4			8,058.5
Noncontrolling interests		302.8			291.0
Total equity		9,773.2			8,349.5
Total liabilities and equity	$	31,841.9		$	30,806.7
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)
	Fiscal Year
	2021					2020					2019
	Shares		Amount			Shares		Amount			Shares		Amount
Total equity, beginning balance			$	8,349.5				$	7,367.7				$	6,492.4
Common stock, 1 billion shares authorized, $0.10 par value	754.6			75.5		754.6			75.5		754.6			75.5
Additional paid-in capital:
Beginning balance				1,348.6					1,386.7					1,202.5
Stock compensation plans				6.2					(12.1)					(96.4)
Unearned compensation related to stock unit awards				**(**78.0)					(85.7)					(71.3)
Earned compensation				88.5					92.8					82.8
Decrease (increase) in redemption value of redeemable interest				0.2					(33.1)					269.1
Ending balance				1,365.5					1,348.6					1,386.7
Retained earnings:
Beginning balance				15,982.1					14,996.7					14,459.6
Comprehensive income				2,339.8					2,181.2					1,752.7
Cash dividends declared ($2.02, $1.96, and $1.96 per share)				**(**1,246.4)					(1,195.8)					(1,181.7)
Adoption of revenue recognition accounting requirements				-					-					(33.9)
Adoption of current expected credit loss accounting requirements				**(**5.7)					-					-
Ending balance				17,069.8					15,982.1					14,996.7
Common stock in treasury:
Beginning balance	**(**144.8)			**(**6,433.3)		(152.7)			(6,779.0)		(161.5)			(7,167.5)
Shares purchased	**(**5.0)			**(**301.4)		(0.1)			(3.4)		-			(1.1)
Stock compensation plans	2.9			123.5		8.0			349.1		8.8			389.6
Ending balance	**(**146.9)			**(**6,611.2)		(144.8)			(6,433.3)		(152.7)			(6,779.0)
Accumulated other comprehensive loss:
Beginning balance				**(**2,914.4)					(2,625.4)					(2,429.0)
Comprehensive income (loss)				485.2					(289.0)					(196.4)
Ending balance				**(**2,429.2)					(2,914.4)					(2,625.4)
Noncontrolling interests:
Beginning balance				291.0					313.2					351.3
Comprehensive income				38.0					10.3					0.4
Distributions to noncontrolling interest holders				**(**26.2)					(32.5)					(38.5)
Ending balance				302.8					291.0					313.2
Total equity, ending balance			$	9,773.2				$	8,349.5				$	7,367.7
Redeemable interest:
Beginning balance			$	544.6				$	551.7				$	776.2
Comprehensive income (loss)				83.2					(0.2)					(11.1)
Increase in investment in redeemable interest				-					-					55.7
(Decrease) increase in redemption value of redeemable interest				**(**0.2)					33.1					(269.1)
Distributions to redeemable interest holder				**(**22.7)					(40.0)					-
Ending balance			$	604.9				$	544.6				$	551.7
See accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions)
	Fiscal Year
	2021			2020			2019
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable and noncontrolling interests	$	2,346.0		$	2,210.8		$	1,786.2
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		601.3			594.7			620.1
After-tax earnings from joint ventures		**(**117.7)			(91.1)			(72.0)
Distributions of earnings from joint ventures		95.2			76.5			86.7
Stock-based compensation		89.9			94.9			84.9
Deferred income taxes		118.8			(29.6)			93.5
Pension and other postretirement benefit plan contributions		**(**33.4)			(31.1)			(28.8)
Pension and other postretirement benefit plan costs		**(**33.6)			(32.3)			6.1
Divestitures loss		53.5			-			30.0
Restructuring, impairment, and other exit costs		150.9			43.6			235.7
Changes in current assets and liabilities, excluding the effects of divestitures		**(**155.9)			793.9			(7.5)
Other, net		**(**131.8)			45.9			(27.9)
Net cash provided by operating activities		2,983.2			3,676.2			2,807.0
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment		**(**530.8)			(460.8)			(537.6)
Investments in affiliates, net		15.5			(48.0)			0.1
Proceeds from disposal of land, buildings, and equipment		2.7			1.7			14.3
Proceeds from divestitures		2.9			-			26.4
Other, net		**(**3.1)			20.9			(59.7)
Net cash used by investing activities		**(**512.8)			(486.2)			(556.5)
Cash Flows - Financing Activities
Change in notes payable		71.7			(1,158.6)			(66.3)
Issuance of long-term debt		1,576.5			1,638.1			339.1
Payment of long-term debt		**(**2,609.0)			(1,396.7)			(1,493.8)
Debt exchange participation incentive cash payment		**(**201.4)			-			-
Proceeds from common stock issued on exercised options		74.3			263.4			241.4
Purchases of common stock for treasury		**(**301.4)			(3.4)			(1.1)
Dividends paid		**(**1,246.4)			(1,195.8)			(1,181.7)
Investments in redeemable interest		-			-			55.7
Distributions to noncontrolling and redeemable interest holders		**(**48.9)			(72.5)			(38.5)
Other, net		**(**30.9)			(16.0)			(31.2)
Net cash used by financing activities		**(**2,715.5)			(1,941.5)			(2,176.4)
Effect of exchange rate changes on cash and cash equivalents		72.5			(20.7)			(23.1)
(Decrease) increase in cash and cash equivalents		**(**172.6)			1,227.8			51.0
Cash and cash equivalents - beginning of year		1,677.8			450.0			399.0
Cash and cash equivalents - end of year	$	1,505.2		$	1,677.8		$	450.0
Cash flow from changes in current assets and liabilities, excluding the effects of divestitures:
Receivables	$	27.9		$	37.9		$	(42.7)
Inventories		**(**354.7)			103.1			53.7
Prepaid expenses and other current assets		**(**42.7)			94.2			(114.3)
Accounts payable		343.1			392.5			162.4
Other current liabilities		**(**129.5)			166.2			(66.6)
Changes in current assets and liabilities	$	**(**155.9)		$	793.9		$	(7.5)
See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTE 1. BASIS OF PRESENTATION AND RECLASSIFICATIONS

Basis of Presentation

Our Consolidated Financial Statements include the accounts of General Mills, Inc. and all subsidiaries in which we have a controlling financial interest. Intercompany transactions and accounts, including any noncontrolling and redeemable interests’ share of those transactions, are eliminated in consolidation.

Our fiscal year ends on the last Sunday in May. Fiscal years 2021 and 2019 consisted of 52 weeks, while fiscal year 2020 consisted of 53 weeks.

Certain reclassifications to our previously reported financial information have been made to conform to the current period presentation. See Note 2 for additional information.

Change in Reporting Period

As part of a long-term plan to conform the fiscal year ends of all our operations, in fiscal 2020 we changed the reporting period of our Pet segment from an April fiscal year-end to a May fiscal year-end to match our fiscal calendar. Accordingly, our fiscal 2020 results include 13 months of Pet segment results compared to 12 months in fiscal 2021 and 2019. The impact of this change was not material to our consolidated results of operations and, therefore, we did not restate prior period financial statements for comparability. Our India business is on an April fiscal year end.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

We consider all investments purchased with an original maturity of three months or less to be cash equivalents.

Inventories

All inventories in the United States other than grain are valued at the lower of cost, using the last-in, first-out (LIFO) method, or market. Grain inventories are valued at net realizable value, and all related cash contracts and derivatives are valued at fair value, with all net changes in value recorded in earnings currently.

Inventories outside of the United States are generally valued at the lower of cost, using the first-in, first-out (FIFO) method, or net realizable value.

Shipping costs associated with the distribution of finished product to our customers are recorded as cost of sales, and are recognized when the related finished product is shipped to and accepted by the customer.

Land, Buildings, Equipment, and Depreciation

Land is recorded at historical cost. Buildings and equipment, including capitalized interest and internal engineering costs, are recorded at cost and depreciated over estimated useful lives, primarily using the straight-line method. Ordinary maintenance and repairs are charged to cost of sales. Buildings are usually depreciated over 40 years, and equipment, furniture, and software are usually depreciated over 3 to 10 years. Fully depreciated assets are retained in buildings and equipment until disposal. When an item is sold or retired, the accounts are relieved of its cost and related accumulated depreciation and the resulting gains and losses, if any, are recognized in earnings. As of May 30, 2021, assets held for sale were insignificant.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows from the operation and disposition of the asset group are less than the carrying amount of the asset group. Asset groups have identifiable cash flows and are largely independent of other asset groups. Measurement of an impairment loss would be based on the excess of the carrying amount of the asset group over its fair value. Fair value is measured using a discounted cash flow model or independent appraisals, as appropriate.

Goodwill and Other Intangible Assets

Goodwill is not subject to amortization and is tested for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. We perform our annual goodwill and indefinite-lived intangible assets impairment test as of the first day of the second quarter of the fiscal year. Impairment testing is performed for each of our reporting units. We compare the carrying value of a reporting unit, including goodwill, to the fair value of the unit. Carrying value is based on the assets and liabilities associated with the operations of that reporting unit, which often requires allocation of shared or corporate items among reporting units. If the carrying amount of a reporting unit exceeds its fair value, impairment has occurred. We recognize an

impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value up to the total amount of goodwill allocated to the reporting unit. Our estimates of fair value are determined based on a discounted cash flow model. Growth rates for sales and profits are determined using inputs from our long-range planning process. We also make estimates of discount rates, perpetuity growth assumptions, market comparables, and other factors.

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 indefinite-lived intangible assets, mainly intangible assets primarily associated with the Blue Buffalo, Pillsbury, Totino’s, Yoplait, Old El Paso, Progresso, Annie’s, Häagen-Dazs, and Yoki brands, are also tested for impairment annually and whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Our estimate of the fair value of the brands is based on a discounted cash flow model using inputs which included 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.

Our finite-lived intangible assets, primarily acquired franchise agreements and customer relationships, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows from the operation and disposition of the asset are less than the carrying amount of the asset. Assets generally have identifiable cash flows and are largely independent of other assets. Measurement of an impairment loss would be based on the excess of the carrying amount of the asset over its fair value. Fair value is measured using a discounted cash flow model or other similar valuation model, as appropriate.

Leases

We determine whether an arrangement is a lease at inception. When our lease arrangements include lease and non-lease components, we account for lease and non-lease components (e.g. common area maintenance) separately based on their relative standalone prices.

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

We have certain lease arrangements with variable rental payments. Our lease arrangements for our Häagen-Dazs retail shops often include rental payments that are based on a percentage of retail sales. We have other lease arrangements that are adjusted periodically based on an inflation index or rate. The future variability of these payments and adjustments are unknown, and therefore they are not included as minimum lease payments used to determine our right of use assets and lease liabilities. Variable rental payments are recognized in the period in which the obligation is incurred.

As most of our lease arrangements do not provide an implicit interest rate, we apply an incremental borrowing rate based on the information available at the commencement date of the lease arrangement to determine the present value of lease payments.

Investments in Unconsolidated Joint Ventures

Our investments in companies over which we have the ability to exercise significant influence are stated at cost plus our share of undistributed earnings or losses. We receive royalty income from certain joint ventures, incur various expenses (primarily research and development), and record the tax impact of certain joint venture operations that are structured as partnerships. In addition, we make advances to our joint ventures in the form of loans or capital investments. We also sell certain raw materials, semi-finished goods, and finished goods to the joint ventures, generally at market prices.

In addition, we assess our investments in our joint ventures if we have reason to believe an impairment may have occurred including, but not limited to, as a result of ongoing operating losses, projected decreases in earnings, increases in the weighted-average cost of capital, or significant business disruptions. The significant assumptions used to estimate fair value include revenue growth and profitability, royalty rates, capital spending, depreciation and taxes, foreign currency exchange rates, and a discount rate. By their nature, these projections and assumptions are uncertain. If we were to determine the current fair value of our investment was less than the carrying value of the investment, then we would assess if the shortfall was of a temporary or permanent nature and write down the investment to its fair value if we concluded the impairment is other than temporary.

Redeemable Interest

We have a 51 percent controlling interest in Yoplait SAS, a consolidated entity. Sodiaal International (Sodiaal) holds the remaining 49 percent interest in Yoplait SAS. Sodiaal has the ability to put all or a portion of its redeemable interest to us at fair value once per year, up to three times before December 2024. This put option requires us to classify Sodiaal’s interest as a redeemable interest outside of equity on our Consolidated Balance Sheets for as long as the put is exercisable by Sodiaal. When the put is no longer exercisable, the redeemable interest will be reclassified to noncontrolling interests on our Consolidated Balance Sheets. We adjust the value of the redeemable interest through additional paid-in capital on our Consolidated Balance Sheets quarterly to the redeemable interest’s redemption value, which approximates its fair value. The significant assumptions used to estimate the redemption value include projected revenue growth and profitability from our long-range plan, capital spending, depreciation, taxes, foreign currency exchange rates, and a discount rate.

Revenue Recognition

Our revenues primarily result from contracts with customers, which are generally short-term and have a single performance obligation – the delivery of product. We recognize revenue for the sale of packaged foods at the point in time when our performance obligation has been satisfied and control of the product has transferred to our customer, which generally occurs when the shipment is accepted by our customer. Sales include shipping and handling charges billed to the customer and 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. Sales, use, value-added, and other excise taxes are not included in revenue. Trade promotions are recorded using significant judgment of estimated participation and performance levels for offered programs at the time of sale. Differences between estimated and actual reductions to the transaction price are recognized as a change in estimate in a subsequent period. We generally do not allow a right of return. However, on a limited case-by-case basis with prior approval, we may allow customers to return product. In limited circumstances, product returned in saleable condition is resold to other customers or outlets. Receivables from customers generally do not bear interest. Payment terms and collection patterns vary around the world and by channel, and are short-term, and as such, we do not have any significant financing components. Our allowance for doubtful accounts represents our estimate of expected credit losses related to our trade receivables. We pool our trade receivables based on similar risk characteristics, such as geographic location, business channel, and other account data. To estimate our allowance for doubtful accounts, we leverage information on historical losses, asset-specific risk characteristics, current conditions, and reasonable and supportable forecasts of future conditions. Account balances are written off against the allowance when we deem the amount is uncollectible. Please see Note 17 for a disaggregation of our revenue into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. We do not have material contract assets or liabilities arising from our contracts with customers.

Environmental Costs

Environmental costs relating to existing conditions caused by past operations that do not contribute to current or future revenues are expensed. Liabilities for anticipated remediation costs are recorded on an undiscounted basis when they are probable and reasonably estimable, generally no later than the completion of feasibility studies or our commitment to a plan of action.

