General
Mills
Annual Report 2012
Generating
Balanced Growth
Generating Balanced Growth
Our brands compete in large and growing food categories
that are on-trend with consumer tastes around the world.
We’re investing in our established brands while also developing
new products. And we’re building our business in developed
markets while increasing our presence in emerging markets
worldwide. Our goal is to generate balanced, long-term growth.
General Mills at a Glance
U.S. Retail
Net Sales by Division
$10.5 Billion
23% Big G Cereals
20% Meals
18% Pillsbury USA
15% Snacks
14% Yoplait USA
8% Baking Products
2% Small Planet Foods
2%
8%
23%
20%
10%
43%
International
Net Sales by Region
$4.2 Billion
43% Europe
24% Asia/Pacific
23% Canada
10% Latin America
18%
23%
14%
15%
Bakeries and Foodservice
Net Sales by
Customer Type
12%
30%
$2.0 Billion
58% Bakeries & National
Restaurant Accounts
30% Foodservice Distributors
12% Convenience Stores
Joint Ventures
Net Sales by Joint Venture
(not consolidated,
proportionate share)
58%
$1.3 Billion
84% Cereal Partners
Worldwide (CPW)
16% Häagen-Dazs Japan (HDJ)
24%
16%
84%
Our Fiscal 2012 Financial Highlights
In millions, except per share and
return on capital data
Net Sales
Segment Operating Profita
Net Earnings Attributable to General Mills
Diluted Earnings per Share (EPS)
Adjusted Diluted EPS, Excluding Certain Items
Affecting Comparability b
52 weeks
ended
May 27, 2012
52 weeks
ended
May 29, 2011
$ 16,658
$ 14,880
3,012
1,567
2.35
2,946
1,798
2.70
2.56
2.48
Change
+ 12%
+ 2
– 13
– 13
+ 3
Return on Average Total Capital a
12.7%
13.8% –110 basis pts.
Average Diluted Shares Outstanding
667
665
Dividends per Share
$ 1.22
$ 1.12
+ 0
+ 9
Net Sales
Dollars in millions
Segment Operating Profita
Dollars in millions
12
11
10
09
08
16,658
14,880
14,636
14,556
13,548
12
11
10
09
08
3,012
2,946
2,840
2,624
2,394
Adjusted Diluted Earnings per Shareb
Dollars
Return on Average Total Capitala
Percent
12
11
10
09
08
2.56
2.48
2.30
1.99
1.76
12
11
10
09
08
a See page 85 for discussion of non-GAAP measures.
b Results exclude certain items affecting comparability. See page 85 for discussion of non-GAAP measures.
12.7
13.8
13.8
12.3
11.8
1
To our Shareholders
Ken Powell
Chairman and
Chief Executive Officer
I appreciate this opportunity to give you an update on
General Mills’ recent business performance and our plans
for continuing growth in the years ahead.
Fiscal 2012 was characterized by the highest input-
cost inflation that we’ve experienced in more than
three decades. Our supply chain costs — primarily
food ingredients and energy — rose more than
10 percent during the year ended May 27, 2012.
This sharp inflation, roughly double the average
annual inflation rate we use for long-term planning
assumptions, restrained our earnings growth for the
year. In addition, slow economic recovery kept many
consumer budgets under pressure. In this environ-
ment, we took strategic actions that increased our
worldwide sales base and strengthened our portfolio.
In particular, we increased advertising and media
investment on our base business, we sustained a high
level of new product activity worldwide, and we made
several acquisitions that expand our participation in
fast-growing food categories and emerging markets
around the globe. We also took restructuring actions
designed to improve our organizational effectiveness
and alignment on key growth strategies.
General Mills’ net sales grew 12 percent in fiscal
2012 to reach $16.7 billion. The international Yoplait
yogurt business that we acquired in July 2011
contributed 7 points of net sales growth, and sales
for our base business grew 5 percent. Segment oper-
ating profit increased 2 percent to exceed $3 billion
for the first time in company history. Profits grew
at a slower rate than sales primarily due to the
2
higher input costs, the change in our business mix
to include the Yoplait acquisition, and an 8 percent
increase in worldwide advertising and media invest-
ment supporting our brands.
Diluted earnings per share (EPS) of $2.35 were below
prior-year results primarily due to changes in mark-
to-market valuation of certain commodity positions in
both years, as well as restructuring charges recorded
in the fourth quarter of fiscal 2012. Adjusted diluted
EPS, which excludes restructuring expense, mark-
to-market effects, and certain other items affecting
comparability of results, totaled $2.56 in 2012
compared to $2.48 a year ago.
Net Sales Performance
Operating Segment/Division
2012 Net Sales % Change
International Segment*
Bakeries and Foodservice Segment
U.S. Retail Segment
Small Planet Foods
Snacks
Big G Cereals
Pillsbury USA
Baking Products
Meals
Yoplait USA
+ 45
+ 8
+ 3
+ 19
+ 15
+ 4
+ 3
+ 3
Flat
– 5
* Does not include the impact of foreign currency translation. See page 85 of our
2012 Annual Report for a reconciliation to reported results.
General Mills Dividends per Share
Dollars
Returns to Shareholders
Percent growth, stock price change plus reinvested dividends
1.32
Fiscal 2012
1.22
1.12
3
0.96
1
13
12
11
10
09
08
0.86
0.78
New Annualized Rate
GIS
S&P 500 Index
S&P Packaged Foods Index
Last 4 Fiscal Years
(compound annual return)
1
9
10
10
Results for our U.S. Retail segment reflected the
challenging packaged foods industry environment.
Branded and private label food manufacturers
increased prices last year across many grocery cate-
gories to partially offset higher input costs, and food
industry volumes were weaker as a result. Our 2012
U.S. Retail net sales grew 3 percent to $10.5 billion,
but volume as measured in pounds declined
6 percent. Segment operating profit of $2.3 billion
was 2 percent below year-ago levels, reflecting
higher input costs, lower volume, and a 5 percent
increase in advertising and media expense.
New products generated 5 percent of U.S. Retail
segment sales in 2012, with particularly strong
contributions from Fiber One 90-calorie brownie
snack bars, Peanut Butter Multi Grain Cheerios
cereal, and Yoplait yogurt and granola parfaits. Each
of our U.S. Retail divisions generated net sales that
matched or exceeded year-ago levels, with the excep-
tion of Yoplait USA, where lower volumes on certain
established product lines offset strong growth by
Yoplait Go-GURT and Yoplait Greek yogurt varieties.
We increased our share of retail dollar sales in several
key product categories. In particular, our U.S. cereal
market share grew for the fifth consecutive year, and
exceeds 31 percent of category sales. Our share of the
$3.2 billion grain snacks category increased by nearly
5 percentage points to 36 percent.
Our Bakeries and Foodservice segment competes
primarily in U.S. channels for food eaten away
from home. While foodservice industry trends
were generally weak in 2012, reflecting the broader
economic climate, our Bakeries and Foodservice net
sales grew 8 percent to $2.0 billion. This included
growth in sales to foodservice distributors and
operators, to convenience stores, and to bakery and
national restaurant accounts. As anticipated, segment
operating profit of $287 million was below unusually
strong year-ago levels.
Sales and profit results for our International segment
included 10 months of contribution from the
acquired Yoplait international business. Net sales
grew 46 percent in 2012 to reach $4.2 billion. Foreign
currency translation contributed 1 point of sales
growth. Excluding currency effects, sales essentially
doubled in Europe and rose 28 percent in Canada,
reflecting the acquisition. Net sales grew 17 percent
in the Asia/Pacific region and 14 percent in Latin
America. International segment operating profit
grew 47 percent to reach $430 million. Excluding
the Yoplait acquisition, our International segment net
sales and profit still grew at double-digit rates.
Our Cereal Partners Worldwide (CPW) and Häagen-
Dazs Japan (HDJ) joint ventures generated a combined
$88 million in after-tax earnings in 2012. This was
below 2011 levels primarily due to higher effective tax
rates and a particularly difficult operating environ-
ment for HDJ following the March 2011 earthquakes
and tsunami. Our 50 percent share of combined
CPW and HDJ net sales, which is not consolidated
in General Mills results, rose 5 percent to nearly
$1.3 billion.
3
Annual Report 2012 Input Cost Inflation
Percent
Gross Margin
Percent of net sales
–3
10
12
11
09
08
10
4
9
7
12
11
10
09
08
36.3
40.0
39.6
35.6
35.5
Our input costs rose more than
10 percent in fiscal 2012, the highest
increase we’ve seen in years. We
were able to offset some, but not all,
of that cost increase through Holistic
Margin Management (HMM), our
companywide productivity initiative.
Our financial results in fiscal 2012 build on a track
record of consistent growth in recent years. Since
2007, General Mills’ net sales and segment operating
profit have both grown at a 6 percent compound
annual rate. And our adjusted diluted EPS (this
measure excludes certain items affecting compa-
rability of results) has increased at a 10 percent
compound rate. These results meet or exceed our
targets for long-term growth, shown below.
General Mills Long-term Growth Model
Growth Factor
Net Sales
Segment Operating Profit
Compound Annual Growth Target
Low single-digit
Mid single-digit
Adjusted Diluted Earnings per Share
High single-digit
Dividend Yield
Total Return to Shareholders
2 to 3 percent
Double-digit
In fiscal 2012, total return to General Mills share-
holders through stock price performance and
dividends was 3 percent. This was below the return
generated by our peer group of packaged food compa-
nies, and below our long-term target for shareholder
returns, but it was above the return generated by
the broader market in 2012. As shown in the chart
on the previous page, over the past four fiscal years,
General Mills has delivered a double-digit compound
annual return to shareholders — superior performance
over a challenging period for the capital markets.
Returns to General Mills shareholders in fiscal 2013
will include the 8 percent dividend increase we
4
announced in June 2012, to a new annualized rate
of $1.32 per share. General Mills and its predecessor
firm have now paid dividends without interruption or
reduction for 113 years. We see dividend growth over
time as an important component of our value creation
for shareholders.
Looking Ahead, our Goal is to Continue Generating
Balanced Growth
As we begin our 2013 fiscal year, our goal is to
generate continued growth, balanced across several
key dimensions.
• We want to generate growth in our core, devel-
oped markets — while we expand our business in
emerging markets worldwide.
• We target sales and earnings growth from estab-
lished brands — and we launch new items that we
believe can become consumer favorites over time.
• We build plans to drive growth in traditional
grocery stores — and in the many other retail
formats selling food today.
• Our marketing plans include strong investment in
traditional media — but we’re also investing in new
digital and social media applications.
• And we build plans designed to generate growth in
the current year — and over the long term.
In recent years, we’ve worked to shift General
Mills’ business mix beyond the U.S. to participate
General Mills A Selection of our New Products Launched in 2012
in faster-growing markets worldwide. We’ve made
good progress and in 2012, a full 25 percent of our
sales came from outside the U.S. This doesn’t include
the growing sales of our international joint ventures
(which are not consolidated), or the fiscal 2013 Yoki
Alimentos S.A. acquisition in Brazil. Including joint
venture sales, international operations generate
roughly 30 percent of the total. We expect our inter-
national businesses to lead the company’s growth in
the years ahead.
We plan to generate ongoing sales and profit increases
by keeping our key established brands vital and
growing. We’ll also introduce brand extensions
and new items that we believe can become sustaining
consumer favorites. You can see several of our recent
introductions pictured above, and you’ll find others
throughout our annual report. Targeted acquisi-
tions are part of our growth plan, too. I’ve already
mentioned the Yoplait international business, and
Yoki in Brazil. We also have added the Food Should
Taste Good line of wholesome salty snacks to our
U.S. portfolio, and the Parampara Foods meal starters
business in India.
In total, we expect to generate good growth in sales
and operating profit in 2013. Cost savings from
Holistic Margin Management (HMM) initiatives are
expected to offset the 2 to 3 percent inflation we’ve
forecast for this year. Our plan also includes invest-
ments to fuel longer-term growth. These include
strong investment in marketing and merchandising
for our U.S. yogurt business, where we have
lagged the rapid growth of the new Greek segment
of the market. We’ll also make investments behind
the Yoplait business in Canada that we will run
beginning this fall. And we are investing in develop-
ment activities to accelerate our growth in emerging
markets, particularly China. We believe this balanced
approach — targeting growth in the current year, and
over the longer term — serves our company and our
shareholders well.
A Note of Thanks
Our company’s growth and success is the product of
34,500 talented employees around the world. I’ll close
this letter by thanking General Mills people across
our organization for all that you do, every day, to
build our company. I’d particularly like to acknowl-
edge John Machuzick, Senior Vice President and
President of our Bakeries and Foodservice business,
who retired this summer following a distinguished
34-year career with General Mills.
I’d also like to thank you for your investment in
General Mills. We appreciate your confidence in our
business and its prospects, and we look forward to
reporting on our continuing growth.
Kendall J. Powell
Chairman and Chief Executive Officer
August 2, 2012
5
Annual Report 2012 Refrigerated Yogurt
As of July 2011, we market Yoplait yogurt
globally in partnership with Sodiaal, a
dairy cooperative in France. Our other
yogurt brands include Liberté in North
America and Mountain High in the U.S.
Generating
Balanced
Growth
General Mills now has five global product platforms that account for
more than 60 percent of our net sales. We’re building these platforms
in our core, developed markets and in emerging markets worldwide.
France
United states
Throughout the years, we’ve
taken a balanced approach to
growing our business. By inno-
vating on well-established brands
like Cheerios, Yoplait and Nature
Valley, we’ve kept them vibrant
and growing. At the same time,
we’ve introduced new brands
that meet changing consumer
needs, like Fiber One cereals and
snacks, Cascadian Farm organic
cereals and Wanchai Ferry frozen
Chinese cuisine.
We’re growing our brands in
markets around the world. Ten
years ago, 10 percent of our
sales were generated outside of
the U.S. Today, approximately
30 percent of our sales come
from non-U.S. markets, including
our proportionate share of joint
venture sales. While the U.S.
remains a very attractive — and
growing — core market, we’ve
been increasing our presence
in emerging markets where a
growing middle class is creating
heightened demand for conve-
nient food products. For example,
our net sales in China are
growing at a double-digit rate,
approaching $550 million in fiscal
2012. We also have a small but
fast-growing business in India,
and we recently acquired the Yoki
food business in Brazil.
We’ll continue to drive growth in
fiscal 2013 and beyond by focusing
6
General Mills Super-premium Ice Cream
Our Häagen-Dazs brand is available in
more than 80 countries, including China.
Category
Ready Meals
Yogurt
Ice Cream
Our Global Businesses Compete in
Large and Growing Food Categories
2011 Retail Sales Percent
in Billions Growth*
+ 4
$93
Ready-to-eat Cereal
Snack Bars
$73
$69
$25
$11
+ 7
+ 5
+ 5
+ 6
Source: Euromonitor 2011
*Projected five-year compound growth rate
aUstralia
china
brazil
Wholesome Snack Bars
Nature Valley and Cascadian Farm granola
bars, Fiber One bars and Lärabar fruit and
nut bars are nutritious snack choices.
Convenient Meals
Our Old El Paso, Wanchai Ferry, Progresso
and Helper brands give consumers great
options for a quick and easy meal.
on our five global platforms shown
here. The categories where these
businesses compete are large, and
growing at mid- to high-single-
digit rates worldwide. You can
read more about how we are
building our global businesses on
the following pages.
General Mills Fiscal 2012
Worldwide Net Sales*
Ready-to-eat Cereal*
Convenient Meals
Refrigerated Yogurt
Wholesome Snack Bars
Super-premium Ice Cream*
All Other Businesses
* Includes our proportionate
share of joint venture net sales.
7
Annual Report 2012
Building our Brands in the U.S.
The ready-to-eat cereal category generates $10 billion in retail sales in
the U.S. We’ve increased our dollar share of the category in each of the
last five years.
Growing Cereal Sales
Around the World
High in nutrition and
low in calories, ready-
to-eat cereal is a
great food choice for
consumers everywhere.
We’re generating good sales
growth by expanding many of
our established cereal brands.
In the U.S., effective advertising
and a new peanut butter flavor
drove 21 percent retail sales
growth for Multi Grain Cheerios.
Retail sales for Cascadian Farm
organic cereals grew 19 percent in
2012, including new varieties of
America’s No. 1 granola brand.
Cereal eaten away from home is
a growth opportunity for us, too.
For example, breakfast programs
in U.S. schools have increased at
a 5 percent compound rate over
the past three years. Our sales in
this channel are outpacing that
growth, and we are the cereal
market leader in U.S. school
breakfast programs.
Our cereal brands also have great
growth opportunities outside the
U.S. In Canada, Chocolate Cheerios
and gluten-free varieties of Chex
cereals contributed to 4 percent
constant-currency net sales
growth for our cereal business in
this market. Cereal Partners
Worldwide (CPW), our joint
venture with Nestlé, has been
showing good growth in developed
8
General Mills Innovating in Cereal Markets Worldwide
In Canada, our cereal business gained 2 points of market
share in 2012. Cereal Partners Worldwide, our joint venture
with Nestlé, is the No. 2 cereal company outside North
America, with a 23 percent value share.
Spain 1.8
Poland 1.3
Russia 0.3
Brazil 0.2
Turkey 0.2
Source: Euromonitor 2011
Cereal Consumption per Capita
Annual kilograms per person
United Kingdom
7.3
Australia
Canada
4.8
4.7
United States
4.1
Mexico
2.8
France 1.8
cereal markets, such as Australia,
the UK and France. And CPW
holds leading share positions in
emerging markets, such as Russia
and Turkey.
Per capita cereal consumption is
growing in markets around the
world, yet consumption is still
quite low in many countries. So
we see great growth opportunities
ahead for our cereal brands.
Fitness is CPW’s largest
brand. It is performing well in
emerging markets, like Turkey,
as we emphasize the weight
management benefits of this
great-tasting cereal.
9
Annual Report 2012 Broadening our International Snacks Portfolio
Wholesome snack bars are an $11 billion category worldwide. In the
U.S., we’ve gained more than 10 points of market share over the past
five years, and we’re expanding our brands in markets around the world.
Fast-growing
Wholesome Options
Healthy snack bars
and yogurt are large,
fast-growing food
categories in markets
around the world.
Retail sales for the wholesome
snack bar category are projected
to grow at a 6 percent compound
rate worldwide over the next five
years. Our Nature Valley granola
bars are available in nearly
80 markets today. We continue to
enter new countries and introduce
new varieties, like Nature Valley
Protein bars, with 10 grams of
protein per serving. In the U.S.,
90-calorie Fiber One brownies
generated more than $100 million
in retail sales in their first year.
And new sweet and salty über
bars extend our Lärabar brand of
natural fruit and nut bars.
Yogurt is a $73 billion global
category, and sales are projected
to grow at a 7 percent pace, as
yogurt consumption is still devel-
oping in many markets around the
world. We’ve marketed Yoplait
yogurt in the U.S. since 1977,
focusing on a variety of segments,
such as light yogurt and offerings
for kids. In 2013, we have more
innovation coming, including a
100-calorie Yoplait Greek yogurt
and multipacks of Trix yogurt for
kids. We’re also expanding
Mountain High all-natural yoghurt
into more U.S. retail outlets.
10
General Mills Building our U.S. and European Yogurt Brands
Our yogurt business generates $1.4 billion in net sales in the
U.S. alone. In addition, we have more than $1 billion in net sales
in international markets.
Yogurt Consumption per Capita
Annual kilograms per person
France
Ireland
Canada
12.3
11.7
United Kingdom
9.8
Australia
9.7
20.3
United States 6.6
Brazil 6.0
Russia 4.4
China 2.6
India 0.4
Source: Euromonitor 2011
In Europe, we posted sales and
share gains with innovation on
yogurt brands like Calin and Perle
de Lait. And in Canada, retail
sales for Liberté are growing
at a 50 percent pace, making
it a leader in the Greek yogurt
segment. We’ll expand this brand
in the U.S. in 2013.
With our broad snack and yogurt
portfolio, we like the growth pros-
pects for our brands in these fast-
growing, good-for-you categories.
Retail sales for Yoplait
Go-GURT yogurt in a tube
grew 11 percent in fiscal
2012 with more new flavors
popular with kids.
11
Annual Report 2012 Our Convenient Meals Span the Globe
The global convenient meals category is projected to grow at a
4 percent pace. We compete in many markets with products like
Hamburger Helper in the U.S., Wanchai Ferry dumplings in China,
and Pasta Master entrées in Australia.
Convenience for Dinner
and Dessert
As the middle class
expands in markets
around the world, the
demand for convenient,
great-tasting foods will
continue to grow.
The convenient meals category
generates more than $90 billion in
worldwide retail sales. Families
in 60 markets enjoy Old El Paso
Mexican meal kits — net sales for
12
this brand are greater outside
the U.S. than in the U.S., and
since 2008, they’ve been growing
at a 5 percent compound rate
internationally on a constant-
currency basis. In China, net sales
for Wanchai Ferry frozen foods
increased 14 percent in 2012. We
see opportunities to expand the
brand into additional cities across
China and additional markets in
Southeast Asia.
In the U.S., retail sales for Progresso
soup grew 8 percent in 2012. In
2013, watch for new flavors of
Light soups and Progresso Recipe
Starters cooking sauces.
Ice cream is a $69 billion global
category, projected to grow at
a 5 percent pace. Net sales for
Häagen-Dazs have been growing
faster, up 16 percent in fiscal
2012 on a constant-currency
basis. In Europe, new Häagen-
Dazs Secret Sensations ice cream
cups with liquid centers contrib-
uted to 6 percent sales growth for
General Mills Expanding the Great Taste of Häagen-Dazs
Consumers in more than 80 countries enjoy Häagen-Dazs
super-premium ice cream at home or in our upscale shops.
Häagen-Dazs is the world’s No. 1 ice cream brand.
General Mills Net Sales in Greater China*
Constant currency, dollars in millions, percent growth
12
11
10
09
22
19
15
19
*Estimated net sales converting local currency data
at a fixed exchange rate.
the brand in that market. And
in China, our sales grew more
than 30 percent as we opened
nearly 50 new shops. We’ll
open another 50 shops there in
fiscal 2013.
The worldwide growth of the
convenient meals and ice cream
categories provides great opportu-
nities for our brands.
China is the largest
international market for
Häagen-Dazs ice cream.
In our shops, we offer
a tantalizing array of ice
cream treats.
13
Annual Report 2012 Building our Brand Portfolio
We build our brands by investing
in product development and
impactful consumer marketing
initiatives, and by expanding our
portfolio through acquisitions.
We leverage this portfolio strength
as we partner with our customers
to generate sales and profit growth.
New product development and
improvements on established
brands are vital to our growth.
Health and nutrition benefits are a
key focus of our product improve-
ment efforts. In 2012, 68 percent
of our U.S. Retail sales volume
came from products that we’ve
improved in recent years.
We support established and new
brands with strong levels of media
spending. Over the past five years,
our worldwide advertising and
media expense has grown at
a double-digit rate, reaching
$914 million in 2012. Investments
in new digital media and in
vehicles targeted at multicultural
consumers have been growing at
the fastest rates.
Research and Development Expense
Dollars in millions
12
11
10
09
08
245
235
218
208
205
14
General Mills We’ve made several strategic acqui-
sitions that position us for future
growth. In July 2011, we acquired
a controlling interest in Yoplait
S.A.S. to market Yoplait yogurt
around the world. We have agreed
to assume the Yoplait license in
Canada in September 2012, and
we have reacquired the license
in Ireland. We acquired Food
Should Taste Good, a U.S.-based
wholesome snack producer and
Parampara Foods meal starters in
India. And in early fiscal 2013,
we acquired Yoki Alimentos S.A.
in Brazil.
Our portfolio of leading brands
makes us an important supplier
to food retailers worldwide. In
the U.S., General Mills accounts
for about 3 percent of total food
and beverage sales, with the
majority of those sales coming
from traditional grocery stores.
Our sales in nontraditional retail
outlets, such as club, drug and
discount stores, are growing
faster than in traditional outlets.
In international markets, we hold
leading positions in key growth
categories. We’ll continue to
partner with all of our retail and
foodservice customers to generate
growth for their businesses and
ours.
Companywide Media Investment
Dollars in millions
12
11
10
09
08
914
844
909
732
587
Our Sales Growth in U.S. Channels
3-year compound annual deliveries
percent growth, fiscal 2009–2012
Natural/Organic Stores
Small Format
Convenience Stores
Club Stores
Supercenters
Traditional Grocery
+LSD
+HSD
+HSD
+MSD
DD = Double-digit; HSD = High single-digit;
MSD = Mid single-digit; LSD = Low single-digit
+DD
+DD
15
Annual Report 2012 Board of Directors
As of August 2, 2012
William T. Esrey1, 3*
Chairman of the
Board, Spectra
Energy Corp.
(natural gas infra-
structure provider)
and Chairman
Emeritus, Sprint
Nextel Corporation
(telecommunica-
tions systems)
Raymond V.
Gilmartin2, 4*
Retired Chairman,
President and Chief
Executive Officer,
Merck &
Company, Inc.
(pharmaceuticals)
Judith Richards
Hope1*, 5
Distinguished
Visitor from
Practice and
Professor of Law,
Georgetown
University
Law Center
Heidi G. Miller3, 5
Retired President,
JPMorgan
International,
JPMorgan Chase
& Co.
(banking and
financial services)
Hilda Ochoa-
Brillembourg3, 5
Founder, President
and Chief
Executive Officer,
Strategic
Investment Group
(investment
management)
Steve Odland3, 4
Adjunct Professor,
Lynn University
College of Business
and Management
and Former
Chairman of the
Board and Chief
Executive Officer,
Office Depot, Inc.
(office products
retailer)
Kendall J. Powell
Chairman of the
Board and Chief
Executive Officer,
General Mills, Inc.
Michael D. Rose2*, 4
Retired Chairman
of the Board, First
Horizon National
Corporation
(banking and
financial services)
Robert L. Ryan1, 3
Retired Senior Vice
President and Chief
Financial Officer,
Medtronic, Inc.
(medical
technology)
Dorothy A. Terrell4, 5*
Managing Partner,
FirstCap Advisors
(venture capital)
Board Committees
1 Audit
2 Compensation
3 Finance
4 Corporate
Governance
5 Public
Responsibility
* Denotes
Committee Chair
Bradbury H.
Anderson2, 4
Retired Chief
Executive Officer
and Vice
Chairman,
Best Buy Co., Inc.
(electronics retailer)
R. Kerry Clark1, 2
Retired Chairman
and Chief Executive
Officer, 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
Senior Management
As of August 2, 2012
Mark W. Addicks
Senior Vice
President;
Chief Marketing
Officer
Michael L. Davis
Senior Vice
President,
Global Human
Resources
David E. Dudick Sr.
Senior Vice
President;
President, Bakeries
and Foodservice
Peter C. Erickson
Senior Vice
President,
Innovation,
Technology and
Quality
Olivier Faujour
Vice President;
President, Yoplait
International
Ian R. Friendly
Executive Vice
President;
Chief Operating
Officer,
U.S. Retail
Y. Marc Belton
Executive Vice
President,
Global Strategy,
Growth and
Marketing
Innovation
Kofi A. Bruce
Vice President;
Treasurer
Gary Chu
Senior Vice
President;
President,
Greater China
Juliana L. Chugg
Senior Vice
President;
President, Meals
John R. Church
Senior Vice
President,
Supply Chain
16
Jeffrey L. Harmening
Senior Vice
President;
Chief Executive
Officer,
Cereal Partners
Worldwide
David P. Homer
Senior Vice
President;
President,
General Mills
Canada
Luis Gabriel
Merizalde
Senior Vice
President;
President, Europe,
Australia and New
Zealand
Michele S. Meyer
Vice President;
President,
Small Planet Foods
Donal L. Mulligan
Executive Vice
President;
Chief Financial
Officer
James H. Murphy
Senior Vice
President;
President,
Big G Cereals
Kimberly A. Nelson
Senior Vice
President,
External Relations;
President, General
Mills Foundation
Jonathon J. Nudi
Vice President;
President,
Snacks
Christopher D.
