General Mills Reports Fiscal 2013 Second Quarter Results

  General Mills Reports Fiscal 2013 Second Quarter Results

                      Company Updates Full-year Outlook

Business Wire

MINNEAPOLIS -- December 19, 2012

General Mills (NYSE: GIS) today reported results for the second quarter of
fiscal 2013. Contributions from new businesses primarily reflect the first
three months of consolidated operating results for the Yoki Alimentos business
in Brazil and Yoplait Canada.

Fiscal 2013 Second Quarter Financial Summary

  *Net sales grew 6 percent to $4.88 billion. Acquisitions together with the
    recently assumed Yoplait Canada business contributed 4 points of net sales
    growth.
  *Segment operating profit grew 10 percent to $959 million.
  *Diluted earnings per share (EPS) totaled 82 cents, up from 67 cents a year
    ago.
  *Adjusted diluted EPS, which excludes certain items affecting
    comparability, totaled 86 cents this year compared to 76 cents in last
    year’s second quarter. (Please see Note 8 to the consolidated financial
    statements below for reconciliation of this non-GAAP measure).

Net sales for the 13 weeks ended Nov. 25, 2012, grew 6 percent to $4.88
billion. Pound volume contributed 7 points of net sales growth, primarily
reflecting the addition of Yoki and Yoplait Canada. Price realization and mix
reduced the net sales growth rate by 1 point. Foreign currency exchange had no
impact on the rate of net sales growth in the quarter. Gross margin was above
year ago levels. Total marketing spending in the quarter was weighted toward
in-store promotional support for established brands and new product
introductions; advertising and media expense was below strong year-ago levels.
Total segment operating profit increased 10 percent to $959 million (Please
see Note 8 for reconciliation of this non-GAAP measure). Second-quarter net
earnings attributable to General Mills grew to $542 million and diluted
earnings per share increased to 82 cents. Adjusted diluted EPS, which excludes
certain items affecting comparability (see Note 8 below), grew 13 percent to
86 cents.

Chairman and Chief Executive Officer Ken Powell said the second-quarter
results reflected good performance by each of the company’s operating
segments. “Our U.S. Retail segment posted gains in pound volume, net sales and
operating profit. The Bakeries and Foodservice segment generated strong
double-digit operating profit growth. And our International segment recorded
good sales and profit growth for established businesses in addition to the
incremental contributions from Yoki and Yoplait Canada.”

Products making the strongest contributions to net sales growth in the second
quarter included new items such as Yoplait Greek and Greek 100 calorie
yogurts, Nature Valley protein bars, Peanut Butter Multigrain Cheerios,
Progresso Recipe Starters sauces and, in the United Kingdom, Nature Valley
Sweet and Nutty bars. Established brands such as Lucky Charms and Chex
cereals, Fiber One 90 calorie snack bars, Totino’s frozen snacks, Pillsbury
refrigerated crescent rolls and, in China, Haagen Dazs mooncakes and other ice
cream products also contributed strong sales gains.

Six-month Financial Summary
Through the first six months of fiscal 2013, General Mills sales grew 5
percent to $8.93 billion. Pound volume contributed 8 points of sales growth.
Price realization and mix subtracted 2 points of net sales growth and foreign
currency exchange reduced net sales growth by 1 point. Segment operating
profit increased 8 percent to $1.73 billion. (Please see Note 8 for
reconciliation of this non-GAAP measure.) Net earnings attributable to General
Mills increased 28 percent to $1.09 billion and diluted EPS rose to $1.64,
including a net increase in mark-to-market valuation of certain commodity
positions. Adjusted diluted earnings per share totaled $1.52 in the first half
of 2013, up 8 percent from $1.41 in last year’s first half (please see Note
8).

U.S. Retail Segment Results
Second-quarter net sales for General Mills U.S. Retail segment grew 2 percent
to $2.98 billion, reflecting increased pound volume. The Snacks, Small Planet
Foods and Meals divisions each recorded net sales gains and Frozen Foods net
sales essentially matched prior-year levels. These results offset declines in
net sales for the Yoplait, Big G, and Baking Products divisions. Advertising
and media expense was 1 percent below strong year-ago levels that grew 6
percent. U.S. Retail segment operating profit rose 9 percent to $723 million.

Through the first six months of 2013, U.S. retail segment net sales increased
1 percent to $5.48 billion and segment operating profits increased 4 percent
to $1.30 billion.

