General Mills Reports Results for Fiscal 2007 Third Quarter.

Net Sales Grew 6 Percent to $3.05 Billion;

Diluted Earnings per Share Increased 9 Percent to 74 Cents;

Company Raises Full-year Guidance;

MINNEAPOLIS -- General Mills, Inc. (NYSE:GIS) today reported results for the third quarter of fiscal 2007. Net sales for the 13 weeks ended Feb. 25, 2007, were $3.05 billion, up 6 percent from the same period a year ago. Unit volume grew 5 percent worldwide. Gross margin improved by 80 basis points and segment operating profits increased 9 percent to $522 million. Net earnings after tax also rose 9 percent to $268 million, as the impact of a lower tax rate offset incremental stock-based compensation expense (from the adoption of SFAS 123R) and higher interest expense. Diluted earnings per share (EPS) totaled 74 cents, up 9 percent from 68 cents in last year's third quarter.

General Mills Chairman and Chief Executive Officer Steve Sanger said, "This was another quarter of broad-based sales growth and margin expansion for the company. We're generating a combination of good unit volume gains, favorable mix and supply chain productivity, which is helping to offset input cost inflation. As a result, we have been able to increase our level of consumer marketing investment and also raise our earnings guidance for the year."

Through the first nine months of fiscal 2007, General Mills' net sales increased 6 percent to $9.38 billion. Segment operating profits grew 9 percent to $1.77 billion. Earnings after tax totaled $920 million, up 6 percent from last year's nine-month results. Diluted earnings per share grew 11 percent to $2.55, including 11 cents of incremental expense related to the adoption of SFAS 123R for stock-based compensation.

U. S. Retail Segment

Net sales for General Mills' domestic retail operations grew 5 percent in the third quarter to $2.11 billion, driven by 5 percent unit volume growth. Operating profits grew 6 percent to $447 million, as volume leverage and productivity offset higher input costs.

Net sales for the Meals division grew 10 percent, led by double-digit growth for Progresso soups along with gains for Helper dinner mixes and Green Giant vegetables. Yoplait division net sales rose 9 percent as Yoplait Light yogurt varieties and Yoplait Kids yogurt continued to generate strong growth. Baking Products division net sales grew 11 percent reflecting strong unit volume growth, particularly in nonmeasured channels. The Snacks division posted an 8 percent net sales gain including introductory volume for new Fiber One bars and continuing growth for Nature Valley snack bars. Net sales for the Pillsbury USA division rose 3 percent, led by core refrigerated dough products, Totino's frozen pizza rolls and Toaster Strudel. Big G cereal unit volume matched prior-year levels but net sales declined 4 percent due to year-over-year differences in the timing of price promotion activity. Net sales for the company's Small Planet Foods organic business grew 15 percent in the quarter.

Through the first nine months of 2007, net sales for the U.S. Retail segment were up 4 percent to $6.46 billion, reflecting 3 percent unit volume growth and net price realization. Segment operating profit grew 7 percent to $1.49 billion year-to-date.

International Segment

Net sales for the company's consolidated international businesses rose 15 percent in the third quarter to $510 million. Unit volume grew 6 percent, price and mix added 5 points, and foreign exchange contributed 4 points of sales growth. Operating profit rose 17 percent to $42 million.

Through the first nine months of 2007, net sales for General Mills' consolidated international businesses grew 15 percent to $1.56 billion. Operating profit increased 7 percent to $160 million.

Bakeries and Foodservice Segment

Third-quarter net sales for General Mills' Bakeries and Foodservice segment grew 5 percent to $436 million, reflecting a 1 percent unit volume increase and net price realization. Segment operating profit increased to $33 million, compared to $18 million in last year's third quarter due to pricing and favorable mix.

Through the first nine months of 2007, net sales for the Bakeries and Foodservice segment were up 7 percent to $1.36 billion. Operating profit rose 39 percent to $118 million.