O’Leary
Executive Vice
President;
Chief Operating
Officer,
International
Roderick A. Palmore
Executive Vice
President;
General Counsel;
Chief Compliance
and Risk
Management
Officer and
Secretary
Rebecca L. O’Grady
Vice President;
President,
Yoplait USA
Kendall J. Powell
Chairman of the
Board and Chief
Executive Officer
Shawn P. O’Grady
Senior Vice
President;
President,
Sales and Channel
Development
Ann W. H. Simonds
Senior Vice
President;
President, Baking
Christi L. Strauss
Senior Vice
President*
Anton V. Vincent
Vice President;
President,
Frozen Foods
Sean N. Walker
Senior Vice
President;
President,
Latin America
Keith A. Woodward
Senior Vice
President,
Financial
Operations
Jerald A. Young
Vice President;
Controller
* On leave of absence
General Mills 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 Reclassifications
2 Summary of Significant Accounting Policies
3 Acquisitions
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 Redeemable and Noncontrolling Interests
10 Stockholders’ Equity
11 Stock Plans
12 Earnings per Share
13 Retirement Benefits and Postemployment Benefits
14 Income Taxes
15 Leases, Other Commitments and Contingencies
16 Business Segment and Geographic Information
17 Supplemental Information
18 Quarterly Data
Glossary
Non-GAAP Measures
Total Return to Stockholders
18
19
43
45
49
49
53
53
55
55
56
62
64
65
66
69
69
77
79
80
81
82
83
85
88
Annual Report 2012
Annual Report 2012
17
17
Financial Summary
The following table sets forth selected financial data for each of the fiscal years in the five-year period ended
May 27, 2012:
In Millions, Except Per Share Data, Percentages and Ratios
2012
2011
2010
2009(a)
2008
Fiscal Year
Operating data:
Net sales
Gross margin (b)
Selling, general, and administrative expenses
Segment operating profit (c)
Divestitures (gain)
After-tax earnings from joint ventures
$ 16,657.9
$ 14,880.2
$ 14,635.6
$ 14,555.8
$ 13,548.0
6,044.7
5,953.5
5,800.2
5,174.9
4,816.2
3,380.7
3,192.0
3,162.7
2,893.2
2,566.0
3,011.6
2,945.6
2,840.5
2,624.2
2,394.4
—
88.2
(17.4)
96.4
—
101.7
(84.9)
91.9
—
110.8
Net earnings attributable to General Mills
1,567.3
1,798.3
1,530.5
1,304.4
1,294.7
Depreciation and amortization
Advertising and media expense
Research and development expense
Average shares outstanding:
Basic
Diluted
Earnings per share:
541.5
913.7
245.4
648.1
666.7
472.6
843.7
235.0
642.7
664.8
457.1
908.5
218.3
659.6
683.3
453.6
732.1
208.2
663.7
687.1
459.2
587.2
204.7
665.9
693.8
$
Basic
Diluted
$
Diluted, excluding certain items affecting comparability (c) $
2.42
2.35
2.56
$
$
$
2.80
2.70
2.48
$
$
$
2.32
2.24
2.30
$
$
$
1.96
1.90
1.99
$
$
$
1.93
1.85
1.76
Operating ratios:
Gross margin as a percentage of net sales
Selling, general, and administrative expenses as a
percentage of net sales
Segment operating profit as a percentage of net sales (c)
Effective income tax rate
Return on average total capital (b) (c)
36.3%
40.0%
39.6%
35.6%
35.5%
20.3%
18.1%
32.1%
12.7%
21.5%
19.8%
29.7%
13.8%
21.6%
19.4%
35.0%
13.8%
19.9%
18.0%
37.1%
12.3%
18.9%
17.7%
34.0%
11.8%
Balance sheet data:
Land, buildings, and equipment
Total assets
Long-term debt, excluding current portion
Total debt (b)
Redeemable interest
Noncontrolling interests
Stockholders’ equity
Cash flow data:
Net cash provided by operating activities
Capital expenditures
Net cash used by investing activities
Net cash used by financing activities
Fixed charge coverage ratio
Operating cash flow to debt ratio (b)
Share data:
Low stock price
High stock price
Closing stock price
Cash dividends per common share
Number of full- and part-time employees
$ 3,652.7
$ 3,345.9
$ 3,127.7
$ 3,034.9
$ 3,108.1
21,096.8
18,674.5
17,678.9
17,874.8
19,041.6
6,161.9
5,542.5
5,268.5
5,754.8
4,348.7
7,429.6
6,885.1
6,425.9
7,075.5
6,999.5
847.8
461.0
—
246.7
—
—
—
245.1
244.2
246.6
6,421.7
6,365.5
5,402.9
5,172.3
6,212.2
$ 2,402.0
$ 1,526.8
$ 2,181.2
$ 1,828.2
$ 1,729.9
675.9
1,870.8
661.4
6.26
32.3%
648.8
715.1
936.6
7.03
22.2%
649.9
721.2
562.6
288.9
522.0
442.4
1,503.8
1,404.5
1,093.0
6.42
33.9%
5.33
25.8%
4.91
24.7%
$
34.95
$
33.57
$
25.59
$
23.61
$
25.72
41.05
39.08
1.22
34,500
39.95
39.29
1.12
35,000
36.96
35.62
0.96
33,000
35.08
25.59
0.86
30,000
31.25
30.54
0.78
29,500
(a) Fiscal 2009 was a 53-week year; all other fiscal years were 52 weeks.
(b) See Glossary on page 83 of this report for definition.
(c) See page 85 of this report for our discussion of this measure not defined by generally accepted accounting principles.
18
General Mills
Management’s Discussion and Analysis of
Financial Condition 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 operating
profit, earnings per share (EPS), and return on average
total capital are the key measures of financial perfor-
mance for our business. See the “Non-GAAP Measures”
section on page 85 for a description of our discussion
of total segment operating profit, diluted EPS exclud-
ing certain items affecting comparability and return on
average total capital, which are not defined 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 profit;
• high single-digit annual growth in diluted EPS
excluding certain items affecting comparability; and
• improvements in return on average total capital.
We believe that this financial performance, coupled
with an attractive dividend yield, should result in long-
term value creation for stockholders. We return a sub-
stantial amount of cash to stockholders through share
repurchases and dividends.
Fiscal 2012 was a challenging year for us as well as
the rest of the food industry, as we experienced double-
digit input cost inflation and consumers were affected
by the slow economic recovery around the world. For
the fiscal year ended May 27, 2012, our net sales grew
12 percent and total segment operating profit grew 2
percent. Diluted EPS declined 13 percent and our return
on average total capital declined by 110 basis points.
Diluted EPS excluding certain items affecting compara-
bility increased 3 percent from fiscal 2011 (see the “Non-
GAAP Measures” section on page 85 for our use of this
measure and our discussion of the items affecting com-
parability). Net cash provided by operations totaled $2.4
billion in fiscal 2012, enabling us to partially fund the
acquisition of Yoplait S.A.S. and Yoplait Marques S.A.S.
and to increase our annual dividend payments per share
by 9 percent from fiscal 2011. We also made significant
capital investments totaling $676 million in fiscal 2012.
We achieved the following related to our three key
operating objectives for fiscal 2012:
• Net sales growth of 12 percent was primarily driven by
contributions from our Yoplait S.A.S. acquisition, volume
gains in our International segment, and net price realiza-
tion and mix.
• We increased marketing, merchandising, and innova-
tion investment in support of our leading brands and
continued to build our global platforms around the world.
Our global advertising and media expense increased 8
percent, including investment in our core developed mar-
kets and continued media support behind our interna-
tional Yoplait business.
• We achieved a 2 percent increase in total segment
operating profit despite the high levels of input cost
inflation. We continued to focus on our holistic mar-
gin management (HMM) program, which includes cost-
savings initiatives, marketing spending efficiencies, and
profitable sales mix strategies.
Details of our financial results are provided in the
“Fiscal 2012 Consolidated Results of Operations” section
below.
Looking ahead, we expect slow improvement in the
operating environment for food companies around
the globe. Although we believe the consumer environ-
ment will remain challenging in fiscal 2013, we expect
to deliver another year of quality growth. Excluding the
effects of our pending acquisition of Yoki Alimentos S.A.
(Yoki), we expect to achieve these results:
• We are targeting mid single-digit growth in net sales
driven by acquisitions, volume growth, mix improve-
ments, and modest net price realization.
• We have a strong line-up of consumer marketing,
merchandising, and innovation planned to support our
leading brands. We will continue to build our global plat-
forms in markets around the world, accelerating our
efforts in rapidly growing emerging markets.
• We are targeting mid single-digit growth in total seg-
ment operating profit in fiscal 2013, as we expect our
HMM discipline of cost savings, mix management, and
price realization to offset lower input cost inflation.
Our businesses generate strong levels of cash flows
and we use some of this cash to reinvest in our business.
Our fiscal 2013 plans call for approximately $650 million
of expenditures for capital projects, excluding expendi-
tures that may be required for Yoki. On June 26, 2012,
our Board of Directors approved a dividend increase to
Annual Report 2012
19
an annual rate of $1.32 per share, an 8 percent increase
from the rate paid in fiscal 2012.
We expect that share repurchases will at least offset
normal levels of stock option exercises in fiscal 2013.
Certain terms used throughout this report are defined
in a glossary on pages 83 and 84 of this report.
FISCAL 2012 CONSOLIDATED RESULTS
OF OPERATIONS
Fiscal 2012 net sales grew 12 percent to $16,658 mil-
lion. In fiscal 2012, net earnings attributable to General
Mills was $1,567 million, down 13 percent from $1,798
million in fiscal 2011, and we reported diluted EPS of
$2.35 in fiscal 2012, down 13 percent from $2.70 in fiscal
2011. Fiscal 2012 results include losses from the mark-
to-market valuation of certain commodity positions and
grain inventories versus fiscal 2011 which included gains.
Fiscal 2012 results also include restructuring charges
reflecting employee severance expense and the write-off
of certain long-lived assets related to our 2012 produc-
tivity and cost savings plan and integration costs result-
ing from the acquisitions of Yoplait S.A.S. and Yoplait
Marques S.A.S. Fiscal 2011 results include the net ben-
efit from the resolution of uncertain tax matters. Diluted
EPS excluding these items affecting comparability was
$2.56 in fiscal 2012, up 3 percent from $2.48 in fiscal
2011 (see the “Non-GAAP Measures” section on page 85
for our use of this measure and our discussion of the
items affecting comparability).
The components of net sales growth are shown in the
following table:
Cost of sales increased $1,686 million in fiscal 2012 to
$10,613 million. This increase was driven by an $877 mil-
lion increase attributable to higher volume and a $610
million increase attributable to higher input costs and
product mix. We recorded a $104 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 56 of this report, compared to a net
decrease of $95 million in fiscal 2011.
Gross margin grew 2 percent in fiscal 2012 versus fis-
cal 2011. Gross margin as a percent of net sales decreased
by 370 basis points from fiscal 2011 to fiscal 2012. This
decrease was primarily driven by higher input costs and
losses from mark-to-market valuation of certain com-
modity positions and grain inventories in fiscal 2012
versus gains in fiscal 2011.
Selling, general and administrative (SG&A) expenses
were up $189 million in fiscal 2012 versus fiscal 2011.
SG&A expenses as a percent of net sales in fiscal 2012
decreased by 1 percentage point compared to fiscal 2011.
The increase in SG&A expenses was primarily driven
by the acquisition of Yoplait S.A.S. and an 8 percent
increase in advertising and media expense.
There were no divestitures in fiscal 2012. In fiscal
2011, we recorded a net divestiture gain of $17 million
consisting of 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 million related to
the sale of a pie shell product line in our Bakeries and
Foodservice segment.
Restructuring, impairment, and other exit costs
totaled $102 million in fiscal 2012 as follows:
Components of Net Sales Growth
Contributions from volume growth (a)
Net price realization and mix
Foreign currency exchange
Net sales growth
Fiscal 2012
vs. 2011
9 pts
3 pts
Flat
12 pts
Expense, in Millions
Productivity and cost savings plan
Charges associated with restructuring actions
previously announced
Total
$ 100.6
1.0
$ 101.6
(a) Measured in tons based on the stated weight of our product shipments.
Net sales grew 12 percent in fiscal 2012, due to 9 per-
centage points of contribution from volume growth,
including 12 percentage points of volume growth con-
tributed by the acquisition of Yoplait S.A.S. Net price
realization and mix contributed 3 percentage points of
net sales growth. Foreign currency exchange was flat
compared to fiscal 2011.
In fiscal 2012, we approved a major productivity and
cost savings plan designed to improve organizational
effectiveness and focus on key growth strategies. The
plan includes organizational changes that strengthen
business alignment, and actions to accelerate adminis-
trative efficiencies across all of our operating segments
and support functions. In connection with this initia-
tive, we expect to eliminate approximately 850 posi-
tions globally and recorded a $101 million restructuring
20
General Mills
charge, consisting of $88 million of employee severance
expense and a non-cash charge of $13 million related
to the write-off of certain long-lived assets in our U.S.
Retail segment. All of our operating segments and sup-
port functions were affected by these actions including
$70 million related to our U.S. Retail segment, $12 mil-
lion related to our Bakeries and Foodservice segment,
$10 million related to our International segment, and
$9 million related to our administrative functions. We
expect to record approximately $19 million of restructur-
ing charges as a result of these actions in fiscal 2013.
These restructuring actions are expected to be com-
pleted by the end of fiscal 2014. In fiscal 2012, we paid
$4 million in cash related to restructuring actions taken
in fiscal 2012 and previous years.
Interest, net for fiscal 2012 totaled $352 million, $6
million higher than fiscal 2011. Average interest bear-
ing instruments increased $792 million in fiscal 2012,
primarily due to the acquisitions of Yoplait S.A.S. and
Yoplait Marques S.A.S., generating a $46 million increase
in net interest. The average interest rate decreased 55
basis points, including the effect of the mix of debt, gen-
erating a $40 million decrease in net interest.
Our consolidated effective tax rate for fiscal 2012 was
32.1 percent compared to 29.7 percent in fiscal 2011. The
2.4 percentage point increase was primarily due to a
$100 million reduction to tax expense recorded in fiscal
2011 related to a settlement with the Internal Revenue
Service (IRS) concerning corporate income tax adjust-
ments for fiscal years 2002 to 2008.
After-tax earnings from joint ventures for fiscal 2012
decreased to $88 million compared to $96 million in fis-
cal 2011 primarily due to higher effective tax rates as a
result of discrete tax items in fiscal 2012.
The 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 2012
vs. 2011
4 %
11
5 %
In fiscal 2012, CPW net sales grew by 4 percent due to
3 percentage points attributable to net price realization
and mix, and a 2 percentage point increase from volume,
partially offset by a 1 percentage point decrease from
unfavorable foreign currency exchange. In fiscal 2012,
net sales for HDJ increased 11 percent from fiscal 2011
due to 7 percentage points of favorable foreign currency
exchange, 3 percentage points due to an increase in vol-
ume, and 1 percentage point attributable to net price
realization and mix.
Average diluted shares outstanding increased by 2
million in fiscal 2012 from fiscal 2011, due primarily to
the issuance of common stock from stock option exer-
cises, partially offset by share repurchases.
FISCAL 2012 CONSOLIDATED BALANCE
SHEET ANALYSIS
Cash and cash equivalents decreased $148 million from
fiscal 2011, as discussed in the “Liquidity” section on
page 28.
Receivables increased $161 million from fiscal 2011 pri-
marily as a result of the acquisition of Yoplait S.A.S.
Inventories decreased $130 million from fiscal 2011
primarily as a result of inventory reduction efforts in
fiscal 2012.
Prepaid expenses and other current assets decreased
$125 million from fiscal 2011, mainly due to decreases in
derivative receivable balances.
Land, buildings, and equipment increased $307 mil-
lion from fiscal 2011, as $676 million of capital expendi-
tures and $252 million of additions from the acquisition
of Yoplait S.A.S. were partially offset by depreciation
expense of $512 million and $84 million of foreign cur-
rency translation in fiscal 2012.
Goodwill and other intangible assets increased $2,323
million from fiscal 2011 primarily due to the acquisitions
of Yoplait S.A.S. and Yoplait Marques S.A.S. We recorded
$1,617 million of goodwill and $1,108 million of other
intangible assets related to fiscal 2012 acquisitions which
were partially offset by $348 million of foreign currency
translation.
Other assets increased $3 million from fiscal 2011.
Accounts payable increased $154 million from fiscal
2011, primarily due to the acquisition of Yoplait S.A.S.
and shifts in the timing of payments.
Long-term debt, including current portion, and notes
payable increased $544 million from fiscal 2011 primarily
due to the consolidation of Yoplait S.A.S. debt of $376
million and our debt refinancing activities in fiscal 2012
The current and noncurrent portions of net deferred
income taxes liability increased $12 million from
fiscal 2011.
Annual Report 2012
21
Other current liabilities increased $105 million from
fiscal 2011, primarily driven by increases in restructuring
and other exit cost reserves and consumer marketing
accruals, partially offset by a decrease in accrued taxes.
Other liabilities increased $457 million from fiscal
2011, primarily driven by an increase of $426 million in
pension, postemployment, and postretirement liabilities.
Redeemable interest of $848 million represents the
redemption value of Sodiaal International’s (Sodiaal) 49
percent interest in Yoplait S.A.S. as of May 27, 2012.
Please refer to Note 9 to the Consolidated Financial
Statements on page 64 of this report.
Retained earnings increased $767 million from fiscal
2011, reflecting fiscal 2012 net earnings of $1,567 mil-
lion less dividends paid of $800 million. Treasury stock
decreased $33 million from fiscal 2011, due to $346 mil-
lion related to stock-based compensation plans partially
offset by $313 million of share repurchases. Additional
paid in capital decreased $11 million from fiscal 2011.
Accumulated other comprehensive loss (AOCI)
increased by $733 million after-tax from fiscal 2011, pri-
marily driven by pension and postemployment activ-
ity of $423 million and foreign currency translation of
$270 million.
Noncontrolling interests increased $214 million in
fiscal 2012 primarily due to the addition of Sodiaal’s 50
percent interest in Yoplait Marques S.A.S. Please refer to
Note 9 to the Consolidated Financial Statements on page
64 of this report.
FISCAL 2011 CONSOLIDATED RESULTS OF
OPERATIONS
Fiscal 2011 net sales grew 2 percent to $14,880 mil-
lion. Net earnings attributable to General Mills were
$1,798 million in fiscal 2011, up 18 percent from $1,530
million in fiscal 2010, and we reported diluted EPS of
$2.70 in fiscal 2011, up 20 percent from $2.24 in fiscal
2010. Fiscal 2011 results include gains from the mark-
to-market valuation of certain commodity positions
and grain inventories versus fiscal 2010 which included
losses. Fiscal 2011 results also include the net benefit
from the resolution of uncertain tax matters, and fis-
cal 2010 results include income tax expense related to
the enactment of federal health care reform. Diluted EPS
excluding these items affecting comparability was $2.48
in fiscal 2011, up 8 percent from $2.30 in fiscal 2010
(see the “Non-GAAP Measures” section on page 85 for
our use of this measure and our discussion of the items
affecting comparability).
The 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
1 pt
Flat
2 pts
(a) Measured in tons based on the stated weight of our product shipments.
Net sales grew 2 percent in fiscal 2011, due to 1 per-
centage point of contribution from volume growth and
1 percentage point of growth from net price realization
and mix. Foreign exchange was flat compared to fiscal
2010.
Cost of sales increased $91 million in fiscal 2011 to
$8,927 million. This was driven by a $157 million increase
attributable to higher net input costs and product mix
and an $84 million increase attributable to higher vol-
ume, partially offset by a $95 million net decrease in cost
of sales related to mark-to-market valuation of certain
commodity positions and grain inventories compared to
a net increase of $7 million in fiscal 2010. In fiscal 2010,
we recorded a charge of $48 million resulting from a
change in the capitalization threshold for certain equip-
ment parts.
Gross margin grew 3 percent in fiscal 2011 versus fis-
cal 2010. Gross margin as a percent of net sales increased
by 40 basis points from fiscal 2010 to fiscal 2011. These
improvements were primarily driven by gains from the
mark-to-market valuation of certain commodity posi-
tions and grain inventories in fiscal 2011 versus losses
in fiscal 2010.
Selling, general and administrative (SG&A) expenses
were up $29 million in fiscal 2011 versus fiscal 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 offset by a 7 percent decrease in advertising and
media expense. In fiscal 2010, the Venezuelan govern-
ment devalued the bolivar fuerte exchange rate against
the U.S. dollar. The $14 million foreign exchange loss
resulting from the devaluation was substantially offset
by a $13 million recovery against a corporate investment.
During fiscal 2011, we recorded a net divestiture gain
of $17 million. We recorded a gain of $14 million related
22
General Mills
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 Affordable Care Act, as
amended by Health Care and Education Reconciliation
Act of 2010). This legislation changed the tax treatment
of subsidies to companies that provide prescription drug
benefits that are at least the equivalent of benefits under
Medicare Part D (see the “Impact of Inflation” section on
page 28 for additional discussion of this legislation).
After-tax earnings from joint ventures for fiscal 2011
decreased to $96 million compared to $102 million in fis-
cal 2010. The decrease is primarily due to higher adver-
tising and media spending and increased service cost
allocations, all in CPW.
The 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
3 %
4
4 %
In fiscal 2011, CPW net sales grew by 3 percent due
to a 2 percentage point increase in volume and a 1 per-
centage point increase from favorable foreign exchange.
Net price realization and mix was flat compared to fiscal
2010. In fiscal 2011, net sales for HDJ increased 4 percent
from fiscal 2010 primarily due to 9 percentage points of
favorable foreign exchange, partially offset by a 5 per-
centage point decline in net price realization and mix.
Volume was flat compared to fiscal 2010.
Average diluted shares outstanding decreased by 18
million in fiscal 2011 from fiscal 2010, due primarily to
the repurchase of 32 million shares, partially offset by
the issuance of shares upon stock option exercises.
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. There were no dives-
titures in fiscal 2010.
Restructuring, impairment, and other exit costs
totaled $4 million in fiscal 2011 as follows:
Expense, in Millions
Discontinuation of fruit-flavored snack product line
$ 1.7
Charges associated with restructuring actions
previously announced
Total
2.7
$ 4.4
In fiscal 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
flows generated by this product line were insufficient
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 affected by
these actions. In addition, we recorded $3 million of
charges associated with restructuring actions previously
announced. In fiscal 2011, we paid $6 million in cash
related to restructuring actions taken in fiscal 2011 and
previous years.
Interest, net for fiscal 2011 totaled $346 million, $55
million lower than fiscal 2010. The average interest rate
on our total outstanding debt was 5.6 percent in fiscal
2011 compared to 6.3 percent in fiscal 2010, generating
a $45 million decrease in net interest. Average inter-
est bearing instruments increased $474 million in fis-
cal 2011, primarily due to more share repurchases than
in fiscal 2010, leading to a $30 million increase in net
interest. In fiscal 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 remain-
ing discount and unamortized fees, and the settlement
of related swaps.
Our consolidated effective tax rate for fiscal 2011 was
29.7 percent compared to 35.0 percent in fiscal 2010.
The 5.3 percentage point decrease was primarily due to
a $100 million reduction to tax expense recorded in fiscal
2011 related to a settlement with the IRS concerning cor-
porate income tax adjustments for fiscal years 2002 to
2008. The adjustments primarily relate to the amount of
capital loss, depreciation, and amortization we reported
as a result of the sale of noncontrolling interests in
Annual Report 2012
23
RESULTS OF SEGMENT OPERATIONS
Our businesses are organized into three operating segments: U.S. Retail; International; and Bakeries and Foodservice.
The following tables provide the dollar amount and percentage of net sales and operating profit from each seg-
ment for fiscal years 2012, 2011, and 2010:
Net Sales
In Millions
U.S. Retail
International
Bakeries and Foodservice
Total
Segment Operating Profit
U.S. Retail
International
Bakeries and Foodservice
Total
2012
Fiscal Year
2011
2010
Dollars
Percent
of Total
Dollars
Percent
of Total
Dollars
Percent
of Total
$ 10,480.2
4,194.3
1,983.4
63%
$ 10,163.9
69%
$ 10,209.8
25
12
2,875.5
1,840.8
19
12
2,684.9
1,740.9
70%
18
12
$ 16,657.9
100%
$ 14,880.2
100%
$ 14,635.6
100%
$ 2,295.3
76%
$ 2,347.9
80%
$ 2,385.2
429.6
286.7
14
10
291.4
306.3
10
10
192.1
263.2
84%
7
9
$ 3,011.6
100%
$ 2,945.6
100%
$ 2,840.5
100%
Segment operating profit excludes unallocated cor-
porate items, gain on divestitures, and restructur-
ing, impairment, and other exit costs because these
items affecting operating profit are centrally man-
aged at the corporate level and are excluded from the
measure of segment profitability reviewed by our
executive management.
U.S Retail Segment Our U.S. Retail segment reflects
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 granola bars,
cereal, and soup.
24
General Mills
In fiscal 2012, net sales for our U.S. Retail segment
were $10.5 billion, up 3 percent from fiscal 2011. Net
price realization and mix contributed 9 percentage
points of growth, partially offset by a 6 percentage point
decrease due to lower pound volume.
In fiscal 2011, net sales for this segment totaled $10.2
billion, flat compared to fiscal 2010. Volume on a ton-
nage basis and net price realization and mix were both
flat compared to fiscal 2010.
Components of U.S. Retail Net Sales Growth
Fiscal 2012
vs. 2011
Fiscal 2011
vs. 2010
Contributions from volume growth (a)
Net price realization and mix
Net sales growth
(6) pts
9 pts
3 pts
Flat
Flat
Flat
(a) Measured in tons based on the stated weight of our product shipments.
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
Snacks
Yoplait
Baking Products
Fiscal Year
2012
2011
2010
$ 2,387.9
$ 2,293.6 $ 2,351.3
2,133.1
1,881.0
1,578.6
1,418.5
832.5
2,131.8
2,146.0
1,823.9
1,858.2
1,378.3
1,315.8
1,499.0
808.6
228.7
1,491.2
845.2
202.1
Small Planet Foods and other
248.6
Total
$10,480.2 $10,163.9 $10,209.8
U.S. Retail Net Sales Percentage
Change by Division
Big G
Meals
Pillsbury
Snacks
Yoplait
Baking Products
Small Planet Foods
Total
Fiscal 2012
vs. 2011
Fiscal 2011
vs. 2010
4%
(2)%
Flat
3
15
(5)
3
19
3%
(1)
(2)
5
1
(4)
13
Flat
In fiscal 2012, net sales for Big G cereals grew 4 per-
cent from last year driven by growth from established
brands such as Honey Nut Cheerios, Cinnamon Toast
Crunch, and Chex varieties along with contributions
from new products including Peanut Butter Multi Grain
Cheerios and Fiber One 80 Calories cereals. Meals divi-
sion net sales were flat. Pillsbury net sales grew 3 per-
cent, led by frozen breakfast items, biscuits, and sweet
rolls. Snacks net sales grew 15 percent, driven by Fiber
One and Nature Valley snack bars. Net sales for Yoplait
declined 5 percent as growth from Go-GURT and Yoplait
Greek was offset by volume declines on certain estab-
lished product lines. Net sales for Baking Products grew
3 percent, driven by flour pricing. Small Planet Food’s net
sales were up 19 percent, led by Lärabar natural fruit
and nut bars, and Cascadian Farm organic cereals and
grain snack bars.
