10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MAY 27, 2007

o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________TO_________

Commission File Number 001-01185

GENERAL MILLS, INC.

(Exact name of registrant as specified in its charter)

Delaware	41-0274440
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

Number One General Mills Boulevard Minneapolis, Minnesota (Mail: P.O. Box 1113)	55426 (Mail: 55440)
(Address of principal executive offices)	(Zip Code)

(763) 764-7600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $.10 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x       Accelerated filer o      Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

Aggregate market value of Common Stock held by non-affiliates of the registrant, based on the closing price of $56.65 per share as reported on the New York Stock Exchange on November 24, 2006 (the last business day of the registrant’s most recently completed second fiscal quarter): $19,451 million.

Number of shares of Common Stock outstanding as of July 13, 2007: 330,188,079 (excluding 172,118,585 shares held in the treasury).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for its 2007 Annual Meeting of Stockholders are incorporated by reference into Part III.

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	1
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	10
Item 2.	Properties	10
Item 3.	Legal Proceedings	11
Item 4.	Submission of Matters to a Vote of Security Holders	11
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	11
Item 6.	Selected Financial Data	12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 8.	Financial Statements and Supplementary Data	37
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	72
Item 9A.	Controls and Procedures	72
Item 9B.	Other Information	73
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	73
Item 11.	Executive Compensation	73
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	74
Item 13.	Certain Relationships and Related Transactions, and Director Independence	74
Item 14.	Principal Accounting Fees and Services	74
Part IV
Item 15.	Exhibits, Financial Statement Schedules	74
Signatures		78

PART I

ITEM 1   Business

COMPANY OVERVIEW

General Mills, Inc. is a leading global manufacturer and marketer of branded, packaged, consumer foods and operates in the consumer foods industry. We are also a leading supplier of branded and unbranded food products to the foodservice and commercial baking industries. As of May 27, 2007, these products are manufactured by us in 18 countries and marketed in more than 100 countries. Our joint ventures manufacture and market products in more than 130 countries and republics worldwide.

    General Mills, Inc. was incorporated in Delaware in 1928. The terms “General Mills,” “Company,” “registrant,” “we,” “us” and “our” mean General Mills, Inc. and all subsidiaries included in the Consolidated Financial Statements included in this report unless the context indicates otherwise.

    Certain terms used throughout this document are defined in a glossary on page 71 of this report.

PRINCIPAL PRODUCTS

Our major product categories in the United States are ready-to-eat cereals, refrigerated yogurt, ready-to-serve soup, dry dinners, shelf stable and frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit, and savory snacks, microwave popcorn, and a wide variety of organic products including soup, granola bars, and cereal.

    In Canada, our major product categories are ready-to-eat cereals, shelf stable and frozen vegetables, dry dinners, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza snacks, and grain, fruit and savory snacks.

    In markets outside the United States and Canada, our major product categories include super-premium ice cream, grain snacks, shelf stable and frozen vegetables, refrigerated and frozen dough products, and dry dinners.

TRADEMARKS AND PATENTS

Our products are marketed under trademarks and service marks that are owned by or licensed to us. The most significant trademarks and service marks used in our businesses are set forth in italics in this report. Some of the important trademarks used in our global operations include:

•	Ready-to-eat cereals	Cheerios, Wheaties, Lucky Charms, Total, Trix, Golden Grahams, Chex, Kix, Fiber One, Reese’s Puffs, Cocoa Puffs, Nature Valley, Cookie Crisp, Cinnamon Toast Crunch, Clusters, Oatmeal Crisp, Uncle Tobys, and Basic 4
•	Refrigerated yogurt	Yoplait, Trix, Yoplait Kids, Go-GURT, Yoplait Whips!, and Colombo
•	Refrigerated and frozen dough products	Pillsbury, the Pillsbury Doughboy character, Grands!, Golden Layers, Big Deluxe Classics, Toaster Strudel, Toaster Scrambles, Perfect Portions, Jus-Rol, Forno de Minas, Latina, Wanchai Ferry, Saxby’s, La Salteña, and Frescarini
•	Dry dinners and shelf stable and frozen vegetable products	Betty Crocker, Hamburger Helper, Tuna Helper, Chicken Helper, Old El Paso, Green Giant, Potato Buds, Suddenly Salad, Bac*O’s, Betty Crocker Bowl Appetit!, Betty Crocker Complete Meals, Valley Selections, Simply Steam, Wanchai Ferry, and Diablitos
•	Grain, fruit, and savory snacks	Nature Valley, Fiber One, Betty Crocker, Fruit Roll-Ups, Fruit By The Foot, Gushers, Chex Mix, Gardetto’s, and Bugles
•	Dessert and baking mixes	Betty Crocker, SuperMoist, Warm Delights, Bisquick, Gold Medal, and Creamy Deluxe
•	Ready-to-serve soup	Progresso
•	Ice cream and frozen desserts	Häagen-Dazs
•	Frozen pizza and pizza snacks	Totino’s, Jeno’s, Pizza Rolls, Pillsbury Pizza Pops, and Pillsbury Pizza Minis
•	Microwave popcorn	Pop•Secret
•	Organic products	Cascadian Farm and Muir Glen

    Trademarks are vital to our businesses. To protect our ownership and rights, we register our trademarks with the Patent and Trademark Office in the United States, and we file similar registrations in foreign jurisdictions. Trademark registrations in the United States are generally for a term of 10 years, renewable every 10 years as long as the trademark is used in the regular course of trade.

1

    Some of our products are marketed under or in combination with trademarks that have been licensed from others, including:

• Yoplait for yogurt in the United States;

• Dora the Explorer for yogurt, cereal, and vegetables;

• Curves for snack bars and cereal;

• Caribou Coffee and Second Cup for snack bars;

• Reese’s Puffs and certain Disney characters for cereal;

• Hershey’s chocolate for a variety of products;

• Weight Watchers as an endorsement for soup;

• Best Life Diet for a variety of products;

• Mario Batali for dry dinners;

• Sunkist for baking products and fruit snacks;

• Cinnabon for refrigerated dough, frozen pastries and baking products;

• Bailey’s for super-premium ice cream; and

• a variety of characters and brands for fruit snacks, including Tonka, My Little Pony, Animal Planet, Care Bears, Teenage Mutant Ninja Turtles, Polly Pocket, Spiderman, and various Warner Bros. characters.

    We license all of our cereal trademarks to Cereal Partners Worldwide (CPW), our joint venture with Nestlé S.A. (Nestlé). Nestlé similarly licenses certain of its trademarks to CPW, including the Nestlé and Uncle Tobys trademarks. We also license our Green Giant trademark to a third party for use in connection with its sale of fresh produce in the United States. We own the Häagen-Dazs trademark and have the right to use the trademark outside of the United States and Canada. Nestlé has an exclusive royalty-free license to use the Häagen-Dazs trademark in the United States and Canada on ice cream and other frozen dessert products. We also license this trademark to our joint ventures in Japan, Korea, and Thailand. The J. M. Smucker Company holds an exclusive royalty-free license to use the Pillsbury brand and the Pillsbury Doughboy character in the dessert mix and baking mix categories in the United States and under limited circumstances in Canada and Mexico.

    Given our focus on developing and marketing innovative, proprietary products, we consider the collective rights under our various patents, which expire from time to time, a valuable asset, but we do not believe that our businesses are materially dependent upon any single patent or group of related patents.

RAW MATERIALS AND SUPPLIES

The principal raw materials that we use are grains (wheat, oats, and corn), sugar, dairy products, vegetables, fruits, meats, vegetable oils, and other agricultural products. We also use substantial quantities of carton board, corrugated and plastic packaging materials, operating supplies and energy. Most of these inputs for our domestic and Canadian operations are purchased from suppliers in the United States. In our international operations, inputs that are not locally available in adequate supply may be imported from other countries. The cost of these inputs may fluctuate widely due to government policy and regulation, weather conditions, or other unforeseen circumstances. We have some long-term fixed price contracts, but the majority of our inputs are purchased on the open market. We believe that we will be able to obtain an adequate supply of needed inputs. Occasionally and where possible, we make advance purchases of items significant to our business in order to ensure continuity of operations. Our objective is to procure materials meeting both our quality standards and our production needs at price levels that allow a targeted profit margin. Since these inputs generally represent the largest variable cost in manufacturing our products, to the extent possible, we hedge the risk associated with adverse price movements for some inputs using a variety of risk management strategies. We also have a grain merchandising operation that provides us efficient access to, and more informed knowledge of, various commodity markets. This operation holds physical inventories that are carried at fair market value and uses derivatives to hedge its net inventory position and minimize its market exposures. See Note 7 to the Consolidated Financial Statements on pages 51 through 54 in Item 8 of this report and Item 7A on pages 35 through 36 of this report.

RESEARCH AND DEVELOPMENT

Our principal research and development facilities are located in Minneapolis, Minnesota. Our research and development resources are focused on new product development, product improvement, process design and improvement, packaging, and exploratory research in new business areas. Research and development expenditures were $191 million in fiscal 2007, $178 million in fiscal 2006, and $165 million in fiscal 2005.

FINANCIAL INFORMATION ABOUT SEGMENTS

We review the financial results of our business under three operating segments – U.S. Retail, International, and Bakeries and Foodservice. See pages 17 through 20 in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for a description of our segments. For financial information by segment and geographic area, refer to Note 16 to the Consolidated Financial Statements on pages 67 through 68 in Item 8 of this report.