Joint Venture Summary

Earnings after tax from joint ventures totaled $16 million in the third quarter, in line with prior-year results despite a $4 million after-tax charge associated with previously announced restructuring of the Cereal Partners Worldwide (CPW) manufacturing plants in the United Kingdom. Net sales for CPW grew 22 percent in the quarter. This included contributions from the Uncle Tobys business in Australia that CPW acquired in July 2006. Net sales for the Haagen-Dazs joint ventures in Asia increased 12 percent. Net sales for the 8th Continent soy beverage joint venture in the U.S. were down 5 percent, reflecting lower unit volume.

Through nine months, earnings from joint ventures totaled $58 million after tax, including CPW restructuring expenses of $7 million. Prior-year earnings of $57 million after tax through nine months did not include any CPW restructuring expense.

Corporate Items

Corporate unallocated expense totaled $35 million pretax in the third quarter of 2007 compared to $19 million pretax in 2006. This year's results include the effects of adopting SFAS 123R for stock-based compensation, which represented $9 million incremental pretax expense ($6 million after tax, or 2 cents per share) in the third quarter. Restructuring and other exit items expense totaled $1 million pretax in the third quarter of 2007 (adjustments to previously announced restructuring actions) compared to $5 million pretax expense in last year's third quarter. Net interest expense for the quarter was up 7 percent to $107 million due to higher rates and changes in mix of debt. The effective tax rate for the quarter was 33.5 percent. This reflects the year-to-date impact of a change in the annual effective tax rate from 35.8 percent to 35.5 percent, along with a discrete tax benefit of $4 million primarily from research and development tax credits. In last year's third quarter, the effective tax rate was 34.7 percent.

Cash Flow Summary

Cash flow from operations totaled $1.15 billion through February 2007, compared to $1.23 billion through the first nine months of 2006. Year-to-date capital expenditures totaled $249 million in 2007 compared to $191 million in the same period last year. Dividends through nine months grew to $377 million. On March 12, 2007, the company announced a quarterly dividend at the prevailing rate of 37 cents per share payable May 1, 2007, to shareholders of record April 10, 2007. During the third quarter, the company repurchased approximately 94 thousand shares of common stock at an average price of approximately $57 per share.

Outlook

In the fourth quarter, General Mills expects input costs to be above both current year-to-date and year-ago levels. Consumer marketing expense is expected to be above year-ago levels, reflecting continued reinvestment in brand-building activities. The company has initiated evaluations of certain assets that may result in impairment or restructuring charges. Tax planning activities may result in a further reduction to the 2007 effective tax rate.

"Our businesses are performing very well in the aggregate and financial performance through the first nine months of this year is ahead of our plans," said Sanger. "We are raising our guidance for 2007 diluted earnings per share to a range of $3.14 to $3.16." General Mills guidance is on an as-reported basis, including restructuring expense, as well as an estimated 12 cents of incremental stock-based compensation expense under SFAS 123R. Previously, the company had targeted diluted EPS of between $3.09 and $3.13 per share.

Total company segment operating profit is a non-GAAP measure. A reconciliation of this measure to the relevant GAAP measure, operating profit, appears in the attached consolidated operating segment results schedule.

General Mills will hold a briefing for investors today, March 22, 2007, beginning at 8:30 a.m. EDT. You may access the web cast from General Mills' corporate home page at www.generalmills.com.

