2012 gm annual final hyperlinks

7/30/2019 2012 GM Annual FINAL Hyperlinks

1/94

GeneralMills

Annual Report 2012

Generating

Balanced Growth


2/94

International

Net Sales by Region

$4.2 Billion43% Europe

24% Asia/Pacific

23% Canada

10% Latin America

43%

24%

23%

10%U.S. Retail

Net Sales by Division

$10.5 Billion23% Big G Cereals

20% Meals

18% Pillsbury USA

15% Snacks

14% Yoplait USA

8% Baking Products

2% Small Planet Foods

23%

18%

14%

2%

20%

15%

8%

Joint Ventures

Net Sales by Joint Venture(not consolidated,proportionate share)

$1.3 Billion84% Cereal Partners

Worldwide (CPW)

16% Hagen-Dazs Japan (HDJ)

84%

16%Bakeries and Foodservice

Net Sales byCustomer Type

$2.0 Billion58% Bakeries & National

Restaurant Accounts

30% Foodservice Distributors

12% Convenience Stores

58%

30%

12%

Generating Balanced Growth

Our brands compete in large and growing food categories

that are on-trend with consumer tastes around the world.

Were investing in our established brands while also developing

new products. And were building our business in developedmarkets while increasing our presence in emerging markets

worldwide. Our goal is to generate balanced, long-term growth.

General Mills at a Glance


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1

Net SalesDollars in millions

12

11

10

09

08

16,658

14,880

14,636

14,556

13,548

Segment Operating Profita

Dollars in millions

12

11

10

09

08

3,012

2,946

2,840

2,624

2,394

Adjusted Diluted Earnings per Shareb

Dollars

12

11

10

09

08

2.56

2.48

2.30

1.99

1.76

Return on Average Total Capitala

Percent

12

11

10

09

08

12.7

13.8

13.8

12.3

11.8

OurFiscalFinancialHighlights

aSeepg 85ordiscussiononon-GAAPmeasures

bResultsexcludecertainitemsaectingcomparabilitySeepg 85ordiscussiononon-GAAPmeasures

5weeks 5weeks

In millions, except per share and ended endedreturn on capital data May7, May9, Change

Net Sales $16,658 $14,880 +12%

Segment Operating Prota 3,012 2,946 + 2

Net Earnings Attributable to General Mills 1,567 1,798 13

Diluted Earnings per Share (EPS) 2.35 2.70 13

Adjusted Diluted EPS, Excluding Certain Items

Aecting Comparabilityb 2.56 2.48 + 3

Return on Average Total Capitala 12.7% 13.8% 110 basis pts.

Average Diluted Shares Outstanding 667 665 + 0

Dividends per Share $ 1.22 $ 1.12 + 9


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2 General Mills

Iappreciatethisopportunitytogiveyouanupdateon

GeneralMillsrecentbusinessperormanceandourplans

orcontinuinggrowthintheyearsahead.

Fiscal 2012 was characterized by the highest input-cost ination that weve experienced in more thanthree decades. Our supply chain costsprimarily

ood ingredients and energy rose more than10 percent during the year ended May 27, 2012.

Tis sharp ination, roughly double the averageannual ination rate we use or long-term planningassumptions, restrained our earnings growth or the

year. In addition, slow economic recovery kept manyconsumer budgets under pressure. In this environ-

ment, we took strategic actions that increased ourworldwide sales base and strengthened our portolio.In particular, we increased advertising and media

investment on our base business, we sustained a highlevel o new product activity worldwide, and we made

several acquisitions that expand our participation inast-growing ood categories and emerging markets

around the globe. We also took restructuring actionsdesigned to improve our organizational eectiveness

and alignment on key growth strategies.General Mills net sales grew 12 percent in scal2012 to reach $16.7 billion. Te international Yoplait

yogurt business that we acquired in July 2011contributed 7 points o net sales growth, and sales

or our base business grew 5 percent. Segment oper-ating prot increased 2 percent to exceed $3 billionor the rst time in company history. Prots grew

at a slower rate than sales primarily due to the

higher input costs, the change in our business mix

to include the Yoplait acquisition, and an 8 percentincrease in worldwide advertising and media invest-ment supporting our brands.

Diluted earnings per share (EPS) o $2.35 were belowprior-year results primarily due to changes in mark-

to-market valuation o certain commodity positions inboth years, as well as restructuring charges recorded

in the ourth quarter o scal 2012. Adjusted diluted

EPS, which excludes restructuring expense, mark-to-market eects, and certain other items aecting

comparability o results, totaled $2.56 in 2012compared to $2.48 a year ago.

NetSalesPerormance

Operating Segment/Division 2012 Net Sales % Change

International Segment* +45

Bakeries and Foodservice Segment + 8

U.S. Retail Segment + 3

Small Planet Foods +19

Snacks +15

Big G Cereals + 4

Pillsbury USA + 3

Baking Products + 3

Meals Flat

Yoplait USA 5

*DoesnotincludetheimpactooreigncurrencytranslationSeepageoourAnnualReportorareconciliationtoreportedresults

ToourShareholders

KenPowell

Chairmanand

ChieExecutiveOfcer


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3Annual Report 2012

Dividends per ShareDollars

Returns to ShareholdersPercent growth, stock price change plus reinvested dividends

12

11

10

09

08

1.22

13 1.32

1.12

0.96

0.86

0.78

3

1

9

10

1

10

Fiscal 2012

GISS&P 500 IndexS&P Packaged Foods Index

Last 4 Fiscal Years

(compound annual return)

New Annualized Rate

Results or our U.S. Retail segment reected the

challenging packaged oods industry environment.Branded and private label ood manuacturersincreased prices last year across many grocery cate-

gories to partially oset higher input costs, and oodindustry 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 declined6 percent. Segment operating prot o $2.3 billion

was 2 percent below year-ago levels, reecting

higher input costs, lower volume, and a 5 percentincrease in advertising and media expense.

New products generated 5 percent o U.S. Retail

segment sales in 2012, with particularly strongcontributions rom Fiber One 90-calorie brownie

snack bars, Peanut Butter Multi Grain Cheerioscereal, and Yoplait yogurt and granola paraits. Eacho our U.S. Retail divisions generated net sales that

matched or exceeded year-ago levels, with the excep-tion o Yoplait USA, where lower volumes on certain

established product lines oset strong growth byYoplait Go-GURTand Yoplait Greek yogurt varieties.

We increased our share o retail dollar sales in severalkey product categories. In particular, our U.S. cerealmarket share grew or the h consecutive year, and

exceeds 31 percent o category sales. Our share o the$3.2 billion grain snacks category increased by nearly5 percentage points to 36 percent.

Our Bakeries and Foodservice segment competesprimarily in U.S. channels or ood eaten away

rom home. While oodservice industry trends

were generally weak in 2012, reecting the broadereconomic climate, our Bakeries and Foodservice netsales grew 8 percent to $2.0 billion. Tis included

growth in sales to oodservice distributors andoperators, to convenience stores, and to bakery and

national restaurant accounts. As anticipated, segmentoperating prot o $287 million was below unusuallystrong year-ago levels.

Sales and prot results or our International segment

included 10 months o contribution rom theacquired Yoplait international business. Net salesgrew 46 percent in 2012 to reach $4.2 billion. Foreign

currency translation contributed 1 point o salesgrowth. Excluding currency eects, sales essentiallydoubled in Europe and rose 28 percent in Canada,

reecting the acquisition. Net sales grew 17 percentin the Asia/Pacic region and 14 percent in Latin

America. International segment operating protgrew 47 percent to reach $430 million. Excluding

the Yoplait acquisition, our International segment netsales and prot still grew at double-digit rates.

Our Cereal Partners Worldwide (CPW) and Hagen-Dazs Japan (HDJ) joint ventures generated a combined$88 million in aer-tax earnings in 2012. Tis was

below 2011 levels primarily due to higher eective taxrates and a particularly difcult operating environ-

ment or HDJ ollowing the March 2011 earthquakesand tsunami. Our 50 percent share o combinedCPW and HDJ net sales, which is not consolidated

in General Mills results, rose 5 percent to nearly$1.3 bill ion.


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4 General Mills

Input Cost InflationPercent

Gross MarginPercent of net sales

12

11

10

09

08

10

4

3

9

7

12

11

10

09

08

36.3

40.0

39.6

35.6

35.5

Our nancial results in scal 2012 build on a track

record o consistent growth in recent years. Since2007, General Mills net sales and segment operatingprot have both grown at a 6 percent compound

annual rate. And our adjusted diluted EPS (thismeasure excludes certain items aecting compa-

rability o results) has increased at a 10 percentcompound rate. Tese results meet or exceed ourtargets or long-term growth, shown below.

GeneralMillsLong-termGrowthModel

Growth Factor Compound Annual Growth Target

Net Sales Low single-digit

Segment Operating Prot Mid single-digit

Adjusted Diluted Earnings per Share High single-digit

Dividend Yield 2 to 3 percent

Total Return to Shareholders Double-digit

In scal 2012, total return to General Mills share-

holders through stock price perormance anddividends was 3 percent. Tis was below the return

generated by our peer group o packaged ood compa-nies, and below our long-term target or shareholderreturns, but it was above the return generated by

the broader market in 2012. As shown in the charton the previous page, over the past our scal years,General Mills has delivered a double-digit compound

annual return to shareholderssuperior perormanceover a challenging period or the capital markets.

Returns to General Mills shareholders in scal 2013will include the 8 percent dividend increase we

announced in June 2012, to a new annualized rate

o $1.32 per share. General Mills and its predecessorrm have now paid dividends without interruption orreduction or 113 years. We see dividend growth over

time as an important component o our value creationor shareholders.

