Item 7. Management’s Discussion and Analysis of

Financial Condition and Results of Operations

EXECUTIVE OVERVIEW

We

are

a

global packaged

foods company.

We

develop

distinctive

value-added

food

products

and

market

them under

unique

brand

names.

We

work

continuously

to

improve

our

core

products

and

to

create

new

products

that

meet

consumers’

evolving

needs

and

preferences.

In

addition,

we

build

the

equity

of

our

brands

over

time

with

strong

consumer-directed

marketing,

innovative

new

products,

and

effective

merchandising.

We

believe

our

brand-building

approach

is

the

key

to

winning

and

sustaining

leading

share

positions in markets around the globe.

Our fundamental

financial goal is

to generate competitively

differentiated returns

for our shareholders

over the long

term. We

believe

achieving

that

goal

requires

us

to

generate

a

consistent

balance

of

net

sales

growth,

margin

expansion,

cash

conversion,

and

cash

return to shareholders over time.

Our long-term growth objectives are to deliver the following performance

on average over time:

●

2 to 3 percent annual growth in organic net sales;

●

mid-single-digit annual growth in adjusted operating profit;

●

mid- to high-single-digit annual growth in adjusted diluted earnings per share (EPS);

●

free cash flow conversion of at least 95 percent of adjusted net earnings after

tax; and

●

cash return to shareholders of 80 to 90 percent of free cash flow,

including an attractive dividend yield.

Guided by our

purpose to make

food the world

loves, we are

executing our Accelerate

strategy to drive

sustainable, profitable growth

and

top-tier

shareholder

returns

over

the

long

term.

The

strategy

focuses

on

four

pillars

to

create

competitive

advantages

and

win:

boldly

building

brands,

relentlessly

innovating,

unleashing

our

scale,

and

standing

for

good.

We

are

prioritizing

our

core

markets,

global

platforms,

and

local

gem

brands

that

have

the

best

prospects

for

profitable

growth

and

we

are

committed

to

reshaping

our

portfolio with strategic acquisitions and divestitures to further enhance

our growth profile.

In

fiscal

2024,

we

experienced

a

more

challenging

category

and

competitive

backdrop

than

we

initially

expected.

As

a

result,

we

pivoted our plans and enhanced our

efficiency to generate adjusted operating

profit and adjusted diluted EPS that

were in line with our

original targeted

ranges, even

in a

slower-than-anticipated

topline growth

environment. We

delivered mixed

performance against

the

three priorities we established at the beginning of the year:

On our

priority of

competing effectively,

we did

not achieve

our objective

of holding

or growing

market share

in more

than

percent

of

our

global

priority

businesses.

Our

fiscal

2024

performance

was

hindered

by

an

uncertain

macroeconomic

environment, which

resulted in

greater-than-expected value

-seeking behaviors

by consumers.

Our organic

net sales

declined

1 percent

for the

year,

with a

decrease

in contributions

from organic

volume growth,

partially offset

by favorable

net price

realization and mix in response to 4 percent input cost inflation.

We

successfully

improved

our supply

chain efficiency,

including generating

industry-leading

Holistic Margin

Management

(HMM)

cost

savings

and

removing

significant

disruption-related

costs

from

the

supply

chain.

These

efforts

allowed

us

to

continue to invest in our

brands and in leading capabilities, such

as digital and technology capabilities,

that will be critical for

driving future growth.

We

maintained our disciplined

approach to capital allocation,

driving increased

operating cash flow that

we used to grow our

capital

investment

level,

raise

our

dividend,

and

increase

our

share

repurchase

activity.

We

also

continued

to

reshape

our

portfolio, including closing on acquisitions

that further improved our portfolio’s

ability to generate profitable growth

over the

long term.

Our consolidated

net sales

for fiscal

2024

decreased 1

percent to

$19,857 million. On

an organic

basis, net

sales decreased

1 percent

compared to

year-ago levels.

Operating profit

of $3,432 million

essentially matched

fiscal 2023.

Adjusted operating

profit of

$3,603

million increased

4 percent

on a

constant-currency basis.

Diluted EPS

of $4.31

matched fiscal

2023 results.

Adjusted diluted

EPS of

$4.52 increased

6 percent on

a constant-currency

basis (See the

“Non-GAAP Measures”

section below

for a description

of our use

of

measures not defined by generally accepted accounting principles (GAAP)).

Net cash

provided by

operations totaled

$3,303 million in

fiscal 2024,

representing a

conversion rate

of 131

percent of

net earnings,

including earnings attributable

to redeemable and noncontrolling

interests. This cash generation

supported capital investments

totaling

$774

million, and our resulting free cash flow was $2,528

million at a conversion rate of 96 percent of adjusted

net earnings, including

earnings attributable

to redeemable

and noncontrolling

interests. We

returned cash

to shareholders

through dividends

totaling $1,363

million and

net share

repurchases totaling

$1,977 million

(See the

“Non-GAAP Measures”

section below

for a description

of our use

of measures not defined by GAAP).

A

detailed

review

of

our

fiscal

2024

performance

compared

to

fiscal

2023

appears

below

in

the

section

titled

“Fiscal

2024

Consolidated Results of Operations.” A detailed review of

our fiscal 2023

performance compared to our fiscal 2022

performance is set

forth

in Part

II, Item

7 of

our Form

10-K for

the fiscal

year

ended

May 28, 2023

under the

caption

“Management’s

Discussion and

Analysis of

Financial Condition

and Results

of Operations

– Fiscal

2023

Results of

Consolidated Operations,”

which is incorporated

herein by reference.

In fiscal 2025, we plan to continue advancing our Accelerate

strategy. Our key

priorities are to accelerate our organic net sales growth,

create fuel for

investment, and drive

strong cash generation. Amid

a continued uncertain

macroeconomic backdrop

for consumers, we

expect volume

trends in

our categories

will gradually

improve over

the course

of the

year, though

full-year category

dollar growth

is

expected to

be below our

long-term growth

projections. We

expect to

increase our

organic net

sales growth

by delivering

remarkable

experiences across

our leading

food brands,

resulting in

improved household

penetration and

stronger market

share trends

versus the

prior year. Our fiscal 2025

plan calls for product news and innovation focused

on taste, health, convenience, and value, supported with

strong

brand

campaigns

and

omnichannel

visibility.

We

expect

to

generate

HMM

cost

savings

of

roughly

to

percent

of

cost

of

goods sold,

which we

expect to

exceed our

forecast for

3 to 4

percent input

cost inflation

in fiscal 2025.

We

expect to

reinvest in

the

business, including plans for increased brand-building investment in

fiscal 2025 to drive improved volume performance.

Based on these assumptions, our key full-year fiscal 2025 targets are

summarized below:

●

Organic net sales are expected to range between flat and up 1 percent.

●

Adjusted operating

profit is expected

to range between

down 2 percent

and flat in

constant-currency from

the base of $3,603

million reported in fiscal 2024.

●

Adjusted diluted

EPS is

expected to

range between

down 1

percent and

up 1

percent in

constant-currency

from the

base of

$4.52 earned in fiscal 2024.

●

Free cash flow conversion is expected to be at least 95 percent of adjusted after-tax

earnings.

See the “Non-GAAP Measures” section below for a description of our use

of measures not defined by GAAP.

Certain terms used throughout this report are defined in a glossary in Item 8 of

this report.

FISCAL 2024 CONSOLIDATED

RESULTS

OF OPERATIONS

In

fiscal

2024,

net

sales

and

organic

net

sales

decreased

percent

compared

to

fiscal

Operating

profit

of

$3,432

million

essentially

matched

fiscal

2023,

primarily

driven

by

a

net

gain

on

divestitures

in

fiscal

2023,

higher

impairment

and

restructuring

charges, a decrease

in contributions from volume

growth, and higher

input costs, partially offset

by favorable net price

realization and

mix,

a

favorable

change

in

the

mark-to-market

valuation

of

certain

commodity

positions

and

grain

inventories,

and

lower

selling,

general, and

administrative

(SG&A) expenses,

including

a decrease

in certain

compensation and

benefits

expenses. Operating

profit

margin

of

17.3

percent

increased

basis

points.

Adjusted

operating

profit

of

$3,603

million

increased

percent

on

a

constant-

currency

basis,

primarily

driven

by

favorable

net

price

realization

and

mix

and

a

decrease

in

SG&A

expenses,

including

certain

compensation

and

benefits

expenses,

partially

offset

by

a

decrease

in

contributions

from

volume

growth

and

higher

input

costs.

Adjusted operating

profit margin

increased 90

basis points

to 18.1

percent. Diluted

earnings per

share of

$4.31 matched

fiscal 2023.

Adjusted diluted earnings per

share of $4.52 increased

6 percent on a constant

-currency basis (see the “Non-GAAP

Measures” section

below for a description of our use of measures not defined by GAAP).