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

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              GENERAL MILLS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (Unaudited)
(1) At the beginning of fiscal 2007, we shifted selling responsibility
    for several customers from our Bakeries and Foodservice segment to
    U.S Retail. All prior year amounts have been restated for
    comparative purposes. For the third quarter of fiscal 2006, net
    sales of $10 million and operating profit of $4 million previously
    reported in our Bakeries and Foodservice segment have now been
    recorded in the U.S. Retail segment. For the first thirty-nine
    weeks of fiscal 2006, net sales of $40 million and operating
    profit of $16 million previously reported in our Bakeries and
    Foodservice segment have now been recorded in the U.S. Retail
    segment. Goodwill of $216 million previously reported in our
    Bakeries and Foodservice segment as of May 28, 2006, has now been
    recorded in the U.S. Retail segment.
    We also made certain changes in the classifications of revenues
    and expenses at the beginning of fiscal 2007, including
    classifying shipping costs associated with the distribution of
    finished products to our customers as cost of sales (previously
    recorded in selling, general and administrative expense) and
    classifying certain trade-related costs and customer allowances as
    cost of sales or selling, general and administrative expense
    (previously recorded as reductions of net sales). We have
    reclassified previously reported results to conform to the current
    year presentation.
    At the beginning of fiscal 2007, we also reclassified certain
    accrued liabilities, including trade and consumer promotion
    accruals, from accounts payable to other current liabilities, and
    we began classifying certain distributions from joint ventures as
    operating cash flows (previously reported as investing cash
    flows). We have reclassified previously reported balance sheets
    and statements of cash flows to conform to the current year
    presentation.
(2) At the beginning of fiscal 2007, we prospectively adopted SFAS No.
    123(R) "Share-based Compensation." Prior to this adoption, no
    compensation expense was recognized for stock options granted.
    Beginning with the adoption of SFAS 123(R), we have recorded
    compensation expense for stock option grants based on their
    grant-date fair value, and we have revised our expense attribution
    method for all stock awards to recognize expense immediately for
    awards granted to retirement-eligible individuals or over the
    period from the grant date to the date retirement eligibility is
    achieved, if less than the contractual vesting period.
    For the third quarter and first thirty-nine weeks of fiscal 2007,
    compensation expense for all stock-based compensation was $24
    million and $105 million, respectively. As a result of the
    adoption of SFAS 123(R), stock-based compensation expense was $9
    million and $61 million higher for the third quarter and first
    thirty-nine weeks of fiscal 2007, respectively, than if we had
    continued our previous accounting method.
(3) In the third quarter of fiscal 2007, we recorded restructuring and
    other costs of $1 million associated with adjustments to
    restructuring actions previously announced. In the third quarter
    of fiscal 2006 we recorded restructuring and other costs of $5
    million consisting of $2 million, primarily for severance costs
    associated with the closure of our frozen dough foodservice plant
    in Swedesboro, New Jersey; $2 million of restructuring costs at
    our Allentown, Pennsylvania frozen waffle plant, primarily related
    to product and production realignment; and $1 million associated
    with restructuring actions previously announced.
    In the first thirty-nine weeks of fiscal 2007, we recorded income
    related to restructuring and other exit activities of $2 million.
    We sold our previously closed plant in San Adrian, Spain resulting
    in a gain of $8 million. We incurred a $6 million loss associated
    with the divestiture of our par-baked bread product line,
    including its plants in Chelsea, Massachusetts and Tempe, Arizona.
    The carrying value of the par-baked bread assets sold, including
    goodwill, was $18 million. In the first thirty-nine weeks of
    fiscal 2006, we recorded restructuring and other costs of $16
    million, consisting of $12 million associated with the closure of
    the plant in Swedesboro, New Jersey, including $10 million of
    asset impairment charges recorded in the first and second quarters
    of fiscal 2006 related to the plant; $2 million related to the
    restructuring at the plant in Allentown, Pennsylvania; and $2
    million of charges associated with restructuring actions
    previously announced.
    As part of our long range planning process, we are evaluating our
    plans for certain long-lived assets. Depending upon the outcome of
    those evaluations, we may take additional impairment or
    restructuring charges in fiscal 2007.
(4) Basic and diluted earnings per share (EPS), including the impact
    of the adoption of SFAS 123(R) in fiscal 2007 and the effect of
    accounting for contingently convertible debt in fiscal 2006, were
    calculated as follows:
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(5) During the third quarter of fiscal 2007, we completed the
    acquisition of Saxby Bros. Limited, a chilled pastry company in
    the U.K. for approximately $21 million. This business, which had
    sales of $24 million in calendar 2006, complements our existing
    frozen pastry business in the U.K. In addition, we made another
    immaterial acquisition totaling $3 million.
    During the first quarter of fiscal 2007, Cereal Partners Worldwide
    (CPW), our joint venture with Nestle, completed the acquisition of
    the Uncle Tobys cereal business in Australia. We funded our 50
    percent share of the purchase price by making additional advances
    to and equity contributions in CPW totaling $135 million
    (classified as investments in affiliates, net on the
    consolidated statements of cash flows) and by acquiring a 50
    percent beneficial interest in certain intellectual property for
    $58 million.