GENERAL MILLS INC (GIS)

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

INTRODUCTION

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in

conjunction with the MD&A included in our Annual Report on Form 10-K for the fiscal year ended May 25, 2025, for important

background regarding, among other things, our key business drivers. Significant trademarks and service marks used in our business

are set forth in italics herein. Certain terms used throughout this report are defined in the “Glossary” section below.

Our key priorities in fiscal 2026 are to return North America Retail to volume growth, accelerate North America Pet growth with an

expanded portfolio, and drive efficiencies to reinvest in growth. We expect category growth to be below our long-term projections,

reflecting less benefit from net price realization and mix amid a continued challenging consumer backdrop. To strengthen our

categories and market share performance, we plan to increase investment in consumer value, product news, innovation, and brand

building, guided by our remarkable experience framework. This included a significant strategic investment to launch Blue Buffalo into

the fast-growing United States fresh pet food sub-category in calendar 2025. We expect the combination of these growth investments,

input cost inflation, and normalization of corporate incentive will outpace expected Holistic Margin Management cost savings of 5

percent of cost of goods sold, savings from our global transformation initiative, and benefits from a 53rd week in fiscal 2026. In

addition, we expect the net impact of the divestitures of our North American yogurt businesses and the Whitebridge Pet Brands

acquisition will reduce adjusted operating profit growth by approximately 5 points in fiscal 2026.

CONSOLIDATED RESULTS OF OPERATIONS

Third Quarter Results

In the third quarter of fiscal 2026, net sales decreased 8 percent, including the net impact of the divestitures of our North American

yogurt businesses (Divestitures) and the acquisition of Whitebridge Pet Brands (Acquisition). Organic net sales decreased 3 percent

compared to the same period last year. Operating profit decreased 41 percent to $525 million, primarily driven by higher input costs, a

decrease in contributions from volume growth, a gain on divestiture related to the sale of our Canada yogurt business recorded in the

third quarter of fiscal 2025, and higher restructuring and transformation costs, partially offset by favorable net price realization and

mix and higher transaction costs recorded in fiscal 2025 related to the Divestitures and Acquisition. Operating profit margin of 11.8

percent decreased 660 basis points. Adjusted operating profit of $547 million decreased 32 percent on a constant-currency basis,

including the net impact of the Divestitures and Acquisition, primarily driven by higher input costs and a decrease in contributions

from volume growth, partially offset by favorable net price realization and mix. Adjusted operating profit margin decreased 420 basis

points to 12.3 percent. Diluted earnings per share of $0.56 decreased 50 percent in the third quarter of fiscal 2026. Adjusted diluted

earnings per share of $0.64 decreased 37 percent on a constant-currency basis compared to the third quarter of fiscal 2025. 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 the third quarter of fiscal 2026 follows:

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

24

Consolidated net sales were as follows:

Note: Table may not foot due to rounding.

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

Net sales in the third quarter of fiscal 2026 decreased 8 percent compared to the same period in fiscal 2025, driven by a decrease in

contributions from volume growth, partially offset by favorable net price realization and mix and favorable foreign currency exchange

impacts, and includes the net impact of the Divestitures and Acquisition.

Components of organic net sales growth are shown in the following table:

Note: Table may not foot due to rounding.

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

Organic net sales decreased 3 percent in the third quarter of fiscal 2026, compared to the same period in fiscal 2025, driven by a

decrease in contributions from organic volume growth and unfavorable organic net price realization and mix.

Cost of sales decreased $133 million to $3,070 million in the third quarter of fiscal 2026, compared to the same period in fiscal 2025.

The decrease was primarily driven by a $349 million decrease attributable to lower volume, partially offset by a $202 million increase

attributable to product rate and mix, both of which include the net impact of the Divestitures and Acquisition. We recorded $8 million

of restructuring charges in cost of sales in the third quarter of fiscal 2026 (please refer to Note 3 to the Consolidated Financial

Statements in Part I, Item 1 of this report). In addition, we recorded a $17 million net decrease in cost of sales related to the mark-to-

market valuation of certain commodity positions and grain inventories in the third quarter of fiscal 2026, compared to a $23 million

net decrease in the third quarter of fiscal 2025.

Selling, general, and administrative (SG&A) expenses decreased $32 million to $813 million in the third quarter of fiscal 2026,

compared to the same period in fiscal 2025, primarily driven by lower other administrative costs, and including the net impact of the

Divestitures and Acquisition. SG&A expenses as a percent of net sales in the third quarter of fiscal 2026 increased 90 basis points

compared to the third quarter of fiscal 2025.

Divestitures loss (gain), net decreased $101 million, primarily due to a $96 million gain in the third quarter of fiscal 2025, related to

the sale of our Canada yogurt business (please refer to Note 2 to the Consolidated Financial Statements in Part I, Item I of this report).

Restructuring, transformation, impairment, and other exit costs (recoveries) totaled $24 million in the third quarter of fiscal

2026, compared to $1 million of net recoveries in the same period last year. In fiscal 2026, we approved a multi-year organizational

initiative to increase the competitiveness of our supply chain, and as a result, we recorded $17 million of charges in the third quarter of

fiscal 2026. In addition, we recorded $8 million of restructuring and transformation charges in the third quarter of fiscal 2026 related

to actions previously announced (please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).

Benefit plan non-service income totaled $15 million in the third quarter of fiscal 2026, compared to $14 million in the same period

last year, primarily driven by lower interest costs partially offset by lower expected return on plan assets.