LookingAhead,ourGoalistoContinueGenerating

BalancedGrowth

As we begin our 2013 scal year, our goal is togenerate continued growth, balanced across severalkey dimensions.

We want to generate growth in our core, devel-oped marketswhile we expand our business inemerging markets worldwide.

We target sales and earnings growth rom estab-lished brandsand we launch new items that we

believe can become consumer avorites over time.

We build plans to drive growth in traditionalgrocery storesand in the many other retail

formats selling ood today. Our marketing plans include strong investment intraditional mediabut were also investing in newdigital and social media applications.

And we build plans designed to generate growth in

the current yearand over the long term.

In recent years, weve worked to shi General

Mills business mix beyond the U.S. to participate

Ourinputcostsrosemorethan

percentinscalthehighestincreaseweveseeninyearsWe

wereabletoosetsomebutnotall

othatcostincreasethroughHolistic

MarginManagement(HMM)our

companywideproductivityinitiative


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5Annual Report 2012

in aster-growing markets worldwide. Weve made

good progress and in 2012, a ull 25 percent o oursales came rom outside the U.S. Tis doesnt includethe growing sales o our international joint ventures

(which are not consolidated), or the scal 2013 YokiAlimentos S.A. acquisition in Brazil. Including joint

venture sales, international operations generateroughly 30 percent o the total. We expect our inter-national businesses to lead the companys growth in

the years ahead.

We plan to generate ongoing sales and prot increases

by keeping our key established brands vital andgrowing. Well also introduce brand extensions

and new items that we believe can become sustainingconsumer avorites. You can see several o our recent

introductions pictured above, and youll nd othersthroughout our annual report. argeted acquisi-tions are part o our growth plan, too. Ive already

mentioned the Yoplait international business, andYoki in Brazil. We also have added the Food ShouldTaste Goodline o wholesome salty snacks to ourU.S. portolio, and the Parampara Foods meal starters

business in India.

In total, we expect to generate good growth in salesand operating prot in 2013. Cost savings rom

Holistic Margin Management (HMM) initiatives areexpected to oset the 2 to 3 percent ination weve

orecast or this year. Our plan also includes invest-ments to uel longer-term growth. Tese includestrong investment in marketing and merchandising

or our U.S. yogurt business, where we have

lagged the rapid growth o the new Greek segmento the market. Well also make investments behindthe Yoplait business in Canada that we will run

beginning this all. And we are investing in develop-ment activities to accelerate our growth in emerging

markets, particularly China. We believe this balancedapproach targeting growth in the current year, andover the longer term serves our company and our

shareholders well.

ANoteoThanks

Our companys growth and success is the product o34,500 talented employees around the world. Ill close

this letter by thanking General Mills people acrossour organization or all that you do, every day, to

build our company. Id particularly like to acknowl-edge John Machuzick, Senior Vice President andPresident o our Bakeries and Foodservice business,

who retired this summer ollowing a distinguished34-year career with General Mills.

Id also like to thank you or your investment in

General Mills. We appreciate your condence in ourbusiness and its prospects, and we look orward toreporting on our continuing growth.

KendallJ.Powell

Chairman and Chie Executive Ofcer

August 2, 2012

ASelectionoourNewProductsLaunchedin
http://www.foodshouldtastegood.com/http://www.foodshouldtastegood.com/http://www.foodshouldtastegood.com/http://www.foodshouldtastegood.com/


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6 General Mills

Generating

BalancedGrowthGeneralMillsnowhasveglobalproductplatormsthataccountor

morethan6percentoournetsales.Werebuildingtheseplatorms

inourcore,developedmarketsandinemergingmarketsworldwide.

Refrigerated Yogurt

AsoJulywemarketYoplaityogurt

globallyinpartnershipwithSodiaala

dairycooperativeinFranceOurother

yogurtbrandsincludeLibertinNorth

AmericaandMountain HighintheUS

Troughout the years, wevetaken a balanced approach togrowing our business. By inno-

vating on well-established brandslike Cheerios, Yoplait and NatureValley, weve kept them vibrantand growing. At the same time,

weve introduced new brands

that meet changing consumerneeds, like Fiber One cereals and

snacks, Cascadian Farm organiccereals and Wanchai Ferry rozenChinese cuisine.

Were growing our brands in

markets around the world. enyears ago, 10 percent o our

sales were generated outside othe U.S. oday, approximately30 percent o our sales come

rom non-U.S. markets, includingour proportionate share o joint

venture sales. While the U.S.remains a very attractive and

growingcore market, wevebeen increasing our presence

in emerging markets where a

growing middle class is creating

heightened demand or conve-nient ood products. For example,

our net sales in China aregrowing at a double-digit rate,

approaching $550 million in scal2012. We also have a small butast-growing business in India,

and we recently acquired the Yokiood business in Brazil.

Well continue to drive growth inscal 2013 and beyond by ocusing

France

United states
http://www.yoplait.com/http://liberteyogurt.com/http://mountainhighyoghurt.com/http://mountainhighyoghurt.com/http://cheerios.com/http://yoplait.com/http://naturevalley.com/http://naturevalley.com/http://fiberone.com/http://cascadianfarm.com/http://wanchaiferry.com/http://wanchaiferry.com/http://cascadianfarm.com/http://fiberone.com/http://naturevalley.com/http://naturevalley.com/http://yoplait.com/http://cheerios.com/http://mountainhighyoghurt.com/http://liberteyogurt.com/http://www.yoplait.com/


9/94

Wholesome Snack Bars

Nature ValleyandCascadian Farmgranola

barsFiber OnebarsandLrabarruitand

nutbarsarenutritioussnackchoices

Convenient Meals

OurOld El PasoWanchai FerryProgresso

andHelperbrandsgiveconsumersgreat

optionsoraquickandeasymeal

7Annual Report 2012

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

Our Global Businesses Compete in

Large and Growing Food Categories

2011 Retail Sales Percent

Category in Billions Growth*

Ready Meals $93 +4

Yogurt $73 +7

Ice Cream $69 +5

Ready-to-eat Cereal $25 +5

Snack Bars $11 +6

Source:Euromonitor*Projectedve-yearcompoundgrowthrate

Super-premium Ice Cream

OurHagen-Dazsbrandisavailablein

morethancountriesincludingChina

on our ve global platorms shownhere. Te categories where thesebusinesses compete are large, and

growing at mid- to high-single-digit rates worldwide. You can

read more about how we arebuilding our global businesses onthe ollowing pages.

*Includesourproportionate

shareojointventurenetsales

chinabrazil

aUstralia
http://naturevalley.com/http://cascadianfarm.com/http://fiberone.com/http://fiberone.com/http://larabar.com/http://bettycrocker.com/Products/Old-El-Pasohttp://bettycrocker.com/Products/Old-El-Pasohttp://wanchaiferry.com/http://wanchaiferry.com/http://progresso.com/http://bettycrocker.com/Products/Hamburger-Helperhttp://bettycrocker.com/Products/Hamburger-Helperhttp://haagendazs.com.cn/http://haagendazs.com.cn/http://bettycrocker.com/Products/Hamburger-Helperhttp://progresso.com/http://wanchaiferry.com/http://bettycrocker.com/Products/Old-El-Pasohttp://larabar.com/http://fiberone.com/http://cascadianfarm.com/http://naturevalley.com/


10/94

8 General Mills

Building our Brands in the U.S.

Te ready-to-eat cereal category generates $10 billion in retail sales in

the U.S. Weve increased our dollar share o the category in each o thelast ve years.

Highinnutritionandlowincaloriesready-to-eatcerealisa

greatoodchoiceorconsumerseverywhere

Were generating good sales

growth by expanding many oour established cereal brands.

In the U.S., eective advertisingand a new peanut butter avordrove 21 percent retail sales

growth or Multi Grain Cheerios.Retail sales or Cascadian Farm

organic cereals grew 19 percent in2012, including new varieties o

Americas No. 1 granola brand.

Cereal eaten away rom home is

a growth opportunity or us, too.For example, breakast programs

in U.S. schools have increased ata 5 percent compound rate overthe past three years. Our sales in

this channel are outpacing thatgrowth, and we are the cereal

market leader in U.S. schoolbreakast programs.

Our cereal brands also have great

growth opportunities outside theU.S. In Canada, Chocolate Cheeriosand gluten-ree varieties oChex

cereals contributed to 4 percentconstant-currency net sales

growth or our cereal business inthis market. Cereal Partners

Worldwide (CPW), our joint

venture with Nestl, has beenshowing good growth in developed

Growing Cereal SalesAround the World
http://cheerios.com/http://cascadianfarm.com/http://www.cheerios.ca/http://chex.com/http://chex.com/http://www.cheerios.ca/http://cascadianfarm.com/http://cheerios.com/


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9Annual Report 2012

Cereal Consumption per CapitaAnnual kilograms per person

United Kingdom

Canada

Australia

United States

Mexico

7.3

4.7

4.8

4.1

2.8

France 1.8

Spain 1.8

Poland 1.3

Russia 0.3

Brazil 0.2

Turkey 0.2

Source: Euromonitor 2011

Innovating in Cereal Markets Worldwide

In Canada, our cereal business gained 2 points o marketshare in 2012. Cereal Partners Worldwide, our joint venture

with Nestl, is the No. 2 cereal company outside North

America, with a 23 percent value share.

Fitness is CPWs largest

brand. It is perorming well in

emerging markets, like urkey,

as we emphasize the weight

management benets o this

great-tasting cereal.

cereal markets, such as Australia,the UK and France. And CPW

holds leading share positions inemerging markets, such as Russia

and urkey.