JOINT VENTURES

In addition to our consolidated operations, we manufacture and sell our products through several joint ventures. See

2

page 21 in MD&A for a description of our joint ventures. For financial information on our joint ventures, refer to Note 5 to the Consolidated Financial Statements on pages 49 through 50 in Item 8 of this report.

CUSTOMERS

Our primary customers are grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, commercial and noncommercial foodservice distributors and operators, and convenience stores. We generally sell to these customers for resale to consumers through our direct sales force. We use broker and distribution arrangements for certain products or to serve certain types of customers. We also use these types of arrangements in less developed markets internationally.

    During fiscal 2007, Wal-Mart Stores, Inc. and its affiliates (Wal-Mart), accounted for 20 percent of our consolidated net sales and 27 percent of our net sales in the U.S. Retail segment. No other customer accounted for 10 percent or more of our consolidated net sales. Wal-Mart also represented 5 percent of our net sales in the International segment and 6 percent of our net sales in the Bakeries and Foodservice segment. As of May 27, 2007, Wal-Mart accounted for 20 percent of our receivables invoiced in the U.S. Retail segment, 3 percent of our receivables invoiced in the International segment and 3 percent of our receivables invoiced in the Bakeries and Foodservice segment. There has been significant worldwide consolidation in the food retailing industry in recent years, and we believe that this trend is likely to continue. The 5 largest customers in our U.S. Retail segment accounted for 54 percent of its fiscal 2007 net sales, the 5 largest customers in our International segment accounted for 41 percent of its fiscal 2007 net sales, and the 5 largest customers in our Bakeries and Foodservice segment accounted for 40 percent of its fiscal 2007 net sales. Although the loss of any large customer for an extended length of time could negatively impact our sales and profits, we do not anticipate that this will occur to a significant extent due to the consumer demand for our products and our relationships with our customers. For further information on our customer credit and product return practices please refer to Note 2 to the Consolidated Financial Statements on pages 43 through 47 in Item 8 of this report.

COMPETITION

The consumer foods industry is highly competitive, with numerous manufacturers of varying sizes in the United States and throughout the world. The food categories in which we participate are very competitive. Our principal competitors in these categories all have substantial financial, marketing, and other resources. Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity, and the ability to identify and satisfy consumer preferences. Our principal strategies for competing in each of our segments include superior product quality, innovative advertising, product promotion, product innovation, and price. In most product categories, we compete not only with other widely advertised branded products, but also with generic and private label products, that are generally sold at lower prices. Internationally, we compete with both multi-national and local manufacturers, and each country includes a unique group of competitors.

SEASONALITY

In general, demand for our products is evenly balanced throughout the year. However, within our U.S. Retail segment demand for refrigerated dough, frozen baked goods, and baking products is stronger in the fourth calendar quarter. Demand for Progresso soup and Green Giant canned and frozen vegetables is higher during the fall and winter months. Internationally, demand for Häagen-Dazs ice cream is higher during the summer months and demand for baking mix and dough products increases during winter months. Due to the offsetting impact of these demand trends, as well as the different seasons in the northern and southern hemispheres, our international net sales are generally evenly balanced throughout the year.

BACKLOG

Orders are generally filled within a few days of receipt and are subject to cancellation at any time prior to shipment. The backlog of any unfilled orders as of May 27, 2007, was not material.

CAPITAL EXPENDITURES

During fiscal 2007, our aggregate capital expenditures for land, buildings and equipment were $460 million.

EMPLOYEES

As of May 27, 2007, we had approximately 28,500 full- and part-time employees.

FOOD QUALITY AND SAFETY REGULATION

The manufacture and sale of consumer food products is highly regulated. In the United States, our activities are subject to regulation by various federal government agencies, including the Food and Drug Administration, Department of Agriculture, Federal Trade Commission, Department of Commerce and Environmental Protection

3

Agency, as well as various state and local agencies. Our business is also regulated by similar agencies outside of the United States.

ENVIRONMENTAL MATTERS

As of May 27, 2007, we were involved with four active cleanup sites associated with the alleged or threatened release of hazardous substances or wastes located in: Minneapolis, Minnesota; Sauget, Illinois; Moonachie, New Jersey; and Doolittle, Missouri. These matters involve several different actions, including administrative proceedings commenced by regulatory agencies and demand letters by regulatory agencies and private parties.

    We recognize that our potential exposure with respect to any of these sites may be joint and several, but have concluded that our probable aggregate exposure is not material to our consolidated financial position or cash flows from operations. This conclusion is based upon, among other things: our payments and accruals with respect to each site; the number, ranking and financial strength of other potentially responsible parties identified at each of the sites; the status of the proceedings, including various settlement agreements, consent decrees or court orders; allocations of volumetric waste contributions and allocations of relative responsibility among potentially responsible parties developed by regulatory agencies and by private parties; remediation cost estimates prepared by governmental authorities or private technical consultants; and our historical experience in negotiating and settling disputes with respect to similar sites.

    Our operations are subject to the Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation and Liability Act, and the Federal Insecticide, Fungicide and Rodenticide Act, and all similar state, local, and foreign environmental laws and regulations applicable to the jurisdictions in which we operate.

    Based on current facts and circumstances, we believe that neither the results of our environmental proceedings nor our compliance in general with environmental laws or regulations will have a material adverse effect upon our capital expenditures, earnings or competitive position.

EXECUTIVE OFFICERS

The section below provides information regarding our executive officers as of July 13, 2007:

    Y. Marc Belton, age 48, is Executive Vice President, Worldwide Health, Brand and New Business Development. Mr. Belton joined General Mills in 1983 and has held various positions, including President of Snacks Unlimited from 1994 to 1997, New Ventures from 1997 to 1999 and Big G cereals from 1999 to 2002. He had oversight responsibility for Yoplait, General Mills Canada and New Business Development from 2002 to May 2005, and has had oversight responsibility for Worldwide Health, Brand and New Business Development since May 2005. Mr. Belton was elected a Vice President of General Mills in 1991, a Senior Vice President in 1994, and an Executive Vice President in June 2006. He is a director of Navistar International Corporation.

    Randy G. Darcy, age 56, is Executive Vice President, Worldwide Operations and Technology. Mr. Darcy joined General Mills in 1987, was named Vice President, Director of Manufacturing, Technology and Operations in 1989, served as Senior Vice President, Supply Chain from 1994 to 2003, and as Senior Vice President, Chief Technical Officer with responsibilities for Supply Chain, Research and Development, and Quality and Regulatory Operations from 2003 to 2005. He was named to his present position in May 2005. Mr. Darcy was employed by The Procter & Gamble Company from 1973 to 1987, serving in a variety of management positions.

    Ian R. Friendly, age 47, is Executive Vice President and Chief Operating Officer, U.S. Retail. Mr. Friendly joined General Mills in 1983 and held various positions before becoming Vice President of Cereal Partners Worldwide in 1994, President of Yoplait in 1998, Senior Vice President of General Mills in 2000, and President of the Big G cereals division in 2002. In May 2004, he was named Chief Executive Officer of Cereal Partners Worldwide. Mr. Friendly was named to his present position in June 2006.

    James A. Lawrence, age 54, is Vice Chairman and Chief Financial Officer. Mr. Lawrence joined General Mills as Chief Financial Officer in 1998 from Northwest Airlines where he was Executive Vice President, Chief Financial Officer. Prior to joining Northwest Airlines in 1996, he was at Pepsi-Cola International, serving as President and Chief Executive Officer for its operations in Asia, the Middle East, and Africa. Mr. Lawrence was elected Vice Chairman of General Mills in June 2006. He is a director of Avnet, Inc., British Airways Plc, and Physicians Formula Holdings, Inc.

    Siri S. Marshall, age 59, is Senior Vice President, General Counsel, Chief Governance and Compliance Officer and Secretary. Ms. Marshall joined General Mills in 1994 as Senior Vice President, General Counsel and Secretary from Avon Products, Inc. where she spent 15 years, last serving as Senior Vice President, General Counsel and Secretary. She was named Chief Governance and Compliance Officer in May 2005. Ms. Marshall is a director of Ameriprise Financial, Inc. and Equifax Inc.

    Donal L. Mulligan, age 46, is Senior Vice President, Financial Operations. Mr. Mulligan joined General Mills in 2001 from The Pillsbury Company. He served as Vice President, Financial Operations, for our International division until 2004, when he was named Vice President, Financial

4

Operations for Operations and Technology. Mr. Mulligan was appointed Vice President and Treasurer of General Mills in January 2006 and was elected to his present position in July 2007. From 1987 to 1998, he was at PepsiCo, Inc. and YUM! Brands, Inc. holding several international positions.

    Christopher D. O’Leary, age 48, is Executive Vice President and Chief Operating Officer, International. Mr. O’Leary joined General Mills in 1997 as Vice President, Corporate Growth. He was elected a Senior Vice President in 1999 and President of the Meals division in 2001. Mr. O’Leary was named to his present position in June 2006. Prior to joining General Mills, he spent 17 years at PepsiCo, Inc., last serving as President and Chief Executive Officer of the Hostess Frito-Lay business in Canada. Mr. O’Leary is a director of Telephone & Data Systems, Inc.

    Michael A. Peel, age 57, is Senior Vice President, Human Resources and Corporate Services. Mr. Peel joined General Mills in this position in 1991 from PepsiCo, Inc. where he spent 14 years, last serving as Senior Vice President, Human Resources, responsible for PepsiCo Worldwide Foods. He is a director of Select Comfort Corporation.

