General Mills Annual Report 2011

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General Mills

A Portfolio for Global Growth
Annual Report 2011

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Number One General Mills Boulevard
Minneapolis, MN 55426-1347
GeneralMills.com

What started 70 years ago as a brand new cereal
has become a mainstay on millions of breakfast
tables. Today, one of every eight boxes of cereal
sold in the U.S. is a Cheerios variety.

WE HAVE A
PORTFOLIO BUILT FOR
GLOBAL GROWTH.

From ready-to-eat cereal to convenient meals to wholesome snacks, we
compete in growing food categories that are on-trend with consumer
tastes around the world. Our brands hold leading market positions in more
than 100 markets worldwide, with great opportunities for expansion.

General Mills at a Glance

U.S. Retail
Net sales by division

International
Net sales by region

Bakeries and Foodservice
Net sales by customer type

8% 2%

13%

23%

13%

12%

31%

Joint Ventures
Net sales by joint venture
(not consolidated,
proportionate share)

15%

15%%

18%

27%

21%

30%

29%

58%

%
%

$10.2 Billion
23% Big G Cereals
21% Meals
18% Pillsbury USA
15% Yoplait
13% Snacks
8% Baking Products
2% Small Planet Foods/Other

$2.9 Billion
31% Europe
29% Asia/Paciﬁc
27% Canada
13% Latin America

$1.8 Billion
58% Bakeries & National
Restaurant Accounts
30% Foodservice Distributors
12% Convenience Stores

85%

$1.2 Billion
85% Cereal Partners

Worldwide (CPW)

15% Häagen-Dazs Japan

Shareholder Information

World Headquarters
Number One General Mills Boulevard
Minneapolis, MN 55426-1347
Phone: (763) 764-7600

Website
GeneralMills.com

Markets
New York Stock Exchange
Trading Symbol: GIS

Independent Auditor
KPMG LLP
4200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3900
Phone: (612) 305-5000

Investor Inquiries
General Shareholder Information:
Investor Relations Department
(800) 245-5703 or (763) 764-3202

Analysts/Investors:
Kristen S. Wenker
Vice President, Investor Relations
(763) 764-2607

Holiday Gift Boxes

General Mills Gift Boxes are a part of
many shareholders’ December holiday
traditions. To request an order form, call
us toll free at (888) 469-7809 or write,
including your name, street address,
city, state, zip code and phone number
(including area code) to:

2011 General Mills Holiday Gift Box
Department 7803
P.O. Box 5011
Stacy, MN 55078-5011

Or you can place an order online at:
GMIHolidayGift Box.com

Please contact us aft er Oct. 1, 2011.

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Transfer Agent and Registrar
Our transfer agent can assist you with
a variety of services, including change
of address or questions about dividend
checks.

Wells Fargo Bank, N.A.
161 North Concord Exchange
P.O. Box 64854
St. Paul, MN 55164-0854
Phone: (800) 670-4763 or (651) 450-4084
WellsFargo.com/shareownerservices

Electronic Access to Proxy Statement,
Annual Report and Form 10-K
Shareholders who have access to the
Internet are encouraged to enroll in the
electronic delivery program. Please see
the Investors section of our website,
GeneralMills.com, or go directly to the
website, ICSDelivery.com/GIS and follow
the instructions to enroll. If your General
Mills shares are not registered in your
name, contact your bank or broker to
enroll in this program.

Notice of Annual Meeting
Th e annual meeting of shareholders will
be held at 11 a.m., Central Daylight Time,
Sept. 26, 2011, at the Children’s Th eatre
Company, 2400 Th ird Avenue South,
Minneapolis, MN 55404-3597.

A ticket or proof of share ownership will
be required for admission. Please refer
to our Proxy Statement for information
concerning admission to the meeting.

General Mills Direct Stock Purchase Plan
Th is plan provides a convenient and
economical way to invest in General Mills
stock. You can increase your ownership
over time through purchases of common
stock and reinvestment of cash dividends,
without paying brokerage commissions
and other fees on your purchases and
reinvestments. For more information
and a copy of a plan prospectus, go to
the Investors section of our website at
GeneralMills.com.

Visit us on the Web
We have a variety of websites that appeal to consumers around the world. Below is
a selection of our most popular sites. For a more complete list, see the “Our websites”
page on GeneralMills.com.

U.S. Sites
Cheerios.com

Pillsbury.com

Yoplait.com

Larabar.com

BettyCrocker.com
Get recipes, cooking tips and view
instructional videos

BoxTops4Education.com
Sign up to support your school

EatBetterAmerica.com
Simple ways to eat healthy, including
healthier versions of your favorite recipes

QueRicaVida.com
Recipes and nutritional information for
Hispanic consumers

Tablespoon.com
Download coupons, recipes and more for
a variety of our brands

International Sites
HaagenDazs.com.cn (China)

HaagenDazs.fr (France)

NatureValley.co.uk (United Kingdom)

OldElPaso.com.au (Australia)

LifeMadeDelicious.ca (Canada)
Get recipes, promotions and entertaining
ideas for many of our brands

Th is Report is Printed on Recycled Paper

10%

Fiscal 2011 Financial Highlights

(In millions, except per share and return on capital data)

May 29, 2011

May 30, 2010

Change

Fiscal Year Ended

Net Sales

Segment Operating Proﬁ ta

Net Earnings Attributable to General Mills

Diluted Earnings per Share (EPS)

Adjusted Diluted EPS, Excluding Certain Items Aﬀ ecting Comparabilityb

Return on Average Total Capital a

Average Diluted Shares Outstanding

Dividends per Share

$ 14,880

$ 14,636

+ 2%

2,946

1,798

2.70

2.48

2,840

1,530

2.24

2.30

+ 4

+ 18

+ 20

+ 8

13.7%

13.8%

- 10 basis pts.

665

$ 1.12

683

$ 0.96

- 3

+ 17

Net Sales
Dollars in millions

Segment Operating Proﬁta
Dollars in millions

Adjusted Diluted Earnings per Shareb
Dollars

14,880

14,636

14,556

13,548

12,304

2,946

2,840

2,624

2,394

2,273

2.48
14,880

2.30
14,636

1.99

14,556

1.76

13,548

1.59

12,304

Average Diluted Shares Outstanding
Shares in millions

Dividends per Share
Dollars

Return on Average Total Capitala
Percent

665

683

687

694

720

1.12

0.96

0.86

0.78

0.72

13.7

13.8

12.3

11.7

11.0

a See page 85 for discussion of non-GAAP measures.
b Results exclude certain items aﬀ ecting comparability. See page 85 for discussion of non-GAAP measures.

Annual Report 2011

To Our Shareholders

Ken Powell
Chairman and Chief Executive Oﬃ cer

I’m pleased to report that General Mills achieved good
sales and earnings growth in ﬁ scal 2011. Our results met
the key targets we had set for the year, and represented
performance consistent with our long-term growth model.
Th e company’s progress in 2011 extended a strong record
of business growth in recent years.

Net sales for the ﬁ scal year ended May 29, 2011, grew
2 percent to reach $14.9 billion. Segment operating proﬁ t
rose 4 percent to exceed $2.9 billion. And diluted earnings
per share (EPS) increased 20 percent to $2.70. Th e EPS
comparison included changes in mark-to-market valuation
of certain commodity positions in both years, as well as
certain tax items that resulted in a net earnings beneﬁ t in
2011 and a charge in 2010. Adjusted diluted earnings per
share, which excludes these items from both years, grew
8 percent to $2.48.

We were generally pleased with these results because
ﬁ scal 2011 presented a truly challenging environment for
food manufacturers. Widespread price promotion took
place across the food industry for much of last year. Costs
for food ingredients and energy, which had moderated in
the prior year, began rising again and the cost inﬂ ation
accelerated as the year went on. In addition, consumers in
developed markets remained cautious in a still uncertain
economic environment. Results for our U.S. Retail segment
reﬂ ected these challenges, with net sales of $10.2 billion
essentially matching year-ago levels and operating proﬁ t of
$2.3 billion declining 2 percent from record performance
in 2010. However, we posted sales increases on a number
of key businesses, including Nature Valley and Fiber One
grain snacks, Progresso ready-to-serve soup, Old El Paso
Mexican foods, and our Small Planet Foods line of organic

General Mills

and natural products. Sales for Big G ready-to-eat cereals
declined slightly, along with sales for the U.S. cereal category
overall. But we maintained our share of cereal category sales
in ACNielsen-measured channels, and our market share
grew on an all-channel basis.

Our Bakeries and Foodservice segment, which competes
primarily in U.S. channels for food eaten away from home,
soundly outpaced industry trends. Net sales for this busi-
ness segment grew 6 percent to $1.8 billion. Th is included
3 percent growth in sales to foodservice distributors and an
11 percent increase in sales to convenience store customers.
Segment operating proﬁ t rose 16 percent to exceed the
$300 million mark for the ﬁ rst time in company history.

Our International segment results were strong across
the board. Net sales rose 7 percent to nearly $2.9 billion.
Excluding the impact of foreign currency exchange rates,
constant-currency net sales grew in each of the four regions
where we compete, including gains of 7 percent in Europe
and 9 percent in the Asia/Paciﬁ c region. International
segment operating proﬁ t totaled $291 million, up sharply
from the prior year that included negative eﬀ ects from
Venezuelan currency devaluation and other foreign exchange
items. Excluding foreign exchange eﬀ ects, proﬁ t still grew at
a double-digit rate.

Our Cereal Partners Worldwide (CPW) and Häagen-
Dazs Japan (HDJ) joint ventures contributed a combined
$96 million in aft er-tax earnings in 2011. Combined
CPW and HDJ net sales, which are not consolidated in
General Mills’ results, rose 4 percent led by higher sales
for CPW.

Total Returns to Shareholders
Percent growth, stock price change plus reinvested dividends

Worldwide Net Sales*
Dollars in millions

Fiscal 2011

GIS
S&P Packaged Foods Index
S&P 500 Index

May 2007–May 2011
Compound annual growth

-1

16,102

15,816

15,689

14,639

13,289

Consolidated Net Sales
07
Our Share of Ongoing Joint Venture Net Sales

* See page 85 of our 2011 Annual Report for
discussion of non-GAAP measures.

Net Sales Performance

Operating Division/Segment

2011 Net Sales % Change

Small Planet Foods

International Segment*

Bakeries and Foodservice Segment

Snacks

Yoplait

Meals

Big G Cereals

Pillsbury USA

Baking Products

+ 13

+ 7

+ 6

+ 5

+ 1

- 1

- 2

- 4

* Does not include the impact of foreign currency translation. See page 86 of our
2011 Annual Report for a reconciliation to reported results.

In total, General Mills results in ﬁ scal 2011 represented
continuing growth on top of strong performance in recent
years. Since 2007, General Mills net sales have grown at
a 5 percent compound rate. Our segment operating proﬁ t
has grown even faster, compounding at 7 percent per year.
And our adjusted diluted EPS (this measure excludes certain
items aﬀ ecting comparability of results) has increased at a
12 percent compound rate.

Our good ﬁ nancial performance was reﬂ ected in price
appreciation for General Mills stock in ﬁ scal 2011. In addition,
dividends per share grew 17 percent last year. In total, stock
price appreciation plus dividends generated a 14 percent
return to our shareholders for the year. Th is lagged the very
strong returns posted by our peer group and the broader
market in 2011. However, our 14 percent return followed a
43 percent return to GIS shareholders in the previous year.

As shown in the chart above, over the past four ﬁ scal years
General Mills has delivered a double-digit compound annual
return to shareholders — superior performance in a volatile
and challenging period for the equity market overall.

As we enter our next phase of growth, we are targeting
continued good sales and earnings performance in the years
ahead. It seems clear that food manufacturers will have to
contend with higher — and more volatile — input costs. In our
case, total supply chain cost inﬂ ation was 4 percent in 2011,
and we’ve estimated 10 to 11 percent inﬂ ation in our plans
for 2012. Th ere are multiple factors contributing to this
inﬂ ationary pressure, but the fundamental driver is growth
of emerging markets and their increased demand for food
ingredients and energy.

We adopted a new business model several years ago to
help us manage higher inﬂ ation. Th is model begins with
Holistic Margin Management (HMM), our discipline of using
productivity, mix and price realization to oﬀ set inﬂ ation
and protect our gross margin. A strong gross margin gives
us the ability to fund continued high levels of investment
in product improvements, new product development, sales
capabilities and consumer marketing. Th ese activities fuel
net sales growth and ultimately, growth in earnings. We
believe this HMM-driven business model has worked very
well in recent years. As you can see in the charts on page 5,
it enabled us to protect and expand gross margin over
a ﬁ ve-year period when our input cost inﬂ ation averaged
between 4 and 5 percent. We expect HMM to help us
achieve continuing high-quality sales and earnings growth
as we go forward.

Annual Report 2011

A Selection of Our New Products Launched in 2011

We remain committed to our long-term growth model,
which is outlined in the following table:

General Mills Long-term Growth Model

Growth Factor

Compound Annual Growth Target

Net Sales

Segment Operating Proﬁ t

Earnings per Share

Dividend Yield

Total Return to Shareholders

Low single-digit

Mid single-digit

High single-digit

2 to 3 percent

Double-digit

Our targets for ﬁ scal 2012 diﬀ er from this long-term model
due to two primary factors: a sharp increase in estimated
input costs, and our acquisition of a controlling interest
in the international Yoplait yogurt business. Our business
plans before any impact from the Yoplait acquisition assume
10 to 11 percent input cost inﬂ ation for ﬁ scal 2012, driven by
higher costs for food ingredients and energy. We expect our
HMM discipline of productivity, mix management and price
realization to oﬀ set most, but not all, of this cost pressure.
As a result, we are estimating a decline in our gross margin
for the year, and we expect segment operating proﬁ t growth
and earnings per share growth will be below our long-term
targets. Net sales are expected to grow at a mid single-digit
rate in 2012, driven by price realization and a strong lineup
of new products and marketing initiatives.

On July 1, 2011, we completed the purchase of a controlling
interest in Yoplait SAS, headquartered in France. Sodiaal,
the leading French dairy cooperative, will hold the remaining
interest. We intend to work together with Sodiaal to build
the Yoplait brand in existing markets and expand to new
markets worldwide. We plan to consolidate this business,
which will increase our reported sales and operating proﬁ t
in 2012. We expect the 2012 EPS contribution from Yoplait’s
operating results will be oﬀ set by some incremental amor-
tization expense and by the eﬀ ect on EPS of our decision to
buy back fewer shares this year to pay for this acquisition
with cash. Beyond 2012, we anticipate that Yoplait will be an
important source of earnings growth for General Mills.

In fact, international business expansion is one of our ﬁ ve
key growth drivers. Th e other four are: partnering eﬀ ec-
tively with our retail and foodservice customers; building
our brands through strong levels of consumer marketing;
protecting and expanding margins; and generating strong
levels of product innovation. Of these, innovation is the
most powerful lever: It drives growth for our categories
and growth in our sales, earnings and market share.
We’ve got a high level of innovation planned across our busi-
nesses in 2012. And our innovation and marketing eﬀ orts
are focused on four big and growing consumer groups: the
millennial generation, ages 17 to 34; the baby boomer gener-
ation, ages 50 and over; U.S. multicultural consumers; and
rising middle-class consumers in emerging global markets.
You can read about many of our product and marketing
initiatives in the following pages of this report.

General Mills

Input Cost Trend
Percent

Gross Margin
Percent of net sales

-3

Includes raw materials, energy, labor expense, carrier
rates, and storage and handling

Net sales less cost of sales

Our input cost inﬂ ation has averaged 4 to
5 percent over the past ﬁ ve years. With our
Holistic Margin Management eﬀ orts, we’ve
been able to oﬀ set this cost inﬂ ation and
expand our gross margin over this time.

40.0

39.6

35.6

35.5

35.9

Leading Market Positions in U.S. Retail Measured Outlets

Category

Ready-to-eat Cereal

Refrigerated Yogurt

Frozen Vegetables

Mexican Aisle Products

Grain Snacks

Dry Packaged Dinners

Ready-to-serve Soup

Refrigerated Dough

Dessert Mixes

Frozen Hot Snacks

Fruit Snacks

Fiscal 2011
Category
Retail Sales
($ in millions)

Our
Dollar
Share %

Our
Branded
Rank

6,300

4,300

2,400

1,800

1,400

1,300

1,100

500

Source: ACNielsen measured outlets, which represent approximately 60 percent
of our U.S. retail sales

We enter 2012 conﬁ dent that we are positioned for another
year of good growth. Our brands hold leading market
share positions in large and attractive food categories. Our
categories are on-trend with consumer demand for great-
tasting, healthy and convenient foods, so these categories
are growing in markets all around the world. And our busi-
ness plans for 2012 include a high level of product news
and marketing innovation, designed to fuel growth for our
categories and for our brands.

General Mills’ performance is the product of our 35,000
talented and dedicated employees around the world, and I
want to close this letter with my sincere thanks to General
Mills people for all that you do to build our great company.
Let me also acknowledge two senior leaders who announced
their retirements during 2011. Chris Shea, Executive Vice
President, External Relations, and Rick Lund, Vice President,
Controller and Principal Accounting Oﬃ cer, made important
and lasting contributions to General Mills, and we thank
them very much for their service.

I’d also like to thank you for your investment in General
Mills. We appreciate your conﬁ dence in our business and
its prospects, and we look forward to reporting on our
continuing growth.

Kendall J. Powell
Chairman and Chief Executive Oﬃ cer
August 1, 2011

Annual Report 2011

WE HAVE A PORTFOLIO
FOR GLOBAL

Whether it’s a bowl of Cheerios in Barcelona, a cup of Yoplait yogurt
in Columbus or a Nature Valley bar in Brisbane, we oﬀ er great-tasting,
nutritious and convenient foods for consumers around the world.

General Mills Pro Forma Net Sales*

Our brands are consumer favorites and hold strong share positions in a
wide variety of growing food categories. For example, we are a leading
player in the $24 billion global ready-to-eat cereal category. Häagen-Dazs
is the world’s best-selling brand of ice cream. And Yoplait is the second-
largest brand in the $65 billion global yogurt category.

40%

We market our brands in a variety of U.S. retail outlets from traditional
grocery stores to convenience stores. We also compete in foodservice
channels such as restaurants, store bakeries and school cafeterias. Our
brands are available internationally in outlets ranging from hypermarkets
to Häagen-Dazs ice cream shops.

Th e demand for wholesome, convenient and great-tasting foods is
growing around the world. Yet per capita consumption of foods such
as cereal and yogurt is still relatively low in many markets. So we see
tremendous opportunities to grow our businesses in both developed and
emerging markets. Our brands are well-positioned to meet the needs of
consumers everywhere, giving us a portfolio for global growth.

General Mills

22%

16%

11%

22% Ready-to-eat Cereal
16% Refrigerated Yogurt
11% Convenient Meals
7% Wholesome Snack Bars
4% Super-premium Ice Cream
40% All Other Businesses

%
%
%

* Fiscal 2011 U.S. net sales plus ﬁ scal 2011
International net sales at estimated foreign
currency translation rates plus ﬁ scal 2012
Yoplait International $1.2 billion pro forma
sales plus ﬁ scal 2011 proportionate share of
joint venture revenues.

OUR FIVE GLOBAL BUSINESSES ARE GROWTH OPPORTUNITIES FOR US

READY-TO-EAT
CEREAL

SUPER-PREMIUM
ICE CREAM

We market cereal
through our wholly
owned businesses
in North America
and through Cereal
Partners Worldwide,
our joint venture
with Nestlé.

Pro Forma Net Sales:*
$3.8 billion

Our Häagen-Dazs
brand is sold in more
than 80 countries,
including China.

Pro Forma Net Sales:*
$750 million

CONVENIENT MEALS

Old El Paso Mexican
foods, Wanchai Ferry
frozen dim sum and
entrées, Progresso soup,
and Helper dinner
mixes give consumers
great options for a
quick and easy meal.

Pro Forma Net Sales:*
$1.9 billion

WHOLESOME
SNACK BARS

REFRIGERATED
YOGURT

Nature Valley and
Cascadian Farm granola
bars, Fiber One bars,
and Lärabar energy
bars are nutritious
snack choices.

Pro Forma Net Sales:*
$1.1 billion

Our Yoplait yogurt
brand leads the U.S.
yogurt market. As
of July 2011, we
now market Yoplait
yogurt internationally
in partnership with
Sodiaal, a dairy
cooperative in France.

Pro Forma Net Sales:*
$2.8 billion

* See page 85 for discussion of non-GAAP measures.

Annual Report 2011

GROWTH PROSPECTS
FOR OUR PRODUCTS
AROUND THE WORLD

Today’s consumers are looking
for foods that provide health and
wellness beneﬁ ts.

Health news is driving growth on many
of our largest cereal brands. All Big G
cereals contain at least 8 grams of
whole grain per serving, making
General Mills the leading source of
whole grain cereal at breakfast in the
U.S. Five ﬂ avors of Chex cereal are now
gluten-free, contributing to 12 percent
retail sales growth for the Chex fran-
chise in 2011. Retail sales for
MultiGrain Cheerios rose 8 percent in
2011 on strong weight manage-
ment messaging. And we launched an
80-calorie version of Fiber One cereal
this summer. Net sales for Cereal
Partners Worldwide, our joint venture
with Nestlé, grew 2 percent in 2011 on
a constant-currency basis led by brands
with health news such as Fitness® and
Nesquik® made with whole grains.

Our snack bar business is growing at a
healthy clip. Nature Valley granola bars
are available in nearly 80 countries,

General Mills

and global net sales for our snack
bars increased 11 percent in 2011 in
constant currency. In the U.S., retail
sales for our Fiber One snack bars
exceeded $140 million in measured
channels alone. Th is summer, we added
a 90-calorie brownie to the line. And
we’re launching two new ﬂ avors of
Cascadian Farm organic trail mix bars.
Lärabar energy bars are made with
all natural ingredients — primarily fruit
and nuts. Retail sales for this line grew
77 percent in 2011 as we expanded
distribution in more retail outlets. And
Wheaties Fuel bars contributed to
11 percent net sales growth for our
products in convenience stores in 2011.

Our yogurt portfolio oﬀ ers great-
tasting, good-for-you options. Yoplait
Original contains 50 percent of the
Daily Value of calcium per serving.
Th at’s twice the amount of other
yogurts. Yoplait Greek competes in the
fastest-growing U.S. yogurt segment.

Our Bakeries and Foodservice segment
is the leading provider of cereals for
school breakfast programs, delivering
over 1 million servings of whole
grain per day in K-12 schools across
the U.S. Our Pillsbury Mini Pancakes
and French Toast give foodservice
operators a quick and easy way to
prepare individual servings of kids’
breakfast favorites, and each serving
contains 16 grams of whole grain.
Studies show that kids who eat
breakfast tend to perform better in
school, so we expect the number of
school breakfast programs will grow
in the years ahead.

It has a creamier texture and twice the
protein of regular yogurt varieties. In
February, we acquired the Mountain
High brand. Th is all-natural yogurt is
currently distributed in the western
U.S. and is a strong addition
to our portfolio.

We’ve made health improvements on
many of our product lines. In 2011,
we added gluten-free Bisquick mix
to our 300 gluten-free oﬀ erings. We
lowered sodium levels in a variety of
Wanchai Ferry products in China,
Old El Paso dinner kits in Europe,
Australia and Canada, and many Green
Giant vegetable products in the U.S.
And we’re reducing sodium and sugar
levels in Big G cereals. In the U.S. alone,
more than 60 percent of our sales in
2011 came from products with health
improvements.

We’ll continue to focus on the health
proﬁ le of our products, delivering more
nutritious food options for consumers
everywhere.

Global Wholesome Snack Bars
Net Sales Growth*
Constant currency, dollars in millions,
percent growth

Cereal Consumption per Capita
Annual kilograms per person

United Kingdom

6.3

Canada

Australia

4.2

4.1

United States

3.9

* U.S. net sales plus International net sales at
estimated foreign currency translation rates

Mexico

2.7

France 1.8

Poland

1.2

Russia 0.3

Brazil 0.2

Turkey 0.1

Southeast Asia 0.01

Source: Euromonitor 2010
Th e world is an emerging market for
ready-to-eat cereal. Th e UK, Canada,
Australia and the United States account
for 54 percent of cereal consumption,
yet they represent just 6 percent of the
world’s population. We’ll bring high levels
of product innovation and consumer
marketing to help grow cereal around
the world.

Annual Report 2011

AND CONVENIENT
MEAL SOLUTIONS
FOR CONSUMERS
EVERYWHERE

We help consumers around the
world with convenient answers to
the question, “What’s for dinner?”

expand this business to Th ailand, and
we see opportunities for Wanchai
Ferry in additional countries in Asia.

Old El Paso dinner kits bring families
together around the world for a fun and
easy-to-make Mexican meal. Th is brand
is available in more than 60 markets,
and constant-currency sales grew
4 percent to nearly $700 million in
ﬁ scal 2011. We continue to develop
more convenient, better-for-you options.
For example, we added to our Healthy
Fiesta line in Australia, introduced the
reduced-sodium Smart Fiesta line in
Canada, and recently launched a ﬁ sh
taco kit in Europe.

In China, dumplings and dim sum are
dinner favorites. Our line of Wanchai
Ferry frozen dim sum makes them
convenient. Last year, we added noodle
varieties to the line, contributing to
33 percent sales growth for the brand
in China in ﬁ scal 2011. In 2012, we’ll

In the U.S., our Wanchai Ferry
and Macaroni Grill® dinners for two
compete in the $1.4 billion frozen
entrée category. Retail sales for these
restaurant-quality entrées grew at a
double-digit pace in 2011, exceeding
$60 million. We have new varieties
coming in 2012, including Grilled
Chicken Alfredo and Chicken Penne
Primavera ﬂ avors of Macaroni
Grill® entrées.

Retail sales for Progresso ready-to-
serve soup exceeded $500 million in
measured channels alone in ﬁ scal 2011.
Watch for new ﬂ avors of our Rich &
Hearty and traditional soup varieties
coming this summer.

Green Giant vegetables are a nutri-
tious way to round out a meal. In the
U.S., our line of Green Giant Valley
Fresh Steamers makes garden-fresh

General Mills

EatBetterAmerica.com

QueRicaVida.com

Consumers today look online for
meal solutions. Our websites, like
Tablespoon.com and EatBetterAmerica.
com, provide recipe ideas and money-
saving coupons for a variety of
products. And we’re going one step
further, sending consumers coupons
directly to their smartphones. On
QueRicaVida.com, the website for our
Hispanic marketing initiative, recipes
are now available through an iPad®
application. Our spending on digital
marketing initiatives has grown
nearly 40 percent over the past three
years in the U.S., and we’ll continue
to develop new marketing tools using
this dynamic medium.

vegetables ready in seconds in the
microwave. In Europe, Green Giant
sales are growing at a low single-digit
pace as consumers enjoy delicacies
such as white asparagus and hearts
of palm.

Dinner isn’t complete without dessert.
Our Betty Crocker dessert mixes are
available from the U.S. to the UK to
Australia and generate more than
$500 million in retail sales in the
U.S. alone. In 2012, we’re introducing
Betty Crocker Fun da-middles ﬁ lled
cupcake mixes in the U.S. and a line
of scone mixes in Australia.

As disposable incomes rise around the
world and consumers lead increasingly
busy lifestyles, the demand for quick
and easy-to-prepare foods will grow.
Our broad portfolio of well-known
brands positions us well to leverage
this growth in the years ahead.

Old El Paso Global Net Sales Growth*
Constant currency, dollars in millions,
percent growth

Wanchai Ferry Global Net Sales Growth*
Constant currency, dollars in millions,
percent growth

* U.S. net sales plus International net sales at
estimated foreign currency translation rates

Annual Report 2011

FOOD CHOICES IN
GROWING, GLOBAL
CATEGORIES

Above all else, consumers around the
world want foods that taste great.

What could be better than a rich,
creamy scoop of Häagen-Dazs ice
cream? We market this super-premium
ice cream in more than 80 countries
outside of North America. Constant-
currency sales for the brand grew
7 percent in 2011, and we’re intro-
ducing more new varieties around the
world. In Europe, we launched Häagen-
Dazs Secret Sensations, a serving
of ice cream with a crème brulee or
chocolate fondant center. And in Japan,
we’re introducing Crepe Glacé, creamy
Häagen-Dazs ice cream wrapped in
a soft crepe. In China, our more than
160 ice cream shops are a big hit with
consumers, and sales of mooncakes, an
ice cream delicacy available during the
annual Mid-Autumn Festival, continue
to grow every year. We’re bringing
Häagen-Dazs to new markets with
two shops now open in India, and we
recently opened a shop in Cairo.

General Mills

Delicious baked goods are easy to make
with Pillsbury refrigerated dough.
In the U.S., category retail sales in
measured channels total $1.4 billion.
Crescent rolls led growth for the
Pillsbury brand in 2011 with retail
sales up 8 percent, due in part to a
strong advertising campaign empha-
sizing their great homemade taste.
Pillsbury Sweet Moments bite-sized
desserts are ready to eat from the
refrigerator case. Th is summer, we
added cheesecake versions to this line.

Pillsbury Egg Scrambles and Grands!
Egg Sandwiches are two new break-
fast options just arriving in the frozen
foods aisle. Egg Scrambles combine
eggs, potatoes, ham or sausage with
Green Giant vegetables. Grands! Egg
Sandwiches oﬀ er scrambled eggs,
cheese and meat inside a ﬂ uﬀ y biscuit.
All six varieties of Egg Scrambles and
Egg Sandwiches are 300 calories or
less per serving.

Our Yoplait Smoothie mixes also are in
the frozen section. Th is blend of yogurt

Yogurt is a nutritious, convenient,
low-calorie food that tastes great.
So it’s no wonder yogurt category
sales total $65 billion worldwide.
Mountain High all-natural yogurt
is currently available in the western
U.S. Yoplait is a leading yogurt
brand, available in more than 70
countries. Per capita consumption
of yogurt is still quite low in many
international markets, and we see
plenty of opportunities to bring the
great taste of Yoplait to consumers
everywhere.

and fresh fruit provides an easy way
to make a frozen yogurt drink — just
add milk and blend. Try our newest
ﬂ avor: Chocolate Banana. Our yogurt
sales in foodservice channels increased
6 percent in 2011 as we increased
distribution in more foodservice outlets.
Our ParfaitPro yogurt gives cafeterias
and restaurants a quick and easy way
to make delicious yogurt parfaits.