Per capita cereal consumption is

growing in markets around theworld, yet consumption is still

quite low in many countries. Sowe see great growth opportunitiesahead or our cereal brands.
http://nestle-fitness.com/http://nestle-fitness.com/


12/94

10 General Mills

Broadening our International Snacks Portfolio

Wholesome snack bars are an $11 billion category worldwide. In theU.S., weve gained more than 10 points o market share over the pastve years, and were expanding our brands in markets around the world.

80 markets today. We continue toenter new countries and introduce

new varieties, like Nature ValleyProtein bars, with 10 grams o

protein per serving. In the U.S.,90-calorie Fiber One browniesgenerated more than $100 million

in retail sales in their rst year.And new sweet and salty ber

bars extend our Lrabarbrand onatural ruit and nut bars.

Yogurt is a $73 billion globalcategory, and sales are projected

Healthysnackbarsandyogurtarelargeast-growingood

categoriesinmarketsaroundtheworld

Retail sales or the wholesome

snack bar category are projectedto grow at a 6 percent compound

rate worldwide over the next veyears. Our Nature Valley granolabars are available in nearly

to grow at a 7 percent pace, asyogurt consumption is still devel-

oping in many markets around theworld. Weve marketed Yoplait

yogurt in the U.S. since 1977,ocusing on a variety o segments,such as light yogurt and oerings

or kids. In 2013, we have moreinnovation coming, including a

100-calorie Yoplait Greek yogurtand multipacks oTrix yogurt orkids. Were also expanding

Mountain High all-natural yoghurtinto more U.S. retail outlets.

Fast-growingWholesome Options
http://fiberone.com/http://larabar.com/products/uberhttp://larabar.com/products/uberhttp://larabar.com/http://naturevalley.com/http://yoplait.com/http://yoplait.com/products/YoplaitGreekYogurthttp://yoplait.com/products/YoplaitGreekYogurthttp://yoplait.com/products/YoplaitTrixYogurthttp://mountainhighyoghurt.com/http://mountainhighyoghurt.com/http://yoplait.com/products/YoplaitTrixYogurthttp://yoplait.com/products/YoplaitGreekYogurthttp://yoplait.com/http://naturevalley.com/http://larabar.com/http://larabar.com/products/uberhttp://larabar.com/products/uberhttp://fiberone.com/


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11Annual Report 2012

France

Ireland

Canada

United Kingdom

Australia

20.3

12.3

11.7

9.7

Yogurt Consumption per CapitaAnnual kilograms per person

9.8

United States 6.6

Brazil 6.0

Russia 4.4

China 2.6

India 0.4

Source: Euromonitor 2011

Retail sales or Yoplait

Go-GURTyogurt in a tube

grew 11 percent in scal

2012 with more new avorspopular with kids.

Building our U.S. andEuropean 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 salesin international markets.

In Europe, we posted sales andshare gains with innovation on

yogurt brands like Calin and Perlede Lait. And in Canada, retail

sales or Libert are growingat a 50 percent pace, makingit a leader in the Greek yogurt

segment. Well expand this brandin the U.S. in 2013.

With our broad snack and yogurtportolio, we like the growth pros-

pects or our brands in these ast-growing, good-or-you categories.
http://yoplait.com/products/Yoplait-go-gurthttp://yoplait.com/products/Yoplait-go-gurthttp://liberteyogurt.com/http://liberteyogurt.com/http://yoplait.com/products/Yoplait-go-gurthttp://yoplait.com/products/Yoplait-go-gurt


14/94

12 General Mills

Asthemiddleclassexpandsinmarketsaroundtheworldthe

demandorconvenientgreat-tastingoodswillcontinuetogrow

Te convenient meals categorygenerates more than $90 billion in

worldwide retail sales. Families

in 60 markets enjoy Old El PasoMexican meal kits net sales or

this brand are greater outsidethe U.S. than in the U.S., and

since 2008, theyve been growingat a 5 percent compound rate

internationally on a constant-currency basis. In China, net salesor Wanchai Ferry rozen oods

increased 14 percent in 2012. Wesee opportunities to expand the

brand into additional cities acrossChina and additional markets inSoutheast Asia.

In the U.S., retail sales or Progresso

soup grew 8 percent in 2012. In

2013, watch or new avors oLight soups and Progresso Recipe

Starters cooking sauces.

Ice cream is a $69 billion global

category, projected to grow ata 5 percent pace. Net sales orHagen-Dazs have been growingaster, up 16 percent in scal2012 on a constant-currency

basis. In Europe, new Hagen-Dazs Secret Sensations ice cream

cups with liquid centers contrib-uted to 6 percent sales growth or

Convenience for Dinnerand Dessert

Our Convenient Meals Span the GlobeTe global convenient meals category is projected to grow at a4 percent pace. We compete in many markets with products like

Hamburger Helperin the U.S., Wanchai Ferry dumplings in China,and Pasta Masterentres in Australia.
http://bettycrocker.com/products/Old-El-Pasohttp://progresso.com/http://bettycrocker.com/products/Hamburger-Helperhttp://pastamaster.com.au/http://pastamaster.com.au/http://bettycrocker.com/products/Hamburger-Helperhttp://progresso.com/http://bettycrocker.com/products/Old-El-Paso


15/94


12

11

10

09

22

19

15

19

General Mills Net Sales in Greater China*

Constant currency, dollars in millions, percent growth

*Estimated net sales converting local currency data

at a fixed exchange rate.

the brand in that market. Andin China, our sales grew more

than 30 percent as we openednearly 50 new shops. Well

open another 50 shops there inscal 2013.

Te worldwide growth o theconvenient meals and ice cream

categories provides great opportu-nities or our brands.

China is the largest

international market or

Hagen-Dazs ice cream.

In our shops, we oer

a tantalizing array o ice

cream treats.

Expanding the Great Taste of Hagen-Dazs

Consumers in more than 80 countries enjoy Hagen-Dazs

super-premium ice cream at home or in our upscale shops.Hagen-Dazs is the worlds No. 1 ice cream brand.
http://haagendazs.com.cn/http://haagendazs.com.cn/


16/94

14 General Mills

Research and Development ExpenseDollars in millions

12

11

10

09

08

245

235

218

208

205

New product development andimprovements on establishedbrands are vital to our growth.

Health and nutrition benets are akey ocus o our product improve-

ment eorts. In 2012, 68 percento our U.S. Retail sales volume

came rom products that weveimproved in recent years.

Webuildourbrandsbyinvesting

inproductdevelopmentand

impactulconsumermarketing

initiatives,andbyexpandingourportoliothroughacquisitions.

Weleveragethisportoliostrength

aswepartnerwithourcustomers

togeneratesalesandprotgrowth.

We support established and newbrands with strong levels o mediaspending. Over the past ve years,

our worldwide advertising andmedia expense has grown at

a double-digit rate, reaching$914 million in 2012. Investments

in new digital media and invehicles targeted at multiculturalconsumers have been growing at

the astest rates.

BuildingourBrandPortolio


17/94


Natural/Organic Stores

Small Format

Convenience Stores

Club Stores

Supercenters

+DD

+DD

+HSD

+HSD

+MSD

+LSDTraditional Grocery

Our Sales Growth in U.S. Channels

3-year compound annual deliveriespercent growth, fiscal 20092012

DD = Double-digit; HSD = High single-digit;

MSD = Mid single-digit; LSD = Low single-digit

Companywide Media InvestmentDollars in millions

12

11

10

09

08

914

844

909

732

587

Parampara Foods meal starters inIndia. And in early scal 2013,

we acquired Yoki Alimentos S.A.

in Brazil.Our portolio o leading brandsmakes us an important supplierto ood retailers worldwide. In

the U.S., General Mills accountsor about 3 percent o total ood

and beverage sales, with themajority o those sales coming

Weve made several strategic acqui-

sitions that position us or uturegrowth. In July 2011, we acquired

a controlling interest in YoplaitS.A.S. to market Yoplait yogurt

around the world. We have agreedto assume the Yoplait license inCanada in September 2012, and

we have reacquired the licensein Ireland. We acquired Food

Should aste Good, a U.S.-basedwholesome snack producer and

rom traditional grocery stores.

Our sales in nontraditional retailoutlets, such as club, drug and

discount stores, are growingaster than in traditional outlets.In international markets, we hold

leading positions in key growthcategories. Well continue topartner with all o our retail and

oodservice customers to generategrowth or their businesses and

ours.


18/94

16 General Mills

BradburyH.

Anderson,4

Retired ChieExecutive Ofcer

and ViceChairman,Best Buy Co., Inc.(electronics retailer)

R.KerryClark,

Retired Chairmanand Chie ExecutiveOfcer, CardinalHealth, Inc.(medical servicesand supplies)

PaulDanos,5

Dean, uck Schoolo Business andLaurence F.

WhittemoreProessor oBusinessAdministration,Dartmouth College

MarkW.Addicks

Senior VicePresident;Chie MarketingOfcer

Y.MarcBelton

Executive VicePresident,Global Strategy,Growth andMarketingInnovation

KoA.Bruce

Vice President;reasurer

GaryChu

Senior VicePresident;President,Greater China

JulianaL.Chugg

Senior VicePresident;President, Meals

JohnR.Church

Senior VicePresident,Supply Chain

WilliamT.Esrey,3*

Chairman o theBoard, SpectraEnergy Corp.

(natural gas inra-structure provider)and ChairmanEmeritus, SprintNextel Corporation(telecommunica-tions systems)

RaymondV.

Gilmartin,4*

Retired Chairman,President and ChieExecutive Ofcer,Merck &Company, Inc.(pharmaceuticals)

MichaelL.Davis

Senior VicePresident,Global HumanResources

DavidE.DudickSr.