A summary of our consolidated financial results for fiscal 2024 follows:

Fiscal 2024

In millions,

except per

share

Fiscal 2024 vs.

Fiscal 2023

Percent of Net

Sales

Constant-

Currency

Growth (a)

Net sales

$

19,857.2

(1)

%

Operating profit

3,431.7

Flat

17.3

%

Net earnings attributable to General Mills

2,496.6

(4)

%

Diluted earnings per share

$

4.31

Flat

Organic net sales growth rate (a)

(1)

%

Adjusted operating profit (a)

3,602.7

%

18.1

%

%

Adjusted diluted earnings per share (a)

$

4.52

%

%

(a)

See the “Non-GAAP Measures” section below for our use of measures not defined by

GAAP.

Consolidated

net sales

were as follows:

Fiscal 2024

Fiscal 2024 vs.

Fiscal 2023

Fiscal 2023

Net sales (in millions)

$

19,857.2

(1)

%

$

20,094.2

Contributions from volume growth (a)

(3)

pts

Net price realization and mix

pts

Foreign currency exchange

Flat

Note: Table may

not foot due to rounding

(a) Measured in tons based on the stated weight of our product shipments.

Net

sales

in

fiscal

2024

decreased

percent

compared

to

fiscal

2023,

driven

by

a

decrease

in

contributions

from

volume

growth,

partially offset by favorable net price realization and mix.

Components of organic net sales growth are shown in the following

table:

Fiscal 2024 vs. Fiscal 2023

Contributions from organic volume growth (a)

(3)

pts

Organic net price realization and mix

pts

Organic net sales growth

(1)

pt

Foreign currency exchange

Flat

Acquisitions and divestitures

Flat

Net sales growth

(1)

pt

Note: Table may

not foot due to rounding

(a) Measured in tons based on the stated weight of our product shipments.

Organic

net

sales

in

fiscal

2024

decreased

percent

compared

to

fiscal

2023,

driven

by

a

decrease

in

contributions

from

organic

volume growth, partially offset by favorable organic

net price realization and mix.

Cost of sales

decreased $623 million in

fiscal 2024 to $12,925

million. The decrease

was primarily driven

by a $360 million

decrease

due to

lower volume,

partially offset

by an

$80 million

increase attributable

to product

rate and

mix. We

recorded a

$39 million

net

decrease

in

cost

of

sales

related

to

mark-to-market

valuation

of

certain

commodity

positions

and

grain

inventories

in

fiscal

2024,

compared to a net increase

of $292 million in fiscal

2023

(please see Note 8 to the

Consolidated Financial Statements

in Item 8 of this

report

for

additional

information).

In

fiscal

2023,

we

recorded

a

$25

million

charge

related

to

a

voluntary

recall

on

certain

international

Häagen-Dazs

ice cream

products. We

also recorded

$18 million

of restructuring

charges and

$2 million

of restructuring

initiative

project-related

costs

in

cost

of

sales

in

fiscal

2024

compared

to

$5

million

of

restructuring

charges

and

$2

million

of

restructuring initiative

project-related costs in

cost of sales

in fiscal 2023

(please see Note

4 to the

Consolidated Financial

Statements

in Item 8 of this report for additional information).

Gross

margin

increased

percent

in

fiscal

2024

compared

to

fiscal

Gross

margin

as

a

percent

of

net

sales

of

34.9

percent

increased 230 basis points compared to fiscal 2023.

SG&A expenses

decreased $241

million to

$3,259 million in

fiscal 2024

compared to

fiscal 2023

primarily

driven by

a decrease

in

certain compensation

and benefits expenses,

favorable net corporate

investment activity,

a legal recovery,

and net recoveries

from the

fiscal

2023

voluntary

recall

on

certain

international

Häagen-Dazs

ice

cream

products.

SG&A

expenses

as

a

percent

of

net

sales

in

fiscal 2024 decreased 100 basis points compared to fiscal 2023.

Divestitures

gain, net

totaled $445

million in

fiscal 2023

primarily related

to the

sale of our

Helper main

meals and

Suddenly Salad

side dishes business (please refer to Note 3 to the Consolidated Financial Statements

in Item 8 of this report).

Restructuring, impairment, and other exit costs

totaled $241 million in fiscal 2024

compared to $56 million in fiscal 2023. In fiscal

2024, we recorded

a $117

million non-cash goodwill

impairment charge

related to our

Latin America reporting

unit and $103

million

of non-cash impairment charges

related to our

Top

Chews

,

True Chews

, and

EPIC

brand intangible assets. In fiscal 2024,

we approved

restructuring actions to

enhance the go-to-market

commercial strategy and

associated organizational

structure of our

Pet segment, and

as

a

result,

we

recorded

$17

million

of

charges

in

fiscal

In

fiscal

2023,

we

approved

restructuring

actions

to

enhance

the

efficiency

of

our

global

supply

chain

structure

and

to

optimize

our

Häagen-Dazs

shops

network,

and

as

a

result,

we

recorded

$41

million

of charges

in fiscal

Please see

Note 4

to the

Consolidated

Financial

Statements

in Item

8 of

this report

for

additional

information.

Benefit

plan

non-service

income

totaled

$76

million

in

fiscal

2024

compared

to

$89 million

in

fiscal

2023,

primarily

reflecting

higher interest

costs, partially

offset by

lower amortization

of losses

(please see

Note 14

to the

Consolidated Financial

Statements in

Item 8 of this report for additional information).

Interest,

net

for

fiscal

2024

totaled

$479 million,

$97 million

higher

than

fiscal

2023,

primarily

driven

by higher

interest rates

and

higher average long-term debt levels.

Our

effective tax rate

for fiscal 2024 was 19.6 percent compared

to 19.5 percent in fiscal 2023.

The 0.1 percentage point increase was

primarily driven

by certain nonrecurring

tax benefits in

fiscal 2023, partially

offset by favorable

earnings mix by

jurisdiction in fiscal

Our adjusted

effective

tax rate

was 20.1

percent in

fiscal 2024

compared

to 20.4

percent in

fiscal 2023

(see the

“Non-GAAP

Measures”

section

below

for

a

description

of

our

use

of

measures

not

defined

by

GAAP).

The

0.3

percentage

point

decrease

was

primarily due to favorable earnings mix by jurisdiction in fiscal 2024.

After-tax

earnings

from

joint

ventures

increased

to

$85 million

in

fiscal

2024

compared

to

$81

million

in

fiscal

2023,

primarily

driven by

higher net

sales due

to favorable

net price

realization

and mix

at CPW,

partially

offset

by higher

input costs

at CPW

and

HDJ.

On

a

constant-currency

basis,

after-tax

earnings

from

joint

ventures

increased

percent

(see

the

“Non-GAAP

Measures”

section below for a

description of our use

of measures not defined

by GAAP). The components

of our joint ventures’

net sales growth

are shown in the following table:

Fiscal 2024 vs. Fiscal 2023

CPW

HDJ

Total

Contributions from volume growth (a)

(7)

pts

(6)

pts

Net price realization and mix

pts

pts

Net sales growth in constant currency

pts

pt

pts

Foreign currency exchange

(2)

pts

(7)

pts

(3)

pts

Net sales growth

pts

(6)

pts

pts

Note: Table may

not foot due to rounding.

(a) Measured in tons based on the stated weight of our product shipments.

Net

earnings

attributable

to

redeemable

and

noncontrolling

interests

increased

to

$22

million

in

fiscal

2024

compared

to

$16

million in fiscal 2023.

Average diluted shares

outstanding

decreased by 22 million in fiscal 2024 from fiscal 2023 primarily due to share repurchase

s.

RESULTS

OF SEGMENT OPERATIONS

Our businesses are organized into four operating segments: North

America Retail, International, Pet, and North America Foodservice

.

The following tables provide

the dollar amount and percentage

of net sales and operating

profit from each segment for

fiscal 2024 and

fiscal 2023:

Fiscal Year

2024

2023

In Millions

Dollars

Percent of Total

Dollars

Percent of Total

Net Sales

North America Retail

$

12,473.4

%

$

12,659.9

%

International

2,746.5

2,769.5

Pet

2,375.8

2,473.3

North America Foodservice

2,258.7

2,191.5

Total

$

19,854.4

%

$

20,094.2

%

Segment Operating Profit

North America Retail

$

3,080.4

%

$

3,181.3

%

International

125.2

161.8

Pet

485.9

445.5

North America Foodservice

315.5

290.0

Total

$

4,007.0

%

$

4,078.6

%

Segment

operating

profit

as

reviewed

by

our

executive

management

excludes

unallocated

corporate

items,

net

gain

or

loss

on

divestitures, and restructuring, impairment, and other exit costs that are centrally

managed.