We also have a great lineup of savory
snack products. New Chex Mix
Gourmet Blends oﬀ er culinary-inspired
ﬂ avor combinations, such as Italian
Herb & Parmesan. Retail sales for
Totino’s Pizza Rolls grew 4 percent in
2011 in the $1.1 billion U.S. hot snacks
category as teens enjoy these fast and
easy aft er-school snacks. Th is summer,
we’ll introduce Totino’s Pizza Stuﬀ ers,
a sandwich-sized version of Pizza Rolls,
ready in minutes in the microwave.

From sweet to salty, creamy to crunchy,
our product portfolio delivers on a
variety of taste preferences. We see
great opportunities to expand our
products to satisfy a whole host of
tastes around the world.

Häagen-Dazs Ice Cream Net Sales Growth*
Constant currency, dollars in millions,
percent growth

Yogurt Consumption per Capita
Annual kilograms per person

-3

* International net sales at estimated foreign currency
translation rates; includes our share of joint venture
net sales

France

Ireland

Canada

11.5

9.9

17.8

United Kingdom

9.1

Australia

8.5

United States 5.9

Brazil

5.2

Russia

3.7

China 2.3

India 0.3

Indonesia 0.2

Source: Euromonitor 2010

Annual Report 2011

Investing to Fuel Growth

Capital Expenditures
Dollars in millions

Advertising and Media Expense
Dollars in millions

Research and Development Expense
Dollars in millions

649

650

563

522

460

844

909

732

587

491

235

218

208

205

191

491

Our businesses are strong generators
of earnings and cash. We reinvest
some of this into research and devel-
opment, consumer marketing, and
capital projects that support growth
and cost-savings opportunities we
see in our businesses. We occasion-
ally make acquisitions or divestitures
to enhance the growth prospects for
our business portfolio. And we return
signiﬁ cant cash to shareholders
through dividends and share repur-
chase activity.

Product quality and product innova-
tion are the lifeblood of every branded
consumer foods company. In 2011, our
research and development expense
totaled $235 million. Our investment in
research and development has grown
steadily over recent years, averaging
roughly 1.5 percent of net sales.

We support our consumer brands with
strong levels of advertising investment.
Advertising and media expense in 2011
totaled $844 million worldwide. Th at’s
up more than 70 percent from our
investment level just four years ago.
Television advertising still represents
the largest share of our advertising

budget, but our investments in new
digital media, and in vehicles targeted
to U.S. multicultural consumers are
growing at the fastest rates.

Capital expenditures in 2011 totaled
$649 million, or just over 4 percent
of net sales. Th ese capital projects
included new capacity for fast-growing
businesses such as grain snack bars
and yogurt, along with various cost-
savings projects companywide.

We enhanced our business portfolio
in 2011 with several acquisitions and
divestitures. We added the Mountain
High brand of all-natural yogurt to
our U.S. yogurt business. In Australia,
we added Pasta Master refrigerated
lasagna to our chilled pasta business.
We also divested a frozen baked goods
line in Australia, and a small pie shell
product line that was part of our
Bakeries and Foodservice segment.
And during the fourth quarter of 2011,
we announced a deﬁ nitive agreement
to purchase a controlling interest in
the international Yoplait business.
We completed this transaction on
July 1, 2011.

Beyond these initiatives to support
ongoing growth of our business, we
returned roughly $1.9 billion to share-
holders in 2011 through dividends and
repurchase of General Mills common
stock. Shareholder dividends grew
17 percent in 2011, and have increased
by more than 50 percent since 2007.
In June, we announced a further
9 percent increase in the dividend, to a
new annualized rate of $1.22 per share.

Our share repurchases reduced average
diluted shares outstanding by nearly
3 percent in 2011. And since 2007,
we have reduced the average diluted
share count by an average of 2 percent
per year. We expect our share repur-
chase activity to be lower in 2012, as
we will use cash to pay for the Yoplait
transaction. However, we plan to repur-
chase at least enough shares to oﬀ set
the impact of stock option exercises
in 2012. And the goal of our ongoing
share repurchase program remains an
average annual net reduction in diluted
shares outstanding of 2 percent.

General Mills

Our Corporate Citizenship:
Th ink Global, Act Local

Fiscal 2011 General Mills Contributions
Dollars in millions

$25

$28

$65

$118 Million
$65 Corporate Contributions
$28 Product Donations
$25 Foundation Grants

Th rough our corporate citizenship
initiatives, we work to make the
world a better place. Our eﬀ orts
include direct philanthropy, brand
philanthropy and volunteering
around the world.

As a food company, we’re uniquely
positioned to help in the battle against
hunger. In 2011, we contributed
$28 million in product donations to
Feeding America®, the nation’s largest
network of food banks, and other
hunger relief agencies. We also began
contributing to the Global Food
Banking Network, a nonproﬁ t organi-
zation dedicated to creating, supplying
and strengthening food bank net-
works around the world. Our goal is
to alleviate hunger and improve nutri-
tional wellness in communities where
General Mills does business.

We’re also improving communi-
ties through foundation grants. Our
Champions for Healthy Kids program
is now in its 10th year of providing
grants to organizations that promote
and support healthy lifestyles for kids.
In total, we’ve contributed more than
$19 million to youth nutrition and
ﬁ tness programs that have involved

From Minneapolis to Mumbai, our
employees everywhere participate in our
“Th ink Global, Volunteer Local” initiative,
helping to improve communities through
their volunteering eﬀ orts.

nearly 5 million children across the
U.S. Our Box Tops for Education
program also supports kids’ well-being
and education. Since its inception in
1996, this program has contributed
more than $400 million to K-8 schools
in the U.S.

Our eﬀ orts have international
reach, too. Th rough Partners in Food
Solutions, our employees are part-
nering with food processors in Africa
to produce high-quality, nutritious
and aﬀ ordable foods to help sustain
communities. And in India, the General
Mills Foundation has provided more
than $100,000 in grants to promote
better health and nutrition and
improved education in rural villages
outside of Mumbai.

It’s our people who make all of our phil-
anthropic eﬀ orts successful. More than
80 percent of our U.S. employees vol-
unteer in their communities. Th rough
our “Th ink Global, Volunteer Local”
initiative, we’ve marshaled the eﬀ orts
of our employees around the world to
make a diﬀ erence where they live and
work. Th at’s a philosophy we embrace
as individuals, and as a company, as
we strive to make the world a better
place for all.

Sustainable business practices are
critical to protecting and improving
our environment. We have a wide
variety of initiatives — from water
conservation to agricultural prac-
tices — designed to protect our natural
resources and decrease our envi-
ronmental impact. Read about these
initiatives and more in our 2011
Corporate Social Responsibility Report
and Summary Report available on
CSR.GeneralMills.com.

Annual Report 2011

Board of Directors
(as of August 1, 2011)

Bradbury H. Anderson2, 4
Retired Chief Executive
Oﬃ cer and Vice Chairman,
Best Buy Co., Inc.
(electronics retailer)

R. Kerry Clark1, 2
Retired Chairman and
Chief Executive Oﬃ cer,
Cardinal Health, Inc.
(medical services and
supplies)

Paul Danos1, 5
Dean, Tuck School
of Business and
Laurence F. Whittemore
Professor of Business
Administration,
Dartmouth College

William T. Esrey1, 3*
Chairman of the Board,
Spectra Energy Corp.
(natural gas infrastructure
provider) and Chairman
Emeritus, Sprint Nextel
Corporation
(telecommunications
systems)

Raymond V. Gilmartin2, 4*
Adjunct Professor,
Harvard Business School
and Retired Chairman,
President and Chief
Executive Oﬃ cer,
Merck & Company, Inc.
(pharmaceuticals)

Judith Richards Hope1*, 5
Distinguished Visitor
from Practice and
Professor of Law,
Georgetown University
Law Center

Heidi G. Miller 3, 5
President, JPMorgan
International,
JPMorgan Chase & Co.
(banking and ﬁ nancial
services)

Hilda Ochoa-
Brillembourg3, 5
Founder, President and
Chief Executive Oﬃ cer,
Strategic Investment
Group (investment
management)

Steve Odland3, 4
Adjunct Professor, Florida
Atlantic University School
of Business and Former
Chairman of
the Board and Chief
Executive Oﬃ cer,
Oﬃ ce Depot, Inc.
(oﬃ ce products retailer)

Kendall J. Powell
Chairman of the Board and
Chief Executive Oﬃ cer,
General Mills, Inc.

Michael D. Rose2*, 4
Chairman of the Board,
First Horizon National
Corporation
(banking and ﬁ nancial
services)

Robert L. Ryan1, 3
Retired Senior Vice
President and Chief
Financial Oﬃ cer,
Medtronic, Inc.
(medical technology)

Dorothy A. Terrell4, 5*
Managing Director,
FirstCap Advisors
(venture capital)

Board Committees
1 Audit
2 Compensation
3 Finance
4 Corporate Governance
5 Public Responsibility
* Denotes Committee Chair

Senior Management
(as of August 1, 2011)

Mark W. Addicks
Senior Vice President;
Chief Marketing Oﬃ cer

John R. Church
Senior Vice President,
Supply Chain

Samir Behl
Vice President;
President,
Asia/Paciﬁ c Region

Y. Marc Belton
Executive Vice President,
Global Strategy, Growth
and Marketing Innovation

Richard L. Best
Senior Vice President,
Global Business Solutions

Peter J. Capell
Senior Vice President,
International Wholesome
Snacks Strategic
Business Unit

Gary Chu
Senior Vice President;
President, Greater China

Juliana L. Chugg
Senior Vice President;
President, Meals

Michael L. Davis
Senior Vice President,
Global Human Resources

David E. Dudick Sr.
Senior Vice President;
President,
U.S. Channels Sales

Peter C. Erickson
Senior Vice President,
Innovation, Technology
and Quality

Ian R. Friendly
Executive Vice President;
Chief Operating Oﬃ cer,
U.S. Retail

Jeﬀ rey L. Harmening
Senior Vice President;
President, Big G Cereals

David P. Homer
Senior Vice President;
President,
General Mills Canada

General Mills

John T. Machuzick
Senior Vice President;
President,
Bakeries and Foodservice

Luis Gabriel Merizalde
Vice President;
President, Europe,
Middle East and Africa

Michele S. Meyer
Vice President;
President,
Small Planet Foods

Donal L. Mulligan
Executive Vice President;
Chief Financial Oﬃ cer

James H. Murphy
Senior Vice President,
Global Strategy and
Growth

Kimberly A. Nelson
Senior Vice President,
External Relations;
President,
General Mills Foundation

Christi L. Strauss
Senior Vice President;
Chief Executive Oﬃ cer,
Cereal Partners Worldwide

Anton V. Vincent
Vice President;
President, Baking Products

Sean N. Walker
Vice President;
President, Latin America
and South Africa

Keith A. Woodward
Senior Vice President,
Financial Operations

Jerald A. Young*
Vice President;
Controller

Michael P. Zechmeister
Vice President;
Treasurer

* Eﬀ ective August 15, 2011

Jonathon J. Nudi
Vice President;
President, Snacks

Rebecca L. O’Grady
Vice President;
President, Yoplait

Shawn P. O’Grady
Senior Vice President;
President, Consumer
Foods Sales

Christopher D. O’Leary
Executive Vice President;
Chief Operating Oﬃ cer,
International

Roderick A. Palmore
Executive Vice President;
General Counsel;
Chief Compliance and Risk
Management Oﬃ cer
and Secretary

Kendall J. Powell
Chairman of the Board and
Chief Executive Oﬃ cer

Ann W. H. Simonds
Senior Vice President;
President, Pillsbury USA

Financial Review

Contents

Financial Summary
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Reports of Management and Independent Registered
Public Accounting Firm
Consolidated Financial Statements
Notes to Consolidated Financial Statements
1 Basis of Presentation and Reclassiﬁ cations
2 Summary of Signiﬁ cant Accounting Policies
3 Acquisitions and Divestitures
4 Restructuring, Impairment, and Other Exit Costs
5 Investments in Joint Ventures
6 Goodwill and Other Intangible Assets
7 Financial Instruments, Risk Management Activities and Fair Values
8 Debt
9 Noncontrolling Interests
10 Stockholders’ Equity
11 Stock Plans
12 Earnings per Share
13 Retirement Beneﬁ ts and Postemployment Beneﬁ ts
14 Income Taxes
15 Leases and Other Commitments
16 Business Segment and Geographic Information
17 Supplemental Information
18 Quarterly Data
Glossary
Non-GAAP Measures
Total Return to Stockholders

43
45

49
49
53
53
55
56
57
63
64
65
66
69
69
77
79
79
81
82
83
85
88

Annual Report 2011 17

Financial Summary

At the beginning of ﬁ scal 2011, we revised the classiﬁ cation of certain revenues and expenses to better align our
income statement line items with how we manage our business. We have revised the classiﬁ cation of amounts
previously reported to conform to our ﬁ scal 2011 presentation. Th ese revised classiﬁ cations had no eﬀ ect on pre-
viously reported net earnings attributable to General Mills or earnings per share. See Note 1 to the Consolidated
Financial Statements in this report for further details of the reclassiﬁ cations. Th e following table sets forth
selected ﬁ nancial data for each of the ﬁ scal years in the ﬁ ve-year period ended May 29, 2011:

In Millions, Except Per Share Data, Percentages and Ratios

2011

2010

Fiscal Year

2009 (a)

2008

2007

Operating data:
Net sales
Gross margin (b)
Selling, general, and administrative expenses
Segment operating proﬁ t (c)
Divestitures (gain)

Aft er-tax earnings from joint ventures

Net earnings attributable to General Mills
Depreciation and amortization

Advertising and media expense

Research and development expense

Average shares outstanding:

Basic

Diluted

Earnings per share:

Basic

$ 14,880.2

$ 14,635.6

$ 14,555.8

$ 13,548.0

$ 12,303.9

5,953.5

5,800.2

5,174.9

4,816.2

4,412.7

3,192.0

3,162.7

2,893.2

2,566.0

2,314.5

2,945.6

2,840.5

2,624.2

2,394.4

2,273.0

(17.4)

96.4

—

101.7

(84.9)

91.9

—

110.8

—

72.7

1,798.3
472.6

1,530.5
457.1

1,304.4
453.6

1,294.7
459.2

1,143.9
417.8

843.7

235.0

642.7

664.8

908.5

218.3

659.6

683.3

732.1

208.2

663.7

687.1

587.2

204.7

665.9

693.8

491.4

191.1

693.1

720.4

$
Diluted
Diluted, excluding certain items aﬀ ecting comparability (c) $
Operating ratios:
Gross margin as a percentage of net sales

Selling, general, and administrative expenses as a

percentage of net sales
Segment operating proﬁ t as a percentage of net sales (c)
Eﬀ ective income tax rate
Return on average total capital (b) (c)
Balance sheet data:
Land, buildings, and equipment

Total assets

Long-term debt, excluding current portion
Total debt (b)
Noncontrolling interests

2.80

2.70

2.48

2.32

2.24

2.30

1.96

1.90

1.99

1.93

1.85

1.76

1.65

1.59

40.0%

39.6%

35.6%

35.5%

35.9%

21.5%

19.8%

29.7%

13.7%

21.6%

19.4%

35.0%

13.8%

19.9%

18.0%

37.1%

12.3%

18.9%

17.7%

34.0%

11.7%

18.8%

18.5%

33.0%

11.0%

$ 3,345.9

$ 3,127.7

$ 3,034.9

$ 3,108.1

$ 3,013.9

18,674.5

17,678.9

17,874.8

19,041.6

18,183.7

5,542.5

5,268.5

5,754.8

4,348.7

3,217.7

6,885.1

6,425.9

7,075.5

6,999.5

6,206.1

246.7

245.1

244.2

246.6

1,139.2

Stockholders’ equity

6,365.5

5,402.9

5,172.3

6,212.2

5,318.7

Cash ﬂ ow data:
Net cash provided by operating activities

Capital expenditures

Net cash used by investing activities

Net cash used by ﬁ nancing activities

Fixed charge coverage ratio
Operating cash ﬂ ow to debt ratio (b)
Share data:
Low stock price

High stock price

Closing stock price

Cash dividends per common share

$ 1,526.8

$ 2,181.2

$ 1,828.2

$ 1,729.9

$ 1,751.2

648.8

715.1

649.9

721.2

562.6

288.9

522.0

442.4

460.2

597.1

936.6

1,503.8

1,404.5

1,093.0

1,398.1

7.03

22.2%

6.42

33.9%

5.33

25.8%

4.91

24.7%

4.51

28.2%

33.57

25.59

23.61

25.72

24.64

39.95

39.29

1.12

36.96

35.62

0.96

35.08

25.59

0.86

31.25

30.54

0.78

30.56

30.08

0.72

Number of full- and part-time employees

35,000

33,000

30,000

29,500

28,580

(a) Fiscal 2009 was a 53-week year; all other ﬁ scal years were 52 weeks.

(b) See Glossary on page 83 of this report for deﬁ nition.

(c) See page 85 of this report for our discussion of this measure not deﬁ ned by generally accepted accounting principles.

Management’s Discussion and Analysis of
Financial Conditions and Results of Operations

EXECUTIVE OVERVIEW

We are a global consumer foods company. We develop
distinctive value-added food products and market them
under unique brand names. We work continuously to
improve our established products and to create new
products that meet consumers’ evolving needs and pref-
erences. In addition, we build the equity of our brands
over time with strong consumer-directed marketing and
innovative merchandising. We believe our brand-build-
ing strategy is the key to winning and sustaining lead-
ing share positions in markets around the globe.

Our fundamental business goal is to generate supe-
rior returns for our stockholders over the long term.
We believe that increases in net sales, segment oper-
ating proﬁ t, earnings per share (EPS), and return on
average total capital are the key measures of ﬁ nancial
performance for our businesses. See the “Non-GAAP
Measures” section on page 85 for a description of our
discussion of total segment operating proﬁ t, diluted
EPS excluding certain items aﬀ ecting comparability and
return on average total capital, which are not deﬁ ned by
generally accepted accounting principles (GAAP).

Our objectives are to consistently deliver:
• low single-digit annual growth in net sales;
• mid single-digit annual growth in total segment

operating proﬁ t;

• high single-digit annual growth in EPS; and
• improvements in return on average total capital.

We believe that this ﬁ nancial performance, coupled
with an attractive dividend yield, should result in long-
term value creation for stockholders. We also return
a substantial amount of cash to stockholders through
share repurchases and dividends.

For the ﬁ scal year ended May 29, 2011, our net sales
grew 2 percent, total segment operating proﬁ t grew
4 percent and diluted EPS grew 20 percent, however
our return on average total capital declined by 10 basis
points despite these positive earnings metrics. Diluted
EPS excluding certain items affecting comparability
increased 8 percent from ﬁ scal 2010 (see the “Non-GAAP
Measures” section on page 85 for our use of this measure
and our discussion of the items aﬀ ecting comparability).
Net cash provided by operations totaled $1.5 billion in
ﬁ scal 2011, enabling us to increase our annual dividend
payments per share by 17 percent from ﬁ scal 2010 and
continue returning cash to stockholders through share
repurchases, which totaled $1.2 billion in ﬁ scal 2011. We
also made signiﬁ cant capital investments totaling $649
million in ﬁ scal 2011.

We achieved the following related to our six key oper-

ating objectives for ﬁ scal 2011:
• Net sales growth of 2 percent was primarily driven by
volume gains in our International segment and net price
realization and mix.
• We achieved a 4 percent increase in total segment
operating proﬁ t despite renewed input cost inﬂ ation.
• Our gross margin as a percent of net sales was com-
parable to ﬁ scal 2010. We took pricing actions on most
of our product lines in ﬁ scal 2011 to partially oﬀ set the
increases in input costs. In addition, we continued to
focus on the other elements of our holistic margin man-
agement (HMM) program, which include cost-savings
initiatives, marketing spending eﬃ ciencies, and proﬁ table
sales mix strategies.
• We continued to invest in media and other brand-
building marketing programs. However, our total media
and advertising spending decreased from ﬁ scal 2010 lev-
els, which increased 24 percent versus ﬁ scal 2009.
• We grew our Bakeries and Foodservice segment oper-
ating proﬁ t, including a focus on higher-margin, branded
product lines within our most attractive foodservice cus-
tomer channels.
• We continued to grow our business in international
markets. We focused on our core platforms of ready-to-
eat cereal, super-premium ice cream, convenient meal
solutions, and healthy snacking by introducing new
products and investing to drive sales growth.

Details of our ﬁ nancial results are provided in the
“Fiscal 2011 Consolidated Results of Operations” section
below.

We expect slow improvement in the operating envi-
ronment for food companies around the globe. Although
we believe the environment will remain challenging in
ﬁ scal 2012, we expect to deliver another year of qual-
ity growth. Excluding the eﬀ ects of our acquisition of
interests in Yoplait S.A.S. and Yoplait Marques S.A.S., we
expect to achieve these results:
• We are targeting mid single-digit growth in net sales
primarily driven by net price realization, as our plans
assume a modest decline in pound volume.
• We have a strong lineup of consumer marketing, mer-
chandising, and innovation planned to support our lead-
ing brands. We will continue to build our global platforms
in markets around the world, accelerating our eﬀ orts in
rapidly growing emerging markets.
• We are targeting low single-digit growth in total seg-
ment operating proﬁ t in ﬁ scal 2012, as we expect our
HMM discipline of cost savings, mix management and

Annual Report 2011 19

price realization to largely oﬀ set an expected 10 to 11
percent increase in input costs.

Our businesses generate strong levels of cash ﬂ ows.
We use some of this cash to reinvest in our business.
Our ﬁ scal 2012 plans call for $670 million of expendi-
tures for capital projects, excluding expenditures that
may be required for Yoplait S.A.S. On June 28, 2011, our
Board of Directors approved a dividend increase to an
annual rate of $1.22 per share, a 9 percent increase from
the rate paid in ﬁ scal 2011.

As a result of the acquisition of interests in Yoplait enti-
ties, we expect to reduce our level of share repurchases in
ﬁ scal 2012. We expect that share repurchases will oﬀ set
normal levels of stock option exercises in ﬁ scal 2012.

Certain terms used throughout this report are deﬁ ned

in a glossary on page 83 of this report.

FISCAL 2011 CONSOLIDATED RESULTS OF OPERATIONS

In ﬁ scal 2011, net earnings attributable to General Mills
was $1,798 million, up 18 percent from $1,530 million in
ﬁ scal 2010, and we reported diluted EPS of $2.70 in ﬁ scal
2011, up 20 percent from $2.24 in ﬁ scal 2010. Fiscal 2011
results include gains from the mark-to-market valuation
of certain commodity positions and grain inventories ver-
sus ﬁ scal 2010 which included losses. Fiscal 2011 results
also include the net beneﬁ t from the resolution of uncer-
tain tax matters, and ﬁ scal 2010 results include income
tax expense related to the enactment of federal health
care reform. Diluted EPS excluding these items aﬀ ecting
comparability was $2.48 in ﬁ scal 2011, up 8 percent from
$2.30 in ﬁ scal 2010 (see the “Non-GAAP Measures” sec-
tion on page 85 for our use of this measure and our dis-
cussion of the items aﬀ ecting comparability).

Th e components of net sales growth are shown in the

following table:

Components of Net Sales Growth

Contributions from volume growth (a)
Net price realization and mix

Foreign currency exchange

Net sales growth

Fiscal 2011
vs. 2010

1 pt

Flat

2 pts

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

Net sales grew 2 percent in ﬁ scal 2011, due to 1 per-
centage point of volume growth and 1 percentage point
of growth from net price realization and mix. Foreign
exchange was ﬂ at compared to ﬁ scal 2010.

Cost of sales increased $91 million in ﬁ scal 2011 to
$8,927 million. Th is increase was driven by $157 million
higher net input costs and product mix and an $84 mil-
lion increase attributable to higher volume, partially oﬀ -
set by a $95 million net decrease in cost of sales related
to mark-to-market valuation of certain commodity posi-
tions and grain inventories as described in Note 7 to the
Consolidated Financial Statements on page 57 of this
report, compared to a net increase of $7 million in ﬁ scal
2010. In ﬁ scal 2010, we recorded a charge of $48 million
resulting from a change in the capitalization threshold
for certain equipment parts.

Gross margin grew 3 percent in ﬁ scal 2011 versus ﬁ s-
cal 2010. Gross margin as a percent of net sales increased
by 40 basis points from ﬁ scal 2010 to ﬁ scal 2011. Th ese
improvements were primarily driven by gains from the
mark-to-market valuation of certain commodity posi-
tions and grain inventories in ﬁ scal 2011 versus losses
in ﬁ scal 2010.

Selling, general and administrative (SG&A) expenses
were up $29 million in ﬁ scal 2011 versus ﬁ scal 2010,
while SG&A expenses as a percent of net sales remained
essentially flat from fiscal 2010 to fiscal 2011. The
increase in SG&A expenses was primarily driven by a
$69 million increase in corporate pension expense par-
tially oﬀ set by a 7 percent decrease in advertising and
media expense. In ﬁ scal 2010, the Venezuelan govern-
ment devalued the bolivar fuerte exchange rate against
the U.S. dollar. Th e $14 million foreign exchange loss
resulting from the devaluation was substantially oﬀ set
by a $13 million recovery against a corporate investment.
During ﬁ scal 2011, we recorded a net divestiture gain
of $17 million. We recorded a gain of $14 million related
to the sale of a foodservice frozen baked goods product
line in our International segment and a gain of $3 mil-
lion related to the sale of a pie shell product line in our
Bakeries and Foodservice segment. Th ere were no dives-
titures in ﬁ scal 2010.

Interest, net for ﬁ scal 2011 totaled $346 million, $55
million lower than ﬁ scal 2010. Th e average interest rate
on our total outstanding debt was 5.6 percent in ﬁ scal
2011 compared to 6.3 percent in ﬁ scal 2010, generating
a $45 million decrease in net interest. Average inter-
est bearing instruments increased $474 million in ﬁ scal
2011, primarily due to more share repurchases than in
ﬁ scal 2010, leading to a $30 million increase in net inter-
est. In ﬁ scal 2010, we also recorded a loss of $40 million
related to the repurchase of certain notes, which rep-
resented the premium paid, the write-oﬀ of remaining

20 General Mills

discount and unamortized fees, and the settlement of
related swaps.

Restructuring, impairment, and other exit costs

totaled $4 million in ﬁ scal 2011 as follows:

Expense, in Millions

Discontinuation of underperforming product

line in our U.S. Retail segment

Charges associated with restructuring actions

previously announced

Total

$1.7

2.7

$4.4

In ﬁ scal 2011, we decided to exit an underperform-
ing product line in our U.S. Retail segment. As a result
of this decision, we concluded that the future cash
ﬂ ows generated by this product line were insuﬃ cient
to recover the net book value of the associated long-
lived assets. Accordingly, we recorded a non-cash charge
of $2 million related to the impairment of the associ-
ated long-lived assets. No employees were aﬀ ected by
these actions. In addition, we recorded $3 million of
charges associated with restructuring actions previously
announced. In ﬁ scal 2011, we paid $6 million in cash
related to restructuring actions taken in ﬁ scal 2011 and
previous years.

Our consolidated eﬀ ective tax rate for ﬁ scal 2011 was
29.7 percent compared to 35.0 percent in ﬁ scal 2010.
Th e 5.3 percentage point decrease was primarily due to
a $100 million reduction to tax expense recorded in ﬁ scal
2011 related to a settlement with the Internal Revenue
Service (IRS) concerning corporate income tax adjust-
ments for ﬁ scal years 2002 to 2008. Th e adjustments
primarily relate to the amount of capital loss, deprecia-
tion, and amortization we reported as a result of the sale
of noncontrolling interests in our General Mills Cereals,
LLC (GMC) subsidiary. Fiscal 2010 income tax expense
included a $35 million increase related to the enactment
of federal health care reform (the Patient Protection and
Aﬀ ordable Care Act, as amended by Health Care and
Education Reconciliation Act of 2010). Th is legislation
changed the tax treatment of subsidies to companies
that provide prescription drug beneﬁ ts that are at least
the equivalent of beneﬁ ts under Medicare Part D (see
the “Impact of Inﬂ ation” section below for additional dis-
cussion of this legislation).

Aft er-tax earnings from joint ventures for ﬁ scal 2011
decreased to $96 million compared to $102 million in ﬁ s-
cal 2010. Th e decrease is primarily due to higher adver-
tising and media spending and increased service cost

allocations, all in CPW. In ﬁ scal 2011, CPW net sales grew
by 3 percent due to a 2 percentage point increase in
volume and a 1 percentage point increase from favorable
foreign exchange. Net price realization and mix was ﬂ at
compared to ﬁ scal 2010. Net sales for HDJ increased 4
percent from ﬁ scal 2010 primarily due to 9 percentage
points of favorable foreign exchange, partially oﬀ set by
a 5 percentage point decline in net price realization and
mix. Volume was ﬂ at compared to ﬁ scal 2010.

Average diluted shares outstanding decreased by 18
million in ﬁ scal 2011 from ﬁ scal 2010, due primarily to
the repurchase of 32 million shares since the end of ﬁ s-
cal 2010, partially oﬀ set by the issuance of shares upon
stock option exercises.

FISCAL 2011 CONSOLIDATED BALANCE
SHEET ANALYSIS

Cash and cash equivalents decreased $54 million from
ﬁ scal 2010, as discussed in the “Liquidity” section on
page 29.

Receivables increased $121 million from ﬁ scal 2010 as
a result of foreign currency translation eﬀ ects of $44
million and sales timing shift s. Th e allowance for doubt-
ful accounts was essentially unchanged from ﬁ scal 2010.
Inventories increased $265 million from ﬁ scal 2010

primarily as a result of increased commodity prices.

Prepaid expenses and other current assets increased
$105 million from ﬁ scal 2010, due mainly to increases in
derivatives receivable balances.

Land, buildings, and equipment increased $218 mil-
lion from ﬁ scal 2010, as capital expenditures of $649 mil-
lion and a foreign currency translation impact of $55
million were partially oﬀ set by depreciation expense of
$462 million in ﬁ scal 2011.