Interest, net for the third quarter of fiscal 2026 totaled $128 million, down $8 million from the third quarter of fiscal 2025, primarily

driven by lower average long-term debt levels.

25

The effective tax rate for the third quarter of fiscal 2026 was 24.3 percent compared to 19.8 percent for the third quarter of fiscal

2025. The 4.5 percentage point increase was primarily due to certain nonrecurring discrete tax benefits in fiscal 2025 and unfavorable

earnings mix by jurisdiction in fiscal 2026. Our effective tax rate excluding certain items affecting comparability was 24.0 percent in

the third quarter of fiscal 2026, compared to 21.0 percent in the same period last year (see the “Non-GAAP Measures” section below

for a description of our use of measures not defined by GAAP). The 3.0 percentage point increase was primarily due to certain

nonrecurring discrete tax benefits in fiscal 2025 and unfavorable earnings mix by jurisdiction in fiscal 2026.

The impacts of the One Big Beautiful Bill Act (OBBBA) are reflected in our results for the quarter ended February 22, 2026, and there

was no material impact to our income tax expense. We expect certain provisions of the OBBBA will change the timing of cash tax

payments in the current fiscal year and future periods. Please refer to Note 15 to the Consolidated Financial Statements in Part I, Item

1 of this report for additional information.

After-tax (loss) earnings from joint ventures for the third quarter of fiscal 2026 was a $6 million after-tax loss compared to after-tax

earnings of $14 million in the same period in fiscal 2025, primarily driven by our share of transaction costs related to certain assets

held for sale at Cereal Partners Worldwide (CPW). On a constant-currency basis, after-tax loss from joint ventures decreased 129

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:

(a)Häagen-Dazs Japan, Inc. (HDJ).

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

Average diluted shares outstanding decreased by 18 million in the third quarter of fiscal 2026 from the same period a year ago

primarily due to share repurchases.

Nine-Month Results

In the nine-month period ended February 22, 2026, net sales decreased 7 percent, including the net impact of the Divestitures and

Acquisition. Organic net sales decreased 3 percent compared to the same period last year. Operating profit increased 6 percent to

$2,978 million, primarily driven by a divestiture gain related to the sale of our United States yogurt business, favorable net price

realization and mix, and lower SG&A expenses, partially offset by a decrease in contributions from volume growth, higher input costs,

and higher restructuring, transformation, and impairment charges. Operating profit margin of 21.6 percent increased 280 basis points

compared to the same period last year. Adjusted o

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7 - Management’s Discussion and Analysis of

Financial Condition and Results of Operations

EXECUTIVE OVERVIEW

We

are

a

global packaged

foods company.

We

develop

distinctive

value-added

food

products

and

market

them under

unique

brand

names.

We

work

continuously

to

improve

our

core

products

and

to

create

new

products

that

meet

consumers’

evolving

needs

and

preferences.

In

addition,

we

build

the

equity

of

our

brands

over

time

with

strong

consumer-directed

marketing,

innovative

new

products,

and

effective

merchandising.

We

believe

our

brand-building

approach

is

the

key

to

winning

and

sustaining

leading

share

positions in markets around the globe.

Our fundamental

financial goal is

to generate competitively

differentiated returns

for our shareholders

over the long

term.

We

believe

achieving

that

goal

requires

us

to

generate

a

consistent

balance

of

net

sales

growth,

margin

expansion,

cash

conversion,

and

cash

return to shareholders over time.

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

on average over time:

●

2 to 3 percent annual growth in organic net sales;

●

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

●

mid- to high-single-digit annual growth in adjusted diluted earnings per share

(EPS);

●

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

after tax; and

●

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

including an attractive dividend yield.

Guided by our

purpose to make

food the world

loves, we are

executing our Accelerate

strategy to drive

sustainable, profitable growth

and

top-tier

shareholder

returns

over

the

long

term.

The

strategy

focuses

on

four

pillars

to

create

competitive

advantages

and

win:

boldly

building

brands,

relentlessly

innovating,

unleashing

our

scale,

and

standing

for

good.

We

are

prioritizing

our

core

markets,

global

platforms,

and

local

gem

brands

that

have

the

best

prospects

for

profitable

growth,

and

we

are

committed

to

reshaping

our

portfolio with strategic acquisitions and divestitures to further enhance

our growth profile.

Our

consolidated

net

sales

for

fiscal

2025

declined

2

percent

to

$19.5

billion.

On

an

organic

basis,

net

sales

decreased

2

percent

compared to year-ago levels. Operating

profit of $3.3 billion decreased

4 percent. Adjusted operating profit

of $3.4 billion decreased 7

percent on a

constant-currency basis.

Diluted EPS declined

5 percent to

$4.10. Adjusted diluted

EPS of $4.21

decreased 7 percent

on

a

constant-currency

basis

(See

the

“Non-GAAP

Measures”

section

below

for

a

description

of

our

use

of

measures

not

defined

by

generally accepted accounting principles (GAAP)).

Net cash

provided

by operations

totaled $2,918

million in

fiscal 2025

representing a

conversion rate

of 126

percent of

net earnings,

including

earnings attributable

to noncontrolling

interests. This

cash generation

supported capital

investments

totaling $625

million,

and

our

resulting

free

cash

flow was

$2,293

million

at

a

conversion

rate

of 97

percent of

adjusted

net

earnings,

including

earnings

attributable

to

noncontrolling

interests.