Advertising Production Costs

We expense the production costs of advertising the first time that the advertising takes place.

Research and Development

All expenditures for research and development (R&D) are charged against earnings in the period incurred. R&D includes expenditures for new product and manufacturing process innovation, and the annual expenditures are comprised primarily of internal salaries, wages, consulting, and supplies attributable to R&D activities. Other costs include depreciation and maintenance of research facilities, including assets at facilities that are engaged in pilot plant activities.

Foreign Currency Translation

For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the period-end exchange rates. Income statement accounts are translated using the average exchange rates prevailing during the period. Translation adjustments are reflected within accumulated other comprehensive loss (AOCI) in stockholders’ equity. Gains and losses from foreign currency transactions are included in net earnings for the period, except for gains and losses on investments in subsidiaries for which settlement is not planned for the foreseeable future and foreign exchange gains and losses on instruments designated as net investment hedges. These gains and losses are recorded in AOCI.

Derivative Instruments

All derivatives are recognized on our Consolidated Balance Sheets at fair value based on quoted market prices or our estimate of their fair value, and are recorded in either current or noncurrent assets or liabilities based on their maturity. Changes in the fair values of derivatives are recorded in net earnings or other comprehensive income, based on whether the instrument is designated and effective as a hedge transaction and, if so, the type of hedge transaction. Gains or losses on derivative instruments reported in AOCI are

reclassified to earnings in the period the hedged item affects earnings. If the underlying hedged transaction ceases to exist, any associated amounts reported in AOCI are reclassified to earnings at that time.

Stock-based Compensation

We generally measure compensation expense for grants of restricted stock units and performance share units using the value of a share of our stock on the date of grant. We estimate the value of stock option grants using a Black-Scholes valuation model. Generally, stock-based compensation is recognized straight line over the vesting period. Our stock-based compensation expense is recorded in selling, general and administrative (SG&A) expenses and cost of sales in our Consolidated Statements of Earnings and allocated to each reportable segment in our segment results.

Certain equity-based compensation plans contain provisions that accelerate vesting of awards upon retirement, termination, or death of eligible employees and directors. We consider a stock-based award to be vested when the employee’s or director’s retention of the award is no longer contingent on providing subsequent service. Accordingly, the related compensation cost is generally recognized immediately for awards granted to retirement-eligible individuals or over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period.

We report the benefits of tax deductions in excess of recognized compensation cost as an operating cash flow.

Defined Benefit Pension, Other Postretirement Benefit, and Postemployment Benefit Plans

We sponsor several domestic and foreign defined benefit plans to provide pension, health care, and other welfare benefits to retired employees. Under certain circumstances, we also provide accruable benefits, primarily severance, to former or inactive employees in the United States, Canada, and Mexico. We recognize an obligation for any of these benefits that vest or accumulate with service. Postemployment benefits that do not vest or accumulate with service (such as severance based solely on annual pay rather than years of service) are charged to expense when incurred. Our postemployment benefit plans are unfunded.

We recognize the underfunded or overfunded status of a defined benefit pension plan as an asset or liability and recognize changes in the funded status in the year in which the changes occur through AOCI.

Use of Estimates

Preparing our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates include our accounting for revenue recognition, valuation of long-lived assets, intangible assets, redeemable interest, stock-based compensation, income taxes, and defined benefit pension, other postretirement benefit and postemployment benefit plans. Actual results could differ from our estimates.

New Accounting Standards

In the first quarter of fiscal 2021, we adopted new accounting requirements related to the measurement of credit losses on financial instruments, including trade receivables. The new standard and subsequent amendments replace the incurred loss impairment model with a forward-looking expected credit loss model, which will generally result in earlier recognition of credit losses. Our allowance for doubtful accounts represents our estimate of expected credit losses related to our trade receivables. We pool our trade receivables based on similar risk characteristics, such as geographic location, business channel, and other account data. To estimate our allowance for doubtful accounts, we leverage information on historical losses, asset-specific risk characteristics, current conditions, and reasonable and supportable forecasts of future conditions. Account balances are written off against the allowance when we deem the amount is uncollectible. We adopted the requirements of the new standard and subsequent amendments using the modified retrospective transition approach, and recorded a decrease to retained earnings of $5.7 million after-tax.

In the fourth quarter of fiscal 2020, we adopted new accounting requirements related to the annual disclosure requirements for defined benefit pension and other postretirement benefit plans. The standard modifies specific disclosures to improve usefulness to financial statement users. We adopted the requirements of the new standard using a retrospective approach. The adoption of this guidance did not impact our results of operations or financial position.

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

In the first quarter of fiscal 2020, we adopted new requirements for the accounting, presentation, and classification of leases. This results in certain leases being capitalized as a right of use asset with a related liability on our Consolidated Balance Sheet. We adopted this guidance utilizing the cumulative effect adjustment approach, which required application of the guidance at the adoption date, and elected certain practical expedients permitted under the transition guidance, including not reassessing whether existing contracts

contain leases and carrying forward the historical classification of those leases. In addition, we elected not to recognize leases with an initial term of 12 months or less on our Consolidated Balance Sheet and to continue our historical treatment of land easements, under permitted elections. This guidance did not have a material impact on retained earnings, our Consolidated Statements of Earnings, or our Consolidated Statements of Cash Flows.

In the first quarter of fiscal 2019, we adopted new accounting requirements related to the presentation of net periodic defined benefit pension expense, net periodic postretirement benefit expense, and net periodic postemployment benefit expense (collectively “net periodic benefit expense”). The new standard requires the service cost component of net periodic benefit expense to be recorded in the same line items as other employee compensation costs within our Consolidated Statements of Earnings. Other components of net periodic benefit expense must be presented separately outside of operating profit in our Consolidated Statements of Earnings. In addition, the new standard requires that only the service cost component of net periodic benefit expense is eligible for capitalization. The standard required retrospective adoption of the presentation of net periodic benefit expense and prospective application of the capitalization of the service cost component. The impact of the adoption of this standard on our results of operations was a decrease to our operating profit of $87.9 million and a corresponding increase to benefit plan non-service income of $87.9 million for fiscal 2019. There were no changes to our reported segment operating profit.

In the first quarter of fiscal 2019, we adopted new accounting requirements for the recognition of revenue from contracts with customers. Under the standard, we apply a principles-based five step model to recognize revenue upon the transfer of control of promised goods to customers and in an amount that reflects the consideration for which we expect to be entitled to in exchange for those goods. We did not identify any material differences resulting from applying the new requirements to our revenue contracts. Additionally, we did not identify any significant changes to our business processes, systems, and controls to support recognition and disclosure requirements under the new guidance. We adopted the requirements of the standard and subsequent amendments to all contracts in the first quarter of fiscal 2019 using the cumulative effect approach. We recorded a $33.9 million cumulative effect adjustment net of income tax effects to the opening balance of fiscal 2019 retained earnings, a decrease to deferred income taxes of $11.4 million, and an increase to other current liabilities of $45.3 million related to the timing of recognition of certain promotional expenditures.

NOTE 3. Acquisition and DIVESTITURES

During the fourth quarter of fiscal 2021, we recorded a pre-tax loss of $53.5 million related to the sale of our Laticínios Carolina business in Brazil.

During the fourth quarter of fiscal 2021, we entered into a definitive agreement to acquire Tyson Foods’ pet treats business for $1.2 billion in cash. We expect to close on the acquisition in the first quarter of fiscal 2022. We intend to fund the acquisition with cash and short-term debt.

During the third quarter of fiscal 2019, we sold our La Salteña fresh pasta and refrigerated dough business in Argentina, and recorded a pre-tax loss of $35.4 million. During the fourth quarter of fiscal 2019, we sold our yogurt business in China and simultaneously entered into a new Yoplait license agreement with the purchaser for their use of the Yoplait brand. We recorded a pre-tax gain of $5.4 million.

NOTE 4. RESTRUCTURING, IMPAIRMENT, AND OTHER EXIT COSTS

ASSET IMPAIRMENTS

In fiscal 2019, we recorded a $192.6 million charge related to the impairment of our Progresso, Food Should Taste Good, and Mountain High brand intangible assets in restructuring, impairment, and other exit costs.

In fiscal 2019, we recorded a $14.8 million charge in restructuring, impairment, and other exit costs related to the impairment of certain manufacturing assets in our North America Retail and Asia & Latin America segments.

RESTRUCTURING INITIATIVES

We view our restructuring activities as actions that help us meet our long-term growth targets and are evaluated against internal rate of return and net present value targets. Each restructuring action normally takes one to two years to complete. At completion (or as each major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation. These activities result in various restructuring costs, including asset write-offs, exit charges including severance, contract termination fees, and decommissioning and other costs. Accelerated depreciation associated with restructured assets, as used in the context of our disclosures regarding restructuring activity, refers to the increase in depreciation expense caused by shortening the useful life or updating the salvage value of depreciable fixed assets to coincide with the end of production under an approved restructuring plan. Any impairment of the asset is recognized immediately in the period the plan is approved.

Charges recorded in fiscal 2021 were as follows:

Expense, in Millions
Global organizational structure and resource alignment	$	157.3
Asia & Latin America route-to-market and supply chain optimization		13.0
Charges associated with restructuring actions previously announced		2.4
Total	$	172.7

In fiscal 2021, we approved restructuring actions designed to better align our organizational structure and resources with strategic initiatives. We expect to incur approximately $170 million to $220 million of restructuring charges related to these global actions, of which approximately $130 million to $180 million will be cash. These charges are expected to consist primarily of severance and other benefits costs and other charges, including consulting and professional fees, contract termination costs, and fixed asset write-offs. We recognized $148.8 million of severance and other benefits costs and $8.5 million of other costs in fiscal 2021 related to these actions. We expect these actions to be completed by the end of fiscal 2023.

In fiscal 2021, we approved restructuring actions to leverage more efficient and effective route-to-market models and to optimize our supply chain in our Asia & Latin America segment. We expect to incur approximately $17 million of restructuring charges related to these actions, of which approximately $10 million will be cash. These charges are expected to consist of approximately $9 million of severance and $8 million of other costs, primarily asset write-offs. We recognized $8.8 million of severance and $4.2 million of other costs in fiscal 2021 related to these actions. We expect these actions to be completed by the end of the first quarter of fiscal 2022.

The charges associated with restructuring actions previously announced primarily relate to actions to drive efficiencies in targeted areas of our global supply chain. We expect these actions to be completed by the end of fiscal 2023.

Certain actions are subject to union negotiations and works counsel consultations, where required.

We paid net $21.8 million of cash related to restructuring actions in fiscal 2021. We paid net $6.6 million of cash in fiscal 2020.

In fiscal 2020, we did not undertake any new restructuring actions and recorded $50.2 million of restructuring charges for previously announced restructuring actions.

Charges recorded in fiscal 2019 were as follows:

Expense, in Millions
Targeted actions in global supply chain	$	80.2
Charges associated with restructuring actions previously announced		(2.6)
Total	$	77.6

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

	Fiscal Year
In Millions		2021		2020		2019
Restructuring, impairment, and other exit costs	$	170.4	$	24.4	$	275.1
Cost of sales		2.3		25.8		9.9
Total restructuring and impairment charges		172.7		50.2		285.0
Project-related costs classified in cost of sales	$	-	$	1.5	$	1.3

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

In Millions		Severance		Contract Termination		Other Exit Costs		Total
Reserve balance as of May 27, 2018	$	66.0	$	0.1	$	0.7	$	66.8
Fiscal 2019 charges, including foreign currency translation		7.7		2.5		1.4		11.6
Utilized in fiscal 2019		(37.2)		(2.6)		(2.1)		(41.9)
Reserve balance as of May 26, 2019		36.5		-		-		36.5
Fiscal 2020 charges, including foreign currency translation		(5.0)		0.8		1.7		(2.5)
Utilized in fiscal 2020		(13.7)		(0.8)		(1.7)		(16.2)
Reserve balance as of May 31, 2020		17.8		-		-		17.8
Fiscal 2021 charges, including foreign currency translation		142.3		0.3		1.3		143.9
Utilized in fiscal 2021		(12.8)		(0.1)		-		(12.9)
Reserve balance as of May 30, 2021	$	147.3	$	0.2	$	1.3	$	148.8

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

NOTE 5. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

We have a 50 percent interest in Cereal Partners Worldwide (CPW), which manufactures and markets ready-to-eat cereal products in more than 120 countries outside the United States and Canada. CPW also markets cereal bars in several European countries and manufactures private label cereals for customers in the United Kingdom. We have guaranteed a portion of CPW’s debt and its pension obligation in the United Kingdom.

We also have a 50 percent interest in Häagen-Dazs Japan, Inc. (HDJ). This joint venture manufactures and markets Häagen-Dazs ice cream products and frozen novelties.

Results from our CPW and HDJ joint ventures are reported for the 12 months ended March 31.

Joint venture related balance sheet activity is as follows:

In Millions		May 30, 2021		May 31, 2020
Cumulative investments	$	486.2	$	481.4
Goodwill and other intangibles		505.7		460.5
Aggregate advances included in cumulative investments		294.2		279.5

Joint venture earnings and cash flow activity is as follows:

	Fiscal Year
In Millions		2021		2020		2019
Sales to joint ventures	$	6.7	$	5.9	$	4.2
Net (repayments) advances		**(**15.5)		48.0		(0.1)
Dividends received		95.2		76.5		86.7

Summary combined financial information for the joint ventures on a 100 percent basis is as follows:

	Fiscal Year
In Millions		2021		2020		2019
Net sales:
CPW	$	1,766.8	$	1,654.3	$	1,647.7
HDJ		422.4		391.3		396.2
Total net sales		2,189.2		2,045.6		2,043.9
Gross margin		882.9		785.3		744.4
Earnings before income taxes		247.8		214.0		155.4
Earnings after income taxes		201.7		176.5		111.9

In Millions	May 30, 2021		May 31, 2020
Current assets	$	877.4	$	870.0
Noncurrent assets		927.2		781.4
Current liabilities		1,424.4		1,365.6
Noncurrent liabilities		142.2		104.2

NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS

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

In Millions		May 30, 2021		May 31, 2020
Goodwill	$	14,062.4	$	13,923.2
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles		6,628.1		6,561.4
Intangible assets subject to amortization:
Franchise agreements, customer relationships, and other finite-lived intangibles		823.4		777.8
Less accumulated amortization		**(**300.9)		(243.4)
Intangible assets subject to amortization		522.5		534.4
Other intangible assets		7,150.6		7,095.8
Total	$	21,213.0	$	21,019.0

Based on the carrying value of finite-lived intangible assets as of May 30, 2021, amortization expense for each of the next five fiscal years is estimated to be approximately $40 million.