International Segment Results
Second-quarter net sales for General Mills’ consolidated international
businesses grew 19 percent to reach $1.38 billion. Pound volume contributed 26
points of net sales growth, reflecting the addition of Yoki and Yoplait
Canada. Price realization and mix reduced net sales growth by 4 points and
foreign-currency translation subtracted 3 points of net sales growth. On a
constant-currency basis, International segment net sales grew 22 percent
overall, with sales more than doubling in Latin America including Yoki, and an
increase of 16 percent in Canada including Yoplait. Constant-currency net
sales grew 3 percent in Europe, and 8 percent in the Asia / Pacific region.
(Please see Note 8 below for reconciliation of this non-GAAP measure).
International segment operating profit grew 4 percent to $139 million
including a $17 million investment associated with transitioning Yoplait
Canada from the former licensee to direct ownership. Excluding this expense,
which has been included in the company’s 2013 financial guidance,
International segment operating profit would have grown at a double-digit
rate.

Through the first six months of 2013, International segment net sales grew 22
percent to $2.47 billion, and segment operating profit increased 24 percent to
$265 million.

Bakeries and Foodservice Segment Results
Second-quarter net sales for the Bakeries and Foodservice segment totaled $516
million, 1 percent below year-ago results. Price realization and mix
contributed 1 point of net sales growth, while lower pound volume reduced net
sales growth by 2 points. Segment operating profits grew 24 percent in the
quarter to $96 million, reflecting lower wheat costs year-over-year, favorable
mix, and higher grain merchandising earnings.

Through the first six months of 2013, Bakeries and Foodservice segment net
sales declined 2 percent to $987 million, and segment operating profits
increased 18 percent to $164 million.

Joint Venture Summary
Combined after-tax earnings from the Cereal Partners Worldwide (CPW) and
Haagen Dazs Japan (HDJ) joint ventures totaled $33 million in the second
quarter, up 14 percent from year-ago levels. Constant-currency net sales for
CPW grew 3 percent. Constant-currency net sales for HDJ grew 5 percent.
Through the first six months of 2013, after-tax earnings from joint ventures
totaled $56 million.

Corporate Items
Unallocated corporate items totaled $127 million net expense in this year’s
second quarter compared to $155 million net expense a year ago. Excluding the
effects of mark-to-market valuation of certain commodity positions in both
years, unallocated corporate items totaled $79 million net expense this year
compared to $61 million net expense a year ago. The increase primarily
reflects higher pension expense.

This year’s second-quarter results included $3 million of restructuring
expense related to actions taken in the previous fiscal year. Net interest
expense declined to $76 million in the second quarter, reflecting changes in
debt mix. The effective tax rate was 32.6 percent, compared to 33.3 percent a
year earlier. Excluding certain items affecting comparability, the second
quarter effective tax rate was 32.8 percent in 2013 and 33.7 percent in 2012.
(Please see Note 8 for reconciliation of this non-GAAP measure).

Cash Flow Items
Cash provided by operating activities totaled $1.32 billion through the first
half of 2013, up 14 percent from year-ago levels. Capital investments through
the first half totaled $264 million, essentially matching year-ago levels.
Cash consideration for the Yoki acquisition totaled $820 million in the second
quarter of 2013. Dividends paid increased to $434 million, reflecting the 8
percent increase in dividend rate year-over-year. During the first half of
2013, General Mills repurchased approximately 12 million shares of common
stock for a total of $479 million. Average diluted shares outstanding totaled
664 million in the second quarter of 2013, approximately 1 million shares
lower than in last year’s second quarter.

Outlook
General Mills said it anticipates fiscal 2013 supply chain inflation will be
at the high end of its forecasted 2 to 3 percent range, with the past summer’s
drought expected to modestly increase second-half inflation rates. The
company’s second-half outlook assumes a higher tax rate than in the first
half, reflecting the timing of tax expense for the year. The company also is
anticipating possible currency devaluation in Venezuela during the second half
of the fiscal year.

“As we move into the second half, the global operating environment remains
challenging,” Powell said. “We are working to build on our good performance
year-to-date. We’re launching a promising slate of new products in our core
U.S. market. And we have strong levels of advertising and in-store
merchandising planned to support new and existing products in markets
worldwide.”

General Mills increased its guidance for fiscal 2013 adjusted diluted EPS to a
range of $2.65 to $2.67, excluding mark-to-market effects, a net tax benefit
recorded in the first quarter, and restructuring and integration costs.

General Mills will hold a briefing for investors today, December 19, 2012,
beginning at 8:30 a.m. Eastern time. You may access the web cast from General
Mills’ internet home page: generalmills.com.

Adjusted diluted EPS, total segment operating profit, international sales
excluding foreign currency translation effects, and adjusted effective tax
rate are each non-GAAP measures. Reconciliations of these measures to their
relevant GAAP measures appear in Note 8 to the attached Consolidated Financial
Statements.