We

returned

cash

to

shareholders

through

dividends

totaling

$1,339

million

and

share

repurchases

totaling

$1,203

million

(See

the

“Non-GAAP

Measures”

section

below

for

a

description

of

our

use

of

measures

not

defined by GAAP).

In

fiscal

2025,

the

operating

environment

was

characterized

by

significant

volatility

and

uncertainty,

resulting

in

value-seeking

behaviors by

consumers that

were deeper

and more

prolonged than

we expected.

As a

result, we

made important

changes to

adapt to

the evolving

environment and

put our

business on

a path

back to

growth.

We

increased investment

to bring

consumers greater

value,

which strengthened our

pound volume performance

as we exited the

year.

While the level of

incremental investment

resulted in fiscal

2025

financial

results

below

our

targeted

ranges,

we

expect

the

improved

pound

volume

and

household

penetration

trends

will

translate into stronger top- and bottom-line performance over the long

term.

We

delivered mixed performance against the three priorities we established

at the beginning of the year:

We

did not achieve our objective

of accelerating organic net sales

growth, with full-year organic

net sales declining 2 percent

driven primarily

by unfavorable

organic net

price realization

and mix

resulting from

our increased

investments in

consumer

value (see the ‘Non-GAAP Measures” section below for our use of

this measure not defined by GAAP).

We

successfully

created

fuel

for

our

investments,

including

generating

industry-leading

Holistic

Margin

Management

(HMM) cost savings by increasingly applying digital and technology capabilities throughout

our supply chain.

We

successfully drove

strong cash

generation, with

free cash

flow conversion

finishing at

97 percent,

which was

above our

full-year

target

of

95

percent.

This

enabled

us

to

fund

capital

investment,

raise

our

dividend,

and

continue

our

share

repurchase activity.

We

also continued

to reshape our

portfolio, including

acquisitions and divestitures

that further

improved

18

our portfolio’s

ability to generate profitable growth

over the long term (see the

“Non-GAAP Measures” section below

for our

use of this measure not defined by GAAP).

A

detailed

review

of

our

fiscal

2025

performance

compared

to

fiscal

2024

appears

below

in

the

section

titled

“Fiscal

2025

Consolidated Results of Operations.” A detailed review

of our fiscal 2024 performance compared to our fiscal

2023 performance is set

forth

in Part

II, Item

7 of

our Form

10-K for

the fiscal

year

ended

May 26, 2024

under the

caption

“Management’s

Discussion and

Analysis of

Financial Condition

and Results

of Operations

– Fiscal

2024 Consolidated

Results of

Operations,” which

is incorporated

herein by reference.

In fiscal 2026, we

plan to continue advancing

our Accelerate strategy.

Our key priorities are to

return North America Retail

to volume

growth,

Accelerate

North

America

Pet

growth

with

an

expanded

portfolio,

and

drive

efficiencies

to

reinvest

in

growth.

We

expect

category

growth

to

be

below

our

long-term

projections,

reflecting

less

benefit

from

net price

realization

and

mix

amid

a

continued

challenging

consumer

backdrop.

To

strengthen

our

categories

and

market

share

performance,

we

plan

to

increase

investment

in

consumer

value,

product

news,

innovation,

and

brand

building,

guided

by

our

remarkable

experience

framework.

This

includes

a

significant

strategic investment

to launch

Blue Buffalo

into the

fast-growing

U.S. fresh

pet food

sub-category

in calendar

2025.

We

expect

the

combination

of

these

growth

investments,

input

cost

inflation,

and

a

reset

of

corporate

incentive

will

outpace

expected

HMM cost savings of 5 percent of cost of

goods sold, savings from our global transformation

initiative, and benefits from a 53rd week

in fiscal 2026.

In addition, we

expect the net

impact of the

divestiture of

our North American

yogurt businesses and

the Whitebridge

Pet Brands acquisition will reduce adjusted operating profit growth

by approximately 5 points in fiscal 2026.

Based on these assumptions, our key full-year fiscal 2026 targets

are summarized below:

●

Organic net sales are expected to range between down 1 percent and

up 1 percent.

●

Adjusted operating profit

is expected to

be down 10

to 15 percent in

constant currency from

the base of

$3.4 billion reported

in fiscal 2025.

●

Adjusted diluted

EPS is

expected

to be

down 10

to 15

percent in

constant currency

from the

base of

$4.21 earned

in fiscal

2025.

●

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 2025 CONSOLIDATED

RESULTS

OF OPERATIONS

In

fiscal

2025,

net

sales

and

organic

net

sales

decreased

2

percent

compared

to

fiscal

2024.

Operating

profit

of

$3,305

million

decreased

4

percent

compared

to

fiscal

2024,

primarily

driven

by

unfavorable

net

price

realization

and

mix,

an

increase

in

selling,

general,

and

administrative

(SG&A)

expenses,

legal

and

voluntary

recall

net

recoveries

recorded

in

fiscal

2024,

a

decrease

in

contributions from

volume growth, higher

restructuring and transformation

charges, higher

acquisition and divestiture

transaction and

integration

costs, and

an unfavorable

change in

the mark

-to-market

valuation

of

certain commodity

positions

and

grain

inventories.

These impacts were

partially offset by

impairment charges recorded

in fiscal 2024,

a divestiture gain related

to the sale of

our Canada

yogurt

business

in

fiscal

2025,

and

lower

input

costs.

Operating

profit

margin

of

17.0

percent

decreased

30

basis

points.