The changes in the carrying amount of goodwill for fiscal 2019, 2020, and 2021 are as follows:

In Millions	North America Retail		Pet			Convenience Stores & Foodservice			Europe & Australia			Asia & Latin America			Joint Ventures			Total
Balance as of May 27, 2018	$	6,410.6	$	5,294.9		$	918.8		$	729.9		$	285.0		$	425.8		$	14,065.0
Divestitures		-		-			-			-			(0.5)			-			(0.5)
Purchase accounting adjustment		-		5.6			-			-			-			-			5.6
Other activity, primarily foreign currency translation		(4.1)		-			-			(29.5)			(24.3)			(16.4)			(74.3)
Balance as of May 26, 2019		6,406.5		5,300.5			918.8			700.4			260.2			409.4			13,995.8
Other activity, primarily foreign currency translation		(2.8)		-			-			(9.7)			(56.4)			(3.7)			(72.6)
Balance as of May 31, 2020		6,403.7		5,300.5			918.8			690.7			203.8			405.7			13,923.2
Divestiture		-		-			-			-			(1.2)			-			(1.2)
Other activity, primarily foreign currency translation		15.6		-			-			74.8			10.1			39.9			140.4
Balance as of May 30, 2021	$	6,419.3	$	5,300.5		$	918.8		$	765.5		$	212.7		$	445.6		$	14,062.4

The changes in the carrying amount of other intangible assets for fiscal 2019, 2020, and 2021 are as follows:

In Millions		Total
Balance as of May 27, 2018	$	7,445.1
Impairment charge		(192.6)
Other activity, primarily amortization and foreign currency translation		(85.7)
Balance as of May 26, 2019		7,166.8
Other activity, primarily amortization and foreign currency translation		(71.0)
Balance as of May 31, 2020		7,095.8
Divestiture		(5.3)
Other activity, primarily amortization and foreign currency translation		60.1
Balance as of May 30, 2021	$	7,150.6

Our annual goodwill and indefinite-lived intangible assets impairment test was performed on the first day of the second quarter of fiscal 2021, and we determined there was no impairment of our intangible assets as their related fair values were substantially in excess of the carrying values.

While having significant coverage as of our fiscal 2021 assessment date, the Europe & Australia reporting unit and the Progresso, Green Giant, and EPIC brand intangible assets had risk of decreasing coverage. We will continue to monitor these businesses for potential impairment.

We did not identify any indicators of impairment for any goodwill or indefinite-lived intangible assets as of May 30, 2021.

In fiscal 2019, as a result of lower sales projections in our long-range plans for the businesses supporting the Progresso, Food Should Taste Good, and Mountain High brand intangible assets, we recorded a $192.6 million impairment charge in restructuring, impairment, and other exit costs. Significant assumptions used in these assessments included our long-range cash flow projections for the businesses, royalty rates, weighted-average cost of capital rates, and tax rates.

NOTE 7. LEASES

Our lease portfolio primarily consists of operating lease arrangements for certain warehouse and distribution space, office space, retail shops, production facilities, rail cars, production and distribution equipment, automobiles, and office equipment. Our lease costs associated with finance leases and sale-leaseback transactions and our lease income associated with lessor and sublease arrangements are not material to our Consolidated Financial Statements.

Components of our lease cost are as follows:

	Fiscal Year
In Millions		2021		2020
Operating lease cost	$	132.7	$	133.5
Variable lease cost		21.8		14.4
Short-term lease cost		15.4		23.3

Rent expense under all operating leases from continuing operations was $184.9 million in fiscal 2019.

Maturities of our operating and finance lease obligations by fiscal year are as follows:

In Millions		Operating Leases		Finance Leases
Fiscal 2022	$	123.3	$	0.7
Fiscal 2023		103.5		0.7
Fiscal 2024		80.9		0.4
Fiscal 2025		50.2		-
Fiscal 2026		32.6		-
After fiscal 2026		36.7		-
Total noncancelable future lease obligations	$	427.2	$	1.8
Less: Interest		(32.8)		-
Present value of lease obligations	$	394.4	$	1.8

The lease payments presented in the table above exclude $87.8 million of minimum lease payments for operating leases we have committed to but have not yet commenced as of May 30, 2021.

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

	May 30, 2021		May 31, 2020
Weighted-average remaining lease term	4.5	years	4.6	years
Weighted-average discount rate	3.7	%	4.1	%

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

	Fiscal Year
In Millions		2021		2020
Cash paid for amounts included in the measurement of lease liabilities	$	132.0	$	131.0
Right of use assets obtained in exchange for new lease liabilities	$	120.2	$	46.3

NOTE 8. FINANCIAL INSTRUMENTS, RISK MANAGEMENT ACTIVITIES, AND FAIR VALUES

FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents, receivables, accounts payable, other current liabilities, and notes payable approximate fair value. Marketable securities are carried at fair value. As of May 30, 2021, and May 31, 2020, a comparison of cost and market values of our marketable debt and equity securities is as follows:

	Cost					Fair Value					Gross Gains					Gross Losses
	Fiscal Year					Fiscal Year					Fiscal Year					Fiscal Year
In Millions		2021		2020			2021		2020			2021		2020			2021		2020
Available for sale debt securities	$	76.9	$	56.7		$	76.9	$	56.7		$	-	$	-		$	-	$	-
Equity securities		360.3		0.3			365.6		4.9			5.3		4.6			-		-
Total	$	437.2	$	57.0		$	442.5	$	61.6		$	5.3	$	4.6		$	-	$	-

There were no realized gains or losses from sales of marketable securities in fiscal 2021. During fiscal 2020, we received $16.0 million of proceeds and recorded $4.0 million of realized losses from the sale of marketable securities. Gains and losses are determined by specific identification. Classification of marketable securities as current or noncurrent is dependent upon our intended holding period and the security’s maturity date. The aggregate unrealized gains and losses on available-for-sale debt securities, net of tax effects, are classified in AOCI within stockholders’ equity.

Scheduled maturities of our marketable securities are as follows:

		Marketable Securities
In Millions		Cost		Fair Value
Under 1 year (current)	$	76.9	$	76.9
Equity securities		360.3		365.6
Total	$	437.2	$	442.5

As of May 30, 2021, $360.0 million of equity securities were restricted for payment of active employee health and welfare benefits.

As of May 30, 2021, we had $2.4 million of marketable debt securities pledged as collateral for derivative contracts. As of May 30, 2021, $28.2 million of certain accounts receivable were pledged as collateral against a foreign uncommitted line of credit.

The fair value and carrying amounts of long-term debt, including the current portion, were $13,194.4 million and $12,250.7 million, respectively, as of May 30, 2021. The fair value of long-term debt was estimated using market quotations and discounted cash flows based on our current incremental borrowing rates for similar types of instruments. Long-term debt is a Level 2 liability in the fair value hierarchy.

RISK MANAGEMENT ACTIVITIES

As a part of our ongoing operations, we are exposed to market risks such as changes in interest and foreign currency exchange rates and commodity and equity prices. To manage these risks, we may enter into various derivative transactions (e.g., futures, options, and swaps) pursuant to our established policies.

COMMODITY PRICE RISK

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

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

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

Unallocated corporate items for fiscal 2021, 2020, and 2019 included:

	Fiscal Year
In Millions		2021			2020			2019
Net gain (loss) on mark-to-market valuation of commodity positions	$	138.2		$	(63.0)		$	(39.0)
Net (gain) loss on commodity positions reclassified from unallocated corporate items to segment operating profit		**(**8.8)			35.6			10.0
Net mark-to-market revaluation of certain grain inventories		9.4			2.7			(7.0)
Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items	$	138.8		$	(24.7)		$	(36.0)

As of May 30, 2021, the net notional value of commodity derivatives was $337.0 million, of which $276.1 million related to agricultural inputs and $60.9 million related to energy inputs. These contracts relate to inputs that generally will be utilized within the next 12 months.

INTEREST RATE RISK

We are exposed to interest rate volatility with regard to future issuances of fixed-rate debt, and existing and future issuances of floating-rate debt. Primary exposures include U.S. Treasury rates, LIBOR, Euribor, and commercial paper rates in the United States and Europe. We use interest rate swaps, forward-starting interest rate swaps, and treasury locks to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, and to achieve a desired proportion of fixed rate versus floating-rate debt, based on current and projected market conditions. Generally under these swaps, we agree with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed upon notional principal amount.

Floating Interest Rate Exposures — Floating-to-fixed interest rate swaps are accounted for as cash flow hedges, as are all hedges of forecasted issuances of debt. Effectiveness is assessed based on either the perfectly effective hypothetical derivative method or changes in the present value of interest payments on the underlying debt. Effective gains and losses deferred to AOCI are reclassified into earnings over the life of the associated debt.

Fixed Interest Rate Exposures — Fixed-to-floating interest rate swaps are accounted for as fair value hedges with effectiveness assessed based on changes in the fair value of the underlying debt and derivatives, using incremental borrowing rates currently available on loans with similar terms and maturities.

In advance of planned debt financing, we entered into $750.0 million notional amount of treasury locks due April 2, 2020 with an average fixed rate of 0.67 percent. All of these treasury locks were cash settled for $1.4 million during the fourth quarter of fiscal 2020, concurrent with the issuance of our $750.0 million 10-year fixed rate notes.

In advance of planned debt financing, in the fourth quarter of fiscal 2020, we entered into $300.0 million notional amount of treasury locks due January 13, 2022 with an average fixed rate of 0.85 percent.

During the third quarter of fiscal 2020, we entered into a €600.0 million notional amount interest rate swap to convert our €600.0 million fixed rate notes due January 15, 2026, to a floating rate.

During the second quarter of fiscal 2020, we entered into a $500.0 million notional amount interest rate swap to convert a portion of our $850.0 million floating-rate notes due April 16, 2021, to a fixed rate.

As of May 30, 2021, the pre-tax amount of cash-settled interest rate hedge gain or loss remaining in AOCI, which will be reclassified to earnings over the remaining term of the related underlying debt, follows:

In Millions		Gain/(Loss)
3.15% notes due December 15, 2021	$	**(**5.3)
2.6% notes due October 12, 2022		1.0
1.0% notes due April 27, 2023		**(**0.5)
3.7% notes due October 17, 2023		**(**0.8)
3.65% notes due February 15, 2024		4.9
4.0% notes due April 17, 2025		**(**2.3)
3.2% notes due February 10, 2027		9.7
1.5% notes due April 27, 2027		**(**1.9)
4.2% notes due April 17, 2028		**(**7.0)
4.55% notes due April 17, 2038		**(**9.2)
5.4% notes due June 15, 2040		**(**10.6)
4.15% notes due February 15, 2043		8.5
4.7% notes due April 17, 2048		**(**12.8)
Net pre-tax hedge loss in AOCI	$	**(**26.3)

The following table summarizes the notional amounts and weighted-average interest rates of our interest rate derivatives. Average floating rates are based on rates as of the end of the reporting period.

In Millions		May 30, 2021				May 31, 2020
Pay-floating swaps - notional amount	$	731.5			$	666.1
Average receive rate		0.4	%			0.4	%
Average pay rate		0.1	%			0.3	%
Pay-fixed swaps - notional amount	$	-			$	500.0
Average receive rate		-	%			1.7	%
Average pay rate		-	%			2.1	%

The floating rate swap contracts outstanding as of May 30, 2021, mature in fiscal 2026.

FOREIGN EXCHANGE RISK

Foreign currency fluctuations affect our net investments in foreign subsidiaries and foreign currency cash flows related to third party purchases, intercompany loans, product shipments, and foreign-denominated debt. We are also exposed to the translation of foreign currency earnings to the U.S. dollar. Our principal exposures are to the Australian dollar, Brazilian real, British pound sterling, Canadian dollar, Chinese renminbi, euro, Japanese yen, Mexican peso, and Swiss franc. We primarily use foreign currency forward contracts to selectively hedge our foreign currency cash flow exposures. We also generally swap our foreign-denominated commercial paper borrowings and nonfunctional currency intercompany loans back to U.S. dollars or the functional currency of the entity with foreign exchange exposure. The gains or losses on these derivatives offset the foreign currency revaluation gains or losses recorded in earnings on the associated borrowings. We generally do not hedge more than 18 months in advance.

As of May 30, 2021, the net notional value of foreign exchange derivatives was $1,176.8 million.

We also have net investments in foreign subsidiaries that are denominated in euros. We previously hedged a portion of these net investments by issuing euro-denominated commercial paper and foreign exchange forward contracts. As of May 30, 2021, we hedged a portion of these net investments with €2,510.4 million of euro denominated bonds. As of May 30, 2021, we had deferred net foreign currency transaction losses of $216.6 million in AOCI associated with net investment hedging activity.

EQUITY INSTRUMENTS

Equity price movements affect our compensation expense as certain investments made by our employees in our deferred compensation plan are revalued. We use equity swaps to manage this risk. As of May 30, 2021, the net notional amount of our equity swaps was $201.1 million of which $191.2 million of swap contracts mature in fiscal 2022 and $9.9 million of swap contracts mature in fiscal 2023.

FAIR VALUE MEASUREMENTS AND FINANCIAL STATEMENT PRESENTATION

The fair values of our assets, liabilities, and derivative positions recorded at fair value and their respective levels in the fair value hierarchy as of May 30, 2021, and May 31, 2020, were as follows:

	May 30, 2021									May 30, 2021
	Fair Values of Assets									Fair Values of Liabilities
In Millions		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Derivatives designated as hedging instruments:
Interest rate contracts (a) (b)	$	-	$	28.8	$	-	$	28.8		$	-	$	-	$	-	$	-
Foreign exchange contracts (a) (c)		-		2.3		-		2.3			-		**(**36.3)		-		**(**36.3)
Total		-		31.1		-		31.1			-		**(**36.3)		-		**(**36.3)
Derivatives not designated as hedging instruments:
Foreign exchange contracts (a) (c)		-		2.5		-		2.5			-		**(**1.6)		-		**(**1.6)
Commodity contracts (a) (d)		11.1		20.5		-		31.6			**(**0.8)		**(**0.5)		-		**(**1.3)
Grain contracts (a) (d)		-		12.0		-		12.0			-		**(**0.9)		-		**(**0.9)
Total		11.1		35.0		-		46.1			**(**0.8)		**(**3.0)		-		**(**3.8)
Other assets and liabilities reported at fair value:
Marketable investments (a) (e)		365.6		76.9		-		442.5			-		-		-		-
Total		365.6		76.9		-		442.5			-		-		-		-
Total assets, liabilities, and derivative positions recorded at fair value	$	376.7	$	143.0	$	-	$	519.7		$	**(**0.8)	$	**(**39.3)	$	-	$	**(**40.1)

(a)These contracts and investments are recorded as prepaid expenses and other current assets, other assets, other current liabilities or other liabilities, as appropriate, based on whether in a gain or loss position. Certain marketable investments are recorded as cash and cash equivalents.