    Kendall J. Powell, age 53, is President, Chief Operating Officer and a director of General Mills. Mr. Powell joined General Mills in 1979 and held various positions before becoming Vice President, Marketing Director of Cereal Partners Worldwide in 1990. He was named President of Yoplait in 1996, President of the Big G cereals division in 1997, and Senior Vice President of General Mills in 1998. From 1999 to 2004, Mr. Powell was Chief Executive Officer of Cereal Partners Worldwide. He was elected Executive Vice President of General Mills in 2004 with responsibility for our Meals, Pillsbury USA, Baking Products, and Bakeries and Foodservice divisions. He was named Executive Vice President and Chief Operating Officer, U.S. Retail in May 2005, and was named to his present position in June 2006. Mr. Powell is a director of Medtronic, Inc.

    Jeffrey J. Rotsch, age 56, is Executive Vice President, Worldwide Sales and Channel Development. Mr. Rotsch joined General Mills in 1974 and served as the President of several divisions, including Betty Crocker and Big G cereals. He served as Senior Vice President from 1993 to 2005 and as President, Consumer Foods Sales from 1997 to 2005. Mr. Rotsch was named to his present position in May 2005.

    Stephen W. Sanger, age 61, has been Chairman of the Board and Chief Executive Officer of General Mills since 1995. Mr. Sanger joined General Mills in 1974 and served as the head of several divisions, including Yoplait and Big G cereals. He was elected a Senior Vice President in 1989, an Executive Vice President in 1991, Vice Chairman in 1992, and President in 1993. Mr. Sanger is a director of Target Corporation and Wells Fargo & Company.

    Christina L. Shea, age 54, is Senior Vice President, External Relations and President, General Mills Foundation. Ms. Shea joined General Mills in 1977 and has held various positions in the Big G cereals, Yoplait, Gold Medal, Snacks, and Betty Crocker divisions. From 1994 to 1999, she was President of the Betty Crocker division and was named a Senior Vice President of General Mills in 1998. Ms. Shea became President of General Mills Community Action and the General Mills Foundation in 2002 and was named to her current position in May 2005.

    Kenneth L. Thome, age 59, is Senior Vice President, Financial Operations. Mr. Thome joined General Mills in 1969 and was named Vice President, Controller for the Convenience and International Foods Group in 1985. He became Vice President, Controller for International Foods in 1989, Vice President, Director of Information Systems in 1991, and was elected to his present position in 1993.

AVAILABLE INFORMATION

AVAILABILITY OF REPORTS   We are a reporting company under the Securities Exchange Act of 1934, as amended (1934 Act), and file reports, proxy statements, and other information with the Securities and Exchange Commission (SEC). The public may read and copy any of our filings at the SEC’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) 732-0330. Because we submit filings to the SEC electronically, you may access this information at the SEC’s internet website: www.sec.gov. This site contains reports, proxies, and information statements and other information regarding issuers that file electronically with the SEC.

WEBSITE ACCESS   Our website is www.generalmills.com. We make available, free of charge in the “Investors” portion of this website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the 1934 Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Reports of beneficial ownership filed pursuant to Section 16(a) of the 1934 Act are also available on our website.

ITEM 1A   Risk Factors

Various risks and uncertainties could affect our business. Any of the risks described below or elsewhere in this report or our other filings with the SEC could materially adversely affect our business, financial condition, and results of operations. It is not possible to predict or identify all risk factors.

5

Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may adversely affect our business, financial condition, and results of operations in the future. Therefore, the following is not intended to be a complete discussion of all potential risks or uncertainties.

The food categories in which we participate are very competitive, and if we are not able to compete effectively, our results of operations could be adversely affected.

The food categories in which we participate are very competitive. Our principal competitors in these categories all have substantial financial, marketing, and other resources. In most product categories, we compete not only with other widely advertised branded products, but also with generic and private label products that are generally sold at lower prices. Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity, and the ability to identify and satisfy consumer preferences. If our large competitors were to decrease their pricing or were to increase their promotional spending, we could choose to do the same, which could adversely affect our margins and profitability. If we did not do the same, our revenues and market share could be adversely affected. Our market share and revenue growth could also be adversely impacted if we are not successful in introducing innovative products in response to changing consumer demands or by new product introductions of our competitors. If we are unable to build and sustain brand equity by offering recognizably superior product quality, we may be unable to maintain premium pricing over generic and private label products.

We may be unable to maintain our profit margins in the face of a consolidating retail environment.

The 5 largest customers in our U.S. Retail segment accounted for 54 percent of its fiscal 2007 net sales, the 5 largest customers in our International segment accounted for 41 percent of its net sales for fiscal 2007, and the 5 largest customers in our Bakeries and Foodservice segment accounted for 40 percent of its net sales for fiscal 2007. The loss of any large customer for an extended length of time could adversely affect our sales and profits. There has been significant worldwide consolidation in the grocery industry in recent years and we believe that this trend is likely to continue. As the retail grocery trade continues to consolidate and mass market retailers become larger, our large retail customers may seek to use their position to improve their profitability through improved efficiency, lower pricing, and increased promotional programs. If we are unable to use our scale, marketing expertise, product innovation, and category leadership positions to respond to these demands, our profitability or volume growth could be negatively impacted.

Price changes for the commodities we depend on for raw materials, packaging, and energy may adversely affect our profitability.

The principal raw materials that we use are grains (wheat, oats, and corn), sugar, dairy products, vegetables, fruits, meats, vegetable oils, and other agricultural products. We also use substantial quantities of carton board, corrugated and plastic packaging materials, operating supplies, and energy. These items are largely commodities that experience price volatility caused by external conditions such as weather and product scarcity, commodity market fluctuations, currency fluctuations, and changes in governmental agricultural programs. Commodity price changes may result in unexpected increases in raw material, packaging, and energy costs. If we are unable to increase productivity to offset these increased costs or increase our prices as a result of consumer sensitivity to pricing or otherwise, we may experience reduced margins and profitability. We do not fully hedge against changes in commodity prices, and the hedging procedures that we do use may not always work as we intend.

If we are not efficient in our production, our profitability could suffer as a result of the highly competitive environment in which we operate.

Our future success and earnings growth depends in part on our ability to be efficient in the production and manufacture of our products in highly competitive markets. Our ability to gain additional efficiencies may become more difficult over time as we take advantage of existing opportunities. Our failure to reduce costs through productivity gains or by eliminating redundant costs resulting from acquisitions could adversely affect our profitability and weaken our competitive position. Further, many productivity initiatives involve complex reorganization of manufacturing facilities and production lines. Such manufacturing realignment may result in the interruption of production which may negatively impact product volume and margins.

Disruption of our supply chain could adversely affect our business.

Our ability to make, move, and sell products is critical to our success. Damage or disruption to raw material supplies or our manufacturing or distribution capabilities due to weather, natural disaster, fire, terrorism, pandemic, strikes, or other reasons could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a

6

product is sourced from a single location, could adversely affect our business and results of operations, as well as require additional resources to restore our supply chain.

We may be unable to anticipate changes in consumer preferences and trends, which may result in decreased demand for our products.

Our success depends in part on our ability to anticipate the tastes and eating habits of consumers and to offer products that appeal to their preferences. Consumer preferences change from time to time and can be affected by a number of different trends. Our failure to anticipate, identify or react to these changes and trends, or to introduce new and improved products on a timely basis, could result in reduced demand for our products, which would in turn cause our revenues and profitability to suffer. Similarly, demand for our products could be affected by consumer concerns regarding the health effects of ingredients such as trans fats, sugar, processed wheat, or other product ingredients or attributes.

We may be unable to grow our market share or add products that are in faster growing and more profitable categories.

The food industry’s growth potential is constrained by population growth. Our success depends in part on our ability to grow our business faster than populations are growing in the markets that we serve. One way to achieve that growth is to enhance our portfolio by adding innovative new products in faster growing and more profitable categories. Our future results will also depend on our ability to increase market share in our existing product categories. If we do not succeed in developing innovative products for new and existing categories, our growth may slow, which could adversely affect our profitability.

Customer demand for our products may be limited in future periods as a result of increased purchases in response to promotional activity.

Our unit volume in the last week of each quarter can be higher than the average for the preceding weeks of the quarter in certain circumstances. In comparison to the average daily shipments in the first 12 weeks of a quarter, the final week of each quarter may have as much as two to four days’ worth of incremental shipments (based on a five-day week), reflecting increased promotional activity at the end of the quarter. This increased activity includes promotions to assure that our customers have sufficient inventory on hand to support major marketing events or increased seasonal demand early in the next quarter, as well as promotions intended to help achieve interim unit volume targets. If, due to quarter-end promotions or other reasons, our customers purchase more product in any reporting period than end-consumer demand will require in future periods, our sales level in future reporting periods could be adversely affected.

Economic downturns could cause consumers to shift their food purchases from our higher priced premium products to lower priced items, which could adversely affect our results of operations.

The willingness of consumers to purchase premium branded food products depends in part on local economic conditions. In periods of economic uncertainty, consumers tend to purchase more generic, private label, and other economy brands. In those circumstances, we could experience a reduction in sales of higher margin products or a shift in our product mix to lower margin offerings. In addition, as a result of economic conditions or otherwise, we may be unable to raise our prices due to increased consumer sensitivity to pricing. Any of these events could have an adverse effect on our results of operations.