Senior VicePresident;President, Bakeriesand Foodservice

PeterC.Erickson

Senior VicePresident,Innovation,echnology andQuality

OlivierFaujour

Vice President;President, YoplaitInternational

IanR.Friendly

Executive VicePresident;Chie OperatingOfcer,U.S. Retail

JudithRichards

Hope*,5

DistinguishedVisitor rom

Practice andProessor o Law,GeorgetownUniversityLaw Center

HeidiG.Miller3,5

Retired President,JPMorganInternational,JPMorgan Chase& Co.(banking andnancial services)

JefreyL.Harmening

Senior VicePresident;Chie ExecutiveOfcer,Cereal Partners

Worldwide

DavidP.Homer

Senior VicePresident;President,General MillsCanada

LuisGabriel

Merizalde

Senior VicePresident;President, Europe,Australia and NewZealand

MicheleS.Meyer

Vice President;President,Small Planet Foods

DonalL.Mulligan

Executive VicePresident;Chie FinancialOfcer

HildaOchoa-

Brillembourg3,5

Founder, Presidentand Chie

Executive Ofcer,StrategicInvestment Group(investmentmanagement)

SteveOdland3,4

Adjunct Proessor,Lynn UniversityCollege o Businessand Managementand FormerChairman o theBoard and ChieExecutive Ofcer,Ofce Depot, Inc.(ofce products

retailer)

JamesH.Murphy

Senior VicePresident;President,Big G Cereals

KimberlyA.Nelson

Senior VicePresident,External Relations;President, GeneralMills Foundation

JonathonJ.Nudi

Vice President;President,Snacks

RebeccaL.OGrady

Vice President;President,Yoplait USA

ShawnP.OGrady

Senior VicePresident;President,Sales and ChannelDevelopment

KendallJ.Powell

Chairman o theBoard and ChieExecutive Ofcer,

General Mills, Inc.

MichaelD.Rose*,4

Retired Chairmano the Board, FirstHorizon NationalCorporation(banking andnancial services)

RobertL.Ryan,3

Retired Senior VicePresident and ChieFinancial Ofcer,Medtronic, Inc.(medicaltechnology)

ChristopherD.

OLeary

Executive VicePresident;Chie OperatingOfcer,International

RoderickA.Palmore

Executive VicePresident;General Counsel;Chie Complianceand RiskManagementOfcer andSecretary

KendallJ.Powell

Chairman o theBoard and ChieExecutive Ofcer

AnnW.H.Simonds

Senior VicePresident;President, Baking

ChristiL.Strauss

Senior VicePresident*

DorothyA.Terrell4,5*

Managing Partner,FirstCap Advisors(venture capital)

BoardCommittees1Audit2Compensation3Finance4CorporateGovernance

5PublicResponsibility

*DenotesCommittee Chair

AntonV.Vincent

Vice President;President,Frozen Foods

SeanN.Walker

Senior VicePresident;President,Latin America

KeithA.Woodward

Senior VicePresident,FinancialOperations

JeraldA.Young

Vice President;Controller

*On leave o absence

BoardoDirectorsAs o August 2, 2012

SeniorManagementAs o August 2, 2012


19/94

Annual Report Annual Report

FinancialReview

Contents

Financial Summary 18

Managements Discussion and Analysis of Financial

Condition and Results of Operations 19

Reports of Management and Independent Registered Public Accounting Firm 43

Consolidated Financial Statements 45

Notes to Consolidated Financial Statements

1 Basis o Presentation and Reclassifcations 49

2 Summary o Signifcant Accounting Policies 49

3 Acquisitions 53

4 Restructuring, Impairment, and Other Exit Costs 53

5 Investments in Joint Ventures 55

6 Goodwill and Other Intangible Assets 55

7 Financial Instruments, Risk Management Activities and Fair Values 56 8 Debt 62

9 Redeemable and Noncontrolling Interests 64

10 Stockholders Equity 65

11 Stock Plans 66

12 Earnings per Share 69

13 Retirement Benefts and Postemployment Benefts 69

14 Income Taxes 77

15 Leases, Other Commitments and Contingencies 79

16 Business Segment and Geographic Inormation 80

17 Supplemental Inormation 81

18 Quarterly Data 82Glossary 83

Non-GAAP Measures 85

Total Return to Stockholders 88


20/94

General Mills

Fiscal Year

In Millions, Except Per Share Data, Percentages and Ratios (a)

Operating data:

Net sales $ ,. $ ,. $ ,. $ ,. $ ,.Gross margin (b) ,. ,. ,. ,. ,.

Selling, general, and administrative expenses ,. ,. ,. ,. ,.

Segment operating prot (c) ,. ,. ,. ,. ,.

Divestitures (gain) (.) (.)

Aer-tax earnings rom joint ventures . . . . .

Net earnings attributable to General Mills ,. ,. ,. ,. ,.

Depreciation and amortization . . . . .

Advertising and media expense . . . . .

Research and development expense . . . . .

Average shares outstanding:

Basic . . . . .

Diluted . . . . .

Earnings per share:Basic $ . $ . $ . $ . $ .

Diluted $ . $ . $ . $ . $ .

Diluted, excluding certain items aecting comparability (c) $ . $ . $ . $ . $ .

Operating ratios:

Gross margin as a percentage o net sales .% .% .% .% .%

Selling, general, and administrative expenses as a

percentage o net sales .% .% .% .% .%

Segment operating prot as a percentage o net sales (c) .% .% .% .% .%

Eective income tax rate .% .% .% .% .%

Return on average total capital (b) (c) .% .% .% .% .%

Balance sheet data:

Land, buildings, and equipment $ ,. $ ,. $ ,. $ ,. $ ,.

otal assets ,. ,. ,. ,. ,.Long-term debt, excluding current portion ,. ,. ,. ,. ,.

otal debt (b) ,. ,. ,. ,. ,.

Redeemable interest .

Noncontrolling interests . . . . .

Stockholders equity ,. ,. ,. ,. ,.

Cash ow data:

Net cash provided by operating activities $ ,. $ ,. $ ,. $ ,. $ ,.

Capital expenditures . . . . .

Net cash used by investing activities ,. . . . .

Net cash used by nancing activities . . ,. ,. ,.

Fixed charge coverage ratio . . . . .

Operating cash ow to debt ratio (b) .% .% .% .% .%

Share data:

Low stock price $ . $ . $ . $ . $ .

High stock price . . . . .

Closing stock price . . . . .

Cash dividends per common share . . . . .

Number o ull- and part-time employees , , , , ,

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

(b) See Glossary on page 83 o this report or denition.

(c) See page 85 o this report or our discussion o this measure not dened by generally accepted accounting principles.

FinancialSummary

Te ollowing table sets orth selected nancial data or each o the scal years in the ve-year period endedMay 27, 2012:


21/94

Annual Report

ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations

EXECUTIVEOVERVIEW

We are a global consumer oods company. We developdistinctive value-added ood products and market them

under unique brand names. We work continuously toimprove our established products and to create newproducts that meet consumers evolving needs and pre-erences. In addition, we build the equity o our brandsover time with strong consumer-directed marketing andinnovative 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 undamental business goal is to generate supe-rior returns or our stockholders over the long term. Webelieve that increases in net sales, segment operatingprot, earnings per share (EPS), and return on average

total capital are the key measures o nancial peror-mance or our business. See the Non-GAAP Measuressection on page 85 or a description o our discussiono total segment operating prot, diluted EPS exclud-ing certain items aecting comparability and return onaverage total capital, which are not dened by generallyaccepted accounting principles (GAAP).

Our objectives are to consistently deliver: lowsingle-digitannualgrowthinnetsales;

mid single-digit annual growth in total segmentoperating prot;

high single-digit annual growth in diluted EPS

excluding certain items aecting comparability; and improvementsinreturnonaveragetotalcapital.We believe that this nancial perormance, coupled

with an attractive dividend yield, should result in long-term value creation or stockholders. We return a sub-stantial amount o cash to stockholders through sharerepurchases and dividends.

Fiscal 2012 was a challenging year or us as well asthe rest o the ood industry, as we experienced double-digit input cost ination and consumers were aectedby the slow economic recovery around the world. Forthe scal year ended May 27, 2012, our net sales grew12 percent and total segment operating prot grew 2percent. Diluted EPS declined 13 percent and our returnon average total capital declined by 110 basis points.Diluted EPS excluding certain items aecting compara-bility increased 3 percent rom scal 2011 (see the Non-GAAP Measures section on page 85 or our use o thismeasure and our discussion o the items aecting com-parability). Net cash provided by operations totaled $2.4billion in scal 2012, enabling us to partially und theacquisition o Yoplait S.A.S. and Yoplait Marques S.A.S.

and to increase our annual dividend payments per shaby 9 percent rom scal 2011. We also made signicacapital investments totaling $676 million in scal 2012We achieved the ollowing related to our three k

operating objectives or scal 2012: Netsalesgrowthof12percentwasprimarilydriven

contributions rom our Yoplait S.A.S. acquisition, volumgains in our International segment, and net price realiztion and mix. Weincreasedmarketing,merchandising,andinnov

tion investment in support o our leading brands acontinued to build our global platorms around the worOur global advertising and media expense increasedpercent, including investment in our core developed mkets and continued media support behind our interntional Yoplait business.

Weachieveda2 percentincreaseintotalsegmeoperating prot despite the high levels o input coination. We continued to ocus on our holistic magin management (HMM) program, which includes cosavings initiatives, marketing spending efciencies, aprotable sales mix strategies.

Details o our nancial results are provided in tFiscal 2012 Consolidated Results o Operations sectibelow.