(b)Based on LIBOR and swap rates. As of May 30, 2021, the carrying amount of hedged debt designated as the hedged item in a fair value hedge was $736.9 million and was classified on the Consolidated Balance Sheet within long-term debt. As of May 30, 2021, the cumulative amount of fair value hedging basis adjustments was $5.4 million.

(c)Based on observable market transactions of spot currency rates and forward currency prices.

(d)Based on prices of futures exchanges and recently reported transactions in the marketplace.

(e)Based on prices of common stock, mutual fund net asset values, and bond matrix pricing.

	May 31, 2020									May 31, 2020
	Fair Values of Assets									Fair Values of Liabilities
In Millions		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Derivatives designated as hedging instruments:
Interest rate contracts (a) (b)	$	-	$	5.6	$	-	$	5.6		$	-	$	(7.8)	$	-	$	(7.8)
Foreign exchange contracts (a) (c)		-		19.8		-		19.8			-		(3.8)		-		(3.8)
Total		-		25.4		-		25.4			-		(11.6)		-		(11.6)
Derivatives not designated as hedging instruments:
Foreign exchange contracts (a) (c)		-		18.8		-		18.8			-		(0.2)		-		(0.2)
Commodity contracts (a) (d)		4.6		1.6		-		6.2			(3.4)		(26.7)		-		(30.1)
Grain contracts (a) (d)		-		5.0		-		5.0			-		(1.2)		-		(1.2)
Total		4.6		25.4		-		30.0			(3.4)		(28.1)		-		(31.5)
Other assets and liabilities reported at fair value:
Marketable investments (a) (e)		4.9		56.7		-		61.6			-		-		-		-
Total		4.9		56.7		-		61.6			-		-		-		-
Total assets, liabilities, and derivative positions recorded at fair value	$	9.5	$	107.5	$	-	$	117.0		$	(3.4)	$	(39.7)	$	-	$	(43.1)

(a)These contracts and investments are recorded as prepaid expenses and other current assets, other assets, other current liabilities or other liabilities, as appropriate, based on whether in a gain or loss position. Certain marketable investments are recorded as cash and cash equivalents.

(b)Based on LIBOR and swap rates. As of May 31, 2020, the carrying amount of hedged debt designated as the hedged item in a fair value hedge was $670.9 million and was classified on the Consolidated Balance Sheet within long-term debt. As of May 31, 2020, the cumulative amount of fair value hedging basis adjustments was $4.8 million.

(c)Based on observable market transactions of spot currency rates and forward currency prices.

(d)Based on prices of futures exchanges and recently reported transactions in the marketplace.

(e)Based on prices of common stock and bond matrix pricing.

We did not significantly change our valuation techniques from prior periods.

Information related to our cash flow hedges, fair value hedges, and other derivatives not designated as hedging instruments for the fiscal years ended May 30, 2021, and May 31, 2020, follows:

		Interest Rate Contracts				Foreign Exchange Contracts				Equity Contracts				Commodity Contracts				Total
		Fiscal Year				Fiscal Year				Fiscal Year				Fiscal Year				Fiscal Year
In Millions		2021		2020		2021		2020		2021		2020		2021		2020		2021		2020
Derivatives in Cash Flow Hedging Relationships:
Amount of gain (loss) recognized in other comprehensive income (OCI)	$	31.2	$	(6.9)	$	**(**58.7)	$	11.3	$	-	$	-	$	-	$	-	$	**(**27.5)	$	4.4
Amount of net (loss) gain reclassified from AOCI into earnings (a)		**(**9.4)		(9.5)		**(**9.8)		4.6		-		-		-		-		**(**19.2)		(4.9)
Derivatives in Fair Value Hedging Relationships:
Amount of net loss recognized in earnings (b)		**(**0.3)		(4.9)		-		-		-		-		-		-		**(**0.3)		(4.9)
Derivatives Not Designated as Hedging Instruments:
Amount of net (loss) gain recognized in earnings (c)		-		(1.4)		4.2		15.7		47.7		8.6		134.6		(55.6)		186.5		(32.7)

(a)(Loss) gain reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts. For the fiscal year ended May 30, 2021, the amount of loss reclassified from AOCI into cost of sales was $9.3 million and the amount of loss reclassified from AOCI into SG&A was $0.5 million. For the fiscal year ended May 31, 2020, the amount of gain reclassified from AOCI into cost of sales was $5.1 million and the amount of loss reclassified from AOCI into SG&A was $0.5 million.

(b)Loss recognized in earnings is reported in interest, net for interest rate contracts, in cost of sales for commodity contracts, and in SG&A expenses for equity contracts and foreign exchange contracts

(c)Gain (loss) recognized in earnings is related to the ineffective portion of the hedging relationship, reported in SG&A expenses for foreign exchange contracts and interest, net for interest rate contracts. No amounts were reported as a result of being excluded from the assessment of hedge effectiveness.

The following tables reconcile the net fair values of assets and liabilities subject to offsetting arrangements that are recorded in our Consolidated Balance Sheets to the net fair values that could be reported in our Consolidated Balance Sheets:

		May 30, 2021
		Assets													Liabilities
								Gross Amounts Not Offset in the Balance Sheet (e)													Gross Amounts Not Offset in the Balance Sheet (e)
In Millions	Gross Amounts of Recognized Assets		Gross Liabilities Offset in the Balance Sheet (a)		Net Amounts of Assets (b)		Financial Instruments		Cash Collateral Received		Net Amount (c)			Gross Amounts of Recognized Liabilities		Gross Assets Offset in the Balance Sheet (a)		Net Amounts of Liabilities (b)		Financial Instruments		Cash Collateral Pledged		Net Amount (d)
Commodity contracts	$	31.6	$	-	$	31.6	$	**(**1.3)	$	**(**9.1)	$	21.2		$	**(**1.3)	$	-	$	**(**1.3)	$	1.3	$	-	$	-
Interest rate contracts		29.8		-		29.8		-		-		29.8			-		-		-		-		-		-
Foreign exchange contracts		4.8		-		4.8		**(**4.1)		-		0.7			**(**37.9)		-		**(**37.9)		4.1		-		**(**33.8)
Equity contracts		2.2		-		2.2		-		-		2.2			-		-		-		-		-		-
Total	$	68.4	$	-	$	68.4	$	**(**5.4)	$	**(**9.1)	$	53.9		$	**(**39.2)	$	-	$	**(**39.2)	$	5.4	$	-	$	**(**33.8)

		May 31, 2020
		Assets													Liabilities
								Gross Amounts Not Offset in the Balance Sheet (e)													Gross Amounts Not Offset in the Balance Sheet (e)
In Millions		Gross Amounts of Recognized Assets		Gross Liabilities Offset in the Balance Sheet (a)		Net Amounts of Assets (b)		Financial Instruments		Cash Collateral Received		Net Amount (c)			Gross Amounts of Recognized Liabilities		Gross Assets Offset in the Balance Sheet (a)		Net Amounts of Liabilities (b)		Financial Instruments		Cash Collateral Pledged		Net Amount (d)
Commodity contracts	$	6.2	$	-	$	6.2	$	(4.2)	$	-	$	2.0		$	(30.1)	$	-	$	(30.1)	$	4.2	$	15.9	$	(10.0)
Interest rate contracts		6.0		-		6.0		(0.8)		-		5.2			(8.0)		-		(8.0)		0.8		-		(7.2)
Foreign exchange contracts		38.6		-		38.6		(3.7)		-		34.9			(4.0)		-		(4.0)		3.7		-		(0.3)
Equity contracts		8.6		-		8.6		-		-		8.6			-		-		-		-		-		-
Total	$	59.4	$	-	$	59.4	$	(8.7)	$	-	$	50.7		$	(42.1)	$	-	$	(42.1)	$	8.7	$	15.9	$	(17.5)

(a)Includes related collateral offset in our Consolidated Balance Sheets.

(b)Net fair value as recorded in our Consolidated Balance Sheets.

(c)Fair value of assets that could be reported net in our Consolidated Balance Sheets.

(d)Fair value of liabilities that could be reported net in our Consolidated Balance Sheets.

(e)Fair value of assets and liabilities reported on a gross basis in our Consolidated Balance Sheets.

AMOUNTS RECORDED IN ACCUMULATED OTHER COMPREHENSIVE LOSS

As of May 30, 2021, the after-tax amounts of unrealized gains and losses in AOCI related to hedge derivatives follows:

In Millions		After-Tax Gain/(Loss)
Unrealized gains from interest rate cash flow hedges	$	0.4
Unrealized losses from foreign currency cash flow hedges		**(**18.9)
After-tax loss in AOCI related to hedge derivatives	$	**(**18.5)

The net amount of pre-tax gains and losses in AOCI as of May 30, 2021, that we expect to be reclassified into net earnings within the next 12 months is a $12.5 million net loss.

CREDIT-RISK-RELATED CONTINGENT FEATURES

Certain of our derivative instruments contain provisions that require us to maintain an investment grade credit rating on our debt from each of the major credit rating agencies. If our debt were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position on May 30, 2021, was $11.0 million. We have posted no collateral under these contracts. If the credit-risk-related contingent features underlying these agreements had been triggered on May 30, 2021, we would have been required to post $11.0 million of collateral to counterparties.

CONCENTRATIONS OF CREDIT AND COUNTERPARTY CREDIT RISK

During fiscal 2021, customer concentration was as follows:

Percent of total	Consolidated		North America Retail		Convenience Stores & Foodservice		Europe & Australia		Asia & Latin America		Pet
Walmart (a):
Net sales	20	%	29	%	7	%	-	%	5	%	13	%
Accounts receivable			28	%	6	%	-	%	5	%	14	%
Five largest customers:
Net sales			53	%	42	%	32	%	11	%	71	%
(a) Includes Walmart Inc. and its affiliates.

No customer other than Walmart accounted for 10 percent or more of our consolidated net sales.

We enter into interest rate, foreign exchange, and certain commodity and equity derivatives, primarily with a diversified group of highly rated counterparties. We continually monitor our positions and the credit ratings of the counterparties involved and, by policy, limit the amount of credit exposure to any one party. These transactions may expose us to potential losses due to the risk of nonperformance by these counterparties; however, we have not incurred a material loss. We also enter into commodity futures transactions through various regulated exchanges.

The amount of loss due to the credit risk of the counterparties, should the counterparties fail to perform according to the terms of the contracts, is $55.8 million, against which we hold $9.1 million of collateral. Under the terms of our swap agreements, some of our transactions require collateral or other security to support financial instruments subject to threshold levels of exposure and counterparty credit risk. Collateral assets are either cash or U.S. Treasury instruments and are held in a trust account that we may access if the counterparty defaults.

We offer certain suppliers access to third-party services that allow them to view our scheduled payments online. The third-party services also allow suppliers to finance advances on our scheduled payments at the sole discretion of the supplier and the third party. We have no economic interest in these financing arrangements and no direct relationship with the suppliers, the third parties, or any financial institutions concerning this service. All of our accounts payable remain as obligations to our suppliers as stated in our supplier agreements. As of May 30, 2021, $1,411.3 million of our accounts payable was payable to suppliers who utilize these third-party services. As of May 31, 2020, $1,328.9 million of our accounts payable was payable to suppliers who utilize these third-party services.

NOTE 9. DEBT

NOTES PAYABLE

The components of notes payable and their respective weighted-average interest rates at the end of the periods were as follows:

		May 30, 2021						May 31, 2020
In Millions		Notes Payable		Weighted- Average Interest Rate				Notes Payable		Weighted- Average Interest Rate
U.S. commercial paper	$	-		-	%		$	99.9		3.6	%
Financial institutions		361.3		3.4	%			179.1		5.1	%
Total	$	361.3		3.4	%		$	279.0		4.6	%

To ensure availability of funds, we maintain bank credit lines and have commercial paper programs available to us in the United States and Europe. We also have uncommitted and asset-backed credit lines that support our foreign operations.

The following table details the fee-paid committed and uncommitted credit lines we had available as of May 30, 2021:

In Billions		Facility Amount			Borrowed Amount
Credit facility expiring:
April 2026	$	2.7		$	-
September 2022		0.2			-
Total committed credit facilities		2.9			-
Uncommitted credit facilities		0.6			0.4
Total committed and uncommitted credit facilities	$	3.5		$	0.4

In the fourth quarter of fiscal 2021, we entered into a $2.7 billion fee-paid committed credit facility that is scheduled to expire in April 2026. Concurrent with the execution of this credit facility, we terminated our existing $2.7 billion credit facility.

The credit facilities contain covenants, including a requirement to maintain a fixed charge coverage ratio of at least 2.5 times. We were in compliance with all credit facility covenants as of May 30, 2021.

LONG-TERM DEBT

In the fourth quarter of fiscal 2021, we repaid $600.0 million of 3.2 percent fixed-rate notes and $850.0 million of floating-rate notes with cash on hand.

In the third quarter of fiscal 2021, we completed an offer to exchange certain series of outstanding notes for a combination of newly issued notes and cash. Holders exchanged $603.9 million of notes previously issued with rates between 4.15 percent and 5.4 percent for $605.2 million of newly issued 3.0 percent fixed-rate notes due February 1, 2051 and $201.4 million of cash, representing a participation incentive.

In the second quarter of fiscal 2021, we issued €500.0 million principal amount of 0.0 percent fixed-rate notes due November 16, 2021. We used the net proceeds to repay €200.0 million of 0.0 percent fixed-rate notes and for general corporate purposes.

In the first quarter of fiscal 2021, we issued €500.0 million principal amount of 0.0 percent fixed-rate notes due August 21, 2021. We used the net proceeds, together with cash on hand, to repay €500.0 million of 2.1 percent fixed-rate notes.

Subsequent to the end of fiscal 2021, we repaid €200.0 million of 2.2 percent fixed-rate notes due June 24, 2021 using proceeds from the issuance of €50.0 million of 2.2 percent fixed-rate notes due November 29, 2021 and borrowings under a committed credit facility.

In the fourth quarter of fiscal 2020, we issued $750.0 million of 2.875 percent fixed-rate notes due April 15, 2030. We used the net proceeds to repay a portion of our outstanding commercial paper and for general corporate purposes.