Adjusted

operating

profit

of

$3,353

million

decreased

7

percent

on

a

constant-currency

basis,

primarily

driven

by

unfavorable

net

price

realization

and

mix,

an

increase in

SG&A

expenses,

and

a decrease

in

contributions

from volume

growth,

partially

offset

by

lower

input costs. Adjusted

operating profit margin

decreased 90 basis

points to 17.2

percent. Diluted earnings

per share of

$4.10 decreased

5 percent compared

to fiscal 2024.

Adjusted diluted earnings

per share of

$4.21 decreased 7

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).

19

A summary of our consolidated financial results for fiscal 2025 follows:

Fiscal 2025

In millions,

except per

share

Fiscal 2025 vs.

Fiscal 2024

Percent of Net

Sales

Constant-

Currency

Growth (a)

Net sales

$

19,486.6

(2)

%

Operating profit

3,304.8

(4)

%

17.0

%

Net earnings attributable to General Mills

2,295.2

(8)

%

Diluted earnings per share

$

4.10

(5)

%

Organic net sales growth rate (a)

(2)

%

Adjusted operating profit (a)

3,352.6

(7)

%

17.2

%

(7)

%

Adjusted diluted earnings per share (a)

$

4.21

(7)

%

(7)

%

(a)

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

GAAP.

Consolidated

net sales

were as follows:

Fiscal 2025

Fiscal 2025 vs.

Fiscal 2024

Fiscal 2024

Net sales (in millions)

$

19,486.6

(2)

%

$

19,857.2

Contributions from volume growth (a)

(1)

pt

Net price realization and mix

(1)

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.

Net sales

in fiscal

2025 decreased

2 percent

compared to

fiscal 2024,

driven by

a decrease

in contributions

from volume

growth and

unfavorable net price realization and mix.

Components of organic net sales growth are shown in the following

table:

Fiscal 2025 vs. Fiscal 2024

Contributions from organic volume growth (a)

Flat

Organic net price realization and mix

(1)

pt

Organic net sales growth

(2)

pts

Foreign currency exchange

Flat

Acquisitions and divestiture

Flat

Net sales growth

(2)

pts

Note: Table may

not foot due to rounding

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

Organic net

sales in

fiscal 2025

decreased 2

percent compared

to fiscal 2024,

driven by

unfavorable organic

net price realization

and

mix.

Cost of

sales

decreased $172 million

in fiscal

2025 to

$12,754 million. The

decrease was

primarily driven

by a

$95 million

decrease

attributable to lower

volume and an $89

million decrease attributable

to product rate and mix.

We

recorded a $16 million

net decrease

in cost of

sales related to

the mark-to-market valuation

of certain commodity

positions and grain

inventories in fiscal

2025, compared

to a net decrease

of $39 million in

fiscal 2024 (please refer

to Note 8 to

the Consolidated Financial

Statements in Item

8 of this report

for

additional

information).

We

also

recorded

$9

million

of

restructuring

charges

in

fiscal

2025

compared

to

$18

million

of

restructuring charges

and $2 million

of restructuring initiative

project-related costs in

cost of sales

in fiscal 2024

(please refer to

Note

4 to the Consolidated Financial Statements in Item 8 of this report for additional

information).

Gross

margin

decreased

3

percent

in

fiscal

2025

compared

to

fiscal

2024.

Gross

margin

as

a

percent

of

net

sales

of

34.6

percent

decreased 30 basis points compared to fiscal 2024.

SG&A expenses

increased $187 million to

$3,446 million in fiscal 2025

compared to fiscal 2024

primarily driven by a

legal recovery

in fiscal 2024, transaction

and integration costs recorded

in fiscal 2025 related to

the definitive agreements to

sell our North American

yogurt businesses

and costs

related to

the Whitebridge

Pet Brands

acquisition,

the addition

of a

pet food

business in

Europe in

fiscal

20

2024,

and net recoveries

recorded in fiscal

2024 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 2025

increased 130 basis points compared to fiscal 2024.

Divestitures

gain, net

totaled $96 million in fiscal 2025

related to the sale of our Canada yogurt business (please refer

to Note 3 to the

Consolidated Financial Statements in Item 8 of this report).

Restructuring,

transformation,

impairment,

and other

exit

costs

totaled

$78

million in

fiscal 202

5

compared

to $241

million

in

fiscal 2024. In fiscal 2025, we approved a multi-year global transformation

initiative to drive increased productivity by enhancing end-

to-end

business

processes,

enabled

by

targeted

organizational

actions,

and

as

a

result,

we

recorded

$70

million

of

charges

in

fiscal

2025.

We

also recorded

$8 million

of restructuring

charges in

fiscal 2025

related to

actions previously

announced.

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 North

America

Pet segment,

and as

a result,

we recorded

$17 million

of charges

in fiscal

2024. Please

refer to

Note 4

to the

Consolidated Financial

Statements in Item 8 of this report for additional information.

Benefit

plan

non-service

income

totaled

$54

million

in

fiscal

2025

compared

to

$76 million

in

fiscal

2024,

primarily

reflecting

higher amortization

of losses

and higher

interest costs

(please refer

to Note

14 to

the Consolidated

Financial Statements

in Item

8 of

this report for additional information).

Interest,

net

for fiscal

2025 totaled

$524 million, $45

million higher

than fiscal

2024, primarily

driven by

higher average

long-term

debt levels.