Volatility in the market value of derivatives we use to hedge exposures to fluctuations in commodity prices will cause volatility in our gross margins and net earnings.

We utilize derivatives to hedge price risk for various raw materials and energy input costs, including grains (wheat, oats, and corn), oils (principally soybean), non-fat dry milk, natural gas, and diesel fuel. Application of hedge accounting under Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, (SFAS 133) requires significant resources, record keeping, and analytical systems. As a result of the rising compliance costs and the complexity associated with the application of hedge accounting, effective as of the beginning of fiscal 2008 we will no longer be documenting our commodity derivatives as hedges of our commodity price risk. Accordingly, the changes in the values of these derivatives will be recorded in earnings currently, resulting in volatility in both gross margin and net earnings. These gains and losses will be reported in cost of sales in our Consolidated Statements of Earnings and in unallocated corporate expenses in our segment operating results. This volatility could cause results reported in any period to differ from our expectations. Our net earnings over the life of the derivative contracts remain unchanged.

Our international operations are subject to political and economic risks.

In fiscal 2007, 17 percent of our consolidated net sales were generated outside of the United States. We are accordingly

7

subject to a number of risks relating to doing business internationally, any of which could significantly harm our business. These risks include:

• political and economic instability;

• exchange controls and currency exchange rates;

• foreign tax treaties and policies; and

• restrictions on the transfer of funds to and from foreign countries.

    Our financial performance on a U.S. dollar denominated basis is subject to fluctuations in currency exchange rates. These fluctuations could cause material variations in our results of operations. Our principal exposures are to the Australian dollar, British pound sterling, Canadian dollar, Euro, and Mexican peso. From time to time, we enter into agreements that are intended to reduce the effects of our exposure to currency fluctuations, but these agreements may not be effective in significantly reducing our exposure.

Concerns with the safety and quality of food products could cause consumers to avoid certain food products or ingredients.

We could be adversely affected if consumers in our principal markets lose confidence in the safety and quality of certain food products or ingredients. Adverse publicity about these types of concerns, whether or not valid, may discourage consumers from buying our products or cause production and delivery disruptions.

If our food products become adulterated or misbranded, we might need to recall those items and may experience product liability claims if consumers are injured.

We may need to recall some of our products if they become adulterated or misbranded. We may also be liable if the consumption of any of our products causes injury. A widespread product recall could result in significant losses due to the costs of a recall, the destruction of product inventory, and lost sales due to the unavailability of product for a period of time. We could also suffer losses from a significant product liability judgment against us. A significant product recall or product liability case could also result in adverse publicity, damage to our reputation, and a loss of consumer confidence in our food products, which could have a material adverse effect on our business results and the value of our brands.

New regulations or regulatory-based claims could adversely affect our business.

Food production and marketing are highly regulated by a variety of federal, state, local, and foreign agencies. Changes in laws or regulations that impose additional regulatory requirements on us could increase our cost of doing business or restrict our actions, causing our results of operations to be adversely affected. In addition, we advertise our products and could be the target of claims relating to false or deceptive advertising under federal, state, and foreign laws and regulations.

We have a substantial amount of indebtedness, which could limit financing and other options and in some cases adversely affect our ability to pay dividends.

As of May 27, 2007, we had total debt and minority interests of $7.3 billion. The agreements under which we have issued indebtedness do not prevent us from incurring additional unsecured indebtedness in the future. Our level of indebtedness may limit our:

• ability to obtain additional financing for working capital, capital expenditures, or general corporate purposes, particularly if the ratings assigned to our debt securities by rating organizations were revised downward; and

• flexibility to adjust to changing business and market conditions and may make us more vulnerable to a downturn in general economic conditions.

    There are various financial covenants and other restrictions in our debt instruments and minority interests. If we fail to comply with any of these requirements, the related indebtedness (and other unrelated indebtedness) could become due and payable prior to its stated maturity, and our ability to obtain additional or alternative financing may also be adversely affected.

    If our subsidiary General Mills Cereals, LLC (GMC) fails to make required distributions to the holders of its Series B-1 preferred membership interests, we will be restricted from paying any dividends (other than dividends in the form of shares of common stock) or other distributions on shares of our common stock and may not repurchase shares of our common stock until such distributions are paid.

    Our ability to make scheduled payments on or to refinance our debt and other obligations will depend on our operating and financial performance, which in turn is subject to prevailing economic conditions and to financial, business, and other factors beyond our control.

Volatility in the securities markets, interest rates, and other factors or changes in our employee base could substantially increase our defined benefit pension, other postretirement, and postemployment benefit costs.

We sponsor a number of defined benefit plans for employees in the United States, Canada, and various foreign locations, including defined benefit pension, retiree health and welfare,

8

severance, and other postemployment benefit plans. Our major defined benefit pension plans are funded with trust assets invested in a globally diversified portfolio of securities and other investments. Changes in interest rates, mortality rates, health care costs, early retirement rates, investment returns, and the market value of plan assets can affect the funded status of our defined benefit pension, other postretirement, and postemployment benefit plans and cause volatility in the net periodic benefit cost and future funding requirements of the plans. Although the aggregate fair value of our defined benefit pension, other postretirement, and postemployment benefit plan assets exceeded the aggregate defined benefit pension, other postretirement, and postemployment benefit obligations as of May 27, 2007, a significant increase in our obligations or future funding requirements could have a negative impact on our results of operations and cash flows from operations.

Our business operations could be disrupted if our information technology systems fail to perform adequately.

The efficient operation of our business depends on our information technology systems. We rely on our information technology systems to effectively manage our business data, communications, supply chain, order entry and fulfillment, and other business processes. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and results of operations to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, systems failures, security breaches, and viruses. Any such damage or interruption could have a material adverse effect on our business.

If other potentially responsible parties (PRPs) are unable to contribute to remediation costs at certain contaminated sites, our costs for remediation could be material.

We are subject to various federal, state, local, and foreign environmental and health and safety laws and regulations. Under certain of these laws, namely the Comprehensive Environmental Response, Compensation and Liability Act and its state counterparts, liability for investigation and remediation of hazardous substance contamination at currently or formerly owned or operated facilities or at third-party waste disposal sites is joint and several. We currently are involved in active remediation efforts at certain sites where we have been named a PRP. If other PRPs at these sites are unable to contribute to remediation costs, we could be held responsible for all or their portion of the remediation costs, and those costs could be material. We cannot assure that our costs in relation to these environmental matters or compliance with environmental laws in general will not exceed our reserves or otherwise have an adverse effect on our business and results of operations.

An impairment in the carrying value of goodwill could negatively affect our consolidated results of operations and net worth.

Goodwill represents the difference between the purchase price of acquired companies and the related fair values of net assets acquired. Goodwill is not subject to amortization and is tested for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. Impairment testing is performed for each of our reporting units. We compare the carrying value of a reporting unit, including goodwill, to the fair value of the unit. Carrying value is based on the assets and liabilities associated with the operations of that reporting unit, which often requires allocation of shared or corporate items among reporting units. If the carrying amount of a reporting unit exceeds its fair value, we revalue all of the assets and liabilities of the reporting unit, excluding goodwill, to determine if the fair value of the net assets is greater than the net assets including goodwill. If the fair value of the net assets is less than the net assets including goodwill, impairment has occurred. Our estimates of fair value are determined based on a discounted cash flow model. Growth rates for sales and profits are determined using inputs from our annual long-range planning process. We also make estimates of discount rates, perpetuity growth assumptions, market comparables, and other factors. We periodically engage third-party valuation consultants to assist in this process. All our reporting units have fair values in excess of their carrying values by at least 20 percent.

    As of May 27, 2007, we had $6.8 billion of goodwill. While we currently believe that the fair value of goodwill exceeds its carrying value, materially different assumptions regarding future performance of our businesses could result in significant impairment losses.

An impairment in the carrying value of, or a change in the useful life of, our indefinite-lived intangible assets could negatively affect our consolidated results of operations and net worth.

We evaluate the useful lives of our intangible assets, primarily intangible assets associated with the Pillsbury, Totino’s, Progresso, Green Giant, Old El Paso, and Häagen-Dazs brands to determine if they are finite or indefinite-lived. Reaching a determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, known technological advances, legislative action that results in an uncertain or changing

9

regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets.

    Our indefinite-lived intangible assets are also tested for impairment annually and whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Our estimate of the fair value of the brands is based on a discounted cash flow model using inputs including: projected revenues from our annual long-range plan; assumed royalty rates which could be payable if we did not own the brands; and a discount rate. We periodically engage third-party valuation consultants to assist in this process.

    As of May 27, 2007, we had $3.7 billion of indefinite-lived intangible assets. While we currently believe that the fair value of each indefinite-lived intangible asset exceeds its carrying value and that those intangibles so classified will contribute indefinitely to our cash flows, materially different assumptions regarding future performance of our businesses could result in significant impairment losses and amortization expense.

Resolution of uncertain income tax matters could adversely affect our results of operations or cash flows from operations.