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 that are based on our
current expectations and assumptions. These forward-looking statements,
including the statements under the caption “Outlook,” and statements made by
Mr. Powell, are subject to certain risks and uncertainties that could cause
actual results to differ materially from the potential results discussed in
the forward-looking statements. In particular, our predictions about future
net sales and earnings could be affected by a variety of factors, including:
competitive dynamics in the consumer foods industry and the markets for our
products, including new product introductions, advertising activities, pricing
actions, and promotional activities of our competitors; economic conditions,
including changes in inflation rates, interest rates, tax rates, or the
availability of capital; product development and innovation; consumer
acceptance of new products and product improvements; consumer reaction to
pricing actions and changes in promotion levels; acquisitions or dispositions
of businesses or assets; changes in capital structure; changes in laws and
regulations, including labeling and advertising regulations; impairments in
the carrying value of goodwill, other intangible assets, or other long-lived
assets, or changes in the useful lives of other intangible assets; changes in
accounting standards and the impact of significant accounting estimates;
product quality and safety issues, including recalls and product liability;
changes in consumer demand for our products; effectiveness of advertising,
marketing, and promotional programs; changes in consumer behavior, trends, and
preferences, including weight loss trends; consumer perception of
health-related issues, including obesity; consolidation in the retail
environment; changes in purchasing and inventory levels of significant
customers; fluctuations in the cost and availability of supply chain
resources, including raw materials, packaging, and energy; disruptions or
inefficiencies in the supply chain; volatility in the market value of
derivatives used to manage price risk for certain commodities; benefit plan
expenses due to changes in plan asset values and discount rates used to
determine plan liabilities; failure of our information technology systems;
foreign economic conditions, including currency rate fluctuations; and
political unrest in foreign markets and economic uncertainty due to terrorism
or war. The company undertakes no obligation to publicly revise any
forward-looking statement to reflect any future events or circumstances.



Consolidated Statements of Earnings and Supplementary Information
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
                                                                                
                   Quarter Ended                             Six-Month Period Ended
                    Nov. 25,     Nov. 27,    % Change       Nov. 25,     Nov. 27,    % Change
                     2012          2011                        2012          2011
Net sales          $ 4,881.8     $ 4,623.8     5.6     %     $ 8,932.8     $ 8,471.4     5.4    %
Cost of sales        3,139.5       3,029.1     3.6     %       5,562.2       5,430.2     2.4    %
Selling,
general, and         910.6         877.1       3.8     %       1,749.6       1,684.6     3.9    %
administrative
expenses
Restructuring,
impairment,         2.7         0.7        NM            11.9        0.8        NM   
and other
exit costs
Operating            829.0         716.9       15.6    %       1,609.1       1,355.8     18.7   %
profit
Interest, net       75.5        87.2       (13.4 ) %      158.5       172.6      (8.2 ) %
Earnings
before income
taxes and            753.5         629.7       19.7    %       1,450.6       1,183.2     22.6   %
after-tax
earnings from
joint ventures
Income taxes         245.4         209.4       17.2    %       403.5         386.9       4.3    %
After-tax
earnings from       32.9        28.9       13.8   %      56.0        57.2       (2.1 ) %
joint ventures
Net earnings,
including
earnings
attributable         541.0         449.2       20.4    %       1,103.1       853.5       29.2   %
to redeemable
and
noncontrolling
interests
Net earnings
(loss)
attributable
to redeemable       (0.6    )    4.4        NM            12.6        3.1        NM   
and
noncontrolling
interests
Net earnings
attributable       $ 541.6      $ 444.8      21.8   %     $ 1,090.5    $ 850.4      28.2  %
to General
Mills
Earnings per       $ 0.84       $ 0.69       21.7   %     $ 1.68       $ 1.31       28.2  %
share - basic
Earnings per
share -            $ 0.82       $ 0.67       22.4   %     $ 1.64       $ 1.28       28.1  %
diluted
Dividends per      $ 0.330      $ 0.305      8.2    %     $ 0.660      $ 0.610      8.2   %
share
                                                                                                
                     Quarter Ended                             Six-Month Period Ended
Comparisons as       Nov. 25,      Nov. 27,    Basis Pt        Nov. 25,      Nov. 27,    Basis Pt
a % of net           2012         2011        Change          2012         2011        Change
sales:
Gross margin         35.7    %     34.5    %   120             37.7    %     35.9    %   180
Selling,
general, and         18.7    %     19.0    %   (30   )         19.6    %     19.9    %   (30  )
administrative
expenses
Operating            17.0    %     15.5    %   150             18.0    %     16.0    %   200
profit
Net earnings
attributable         11.1    %     9.6     %   150             12.2    %     10.0    %   220
to General
Mills
                                                                                                
                     Quarter Ended                             Six-Month Period Ended
Comparisons as
a % of net
sales
excluding            Nov. 25,     Nov. 27,    Basis Pt        Nov. 25,     Nov. 27,    Basis Pt
certain items        2012          2011        Change          2012          2011        Change
affecting
comparability
(a):
Gross margin         36.7    %     36.5    %   20              37.3    %     37.5    %   (20  )
Operating            18.1    %     17.6    %   50              17.8    %     17.6    %   20
profit
Net earnings
attributable         11.8    %     11.0    %   80              11.4    %     11.0    %   40
to General
Mills
                                                                                                
(a) See Note 8 for a reconciliation of this measure not defined by generally accepted accounting
principles (GAAP).
See accompanying notes to consolidated financial statements.