In fiscal 2011, net sales for Big G cereals declined 2 per-
cent from fiscal 2010 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 offset by growth in Old El Paso Mexican prod-
ucts, 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. Snacks net sales grew 5 percent, driven by Nature
Valley and Fiber One grain snack bars. Net sales for
Yoplait grew 1 percent including the acquisition of the
Mountain High yogurt business. 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 natural fruit and nut bars.
Segment operating profit of $2.3 billion in fiscal 2012
declined $53 million, or 2 percent, from fiscal 2011. The
decrease was primarily driven by higher input costs,
lower volume, and a 5 percent increase in advertising
and media expense.
Segment operating profit of $2.3 billion in fiscal 2011
declined $37 million, or 2 percent, from fiscal 2010. The
decrease was primarily driven by unfavorable supply
chain costs of $81 million, partially offset by a 9 percent
reduction in advertising and media expense.
Annual Report 2012
25
International Segment Our International segment
consists of retail and foodservice businesses outside of
the United States. In Canada, our major product cate-
gories are ready-to-eat cereals, shelf stable and frozen
vegetables, dry dinners, refrigerated and frozen dough
products, dessert and baking mixes, frozen pizza snacks,
refrigerated yogurt, and grain and fruit snacks. In mar-
kets 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 dinners. Our International segment also includes
products manufactured in the United States for export,
mainly to Caribbean and Latin American markets, as
well as products we manufacture for sale to our inter-
national joint ventures. Revenues from export activities
and franchise fees are reported in the region or country
where the end customer is located.
In fiscal 2012, net sales for our International segment
were $4,194 million, up 46 percent from fiscal 2011. This
growth was driven by 36 percentage points contributed
by the acquisition of Yoplait S.A.S. Volume contributed
65 percentage points of net sales growth, including
63 percentage points resulting from the acquisition of
Yoplait S.A.S., and favorable foreign currency exchange
contributed 1 percentage point of net sales growth. These
gains were partially offset by a decrease of 20 percentage
points due to unfavorable net price realization and mix
resulting from the acquisition of Yoplait S.A.S.
Net sales totaled $2,876 million in fiscal 2011, up 7
percent from $2,685 million in fiscal 2010. The growth
in fiscal 2011 was driven by 6 percentage points of con-
tributions from volume and 1 percentage point from net
price realization and mix. Foreign currency exchange
was flat compared to fiscal 2010.
Components of International Net Sales Growth
Fiscal 2012
vs. 2011
Fiscal 2011
vs. 2010
Contributions from volume growth (a)
Net price realization and mix
Foreign currency exchange
Net sales growth
65 pts
(20) pts
1 pt
46 pts
6 pts
1 pt
Flat
7 pts
(a) Measured in tons based on the stated weight of our product shipments.
Net sales for our International segment by geographic
region are shown in the following tables:
International Net Sales by Geographic Region
In Millions
Europe
Asia/Pacific
Canada
Fiscal Year
2012
2011
2010
$ 1,785.8
$ 905.5 $ 859.6
997.8
822.9
720.0
990.9
769.9
709.9
Latin America
419.8
377.2
395.4
Total
$ 4,194.3
$ 2,875.5 $ 2,684.9
International Change in Net Sales by Geographic Region
Percentage Change in
Net Sales as Reported
Percentage Change in
Net Sales on Constant
Currency Basis(a)
Fiscal 2012
vs. 2011
Fiscal 2011
vs. 2010
Fiscal 2012
vs. 2011
Fiscal 2011
vs. 2010
Europe
Asia/Pacific
Canada
Latin America
Total
97%
21
29
11
46%
5%
14
8
(5)
7%
98%
17
28
14
45%
7%
9
3
11
7%
(a) See the “Non-GAAP Measures” section on page 85 for our use of this
measure.
In fiscal 2012, net sales in Europe grew 97 percent,
including 90 percentage points from the acquisition of
Yoplait S.A.S. The remaining growth was driven by Old
El Paso Mexican products and Häagen Dazs in France,
Green Giant, Nature Valley and Betty Crocker products
in the United Kingdom, and favorable foreign currency
exchange. In the Asia/Pacific region, net sales grew 21
percent driven by growth from Häagen-Dazs products
in China, the fiscal 2011 acquisition of Pasta Master in
Australia, and favorable foreign currency exchange. Net
sales in Canada increased 29 percent primarily due to 27
percentage points of net sales growth from the acquisi-
tion of Yoplait S.A.S. The remaining growth was driven
by Cheerios varieties, Old El Paso Mexican products,
and favorable foreign currency exchange. Latin America
net sales increased 11 percent driven by growth in La
Salteña in Argentina and Diablitos in Venezuela, par-
tially offset by unfavorable foreign currency exchange.
In fiscal 2011, net sales in Europe increased by 5 per-
cent, driven by growth in Häagen Dazs and Nature
Valley in the United Kingdom, and Old El Paso Mexican
products in France and Switzerland, partially offset by
unfavorable foreign currency exchange. In the Asia/
Pacific region, net sales grew 14 percent due to growth
from Häagen-Dazs and Wanchai Ferry brands
in China, and atta flour in India. Net sales in Canada
26
General Mills
increased 8 percent due to favorable foreign currency
exchange and growth in ready-to-eat-cereals. Latin
America net sales decreased 5 percent due to unfavor-
able foreign currency exchange primarily related to the
2010 devaluation of the Venezuelan currency, partially
offset by Diablitos growth in Venezuela and La Salteña
growth in Argentina.
Segment operating profit for fiscal 2012 grew 47 per-
cent to $430 million from $291 million in fiscal 2011, pri-
marily driven by the acquisition of Yoplait S.A.S., higher
volume, and favorable foreign currency effects.
Segment operating profit for fiscal 2011 grew 52 per-
cent to $291 million, from $192 million in fiscal 2010,
primarily driven by volume growth and favorable foreign
currency exchange. In fiscal 2010, we incurred a $14 mil-
lion foreign exchange loss on the revaluation of non-
bolivar fuerte monetary balances in Venezuela.
In January 2010, the Venezuelan government devalued
the bolivar fuerte by resetting the official exchange rate.
The effect of the devaluation was a $14 million foreign
exchange loss in fiscal 2010, primarily on the revaluation
of non- bolivar fuerte monetary balances in Venezuela.
We continue to use the official exchange rate to remea-
sure the financial statements of our Venezuelan opera-
tions, as we intend to remit dividends solely through the
government-operated Foreign Exchange Administration
Board (CADIVI). The devaluation of the bolivar fuerte
also reduced the U.S. dollar equivalent of our Venezuelan
results of operations and financial condition, but this did
not have a material impact on our results. During fiscal
2010, Venezuela became a highly inflationary economy,
which did not have a material impact on our results in
fiscal 2012, 2011, or 2010.
Bakeries and Foodservice Segment In our Bakeries and
Foodservice segment our major product categories are
cereals, snacks, refrigerated yogurt, unbaked and fully
baked frozen dough products, baking mixes, and flour.
Many products we sell are branded to the consumer
and nearly all are branded to our customers. We sell to
distributors and operators in many customer channels,
including foodservice, convenience stores, vending, and
supermarket bakeries.
For fiscal 2011, net sales for our Bakeries and
Foodservice segment increased 6 percent to $1,841 mil-
lion. The increase in fiscal 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 flat, including a 2 per-
centage point decline from a divested product line.
Components of Bakeries and Foodservice Net Sales Growth
Fiscal 2012
vs. 2011
Fiscal 2011
vs. 2010
Contributions from volume growth (a)
Net price realization and mix
Foreign currency exchange
Net sales growth
1 pt
7 pts
NM
8 pts
Flat
6 pts
NM
6 pts
(a) Measured in tons based on the stated weight of our product shipments.
Net sales for our Bakeries and Foodservice segment by
customer channel is shown in the following tables:
Bakeries and Foodservice Net Sales by Customer Channel
Fiscal Year
In Millions
2012
2011
2010
Bakeries and National
Restaurant Accounts
$ 1,138.8
$ 1,057.9 $ 994.8
Foodservice Distributors
601.4
557.3
543.3
Convenience Stores
243.2
225.6
202.8
Total
$ 1,983.4
$ 1,840.8 $ 1,740.9
Bakeries and Foodservice Net Sales Percentage Change by
Customer Channel
Fiscal 2012
vs. 2011
Fiscal 2011
vs. 2010
Bakeries and National Restaurant Accounts
Foodservice Distributors
Convenience Stores
Total
8%
8
8
8%
6%
3
11
6%
In fiscal 2012, segment operating profit was $287 mil-
lion, down from $306 million in fiscal 2011. The decrease
was primarily driven by lower grain merchandising
earnings.
For fiscal 2012, net sales for our Bakeries and
Foodservice segment increased 8 percent to $1,983 mil-
lion. The increase in fiscal 2012 was driven by an increase
in net price realization and mix of 7 percentage points
and 1 percentage point contributed by volume growth.
Segment operating profit was $306 million in fiscal
2011, up from $263 million in fiscal 2010. The increase
was primarily driven by net price realization and mix
and increased grain merchandising earnings, partially
offset by higher input costs.
Annual Report 2012
27
to 2018. Many provisions in the Act require the issu-
ance of additional guidance from various government
agencies. Because the Act does not take effect fully until
future years, the Act did not have a material impact on
our fiscal 2012, 2011, or 2010 results of operations. 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, the full
impact of the Act on future periods will not be known
until those regulations are adopted.
LIqUIDITY
The primary source of our liquidity is cash flow from
operations. Over the most recent three-year period, our
operations have generated $6.1 billion in cash. A sub-
stantial portion of this operating cash flow 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 finance
acquisitions and major capital expansions.
As of May 27, 2012, we had $446 million of cash and
cash equivalents held in foreign jurisdictions which will
be used to fund foreign operations and acquisitions.
There is currently no intent or need to repatriate these
funds in order to meet domestic funding obligations or
scheduled cash distributions. If we choose to repatriate
cash held in foreign jurisdictions, we will only do so in a
tax-neutral manner.
Unallocated Corporate Items Unallocated corporate
items include corporate overhead expenses, variances
to planned domestic employee benefits and incentives,
contributions to the General Mills Foundation, and other
items that are not part of our measurement of segment
operating performance. This 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 fiscal 2012, unallocated corporate expense totaled
$348 million compared to $184 million last year. In fiscal
2012 we recorded a $104 million net increase in expense
related to mark-to-market valuation of certain commod-
ity positions and grain inventories, compared to a $95
million net decrease in expense last year. In fiscal 2012,
we also recorded $11 million of integration costs related
to the acquisition of Yoplait S.A.S. and Yoplait Marques
S.A.S. These increases in expense were partially offset
by a decrease in compensation and benefit expense com-
pared to fiscal 2011.
Unallocated corporate expense totaled $184 million
in fiscal 2011 compared to $203 million in fiscal 2010.
In fiscal 2011, we recorded a $95 million net decrease
in expense related to mark-to-market valuation of cer-
tain commodity positions and grain inventories, com-
pared to a $7 million net increase in expense in fiscal
2010. This was partially offset by a $69 million increase
in corporate pension expense in fiscal 2011. In fis-
cal 2010, we recorded a $13 million recovery against a
corporate investment.
IMPACT OF INFLATION
We have experienced significant input cost volatil-
ity since fiscal 2006. Our gross margin performance in
fiscal 2012 reflects the impact of 10 percent input cost
inflation, primarily on commodities inputs. We expect
the rate of inflation of commodities and energy costs
to moderate in fiscal 2013. We attempt to minimize the
effects of inflation through planning and operating prac-
tices. 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. The Act codifies health
care reforms with staggered effective dates from 2010
28
General Mills
Cash Flows from Operations
In Millions
2012
2011
2010
Fiscal Year
Net earnings, including
earnings attributable to
noncontrolling interests
$1,589.1
$1,803.5 $1,535.0
Depreciation and amortization
541.5
472.6
457.1
After-tax earnings
from joint ventures
Stock-based compensation
Deferred income taxes
(88.2)
108.3
149.4
(96.4)
(101.7)
105.3
205.3
107.3
22.3
Tax benefit on exercised options
(63.1)
(106.2)
(114.0)
Distributions of earnings
68.0
72.7
88.0
(222.2)
(220.8)
(17.2)
decreased 7 percent, compared to net sales growth of
12 percent, primarily reflecting our inventory reduction
efforts. In fiscal 2011, core working capital increased 16
percent, compared to net sales growth of 2 percent, and
in fiscal 2010, core working capital increased 3 percent,
compared to net sales growth of 1 percent.
In fiscal 2011, our operations generated $1.5 billion of
cash compared to $2.2 billion in fiscal 2010. The decrease
primarily reflects an $864 million increase in use of cash
for net current assets and liabilities and a $200 million
voluntary contribution to our principal domestic pen-
sion plans, partially offset 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.
from joint ventures
Pension and other postretirement
benefit plan contributions
Pension and other postretirement
benefit plan expense (income)
Divestitures (gain)
Restructuring, impairment,
and other exit costs (income)
Changes in current
assets and liabilities
Other, net
Net cash provided by
operating activities
77.8
—
73.6
(17.4)
(37.9)
—
97.8
(1.3)
23.4
Cash Flows from Investing Activities
In Millions
2012
2011
2010
Fiscal Year
Purchases of land, buildings,
243.8
(100.2)
$2,402.0
(720.9)
(43.2)
143.4
75.5
and equipment
Acquisitions
$ (675.9)
$(648.8)
$(649.9)
(1,050.1)
(123.3)
—
Investments in affiliates, net
(22.2)
(1.8)
(130.7)
$1,526.8 $2,181.2
Proceeds from disposal of land,
buildings, and equipment
2.2
4.1
7.4
In fiscal 2012, our operations generated $2.4 billion
of cash compared to $1.5 billion in fiscal 2011. The $875
million increase primarily reflects changes in current
assets and liabilities, including a $384 million increase
driven by inventory reduction efforts in fiscal 2012.
Prepaid expenses and other current assets accounted for
a $245 million increase, primarily reflecting changes in
foreign currency hedges and the fair value of open grain
contracts. Other current liabilities accounted for a $386
million increase, primarily reflecting changes in accrued
income taxes as a result of audit settlements and court
decisions in fiscal 2011 and changes in consumer mar-
keting and related accruals. The favorable change in
working capital was offset by a $214 million decrease in
net earnings. Additionally, fiscal 2012 includes non-cash
restructuring charges of $101 million reflecting employee
severance expense and the write-off of certain long-
lived assets. In both fiscal 2012 and fiscal 2011, we made
a $200 million voluntary contribution to our principal
domestic pension plans.
We strive to grow core working capital at or below our
growth in net sales. For fiscal 2012, core working capital
Proceeds from divestiture
of product lines
Exchangeable note
Other, net
Net cash used by
—
(131.6)
6.8
34.4
—
20.3
—
—
52.0
investing activities
$(1,870.8)
$(715.1)
$(721.2)
In fiscal 2012, cash used by investing activities increased
by $1.2 billion from fiscal 2011. The increased use of cash
primarily reflects the acquisitions of Yoplait S.A.S. and
Yoplait Marques S.A.S. in fiscal 2012 for an aggregate
purchase price of $1.2 billion, comprised of $900 million
of cash, net of $30 million of cash acquired, and $261
million of non-cash consideration for debt assumed. In
addition, we purchased a zero coupon exchangeable note
due in 2016 from Sodiaal with a notional amount of $132
million. We invested $676 million in land, buildings, and
equipment in fiscal 2012.
In fiscal 2011, cash used by investing activities
decreased by $6 million from fiscal 2010. The decreased
use of cash reflects $25 million of proceeds from the
divestiture of a foodservice frozen baked goods product
Annual Report 2012
29
line in our International segment and $9 million of pro-
ceeds from the sale of a pie shell product line in our
Bakeries and Foodservice segment in fiscal 2011. In addi-
tion, in fiscal 2011, we paid $123 million for acquisitions
during the year. We also invested $131 million in affili-
ates in fiscal 2010, mainly our CPW joint venture, to
repay local borrowings.
We expect capital expenditures to be approximately
$650 million in fiscal 2013, excluding any expenditures
required to support Yoki. These expenditures will sup-
port initiatives that are expected to: increase manufac-
turing capacity for grain snacks and Greek yogurt; fuel
International growth and expansion; continue HMM
initiatives throughout the supply chain; and support
yogurt capacity initiatives of Yoplait S.A.S.
Cash Flows from Financing Activities
Fiscal Year
In Millions
2012
2011
2010
Change in notes payable
$ 227.9
$ (742.6) $ 235.8
Issuance of long-term debt
1,390.5
1,200.0
—
Payment of long-term debt
(1,450.1)
(7.4)
(906.9)
Proceeds from common stock
issued on exercised options
233.5
410.4
388.8
Tax benefit on exercised options
63.1
106.2
114.0
Purchases of common
stock for treasury
Dividends paid
Other, net
Net cash used by
(313.0)
(1,163.5)
(691.8)
(800.1)
(729.4)
(643.7)
(13.2)
(10.3)
—
financing activities
$ (661.4) $ (936.6) $ (1,503.8)
Net cash used by financing activities decreased by
$275 million in fiscal 2012.
In February 2012, we repaid $1.0 billion of 6.0 percent
notes. In November 2011, we issued $1.0 billion aggregate
principal amount of 3.15 percent notes due December
15, 2021. The net proceeds were used to repay a portion
of our notes due February 2012, to reduce our commer-
cial paper borrowings, and for general corporate pur-
poses. Interest on these notes is payable semi-annually
in arrears. These notes may be redeemed at our option
at any time prior to September 15, 2021 for a specified
make whole amount and any time on or after that date
at par. These notes are senior unsecured, unsubordi-
nated obligations that include a change of control repur-
chase provision.
As part of our acquisition of Yoplait S.A.S., we con-
solidated $458 million of primarily euro-denominated
Euribor-based floating-rate bank debt. In December
2011, we refinanced this debt with $390 million of euro-
denominated Euribor-based floating-rate bank debt due
at various dates through December 15, 2014.
In May 2011, we issued $300 million aggregate prin-
cipal amount of 1.55 percent fixed-rate notes and $400
million aggregate principal amount of floating-rate
notes, both due May 16, 2014. The proceeds of these
notes were used to repay a portion of our outstanding
commercial paper. The floating-rate notes bear interest
equal to three-month LIBOR plus 35 basis points, subject
to quarterly reset. Interest on the floating-rate notes is
payable quarterly in arrears. Interest on the fixed-rate
notes is payable semi-annually in arrears. The fixed-rate
notes may be redeemed at our option at any time for a
specified make whole amount. These 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. The 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. These notes
may be redeemed at our option at any time for a speci-
fied make whole amount. These 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 offer $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.
During fiscal 2012, we had $234 million in proceeds
from common stock issued on exercised options com-
pared to $410 million in fiscal 2011, a decrease of $177
million. During fiscal 2010, we had $389 million proceeds
from common stock issued on exercised options.
During fiscal 2012, we repurchased 8 million shares
of our common stock for an aggregate purchase price
of $313 million. During fiscal 2011, we repurchased 32
million shares of our common stock for an aggregate
purchase price of $1,164 million. During fiscal 2010, we
repurchased 21 million shares of our common stock for
an aggregate purchase price of $692 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
30
General Mills
instruments, Rule 10b5-1 trading plans, and accelerated
repurchase programs. The authorization has no specified
termination date.
The following table details the fee-paid committed and
uncommitted credit lines we had available as of May 27,
2012:
Dividends paid in fiscal 2012 totaled $800 million, or
$1.22 per share, a 9 percent per share increase from fis-
cal 2011. Dividends paid in fiscal 2011 totaled $729 mil-
lion, or $1.12 per share, a 17 percent per share increase
from fiscal 2010 dividends of $0.96 per share. On June
26, 2012, our Board of Directors approved a dividend
increase to an annual rate of $1.32 per share, an 8 per-
cent increase from the rate paid in fiscal 2012.
Selected Cash Flows from Joint Ventures
Selected cash flows from our joint ventures are set
forth in the following table:
Inflow (Outflow), in Millions
2012
2011
2010
Advances to joint ventures, net
$(22.2)
$(1.8)
$(128.1)
Dividends received
68.0
72.7
88.0
Fiscal Year
CAPITAL RESOURCES
Total capital consisted of the following:
In Millions
Notes payable
Current portion of long-term debt
Long-term debt
Total debt
Redeemable interest
Noncontrolling interests
Stockholders’ equity
Total capital
May 27, 2012 May 29, 2011
$ 526.5
$ 311.3
741.2
6,161.9
7,429.6
847.8
461.0
1,031.3
5,542.5
6,885.1
—
246.7
6,421.7
6,365.5
$15,160.1
$13,497.3
The increase in total capital from fiscal 2011 to fis-
cal 2012 was primarily due to additional non-controlling
interests and the redeemable interest generated as a
result of the acquisitions of Yoplait S.A.S. and Yoplait
Marques S.A.S., as well as an increase in long-term debt
and notes payable as a result of our debt refinancing
activities during fiscal 2012.
In Billions
Credit facility expiring:
April 2015
April 2017
Total committed credit facilities
Uncommitted credit facilities
Total committed and uncommitted credit facilities
Amount
$1.0
1.7
2.7
0.4
$3.1
To ensure availability of funds, we maintain bank
credit lines sufficient to cover our outstanding short-term
borrowings. Commercial paper is a continuing source of
short-term financing. We have commercial paper pro-
grams available to us in the United States and Europe.
Our commercial paper borrowings are supported by $2.7
billion of fee-paid committed credit lines, consisting of a
$1.0 billion facility expiring in April 2015 and a $1.7 bil-
lion facility expiring in April 2017. We also have $394 mil-
lion in uncommitted credit lines that support our foreign
operations. As of May 27, 2012, there were no amounts
outstanding on the fee-paid committed credit lines and
$114 million was drawn on the uncommitted lines. The
credit facilities contain several covenants, including a
requirement to maintain a fixed charge coverage ratio of
at least 2.5 times.
Certain of our long-term debt agreements, our credit
facilities, and our noncontrolling interests contain
restrictive covenants. As of May 27, 2012, we were in
compliance with all of these covenants.
We have $741 million of long-term debt maturing in
the next 12 months that is classified as current. We
believe that cash flows from operations, together with
available short- and long-term debt financing, will be
adequate to meet our liquidity and capital needs for at
least the next 12 months.
As of May 27, 2012, our total debt, including the
impact of derivative instruments designated as hedges,
was 71 percent in fixed-rate and 29 percent in floating-
rate instruments, compared to 77 percent in fixed-rate
and 23 percent in floating-rate instruments on May 29,
2011. The change in the fixed-rate and floating-rate per-
centages was driven by the addition of the floating-rate
debt consolidated as part of the acquisition of Yoplait
S.A.S. and an increase in notes payable in fiscal 2012.
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
Annual Report 2012
31
measure, which is not defined by GAAP). Return on
average total capital decreased from 13.8 percent in fis-
cal 2011 to 12.7 percent in fiscal 2012 primarily reflecting
the impact of the acquisition of Yoplait S.A.S. and Yoplait
Marques S.A.S. We also believe that the ratio of fixed
charge coverage and the ratio of operating cash flow to
debt are important measures of our financial strength.
Our fixed charge coverage ratio in fiscal 2012 was 6.26
compared to 7.03 in fiscal 2011. The measure decreased
from fiscal 2011 as earnings before income taxes and
after-tax earnings from joint ventures decreased by $218
million and fixed charges increased by $18 million, driven
mainly by higher interest and rent expense. Our oper-
ating cash flow to debt ratio increased 10.1 percentage
points to 32.3 percent in fiscal 2012, primarily driven by
an increase of $875 million in cash flows from operations.
During the fourth quarter of fiscal 2012, we entered
into a purchase agreement with Yoki, a privately held
food company headquartered in Sao Bernardo do Campo,
Brazil, for an aggregate purchase price of approximately
1.97 billion Brazilian reals (approximately $990 mil-
lion as of May 27, 2012) including the assumption of
approximately 220 million Brazilian reals (approximately
$110 million as of May 27, 2012) of outstanding debt.
The purchase price is subject to an adjustment based
on the net asset value of the business at the closing
date. Yoki operates in several food categories, including
snacks, convenient meals, basic foods, and seasonings.
We expect the transaction to be completed in the first
half of fiscal 2013. We expect to fund this transaction
using cash available in our foreign subsidiaries and com-
mercial paper.
During the first quarter of fiscal 2012, we acquired
a 51 percent controlling interest in Yoplait S.A.S. and
a 50 percent interest in Yoplait Marques S.A.S. Sodiaal
holds the remaining interests in each of the entities. We
consolidated both entities into our consolidated financial
statements. At the date of the acquisition, we recorded
the $264 million fair value of Sodiaal’s 50 percent inter-
est in Yoplait Marques S.A.S. as a noncontrolling inter-
est, and the $904 million fair value of its 49 percent
interest in Yoplait S.A.S. as a redeemable interest on our
Consolidated Balance Sheets. These euro-denominated
interests are reported in U.S. dollars on our Consolidated
Balance Sheets. Sodiaal has the ability to put a limited
portion of its redeemable interest to us at fair value once
per year up to a maximum of 9 years. As of May 27,
2012, the redemption value of the redeemable interest
was $848 million which approximates its fair value.
As of May 27, 2012, we also had a noncontrolling
interest related to our subsidiary General Mills Cereals,
LLC (GMC). We hold all interests in GMC other than
Class A Limited Membership Interests (Class A Interests)
which were held by an unrelated third-party investor.
On June 1, 2012, subsequent to our year end, we restruc-
tured GMC through the distribution of its manufactur-
ing assets, stock, inventory, cash and certain intellectual
property to a wholly owned subsidiary. GMC retained
the remaining intellectual property. Immediately fol-
lowing the restructuring, the Class A Interests were
sold by the current holder to another unrelated third-
party investor.
The third-party holder of the Class A Interests
receives quarterly preferred distributions from available
net income based on the application of a floating pre-
ferred return rate, currently equal to the sum of three-
month LIBOR plus 110 basis points, to the holder’s capital
account balance established in the most recent mark-
to-market valuation (currently $252 million). The pre-
ferred return rate is adjusted every three years through
a negotiated agreement with the Class A Interest holder
or through a remarketing auction.
The 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. In the
event of a liquidation of GMC, each member of GMC will
receive the amount of its then current capital account
balance. The managing member may avoid liquidation 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.
32
General Mills
OFF-BALANCE SHEET ARRANGEMENTS AND
CONTRACTUAL OBLIGATIONS
As of May 27, 2012, we have issued guarantees and com-
fort letters of $398 million for the debt and other obliga-
tions of consolidated subsidiaries, and guarantees and
comfort letters of $335 million for the debt and other
obligations of non-consolidated affiliates, mainly CPW.
In addition, off-balance sheet arrangements are gener-
ally limited to the future payments under non-cancelable
operating leases, which totaled $338 million as of May
27, 2012.
As of May 27, 2012, we had invested in five variable
interest entities (VIEs). None of our VIEs are material to
our results of operations, financial condition, or liquidity
as of and for the year ended May 27, 2012. We deter-
mined whether or not we were the primary beneficiary
(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 ben-
efits of the VIE. We are the PB of three of the VIEs.
We provided minimal financial or other support to our
VIEs during fiscal 2012 and there are no arrangements
related to VIEs that would require us to provide signifi-
cant financial support in the future.
Our defined benefit plans in the United States are
subject to the requirements of the Pension Protection
Act (PPA). The PPA revised the basis and methodology
for determining defined benefit plan minimum funding
requirements as well as maximum contributions to and
benefits paid from tax-qualified plans. Most of these
provisions were applicable to our domestic defined ben-
efit pension plans in fiscal 2011. The PPA may ultimately
require us to make additional contributions to our
domestic plans. We made $200 million of voluntary con-
tributions to our principal domestic plans in each of fis-
cal 2012 and fiscal 2011. We do not expect to be required
to make any contributions in fiscal 2013. Actual fiscal
2013 contributions could exceed our current projections,
and may be influenced by our decision to undertake dis-
cretionary funding of our benefit trusts or by changes
in regulatory requirements. Additionally, our projections
concerning timing of the PPA funding requirements
are subject to change and may be influenced by factors
such as general market conditions affecting trust asset
performance, interest rates, and our future decisions
regarding certain elective provisions of the PPA.