Our

effective tax rate

for fiscal 2025 was 20.2 percent compared

to 19.6 percent in fiscal 2024. The 0.6

percentage point increase was

primarily driven

by certain nonrecurring

tax benefits in

fiscal 2024, partially

offset by favorable

earnings mix by

jurisdiction in fiscal

2025. Our

adjusted

effective

tax rate

was 20.6

percent in

fiscal 2025

compared

to 20.1

percent in

fiscal 2024

(see the

“Non-GAAP

Measures”

section

below

for

a

description

of

our

use

of

measures

not

defined

by

GAAP).

The

0.5

percentage

point

increase

was

primarily

due

to

certain

nonrecurring

tax

benefits

in

fiscal

2024,

partially

offset

by

favorable

earnings

mix

by

jurisdiction

in

fiscal

2025.

After-tax

earnings from

joint ventures

decreased

to

$58 million

in

fiscal

2025

compared

to

$85

million

in

fiscal

2024,

primarily

driven

by our

share of

asset impairment

charges

at CPW

in

fiscal

2025.

On

a constant

-currency

basis,

after-tax

earnings from

joint

ventures decreased

29 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 2025 vs. Fiscal 2024

CPW

HDJ

Total

Contributions from volume growth (a)

(4)

pts

4

pts

Net price realization and mix

3

pts

(1)

pt

Net sales growth in constant currency

(1)

pts

3

pts

(1)

pt

Foreign currency exchange

(3)

pts

(2)

pts

(3)

pts

Net sales growth

(4)

pts

1

pt

(3)

pts

Note: Table may

not foot due to rounding.

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

Net earnings attributable to noncontrolling interests

increased to $24 million in fiscal 2025

compared to $22 million in fiscal 2024.

Average diluted shares

outstanding

decreased by 22 million in fiscal 2025 from fiscal 2024 primarily due to share repurchase

s.

RESULTS

OF SEGMENT OPERATIONS

Our

businesses

are

organized

into

four

operating

segments:

North

America

Retail,

International,

North

America

Pet,

and

North

America Foodservice.

21

The following tables provide

the dollar amount and percentage

of net sales and operating

profit from each segment for

fiscal 2025 and

fiscal 2024:

Fiscal Year

2025

2024

In Millions

Dollars

Percent of Total

Dollars

Percent of Total

Net Sales

North America Retail

$

11,907.0

61

%

$

12,473.4

63

%

International

2,797.8

14

2,746.5

14

North America Pet

2,470.8

13

2,375.8

12

North America Foodservice

2,300.9

12

2,258.7

11

Total

$

19,476.5

100

%

$

19,854.4

100

%

Segment Operating Profit

North America Retail

$

2,729.9

73

%

$

3,080.4

77

%

International

96.4

3

125.2

3

North America Pet

501.0

14

485.9

12

North America Foodservice

355.4

10

315.5

8

Total

$

3,682.7

100

%

$

4,007.0

100

%

Net sales of $10.1

million in fiscal 2025

and $2.8 million in

fiscal 2024 related to

a business managed

by our Strategic Growth

Office

are included within corporate and other net sales, which is reported separately

from segment net sales.

Segment

operating

profit

as

reviewed

by

our

executive

management

excludes

unallocated

corporate

items,

net

gain

or

loss

on

divestitures, and restructuring, transformation, impairment, and other

exit costs that are centrally managed.

NORTH AMERICA RETAIL

SEGMENT

Our North America Retail

operating segment reflects business

with a wide variety of

grocery stores, mass merchandisers, membership

stores,

natural

food

chains,

drug,

dollar

and

discount

chains,

convenience

stores,

and

e-commerce

grocery

providers.

Our

product

categories

in

this

business

segment

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 2025

Fiscal 2025 vs. 2024

Percentage Change

Fiscal 2024

Net sales (in millions)

$

11,907.0

(5)

%

$

12,473.4

Contributions from volume growth (a)

(4)

pts

Net price realization and mix

Flat

Foreign currency exchange

Flat

Note: Table may

not foot due to rounding.

(a)

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

North America Retail

net sales decreased

5 percent in

fiscal 2025 compared

to fiscal 2024, driven

by a decrease in

contributions from

volume growth.

22

The components of North America Retail organic net

sales growth are shown in the following table:

Fiscal 2025 vs. 2024

Percentage Change

Contributions from organic volume growth (a)

(2)

pts

Organic net price realization and mix

(1)

pt

Organic net sales growth

(3)

pts

Foreign currency exchange

Flat

Divestiture (b)

(1)

pt

Net sales growth

(5)

pts

Note: Table may

not foot due to rounding.

(a)

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

(b)

Divestiture

of

Canada

yogurt

business

in

the

third

quarter

of

fiscal

2025.

Please

refer

to

Note

3

to

the

Consolidated

Financial

Statements in Part II, Item 8 of this report.

North

America

Retail

organic

net

sales

decreased

3

percent

in

fiscal

2025

compared

to

fiscal

2024,

driven

by

a

decrease

in

contributions from organic volume growth and unfavorable

organic net price realization and mix.

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

In Millions

Fiscal 2025

Fiscal 2025 vs. 2024

Percentage Change

Fiscal 2024

U.S. Meals & Baking Solutions

$

4,238.9

(2)

%

$

4,324.3

U.S. Morning Foods

3,439.9

(3)

%

3,561.8

U.S. Snacks

3,356.3

(5)

%

3,538.9

Canada (a)

871.9

(17)

%

1,048.4

Total

$

11,907.0

(5)

%

$

12,473.4

(a)

On

a

constant

currency

basis,

Canada

operating

unit

net

sales

decreased

14

percent

in

fiscal

2025.