Operating Segment Results and Supplementary Information
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
                                                                        
                     Quarter Ended                         Six-Month Period Ended
                     Nov.        Nov.                      Nov.        Nov.
                     25,         27,                       25,         27,
                 2012      2011     % Change     2012      2011     % Change
Net sales:
U.S. Retail        $ 2,985.0   $ 2,938.3   1.6     %     $ 5,478.9   $ 5,448.6   0.6     %
International        1,381.2     1,163.3   18.7    %       2,466.7     2,019.6   22.1    %
Bakeries and      515.6     522.2    (1.3  ) %    987.2     1,003.2  (1.6  ) %
Foodservice
Total            $ 4,881.8  $ 4,623.8  5.6    %   $ 8,932.8  $ 8,471.4  5.4    %
                                                                                         
Operating
profit:
U.S. Retail        $ 723.2     $ 661.4     9.3     %     $ 1,298.3   $ 1,246.6   4.1     %
International        139.2       133.5     4.3     %       265.0       214.2     23.7    %
Bakeries and      96.2      77.8     23.7   %    163.9     139.2    17.7   %
Foodservice
Total segment
operating            958.6       872.7     9.8     %       1,727.2     1,600.0   8.0     %
profit
                                                                                         
Unallocated
corporate            126.9       155.1     (18.2 ) %       106.2       243.4     (56.4 ) %
items
Restructuring,
impairment,
and
other exit        2.7       0.7      NM         11.9      0.8      NM     
costs
Operating        $ 829.0    $ 716.9    15.6   %   $ 1,609.1  $ 1,355.8  18.7   %
profit
                                                                                         
                     Quarter Ended                         Six-Month Period Ended
                     Nov.        Nov.      Basis Pt        Nov.        Nov.      Basis Pt
                     25,         27,                       25,         27,
                     2012      2011     Change       2012      2011     Change
Segment
operating
profit as a
% of net
sales:
U.S. Retail          24.2%       22.5%     170             23.7%       22.9%     80
International        10.1%       11.5%     (140  )         10.7%       10.6%     10
Bakeries and      18.7%     14.9%    380        16.6%     13.9%    270    
Foodservice
Total segment
operating         19.6%     18.9%    70         19.3%     18.9%    40     
profit
                                                                                         
See accompanying notes to consolidated financial statements.



Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
                                                              
                                    Nov. 25,        Nov. 27,        May 27,
                                   2012            2011           2012
                                    (Unaudited)     (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents         $ 734.9         $ 509.1         $ 471.2
Receivables                         1,673.8         1,510.4         1,323.6
Inventories                         1,770.2         1,628.7         1,478.8
Deferred income taxes               51.9            20.2            59.7
Prepaid expenses and other         334.7         353.2         358.1    
current assets
                                                                    
Total current assets                4,565.5         4,021.6         3,691.4
                                                                    
Land, buildings, and equipment      3,814.0         3,507.4         3,652.7
Goodwill                            8,604.1         8,115.9         8,182.5
Other intangible assets             5,026.0         4,795.5         4,704.9
Other assets                       943.3         1,026.4       865.3    
                                                                    
Total assets                      $ 22,952.9     $ 21,466.8     $ 21,096.8 
                                                                    
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                  $ 1,244.9       $ 1,096.5       $ 1,148.9
Current portion of long-term        820.8           1,732.4         741.2
debt
Notes payable                       1,939.9         849.0           526.5
Other current liabilities          1,730.8       1,464.1       1,426.6  
                                                                    
Total current liabilities           5,736.4         5,142.0         3,843.2
                                                                    
Long-term debt                      5,571.9         5,247.6         6,161.9
Deferred income taxes               1,148.7         1,374.1         1,171.4
Other liabilities                  2,178.3       1,818.4       2,189.8  
                                                                    
Total liabilities                  14,635.3      13,582.1      13,366.3 
                                                                    
Redeemable interest                 877.6           831.6           847.8
                                                                    
Stockholders' equity:
                                                                    