Goodwill and other intangible assets increased $256
million from ﬁ scal 2010 primarily due to foreign currency
translation of $148 million and the acquisitions of the
Mountain High yoghurt business and the Pasta Master
meals business. We recorded $72 million of goodwill and
$45 million of other intangible assets related to these
transactions.

Other assets increased $99 million from ﬁ scal 2010,
driven mainly by a $126 million increase in our prepaid
pension assets and a $121 million increase in our invest-
ment and advances to joint ventures, partially oﬀ set by
a decrease of $117 million in non-current interest rate
derivatives receivable.

Annual Report 2011 21

Accounts payable increased $146 million to $995 mil-
lion in ﬁ scal 2011, primarily due to shift s in timing of
payments.

Long-term debt, including current portion, and notes
payable increased $459 million from ﬁ scal 2010 primar-
ily due to the issuance of $1.2 billion of long-term debt
in ﬁ scal 2011, partially oﬀ set by a $739 million decrease
in notes payable.

Th e current and non-current portions of net deferred
income taxes liability increased $268 million from ﬁ scal
2010 due to contributions to our deﬁ ned beneﬁ t pension
plans and book versus tax depreciation diﬀ erences.

Other current liabilities decreased $441 million from
ﬁ scal 2010, primarily driven by decreases in accrued
taxes of $360 million and a $136 million decrease in con-
sumer marketing accruals.

Other liabilities decreased $386 million from ﬁ scal
2010, driven by a decrease of $175 million in pension and
postretirement liabilities, a decrease of $158 million in
non-current derivatives payable, and a decrease of $43
million in non-current accrued taxes payable.

Retained earnings increased $1,069 million from ﬁ scal
2010, reﬂ ecting ﬁ scal 2011 net earnings of $1,798 mil-
lion less dividends paid of $729 million. Treasury stock
increased $595 million from ﬁ scal 2010, due to $1,164 mil-
lion of share repurchases, partially oﬀ set by $568 million
related to stock-based compensation plans. Additional
paid in capital increased $13 million from ﬁ scal 2010,
due to stock compensation plan activity. Accumulated
other comprehensive loss (AOCI) decreased by $476
million aft er-tax from ﬁ scal 2010, primarily driven by
foreign currency translation of $358 million and pension
and postemployment activity of $128 million.

FISCAL 2010 CONSOLIDATED RESULTS
OF OPERATIONS

Net earnings attributable to General Mills were $1,530
million in ﬁ scal 2010, up 17 percent from $1,304 million
in ﬁ scal 2009, and we reported diluted EPS of $2.24 in
ﬁ scal 2010, up 18 percent from $1.90 in ﬁ scal 2009. Fiscal
2010 and 2009 results include losses from the mark-
to-market valuation of certain commodity positions
and grain inventories. Fiscal 2010 results also include
income tax expense related to the enactment of federal
health care reform, and the ﬁ scal 2009 results include
a net divestiture gain, income from a settlement with
an insurance carrier, and the impact of a court deci-
sion on an uncertain tax matter. Diluted EPS excluding

these items aﬀ ecting comparability was $2.30 in ﬁ scal
2010, up 16 percent from $1.99 in ﬁ scal 2009 (see the
“Non-GAAP Measures” section on page 85 for our use of
this measure and our discussion of the items aﬀ ecting
comparability).

Th e components of net sales growth are shown in the

following table:

Components of Net Sales Growth

Contributions from volume growth (a)

Net price realization and mix

Foreign currency exchange

Net sales growth

Fiscal 2010
vs. 2009

Flat

1 pt

Flat

1 pt

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

Net sales grew 1 point in ﬁ scal 2010, driven by 1 per-
centage point of growth from net price realization and
mix. Contributions from volume were ﬂ at, including the
loss of 2 points of growth from divested products and a
1 percentage point loss from an additional week in ﬁ scal
2009. Foreign exchange did not aﬀ ect sales growth in
ﬁ scal 2010.

Cost of sales decreased $546 million in ﬁ scal 2010
to $8,835 million. Th is decrease was mainly driven by
favorable mix, HMM initiatives, and lower input costs. In
ﬁ scal 2010, we recorded a $7 million net increase in cost
of sales related to mark-to-market valuation of certain
commodity positions and grain inventories as described
in Note 7 to the Consolidated Financial Statements on
page 57 of this report, compared to a net increase of
$119 million in ﬁ scal 2009. In ﬁ scal 2010, we recorded
a charge of $48 million resulting from a change in the
capitalization threshold for certain equipment parts,
enabled by an upgrade to our parts management system.
Gross margin grew 12 percent in ﬁ scal 2010 ver-
sus ﬁ scal 2009. Gross margin as a percent of net sales
increased by 400 basis points from ﬁ scal 2009 to ﬁ scal
2010. Th ese improvements were driven by favorable mix,
HMM initiatives and lower input costs.

Selling, general and administrative (SG&A) expenses
were up $270 million in ﬁ scal 2010 versus ﬁ scal 2009.
SG&A expenses as a percent of net sales in ﬁ scal 2010
increased by 2 percentage points compared to ﬁ scal
2009. Th e increase in SG&A expenses was primarily
driven by a 24 percent increase in advertising and media
expense. In fiscal 2010, the Venezuelan government
devalued the bolivar fuerte exchange rate against the

22 General Mills

U.S. dollar. Th e eﬀ ect of the devaluation was a $14 million
foreign exchange loss. Also in ﬁ scal 2010, we recorded
a $13 million recovery against a corporate investment
compared to write downs of $35 million related to vari-
ous corporate investments in ﬁ scal 2009. In ﬁ scal 2009,
we recorded a $41 million gain from a settlement with
the insurance carrier covering the loss of our La Salteña
pasta manufacturing facility in Argentina, which was
destroyed by ﬁ re in ﬁ scal 2008.

Th ere were no divestitures in ﬁ scal 2010. In ﬁ scal
2009, we recorded a net divestiture gain of $129 million
related to the sale of our Pop•Secret product line from
our U.S. Retail segment for $192 million in cash. Also in
ﬁ scal 2009, we recorded a $38 million loss on the sale
of a portion of the assets of our frozen unbaked bread
dough product line in our Bakeries and Foodservice seg-
ment, including the discontinuation of our frozen dinner
roll product line in our U.S. Retail segment that shared
a divested facility. In addition, we recorded a $6 million
loss in ﬁ scal 2009 on the sale of our bread concentrates
product line in our Bakeries and Foodservice segment.

Interest, net for ﬁ scal 2010 totaled $402 million, $19
million higher than ﬁ scal 2009. Average interest-bearing
instruments decreased $1.0 billion in ﬁ scal 2010, leading
to a $58 million decrease in net interest, while average
interest rates increased 60 basis points generating a $37
million increase in net interest. Th e average interest rate
on our total outstanding debt was 6.3 percent in ﬁ scal
2010 compared to 5.7 percent in ﬁ scal 2009. In ﬁ scal
2010, we also recorded a loss of $40 million related to
the repurchase of certain notes, which represented the
premium paid, the write-oﬀ of remaining discount and
unamortized fees, and the settlement of related swaps.

Restructuring, impairment, and other exit costs

totaled $31 million in ﬁ scal 2010 as follows:

Expense (Income), in Millions

Discontinuation of kids’ refrigerated yogurt

beverage and microwave soup product lines

$24.1

Discontinuation of the breadcrumbs product

line at Federalsburg, Maryland plant

Sale of Contagem, Brazil bread and pasta plant

Charges associated with restructuring

actions previously announced

Total

6.2

(0.6)

1.7

$31.4

In ﬁ scal 2010, we decided to exit our kids’ refriger-
ated yogurt beverage product line at our Murfreesboro,
Tennessee plant and our microwave soup product line

at our Vineland, New Jersey plant to rationalize capac-
ity for more proﬁ table items. Our decisions to exit these
U.S. Retail segment products resulted in a $24 million
non-cash charge against the related long-lived assets.
No employees were aﬀ ected by these actions. We recog-
nized $2 million of other exit costs and completed these
actions in ﬁ scal 2011. We also decided to exit our bread-
crumb product line at our Federalsburg, Maryland plant
in our Bakeries and Foodservice segment. As a result of
this decision, we concluded that the future cash ﬂ ows
generated by these products were insuﬃ cient to recover
the net book value of the associated long-lived assets.
Accordingly, we recorded a non-cash charge of $6 mil-
lion primarily related to the impairment of these long-
lived assets and in the fourth quarter of ﬁ scal 2010, we
sold our manufacturing facility in Federalsburg for $3
million. In ﬁ scal 2010, we also recorded a $1 million net
gain on the sale of our previously closed Contagem, Brazil
bread and pasta plant for cash proceeds of $6 million,
and recorded $2 million of costs related to previously
announced restructuring actions. In ﬁ scal 2010, we paid
$8 million in cash related to restructuring actions taken
in ﬁ scal 2010 and previous years.

Our consolidated eﬀ ective tax rate for ﬁ scal 2010 was
35.0 percent compared to 37.1 percent in ﬁ scal 2009.
Th e 2.1 percentage point decrease primarily reﬂ ects an
unfavorable court decision in ﬁ scal 2009 on an uncer-
tain tax matter, which increased ﬁ scal 2009 income tax
expense by $53 million. In addition, ﬁ scal 2009 included
$15 million of tax expense related to nondeductible good-
will write-oﬀ s associated with divestitures. Fiscal 2010
income tax expense included a $35 million increase
related to the enactment of federal health care reform.
Th is legislation changed the tax treatment of subsi-
dies to companies that provide prescription drug ben-
eﬁ ts that are at least the equivalent of beneﬁ ts under
Medicare Part D (see the “Impact of Inﬂ ation” section
below for additional discussion of this legislation). Th e
ﬁ scal 2010 tax rate also included increased beneﬁ ts from
the domestic manufacturing deduction.

Aft er-tax earnings from joint ventures for ﬁ scal 2010
increased to $102 million compared to $92 million in
the same period in ﬁ scal 2009. In ﬁ scal 2010, net sales
for CPW grew 6 percent, due to 4 percentage points of
growth from net price realization and mix, 1 percentage
point from favorable foreign exchange and a 1 percent-
age point increase in volume, including growth in Russia,
Southeast Asia, the Middle East and Latin America. Net
sales for HDJ decreased 4 percent, due primarily to an 11

Annual Report 2011 23

percentage point decline in volume, partially oﬀ set by
favorable foreign exchange.

Average diluted shares outstanding decreased by 4
million in ﬁ scal 2010 from ﬁ scal 2009, due primarily to
the timing of share repurchases including the repur-
chase of 21 million shares since the end of ﬁ scal 2009,
partially oﬀ set by the issuance of shares upon stock
option exercises.

RESULTS OF SEGMENT OPERATIONS

Our businesses are organized into three operating segments: U.S. Retail; International; and Bakeries and Foodservice.
Th e following tables provide the dollar amount and percentage of net sales and operating proﬁ t from each seg-

ment for ﬁ scal years 2011, 2010, and 2009:

Net Sales

In Millions

U.S. Retail

International

Bakeries and Foodservice

Total

Segment Operating Proﬁ t

U.S. Retail

International

Bakeries and Foodservice

Total

2011

Fiscal Year

2010

2009

Dollars

Percent
of Total

Dollars

Percent
of Total

Dollars

Percent
of Total

$10,163.9

69%

$10,209.8

70%

$9,973.6

2,875.5

1,840.8

2,684.9

1,740.9

2,571.8

2,010.4

68%

$14,880.2

100%

$14,635.6

100%

$14,555.8

100%

$2,347.9

80%

$2,385.2

84%

$2,206.6

84%

291.4

306.3

192.1

263.2

239.2

178.4

$2,945.6

100%

$2,840.5

100%

$2,624.2

100%

Segment operating proﬁ t excludes unallocated cor-
porate items, gain on divestitures, and restructuring,
impairment, and other exit costs because these items
affecting operating profit are centrally managed at
the corporate level and are excluded from the mea-
sure of segment proﬁ tability reviewed by our executive
management.

U.S. Retail Segment Our U.S. Retail segment reﬂ ects
business with a wide variety of grocery stores, mass
merchandisers, membership stores, natural food chains,
and drug, dollar and discount chains operating through-
out the United States. Our major product categories in
this business segment are ready-to-eat cereals, refrig-
erated yogurt, ready-to-serve soup, dry dinners, shelf
stable and frozen vegetables, refrigerated and frozen
dough products, dessert and baking mixes, frozen pizza
and pizza snacks, grain, fruit and savory snacks, and a
wide variety of organic products including soup, granola
bars, and cereal.

24 General Mills

Components of net sales growth are shown in the fol-

lowing table:

U.S. Retail Net Sales Percentage
Change by Division

Components of U.S. Retail Net Sales Growth

Contributions from volume growth (a)

Net price realization and mix

Net sales growth

Fiscal
2011
vs. 2010

Fiscal
2010
vs. 2009

Flat

1 pt

2 pts

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

In ﬁ scal 2011, net sales for our U.S. Retail segment
were $10.2 billion, ﬂ at compared to ﬁ scal 2010. Volume
on a tonnage basis and net price realization and mix
were both ﬂ at compared to ﬁ scal 2011.

Net sales for this segment totaled $10.2 billion in ﬁ scal
2010 and $10.0 billion in ﬁ scal 2009. Net price realiza-
tion and mix added 1 percentage point of growth and
volume on a tonnage basis contributed 1 percentage
point of growth including a loss of 2 percentage points
from an additional week in ﬁ scal 2009.

Net sales for our U.S. retail divisions are shown in the

tables below:

U.S. Retail Net Sales by Division

In Millions

Big G

Meals

Pillsbury

Yoplait

Snacks

Fiscal Year

2011

2010

2009

$2,293.6

$2,351.3

$2,231.9

2,131.8

2,146.0

2,139.6

1,823.9

1,858.2

1,851.9

1,499.0

1,491.2

1,471.0

1,378.3

1,315.8

1,237.7

Baking Products
Small Planet Foods and other

808.6
228.7

845.2
202.1

842.6
198.9

Total

$10,163.9 $10,209.8

$9,973.6

Big G

Meals

Pillsbury

Yoplait

Snacks

Baking Products

Small Planet Foods

Total

Fiscal 2011
vs. 2010

Fiscal 2010
vs. 2009

(2)%

(1)

(2)

(4)

Flat

In ﬁ scal 2011, net sales for Big G cereals declined 2 per-
cent from last year which included Chocolate Cheerios
and Wheaties Fuel introductory volume. Meals division
net sales decreased 1 percent as Helper dinner mixes
and Green Giant canned vegetables declines were par-
tially oﬀ set by growth in Old El Paso Mexican products,
Progresso ready-to-serve soups and Wanchai Ferry
and Macaroni Grill frozen entrees. Pillsbury net sales
declined 2 percent due to sales declines in Totino’s pizza.
Net sales for Yoplait grew 1 percent including the acquisi-
tion of the Mountain High yoghurt business. Snacks net
sales grew 5 percent, driven by Nature Valley and Fiber
One grain snack bars. Net sales for Baking Products
declined 4 percent. Small Planet Food’s net sales were
up 13 percent driven by double-digit growth for Lärabar
fruit and nut energy bars.

In ﬁ scal 2010, net sales for Big G cereals grew 5 per-
cent driven by Multigrain Cheerios, Cinnamon Toast
Crunch, and Fiber One cereals and introductory sales
of Chocolate Cheerios and Wheaties Fuel. Meals divi-
sion net sales were ﬂ at, as gains from Green Giant fro-
zen vegetables and Old El Paso Mexican products were
oﬀ set by lower sales of Progresso ready-to-serve soups.
Pillsbury net sales were ﬂ at, including gains on Totino’s
pizza and Pizza Rolls snacks and Pillsbury Toaster
Strudel pastries offset by lower sales for Pillsbury
refrigerated baked goods. Net sales for Yoplait grew 1
percent, led by introductory sales from Yoplait Delights
and Yoplait Greek style yogurt. Snacks net sales grew 6
percent, driven by Fiber One bars, Nature Valley grain
snacks and several fruit snack varieties. Net sales for
Baking Products were ﬂ at. Small Planet Food’s net sales
were up 3 percent, reﬂ ecting performance of Cascadian
Farm cereal and granola bars and Lärabar fruit and nut
energy bars.

Annual Report 2011 25

Segment operating proﬁ t of $2.3 billion in ﬁ scal 2011
declined $37 million, or 2 percent, from ﬁ scal 2010. Th e
decrease was primarily driven by unfavorable supply
chain costs of $81 million, partially oﬀ set by a 9 percent
reduction in advertising and media expense.

Segment operating proﬁ t of $2.4 billion in ﬁ scal 2010
improved $179 million, or 8 percent, over ﬁ scal 2009. Th e
increase was primarily driven by favorable supply chain
costs of $238 million, net price realization and mix of
$106 million, and volume growth of $54 million, partially
oﬀ set by a 22 percent increase in advertising and media
expense and higher administrative costs.

International Segment In Canada, our major prod-
uct categories are ready-to-eat cereals, shelf stable and
frozen vegetables, dry dinners, refrigerated and frozen
dough products, dessert and baking mixes, frozen pizza
snacks, and grain and fruit snacks. In markets outside
North America, our product categories include super-
premium ice cream and frozen desserts, refrigerated
yogurt, grain snacks, shelf stable and frozen vegetables,
refrigerated and frozen dough products, and dry din-
ners. Our International segment also includes products
manufactured in the United States for export, mainly to
Caribbean and Latin American markets, as well as prod-
ucts we manufacture for sale to our international joint
ventures. Revenues from export activities are reported in
the region or country where the end customer is located.
Components of net sales growth are shown in the fol-

lowing table:

Components of International Net Sales Growth

Fiscal 2011
vs. 2010

Fiscal 2010
vs. 2009

Contributions from volume growth (a)
Net price realization and mix

Foreign currency exchange

Net sales growth

6 pts

1 pt

Flat

7 pts

Flat

3 pts

1 pt

4 pts

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

In ﬁ scal 2011, net sales for our International segment
were $2,876 million, up 7 percent from ﬁ scal 2010. Th is
growth was driven by 6 percentage points of contribu-
tions from volume and 1 percentage point from net price
realization and mix. Foreign currency exchange was ﬂ at
compared to ﬁ scal 2010.

Net sales totaled $2,685 million in ﬁ scal 2010, up 4
percent from $2,572 million in ﬁ scal 2009. Th e growth

in ﬁ scal 2010 was driven by 3 percentage points from
net price realization and mix and 1 percentage point
of favorable foreign currency exchange. Pound volume
was ﬂ at, reﬂ ecting a 2 percentage point reduction from
divested product lines.

Net sales for our International segment by geographic

region are shown in the following tables:

International Net Sales by Geographic Region

In Millions

Europe

Canada
Asia/Paciﬁ c

Latin America

Total

Fiscal Year

2011

2010

2009

$905.5

$859.6

$849.1

769.9
822.9

377.2

709.9
720.0

395.4

645.9
634.5

442.3

$2,875.5

$2,684.9

$2,571.8

International Change in Net Sales by Geographic Region

Europe

Canada

Asia/Paciﬁ c

Latin America

Total

Fiscal 2011
vs. 2010

Fiscal 2010
vs. 2009

(5)

(11)

In ﬁ scal 2011, net sales in Europe grew 5 percent
driven by growth in Häagen Dazs and Nature Valley
in the United Kingdom, and Old El Paso in France and
Switzerland, partially offset by unfavorable foreign
exchange. Net sales in Canada increased 8 percent due
to favorable foreign exchange and growth in ready-to-
eat cereals. In the Asia/Paciﬁ c region, net sales grew
14 percent driven by growth of Häagen-Dazs and
Wanchai Ferry brands in China, and atta ﬂ our in India.
Latin America net sales decreased 5 percent driven by
unfavorable foreign exchange primarily related to the
2010 devaluation of the Venezuelan currency, partially
oﬀ set by Diablitos growth in Venezuela and La Salteña
growth in Argentina.

In ﬁ scal 2010, net sales in Europe increased by 1 per-
cent, driven by growth in Nature Valley and Old El
Paso partially oﬀ set by unfavorable foreign currency
exchange. Net sales in Canada increased 10 percent due
to favorable foreign currency exchange and growth from
cereal and Old El Paso. In the Asia/Paciﬁ c region, net
sales grew 13 percent due to growth from Häagen-Dazs
shops and Wanchai Ferry products in China. Latin

26 General Mills

America net sales decreased 11 percent due to unfavor-
able foreign currency exchange, partially oﬀ set by net
price realization.

Segment operating proﬁ t for ﬁ scal 2011 grew 52 per-
cent to $291 million from $192 million in ﬁ scal 2010,
primarily driven by volume growth and favorable foreign
currency exchange. In ﬁ scal 2010, we incurred a $14 mil-
lion foreign exchange loss on the revaluation of non-
bolivar fuerte monetary balances in Venezuela.

Segment operating proﬁ t for ﬁ scal 2010 declined 20
percent to $192 million, from $239 million in ﬁ scal 2009,
reﬂ ecting unfavorable foreign currency eﬀ ects and a 31
percent increase in advertising and media expense, par-
tially oﬀ set by favorable net price realization.

In January 2010, the Venezuelan government devalued
the bolivar fuerte by resetting the oﬃ cial exchange rate.
Th e eﬀ ect of the devaluation was a $14 million foreign
exchange loss in ﬁ scal 2010, primarily on the revaluation
of non-bolivar fuerte monetary balances in Venezuela.
We continue to use the oﬃ cial exchange rate to remea-
sure the ﬁ nancial statements of our Venezuelan opera-
tions, as we intend to remit dividends solely through the
government-operated Foreign Exchange Administration
Board (CADIVI). Th e devaluation of the bolivar fuerte
also reduced the U.S. dollar equivalent of our Venezuelan
results of operations and ﬁ nancial condition, but this did
not have a material impact on our results. During ﬁ scal
2010, Venezuela became a highly inﬂ ationary economy,
which did not have a material impact on our results in
ﬁ scal 2011 or 2010.

Components of net sales growth are shown in the fol-

lowing table:

Components of Bakeries and Foodservice Net Sales Growth

Contributions from volume growth (a)
Net price realization and mix

Foreign currency exchange

Net sales growth

Fiscal 2011
vs. 2010

Fiscal 2010
vs. 2009

Flat

6 pts

Flat

6 pts

-8 pts

-5 pts

Flat

-13 pts

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

For fiscal 2011, net sales for our Bakeries and
Foodservice segment increased 6 percent to $1,841 mil-
lion. Th e increase in ﬁ scal 2011 was driven by an increase
in net price realization and mix of 6 percentage points,
primarily from prices indexed to commodity markets.
Contributions from volume were ﬂ at, including a 2 per-
centage point decline from a divested product line.

For fiscal 2010, net sales for our Bakeries and
Foodservice segment decreased 13 percent to $1,741 mil-
lion. Th e decrease in ﬁ scal 2010 was driven by 8 percent-
age points from volume declines, including 8 percentage
points from divested product lines and a loss of 2 per-
centage points from an additional week in ﬁ scal 2009.
Net price realization and mix decreased 5 percentage
points, primarily from prices indexed to commodity
markets.

Net sales for our Bakeries and Foodservice segment by

customer channel is shown in the following tables:

Bakeries And Foodservice Segment In our Bakeries and
Foodservice segment our major product categories are
cereals, snacks, yogurt, unbaked and fully baked frozen
dough products, baking mixes, and ﬂ our. 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 food-
service, convenience stores, vending, and supermarket
bakeries.

Bakeries and Foodservice Net Sales by Customer Channel

Fiscal Year

In Millions

2011

2010

2009

Foodservice Distributors

Convenience Stores

Bakeries and National

$557.3

225.6

$543.3

$558.1

202.8

190.4

Restaurant Accounts

1,057.9

994.8

1,261.9

Total

$1,840.8

$1,740.9

2,010.4

Bakeries and Foodservice Net Sales Percentage Change by
Customer Channel

Fiscal 2011
vs. 2010

Fiscal 2010
vs. 2009

Foodservice Distributors

Convenience Stores

Bakeries and National Restaurant Accounts

Total

(3)%

(21)

(13)%

Annual Report 2011 27

cereals for customers in the United Kingdom. We also
have a 50 percent equity interest in HDJ, which man-
ufactures, distributes, and markets Häagen-Dazs ice
cream products and frozen novelties.

Our share of after-tax joint venture earnings
decreased from $102 million in ﬁ scal 2010 to $96 mil-
lion in ﬁ scal 2011 primarily due to higher advertising and
media spending and increased service cost allocations,
all in CPW.

Our share of aft er-tax joint venture earnings increased
from $92 million in ﬁ scal 2009 to $102 million in ﬁ scal
2010. Th e increase is mainly due to lower ﬁ scal 2009
earnings which were reduced by a $6 million deferred
income tax valuation allowance.

Th e change in net sales for each joint venture is set

forth in the following table:

Joint Venture Change in Net Sales

CPW

HDJ

Joint Ventures

Fiscal 2011
vs. 2010

Fiscal 2010
vs. 2009

(4)

For ﬁ scal 2011, CPW net sales grew by 3 percent due
to a 2 percentage point increase in volume and 1 per-
centage point from favorable foreign exchange. Net price
realization and mix was ﬂ at compared to ﬁ scal 2010. Net
sales for HDJ increased 4 percent from ﬁ scal 2010 pri-
marily due to 9 percentage points of favorable foreign
exchange, partially oﬀ set by a 5 percentage point decline
in net price realization and mix. Volume was ﬂ at com-
pared to ﬁ scal 2010.

For ﬁ scal 2010, CPW net sales grew by 6 percent due
to 4 percentage points of growth from net price realiza-
tion and mix, 1 percentage point from favorable foreign
exchange and a 1 percentage point increase in volume,
including growth in Russia, Southeast Asia, the Middle
East and Latin America. Net sales for HDJ decreased 4
percent from ﬁ scal 2009 due to an 11 percentage point
decline in volume, partially oﬀ set by favorable foreign
exchange.

Selected cash ﬂ ows from our joint ventures are set

forth in the following table:

In ﬁ scal 2011, segment operating proﬁ t was $306 mil-
lion, up from $263 million in ﬁ scal 2010. Th e increase
was primarily driven by net price realization and mix
and increased grain merchandising earnings, partially
oﬀ set by higher input costs.

Segment operating proﬁ t was $263 million in ﬁ scal
2010, up from $178 million in ﬁ scal 2009. Th e increase
was due to lower input costs, plant operating perfor-
mance, and increased grain merchandising earnings.

Unallocated Corporate Items Unallocated corporate
items include corporate overhead expenses, variances
to planned domestic employee beneﬁ ts and incentives,
annual contributions to the General Mills Foundation,
and other items that are not part of our measurement
of segment operating performance. Th is includes gains
and losses from mark-to-market valuation of certain
commodity positions until passed back to our operating
segments in accordance with our policy as discussed in
Note 2 of the Consolidated Financial Statements on page
49 of this report.

For ﬁ scal 2011, unallocated corporate expense totaled
$184 million compared to $203 million last year. In ﬁ scal
2011 we recorded a $95 million net decrease in expense
related to mark-to-market valuation of certain commod-
ity positions and grain inventories, compared to a $7
million net increase in expense last year. Th is was par-
tially oﬀ set by a $69 million increase in corporate pen-
sion expense in ﬁ scal 2011. In ﬁ scal 2010, we recorded a
$13 million recovery against a corporate investment.

Unallocated corporate expense totaled $203 million
in ﬁ scal 2010 compared to $342 million in ﬁ scal 2009.
In ﬁ scal 2010, we recorded a $7 million net increase in
expense related to mark-to-market valuation of certain
commodity positions and grain inventories, compared to
a $119 million net increase in expense in ﬁ scal 2009.
Also in ﬁ scal 2010, we recorded a $13 million recovery
against a corporate investment compared to $35 mil-
lion of write-downs against various investments in ﬁ scal
2009. In ﬁ scal 2009, we recognized a $41 million gain
from an insurance settlement.

Joint Ventures In addition to our consolidated opera-
tions, we participate in two joint ventures. We have a
50 percent equity interest in CPW, which manufactures
and markets ready-to-eat cereal products in more than
130 countries and republics outside the United States
and Canada. CPW also markets cereal bars in several
European countries and manufactures private label

28 General Mills

Selected Cash Flows from Joint Ventures

Cash Flows from Operations

Inﬂ ow (Outﬂ ow), in Millions

2011

2010

2009

In Millions

Fiscal Year

2011

2010

2009

Advances to joint ventures, net

$(1.8)

$(128.1)

Dividends received

72.7

88.0

$8.2

68.5

Net earnings, including

earnings attributable to

IMPACT OF INFLATION

We have experienced signiﬁ cant input cost volatility
since ﬁ scal 2006. Our gross margin performance in ﬁ s-
cal 2011 reﬂ ects the impact of input cost inﬂ ation, pri-
marily on commodities inputs. We expect the cost of
commodities and energy to increase at a higher rate
in ﬁ scal 2012. We attempt to minimize the eﬀ ects of
inﬂ ation through planning and operating practices. Our
risk management practices are discussed on pages 41
through 42 of this report.

The Patient Protection and Affordable Care Act,
as amended by the Health Care and Education
Reconciliation Act of 2010 (collectively, the Act) was
signed into law in March 2010. Th e Act codiﬁ es health
care reforms with staggered eﬀ ective dates from 2010 to
2018. Many provisions in the Act require the issuance of
additional guidance from various government agencies.
Because the Act does not take eﬀ ect fully until future
years, the Act did not have a material impact on our
ﬁ scal 2011 or 2010 results of operations. Given the com-
plexity of the Act, the extended time period over which
the reforms will be implemented, and the unknown
impact of future regulatory guidance, the full impact of
the Act on future periods will not be known until those
regulations are adopted.