NORTH AMERICA RETAIL

SEGMENT

Our North America Retail

operating segment reflects business

with a wide variety of

grocery stores, mass merchandisers, membership

stores,

natural

food

chains,

drug,

dollar

and

discount

chains,

convenience

stores,

and

e-commerce

grocery

providers.

Our

product

categories

in

this

business

segment

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 and snack bars.

North America Retail net sales were as follows:

Fiscal 2024

Fiscal 2024 vs. 2023

Percentage Change

Fiscal 2023

Net sales (in millions)

$

12,473.4

(1)

%

$

12,659.9

Contributions from volume growth (a)

(5)

pts

Net price realization and mix

pts

Foreign currency exchange

Flat

Note: Table may

not foot due to rounding.

(a)

Measured in tons based on the stated weight of our product shipments.

The

percent

decrease

in

North

America

Retail

net

sales

for

fiscal

2024

was

driven

by

a

decrease

in

contributions

from

volume

growth,

partially offset by favorable net price realization and mix.

The components of North America Retail organic net

sales growth are shown in the following table:

Fiscal 2024 vs. 2023

Percentage Change

Contributions from organic volume growth (a)

(4)

pts

Organic net price realization and mix

pts

Organic net sales growth

(1)

pt

Foreign currency exchange

Flat

Net sales growth

(1)

pt

Note: Table may

not foot due to rounding.

(a)

Measured in tons based on the stated weight of our product shipments.

North

America

Retail

organic

net

sales

decreased

percent

in

fiscal

2024

compared

to

fiscal

2023,

driven

by

a

decrease

in

contributions from organic volume growth, partially

offset by an increase in organic net price realization and

mix.

Net sales for our North America Retail operating units are shown in the following table:

In Millions

Fiscal 2024

Fiscal 2024 vs. 2023

Percentage Change

Fiscal 2023

U.S. Meals & Baking Solutions

$

4,324.3

(2)

%

$

4,426.3

U.S. Morning Foods

3,561.8

(2)

%

3,620.1

U.S. Snacks

3,538.9

(2)

%

3,611.0

Canada (a)

1,048.4

%

1,002.5

Total

$

12,473.4

(1)

%

$

12,659.9

(a)

On a constant

currency basis, Canada

operating unit net

sales increased 6

percent in fiscal

2024. See the

“Non-GAAP Measures”

section below for our use of this measure not defined by GAAP.

Segment

operating

profit

decreased

percent

to $3,080

million

in

fiscal

2024

compared

to

$3,181

million

in

fiscal

2023,

primarily

driven by

higher input

costs, a

decrease in

contributions from

volume growth,

and an increase

in SG&A

expenses, partially

offset by

favorable

net

price

realization

and

mix.

Segment

operating

profit

decreased

percent

on

a

constant-currency

basis

in

fiscal

2024

compared to fiscal 2023 (see the “Non-GAAP Measures” section below

for our use of this measure not defined by GAAP).

INTERNATIONAL SEGMENT

Our International

operating segment

reflects retail

and foodservice

businesses outside

of the

United States

and Canada.

Our product

categories include

super-premium ice

cream and

frozen desserts,

meal kits,

salty snacks,

snack bars,

dessert and

baking mixes,

shelf-

stable

vegetables,

and

pet

food

products.

Our

International

segment

also

includes

products

manufactured

in

the

United

States

for

export,

mainly

to

Caribbean

and

Latin

American

markets,

as

well

as

products

we

manufacture

for

sale

to

our

international

joint

ventures. Revenues from export activities are reported in the region or

country where the end customer is located.

International net sales were as follows:

Fiscal 2024

Fiscal 2024 vs. 2023

Percentage Change

Fiscal 2023

Net sales (in millions)

$

2,746.5

(1)

%

$

2,769.5

Contributions from volume growth (a)

(3)

pts

Net price realization and mix

pt

Foreign currency exchange

pt

Note: Table may

not foot due to rounding.

(a)

Measured in tons based on the stated weight of our product shipments.

The

percent

decrease

in

International

net

sales

in

fiscal

2024

was

driven

by

a

decrease

in

contributions

from

volume

growth,

partially offset by favorable net price realization and mix

and favorable foreign currency exchange.

The components of International organic net sales growth

are shown in the following table:

Fiscal 2024 vs. 2023

Percentage Change

Contributions from organic volume growth (a)

(3)

pts

Organic net price realization and mix

pt

Organic net sales growth

(2)

pts

Foreign currency exchange

pt

Net sales growth

(1)

pt

Note: Table may

not foot due to rounding.

(a)

Measured in tons based on the stated weight of our product shipments.

The 2

percent decrease

in International

organic net

sales growth

in fiscal

2024 compared

to fiscal

2023 was

driven by

a decrease

in

contributions from organic volume growth, partially offset

by favorable organic net price realization and mix.

Segment operating

profit decreased

23 percent

to $125 million

in fiscal

2024 compared

to $162

million in

2023, primarily

driven by

higher input

costs and a

decrease in contributions

from volume growth

,

partially offset

by favorable net

price realization

and mix, the

voluntary recall

on certain international

Häagen-Dazs

ice cream products

in fiscal 2023,

and a decrease

in SG&A expenses.

Segment

operating

profit

decreased

percent

on

a

constant-currency

basis

in

fiscal

2024

compared

to

fiscal

2023

(see

the

“Non-GAAP

Measures” section below for our use of this measure not defined by GAAP).

PET SEGMENT

Our Pet operating segment includes

pet food products sold primarily in the

United States and Canada in national

pet superstore chains,

e-commerce retailers,

grocery stores,

regional pet

store chains,

mass merchandisers,

and veterinary

clinics and

hospitals. Our

product

categories include

dog and

cat food

(dry foods,

wet foods,

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.

Pet net sales were as follows:

Fiscal 2024

Fiscal 2024 vs. 2023

Percentage Change

Fiscal 2023

Net sales (in millions)

$

2,375.8

(4)

%

$

2,473.3

Contributions from volume growth (a)

(7)

pts

Net price realization and mix

pts

Foreign currency exchange

Flat

Note: Table may

not foot due to rounding.

(a)

Measured in tons based on the stated weight of our product shipments.

Pet net

sales decreased

4 percent

in fiscal

2024 compared

to fiscal

2023, driven

by a

decrease in

contributions from

volume growth,

partially offset by favorable net price realization and mix.

The components of Pet organic net sales growth are shown in the following

table:

Fiscal 2024 vs. 2023

Percentage Change

Contributions from organic volume growth (a)

(7)

pts

Organic net price realization and mix

pts

Organic net sales growth

(4)

pts

Foreign currency exchange

Flat

Net sales growth

(4)

pts

Note: Table may

not foot due to rounding.

(a)

Measured in tons based on the stated weight of our product shipments.

The 4

percent decrease

in Pet organic

net sales

growth in

fiscal 2024

was driven

by a

decrease in

contributions from

organic volume

growth, partially offset by favorable organic net

price realization and mix.

Pet operating

profit increased

9 percent

to $486 million

in fiscal

2024, compared

to $446 million

in fiscal

2023, primarily

driven by

favorable net

price realization

and mix

and lower

input costs, partially

offset by

a decrease

in contributions

from volume

growth and

an increase in

SG&A expenses. Segment

operating profit increased

9 percent on

a constant-currency basis

in fiscal 2024

compared to

fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure

not defined by GAAP).

NORTH AMERICA FOODSERVICE SEGMENT

Our

North

America

Foodservice

segment

consists

of

foodservice

businesses

in

the

United

States

and

Canada.

Our

major

product

categories

in

our

North

America

Foodservice

operating

segment

are

ready-to-eat

cereals,

snacks,

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,

vending, and supermarket bakeries.

North America Foodservice net sales were as follows:

Fiscal 2024

Fiscal 2024 vs. 2023

Percentage Change

Fiscal 2023

Net sales (in millions)

$

2,258.7

%

$

2,191.5

Contributions from volume growth (a)

pts

Net price realization and mix

pt

Foreign currency exchange

Flat

Note: Table may

not foot due to rounding.

(a)

Measured in tons based on the stated weight of our product shipments.

North America

Foodservice net

sales increased

3 percent

in fiscal

2024,

driven by

an increase

in contributions

from volume

growth

and favorable net price realization and mix.

The components of North America Foodservice organic

net sales growth are shown in the following table:

Fiscal 2024 vs. 2023

Percentage Change

Contributions from organic volume growth (a)

pts

Organic net price realization and mix

pt

Organic net sales growth

pts

Foreign currency exchange

Flat

Acquisition (b)

pt

Net sales growth

pts

Note: Table may

not foot due to rounding.

(a)

Measured in tons based on the standard weight of our product shipments.

(b)

Acquisition

of

TNT

Crust

in

fiscal

Please

see

Note

to

the

Consolidated

Financial

Statements

in

Part

II,

Item

of

this

report.