In the third quarter of fiscal 2020, we issued €600.0 million of 0.45 percent fixed-rate notes due January 15, 2026 and €200.0 million of 0.0 percent fixed-rate notes due November 16, 2020. We used the net proceeds, together with cash on hand, to repay €500.0 million of floating-rate notes and €300.0 million of 0.0 percent fixed-rate notes.

In the second quarter of fiscal 2020, we repaid $500.0 million of 2.2 percent fixed-rate notes with proceeds from commercial paper.

A summary of our long-term debt is as follows:

In Millions		May 30, 2021		May 31, 2020
4.2% notes due April 17, 2028	$	1,400.0	$	1,400.0
3.15% notes due December 15, 2021		1,000.0		1,000.0
3.7% notes due October 17, 2023		850.0		850.0
Floating-rate notes due April 16, 2021		-		850.0
4.0% notes due April 17, 2025		800.0		800.0
3.2% notes due February 10, 2027		750.0		750.0
2.875% notes due April 15, 2030		750.0		750.0
Euro-denominated 0.45% notes due January 15, 2026		731.5		666.1
4.7% notes due April 17, 2048		446.2		650.0
3.2% notes due April 16, 2021		-		600.0
Euro-denominated 2.1% notes due November 16, 2020		-		555.1
Euro-denominated 1.0% notes due April 27, 2023		609.6		555.1
4.55% notes due April 17, 2038		282.4		500.0
2.6% notes due October 12, 2022		500.0		500.0
5.4% notes due June 15, 2040		382.5		500.0
4.15% notes due February 15, 2043		434.9		500.0
3.65% notes due February 15, 2024		500.0		500.0
Euro-denominated 1.5% notes due April 27, 2027		487.7		444.0
Floating-rate notes due October 17, 2023		400.0		400.0
Euro-denominated 2.2% notes due June 24, 2021		243.9		222.0
Euro-denominated 0.0% notes due November 16, 2020		-		222.0
Medium-term notes, 0.56% to 6.41%, due fiscal 2023 or later		104.0		104.2
Euro-denominated 0.0% notes due August 21, 2021		609.6		-
Euro-denominated 0.0% notes due November 16, 2021		609.6		-
3.0% notes due February 1, 2051		605.2		-
Other, including debt issuance costs, debt exchange participation premium, and finance leases		**(**246.4)		(58.0)
		12,250.7		13,260.5
Less amount due within one year		**(**2,463.8)		(2,331.5)
Total long-term debt	$	9,786.9	$	10,929.0

Principal payments due on long-term debt and finance leases in the next five fiscal years based on stated contractual maturities, our intent to redeem, or put rights of certain note holders are as follows:

In Millions
Fiscal 2022	$	2,463.8
Fiscal 2023		1,210.3
Fiscal 2024		1,754.4
Fiscal 2025		800.0
Fiscal 2026		731.5

Certain of our long-term debt agreements contain restrictive covenants. As of May 30, 2021, we were in compliance with all of these covenants.

As of May 30, 2021, the $26.3 million pre-tax loss recorded in AOCI associated with our previously designated interest rate swaps will be reclassified to net interest over the remaining lives of the hedged transactions. The amount expected to be reclassified from AOCI to net interest in fiscal 2022 is a $4.8 million pre-tax loss.

NOTE 10. REDEEMABLE AND NONCONTROLLING INTERESTS

Our principal redeemable and noncontrolling interests relate to our Yoplait SAS, Yoplait Marques SNC, Liberté Marques Sàrl, and General Mills Cereals, LLC (GMC) subsidiaries.

We have a 51 percent controlling interest in Yoplait SAS and a 50 percent interest in Yoplait Marques SNC and Liberté Marques Sàrl. Sodiaal holds the remaining interests in each of the entities. On the acquisition date, we recorded the $904.4 million fair value of Sodiaal’s 49 percent euro-denominated interest in Yoplait SAS as a redeemable interest on our Consolidated Balance Sheets. Sodiaal has the ability to put all or a portion of its redeemable interest to us at fair value once per year, up to three times before December 2024. We adjust the value of the redeemable interest through additional paid-in capital on our Consolidated Balance Sheets quarterly to the redeemable interest’s redemption value, which approximates its fair value. Yoplait SAS pays dividends annually if it meets certain financial metrics set forth in its shareholders’ agreement. As of May 30, 2021, the redemption value of the euro-denominated redeemable interest was $604.9 million.

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

We paid dividends of $40.3 million in fiscal 2021 and $56.9 million in fiscal 2020 to Sodiaal under the terms of the Yoplait SAS, Yoplait Marques SNC, and Liberté Marques Sàrl shareholder agreements.

A subsidiary of Yoplait SAS has entered into an exclusive milk supply agreement for its European operations with Sodiaal at market-determined prices through May 31, 2022. Net purchases totaled $212.1 million for fiscal 2021 and $201.8 million for fiscal 2020.

The holder of the GMC Class A Interests receives quarterly preferred distributions from available net income based on the application of a floating preferred return rate to the holder’s capital account balance established in the most recent mark-to-market valuation (currently $251.5 million). On June 1, 2021, the floating preferred return rate on GMC’s Class A interests was reset to the sum of three-month LIBOR plus 160 basis points. The preferred return rate is adjusted every three years through a negotiated agreement with the Class A Interest holder or through a remarketing auction.

For financial reporting purposes, the assets, liabilities, results of operations, and cash flows of our non-wholly owned consolidated subsidiaries are included in our Consolidated Financial Statements. The third-party investor’s share of the net earnings of these subsidiaries is reflected in net earnings attributable to redeemable and noncontrolling interests in our Consolidated Statements of Earnings.

Our noncontrolling interests contain restrictive covenants. As of May 30, 2021, we were in compliance with all of these covenants.

NOTE 11. STOCKHOLDERS’ EQUITY

Cumulative preference stock of 5.0 million shares, without par value, is authorized but unissued.

On May 6, 2014, our Board of Directors authorized the repurchase of up to 100 million shares of our common stock. Purchases under the authorization can be made in the open market or in privately negotiated transactions, including the use of call options and other derivative instruments, Rule 10b5-1 trading plans, and accelerated repurchase programs. The authorization has no specified termination date.

Share repurchases were as follows:

		Fiscal Year
In Millions		2021		2020		2019
Shares of common stock		5.0		0.1		-
Aggregate purchase price	$	301.4	$	3.4	$	1.1

The following tables provide details of total comprehensive income:

	Fiscal 2021
	General Mills							Noncontrolling Interests		Redeemable Interest
In Millions		Pretax		Tax		Net		Net		Net
Net earnings, including earnings attributable to redeemable and noncontrolling interests					$	2,339.8	$	6.5	$	**(**0.3)
Other comprehensive income (loss):
Foreign currency translation	$	**(**6.1)	$	64.9		58.8		31.5		84.8
Net actuarial gain		464.9		**(**111.5)		353.4		-		-
Other fair value changes:
Hedge derivatives		**(**25.8)		6.5		**(**19.3)		-		**(**1.4)
Reclassification to earnings:
Hedge derivatives (a)		19.1		**(**5.7)		13.4		-		0.1
Amortization of losses and prior service costs (b)		102.5		**(**23.6)		78.9		-		-
Other comprehensive income		554.6		**(**69.4)		485.2		31.5		83.5
Total comprehensive income					$	2,825.0	$	38.0	$	83.2

(a) Loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.

(b) Loss reclassified from AOCI into earnings is reported in benefit plan non-service income. Please refer to Note 2.

	Fiscal 2020
	General Mills							Noncontrolling Interests		Redeemable Interest
In Millions		Pretax		Tax		Net		Net		Net
Net earnings, including earnings attributable to redeemable and noncontrolling interests					$	2,181.2	$	12.9	$	16.7
Other comprehensive income (loss):
Foreign currency translation	$	(149.1)	$	-		(149.1)		(2.6)		(17.4)
Net actuarial loss		(290.2)		65.6		(224.6)		-		-
Other fair value changes:
Hedge derivatives		4.4		(1.2)		3.2		-		-
Reclassification to earnings:
Hedge derivatives (a)		4.3		(0.7)		3.6		-		0.5
Amortization of losses and prior service costs (b)		101.3		(23.4)		77.9		-		-
Other comprehensive loss		(329.3)		40.3		(289.0)		(2.6)		(16.9)
Total comprehensive income (loss)					$	1,892.2	$	10.3	$	(0.2)

(a) Loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.

(b) Loss reclassified from AOCI into earnings is reported in benefit plan non-service income. Please refer to Note 2.

	Fiscal 2019
	General Mills							Noncontrolling Interests		Redeemable Interest
In Millions		Pretax		Tax		Net		Net		Net
Net earnings, including earnings attributable to redeemable and noncontrolling interests					$	1,752.7	$	13.9	$	19.6
Other comprehensive income (loss):
Foreign currency translation	$	(38.3)	$	-		(38.3)		(13.5)		(31.0)
Net actuarial loss		(325.6)		72.2		(253.4)		-		-
Other fair value changes:
Hedge derivatives		15.9		(3.7)		12.2		-		(0.1)
Reclassification to earnings:
Securities (a)		(2.6)		0.6		(2.0)		-		-
Hedge derivatives (b)		0.1		0.4		0.5		-		0.4
Amortization of losses and prior service costs (c)		107.5		(22.9)		84.6		-		-
Other comprehensive (loss)		(243.0)		46.6		(196.4)		(13.5)		(30.7)
Total comprehensive income (loss)					$	1,556.3	$	0.4	$	(11.1)

(a) Gain reclassified from AOCI into earnings is reported in interest, net for securities.

(b) Loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.

(c) Loss reclassified from AOCI into earnings is reported in benefit plan non-service income. Please refer to Note 2.

In fiscal 2021, 2020, and 2019, except for reclassifications to earnings, changes in other comprehensive income (loss) were primarily non-cash items.

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

In Millions		May 30, 2021			May 31, 2020
Foreign currency translation adjustments	$	**(**830.2)		$	(889.0)
Unrealized loss from hedge derivatives		**(**18.5)			(12.6)
Pension, other postretirement, and postemployment benefits:
Net actuarial loss		**(**1,718.4)			(2,022.5)
Prior service credits		137.9			9.7
Accumulated other comprehensive loss	$	**(**2,429.2)		$	(2,914.4)

NOTE 12. STOCK PLANS

We use broad-based stock plans to help ensure that management’s interests are aligned with those of our shareholders. As of May 30, 2021, a total of 23.5 million shares were available for grant in the form of stock options, restricted stock, restricted stock units, and shares of unrestricted stock under the 2017 Stock Compensation Plan (2017 Plan). The 2017 Plan also provides for the issuance of cash-settled share-based units, stock appreciation rights, and performance-based stock awards. Stock-based awards now outstanding include some granted under the 2009 and 2011 stock plans and the 2006, 2011, and 2016 compensation plans for non-employee directors, under which no further awards may be granted. The stock plans provide for potential accelerated vesting of awards upon retirement, termination, or death of eligible employees and directors.

Stock Options

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

	Fiscal Year
	2021				2020				2019
Estimated fair values of stock options granted	$	8.03			$	7.10			$	5.35
Assumptions:
Risk-free interest rate		0.7	%			2.0	%			2.9	%
Expected term		8.5	years			8.5	years			8.5	years
Expected volatility		19.5	%			17.4	%			16.3	%
Dividend yield		3.3	%			3.6	%			4.3	%

We estimate the fair value of each option on the grant date using a Black-Scholes option-pricing model, which requires us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, dividend yield, and the forfeiture rate. We estimate our future stock price volatility using the historical volatility over the expected term of the option, excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility.

Our expected term represents the period of time that options granted are expected to be outstanding based on historical data to estimate option exercises and employee terminations within the valuation model. Separate groups of employees have similar historical exercise behavior and therefore were aggregated into a single pool for valuation purposes. The weighted-average expected term for all employee groups is presented in the table above. The risk-free interest rate for periods during the expected term of the options is based on the U.S. Treasury zero-coupon yield curve in effect at the time of grant.

Any corporate income tax benefit realized upon exercise or vesting of an award in excess of that previously recognized in earnings (referred to as a windfall tax benefit) is presented in our Consolidated Statements of Cash Flows as an operating cash flow. Realized windfall tax benefits and shortfall tax deficiencies related to the exercise or vesting of stock-based awards are recognized in the Consolidated Statement of Earnings. We recognized windfall tax benefits from stock-based payments in income tax expense in our Consolidated Statements of Earnings of $12.4 million in fiscal 2021, $27.3 million in fiscal 2020, and $24.5 million in fiscal 2019.

Options may be priced at 100 percent or more of the fair market value on the date of grant, and generally vest four years after the date of grant. Options generally expire within 10 years and one month after the date of grant.

Information on stock option activity follows:

	Options Outstanding (Thousands)		Weighted-Average Exercise Price Per Share	Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (Millions)
Balance as of May 31, 2020	18,164.6	$	51.21	5.53	$	222.6
Granted	1,366.0		61.65
Exercised	(1,910.6)		39.15
Forfeited or expired	(222.5)		55.80
Outstanding as of May 30, 2021	17,397.5	$	53.29	5.26	$	174.4
Exercisable as of May 30, 2021	9,018.7	$	53.60	3.28	$	91.4

Stock-based compensation expense related to stock option awards was $11.2 million in fiscal 2021, $13.4 million in fiscal 2020, and $14.7 million in fiscal 2019.

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

		Fiscal Year
In Millions		2021		2020		2019
Net cash proceeds	$	74.3	$	263.4	$	241.4
Intrinsic value of options exercised	$	44.8	$	132.9	$	126.7

Restricted Stock, Restricted Stock Units, and Performance Share Units

Stock and units settled in stock subject to a restricted period and a purchase price, if any (as determined by the Compensation Committee of the Board of Directors), may be granted to key employees under the 2017 Plan. Restricted stock and restricted stock units generally vest and become unrestricted four years after the date of grant. Performance share units are earned primarily based on our future achievement of three-year goals for average organic net sales growth and cumulative free cash flow. Performance share units are settled in common stock and are generally subject to a three-year performance and vesting period. The sale or transfer of these awards is restricted during the vesting period. Participants holding restricted stock, but not restricted stock units or performance share units, are entitled to vote on matters submitted to holders of common stock for a vote. These awards accumulate dividends from the date of grant, but participants only receive payment if the awards vest.