LIQUIDITY

Th e primary source of our liquidity is cash ﬂ ow from
operations. Over the most recent three-year period, our
operations have generated $5.5 billion in cash. A sub-
stantial portion of this operating cash ﬂ ow has been
returned to stockholders through share repurchases and
dividends. We also use this source of liquidity to fund
our capital expenditures. We typically use a combination
of cash, notes payable, and long-term debt to ﬁ nance
acquisitions and major capital expansions.

noncontrolling interests

$1,803.5 $1,535.0 $1,313.7

Depreciation and amortization

472.6

457.1

453.6

Aft er-tax earnings

from joint ventures

(96.4)

(101.7)

Stock-based compensation

105.3

107.3

Deferred income taxes

205.3

22.3

Tax beneﬁ t on exercised options

(106.2)

(114.0)

(91.9)

117.7

215.8

(89.1)

Distributions of earnings

from joint ventures

72.7

88.0

68.5

Pension and other postretirement

beneﬁ t plan contributions

(220.8)

(17.2)

(220.3)

Pension and other postretirement

beneﬁ t plan (income) expense

73.6

(37.9)

Divestitures (gain), net

Gain on insurance settlement

Restructuring, impairment,

(17.4)

—

(27.5)

(84.9)

(41.3)

and other exit costs (income)

(1.3)

23.4

31.3

Changes in current

assets and liabilities

(720.9)

143.4

176.9

Other, net

Net cash provided by

(43.2)

75.5

5.7

operating activities

$1,526.8 $2,181.2 $1,828.2

In ﬁ scal 2011, our operations generated $1.5 billion of
cash compared to $2.2 billion in ﬁ scal 2010. Th e $654
million decrease primarily reflects an $864 million
increased use of cash for net current assets and liabili-
ties and a $200 million voluntary contribution to our
principal domestic pension plans, partially oﬀ set by the
$268 million increase in net earnings and a $183 million
change in deferred income taxes primarily related to our
pension plan contribution and a change in tax legislation
related to depreciation deductions.

Th e increased use of cash for net current assets and
liabilities reﬂ ects lower other current liabilities, primarily
reﬂ ecting changes in the timing of marketing activities
and related accruals and a payment of $385 million in ﬁ s-
cal 2011 related to our IRS settlement as described in Note
14 to the Consolidated Financial Statements on page 77
of this report. In addition, inventories used $223 million
more cash in ﬁ scal 2011 reﬂ ecting increased input costs.

We strive to grow core working capital at or below our
growth in net sales. For ﬁ scal 2011, core working capital
increased 16 percent, compared to net sales growth of 2

Annual Report 2011 29

percent, reﬂ ecting cost inﬂ ation and higher inventories.
In ﬁ scal 2010, core working capital increased 3 percent,
compared to net sales growth of 1 percent, and in ﬁ scal
2009, core working capital declined 1 percent, compared
to net sales growth of 7 percent.

In ﬁ scal 2010, our operations generated $2.2 billion
of cash compared to $1.8 billion in ﬁ scal 2009, primarily
reﬂ ecting the $221 million increase in net earnings, includ-
ing earnings attributable to noncontrolling interests.

Cash Flows from Investing Activities

In Millions

2011

2010

2009

Fiscal Year

expenditures required to support Yoplait S.A.S. Th ese
expenditures support initiatives that are expected to:
increase manufacturing capacity for grain snacks; con-
tinue HMM initiatives throughout the supply chain;
expand International production capacity for Bugles,
Nature Valley bars and Häagen-Dazs products; and
integrate ﬁ scal 2011 acquisitions.

Cash Flows from Financing Activities

Fiscal Year

In Millions

2011

2010

2009

Change in notes payable

$ (742.6) $ 235.8 $ (1,390.5)

Issuance of long-term debt
Payment of long-term debt

1,200.0
(7.4)

—
(906.9)

1,850.0
(370.3)

Purchases of land, buildings,

and equipment

Acquisitions

$(648.8)

$(649.9)

$(562.6)

Proceeds from common stock

Investments in aﬃ liates, net

(1.8)

(130.7)

(123.3)

—

5.9

issued on exercised options

410.4

388.8

305.2

Tax beneﬁ t on exercised options

106.2

114.0

89.1

Proceeds from disposal of land,

Purchases of common

buildings, and equipment

4.1

7.4

4.1

stock for treasury

(1,163.5)

(691.8)

(1,296.4)

Proceeds from divestitures

of product lines

34.4

Proceeds from insurance settlement

—

Other, net

Net cash used by

20.3

52.0

244.7

41.3

(22.3)

investing activities

$(715.1)

$(721.2)

$(288.9)

In fiscal 2011, cash used by investing activities
decreased by $6 million from ﬁ scal 2010. Th e decreased
use of cash reﬂ ects $25 million of proceeds from the
divestiture of a foodservice frozen baked goods prod-
uct line in our International segment and $9 million of
proceeds from the sale of a pie shell product line in our
Bakeries and Foodservice segment in ﬁ scal 2011. In addi-
tion, in ﬁ scal 2011, we paid $85 million for the acquisi-
tion of the Mountain High yoghurt business for our
U.S. Retail segment and $38 million for the acquisition
of the Pasta Master meals business in Australia for our
International segment. We also invested $131 million in
aﬃ liates in ﬁ scal 2010, mainly our CPW joint venture, to
repay local borrowings.

In fiscal 2010, cash used by investing activities
increased by $432 million from ﬁ scal 2009 primarily
due to $245 million of proceeds from the sale of certain
product lines in ﬁ scal 2009 and $41 million of insurance
proceeds received in ﬁ scal 2009 from the settlement
with the insurance carrier covering the loss at our La
Salteña pasta manufacturing facility in Argentina. We
also invested $131 million in aﬃ liates in ﬁ scal 2010.

We expect capital expenditures to increase to approx-
imately $670 million in fiscal 2012, excluding any

30 General Mills

Dividends paid

Other, net

Net cash used by

(729.4)

(643.7)

(579.5)

(10.3)

—

(12.1)

ﬁ nancing activities

$ (936.6) $ (1,503.8) $ (1,404.5)

Net cash used by ﬁ nancing activities decreased by

$567 million in ﬁ scal 2011.

In May 2011, we issued $300 million aggregate prin-
cipal amount of 1.55 percent ﬁ xed-rate notes and $400
million aggregate principal amount of floating-rate
notes, both due May 16, 2014. Th e proceeds of these
notes were used to repay a portion of our outstanding
commercial paper. Th e ﬂ oating-rate notes bear interest
equal to three-month LIBOR plus 35 basis points, subject
to quarterly reset. Interest on the ﬂ oating-rate notes is
payable quarterly in arrears. Interest on the ﬁ xed-rate
notes is payable semi-annually in arrears. Th e ﬁ xed-rate
notes may be redeemed at our option at any time for a
speciﬁ ed make whole amount. Th ese notes are senior
unsecured, unsubordinated obligations that include a
change of control repurchase provision.

In June 2010, we issued $500 million aggregate prin-
cipal amount of 5.4 percent notes due 2040. Th e pro-
ceeds of these notes were used to repay a portion of
our outstanding commercial paper. Interest on these
notes is payable semi-annually in arrears. Th ese notes
may be redeemed at our option at any time for a speci-
ﬁ ed make whole amount. Th ese notes are senior unse-
cured, unsubordinated obligations that include a change
of control repurchase provision.

In May 2010, we paid $437 million to repurchase in a
cash tender oﬀ er $400 million of our previously issued
debt. We repurchased $221 million of our 6.0 percent
notes due 2012 and $179 million of our 5.65 percent
notes due 2012. We issued commercial paper to fund the
repurchase.

In January 2009, we issued $1.2 billion aggregate prin-
cipal amount of 5.65 percent notes due 2019. In August
2008, we issued $700 million aggregate principal amount
of 5.25 percent notes due 2013. Th e proceeds of these
notes were used to repay a portion of our outstand-
ing commercial paper. Interest on these notes is payable
semi-annually in arrears. Th ese notes may be redeemed
at our option at any time for a speciﬁ ed make-whole
amount. Th ese notes are senior unsecured, unsubordi-
nated obligations that include a change of control repur-
chase provision.

During ﬁ scal 2011, we repurchased 32 million shares
of our common stock for an aggregate purchase price
of $1,164 million. During ﬁ scal 2010, we repurchased 21
million shares of our common stock for an aggregate
purchase price of $692 million. During ﬁ scal 2009, we
repurchased 40 million shares of our common stock for
an aggregate purchase price of $1,296 million. On June
28, 2010, our Board of Directors authorized the repur-
chase of up to 100 million shares of our common stock.
Purchases under the authorization can be made in the
open market or in privately negotiated transactions,
including the use of call options and other derivative
instruments, Rule 10b5-1 trading plans, and accelerated
repurchase programs. Th e authorization has no speciﬁ ed
termination date.

Dividends paid in ﬁ scal 2011 totaled $729 million, or
$1.12 per share, a 17 percent per share increase from ﬁ s-
cal 2010. Dividends paid in ﬁ scal 2010 totaled $644 mil-
lion, or $0.96 per share, a 12 percent per share increase
from ﬁ scal 2009 dividends of $0.86 per share. On June
28, 2011, our Board of Directors approved a dividend
increase to an annual rate of $1.22 per share, a 9 percent
increase from the rate paid in ﬁ scal 2011.

CAPITAL RESOURCES

Total capital consisted of the following:

In Millions

Notes payable

May 29,
2011

May 30,
2010

$ 311.3 $ 1,050.1

Current portion of long-term debt

1,031.3

107.3

Long-term debt

Total debt

Noncontrolling interests

Stockholders’ equity

Total capital

5,542.5

5,268.5

6,885.1

6,425.9

246.7

245.1

6,365.5

5,402.9

$13,497.3

$12,073.9

Th e increase in total capital from ﬁ scal 2010 to ﬁ s-
cal 2011 was primarily due to net earnings attributable
to General Mills of $1.8 billion and an increase in cur-
rent and long-term debt, partially oﬀ set by a decrease in
notes payable.

Th e following table details the fee-paid committed
and uncommitted credit lines we had available as of
May 29, 2011:

In Billions

Credit facility expiring:

October 2012

October 2013

Total committed credit facilities

Uncommitted credit facilities

Total committed and uncommitted credit facilities

Amount

$1.8

1.1

2.9

0.3

$3.2

To ensure availability of funds, we maintain bank
credit lines suﬃ cient to cover our outstanding short-
term borrowings. Commercial paper is a continuing
source of short-term ﬁ nancing. We issue commercial
paper in the United States and Europe. Our commercial
paper borrowings are supported by $2.9 billion of fee-
paid committed credit lines, consisting of a $1.8 billion
facility expiring in October 2012 and a $1.1 billion facility
expiring in October 2013. We also have $312 million in
uncommitted credit lines that support our foreign opera-
tions. As of May 29, 2011, there were no amounts out-
standing on the fee-paid committed credit lines and $119
million was drawn on the uncommitted lines. Th e credit
facilities contain several covenants, including a requirement
to maintain a ﬁ xed charge coverage ratio of at least 2.5.

Certain of our long-term debt agreements, our credit
facilities, and our noncontrolling interests contain
restrictive covenants. As of May 29, 2011, we were in
compliance with all of these covenants.

Annual Report 2011 31

In April 2002, we contributed assets to our subsidiary
GMC. In exchange for the contribution of these assets,
GMC issued its managing membership interest and its
limited preferred membership interests to certain of
our wholly owned subsidiaries. We continue to hold the
entire managing membership interest, and therefore
direct the operations of GMC.

Th e third-party holder of the Class A Interests in GMC
receives quarterly preferred distributions from available
net income based on the application of a ﬂ oating pre-
ferred return rate, currently equal to the sum of three-
month LIBOR plus 65 basis points. Th e preferred return
rate of the Class A Interests is adjusted every ﬁ ve years
through a negotiated agreement between the Class A
Interest holder and GMC, or through a remarketing auc-
tion. Th e next remarketing is scheduled to occur in June
2012 and thereaft er in ﬁ ve-year intervals.

Th e holder of the Class A Interests may initiate a liq-
uidation of GMC under certain circumstances, including,
without limitation, the bankruptcy of GMC or its sub-
sidiaries, GMC’s failure to deliver the preferred distribu-
tions on the Class A Interests, GMC’s failure to comply
with portfolio requirements, breaches of certain cove-
nants, lowering of our senior debt rating below either
Baa3 by Moody’s or BBB- by Standard & Poor’s, and a
failed attempt to remarket the Class A Interests as a
result of GMC’s failure to assist in such remarketing.
In the event of a liquidation of GMC, each member of
GMC will receive the amount of its then current capital
account balance. Th e managing member may avoid liq-
uidation by exercising its option to purchase the Class A
Interests.

We may exercise our option to purchase the Class A
Interests for consideration equal to the then current
capital account value, plus any unpaid preferred return
and the prescribed make-whole amount. If we purchase
these interests, any change in the unrelated third-party
investor’s capital account from its original value will be
charged directly to retained earnings and will increase
or decrease the net earnings used to calculate EPS in
that period.

On July 1, 2011, we acquired a 51 percent controlling
interest in Yoplait S.A.S. and a 50 percent interest in
Yoplait Marques S.A.S. for an aggregate purchase price
of $1.2 billion. Yoplait S.A.S. operates yogurt businesses
in several countries, including France and the United
Kingdom, and oversees franchise relationships around
the world. Yoplait Marques S.A.S. holds the worldwide
rights to Yoplait and related trademarks. We ﬁ nanced
this transaction using cash available in our foreign sub-
sidiaries and commercial paper.

We have $1,031 million of long-term debt maturing
in the next 12 months that is classiﬁ ed as current, pri-
marily $1,020 million of 6.0 percent notes which mature
on February 15, 2012. We believe that cash ﬂ ows from
operations, together with available short- and long-term
debt ﬁ nancing, will be adequate to meet our liquidity
and capital needs for at least the next 12 months.

As of May 29, 2011, our total debt, including the
impact of derivative instruments designated as hedges,
was 77 percent in ﬁ xed-rate and 23 percent in ﬂ oating-
rate instruments, compared to 75 percent in ﬁ xed-rate
and 25 percent in ﬂ oating-rate instruments on May
30, 2010. Th e change in the ﬁ xed-rate and ﬂ oating-rate
percentages was driven by the issuance of $500 mil-
lion aggregate principal amount of ﬁ xed rate debt and a
decrease in notes payable in ﬁ scal 2011.

We have an eﬀ ective shelf registration statement on
ﬁ le with the SEC covering the sale of debt securities.
Th e shelf registration statement will expire in December
2011.

Growth in return on average total capital is one of
our key performance measures (see the “Non-GAAP
Measures” section on page 85 for our discussion of this
measure, which is not deﬁ ned by GAAP). Return on
average total capital decreased from 13.8 percent in ﬁ s-
cal 2010 to 13.7 percent in ﬁ scal 2011 primarily reﬂ ect-
ing higher working capital. We also believe that the
ratio of ﬁ xed charge coverage and the ratio of operat-
ing cash ﬂ ow to debt are important measures of our
ﬁ nancial strength. Our ﬁ xed charge coverage ratio in ﬁ s-
cal 2011 was 7.03 compared to 6.42 in ﬁ scal 2010. Th e
measure increased from ﬁ scal 2010 as earnings before
income taxes and aft er-tax earnings from joint ventures
increased by $224 million and ﬁ xed charges decreased
by $9 million, driven mainly by lower interest expense.
Our operating cash ﬂ ow to debt ratio decreased 11.7 per-
centage points to 22.2 percent in ﬁ scal 2011, driven by a
decrease in cash ﬂ ows from operations and an increase
in our year-end debt balance.

32 General Mills

OFF-BALANCE SHEET ARRANGEMENTS AND
CONTRACTUAL OBLIGATIONS

As of May 29, 2011, we have issued guarantees and com-
fort letters of $591 million for the debt and other obliga-
tions of consolidated subsidiaries, and guarantees and
comfort letters of $341 million for the debt and other
obligations of non-consolidated aﬃ liates, mainly CPW.
In addition, oﬀ -balance sheet arrangements are gener-
ally limited to the future payments under non-cancelable
operating leases, which totaled $261 million as of May
29, 2011.

As of May 29, 2011, we had invested in six variable
interest entities (VIEs). We determined whether or not
we were the primary beneﬁ ciary (PB) of each VIE using
a qualitative assessment that considered the VIE’s pur-
pose and design, the involvement of each of the interest
holders, and the risks and beneﬁ ts of the VIE. We have
an interest in a contract manufacturer at our former
facility in Geneva, Illinois. We are the PB and have con-
solidated this entity. Th is entity had property and equip-
ment with a carrying value of $14 million and long-term
debt of $15 million as of May 29, 2011. Th e liabilities
recognized as a result of consolidating this entity do not
represent additional claims on our general assets. Th e
remaining ﬁ ve VIEs, two of which we are not the PB, are
not material to our results of operations, ﬁ nancial condi-
tion, or liquidity as of and for the year ended May 29,
2011. We have provided minimal ﬁ nancial or other sup-
port to VIEs during the current period and there are no
arrangements related to VIEs that would require us to
provide signiﬁ cant ﬁ nancial support in the future.

Our deﬁ ned beneﬁ t plans in the United States are
subject to the requirements of the Pension Protection
Act (PPA). Th e PPA revised the basis and methodology
for determining deﬁ ned beneﬁ t plan minimum funding
requirements as well as maximum contributions to and
beneﬁ ts paid from tax-qualiﬁ ed plans. Most of these
provisions were applicable to our domestic deﬁ ned ben-
eﬁ t pension plans in ﬁ scal 2011 on a phased-in basis.
Th e PPA may ultimately require us to make additional
contributions to our domestic plans. We did not make
a contribution to our principal deﬁ ned beneﬁ t pension
plans in ﬁ scal 2010. We made $200 million of voluntary
contributions to our principal domestic plans in ﬁ scal
2011. We do not expect to be required to make any
contributions in ﬁ scal 2012. Actual ﬁ scal 2012 contri-
butions could exceed our current projections, and may
be inﬂ uenced by our decision to undertake discretionary

funding of our beneﬁ t trusts or by changes in regulatory
requirements. Additionally, our projections concerning
timing of the PPA funding requirements are subject to
change and may be inﬂ uenced by factors such as gen-
eral market conditions aﬀ ecting trust asset performance,
interest rates, and our future decisions regarding certain
elective provisions of the PPA.

Th e following table summarizes our future estimated
cash payments under existing contractual obligations,
including payments due by period:

In Millions

Total

2012

2013-14

2017 and
2015-16 Th ereaft er

Payments Due by Fiscal Year

Long-term debt(a)

$ 6,565.1 $1,030.1 $2,134.8 $750.1 $2,650.1

Accrued interest

114.0

—

Operating leases (b)

261.4

74.4

88.9

48.7

49.4

Capital leases

5.9

2.2

2.7

0.8

0.2

Purchase obligations (c) 2,791.4 2,457.6

193.9

74.8

65.1

Total contractual

obligations

9,737.8 3,678.3 2,420.3

874.4 2,764.8

Other long-term

obligations (d)

1,731.1

—

Total long-term

obligations

$11,468.9 $3,678.3 $2,420.3 $874.4 $2,764.8

(a) Amounts represent the expected cash payments of our long-term debt and
do not include $3 million for domestic capital leases or $6 million for net
unamortized bond premiums and discounts and fair value adjustments.

(b) Operating leases represents the minimum rental commitments under

non-cancelable operating leases.

(c) Th e majority of the purchase obligations represent commitments for raw
material and packaging to be utilized in the normal course of business
and for consumer marketing spending commitments that support our
brands. For purposes of this table, arrangements are considered purchase
obligations if a contract speciﬁ es all signiﬁ cant terms, including ﬁ xed or
minimum quantities to be purchased, a pricing structure, and approximate
timing of the transaction. Most arrangements are cancelable without a
signiﬁ cant penalty and with short notice (usually 30 days). Any amounts
reﬂ ected on the Consolidated Balance Sheets as accounts payable and
accrued liabilities are excluded from the table above.

(d) Th e fair value of our interest rate, foreign exchange and grain derivative
contracts with a payable position to the counterparty was $86 million
as of May 29, 2011, based on fair market values as of that date. Future
changes in market values will impact the amount of cash ultimately paid
or received to settle those instruments in the future. Other long-term obli-
gations mainly consist of liabilities for accrued compensation and beneﬁ ts,
including the underfunded status of certain of our deﬁ ned beneﬁ t pen-
sion, other postretirement, and postemployment plans, and miscellaneous
liabilities. We expect to pay $18 million of beneﬁ ts from our unfunded
postemployment beneﬁ t plans and $10 million of deferred compensation
in ﬁ scal 2012. We are unable to reliably estimate the amount of these
payments beyond ﬁ scal 2012. As of May 29, 2011, our total liability for
uncertain tax positions and the associated accrued interest and penalties
was $280 million.

Annual Report 2011 33

SIGNIFICANT ACCOUNTING ESTIMATES

For a complete description of our signiﬁ cant account-
ing policies, see Note 2 to the Consolidated Financial
Statements on page 49 of this report. Our signiﬁ cant
accounting estimates are those that have a meaning-
ful impact on the reporting of our ﬁ nancial condition
and results of operations. Th ese estimates include our
accounting for promotional expenditures, valuation of
long-lived assets, intangible assets, stock-based compen-
sation, income taxes, and deﬁ ned beneﬁ t pension, other
postretirement and postemployment beneﬁ ts.

Promotional Expenditures Our promotional activities
are conducted through our customers and directly or
indirectly with end consumers. Th ese activities include:
payments to customers to perform merchandising activ-
ities on our behalf, such as advertising or in-store dis-
plays; discounts to our list prices to lower retail shelf
prices; payments to gain distribution of new products;
coupons, contests, and other incentives; and media and
advertising expenditures. Th e media and advertising
expenditures are generally recognized as expense when
the advertisement airs. Th e cost of payments to custom-
ers and other consumer-related activities are recognized
as the related revenue is recorded, which generally pre-
cedes the actual cash expenditure. Th e recognition of
these costs requires estimation of customer participa-
tion and performance levels. Th ese estimates are made
based on the forecasted customer sales, the timing and
forecasted costs of promotional activities, and other fac-
tors. Diﬀ erences between estimated expenses and actual
costs are normally insigniﬁ cant and are recognized as a
change in management estimate in a subsequent period.
Our accrued trade, coupon, and consumer marketing lia-
bilities were $463 million as of May 29, 2011, and $555
million as of May 30, 2010. Because our total promo-
tional expenditures (including amounts classiﬁ ed as a
reduction of revenues) are signiﬁ cant, if our estimates
are inaccurate we would have to make adjustments in
subsequent periods that could have a material eﬀ ect on
our results of operations.

Valuation of Long-lived Assets Long-lived assets are
reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount
of an asset (or asset group) may not be recoverable.
An impairment loss would be recognized when esti-
mated undiscounted future cash ﬂ ows from the opera-
tion and disposition of the asset group are less than

34 General Mills

the carrying amount of the asset group. Asset groups
have identiﬁ able cash ﬂ ows independent of other asset
groups. Measurement of an impairment loss would be
based on the excess of the carrying amount of the asset
group over its fair value. Fair value is measured using
discounted cash ﬂ ows or independent appraisals, as
appropriate.

Intangible Assets Goodwill is not subject to amortiza-
tion and is tested for impairment annually and when-
ever events or changes in circumstances indicate that
impairment may have occurred. Impairment testing is
performed for each of our reporting units. We compare
the carrying value of a reporting unit, including goodwill,
to the fair value of the unit. Carrying value is based on
the assets and liabilities associated with the operations
of that reporting unit, which oft en requires allocation
of shared or corporate items among reporting units. If
the carrying amount of a reporting unit exceeds its fair
value, we revalue all assets and liabilities of the reporting
unit, excluding goodwill, to determine if the fair value of
the net assets is greater than the net assets including
goodwill. If the fair value of the net assets is less than
the carrying amount of net assets including goodwill,
impairment has occurred. Our estimates of fair value
are determined based on a discounted cash ﬂ ow model.
Growth rates for sales and proﬁ ts are determined using
inputs from our annual long-range planning process. We
also make estimates of discount rates, perpetuity growth
assumptions, market comparables, and other factors. We
performed our ﬁ scal 2011 assessment as of November
29, 2010, and determined there was no impairment of
goodwill for any of our reporting units as their related
fair values were substantially in excess of their carrying
values.

We evaluate the useful lives of our other intangible
assets, mainly brands, to determine if they are ﬁ nite or
indeﬁ nite-lived. Reaching a determination on useful life
requires signiﬁ cant judgments and assumptions regard-
ing the future eﬀ ects of obsolescence, demand, compe-
tition, other economic factors (such as the stability of
the industry, known technological advances, legislative
action that results in an uncertain or changing regula-
tory environment, and expected changes in distribution
channels), the level of required maintenance expendi-
tures, and the expected lives of other related groups of
assets.

Our indeﬁ nite-lived intangible assets, mainly intangible
assets primarily associated with the Pillsbury, Totino’s,
Progresso, Green Giant, Old El Paso, and Häagen-Dazs

brands, are also tested for impairment annually and
whenever events or changes in circumstances indi-
cate that their carrying value may not be recoverable.
We performed our ﬁ scal 2011 assessment of our brand
intangibles as of November 29, 2010. Our estimate of
the fair value of the brands was based on a discounted
cash ﬂ ow model using inputs which included: projected
revenues from our annual long-range plan; assumed roy-
alty rates that could be payable if we did not own the
brands; and a discount rate. As of our assessment date,
there was no impairment of any of our indeﬁ nite-lived
intangible assets as their related fair values were sub-
stantially in excess of the carrying values.

As of May 29, 2011, we had $10.5 billion of goodwill
and indeﬁ nite-lived intangible assets. While we currently
believe that the fair value of each intangible exceeds its
carrying value and that those intangibles so classiﬁ ed
will contribute indeﬁ nitely to our cash ﬂ ows, materially
diﬀ erent assumptions regarding future performance of
our businesses or a diﬀ erent weighted-average cost of
capital could result in signiﬁ cant impairment losses and
amortization expense.

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

Aft er the earthquakes and tsunami in Japan in March
2011, we assessed the fair value of our investment in
HDJ and determined that it exceeded the carrying value
by approximately 5 percent. As of May 29, 2011, the car-
rying value of HDJ consisted of our investment of $61
million and goodwill of $524 million. Sustained declines
in business results or an increase in the weighted aver-
age cost of capital may adversely aﬀ ect the fair value
of our investment in HDJ, and could result in a future
impairment to our investment.

Stock-based Compensation The valuation of stock
options is a signiﬁ cant accounting estimate that requires
us to use judgments and assumptions that are likely
to have a material impact on our ﬁ nancial statements.
Annually, we make predictive assumptions regarding
future stock price volatility, employee exercise behavior,
dividend yield, and the forfeiture rate.

We estimate our future stock price volatility using the
historical volatility over the expected term of the option,
excluding time periods of volatility we believe a market-
place participant would exclude in estimating our stock
price volatility. We also have considered, but did not use,
implied volatility in our estimate, because trading activity
in options on our stock, especially those with tenors of
greater than 6 months, is insuﬃ cient to provide a reli-
able measure of expected volatility. If all other assump-
tions are held constant, a one percentage point increase
in our ﬁ scal 2011 volatility assumption would increase
the grant-date fair value of our ﬁ scal 2011 option awards
by 5 percent.

Our expected term represents the period of time that
options granted are expected to be outstanding based on
historical data to estimate option exercises and employee
terminations within the valuation model. Separate groups
of employees have similar historical exercise behavior
and therefore were aggregated into a single pool for valu-
ation purposes. Th e weighted-average expected term for
all employee groups is presented in the table below. An
increase in the expected term by 1 year, leaving all other
assumptions constant, would change the grant date fair
value by 16 percent.

The risk-free interest rate for periods during the
expected term of the options is based on the U.S.
Treasury zero-coupon yield curve in eﬀ ect at the time of
grant.

Th e estimated fair values of stock options granted and
the assumptions used for the Black-Scholes option-pric-
ing model were as follows:

Fiscal Year

2011

2010

2009

Estimated fair values of

stock options granted

$ 4.12

$ 3.20

$ 4.70

Assumptions:

Risk-free interest rate

2.9%

3.7%

4.4%

Expected term

Expected volatility

Dividend yield

8.5 years 8.5 years 8.5 years

18.5%

18.9%

16.1%

3.0%

3.4%

2.7%

Annual Report 2011 35

To the extent that actual outcomes diﬀ er from our
assumptions, we are not required to true up grant-
date fair value-based expense to ﬁ nal intrinsic values.
However, these diﬀ erences can impact the classiﬁ ca-
tion of cash tax beneﬁ ts realized upon exercise of stock
options, as explained in the following two paragraphs.
Furthermore, historical data has a signiﬁ cant bearing on
our forward-looking assumptions. Signiﬁ cant variances
between actual and predicted experience could lead to
prospective revisions in our assumptions, which could
then signiﬁ cantly impact the year-over-year comparabil-
ity of stock-based compensation expense.

Any corporate income tax beneﬁ t realized upon exer-
cise or vesting of an award in excess of that previously
recognized in earnings (referred to as a windfall tax ben-
eﬁ t) is presented in the Consolidated Statements of Cash
Flows as a ﬁ nancing cash ﬂ ow. Th e actual impact on
future years’ ﬁ nancing cash ﬂ ow will depend, in part,
on the volume of employee stock option exercises dur-
ing a particular year and the relationship between the
exercise-date market value of the underlying stock and
the original grant-date fair value previously determined
for ﬁ nancial reporting purposes.

Realized windfall tax beneﬁ ts are credited to addi-
tional paid-in capital within the Consolidated Balance
Sheets. Realized shortfall tax beneﬁ ts (amounts which
are less than that previously recognized in earnings)
are ﬁ rst oﬀ set against the cumulative balance of wind-
fall tax beneﬁ ts, if any, and then charged directly to
income tax expense, potentially resulting in volatility
in our consolidated eﬀ ective income tax rate. We cal-
culated a cumulative amount of windfall tax beneﬁ ts
from post-1995 ﬁ scal years for the purpose of account-
ing for future shortfall tax beneﬁ ts and currently have
suﬃ cient cumulative windfall tax beneﬁ ts to absorb pro-
jected arising shortfalls, such that we do not currently
expect future earnings to be aﬀ ected by this provision.
However, as employee stock option exercise behavior is
not within our control, it is possible that materially dif-
ferent reported results could occur if diﬀ erent assump-
tions or conditions were to prevail.

Income Taxes We apply a more-likely-than-not thresh-
old to the recognition and derecognition of uncertain
tax positions. Accordingly we recognize the amount of
tax beneﬁ t 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 aﬀ ect earnings
in the quarter of such change.