The following table summarizes our future estimated
cash payments under existing contractual obligations,
including payments due by period:
In Millions
Total
2013
2014-15
2018 and
2016-17 Thereafter
Payments Due by Fiscal Year
Long-term debt (a)
$ 6,900.5 $ 739.6 $ 2,511.0 $ 999.9 $2,650.0
Accrued interest
Operating leases (b)
Capital leases
100.2
337.7
3.8
100.2
86.8
1.8
—
124.2
1.7
Purchase obligations (c) 2,633.2 2,286.9
168.1
—
78.1
0.3
91.8
—
48.6
—
86.4
Total contractual
obligations
9,975.4 3,215.3
2,805.0 1,170.1
2,785.0
Other long-term
obligations (d)
Total long-term
2,142.4
—
—
—
—
obligations
$12,117.8 $3,215.3 $2,805.0 $1,170.1 $2,785.0
(a) Amounts represent the expected cash payments of our long-term debt
and do not include $4 million for capital leases or $1 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) The majority of the purchase obligations represent commitments for
raw material and packaging to be utilized in the normal course of busi-
ness and for consumer marketing spending commitments that support
our brands. For purposes of this table, arrangements are considered pur-
chase obligations if a contract specifies all significant terms, including
fixed or minimum quantities to be purchased, a pricing structure, and
approximate timing of the transaction. Most arrangements are cancelable
without a significant penalty and with short notice (usually 30 days). Any
amounts reflected on the Consolidated Balance Sheets as accounts pay-
able and accrued liabilities are excluded from the table above.
(d) The fair value of our foreign exchange, equity, commodity, and grain
derivative contracts with a payable position to the counterparty was $56
million as of May 27, 2012, based on fair market values as of that date.
Future changes in market values will impact the amount of cash ulti-
mately paid or received to settle those instruments in the future. Other
long-term obligations mainly consist of liabilities for accrued compensa-
tion and benefits, including the underfunded status of certain of our
defined benefit pension, other postretirement, and postemployment
plans, and miscellaneous liabilities. We expect to pay $19 million of ben-
efits from our unfunded postemployment benefit plans and $10 million of
deferred compensation in fiscal 2013. We are unable to reliably estimate
the amount of these payments beyond fiscal 2013. As of May 27, 2012,
our total liability for uncertain tax positions and accrued interest and
penalties was $281 million.
Annual Report 2012
33
SIGNIFICANT ACCOUNTING ESTIMATES
For a complete description of our significant account-
ing policies, see Note 2 to the Consolidated Financial
Statements on page 49 of this report. Our significant
accounting estimates are those that have a meaning-
ful impact on the reporting of our financial condition
and results of operations. These estimates include our
accounting for promotional expenditures, valuation of
long-lived assets, intangible assets, redeemable interest,
stock-based compensation, income taxes, and defined
benefit pension, other postretirement and postemploy-
ment benefits.
Promotional Expenditures Our promotional activities
are conducted through our customers and directly or
indirectly with end consumers. These 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. The media and advertising
expenditures are generally recognized as expense when
the advertisement airs. The 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. The recognition of
these costs requires estimation of customer participa-
tion and performance levels. These estimates are made
based on the forecasted customer sales, the timing and
forecasted costs of promotional activities, and other fac-
tors. Differences between estimated expenses and actual
costs are normally insignificant and are recognized as a
change in management estimate in a subsequent period.
Our accrued trade, coupon, and consumer marketing lia-
bilities were $561 million as of May 27, 2012, and $463
million as of May 29, 2011. Because our total promo-
tional expenditures (including amounts classified as a
reduction of revenues) are significant, if our estimates
are inaccurate we would have to make adjustments in
subsequent periods that could have a material effect 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 estimated
undiscounted future cash flows from the operation and
disposition of the asset group are less than the carry-
ing amount of the asset group. Asset groups have iden-
tifiable cash flows independent of other asset groups.
Measurement of an impairment loss would be based
on the excess of the carrying amount of the asset or
asset group over its fair value. Fair value is measured
using discounted cash flows 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 com-
pare 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 often 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 flow
model. Growth rates for sales and profits are determined
using inputs from our annual long-range planning pro-
cess. We also make estimates of discount rates, perpetu-
ity growth assumptions, market comparables, and other
factors. We performed our fiscal 2012 assessment as of
November 28, 2011, and determined there was no impair-
ment 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 finite or
indefinite-lived. Reaching a determination on useful life
requires significant judgments and assumptions regard-
ing the future effects 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. Intangible assets that are deemed to have definite
lives are amortized on a straight-line basis, over their
useful lives, generally ranging from 4 to 30 years.
34
General Mills
Our indefinite-lived intangible assets, mainly intan-
gible assets primarily associated with the Pillsbury,
Totino’s, Progresso, Green Giant, Yoplait, Old El Paso,
and Häagen-Dazs brands, are also tested for impair-
ment annually and whenever events or changes in cir-
cumstances indicate that their carrying value may not
be recoverable. We performed our fiscal 2012 assess-
ment of our brand intangibles as of November 28, 2011.
Our estimate of the fair value of the brands was based
on a discounted cash flow model using inputs which
included: projected revenues from our annual long-range
plan; assumed royalty 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
indefinite-lived intangible assets as their related fair val-
ues were substantially in excess of the carrying values.
As of May 27, 2012, we had $12.4 billion of goodwill
and indefinite-lived intangible assets. While we currently
believe that the fair value of each intangible exceeds its
carrying value and that those intangibles so classified
will contribute indefinitely to our cash flows, materially
different assumptions regarding future performance of
our businesses or a different weighted-average cost of
capital could result in significant 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-
nificant business disruptions. The significant assump-
tions used to estimate fair value include revenue growth
and profitability, 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.
Redeemable Interest On July 1, 2011, we acquired a
51 percent controlling interest in Yoplait S.A.S., a con-
solidated entity. Sodiaal holds the remaining 49 per-
cent interest in Yoplait S.A.S. Sodiaal has the ability
to put a limited portion of its redeemable interest to
us at fair value once per year up to a maximum of 9
years. This put option requires us to classify Sodiaal’s
interest as a redeemable interest outside of equity on
our Consolidated Balance Sheets for as long as the put is
exercisable by Sodiaal. When the put is no longer exercis-
able, the redeemable interest will be reclassified to non-
controlling interests on our Consolidated Balance Sheets.
We adjust the value of the redeemable interest through
additional paid-in capital on our Consolidated Balance
Sheets quarterly to the redeemable interest’s redemp-
tion value, which approximates its fair value. During the
fourth quarter of fiscal 2012, we adjusted the redeemable
interest’s redemption value based on a discounted cash
flow model. The significant assumptions used to estimate
the redemption value include projected revenue growth
and profitability from our long range plan, capital spend-
ing, depreciation and taxes, foreign currency rates, and a
discount rate.
Stock-based Compensation The valuation of stock
options is a significant accounting estimate that requires
us to use judgments and assumptions that are likely
to have a material impact on our financial 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 insufficient to provide a reli-
able measure of expected volatility. If all other assump-
tions are held constant, a one percentage point increase
in our fiscal 2012 volatility assumption would increase
the grant-date fair value of our fiscal 2012 option awards
by 6 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. The 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 17 percent.
Annual Report 2012
35
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 effect at the time
of grant.
The estimated fair values of stock options granted and
the assumptions used for the Black-Scholes option-pric-
ing model were as follows:
Fiscal Year
2012
2011
2010
Estimated fair values of
stock options granted
$ 5.88
$ 4.12
$ 3.20
Assumptions:
Risk-free interest rate
Expected term
Expected volatility
Dividend yield
2.9%
2.9%
3.7%
8.5 years
8.5 years
8.5 years
17.6%
3.3%
18.5%
3.0%
18.9%
3.4%
To the extent that actual outcomes differ from our
assumptions, we are not required to true up grant-
date fair value-based expense to final intrinsic values.
However, these differences can impact the classifica-
tion of cash tax benefits realized upon exercise of stock
options, as explained in the following two paragraphs.
Furthermore, historical data has a significant bearing on
our forward-looking assumptions. Significant variances
between actual and predicted experience could lead to
prospective revisions in our assumptions, which could
then significantly impact the year-over-year comparabil-
ity of stock-based compensation expense.
Any corporate income tax benefit realized upon exer-
cise or vesting of an award in excess of that previously
recognized in earnings (referred to as a windfall tax ben-
efit) is presented in the Consolidated Statements of Cash
Flows as a financing cash flow. The actual impact on
future years’ financing cash flow 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 financial reporting purposes.
Realized windfall tax benefits are credited to addi-
tional paid-in capital within the Consolidated Balance
Sheets. Realized shortfall tax benefits (amounts which
are less than that previously recognized in earnings)
are first offset against the cumulative balance of wind-
fall tax benefits, if any, and then charged directly to
income tax expense, potentially resulting in volatility
in our consolidated effective income tax rate. We cal-
culated a cumulative amount of windfall tax benefits
from post-1995 fiscal years for the purpose of account-
ing for future shortfall tax benefits and currently have
sufficient cumulative windfall tax benefits to absorb pro-
jected arising shortfalls, such that we do not currently
expect future earnings to be affected 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 different 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 benefit that has a greater than 50 percent likelihood
of being ultimately realized upon settlement. Future
changes in judgment related to the expected ultimate
resolution of uncertain tax positions will affect earnings
in the 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 finally resolved. While it is
often difficult to predict the final outcome or the timing
of resolution of any particular uncertain tax position,
we believe that our liabilities for income taxes reflect 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.
The number of years with open tax audits varies
depending on the tax jurisdiction. Our major taxing
jurisdictions include the United States (federal and state)
and Canada. The IRS initiated its audit of our fiscal 2009
and fiscal 2010 tax years during fiscal 2012.
During fiscal 2012, we reached a settlement with the
IRS concerning research and development tax credits
claimed for fiscal years 2002 to 2008. This settlement
did not have a material impact on our results of opera-
tions or financial position. As of the end of fiscal 2012,
we have effectively settled all issues with the IRS for fis-
cal years 2008 and prior.
During fiscal 2011, we reached a settlement with the
IRS concerning certain corporate income tax adjust-
ments for fiscal years 2002 to 2008. The 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 fiscal 2011.
36
General Mills
We made payments totaling $385 million in fiscal 2011
related to this settlement.
Also during fiscal 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 in fiscal 2011. We believe our
positions are supported by substantial technical author-
ity and have appealed this decision. We do not expect to
make a payment related to this matter until it is defini-
tively resolved.
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. The Canada Revenue Agency (CRA) has completed
its review of our income tax returns in Canada for fiscal
years 2003 to 2005. The CRA has raised assessments
for these years to which we have objected or otherwise
addressed through the Mutual Agreement procedures
of the Canada-US tax treaty. We believe our positions
are supported by substantial technical authority and are
vigorously defending our positions. We do not anticipate
that any United States or Canadian tax adjustments will
have a significant impact on our financial position or
results of operations.
As of May 27, 2012, our total liability for uncertain tax
positions and accrued interest and penalties was $281
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 reasonably estimate the
timing of future cash flows beyond 12 months due to
uncertainties in the timing of tax audit outcomes.
Defined Benefit Pension, Other Postretirement And
Postemployment Benefit Plans
Defined Benefit Pension Plans We have defined benefit
pension plans covering most employees in the United
States, Canada, France, and the United Kingdom. Benefits
for salaried employees are based on length of service and
final average compensation. Benefits for hourly employ-
ees include various monthly amounts for each year of
credited service. Our funding policy is consistent with
the requirements of applicable laws. We made $200
million of voluntary contributions to our principal U.S.
plans in each of fiscal 2012 and fiscal 2011. We do not
expect to be required to make any contributions in fiscal
2013. Our principal domestic retirement plan covering
salaried employees has a provision that any excess pen-
sion assets would be allocated to active participants if
the plan is terminated within five years of a change in
control. In fiscal 2012, we announced changes to our U.S.
defined benefit pension plans. All new salaried employees
hired on or after June 1, 2013, will be eligible for a new
retirement program that does not include a defined ben-
efit pension plan. Current salaried employees will remain
in the existing defined benefit pension plan with adjust-
ments to benefits.
Other Postretirement Benefit Plans We also sponsor
plans that provide health care benefits to the majority of
our retirees in the United States and Canada. The salaried
health care benefit 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 fiscal 2012. 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. We continue
to evaluate the effect of the Act, including its potential
impact on the future cost of our benefit plans.
Postemployment Benefit Plans Under certain circum-
stances, we also provide accruable benefits 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 payable upon death.
We recognize an obligation for any of these benefits that
vest or accumulate with service. Postemployment ben-
efits 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 benefit plans are unfunded.
We recognize benefits 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 significant management judgment and have
a material impact on the measurement of our net peri-
odic benefit expense or income and accumulated ben-
efit obligations include the long-term rates of return on
plan assets, the interest rates used to discount the obli-
gations for our benefit plans, and the health care cost
trend rates.
Annual Report 2012
37
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
services, and investment managers), and long-term infla-
tion assumptions. We review this assumption annually
for each plan, however, our annual investment perfor-
mance for one particular year does not, by itself, signifi-
cantly influence our evaluation.
The investment objective for our defined benefit pen-
sion and other postretirement benefit plans is to secure
the benefit obligations to participants at a reasonable
cost to us. Our goal is to optimize the long-term return
on plan assets at a moderate level of risk. The defined
benefit pension and other postretirement portfolios are
broadly diversified across asset classes. Within asset
classes, the portfolios are further diversified across
investment styles and investment organizations. For the
defined benefit pension plans, the long-term investment
policy allocation is: 25 percent to equities in the United
States; 15 percent to international equities; 10 percent to
private equities; 35 percent to fixed income; and 15 per-
cent to real assets (real estate, energy, and timber). For
other postretirement benefit plans, the long-term invest-
ment policy allocations are: 30 percent to equities in the
United States; 20 percent to international equities; 10
percent to private equities; 30 percent to fixed income;
and 10 percent to real assets (real estate, energy, and
timber). The 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 defined benefit
pension and other postretirement plan assets were 1.2
percent, 2.3 percent, 7.7 percent, 8.1 percent, and 9.5
percent for the 1, 5, 10, 15, and 20 year periods ended
May 27, 2012.
On a weighted-average basis, the expected rate of
return for all defined benefit plans was 9.52 percent for
fiscal 2012, 9.53 percent for fiscal 2011, and 9.55 per-
cent for fiscal 2010. During fiscal 2012, we lowered our
weighted-average expected rate of return on plan assets
for our principal defined benefit pension and other post-
retirement plans in the United States to 8.6 percent due
to generally lower expectations for long-term rates of
return across our asset classes due to the recent global
economic slowdown and our expectation of an extended
time frame for recovery.
Lowering the expected long-term rate of return on
assets by 50 basis points would increase our net pension
and postretirement expense by $26.5 million for fiscal
2013. A market-related valuation basis is used to reduce
year-to-year expense volatility. The market-related valu-
ation recognizes certain investment gains or losses over
a five-year period from the year in which they occur.
Investment gains or losses for this purpose are the 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 fiscal year
for our defined benefit pension, other postretirement,
and postemployment benefit plan obligations. We also
use the same discount rates to determine defined ben-
efit pension, other postretirement, and postemployment
benefit plan income and expense for the following fis-
cal year. We work with our actuaries to determine the
timing and amount of expected future cash outflows 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. This forward interest rate curve is applied
to our expected future cash outflows to determine our
discount rate assumptions.
Our weighted-average discount rates were as follows:
Weighted-average Discount Rates
Defined
Other
Benefit Postretirement Postemployment
Benefit
Benefit
Pension
Plans
Plans
Plans
Obligations as of
May 27, 2012, and
fiscal 2013 expense
4.85%
4.70%
3.86 %
Obligations as of
May 29, 2011, and
fiscal 2012 expense
Fiscal 2011 expense
5.45%
5.85%
5.35%
5.80%
4.77 %
5.12 %
Lowering the discount rates by 50 basis points would
increase our net defined benefit pension, other postre-
tirement, and postemployment benefit plan expense for
fiscal 2013 by approximately $41.8 million. All obligation-
related experience gains and losses are amortized using
38
General Mills
a straight-line method over the average remaining ser-
vice 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. This 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.
The trend rates are applicable for calculations only if
the retirees’ benefits increase as a result of health care
inflation. The ultimate trend rate is adjusted annually, as
necessary, to approximate the current economic view on
the rate of long-term inflation plus an appropriate health
care cost premium. Assumed trend rates for health care
costs have an important effect on the amounts reported
for the other postretirement benefit plans.
A one percentage point change in the health care
cost trend rate would have the following effects:
In Millions
One
Percentage
Point
Increase
One
Percentage
Point
Decrease
Effect on the aggregate of the service and
interest cost components in fiscal 2013
$ 5.7
$ (4.7)
Effect on the other postretirement
accumulated benefit obligation as of
May 27, 2012
96.7
(85.4)
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 fiscal 2012, we recorded
net defined benefit pension, other postretirement, and
postemployment benefit plan expense of $106 million
compared to $95 million of expense in fiscal 2011 and
$11 million of income in fiscal 2010. As of May 27, 2012,
we had cumulative unrecognized actuarial net losses of
$1.7 billion on our defined benefit pension plans and
$232 million on our postretirement and postemployment
benefit plans, mainly as the result of liability increases
from lower interest rates and declines in the values of
plan assets. These unrecognized actuarial net losses will
result in increases in our future pension expense and
increases in postretirement expense since they currently
exceed the corridors defined by GAAP.
We use the 2012 IRS Static Mortality Table projected
forward to our plans’ measurement dates to calculate the
year-end defined benefit pension, other postretirement, and
postemployment benefit obligations and annual expense.
Actual future net defined benefit pension, other post-
retirement, and postemployment benefit plan income
or expense will depend on investment performance,
changes in future discount rates, changes in health care
cost trend rates, and other factors related to the 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 (collectively, the Act), was signed into law in
March 2010. The Act codifies health care reforms with
staggered effective dates from 2010 to 2018 with many
provisions 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 benefit 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 benefit liability in fiscal 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
financial impacts to our postretirement benefit liability
and related future expense may occur.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2011, the Financial Accounting Standards Board
(FASB) issued new accounting guidance for the presenta-
tion of other comprehensive income (OCI). This guidance
requires entities to present net income and OCI in either
a single continuous statement or in separate consecutive
statements. The guidance does not change the compo-
nents of net income or OCI, when OCI should be reclas-
sified to net income, or the EPS calculation. The guidance
is effective for fiscal years beginning after December 15,
2011, which for us is the first quarter of fiscal 2013. This
guidance will not impact our results of operations or
financial position.
Annual Report 2012
39
In December 2011, the FASB issued new accounting
disclosure requirements about the nature and exposure
of offsetting arrangements related to financial and deriv-
ative instruments. The requirements are effective for fis-
cal years beginning after January 1, 2013, which for us is
the first quarter of fiscal 2014. The requirements will not
impact our results of operations or financial position.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-
LOOKING INFORMATION FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This 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 filings
with the SEC and in our reports to stockholders.
The 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 differ 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 affect our
financial performance and could cause our actual results
in future periods to differ materially from any current
opinions or statements.
pricing actions, and promotional activities of our com-
petitors; economic conditions, including changes in infla-
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-
nificant accounting estimates; product quality and safety
issues, including recalls and product liability; changes
in consumer demand for our products; effectiveness
of advertising, marketing, and promotional programs;
changes in consumer behavior, trends, and preferences,
including weight loss trends; consumer perception of
health-related issues, including obesity; consolidation
in the retail environment; changes in purchasing and
inventory levels of significant customers; fluctuations
in the cost and availability of supply chain resources,
including raw materials, packaging, and energy; disrup-
tions or inefficiencies in the supply chain; volatility in
the market value of derivatives used to manage price
risk for certain commodities; benefit plan expenses
due to changes in plan asset values and discount rates
used to determine plan liabilities; failure of our informa-
tion technology systems; foreign economic conditions,
including currency rate fluctuations; 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 2012 Form 10-K, which could also
affect our future results.
Our future results could be affected 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,
We undertake no obligation to publicly revise any
forward-looking statements to reflect events or circum-
stances after the date of those statements or to reflect
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
fluctuations in our earnings and cash flows. 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. The 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 financial instruments.
hedge our foreign currency cash flow exposures. We
also generally swap our foreign-denominated commercial
paper borrowings and nonfunctional currency intercom-
pany loans back to U.S. dollars or the functional cur-
rency; the gains or losses on these derivatives offset 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 27, 2012, 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 fixed-rate debt, and existing and
future issuances of floating-rate debt. Primary exposures
include U.S. Treasury rates, LIBOR, Euribor, 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 financing costs, and to
achieve a desired proportion of fixed versus floating-rate
debt, based on current and projected market conditions.
Generally under these swaps, we agree with a counter-
party to exchange the difference between fixed-rate and
floating-rate interest amounts based on an agreed upon
notional principal amount.
As of May 27, 2012, we had interest rate swaps with
$835 million of aggregate notional principal amount out-
standing, all of which converts fixed-rate notes to float-
ing-rate notes.
FOREIGN EXCHANGE RISK
Foreign currency fluctuations affect our net investments
in foreign subsidiaries and foreign currency cash flows
related to third party purchases, intercompany loans,
product shipments, and foreign-denominated commercial
paper. 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, Brazilian real, British
pound sterling, Canadian dollar, Chinese renminbi, euro,
Japanese yen, Swiss franc, and Mexican peso. We mainly
use foreign currency forward contracts to selectively
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 offset 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 27, 2012, the net notional value of commod-
ity derivatives was $307 million, of which $127 million
related to agricultural inputs and $180 million related to
energy inputs. These contracts relate to inputs that gen-
erally will be utilized within the next 12 months.
EqUITY INSTRUMENTS
Equity price movements affect our compensation expense
as certain investments made by our employees in our
deferred compensation plan are revalued. We use equity
swaps to manage this risk. As of May 27, 2012, the net
notional amount of our equity swaps was $48 million.
Annual Report 2012
41
VALUE AT RISK
The 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. The models assumed
normal market conditions and used a 95 percent confi-
dence level.
The 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. The market
data were drawn from the RiskMetrics™ data set. The
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 offset by an increase or decrease in the fair
value of the underlying exposure. The positions included
in the calculations were: debt; investments; interest rate
swaps; foreign exchange forwards; commodity swaps,
futures and options; and equity instruments. The calcu-
lations do not include the underlying foreign exchange
and commodities or equity-related positions that are off-
set by these market-risk-sensitive instruments.
The 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 27, 2012, and May 29, 2011, and the average fair
value impact during the year ended May 27, 2012.
In Millions
Fair Value Impact
May 27,
2012
Average
During
Fiscal 2012
May 29,
2011
Interest rate instruments
$29.4
$29.9
$26.5
Foreign currency instruments
Commodity instruments
Equity instruments
7.1
3.8
1.1
7.6
4.4
0.6
8.7
3.9
—
42
General Mills
Reports of Management and Independent Registered Public Accounting Firm
REPORT OF MANAGEMENT RESPONSIBILITIES
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The management of General Mills, Inc. is responsible
for the fairness and accuracy of the consolidated finan-
cial statements. The 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. The
financial information throughout the Annual Report on
Form 10-K is consistent with our consolidated financial
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
effectiveness 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 financial reporting. These
formally stated and regularly communicated policies
demand highly ethical conduct from all employees.
The Audit Committee of the Board of Directors meets
regularly with management, internal auditors, and our
independent registered public accounting firm to review
internal control, auditing, and financial reporting mat-
ters. The independent registered public accounting
firm, 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 financial statements be
included in the Annual Report. The Audit Committee
also appointed KPMG LLP to serve as the Company’s
independent registered public accounting firm for fiscal
2013, subject to ratification by the stockholders at the
annual meeting.
K. J. Powell
Chairman of the Board
and Chief Executive Officer and Chief Financial Officer
D. L. Mulligan
Executive Vice President
July 3, 2012
Annual Report 2012
The 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 27, 2012 and May 29, 2011, and the related consoli-
dated statements of earnings, total equity, comprehensive
income, and redeemable interest, and cash flows for each
of the fiscal years in the three-year period ended May 27,
2012. In connection with our audits of the consolidated
financial statements, we have audited the accompany-
ing financial statement schedule. We also have audited
General Mills, Inc.’s internal control over financial report-
ing as of May 27, 2012, 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 financial statements
and financial statement schedule, for maintaining effec-
tive internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting, included in Management’s Report on
Internal Control over Financial Reporting. Our respon-
sibility is to express an opinion on these consolidated
financial statements and financial statement schedule
and an opinion on the Company’s internal control over
financial reporting based on our audits.
We conducted our audits in accordance with the stan-
dards of the Public Company Accounting Oversight
Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assur-
ance about whether the financial statements are free of
material misstatement and whether effective internal
control over financial reporting was maintained in all
material respects. Our audits of the consolidated financial
statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evalu-
ating the overall financial statement presentation. Our
audit of internal control over financial reporting included
obtaining an understanding of internal control over
financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing
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 financial reporting
is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external pur-
poses in accordance with generally accepted accounting
principles. A company’s internal control over financial
reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reason-
able detail, accurately and fairly reflect 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 financial 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 effect on the financial statements.
Because of its inherent limitations, internal control
over financial reporting may not prevent or detect mis-
statements. Also, projections of any evaluation of effec-
tiveness to future periods are subject to the risk that
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of General Mills, Inc. and subsidiar-
ies as of May 27, 2012 and May 29, 2011, and the results
of their operations and their cash flows for each of the
fiscal years in the three-year period ended May 27, 2012,
in conformity with U.S. generally accepted accounting
principles. Also in our opinion, the accompanying finan-
cial statement schedule, when considered in relation to
the basic consolidated financial 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, effective
internal control over financial reporting as of May 27,
2012, based on criteria established in Internal Control
– Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
Minneapolis, Minnesota
July 3, 2012
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)
Restructuring, impairment, and other exit costs
Operating profit
Interest, net
Earnings before income taxes and after-tax earnings from joint ventures
Income taxes
After-tax earnings from joint ventures
Fiscal Year
2012
2011
2010
$ 16,657.9
$ 14,880.2
$ 14,635.6
10,613.2
3,380.7
—
101.6
2,562.4
351.9
2,210.5
709.6
88.2
8,926.7
3,192.0
(17.4)
4.4
8,835.4
3,162.7
—
31.4
2,774.5
2,606.1
346.3
2,428.2
721.1
96.4
401.6
2,204.5
771.2
101.7
Net earnings, including earnings attributable to redeemable and noncontrolling interests
1,589.1
1,803.5
1,535.0
Net earnings attributable to redeemable and noncontrolling interests
Net earnings attributable to General Mills
Earnings per share - basic
Earnings per share - diluted
Dividends per share
See accompanying notes to consolidated financial statements.