Information on restricted stock unit and performance share unit activity follows:

	Equity Classified				Liability Classified
	Share-Settled Units (Thousands)		Weighted-Average Grant-Date Fair Value		Share-Settled Units (Thousands)		Weighted-Average Grant-Date Fair Value
Non-vested as of May 31, 2020	4,925.5	$	53.26		103.3	$	54.75
Granted	1,501.8		61.23		27.2		61.59
Vested	(1,199.3)		60.54		(28.0)		62.88
Forfeited or expired	(155.2)		55.47		(4.9)		55.82
Non-vested as of May 30, 2021	5,072.8	$	53.84		97.6	$	54.26

		Fiscal Year
		2021			2020			2019
Number of units granted (thousands)		1,529.0			1,947.6			1,848.2
Weighted-average price per unit	$	61.24		$	53.28		$	46.14

The total grant-date fair value of restricted stock unit awards that vested was $74.4 million in fiscal 2021 and $59.7 million in fiscal 2020.

As of May 30, 2021, unrecognized compensation expense related to non-vested stock options, restricted stock units, and performance share units was $103.0 million. This expense will be recognized over 19 months, on average.

Stock-based compensation expense related to restricted stock units and performance share units was $78.7 million for fiscal 2021, $81.5 million for fiscal 2020, and $70.2 million for fiscal 2019. Compensation expense related to stock-based payments recognized in our Consolidated Statements of Earnings includes amounts recognized in restructuring, impairment, and other exit costs for fiscal 2019.

NOTE 13. EARNINGS PER SHARE

Basic and diluted EPS were calculated using the following:

	Fiscal Year
In Millions, Except per Share Data		2021			2020			2019
Net earnings attributable to General Mills	$	2,339.8		$	2,181.2		$	1,752.7
Average number of common shares - basic EPS		614.1			608.1			600.4
Incremental share effect from: (a)
Stock options		2.5			2.7			3.1
Restricted stock units and performance share units		2.5			2.5			1.9
Average number of common shares - diluted EPS		619.1			613.3			605.4
Earnings per share — basic	$	3.81		$	3.59		$	2.92
Earnings per share — diluted	$	3.78		$	3.56		$	2.90

(a) Incremental shares from stock options, restricted stock units, and performance share units are computed by the treasury stock method. Stock options, restricted stock units, and performance share units excluded from our computation of diluted EPS because they were not dilutive were as follows:

			Fiscal Year
	In Millions		2021		2020		2019
	Anti-dilutive stock options, restricted stock units, and performance share units		3.4		8.4		14.1

NOTE 14. RETIREMENT BENEFITS AND POSTEMPLOYMENT BENEFITS

Defined Benefit Pension Plans

We have defined benefit pension plans covering many employees in the United States, Canada, Switzerland, France, and the United Kingdom. Benefits for salaried employees are based on length of service and final average compensation. Benefits for hourly employees include various monthly amounts for each year of credited service. Our funding policy is consistent with the requirements of applicable laws. We made no voluntary contributions to our principal U.S. plans in fiscal 2021 or fiscal 2020. We do not expect to be required to make any contributions to our principal U.S. plans in fiscal 2022. Our principal U.S. retirement plan covering salaried employees has a provision that any excess pension assets would be allocated to active participants if the plan is terminated within five years of a change in control. All salaried employees hired on or after June 1, 2013, are eligible for a retirement program that does not include a defined benefit pension plan.

Other Postretirement Benefit Plans

We also sponsor plans that provide health care benefits to many of our retirees in the United States, Canada, and Brazil. The U.S. salaried health care benefit plan is contributory, with retiree contributions based on years of service. We make decisions to fund related trusts for certain employees and retirees on an annual basis. We made no voluntary contributions to these plans in fiscal 2021 or fiscal 2020. We do not expect to be required to make any contributions to these plans in fiscal 2022.

In fiscal 2021, we approved amendments to reorganize certain U.S. retiree health and welfare benefit plans. The General Mills Retiree Health Plan for Union Employees was divided into two plans, with participants under age 65 remaining within its coverage, and participants age 65 and over covered by The General Mills Retiree Health Plan for Union Employees (65+). The General Mills Retiree Health Plan for Union Employees (65+) will allow certain participants to purchase individual health insurance policies on a private health care exchange effective January 1, 2022. Additionally, the Employees’ Benefit Plan of General Mills was merged into the General Mills Retiree Health Plan for Union Employees. Separate benefit structures and plan provisions continue to apply to eligible participants of these merged plans. A portion of the General Mills Retiree Health Plan for Union Employees overfunded plan assets were segregated to offset the cost of the Employees’ Benefit Plan of General Mills health and welfare benefits. The segregation of assets is reported as a negative employer contribution in the change in other postretirement benefit plan assets. The amendments facilitate targeted investment strategies that reflect each plan’s unique liability characteristics.

In fiscal 2021, we announced changes to the design of our health care coverage for certain eligible retirees to allow participants to purchase individual health insurance policies on a private health care exchange effective January 1, 2022. These changes will provide certain eligible retirees with greater flexibility in choosing health care coverage that best fits their needs.

Health Care Cost Trend Rates

Assumed health care cost trends are as follows:

	Fiscal Year
	2021			2020
Health care cost trend rate for next year	6.0% and 6.3%			6.2% and 6.5%
Rate to which the cost trend rate is assumed to decline (ultimate rate)	4.5	%		4.5	%
Year that the rate reaches the ultimate trend rate	2029			2029

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 6.3 percent for retirees age 65 and over and 6.0 percent for retirees under age 65 at the end of fiscal 2021. Rates are graded down annually until the ultimate trend rate of 4.5 percent is reached in 2029 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.

Postemployment Benefit Plans

Under certain circumstances, we also provide accruable benefits, primarily severance, to former or inactive employees in the United States, Canada, and Mexico. We recognize an obligation for any of these benefits that vest or accumulate with service. Postemployment benefits that do not vest or accumulate with service (such as severance based solely on annual pay rather than years of service) are charged to expense when incurred. Our postemployment benefit plans are unfunded.

Summarized financial information about defined benefit pension, other postretirement benefit, and postemployment benefit plans is presented below:

		Defined Benefit Pension Plans						Other Postretirement Benefit Plans						Postemployment Benefit Plans
		Fiscal Year						Fiscal Year						Fiscal Year
In Millions		2021			2020			2021			2020			2021			2020
Change in Plan Assets:
Fair value at beginning of year	$	6,993.2		$	6,291.6		$	793.5		$	753.8
Actual return on assets		716.3			983.7			108.1			65.0
Employer contributions		33.8			32.9			**(**359.9)			0.1
Plan participant contributions		4.1			6.7			13.0			13.8
Benefits payments		**(**315.1)			(317.2)			**(**35.3)			(39.2)
Foreign currency		27.9			(4.5)			-			-
Fair value at end of year (a)	$	7,460.2		$	6,993.2		$	519.4		$	793.5
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year	$	7,640.2		$	6,750.7		$	773.7		$	824.1		$	150.3		$	128.0
Service cost		104.4			92.7			8.5			9.4			9.3			8.3
Interest cost		192.1			230.5			18.0			27.1			1.7			2.6
Plan amendment		1.1			1.2			**(**138.7)			-			-			-
Curtailment/other		**(**5.8)			(1.2)			-			-			5.1			-
Plan participant contributions		4.1			6.7			13.0			13.8			-			-
Medicare Part D reimbursements		-			-			2.5			2.7			-			-
Actuarial loss (gain)		67.4			881.8			**(**15.8)			(38.3)			7.2			17.7
Benefits payments		**(**315.7)			(317.7)			**(**61.9)			(63.5)			**(**22.5)			(6.2)
Foreign currency		26.6			(4.5)			0.7			(1.6)			0.6			(0.1)
Projected benefit obligation at end of year (a)	$	7,714.4		$	7,640.2		$	600.0		$	773.7		$	151.7		$	150.3
Plan assets less than benefit obligation as of fiscal year end	$	**(**254.2)		$	(647.0)		$	**(**80.6)		$	19.8		$	**(**151.7)		$	(150.3)

(a)Plan assets and obligations are measured as of May 31, 2021 and May 31, 2020.

During fiscal 2021, the increase in defined benefit pension benefit obligations was primarily driven by actuarial losses due to a decrease in the discount rate. The decrease in other postretirement obligations was primarily driven by the reorganization of certain U.S. retiree health and welfare benefit plans.

During fiscal 2020, the increase in defined benefit pension benefit obligations was primarily driven by actuarial losses due to a decrease in the discount rate and an update in mortality rates. The decrease in other postretirement obligations was primarily driven by a decrease in expected future claims, partially offset by losses due to a decrease in the discount rate.

As of May 30, 2021, other postretirement benefit plans had benefit obligations of $412.4 million that exceeded plan assets of $310.1 million. As of May 31, 2020, other postretirement benefit plans had benefit obligations of $479.4 million that exceeded plan assets of $248.0 million. Postemployment benefit plans are not funded and had benefit obligations of $151.7 million and $150.3 million as of May 30, 2021 and May 31, 2020, respectively.

The accumulated benefit obligation for all defined benefit pension plans was $7,402.1 million as of May 30, 2021, and $7,285.2 million as of May 31, 2020.

Amounts recognized in AOCI as of May 30, 2021 and May 31, 2020, are as follows:

	Defined Benefit Pension Plans						Other Postretirement Benefit Plans						Postemployment Benefit Plans						Total
	Fiscal Year						Fiscal Year						Fiscal Year						Fiscal Year
In Millions		2021			2020			2021			2020			2021			2020			2021			2020
Net actuarial (loss) gain	$	**(**1,897.2)		$	(2,136.6)		$	200.8		$	129.5		$	**(**22.0)		$	(15.4)		$	**(**1,718.4)		$	(2,022.5)
Prior service (costs) credits		5.8			(6.0)			133.7			21.0			**(**1.6)			(5.3)			137.9			9.7
Amounts recorded in accumulated other comprehensive loss	$	**(**1,891.4)		$	(2,142.6)		$	334.5		$	150.5		$	**(**23.6)		$	(20.7)		$	**(**1,580.5)		$	(2,012.8)

Plans with accumulated benefit obligations in excess of plan assets as of May 30, 2021 and May 31, 2020 are as follows:

		Defined Benefit Pension Plans
		Fiscal Year
In Millions		2021			2020
Projected benefit obligation	$	615.3		$	3,512.9
Accumulated benefit obligation		556.2			3,200.1
Plan assets at fair value		26.7			2,569.9

Components of net periodic benefit expense are as follows:

	Defined Benefit Pension Plans							Other Postretirement Benefit Plans							Postemployment Benefit Plans
	Fiscal Year								Fiscal Year							Fiscal Year
In Millions		2021		2020		2019			2021		2020		2019			2021		2020		2019
Service cost	$	104.4	$	92.7	$	94.6		$	8.5	$	9.4	$	9.9		$	9.3	$	8.3	$	7.6
Interest cost		192.1		230.5		248.0			18.0		27.1		33.1			1.7		2.6		3.0
Expected return on plan assets		**(**420.9)		(449.9)		(445.8)			**(**34.7)		(42.1)		(40.4)			-		-		-
Amortization of losses (gains)		108.3		106.0		109.8			**(**5.1)		(2.1)		0.6			2.6		0.4		0.1
Amortization of prior service costs (credits)		1.3		1.6		1.5			**(**5.5)		(5.5)		(5.5)			0.9		0.9		0.7
Other adjustments		-		-		-			-		-		-			8.4		17.7		6.7
Settlement or curtailment losses		14.9		-		0.3			-		-		-			-		-		-
Net expense (income)	$	0.1	$	(19.1)	$	8.4		$	**(**18.8)	$	(13.2)	$	(2.3)		$	22.9	$	29.9	$	18.1

Assumptions

Weighted-average assumptions used to determine fiscal year-end benefit obligations are as follows:

	Defined Benefit Pension Plans					Other Postretirement Benefit Plans					Postemployment Benefit Plans
	Fiscal Year					Fiscal Year					Fiscal Year
	2021		2020			2021		2020			2021		2020
Discount rate	3.17	%	3.20	%		3.03	%	3.02	%		2.04	%	1.85	%
Rate of salary increases	4.39		4.44			-		-			4.46		4.51

Weighted-average assumptions used to determine fiscal year net periodic benefit expense are as follows:

	Defined Benefit Pension Plans							Other Postretirement Benefit Plans							Postemployment Benefit Plans
	Fiscal Year							Fiscal Year							Fiscal Year
	2021		2020		2019			2021		2020		2019			2021		2020		2019
Discount rate	3.20	%	3.91	%	4.20	%		3.02	%	3.79	%	4.17	%		1.86	%	3.10	%	3.60	%
Service cost effective rate	3.58		4.19		4.34			3.40		4.04		4.27			3.51		3.51		3.99
Interest cost effective rate	2.55		3.47		3.92			2.29		3.28		3.80			2.83		2.84		3.37
Rate of salary increases	4.44		4.17		4.27			-		-		-			4.47		4.47		4.44
Expected long-term rate of return on plan assets	5.72		6.95		7.25			4.57		5.67		5.67			-		-		-

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 also use discount rates as of May 31 to determine defined benefit pension, other postretirement benefit, and postemployment benefit plan income and expense for the following fiscal year. 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.

Fair Value of Plan Assets

The fair values of our pension and postretirement benefit plans’ assets and their respective levels in the fair value hierarchy by asset category were as follows:

	May 31, 2021									May 31, 2020
In Millions		Level 1		Level 2		Level 3		Total Assets			Level 1		Level 2		Level 3		Total Assets
Fair value measurement of pension plan assets:
Equity (a)	$	838.3	$	697.2	$	-	$	1,535.5		$	1,039.6	$	777.7	$	-	$	1,817.3
Fixed income (b)		1,993.5		1,936.3		-		3,929.8			1,833.3		1,667.4		-		3,500.7
Real asset investments (c)		277.9		0.2		-		278.1			223.4		0.1		-		223.5
Other investments (d)		-		-		0.1		0.1			-		-		0.2		0.2
Cash and accruals		180.0		-		-		180.0			180.3		-		-		180.3
Fair value measurement of pension plan assets	$	3,289.7	$	2,633.7	$	0.1	$	5,923.5		$	3,276.6	$	2,445.2	$	0.2	$	5,722.0
Assets measured at net asset value (e)								1,536.7									1,271.2
Total pension plan assets							$	7,460.2								$	6,993.2
Fair value measurement of postretirement benefit plan assets:
Equity (a)	$	0.2	$	-	$	-	$	0.2		$	-	$	46.9	$	-	$	46.9
Fixed income (b)		117.3		-		-		117.3			157.5		268.4		-		425.9
Real asset investments (c)		-		-		-		-			0.1		-		-		0.1
Cash and accruals		14.8		-		-		14.8			16.7		-		-		16.7
Fair value measurement of postretirement benefit plan assets	$	132.3	$	-	$	-	$	132.3		$	174.3	$	315.3	$	-	$	489.6
Assets measured at net asset value (e)								387.1									303.9
Total postretirement benefit plan assets							$	519.4								$	793.5

(a)Primarily publicly traded common stock for purposes of total return and to maintain equity exposure consistent with policy allocations. Investments include: United States and international equity securities, mutual funds, and equity futures valued at closing prices from national exchanges, and commingled funds valued at unit values provided by the investment managers, which are based on the fair value of the underlying investments.