We are subject to federal income taxes in the United
States as well as various state, local, and foreign jurisdic-
tions. A number of years may elapse before an uncertain
tax position is audited and ﬁ nally resolved. While it is
oft en diﬃ cult to predict the ﬁ nal outcome or the timing
of resolution of any particular uncertain tax position,
we believe that our liabilities for income taxes reﬂ ect the
most likely outcome. We adjust these liabilities, as well
as the related interest, in light of changing facts and cir-
cumstances. Settlement of any particular position would
usually require the use of cash.

Th e number of years with open tax audits varies
depending on the tax jurisdiction. Our major taxing juris-
dictions include the United States (federal and state) and
Canada. Th e IRS has completed its review of our fed-
eral income tax returns for ﬁ scal years 2008 and prior
and has proposed adjustments related to the amount of
research and development tax credits claimed. We have
appealed these proposed adjustments.

During ﬁ scal 2011, we reached a settlement with the
IRS concerning certain corporate income tax adjust-
ments for ﬁ scal years 2002 to 2008. Th e adjustments
primarily relate to the amount of capital loss, deprecia-
tion, and amortization we reported as a result of the
sale of noncontrolling interests in our GMC subsidiary.
As a result, we recorded a $108 million reduction in our
total liabilities for uncertain tax positions in ﬁ scal 2011.
We made payments totaling $385 million in ﬁ scal 2011
related to this settlement. In addition, we made a pay-
ment of $18 million in ﬁ scal 2009 related to adjustments
made at the IRS exam level for audits of ﬁ scal years
2004 to 2006.

Also during ﬁ scal 2011, the Superior Court of the State
of California issued an adverse decision concerning our
state income tax apportionment calculations. As a result,
we recorded a $12 million increase in our total liabilities
for uncertain tax positions. We believe our positions
are supported by substantial technical authority and
have appealed this decision. We do not expect to make
a payment related to this matter until it is deﬁ nitively
resolved.

In ﬁ scal 2009, the U.S. Court of Appeals for the Eighth
Circuit issued an opinion reversing a district court deci-
sion rendered in ﬁ scal 2008. As a result, we recorded
$53 million (including interest) of income tax expense in
ﬁ scal 2009 related to the reversal of cumulative income
tax beneﬁ ts from this uncertain tax matter recognized

36 General Mills

in ﬁ scal years 1992 through 2008. All outstanding liabili-
ties associated with this matter were paid during ﬁ scal
2011.

Various tax examinations by United States state tax-
ing authorities could be conducted for any open tax year,
which vary by jurisdiction, but are generally from 3 to 5
years. Currently, several state examinations are in prog-
ress. Th e Canada Revenue Agency (CRA) has completed
its review of our income tax returns in Canada for ﬁ scal
years 2003 to 2005. Th e CRA has raised assessments
for these years that we are currently appealing. We
believe our positions are supported by substantial tech-
nical authority and are vigorously defending our posi-
tions. We do not anticipate that any United States or
Canadian tax adjustments will have a signiﬁ cant impact
on our ﬁ nancial position or results of operations.

As of May 29, 2011, our total liability for uncertain
tax positions and the associated accrued interest and
penalties was $280 million. We do not expect to pay any
amounts related to uncertain tax positions or accrued
interest in the next 12 months. We are not able to rea-
sonably estimate the timing of future cash ﬂ ows beyond
12 months due to uncertainties in the timing of tax audit
outcomes.

Deﬁ ned Beneﬁ t Pension, Other Postretirement And
Postemployment Beneﬁ t Plans

Deﬁ ned Beneﬁ t Pension Plans We have deﬁ ned beneﬁ t
pension plans covering most United States, Canadian,
and United Kingdom employees. Beneﬁ ts for salaried
employees are based on length of service and ﬁ nal aver-
age compensation. Beneﬁ ts for hourly employees include
various monthly amounts for each year of credited ser-
vice. Our funding policy is consistent with the require-
ments of applicable laws. We made $200 million of
voluntary contributions to our principal domestic plans
in ﬁ scal 2011. We do not expect to be required to make
any contributions in ﬁ scal 2012. Our principal domestic
retirement plan covering salaried employees has a provi-
sion that any excess pension assets would be allocated
to active participants if the plan is terminated within
ﬁ ve years of a change in control.

to fund related trusts for certain employees and retirees
on an annual basis. We did not make voluntary contribu-
tions to these plans in ﬁ scal 2011. Th e Patient Protection
and Aﬀ ordable Care Act, as amended by the Health Care
and Education Reconciliation Act of 2010, was signed
into law in March 2010. We have not fully evaluated
the eﬀ ect of the Act, including possible modiﬁ cations to
provider plans, but it could aﬀ ect the future cost of our
beneﬁ t plans.

Postemployment Beneﬁ t Plans Under certain circum-
stances, we also provide accruable beneﬁ ts to former
or inactive employees in the United States, Canada, and
Mexico, and members of our Board of Directors, including
severance and certain other beneﬁ ts payable upon death.
We recognize an obligation for any of these beneﬁ ts that
vest or accumulate with service. Postemployment ben-
eﬁ ts that do not vest or accumulate with service (such as
severance based solely on annual pay rather than years
of service) are charged to expense when incurred. Our
postemployment beneﬁ t plans are unfunded.

We recognize beneﬁ ts provided during retirement or
following employment over the plan participants’ active
working life. Accordingly, we make various assumptions
to predict and measure costs and obligations many years
prior to the settlement of our obligations. Assumptions
that require signiﬁ cant management judgment and have
a material impact on the measurement of our net peri-
odic beneﬁ t expense or income and accumulated ben-
eﬁ t obligations include the long-term rates of return on
plan assets, the interest rates used to discount the obli-
gations for our beneﬁ t plans, and the health care cost
trend rates.

Expected Rate of Return on Plan Assets Our expected
rate of return on plan assets is determined by our asset
allocation, our historical long-term investment perfor-
mance, our estimate of future long-term returns by asset
class (using input from our actuaries, investment ser-
vices, and investment managers), and long-term inﬂ ation
assumptions. We review this assumption annually for
each plan, however, our annual investment performance
for one particular year does not, by itself, signiﬁ cantly
inﬂ uence our evaluation.

Annual Report 2011 37

beneﬁ t pension and other postretirement portfolios are
broadly diversiﬁ ed across asset classes. Within asset
classes, the portfolios are further diversified across
investment styles and investment organizations. For the
deﬁ ned beneﬁ t pension and other postretirement beneﬁ t
plans, the long-term investment policy allocations are:
30 percent to equities in the United States; 20 percent
to international equities; 10 percent to private equities;
30 percent to ﬁ xed income; and 10 percent to real assets
(real estate, energy, and timber). Th e actual allocations
to these asset classes may vary tactically around the
long-term policy allocations based on relative market
valuations.

Our historical investment returns (compound annual
growth rates) for our United States deﬁ ned beneﬁ t pen-
sion and other postretirement plan assets were 20.3
percent, 5.6 percent, 7.5 percent, 9.2 percent, and 10.0
percent for the 1, 5, 10, 15, and 20 year periods ended
May 29, 2011.

Our principal deﬁ ned beneﬁ t pension and other post-
retirement plans in the United States have an expected
return on plan assets of 9.6 percent. On a weighted-
average basis, the expected rate of return for all deﬁ ned
beneﬁ t plans was 9.53 percent for ﬁ scal 2011, 9.55 per-
cent for ﬁ scal 2010, and 9.55 percent for ﬁ scal 2009.

Lowering the expected long-term rate of return on
assets by 50 basis points would increase our net pension
and postretirement expense by $24 million for ﬁ scal
2012. A market-related valuation basis is used to reduce
year-to-year expense volatility. Th e market-related valu-
ation recognizes certain investment gains or losses over
a ﬁ ve-year period from the year in which they occur.
Investment gains or losses for this purpose are the dif-
ference between the expected return calculated using
the market-related value of assets and the actual return
based on the market-related value of assets. Our outside
actuaries perform these calculations as part of our deter-
mination of annual expense or income.

Discount Rates Our discount rate assumptions are
determined annually as of the last day of our ﬁ scal year
for our deﬁ ned beneﬁ t pension, other postretirement,
and postemployment beneﬁ t plan obligations. We also
use the same discount rates to determine deﬁ ned ben-
eﬁ t pension, other postretirement, and postemployment
beneﬁ t plan income and expense for the following ﬁ s-
cal year. We work with our actuaries to determine the
timing and amount of expected future cash outﬂ ows to
plan participants and, using the top quartile of AA-rated

corporate bond yields, to develop a forward interest rate
curve, including a margin to that index based on our
credit risk. Th is forward interest rate curve is applied
to our expected future cash outﬂ ows to determine our
discount rate assumptions.

Our weighted-average discount rates were as follows:

Weighted-average Discount Rates

Deﬁ ned
Other
Beneﬁ t Postretirement Postemployment
Beneﬁ t
Pension
Plans
Plans

Beneﬁ t
Plans

5.45%

5.35%

4.77%

Obligations as of May 29,

2011, and ﬁ scal 2012
expense

Obligations as of May 30,

2010, and ﬁ scal 2011

expense

Fiscal 2010 expense

5.85%

7.49%

5.80%

7.45%

5.12%

7.06%

Lowering the discount rates by 50 basis points would
increase our net deﬁ ned beneﬁ t pension, other postre-
tirement, and postemployment beneﬁ t plan expense for
ﬁ scal 2012 by approximately $36.9 million. All obliga-
tion-related experience gains and losses are amortized
using a straight-line method over the average remaining
service period of active plan participants.

Health Care Cost Trend Rates We review our health
care cost trend rates annually. Our review is based on
data we collect about our health care claims experience
and information provided by our actuaries. Th is infor-
mation includes recent plan experience, plan design,
overall industry experience and projections, and assump-
tions used by other similar organizations. Our initial
health care cost trend rate is adjusted as necessary to
remain consistent with this review, recent experiences,
and short-term expectations. Our initial health care
cost trend rate assumption is 8.5 percent for all retirees.
Rates are graded down annually until the ultimate trend
rate of 5.2 percent is reached in 2019 for all retirees.
Th e trend rates are applicable for calculations only if
the retirees’ beneﬁ ts increase as a result of health care
inﬂ ation. Th e ultimate trend rate is adjusted annually, as
necessary, to approximate the current economic view on
the rate of long-term inﬂ ation plus an appropriate health
care cost premium. Assumed trend rates for health care
costs have an important eﬀ ect on the amounts reported
for the other postretirement beneﬁ t plans.

38 General Mills

A one percentage point change in the health care cost

trend rate would have the following eﬀ ects:

In Millions

One

One
Percentage Percentage
Point
Decrease

Point
Increase

Eﬀ ect on the aggregate of the service and

interest cost components in ﬁ scal 2012

$ 6.2

$ (5.4)

Eﬀ ect on the other postretirement

accumulated beneﬁ t obligation as of

May 29, 2011

82.4

(73.6)

Any arising health care claims cost-related experience
gain or loss is recognized in the calculation of expected
future claims. Once recognized, experience gains and
losses are amortized using a straight-line method over
15 years, resulting in at least the minimum amortization
required being recorded.

Financial Statement Impact In ﬁ scal 2011, we recorded
net deﬁ ned beneﬁ t pension, other postretirement, and
postemployment beneﬁ t plan expense of $95 million
compared to $11 million of income in ﬁ scal 2010 and $4
million of income in ﬁ scal 2009. As of May 29, 2011, we
had cumulative unrecognized actuarial net losses of $1.3
billion on our deﬁ ned beneﬁ t pension plans and $180
million on our postretirement and postemployment ben-
eﬁ t plans, mainly as the result of declines in the values
of plan assets. Th ese unrecognized actuarial net losses
will result in increases in our future pension expense
and increases in postretirement expense since they cur-
rently exceed the corridors deﬁ ned by GAAP.

We use the Retirement Plans (RP) 2000 Mortality
Table projected forward to our plans’ measurement dates
to calculate the year-end deﬁ ned beneﬁ t pension, other
postretirement, and postemployment beneﬁ t obligations
and annual expense.

Actual future net deﬁ ned beneﬁ t pension, other post-
retirement, and postemployment beneﬁ t plan income
or expense will depend on investment performance,
changes in future discount rates, changes in health care
cost trend rates, and other factors related to the popula-
tions participating in these plans.

The Patient Protection and Affordable Care Act,
as amended by the Health Care and Education
Reconciliation Act of 2010 was signed into law in March
2010. Th e Act codiﬁ es health care reforms with stag-
gered eﬀ ective dates from 2010 to 2018 with many pro-
visions in the Act requiring the issuance of additional
guidance from various government agencies. Estimates

of the future impacts of several of the Act’s provisions
are incorporated into our postretirement beneﬁ t liability
including the elimination of lifetime maximums and the
imposition of an excise tax on high cost health plans.
These changes resulted in a $24 million increase in
our postretirement beneﬁ t liability in ﬁ scal 2010. Given
the complexity of the Act, the extended time period
over which the reforms will be implemented, and the
unknown impact of future regulatory guidance, further
ﬁ nancial impacts to our postretirement beneﬁ t liability
and related future expense may occur.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2011, the Financial Accounting Standards Board
(FASB) issued new accounting guidance for fair value
measurements providing common fair value measure-
ment and disclosure requirements. This guidance is
eﬀ ective for interim and annual periods beginning aft er
December 15, 2011, which for us is the fourth quarter
of ﬁ scal 2012. We do not expect this guidance to have a
material impact on our results of operations or ﬁ nancial
position.

In June 2011, the FASB issued new accounting guid-
ance for the presentation of other comprehensive income
(OCI). Th is guidance requires entities to present net
income and OCI in either a single continuous statement
or in separate consecutive statements. Th e guidance does
not change the components of net income or OCI, when
OCI should be reclassiﬁ ed to net income, or the earnings
per share calculation. Th e guidance is eﬀ ective for ﬁ scal
years beginning aft er December 15, 2011, which for us
is the ﬁ rst quarter of ﬁ scal 2013. Th is guidance will not
impact our results of operations or ﬁ nancial position.

Annual Report 2011 39

CAUTIONARY STATEMENT RELEVANT TO FORWARD-
LOOKING INFORMATION FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995

Th is report contains or incorporates by reference for-
ward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that are
based on our current expectations and assumptions. We
also may make written or oral forward-looking state-
ments, including statements contained in our ﬁ lings
with the SEC and in our reports to stockholders.

Th e words or phrases “will likely result,” “are expected
to,” “will continue,” “is anticipated,” “estimate,” “plan,”
“project,” or similar expressions identify “forward-looking
statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are sub-
ject to certain risks and uncertainties that could cause
actual results to diﬀ er materially from historical results
and those currently anticipated or projected. We wish
to caution you not to place undue reliance on any such
forward-looking statements.

In connection with the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995, we
are identifying important factors that could aﬀ ect our
ﬁ nancial performance and could cause our actual results
in future periods to diﬀ er materially from any current
opinions or statements.

Our future results could be aﬀ ected by a variety of
factors, such as: competitive dynamics in the consumer
foods industry and the markets for our products, includ-
ing new product introductions, advertising activities,
pricing actions, and promotional activities of our com-
petitors; economic conditions, including changes in inﬂ a-
tion 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 busi-
nesses or assets; changes in capital structure; changes in
laws and regulations, including labeling and advertising
regulations; impairments in the carrying value of good-
will, 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 sig-
niﬁ cant accounting estimates; product quality and safety
issues, including recalls and product liability; changes
in consumer demand for our products; eﬀ ectiveness
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 signiﬁ cant customers; ﬂ uctuations
in the cost and availability of supply chain resources,
including raw materials, packaging, and energy; disrup-
tions or ineﬃ ciencies 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 informa-
tion technology systems; foreign economic conditions,
including currency rate ﬂ uctuations; and political unrest
in foreign markets and economic uncertainty due to ter-
rorism or war.

You should also consider the risk factors that we iden-
tify in Item 1A of our 2011 Form 10-K, which could also
aﬀ ect our future results.

We undertake no obligation to publicly revise any
forward-looking statements to reﬂ ect events or circum-
stances aft er the date of those statements or to reﬂ ect
the occurrence of anticipated or unanticipated events.

40 General Mills

Quantitative and Qualitative
Disclosures About Market Risk

We are exposed to market risk stemming from changes in
interest rates, foreign exchange rates, commodity prices,
and equity prices. Changes in these factors could cause
ﬂ uctuations in our earnings and cash ﬂ ows. In the nor-
mal course of business, we actively manage our exposure
to these market risks by entering into various hedging
transactions, authorized under established policies that
place clear controls on these activities. Th e counterpar-
ties in these transactions are generally highly rated insti-
tutions. We establish credit limits for each counterparty.
Our hedging transactions include but are not limited to a
variety of derivative ﬁ nancial instruments.

foreign currency cash ﬂ ow exposures. We also generally
swap our foreign-denominated commercial paper bor-
rowings and nonfunctional currency intercompany loans
back to U.S. dollars or the functional currency; the gains
or losses on these derivatives oﬀ set the foreign currency
revaluation gains or losses recorded in earnings on the
associated borrowings. We generally do not hedge more
than 18 months forward.

We also have many net investments in foreign sub-
sidiaries that are denominated in euros. We previously
hedged a portion of these net investments by issu-
ing euro-denominated commercial paper and foreign
exchange forward contracts. As of May 29, 2011, we had
deferred net foreign currency transaction losses of $96
million in AOCI associated with hedging activity.

INTEREST RATE RISK

COMMODITY PRICE RISK

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

As of May 29, 2011, we had interest rate swaps with
$1.3 billion of aggregate notional principal amount out-
standing, with a net notional amount of $838 million
that converts ﬂ oating-rate notes to ﬁ xed rates.

FOREIGN EXCHANGE RISK

Foreign currency ﬂ uctuations aﬀ ect our net investments
in foreign subsidiaries and foreign currency cash ﬂ ows
related to foreign-denominated commercial paper, third
party purchases, intercompany loans, and product ship-
ments. We are also exposed to the translation of foreign
currency earnings to the U.S. dollar. Our principal expo-
sures are to the Australian dollar, British pound sterling,
Canadian dollar, Chinese renminbi, euro, Japanese yen,
Swiss franc, and Mexican peso. We mainly use foreign
currency forward contracts to selectively hedge our

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

As of May 29, 2011, the net notional value of commod-
ity derivatives was $348 million, of which $161 million
related to agricultural inputs and $187 million related to
energy inputs. Th ese contracts relate to inputs that gen-
erally will be utilized within the next 12 months.

EQUITY INSTRUMENTS

Equity price movements aﬀ ect our compensation expense
as certain investments made by our employees in our
deferred compensation plan are revalued. We occasion-
ally use equity swaps to manage this risk, but no swaps
were outstanding as of May 29, 2011.

Annual Report 2011 41

VALUE AT RISK

Th e estimates in the table below are intended to mea-
sure the maximum potential fair value we could lose in
one day from adverse changes in market interest rates,
foreign exchange rates, commodity prices, and equity
prices under normal market conditions. A Monte Carlo
value-at-risk (VAR) methodology was used to quantify
the market risk for our exposures. Th e models assumed
normal market conditions and used a 95 percent conﬁ -
dence level.

Th e VAR calculation used historical interest rates, for-
eign exchange rates, and commodity and equity prices
from the past year to estimate the potential volatility
and correlation of these rates in the future. Th e market
data were drawn from the RiskMetrics™ data set. Th e
calculations are not intended to represent actual losses
in fair value that we expect to incur. Further, since the
hedging instrument (the derivative) inversely correlates
with the underlying exposure, we would expect that any
loss or gain in the fair value of our derivatives would be
generally oﬀ set by an increase or decrease in the fair

value of the underlying exposure. Th e positions included
in the calculations were: debt; investments; interest rate
swaps; foreign exchange forwards; commodity swaps,
futures and options; and equity instruments. Th e calcu-
lations do not include the underlying foreign exchange
and commodities-related positions that are oﬀ set by
these market-risk-sensitive instruments.

Th e table below presents the estimated maximum
potential VAR arising from a one-day loss in fair value
for our interest rate, foreign currency, commodity, and
equity market-risk-sensitive instruments outstanding as
of May 29, 2011, and May 30, 2010, and the average fair
value impact during the year ended May 29, 2011.

In Millions

Fair Value Impact

May 29,
2011

Average
During
Fiscal 2011

May 30,
2010

Interest rate instruments

$26.5

$27.1

$27.7

Foreign currency instruments

Commodity instruments

8.7

3.9

5.8

4.9

4.3

4.8

42 General Mills

Reports of Management and Independent Registered
Public Accounting Firm

REPORT OF MANAGEMENT RESPONSIBILITIES

REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

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

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

Th e Audit Committee of the Board of Directors meets
regularly with management, internal auditors, and our
independent registered public accounting ﬁ rm to review
internal control, auditing, and ﬁ nancial reporting mat-
ters. The independent registered public accounting
ﬁ rm, internal auditors, and employees have full and free
access to the Audit Committee at any time.

The Audit Committee reviewed and approved the
Company’s annual financial statements. The Audit
Committee recommended, and the Board of Directors
approved, that the consolidated ﬁ nancial statements be
included in the Annual Report. Th e Audit Committee
also appointed KPMG LLP to serve as the Company’s
independent registered public accounting ﬁ rm for ﬁ scal
2012, subject to ratiﬁ cation by the stockholders at the
annual meeting.

K. J. Powell
Chairman of the Board
and Chief Executive Oﬃ cer

D. L. Mulligan
Executive Vice President
and Chief Financial
Oﬃ cer

July 8, 2011

Th e Board of Directors and Stockholders
General Mills, Inc.:

We have audited the accompanying consolidated bal-
ance sheets of General Mills, Inc. and subsidiaries as of
May 29, 2011, and May 30, 2010, and the related con-
solidated statements of earnings, total equity and com-
prehensive income, and cash ﬂ ows for each of the ﬁ scal
years in the three-year period ended May 29, 2011. In
connection with our audits of the consolidated ﬁ nancial
statements, we have audited the accompanying ﬁ nancial
statement schedule. We also have audited General Mills,
Inc.’s internal control over ﬁ nancial reporting as of May
29, 2011, based on criteria established in Internal Control
– Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(COSO). General Mills, Inc.’s management is responsible
for these consolidated ﬁ nancial statements and ﬁ nancial
statement schedule, for maintaining eﬀ ective internal
control over ﬁ nancial reporting, and for its assessment
of the eﬀ ectiveness of internal control over ﬁ nancial
reporting, included in Management’s Report on Internal
Control over Financial Reporting. Our responsibility is to
express an opinion on these consolidated ﬁ nancial state-
ments and ﬁ nancial statement schedule and an opinion
on the Company’s internal control over ﬁ nancial report-
ing based on our audits.

We conducted our audits in accordance with the stan-
dards of the Public Company Accounting Oversight
Board (United States). Th ose standards require that we
plan and perform the audits to obtain reasonable assur-
ance about whether the ﬁ nancial statements are free of
material misstatement and whether eﬀ ective internal
control over ﬁ nancial reporting was maintained in all
material respects. Our audits of the consolidated ﬁ nancial
statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the ﬁ nancial
statements, assessing the accounting principles used and
signiﬁ cant estimates made by management, and evalu-
ating the overall ﬁ nancial statement presentation. Our
audit of internal control over ﬁ nancial reporting included
obtaining an understanding of internal control over
ﬁ nancial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design
and operating eﬀ ectiveness of internal control based on
the assessed risk. Our audits also included performing

Annual Report 2011 43

such other procedures as we considered necessary in
the circumstances. We believe that our audits provide a
reasonable basis for our opinions.

controls may become inadequate because of changes in
conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

A company’s internal control over ﬁ nancial reporting
is a process designed to provide reasonable assurance
regarding the reliability of ﬁ nancial reporting and the
preparation of ﬁ nancial statements for external pur-
poses in accordance with generally accepted accounting
principles. A company’s internal control over ﬁ nancial
reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reason-
able detail, accurately and fairly reﬂ ect the transactions
and dispositions of the assets of the company; (2) pro-
vide reasonable assurance that transactions are recorded
as necessary to permit preparation of ﬁ nancial state-
ments in accordance with generally accepted account-
ing principles, and that receipts and expenditures of the
company are being made only in accordance with autho-
rizations of management and directors of the company;
and (3) provide reasonable assurance regarding preven-
tion or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a
material eﬀ ect on the ﬁ nancial statements.

Because of its inherent limitations, internal control
over ﬁ nancial reporting may not prevent or detect mis-
statements. Also, projections of any evaluation of eﬀ ec-
tiveness to future periods are subject to the risk that

In our opinion, the consolidated ﬁ nancial statements
referred to above present fairly, in all material respects,
the ﬁ nancial position of General Mills, Inc. and subsidiar-
ies as of May 29, 2011, and May 30, 2010, and the results
of their operations and their cash ﬂ ows for each of the
ﬁ scal years in the three-year period ended May 29, 2011,
in conformity with U.S. generally accepted accounting
principles. Also in our opinion, the accompanying ﬁ nan-
cial statement schedule, when considered in relation to
the basic consolidated ﬁ nancial statements taken as a
whole, presents fairly, in all material respects, the infor-
mation set forth therein. Also in our opinion, General
Mills, Inc. maintained, in all material respects, eﬀ ective
internal control over ﬁ nancial reporting as of May 29,
2011, based on criteria established in Internal Control
– Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.

Minneapolis, Minnesota
July 8, 2011

44 General Mills

Consolidated Statements of Earnings

GENERAL MILLS, INC. AND SUBSIDIARIES

In Millions, Except per Share Data

Net sales

Cost of sales

Selling, general, and administrative expenses

Divestitures (gain), net

Restructuring, impairment, and other exit costs

Operating proﬁ t

Interest, net

Earnings before income taxes and aft er-tax earnings from joint ventures

Income taxes

Aft er-tax earnings from joint ventures

Fiscal Year

2011

2010

2009

$ 14,880.2

$ 14,635.6

$ 14,555.8

8,926.7

3,192.0

(17.4)

4.4

8,835.4

3,162.7

—

31.4

9,380.9

2,893.2

(84.9)

41.6

2,774.5

2,606.1

2,325.0

346.3

2,428.2

721.1

96.4

401.6

382.8

2,204.5

1,942.2

771.2

101.7

720.4

91.9

Net earnings, including earnings attributable to noncontrolling interests

1,803.5

1,535.0

1,313.7

Net earnings attributable to noncontrolling interests
Net earnings attributable to General Mills

Earnings per share - basic

Earnings per share - diluted

Dividends per share

See accompanying notes to consolidated ﬁ nancial statements.

5.2
$ 1,798.3

4.5
$ 1,530.5

9.3
$ 1,304.4

2.80

2.70

1.12

2.32

2.24

0.96

1.96

1.90

0.86

Annual Report 2011 45

May 29, 2011 May 30, 2010

$ 619.6

$ 673.2

1,162.3

1,609.3

27.3

483.5

3,902.0

3,345.9

6,750.8

3,813.3

862.5

1,041.6

1,344.0

42.7

378.5

3,480.0

3,127.7

6,592.8

3,715.0

763.4

$ 18,674.5

$ 17,678.9

$ 995.1

$ 849.5

1,031.3

311.3

1,321.5

3,659.2

5,542.5

1,127.4

1,733.2

12,062.3

75.5

1,319.8

9,191.3

(3,210.3)

(1,010.8)

6,365.5

246.7

6,612.2

107.3

1,050.1

1,762.2

3,769.1

5,268.5

874.6

2,118.7

12,030.9

75.5

1,307.1

8,122.4

(2,615.2)

(1,486.9)

5,402.9

245.1

5,648.0

$ 18,674.5

$ 17,678.9

Consolidated Balance Sheets

GENERAL MILLS, INC. AND SUBSIDIARIES

In Millions, Except Par Value

ASSETS
Current assets:

Cash and cash equivalents

Receivables

Inventories

Deferred income taxes

Prepaid expenses and other current assets

Total current assets

Land, buildings, and equipment

Goodwill

Other intangible assets

Other assets

Total assets

LIABILITIES AND EQUITY
Current liabilities:

Accounts payable

Current portion of long-term debt

Notes payable

Other current liabilities

Total current liabilities

Long-term debt

Deferred income taxes

Other liabilities

Total liabilities

Stockholders’ equity:

Common stock, 754.6 shares issued, $0.10 par value

Additional paid-in capital

Retained earnings

Common stock in treasury, at cost, shares of 109.8 and 98.1

Accumulated other comprehensive loss

Total stockholders’ equity

Noncontrolling interests

Total equity

Total liabilities and equity

See accompanying notes to consolidated ﬁ nancial statements.

46 General Mills

Consolidated Statements of Total Equity and Comprehensive Income

GENERAL MILLS, INC. AND SUBSIDIARIES

$.10 Par Value Common Stock
(One Billion Shares Authorized)

Issued

Treasury

In Millions, Except per Share Data

Par
Shares Amount

Additional
Paid-In
Capital Shares

Amount

Accumulated
Other
Retained Comprehensive Noncontrolling
Interests
Earnings

Income (Loss)

Total

754.6

Balance as of May 25, 2008
Comprehensive income:
Net earnings, including earnings
attributable to noncontrolling interests
Other comprehensive loss
Total comprehensive income
Cash dividends declared
($0.86 per share)
Stock compensation plans (includes
income tax beneﬁ ts of $94.0)
Shares purchased
Shares issued for acquisition
Unearned compensation related to
restricted stock unit awards
Distributions to noncontrolling
interest holders
Earned compensation

$75.5 $1,111.3

(79.6) $(1,658.4)

$6,510.7

$ 173.1

$246.6

$6,458.8

1,304.4

(1,050.9)

9.3
(1.2)

(579.5)

23.0

16.4

19.6
(40.4)
1.8

443.1
(1,296.4)
38.6

(56.2)

117.6

(10.5)

1,313.7
(1,052.1)
261.6

(579.5)

466.1
(1,296.4)
55.0

(56.2)

(10.5)
117.6

Balance as of May 31, 2009
Comprehensive income:
Net earnings, including earnings
attributable to noncontrolling interests
Other comprehensive income (loss)

Total comprehensive income
Cash dividends declared
($0.96 per share)
Stock compensation plans (includes
income tax beneﬁ ts of $114.0)
Shares purchased
Unearned compensation related to
restricted stock unit awards
Distributions to noncontrolling
interest holders
Earned compensation

Balance as of May 30, 2010
Comprehensive income:
Net earnings, including earnings
attributable to noncontrolling interests
Other comprehensive income

Total comprehensive income
Cash dividends declared
($1.12 per share)
Stock compensation plans (includes
income tax beneﬁ ts of $106.2)
Shares purchased
Unearned compensation related to
restricted stock unit awards
Distributions to noncontrolling
interest holders
Earned compensation

754.6

75.5

1,212.1

(98.6)

(2,473.1)

7,235.6

(877.8)

244.2

5,416.5

1,530.5

(609.1)

4.5
0.2

1,535.0
(608.9)

926.1

(643.7)

53.3

21.8
(21.3)

549.7
(691.8)

(65.6)

107.3

(643.7)

603.0
(691.8)

(65.6)

(3.8)
107.3

(3.8)

754.6

75.5

1,307.1

(98.1)

(2,615.2)

8,122.4

(1,486.9)

245.1

5,648.0

1,798.3

476.1

5.2
0.7

(729.4)

(22.2)

20.1
(31.8)

568.4
(1,163.5)

(70.4)

105.3

(4.3)

1,803.5
476.8

2,280.3

(729.4)

546.2
(1,163.5)

(70.4)

(4.3)
105.3

Balance as of May 29, 2011

754.6

$75.5 $1,319.8

(109.8) $(3,210.3)

$9,191.3

$(1,010.8)

$246.7

$6,612.2

See accompanying notes to consolidated ﬁ nancial statements.