21.8
$ 1,567.3
2.42
$
2.35
$
1.22
$
5.2
$ 1,798.3
2.80
$
2.70
$
1.12
$
4.5
$ 1,530.5
$
2.32
$
$
2.24
0.96
Annual Report 2012
Annual Report 2012
45
45
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
Redeemable interest
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 106.1 and 109.8
Accumulated other comprehensive loss
Total stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
May 27, 2012 May 29, 2011
$ 471.2
$ 619.6
1,323.6
1,478.8
59.7
358.1
3,691.4
3,652.7
8,182.5
4,704.9
865.3
1,162.3
1,609.3
27.3
483.5
3,902.0
3,345.9
6,750.8
3,813.3
862.5
$ 21,096.8
$ 18,674.5
$ 1,148.9
741.2
526.5
1,426.6
3,843.2
6,161.9
1,171.4
2,189.8
13,366.3
847.8
75.5
1,308.4
9,958.5
(3,177.0)
(1,743.7)
6,421.7
461.0
6,882.7
$ 995.1
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
$ 21,096.8
$ 18,674.5
46
46
General Mills
General Mills
Consolidated Statements of Total Equity, Comprehensive Income,
and Redeemable Interest
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
Retained Comprehensive Noncontrolling
Interests
Earnings
Loss
Accumulated
Other
Total
Total Redeemable Comprehensive
Income (Loss)
Interest
Equity
754.6 $75.5 $1,212.1 (98.6) $(2,473.1) $7,235.6
$(877.8)
$244.2 $5,416.5
754.6
Balance as of May 31, 2009
Comprehensive income:
Net earnings, including
earnings attributable to
redeemable and
noncontrolling interests
Other comprehensive income (loss)
Total comprehensive income
Cash dividends declared
($0.96 per share)
Shares purchased
Stock compensation plans (includes
income tax benefits of $114.0)
Unearned compensation related to
restricted stock unit awards
Earned compensation
Distributions to noncontrolling
interest holders
Balance as of May 30, 2010
Comprehensive income:
Net earnings, including
earnings attributable to
redeemable and
noncontrolling interests
Other comprehensive income
Total comprehensive income
Cash dividends declared
($1.12 per share)
Shares purchased
Stock compensation plans (includes
income tax benefits of $106.2)
Unearned compensation related to
restricted stock unit awards
Earned compensation
Distributions to noncontrolling
interest holders
Balance as of May 29, 2011
Comprehensive income:
Net earnings, including
earnings attributable to
redeemable and
noncontrolling interests
Other comprehensive loss
Total comprehensive
income (loss)
Cash dividends declared
($1.22 per share)
Shares purchased
Stock compensation plans (includes
income tax benefits of $63.1)
Unearned compensation related to
restricted stock unit awards
Earned compensation
Addition of redeemable and noncontrolling
interest from acquisitions
Increase in redemption
value of redeemable interest
Distributions to noncontrolling
interest holders
Balance as of May 27, 2012
754.6
1,530.5
(609.1)
4.5 1,535.0
(608.9)
0.2
926.1
$1,535.0
(608.9)
926.1
(21.3)
(691.8)
(643.7)
53.3
21.8
549.7
(65.6)
107.3
(643.7)
(691.8)
603.0
(65.6)
107.3
75.5 1,307.1 (98.1)
(2,615.2)
8,122.4
(1,486.9)
(3.8)
245.1
(3.8)
5,648.0
1,798.3
476.1
5.2
0.7
1,803.5
476.8
2,280.3
1,803.5
476.8
2,280.3
(31.8)
(1,163.5)
(729.4)
(22.2) 20.1
568.4
(70.4)
105.3
(729.4)
(1,163.5)
546.2
(70.4)
105.3
75.5 1,319.8 (109.8)
(3,210.3)
9,191.3
(1,010.8)
(4.3)
246.7
(4.3)
6,612.2
1,567.3
(732.9)
6.8 1,574.1
(784.0)
(51.1)
$15.0
(101.1)
1,589.1
(885.1)
790.1
(86.1)
704.0
(8.3)
(313.0)
(800.1)
3.2 12.0
346.3
(93.4)
108.3
(29.5)
(800.1)
(313.0)
349.5
(93.4)
108.3
263.8
263.8
904.4
(29.5)
29.5
$(1,743.7)
(5.2)
(5.2)
$461.0 $6,882.7
$847.8
754.6 $75.5 $1,308.4 (106.1) $(3,177.0) $9,958.5
See accompanying notes to consolidated financial statements.
Annual Report 2012
Annual Report 2012
47
47
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
In Millions
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable and noncontrolling interests
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
After-tax earnings from joint ventures
Stock-based compensation
Deferred income taxes
Tax benefit on exercised options
Distributions of earnings from joint ventures
Pension and other postretirement benefit plan contributions
Pension and other postretirement benefit plan expense (income)
Divestitures (gain)
Restructuring, impairment, and other exit costs (income)
Changes in current assets and liabilities, excluding the effects of acquisitions
Other, net
Net cash provided by operating activities
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
Acquisitions
Investments in affiliates, net
Proceeds from disposal of land, buildings, and equipment
Proceeds from divestiture of product lines
Exchangeable note
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 benefit on exercised options
Purchases of common stock for treasury
Dividends paid
Other, net
Net cash used by financing activities
Effect of exchange rate changes on cash and cash equivalents
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, excluding the effects of acquisitions:
Receivables
Inventories
Prepaid expenses and other current assets
Accounts payable
Other current liabilities
Changes in current assets and liabilities
See accompanying notes to consolidated financial statements.
Fiscal Year
2012
2011
2010
$ 1,589.1
$ 1,803.5
$ 1,535.0
541.5
(88.2)
108.3
149.4
(63.1)
68.0
(222.2)
77.8
—
97.8
243.8
(100.2)
2,402.0
(675.9)
(1,050.1)
(22.2)
2.2
—
(131.6)
6.8
(1,870.8)
227.9
1,390.5
(1,450.1)
233.5
63.1
(313.0)
(800.1)
(13.2)
(661.4)
(18.2)
(148.4)
619.6
$ 471.2
$
(24.2)
144.5
149.4
12.1
(38.0)
$ 243.8
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
48
48
General Mills
General Mills
Notes to Consolidated Financial Statements
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTE 1. BASIS OF PRESENTATION AND
RECLASSIFICATIONS
sales, and are recognized when the related finished prod-
uct is shipped to and accepted by the customer.
Basis of Presentation Our Consolidated Financial
Statements include the accounts of General Mills,
Inc. and all subsidiaries in which we have a control-
ling financial interest. Intercompany transactions and
accounts, including any noncontrolling and redeemable
interests’ share of those transactions, are eliminated
in consolidation.
Our fiscal year ends on the last Sunday in May. Fiscal
years 2012, 2011 and 2010 each consisted of 52 weeks.
Change in Reporting Period As part of a long-term plan
to conform the fiscal year ends of all our operations, we
have changed the reporting period of certain countries
within our International segment from an April fiscal
year end to a May fiscal year end to match our fiscal
calendar. Accordingly, in the year of change, our results
include 13 months of results from the affected opera-
tions compared to 12 months in previous fiscal years.
In fiscal 2012, we changed the reporting period for our
China operations and in fiscal 2010 we changed many of
the countries in our Asia/Pacific region. The impact of
these changes was not material to our results of oper-
ations and, therefore, we did not restate prior period
financial statements for comparability. Countries within
the International segment that remain on an April fiscal
year end include our European operations, Australia,
and Brazil.
NOTE 2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Cash and Cash Equivalents We consider all invest-
ments 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, first-out (LIFO) method, or market. Grain inven-
tories and all related cash contracts and derivatives are
valued at market with all net changes in value recorded
in earnings currently.
Inventories outside of the United States are generally
valued at the lower of cost, using the first-in, first-out
(FIFO) method, or market.
Shipping costs associated with the distribution of fin-
ished product to our customers are recorded as cost of
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 software 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 27, 2012, assets held for sale were
insignificant.
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
not be recoverable. An impairment loss would be recog-
nized when estimated undiscounted future cash flows
from the operation and disposition of the asset group
are less than the carrying amount of the asset group.
Asset groups have identifiable cash flows and are largely
independent of other asset groups. Measurement of an
impairment loss would be based on the excess of the car-
rying amount of the asset group over its fair value. Fair
value is measured using a discounted cash flow 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 report-
ing 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 often 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.
Annual Report 2012
49
Our estimates of fair value are determined based on a
discounted cash flow model. Growth rates for sales and
profits 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 fiscal
2012 assessment as of November 28, 2011, 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 finite or
indefinite-lived. Reaching a determination on useful life
requires significant judgments and assumptions regard-
ing the future effects 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. Intangible assets that are deemed to have definite
lives are amortized on a straight-line basis, over their
useful lives, generally ranging from 4 to 30 years.
Our indefinite-lived intangible assets, mainly intan-
gible assets primarily associated with the Pillsbury,
Totino’s, Progresso, Green Giant, Yoplait, Old El Paso,
and Häagen-Dazs brands, are also tested for impair-
ment annually and whenever events or changes in cir-
cumstances indicate that their carrying value may not
be recoverable. We performed our fiscal 2012 assess-
ment of our brand intangibles as of November 28, 2011.
Our estimate of the fair value of the brands was based
on a discounted cash flow model using inputs which
included: projected revenues from our annual long-range
plan; assumed royalty 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
indefinite-lived intangible assets as their related fair val-
ues were substantially in excess of the carrying values.
Our finite-lived intangible assets, primarily acquired
franchise agreements and customer relationships, are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an
asset may not be recoverable. An impairment loss would
be recognized when estimated undiscounted future cash
flows from the operation and disposition of the asset
are less than the carrying amount of the asset. Assets
generally have identifiable cash flows and are largely
independent of other assets. Measurement of an impair-
ment loss would be based on the excess of the carry-
ing amount of the asset over its fair value. Fair value is
measured using a discounted cash flow model or other
similar valuation model, as appropriate.
Investments in Joint Ventures Our investments in
companies over which we have the ability to exercise
significant influence 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-finished goods, and finished 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-
nificant business disruptions. The significant assump-
tions used to estimate fair value include revenue growth
and profitability, 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.
Redeemable Interest On July 1, 2011, we acquired a 51
percent controlling interest in Yoplait S.A.S., a consoli-
dated entity. Sodiaal International (Sodiaal) holds the
remaining 49 percent interest in Yoplait S.A.S. Sodiaal
has the ability to put a limited portion of its redeem-
able interest to us at fair value once per year up to a
maximum of 9 years. This put option requires us to clas-
sify Sodiaal’s interest as a redeemable interest outside of
equity on our Consolidated Balance Sheets for as long
as the put is exercisable by Sodiaal. When the put is no
longer exercisable, the redeemable interest will be reclas-
sified to noncontrolling interests on our Consolidated
Balance Sheets. We adjust the value of the redeem-
able interest through additional paid-in capital on our
50
General Mills
Consolidated Balance Sheets quarterly to the redeem-
able interest’s redemption value, which approximates
its fair value. During the fourth quarter of fiscal 2012,
we adjusted the redeemable interest’s redemption value
based on a discounted cash flow model. The significant
assumptions used to estimate the redemption value
include projected revenue growth and profitability from
our long range plan, capital spending, depreciation and
taxes, foreign currency rates, and a discount rate.
Variable Interest Entities As of May 27, 2012, we had
invested in five variable interest entities (VIEs). None of
our VIEs are material to our results of operations, finan-
cial condition, or liquidity as of and for the year ended
May 27, 2012. We determined whether or not we were
the primary beneficiary (PB) of each VIE using a qualita-
tive assessment that considered the VIE’s purpose and
design, the involvement of each of the interest holders,
and the risks and benefits of the VIE. We are the PB
of three of the VIEs. We provided minimal financial or
other support to our VIEs during fiscal 2012, and there
are no arrangements related to VIEs that would require
us to provide significant financial 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 redemption,
trade promotion and other costs, including estimated
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 offered
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 customers
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. The 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 specific account data. Account balances
are written off against the allowance when we deem
the amount is uncollectible.
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 first 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 significant 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
reflected 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. These 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
instrument is designated and effective as a hedge trans-
action and, if so, the type of hedge transaction. Gains or
losses on derivative instruments reported in AOCI are
Annual Report 2012
51
reclassified to earnings in the period the hedged item
affects earnings. If the underlying hedged transaction
ceases to exist, any associated amounts reported in AOCI
are reclassified to earnings at that time. Any ineffective-
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 a Black-Scholes valuation model. Stock compensa-
tion is recognized straight line over the vesting period.
Our stock compensation expense is recorded in selling,
general and administrative (SG&A) expenses 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, termination 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 benefits of tax deductions in excess of
recognized compensation cost as a financing cash flow,
thereby reducing net operating cash flows and increas-
ing net financing cash flows.
Defined Benefit Pension, Other Postretirement, and
Postemployment Benefit Plans We sponsor several
domestic and foreign defined benefit plans to provide
pension, health care, and other welfare benefits to retired
employees. Under certain circumstances, we also provide
accruable benefits to former or inactive employees in the
United States and Canada and members of our Board of
Directors, including severance and certain other benefits
payable upon death. We recognize an obligation for any
of these benefits that vest or accumulate with service.
Postemployment benefits 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 benefit plans
are unfunded.
We recognize the underfunded or overfunded status
of a defined benefit 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 affect reported
amounts of assets and liabilities, disclosures of contin-
gent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and
expenses during the reporting period. These estimates
include our accounting for promotional expenditures,
valuation of long-lived assets, intangible assets, redeem-
able interest, stock-based compensation, income taxes,
and defined benefit pension, post-retirement and post-
employment benefits. Actual results could differ from
our estimates.
Other New Accounting Standards In fiscal 2012, we
adopted new accounting guidance for fair value mea-
surements providing common fair value measurement
and disclosure requirements. The adoption of the guid-
ance did not have an impact on our results of operations
or financial condition.
In fiscal 2012, we adopted new accounting guidance
on employer’s disclosures about participation in multi-
employer benefit plans. The adoption of the guidance did
not have an impact on our results of operations or finan-
cial condition. Please refer to Note 13 to the Consolidated
Financial Statements.
In fiscal 2012, we adopted new accounting guid-
ance intended to simplify goodwill impairment testing.
Entities are allowed to perform a qualitative assessment
of goodwill impairment to determine whether a quan-
titative assessment is necessary. We adopted this guid-
ance for our annual goodwill impairment test for fiscal
2012, which was conducted in the third quarter. The
adoption of this guidance did not have an impact on our
results of operations or financial position.
In fiscal 2011, we adopted new accounting guidance on
the consolidation model for VIEs. The guidance requires
companies to qualitatively assess the determination of
the primary beneficiary of a VIE based on whether the
company (1) has the power to direct matters that most
significantly impact the VIE’s economic performance,
and (2) has the obligation to absorb losses or the right
to receive benefits of the VIE that could potentially be
52
General Mills
significant to the VIE. The adoption of the guidance
did not have an impact on our results of operations or
financial condition.
In fiscal 2010, we adopted new accounting guidance
on employer’s disclosures for post-retirement benefit
plan assets. The guidance requires an employer to dis-
close information on the investment policies and strate-
gies and the significant 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. The adoption of the guidance
did not have an impact on our results of operations or
financial condition.
In fiscal 2010, we adopted new accounting guidance
on accounting for equity method investments. The
guidance addresses the impact of the issuance of the
noncontrolling interests and business combination guid-
ance on accounting for equity method investments. The
adoption of the guidance did not have a material impact
on our results of operations or financial condition.
In fiscal 2010, we adopted new accounting guidance
issued to assist in determining whether instruments
granted in share-based payment transactions are partic-
ipating securities. The 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 earnings per share (EPS)
pursuant to the two-class method. The adoption of the
guidance did not have a material impact on our basic or
diluted EPS.
In fiscal 2010, we adopted new accounting guidance
on convertible debt instruments. The 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. The adoption of the
guidance did not have a material impact on our results
of operations or financial condition.
NOTE 3. ACQUISITIONS
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. from PAI Partners and Sodiaal
for an aggregate purchase price of $1.2 billion, includ-
ing $261.3 million of non-cash consideration for debt
assumed. Yoplait S.A.S. operates yogurt businesses in
several countries, including France, Canada, 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
consolidated both entities into our Consolidated Balance
Sheets and recorded goodwill of $1.5 billion. Indefinite
lived intangible assets acquired primarily include brands
of $476.0 million. Finite lived intangible assets acquired
primarily include franchise agreements of $440.2 million
and customer relationships of $107.3 million. In addition,
we purchased a zero coupon exchangeable note due in
2016 from Sodiaal with a notional amount of $131.6 mil-
lion and a fair value of $110.9 million. As of the date of
the acquisition, the pro forma effects of this acquisition
were not material.
During the fourth quarter of fiscal 2012, we entered
into a purchase agreement with Yoki Alimentos S.A.
(Yoki), a privately held food company headquartered in
Sao Bernardo do Campo, Brazil, for an aggregate pur-
chase price of approximately 1.97 billion Brazilian
reals (approximately $990 million as of May 27, 2012)
including the assumption of approximately 220 million
Brazilian reals (approximately $110 million as of May 27,
2012) of outstanding debt. The purchase price is sub-
ject to an adjustment based on the net asset value of
the business at the closing date. Yoki operates in sev-
eral food categories, including snacks, convenient meals,
basic foods, and seasonings. We expect the transaction
to be completed in the first half of fiscal 2013. We expect
to fund this transaction using cash available in our for-
eign subsidiaries and commercial paper.
NOTE 4. RESTRUCTURING, IMPAIRMENT, AND OTHER
EXIT COSTS
We view our restructuring activities as actions that help
us 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 sav-
ings and/or reduced depreciation. These activities result
in various restructuring costs, including asset write-offs,
exit charges including severance, contract termination
fees, and decommissioning and other costs. Depreciation
associated with restructured assets, as used in the con-
text of our disclosures regarding restructuring activity,
refers to the increase in depreciation expense caused by
Annual Report 2012
53
shortening the useful life or updating the salvage value
of depreciable fixed 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.
Expense, in Millions
Productivity and cost savings plan
Charges associated with restructuring
actions previously announced
Total
In fiscal 2010, we recorded restructuring, impairment,
and other exit costs pursuant to approved plans as
follows:
Expense, in Millions
Discontinuation of kids’ refrigerated yogurt
beverage and microwave soup product lines
$24.1
$100.6
Discontinuation of breadcrumbs product line
1.0
$101.6
at Federalsburg, Maryland plant
Sales of Contagem, Brazil bread and pasta plant
Charges associated with restructuring
actions previously announced
Total
6.2
(0.6)
1.7
$31.4
In fiscal 2012, we approved a major productivity and
cost savings plan designed to improve organizational
effectiveness and focus on key growth strategies. The
plan includes organizational changes that strengthen
business alignment, and actions to accelerate adminis-
trative efficiencies across all of our operating segments
and support functions. In connection with this initia-
tive, we expect to eliminate approximately 850 positions
globally and recorded a $100.6 million restructuring
charge, consisting of $87.6 million of employee sever-
ance expense and a non-cash charge of $13.0 million
related to the write-off of certain long-lived assets in our
U.S. Retail segment. All of our operating segments and
support functions were affected by these actions includ-
ing $69.9 million related to our U.S. Retail segment, $12.2
million related to our Bakeries and Foodservice segment,
$9.5 million related to our International segment, and
$9.0 million related to our administrative functions. We
expect to record approximately $19 million of restructur-
ing charges as a result of these actions in fiscal 2013.
These restructuring actions are expected to be completed
by the end of fiscal 2014. In fiscal 2012, we paid $3.8 mil-
lion in cash related to restructuring actions taken in fis-
cal 2012 and previous years.
In fiscal 2011, we recorded restructuring, impairment,
and other exit costs pursuant to approved plans as
follows:
Expense, in Millions
Discontinuation of fruit-flavored snack product line
$1.7
Charges associated with restructuring
actions previously announced
Total
2.7
$4.4
The roll forward of our restructuring and other exit
cost reserves, included in other current liabilities, is as
follows:
In Millions
Reserve balance as of
Contract
Severance Termination
Other
Exit
Costs
Total
May 31, 2009
$ 8.4
$ 10.3 $ 0.1 $ 18.8
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
2.6
8.1
0.1 10.8
2011 charges, including
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
2012 charges, including
foreign currency translation 82.4
—
— 82.4
Utilized in 2012
(1.0)
(2.8)
0.1 (3.7)
Reserve balance as of
May 27, 2012
$ 83.1
$ 2.7 $ 0.1 $ 85.9
The 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 reflected in our restructuring and other
exit cost reserves on our Consolidated Balance Sheets.
54
General Mills
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). This joint venture manufactures,
distributes, and markets Häagen-Dazs ice cream prod-
ucts and frozen novelties.
Results from our CPW and HDJ joint ventures are
reported for the 12 months ended March 31.
Joint venture related balance sheet activity follows:
In Millions
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
May 27,
2012
May 29,
2011
$ 934.8
$ 904.7
1,078.0
1,138.0
1,671.0
1,690.1
91.0
103.3
NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS
The components of goodwill and other intangible assets
are as follows:
May 27,
2012
May 29,
2011
$ 8,182.5 $ 6,750.8
In Millions
Goodwill
Other intangible assets:
Intangible assets not subject
to amortization:
Brands and other
indefinite-lived intangibles
4,217.1
3,771.7
In Millions
Cumulative investments
Goodwill and other intangibles
Aggregate advances
May 27,
2012
May 29,
2011
$529.0
$519.1
522.1
268.1
597.1
293.3
Intangible assets subject to amortization:
Franchise agreements, customer
relationships, and other
finite-lived intangibles
Less accumulated amortization
544.7
(56.9)
Intangible assets subject to amortization 487.8
69.2
(27.6)
41.6
Joint venture earnings and cash flow activity follows:
Total
Other intangible assets
4,704.9
3,813.3
$12,887.4
$10,564.1
Fiscal Year
In Millions
2012
2011
2010
Sales to joint ventures
Net advances
Dividends received
$10.4
22.2
68.0
$10.2
$ 10.7
1.8
128.1
72.7
88.0
Based on the carrying value of finite-lived intangible
assets as of May 27, 2012, amortization expense for each
of the next five fiscal years is estimated to be approxi-
mately $26 million.
Summary combined financial information for the joint
ventures on a 100 percent basis follows:
In Millions
Net sales:
CPW
HDJ
Total net sales
Gross margin
Fiscal Year
2012
2011
2010
$2,152.6
$2,067.2 $1,997.4
420.8
377.7
362.6
2,573.4
2,444.9 2,360.0
1,076.0
1,066.3 1,053.2
Earnings before income taxes
250.3
233.4
251.2
Earnings after income taxes
189.0
164.2
202.3
Annual Report 2012
55
The changes in the carrying amount of goodwill for
fiscal 2010, 2011, and 2012 are as follows:
NOTE 7. FINANCIAL INSTRUMENTS, RISK
MANAGEMENT ACTIVITIES, AND FAIR VALUES
U.S.
Joint
Retail International Foodservice Ventures
Bakeries
and
Total
In Millions
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
44.6
26.9
—
—
(0.5)
(1.9)
—
—
71.5
(2.4)
Other activity,
primarily foreign
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
Acquisitions
670.3
946.4
—
— 1,616.7
Other activity,
primarily foreign
currency translation
—
(119.1)
—
(65.9)
(185.0)
Balance as of
May 27, 2012 $5,813.2
$989.9
$921.1 $458.3 $8,182.5
The changes in the carrying amount of other intan-
gible assets for fiscal 2010, 2011, and 2012 are as follows:
Financial Instruments
The 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 27, 2012, and
May 29, 2011, 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 Fiscal Year
In Millions
2012
2011 2012 2011 2012
2011 2012 2011
Available for sale:
Debt securities
$52.2 $ 8.9 $52.3 $ 9.0 $0.1 $0.1 $— $—
Equity securities
1.8
2.0
5.3 6.0 3.5 4.0 — —
Total
$54.0 $10.9 $57.6 $15.0 $3.6 $4.1 $— $—
Earnings include less than $1 million of realized gains
from sales of available-for-sale marketable securities.
Gains and losses are determined by specific identifica-
tion. Classification of marketable securities as current
or noncurrent is dependent upon our intended hold-
ing period, the security’s maturity date, or both. The
aggregate unrealized gains and losses on available-for-
sale securities, net of tax effects, are classified in AOCI
within stockholders’ equity.
Scheduled maturities of our marketable securities are
U.S.
Retail
International
Joint
Ventures
Total
as follows:
In Millions
Balance as of
May 31, 2009
$3,208.9
$ 462.6
$75.5 $3,747.0
Other activity,
primarily foreign
In Millions
Under 1 year (current)
From 1 to 3 years
currency translation
(2.3)
(17.3)
(12.4)
(32.0)
From 4 to 7 years
Balance as of
Over 7 years
May 30, 2010
3,206.6
445.3
63.1 3,715.0
Equity securities
Available for Sale
Cost
Market
Value
$ 46.6
$ 46.6
0.5
5.1
—
1.8
0.5
5.2
—
5.3
Acquisitions
Other activity,
primarily foreign
39.3
6.0
—
45.3
Total
$54.0
$57.6
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
Acquisitions
Other activity,
primarily foreign
58.2
1,050.3
— 1,108.5
currency translation
(3.7)
(204.1)
(9.1)
(216.9)
Balance as of
May 27, 2012
$3,297.0
$1,344.1
$63.8 $4,704.9
Cash, cash equivalents, and marketable securities
totaling $6.6 million as of May 27, 2012, were pledged as
collateral for derivative contracts.
The fair value and carrying amount of long-term debt,
including the current portion, were $7,664.5 million and
$6,903.1 million, respectively, as of May 27, 2012. The
fair value of long-term debt was estimated using market
quotations and discounted cash flows based on our cur-
rent incremental borrowing rates for similar types of
56
General Mills
instruments. Long-term debt would be a Level 2 liability
in the fair value hierarchy.
Unallocated corporate items for fiscal 2012 and fiscal
2011 included:
Risk Management Activities
As a part of our ongoing operations, we are exposed to
market risks such as changes in interest rates, foreign
currency exchange rates, commodity prices, and equity
prices. To manage these risks, we may enter into various
derivative transactions (e.g., futures, options, and swaps)
pursuant 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 offset 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 flow
hedge accounting, we nonetheless believe that these
instruments are effective 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 affects
earnings. At that time we reclassify the gain or loss
from unallocated corporate items to segment operating
profit, allowing our operating segments to realize the
economic effects of the derivative without experiencing
any resulting mark-to-market volatility, which remains
in unallocated corporate items.
In Millions
2012
2011
2010
Net gain (loss) on mark-to-market
valuation of commodity positions $ (122.5) $ 160.3 $ (54.7)
Fiscal Year
Net loss (gain) on commodity
positions reclassified from
unallocated corporate items
to segment operating profit
35.7
(93.6)
55.7
Net mark-to-market revaluation
of certain grain inventories
(17.4)
28.5
(8.1)
Net mark-to-market valuation of
certain commodity positions
recognized in unallocated
corporate items
$ (104.2) $ 95.2 $ (7.1)
As of May 27, 2012, the net notional value of com-
modity derivatives was $307.4 million, of which $126.9
million related to agricultural inputs and $180.5 million
related to energy inputs. These 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 fixed-rate debt, and existing and
future issuances of floating-rate debt. Primary exposures
include U.S. Treasury rates, LIBOR, Euribor, 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 financing costs, and to
achieve a desired proportion of fixed versus floating-rate
debt, based on current and projected market conditions.
Generally under these swaps, we agree with a counter-
party to exchange the difference between fixed-rate and
floating-rate interest amounts based on an agreed upon
notional principal amount.
Floating Interest Rate Exposures — Floating-to-fixed
interest rate swaps are accounted for as cash flow
hedges, as are all hedges of forecasted issuances of debt.
Effectiveness is assessed based on either the perfectly
effective hypothetical derivative method or changes in
the present value of interest payments on the underly-
ing debt. Effective gains and losses deferred to AOCI are
reclassified into earnings over the life of the associated
debt. Ineffective gains and losses are recorded as net
Annual Report 2012
57
interest. The amount of hedge ineffectiveness was less
than $1 million in each of fiscal 2012, 2011, and 2010.