The

percent

increase

in

North

America

Foodservice

organic

net

sales

growth

in

fiscal

2024

was

driven

by

an

increase

in

contributions from organic volume growth and favorable

organic net price realization and mix.

Segment operating profit

increased 9 percent to $316

million in fiscal 2024,

compared to $290 million

in fiscal 2023, primarily

driven

by favorable

net price realization

and mix

and an increase

in contributions

from volume growth

,

partially offset

by higher

input costs

and

an

increase

in

SG&A

expenses.

Segment

operating

profit

increased

percent

on

a

constant-currency

basis

in

fiscal

2024

compared to fiscal 2023 (see the “Non-GAAP Measures” section below

for our use of this measure not defined by GAAP).

UNALLOCATED CORPORATE

ITEMS

Unallocated

corporate

items

include

corporate

overhead

expenses,

variances

to

planned

domestic

employee

benefits

and

incentives,

certain

charitable

contributions,

restructuring

initiative project-related

costs,

gains and

losses on

corporate

investments,

results

from

certain

businesses

managed

by

our

Gold

Medal

Ventures

entity,

and

other

items

that

are

not

part

of

our

measurement

of

segment

operating performance.

These include

gains and

losses arising

from the

revaluation of

certain grain

inventories and

gains and

losses

from

mark-to-market

valuation

of

certain

commodity

positions

until

passed

back

to

our

operating

segments.

These

items

affecting

operating profit

are centrally

managed at

the corporate

level and

are excluded

from the

measure of

segment profitability

reviewed by

executive

management.

Under

our

supply

chain

organization,

our

manufacturing,

warehouse,

and

distribution

activities

are

substantially

integrated

across

our

operations

in

order

to

maximize

efficiency

and

productivity.

As

a

result,

fixed

assets

and

depreciation and amortization expenses are neither maintained nor available

by operating segment.

Unallocated corporate

expense totaled

$334 million

in fiscal

2024, compared

to $1,033

million last

year.

We

recorded a

$39 million

net decrease

in expense

related to

the mark-to-market

valuation of

certain commodity

positions and

grain inventories

in fiscal

2024,

compared

to

a

$292

million

net

increase

in

expense

last

year.

In

fiscal

2024,

certain

compensation

and

benefits

expenses

and

charitable contributions decreased compared to fiscal 2023.

We recorded

$18 million of net losses related to valuation adjustments and

the sale of

corporate investments in

fiscal 2024, compared

to $84 million

of net losses

in fiscal 2023.

In fiscal 2024,

we recorded $30

million

of

net

recoveries

related

to

a

voluntary

recall

on

certain

international

Häagen-Dazs

ice

cream

products

in

fiscal

2023,

compared to a

$22 million charge

in fiscal 2023.

We

recorded a $53 million

legal recovery in

fiscal 2024. In

fiscal 2024, we

recorded

$14

million

of

transaction

costs,

primarily

related

to

our

acquisition

of

a

pet

food

business

in

Europe.

We

recorded

$6

million

of

integration costs primarily related

to our acquisition of TNT

Crust in fiscal 2023. In

addition, we recorded $18 million

of restructuring

charges

and

$2

million

of

restructuring

initiative

project-related

costs

in

cost

of

sales

in

fiscal

2024,

compared

to

$5

million

of

restructuring charges and $2 million of restructuring

initiative project-related costs in cost of sales in fiscal 2023.

IMPACT OF INFLATION

We

experienced

broad-based

global

input

cost

inflation

of

percent

in

fiscal

2024

and

percent

in

fiscal

We

expect

approximately

to

percent

input

cost

inflation

in

fiscal

We

attempt

to

minimize

the

effects

of

inflation

through

HMM,

Strategic

Revenue

Management

(SRM),

planning,

and

operating

practices.

Our

market

risk

management

practices

are

discussed

in

Item 7A of this report.

LIQUIDITY AND CAPITAL

RESOURCES

The primary source of our

liquidity is cash flow from

operations. Over the most recent

two-year period, our operations have

generated

$6.1 billion

in cash.

A substantial

portion of

this operating

cash flow

has been

returned to

shareholders through

dividends and

share

repurchases.

We

also

use

cash

from

operations

to

fund

our

capital

expenditures,

acquisitions,

and

debt

service.

We

typically

use

a

combination

of

cash,

notes

payable,

and

long-term

debt,

and

occasionally

issue

shares

of

common

stock,

to

finance

significant

acquisitions.

As of

May

26,

2024,

we had

$330

million

of cash

and

cash equivalents

held

in foreign

jurisdictions.

In

anticipation

of

repatriating

funds

from

foreign

jurisdictions,

we

record

local

country

withholding

taxes

on

our

international

earnings,

as

applicable.

We

may

repatriate our

cash and

cash equivalents

held by

our foreign

subsidiaries without

such funds

being subject

to further

U.S. income

tax

liability. Earnings

prior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested in

those jurisdictions.

Cash Flows from Operations

Fiscal Year

In Millions

2024

2023

Net earnings, including earnings attributable to redeemable and noncontrolling

interests

$

2,518.6

$

2,609.6

Depreciation and amortization

552.7

546.6

After-tax earnings from joint ventures

(84.8)

(81.3)

Distributions of earnings from joint ventures

50.4

69.9

Stock-based compensation

95.3

111.7

Deferred income taxes

(48.5)

(22.2)

Pension and other postretirement benefit plan contributions

(30.1)

(30.1)

Pension and other postretirement benefit plan costs

(27.0)

(27.6)

Divestitures gain, net

-

(444.6)

Restructuring, impairment, and other exit costs

223.5

24.4

Changes in current assets and liabilities, excluding the effects of

acquisitions and divestitures

10.6

(48.9)

Other, net

41.9

71.1

Net cash provided by operating activities

$

3,302.6

$

2,778.6

During

fiscal

2024,

cash

provided

by

operations

was

$3,303

million

compared

to

$2,779 million

in

the

same

period

last

year.

The

$524 million increase was primarily

driven by a $354 million increase in

net earnings, excluding the $445

million net divestitures gain

in fiscal 2023 and a $199 million change in restructuring, impairment, and other

exit costs.

We

strive

to

grow

core

working

capital

at

or

below

the

rate

of

growth

in

our

net

sales.

For

fiscal

2024,

core

working

capital

net

liability

increased

percent,

compared

to

a

net

sales

increase

of

percent.

The

core

working

capital

net

liability

increased

$54

million from a

net liability of

$339 million in

fiscal 2023 to

a net liability of

$393

million in fiscal

2024. The $54

million net liability

increase was primarily due to a decrease in inventory,

partially offset by a decrease in accounts payable in fiscal 2024.

Cash Flows from Investing Activities

Fiscal Year

In Millions

2024

2023

Purchases of land, buildings, and equipment

$

(774.1)

$

(689.5)

Acquisitions, net of cash acquired

(451.9)

(251.5)

Investments in affiliates, net

(2.7)

(32.2)

Proceeds from disposal of land, buildings, and equipment

0.8

1.3

Proceeds from divestitures, net of cash divested

-

633.1

Other, net

30.5

(7.6)

Net cash used by investing activities

$

(1,197.4)

$

(346.4)

In

fiscal

2024,

we

used

$1,197 million

of

cash

through

investing

activities

compared

to

$346 million

in

fiscal

We

invested

$774 million in land, buildings, and equipment in fiscal 2024, an

increase of $85 million from fiscal 2023.

During

fiscal

2024,

we

acquired

a

pet

food

business

in

Europe

for

$426

million

cash,

net

of

cash

acquired.

We

expect

to

pay

an

additional amount of

approximately $8 million related

to a holdback in

the first quarter of

fiscal 2025, contingent

upon certain closing

requirements.

During

fiscal

2023,

we

acquired

TNT

Crust

for

$252

million

cash,

net

of

cash

acquired.

During

fiscal

2023,

we

completed the sale of our Helper main meals and Suddenly Salad side dishes business

es for cash proceeds of $607 million.

We

expect

capital

expenditures

to

be

approximately

3.5

percent

of

reported

net

sales

in

fiscal

These

expenditures

will

fund

initiatives that are expected to fuel growth, support innovative products,

and continue HMM initiatives throughout the supply chain.

Cash Flows from Financing Activities

Fiscal Year

In Millions

2024

2023

Change in notes payable

$

(20.5)

$

(769.3)

Issuance of long-term debt

2,065.2

2,324.4

Payment of long-term debt

(901.5)

(1,421.7)

Proceeds from common stock issued on exercised options

25.5

232.3

Purchases of common stock for treasury

(2,002.4)

(1,403.6)

Dividends paid

(1,363.4)

(1,287.9)

Distributions to noncontrolling and redeemable interest holders

(21.3)

(15.7)

Other, net

(53.9)

(62.6)

Net cash used by financing activities

$

(2,272.3)

$

(2,404.1)

Financing activities used

$2.3 billion of cash in

fiscal 2024 compared to

$2.4 billion in fiscal 2023.