Annual Report 2011 47

Consolidated Statements of Cash Flows

GENERAL MILLS, INC. AND SUBSIDIARIES

In Millions

Cash Flows - Operating Activities
Net earnings, including earnings attributable to noncontrolling interests
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
Aft er-tax earnings from joint ventures
Stock-based compensation
Deferred income taxes
Tax beneﬁ t on exercised options
Distributions of earnings from joint ventures
Pension and other postretirement beneﬁ t plan contributions
Pension and other postretirement beneﬁ t plan expense (income)
Divestitures (gain), net
Gain on insurance settlement
Restructuring, impairment, and other exit costs (income)
Changes in current assets and liabilities
Other, net
Net cash provided by operating activities
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
Acquisitions
Investments in aﬃ liates, net
Proceeds from disposal of land, buildings, and equipment
Proceeds from divestiture of product lines
Proceeds from insurance settlement
Other, net
Net cash used by investing activities
Cash Flows - Financing Activities
Change in notes payable
Issuance of long-term debt
Payment of long-term debt
Proceeds from common stock issued on exercised options
Tax beneﬁ t on exercised options
Purchases of common stock for treasury
Dividends paid
Other, net
Net cash used by ﬁ nancing activities
Eﬀ ect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents - beginning of year
Cash and cash equivalents - end of year
Cash Flow from Changes in Current Assets and Liabilities:
Receivables
Inventories
Prepaid expenses and other current assets
Accounts payable
Other current liabilities
Changes in current assets and liabilities

See accompanying notes to consolidated ﬁ nancial statements.

48 General Mills

Fiscal Year

2011

2010

2009

$ 1,803.5

$ 1,535.0

$ 1,313.7

472.6
(96.4)
105.3
205.3
(106.2)
72.7
(220.8)
73.6
(17.4)
—
(1.3)
(720.9)
(43.2)
1,526.8

(648.8)
(123.3)
(1.8)
4.1
34.4
—
20.3
(715.1)

(742.6)
1,200.0
(7.4)
410.4
106.2
(1,163.5)
(729.4)
(10.3)
(936.6)
71.3
(53.6)
673.2
$ 619.6

(69.8)
(240.0)
(96.0)
109.0
(424.1)
$ (720.9)

457.1
(101.7)
107.3
22.3
(114.0)
88.0
(17.2)
(37.9)
—
—
23.4
143.4
75.5
2,181.2

(649.9)
—
(130.7)
7.4
—
—
52.0
(721.2)

235.8
—
(906.9)
388.8
114.0
(691.8)
(643.7)
—
(1,503.8)
(32.8)
(76.6)
749.8
$ 673.2

$ (121.1)
(16.7)
53.5
69.6
158.1
$ 143.4

453.6
(91.9)
117.7
215.8
(89.1)
68.5
(220.3)
(27.5)
(84.9)
(41.3)
31.3
176.9
5.7
1,828.2

(562.6)
—
5.9
4.1
244.7
41.3
(22.3)
(288.9)

(1,390.5)
1,850.0
(370.3)
305.2
89.1
(1,296.4)
(579.5)
(12.1)
(1,404.5)
(46.0)
88.8
661.0
$ 749.8

$ 81.8
(28.1)
30.2
(116.4)
209.4
$ 176.9

Notes to Consolidated Financial Statements

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTE 1. BASIS OF PRESENTATION AND
RECLASSIFICATIONS

Income Statement Classiﬁ cations At the beginning of
ﬁ scal 2011, we revised the classiﬁ cation of certain reve-
nues and expenses to better align our income statement
line items with how we manage our business. We have
revised the classiﬁ cation of amounts previously reported
in our Consolidated Statements of Earnings to conform
to our ﬁ scal 2011 presentation. Th ese revised classiﬁ -
cations had no eﬀ ect on previously reported net earn-
ings attributable to General Mills or earnings per share.
Th ese changes include:

• Revising the classiﬁ cation of certain customer logis-
tics allowances as a reduction of net sales (previously
recorded as cost of sales). Th e impact of this change was
a decrease in net sales of $160.9 million in ﬁ scal 2010
and $157.5 million in ﬁ scal 2009 and a corresponding
decrease to cost of sales in each of the years.

• Revising the classification of certain promotion-
related costs, customer allowances, and supply chain
costs as cost of sales or selling, general, and administra-
tive (SG&A) expenses (previously recorded as a reduction
of net sales or SG&A expenses). Th e impact of these
changes was an increase to net sales of $22.0 million
in ﬁ scal 2009; an increase to cost of sales of $73.4 mil-
lion in ﬁ scal 2010 and $80.6 million in ﬁ scal 2009; and
a decrease to SG&A expenses of $73.4 million in ﬁ scal
2010 and $58.6 million in ﬁ scal 2009.

• Shift ing allocation of certain SG&A expenses, primar-
ily stock-based compensation, between segment operat-
ing proﬁ t and unallocated corporate items. Th e impact
of this change was a decrease to segment operating
proﬁ t of $20.8 million in ﬁ scal 2010 and $18.9 million in
ﬁ scal 2009 and a corresponding decrease in unallocated
corporate items.

• Shift ing sales responsibility for a customer from our
Bakeries and Foodservice segment to our U.S. Retail seg-
ment. Net sales of $9.8 million in ﬁ scal 2010 and $15.0
million in ﬁ scal 2009 and segment operating proﬁ t of
$4.1 million in ﬁ scal 2010 and $6.4 million in ﬁ scal 2009
previously recorded in our Bakeries and Foodservice seg-
ment have now been reported in the U.S. Retail segment.
In addition, certain other reclassiﬁ cations to our previ-
ously reported ﬁ nancial information have been made to
conform to the current period presentation.

Basis of Presentation Our Consolidated Financial
Statements include the accounts of General Mills, Inc.
and all subsidiaries in which we have a controlling ﬁ nan-
cial interest. Intercompany transactions and accounts
are eliminated in consolidation.

Our ﬁ scal year ends on the last Sunday in May, except
for our operations in Europe and China, which have an
April year-end. Fiscal 2011 and 2010 each consisted of 52
weeks, and ﬁ scal 2009 consisted of 53 weeks.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

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

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

Inventories outside of the United States are valued
at the lower of cost, using the ﬁ rst-in, ﬁ rst-out (FIFO)
method, or market.

Shipping costs associated with the distribution of ﬁ n-
ished product to our customers are recorded as cost of
sales, and are recognized when the related ﬁ nished prod-
uct is shipped to and accepted by the customer.

Land, Buildings, Equipment, and Depreciation Land
is recorded at historical cost. Buildings and equipment,
including capitalized interest and internal engineer-
ing costs, are recorded at cost and depreciated over
estimated useful lives, primarily using the straight-line
method. Ordinary maintenance and repairs are charged
to cost of sales. Buildings are usually depreciated over 40
to 50 years, and equipment, furniture, and soft ware are
usually depreciated over 3 to 10 years. Fully depreciated
assets are retained in buildings and equipment until dis-
posal. When an item is sold or retired, the accounts are
relieved of its cost and related accumulated depreciation
and the resulting gains and losses, if any, are recognized
in earnings. As of May 29, 2011, assets held for sale were
insigniﬁ cant.

Long-lived assets are reviewed for impairment when-
ever events or changes in circumstances indicate that
the carrying amount of an asset (or asset group) may

Annual Report 2011 49

not be recoverable. An impairment loss would be recog-
nized when estimated undiscounted future cash ﬂ ows
from the operation and disposition of the asset group
are less than the carrying amount of the asset group.
Asset groups have identiﬁ able cash ﬂ ows and are largely
independent of other asset groups. Measurement of an
impairment loss would be based on the excess of the
carrying amount of the asset group over its fair value.
Fair value is measured using a discounted cash ﬂ ow
model or independent appraisals, as appropriate.

Goodwill and Other Intangible Assets Goodwill is not
subject to amortization and is tested for impairment
annually and whenever events or changes in circum-
stances indicate that impairment may have occurred.
Impairment testing is performed for each of our report-
ing units. We compare the carrying value of a reporting
unit, including goodwill, to the fair value of the unit.
Carrying value is based on the assets and liabilities asso-
ciated with the operations of that reporting unit, which
oft en requires allocation of shared or corporate items
among reporting units. If the carrying amount of a
reporting unit exceeds its fair value, we revalue all assets
and liabilities of the reporting unit, excluding goodwill,
to determine if the fair value of the net assets is greater
than the net assets including goodwill. If the fair value
of the net assets is less than the carrying amount of
net assets including goodwill, impairment has occurred.
Our estimates of fair value are determined based on a
discounted cash ﬂ ow model. Growth rates for sales and
proﬁ ts are determined using inputs from our annual
long-range planning process. We also make estimates of
discount rates, perpetuity growth assumptions, market
comparables, and other factors. We performed our ﬁ scal
2011 assessment as of November 29, 2010, and deter-
mined there was no impairment of goodwill for any of
our reporting units as their related fair values were sub-
stantially in excess of their carrying values.

We evaluate the useful lives of our other intangible
assets, mainly brands, to determine if they are ﬁ nite or
indeﬁ nite-lived. Reaching a determination on useful life
requires signiﬁ cant judgments and assumptions regard-
ing the future eﬀ ects of obsolescence, demand, com-
petition, other economic factors (such as the stability
of the industry, known technological advances, legis-
lative action that results in an uncertain or changing
regulatory environment, and expected changes in dis-
tribution channels), the level of required maintenance

expenditures, and the expected lives of other related
groups of assets.

Our indeﬁ nite-lived intangible assets, mainly intangible
assets primarily associated with the Pillsbury, Totino’s,
Progresso, Green Giant, Old El Paso, and Häagen-
Dazs brands, are also tested for impairment annually
and whenever events or changes in circumstances indi-
cate that their carrying value may not be recoverable.
We performed our ﬁ scal 2011 assessment of our brand
intangibles as of November 29, 2010. Our estimate of
the fair value of the brands was based on a discounted
cash ﬂ ow model using inputs which included: projected
revenues from our annual long-range plan; assumed roy-
alty rates that could be payable if we did not own the
brands; and a discount rate. As of our assessment date,
there was no impairment of any of our indeﬁ nite-lived
intangible assets as their related fair values were sub-
stantially in excess of the carrying values.

Investments in Joint Ventures Our investments in
companies over which we have the ability to exercise
signiﬁ cant inﬂ uence are stated at cost plus our share
of undistributed earnings or losses. We receive roy-
alty income from certain joint ventures, incur various
expenses (primarily research and development), and
record the tax impact of certain joint venture opera-
tions that are structured as partnerships. In addition, we
make advances to our joint ventures in the form of loans
or capital investments. We also sell certain raw materi-
als, semi-ﬁ nished goods, and ﬁ nished goods to the joint
ventures, generally at market prices.

In addition, we assess our investments in our joint
ventures if we have reason to believe an impairment
may have occurred including, but not limited to, ongo-
ing operating losses, projected decreases in earnings,
increases in the weighted average cost of capital or sig-
niﬁ cant business disruptions. Th e signiﬁ cant assump-
tions used to estimate fair value include revenue growth
and proﬁ tability, royalty rates, capital spending, depre-
ciation and taxes, foreign currency exchange rates and
a discount rate. By their nature, these projections and
assumptions are uncertain. If we were to determine
the current fair value of our investment was less than
the carrying value of the investment, then we would
assess if the shortfall was of a temporary or permanent
nature and write down the investment to its fair value if
we concluded the impairment is other than temporary.
Aft er the earthquakes and tsunami in Japan in March
2011, we assessed the fair value of our investment in

50 General Mills

Häagen-Dazs Japan and determined that it exceeded the
carrying value by approximately 5 percent.

are written oﬀ against the allowance when we deem the
amount is uncollectible.

Variable Interest Entities As of May 29, 2011, we had
invested in six variable interest entities (VIEs). We deter-
mined whether or not we were the primary beneﬁ ciary
(PB) of each VIE using a qualitative assessment that con-
sidered the VIE’s purpose and design, the involvement of
each of the interest holders, and the risks and beneﬁ ts
of the VIE. We have an interest in a contract manufac-
turer at our former facility in Geneva, Illinois. We are the
PB and have consolidated this entity. Th is entity had
property and equipment with a carrying value of $13.6
million and long-term debt of $15.0 million as of May
29, 2011. Th e liabilities recognized as a result of con-
solidating this entity do not represent additional claims
on our general assets. Th e remaining ﬁ ve VIEs, two of
which we are not the PB, are not material to our results
of operations, ﬁ nancial condition, or liquidity as of and
for the year ended May 29, 2011. We provided minimal
ﬁ nancial or other support to VIEs during ﬁ scal 2011 and
there are no arrangements related to VIEs that would
require us to provide signiﬁ cant ﬁ nancial support in the
future.

Revenue Recognition We recognize sales revenue when
the shipment is accepted by our customer. Sales include
shipping and handling charges billed to the customer
and are reported net of consumer coupon redemp-
tion, trade promotion and other costs, including esti-
mated allowances for returns, unsalable product, and
prompt pay discounts. Sales, use, value-added, and other
excise taxes are not recognized in revenue. Coupons are
recorded when distributed, based on estimated redemp-
tion rates. Trade promotions are recorded based on esti-
mated participation and performance levels for oﬀ ered
programs at the time of sale. We generally do not
allow a right of return. However, on a limited case-by-
case basis with prior approval, we may allow custom-
ers to return product. In limited circumstances, product
returned in saleable condition is resold to other custom-
ers or outlets. Receivables from customers generally do
not bear interest. Terms and collection patterns vary
around the world and by channel. Th e allowance for
doubtful accounts represents our estimate of probable
non-payments and credit losses in our existing receiv-
ables, as determined based on a review of past due bal-
ances and other speciﬁ c account data. Account balances

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

Advertising Production Costs We expense the produc-
tion costs of advertising the ﬁ rst time that the advertis-
ing takes place.

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

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

Derivative Instruments All derivatives are recognized
on the Consolidated Balance Sheets at fair value based
on quoted market prices or our estimate of their fair
value, and are recorded in either current or noncurrent
assets or liabilities based on their maturity. Changes in
the fair values of derivatives are recorded in net earnings
or other comprehensive income, based on whether the

Annual Report 2011 51

instrument is designated and eﬀ ective as a hedge trans-
action and, if so, the type of hedge transaction. Gains or
losses on derivative instruments reported in AOCI are
reclassiﬁ ed to earnings in the period the hedged item
aﬀ ects earnings. If the underlying hedged transaction
ceases to exist, any associated amounts reported in AOCI
are reclassiﬁ ed to earnings at that time. Any ineﬀ ective-
ness is recognized in earnings in the current period.

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

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

We report the beneﬁ ts of tax deductions in excess of
recognized compensation cost as a ﬁ nancing cash ﬂ ow,
thereby reducing net operating cash ﬂ ows and increas-
ing net ﬁ nancing cash ﬂ ows.

Deﬁ ned Beneﬁ t Pension, Other Postretirement, and
Postemployment Benefit Plans We sponsor several
domestic and foreign deﬁ ned beneﬁ t plans to provide
pension, health care, and other welfare beneﬁ ts to retired
employees. Under certain circumstances, we also provide
accruable beneﬁ ts to former or inactive employees in the
United States and Canada and members of our Board of
Directors, including severance and certain other beneﬁ ts
payable upon death. We recognize an obligation for any
of these beneﬁ ts that vest or accumulate with service.
Postemployment beneﬁ ts that do not vest or accumulate
with service (such as severance based solely on annual
pay rather than years of service) are charged to expense

when incurred. Our postemployment beneﬁ t plans are
unfunded.

We recognize the underfunded or overfunded status
of a deﬁ ned beneﬁ t postretirement plan as an asset or
liability and recognize changes in the funded status in
the year in which the changes occur through AOCI.

Use of Estimates Preparing our Consolidated Financial
Statements in conformity with accounting principles
generally accepted in the United States requires us to
make estimates and assumptions that aﬀ ect reported
amounts of assets and liabilities, disclosures of contin-
gent assets and liabilities at the date of the ﬁ nancial
statements, and the reported amounts of revenues and
expenses during the reporting period. Th ese estimates
include our accounting for promotional expenditures,
valuation of long-lived assets, intangible assets, stock-
based compensation, income taxes, and deﬁ ned beneﬁ t
pension, post-retirement and post-employment beneﬁ ts.
Actual results could diﬀ er from our estimates.

Other New Accounting Standards In ﬁ scal 2011, we
adopted new accounting guidance on the consolida-
tion model for VIE’s. Th e guidance requires companies
to qualitatively assess the determination of the primary
beneﬁ ciary of a VIE based on whether the company (1)
has the power to direct matters that most signiﬁ cantly
impact the VIE’s economic performance, and (2) has
the obligation to absorb losses or the right to receive
beneﬁ ts of the VIE that could potentially be signiﬁ -
cant to the VIE. Th e adoption of the guidance did not
have an impact on our results of operations or ﬁ nancial
condition.

In ﬁ scal 2010, we adopted new accounting guidance
on employer’s disclosures for post-retirement beneﬁ t
plan assets. Th e guidance requires an employer to dis-
close information on the investment policies and strate-
gies and the signiﬁ cant concentrations of risk in plan
assets. An employer must also disclose the fair value of
each major category of plan assets as of each annual
reporting date together with the information on the
inputs and valuation techniques used to develop such
fair value measurements. Th e adoption of the guidance
did not have an impact on our results of operations or
ﬁ nancial condition. See Note 13.

In ﬁ scal 2010, we adopted new accounting guidance
on accounting for equity method investments. Th e guid-
ance addresses the impact of the issuance of the non-
controlling interests and business combination guidance

52 General Mills

on accounting for equity method investments. Th e adop-
tion of the guidance did not have a material impact on
our results of operations or ﬁ nancial condition.

In ﬁ scal 2010, we adopted new accounting guidance
issued to assist in determining whether instruments
granted in share-based payment transactions are partic-
ipating securities. Th e guidance provides that unvested
share-based payment awards that contain non-forfeit-
able rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be
included in the computation of EPS pursuant to the
two-class method. Th e adoption of the guidance did not
have a material impact on our basic or diluted EPS.

In ﬁ scal 2010, we adopted new accounting guidance
on convertible debt instruments. Th e guidance requires
issuers to account separately for the liability and equity
components of convertible debt instruments that may
be settled in cash or other assets. Th e adoption of the
guidance did not have a material impact on our results
of operations or ﬁ nancial condition.

NOTE 3. ACQUISITIONS AND DIVESTITURES

During the third quarter of ﬁ scal 2011, we acquired the
Mountain High yoghurt business for $84.8 million. We
recorded the purchase price less the fair value of tan-
gible and intangible net assets acquired as goodwill
of $44.6 million. During the fourth quarter of ﬁ scal
2011, we acquired the Pasta Master meals business in
Australia for $38.5 million. We recorded the purchase
price less the fair value of tangible and intangible net
assets acquired as goodwill of $26.9 million. Th e pro
forma eﬀ ects of these acquisitions were not material.

During the third quarter of ﬁ scal 2011, we sold a
foodservice frozen baked goods product line in our
International segment for $24.9 million in cash and
recorded a pre-tax gain of $14.3 million. In addition, dur-
ing the fourth quarter of ﬁ scal 2011, we sold a pie shell
product line in our Bakeries and Foodservice segment
for cash proceeds of $9.5 million and recorded a pre-tax
gain of $3.1 million.

During the fourth quarter of ﬁ scal 2011, we entered
into deﬁ nitive agreements with PAI Partners and Sodiaal
International to purchase a 51 percent controlling
interest in Yoplait S.A.S. and a 50 percent interest in
Yoplait Marques S.A.S. for an aggregate purchase price
of $1.2 billion. Yoplait S.A.S. operates yogurt businesses
in several countries, including France and the United
Kingdom, and oversees franchise relationships around

the world. Yoplait Marques S.A.S. holds the worldwide
rights to Yoplait and related trademarks. We ﬁ nalized
this transaction on July 1, 2011. Th e pro forma eﬀ ects of
this acquisition were not material.

Th ere were no acquisitions or divestitures in ﬁ scal

2010.

In ﬁ scal 2009, we sold our bread concentrates prod-
uct line within our Bakeries and Foodservice segment,
including a plant in Cedar Rapids, Iowa, for $8.3 million
in cash. We recorded a pre-tax loss of $5.6 million on
the transaction. We also sold a portion of the assets of
the frozen unbaked bread dough product line within our
Bakeries and Foodservice segment, including plants in
Bakersﬁ eld, California; Hazleton, Pennsylvania; Montreal,
Canada; and Vinita, Oklahoma, for $43.9 million in cash,
an $11.9 million note receivable, and contingent future
payments based on the post-sale performance of the
product line. Certain assets sold were shared with a fro-
zen dinner roll product line within our U.S. Retail seg-
ment, and we exited this product line as a result of the
asset sale. We recorded a pre-tax loss of $38.3 million.
In ﬁ scal 2010, we recorded cash proceeds of $3.2 mil-
lion related to the repayment of the note. In ﬁ scal 2009,
we sold our Pop•Secret microwave popcorn product line
from our U.S. Retail segment for $192.5 million in cash,
and we recorded a pre-tax gain of $128.8 million. We
received cash proceeds of $158.9 million aft er repayment
of a lease obligation and transaction costs. In ﬁ scal 2009,
we also acquired Humm Foods, Inc. (Humm Foods), the
maker of Lärabar fruit and nut energy bars. We issued
1.8 million shares of our common stock with a value of
$55.0 million to the shareholders of Humm Foods as con-
sideration for the acquisition. We recorded the purchase
price less tangible and intangible net assets acquired as
goodwill of $41.6 million. Th e pro forma eﬀ ect of this
acquisition was not material.

NOTE 4. RESTRUCTURING, IMPAIRMENT, AND OTHER
EXIT COSTS

We view our restructuring activities as a way to meet
our long-term growth targets. Activities we undertake
must meet internal rate of return and net present value
targets. Each restructuring action normally takes one to
two years to complete. At completion (or as each major
stage is completed in the case of multi-year programs),
the project begins to deliver cash savings and/or reduced
depreciation. Th ese activities result in various restruc-
turing costs, including asset write-offs, exit charges

Annual Report 2011 53

In ﬁ scal 2010, we decided to exit our kids’ refriger-
ated yogurt beverage product line at our Murfreesboro,
Tennessee plant and our microwave soup product line
at our Vineland, New Jersey plant to rationalize capac-
ity for more profitable items. Our decisions to exit
these U.S. Retail segment products resulted in a $24.1
million non-cash charge against the related long-lived
assets. No employees were aﬀ ected by these actions.
We also decided to exit our breadcrumbs product line
at our Federalsburg, Maryland facility in our Bakeries
and Foodservice segment. As a result of this decision,
we concluded that the future cash ﬂ ows generated by
these products were insuﬃ cient to recover the net book
value of the associated long-lived assets. Accordingly,
we recorded a non-cash charge of $6.2 million primarily
related to the impairment of these long-lived assets and
in the fourth quarter of ﬁ scal 2010, we sold our bread-
crumbs manufacturing facility in Federalsburg for $2.9
million. In ﬁ scal 2010, we also recorded a $0.6 million
net gain on the sale of our previously closed Contagem,
Brazil bread and pasta plant for cash proceeds of $5.9
million, and recorded $1.7 million of costs related to pre-
viously announced restructuring actions. In ﬁ scal 2010,
we paid $8.0 million in cash related to restructuring
actions taken in ﬁ scal 2010 and previous years.

In fiscal 2009, we recorded restructuring, impair-
ment, and other exit costs pursuant to approved plans
as follows:

Expense, in Millions

Closure of Contagem, Brazil bread and pasta plant

$16.8

Discontinuation of product line at

Murfreesboro, Tennessee plant

Charges associated with restructuring

actions previously announced

Total

8.3

16.5

$41.6

including severance, contract termination fees, and
decommissioning and other costs. Depreciation associ-
ated with restructured assets, as used in the context of
our disclosures regarding restructuring activity, refers to
the increase in depreciation expense caused by shorten-
ing the useful life or updating the salvage value of depre-
ciable ﬁ xed assets to coincide with the end of production
under an approved restructuring plan. Any impairment
of the asset is recognized immediately in the period the
plan is approved.

In ﬁ scal 2011, we recorded restructuring, impairment,
and other exit costs pursuant to approved plans as
follows:

Expense, in Millions

Discontinuation of underperforming

product line in our U.S. Retail segment

Charges associated with restructuring

actions previously announced

Total

$1.7

2.7

$4.4

In ﬁ scal 2011, we decided to exit an underperform-
ing product line in our U.S. Retail segment. As a result
of this decision, we concluded that the future cash
ﬂ ows generated by this product line were insuﬃ cient
to recover the net book value of the associated long-
lived assets. Accordingly, we recorded a non-cash charge
of $1.7 million related to the impairment of the associ-
ated long-lived assets. No employees were aﬀ ected by
these actions. In addition, we recorded $2.7 million of
charges associated with restructuring actions previously
announced. In ﬁ scal 2011, we paid $5.9 million in cash
related to restructuring actions taken in ﬁ scal 2011 and
previous years.

In ﬁ scal 2010, we recorded restructuring, impairment,
and other exit costs pursuant to approved plans as
follows:

Expense (Income), in Millions

Discontinuation of kids’ refrigerated yogurt

beverage and microwave soup product lines

$24.1

Discontinuation of the breadcrumbs product

line at Federalsburg, Maryland plant

Sale of Contagem, Brazil bread and pasta plant

Charges associated with restructuring

actions previously announced

Total

6.2

(0.6)

1.7

$31.4

54 General Mills

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

Results from our CPW and HDJ joint ventures are

reported for the 12 months ended March 31.

Joint venture balance sheet activity follows:

Contract
Severance Termination

Other
Exit
Costs

Total

In Millions

Reserve balance as of

May 25, 2008

$ 7.6

$ —

$ 0.3 $ 7.9

2009 charges, including

foreign currency translation

5.5

10.3

—

15.8

Cumulative investments

Goodwill and other intangibles

Aggregate advances

May 29,

2011

May 30,
2010

$519.1

$398.1

597.1

293.3

512.6

238.2

Utilized in 2009

Reserve balance as of

May 31, 2009

(4.7)

—

(0.2) (4.9)

Joint venture earnings and cash ﬂ ow activity follows:

8.4

10.3

0.1 18.8

Fiscal Year

In Millions

2011

2010

2009

Sales to joint ventures

$10.2

$ 10.7

$14.2

Net advances (repayments)

Dividends received

1.8

72.7

128.1

88.0

(8.2)

68.5

Summary combined ﬁ nancial information for the joint

ventures on a 100 percent basis follows:

In Millions

Net sales

Gross margin

Fiscal Year

2011

2010

2009

$2,444.9

$2,360.0 $2,280.0

1,066.3

1,053.2

873.5

Earnings before income taxes

Earnings aft er income taxes

233.4

164.2

251.2

234.7

202.3

175.3

In Millions

Current assets

Noncurrent assets

Current liabilities

Noncurrent liabilities

May 29,

2011

May 30,
2010

$ 904.7

$ 731.7

1,138.0

907.3

1,690.1

1,322.0

103.3

112.1

2010 charges, including
foreign currency translation 0.2

0.8

— 1.0

Utilized in 2010

(6.0)

(3.0)

— (9.0)

Reserve balance as of

May 30, 2010

2011 charges, including

2.6

8.1

0.1 10.8

foreign currency translation

—

Utilized in 2011

(0.9)

(2.6)

(0.1) (3.6)

Reserve balance as of

May 29, 2011

$ 1.7

$ 5.5

$ — $ 7.2

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

NOTE 5. INVESTMENTS IN JOINT VENTURES

We have a 50 percent equity interest in Cereal Partners
Worldwide (CPW), which manufactures and markets
ready-to-eat cereal products in more than 130 countries
and republics outside the United States and Canada.
CPW also markets cereal bars in several European coun-
tries and manufactures private label cereals for cus-
tomers in the United Kingdom. We have guaranteed a
portion of CPW’s debt and its pension obligation in the
United Kingdom.

We also have a 50 percent equity interest in Häagen-
Dazs Japan, Inc. (HDJ). Th is joint venture manufactures,
distributes, and markets Häagen-Dazs ice cream prod-
ucts and frozen novelties.

Annual Report 2011 55

NOTE 6. GOODWILL AND OTHER
INTANGIBLE ASSETS

Th e changes in the carrying amount of goodwill for

ﬁ scal 2009, 2010, and 2011 are as follows:

Bakeries

Th e components of goodwill and other intangible assets
are as follows:

May 29,

2011

May 30,
2010

$6,750.8

$6,592.8

In Millions

Balance as of

U.S.