Fixed Interest Rate Exposures — Fixed-to-floating
interest rate swaps are accounted for as fair value
hedges with effectiveness 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. Ineffective
gains and losses on these derivatives and the underlying
hedged items are recorded as net interest. The amount
of hedge ineffectiveness was less than $1 million in each
of fiscal 2012, 2011, and 2010.
During the fourth quarter of fiscal 2011, first quar-
ter of fiscal 2012 and second quarter of fiscal 2012, we
entered into $500.0 million, $300.0 million, and $200.0
million of forward starting swaps with average fixed
rates of 3.9 percent, 2.7 percent, and 2.4 percent, respec-
tively, in advance of a planned debt financing. All of
these forward starting swaps were cash settled for
$100.4 million coincident with the issuance of our $1.0
billion 10-year fixed rate notes in November 2011. As of
May 27, 2012, there was a $94.6 million pre-tax loss
in AOCI, which will be reclassified to earnings over the
term of the underlying debt.
During the fourth quarter of fiscal 2011, we entered
into swaps to convert $300.0 million of 1.55 percent
fixed-rate notes due May 16, 2014, to floating rates.
During the fourth quarter of fiscal 2010, in advance of
a planned debt financing, we entered into $500.0 mil-
lion of treasury lock derivatives with an average fixed
rate of 4.3 percent. All of these treasury locks were cash
settled for $17.1 million during the first quarter of fiscal
2011, coincident with the issuance of our $500.0 million
30-year fixed-rate notes. As of May 27, 2012, a $15.7 mil-
lion pre-tax loss remained in AOCI, which will be reclas-
sified to earnings over the term of the underlying debt.
During the second quarter of fiscal 2010, we entered
into $700.0 million of interest rate swaps to con-
vert $700.0 million of 5.65 percent fixed-rate notes to
floating rates. In May 2010, we repurchased $179.2 mil-
lion of our 5.65 percent notes. We received $2.7 million
to settle a portion of these swaps that related to the
repurchased debt.
As of May 27, 2012, a $10.5 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 reclassified to earnings over the term of
the underlying debt.
The following table summarizes the notional amounts
and weighted-average interest rates of our interest rate
swaps. Average floating rates are based on rates as of
the end of the reporting period.
In Millions
May 27,
2012
May 29,
2011
Pay-floating swaps - notional amount
$834.6
$838.0
Average receive rate
Average pay rate
Pay-fixed forward starting swaps -
1.7%
0.3 %
1.8%
0.2%
notional amount
$
—
$ 500.0
The swap contracts mature at various dates from fis-
cal 2013 to 2014 as follows:
In Millions
2013
2014
Total
Pay Floating
$534.6
300.0
$834.6
Foreign Exchange Risk
Foreign currency fluctuations affect our net investments
in foreign subsidiaries and foreign currency cash flows
related to third party purchases, intercompany loans,
product shipments, and foreign-denominated commer-
cial paper. We are also exposed to the translation of
foreign currency earnings to the U.S. dollar. Our prin-
cipal exposures are to the Australian dollar, Brazilian
real, 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 foreign currency cash flow expo-
sures. We also generally swap our foreign-denominated
commercial paper borrowings and nonfunctional cur-
rency intercompany loans back to U.S. dollars or the
functional currency; the gains or losses on these deriv-
atives offset the foreign currency revaluation gains
or losses recorded in earnings on the associated bor-
rowings. We generally do not hedge more than 18
months forward.
As of May 27, 2012, the notional value of foreign
exchange derivatives was $930.2 million. The amount of
hedge ineffectiveness was less than $1 million in each of
fiscal 2012, 2011, and 2010.
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
58
General Mills
exchange forward contracts. As of May 27, 2012, we
had deferred net foreign currency transaction losses of
$95.7 million in AOCI associated with hedging activity.
Equity Instruments
Equity price movements affect our compensation
expense as certain investments made by our employees
in our deferred compensation plan are revalued. We use
equity swaps to manage this risk. As of May 27, 2012,
the net notional amount of our equity swaps was $48.1
million. These swap contracts mature in fiscal 2013.
Fair Value Measurements And Financial Statement Presentation
The fair values of our assets, liabilities, and derivative positions recorded at fair value and their respective levels in the
fair value hierarchy as of May 27, 2012 and May 29, 2011, were as follows:
In Millions
Level 1 Level 2 Level 3
Total Level 1 Level 2 Level 3
Total
May, 27, 2012
May 27, 2012
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)
Equity contracts (a) (e)
Commodity contracts (c) (e)
Grain contracts (c) (e)
Total
Other assets and liabilities reported at fair value:
Marketable investments (a) (f)
Total
$ — $ 5.7 $ — $ 5.7 $ — $ —
$ — $ —
—
11.5
— 11.5
— (18.8)
— (18.8)
—
17.2
— 17.2
— (18.8)
— (18.8)
—
0.5
— 0.5 — —
— —
—
6.6
— 6.6
—
(1.1)
—
(1.1)
—
—
—
—
— (0.1)
—
(0.1)
8.0 1.0
— 9.0
— (15.1)
— (15.1)
—
8.3
— 8.3
— (20.6)
— (20.6)
8.0 16.4
— 24.4
— (36.9)
— (36.9)
5.3 52.3
— 57.6
—
—
— —
5.3 52.3
— 57.6
—
—
—
—
Total assets, liabilities, and derivative positions recorded at fair value
$ 13.3 $ 85.9 $ — $ 99.2 $ — $ (55.7) $ — $ (55.7)
Annual Report 2012
59
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
— 57.1
— (19.9)
—
(19.9)
14.6 16.3
—
30.9
—
—
—
—
— 61.1
— 61.1
—
(29.0)
— (29.0)
14.6 136.7
— 151.3
— (49.8)
— (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)
(a) These 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) These 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.
We did not significantly change our valuation techniques from prior periods.
60
General Mills
Information related to our cash flow hedges, fair value hedges, and other derivatives not designated as hedging
instruments for the fiscal years ended May 27, 2012, and May 29, 2011, follows:
In Millions
Derivatives in Cash Flow Hedging Relationships:
Amount of loss recognized in other
comprehensive income (OCI) (a)
Amount of loss reclassified from
AOCI into earnings (a) (b)
Amount of gain (loss) recognized
in earnings (c)
Derivatives in Fair Value Hedging Relationships:
Amount of net gain (loss) recognized
Interest Rate Foreign Exchange
Contracts
Contracts
Equity
Contracts
Commodity
Contracts
Total
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
$ (78.6) $(20.9) $(7.3) $(18.9)
$ — $ — $ —
$ — $(85.9) $(39.8)
(8.2) (13.1)
(9.9) (16.7)
—
—
—
— (18.1) (29.8)
(0.5)
(0.4)
(0.3)
0.3
—
—
—
— (0.8)
(0.1)
in earnings (d)
(0.8)
0.3
—
—
—
—
—
—
(0.8)
0.3
Derivatives Not Designated as Hedging Instruments:
Amount of gain (loss) recognized in earnings (d)
(a) Effective portion.
—
1.0 (1.3) 23.7
(1.0)
— (122.5) 160.3 (124.8) 185.0
(b) Loss reclassified 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 ineffective portion of the hedging relationship, including SG&A expenses for foreign exchange con-
tracts. No amounts were reported as a result of being excluded from the assessment of hedge effectiveness.
(d) 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.
Annual Report 2012
61
Amounts Recorded In Accumulated Other
Comprehensive Loss
Unrealized losses from interest rate cash flow hedges
recorded in AOCI as of May 27, 2012, totaled $73.6
million after tax. These deferred losses are primarily
related to interest rate swaps that we entered into in
contemplation of future borrowings and other financ-
ing requirements and that are being reclassified into net
interest over the lives of the hedged forecasted transac-
tions. Unrealized losses from foreign currency cash flow
hedges recorded in AOCI as of May 27, 2012, were $1.7
million after-tax. The net amount of pre-tax gains and
losses in AOCI as of May 27, 2012, that we expect to be
reclassified into net earnings within the next 12 months
is $14.0 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. The aggregate fair value
of all derivative instruments with credit-risk-related
contingent features that were in a liability position on
May 27, 2012, was $19.9 million. We have posted col-
lateral of $4.3 million in the normal course of business
associated with these contracts. If the credit-risk-related
contingent features underlying these agreements had
been triggered on May 27, 2012, we would have been
required to post an additional $15.6 million of collateral
to counterparties.
Concentrations Of Credit And
Counterparty Credit Risk
During fiscal 2012, Wal-Mart Stores, Inc. and its affili-
ates (Wal-Mart) accounted for 22 percent of our con-
solidated 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 represented 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 27,
2012, Wal-Mart accounted for 26 percent of our U.S.
Retail receivables, 5 percent of our International receiv-
ables, and 9 percent of our Bakeries and Foodservice
receivables. The five largest customers in our U.S. Retail
segment accounted for 54 percent of its fiscal 2012 net
sales, the five largest customers in our International
segment accounted for 26 percent of its fiscal 2012 net
sales, and the five largest customers in our Bakeries and
Foodservice segment accounted for 46 percent of its fis-
cal 2012 net sales.
We enter into interest rate, foreign exchange, and cer-
tain commodity and equity derivatives, primarily with
a diversified 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. These
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.
The 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 $19.5 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 financial
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 The components of notes payable and
their respective weighted-average interest rates at the
end of the periods were as follows:
May 27, 2012
May 29, 2011
Weighted-
average
Interest
Rate
Notes
Payable
Weighted-
average
Interest
Rate
Notes
Payable
In Millions
U.S. commercial paper
$412.0
0.2%
$192.5
0.2%
Financial institutions
114.5
10.0
118.8
11.5
Total
$526.5
2.4%
$311.3
4.5%
To ensure availability of funds, we maintain bank
credit lines sufficient to cover our outstanding short-
term borrowings. Commercial paper is a continuing
source of short-term financing. We have commercial
paper programs available to us in the United States and
Europe. In April 2012, we entered into fee-paid commit-
ted credit lines, consisting of a $1.0 billion facility sched-
uled to expire in April 2015 and a $1.7 billion facility
62
General Mills
scheduled to expire in April 2017. Concurrent with the
execution of the credit agreements, we terminated our
credit facilities which provided $1.8 billion and $1.1 bil-
lion of revolving credit lines which were set to expire
October 2012 and October 2013, respectively. We also
have $393.8 million in uncommitted credit lines that
support our foreign operations. As of May 27, 2012,
there were no amounts outstanding on the fee-paid
committed credit lines and $114.5 million was drawn
on the uncommitted lines. The credit facilities contain
several covenants, including a requirement to maintain
a fixed charge coverage ratio of at least 2.5 times. We
were in compliance with all credit facility covenants as
of May 27, 2012.
Long-term Debt In February 2012, we repaid $1.0 billion
of 6.0 percent notes. In November 2011, we issued $1.0
billion aggregate principal amount of 3.15 percent notes
due December 15, 2021. The net proceeds were used to
repay a portion of our notes due February 2012, reduce
our commercial paper borrowings, and for general cor-
porate purposes. Interest on these notes is payable
semi-annually in arrears. These notes may be redeemed
at our option at any time prior to September 15, 2021
for a specified make whole amount and any time on
or after that date at par. These notes are senior unse-
cured, unsubordinated obligations that include a change
of control repurchase provision.
As part of our acquisition of Yoplait S.A.S., we con-
solidated $457.9 million of primarily euro-denominated
Euribor-based floating-rate bank debt. In December 2011,
we refinanced this debt with $390.5 million of euro-
denominated Euribor-based floating-rate bank debt due
at various dates through December 15, 2014.
In May 2011, we issued $300.0 million aggregate prin-
cipal amount of 1.55 percent fixed-rate notes and $400.0
million aggregate principal amount of floating-rate
notes, both due May 16, 2014. The proceeds of these
notes were used to repay a portion of our outstanding
commercial paper. The floating-rate notes bear interest
equal to three-month LIBOR plus 35 basis points, subject
to quarterly reset. Interest on the floating-rate notes is
payable quarterly in arrears. Interest on the fixed-rate
notes is payable semi-annually in arrears. The fixed-rate
notes may be redeemed at our option at any time for a
specified make whole amount. These 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 June 15, 2040. The
proceeds of these notes were used to repay a portion
of our outstanding commercial paper. Interest on these
notes is payable semi-annually in arrears. These notes
may be redeemed at our option at any time for a speci-
fied make whole amount. These notes are senior unse-
cured, unsubordinated obligations that include a change
of control repurchase provision.
In May 2010, we paid $437.0 million to repurchase in a
cash tender offer $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.
Certain of our long-term debt agreements contain
restrictive covenants. As of May 27, 2012, we were in
compliance with all of these covenants.
As of May 27, 2012, the $118.8 million pre-tax loss
recorded in AOCI associated with our previously desig-
nated interest rate swaps will be reclassified to net inter-
est over the remaining lives of the hedged transactions.
The amount expected to be reclassified from AOCI to net
interest in fiscal 2013 is $12.7 million pre-tax.
A summary of our long-term debt is as follows:
In Millions
May 27, 2012
May 29, 2011
5.65% notes due February 15, 2019
$1,150.0
$1,150.0
5.7% notes due February 15, 2017
1,000.0
1,000.0
3.15% notes due December 15, 2021
1,000.0
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
Floating-rate notes due May 16, 2014
Euribor-based floating-rate note
due December 15, 2014
1.55% notes due May 16, 2014
Medium-term notes, 0.3% to 8.0%,
due fiscal 2013 or later
Debt of consolidated contract manufacturer
6% notes due February 15, 2012
Other, including capital leases
750.0
700.0
520.8
500.0
400.0
375.5
300.0
204.2
—
—
2.6
—
750.0
700.0
520.8
500.0
400.0
—
300.0
204.4
15.0
1,019.5
14.1
Less amount due within one year
(741.2)
(1,031.3)
Total long-term debt
$6,161.9
$5,542.5
6,903.1
6,573.8
Annual Report 2012
63
As of May 27, 2012, we also had a noncontrolling
interest related to our subsidiary GMC. We hold the
entire managing membership interest, and therefore
direct the operations of GMC. We hold all interests in
GMC other than Class A Limited Membership Interests
(Class A Interests) which were held by an unrelated
third-party investor. As of May 27, 2012, the carrying
value of all outstanding Class A Interests was $242.3
million, classified as noncontrolling interests on our
Consolidated Balance Sheets.
On June 1, 2012, subsequent to our year end, we
restructured GMC through the distribution of its manu-
facturing assets, stock, inventory, cash and certain intel-
lectual property to a wholly owned subsidiary. GMC
retained the remaining intellectual property. Immediately
following the restructuring, the Class A Interests were
sold by the then current holder to another unrelated
third-party investor.
The holder of the Class A Interests receives quarterly
preferred distributions from available net income based
on the application of a floating preferred return rate,
currently equal to the sum of three-month LIBOR plus
110 basis points, to the holder’s capital account balance
established in the most recent mark-to-market valuation
(currently $251.5 million). The preferred return rate is
adjusted every three years through a negotiated agree-
ment with the Class A Interest holder or through a
remarketing auction.
For financial reporting purposes, the assets, liabilities,
results of operations, and cash flows of our non-wholly
owned subsidiaries are included in our Consolidated
Financial Statements. The third-party investor’s share of
the net earnings of these subsidiaries is reflected in net
earnings attributable to noncontrolling interests in the
Consolidated Statements of Earnings.
Our noncontrolling interests contain restrictive cov-
enants. As of May 27, 2012, we were in compliance with
all of these covenants.
Principal payments due on long-term debt in the next
five years based on stated contractual maturities, our
intent to redeem, or put rights of certain note holders
are $741.2 million in fiscal 2013, $1,445.8 million in fiscal
2014, $1,066.7 million in fiscal 2015, $0.3 million in fiscal
2016, and $1,000.0 million in fiscal 2017.
NOTE 9. REDEEMABLE AND
NONCONTROLLING INTERESTS
Our principal redeemable and noncontrolling inter-
ests relate to our Yoplait S.A.S., Yoplait Marques S.A.S.,
and General Mills Cereals, LLC (GMC) subsidiaries. In
addition, we have seven foreign subsidiaries that have
noncontrolling interests totaling $5.9 million as of
May 27, 2012.
We have a 51 percent controlling interest in Yoplait
S.A.S. and a 50 percent interest in Yoplait Marques
S.A.S. Sodiaal holds the remaining interests in each of
the entities. On the acquisition date, we recorded the
$904.4 million fair value of Sodiaal’s 49 percent euro-
denominated interest in Yoplait S.A.S. as a redeemable
interest on our Consolidated Balance Sheets. Sodiaal
has the ability to put a limited portion of its redeem-
able interest to us once per year at fair value up to a
maximum of 9 years. We adjust the value of the redeem-
able interest through additional paid-in capital on our
Consolidated Balance Sheets quarterly to the redeemable
interest’s redemption value, which approximates its fair
value. Yoplait S.A.S. pays dividends annually if it meets
certain financial metrics set forth in its shareholders
agreement. As of May 27, 2012, the redemption value
of the euro-denominated redeemable interest was
$847.8 million.
In addition, a subsidiary of Yoplait S.A.S. has entered
into an exclusive milk supply agreement for its European
operations with Sodiaal at market-determined prices
through July 1, 2021. Net purchases totaled $235.7 mil-
lion for fiscal 2012.
On the acquisition date, we recorded the $263.8 mil-
lion fair value of Sodiaal’s 50 percent euro-denominated
interest in Yoplait Marques S.A.S. as a noncontrolling
interest on our Consolidated Balance Sheets. Yoplait
Marques S.A.S. earns a royalty stream through a licens-
ing agreement with Yoplait S.A.S. for the rights to
Yoplait and related trademarks. Yoplait Marques S.A.S.
pays dividends annually based on its available cash as of
its fiscal year end.
64
General Mills
NOTE 10. STOCKHOLDERS’ EQUITY
Cumulative preference stock of 5.0 million shares, with-
out par value, is authorized but unissued.
During fiscal 2012, we repurchased 8.3 million shares
of common stock for an aggregate purchase price of
$313.0 million. During fiscal 2011, we repurchased 31.8
million shares of common stock for an aggregate pur-
chase price of $1,163.5 million. During fiscal 2010, we
repurchased 21.3 million shares of common stock for an
aggregate purchase price of $691.8 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. The authorization has
no specified termination date.
The following table provides details of total compre-
hensive income:
In Millions
Net earnings, including earnings
attributable to redeemable and
noncontrolling interests
Other comprehensive income (loss):
Foreign currency translation
Net actuarial loss
Other fair value changes:
Securities
Hedge derivatives
Reclassification to earnings:
Hedge derivatives
Amortization of losses and
prior service costs
Other comprehensive loss
Total comprehensive income (loss)
In Millions
Net earnings, including earnings
attributable to redeemable and
noncontrolling interests
Other comprehensive income (loss):
Foreign currency translation
Net actuarial gain
Other fair value changes:
Securities
Hedge derivatives
Reclassification to earnings:
Hedge derivatives
Amortization of losses and
prior service costs
Other comprehensive income
Total comprehensive income
Annual Report 2012
Pretax
General Mills
Tax
Fiscal 2012
Net
Noncontrolling
Interests
Net
Redeemable
Interest
Net
$1,567.3
$ 6.8
$ 15.0
$ (270.3)
(813.1)
$
—
308.5
$ (270.3)
(504.6)
(0.3)
(80.8)
0.1
31.2
(0.2)
(49.6)
16.3
(6.2)
10.1
131.6
(1,016.6)
(49.9)
283.7
81.7
(732.9)
$ 834.4
Fiscal 2011
(51.1)
—
—
—
—
—
(51.1)
$ (44.3)
(98.7)
—
—
(3.8)
1.4
—
(101.1)
$ (86.1)
Pretax
General Mills
Tax
Net
Noncontrolling
Interests
Net
Redeemable
Interest
Net
$1,798.3
$ 5.2
$ —
$ 358.3
93.5
(5.8)
(39.8)
$
—
(32.4)
2.2
14.4
$ 358.3
61.1
(3.6)
(25.4)
29.8
(11.3)
18.5
108.7
544.7
(41.5)
(68.6)
67.2
476.1
$2,274.4
0.7
—
—
—
—
—
0.7
$ 5.9
—
—
—
—
—
—
—
$ —
65
In Millions
Net earnings, including earnings
attributable to redeemable and
noncontrolling interests
Other comprehensive income (loss):
Foreign currency translation
Net actuarial loss
Other fair value changes:
Securities
Hedge derivatives
Reclassification to earnings:
Hedge derivatives
Amortization of losses and
prior service costs
Other comprehensive income (loss)
Total comprehensive income
Pretax
General Mills
Tax
Fiscal 2010
Net
Noncontrolling
Interests
Net
Redeemable
Interest
Net
$1,530.5
$ 4.5
$ —
$(163.3)
(786.3)
$
—
314.8
$ (163.3)
(471.5)
1.9
(25.0)
(0.7)
10.6
1.2
(14.4)
44.4
(17.0)
27.4
19.1
(909.2)
(7.6)
300.1
11.5
(609.1)
$ 921.4
0.2
—
—
—
—
—
0.2
$ 4.7
—
—
—
—
—
—
—
$ —
In fiscal 2012, 2011, and 2010, except for reclassifications to earnings, changes in other comprehensive income (loss)
were primarily non-cash items.
Accumulated other comprehensive loss balances, net of
tax effects, were as follows:
In Millions
May 27, 2012 May 29, 2011
Foreign currency translation adjustments $ 282.9
$ 553.2
Unrealized gain (loss) from:
Securities
Hedge derivatives
Pension, other postretirement,
and postemployment benefits:
Net actuarial loss
Prior service costs
1.8
(75.3)
2.0
(35.8)
(1,945.9)
(1,509.5)
(7.2)
(20.7)
Accumulated other comprehensive loss
$ (1,743.7) $(1,010.8)
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 27, 2012, a total of 41,173,306 shares
were available for grant in the form of stock options,
restricted stock, restricted stock units, and shares of
unrestricted stock under the 2011 Stock Compensation
Plan (2011 Plan) and the 2011 Compensation Plan for
Non-Employee Directors. The 2011 Plan also provides
for the issuance of cash-settled share-based units, stock
appreciation rights, and performance awards. Stock-
based awards now outstanding include some granted
under the 1998 (senior management), 1998 (employee),
2001, 2003, 2005, 2006, 2007, and 2009 stock plans and
the Executive Incentive Plan (EIP), under which no fur-
ther awards may be granted. The stock plans provide for
accelerated vesting of awards upon retirement, termina-
tion, or death of eligible employees and directors.
Stock Options The estimated fair values of stock options
granted and the assumptions used for the Black-Scholes
option-pricing model were as follows:
Fiscal Year
2012
2011
2010
Estimated fair values of
stock options granted
$ 5.88
$ 4.12
$3.20
Assumptions:
Risk-free interest rate
2.9%
2.9%
3.7%
Expected term
8.5 years
8.5 years
8.5 years
Expected volatility
Dividend yield
17.6%
3.3%
18.5%
3.0%
18.9%
3.4%
The valuation of stock options is a significant accounting
estimate that requires us to use judgments and assump-
tions that are likely to have a material impact on our finan-
cial statements. Annually, we make predictive assumptions
regarding future stock price volatility, employee exercise
behavior, dividend yield, and the forfeiture rate.
66
General Mills
Information on stock option activity follows:
Weighted-
average
Exercise
Weighted-
average
Exercise
Exercisable Price Per Outstanding Price Per
Share
(Thousands)
(Thousands)
Options
Options
Share
Balance as of
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
Granted
Exercised
Forfeited or expired
Balance as of
4,069.0
37.29
(10,279.3)
24.12
(394.3)
27.88
May 27, 2012
39,564.9 $25.27
60,942.7 $27.96
Stock-based compensation expense related to stock
option awards was $23.9 million in fiscal 2012, $26.8
million in fiscal 2011, and $34.4 million in fiscal 2010.
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
2012
2011
2010
Fiscal Year
Net cash proceeds
Intrinsic value of
$233.5
$410.4
$388.5
options exercised
$156.7
$275.6
$271.8
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 esti-
mating 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 insufficient 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. The weighted-average
expected term for all employee groups is presented in
the table above. 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 effect at the
time of grant.
Any corporate income tax benefit realized upon exer-
cise or vesting of an award in excess of that previously
recognized in earnings (referred to as a windfall tax ben-
efit) is presented in the Consolidated Statements of Cash
Flows as a financing cash flow.
Realized windfall tax benefits are credited to addi-
tional paid-in capital within the Consolidated Balance
Sheets. Realized shortfall tax benefits (amounts which
are less than that previously recognized in earnings) are
first offset against the cumulative balance of windfall
tax benefits, if any, and then charged directly to income
tax expense, potentially resulting in volatility in our
consolidated effective income tax rate. We calculated a
cumulative memo balance of windfall tax benefits from
post-1995 fiscal years for the purpose of accounting for
future shortfall tax benefits.
Options may be priced at 100 percent or more of the
fair market value on the date of grant, and generally
vest four years after the date of grant. Options gener-
ally expire within 10 years and one month after the date
of grant.
Annual Report 2012
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 2011 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 after 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. The 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 Classified
Liability Classified
Share-
settled
Units
(Thousands)
Weighted-
average
Grant-date
Fair Value
Share-
settled
Units
(Thousands)
Weighted-
average
Grant-date
Fair Value
Cash-settled
Share-based
Units
(Thousands)
Weighted-
average
Grant-date
Fair Value
Non-vested as of May 29, 2011
Granted
Vested
Forfeited or expired
Non-vested as of May 27, 2012
9,169.9
2,697.8
(3,187.0)
(128.9)
8,551.8
$30.92
37.29
29.85
34.89
$33.79
437.2
87.9
(81.7)
(46.3)
397.1
$31.01
37.21
28.99
32.06
$32.68
4,515.1
$31.58
—
31.39
31.88
$31.58
—
(269.3)
(254.3)
3,991.5
Fiscal Year
In Millions
Number of units granted (thousands)
Weighted average price per unit
2012
2011
2010
2,785.7
3,751.6
4,745.7
$37.29
$36.16
$28.03
68
General Mills
The total grant-date fair value of restricted stock unit
awards that vested during fiscal 2012 was $106.0 mil-
lion, and $93.6 million vested during fiscal 2011.
As of May 27, 2012, unrecognized compensa-
tion expense related to non-vested stock options and
restricted stock units was $150.0 million. This expense
will be recognized over 17 months, on average.
Stock-based compensation expense related to
restricted stock units and cash-settled share-based pay-
ment awards was $124.3 million for fiscal 2012, $141.2
million for fiscal 2011, and $131.0 million for fiscal 2010.
NOTE 12. EARNINGS PER SHARE
Basic and diluted EPS were calculated using the
following:
Fiscal Year
In Millions, Except per Share Data
2012
2011
2010
Net earnings attributable
to General Mills
$1,567.3 $1,798.3 $1,530.5
Average number of common
shares - basic EPS
Incremental share effect from: (a)
Stock options
Restricted stock, restricted
648.1
642.7
659.6
13.9
16.6
17.7
stock units, and other
4.7
5.5
6.0
Average number of
common shares - diluted EPS
Earnings per share - basic
Earnings per share - diluted
666.7
$2.42
$2.35
664.8
683.3
$2.80
$2.70
$2.32
$2.24
(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
2012
2011
2010
Anti-dilutive stock options
and restricted stock units
5.8
4.8
6.3
Fiscal Year
NOTE 13. RETIREMENT BENEFITS AND
POSTEMPLOYMENT BENEFITS
Defined Benefit Pension Plans We have defined benefit
pension plans covering most employees in the United
States, Canada, France, and the United Kingdom. Benefits
for salaried employees are based on length of service and
final average compensation. Benefits for hourly employ-
ees include various monthly amounts for each year of
credited service. Our funding policy is consistent with
the requirements of applicable laws. We made $200.0
million of voluntary contributions to our principal U.S.
plans in each of fiscal 2012 and fiscal 2011. We do not
expect to be required to make any contributions in fis-
cal 2013. Our principal domestic retirement plan cover-
ing salaried employees has a provision that any excess
pension assets would be allocated to active participants
if the plan is terminated within five years of a change in
control. In fiscal 2012, we announced changes to our U.S.
defined benefit pension plans. All new salaried employees
hired on or after June 1, 2013 will be eligible for a new
retirement program that does not include a defined ben-
efit pension plan. Current salaried employees will remain
in the existing defined benefit pension plan with adjust-
ments to benefits.