We

had $1,143 million of net

debt

issuances in

fiscal 202

compared to

$133 million

of net

debt issuances

in fiscal

For more

information

on our

debt

issuances

and payments, please refer to Note 9 to the Consolidated Financial Statements in

Item 8 of this report.

During

fiscal

2024,

we

received

$26 million

of

net

proceeds

from

common

stock

issued

on

exercised

options

compared

to

$232 million in fiscal 2023.

During fiscal 2024, we

repurchased 29 million shares

of our common stock for

$2,002 million. During fiscal 2023,

we repurchased 18

million shares of our common stock for $1,404 million.

Dividends paid in fiscal 2024 totaled

$1,363 million, or $2.36 per share.

Dividends paid in fiscal 2023

totaled $1,288 million, or $2.16

per share.

Selected Cash Flows from Joint Ventures

Selected cash flows from our joint ventures are set forth in the following table:

Fiscal Year

Inflow (Outflow), in Millions

2024

2023

Investments in affiliates, net

$

(2.7)

$

(32.2)

Dividends received

50.4

69.9

The following table details the fee-paid committed and uncommitted credit

lines we had available as of May 26, 2024:

In Billions

Facility Amount

Borrowed Amount

Committed credit facility expiring April 2026

$

2.7

$

-

Uncommitted credit facilities

0.7

-

Total committed

and uncommitted credit facilities

$

3.4

$

-

To ensure availability

of funds, we maintain bank credit lines and have commercial paper programs

available to us in the United States

and Europe.

We

have material

contractual obligations

that arise

in the

normal course

of business

and we

believe that

cash flows

from operations

will be adequate to meet our liquidity and capital needs for at least the next 12

months.

Certain

of

our

long-term

debt

agreements,

our

credit

facilities,

and

our

noncontrolling

interests

contain

restrictive

covenants.

As

of

May 26, 2024, we were in compliance with all of these covenants.

We

have $1,614

million of

long-term debt

maturing in

the next

12 months

that is

classified as

current, including

$800 million

of 4.0

percent fixed-rate notes due April 17, 2025, and

€750 million of floating-rate notes due November 8,

2024. We believe

that cash flows

from operations,

together with

available short-

and long-term

debt financing,

will be

adequate to meet

our liquidity

and capital

needs

for at least the next 12 months.

As of May

26, 2024,

our total debt,

including the

impact of derivative

instruments designated

as hedges, was

85 percent

in fixed-rate

and 15

percent in

floating-rate instruments,

compared to

80 percent

in fixed-rate

and 20

percent in

floating-rate instruments

on May

28, 2023.

The

third-party

holder

of

the

General

Mills

Cereals,

LLC

(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 $252 million). The

floating preferred return

rate on GMC’s

Class A Interests

was

the

sum

of

three-month

Term

SOFR

plus

basis

points.

On

June

1,

2024,

the

floating

preferred

return

rate

on

GMC’s

Class

A

Interests was

reset to

the sum

of the

three-month Term

SOFR plus

261 basis

points. The

preferred return

rate is

adjusted every

three

years through a negotiated agreement with the Class A Interests

holder or through a remarketing auction.

We

have an option

to purchase the

Class A Interests for

consideration equal to

the then current

capital account value,

plus any unpaid

preferred return

and the

prescribed make-whole

amount. If

we purchase

these interests,

any change

in the

third-party holder’s

capital

account

from

its

original

value

will

be

charged

directly

to

retained

earnings

and

will

increase

or

decrease

the

net

earnings

used

to

calculate EPS in that period.

CRITICAL ACCOUNTING ESTIMATES

For a complete description of our

significant accounting policies, please see Note

2 to the Consolidated Financial

Statements in Item 8

of this report. Our critical accounting

estimates are those that have

a meaningful impact on the reporting of our

financial condition and

results of operations.

These estimates include

our accounting for

revenue recognition, valuation

of long-lived assets,

intangible assets,

income taxes, and defined benefit pension, other postretirement benefit,

and postemployment benefit plans.

Revenue Recognition

Our

revenues

are

reported

net

of

variable

consideration

and

consideration

payable

to

our

customers,

including

trade

promotion,

consumer

coupon

redemption,

and

other

reductions

to

the

transaction

price,

including

estimated

allowances

for

returns,

unsalable

product,

and

prompt

pay

discounts.

Trade

promotions

are

recorded

using

significant

judgment

of

estimated

participation

and

performance levels

for offered

programs at the

time of sale.

Differences between

the estimated and

actual reduction to

the transaction

price

are recognized

as a

change

in estimate

in a

subsequent

period.

Our accrued

trade and

coupon promotion

liabilities

were

$425

million

as

of

May

26,

2024,

and

$394

million

as

of

May

28,

Because

these

amounts

are

significant,

if

our

estimates

are

inaccurate we would have to make adjustments in subsequent periods that could have

a significant effect on our results of operations.

Valuation

of Long-Lived Assets

We

estimate

the useful

lives

of long

-lived

assets and

make

estimates concerning

undiscounted

cash flows

to review

for impairment

whenever

events or

changes in

circumstances indicate

that the

carrying

amount of

an asset

(or asset

group)

may not

be recoverable.

Fair value is measured using discounted cash flows or independent appraisals,

as appropriate.

Intangible Assets

Goodwill

and

other

indefinite-lived

intangible

assets

are

not

subject

to

amortization

and

are

tested

for

impairment

annually

and

whenever

events or

changes in

circumstances

indicate

that impairment

may have

occurred. Our

estimates of

fair value

for

goodwill

impairment

testing

are determined

based on

a

discounted

cash

flow

model.

We

use

inputs from

our

long-range

planning

process to

determine

growth

rates

for

sales

and

profits.

We

also

make

estimates

of

discount

rates,

perpetuity

growth

assumptions,

market

comparables, and other factors.

We evaluate the

useful lives of our other intangible assets, mainly brands, to

determine if they are finite or indefinite-lived.

Reaching a

determination

on

useful

life

requires

significant

judgments

and

assumptions

regarding

the

future

effects

of

obsolescence,

demand,

competition, other economic

factors (such as the

stability of the industry,

known technological advances,

legislative action that

results

in an uncertain or

changing regulatory environment,

and expected changes in

distribution channels), the level

of required maintenance

expenditures,

and

the

expected

lives

of

other

related

groups

of

assets.

Intangible

assets

that

are

deemed

to

have

finite

lives

are

amortized

on a

straight-line basis

over their

useful lives,

generally

ranging from

4 to

30 years.

Our estimate

of the

fair value

of our

brand

assets

is

based

on

a

discounted

cash

flow

model

using

inputs

which

include

projected

revenues

from

our

long-range

plan,

assumed royalty rates that could be payable if we did not own the brands, and a discount

rate.

As of

May

26,

2024,

we

had

$22 billion

of

goodwill

and

indefinite-lived

intangible

assets. While

we

currently

believe

that

the

fair

value of each

intangible exceeds its carrying

value,

and that those intangibles

will contribute indefinitely

to our cash flows,

materially

different

assumptions

regarding

future performance

of our

businesses

or

a different

weighted-average

cost

of capital

could

result

in

material impairment losses

and amortization expense.

We

performed our fiscal

2024 assessment of

our intangible assets

as of the first

day of

the second

quarter of

fiscal 2024.

As a result

of lower

future profitability

projections for

our Latin

America reporting

unit, we

determined

that

the

fair

value

of

the

reporting

unit

was

less

than

its

book

value

and

recorded

a

$117

million

non-cash

goodwill

impairment charge.

In addition, during the fourth

quarter of fiscal 2024, we executed

our fiscal 2025 planning process and

preliminary

long-range planning

process, which

resulted in

lower future

sales and

profitability

projections for

the businesses

supporting

our

Top

Chews

,

True

Chews,

and

EPIC

brand

intangible

assets.

As

a

result

of

this

triggering

event,

we

performed

an

interim

impairment

assessment of

these assets as

of May 26,

2024, and determined

that the fair

value of these

brand intangible

assets no longer

exceeded

the

carrying

values

of

the

respective

assets,

resulting

in

$103

million

of

non-cash

impairment

charges.

We

recorded

impairment

charges in restructuring,

impairment, and other

exit costs in our

Consolidated Statements of

Earnings. Our estimates

of the fair

values

were

determined

based

on

a

discounted

cash

flow

model

using

inputs

which

included

our

long-range

cash

flow

projections

for

the

businesses,

royalty

rates,

weighted-average

cost

of capital

rates,

and

tax rates.

These

fair value

s

are Level

3 assets

in

the

fair value

hierarchy.

