GIS » Topics » Cash Flows from Operations

These excerpts taken from the GIS 10-K filed Jul 11, 2008.
Cash Flows from Operations
 
                           
      Fiscal Year  
In Millions     2008     2007     2006  
Net earnings
    $ 1,294.7     $ 1,143.9     $ 1,090.3  
Depreciation and amortization
      459.2       417.8       423.9  
After-tax earnings from joint ventures
      (110.8 )     (72.7 )     (69.2 )
Stock-based compensation
      133.2       127.1       44.6  
Deferred income taxes
      98.1       26.0       25.9  
Distributions of earnings from joint ventures
      108.7       45.2       77.4  
Tax benefit on exercised options
      (55.7 )     (73.1 )     40.9  
Pension, other postretirement, and postemployment benefit costs
      (24.8 )     (53.6 )     (74.2 )
Restructuring, impairment, and other exit costs (income)
      (1.7 )     39.1       29.8  
Changes in current assets and liabilities
      (126.7 )     149.1       183.9  
Other, net
      (44.3 )     2.4       70.2  
Net cash provided by operating activities
    $ 1,729.9     $ 1,751.2     $ 1,843.5  
 
 
 
Our cash flow from operations decreased $21.3 million from fiscal 2007 to fiscal 2008 as a $150.8 million increase in net earnings and the $72.1 million effect of changes in deferred income taxes were more than offset by an increase of $275.8 million in working capital compared to the prior year. Accounts receivable was a $69.9 million increased use of cash, partially offset by a $37.3 million increase in cash from accounts payable, and inventory was a $49.1 million increased use of cash in fiscal 2008. Working capital also includes $59.6 million of mark-to-market gains on our commodity derivatives. In addition, other current liabilities had a $173.1 million reduction to the source of cash driven by cash taxes paid in fiscal 2008.
 
We strive to grow a key measure, core working capital, at or below our growth in net sales. For fiscal 2008, core working capital grew 12.1 percent, more than our net sales growth of 9.7 percent, largely driven by the effect of increases in commodity prices on inventories and an increase in accounts receivable. In fiscal 2007, core working capital grew 4.2 percent, less than net sales growth of 6.2 percent, and in fiscal 2006, core working capital grew 5.0 percent and net sales grew 3.6 percent.
 
The $92.3 million decrease in cash flows from operations from fiscal 2006 to fiscal 2007 was the result of a reduction in our cash flows from working capital and a decrease in distributions of earnings from joint ventures, offset by an increase in net earnings.
 
Cash Flows
from Operations



 





















































































































































































































































                           

 

 

 

Fiscal Year

 

In Millions

 

 

2008

 

 

2007

 

 

2006

 




Net earnings


 

 

$

1,294.7

 

 

$

1,143.9

 

 

$

1,090.3

 


Depreciation and amortization


 

 

 

459.2

 

 

 

417.8

 

 

 

423.9

 


After-tax earnings from joint ventures


 

 

 

(110.8

)

 

 

(72.7

)

 

 

(69.2

)


Stock-based compensation


 

 

 

133.2

 

 

 

127.1

 

 

 

44.6

 


Deferred income taxes


 

 

 

98.1

 

 

 

26.0

 

 

 

25.9

 


Distributions of earnings from joint ventures


 

 

 

108.7

 

 

 

45.2

 

 

 

77.4

 


Tax benefit on exercised options


 

 

 

(55.7

)

 

 

(73.1

)

 

 

40.9

 


Pension, other postretirement, and postemployment benefit costs


 

 

 

(24.8

)

 

 

(53.6

)

 

 

(74.2

)


Restructuring, impairment, and other exit costs (income)


 

 

 

(1.7

)

 

 

39.1

 

 

 

29.8

 


Changes in current assets and liabilities


 

 

 

(126.7

)

 

 

149.1

 

 

 

183.9

 


Other, net


 

 

 

(44.3

)

 

 

2.4

 

 

 

70.2

 




Net cash provided by operating activities


 

 

$

1,729.9

 

 

$

1,751.2

 

 

$

1,843.5

 

 

 






 



Our cash flow from operations decreased $21.3 million from
fiscal 2007 to fiscal 2008 as a $150.8 million increase in
net earnings and the $72.1 million effect of changes in
deferred income taxes were more than offset by an increase of
$275.8 million in working capital compared to the prior
year. Accounts receivable was a $69.9 million increased use
of cash, partially offset by a $37.3 million increase in
cash from accounts payable, and inventory was a
$49.1 million increased use of cash in fiscal 2008. Working
capital also includes $59.6 million of mark-to-market gains
on our commodity derivatives. In addition, other current
liabilities had a $173.1 million reduction to the source of
cash driven by cash taxes paid in fiscal 2008.


 



We strive to grow a key measure, core working capital, at or
below our growth in net sales. For fiscal 2008, core working
capital grew 12.1 percent, more than our net sales growth
of 9.7 percent, largely driven by the effect of increases
in commodity prices on inventories and an increase in accounts
receivable. In fiscal 2007, core working capital grew
4.2 percent, less than net sales growth of
6.2 percent, and in fiscal 2006, core working capital grew
5.0 percent and net sales grew 3.6 percent.


 



The $92.3 million decrease in cash flows from operations
from fiscal 2006 to fiscal 2007 was the result of a reduction in
our cash flows from working capital and a decrease in
distributions of earnings from joint ventures, offset by an
increase in net earnings.


 




This excerpt taken from the GIS 10-K filed Jul 26, 2007.

Cash Flows from Operations

In Millions, for Fiscal Year Ended     May 27,
2007
    May 28,
2006
    May 29,
2005
 

Net earnings       $ 1,144     $ 1,090     $ 1,240  
Depreciation and amortization         418       424       443  
After-tax earnings from joint ventures         (73 )     (69 )     (94 )
Stock-based compensation         128       45       38  
Deferred income taxes         26       26       9  
Distribution of earnings from joint ventures         45       77       83  
Tax benefit on exercised options               41       62  
Pension and other postretirement costs         (54 )     (74 )     (70 )
Restructuring, impairment and other exit costs         39       30       84  
Divestitures (gain)                     (499 )
Debt repurchase costs                     137  
Changes in current assets and liabilities         77       184       251  
Other, net         15       74       110  

Net Cash Provided by Operating Activities       $ 1,765     $ 1,848     $ 1,794  

    Our cash flow from operations decreased $83 million from fiscal 2006 to fiscal 2007 as an increase in net earnings of $54 million and the net benefit to operating cash flow from stock compensation of $42 million were more than offset by a reduction in our cash flows from working capital of $107 million and a $32 million decrease in distributions of earnings from joint ventures. Changes in working capital were a reduced source of cash flow from operations in fiscal 2007 versus fiscal 2006 primarily reflecting a $32 million decrease in cash flows from accounts receivable, and a $69 million reduction in the source of cash from other current liabilities, primarily from a smaller increase in accrued taxes in fiscal 2007 than in fiscal 2006.

    A key measure that we manage is the growth rate in core working capital. We strive to grow core working capital at or below our growth in net sales. For fiscal 2007, core working capital grew 4 percent, less than our net sales growth of 6 percent. In fiscal 2006, core working capital grew 5 percent, compared to net sales growth of 4 percent, and in fiscal 2005, core working capital decreased 2 percent and net sales grew 2 percent.

    The increase in cash flows from operations from fiscal 2005 to fiscal 2006 was primarily the result of increases in accrued compensation and accrued income taxes.

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