(b)Primarily government and corporate debt securities and futures for purposes of total return, managing fixed income exposure to policy allocations, and duration targets. Investments include: fixed income securities and bond futures generally valued at closing prices from national exchanges, fixed income pricing models, and independent financial analysts; and fixed income commingled funds valued at unit values provided by the investment managers, which are based on the fair value of the underlying investments.

(c)Publicly traded common stocks in energy, real estate, and infrastructure for the purpose of total return. Investments include: energy, real estate, and infrastructure securities generally valued at closing prices from national exchanges, and commingled funds valued at unit values provided by the investment managers, which are based on the fair value of the underlying investments.

(d)Insurance and annuity contracts to provide a stable stream of income for pension retirees. Fair values are based on the fair value of the underlying investments and contract fair values established by the providers.

(e)Primarily private investments and common collective trusts that are measured at fair value using the net asset value per share (or its equivalent) practical expedient and have not been classified in the fair value hierarchy.

There were no material changes in our level 3 investments in fiscal 2021 and fiscal 2020.

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.

Weighted-average asset allocations for our defined benefit pension and other postretirement benefit plans are as follows:

	Defined Benefit Pension Plans					Other Postretirement Benefit Plans
	Fiscal Year					Fiscal Year
	2021		2020			2021		2020
Asset category:
United States equities	15.4	%	19.7	%		28.0	%	18.1	%
International equities	9.9		11.0			13.9		9.8
Private equities	9.3		6.2			15.1		4.4
Fixed income	54.6		52.8			43.0		64.8
Real assets	10.8		10.3			-		2.9
Total	100.0	%	100.0	%		100.0	%	100.0	%

The investment objective for our defined benefit pension and other postretirement benefit plans is to secure the benefit obligations to participants at a reasonable cost to us. Our goal is to optimize the long-term return on plan assets at a moderate level of risk. The defined benefit pension plan and other postretirement benefit plan portfolios are broadly diversified across asset classes. Within asset classes, the portfolios are further diversified across investment styles and investment organizations. For the U.S. defined benefit pension plans, the long-term investment policy allocation is: 15 percent to equities in the United States; 9 percent to international equities; 8 percent to private equities; 57 percent to fixed income; and 12 percent to real assets (real estate, energy, and infrastructure). For other U.S. postretirement benefit plans, the long-term investment policy allocations are: 28 percent to equities in the United States; 14 percent to international equities; 14 percent to total private equities; and 44 percent to fixed income. The actual allocations to these asset classes may vary tactically around the long-term policy allocations based on relative market valuations.

Contributions and Future Benefit Payments

We do not expect to be required to make contributions to our defined benefit pension, other postretirement benefit, and postemployment benefit plans in fiscal 2022. Actual fiscal 2022 contributions could exceed our current projections, as influenced by our decision to undertake discretionary funding of our benefit trusts and future changes in regulatory requirements. Estimated benefit payments, which reflect expected future service, as appropriate, are expected to be paid from fiscal 2022 to fiscal 2031 as follows:

In Millions	Defined Benefit Pension Plans			Other Postretirement Benefit Plans Gross Payments			Medicare Subsidy Receipts			Postemployment Benefit Plans
Fiscal 2022	$	332.6		$	40.2		$	1.9		$	29.0
Fiscal 2023		339.6			36.6			-			21.0
Fiscal 2024		347.1			36.9			-			19.3
Fiscal 2025		355.7			37.3			-			17.8
Fiscal 2026		364.5			37.7			-			16.5
Fiscal 2027-2031		1,944.0			168.0			-			66.8

Defined Contribution Plans

The General Mills Savings Plan is a defined contribution plan that covers domestic salaried, hourly, nonunion, and certain union employees. This plan is a 401(k) savings plan that includes a number of investment funds, including a Company stock fund and an Employee Stock Ownership Plan (ESOP). We sponsor another money purchase plan for certain domestic hourly employees with net assets of $22.5 million as of May 30, 2021, and $20.6 million as of May 31, 2020. We also sponsor defined contribution plans in many of our foreign locations. Our total recognized expense related to defined contribution plans was $76.1 million in fiscal 2021, $90.1 million in fiscal 2020, and $52.7 million in fiscal 2019.

We match a percentage of employee contributions to the General Mills Savings Plan. The Company match is directed to investment options of the participant’s choosing. The number of shares of our common stock allocated to participants in the ESOP was 4.3 million as of May 30, 2021, and 4.6 million as of May 31, 2020. The ESOP’s only assets are our common stock and temporary cash balances.

The Company stock fund and the ESOP collectively held $433.0 million and $464.8 million of Company common stock as of May 30, 2021, and May 31, 2020, respectively.

NOTE 15. INCOME TAXES

The components of earnings before income taxes and after-tax earnings from joint ventures and the corresponding income taxes thereon are as follows:

		Fiscal Year
In Millions		2021		2020		2019
Earnings before income taxes and after-tax earnings from joint ventures:
United States	$	2,567.1	$	2,402.1	$	1,788.2
Foreign		290.3		198.1		293.8
Total earnings before income taxes and after-tax earnings from joint ventures	$	2,857.4	$	2,600.2	$	2,082.0
Income taxes:
Currently payable:
Federal	$	369.8	$	381.0	$	151.9
State and local		47.5		55.3		35.3
Foreign		93.0		73.8		84.6
Total current		510.3		510.1		271.8
Deferred:
Federal		117.9		67.8		86.7
State and local		13.6		(56.6)		21.6
Foreign		**(**12.7)		(40.8)		(12.3)
Total deferred		118.8		(29.6)		96.0
Total income taxes	$	629.1	$	480.5	$	367.8

The following table reconciles the United States statutory income tax rate with our effective income tax rate:

	Fiscal Year
	2021		2020		2019
United States statutory rate	21.0	%	21.0	%	21.0	%
State and local income taxes, net of federal tax benefits	1.7		2.0		2.5
Foreign rate differences	0.3		(0.8)		-
Provisional net tax benefit	-		-		(0.4)
Stock based compensation	**(**0.4)		(1.1)		(1.2)
Subsidiary reorganization (a)	-		(2.0)		-
Capital loss (b)	-		-		(3.7)
Other, net	**(**0.6)		(0.6)		(0.5)
Effective income tax rate	22.0	%	18.5	%	17.7	%

(a)During fiscal 2020, we recorded a $53.1 million decrease to our deferred income tax liabilities associated with the reorganization of certain wholly owned subsidiaries.

(b)During fiscal 2019, we recorded a discrete benefit related to a capital loss carryback of $72.9 million.

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:

In Millions		May 30, 2021		May 31, 2020
Accrued liabilities	$	58.5	$	61.8
Compensation and employee benefits		198.7		171.4
Unrealized hedges		16.3		-
Pension		61.4		148.2
Tax credit carryforwards		22.7		12.5
Stock, partnership, and miscellaneous investments		46.3		80.2
Capital losses		67.3		65.9
Net operating losses		160.5		146.6
Other		93.4		87.0
Gross deferred tax assets		725.1		773.6
Valuation allowance		229.2		214.2
Net deferred tax assets		495.9		559.4
Brands		1,413.8		1,415.0
Fixed assets		412.7		378.3
Intangible assets		256.2		246.8
Tax lease transactions		18.8		21.5
Inventories		36.2		33.0
Stock, partnership, and miscellaneous investments		364.0		338.1
Unrealized hedges		-		22.4
Other		112.6		51.4
Gross deferred tax liabilities		2,614.3		2,506.5
Net deferred tax liability	$	2,118.4	$	1,947.1

We have established a valuation allowance against certain of the categories of deferred tax assets described above as current evidence does not suggest we will realize sufficient taxable income of the appropriate character (e.g., ordinary income versus capital gain income) within the carryforward period to allow us to realize these deferred tax benefits.

Information about our valuation allowance follows:

In Millions		May 30, 2021
Pillsbury acquisition losses	$	107.9
State and foreign loss carryforwards		29.1
Capital loss carryforwards		67.3
Other		24.9
Total	$	229.2

As of May 30, 2021, we believe it is more-likely-than-not that the remainder of our deferred tax assets are realizable.

Information about our tax loss carryforwards follows:

In Millions		May 30, 2021
Foreign loss carryforwards	$	162.9
State operating loss carryforwards		8.2
Total tax loss carryforwards	$	171.1

Our foreign loss carryforwards expire as follows:

In Millions		May 30, 2021
Expire in fiscal 2022 and 2023	$	2.2
Expire in fiscal 2024 and beyond		20.7
Do not expire		140.0
Total foreign loss carryforwards	$	162.9

On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law. The ARPA includes a provision expanding the limitations on the deductibility of certain executive employee compensation beginning in our fiscal 2028. We do not currently expect the ARPA to have a material impact on our financial results, including our annual estimated effective tax rate, or on our liquidity. We will continue to monitor and assess the impact the ARPA may have on our business and financial results.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. The CARES Act and related notices included several significant provisions, including delaying certain payroll tax payments into fiscal 2022 and fiscal 2023.

As of May 30, 2021, we have not recognized a deferred tax liability for unremitted earnings of approximately $2.3 billion from our foreign operations because we currently believe our subsidiaries have invested the undistributed earnings indefinitely or the earnings will be remitted in a tax-neutral transaction. It is not practicable for us to determine the amount of unrecognized tax expense on these reinvested earnings. Deferred taxes are recorded for earnings of our foreign operations when we determine that such earnings are no longer indefinitely reinvested. All earnings prior to fiscal 2018 remain permanently reinvested. Earnings from fiscal 2018 and later are not permanently reinvested and local country withholding taxes are recorded on earnings each year.

We are subject to federal income taxes in the United States as well as various state, local, and foreign jurisdictions. A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe that our liabilities for income taxes reflect the most likely outcome. We adjust these liabilities, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular position would usually require the use of cash.

The number of years with open tax audits varies depending on the tax jurisdiction. Our major taxing jurisdiction is the United States (federal and state). Various tax examinations by United States state taxing authorities could be conducted for any open tax year, which vary by jurisdiction, but are generally from 3 to 5 years.

The Internal Revenue Service (IRS) is currently auditing our federal tax returns for fiscal 2016, 2018, and 2019. Several state and foreign examinations are currently in progress. We do not expect these examinations to result in a material impact on our results of operations or financial position. We have effectively settled all issues with the IRS for fiscal years 2015 and prior.

During fiscal 2017, the Brazilian tax authority, Secretaria da Receita Federal do Brasil (RFB), concluded audits of our 2012 and 2013 tax return years. These audits included a review of our determinations of amortization of certain goodwill arising from the acquisition of Yoki Alimentos S.A. The RFB has proposed adjustments that effectively eliminate the goodwill amortization benefits related to this transaction. During fiscal 2020, we received proposed adjustments related to the goodwill amortization benefits for our 2014 and 2015 tax return years. We believe we have meritorious defenses and intend to contest the disallowance.

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.

The following table sets forth changes in our total gross unrecognized tax benefit liabilities, excluding accrued interest, for fiscal 2021 and fiscal 2020. Approximately $75.6 million of this total in fiscal 2021 represents the amount that, if recognized, would affect our effective income tax rate in future periods. This amount differs from the gross unrecognized tax benefits presented in the table because certain of the liabilities below would impact deferred taxes if recognized. We also would record a decrease in U.S. federal income taxes upon recognition of the state tax benefits included therein.

	Fiscal Year
In Millions		2021			2020
Balance, beginning of year	$	147.9		$	139.1
Tax positions related to current year:
Additions		20.1			18.7
Tax positions related to prior years:
Additions		6.3			2.3
Reductions		**(**7.2)			(6.0)
Settlements		**(**2.1)			(2.9)
Lapses in statutes of limitations		**(**19.7)			(3.3)
Balance, end of year	$	145.3		$	147.9

As of May 30, 2021, we expect to pay approximately $1.1 million of unrecognized tax benefit liabilities and accrued interest within the next 12 months. We are not able to reasonably estimate the timing of future cash flows beyond 12 months due to uncertainties in the timing of tax audit outcomes. The remaining amount of our unrecognized tax liability was classified in other liabilities.

We report accrued interest and penalties related to unrecognized tax benefit liabilities in income tax expense. For fiscal 2021, we recognized $2.9 million of tax-related net interest and penalties, and had $24.9 million of accrued interest and penalties as of May 30, 2021. For fiscal 2020, we recognized $3.2 million of tax-related net interest and penalties, and had $27.9 million of accrued interest and penalties as of May 31, 2020.

NOTE 16. COMMITMENTS AND CONTINGENCIES

As of May 30, 2021, we have issued guarantees and comfort letters of $146.6 million for the debt and other obligations of non-consolidated affiliates, mainly CPW. Off-balance sheet arrangements were not material as of May 30, 2021.

During the second quarter of fiscal 2020, we received notice from the tax authorities of the State of São Paulo, Brazil regarding our compliance with its state sales tax requirements. As a result, we have been assessed additional state sales taxes, interest, and penalties. We believe that we have meritorious defenses against this claim and will vigorously defend our position. As of May 30, 2021, we are unable to estimate any possible loss and have not recorded a loss contingency for this matter.

NOTE 17. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

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

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

Our Europe & Australia operating segment reflects retail and foodservice businesses in the greater Europe and Australia regions. Our product categories include refrigerated yogurt, meal kits, snack bars, super-premium ice cream, refrigerated and frozen dough products, shelf stable vegetables, and dessert and baking mixes. Revenues from franchise fees are reported in the region or country where the franchisee is located.

Our major product categories in our Convenience Stores & Foodservice operating segment are ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, baking mixes, 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, convenience stores, vending, and supermarket bakeries in the United States.