Common stock, 754.6 shares          75.5            75.5            75.5
issued, $0.10 par value
Additional paid-in capital          1,261.8         1,318.8         1,308.4
Retained earnings                   10,614.5        9,642.2         9,958.5
Common stock in treasury, at
cost,                               (3,364.8  )     (3,254.6  )     (3,177.0 )
shares of 108.7, 109.7 and
106.1
Accumulated other comprehensive    (1,603.3  )    (1,204.6  )    (1,743.7 )
loss
                                                                    
Total stockholders' equity          6,983.7         6,577.3         6,421.7
                                                                    
Noncontrolling interests           456.3         475.8         461.0    
                                                                    
Total equity                       7,440.0       7,053.1       6,882.7  
                                                                    
Total liabilities and equity      $ 22,952.9     $ 21,466.8     $ 21,096.8 
                                                                    
See accompanying notes to consolidated financial statements.



Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)

                                               Six-Month Period Ended
                                                 Nov. 25,       Nov. 27,
                                                 2012             2011
Cash Flows - Operating Activities
Net earnings, including earnings
attributable to redeemable                       $ 1,103.1        $ 853.5
and noncontrolling interests
Adjustments to reconcile net earnings to net
cash
provided by operating activities:
Depreciation and amortization                      286.1            263.3
After-tax earnings from joint ventures             (56.0    )       (57.2    )
Distributions of earnings from joint               42.8             36.4
ventures
Stock-based compensation                           61.3             66.2
Deferred income taxes                              (25.2    )       39.7
Tax benefit on exercised options                   (58.5    )       (31.1    )
Pension and other postretirement benefit           (11.6    )       (8.5     )
plan contributions
Pension and other postretirement benefit           65.2             38.9
plan costs
Restructuring, impairment, and other exit          (32.6    )       (1.8     )
costs
Changes in current assets and liabilities,         63.6             (26.6    )
excluding the effects of acquisitions
Other, net                                        (121.1   )      (16.3    )
Net cash provided by operating activities         1,317.1        1,156.5  
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment        (264.1   )       (264.8   )
Acquisitions, net of cash acquired                 (851.8   )       (900.1   )
Investments in affiliates, net                     (3.7     )       (22.1    )
Proceeds from disposal of land, buildings,         3.5              1.3
and equipment
Exchangeable note                                  16.2             (131.6   )
Other, net                                        (3.3     )      6.6      
Net cash used by investing activities             (1,103.2 )      (1,310.7 )
Cash Flows - Financing Activities
Change in notes payable                            1,292.4          548.8
Payment of long-term debt                          (521.6   )       (9.1     )
Proceeds from common stock issued on               152.7            99.2
exercised options
Tax benefit on exercised options                   58.5             31.1
Purchases of common stock for treasury             (479.2   )       (210.8   )
Dividends paid                                     (434.5   )       (399.5   )
Distributions to noncontrolling and                (34.6    )       (3.3     )
redeemable interest holders
Other, net                                        -              (0.4     )
Net cash provided by financing activities         33.7           56.0     
Effect of exchange rate changes on cash and       16.1           (12.3    )
cash equivalents
Increase (decrease) in cash and cash               263.7            (110.5   )
equivalents
Cash and cash equivalents - beginning of          471.2          619.6    
year
Cash and cash equivalents - end of period        $ 734.9         $ 509.1    
Cash Flow from Changes in Current Assets and
Liabilities,

excluding the effects of acquisitions:
Receivables                                      $ (252.6   )     $ (205.6   )
Inventories                                        (187.2   )       (1.3     )
Prepaid expenses and other current assets          49.5             146.0
Accounts payable                                   123.6            11.1
Other current liabilities                         330.3          23.2     
Changes in current assets and liabilities        $ 63.6          $ (26.6    )
See accompanying notes to consolidated financial statements.


    
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
      
      The accompanying Consolidated Financial Statements of General Mills,
      Inc. (we, us, our, General Mills, or the Company) have been prepared in
(1)   accordance with accounting principles generally accepted in the United
      States for annual and interim financial information. In the opinion of
      management, all adjustments considered necessary for a fair presentation
      have been included and are of a normal recurring nature.
      
      At the beginning of fiscal 2013, we realigned certain divisions within
      our U.S. Retail operating segment and certain geographic regions within
(2)   our International operating segment. These realignments had no effect on
      previously reported consolidated net sales, operating segments’ net
      sales, operating profit, segment operating profit, net earnings
      attributable to General Mills or earnings per share.
      