All other intangible

asset fair values

were substantially

in excess of

the carrying

values, except for

the

Uncle Toby’s

brand intangible

asset. In

addition,

while having

significant coverage

as of

our fiscal

2024

assessment date,

the

Progresso

,

Nudges

,

and True

Chews

brand intangible assets had risk of decreasing coverage. We

will continue to monitor applicable businesses for potential impairment

.

Income Taxes

We

apply a more-likely-than-not

threshold to the

recognition and derecognition

of uncertain tax

positions. Accordingly,

we recognize

the amount of

tax benefit that

has a greater

than 50 percent

likelihood of being

ultimately realized upon

settlement. Future

changes in

judgment related

to the

expected ultimate

resolution of

uncertain tax

positions will

affect earnings

in the

period of

such change.

For

more information on income taxes, please see Note 15 to the Consolidated Financial

Statements in Item 8 of this report.

Defined Benefit Pension, Other Postretirement Benefit, and Postemployment

Benefit Plans

We have

defined benefit pension plans covering

many employees in the United States,

Canada, Switzerland, and the United

Kingdom.

We also

sponsor plans that provide

health care benefits to

many of our retirees

in the United States, Canada,

and Brazil. Under certain

circumstances,

we

also

provide

accruable

benefits,

primarily

severance,

to

former

and

inactive

employees

in

the

United

States,

Canada,

and

Mexico.

Please see

Note

to

the

Consolidated

Financial

Statements

in

Item

of

this

report

for

a

description

of

our

defined benefit pension, other postretirement benefit, and postemployment

benefit plans.

We

recognize

benefits

provided

during

retirement

or

following

employment

over

the

plan

participants’

active

working

lives.

Accordingly,

we

make

various

assumptions

to

predict

and

measure

costs

and

obligations

many

years

prior

to

the

settlement

of

our

obligations.

Assumptions

that

require

significant

management

judgment

and

have

a material

impact

on

the

measurement

of

our

net

periodic

benefit

expense

or

income

and

accumulated

benefit

obligations

include

the

long-term

rates

of

return

on

plan

assets,

the

interest rates used to discount the obligations for our benefit plans, and health

care cost trend rates.

Expected Rate of Return on Plan Assets

Our expected

rate of return

on plan assets

is determined

by our asset

allocation, our

historical long-term

investment performance,

our

estimate of future long-term returns

by asset class (using input from our

actuaries, investment services, and investment

managers), and

long-term inflation

assumptions. We

review this assumption

annually for

each plan; however,

our annual

investment performance

for

one particular year does not, by itself, significantly influence our evaluation.

Our

historical

investment

returns

(compound

annual

growth

rates)

for

our

United

States

defined

benefit

pension

and

other

postretirement benefit

plan assets

were 0.6

percent in

the 1-year

period ended

May 26,

2024, and

returns of

2.3 percent,

4.5 percent,

7.5 percent, and 6.8 percent for the 5, 10, 15, and 20-year periods ended

May 26, 2024.

On a weighted-average basis, the

expected rate of return for all

defined benefit plans was 7.13

percent for fiscal 2024, 6.70

percent for

fiscal 2023, and 5.85 percent for fiscal 2022. For

fiscal 2025,

we increased our weighted-average expected rate of

return on plan assets

for our principal

defined benefit pension

and other postretirement

plans in the

United States to

7.70 percent due

to higher prospective

long-term asset returns primarily on fixed income investments.

Lowering

the

expected

long-term

rate

of

return

on

assets

by

basis

points

would

increase

our

net

pension

and

postretirement

expense by $58 million for

fiscal 2025. A market-related

valuation basis is used to reduce

year-to-year expense volatility.

The market-

related valuation

recognizes certain

investment gains

or losses over

a five-year

period from

the year

in which

they occur.

Investment

gains or

losses for

this purpose

are the difference

between the

expected return

calculated using

the market-related

value of

assets and

the

actual

return

based

on

the

market-related

value

of

assets.

Our

outside

actuaries

perform

these

calculations

as

part

of

our

determination of annual expense or income.

Discount Rates

We

estimate

the

service

and

interest

cost

components

of

the

net

periodic

benefit

expense

for

our

United

States

and

most

of

our

international

defined

benefit

pension,

other

postretirement

benefit,

and

postemployment

benefit

plans

utilizing

a

full

yield

curve

approach

by applying

the specific

spot rates

along

the yield

curve used

to determine

the benefit

obligation

to the

relevant projected

cash flows. Our

discount rate assumptions

are determined annually

as of May 31

for our defined

benefit pension, other

postretirement

benefit,

and

postemployment

benefit

plan

obligations.

We

work

with

our

outside

actuaries

to

determine

the

timing

and

amount

of

expected future cash outflows to plan

participants and, using the Aa Above Median

corporate bond yield, to develop a forward

interest

rate curve, including

a margin to

that index based

on our credit

risk. This forward

interest rate curve

is applied to

our expected

future

cash outflows to determine our discount rate assumptions.

Our weighted-average discount rates were as follows:

Defined Benefit

Pension Plans

Other

Postretirement

Benefit Plans

Postemployment

Benefit Plans

Effective rate for fiscal 2025 service costs

5.58

%

5.48

%

5.37

%

Effective rate for fiscal 2025 interest costs

5.40

%

5.28

%

5.05

%

Obligations as of May 31, 2024

5.52

%

5.52

%

5.05

%

Effective rate for fiscal 2024 service costs

5.27

%

5.15

%

5.00

%

Effective rate for fiscal 2024 interest costs

5.06

%

4.96

%

4.61

%

Obligations as of May 31, 2023

5.18

%

5.19

%

4.55

%

Effective rate for fiscal 2023 service costs

4.57

%

4.41

%

3.69

%

Effective rate for fiscal 2023 interest costs

4.03

%

3.80

%

3.35

%

Lowering

the

discount

rates

by

basis

points

would

increase

our

net

defined

benefit

pension,

other

postretirement

benefit,

and

postemployment benefit plan expense

for fiscal 2025 by approximately

$29 million. All obligation-related

experience gains and losses

are amortized

using

a straight-line

method over

the average

remaining

service period

of active

plan participants

or over

the average

remaining lifetime of the remaining plan participants if the plan is viewed as “all or

almost all” inactive participants.

Health Care Cost Trend

Rates

We

review our

health care

cost trend

rates annually.

Our review

is based

on data

we collect

about our

health care

claims experience

and information

provided by our

actuaries. This information

includes recent

plan experience,

plan design, overall

industry experience

and projections, and

assumptions used by other

similar organizations.

Our initial health

care cost trend

rate is adjusted

as necessary to

remain consistent

with this

review,

recent experiences,

and short-term

expectations.

Our initial

health care

cost trend

rate assumption

is 7.3

percent for

retirees age

65 and

over and

7.3 percent

for retirees

under age

65 at

the end

of fiscal

2024. Rates

are graded

down

annually until

the ultimate

trend rate

of 4.5

percent is

reached in

2033 for

all retirees.

The trend

rates are

applicable for

calculations

only if

the retirees’

benefits increase

as a

result of

health care

inflation. The

ultimate trend

rate is

adjusted annually,

as necessary,

to

approximate

the

current

economic

view

on

the

rate

of

long-term

inflation

plus

an

appropriate

health

care

cost

premium.

Assumed

trend rates for health care costs have an important effect on the

amounts reported for the other postretirement benefit plans.

Any

arising

health

care

claims cost-related

experience

gain

or

loss is

recognized

in the

calculation

of expected

future claims.

Once

recognized, experience gains and

losses are amortized using a straight-line

method over the average remaining

service period of active

plan participants

or over

the average

remaining lifetime

of the

remaining plan

participants if

the plan

is viewed

as “all

or almost

all”

inactive participants.

Financial Statement Impact

In

fiscal

2024,

we

recorded

net

defined

benefit

pension,

other

postretirement

benefit,

and

postemployment

benefit

plan

income

of

$11 million

compared to

$6 million of

income in

fiscal 2023

and $26 million

of income

in fiscal

2022. As

of May

26, 2024,

we had

cumulative unrecognized

actuarial net losses of

$2 billion on our

defined benefit pension plans

and cumulative unrecognized

actuarial

net gains of

$185 million on our

postretirement and postemployment

benefit plans. These

net unrecognized actuarial

losses will result

in

increases

in

our

future

net

pension

and

postretirement

benefit

expenses

because

they

currently

exceed

the

corridors

defined

by

GAAP.

Actual

future

net

defined

benefit

pension,

other

postretirement

benefit,

and

postemployment

benefit

plan

income

or

expense

will

depend on

investment performance,

changes in

future discount

rates, changes

in health care

cost trend

rates, and

other factors

related

to the populations participating in these plans.

RECENTLY

ISSUED ACCOUNTING PRONOUNCEMENTS

In March

2024,

the SEC

issued final

rules on

the enhancement

and

standardization

of climate-related

disclosures.