See

the

“Non-GAAP

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

Segment operating

profit decreased

11

percent to

$2,730 million in

fiscal 2025

compared to

$3,080 million

in fiscal

2024, primarily

driven by a

decrease in contributions

from volume growth,

higher input costs,

and unfavorable net

price realization

and mix, partially

offset by lower

SG&A expenses. Segment

operating profit decreased

11 percent

on a constant-currency

basis in fiscal 2025

compared

to fiscal 2024 (see the “Non-GAAP Measures” section below for our use

of this measure not defined by GAAP).

INTERNATIONAL SEGMENT

Our

International

operating

segment

consists

of

retail

and

foodservice

businesses

outside

of

the

United

States

and

Canada.

Our

product categories include super-premium

ice cream and frozen desserts, meal kits, salty snacks

,

snack bars, dessert and baking mixes,

shelf-stable

vegetables,

and

pet

food

products.

We

also

sell

super-premium

ice

cream

and

frozen

desserts

directly

to

consumers

through owned

retail shops. Our

International segment

also includes products

manufactured in

the United States

for export, mainly

to

Caribbean and Latin American markets, as well as products we

manufacture for sale to our international joint ventures. Revenu

es from

export activities are reported in the region or country where the end customer

is located.

International net sales were as follows:

Fiscal 2025

Fiscal 2025 vs. 2024

Percentage Change

Fiscal 2024

Net sales (in millions)

$

2,797.8

2

%

$

2,746.5

Contributions from volume growth (a)

3

pts

Net price realization and mix

1

pt

Foreign currency exchange

(2)

pts

Note: Table may

not foot due to rounding.

(a)

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

International net

sales increased 2

percent in fiscal

2025 compared to

fiscal 2024, driven

by an increase

in contributions from

volume

growth and favorable net price realization and mix, partially offset

by unfavorable foreign currency exchange.

23

The components of International organic net sales growth

are shown in the following table:

Fiscal 2025 vs. 2024

Percentage Change

Contributions from organic volume growth (a)

1

pt

Organic net price realization and mix

Flat

Organic net sales growth

Flat

Foreign currency exchange

(2)

pts

Acquisition (b)

4

pts

Net sales growth

2

pts

Note: Table may

not foot due to rounding.

(a)

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

(b)

Acquisition of a pet food business in Europe in fiscal 2024. Please refer to Note

3 to the Consolidated Financial Statements in Part

II, Item 8 of this report.

International organic net sales in fiscal 2025 essentially matched

fiscal 2024.

Segment

operating

profit decreased

23

percent to

$96 million

in fiscal

2025 compared

to $125

million

in 2024,

primarily

driven by

higher

SG&A

expenses

and

unfavorable

net

price

realization

and

mix,

partially

offset

by

lower

input

costs

and

an

increase

in

contributions

from

volume

growth.

Segment

operating

profit

decreased

33

percent

on

a

constant-currency

basis

in

fiscal

2025

compared to fiscal 2024 (see the “Non-GAAP Measures” section below

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

NORTH AMERICA PET SEGMENT

Our North

America Pet

operating segment

includes pet

food products

sold primarily

in the

United States

and Canada

in national

pet

superstore

chains,

e-commerce

retailers,

grocery

stores,

regional

pet

store

chains,

mass

merchandisers,

and

veterinary

clinics

and

hospitals.

Our

product

categories

include

dog

and

cat

food

(dry

foods,

wet

foods,

and

treats)

made

with

whole

meats,

fruits,

and

vegetables

and

other

high-quality

natural

ingredients.

Our tailored

pet

product

offerings

address

specific

dietary,

lifestyle,

and

life-

stage needs

and span

different product

types, diet

types, breed

sizes for

dogs, life

stages, flavors,

product functions,

and textures

and

cuts for wet foods.

North America Pet net sales were as follows:

Fiscal 2025

Fiscal 2025 vs. 2024

Percentage Change

Fiscal 2024

Net sales (in millions)

$

2,470.8

4

%

$

2,375.8

Contributions from volume growth (a)

4

pts

Net price realization and mix

Flat

Foreign currency exchange

Flat

Note: Table may

not foot due to rounding.

(a)

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

North America

Pet net

sales increased

4 percent

in fiscal

2025 compared

to fiscal

2024, driven

by an

increase in

contributions from

volume growth.

24

The components of North America Pet organic net sales growth

are shown in the following table:

Fiscal 2025 vs. 2024

Percentage Change

Contributions from organic volume growth (a)

3

pts

Organic net price realization and mix

(2)

pts

Organic net sales growth

Flat

Foreign currency exchange

Flat

Acquisition (b)

4

pts

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.

(b)

Acquisition of Whitebridge

Pet Brands business in

fiscal 2025. Please

refer to Note 3

to the Consolidated

Financial Statements in

Part II, Item 8 of this report.

North America Pet organic net sales in fiscal 2025 essentially matched

fiscal 2024.

North

America

Pet

operating

profit

increased

3

percent

to

$501 million

in

fiscal

2025,

compared

to

$486 million

in

fiscal

2024,

primarily driven by an increase in contributions

from volume growth and lower input costs, partially offset

by higher SG&A expenses,

including increased media and advertising expenses,

and unfavorable net price realization and mix. Segment

operating profit increased

3 percent

on a

constant-currency basis

in fiscal

2025 compared

to fiscal

2024 (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 2025

Fiscal 2025 vs. 2024

Percentage Change

Fiscal 2024

Net sales (in millions)

$

2,300.9

2

%

$

2,258.7

Contributions from volume growth (a)

1

pt

Net price realization and mix

1

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 2 percent in fiscal

2025 compared to 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 2025 vs. 2024

Percentage Change

Contributions from organic volume growth (a)

1

pt

Organic net price realization and mix

1

pt

Organic net sales growth

2

pts

Foreign currency exchange

Flat

Net sales growth

2

pts

Note: Table may

not foot due to rounding.