      On August 1, 2012, we acquired Yoki Alimentos S.A. (Yoki), a privately
      held food company headquartered in Sao Bernardo do Campo, Brazil, for an
      aggregate purchase price of $940 million, comprised of $820 million of
      cash, net of $31 million of cash acquired, and $120 million of non-cash
      consideration for debt assumed. Yoki operates in several food
(3)   categories, including snacks, convenient meals, basic foods, and
      seasonings. We consolidated Yoki into our Consolidated Balance Sheets
      and recorded goodwill of $358 million. Indefinite lived intangible
      assets acquired include brands of $253 million. Finite lived intangible
      assets acquired primarily include customer relationships of $18 million.
      As of the date of the acquisition, the pro forma effects of this
      acquisition were not material.
      
      During the second quarter of fiscal 2013, we recorded a $3 million
      restructuring charge related to a productivity and cost savings plan
      approved in the fourth quarter of fiscal 2012. The plan was designed to
      improve organizational effectiveness and focus on key growth strategies,
      and included organizational changes to strengthen business alignment and
      actions to accelerate administrative efficiencies across all of our
(4)   operating segments and support functions. During the second quarter of
      fiscal 2013, we recorded restructuring charges of $2 million related to
      our International segment and less than $1 million related to our
      Bakeries and Foodservice segment. For the six-month period ended
      November 25, 2012, we recorded $12 million related to these actions.
      These restructuring actions are expected to be completed by the end of
      fiscal 2014.
      
      For the second quarter of fiscal 2013, unallocated corporate expense
      totaled $127 million compared to $155 million in the same period last
      year. We recorded a $48 million net increase in expense related to the
(5)   mark-to-market valuations of certain commodity positions and grain
      inventories in the second quarter of fiscal 2013, compared to a $94
      million net increase in expense in the second quarter of fiscal 2012.
      Additionally, pension expense increased $10 million in the second
      quarter of fiscal 2013 compared to the same period last year.
      
      For the six-month period ended November 25, 2012, unallocated corporate
      expense totaled $106 million compared to $243 million in the same period
      last year. We recorded a $34 million net decrease in expense related to
      the mark-to-market valuations of certain commodity positions and grain
      inventories in the six-month period ended November 25, 2012, compared to
      a $132 million net increase in expense in the six-month period ended
      November 27, 2011. Additionally, pension expense increased $20 million
      in the six-month period ended November 25, 2012, compared to the same
      period in fiscal 2012.
      
(6)   Basic and diluted earnings per share (EPS) were calculated as follows:
      

                        Quarter Ended              Six-Month Period Ended
                             Nov. 25,    Nov. 27,       Nov. 25,    Nov. 27,
In Millions, Except       2012       2011        2012       2011
per Share Data
Net earnings
attributable to         $  541.6     $ 444.8      $ 1,090.5   $ 850.4
General Mills
                                                                      
Average number of
common shares -              648.1        646.3          649.2        647.1
basic EPS
Incremental share
effect from: (a)
Stock options                11.9         14.8           12.2         14.6
Restricted stock,
restricted stock          4.5        4.7         4.6        4.6
units, and other
Average number of
common shares -           664.5      665.8       666.0      666.3
diluted EPS
Earnings per share        $  0.84       $ 0.69         $ 1.68       $ 1.31
- basic
Earnings per share      $  0.82      $ 0.67       $ 1.64      $ 1.28
- diluted
(a) Incremental shares from stock options and restricted stock units are
computed by the treasury stock method.

    
      The effective tax rate for the six-month period ended November 25, 2012
      was 27.8 percent compared to 32.7 percent for the six-month period ended
      November 27, 2011. The 4.9 percentage point decrease was primarily
(7)   related to the restructuring of a subsidiary during the first quarter of
      fiscal 2013 which resulted in a $67 million decrease to deferred income
      tax liabilities related to the tax basis of the investment in the
      subsidiary and certain distributed assets, with a corresponding discrete
      non-cash reduction to income taxes in the first quarter of fiscal 2013.
      
      We have included five measures in this release that are not defined by
      generally accepted accounting principles (GAAP): (1) diluted earnings
      per share excluding mark-to-market valuation of certain commodity
      positions and grain inventories (“mark-to-market effects”),
      restructuring costs reflecting employee severance expense
      (“restructuring costs”), integration costs resulting from the
      acquisitions of Yoki in fiscal 2013 and Yoplait S.A.S. and Yoplait
      Marques S.A.S. in fiscal 2012 (“acquisition integration costs”), and a
      discrete tax item related to a subsidiary (“tax item”) (collectively,
      these four items are referred to as “certain items affecting
(8)   comparability” in this footnote), (2) earnings comparisons as a percent
      of net sales excluding certain items affecting comparability, (3) total
      segment operating profit, (4) net sales growth rates for our
      International segment in total and by region excluding the impact of
      changes in foreign currency exchange, and (5) effective income tax rates
      excluding certain items affecting comparability. We believe that these
      measures provide useful supplemental information to assess our operating
      performance. These measures are reconciled below to the measures as
      reported in accordance with GAAP, and should be viewed in addition to,
      and not in lieu of, our diluted earnings per share and operating
      performance measures as calculated in accordance with GAAP.
      