The rules

require

disclosure

of,

among

other

things:

material

climate-related

risks;

activities

to

mitigate

or

adapt

to

such

risks;

governance

and

management

of

such

risks;

and

material

greenhouse

gas

(GHG)

emissions

from

operations

owned

or

controlled

(Scope

and/or

indirect emissions

from purchased

energy consumed

in operations (Scope

2). Additionally,

the rules require

disclosure in

the notes

to

the financial

statements of

the effects

of severe

weather events

and other

natural conditions,

subject to

certain materiality

thresholds.

The SEC

has issued

a stay

on the

final rules

due to

litigation and

the effective

date is

delayed indefinitely.

We

are in

the process

of

analyzing the impact of the rules on our disclosures.

In December 2023, the

Financial Accounting Standards Board

(FASB) issued

Accounting Standards Update (ASU)

2023-09 requiring

enhanced

income

tax

disclosures.

The

ASU

requires

disclosure

of

specific

categories

and

disaggregation

of

information

in

the

rate

reconciliation table. The

ASU also requires

disclosure of disaggregated

information related to

income taxes paid,

income or loss

from

continuing

operations

before

income

tax

expense

or

benefit,

and

income

tax

expense

or

benefit

from

continuing

operations.

The

requirements

of

the

ASU

are

effective

for

annual

periods

beginning

after

December

15,

2024,

which

for

us

is

fiscal

Early

adoption is permitted

and the amendments

should be applied

on a prospective

basis. Retrospective application

is permitted. We

are in

the process of analyzing the impact of the ASU on our related disclosures.

In

November

2023,

the

FASB

issued

ASU

2023-07

requiring

enhanced

segment

disclosures.

The

ASU

requires

disclosure

of

significant

segment

expenses

regularly

provided

to

the

chief

operating

decision

maker

(CODM)

included

within

segment

operating

profit

or

loss.

Additionally,

the

ASU

requires

a

description

of

how

the

CODM

utilizes

segment

operating

profit

or

loss

to

assess

segment performance.

The requirements

of the

ASU are effective

for annual

periods beginning

after December

15, 2023,

and interim

periods within

fiscal years

beginning after

December 15,

2024. For

us, annual

reporting requirements

will be

effective for

our fiscal

2025 and

interim reporting

requirements will

be effective

beginning with

our first

quarter of

fiscal 2026.

Early adoption

is permitted

and retrospective

application is

required

for all

periods presented.

We

are in

the process

of analyzing

the impact

of the

ASU on

our

related disclosures.

In December of 2021, the Organization for Economic Cooperation

and Development (OECD) established a framework, referred to as

Pillar 2, designed to ensure large multinational enterprises pay

a minimum 15 percent level of tax on the income arising in each

jurisdiction in which they operate. The earliest effective date is for

taxable years beginning after December 31, 2023, which for us is

fiscal 2025.

Numerous countries have already enacted the OECD model rules, and several other

countries have drafted legislation.

We do not

expect this legislation to have a material impact on our consolidated financial statements. We

will continue to monitor and

evaluate new legislation and guidance, which could change our current

assessment.

NON-GAAP MEASURES

We

have

included

in

this

report

measures

of

financial

performance

that

are not

defined

by

GAAP.

We

believe

that

these

measures

provide useful information to investors and include these measures in other

communications to investors.

For each

of these

non-GAAP financial

measures, we

are providing

below a

reconciliation of

the differences

between the

non-GAAP

measure and the most

directly comparable GAAP measure,

an explanation of

why we believe the non-GAAP

measure provides useful

information to

investors, and

any additional

material purposes

for which

our management

or Board

of Directors

uses the

non-GAAP

measure. These non-GAAP measures should be viewed in addition to, and not

in lieu of, the comparable GAAP measure.

Significant Items Impacting Comparability

Several

measures

below

are

presented

on

an

adjusted

basis.

The

adjustments

are

either

items

resulting

from

infrequently

occurring

events or items that, in management’s

judgment, significantly affect the year-to-year

assessment of operating results.

The following are descriptions of significant items impacting comparability

of our results.

Goodwill and other intangible assets impairments

Non-cash

goodwill

and

other intangible

assets impairment

charges

related

to

our

Latin America

reporting

unit

and

our

Top

Chews

,

True Chews

, and

EPIC

brand intangible

assets in fiscal 2024.

Please see Note

6 to the Consolidated

Financial Statements in

Item 8 of

this report.

Legal recovery

Legal recovery recorded in fiscal 2024.

Mark-to-market effects

Net

mark-to-market

valuation

of

certain

commodity

positions

recognized

in

unallocated

corporate

items.

Please

see

Note

to

the

Consolidated Financial Statements in Item 8 of this report.

Restructuring charges and project-related costs

Restructuring

charges

and

project-related

costs

related

to

commercial

strategy

restructuring

actions

and

previously

announced

restructuring

actions

in

fiscal

Restructuring

charges

and

project-related

costs

for

global

supply

chain

actions,

network

optimization

actions, and

previously announced

restructuring actions

in fiscal

2023. Please

see Note

4 to

the Consolidated

Financial

Statements in Item 8 of this report.

Product recall, net

Costs related to the fiscal 2023 voluntary recall of certain international

Häagen-Dazs

ice cream products, net of recoveries.

Investment activity, net

Valuation

adjustments and the

gain on sale

of certain corporate

investments in fiscal

2024. Valuation

adjustments and the

loss on sale

of certain corporate investments in fiscal 2023.

Transaction costs

Transaction

costs

primarily

related

to

the

acquisition

of

a

pet

food

business

in

Europe

in

fiscal

Transaction

costs

primarily

related

to

the

sale

of

our

Helper

main

meals

and

Suddenly

Salad

side

dish

business

in

fiscal

Please

see

Note

to

the

Consolidated Financial Statements in Item 8 of this report.

Acquisition integration costs

Integration

costs

primarily

resulting

from

the

acquisition

of

TNT

Crust

in

fiscal

2024

and

fiscal

Please

see

Note

to

the

Consolidated Financial Statements in Item 8 of this report.

Divestitures gain, net

Net divestitures

gain primarily

related to

the sale

of our

Helper main

meals and

Suddenly Salad

side dishes

business in

fiscal 2023.

Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.

CPW restructuring charges

CPW restructuring charges related to previously announced restructuring

actions.

Organic Net Sales Growth Rates

We

provide organic

net sales

growth rates

for our

consolidated net

sales and

segment net

sales. This

measure is

used in

reporting to

our

Board

of

Directors

and

executive

management

and

as

a

component

of

the

measurement

of

our

performance

for

incentive

compensation purposes.

We

believe that

organic net

sales growth

rates provide

useful information

to investors

because they

provide

transparency

to underlying

performance

in our

net sales

by excluding

the effect

that foreign

currency

exchange rate

fluctuations,

as

well

as

acquisitions,

divestitures,

and

a

rd

week,

when

applicable,

have

on

year-to-year

comparability.

A

reconciliation

of

these

measures to reported

net sales growth

rates, the relevant

GAAP measures, are

included in our

Consolidated Results of

Operations and

Results of Segment Operations discussions in the MD&A above.

Adjusted Operating Profit and Related Constant-currency Growth

Rate

This measure is used in reporting

to our Board of Directors and

executive management and as a

component of the measurement of

our

performance for

incentive compensation purposes.

We

believe that

this measure provides

useful information

to investors because

it is

the

operating

profit

measure

we

use

to

evaluate

operating

profit

performance

on

a

comparable

year-to-year

basis.

Additionally,

the

measure

is

evaluated

on

a

constant-currency

basis

by

excluding

the

effect

that

foreign

currency

exchange

rate

fluctuations

have

on

year-to-year comparability given the volatility in foreign

currency exchange rates.

Our adjusted operating profit growth on a constant-currency basis is calculated

as follows:

Fiscal Year

2024

2023

Change

Operating profit as reported

$

3,431.7

$

3,433.8

Flat

Goodwill and other intangible assets impairments

220.2

-

Legal recovery

(53.2)

-

Mark-to-market effects

(39.1)

291.9

Restructuring charges

38.8

61.0

Product recall, net

(30.3)

22.5

Investment activity, net

18.5

84.0

Transaction costs

14.0

0.4

Project-related costs

2.0

2.4

Acquisition integration costs

0.2

5.9

Divestitures gain, net

-

(444.6)

Adjusted operating profit

$

3,602.7

$

3,457.3

%

Foreign currency exchange impact

Flat

Adjusted operating profit growth, on a constant-currency basis

%

Note: Table may not foot due to rounding.

For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.

Adjusted Diluted EPS and Related Constant-currency Growth Rate

This measure

is used in

reporting to

our Board of

Directors and executive

management. We

believe that

this measure provides

useful

information to

investors because it

is the profitability

measure we use

to evaluate earnings

performance on

a comparable year-to-year

basis.