Looking ahead, we expect slow improvement in toperating environment or ood companies arouthe globe. Although we believe the consumer enviro

ment will remain challenging in scal 2013, we expeto deliver another year o quality growth. Excluding teects o our pending acquisition o Yoki Alimentos S(Yoki), we expect to achieve these results: Wearetargetingmidsingle-digitgrowthinnetsa

driven by acquisitions, volume growth, mix improvments, and modest net price realization. Wehaveastrongline-upof consumermarketin

merchandising, and innovation planned to support oleading brands. We will continue to build our global plorms in markets around the world, accelerating oeorts in rapidly growing emerging markets. Wearetargetingmidsingle-digitgrowthintotals

ment operating prot in scal 2013, as we expect oHMM discipline o cost savings, mix management, aprice realization to oset lower input cost ination.

Our businesses generate strong levels o cash owand we use some o this cash to reinvest in our busineOur scal 2013 plans call or approximately $650 millio expenditures or capital projects, excluding expentures that may be required or Yoki. On June 26, 20our Board o Directors approved a dividend increase


22/94

General Mills

an annual rate o $1.32 per share, an 8 percent increaserom the rate paid in scal 2012.We expect that share repurchases will at least oset

normal levels o stock option exercises in scal 2013.

Certain terms used throughout this report are denedin a glossary on pages 83 and 84 o this report.

FISCAL2012CONSOLIDATEDRESULTS

OFOPERATIONS

Fiscal 2012 net sales grew 12 percent to $16,658 mil-lion. In scal 2012, net earnings attributable to GeneralMills was $1,567 million, down 13 percent rom $1,798million in scal 2011, and we reported diluted EPS o$2.35 in scal 2012, down 13 percent rom $2.70 in scal2011. Fiscal 2012 results include losses rom the mark-

to-market valuation o certain commodity positions andgrain inventories versus scal 2011 which included gains.Fiscal 2012 results also include restructuring chargesreecting employee severance expense and the write-oo certain long-lived assets related to our 2012 produc-tivity and cost savings plan and integration costs result-ing rom the acquisitions o Yoplait S.A.S. and YoplaitMarques S.A.S. Fiscal 2011 results include the net ben-et rom the resolution o uncertain tax matters. DilutedEPS excluding these items aecting comparability was$2.56 in scal 2012, up 3 percent rom $2.48 in scal2011 (see the Non-GAAP Measures section on page 85

or our use o this measure and our discussion o theitems aecting comparability).Te components o net sales growth are shown in the

ollowing table:

Components o Net Sales Growth

Fiscal 2012vs. 2011

Contributions rom volume growth (a) pts

Net price realization and mix pts

Foreign currency exchange Flat

Net sales growth pts

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

Net sales grew 12 percent in scal 2012, due to 9 per-centage points o contribution rom volume growth,including 12 percentage points o volume growth con-tributed by the acquisition o Yoplait S.A.S. Net pricerealization and mix contributed 3 percentage points onet sales growth. Foreign currency exchange was atcompared to scal 2011.

Cost o sales increased $1,686 million in scal 2012 to$10,613 million. Tis increase was driven by an $877 mil-lion increase attributable to higher volume and a $610million increase attributable to higher input costs and

product mix. We recorded a $104 million net increasein cost o sales related to mark-to-market valuationo certain commodity positions and grain inventoriesas described in Note 7 to the Consolidated FinancialStatements on page 56 o this report, compared to a netdecrease o $95 million in scal 2011.

Gross margin grew 2 percent in scal 2012 versus s-cal 2011. Gross margin as a percent o net sales decreasedby 370 basis points rom scal 2011 to scal 2012. Tisdecrease was primarily driven by higher input costs andlosses rom mark-to-market valuation o certain com-modity positions and grain inventories in scal 2012

versus gains in scal 2011.Selling, general and administrative (SG&A) expenses

were up $189 million in scal 2012 versus scal 2011.SG&A expenses as a percent o net sales in scal 2012decreased by 1 percentage point compared to scal 2011.Te increase in SG&A expenses was primarily drivenby the acquisition o Yoplait S.A.S. and an 8 percentincrease in advertising and media expense.

Tere were no divestitures in scal 2012. In scal2011, we recorded a net divestiture gain o $17 millionconsisting o a gain o $14 million related to the saleo a oodservice rozen baked goods product line in our

International segment and a gain o $3 million related tothe sale o a pie shell product line in our Bakeries andFoodservice segment.

Restructuring, impairment, and other exit coststotaled $102 million in scal 2012 as ollows:

Expense, in Millions

Productivity and cost savings plan $ .

Charges associated with restructuring actions

previously announced .

otal $ .

In scal 2012, we approved a major productivity andcost savings plan designed to improve organizationaleectiveness and ocus on key growth strategies. Teplan includes organizational changes that strengthenbusiness alignment, and actions to accelerate adminis-trative efciencies across all o our operating segmentsand support unctions. In connection with this initia-tive, we expect to eliminate approximately 850 posi-tions globally and recorded a $101 million restructuring


23/94

Annual Report

charge, consisting o $88 million o employee severanceexpense and a non-cash charge o $13 million relatedto the write-o o certain long-lived assets in our U.S.Retail segment. All o our operating segments and sup-

port unctions were aected 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 unctions. Weexpect to record approximately $19 million o restructur-ing charges as a result o these actions in scal 2013.Tese restructuring actions are expected to be com-pleted by the end o scal 2014. In scal 2012, we paid$4 million in cash related to restructuring actions takenin scal 2012 and previous years.

Interest, net or scal 2012 totaled $352 million, $6

million higher than scal 2011. Average interest bear-ing instruments increased $792 million in scal 2012,primarily due to the acquisitions o Yoplait S.A.S. andYoplait Marques S.A.S., generating a $46 million increasein net interest. Te average interest rate decreased 55basis points, including the eect o the mix o debt, gen-erating a $40 million decrease in net interest.

Our consolidated eective tax rate or scal 2012 was32.1 percent compared to 29.7 percent in scal 2011. Te2.4 percentage point increase was primarily due to a$100 million reduction to tax expense recorded in scal2011 related to a settlement with the Internal Revenue

Service (IRS) concerning corporate income tax adjust-ments or scal years 2002 to 2008.Aer-tax earnings rom joint ventures or scal 2012

decreased to $88 million compared to $96 million in s-cal 2011 primarily due to higher eective tax rates as aresult o discrete tax items in scal 2012.

Te change in net sales or each joint venture is setorth in the ollowing table:

Joint Venture Change in Net Sales

Fiscal vs.

CPW %

HDJ

Joint Ventures %

In scal 2012, CPW net sales grew by 4 percent due to3 percentage points attributable to net price realizationand mix, and a 2 percentage point increase rom volume,partially oset by a 1 percentage point decrease romunavorable oreign currency exchange. In scal 2012,

net sales or HDJ increased 11 percent rom scal 20due to 7 percentage points o avorable oreign currenexchange, 3 percentage points due to an increase in vume, and 1 percentage point attributable to net pr

realization and mix.Average diluted shares outstanding increased by

million in scal 2012 rom scal 2011, due primarilythe issuance o common stock rom stock option execises, partially oset by share repurchases.

FISCAL2012CONSOLIDATEDBALANCE

SHEETANALYSIS

Cash and cash equivalents decreased $148 million roscal 2011, as discussed in the Liquidity section page 28.

Receivables increased $161 million rom scal 2011 pmarily as a result o the acquisition o Yoplait S.A.S.

Inventories decreased $130 million rom scal 20primarily as a result o inventory reduction eorts scal 2012.

Prepaid expenses and other current assets decreas$125 million rom scal 2011, mainly due to decreasesderivative receivable balances.

Land, buildings, and equipment increased $307 mlion rom scal 2011, as $676 million o capital expentures and $252 million o additions rom the acquisitio Yoplait S.A.S. were partially oset by depreciati

expense o $512 million and $84 million o oreign curency translation in scal 2012.Goodwill and other intangible assets increased $2,3

million rom scal 2011 primarily due to the acquisitioo Yoplait S.A.S. and Yoplait Marques S.A.S. We record$1,617 million o goodwill and $1,108 million o othintangible assets related to scal 2012 acquisitions whwere partially oset by $348 million o oreign currentranslation.

Other assets increased $3 million rom scal 2011.Accounts payable increased $154 million rom s

2011, primarily due to the acquisition o Yoplait S.Aand shis in the timing o payments.

Long-term debt, including current portion, and nopayable increased $544 million rom scal 2011 primardue to the consolidation o Yoplait S.A.S. debt o $3million and our debt renancing activities in scal 201

Te current and noncurrent portions o net deerrincome taxes liability increased $12 million roscal 2011.


24/94

General Mills

Other current liabilities increased $105 million romscal 2011, primarily driven by increases in restructuringand other exit cost reserves and consumer marketingaccruals, partially oset by a decrease in accrued taxes.

Other liabilities increased $457 million rom scal2011, primarily driven by an increase o $426 million inpension, postemployment, and postretirement liabilities.

Redeemable interest o $848 million represents theredemption value o Sodiaal Internationals (Sodiaal) 49percent interest in Yoplait S.A.S. as o May 27, 2012.Please reer to Note 9 to the Consolidated FinancialStatements on page 64 o this report.

Retained earnings increased $767 million rom scal2011, reecting scal 2012 net earnings o $1,567 mil-lion less dividends paid o $800 million. reasury stockdecreased $33 million rom scal 2011, due to $346 mil-

lion related to stock-based compensation plans partiallyoset by $313 million o share repurchases. Additionalpaid in capital decreased $11 million rom scal 2011.Accumulated other comprehensive loss (AOCI)increased by $733 million aer-tax rom scal 2011, pri-marily driven by pension and postemployment activ-ity o $423 million and oreign currency translation o$270 million.