Joint
Retail International Foodservice Ventures

and

Total

May 25, 2008 $5,107.0

$146.4 $955.7 $577.0 $6,786.1

Acquisition

Divestitures

Deferred tax

adjustment related

41.6

(17.8)

—

41.6

(0.1)

(23.7)

—

(41.6)

In Millions

Goodwill

Other intangible assets:

Intangible assets not subject

to amortization:

Brands

3,771.7

3,679.6

to divestitures

(46.5)

(4.5)

(12.8)

—

(63.8)

Intangible assets subject to amortization:

Patents, trademarks, and
other ﬁ nite-lived intangibles

Less accumulated amortization

69.2

(27.6)

Intangible assets subject to amortization

41.6

54.4

(19.0)

35.4

Deferred tax

adjustment resulting

from change in

acquisition-related

income tax liabilities

14.0

1.3

3.8 —

19.1

Other intangible assets

Total

3,813.3

3,715.0

$10,564.1 $10,307.8

Other activity,

primarily foreign

currency translation

—

(19.8)

—

(58.6)

(78.4)

Balance as of

May 31, 2009

5,098.3

123.3

923.0 518.4 6,663.0

Other activity,

primarily foreign

currency translation

—

(1.3)

—

(68.9)

(70.2)

Balance as of

May 30, 2010

5,098.3

122.0

923.0 449.5 6,592.8

Acquisitions

Divestitures

Other activity,

primarily foreign

44.6

—

26.9

(0.5)

—

(1.9)

—

71.5

(2.4)

currency translation —

14.2

—

74.7

88.9

Balance as of

May 29, 2011 $5,142.9

$162.6

$921.1 $524.2 $6,750.8

56 General Mills

Th e changes in the carrying amount of other intan-
gible assets for ﬁ scal 2009, 2010, and 2011 are as follows:

NOTE 7. FINANCIAL INSTRUMENTS, RISK
MANAGEMENT ACTIVITIES, AND FAIR VALUES

In Millions

Balance as of

U.S.
Retail

International

Joint
Ventures

Total

May 25, 2008

$3,175.2

$518.8

$83.2 $3,777.2

Acquisition

Other activity,

primarily foreign

19.4

—

19.4

currency translation

14.3

(56.2)

(7.7)

(49.6)

Balance as of

May 31, 2009

3,208.9

462.6

75.5 3,747.0

Other activity,

primarily foreign

Financial Instruments
Th e carrying values of cash and cash equivalents, receiv-
ables, accounts payable, other current liabilities, and
notes payable approximate fair value. Marketable secu-
rities are carried at fair value. As of May 29, 2011, and
May 30, 2010, a comparison of cost and market values of
our marketable debt and equity securities is as follows:

Cost

Market
Value

Gross
Gains

Gross
Losses

Fiscal Year

Fiscal Year Fiscal Year

In Millions

2011 2010 2011 2010 2011 2010 2011 2010

currency translation

(2.3)

(17.3)

(12.4)

(32.0)

Available for sale:

Balance as of

May 30, 2010

3,206.6

445.3

63.1 3,715.0

Acquisitions

Other activity,

primarily foreign

39.3

6.0

—

45.3

currency translation (3.4)

46.6

9.8

53.0

Balance as of

May 29, 2011

$ 3,242.5

$497.9

$72.9 $3,813.3

Debt securities

$ 8.9 $11.8 $ 9.0 $11.9 $0.1 $0.1 $—

$—

Equity securities

2.0

6.1 6.0 15.5 4.0 9.4 — —

Total

$10.9 $17.9 $15.0 $27.4 $4.1 $9.5 $— $—

Earnings include $10.5 million of realized gains from
sales of available-for-sale marketable securities. Gains
and losses are determined by specific identification.
Classiﬁ cation of marketable securities as current or non-
current is dependent upon our intended holding period,
the security’s maturity date, or both. Th e aggregate unre-
alized gains and losses on available-for-sale securities, net
of tax eﬀ ects, are classiﬁ ed in AOCI within stockholders’
equity. Scheduled maturities of our marketable securities
are as follows:

In Millions

Available for Sale

Cost

Market
Value

Under 1 year (current)

$ 2.7

From 1 to 3 years

From 4 to 7 years

Over 7 years

Equity securities

Total

0.7

5.2

0.3

2.0

$10.9

0.7

5.3

0.3

6.0

$15.0

Marketable securities with a market value of $2.3 mil-
lion as of May 29, 2011, were pledged as collateral for
certain derivative contracts.

Th e fair value and carrying amount of long-term debt,
including the current portion, were $7,164.5 million and
$6,573.8 million as of May 29, 2011. Th e fair value of
long-term debt was estimated using market quotations
and discounted cash ﬂ ows based on our current incre-
mental borrowing rates for similar types of instruments.

Annual Report 2011 57

Risk Management Activities
As a part of our ongoing operations, we are exposed
to market risks such as changes in interest rates, for-
eign currency exchange rates, and commodity prices. To
manage these risks, we may enter into various deriva-
tive transactions (e.g., futures, options, and swaps) pur-
suant to our established policies.

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

We use derivatives to manage our exposure to changes
in commodity prices. We do not perform the assess-
ments required to achieve hedge accounting for com-
modity derivative positions. Accordingly, the changes in
the values of these derivatives are recorded currently in
cost of sales in our Consolidated Statements of Earnings.
Although we do not meet the criteria for cash ﬂ ow
hedge accounting, we nonetheless believe that these
instruments are eﬀ ective in achieving our objective of
providing certainty in the future price of commodities
purchased for use in our supply chain. Accordingly, for
purposes of measuring segment operating performance
these gains and losses are reported in unallocated cor-
porate items outside of segment operating results until
such time that the exposure we are managing aﬀ ects
earnings. At that time we reclassify the gain or loss
from unallocated corporate items to segment operating
proﬁ t, allowing our operating segments to realize the
economic eﬀ ects of the derivative without experiencing
any resulting mark-to-market volatility, which remains
in unallocated corporate items.

Unallocated corporate items for ﬁ scal 2011 and ﬁ scal

2010 included:

In Millions

2011

2010

2009

Net gain (loss) on mark-to-market

valuation of commodity positions $160.3

$(54.7) $(249.6)

Fiscal Year

Net loss (gain) on commodity

positions reclassiﬁ ed from

unallocated corporate items

to segment operating proﬁ t

(93.6)

55.7

134.8

Net mark-to-market revaluation

of certain grain inventories

28.5

(8.1)

(4.1)

Net mark-to-market valuation of

certain commodity positions
recognized in unallocated

corporate items

$ 95.2

$ (7.1) $(118.9)

As of May 29, 2011, the net notional value of com-
modity derivatives was $347.5 million, of which $160.7
million related to agricultural inputs and $186.8 million
related to energy inputs. Th ese contracts relate to inputs
that generally will be utilized within the next 12 months.

Interest Rate Risk
We are exposed to interest rate volatility with regard
to future issuances of ﬁ xed-rate debt, and existing and
future issuances of ﬂ oating-rate debt. Primary expo-
sures include U.S. Treasury rates, LIBOR, and commer-
cial paper rates in the United States and Europe. We use
interest rate swaps and forward-starting interest rate
swaps to hedge our exposure to interest rate changes,
to reduce the volatility of our ﬁ nancing costs, and to
achieve a desired proportion of ﬁ xed versus ﬂ oating-rate
debt, based on current and projected market conditions.
Generally under these swaps, we agree with a counter-
party to exchange the diﬀ erence between ﬁ xed-rate and
ﬂ oating-rate interest amounts based on an agreed upon
notional principal amount.

Floating Interest Rate Exposures —Floating-to-ﬁ xed
interest rate swaps are accounted for as cash flow
hedges, as are all hedges of forecasted issuances of debt.
Eﬀ ectiveness is assessed based on either the perfectly
eﬀ ective hypothetical derivative method or changes in
the present value of interest payments on the underly-
ing debt. Eﬀ ective gains and losses deferred to AOCI are
reclassiﬁ ed into earnings over the life of the associated
debt. Ineﬀ ective gains and losses are recorded as net
interest. Th e amount of hedge ineﬀ ectiveness was less
than $1 million in each of ﬁ scal 2011, 2010 and 2009.

58 General Mills

Fixed Interest Rate Exposures — Fixed-to-ﬂ oating
interest rate swaps are accounted for as fair value
hedges with eﬀ ectiveness assessed based on changes in
the fair value of the underlying debt and derivatives,
using incremental borrowing rates currently available
on loans with similar terms and maturities. Ineﬀ ective
gains and losses on these derivatives and the underlying
hedged items are recorded as net interest. Th e amount
of hedge ineﬀ ectiveness was less than $1 million in each
of ﬁ scal 2011, 2010 and 2009.

During the fourth quarter of ﬁ scal 2011, we entered
into swaps to convert $300.0 million of 1.55 percent
ﬁ xed-rate notes due May 16, 2014, to ﬂ oating rates.
We also entered into $500.0 million of forward start-
ing swaps with an average ﬁ xed rate of 3.9 percent in
advance of a planned debt ﬁ nancing.

During the fourth quarter of ﬁ scal 2010, in advance of
a planned debt ﬁ nancing, we entered into $500.0 mil-
lion of treasury lock derivatives with an average ﬁ xed
rate of 4.3 percent. All of these treasury locks were cash
settled for $17.1 million during the ﬁ rst quarter of ﬁ scal
2011, coincident with the issuance of our $500.0 million
30-year ﬁ xed-rate notes. As of May 29, 2011, a $16.2 mil-
lion pre-tax loss remained in AOCI, which will be reclas-
siﬁ ed to earnings over the term of the underlying debt.

During the second quarter of ﬁ scal 2010 we entered
into $700.0 million of interest rate swaps to convert
$700.0 million of 5.65 percent ﬁ xed-rate notes to ﬂ oat-
ing rates. In May 2010, we repurchased $179.2 million of
our 5.65 percent notes, and as a result, we received $2.7
million to settle a portion of these swaps that related to
the repurchased debt.

In anticipation of our acquisition of Th e Pillsbury
Company (Pillsbury) and other financing needs, we
entered into pay-ﬁ xed interest rate swap contracts dur-
ing ﬁ scal 2001 and 2002 totaling $7.1 billion to lock
in our interest payments on the associated debt. Th e
remaining $1.6 billion of these pay-ﬁ xed swap contracts
along with $1.6 billion of oﬀ setting pay-ﬂ oating swaps
were cash settled for $22.3 million during the third
quarter of ﬁ scal 2011. As of May 29, 2011, a $0.5 million
pre-tax loss remained in AOCI, which will be reclassiﬁ ed
to earnings over the remaining term of the underlying
debt.

As of May 29, 2011, a $12.7 million pre-tax loss on
cash settled interest rate swaps for our $1.0 billion
10-year note issued January 24, 2007, remained in AOCI,
which will be reclassiﬁ ed to earnings over the term of
the underlying debt.

Th e following table summarizes the notional amounts
and weighted-average interest rates of our interest rate
swaps. Average ﬂ oating rates are based on rates as of
the end of the reporting period.

In Millions

May 29,
2011

May 30,
2010

Pay-ﬂ oating swaps - notional amount

$ 838.0

$ 2,155.6

Average receive rate

Average pay rate

Pay-ﬁ xed swaps - notional amount

Average receive rate

Average pay rate

Pay-ﬁ xed forward starting swaps -

1.8%

0.2%

—

4.8%

0.3%

$ 1,600.0

0.3%

7.3%

notional amount

$ 500.0

—

Th e swap contracts mature at various dates from ﬁ s-

cal 2012 to 2014 as follows:

In Millions

Pay Floating

Pay Fixed

Fiscal Year
Maturity Date

2012

2013

2014

Total

$ 3.4

$500.0

534.6

300.0

—

$838.0

$500.0

Foreign Exchange Risk
Foreign currency ﬂ uctuations aﬀ ect our net investments
in foreign subsidiaries and foreign currency cash ﬂ ows
related to foreign-denominated commercial paper, third
party purchases, intercompany loans, and product ship-
ments. We are also exposed to the translation of foreign
currency earnings to the U.S. dollar. Our principal expo-
sures are to the Australian dollar, British pound sterling,
Canadian dollar, Chinese renminbi, euro, Japanese yen,
Swiss franc, and Mexican peso. We mainly use foreign
currency forward contracts to selectively hedge our for-
eign currency cash ﬂ ow exposures. We also generally
swap our foreign-denominated commercial paper bor-
rowings and nonfunctional currency intercompany loans
back to U.S. dollars or the functional currency; the gains
or losses on these derivatives oﬀ set the foreign currency
revaluation gains or losses recorded in earnings on the
associated borrowings. We generally do not hedge more
than 18 months forward.

As of May 29, 2011, the notional value of foreign
exchange derivatives was $2,436.5 million. Th e amount
of hedge ineﬀ ectiveness was less than $1 million in each
of ﬁ scal 2011, 2010 and 2009.

Annual Report 2011 59

As discussed in Note 3, during the fourth quarter of
ﬁ scal 2011 we entered into deﬁ nitive agreements with
PAI Partners and Sodiaal International to purchase inter-
ests in Yoplait entities for $1.2 billion. To reduce the risk
of the U.S. dollar cost of the euro-denominated acquisi-
tion, we purchased call options covering €637 million at
a cost of $12.7 million. As of May 29, 2011, we recorded a
$2.2 million unrealized gain on these derivatives.

We also have many net investments in foreign sub-
sidiaries that are denominated in euros. We hedged a
portion of these net investments by issuing euro-denom-
inated commercial paper and foreign exchange forward
contracts. As of May 29, 2011, we had deferred net for-
eign currency transaction losses of $95.7 million in AOCI
associated with hedging activity.

Fair Value Measurements And
Financial Statement Presentation
We categorize assets and liabilities into one of three lev-
els based on the assumptions (inputs) used in valuing
the asset or liability. Level 1 provides the most reliable
measure of fair value, while Level 3 generally requires
signiﬁ cant management judgment. Th e three levels are
deﬁ ned as follows:

Level 1:

Level 2:

Level 3:

Unadjusted quoted prices in active mar-
kets for identical assets or liabilities.
Observable inputs other than quoted
prices included in Level 1, such as quoted
prices for similar assets or liabilities
in active markets or quoted prices for
identical assets or liabilities in inactive
markets.
Unobservable inputs reﬂ ecting manage-
ment’s assumptions about the inputs
used in pricing the asset or liability.

Th e fair values of our assets, liabilities, and derivative positions recorded at fair value as of May 29, 2011, and May

30, 2010, were as follows:

In Millions

Level 1 Level 2 Level 3

Total Level 1 Level 2 Level 3

Total

May, 29, 2011

May 29, 2011

Fair Values of Assets

Fair Values of Liabilities

Derivatives designated as hedging instruments:

Interest rate contracts (a) (b)

Foreign exchange contracts (c) (d)
Total

Derivatives not designated as hedging instruments:

Interest rate contracts (a) (b)

Foreign exchange contracts (c) (d)
Commodity contracts (c) (e)
Grain contracts (c) (e)
Total

Other assets and liabilities reported at fair value:
Marketable investments (a) (f)
Total

$ — $ 11.2

$ — $ 11.2 $ — $(21.3) $ — $(21.3)

—

10.1

—

10.1

— (14.9)

—

(14.9)

— 21.3

— 21.3 — (36.2)

— (36.2)

—

2.2

—

2.2

—

(0.9)

—

(0.9)

— 57.1

— (19.9)

—

(19.9)

14.6 16.3

—

30.9

—

— 61.1
14.6 136.7

— 61.1
— 151.3

(29.0)
—
— (49.8)

— (29.0)
— (49.8)

5.9

9.1

— 15.0

—

5.9

9.1

— 15.0

—

Total assets, liabilities, and derivative positions recorded at fair value

$20.5 $167.1

$ — $187.6 $ — $(86.0) $ — $(86.0)

60 General Mills

In Millions

Level 1 Level 2 Level 3

Total Level 1 Level 2 Level 3

Total

May, 30, 2011

May 30, 2011

Fair Values of Assets

Fair Values of Liabilities

Derivatives designated as hedging instruments:

Interest rate contracts (a) (b)

Foreign exchange contracts (c) (d)
Total

Derivatives not designated as hedging instruments:

Interest rate contracts (a) (b)

Foreign exchange contracts (c) (d)
Commodity contracts (c) (e)
Grain contracts (c) (e)
Total

Other assets and liabilities reported at fair value:
Marketable investments (a) (f)
Long-lived assets (g)
Total

$ — $ 5.8 $ — $ 5.8 $ — $ (17.1) $ — $ (17.1)

—

8.6

—

8.6

— (12.5)

—

(12.5)

— 14.4

— (29.6)

— 124.3

— (163.1)

—

9.5

7.4

—

9.5 —

(1.0)

—

(1.0)

—

7.4 (5.6)

—

(5.6)

— 11.9

—

(13.0)

— (13.0)

— 153.1

— 153.1 (5.6) (177.1)

— (182.7)

15.5 11.9

— 27.4

—

0.4

—

0.4

15.5 12.3

—

27.8

—

Total assets, liabilities, and derivative positions recorded at fair value

$15.5 $179.8 $ — $195.3 $(5.6) $(206.7) $ — $(212.3)

(a) Th ese contracts and investments are recorded as other assets or as other liabilities, as appropriate, based on whether in a gain or loss position. Certain

marketable investments are recorded as cash and cash equivalents.

(b) Based on LIBOR and swap rates.

(c) Th ese contracts are recorded as prepaid expenses and other current assets or as other current liabilities, as appropriate, based on whether in a gain or loss

position.

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

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

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

(g) We recorded a $6.6 million non-cash impairment charge in ﬁ scal 2010 to write down certain long-lived assets to their fair value of $0.4 million. Fair value
was based on recently reported transactions for similar assets in the marketplace. Th ese assets had a book value of $7.0 million and were associated with
the exit activities described in Note 4.

We did not signiﬁ cantly change our valuation techniques from prior periods.

Annual Report 2011 61

Information related to our cash ﬂ ow hedges, fair value hedges, and other derivatives not designated as hedging

instruments for the ﬁ scal years ended May 29, 2011, and May 30, 2010, follows:

In Millions

Derivatives in Cash Flow Hedging Relationships:

Amount of loss recognized in other
comprehensive income (OCI) (a)
Amount of loss reclassiﬁ ed from

AOCI into earnings (a) (b)

Amount of gain (loss) recognized

in earnings (c) (d)

Derivatives in Fair Value Hedging Relationships:
Amount of net gain recognized in earnings (e)
Derivatives Not Designated as Hedging

Instruments:

Interest Rate Foreign Exchange

Contracts

Equity
Contracts

Commodity
Contracts

Total

Fiscal Year

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

$(20.9) $(11.7) $(18.9) $(13.3)

$ — $ — $ —

$ — $(39.8) $(25.0)

(13.1) (18.0) (16.7) (26.4)

—

— (29.8) (44.4)

(0.4)

(0.3)

0.3

(0.5)

—

— (0.1)

(0.8)

0.3

0.2

—

— 0.3

0.2

Amount of gain (loss) recognized in earnings (e)

1.0

0.2 23.7 13.3

—

0.2 160.3 (54.7) 185.0 (41.0)

(a) Eﬀ ective portion.

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

contracts.

(c) All gain (loss) recognized in earnings is related to the ineﬀ ective portion of the hedging relationship. No amounts were reported as a result of being excluded

from the assessment of hedge eﬀ ectiveness.

(d) Gain (loss) recognized in earnings is reported in SG&A expenses for foreign exchange contracts.

(e) Gain (loss) recognized in earnings is reported in interest, net for interest rate contracts, in cost of sales for commodity contracts, and in SG&A expenses for

equity contracts and foreign exchange contracts.

Amounts Recorded In Accumulated Other
Comprehensive Loss
Unrealized losses from interest rate cash ﬂ ow hedges
recorded in AOCI as of May 29, 2011, totaled $30.0
million aft er tax. Th ese deferred losses are primarily
related to interest rate swaps that we entered into in
contemplation of future borrowings and other ﬁ nanc-
ing requirements and that are being reclassiﬁ ed into net
interest over the lives of the hedged forecasted transac-
tions. Unrealized losses from foreign currency cash ﬂ ow
hedges recorded in AOCI as of May 29, 2011, were $5.8
million aft er-tax. Th e net amount of pre-tax gains and
losses in AOCI as of May 29, 2011, that we expect to be
reclassiﬁ ed into net earnings within the next 12 months
is $11.7 million of expense.

Credit-Risk-Related Contingent Features
Certain of our derivative instruments contain provisions
that require us to maintain an investment grade credit
rating on our debt from each of the major credit rat-
ing agencies. If our debt were to fall below investment

grade, the counterparties to the derivative instruments
could request full collateralization on derivative instru-
ments in net liability positions. Th e aggregate fair value
of all derivative instruments with credit-risk-related
contingent features that were in a liability position on
May 29, 2011, was $6.3 million. We would be required
to post this amount of collateral to the counterparties if
the contingent features were triggered.

Concentrations Of Credit And
Counterparty Credit Risk
During ﬁ scal 2011, Wal-Mart Stores, Inc. and its aﬃ liates
(Wal-Mart) accounted for 23 percent of our consolidated
net sales and 30 percent of our net sales in the U.S. Retail
segment. No other customer accounted for 10 percent or
more of our consolidated net sales. Wal-Mart also rep-
resented 6 percent of our net sales in the International
segment and 7 percent of our net sales in the Bakeries
and Foodservice segment. As of May 29, 2011, Wal-Mart
accounted for 26 percent of our U.S. Retail receivables, 5
percent of our International receivables, and 9 percent of

62 General Mills

our Bakeries and Foodservice receivables. Th e ﬁ ve larg-
est customers in our U.S. Retail segment accounted for
53 percent of its ﬁ scal 2011 net sales, the ﬁ ve largest
customers in our International segment accounted for
24 percent of its ﬁ scal 2011 net sales, and the ﬁ ve larg-
est customers in our Bakeries and Foodservice segment
accounted for 45 percent of its ﬁ scal 2011 net sales.

We enter into interest rate, foreign exchange, and cer-
tain commodity and equity derivatives, primarily with
a diversiﬁ ed group of highly rated counterparties. We
continually monitor our positions and the credit rat-
ings of the counterparties involved and, by policy, limit
the amount of credit exposure to any one party. Th ese
transactions may expose us to potential losses due to
the risk of nonperformance by these counterparties;
however, we have not incurred a material loss. We also
enter into commodity futures transactions through vari-
ous regulated exchanges.

Th e amount of loss due to the credit risk of the coun-
terparties, should the counterparties fail to perform
according to the terms of the contracts, is $63.1 million
against which we do not hold collateral. Under the terms
of master swap agreements, some of our transactions
require collateral or other security to support ﬁ nancial
instruments subject to threshold levels of exposure and
counterparty credit risk. Collateral assets are either cash
or U.S. Treasury instruments and are held in a trust
account that we may access if the counterparty defaults.

NOTE 8. DEBT

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

May 29, 2011

May 30, 2010

Weighted-
average
Interest
Rate

Notes
Payable

Weighted-
average
Interest
Rate

Notes
Payable

In Millions

U.S. commercial paper

$192.5

0.2%

$ 973.0

0.3%

Financial institutions

118.8

11.5

77.1

10.6

Total

$311.3

4.5%

$1,050.1

1.1%

fee-paid committed credit lines, consisting of a $1.8 bil-
lion facility expiring in October 2012 and a $1.1 billion
facility expiring in October 2013. We also have $311.8 mil-
lion in uncommitted credit lines that support our foreign
operations. As of May 29, 2011, there were no amounts
outstanding on the fee-paid committed credit lines and
$118.8 million was drawn on the uncommitted lines. Th e
credit facilities contain several covenants, including a
requirement to maintain a ﬁ xed charge coverage ratio of
at least 2.5. We were in compliance with all credit facility
covenants as of May 29, 2011.

Long-Term Debt In May 2011, we issued $300.0 million
aggregate principal amount of 1.55 percent ﬁ xed-rate
notes and $400.0 million aggregate principal amount of
ﬂ oating-rate notes, both due May 16, 2014. Th e pro-
ceeds of these notes were used to repay a portion of our
outstanding commercial paper. Th e ﬂ oating-rate notes
bear interest equal to three-month LIBOR plus 35 basis
points, subject to quarterly reset. Interest on the ﬂ oating-
rate notes is payable quarterly in arrears. Interest on the
ﬁ xed-rate notes is payable semi-annually in arrears. Th e
ﬁ xed-rate notes may be redeemed at our option at any
time for a speciﬁ ed make whole amount. Th ese notes
are senior unsecured, unsubordinated obligations that
include a change of control repurchase provision.

In June 2010, we issued $500.0 million aggregate prin-
cipal amount of 5.4 percent notes due 2040. Th e pro-
ceeds of these notes were used to repay a portion of our
outstanding commercial paper. Interest on these notes
is payable semi-annually in arrears. Th ese notes may be
redeemed at our option at any time for a speciﬁ ed make
whole amount. Th ese notes are senior unsecured, unsub-
ordinated obligations that include a change of control
repurchase provision.

In May 2010, we paid $437.0 million to repurchase in a
cash tender oﬀ er $400.0 million of our previously issued
debt. We repurchased $220.8 million of our 6.0 percent
notes due 2012 and $179.2 million of our 5.65 percent
notes due 2012. We issued commercial paper to fund the
repurchase.

In January 2009, we issued $1.2 billion aggregate prin-
cipal amount of 5.65 percent notes due 2019. In August
2008, we issued $700.0 million aggregate principal
amount of 5.25 percent notes due 2013. Th e proceeds
of these notes were used to repay a portion of our out-
standing commercial paper. Interest on these notes is
payable semi-annually in arrears. Th ese notes may be
redeemed at our option at any time for a speciﬁ ed make

Annual Report 2011 63

whole amount. Th ese notes are senior unsecured, unsub-
ordinated obligations that include a change of control
repurchase provision.

Certain of our long-term debt agreements contain
restrictive covenants. As of May 29, 2011, we were in
compliance with all of these covenants.

As of May 29, 2011, the $48.4 million pre-tax loss
recorded in AOCI associated with our previously des-
ignated interest rate swaps will be reclassiﬁ ed to net
interest over the remaining lives of the hedged transac-
tions. Th e amount expected to be reclassiﬁ ed from AOCI
to net interest in ﬁ scal 2012 is $4.3 million pre-tax.
A summary of our long-term debt is as follows:

In Millions

May 29, 2011

May 30, 2010

5.65% notes due February 15, 2019

$1,150.0

6% notes due February 15, 2012

5.7% notes due February 15, 2017

5.2% notes due March 17, 2015

5.25% notes due August 15, 2013

5.65% notes due September 10, 2012

5.4% notes due June 15, 2040

1.55% notes due May 16, 2014

Floating-rate notes due May 16, 2014

Medium-term notes, 0.1% to 6.5%,

1,019.5

1,000.0

750.0

700.0

520.8

500.0

300.0

400.0

1,019.5

1,000.0

750.0

700.0

520.8

—

due ﬁ scal 2012 or later

204.4

Debt of consolidated contract manufacturer

15.0

Other, including capital leases

14.1

20.9

10.2

Less amount due within one year

(1,031.3)

(107.3)

Total long-term debt

$5,542.5

$5,268.5

6,573.8

5,375.8

Principal payments due on long-term debt in the next
ﬁ ve years based on stated contractual maturities, our
intent to redeem, or put rights of certain note holders
are $1,031.3 million in ﬁ scal 2012, $733.6 million in ﬁ scal
2013, $1,402.6 million in ﬁ scal 2014, $750.1 million in ﬁ s-
cal 2015, and less than $1 million in ﬁ scal 2016.

NOTE 9. NONCONTROLLING INTERESTS

Our principal noncontrolling interest relates to our sub-
sidiary General Mills Cereals, LLC (GMC). GMC issued
a managing membership interest and limited preferred
membership interests to certain of our wholly owned
subsidiaries. We continue to hold the entire managing
membership interest, and therefore direct the opera-
tions of GMC. We currently hold all interests in GMC
other than Class A Limited Membership Interests (Class
A Interests) which are held by an unrelated third-party
investor. As of May 29, 2011, the carrying value of all
outstanding Class A Interests was $242.3 million, clas-
siﬁ ed as noncontrolling interests on our Consolidated
Balance Sheets.

Th e holder of the Class A Interests receives quarterly
preferred distributions from available net income based
on the application of a ﬂ oating preferred return rate,
currently equal to the sum of three-month LIBOR plus
65 basis points, to the holder’s capital account balance
established in the most recent mark-to-market valuation
(currently $248.1 million).

For ﬁ nancial reporting purposes, the assets, liabili-
ties, results of operations, and cash ﬂ ows of GMC are
included in our Consolidated Financial Statements. Th e
return to the third-party investor is reﬂ ected in net
earnings attributable to noncontrolling interests in the
Consolidated Statements of Earnings.

In addition, we have seven foreign subsidiaries that
have minority interests totaling $4.4 million as of May
29, 2011.

Our noncontrolling interests contain restrictive cov-
enants. As of May 29, 2011, we were in compliance with
all of these covenants.

64 General Mills

NOTE 10. STOCKHOLDERS’ EQUITY

In Millions

Pretax

Tax

Net

Fiscal 2010

Cumulative preference stock of 5.0 million shares, with-
out par value, is authorized but unissued.

During ﬁ scal 2011, we repurchased 31.8 million shares
of common stock for an aggregate purchase price of
$1,163.5 million. During ﬁ scal 2010, we repurchased 21.3
million shares of common stock for an aggregate pur-
chase price of $691.8 million. During ﬁ scal 2009, we
repurchased 40.4 million shares of common stock for an
aggregate purchase price of $1,296.4 million.

On June 28, 2010, our Board of Directors authorized
the repurchase of up to 100 million shares of our com-
mon stock. Purchases under the authorization can be
made in the open market or in privately negotiated
transactions, including the use of call options and other
derivative instruments, Rule 10b5-1 trading plans, and
accelerated repurchase programs. Th e authorization has
no speciﬁ ed termination date.