Our consolidated effective income tax rate is influenced by tax planning opportunities available to us in the various jurisdictions in which we operate. Management judgment is involved in determining our effective tax rate and in evaluating the ultimate resolution of any uncertain tax positions. We are periodically under examination or engaged in a tax controversy. We establish reserves in a variety of taxing jurisdictions when, despite our belief that our tax return positions are supportable, we believe that certain positions may be challenged and may need to be revised. We adjust these reserves in light of changing facts and circumstances, such as the progress of a tax audit. Our effective income tax rate includes the impact of reserve provisions and changes to those reserves. We also provide interest on these reserves at the appropriate statutory interest rate. These interest charges are also included in our effective tax rate. As of May 27, 2007, our income tax and related interest reserves recorded in other current liabilities were slightly more than $700 million. Reserve adjustments for individual issues have generally not exceeded 1 percent of earnings before income taxes and after-tax earnings from joint ventures annually. Nevertheless, the accumulation of individually insignificant discrete adjustments throughout a particular year has historically impacted our consolidated effective income tax rate by up to 80 basis points.

    The Internal Revenue Service (IRS) recently concluded field examinations for our 2002 and 2003 federal tax years. These examinations included review of our determinations of cost basis, capital losses, and the depreciation of tangible assets and amortization of intangible assets arising from our acquisition of Pillsbury and the sale of minority interests in our GMC subsidiary. The IRS has proposed adjustments related to a majority of the tax benefits associated with these items. We believe we have meritorious defenses and intend to vigorously defend our positions. Our potential liability for this matter is significant and, notwithstanding our reserves against this potential liability, an unfavorable resolution could have a material adverse impact on our results of operations or cash flows from operations.

ITEM 1B   Unresolved Staff Comments

None.

ITEM 2   Properties

We own our principal executive offices and main research facilities, which are located in the Minneapolis, Minnesota metropolitan area. We operate numerous manufacturing facilities and maintain many sales and administrative offices and warehouses, mainly in the United States. Other facilities are operated in Canada and elsewhere around the world.

    As of May 27, 2007, we operated 83 facilities for the production of a wide variety of food products. Of these facilities, 51 are located in the United States (1 of which is leased), 15 in the Asia/Pacific region (10 of which are leased), 6 in Canada (2 of which are leased), 5 in Europe (1 of which is leased), 5 in Latin America and Mexico, and 1 in South Africa. The following is a list of the locations of our principal production facilities, which primarily support the segment noted:

U.S. Retail

• Carson, California

• Lodi, California

• Covington, Georgia

• Belvidere, Illinois

• West Chicago, Illinois

• New Albany, Indiana

• Carlisle, Iowa

• Cedar Rapids, Iowa

• Reed City, Michigan

• Hannibal, Missouri

• Kansas City, Missouri

• Great Falls, Montana

• Vineland, New Jersey

• Albuquerque, New Mexico

• Buffalo, New York

• Wellston, Ohio

• Murfreesboro, Tennessee

10

• Milwaukee, Wisconsin

• Irapuato, Mexico

International

• Rooty Hill, Australia

• Guangzhou, China

• Arras, France

• San Adrian, Spain

• Berwick, United Kingdom

• Cagua, Venezuela

Bakeries and Foodservice

• Chanhassen, Minnesota

• Joplin, Missouri

• Martel, Ohio

• Trenton, Ontario

    We also own or lease warehouse space totaling 12.7 million square feet, of which 9.6 million square feet are leased, that primarily supports our U.S. Retail segment. We own and lease a number of sales and administrative offices in the United States, Canada and elsewhere around the world, totaling 2.7 million square feet (600,000 square feet of which are leased).

    As part of our Häagen-Dazs business in our International segment, we operate 149 and franchise 356 branded ice-cream parlors in various countries around the world, all outside of the United States and Canada. All shops we operate are leased, totaling 150,000 square feet.

ITEM 3   Legal Proceedings

We are the subject of various pending or threatened legal actions in the ordinary course of our business. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. In our opinion, there were no claims or litigation pending as of May 27, 2007, that were reasonably likely to have a material adverse effect on our consolidated financial position or results of operations. See the information contained under the section entitled “Environmental Matters” on page 4 in Item 1 of this report for a discussion of environmental matters in which we are involved.

ITEM 4   Submission of Matters to a Vote of Security Holders

None.

PART II

ITEM 5   Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange. On July 13, 2007, there were approximately 33,259 record holders of our common stock. Information regarding the market prices for our common stock and dividend payments for the two most recent fiscal years is set forth in Note 18 to the Consolidated Financial Statements on page 70 in Item 8 of this report. Information regarding restrictions on our ability to pay dividends in certain situations is set forth in Note 9 to the Consolidated Financial Statements on pages 56 and 57 in Item 8 of this report.

    The following table sets forth information with respect to shares of our common stock that we purchased during the fiscal quarter ended May 27, 2007:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased(a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program(b)		Maximum Number of Shares that may yet be Purchased Under the Program(b)
February 26, 2007 through April 1, 2007		548,810	$	57.65		548,810		74,367,463
April 2, 2007 through April 29, 2007		2,400,809	$	59.15		2,400,809		71,966,654
April 30, 2007 through May 27, 2007		5,259,985	$	60.16		5,259,985		66,706,669
Total		8,209,604	$	59.70		8,209,604		66,706,669

(a)

The total number of shares purchased includes: (i) 96,700 shares purchased from the ESOP fund of our 401(k) savings plan; (ii) 6,925 shares of restricted stock withheld for the payment of withholding taxes upon vesting of restricted stock; and (iii) 8,105,979 shares purchased in the open market. These amounts include 1,069,100 shares acquired at an average price of $60.30 for which settlement occurred after May 27, 2007.

(b)

On December 11, 2006, our Board of Directors approved and we announced an authorization for the repurchase of up to 75 million shares of our common stock. Purchases can be made in the open market or in privately negotiated transactions, including the use of call options and other derivative instruments, Rule 10b5-1 trading plans, and accelerated repurchase programs. The Board did not specify an expiration date for the authorization.

11

ITEM 6   Selected Financial Data

The following table sets forth selected financial data for each of the fiscal years in the five-year period ended May 27, 2007:

In Millions, Except per Share Data and Percentages Fiscal Year Ended	May 27, 2007			May 28, 2006			May 29, 2005			May 30, 2004			May 25, 2003
Operating data:
Net sales	$	12,442		$	11,712		$	11,308		$	11,122		$	10,544
Gross margin(a)		4,487			4,167			3,982			4,088			3,969
Selling, general and administrative expenses		2,390			2,179			1,998			2,052			2,050
Operating profit		2,058			1,958			1,900			2,010			1,857
Interest expense, net		427			399			455			508			547
Income taxes		560			538			661			526			458
Net earnings		1,144			1,090			1,240			1,055			917
Depreciation and amortization		418			424			443			399			365
Advertising and media expense		543			524			481			514			526
Research and development expense		191			178			165			158			149
Average shares outstanding:
Basic		347			358			371			375			369
Diluted		360			379			409			413			395
Net earnings per share:
Basic	$	3.30		$	3.05		$	3.34		$	2.82		$	2.49
Diluted	$	3.18		$	2.90		$	3.08		$	2.60		$	2.35
Operating ratios:
Gross margin as a percentage of net sales		36.1	%		35.6	%		35.2	%		36.8	%		37.6	%
Selling, general and administrative expenses as a percentage of net sales		19.2	%		18.6	%		17.7	%		18.5	%		19.4	%
Operating profit as a percentage of net sales		16.5	%		16.7	%		16.8	%		18.1	%		17.6	%
Income taxes as a percentage of earnings before income taxes		34.3	%		34.5	%		36.6	%		35.0	%		35.0	%
Return on average total capital(a)(b)		11.1	%		10.5	%		11.4	%		10.0	%		9.5	%
Balance sheet data:
Land, buildings and equipment	$	3,014		$	2,997		$	3,111		$	3,197		$	3,087
Total assets		18,184			18,075			17,923			18,331			18,087
Long-term debt, excluding current portion		3,218			2,415			4,255			7,410			7,516
Total debt(a)		6,206			6,049			6,192			8,226			8,857
Stockholders’ equity		5,319			5,772			5,676			5,248			4,175
Cash flow data:
Net cash provided by operating activities		1,765			1,848			1,794			1,521			1,726
Capital expenditures		460			360			434			653			750
Net cash provided (used) by investing activities		(597	)		(369	)		413			(530	)		(1,113	)
Net cash used by financing activities		(1,398	)		(1,405	)		(2,385	)		(943	)		(885	)
Fixed charge coverage ratio		4.37			4.54			4.61			3.74			3.26
Operating cash flow to debt ratio(a)		28.4	%		30.6	%		29.0	%		18.5	%		19.5	%
Share data:
Low stock price	$	49.27		$	44.67		$	43.01		$	43.75		$	37.38
High stock price	$	61.11		$	52.16		$	53.89		$	49.66		$	48.18
Cash dividends per common share	$	1.44		$	1.34		$	1.24		$	1.10		$	1.10

Fiscal 2004 was a 53-week year; all other fiscal years were 52 weeks.

In fiscal 2007, we adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans an amendment of FASB Statements No. 87, 88, 106 and 132(R)”, resulting in an after-tax reduction to stockholders’ equity of $440 million, and SFAS No. 123R, “Share Based Payment”, resulting in a decrease to fiscal 2007 net earnings of $43 million, and a decrease to fiscal 2007 cash flows from operations and corresponding decrease to cash flows used by financing activities of $73 million. See Notes 2 and 13 to the Consolidated Financial Statements beginning on page 43 in Item 8 of this report.