Noncontrolling interests increased $214 million inscal 2012 primarily due to the addition o Sodiaals 50percent interest in Yoplait Marques S.A.S. Please reer toNote 9 to the Consolidated Financial Statements on page

64 o this report.

FISCAL2011CONSOLIDATEDRESULTSOF

OPERATIONS

Fiscal 2011 net sales grew 2 percent to $14,880 mil-lion. Net earnings attributable to General Mills were$1,798 million in scal 2011, up 18 percent rom $1,530million in scal 2010, and we reported diluted EPS o$2.70 in scal 2011, up 20 percent rom $2.24 in scal2010. Fiscal 2011 results include gains rom the mark-to-market valuation o certain commodity positionsand grain inventories versus scal 2010 which includedlosses. Fiscal 2011 results also include the net benetrom the resolution o uncertain tax matters, and s-cal 2010 results include income tax expense related tothe enactment o ederal health care reorm. Diluted EPSexcluding these items aecting comparability was $2.48in scal 2011, up 8 percent rom $2.30 in scal 2010(see the Non-GAAP Measures section on page 85 orour use o this measure and our discussion o the itemsaecting comparability).

Te components o net sales growth are shown in theollowing table:

Components o Net Sales Growth

Fiscal vs.

Contributions rom volume growth (a) pt

Net price realization and mix pt

Foreign currency exchange Flat



Net sales grew 2 percent in scal 2011, due to 1 per-centage point o contribution rom volume growth and1 percentage point o growth rom net price realizationand mix. Foreign exchange was at compared to scal

2010.Cost o sales increased $91 million in scal 2011 to

$8,927 million. Tis was driven by a $157 million increaseattributable to higher net input costs and product mixand an $84 million increase attributable to higher vol-ume, partially oset by a $95 million net decrease in costo sales related to mark-to-market valuation o certaincommodity positions and grain inventories compared toa net increase o $7 million in scal 2010. In scal 2010,we recorded a charge o $48 million resulting rom achange in the capitalization threshold or certain equip-ment parts.

Gross margin grew 3 percent in scal 2011 versus s-cal 2010. Gross margin as a percent o net sales increasedby 40 basis points rom scal 2010 to scal 2011. Teseimprovements were primarily driven by gains rom themark-to-market valuation o certain commodity posi-tions and grain inventories in scal 2011 versus lossesin scal 2010.

Selling, general and administrative (SG&A) expenseswere up $29 million in scal 2011 versus scal 2010,while SG&A expenses as a percent o net sales remainedessentially lat rom iscal 2010 to iscal 2011. heincrease in SG&A expenses was primarily driven by a$69 million increase in corporate pension expense par-tially oset by a 7 percent decrease in advertising andmedia expense. In scal 2010, the Venezuelan govern-ment devalued the bolivar uerte exchange rate againstthe U.S. dollar. Te $14 million oreign exchange lossresulting rom the devaluation was substantially osetby a $13 million recovery against a corporate investment.

During scal 2011, we recorded a net divestiture gaino $17 million. We recorded a gain o $14 million related


25/94

Annual Report

to the sale o a oodservice rozen baked goods productline in our International segment and a gain o $3 mil-lion related to the sale o a pie shell product line in ourBakeries and Foodservice segment. Tere were no dives-

titures in scal 2010.Restructuring, impairment, and other exit costs

totaled $4 million in scal 2011 as ollows:

Expense, in Millions

Discontinuation o ruit-avored snack product line $ .

Charges associated with restructuring actions

previously announced .

otal $ .

In scal 2011, we decided to exit an underperorm-ing product line in our U.S. Retail segment. As a result

o this decision, we concluded that the uture cashows generated by this product line were insufcientto recover the net book value o the associated long-lived assets. Accordingly, we recorded a non-cash chargeo $2 million related to the impairment o the associ-ated long-lived assets. No employees were aected bythese actions. In addition, we recorded $3 million ocharges associated with restructuring actions previouslyannounced. In scal 2011, we paid $6 million in cashrelated to restructuring actions taken in scal 2011 andprevious years.

Interest, net or scal 2011 totaled $346 million, $55

million lower than scal 2010. Te average interest rateon our total outstanding debt was 5.6 percent in scal2011 compared to 6.3 percent in scal 2010, generatinga $45 million decrease in net interest. Average inter-est bearing instruments increased $474 million in s-cal 2011, primarily due to more share repurchases thanin scal 2010, leading to a $30 million increase in netinterest. In scal 2010, we also recorded a loss o $40million related to the repurchase o certain notes, whichrepresented the premium paid, the write-o o remain-ing discount and unamortized ees, and the settlemento related swaps.

Our consolidated eective tax rate or scal 2011 was29.7 percent compared to 35.0 percent in scal 2010.Te 5.3 percentage point decrease was primarily due toa $100 million reduction to tax expense recorded in scal2011 related to a settlement with the IRS concerning cor-porate income tax adjustments or scal years 2002 to2008. Te adjustments primarily relate to the amount ocapital loss, depreciation, and amortization we reportedas a result o the sale o noncontrolling interests in

our General Mills Cereals, LLC (GMC) subsidiary. Fis2010 income tax expense included a $35 million increarelated to the enactment o ederal health care reo(the Patient Protection and Aordable Care Act,

amended by Health Care and Education ReconciliatiAct o 2010). Tis legislation changed the tax treatmeo subsidies to companies that provide prescription drbenets that are at least the equivalent o benets undMedicare Part D (see the Impact o Ination section page 28 or additional discussion o this legislation).

Aer-tax earnings rom joint ventures or scal 20decreased to $96 million compared to $102 million in cal 2010. Te decrease is primarily due to higher advetising and media spending and increased service coallocations, all in CPW.

Te change in net sales or each joint venture is s

orth in the ollowing table:

Joint Venture Change in Net Sales

Fiscal vs.

CPW

HDJ

Joint Ventures

In scal 2011, CPW net sales grew by 3 percent dto a 2 percentage point increase in volume and a 1 pecentage point increase rom avorable oreign exchan

Net price realization and mix was at compared to s2010. In scal 2011, net sales or HDJ increased 4 percerom scal 2010 primarily due to 9 percentage points avorable oreign exchange, partially oset by a 5 pecentage point decline in net price realization and mVolume was at compared to scal 2010.

Average diluted shares outstanding decreased bymillion in scal 2011 rom scal 2010, due primarilythe repurchase o 32 million shares, partially oset the issuance o shares upon stock option exercises.


26/94

General Mills

Segment operating prot excludes unallocated cor-porate items, gain on divestitures, and restructur-ing, impairment, and other exit costs because theseitems aecting operating proit are centrally man-aged at the corporate level and are excluded rom the

measure o segment proitability reviewed by ourexecutive management.

RESULTSOFSEGMENTOPERATIONS

Our businesses are organized into three operating segments: U.S. Retail; International; and Bakeries and Foodservice.Te ollowing tables provide the dollar amount and percentage o net sales and operating prot rom each seg-

ment or scal years 2012, 2011, and 2010:

Net Sales Fiscal Year2012 2011 2010

Percent Percent Percent

In Millions Dollars o otal Dollars o otal Dollars o otal

U.S. Retail $,. % $,. % $ ,. %

International ,. ,. ,.

Bakeries and Foodservice ,. ,. ,.

otal $,. % $,. % $ ,. %

Segment Operating Proft

U.S. Retail $ ,. % $ ,. % $ ,. %

International . . .

Bakeries and Foodservice . . .

otal $ ,. % $ ,. % $ ,. %

U.S Retail Segment Our U.S. Retail segment reectsbusiness with a wide variety o grocery stores, massmerchandisers, membership stores, natural ood 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, rerig-erated yogurt, ready-to-serve soup, dry dinners, shelstable and rozen vegetables, rerigerated and rozendough products, dessert and baking mixes, rozen pizzaand pizza snacks, grain, ruit and savory snacks, and awide variety o organic products, including granola bars,cereal, and soup.


27/94

Annual Report

In scal 2012, net sales or our U.S. Retail segmentwere $10.5 billion, up 3 percent rom scal 2011. Netprice realization and mix contributed 9 percentagepoints o growth, partially oset by a 6 percentage point

decrease due to lower pound volume.In scal 2011, net sales or this segment totaled $10.2

billion, at compared to scal 2010. Volume on a ton-nage basis and net price realization and mix were bothat compared to scal 2010.

Components o U.S. Retail Net Sales Growth

Fiscal 2012 Fiscal 2011

vs. 2011 vs. 2010

Contributions rom volume growth (a) () pts Flat

Net price realization and mix pts Flat

Net sales growth pts Flat


Net sales or our U.S. Retail divisions are shown in thetables below:

U.S. Retail Net Sales by Division

Fiscal Year

In Millions 2012 2011 2010

Big G $ ,. $ ,. $ ,.

Meals ,. ,. ,.

Pillsbury ,. ,. ,.

Snacks ,. ,. ,.

Yoplait ,. ,. ,.

Baking Products . . .

Small Planet Foods and other . . .

otal $,. $,. $,.