Other Postretirement Benefit Plans We also sponsor
plans that provide health care benefits to the majority of
our retirees in the United States and Canada. The sala-
ried health care benefit plan is contributory, with retiree
contributions based on years of service. We make deci-
sions to fund related trusts for certain employees and
retirees on an annual basis. We did not make voluntary
contributions to these plans in fiscal 2012 or fiscal 2011.
Health Care Cost Trend Rates Assumed health care
cost trends are as follows:
Fiscal Year
2012
2011
Health care cost trend rate for next year
8.5%
8.5%
Rate to which the cost trend rate is
assumed to decline (ultimate rate)
5.2%
5.2%
Year that the rate reaches the
ultimate trend rate
2019
2019
Annual Report 2012
69
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. This 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
until the ultimate trend rate of 5.2 percent is reached in
2019 for all retirees. The trend rates are applicable for
calculations only if the retirees’ benefits increase as a
result of health care inflation. The ultimate trend rate
is adjusted annually, as necessary, to approximate the
current economic view on the rate of long-term inflation
plus an appropriate health care cost premium. Assumed
trend rates for health care costs have an important
effect on the amounts reported for the other postretire-
ment benefit plans.
A one percentage point change in the health care cost
trend rate would have the following effects:
In Millions
One
Percentage
Point
Increase
One
Percentage
Point
Decrease
Effect on the aggregate of the service and
interest cost components in fiscal 2013
$ 5.7
$ (4.7)
Effect on the other postretirement
accumulated benefit obligation as of
May 27, 2012
96.7
(85.4)
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. The Act codifies health care reforms with
staggered effective dates from 2010 to 2018. Estimates
of the future impacts of several of the Act’s provisions
are incorporated into our postretirement benefit liability
including the elimination of lifetime maximums and the
imposition of an excise tax on high cost health plans.
These changes resulted in a $24.0 million increase in our
postretirement benefit liability in fiscal 2010.
Postemployment Benefit Plans Under certain circum-
stances, we also provide accruable benefits 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 benefits that vest or accumulate with service.
Postemployment benefits 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 benefit plans are
unfunded.
We use our fiscal year end as the measurement date
for our defined benefit pension and other postretirement
benefit plans.
70
General Mills
Summarized financial information about defined benefit pension, other postretirement, and postemployment ben-
efit plans is presented below:
In Millions
Change in Plan Assets:
Fair value at beginning of year
Actual return on assets
Employer contributions
Plan participant contributions
Benefits payments
Foreign currency
Fair value at end of year
Change in Projected Benefit Obligation:
Defined Benefit
Pension Plans
Fiscal Year
Other
Postretirement
Benefit Plans
Fiscal Year
Postemployment
Benefit Plans
Fiscal Year
2012
2011
2012
2011
2012
2011
$4,264.0
$3,529.8
$ 353.8 $ 284.3
56.3
688.9
222.1
220.7
(4.8)
60.7
0.1
0.1
20.3
4.1
12.2
11.8
(203.3)
(188.2)
(2.5)
(3.1)
(5.5)
8.7
$4,353.9 $4,264.0
—
—
$ 358.8 $ 353.8
Benefit obligation at beginning of year
$4,458.4
$4,030.0
$ 1,065.8 $1,060.6
$ 131.3 $ 130.3
Service cost
Interest cost
Plan amendment
Curtailment/other
Plan participant contributions
Medicare Part D reimbursements
Actuarial loss (gain)
Benefits payments
Foreign currency
Acquisitions
114.3
101.4
18.0
237.9
230.9
55.6
18.7
60.1
(35.3)
7.5
4.8
—
—
11.9
—
0.1
(13.4)
(27.1)
20.3
—
—
—
4.1
—
12.2
11.8
—
4.7
4.5
—
—
8.0
5.1
—
4.2
—
405.7
271.2
(203.5)
(188.2)
28.4
(55.5)
2.0
5.5
(0.5)
(56.9)
(19.6)
(16.1)
(5.9)
4.8
9.0
—
(0.3)
—
0.3
—
(0.1)
—
0.3
—
Projected benefit obligation at end of year
$4,991.5 $4,458.4
$1,129.0 $1,065.8
$ 141.3
$ 131.3
Plan assets less than benefit
obligation as of fiscal year end
$ (637.6) $ (194.4)
$ (770.2) $ (712.0)
$ (141.3)
$ (131.3)
The accumulated benefit obligation for all defined benefit pension plans was $4,504.7 million as of May 27, 2012,
and $3,991.6 million as of May 29, 2011.
Amounts recognized in AOCI as of May 27, 2012, and May 29, 2011, are as follows:
Defined Benefit
Pension Plans
Fiscal Year
Other
Postretirement
Benefit Plans
Fiscal Year
Postemployment
Benefit Plans
Fiscal Year
Total
Fiscal Year
In Millions
2012
2011
2012
2011
2012
2011
2012
2011
Net actuarial loss
$(1,714.1) $(1,313.9)
$(215.0) $(181.3)
$(16.8)
$(14.3)
$(1,945.9) $(1,509.5)
Prior service (costs) credits
(22.0)
(35.8)
19.0
20.7
(4.2)
(5.6)
(7.2)
(20.7)
Amounts recorded in accumulated
other comprehensive loss
$(1,736.1) $(1,349.7)
$(196.0) $(160.6)
$(21.0)
$(19.9)
$(1,953.1) $(1,530.2)
Annual Report 2012
71
Plans with accumulated benefit obligations in excess of plan assets are as follows:
Defined Benefit
Pension Plans
Fiscal Year
Other
Postretirement
Benefit Plans
Fiscal Year
Postemployment
Benefit Plans
Fiscal Year
In Millions
2012
2011
2012
2011
2012
2011
Projected benefit obligation
Accumulated benefit obligation
Plan assets at fair value
$423.4
$335.1
$
— $
—
$
—
$
—
361.5
280.6
1,129.0 1,065.8
141.3
131.3
53.0
9.0
358.8 353.8
—
—
Components of net periodic benefit expense (income) are as follows:
Defined Benefit
Pension Plans
Fiscal Year
Other
Postretirement
Benefit Plans
Fiscal Year
Postemployment
Benefit Plans
Fiscal Year
2012
2011
2010
2012
2011
2010
2012
2011
2010
$ 114.3
$ 101.4 $ 70.9
$ 18.0
$ 18.7
$ 12.9
$ 7.5
$ 8.0
$ 7.2
In Millions
Service cost
Interest cost
Amortization of prior service
costs (credits)
Other adjustments
Net expense (income)
5.1
—
2.1
2.4
4.2
5.7
—
1.0
2.4
10.6
Expected return on plan assets
(440.3)
(408.5)
(400.1)
Amortization of losses
108.1
81.4
8.4
237.9
230.9
230.3
55.6
(35.5)
14.5
60.1
61.6
(33.2)
14.4
(29.2)
2.0
4.8
—
1.7
8.6
—
9.0
—
6.9
—
(3.4)
—
(0.6)
—
(1.6)
—
2.1
12.0
$ 28.6
$ 14.2 $ (83.6)
$ 49.2
$ 59.4
$ 45.7
$ 28.1
$ 21.8
$ 26.9
We expect to recognize the following amounts in net periodic benefit expense (income) in fiscal 2013:
In Millions
Amortization of losses
Amortization of prior service costs (credits)
Defined Benefit
Pension Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
$136.0
6.2
$17.3
(3.4)
$2.2
1.9
Assumptions Weighted-average assumptions used to determine fiscal year-end benefit obligations are as follows:
Discount rate
Rate of salary increases
Defined Benefit
Pension Plans
Fiscal Year
Other
Postretirement
Benefit Plans
Fiscal Year
Postemployment
Benefit Plans
Fiscal Year
2012
2011
2012
2011
2012
2011
4.85%
5.45%
4.70%
5.35%
4.44
4.92
—
—
3.86%
4.45
4.77%
4.92
72
General Mills
Weighted-average assumptions used to determine fiscal year net periodic benefit expense (income) are as follows:
Defined Benefit
Pension Plans
Fiscal Year
Other
Postretirement
Benefit Plans
Fiscal Year
Postemployment
Benefit Plans
Fiscal Year
2012
2011
2010
2012
2011
2010
2012
2011
2010
Discount rate
5.45%
5.85%
7.49%
5.35%
5.80%
7.45%
4.77%
5.12%
Rate of salary increases
4.92
4.93
4.92
—
—
—
4.92
4.93
7.06%
4.93
Expected long-term rate of
return on plan assets
9.52
9.53
9.55
9.32
9.33
9.33
—
—
—
Discount Rates Our discount rate assumptions are
determined annually as of the last day of our fiscal
year for our defined benefit pension, other postretire-
ment, and postemployment benefit plan obligations.
We also use the same discount rates to determine
defined benefit pension, other postretirement, and pos-
temployment benefit plan income and expense for the
following fiscal year. We work with our actuaries to
determine the timing and amount of expected future
cash outflows 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. This forward interest
rate curve is applied to our expected future cash out-
flows to determine our discount rate assumptions.
Fair Value of Plan Assets The fair values of our pen-
sion and postretirement benefit plans’ assets and their
respective levels in the fair value hierarchy at May
27, 2012 and May 29, 2011, by asset category were as
follows:
In Millions
Level 1
Level 2
Level 3
Total Assets
May 27, 2012
Fair value measurement of pension plan assets:
Equity (a)
Fixed income (b)
Real asset investments (c)
Other investments (d)
Cash and accruals
$ 1,119.2
$ 717.6
$ 575.4
$ 2,412.2
506.1
135.0
—
153.4
647.2
88.9
49.6
—
—
361.2
0.3
—
1,153.3
585.1
49.9
153.4
Total fair value measurement of pension plan assets
$ 1,913.7
$ 1,503.3
$ 936.9
$ 4,353.9
Fair value measurement of postretirement benefit plan assets:
Equity (a)
Fixed income (b)
Real asset investments (c)
Other investments (d)
Cash and accruals
$
12.6
$ 135.4
$ 22.0
$ 170.0
15.7
4.3
—
10.7
39.1
5.7
104.9
—
—
8.4
—
—
54.8
18.4
104.9
10.7
Fair value measurement of postretirement benefit plan assets
$
43.3
$ 285.1
$ 30.4
$ 358.8
Annual Report 2012
73
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 benefit 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 benefit plan assets
$
35.7
$ 278.0
$ 40.1
$ 353.8
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 financing, and expected cash flows. 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 fixed income exposure to policy allocations. Investments
include: i) fixed income securities and bond futures generally valued at closing prices from national exchanges, fixed income pricing models, and/or inde-
pendent financial analysts; and ii) fixed 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, fixed income, and real estate securities for purposes of meeting Canadian pension plan asset allocation policies, and insur-
ance and annuity contracts for purposes of providing a stable stream of income for retirees and to fund postretirement medical benefits. 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
The following table is a roll forward of the Level 3 investments of our pension and postretirement benefit plans’
assets during the years ended May 27, 2012, and May 29, 2011:
In Millions
Pension benefit plan assets:
Equity
Fixed income
Real asset investments
Other investments
Fiscal 2012
Balance as of
May 29, 2011
Transfers
In/(Out)
Purchases, Sales
Issuances, and
Net Balance as of
Settlements (Net) Gain (Loss) May 27, 2012
$568.5
$ (1.2)
$(28.4)
$ 36.5
$575.4
0.2
—
356.9
(48.9)
0.3
—
(0.2)
32.8
—
—
20.4
—
—
361.2
0.3
Fair value activity of pension level 3 plan assets
$925.9
$(50.1)
$ 4.2
$ 56.9
$936.9
Postretirement benefit plan assets:
Equity
Fixed income
Real asset investments
$ 26.3
$ —
$ (4.1)
$ (0.2)
$ 22.0
0.2
13.6
—
(4.0)
—
(1.1)
(0.2)
(0.1)
—
8.4
Fair value activity of postretirement benefit level 3 plan assets
$ 40.1
$ (4.0)
$ (5.2)
$ (0.5)
$ 30.4
In Millions
Pension benefit 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)
1.5
16.0
42.2
—
—
0.2
356.9
0.3
Fair value activity of pension level 3 plan assets
$815.7
$ 1.5
$ (36.4)
$ 145.1
$925.9
Postretirement benefit plan assets:
Equity
Fixed income
Real asset investments
$ 25.7
$ —
$ (3.7)
$
4.3
$ 26.3
1.7
14.6
—
—
(1.5)
(2.2)
—
1.2
0.2
13.6
Fair value activity of postretirement benefit level 3 plan assets
$ 42.0
$ —
$ (7.4)
$
5.5
$ 40.1
The net change in Level 3 assets attributable to unre-
alized losses at May 27, 2012, was $32.1 million for our
pension plan assets, and $5.2 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 inflation assumptions. We review this assumption
annually for each plan, however, our annual investment
performance for one particular year does not, by itself,
significantly influence our evaluation.
Annual Report 2012
75
Weighted-average asset allocations for the past two
fiscal years for our defined benefit pension and other
postretirement benefit plans are as follows:
Defined Benefit
Pension Plans
Other Postretirement
Benefit Plans
Fiscal Year
Fiscal Year
2012
2011
2012
2011
In Millions
2013
2014
2015
2016
2017
Asset category:
United States equities 28.7%
30.1%
38.4%
International equities
15.7
Private equities
Fixed income
Real assets
13.3
28.6
13.7
37.6%
18.7
7.3
18.9
13.5
19.9
6.2
23.9
30.3
30.1
13.6
5.2
6.3
Total
100.0%
100.0% 100.0%
100.0%
The investment objective for our defined benefit pen-
sion and other postretirement benefit plans is to secure
the benefit obligations to participants at a reasonable
cost to us. Our goal is to optimize the long-term return
on plan assets at a moderate level of risk. The defined
benefit pension and other postretirement portfolios are
broadly diversified across asset classes. Within asset
classes, the portfolios are further diversified across
investment styles and investment organizations. For the
defined benefit pension plans, the long-term investment
policy allocation is: 25 percent to equities in the United
States; 15 percent to international equities; 10 percent to
private equities; 35 percent to fixed income; and 15 per-
cent to real assets (real estate, energy, and timber). For
other postretirement benefit plans, the long-term invest-
ment policy allocations are: 30 percent to equities in the
United States; 20 percent to international equities; 10
percent to private equities; 30 percent to fixed income;
and 10 percent to real assets (real estate, energy, and
timber). The actual allocations to these asset classes may
vary tactically around the long-term policy allocations
based on relative market valuations.
Contributions and Future Benefit Payments We do
not expect to be required to make contributions to our
defined benefit, other postretirement, and postemploy-
ment benefit plans in fiscal 2013. Actual fiscal 2013
contributions could exceed our current projections, as
influenced by our decision to undertake discretion-
ary funding of our benefit trusts and future changes
in regulatory requirements. Estimated benefit payments,
which reflect expected future service, as appropriate, are
expected to be paid from fiscal 2013 to 2022 as follows:
Other
Defined
Benefit
Pension
Postretirement Medicare Postemployment
Benefit
Subsidy
Benefit Plans
Plans
Plans Gross Payments Receipts
$ 217.5
$ 58.6
$ 5.3
226.5
236.0
245.8
256.9
62.1
64.6
66.2
68.9
5.8
6.3
6.9
7.5
$19.3
17.6
16.3
15.3
14.6
66.7
2018-2022
1,470.4
382.2
34.5
Defined Contribution Plans The General Mills Savings
Plan is a defined contribution plan that covers domestic
salaried, hourly, nonunion, and certain union employees.
This 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 $18.7 mil-
lion as of May 27, 2012, and $18.1 million as of May
29, 2011. We also sponsor defined contribution plans
in many of our foreign locations. Our total recognized
expense related to defined contribution plans was $41.8
million in fiscal 2012, $41.8 million in fiscal 2011, and
$64.5 million in fiscal 2010.
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. Effective 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. The number of
shares of our common stock allocated to participants in
the ESOP was 10.6 million as of May 27, 2012, and 11.2
million as of May 29, 2011.
The ESOP’s only assets are our common stock and
temporary cash balances. The ESOP’s share of the total
defined contribution expense was $53.7 million in fiscal
2010. The ESOP’s expense was calculated by the “shares
allocated” method.
The Company stock fund and the ESOP held $638.6
million and $648.1 million of Company common stock as
of May 27, 2012, and May 29, 2011.
Multiemployer Benefit Plan We participate in the
Western Conference of Teamsters Pension Plan (WCTPP)
(EIN: 91-6145047; Plan Number: 001), a trustee-managed
multiemployer defined benefit pension plan. We cur-
rently have approximately 20 employees participating
in the WCTPP and contributions were less than $1.0
76
General Mills
million in each of the last three years, which represent
less than 5 percent of total contributions to the plan
each year. The Plan reported a “Green Zone” status for
the 2011 and 2010 plan years as defined by the Pension
Protection Act. For the plan year ending December 31,
2011, we had an estimated withdrawal liability of less
than $1.0 million. If other employers withdrew from the
plan, our share of the unvested liability could increase.
NOTE 14. INCOME TAXES
The components of earnings before income taxes and
after-tax earnings from joint ventures and the corre-
sponding income taxes thereon are as follows:
In Millions
2012
2011
2010
Fiscal Year
Earnings before income
taxes and after-tax earnings
from joint ventures:
The following table reconciles the United States statu-
tory income tax rate with our effective income tax rate:
Fiscal Year
2012
2011
2010
United States statutory rate
35.0%
35.0%
35.0%
State and local income taxes,
net of federal tax benefits
Foreign rate differences
Enactment date effect of
health care reform
1.4
(2.0)
—
Court decisions and audit settlements
—
Domestic manufacturing deduction
Other, net
(1.8)
(0.5)
2.7
(2.0)
—
(3.7)
(1.6)
(0.7)
2.5
(1.8)
1.3
—
(1.8)
(0.2)
Effective income tax rate
32.1%
29.7%
35.0%
The tax effects of temporary differences that give rise
to deferred tax assets and liabilities are as follows:
In Millions
May 27, 2012
May 29, 2011
United States
$1,816.5 $2,144.8 $2,060.4
Accrued liabilities
$
86.9
$ 129.5
Foreign
394.0
283.4
144.1
Compensation and employee benefits
Total earnings before
income taxes and after-tax
Unrealized hedge losses
Pension liability
earnings from joint ventures $2,210.5 $2,428.2 $2,204.5
Tax credit carryforwards
Income taxes:
Currently payable:
Federal
State and local
Foreign
Total current
Deferred:
Federal
State and local
Foreign
Total deferred
$ 399.1 $ 370.0 $ 616.0
Capital losses
Stock, partnership, and
miscellaneous investments
Net operating losses
Other
52.0
109.1
76.9
68.9
87.4
45.5
560.2
515.8
748.9
167.9
178.9
(1.3)
(17.2)
149.4
30.8
(4.4)
205.3
38.5
(4.9)
(11.3)
22.3
Total income taxes
$ 709.6 $ 721.1 $ 771.2
635.4
26.4
240.1
86.5
534.3
90.7
130.6
151.9
582.9
—
74.1
62.0
500.6
92.1
140.9
123.7
Gross deferred tax assets
1,982.8
1,705.8
Valuation allowance
Net deferred tax assets
Brands
Fixed assets
Intangible assets
Tax lease transactions
Inventories
Stock, partnership, and
miscellaneous investments
Unrealized hedges
Other
384.4
1,598.4
1,292.8
500.1
289.1
56.5
55.9
468.2
—
47.5
404.5
1,301.3
1,289.1
394.6
122.3
63.0
53.0
424.5
34.9
20.0
Gross deferred tax liabilities
2,710.1
2,401.4
Net deferred tax liability
$ 1,111.7
$ 1,100.1
We have established a valuation allowance against cer-
tain of the categories of deferred tax assets described
above as current evidence does not suggest we will real-
ize sufficient taxable income of the appropriate character
(e.g., ordinary income versus capital gain income) within
Annual Report 2012
77
the carry forward period to allow us to realize these
deferred tax benefits.
we have effectively settled all issues with the IRS for fis-
cal years 2008 and prior.
Of the total valuation allowance of $384.4 million,
$168.3 million relates to a deferred tax asset for losses
recorded as part of the Pillsbury acquisition. Of the
remaining valuation allowance, $90.7 million relates to
capital loss carryforwards and $122.1 million relates to
state and foreign operating loss carryforwards. We have
approximately $78.9 million of U.S. foreign tax credit
carryforwards for which no valuation allowance has
been recorded. As of May 27, 2012, we believe it is more-
likely-than-not that the remainder of our deferred tax
assets are realizable.
The carryforward periods on our foreign loss carry-
forwards are as follows: $86.8 million do not expire; $4.4
million expire in fiscal 2013 and 2014; and $23.0 million
expire in fiscal 2015 and beyond.
We have not recognized a deferred tax liability for
unremitted earnings of $2.8 billion from our foreign
operations because our subsidiaries have invested or
will invest the undistributed earnings indefinitely, or the
earnings will be remitted in a tax-neutral transaction.
It is not practicable for us to determine the amount of
unrecognized deferred tax liabilities on these indefinitely
reinvested earnings. Deferred taxes are recorded for
earnings of our foreign operations when we determine
that such earnings are no longer indefinitely reinvested.
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 finally resolved. While it is
often difficult to predict the final outcome or the timing
of resolution of any particular uncertain tax position,
we believe that our liabilities for income taxes reflect 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.
The number of years with open tax audits varies
depending on the tax jurisdiction. Our major taxing
jurisdictions include the United States (federal and state)
and Canada. The IRS initiated its audit of our fiscal 2009
and fiscal 2010 tax years during fiscal 2012.
During fiscal 2012, we reached a settlement with the
IRS concerning research and development tax credits
claimed for fiscal years 2002 to 2008. This settlement
did not have a material impact on our results of opera-
tions or financial position. As of the end of fiscal 2012,
During fiscal 2011, we reached a settlement with the
IRS concerning certain corporate income tax adjust-
ments for fiscal years 2002 to 2008. The 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 $108.1 million reduction in our
total liabilities for uncertain tax positions in fiscal 2011.
We made payments totaling $385.3 million in fiscal 2011
related to this settlement.
During 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 an $11.5 million increase in our total liabili-
ties for uncertain tax positions in fiscal 2011. 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 definitively resolved.
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. The Canada Revenue Agency (CRA) has completed
its review of our income tax returns in Canada for fiscal
years 2003 to 2005. The CRA has raised assessments
for these years to which we have objected or otherwise
addressed through the Mutual Agreement procedures
of the Canada-US tax treaty. We believe our positions
are supported by substantial technical authority and are
vigorously defending our positions. We do not anticipate
that any United States or Canadian tax adjustments will
have a significant impact on our financial position or
results of operations.
We apply a more-likely-than-not threshold to the rec-
ognition and derecognition of uncertain tax positions.
Accordingly we recognize the amount of tax benefit
that has a greater than 50 percent likelihood of being
ultimately realized upon settlement. Future changes in
judgment related to the expected ultimate resolution of
uncertain tax positions will affect earnings in the quar-
ter of such change.
The following table sets forth changes in our total
gross unrecognized tax benefit liabilities, excluding
accrued interest, for fiscal 2012. Approximately $148.3
million of this total represents the amount that, if recog-
nized, would affect our effective income tax rate in future
78
General Mills
periods. This amount differs from the gross unrecog-
nized tax benefits presented in the table because certain
of the liabilities below would impact deferred taxes if
recognized or are the result of stock compensation items
impacting additional paid-in capital. We also would
record a decrease in U.S. federal income taxes upon rec-
ognition of the state tax benefits included therein.
In Millions
Fiscal Year
2012
2011
Balance, beginning of year
$226.2
$552.9
Tax positions related to current year:
Additions
23.8
25.0
Tax positions related to prior years:
Additions
Reductions
Settlements
Lapses in statutes of limitations
24.3
(13.4)
(6.6)
(23.0)
75.6
(131.2)
(287.9)
(8.2)
Balance, end of year
$231.3
$226.2
As of May 27, 2012, we do not expect to pay any
unrecognized tax benefit liabilities within the next 12
months. We are not able to reasonably estimate the
timing of future cash flows beyond 12 months due to
uncertainties in the timing of tax audit outcomes. The
remaining amount of our unrecognized tax liability was
classified in other liabilities.
We report accrued interest and penalties related
to unrecognized tax benefit liabilities in income tax
expense. For fiscal 2012, we recognized $0.2 million of
tax-related net interest and penalties, and had $49.3
million of accrued interest and penalties as of May 27,
2012. For fiscal 2011, we recognized a net benefit of $10.5
million associated with tax-related interest and penal-
ties, and had $53.4 million of accrued interest and penal-
ties as of May 29, 2011.
NOTE 15. LEASES, OTHER COMMITMENTS,
AND CONTINGENCIES
An analysis of rent expense by type of property for
operating leases follows:
Fiscal Year
In Millions
2012
2011
2010
Warehouse space
$ 72.6
$ 63.4
$ 55.7
Equipment
Other
34.8
32.1
68.1
56.9
30.6
51.6
Total rent expense
$ 175.5 $ 152.4
$ 137.9
Some operating leases require payment of property
taxes, insurance, and maintenance costs in addition to
the rent payments. Contingent and escalation rent in
excess of minimum rent payments and sublease income
netted in rent expense were insignificant.
Noncancelable future lease commitments are:
In Millions
2013
2014
2015
2016
2017
After 2017
Total noncancelable future
lease commitments
Less: interest
Operating
Leases
$ 86.8
Capital
Leases
$ 1.8
69.5
54.7
45.6
32.5
48.6
$ 337.7
1.0
0.7
0.3
—
—
$ 3.8
(0.3)
$ 3.5
Present value of obligations under capital leases
These future lease commitments will be partially offset
by estimated future sublease receipts of approximately
$13.1 million. Depreciation on capital leases is recorded as
depreciation expense in our results of operations.
As of May 27, 2012, we have issued guarantees and
comfort letters of $397.8 million for the debt and other
obligations of consolidated subsidiaries, and guarantees
and comfort letters of $335.4 million for the debt and
other obligations of non-consolidated affiliates, mainly
CPW. In addition, off-balance sheet arrangements are
generally limited to the future payments under non-can-
celable operating leases, which totaled $337.7 million as
of May 27, 2012.
Contingencies We are party to various pending or
threatened legal actions in the ordinary course of our
business. In our opinion, there were no claims or litiga-
tion pending as of May 27, 2012, that were reasonably
likely to have a material adverse effect on our consoli-
dated financial position or results of operations. These
matters include a class action lawsuit filed on January 14,
2010, in the United States District Court, Central District
of California, alleging that we made false and misleading
claims about the digestive health benefits of our YoPlus
yogurt product. The YoPlus matter is scheduled to go to
trial in fiscal 2013. We believe that we have meritorious
defenses against these allegations and will vigorously
defend our position. As of May 27, 2012, we have not
recorded a loss contingency for this matter.
Annual Report 2012
79
NOTE 16. BUSINESS SEGMENT AND
GEOGRAPHIC INFORMATION
We operate in the consumer foods industry. We have
three operating segments by type of customer and geo-
graphic region as follows: U.S. Retail, 62.9 percent of our
fiscal 2012 consolidated net sales; International, 25.2
percent of our fiscal 2012 consolidated net sales; and
Bakeries and Foodservice, 11.9 percent of our fiscal 2012
consolidated net sales.