(a)	See Glossary on page 71 for definition.
(b)	See pages 33 to 34 in MD&A in Item 7 of this report for our discussion of these measures not defined by generally accepted accounting principles.

12

ITEM 7   Management’s Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE OVERVIEW

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

    Our fundamental business goal is to generate superior returns for our stockholders over the long term. We believe that increases in net sales, segment operating profits, earnings per share, and return on average total capital are the key measures of financial performance for our businesses. See page 33 for our discussion of segment operating profit and return on average total capital, which are not defined by generally accepted accounting principles (GAAP).

    Our objectives are to consistently deliver:

• low single-digit average annual growth in net sales;

• mid single-digit average annual growth in total segment operating profit;

• high single-digit average annual growth in earnings per share (EPS); and

• at least a 50 basis point average annual increase in return on average total capital.

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

    For the fiscal year ended May 27, 2007, our net sales grew 6 percent, total segment operating profit grew 7 percent, diluted EPS increased 10 percent, and our return on average total capital improved by 60 basis points. These results met or exceeded our long-term targets. Net cash provided by operations totaled nearly $1.8 billion in fiscal 2007, enabling us to increase our annual dividend payments per share by 7.5 percent from fiscal 2006 and continue returning cash to stockholders through share repurchases, which totaled $1,321 million in fiscal 2007. We made significant capital investments totaling $460 million to support future growth and productivity.

    We achieved each of our four key operating objectives for fiscal 2007:

• We generated net sales growth across our businesses. Both Big G cereals and Pillsbury USA renewed net sales growth in fiscal 2007 following modest sales declines in fiscal 2006. In addition, all of our other U.S. Retail divisions and our International and Bakeries and Foodservice segments each posted net sales gains in fiscal 2007.

• We achieved net sales contributions from new products, as we introduced more than 400 new food items in markets around the world.

• We capitalized on growth opportunities for our brands in new channels and international markets. During 2007, we increased our unit volume and net sales in fast-growing retail channels such as drug, dollar and discount stores, convenience stores, and supercenters. Outside the United States, International segment net sales increased 16 percent in fiscal 2007 and exceeded $2 billion for the first time.

• We also recorded increases in both gross margin and segment operating profit in fiscal 2007, despite continued input cost inflation and a significant increase in our consumer marketing spending.

    Details of our financial results are provided in the “Fiscal 2007 Consolidated Results of Operations” section below.

    Our fiscal 2008 operating objectives are consistent with our long-term growth model and are built around broad-based growth in net sales, focused cost-savings initiatives to offset higher input costs, and increased levels of investment in media and other brand-building marketing programs to fuel continued net sales growth. To drive growth in net sales, we plan to increase unit volumes, improve sales mix, and achieve net price realization through a combination of pricing actions and trade promotion efficiencies. We also will continue to focus on faster-growing retail formats and foodservice channels such as membership and convenience stores, and expand our branded product sales to hospitality and healthcare-related foodservice customers with new products and portion sizes. Internationally, we are focused on building our global brands. Our company-wide cost-saving initiatives include evaluating sales mix and trade spending efficiency, portfolio management techniques including product rationalization and simplification, capital investments in manufacturing technology, and global sourcing. We expect pricing and cost-savings initiatives to help us largely offset significant input cost inflation, especially for dairy ingredients, oils (primarily soybean), and grains. Our plans also call for reinvestment of some of these cost savings in

13

media and other brand-building marketing programs, resulting in another high single-digit increase in these expenditures.

    Our plans also call for $575 million of expenditures for capital projects, and a significant amount of cash returned to stockholders. We intend to continue repurchasing shares in fiscal 2008, with a goal of reducing average diluted shares outstanding a net 2 percent. On June 25, 2007, our Board of Directors approved a dividend increase to an annual rate of $1.56 per share. This represents a 9 percent compound annual growth rate in dividends from fiscal 2004 to fiscal 2008.

    Application of hedge accounting under Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (SFAS 133), requires significant resources, recordkeeping, and analytical systems. As a result of the rising compliance costs and the complexity associated with the application of hedge accounting, we have elected to discontinue the use of hedge accounting for our commodity derivatives at the beginning of fiscal 2008 for all new commodity derivatives entered into after that date. Accordingly, the changes in the values of these derivatives will be recorded in earnings currently, resulting in volatility in both net earnings and gross margin. These gains and losses will be reported in cost of sales in our Consolidated Statements of Earnings and in unallocated corporate expenses in our segment operating results. Regardless of designation for accounting purposes, we believe all our commodity hedges are economic hedges of our risk exposures. Commodity derivatives previously accounted for as cash flow hedges are not affected by this change and any gains or losses deferred to accumulated other comprehensive income (loss) in stockholders’ equity will remain there until the hedged item affects earnings.

    Certain terms used throughout this report are defined in a glossary on page 71 of this report.

FISCAL 2007 CONSOLIDATED RESULTS OF OPERATIONS

For fiscal 2007, we reported diluted EPS of $3.18, up 10 percent from $2.90 per share earned in fiscal 2006. Earnings after tax were $1,144 million in fiscal 2007, up 5 percent from $1,090 million in fiscal 2006.

    The components of net sales growth are shown in the following table:

Components of Net Sales Growth

	Fiscal 2007 vs. 2006
Unit Volume Growth	+4 pts
Price/Product Mix	+2 pts
Foreign Currency Exchange	+1 pt
Trade and Coupon Promotional Expenses	Flat
Net Sales Growth	+6%

Table does not add due to rounding.

    Net sales for fiscal 2007 grew 6 percent to $12.4 billion, driven by 4 percentage points of unit volume growth, primarily in our U.S. Retail and International segments, and 2 percentage points of growth from pricing and favorable product mix across many of our businesses. In addition, foreign currency exchange effects added 1 percentage point of growth, while promotional spending was flat compared to fiscal 2006.

    Cost of sales was up $410 million in fiscal 2007 versus fiscal 2006. Cost of sales as a percent of net sales decreased from 64.4 percent in fiscal 2006 to 63.9 percent in fiscal 2007 as $115 million of higher ingredient (primarily grains and dairy) and energy costs were more than offset by efficiency gains at our manufacturing facilities. These gains resulted from cost-saving capital projects, the operating benefits of our broad-based unit volume growth, changes to product formulations, and continued actions to replace low-turning products with faster-turning items.

    Selling, general and administrative (SG&A) expenses increased by $211 million in fiscal 2007 versus fiscal 2006. SG&A expense as a percent of net sales increased from 18.6 percent in fiscal 2006 to 19.2 percent in fiscal 2007. The increase in SG&A expense from fiscal 2006 was largely the result of a $78 million increase in media and brand-building consumer marketing spending and $69 million of incremental stock compensation expense resulting from our adoption of SFAS No. 123 (Revised), “Share-Based Payment” (SFAS 123R).

    Net interest expense for fiscal 2007 totaled $427 million, $28 million higher than net interest expense for fiscal 2006. Higher interest rates caused nearly all of the increase. Interest expense includes preferred distributions paid on subsidiary minority interests. The average rate on our total outstanding debt and subsidiary minority interests was 6.1 percent during fiscal 2007, compared to 5.8 percent during fiscal 2006.

14

    Restructuring, impairment and other exit costs totaled $39 million in fiscal 2007 as follows:

Expense (Income), in millions
Noncash impairment charge for certain Bakeries and Foodservice product lines	$	37
Gain from the sale of our previously closed plant in San Adrian, Spain		(7	)
Loss from divestitures of our par-baked bread and frozen pie product lines		10
Adjustment of reserves from previously announced restructuring actions		(1	)
Total	$	39

    In late May 2007, we concluded that the future cash flows generated by certain product lines in our Bakeries and Foodservice segment will be insufficient to recover the net book value of the related long-lived assets. We recorded a noncash impairment charge of $37 million against these assets in the fourth quarter of fiscal 2007. We are further evaluating the viability of the impaired product lines and may incur additional charges in the future, depending upon the outcome of those evaluations.

    Net proceeds received for the par-baked bread product line were $13 million, and net proceeds from the sale of our frozen pie product line were $1 million.

    The effective income tax rate was 34.3 percent for fiscal 2007, including an increase of $30 million in benefits from our international tax structure and benefits from the settlement of tax audits. In fiscal 2006, our effective income tax rate was 34.5 percent, including the benefit of $11 million of adjustments to deferred tax liabilities associated with our International segment’s brand intangibles.

    After-tax earnings from joint ventures totaled $73 million in fiscal 2007, compared to $69 million in fiscal 2006. In fiscal 2007, net sales for Cereal Partners Worldwide (CPW) grew 18 percent, including 6 points of incremental sales from the Uncle Tobys cereal business it acquired in Australia. In February 2006, CPW announced a restructuring of its manufacturing plants in the United Kingdom. Our after-tax earnings from joint ventures were reduced by $8 million in both fiscal 2007 and 2006 for our share of the restructuring costs, primarily accelerated depreciation and severance. Net sales for our Häagen-Dazs joint ventures in Asia declined 7 percent in fiscal 2007, reflecting a change in our reporting period for these joint ventures. We changed this reporting period to include results through March 31. In previous years, we included results for the twelve months ended April 30. Accordingly, fiscal 2007 included only 11 months of results from these joint ventures, compared to 12 months in fiscal 2006. The impact of this change was not material to our consolidated results of operations, so we did not restate prior periods for comparability.