Net earnings attributable

to General Mills

Net earnings attributable

to noncontrolling interests

Net earnings, including

earnings attributable to

noncontrolling interests

$1,530.5

4.5

$1,535.0

Other comprehensive income (loss):

Foreign currency translation

$(163.3) $

— $ (163.3)

Net actuarial loss

(786.3) 314.8

(471.5)

Other fair value changes:

Securities

1.9

(0.7)

1.2

Hedge derivatives

(25.0)

10.6

(14.4)

Reclassiﬁ cation to earnings:

Hedge derivatives

44.4

(17.0)

27.4

Amortization of losses

and prior service costs

19.1

(7.6)

11.5

Other comprehensive income

Th e following table provides details of total compre-

(loss) in accumulated

hensive income:

other comprehensive loss

(909.2) 300.1

(609.1)

In Millions

Pretax

Tax

Net

Fiscal 2011

Other comprehensive loss

attributable to

noncontrolling interests

0.2

—

0.2

Other comprehensive income (loss) $(909.0) $300.1 $ (608.9)

Total comprehensive income

$ 926.1

Net earnings attributable

to General Mills

Net earnings attributable

to noncontrolling interests

Net earnings, including

earnings attributable to

noncontrolling interests

$1,798.3

5.2

$1,803.5

Other comprehensive income (loss):

Foreign currency translation

$358.3 $ — $ 358.3

Net actuarial gain

93.5

(32.4)

61.1

Other fair value changes:

Securities
Hedge derivatives

Reclassiﬁ cation to earnings:

(5.8)
(39.8)

2.2
14.4

(3.6)
(25.4)

Hedge derivatives

29.8

(11.3)

18.5

Amortization of losses and

prior service costs

108.7

(41.5)

67.2

Other comprehensive income

(loss) in accumulated

other comprehensive loss

544.7

(68.6)

476.1

Other comprehensive income

attributable to

noncontrolling interests

0.7

—

0.7

Other comprehensive income (loss) $545.4 $(68.6) $ 476.8

Total comprehensive income

$2,280.3

Annual Report 2011 65

In Millions

Pretax

Tax

Net

Foreign currency translation adjustments $ 553.2

$ 194.9

Fiscal 2009

In Millions

May 29, 2011

May 30, 2010

Net earnings attributable

to General Mills

Net earnings attributable

to noncontrolling interests

Net earnings, including

earnings attributable to

noncontrolling interests

Unrealized gain (loss) from:

$ 1,304.4

Securities

Hedge derivatives

9.3

Pension, other postretirement,

and postemployment beneﬁ ts:

Net actuarial loss

$ 1,313.7

Prior service costs

2.0

(35.8)

5.6

(28.9)

(1,509.5)

(1,611.0)

(20.7)

(47.5)

Other comprehensive income (loss):

Accumulated other comprehensive loss

$(1,010.8)

$(1,486.9)

Foreign currency translation

$ (286.6) $

— $ (286.6)

Net actuarial loss

(1,254.0) 477.8

(776.2)

Other fair value changes:

Securities

Hedge derivatives

Reclassiﬁ cation to earnings:

(0.6)

0.2

8.0

(3.4)

(0.4)

4.6

Hedge derivatives

(11.9)

4.6

(7.3)

Amortization of losses

and prior service costs

24.2

(9.2)

15.0

Other comprehensive income

(loss) in accumulated

other comprehensive loss

(1,520.9) 470.0 (1,050.9)

Other comprehensive

income attributable to

noncontrolling interests

(1.2)

—

(1.2)

Other comprehensive

income (loss)

$(1,522.1) $470.0 $(1,052.1)

Total comprehensive income

$ 261.6

During ﬁ scal 2009, we incurred unrecognized losses
in excess of $1.1 billion on assets, primarily equity secu-
rities, in our deﬁ ned beneﬁ t pension and other postre-
tirement beneﬁ t plans. Th ese losses were recognized in
other comprehensive income. In ﬁ scal 2010 and future
years, the losses are reﬂ ected in pension expense using
the market-related value of the plan assets over a ﬁ ve
year period and amortized using a declining balance
method over the average remaining service period of
active plan participants.

In ﬁ scal 2011, 2010, and 2009, except for reclassiﬁ -
cations to earnings, changes in other comprehensive
income (loss) were primarily non-cash items.

Accumulated other comprehensive loss balances, net

of tax eﬀ ects, were as follows:

NOTE 11. STOCK PLANS

We use broad-based stock plans to help ensure that man-
agement’s interests are aligned with those of our stock-
holders. As of May 29, 2011, a total of 16,942,290 shares
were available for grant in the form of stock options,
restricted shares, restricted stock units, and shares of
common stock under the 2009 Stock Compensation
Plan (2009 Plan) and the 2006 Compensation Plan
for Non-Employee Directors (2006 Director Plan). Th e
2009 Plan also provides for the issuance of cash-settled
share-based units. Stock-based awards now outstanding
include some granted under the 1995, 1996, 1998 (senior
management), 1998 (employee), 2001, 2003, 2005, and
2007 stock plans and the Executive Incentive Plan (EIP),
under which no further awards may be granted. Th e
stock plans provide for full vesting of options, restricted
shares, restricted stock units, and cash-settled share-
based units upon completion of speciﬁ ed service peri-
ods or in certain circumstances, following a change of
control.

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

Fiscal Year

2011

2010

2009

Estimated fair values of

stock options granted

$ 4.12

$3.20

$4.70

Assumptions:

Risk-free interest rate

2.9%

3.7%

4.4%

Expected term

8.5 years

Expected volatility

18.5%

18.9%

16.1%

Dividend yield

3.0%

3.4%

2.7%

66 General Mills

Th e valuation of stock options is a signiﬁ cant account-
ing estimate that requires us to use judgments and
assumptions that are likely to have a material impact
on our ﬁ nancial statements. Annually, we make predic-
tive assumptions regarding future stock price volatility,
employee exercise behavior, dividend yield, and the for-
feiture rate.

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

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

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

Information on stock option activity follows:

Weighted-
average
Exercise

Weighted-
average
Exercise
Exercisable Price Per Outstanding Price Per
Share
(Th ousands)

(Th ousands)

Options

Balance as of

May 25, 2008

76,389.2 $21.23 106,042.4 $22.68

Granted

Exercised

Forfeited or expired

Balance as of

6,495.4

31.74

(17,548.4)

19.60

(382.4)

27.50

May 31, 2009

67,619.2

21.96

94,607.0

23.84

Granted

Exercised

Forfeited or expired

Balance as of

6,779.4

27.99

(20,013.6)

19.87

(268.2)

24.82

May 30, 2010

47,726.6

22.89

81,104.6

25.17

Granted

Exercised

Forfeited or expired

Balance as of

5,234.3

37.38

(18,665.4)

22.59

(126.2)

31.26

May 29, 2011

39,221.7 $23.78

67,547.3 $26.82

Stock-based compensation expense related to stock
option awards was $26.8 million in ﬁ scal 2011, $34.4 mil-
lion in ﬁ scal 2010, and $40.0 million in ﬁ scal 2009.

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

In Millions

2011

2010

2009

Fiscal Year

Net cash proceeds

Intrinsic value of

$410.4

$388.5

$305.9

options exercised

$275.6

$271.8

$226.7

Annual Report 2011 67

Restricted Stock, Restricted Stock Units, and Cash-
Settled Share-Based Units Stock and units settled in
stock subject to a restricted period and a purchase price,
if any (as determined by the Compensation Committee
of the Board of Directors), may be granted to key
employees under the 2009 Plan. Certain restricted stock
and restricted stock unit awards require the employee
to deposit personally owned shares (on a one-for-one
basis) during the restricted period. Restricted stock and

restricted stock units generally vest and become unre-
stricted four years aft er the date of grant. Participants
are entitled to dividends on such awarded shares and
units, but only receive those amounts if the shares or
units vest. Th e sale or transfer of these shares and units
is restricted during the vesting period. Participants hold-
ing restricted stock, but not restricted stock units, are
entitled to vote on matters submitted to holders of com-
mon stock for a vote.

Information on restricted stock unit and cash-settled share-based units activity follows:

Equity Classiﬁ ed

Liability Classiﬁ ed

Share-
Settled
Units
(Th ousands)

Weighted-
Average
Grant-Date
Fair Value

Share-
Settled
Units
(Th ousands)

Weighted-
Average
Grant-Date
Fair Value

Cash-Settled
Share-Based
Units
(Th ousands)

Weighted-
Average
Grant-Date
Fair Value

Non-vested as of May 30, 2010

Granted

Vested

Forfeited or expired

Non-vested as of May 29, 2011

10,209.8

2,406.7

(3,161.0)

(285.6)

9,169.9

$28.49

35.47

26.46

31.61

$30.92

424.3

127.7

(78.1)

(36.7)

437.2

$28.64

37.40

29.02

30.04

$31.01

3,703.7

1,217.2

(245.2)

(160.6)

$29.65

37.40

31.33

31.36

4,515.1

$31.58

In Millions

Number of units granted (thousands)

Weighted average price per unit

Fiscal Year

2011

2010

2009

3,751.6

4,745.7

4,348.0

$36.16

$28.03

$31.70

68 General Mills

Th e total grant-date fair value of restricted stock unit
awards that vested during ﬁ scal 2011 was $93.6 million,
and $26.1 million vested during ﬁ scal 2010.

As of May 29, 2011, unrecognized compensa-
tion expense related to non-vested stock options and
restricted stock units was $170.7 million. Th is expense
will be recognized over 19 months, on average.

Stock-based compensation expense related to
restricted stock units and cash-settled share-based pay-
ment awards was $141.2 million for ﬁ scal 2011, $131.0
million for ﬁ scal 2010, and $101.4 million for ﬁ scal 2009.

NOTE 12. EARNINGS PER SHARE

Basic and diluted earnings per share (EPS) were calcu-
lated using the following:

In Millions, Except per Share Data

2011

2010

2009

Net earnings attributable

to General Mills

$1,798.3 $1,530.5 $1,304.4

Fiscal Year

Average number of common

shares - basic EPS
Incremental share eﬀ ect from: (a)
Stock options

Restricted stock, restricted

642.7

659.6

663.7

16.6

17.7

17.9

stock units, and other

5.5

6.0

5.5

Average number of

common shares - diluted EPS

664.8

683.3

687.1

Earnings per share - basic

Earnings per share - diluted

$2.80

$2.70

$2.32

$1.96

$2.24

$1.90

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

In Millions

2011

2010

2009

Anti-dilutive stock options

and restricted stock units

4.8

6.3

14.2

Fiscal Year

NOTE 13. RETIREMENT BENEFITS AND
POSTEMPLOYMENT BENEFITS

Deﬁ ned Beneﬁ t Pension Plans We have deﬁ ned beneﬁ t
pension plans covering most United States, Canadian,
and United Kingdom employees. Beneﬁ ts for salaried
employees are based on length of service and ﬁ nal aver-
age compensation. Beneﬁ ts for hourly employees include
various monthly amounts for each year of credited ser-
vice. Our funding policy is consistent with the require-
ments of applicable laws. We made $200.0 million of
voluntary contributions to our principal domestic plans
in ﬁ scal 2011. We do not expect to be required to make
any contributions in ﬁ scal 2012. Our principal domestic
retirement plan covering salaried employees has a provi-
sion that any excess pension assets would be allocated
to active participants if the plan is terminated within ﬁ ve
years of a change in control.

Other Postretirement Beneﬁ t Plans We also sponsor
plans that provide health care beneﬁ ts to the majority
of our United States and Canadian retirees. Th e salaried
health care beneﬁ t plan is contributory, with retiree con-
tributions based on years of service. We make decisions
to fund related trusts for certain employees and retirees
on an annual basis. We did not make voluntary contribu-
tions to these plans in ﬁ scal 2011 or ﬁ scal 2010.

Health Care Cost Trend Rates Assumed health care
cost trends are as follows:

Fiscal Year

2011

2010

Health care cost trend rate for next year

8.5%

9.0%

Rate to which the cost trend rate is

assumed to decline (ultimate rate)
Year that the rate reaches the

5.2%

ultimate trend rate

2019

We review our health care cost trend rates annu-
ally. Our review is based on data we collect about our
health care claims experience and information provided
by our actuaries. Th is information includes recent plan
experience, plan design, overall industry experience
and projections, and assumptions used by other simi-
lar organizations. Our initial health care cost trend rate
is adjusted as necessary to remain consistent with this
review, recent experiences, and short-term expectations.
Our initial health care cost trend rate assumption is 8.5
percent for all retirees. Rates are graded down annually

Annual Report 2011 69

until the ultimate trend rate of 5.2 percent is reached in
2019 for all retirees. Th e trend rates are applicable for
calculations only if the retirees’ beneﬁ ts increase as a
result of health care inﬂ ation. Th e ultimate trend rate
is adjusted annually, as necessary, to approximate the
current economic view on the rate of long-term inﬂ ation
plus an appropriate health care cost premium. Assumed
trend rates for health care costs have an important
eﬀ ect on the amounts reported for the other postretire-
ment beneﬁ t plans.

A one percentage point change in the health care cost

trend rate would have the following eﬀ ects:

In Millions

One
Percentage
Point
Increase

One
Percentage
Point
Decrease

Eﬀ ect on the aggregate of the service and

interest cost components in ﬁ scal 2012

$ 6.2

$ (5.4)

Eﬀ ect on the other postretirement

accumulated beneﬁ t obligation as of

May 29, 2011

82.4

(73.6)

Th e Patient Protection and Aﬀ ordable Care Act, as
amended by the Health Care and Education Reconciliation
Act of 2010 (collectively, the Act) was signed into law in
March 2010. Th e Act codiﬁ es health care reforms with
staggered eﬀ ective dates from 2010 to 2018. Estimates
of the future impacts of several of the Act’s provisions
are incorporated into our postretirement beneﬁ t liability
including the elimination of lifetime maximums and the
imposition of an excise tax on high cost health plans.
Th ese changes resulted in a $24.0 million increase in our
postretirement beneﬁ t liability in ﬁ scal 2010.

Postemployment Beneﬁ t Plans Under certain circum-
stances, we also provide accruable beneﬁ ts to former
or inactive employees in the United States, Canada,
and Mexico, and members of our Board of Directors,
including severance and certain other benefits pay-
able upon death. We recognize an obligation for any
of these beneﬁ ts that vest or accumulate with service.
Postemployment beneﬁ ts that do not vest or accumulate
with service (such as severance based solely on annual
pay rather than years of service) are charged to expense
when incurred. Our postemployment beneﬁ t plans are
unfunded.

We use our ﬁ scal year end as the measurement date
for our deﬁ ned beneﬁ t pension and other postretirement
beneﬁ t plans.

70 General Mills

Summarized ﬁ nancial information about deﬁ ned beneﬁ t pension, other postretirement, and postemployment ben-

eﬁ ts plans is presented below:

In Millions

Change in Plan Assets:

Deﬁ ned Beneﬁ t
Pension Plans

Fiscal Year

Other
Postretirement
Beneﬁ t Plans

Fiscal Year

Postemployment
Beneﬁ t Plans

Fiscal Year

2011

2010

2011

2010

2011

2010

Fair value at beginning of year

$3,529.8 $3,157.8

$ 284.3 $ 235.6

Actual return on assets

Employer contributions

Plan participant contributions

Beneﬁ ts payments

Foreign currency
Fair value at end of year

Change in Projected Beneﬁ t Obligation:

688.9

535.9

220.7

17.1

4.1

3.5

(188.2)

(182.6)

8.7

(1.9)
$4,264.0 $3,529.8

60.7

0.1

11.8

(3.1)

—

41.0

0.1

11.3

(3.7)

—

$ 353.8 $ 284.3

Beneﬁ t obligation at beginning of year

$4,030.0 $3,167.3

$1,060.6 $ 852.0

$ 130.3 $ 112.5

Service cost

Interest cost

Plan amendment

Curtailment/other

Plan participant contributions

Medicare Part D reimbursements

Actuarial loss (gain)

Beneﬁ ts payments

Foreign currency

101.4

70.9

230.9

230.3

—

4.1

—

25.8

—

3.5

—

18.7

60.1

(35.3)

—

12.9

61.6

7.5

—

11.8

11.3

4.5

4.7

271.2

716.4

2.0

168.1

(188.2)

(182.6)

(56.9)

(57.5)

9.0

(1.6)

0.3

—

8.0

5.1

—

4.2

—

(0.5)

(16.1)

0.3

7.2

5.6

—

10.6

—

11.8

(17.6)

0.2

Projected beneﬁ t obligation at end of year

$4,458.4 $4,030.0

$1,065.8 $1,060.6

$ 131.3

$ 130.3

Plan assets less than beneﬁ t

obligation as of ﬁ scal year end

$ (194.4) $ (500.2)

$ (712.0) $ (776.3)

$(131.3)

$(130.3)

Th e accumulated beneﬁ t obligation for all deﬁ ned beneﬁ t pension plans was $3,991.6 million as of May 29, 2011,

and $3,620.3 million as of May 30, 2010.

Amounts recognized in AOCI as of May 29, 2011, and May 30, 2010, are as follows:

Deﬁ ned Beneﬁ t
Pension Plans

Fiscal Year

Other
Postretirement
Beneﬁ t Plans

Fiscal Year

Postemployment
Beneﬁ t Plans

Fiscal Year

Total

Fiscal Year

In Millions

2011

2010

2011

2010

2011

2010

2011

2010

Net actuarial loss

$(1,313.9) $(1,369.9)

$(181.3)

$(225.2)

$(14.3)

$(15.9) $(1,509.5) $(1,611.0)

Prior service (costs) credits

(35.8)

(41.3)

20.7

1.0

(5.6)

(7.2)

(20.7)

(47.5)

Amounts recorded in accumulated

other comprehensive loss

$(1,349.7) $(1,411.2)

$(160.6)

$(224.2)

$(19.9)

$(23.1)

$(1,530.2) $(1,658.5)

Annual Report 2011 71

Plans with accumulated beneﬁ t obligations in excess of plan assets are as follows:

Deﬁ ned Beneﬁ t
Pension Plans

Fiscal Year

Other
Postretirement
Beneﬁ t Plans

Fiscal Year

Postemployment
Beneﬁ t Plans

Fiscal Year

In Millions

2011

2010

2011

2010

2011

2010

Projected beneﬁ t obligation

Accumulated beneﬁ t obligation

Plan assets at fair value

$335.1

$299.6

— $

—

280.6

252.5

1,065.8 1,060.6

131.3

130.3

9.0

17.3

353.8 284.3

—

Components of net periodic beneﬁ t expense (income) are as follows:

Deﬁ ned Beneﬁ t
Pension Plans

Fiscal Year

Other
Postretirement
Beneﬁ t Plans

Fiscal Year

Postemployment
Beneﬁ t Plans

Fiscal Year

2011

2010

2009

2011

2010

2009

2011

2010

2009

In Millions

Service cost

Interest cost

$ 101.4 $ 70.9 $ 76.5

$ 18.7

$ 12.9

$ 14.2

230.9

230.3

215.4

60.1

61.6

61.2

Expected return on plan assets

(408.5)

(400.1)

(385.8)

Amortization of losses

81.4

8.4

7.8

(33.2)

14.4

(29.2)

2.0

(30.0)

7.2

$ 8.0

5.1

—

2.1

$ 7.2

5.7

—

1.0

$ 6.5

4.9

—

1.0

Amortization of prior service

costs (credits)

Other adjustments

Net expense (income)

9.0

—

6.9

—

7.4

—

(0.6)

(1.6)

(1.4)

—

2.4

4.2

2.4

10.6

2.2

8.4

$ 14.2 $ (83.6) $ (78.7)

$ 59.4

$ 45.7

$ 51.2

$ 21.8

$ 26.9

$ 23.0

We expect to recognize the following amounts in net periodic beneﬁ t expense (income) in ﬁ scal 2012:

In Millions

Amortization of losses

Amortization of prior service costs (credits)

Deﬁ ned Beneﬁ t
Pension Plans

Other
Postretirement
Beneﬁ t Plans

Fiscal Year

Postemployment
Beneﬁ t Plans

Fiscal Year

2011

2010

2011

2010

2011

2010

5.45%

5.85%

5.35%

5.80%

4.77%

5.12%

4.92

4.93

—

4.92

4.93

Discount rate

Rate of salary increases

72 General Mills

Weighted-average assumptions used to determine ﬁ scal year net periodic beneﬁ t expense (income) are as follows:

Deﬁ ned Beneﬁ t
Pension Plans

Fiscal Year

Other
Postretirement
Beneﬁ t Plans

Fiscal Year

Postemployment
Beneﬁ t Plans

Fiscal Year

2011

2010

2009

2011

2010

2009

2011

2010

2009

Discount rate

5.85%

7.49%

6.88%

5.80%

7.45%

6.90%

5.12%

7.06%

6.64%

Rate of salary increases

4.93

4.92

4.93

—

4.93

Expected long-term rate of

return on plan assets

9.53

9.55

9.33

9.35

—

Discount Rate Our discount rate assumptions are deter-
mined annually as of the last day of our ﬁ scal year for
our deﬁ ned beneﬁ t pension, other postretirement, and
postemployment beneﬁ t plan obligations. We also use
the same discount rates to determine deﬁ ned beneﬁ t
pension, other postretirement, and postemployment
beneﬁ t plan income and expense for the following ﬁ s-
cal year. We work with our actuaries to determine the
timing and amount of expected future cash outﬂ ows to
plan participants and, using the top quartile of AA-rated
corporate bond yields, to develop a forward interest rate

curve, including a margin to that index based on our
credit risk. Th is forward interest rate curve is applied to
our expected future cash outﬂ ows to determine our dis-
count rate assumptions.

Fair Value of Plan Assets We categorize plan assets
with a three level fair value hierarchy as described in
Note 7. Th e fair values of our pension and postretire-
ment beneﬁ t plans assets at May 29, 2011, and May 30,
2010, by asset category were as follows:

In Millions

Level 1

Level 2

Level 3

Total Assets

May 29, 2011

Fair value measurement of pension plan assets:
Equity (a)
Fixed income (b)
Real asset investments (c)
Other investments (d)
Cash and accruals

$ 1,052.5

$ 900.2

$ 568.5

$ 2,521.2

794.7

113.0

—

155.9

174.4

95.2

52.2

—

0.2

356.9

0.3

—

969.3

565.1

52.5

155.9

Total fair value measurement of pension plan assets

$ 2,116.1

$ 1,222.0

$925.9

$4,264.0

Fair value measurement of postretirement beneﬁ t plan assets:
Equity (a)
Fixed income (b)
Real asset investments (c)
Other investments (d)
Cash and accruals

$ 13.5

$ 131.0

26.3

$ 170.8

1.8

—

20.4

55.9

7.2

83.9

—

0.2

13.6

—

57.9

20.8

83.9

20.4

Fair value measurement of postretirement beneﬁ t plan assets

$ 35.7

$ 278.0

$ 40.1

$ 353.8

Annual Report 2011 73

In Millions

Level 1

Level 2

Level 3

Total Assets

May 30, 2010

Fair value measurement of pension plan assets:
Equity (a)
Fixed income (b)
Real asset investments (c)
Other investments (d)
Cash and accruals

$ 744.5

$ 716.6

$ 512.8

$ 1,973.9

700.0

72.4

—

158.9

206.0

75.8

39.9

—

3.9

298.7

0.3

—

909.9

446.9

40.2

158.9

Total fair value measurement of pension plan assets

$ 1,675.8

$ 1,038.3

$ 815.7

$ 3,529.8

Fair value measurement of postretirement beneﬁ t plan assets:
Equity (a)
Fixed income (b)
Real asset investments (c)
Other investments (d)
Cash and accruals

$10.1

1.1

0.1

—

28.4

81.4

46.1

3.7

71.4

—

25.7

1.7

14.6

—

117.2

48.9

18.4

71.4

28.4

Fair value measurement of postretirement beneﬁ t plan assets

$ 39.7

$ 202.6

$ 42.0

$ 284.3

(a) Primarily publicly traded common stock and private equity partnerships for purposes of total return and to maintain equity exposure consistent with
policy allocations. Investments include: i) United States and international equity securities, mutual funds and equity futures valued at closing prices from
national exchanges; and ii) commingled funds, privately held securities and private equity partnerships valued at unit values or net asset values provided
by the investment managers, which are based on the fair value of the underlying investments. Various methods are used to determine fair values and may
include the cost of the investment, most recent ﬁ nancing, and expected cash ﬂ ows. For some of these investments, realization of the estimated fair value is
dependent upon transactions between willing sellers and buyers.

(b) Primarily government and corporate debt securities for purposes of total return and managing ﬁ xed income exposure to policy allocations. Investments
include: i) ﬁ xed income securities and bond futures generally valued at closing prices from national exchanges, ﬁ xed income pricing models and/or inde-
pendent ﬁ nancial analysts; and ii) ﬁ xed commingled funds valued at unit values provided by the investment managers, which are based on the fair value
of the underlying investments.

(c) Publicly traded common stock and limited partnerships in the energy and real estate sectors for purposes of total return. Investments include: i) energy
and real estate securities generally valued at closing prices from national exchanges; and ii) commingled funds, private securities, and limited partnerships
valued at unit values or net asset values provided by the investment managers, which are generally based on the fair value of the underlying investments.

(d) Global balanced fund of equity, ﬁ xed income and real estate securities for purposes of meeting Canadian pension plan asset allocation policies and insurance
and annuity contracts for purposes of providing a stable stream of income for retirees and to fund postretirement medical beneﬁ ts. Fair values are derived
from unit values provided by the investment managers, which are generally based on the fair value of the underlying investments and contract fair values
from the providers.

74 General Mills

Th e following table is a roll forward of the Level 3 investments of our pension and postretirement beneﬁ t plan

assets during the years ended May 29, 2011, and May 30, 2010:

In Millions

Pension beneﬁ t plan assets:

Equity

Fixed income

Real asset investments

Other investments

Balance as of
May 30, 2010

Transfers
In/(Out)

Fiscal 2011

Purchases, Sales
Issuances, and
Settlements (Net)

Net Balance as of
Gain May 29, 2011

$512.8

3.9

298.7

0.3

$2.4

(0.9)

—

$(48.1)

$101.4

$568.5

(4.3)

16.0

—

1.5

0.2

42.2

356.9

—

0.3

Fair value activity of pension level 3 plan assets

$815.7

$1.5

$(36.4)

$145.1

$925.9

Postretirement beneﬁ t plan assets:

Equity

Fixed income

Real asset investments

25.7

1.7

14.6

$ —

—

$ (3.7)

$ 4.3

$ 26.3

(1.5)

(2.2)

—

1.2

0.2

13.6

Fair value activity of postretirement beneﬁ t level 3 plan assets:

$ 42.0

$ —

$ (7.4)

$ 5.5

$ 40.1

In Millions

Pension beneﬁ t plan assets:

Equity

Fixed income

Real asset investments

Other investments

Fiscal 2010

Balance as of
May 31, 2009

Transfers
In/(Out)

Purchases, Sales
Issuances, and

Net Balance as of
Settlements (Net) Gain/(Loss) May 30, 2010

$423.9

$ —

$ 17.0

$ 71.9

$512.8

4.2

275.2

0.5

—

(1.2)

25.0

(0.3)

0.9

(1.5)

0.1

3.9

298.7

0.3

Fair value activity of pension level 3 plan assets

$703.8

$ —

$ 40.5

$ 71.4

$815.7

Postretirement beneﬁ t plan assets:

Equity

Fixed income

Real asset investments

$ 23.8

$ —

$ (1.5)

$ 3.4

$ 25.7

1.5

17.0

—

(0.6)

0.2

(1.8)

1.7

14.6

Fair value activity of postretirement beneﬁ t level 3 plan assets:

$ 42.3

$ —

$ (2.1)

$ 1.8

$ 42.0

Th e net change in Level 3 assets attributable to unre-
alized gains at May 29, 2011, were $96.8 million for our
pension plan assets, and $1.9 million for our postretire-
ment plan assets.

Expected Rate of Return on Plan Assets Our expected
rate of return on plan assets is determined by our
asset allocation, our historical long-term investment

performance, our estimate of future long-term returns
by asset class (using input from our actuaries, invest-
ment services, and investment managers), and long-
term inﬂ ation assumptions. We review this assumption
annually for each plan, however, our annual investment
performance for one particular year does not, by itself,
signiﬁ cantly inﬂ uence our evaluation.

Annual Report 2011 75

Other

Deﬁ ned
Beneﬁ t
Pension

Postretirement Medicare Postemployment
Beneﬁ t
Subsidy
Beneﬁ t Plans
Plans
Plans Gross Payments Receipts

In Millions

2012

2013

2014

2015

2016

$ 204.8

$ 58.6

$ 5.0

213.8

223.3

233.2

243.8

62.6

64.6

66.6

39.6

5.5

6.0

6.5

7.1

2017-2021

1,402.3

387.7

38.9

$18.4

17.3

16.3

15.1

14.4

66.6

Deﬁ ned Contribution Plans Th e General Mills Savings
Plan is a deﬁ ned contribution plan that covers domestic
salaried, hourly, nonunion, and certain union employees.
Th is plan is a 401(k) savings plan that includes a num-
ber of investment funds, including a Company stock
fund and an Employee Stock Ownership Plan (ESOP).
We sponsor another money purchase plan for certain
domestic hourly employees with net assets of $18.1 mil-
lion as of May 29, 2011, and $16.8 million as of May
30, 2010. We also sponsor deﬁ ned contribution plans
in many of our foreign locations. Our total recognized
expense related to deﬁ ned contribution plans was $41.8
million in ﬁ scal 2011, $64.5 million in ﬁ scal 2010, and
$59.5 million in ﬁ scal 2009.

We matched a percentage of employee contributions
to the General Mills Savings Plan with a base match
plus a variable year-end match that depended on annual
results. Eﬀ ective April 1, 2010, the company match is
directed to investment options of the participant’s
choosing. Prior to April 1, 2010, the company match was
invested in Company stock in the ESOP. Th e number of
shares of our common stock allocated to participants in
the ESOP was 11.2 million as of May 29, 2011, and 11.9
million as of May 30, 2010.

Th e ESOP’s only assets are our common stock and
temporary cash balances. Th e ESOP’s share of the total
deﬁ ned contribution expense was $53.7 million in ﬁ s-
cal 2010 and $50.6 million in ﬁ scal 2009. Th e ESOP’s
expense was calculated by the “shares allocated” method.
Th e Company stock fund and the ESOP held $648.1
million and $610.3 million of Company common stock as
of May 29, 2011, and May 30, 2010.

Weighted-average asset allocations for the past two
ﬁ scal years for our deﬁ ned beneﬁ t pension and other
postretirement beneﬁ t plans are as follows:

Deﬁ ned Beneﬁ t
Pension Plans