(a)

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

25

North

America

Foodservice

organic

net

sales

increased

2

percent

in

fiscal

2025

compared

to

fiscal

2024,

driven

by

an

increase

in

contributions from organic volume growth and favorable

organic net price realization and mix.

Segment

operating

profit

increased

13

percent

to

$355 million

in

fiscal

2025,

compared

to

$316 million

in

fiscal

2024,

primarily

driven by favorable

net price realization and

mix. Segment operating

profit increased 13 percent

on a constant-currency

basis in fiscal

2025 compared to fiscal 2024 (see the “Non-GAAP Measures” section below

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

UNALLOCATED CORPORATE

ITEMS

Unallocated

corporate

items

include

corporate

overhead

expenses,

variances

to

planned

domestic

employee

benefits

and

incentives,

certain

charitable

contributions,

restructuring

initiative project-related

costs,

gains and

losses on

corporate

investments,

results

from

certain businesses managed by our Strategic Growth Office,

and other items that are not part of our measurement of segment operating

performance. These

include gains and

losses arising from

the revaluation of

certain grain inventories

and gains and

losses from mark-

to-market valuation of certain commodity positions until

passed back to our operating segments. These items affecting

operating profit

are

centrally

managed

at

the

corporate

level

and

are

excluded

from

the

measure

of

segment

profitability

reviewed

by

executive

management.

Under

our

supply

chain

organization,

our

manufacturing,

warehouse,

and

distribution

activities

are

substantially

integrated

across

our

operations

in

order

to

maximize

efficiency

and

productivity.

As

a

result,

fixed

assets

and

depreciation

and

amortization expenses are neither maintained nor available by operating

segment.

Unallocated corporate

expense totaled

$396 million

in fiscal 2025

,

compared to

$334 million

last year.

In fiscal

2024, we

recorded a

$53

million

legal

recovery.

We

recorded

$49

million

of

transaction

costs

related

to

the

definitive

agreements

to

sell

our

North

American yogurt businesses and the Whitebridge Pet Brands acquisition

in fiscal 2025, compared to $14 million of transaction costs in

fiscal 2024, primarily

related to our

acquisition of a

pet food business

in Europe.

We

also recorded $14

million of integration

costs in

fiscal 2025,

related to

the acquisition

of Whitebridge

Pet Brands

and the

acquisition of

a pet

food business

in Europe.

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. We

recorded a $16 million net decrease in expense related to the mark-to-market

valuation of certain commodity positions

and grain

inventories in fiscal

2025, compared

to a $39

million net decrease

in expense

last year.

In addition,

we recorded $8

million

of net losses related to valuation adjustments in fiscal 2025,

compared to $18 million of net losses related to valuation

adjustments and

the

sale

of

corporate

investments

in

fiscal

2024.

We

recorded

$9

million

of

restructuring

charges

and

$1

million

of

restructuring

initiative

project-related

costs

in

cost

of

sales

in

fiscal

2025,

compared

to

$18

million

of

restructuring

charges

and

$2

million

of

restructuring

initiative

project-related

costs

in

cost

of

sales

in

fiscal

2024.

Certain

compensation

and

benefit

related

expenses

decreased in fiscal 2025 compared to fiscal 2024.

IMPACT OF INFLATION

We

experienced broad-based global input cost inflation

of 4 percent in fiscal 2025 and fiscal 2024. We

expect approximately 3 percent

input cost inflation

in fiscal 2026

before the impact

of newly enacted

tariffs. We

expect the gross

risk of newly

enacted tariffs

to be 1

to 2 percent

of cost of

goods sold, and

we are attempting

to mitigate tariff

risk through

various methods.

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

$6.2 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

25,

2025,

we had

$316

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.

26

Cash Flows from Operations

Fiscal Year

In Millions

2025

2024

Net earnings, including earnings attributable to noncontrolling interests

$

2,318.9

$

2,518.6

Depreciation and amortization

539.0

552.7

After-tax earnings from joint ventures

(57.6)

(84.8)

Distributions of earnings from joint ventures

44.6

50.4

Stock-based compensation

91.7

95.3

Deferred income taxes

(120.9)

(48.5)

Pension and other postretirement benefit plan contributions

(30.8)

(30.1)

Pension and other postretirement benefit plan costs

(12.7)

(27.0)

Divestitures gain, net

(95.9)

-

Restructuring, transformation, impairment, and other exit costs

74.3

223.5

Changes in current assets and liabilities, excluding the effects of

acquisitions and divestitures

192.4

10.6

Other, net

(24.8)

41.9

Net cash provided by operating activities

$

2,918.2

$

3,302.6

During

fiscal

2025,

cash

provided

by

operations

was

$2,918

million

compared

to

$3,303 million

in

the

same

period

last

year.

The

$384 million decrease was

primarily driven by a

$296 million decrease in net

earnings excluding the impact

of the divestiture in fiscal

2025, and a $149 million change in restructuring, transformation,

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

2025,

core

working

capital

net

liability

decreased

23

percent,

compared

to

a

net

sales

decrease

of

2

percent.