U.S. Retail Net Sales Percentage

Change by Division

Fiscal 2012 Fiscal 2011vs. 2011 vs. 2010

Big G % ()%

Meals Flat ()

Pillsbury ()

Snacks

Yoplait ()

Baking Products ()

Small Planet Foods

otal % Flat

In scal 2012, net sales or Big G cereals grew 4 pcent rom last year driven by growth rom establishbrands such as Honey Nut Cheerios, Cinnamon ToaCrunch, and Chex varieties along with contributio

rom new products including Peanut Butter Multi GraCheerios and Fiber One 80 Calories cereals. Meals dision net sales were at. Pillsbury net sales grew 3 pecent, led by rozen breakast items, biscuits, and swerolls. Snacks net sales grew 15 percent, driven by FibOne and Nature Valley snack bars. Net sales or Yopldeclined 5 percent as growth rom Go-GURTand YoplGreek was oset by volume declines on certain estalished product lines. Net sales or Baking Products gr3 percent, driven by our pricing. Small Planet Foods nsales were up 19 percent, led by Lrabarnatural rand nut bars, and Cascadian Farm organic cereals a

grain snack bars.In scal 2011, net sales or Big G cereals declined 2 p

cent rom scal 2010 which included Chocolate Cheerand Wheaties Fuelintroductory volume. Meals divisinet sales decreased 1 percent as Helperdinner mixand Green Giant canned vegetables declines were patially oset by growth in Old El Paso Mexican proucts, Progresso ready-to-serve soups, and WanchFerry and Macaroni Grillrozen entrees. Pillsbury nsales declined 2 percent due to sales declines in Totinpizza. Snacks net sales grew 5 percent, driven by NatuValley and Fiber One grain snack bars. Net sales

Yoplait grew 1 percent including the acquisition o tMountain High yogurt business. Net sales or BakiProducts declined 4 percent. Small Planet Foods net sawere up 13 percent driven by double-digit growth Lrabarnatural ruit and nut bars.

Segment operating prot o $2.3 billion in scal 20declined $53 million, or 2 percent, rom scal 2011. Tdecrease was primarily driven by higher input coslower volume, and a 5 percent increase in advertisiand media expense.

Segment operating prot o $2.3 billion in scal 20declined $37 million, or 2 percent, rom scal 2010. Tdecrease was primarily driven by unavorable suppchain costs o $81 million, partially oset by a 9 percereduction in advertising and media expense.


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General Mills

International SegmentOur International segmentconsists o retail and oodservice businesses outside othe United States. In Canada, our major product cate-gories are ready-to-eat cereals, shel stable and rozen

vegetables, dry dinners, rerigerated and rozen doughproducts, dessert and baking mixes, rozen pizza snacks,rerigerated yogurt, and grain and ruit snacks. In mar-kets outside North America, our product categoriesinclude super-premium ice cream and rozen desserts,rerigerated yogurt, grain snacks, shel stable and rozenvegetables, rerigerated and rozen dough products, anddry dinners. Our International segment also includesproducts manuactured in the United States or export,mainly to Caribbean and Latin American markets, aswell as products we manuacture or sale to our inter-national joint ventures. Revenues rom export activities

and ranchise ees are reported in the region or countrywhere the end customer is located.

In scal 2012, net sales or our International segmentwere $4,194 million, up 46 percent rom scal 2011. Tisgrowth was driven by 36 percentage points contributedby the acquisition o Yoplait S.A.S. Volume contributed65 percentage points o net sales growth, including63 percentage points resulting rom the acquisition oYoplait S.A.S., and avorable oreign currency exchangecontributed 1 percentage point o net sales growth. Tesegains were partially oset by a decrease o 20 percentagepoints due to unavorable net price realization and mix

resulting rom the acquisition o Yoplait S.A.S.Net sales totaled $2,876 million in scal 2011, up 7percent rom $2,685 million in scal 2010. Te growthin scal 2011 was driven by 6 percentage points o con-tributions rom volume and 1 percentage point rom netprice realization and mix. Foreign currency exchangewas at compared to scal 2010.

Components o International Net Sales Growth


Contributions rom volume growth (a) pts pts

Net price realization and mix () pts ptForeign currency exchange pt Flat

Net sales growth pts pts


Net sales or our International segment by geographicregion are shown in the ollowing tables:

International Net Sales by Geographic Region

Fiscal Year

In Millions 2012 2011 2010

Europe $ ,. $ . $ .Asia/Pacic . . .

Canada . . .

Latin America . . .

otal $ ,. $ ,. $,.

International Change in Net Sales by Geographic Region

Percentage Change inPercentage Change in Net Sales on ConstantNet Sales as Reported Currency Basis(a)

Fiscal 2012 Fiscal 2011 Fiscal 2012 Fiscal 2011vs. 2011 vs. 2010 vs. 2011 vs. 2010

Europe % % % %

Asia/Pacic

Canada

Latin America ()

otal % % % %

(a) See the Non-GAAP Measures section on page 85 or our use o thismeasure.

In scal 2012, net sales in Europe grew 97 percent,including 90 percentage points rom the acquisition oYoplait S.A.S. Te remaining growth was driven by OldEl Paso Mexican products and Hagen Dazs in France,Green Giant, Nature Valley and Betty Crockerproducts

in the United Kingdom, and avorable oreign currencyexchange. In the Asia/Pacic region, net sales grew 21percent driven by growth rom Hagen-Dazs productsin China, the scal 2011 acquisition oPasta MasterinAustralia, and avorable oreign currency exchange. Netsales in Canada increased 29 percent primarily due to 27percentage points o net sales growth rom the acquisi-tion o Yoplait S.A.S. Te remaining growth was drivenby Cheerios varieties, Old El Paso Mexican products,and avorable oreign currency exchange. Latin Americanet sales increased 11 percent driven by growth in LaSaltea in Argentina and Diablitos in Venezuela, par-tially oset by unavorable oreign currency exchange.

In scal 2011, net sales in Europe increased by 5 per-cent, driven by growth in Hagen Dazs and NatureValley in the United Kingdom, and Old El Paso Mexicanproducts in France and Switzerland, partially oset byunavorable oreign currency exchange. In the Asia/Pacic region, net sales grew 14 percent due to growthrom Hagen-Dazs and Wanchai Ferry brandsin China, and atta our in India. Net sales in Canada


29/94

Annual Report

increased 8 percent due to avorable oreign currencyexchange and growth in ready-to-eat-cereals. LatinAmerica net sales decreased 5 percent due to unavor-able oreign currency exchange primarily related to the

2010 devaluation o the Venezuelan currency, partiallyoset by Diablitos growth in Venezuela and La Salteagrowth in Argentina.

Segment operating prot or scal 2012 grew 47 per-cent to $430 million rom $291 million in scal 2011, pri-marily driven by the acquisition o Yoplait S.A.S., highervolume, and avorable oreign currency eects.

Segment operating prot or scal 2011 grew 52 per-cent to $291 million, rom $192 million in scal 2010,primarily driven by volume growth and avorable oreigncurrency exchange. In scal 2010, we incurred a $14 mil-lion oreign exchange loss on the revaluation o non-

bolivar uerte monetary balances in Venezuela.In January 2010, the Venezuelan government devalued

the bolivar uerte by resetting the ofcial exchange rate.Te eect o the devaluation was a $14 million oreignexchange loss in scal 2010, primarily on the revaluationo non- bolivar uerte monetary balances in Venezuela.We continue to use the ofcial exchange rate to remea-sure the nancial statements o our Venezuelan opera-tions, as we intend to remit dividends solely through thegovernment-operated Foreign Exchange AdministrationBoard (CADIVI). Te devaluation o the bolivar uertealso reduced the U.S. dollar equivalent o our Venezuelan

results o operations and nancial condition, but this didnot have a material impact on our results. During scal2010, Venezuela became a highly inationary economy,which did not have a material impact on our results inscal 2012, 2011, or 2010.

Bakeries and Foodservice Segment In our Bakeries andFoodservice segment our major product categories arecereals, snacks, rerigerated yogurt, unbaked and ullybaked rozen dough products, baking mixes, and our.Many products we sell are branded to the consumerand nearly all are branded to our customers. We sell todistributors and operators in many customer channels,including oodservice, convenience stores, vending, andsupermarket bakeries.

For iscal 2012, net sales or our Bakeries andFoodservice segment increased 8 percent to $1,983 mil-lion. Te increase in scal 2012 was driven by an increasein net price realization and mix o 7 percentage pointsand 1 percentage point contributed by volume growth.

For iscal 2011, net sales or our Bakeries aFoodservice segment increased 6 percent to $1,841 mlion. Te increase in scal 2011 was driven by an increain net price realization and mix o 6 percentage poin

primarily rom prices indexed to commodity markeContributions rom volume were at, including a 2 pecentage point decline rom a divested product line.

Components o Bakeries and Foodservice Net Sales Gro


Contributions rom volume growth (a) pt Fl

Net price realization and mix pts

Foreign currency exchange NM N


(a) Measured in tons based on the stated weight o our product shipment

Net sales or our Bakeries and Foodservice segment customer channel is shown in the ollowing tables:

Bakeries and Foodservice Net Sales by Customer Chan

Fiscal Year

In Millions 2012 2011 2

Bakeries and National

Restaurant Accounts $,. $,. $

Foodservice Distributors . .

Convenience Stores . .

otal $,. $,. $,

Bakeries and Foodservice Net Sales Percentage Change

Customer Channel


Bakeries and National Restaurant Accounts %

Foodservice Distributors

Convenience Stores

otal %

In scal 2012, segment operating prot was $287 mlion, down rom $306 million in scal 2011. Te decreawas primari ly driven by lower grain merchandisiearnings.

Segment operating prot was $306 million in s2011, up rom $263 million in scal 2010. Te increawas primarily driven by net price realization and mand increased grain merchandising earnings, partiaoset by higher input costs.


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General Mills

Unallocated Corporate Items Unallocated corporateitems include corporate overhead expenses, variancesto planned domestic employee benets and incentives,contributions to the General Mills Foundation, and other

items that are not part o our measurement o segmentoperating perormance. Tis includes gains and lossesrom mark-to-market valuation o certain commoditypositions until passed back to our operating segmentsin accordance with our policy as discussed in Note 2o the Consolidated Financial Statements on page 49 othis report.