The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted

EPS and the related constant-currency growth rate follows:

Fiscal Year

Per Share Data

2024

2023

Change

Diluted earnings per share, as reported

$

4.31

$

4.31

Flat

Goodwill and other intangible assets impairments

0.28

-

Legal recovery

(0.07)

-

Mark-to-market effects

(0.05)

0.37

Restructuring charges

0.05

0.08

Product recall, net

(0.04)

0.03

Investment activity, net

0.02

0.11

Transaction costs

0.02

-

Acquisition integration costs

-

0.01

Divestitures gain, net

-

(0.62)

Adjusted diluted earnings per share

$

4.52

$

4.30

%

Foreign currency exchange impact

Flat

Adjusted diluted earnings per share growth, on a constant-currency basis

%

Note: Table may not foot due to rounding.

For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.

See our reconciliation

below of the effective

income tax rate as

reported to the adjusted

effective income tax

rate for the tax

impact of

each item affecting comparability.

Free Cash Flow Conversion Rate

We

believe

this

measure

provides

useful

information

to

investors

because

it

is

important

for

assessing

our

efficiency

in

converting

earnings

to

cash

and

returning

cash

to

shareholders.

The

calculation

of

free

cash

flow

conversion

rate

and

net

cash

provided

by

operating activities conversion rate, its equivalent GAAP measure, follows:

In Millions

Fiscal 2024

Net earnings, including earnings attributable to redeemable and noncontrolling

interests, as reported

$

2,518.6

Goodwill and other intangible assets impairments, net of tax

161.8

Legal recovery, net of

tax

(40.3)

Mark-to-market effects, net of tax

(30.1)

Restructuring charges, net of tax

28.4

Product recall, net, net of tax

(23.3)

Investment activity, net,

net of tax

12.6

Transaction costs, net of tax

11.9

CPW restructuring charges, net of tax

2.0

Project-related costs, net of tax

1.3

Acquisition integration costs, net of tax

0.2

Adjusted net earnings, including earnings attributable to redeemable and

noncontrolling interests

$

2,643.0

Net cash provided by operating activities

3,302.6

Purchases of land, buildings, and equipment

(774.1)

Free cash flow

$

2,528.5

Net cash provided by operating activities conversion rate

131%

Free cash flow conversion rate

96%

Note: Table may not foot due rounding.

For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.

See our reconciliation

below of the effective

income tax rate as

reported to the

adjusted effective income

tax rate for the

tax impact of

each item affecting comparability.

Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit

Margin)

We believe

this measure provides useful information

to investors because it is important

for assessing our operating profit margin

on a

comparable year-to-year basis.

Our adjusted operating profit margins are calculated as follows:

Fiscal Year

Percent of Net Sales

2024

2023

Operating profit as reported

$

3,431.7

17.3

%

$

3,433.8

17.1

%

Goodwill and other intangible assets impairments

220.2

1.1

%

-

-

%

Legal recovery

(53.2)

(0.3)

%

-

-

%

Mark-to-market effects

(39.1)

(0.2)

%

291.9

1.5

%

Restructuring charges

38.8

0.2

%

61.0

0.3

%

Product recall, net

(30.3)

(0.2)

%

22.5

0.1

%

Investment activity, net

18.5

0.1

%

84.0

0.4

%

Transaction costs

14.0

0.1

%

0.4

-

%

Project-related costs

2.0

-

%

2.4

-

%

Acquisition integration costs

0.2

-

%

5.9

-

%

Divestitures gain, net

-

-

%

(444.6)

(2.2)

%

Adjusted operating profit

$

3,602.7

18.1

%

$

3,457.3

17.2

%

Note: Table may not foot due to rounding.

For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.

Adjusted Effective Income Tax

Rates

We

believe

this

measure

provides

useful

information

to

investors

because

it

presents

the

adjusted

effective

income

tax

rate

on

a

comparable year-to-year basis.

Adjusted effective income tax rates are calculated as follows:

Fiscal Year

Ended

2024

2023

In Millions

(Except Per Share Data)

Pretax

Earnings (a)

Income

Taxes

Pretax

Earnings (a)

Income

Taxes

As reported

$

3,028.3

$

594.5

$

3,140.5

$

612.2

Goodwill and other intangible assets impairments

220.2

58.4

-

-

Legal recovery

(53.2)

(12.9)

-

-

Mark-to-market effects

(39.1)

(9.0)

291.9

67.1

Restructuring charges

38.8

10.4

61.0

12.6

Product recall, net

(30.3)

(7.0)

22.5

5.2

Investment activity, net

18.5

5.9

84.0

18.0

Transaction costs

14.0

2.1

0.4

0.2

Project-related costs

2.0

0.7

2.4

0.8

Acquisition integration costs

0.2

0.1

5.9

1.3

Divestitures gain, net

-

-

(444.6)

(73.2)

As adjusted

$

3,199.4

$

643.1

$

3,164.0

$

644.1

Effective tax rate:

As reported

19.6%

19.5%

As adjusted

20.1%

20.4%

Sum of adjustments to income taxes

$

48.6

$

32.0

Average number

of common shares - diluted EPS

579.5

601.2

Impact of income tax adjustments on adjusted diluted EPS

$

(0.08)

$

(0.05)

Note: Table may not foot due to rounding.

(a)

Earnings before income taxes and after-tax earnings from joint ventures.

For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.

Constant-currency After-Tax

Earnings from Joint Ventures

Growth Rate

We

believe that

this measure

provides useful

information to

investors because

it provides

transparency to

underlying performance

of

our joint

ventures by

excluding the

effect

that foreign

currency exchange

rate fluctuations

have on

year-to-year

comparability given

volatility in foreign currency exchange markets.

After-tax earnings from joint ventures growth rate on

a constant-currency basis are calculated as follows:

Fiscal 2024

Percentage change in after-tax earnings from joint ventures as reported

%

Impact of foreign currency exchange

(10)

pts

Percentage change in after-tax earnings from joint ventures on

a constant-currency basis

%

Note: Table may not foot due to rounding.

Net Sales Growth Rate for Canada Operating Unit on a Constant-currency

Basis

We

believe

this

measure

of

our

Canada

operating

unit

net

sales

provides

useful

information

to

investors

because

it

provides

transparency to

the underlying

performance for

the Canada operating

unit within our

North America Retail

segment by

excluding the

effect

that

foreign

currency

exchange

rate

fluctuations

have

on

year-to-year

comparability

given

volatility

in

foreign

currency

exchange markets.

Net sales growth rate for our Canada operating unit on a constant-currency

basis is calculated as follows:

Fiscal 2024

Percentage change in net sales as reported

%

Impact of foreign currency exchange

(1)

pt

Percentage change in net sales on a constant-currency basis

%

Note: Table may not foot due to rounding.

Constant-currency Segment Operating Profit Growth Rates

We

believe that

this measure

provides useful

information to

investors because

it provides

transparency to

underlying performance

of

our

segments

by

excluding

the

effect

that

foreign

currency

exchange

rate

fluctuations

have

on

year-to-year

comparability

given

volatility in foreign currency exchange markets.

Our segments’ operating profit growth rates on a constant-currency

basis are calculated as follows:

Fiscal 2024

Percentage Change

in Operating Profit

as Reported

Impact of Foreign

Currency Exchange

Percentage Change

in Operating Profit

on Constant-

Currency Basis

North America Retail

(3)

%

Flat

(3)

%

International

(23)

%

(3)

pts

(20)

%

Pet

%

Flat

%

North America Foodservice

%

Flat

%

Note: Table may not foot due to rounding.

Forward-Looking Financial Measures

Our fiscal 2025

outlook for organic

net sales growth,

constant-currency adjusted

operating profit,

adjusted diluted

EPS, and free

cash

flow conversion

are non-GAAP financial

measures that

exclude, or

have otherwise

been adjusted

for, items

impacting comparability,

including the effect

of foreign currency exchange

rate fluctuations, restructuring

charges, acquisition transaction

and integration costs,

acquisitions,

divestitures,

and

mark-to-market

effects.

We

are

not

able

to

reconcile

these

forward-looking

non-GAAP

financial

measures

to their

most directly

comparable

forward-looking

GAAP financial

measures

without

unreasonable

efforts because

we are

unable to predict with a reasonable degree of certainty

the actual impact of changes in foreign currency exchange rates

and commodity

prices

or

the

timing

or

impact

of

acquisitions,

divestitures,

and

restructuring

actions

throughout

fiscal

The

unavailable

information could have a significant impact on our fiscal 2025 GAAP financial results.

For

fiscal

2025,

we

currently expect:

foreign

currency

exchange

rates

(based

on

a blend

of

forward

and

forecasted

rates and

hedge

positions)

and

acquisitions

and

divestitures

completed

prior

to

fiscal

2025

will

have

no

material

impact

to

net

sales

growth

and

restructuring charges to be immaterial.