Diluted EPS excluding certain items affecting comparability follows:

                                                  
                                                       Six-Month
                               Quarter Ended           Period Ended
                                 Nov.      Nov.        Nov. 25,     Nov.
                                 25,         27,                         27,
Per Share Data                2012     2011     2012        2011
Diluted earnings per           $ 0.82      $ 0.67      $ 1.64          $ 1.28
share, as reported
Mark-to-market effects (a)       0.04        0.09        (0.03  )        0.13
Restructuring costs (b)          -           -           0.01            -
Tax item (c)                  -        -        (0.10  )     -
Diluted earnings per
share, excluding             $ 0.86    $ 0.76    $ 1.52       $ 1.41
certain items affecting
comparability (d)

  (a)  See Note 5.
    (b)   See Note 4.
    (c)   See Note 7.
          Items affecting comparability includes integration costs resulting
          from the acquisitions of Yoki in fiscal 2013 and Yoplait S.A.S. and
    (d)   Yoplait Marques S.A.S. in fiscal 2012. The impact on diluted
          earnings per share, excluding certain items affecting comparability
          was less than $.01 for both the quarterly and six-month periods
          ended November 25, 2012, and November 27, 2011.
          

Earnings comparisons as a percent of net sales excluding certain items
affecting comparability follows:

                     
                        Quarter Ended
In Millions            Nov. 25, 2012             Nov. 27, 2011        
                                     Percent of                Percent
                                                                   of
Comparisons as a %     Value      Net Sales      Value    Net Sales 
of Net Sales
Gross margin as         $ 1,742.3     35.7       %     $ 1,594.7   34.5      %
reported (a)
Mark-to-market         47.9      1.0       %    94.4     2.0      %
effects (b)
Adjusted gross        $ 1,790.2   36.7      %   $ 1,689.1  36.5     %
margin
                                                                             
Operating profit as     $ 829.0       17.0       %     $ 716.9     15.5      %
reported
Mark-to-market            47.9        1.0        %       94.4      2.0       %
effects (b)
Restructuring costs       2.7         -          %       -         -         %
(c)
Acquisition
integration costs      4.8       0.1       %    3.9      0.1      %
(d)
Adjusted operating    $ 884.4     18.1      %   $ 815.2    17.6     %
profit
                                                                             
Net earnings
attributable to         $ 541.6       11.1       %     $ 444.8     9.6       %
General Mills as
reported
Mark-to-market
effects, net of tax       30.2        0.6        %       59.5      1.3       %
(b)
Restructuring
costs, net of tax         2.2         -          %       -         -         %
(c)
Acquisition
integration costs,     3.4       0.1       %    3.0      0.1      %
net of tax (d)
Adjusted net
earnings              $ 577.4     11.8      %   $ 507.3    11.0     %
attributable to
General Mills
                                                                             
                        Six-Month Period Ended
In Millions            Nov. 25, 2012             Nov. 27, 2011        
                                      Percent of                   Percent
                                                                   of
Comparisons as a %     Value      Net Sales      Value    Net Sales 
of Net Sales
Gross margin as         $ 3,370.6     37.7       %     $ 3,041.2   35.9      %
reported (a)
Mark-to-market         (33.7   )  (0.4   )   %    132.1    1.6      %
effects (b)
Adjusted gross        $ 3,336.9   37.3      %   $ 3,173.3  37.5     %
margin
                                                                             
Operating profit as     $ 1,609.1     18.0       %     $ 1,355.8   16.0      %
reported
Mark-to-market            (33.7   )   (0.4   )   %       132.1     1.6       %
effects (b)
Restructuring costs       11.7        0.1        %       -         -         %
(c)
Acquisition
integration costs      5.3       0.1       %    4.0      -        %
(d)
Adjusted operating    $ 1,592.4   17.8      %   $ 1,491.9  17.6     %
profit
                                                                             
Net earnings
attributable to         $ 1,090.5     12.2       %     $ 850.4     10.0      %
General Mills as
reported
Mark-to-market
effects, net of tax       (21.2   )   (0.2   )   %       83.2      1.0       %
(b)
Restructuring
costs, net of tax         9.7         0.1        %       -         -         %
(c)
Acquisition
integration costs,        3.9         -          %       3.1       -         %
net of tax (d)
Tax item (e)           (66.7   )  (0.7   )   %    -        -        %
Adjusted net
earnings              $ 1,016.2   11.4      %   $ 936.7    11.0     %
attributable to
General Mills

  (a)  Net sales less cost of sales.
    (b)   See Note 5.
    (c)   See Note 4.
    (d)   Integration costs resulting from the acquisitions of Yoki, Yoplait
          S.A.S., and Yoplait Marques S.A.S.
    (e)   See Note 7.
          