For scal 2012, unallocated corporate expense totaled$348 million compared to $184 million last year. In scal2012 we recorded a $104 million net increase in expenserelated to mark-to-market valuation o certain commod-ity positions and grain inventories, compared to a $95

million net decrease in expense last year. In scal 2012,we also recorded $11 million o integration costs relatedto the acquisition o Yoplait S.A.S. and Yoplait MarquesS.A.S. Tese increases in expense were partially osetby a decrease in compensation and benet expense com-pared to scal 2011.

Unallocated corporate expense totaled $184 millionin scal 2011 compared to $203 million in scal 2010.In scal 2011, we recorded a $95 million net decreasein expense related to mark-to-market valuation o cer-tain commodity positions and grain inventories, com-pared to a $7 million net increase in expense in scal

2010. Tis was partially oset by a $69 million increasein corporate pension expense in iscal 2011. In is-cal 2010, we recorded a $13 million recovery against acorporate investment.

IMPACTOFINFLATION

We have experienced signiicant input cost volatil-ity since scal 2006. Our gross margin perormance inscal 2012 reects the impact o 10 percent input costination, primarily on commodities inputs. We expectthe rate o ination o commodities and energy coststo moderate in scal 2013. We attempt to minimize theeects o ination through planning and operating prac-tices. Our risk management practices are discussed onpages 41 through 42 o this report.

he Patient Protection and Aordable Care Act,as amended by the Health Care and EducationReconciliation Act o 2010 (collectively, the Act) wassigned into law in March 2010. Te Act codies healthcare reorms with staggered eective dates rom 2010

to 2018. Many provisions in the Act require the issu-ance o additional guidance rom various governmentagencies. Because the Act does not take eect ully untiluture years, the Act did not have a material impact on

our scal 2012, 2011, or 2010 results o operations. Giventhe complexity o the Act, the extended time periodover which the reorms will be implemented, and theunknown impact o uture regulatory guidance, the ullimpact o the Act on uture periods will not be knownuntil those regulations are adopted.

LIqUIDITY

Te primary source o our liquidity is cash ow romoperations. Over the most recent three-year period, ouroperations have generated $6.1 billion in cash. A sub-

stantial portion o this operating cash ow has beenreturned to stockholders through share repurchases anddividends. We also use this source o liquidity to undour capital expenditures. We typically use a combinationo cash, notes payable, and long-term debt to nanceacquisitions and major capital expansions.

As o May 27, 2012, we had $446 million o cash andcash equivalents held in oreign jurisdictions which willbe used to und oreign operations and acquisitions.Tere is currently no intent or need to repatriate theseunds in order to meet domestic unding obligations orscheduled cash distributions. I we choose to repatriate

cash held in oreign jurisdictions, we will only do so in atax-neutral manner.


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Annual Report

Cash Flows rom Operations

Fiscal Year

In Millions 2012 2011 2010

Net earnings, includingearnings attributable to

noncontrolling interests $,. $,. $,.

Depreciation and amortization . . .

Aer-tax earnings

rom joint ventures (.) (.) (.)

Stock-based compensation . . .

Deerred income taxes . . .

ax benet on exercised options (.) (.) (.)

Distributions o earnings

rom joint ventures . . .

Pension and other postretirement

benet plan contributions (.) (.) (.)

Pension and other postretirementbenet 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 $,. $,. $,.

In scal 2012, our operations generated $2.4 billion

o cash compared to $1.5 billion in scal 2011. Te $875million increase primarily reects changes in currentassets and liabilities, including a $384 million increasedriven by inventory reduction eorts in scal 2012.Prepaid expenses and other current assets accounted ora $245 million increase, primarily reecting changes inoreign currency hedges and the air value o open graincontracts. Other current liabilities accounted or a $386million increase, primarily reecting changes in accruedincome taxes as a result o audit settlements and courtdecisions in scal 2011 and changes in consumer mar-keting and related accruals. Te avorable change inworking capital was oset by a $214 million decrease innet earnings. Additionally, scal 2012 includes non-cashrestructuring charges o $101 million reecting employeeseverance expense and the write-o o certain long-lived assets. In both scal 2012 and scal 2011, we madea $200 million voluntary contribution to our principaldomestic pension plans.We strive to grow core working capital at or below our

growth in net sales. For scal 2012, core working capital

decreased 7 percent, compared to net sales growth 12 percent, primarily reecting our inventory reductieorts. In scal 2011, core working capital increased percent, compared to net sales growth o 2 percent, a

in scal 2010, core working capital increased 3 percecompared to net sales growth o 1 percent.

In scal 2011, our operations generated $1.5 billion cash compared to $2.2 billion in scal 2010. Te decreaprimarily reects an $864 million increase in use o caor net current assets and liabilities and a $200 millivoluntary contribution to our principal domestic pesion plans, partially oset by the $268 million increain net earnings and a $183 million change in deerrincome taxes primarily related to our pension plcontribution and a change in tax legislation related depreciation deductions.

Cash Flows rom Investing Activities

Fiscal Year

In Millions 2012 2011 2

Purchases o land, buildings,

and equipment $ (.) $(.) $(

Acquisitions (,.) (.)

Investments in afliates, net (.) (1.8) (13

Proceeds rom disposal o land,

buildings, and equipment . .

Proceeds rom divestiture

o product lines .

Exchangeable note (.) Other, net . .

Net cash used by

investing activities $(,.) $(.) $(

In scal 2012, cash used by investing activities increasby $1.2 billion rom scal 2011. Te increased use o caprimarily reects the acquisitions o Yoplait S.A.S. aYoplait Marques S.A.S. in scal 2012 or an aggregapurchase price o $1.2 billion, comprised o $900 millio cash, net o $30 million o cash acquired, and $2million o non-cash consideration or debt assumed. addition, we purchased a zero coupon exchangeable nodue in 2016 rom Sodiaal with a notional amount o $1million. We invested $676 million in land, buildings, aequipment in scal 2012.

In iscal 2011, cash used by investing activitidecreased by $6 million rom scal 2010. Te decreasuse o cash reects $25 million o proceeds rom tdivestiture o a oodservice rozen baked goods produ


32/94

General Mills

line in our International segment and $9 million o pro-ceeds rom the sale o a pie shell product line in ourBakeries and Foodservice segment in scal 2011. In addi-tion, in scal 2011, we paid $123 million or acquisitions

during the year. We also invested $131 million in afli-ates in scal 2010, mainly our CPW joint venture, torepay local borrowings.We expect capital expenditures to be approximately

$650 million in scal 2013, excluding any expendituresrequired to support Yoki. Tese expenditures will sup-port initiatives that are expected to: increase manuac-turing capacity or grain snacks and Greek yogurt; uelInternational growth and expansion; continue HMMinitiatives throughout the supply chain; and supportyogurt capacity initiatives o Yoplait S.A.S.

Cash Flows rom Financing Activities

Fiscal Year

In Millions 2012 2011 2010

Change in notes payable $ . $ (.) $ .

Issuance o long-term debt ,. ,.

Payment o long-term debt (,.) (.) (.)

Proceeds rom common stock

issued on exercised options . . .

ax benet on exercised options . . .

Purchases o common

stock or treasury (.) (,.) (.)

Dividends paid (.) (.) (.)

Other, net (.) (.) Net cash used by

nancing activities $ (.) $ (.) $(,.)

Net cash used by nancing activities decreased by$275 million in scal 2012.

In February 2012, we repaid $1.0 billion o 6.0 percentnotes. In November 2011, we issued $1.0 billion aggregateprincipal amount o 3.15 percent notes due December15, 2021. Te net proceeds were used to repay a portiono our notes due February 2012, to reduce our commer-cial paper borrowings, and or general corporate pur-poses. Interest on these notes is payable semi-annuallyin arrears. Tese notes may be redeemed at our optionat any time prior to September 15, 2021 or a speciedmake whole amount and any time on or aer that dateat par. Tese notes are senior unsecured, unsubordi-nated obligations that include a change o control repur-chase provision.

As part o our acquisition o Yoplait S.A.S., we con-solidated $458 million o primarily euro-denominated

Euribor-based loating-rate bank debt. In December2011, we renanced this debt with $390 million o euro-denominated Euribor-based oating-rate bank debt dueat various dates through December 15, 2014.

In May 2011, we issued $300 million aggregate prin-cipal amount o 1.55 percent xed-rate notes and $400million aggregate principal amount o loating-ratenotes, both due May 16, 2014. Te proceeds o thesenotes were used to repay a portion o our outstandingcommercial paper. Te oating-rate notes bear interestequal to three-month LIBOR plus 35 basis points, subjectto quarterly reset. Interest on the oating-rate notes ispayable quarterly in arrears. Interest on the xed-ratenotes is payable semi-annually in arrears. Te xed-ratenotes may be redeemed at our option at any time or aspecied make whole amount. Tese notes are senior

unsecured, unsubordinated obligations that include achange o control repurchase provision.

In June 2010, we issued $500 million aggregate prin-cipal amount o 5.4 percent notes due 2040. Te pro-ceeds o these notes were used to repay a portion oour outstanding commercial paper. Interest on thesenotes is payable semi-annually in arrears. Tese notesmay be redeemed at our option at any time or a speci-ed make whole amount. Tese notes are senior unse-cured, unsubordinated obligations that include a changeo control repurchase provision.

In May 2010, we paid $437 million to repurchase in a

cash tender oer $400 million o our previously issueddebt. We repurchased $221 million o our 6.0 percentnotes due 2012 and $179 million o our 5.65 percentnotes due 2012. We issued commercial paper to und therepurchase.

During scal 2012, we had $234 million in proceedsrom common stock issued on exercised options com-pared to $410 million in scal 2011, a decrease o $177million. During scal 2010, we had $389 million proceedsrom common stock issued on exercised options.

During sca

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