The

core

working

capital

net

liability

decreased

$90

million from $393

million in fiscal

2024

to $303 million

in fiscal 2025,

primarily due to

an increase in

receivables, partially offset

by

an increase in accounts payable.

Cash Flows from Investing Activities

Fiscal Year

In Millions

2025

2024

Purchases of land, buildings, and equipment

$

(625.3)

$

(774.1)

Acquisitions, net of cash acquired

(1,419.3)

(451.9)

Investments in affiliates, net

13.3

(2.7)

Proceeds from disposal of land, buildings, and equipment

1.1

0.8

Proceeds from divestitures, net of cash divested

241.8

-

Other, net

(6.5)

30.5

Net cash used by investing activities

$

(1,794.9)

$

(1,197.4)

In

fiscal

2025,

we

used

$1,795 million

of

cash

through

investing

activities

compared

to $1,197

million

in

fiscal

2024.

We

invested

$625 million in land, buildings, and equipment in fiscal 2025, a

decrease of $149 million from fiscal 2024.

During fiscal 2025, we acquired Whitebridge Pet Brands for $1,412

million cash, net of cash acquired.

During fiscal 2025, we

completed the sale of our Canada yogurt business for $242 million cash.

During fiscal 2024, we acquired a pet food business in

Europe for $426 million cash, net of cash acquired, and we paid an additional

$8 million purchase price holdback after certain closing

conditions were met in fiscal 2025.

We

expect

capital

expenditures

to

be

approximately

3.5

percent

of

reported

net

sales

in

fiscal

2026.

These

expenditures

will

fund

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

and continue HMM initiatives throughout the supply chain.

27

Cash Flows from Financing Activities

Fiscal Year

In Millions

2025

2024

Change in notes payable

$

667.1

$

(20.5)

Issuance of long-term debt

2,354.9

2,065.2

Payment of long-term debt

(1,300.0)

(901.5)

Repurchase of Class A limited membership interests in General Mills Cereals, LLC

(252.8)

-

Proceeds from common stock issued on exercised options

43.0

25.5

Purchases of common stock for treasury

(1,202.9)

(2,002.4)

Dividends paid

(1,338.7)

(1,363.4)

Distributions to noncontrolling interest holders

(21.6)

(21.3)

Other, net

(129.1)

(53.9)

Net cash used by financing activities

$

(1,180.1)

$

(2,272.3)

Financing

activities used

$1,180 million of

cash in

fiscal 2025

compared to

$2,272 million

in fiscal

2024. We

had $1,722 million

of

net debt

issuances in

fiscal 2025

compared to

$1,143 million of

net debt

issuances in

fiscal 2024.

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 2025, we

received $43 million of net

proceeds from common stock

issued on exercised options

compared to $26 million

in fiscal 2024.

During fiscal 2025, we purchased

the outstanding Class A limited

membership interests in General

Mills Cereals, LLC (GMC Class A

Interests)

from

the third-party

holder

for

$253 million.

For more

information,

please refer

to Note

10 to

the Consolidated

Financial

Statements in Item 8 of this report.

During fiscal 2025, we

repurchased 19 million shares

of our common stock for

$1,203 million. During fiscal 2024,

we repurchased 29

million shares of our common stock for $2,002 million.

Dividends paid in fiscal 2025 totaled

$1,339 million, or $2.40 per share.

Dividends paid in fiscal 2024

totaled $1,363 million, or $2.36

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

2025

2024

Investments in affiliates, net

$

13.3

$

(2.7)

Dividends received

44.6

50.4

The following table details the credit facilities and lines of credit we had available

as of May 25, 2025:

In Millions

Borrowing Capacity

Borrowed Amount

Committed credit facility expiring October 2029

$

2,700.0

$

-

Uncommitted credit facilities and lines of credit

703.7

7.6

Total

$

3,403.7

$

7.6

To ensure availability

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

available to us in the United States

and Europe.

Certain

of

our

long-term

debt

agreements

and

our

credit

facilities

contain

restrictive

covenants.

As

of

May

25,

2025,

we

were

in

compliance with all of these covenants.

We have

$1,528 million of long-term debt maturing

in the next 12 months that

is classified as current, including

€500 million of 0.125

percent fixed-rate notes due November 15, 2025,

€600 million of 0.45 percent fixed-rate notes due January

15, 2026, and €250 million

28

of

floating-rate

notes

due

April 22,

2026.

We

believe

that cash

flows

from

operations,

together

with available

short- and

long-term

debt financing, will be adequate to meet our material contractual

obligations and overall liquidity and capital needs

for at least the next

12 months.

As of May

25, 2025,

our total debt,

including the

impact of derivative

instruments designated

as hedges,

was 74 percent

in fixed-rate

and 26

percent in

floating-rate instruments,

compared to

85 percent

in fixed-rate

and 15

percent in

floating-rate instruments

on May

26, 2024.

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

$470

million

as

of

May

25,

2025,

and

$425

million

as

of

May

26,

2024.

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

25,

2025,

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

2025

assessment of our

intangible assets as of

the first

day

of

the

second

quarter

of

fiscal

2025,

and

we

determined

there

was

no

impairment

of

our

intangible

assets

as

their

related

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

2025 assessment

date, the

Progresso

,

Nudges

,

True

Chews

, and

Kitano

brand intangible

assets had risk of decreasing coverage. We

will continue to monitor these 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.

29

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

14

to

the

Consolidated

Financial

Statements

in