A reconciliation of total segment operating profit to the relevant GAAP
measure, operating profit, is included in the Statements of Operating Segment
Results.

The reconciliation of International segment and region net sales growth rates
as reported to growth rates excluding the impact of foreign currency exchange
below demonstrates the effect of foreign currency exchange rate fluctuations
from year to year. To present this information, current period results for
entities reporting in currencies other than United States dollars are
converted into United States dollars at the average exchange rates in effect
during the corresponding period of the prior fiscal year, rather than the
actual average exchange rates in effect during the current fiscal year.
Therefore, the foreign currency impact is equal to current year results in
local currencies multiplied by the change in the average foreign currency
exchange rate between the current fiscal period and the corresponding period
of the prior fiscal year.

                     
                        Quarter Ended Nov. 25, 2012
                        Percentage Change   Impact of      Percentage Change
                        in                   Foreign         in
                        Net Sales            Currency        Net Sales on
                                                             Constant
                     as Reported (a)     Exchange       Currency Basis
Europe                  Flat                 (3     ) pts    3          %
Canada                  19         %         3               16
Asia/Pacific            8                    -               8
Latin America         143                (25    )       168        
Total International   19         %        (3     ) pts   22         %
                                                             
                        Six-Month Period Ended Nov. 25, 2012
                        Percentage Change    Impact of       Percentage Change
                        in                   Foreign         in
                        Net Sales            Currency        Net Sales on
                                                             Constant
                     as Reported (a)     Exchange       Currency Basis
Europe                  15         %         (8     ) pts    23         %
Canada                  21                   -               21
Asia/Pacific            12                   (1     )        13
Latin America         83                 (16    )       99         
                                                             
Total International   22         %        (6     ) pts   28         %

(a)  See Note 2.
      

A reconciliation of the effective income tax rate as reported to the effective
income tax rate excluding certain items affecting comparability follows:

                                                                  
                   Quarter Ended                                       Six-Month Period Ended
                   Nov. 25, 2012           Nov. 27, 2011              Nov. 25, 2012              Nov. 27, 2011
                   Pretax    Income        Pretax    Income          Pretax       Income        Pretax     Income
In Millions      Earnings  Taxes        Earnings  Taxes         Earnings     Taxes        Earnings   Taxes
                   (a)                      (a)                        (a)                         (a)
As reported        $  753.5   $  245.4     $  629.7   $  209.4       $ 1,450.6     $  403.5     $ 1,183.2   $  386.9
Mark-to-market        47.9        17.7         94.4        34.9          (33.7   )       (12.5 )     132.1         48.9
effects (b)
Restructuring         2.7         0.5          -           -             11.7            2.0         -             -
costs (c)
Acquisition
integration           4.8         1.4          3.9         0.9           5.3             1.4         4.0           0.9
costs (d)
Tax item (e)       -        -         -        -         -           66.7     -          -     
As adjusted      $  808.9  $  265.0   $  728.0  $  245.2    $ 1,433.9   $  461.1   $ 1,319.3  $  436.7 
Effective tax
rate:
As reported                       32.6  %                  33.3  %                       27.8  %                   32.7  %
As adjusted                 32.8  %             33.7  %                 32.2  %              33.1  %

  (a)  Earnings before income taxes and after-tax earnings from joint
          ventures.
    (b)   See Note 5.
    (c)   See Note 4.
    (d)   Integration costs resulting from the acquisitions of Yoki, Yoplait
          S.A.S., and Yoplait Marques S.A.S.
    (e)   See Note 7.
          

      Our consolidated results for fiscal 2013 include operating activity from
      the acquisitions of Yoki in Brazil (second quarter of fiscal 2013),
      Yoplait Ireland (first quarter of fiscal 2013), Food Should Taste Good
      in the United States (fourth quarter of fiscal 2012), Parampara Foods in
(9)  India (first quarter of fiscal 2013), and the assumption of the Canadian
      Yoplait franchise license (second quarter of fiscal 2013). Also included
      in the first quarter of fiscal 2013 are two additional months of results
      from the acquisition of Yoplait S.A.S. (first quarter of fiscal 2012).
      Collectively, these items are referred to as “new businesses” in
      comparing our fiscal 2013 results to fiscal 2012 within this release.

Contact:

General Mills, Inc.
Analysts:
Kris Wenker, 763-764-2607
or
Media:
Kirstie Foster, 763-764-6364
 
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