Our U.S. Retail segment reflects business with a wide
variety of grocery stores, mass merchandisers, member-
ship stores, natural food chains, and drug, dollar and
discount chains operating throughout the United States.
Our major product categories in this business segment
are ready-to-eat cereals, refrigerated yogurt, ready-to-
serve soup, dry dinners, shelf stable and frozen vege-
tables, 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 granola bars, cereal, and soup.
Our International segment consists of retail and
foodservice businesses outside of the United States.
In Canada, our major product categories are ready-to-
eat cereals, shelf stable and frozen vegetables, dry din-
ners, refrigerated and frozen dough products, dessert
and baking mixes, frozen pizza snacks, refrigerated
yogurt, 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 and franchise
fees are reported in the region or country where the end
customer is located.
In our Bakeries and Foodservice segment our major
product categories are ready-to-eat cereals, snacks,
refrigerated yogurt, frozen dough products, baking
mixes, and flour. Many products we sell are branded to
the consumer and nearly all are branded to our cus-
tomers. We sell to distributors and operators in many
customer channels including foodservice, convenience
stores, vending, and supermarket bakeries. Substantially
all of this segment’s operations are located in the United
States.
Operating profit for these segments excludes unal-
located corporate items, restructuring, impairment,
and other exit costs, and divestiture gains and losses.
Unallocated corporate items include corporate overhead
expenses, variances to planned domestic employee ben-
efits and incentives, contributions to the General Mills
Foundation, and other items that are not part of our
measurement of segment operating performance. These
include gains and losses arising from the revaluation
of certain grain inventories and gains and losses from
mark-to-market valuation of certain commodity posi-
tions until passed back to our operating segments.
These items affecting operating profit are centrally man-
aged at the corporate level and are excluded from the
measure of segment profitability reviewed by execu-
tive management. Under our supply chain organization,
our manufacturing, warehouse, and distribution activi-
ties are substantially integrated across our operations
in order to maximize efficiency and productivity. As a
result, fixed assets and depreciation and amortization
expenses are neither maintained nor available by operat-
ing segment.
Our operating segment results were as follows:
In Millions
Net sales:
U.S. Retail
Fiscal Year
2012
2011
2010
$10,480.2 $10,163.9 $10,209.8
International
4,194.3
2,875.5 2,684.9
Bakeries and Foodservice
1,983.4
1,840.8 1,740.9
Total
Operating profit:
U.S. Retail
International
$16,657.9 $14,880.2 $14,635.6
$ 2,295.3 $ 2,347.9 $ 2,385.2
429.6
291.4
192.1
Bakeries and Foodservice
286.7
306.3
263.2
Total segment operating profit
3,011.6
2,945.6 2,840.5
Unallocated corporate items
347.6
184.1
203.0
Divestitures (gain)
—
(17.4)
—
Restructuring, impairment,
and other exit costs
101.6
4.4
31.4
Operating profit
$ 2,562.4 $ 2,774.5 $ 2,606.1
The following table provides financial information by
geographic area:
In Millions
Net sales:
Fiscal Year
2012
2011
2010
United States
$12,462.1 $11,987.8 $11,934.4
Non-United States
4,195.8
2,892.4
2,701.2
Total
$16,657.9 $14,880.2 $14,635.6
80
General Mills
34.5
109.1
103.8
104.7
8.3
18.2
57.3
22.4
$358.1
$483.5
May 27,
2012
May 29,
2011
$ 75.9 $ 61.2
1,980.6
1,777.7
0.3
25.0
5,257.2
4,719.7
9.0
18.9
419.1
367.7
542.6
521.9
In Millions
Cash and cash equivalents:
United States
Non-United States
Total
In Millions
Land, buildings, and equipment:
United States
Non-United States
Total
May 27,
2012
May 29,
2011
In Millions
May 27,
2012
May 29,
2011
Prepaid expenses and other current assets:
$ 25.7 $ 123.7
Prepaid expenses
$178.3
$161.0
445.5
495.9
Accrued interest receivable,
$ 471.2 $ 619.6
including interest rate swaps
15.0
29.0
May 27,
2012
May 29,
2011
$2,804.9 $2,752.1
Derivative receivables,
primarily commodity-related
Other receivables
Grain contracts
Miscellaneous
847.8
593.8
Total
$3,652.7 $3,345.9
Generally, our products can be classified into catego-
ries of similar products, such as cereal, yogurt, whole-
some snacks, convenient meals, and super-premium ice
cream, among others. However, it is currently impracti-
cable for us to provide revenue information on this basis.
NOTE 17. SUPPLEMENTAL INFORMATION
In Millions
Land, buildings, and equipment:
Land
Buildings
Buildings under capital lease
Equipment
Equipment under capital lease
Capitalized software
Construction in progress
The components of certain Consolidated Balance Sheet
accounts are as follows:
Total land, buildings, and equipment
8,284.7
7,492.1
Less accumulated depreciation
Total
(4,632.0) (4,146.2)
$3,652.7 $3,345.9
In Millions
Receivables:
May 27,
2012
May 29,
2011
From customers
$1,345.3 $1,178.6
Less allowance for doubtful accounts
(21.7)
(16.3)
In Millions
Other assets:
Pension assets
Investments in and advances
Total
In Millions
Inventories:
$1,323.6 $1,162.3
to joint ventures
May 27,
2012
May 29,
2011
Life insurance
Derivative receivables
Exchangeable note with related party
Miscellaneous
Raw materials and packaging
Finished goods
Grain
Excess of FIFO over LIFO cost (a)
Total
$ 334.4 $ 286.2
1,211.8
1,273.6
Total
155.3
218.0
(222.7)
(168.5)
In Millions
$1,478.8 $1,609.3
Other current liabilities:
May 27,
2012
May 29,
2011
$ 42.7
$ 128.6
529.0
86.7
6.2
98.9
519.1
87.2
13.3
—
101.8
114.3
$ 865.3
$ 862.5
May 27,
2012
May 29,
2011
(a) Inventories of $930.2 million as of May 27, 2012, and $1,034.1 million as
of May 29, 2011, were valued at LIFO. During fiscal 2012, LIFO inventory
layers were reduced. Results of operations were not materially affected
by a liquidation of LIFO inventory. The difference between replacement
cost and the stated LIFO inventory value is not materially different from
the reserve for the LIFO valuation method.
Accrued payroll
$ 367.4 $ 303.3
Accrued interest, including
interest rate swaps
100.2
114.0
Accrued trade and consumer promotions
560.7
463.0
Accrued taxes
Derivative payable
Accrued customer advances
39.2
26.1
80.4
34.8
4.6
36.4
Restructuring and other exit costs reserve
85.9
Annual Report 2012
Grain contracts
Miscellaneous
Total
20.6
7.2
28.7
221.9
253.7
$ 1,426.6 $ 1,321.5
81
In Millions
Other noncurrent liabilities:
Interest rate swaps
Accrued compensation and benefits,
including obligations for underfunded
other postretirement and
May 27,
2012
May 29,
2011
The components of interest, net are as follows:
$
8.9 $
22.2
Expense (Income), in Millions
2012
2011
2010
Fiscal Year
postemployment benefit plans
1,853.1
1,412.8
Accrued income taxes
Miscellaneous
Total
230.9
233.3
Gain on debt repurchase
96.9
64.9
Interest, net
$ 2,189.8 $ 1,733.2
Interest expense
Capitalized interest
Interest income
$370.7
$360.9
$374.5
(8.9)
(9.9)
—
(7.2)
(7.4)
(6.2)
(6.8)
—
40.1
$351.9
$346.3
$401.6
Certain Consolidated Statements of Earnings amounts
amounts are as follows:
are as follows:
Fiscal Year
In Millions
Fiscal Year
2012
2011
2010
Certain Consolidated Statements of Cash Flows
In Millions
2012
2011
2010
Depreciation and amortization
$541.5
$472.6
$ 457.1
Research and development expense 245.4
235.0
218.3
Advertising and media expense
(including production and
communication costs)
913.7
843.7
908.5
Cash interest payments
$344.3
$333.1
$384.1
Cash paid for income taxes
590.6
699.3
672.5
NOTE 18. QUARTERLY DATA (UNAUDITED)
Summarized quarterly data for fiscal 2012 and fiscal 2011 follows:
In Millions, Except Per Share Amounts
2012
2011
2012
2011
2012
2011
2012
2011
First Quarter
Fiscal Year
Second Quarter
Fiscal Year
Third Quarter
Fiscal Year
Fourth Quarter
Fiscal Year
Net sales
Gross margin
Net earnings attributable
to General Mills
EPS:
Basic
Diluted
$3,847.6 $3,533.1
$4,623.8 $4,066.6
$4,120.1 $3,646.2
$4,066.4 $3,634.3
1,446.5 1,524.3
1,594.7 1,634.0
1,507.4 1,430.8
1,496.1 1,364.4
405.6
472.1
444.8
613.9
391.5
392.1
325.4
320.2
$
$
0.63 $
0.73
$ 0.69 $
0.96
$ 0.61 $
0.61
$ 0.50 $
0.50
0.61 $
0.70
$ 0.67 $
0.92
$ 0.58 $
0.59
$ 0.49 $
0.48
Dividends per share
$ 0.305 $ 0.280
$ 0.305 $ 0.280
$ 0.305 $ 0.280
$ 0.305 $ 0.280
Market price of common stock:
High
Low
$ 39.77 $ 38.93
$ 39.92 $ 37.54
$ 41.05 $ 37.20
$ 39.69 $ 39.95
$ 34.95 $ 33.57
$ 36.89 $ 34.99
$ 38.15 $ 34.60
$ 38.04 $ 35.99
During the fourth quarter of fiscal 2012, we finalized the purchase accounting for certain assets and liabilities
related to the acquisitions of Yoplait S.A.S. and Yoplait Marques S.A.S. We recorded final adjustments that resulted in
a $38.7 million decrease in goodwill.
82
General Mills
Glossary
AOCI. Accumulated other comprehensive income (loss).
Average total capital. Notes payable, long-term debt
including current portion, redeemable interest, noncon-
trolling interests, and stockholders’ equity excluding
AOCI, and certain after-tax earnings adjustments are
used to calculate return on average total capital. The
average is calculated using the average of the beginning
of fiscal year and end of fiscal year Consolidated Balance
Sheet amounts for these line items.
Core working capital. Accounts receivable plus inven-
tories less accounts payable, all as of the last day of our
fiscal year.
Depreciation associated with restructured assets.
The increase in depreciation expense caused by updat-
ing the salvage value and shortening the useful life of
depreciable fixed assets to coincide with the end of pro-
duction under an approved restructuring plan, but only
if impairment is not present.
Derivatives. Financial instruments such as futures,
swaps, options, and forward contracts that we use
to manage our risk arising from changes in commod-
ity prices, interest rates, foreign exchange rates, and
equity prices.
Fair value hierarchy. For purposes of fair value mea-
surement, we categorize assets and liabilities into one of
three levels 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 significant management judgment. The three
levels are defined as follows:
Fixed charge coverage ratio. The sum of earnings
before income taxes and fixed charges (before tax),
divided by the sum of the fixed charges (before tax)
and interest.
Generally Accepted Accounting Principles (GAAP).
Guidelines, procedures, and practices that we are
required to use in recording and reporting accounting
information in our financial statements.
Goodwill. The difference between the purchase price
of acquired companies and the related fair values of net
assets acquired.
Hedge accounting. Accounting for qualifying hedges
that allows changes in a hedging instrument’s fair value
to offset corresponding changes in the hedged item in
the same reporting period. Hedge accounting is permit-
ted for certain hedging instruments and hedged items
only if the hedging relationship is highly effective, and
only prospectively from the date a hedging relationship
is formally documented.
Interest bearing instruments. Notes payable, long-
term debt, including current portion, cash and cash
equivalents, and certain interest bearing investments
classified within prepaid expenses and other current
assets and other assets.
LIBOR. London Interbank Offered Rate.
Mark-to-market. The act of determining a value for
financial instruments, commodity contracts, and related
assets or liabilities based on the current market price for
that item.
Level 1: Unadjusted quoted prices in active markets
for identical assets or liabilities.
Level 2: 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 liabili-
ties in inactive markets.
Net mark-to-market valuation of certain commod-
ity positions. Realized and unrealized gains and losses
on derivative contracts that will be allocated to segment
operating profit when the exposure we are hedging
affects earnings.
Net price realization. The impact of list and promoted
price changes, net of trade and other price promotion costs.
Level 3: Unobservable inputs reflecting manage-
ment’s assumptions about the inputs used in
pricing the asset or liability.
Noncontrolling interests. Interests of subsidiaries
held by third parties.
Annual Report 2012
83
Notional principal amount. The principal amount on
which fixed-rate or floating-rate interest payments are
calculated.
Total debt. Notes payable and long-term debt, includ-
ing current portion.
Transaction gains and losses. The impact on our
Consolidated Financial Statements of foreign exchange
rate changes arising from specific transactions.
Translation adjustments. The impact of the conver-
sion of our foreign affiliates’ financial statements to U.S.
dollars for the purpose of consolidating our financial
statements.
Variable interest entities (VIEs). A legal structure
that is used for business purposes that either (1) does
not have equity investors that have voting rights and
share in all the entity’s profits and losses or (2) has
equity investors that do not provide sufficient financial
resources to support the entity’s activities.
Working capital. Current assets and current liabili-
ties, all as of the last day of our fiscal year.
OCI. Other comprehensive income (loss).
Operating cash flow to debt ratio. Net cash provided
by operating activities, divided by the sum of notes pay-
able and long-term debt, including current portion.
Redeemable interest. Interest of subsidiaries held by a
third party that can be redeemed outside of our control
and therefore cannot be classified as a noncontrolling
interest in equity.
Reporting unit. An operating segment or a business
one level below an operating segment.
Return on average total capital. Net earnings attrib-
utable to General Mills, excluding after-tax net interest,
and adjusted for certain items affecting year-over-year
comparability, divided by average total capital.
Segment operating profit margin. Segment operating
profit divided by net sales for the segment.
Supply chain input costs. Costs incurred to produce
and deliver product, including costs for ingredients
and conversion, inventory management, logistics, and
warehousing.
84
General Mills
Non-GAAP Measures
This report includes measures of financial performance
that are not defined by generally accepted accounting
principles (GAAP). For each of these non-GAAP finan-
cial measures, we are providing below a reconciliation of
the differences between the non-GAAP measure and the
most directly comparable GAAP measure. These non-
GAAP measures are used in reporting to our executive
management and/or as a component of the board of
director’s measurement of our performance for incentive
compensation purposes. Management and the board
of directors believe that these measures provide useful
information to investors. These non-GAAP measures
should be viewed in addition to, and not in lieu of, the
comparable GAAP measure.
TOTAL SEGMENT OPERATING PROFIT
In Millions
Net sales:
U.S. Retail
International
Bakeries and Foodservice
Total
Operating profit:
U.S. Retail
International
Bakeries and Foodservice
Total segment operating profit
Memo: Segment operating profit as a % of net sales
Unallocated corporate items
Divestitures (gain), net
Restructuring, impairment and other exit costs
2012
2011
2010
2009
2008
Fiscal Year
$ 10,480.2
4,194.3
1,983.4
$ 16,657.9
$ 10,163.9
2,875.5
1,840.8
$ 14,880.2
$ 10,209.8
2,684.9
1,740.9
$ 14,635.6
$ 9,973.6
2,571.8
2,010.4
$ 14,555.8
$ 9,028.2
2,535.5
1,984.3
$ 13,548.0
$ 2,295.3
429.6
$ 2,347.9
291.4
$ 2,385.2
192.1
$ 2,206.6
239.2
$ 1,976.7
247.5
286.7
306.3
263.2
178.4
170.2
3,011.6
2,945.6
2,840.5
2,624.2
2,394.4
18.1%
19.8%
19.4%
18.0%
17.7%
347.6
—
101.6
184.1
(17.4)
4.4
203.0
—
31.4
342.5
(84.9)
41.6
144.2
—
21.0
Operating Profit
$ 2,562.4
$ 2,774.5
$ 2,606.1
$ 2,325.0
$ 2,229.2
ADjUSTED DILUTED EPS, EXCLUDING CERTAIN ITEMS AFFECTING COMPARABILITY
Per Share Data
Diluted earnings per share, as reported
Mark-to-market effects (a)
Divestitures gain, net (b)
Gain from insurance settlement (c)
Uncertain tax items (d)
Tax charge - health care reform (e)
Acquisition integration costs (f)
Restructuring costs (g)
Diluted earnings per share, excluding
certain items affecting comparability
2012
$2.35
0.10
—
—
—
—
0.01
0.10
Fiscal Year
2011
2010
2009
2008
$2.70
(0.09)
—
—
(0.13)
—
—
—
$2.24
0.01
—
—
—
0.05
—
—
$1.90
0.11
(0.06)
(0.04)
0.08
—
—
—
$1.85
(0.05)
—
—
(0.04)
—
—
—
$2.56
$2.48
$2.30
$1.99
$1.76
(a) Net (gain) loss from mark-to-market valuation of certain commodity positions and grain inventories.
(b) Net gain on divestitures of certain product lines.
(c) Gain on settlement with insurance carrier covering the loss of a manufacturing facility in Argentina.
(d) Effects of court decisions and audit settlements on uncertain tax matters.
(e) Enactment date charges related to the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of
2010, affecting deferred taxes associated with Medicare Part D subsidies.
(f) Integration costs resulting from the acquisitions of Yoplait S.A.S. and Yoplait Marques S.A.S.
(g) Productivity and cost savings plan restructuring charges.
Annual Report 2012
85
RETURN ON AvERAGE TOTAL CAPITAL
In Millions
2012
2011
2010
2009
2008
2007
Fiscal Year
Net earnings, including earnings attributable to
redeemable and noncontrolling interests
$ 1,589.1 $ 1,803.5 $ 1,535.0 $ 1,313.7 $ 1,318.1
Interest, net, after-tax
238.9
243.5
261.1
240.8
263.8
Earnings before interest, after-tax
1,828.0
2,047.0
1,796.1
1,554.5
1,581.9
Mark-to-market effects
Restructuring costs
Acquisition integration costs
Divestitures gain, net
Gain from insurance settlement
Uncertain tax items
Tax charge - heath care reform
Earnings before interest, after-tax for
65.6
64.3
9.7
—
—
—
—
(60.0)
4.5
74.9
(35.9)
—
—
—
—
(88.9)
—
—
—
—
—
—
35.0
—
—
(38.0)
(26.9)
52.6
—
—
—
—
—
(30.7)
—
return on capital calculation
$ 1,967.6 $ 1,898.1 $ 1,835.6 $ 1,617.1 $ 1,515.3
Current portion of long-term debt
$
741.2 $ 1,031.3 $
107.3 $
508.5 $
442.0 $ 1,734.0
Notes payable
Long-term debt
Total debt
Redeemable interest
Noncontrolling interests
Stockholders’ equity
Total capital
Accumulated other comprehensive
(income) loss
After-tax earnings adjustments (a)
Adjusted total capital
Adjusted average total capital
Return on average total capital
526.5
311.3
1,050.1
812.2
2,208.8
1,254.4
6,161.9
5,542.5
5,268.5
5,754.8
4,348.7
3,217.7
7,429.6
6,885.1
6,425.9
7,075.5
6,999.5
6,206.1
847.8
461.0
—
—
—
—
—
246.7
245.1
244.2
246.6
1,139.2
6,421.7
6,365.5
5,402.9
5,172.3
6,212.2
5,318.7
15,160.1 13,497.3
12,073.9
12,492.0
13,458.3 12,664.0
1,743.7
1,010.8
1,486.9
(170.9)
(310.5)
(161.6)
877.8
(201.1)
(173.1)
(263.7)
120.1
(197.1)
$ 16,732.9 $ 14,197.6 $ 13,399.2 $ 13,168.7 $ 13,021.5 $ 12,587.0
$ 15,465.3 $ 13,798.4 $ 13,283.9 $ 13,095.1 $ 12,804.3
12.7%
13.8%
13.8%
12.3%
11.8%
(a) Sum of current year and previous year after-tax adjustments.
86
General Mills
INTERNATIONAL SEGMENT AND REGION SALES
GROWTH RATES EXCLUDING IMPACT OF FOREIGN
EXCHANGE
The reconciliation of International segment and region
sales growth rates as reported to growth rates excluding
the impact of foreign currency exchange below demon-
strates the effect of foreign currency exchange rate fluc-
tuations from year to year. To present this information,
Europe
Asia/Pacific
Canada
Latin America
Total International
Europe
Asia/Pacific
Canada
Latin America
Total International
current-period results for entities reporting in curren-
cies other than U.S. dollars are converted into U.S. dol-
lars at the average exchange rates in effect during the
corresponding period of the prior fiscal year, rather
than the actual average exchange rates in effect during
the current fiscal year. Therefore, the foreign currency
impact is equal to current-year results in local curren-
cies multiplied by the change in the average foreign cur-
rency exchange rates between the current fiscal period
and the corresponding period of the prior fiscal year.
Fiscal Year 2012
Percentage Change
in Net Sales
as Reported
Impact of Foreign
Currency Exchange
Percentage Change
in Net Sales
on Constant
Currency Basis
97%
21
29
11
46%
(1) pt
4
1
(3)
1 pt
98%
17
28
14
45%
Fiscal Year 2011
Percentage Change
in Net Sales
as Reported
Impact of Foreign
Currency Exchange
Percentage Change
in Net Sales
on Constant
Currency Basis
5%
14
8
(5)
7%
(2) pts
5
5
(16)
Flat
7%
9
3
11
7%
Annual Report 2012
87
Total Return to Stockholders
These line graphs compare the cumulative total return
for holders of our common stock with the cumulative
total return of the Standard & Poor’s 500 Stock Index
and Standard & Poor’s 500 Packaged Foods Index for
the last five-year and ten-year fiscal periods. The graphs
assume the investment of $100 in each of General Mills’
common stock and the specified indexes at the begin-
ning of the applicable period, and assume the reinvest-
ment of all dividends.
On July 6, 2012, there were approximately 33,400
record holders of our common stock.
Total Return to Stockholders
5 Years
Total Return to Stockholders
5 Years
160
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
0
May 07
0
May 08
May 09
May 10
May 11
May 12
May 07
May 08
May 09
May 10
May 11
May 12
Total Return to Stockholders
10 Years
Total Return to Stockholders
10 Years
260
240
260
220
240
200
220
180
200
160
180
140
160
120
140
100
120
80
100
60
80
40
60
20
40
0
20
May 02 May 03 May 04 May 05 May 06 May 07 May 08 May 09 May 10 May 11 May 12
0
May 02 May 03 May 04 May 05 May 06 May 07 May 08 May 09 May 10 May 11 May 12
General Mills (GIS)
General Mills (GIS)
S&P 500
S&P 500
S&P Packaged Foods
S&P Packaged Foods
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General Mills
Annual Report 2012
89
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
Visit us on the Web
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.
1110 Centre Pointe Curve
Mendota Heights, MN 55120-4100
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
The annual meeting of shareholders
will be held at 11 a.m., Central Daylight
Time, Sept. 24, 2012, at the Children’s
Theatre Company, 2400 Third Avenue
South, Minneapolis, MN 55404-3597.
Proof of share ownership is required
for admission. Please refer to the Proxy
Statement for information concerning
admission to the meeting.
General Mills Direct Stock Purchase Plan
This 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 rein-
vestment 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.
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 under the Media tab on GeneralMills.com.
U.S. Sites
Cheerios.com
Pillsbury.com
Yoplait.com
Larabar.com
GlutenFreely.com
Get information on gluten-free
products and recipes.
QueRicaVida.com
Recipes and nutritional information for
Hispanic consumers.
BettyCrocker.com
Get recipes, cooking tips and view
instruction videos.
Tablespoon.com
Download coupons, recipes and more
for a variety of our brands.
Blog.GeneralMills.com
Get a unique perspective on recent
news and stories about our brands and
our company.
BoxTops4Education.com
Sign up to support your school.
EatBetterAmerica.com
Simple ways to eat healthy,
including healthier versions of
your favorite recipes.
90
You also can visit many of our brands
on Facebook or follow us on Twitter.
International Sites
HaagenDazs.com.cn (China)
Haagen-Dazs.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.
General Mills
A Commitment to our Communities
We believe that doing well for
our shareholders goes hand in
hand with doing well for our
consumers, our communities and
our planet. Being a good corporate
citizen is at the core of our culture
and our business strategy. This
includes our efforts to improve
our communities through philan-
thropy and volunteerism, as well
as developing sustainable busi-
ness practices that protect our
environment.
Shareholder Information
For a comprehensive overview of
our commitment to stand among
World Headquarters
the most socially responsible
Number One General Mills Boulevard
Minneapolis, MN 55426-1347
food companies in the world, see
Phone: (763) 764-7600
our Global Responsibility report
Website
online at GeneralMills.com/
GeneralMills.com
Responsibility.
Markets
New York Stock Exchange
Trading Symbol: GIS
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
Holiday Gift Boxes
Investor Inquiries
General Shareholder Information:
Investor Relations Department
(800) 245-5703 or (763) 764-3202
Independent Auditor
KPMG LLP
4200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3900
Phone: (612) 305-5000
Analysts/Investors:
Kristen S. Wenker
Vice President, Investor Relations
(763) 764-2607
Holiday Gift Boxes
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
General Mills Gift Boxes are a part
enroll in this program.
of many shareholders’ December
holiday traditions. To request an
order form, call us toll free at
(888) 496-7809 or write, including
your name, street address, city,
state, zip code and phone number
(including area code) to:
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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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.
2012 General Mills Holiday Gift Box
Department 8383
P.O. Box 5012
Stacy, MN 55078-5012
Or you can place an order
online at:
GMIHolidayGiftBox.com
Please contact us after
Oct. 1, 2012.
This Report is Printed on Recycled Paper.
10%
©2012 General Mills
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.
Joint Ventures
Net sales by joint venture
Net sales by joint venture
(not consolidated,
(not consolidated,
proportionate share)
proportionate share)
15%15%
85%85%
General Mills at a Glance
U.S. Retail
Net sales by
Net sales by division
division
International
Net sales by
Net sales by region
region
Bakeries and Foodservice
Net sales by customer type
customer type
Net sales by
8%8% 2%2%
13%13%
23%23%
13%13%
12%12%
31%31%
15%15%15%15%
27%27%
21%21%
30%30%
29%29%
58%58%
18%
$10.2 Billion
$10.2 Billion
23% 23% Big G Cereals
23% 23% Big G Cereals
Big G Cereals
23% 23%
21% 21% Meals
21% 21% Meals
Meals
21% 21%
18% 18% Pillsbury USA
Pillsbury USA
15% 15% Yoplait
Yoplait
13% 13% Snacks
13% 13% Snacks
Snacks
13% 13%
8% 8% Baking Products
Baking Products
2% 2% Small Planet Food
Small Planet Foodss/Other
/Other
$2.9 Billion
$2.9 Billion
31% 31% Europe
31% 31% Europe
Europe
31% 31%
29% 29% AsiAsiaa/Pacific
/Pacific
27% 27% Canada
27% 27% Canada
Canada
27% 27%
13% 13% Latin America
Latin America
$1.8 Billion
$1.8 Billion
58% 58% Bakeries & National
Bakeries & National
Restaurant Accounts
Restaurant Accounts
30%30% Foodservice Distributors
Foodservice Distributors
12%12% Convenience Stores
Convenience Stores
$1.2 Billion
$1.2 Billion
Cereal Partners
85%85% Cereal Partners
Worldwide (CPW)
Worldwide (CPW)
Häagen-Daz
Japan
gen-Dazss Japan
15%15% Häa
41579_Cvr.indd 2
7/27/11 6:09 AM
Number One General Mills Boulevard
Minneapolis, MN 55426-1347
GeneralMills.com