    Average diluted shares outstanding decreased by 19 million from fiscal 2006 due to our repurchase of 25 million shares of stock during fiscal 2007, partially offset by increases in diluted shares outstanding from the issuance of annual stock awards.

FISCAL 2007 CONSOLIDATED BALANCE SHEET ANALYSIS

As of May 27, 2007, we adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans: An amendment of FASB Statements No. 87, 88, 106 and 132R” (SFAS 158). SFAS 158 requires employers to recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income (loss), which is a component of stockholders’ equity. As a result of the implementation of SFAS 158, we recognized an after-tax decrease in accumulated other comprehensive income (loss) of $440 million for all of our defined benefit pension, other postretirement, and postemployment benefit plans. Other balances affected by the adoption of SFAS 158 are identified in the analysis below. Prior periods were not restated.

    Cash and cash equivalents decreased by $230 million from fiscal 2006 due to our acquisitions of Saxby Bros. Limited in the United Kingdom and the funding of our share of CPW’s acquisition of Uncle Tobys in Australia.

    Receivables increased $41 million from fiscal 2006, driven mainly by higher international sales levels and foreign exchange translation, partially offset by a decrease in domestic receivables due mainly to the timing of sales in the month of May. The allowance for doubtful accounts was essentially unchanged from fiscal 2006.

    Inventories increased $119 million from fiscal 2006, due primarily to a higher level of finished goods in advance of our package size modification of Big G cereals in early fiscal 2008, and increases in grain inventories due to higher quantities and prices. These increases were partially offset by an increase in the reserve for the excess of first in, first out (FIFO) inventory costs over last in, first out (LIFO) inventory costs of $16 million.

    Land, buildings and equipment increased $17 million, as capital expenditures of $460 million were offset by normal depreciation and disposal of assets related to the sales of our Chelsea, Tempe, Rochester, and San Adrian facilities. In addition, we recorded $37 million of impairment charges against certain long-lived assets related to underperforming product lines in our Bakeries and Foodservice segment.

    Goodwill and other intangible assets increased $270 million from fiscal 2006, primarily from foreign currency translation. Our international acquisitions, including CPW’s

15

acquisition of Uncle Tobys, completed during fiscal 2007 increased these intangibles by $58 million.

    Other assets decreased by $191 million from fiscal 2006. Our prepaid pension asset decreased by $304 million following our annual changes in assumptions, fiscal 2007 asset performance, and our adoption of SFAS No. 158. This decrease was partially offset by a $109 million increase in our investments in joint ventures, consisting primarily of loans to and additional equity investments in CPW to finance its acquisition of Uncle Tobys.

    Accounts payable increased $105 million to $778 million in fiscal 2007 from higher vendor payables that were generally in line with increases in inventories, and from foreign exchange translation.

    Long-term debt, the current portion of long-term debt, and notes payable together increased $157 million from fiscal 2006. We issued $1.5 billion of long-term debt that replaced long-term debt maturing in fiscal 2007. We issued $1.15 billion of convertible notes in fiscal 2007 that were used to repay commercial paper. We also carried higher levels of debt as of May 27, 2007, due to increased share repurchases. In addition, as of May 27, 2007, we consolidated a variable interest entity (VIE) in which we are the primary beneficiary (PB), resulting in a $37 million increase to total debt. As of May 27, 2007, we also recorded $23 million of debt for capital lease obligations related to certain contractual relationships with third parties.

    The current and noncurrent portions of deferred income taxes decreased $274 million to $1.4 billion primarily due to a reclassification of $248 million of deferred taxes to accumulated other comprehensive income (loss), a component of stockholders’ equity, following our adoption of SFAS 158. We also incurred $26 million of deferred income tax expense in fiscal 2007.

    Other current liabilities increased $248 million to $2,079 million primarily due to a $118 million increase in accrued income taxes and a $56 million increase in unsettled share repurchases.

    Other liabilities increased $306 million, primarily the result of an increase in accrued other postretirement and postemployment benefit liabilities following our annual changes in assumptions, fiscal 2007 asset performance, and our adoption of SFAS 158.

    Retained earnings increased $638 million, reflecting fiscal 2007 net earnings of $1,144 million less dividends of $506 million. Treasury stock increased $1,035 million from fiscal 2007 share repurchases of $1,385 million, offset by shares issued for stock option exercises and restricted stock unit vesting. Additional paid in capital increased $105 million including a $84 million decrease from the reclassification of unearned compensation resulting from our adoption of SFAS 123R, an $11 million after-tax decrease from the issuance of shares to settle the conversion premium on our zero coupon contingently convertible debentures, and a $95 million decrease from the issuance of stock awards during fiscal 2007, offset by an increase of $105 million from current year stock option exercises and $128 million of stock compensation expense recognized in fiscal 2007 earnings. Accumulated other comprehensive income (loss) decreased by $245 million after-tax, including a $440 million after-tax reduction from our adoption of SFAS 158 offset by favorable foreign exchange translation of $194 million.

FISCAL 2006 CONSOLIDATED RESULTS OF OPERATIONS

For fiscal 2006, we reported diluted EPS of $2.90. This was down 6 percent from $3.08 per share earned in fiscal 2005, which included a significant net gain from divestitures and debt repurchases. Earnings after tax were $1,090 million in fiscal 2006, down 12 percent from $1,240 million in fiscal 2005, primarily due to the net benefit of gains on divestitures and debt repurchase costs in fiscal 2005.

    The components of net sales growth are shown in the following table:

Components of Net Sales Growth

	Fiscal 2006 vs. 2005
Unit Volume Growth	+2 pts
Price/Product Mix	+1 pt
Foreign Currency Exchange	Flat
Trade and Coupon Promotion Expense	Flat
Net Sales Growth	+4%

Table does not add due to rounding.

    Net sales for fiscal 2006 grew 4 percent to $11.7 billion, driven by 2 percentage points of unit volume growth, primarily in U.S. Retail and International, and 1 percentage point of growth from pricing and product mix across many of our businesses. Foreign currency exchange effects and promotional spending were flat compared to fiscal 2005.

    Cost of sales was up $219 million in fiscal 2006 versus fiscal 2005, primarily due to unit volume increases and a $89 million increase in customer freight expense, as manufacturing efficiencies largely offset cost increases due to inflation. Also, the year-over-year change in cost of sales was favorably impacted by the following costs incurred in fiscal 2005: $18 million in expense from accelerated depreciation associated with exit activities, as described below; and $5 million of product recall costs. Cost of sales as a percent of net sales decreased from 64.8 percent in fiscal 2005 to 64.4 percent in fiscal 2006.

    SG&A expense increased by $181 million in fiscal 2006. SG&A expense as a percent of net sales increased from

16

17.7 percent in fiscal 2005 to 18.6 percent in fiscal 2006. The increase in SG&A expense from fiscal 2005 was largely the result of: a $97 million increase in domestic employee benefit costs, including incentives; a $49 million increase in consumer marketing spending; and a $23 million increase in environmental reserves.

    Restructuring, impairment and other exit costs totaled $30 million in fiscal 2006. The components of this expense are summarized in the table below:

In Millions
Closure of our Swedesboro, New Jersey plant	$	13
Closure of a production line at our Montreal, Quebec plant		6
Restructuring actions at our Allentown, Pennsylvania plant		4
Asset impairment charge at our Rochester, New York plant		3
Adjustment of reserves from previously announced restructuring actions		4
Total	$	30

    In fiscal 2005, we recorded restructuring, impairment, and other exit costs pursuant to approved plans as follows:

In Millions
Charges associated with supply chain initiatives	$	44
Relocation of a frozen baked goods line from our Boston, Massachusetts plant		30
Bakeries and Foodservice severance charges		3
Adjustment of reserves from previously announced restructuring actions		7
Total	$	84

    The supply chain initiatives were undertaken to further increase asset utilization and reduce manufacturing and sourcing costs, resulting in decisions regarding plant closures and production realignment. The actions included decisions to: close our flour milling plant in Vallejo, California; close our par-baked bread plant in Medley, Florida; relocate bread production from our Swedesboro, New Jersey plant; relocate a portion of our cereal production from our plant in Cincinnati, Ohio; close our snacks foods plant in Iowa City, Iowa; and close our dry mix production at Trenton, Ontario.

    Net interest expense for fiscal 2006 totaled $399 million, $56 million lower than interest expense for fiscal 2005 of $455 million, primarily as the result of debt pay down and the maturation of interest rate swaps. In fiscal 2006, we had interest rate swaps that converted $500 million of fixed-rate debt to floating rates. Taking into account the effect of our interest rate swaps, the average interest rate on our total outstanding debt and subsidiary minority interests was 5.8 percent in fiscal 2006, compared to 5.9 percent in fiscal 2005.

    The effective income tax rate was 34.5 percent for fiscal 2006, including the benefit of $11 million of adjustments to deferred tax liabilities associated with our International segment’s brand intangibles. In fiscal 2005, our effective income tax rate was 36.6 percent, higher than fiscal 2005 primarily due to the tax impacts of our fiscal 2005 divestitures.

    After-tax earnings from joint ventures totaled $69 million in fiscal 2006, compared to $94 million in fiscal 2005. Earnings from joint ventures in fiscal 2005 included $28 million from our Snack Ventures Europe (SVE) joint venture with PepsiCo, Inc., which we divested on February 28, 2005. In fiscal 2006, net sales for CPW grew 4 percent. In February 2006, CPW announced a restructuring of its manufacturing plants in the United Kingdom. Our after-tax earnings from joint ventures was reduced by $8 million for our share of the restructuring costs, primarily accelerated depreciation and severance, incurred in fiscal 2006. Net sales for our Häagen-Dazs joint ventures in Asia declined 7 percent from fiscal 2005 due to an unseasonably cold winter and increased competitive pressure in Japan.