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

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

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

Our operating segment results were as follows:

	Fiscal Year
In Millions		2021			2020			2019
Net sales:
North America Retail	$	10,995.4		$	10,750.5		$	9,925.2
Europe & Australia		1,981.5			1,838.9			1,886.7
Convenience Stores & Foodservice		1,742.4			1,816.4			1,969.1
Pet		1,732.4			1,694.6			1,430.9
Asia & Latin America		1,675.3			1,526.2			1,653.3
Total	$	18,127.0		$	17,626.6		$	16,865.2
Operating profit:
North America Retail	$	2,623.2		$	2,627.0		$	2,277.2
Europe & Australia		151.0			113.8			123.3
Convenience Stores & Foodservice		306.0			337.2			419.5
Pet		415.0			390.7			268.4
Asia & Latin America		85.6			18.7			72.4
Total segment operating profit	$	3,580.8		$	3,487.4		$	3,160.8
Unallocated corporate items		212.1			509.1			339.8
Divestitures loss		53.5			-			30.0
Restructuring, impairment, and other exit costs		170.4			24.4			275.1
Operating profit	$	3,144.8		$	2,953.9		$	2,515.9

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

		Fiscal Year
In Millions		2021			2020			2019
U.S. Meals & Baking	$	4,611.6		$	4,408.5		$	3,839.8
U.S. Cereal		2,455.2			2,434.1			2,255.4
U.S. Snacks		2,048.3			2,091.9			2,060.9
Canada		953.2			897.0			862.4
U.S. Yogurt and other		927.1			919.0			906.7
Total	$	10,995.4		$	10,750.5		$	9,925.2

Net sales by class of similar products were as follows:

	Fiscal Year
In Millions		2021			2020			2019
Snacks	$	3,574.2		$	3,529.7		$	3,487.4
Convenient meals		3,030.2			2,814.3			2,538.6
Cereal		2,868.9			2,874.1			2,672.8
Yogurt		2,074.8			2,056.6			2,113.1
Dough		1,866.1			1,801.1			1,661.9
Pet		1,732.4			1,694.6			812.7
Baking mixes and ingredients		1,695.5			1,674.2			1,663.7
Super-premium ice cream		819.7			718.1			812.7
Vegetables and other		465.2			463.9			484.1
Total	$	18,127.0		$	17,626.6		$	16,865.2

The following tables provide financial information by geographic area:

	Fiscal Year
In Millions		2021			2020			2019
Net sales:
United States	$	13,496.9		$	13,364.5		$	12,462.8
Non-United States		4,630.1			4,262.1			4,402.4
Total	$	18,127.0		$	17,626.6		$	16,865.2

In Millions		May 30, 2021			May 31, 2020
Cash and cash equivalents:
United States	$	817.9		$	1,112.0
Non-United States		687.3			565.8
Total	$	1,505.2		$	1,677.8

In Millions		May 30, 2021			May 31, 2020
Land, buildings, and equipment:
United States	$	2,714.7		$	2,761.6
Non-United States		892.1			819.0
Total	$	3,606.8		$	3,580.6

NOTE 18. SUPPLEMENTAL INFORMATION

The components of certain Consolidated Balance Sheet accounts are as follows:

In Millions		May 30, 2021			May 31, 2020
Receivables:
Customers	$	1,674.5		$	1,648.3
Less allowance for doubtful accounts		**(**36.0)			(33.2)
Total	$	1,638.5		$	1,615.1

In Millions		May 30, 2021			May 31, 2020
Inventories:
Finished goods	$	1,506.9		$	1,142.6
Raw materials and packaging		411.9			392.2
Grain		111.2			93.6
Excess of FIFO over LIFO cost (a)		**(**209.5)			(202.1)
Total	$	1,820.5		$	1,426.3

(a)Inventories of $1,139.7 million as of May 30, 2021, and $892.6 million as of May 31, 2020, were valued at LIFO. The difference between replacement cost and the stated LIFO inventory value is not materially different from the reserve for the LIFO valuation method.

In Millions		May 30, 2021			May 31, 2020
Prepaid expenses and other current assets:
Marketable investments	$	360.0		$	-
Prepaid expenses		221.7			194.5
Other receivables		139.1			85.2
Derivative receivables		37.5			70.6
Grain contracts		12.0			5.0
Miscellaneous		20.0			46.8
Total	$	790.3		$	402.1

In Millions		May 30, 2021			May 31, 2020
Land, buildings, and equipment:
Equipment	$	6,732.7		$	6,428.0
Buildings		2,542.7			2,412.6
Capitalized software		718.5			668.5
Construction in progress		395.7			373.5
Land		67.4			66.1
Equipment under finance lease		7.8			5.8
Buildings under finance lease		0.3			0.3
Total land, buildings, and equipment		10,465.1			9,954.8
Less accumulated depreciation		**(**6,858.3)			(6,374.2)
Total	$	3,606.8		$	3,580.6

In Millions		May 30, 2021			May 31, 2020
Other assets:
Investments in and advances to joint ventures	$	566.4		$	566.7
Right of use operating lease assets		378.6			365.2
Pension assets		30.0			21.2
Life insurance		18.6			19.5
Miscellaneous		274.0			113.2
Total	$	1,267.6		$	1,085.8

In Millions		May 30, 2021			May 31, 2020
Other current liabilities:
Accrued trade and consumer promotions	$	580.9		$	550.4
Accrued payroll		434.4			430.4
Restructuring and other exit costs reserve		148.8			17.8
Current portion of operating lease liabilities		111.2			102.0
Accrued interest, including interest rate swaps		80.0			92.8
Derivative payable, primarily commodity-related		39.2			39.2
Accrued taxes		37.4			80.3
Dividends payable		24.1			20.7
Grain contracts		0.9			1.2
Miscellaneous		330.3			298.5
Total	$	1,787.2		$	1,633.3

In Millions		May 30, 2021			May 31, 2020
Other noncurrent liabilities:
Accrued compensation and benefits, including obligations for underfunded other postretirement benefit and postemployment benefit plans	$	707.7		$	958.7
Noncurrent portion of operating lease liabilities		283.2			277.0
Accrued taxes		215.6			238.6
Miscellaneous		86.2			70.7
Total	$	1,292.7		$	1,545.0

Certain Consolidated Statements of Earnings amounts are as follows:

		Fiscal Year
In Millions		2021			2020			2019
Depreciation and amortization	$	601.3		$	594.7		$	620.1
Research and development expense		239.3			224.4			221.9
Advertising and media expense (including production and communication costs)		736.3			691.8			601.6

The components of interest, net are as follows:

		Fiscal Year
Expense (Income), in Millions		2021			2020			2019
Interest expense	$	430.9		$	475.1		$	530.2
Capitalized interest		**(**3.2)			(2.6)			(2.8)
Interest income		**(**7.4)			(6.0)			(5.6)
Interest, net	$	420.3		$	466.5		$	521.8

Certain Consolidated Statements of Cash Flows amounts are as follows:

	Fiscal Year
In Millions		2021			2020			2019
Cash interest payments	$	412.5		$	418.5		$	500.1
Cash paid for income taxes		636.1			403.3			440.8

NOTE 19. QUARTERLY DATA (UNAUDITED)

Summarized quarterly data for fiscal 2021 and fiscal 2020 follows:

		First Quarter					Second Quarter					Third Quarter					Fourth Quarter
		Fiscal Year					Fiscal Year					Fiscal Year					Fiscal Year
In Millions, Except Per Share Amounts		2021		2020			2021		2020			2021		2020			2021		2020
Net sales	$	4,364.0	$	4,002.5		$	4,719.4	$	4,420.8		$	4,520.0	$	4,180.3		$	4,523.6	$	5,023.0
Gross margin		1,590.4		1,389.5			1,721.1		1,569.1			1,553.9		1,403.2			1,582.9		1,768.1
Net earnings attributable to General Mills		638.9		520.6			688.4		580.8			595.7		454.1			416.8		625.7
EPS:
Basic	$	1.04	$	0.86		$	1.12	$	0.96		$	0.97	$	0.75		$	0.68	$	1.03
Diluted	$	1.03	$	0.85		$	1.11	$	0.95		$	0.96	$	0.74		$	0.68	$	1.02

In the fourth quarter of fiscal 2021, we approved restructuring actions designed to better align our organizational structure and resources with strategic initiatives and recorded $157.3 million of charges. We recorded a loss on the sale of our Laticínios Carolina business in Brazil of $53.5 million in the fourth quarter of fiscal 2021. In the fourth quarter of fiscal 2021, we recorded $9.5 million of transaction costs related to our non-binding memorandum of understanding to sell our 51 percent controlling interest in our European Yoplait business and our planned acquisition of Tyson Foods’ pet treats business. We also recorded an $8.8 million gain related to indirect taxes in Brazil and an $11.2 million loss related to deferred taxes on amendments to reorganize certain U.S. retiree health and welfare benefit plans.

During the fourth quarter of fiscal 2020, we changed the reporting period of our Pet segment from an April fiscal year end to a May fiscal year end to match our fiscal calendar. Accordingly, our fiscal 2020 fourth quarter results include 4 months of Pet segment results compared to 3 months in the fourth quarter of fiscal 2019. The fourth quarter of fiscal 2020 also included an additional week of results across all other segments. In the fourth quarter of fiscal 2020, we recorded $19.3 million of expense due to a product recall related to our international Green Giant business and $11.5 million of restructuring charges.

Glossary

AOCI. Accumulated other comprehensive income (loss).

Adjusted diluted EPS. Diluted EPS adjusted for certain items affecting year-to-year comparability.

Adjusted EBITDA. The calculation of earnings before income taxes and after-tax earnings from joint ventures, net interest, and depreciation and amortization adjusted for certain items affecting year-to-year comparability.

Adjusted operating profit. Operating profit adjusted for certain items affecting year-to-year comparability.

Adjusted operating profit margin. Operating profit adjusted for certain items affecting year-to-year comparability, divided by net sales.

Constant currency. Financial results translated to United States dollars using constant foreign currency exchange rates based on the rates in effect for the comparable prior-year period**.** To present this information, current period results for entities reporting in currencies other than United States dollars are translated into United States dollars at the average exchange rates in effect during the corresponding period of the prior fiscal year, rather than the actual average exchange rates in effect during the current fiscal year**.** Therefore, the foreign currency impact is equal to current year results in local currencies multiplied by the change in the average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

Core working capital. Accounts receivable plus inventories less accounts payable, all as of the last day of our fiscal year.

COVID-19. Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered coronavirus**.** In March 2020, the World Health Organization declared COVID-19 a global pandemic.

Derivatives. Financial instruments such as futures, swaps, options, and forward contracts that we use to manage our risk arising from changes in commodity prices, interest rates, foreign exchange rates, and equity prices.

Earnings before interest, taxes, depreciation and amortization (EBITDA). The calculation of earnings before income taxes and after-tax earnings from joint ventures, net interest, depreciation and amortization.

Euribor. European Interbank Offered Rate.

Fair value hierarchy. For purposes of fair value measurement, we categorize assets and liabilities into one of three levels based on the assumptions (inputs) used in valuing the asset or liability**.** Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment**.** The three levels are defined as follows:

Level 1:Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2:Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3:Unobservable inputs reflecting management’s assumptions about the inputs used in pricing the asset or liability.

Free cash flow. Net cash provided by operating activities less purchases of land, buildings, and equipment.

Free cash flow conversion rate. Free cash flow divided by our net earnings, including earnings attributable to redeemable and noncontrolling interests adjusted for certain items affecting year-to-year comparability.

GDP. Gross domestic product.

Generally accepted accounting principles (GAAP). Guidelines, procedures, and practices that we are required to use in recording and reporting accounting information in our financial statements.

Goodwill. The difference between the purchase price of acquired companies plus the fair value of any redeemable and noncontrolling interests and the related fair values of net assets acquired.

Gross margin. Net sales less cost of sales.

Hedge accounting. Accounting for qualifying hedges that allows changes in a hedging instrument’s fair value to offset corresponding changes in the hedged item in the same reporting period**.** Hedge accounting is permitted for certain hedging instruments and hedged items only if the hedging relationship is highly effective, and only prospectively from the date a hedging relationship is formally documented.

Holistic Margin Management (HMM). Company-wide initiative to use productivity savings, mix management, and price realization to offset input cost inflation, protect margins, and generate funds to reinvest in sales-generating activities.

Interest bearing instruments. Notes payable, long-term debt, including current portion, cash and cash equivalents, and certain interest bearing investments classified within prepaid expenses and other current assets and other assets.

LIBOR. London Interbank Offered Rate.

Mark-to-market. The act of determining a value for financial instruments, commodity contracts, and related assets or liabilities based on the current market price for that item.

Net debt. Long-term debt, current portion of long-term debt, and notes payable, less cash and cash equivalents.

Net debt-to-adjusted EBITDA ratio. Net debt divided by Adjusted EBITDA.

Net mark-to-market valuation of certain commodity positions. Realized and unrealized gains and losses on derivative contracts that will be allocated to segment operating profit when the exposure we are hedging affects earnings.

Net price realization. The impact of list and promoted price changes, net of trade and other price promotion costs.

Net realizable value. The estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

Noncontrolling interests. Interests of consolidated subsidiaries held by third parties.

Notional principal amount. The principal amount on which fixed-rate or floating-rate interest payments are calculated.

OCI. Other comprehensive income (loss).

Operating cash flow conversion rate. Net cash provided by operating activities, divided by net earnings, including earnings attributable to redeemable and noncontrolling interests.

Operating cash flow to net debt ratio. Net debt divided by cash provided by operating activities.

Organic net sales growth. Net sales growth adjusted for foreign currency translation, as well as acquisitions, divestitures, and a 53rd week impact, when applicable.

Project-related costs. Costs incurred related to our restructuring initiatives not included in restructuring charges.

Redeemable interest. Interest of consolidated subsidiaries held by a third party that can be redeemed outside of our control and therefore cannot be classified as a noncontrolling interest in equity.

Reporting unit. An operating segment or a business one level below an operating segment.

Strategic Revenue Management (SRM). A company-wide capability focused on generating sustainable benefits from net price realization and mix by identifying and executing against specific opportunities to apply tools including pricing, sizing, mix management, and promotion optimization across each of our businesses.

Supply chain input costs. Costs incurred to produce and deliver product, including costs for ingredients and conversion, inventory management, logistics, and warehousing.

Total debt. Notes payable and long-term debt, including current portion.

Translation adjustments. The impact of the conversion of our foreign affiliates’ financial statements to United States dollars for the purpose of consolidating our financial statements.

Variable interest entities (VIEs). A legal structure that is used for business purposes that either (1) does not have equity investors that have voting rights and share in all the entity’s profits and losses or (2) has equity investors that do not provide sufficient financial resources to support the entity’s activities.

Working capital. Current assets and current liabilities, all as of the last day of our fiscal year.