    Average diluted shares outstanding decreased by 30 million from fiscal 2005. This was primarily due to the repurchase of a significant portion of our zero coupon contingently convertible debentures in October 2005 and the completion of a consent solicitation related to the remaining convertible debentures in December 2005. These actions ended the dilutive accounting effect of these debentures in our EPS calculations. In addition, we repurchased 19 million shares of our stock during fiscal 2006, partially offset by the issuance of shares upon stock option exercises.

RESULTS OF SEGMENT OPERATIONS

Our businesses are organized into three operating segments: U.S. Retail, International, and Bakeries and Foodservice.

    The following tables provide the dollar amount and percentage of net sales and operating profit from each reportable segment for fiscal years 2007, 2006, and 2005:

Net Sales

Dollars In Millions, Fiscal Year	2007					2006					2005
	Net Sales		Percent of Net Sales			Net Sales		Percent of Net Sales			Net Sales		Percent of Net Sales
U.S. Retail	$	8,491		68	%	$	8,137		69	%	$	7,891		70	%
International		2,124		17			1,837		16			1,725		15
Bakeries and Foodservice		1,827		15			1,738		15			1,692		15
Total	$	12,442		100	%	$	11,712		100	%	$	11,308		100	%

17

Segment Operating Profit

Dollars In Millions, Fiscal Year	2007					2006					2005
	Segment Operating Profit		Percent of Segment Operating Profit			Segment Operating Profit		Percent of Segment Operating Profit			Segment Operating Profit		Percent of Segment Operating Profit
U.S. Retail	$	1,896		84	%	$	1,801		85	%	$	1,745		87	%
International		216		10			194		9			163		8
Bakeries and Foodservice		148		6			116		6			108		5
Total	$	2,260		100	%	$	2,111		100	%	$	2,016		100	%

    Segment operating profit excludes unallocated corporate expenses of $163 million for fiscal 2007, $123 million for fiscal 2006, and $32 million for fiscal 2005; and also excludes restructuring, impairment and other exit costs because these items affecting operating profit are centrally managed at the corporate level and are excluded from the measure of segment profitability reviewed by our executive management.

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

    The components of the changes in net sales are shown in the following table:

Components of U.S. Retail Change in Net Sales

	Fiscal 2007 vs. 2006	Fiscal 2006 vs. 2005
Unit Volume Growth	+4 pts	+2 pts
Price/Product Mix	Flat	Flat
Trade and Coupon Promotion Expense	Flat	+1 pt
Change in Net Sales	+4%	+3%

    In fiscal 2007, net sales for our U.S. Retail operations were $8.5 billion, up 4 percent from fiscal 2006. This growth in net sales was the result of a 4 percentage point increase in unit volume, led by strong growth in our grain snacks business, as well as volume increases in our Yoplait, Meals, and Pillsbury USA divisions. The unit volume increase was largely driven by higher levels of consumer marketing spending and new product innovation, resulting in higher sales to key customers.

    Net sales for this segment totaled $8.1 billion in fiscal 2006 and $7.9 billion in fiscal 2005. Unit volume increased 2 points in fiscal 2006 versus fiscal 2005, led by strong growth in our Yoplait business and volume increases in our Meals, Baking Products and Snacks divisions. Favorable trade and coupon spending also contributed 1 point to the fiscal 2006 increase in net sales, as the rate of promotional activity decreased on a year-over-year basis, largely the result of narrowing price gaps between our products and competitors’ products in several heavily promoted categories.

    All of our U.S. Retail divisions experienced net sales growth in fiscal 2007 as shown in the tables below:

U.S. Retail Net Sales by Division

Dollars In Millions, Fiscal Year	2007		2006		2005
U.S. Retail:
Big G	$	1,933	$	1,903	$	1,919
Meals		1,909		1,816		1,697
Pillsbury USA		1,591		1,550		1,562
Yoplait		1,171		1,099		967
Snacks		1,066		967		924
Baking Products		667		650		615
Small Planet Foods and Other		154		152		207
Total U.S. Retail	$	8,491	$	8,137	$	7,891

U.S. Retail Change in Net Sales by Division

	Fiscal 2007 vs. 2006			Fiscal 2006 vs. 2005
Big G		+2	%		–1	%
Meals		+5			+7
Pillsbury USA		+3			–1
Yoplait		+6			+14
Snacks		+10			+5
Baking Products		+3			+6
Small Planet Foods		+21			+27
Total U.S. Retail		+4	%		+3	%

    In fiscal 2007, Big G cereals net sales grew 2 percent as a result of new product launches such as Fruity Cheerios and Nature Valley cereals, and continued strong performance of the Cheerios franchise. Net sales for the Meals division grew by 5 percent led by the introduction of Progresso reduced sodium soups and Hamburger Helper Microwave Singles, and the continued strong performance of our other Hamburger Helper and Progresso offerings. Net sales for Pillsbury USA increased 3 percent as core refrigerated dough products, Totino’s Pizza Rolls pizza snacks and Toaster Strudel pastries all generated solid growth. The Yoplait division’s net sales grew 6 percent primarily due to strong performance by Yoplait Light, Go-GURT, and Yoplait Kids yogurt. Net sales for the Snacks division grew 10 percent led by continuing growth for Nature Valley granola bars and the introduction of Fiber One bars. Baking Products net sales grew 3 percent reflecting greater focus on product lines such as Bisquick baking mix and Warm Delights microwaveable desserts.

18

    For fiscal 2006, Big G cereals net sales declined 1 percent as our merchandising activity lagged competitors’ levels, particularly in the first half of the year. The Meals division’s net sales grew by 7 percent led by Progresso soup and Hamburger Helper. Pillsbury USA net sales declined 1 percent due to weakness in frozen breakfast items, frozen baked goods, and refrigerated cookies. Net sales for the Yoplait division grew 14 percent over fiscal 2005 primarily due to growth in established cup yogurt lines. Net sales for the Snacks division grew 5 percent led by Nature Valley granola bars and Chex Mix products. Baking Products net sales grew 6 percent reflecting the introduction of Warm Delights microwaveable desserts and strong performance during the holiday baking season.

    Operating profit of $1.9 billion in fiscal 2007 improved $95 million, or 5 percent, over fiscal 2006. Unit volume increased operating profit by $127 million, and inflation in ingredients (primarily grains and dairy), energy, and labor costs was more than offset by efficiency gains at our manufacturing facilities resulting from cost-saving capital projects, changes to product formulations, and continued actions to reduce low-turning products. These increases in operating profit were partially offset by $46 million of brand-building consumer marketing spending.

    Operating profit of $1.8 billion in fiscal 2006 improved $56 million, or 3 percent, over fiscal 2005. Unit volume increases accounted for approximately $89 million of improvement. Net pricing realization and product mix contributed $98 million. These factors exceeded manufacturing and distribution rate increases of $77 million, and increases in consumer marketing spending of $32 million.

INTERNATIONAL SEGMENT   In Canada, our major product categories are ready-to-eat cereals, shelf stable and frozen vegetables, dry dinners, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza snacks, and grain, fruit and savory snacks. In markets outside North America, our product categories include super-premium ice cream, grain snacks, shelf stable and frozen vegetables, dough products, and dry dinners. Our International segment also includes products manufactured in the United States for export internationally, primarily to the Caribbean and Latin American markets, as well as products we manufacture for sale to our international joint ventures. Revenues from export activities are reported in the region or country where the end customer is located. These international businesses are managed through 34 sales and marketing offices.

    The components of net sales growth are shown in the following table:

Components of International Change in Net Sales

	Fiscal 2007 vs. 2006	Fiscal 2006 vs. 2005
Unit Volume Growth	+8 pts	+4 pts
Price/Product Mix	+6 pts	+2 pts
Foreign Currency Exchange	+4 pts	+1 pt
Trade and Coupon Promotion Expense	-2 pts	–1 pt
Change in Net Sales	+16%	+6%

    For fiscal 2007, net sales for our International segment were $2.1 billion, up 16 percent from fiscal 2006. This growth was largely driven by a 15 percent increase in net sales of Häagen-Dazs ice cream and the continued strong performance of Green Giant and Old El Paso products across Europe. Acquisitions made in fiscal 2007 contributed less than 1 point of net sales growth. Four points of net sales growth came from favorable foreign exchange.

    Net sales totaled $1.8 billion in fiscal 2006 and $1.7 billion in fiscal 2005. For fiscal 2006 versus fiscal 2005, unit volume grew 4 percent, driven by a 6 percent increase in the Asia/Pacific region.

    Net sales growth for our International segment by geographic region is shown in the following tables:

International Net Sales by Geographic Region

Dollars In Millions, Fiscal Year	2007		2006		2005
Europe	$	756	$	629	$	622
Canada		611		566		514
Asia/Pacific		462		403		370
Latin America and South Africa		295		239		219
Total International	$	2,124	$	1,837	$	1,725

International Change in Net Sales by Geographic Region

	Fiscal 2007 vs. 2006			Fiscal 2006 vs. 2005
Europe		+20	%		+1	%
Canada		+8			+10
Asia/Pacific		+14			+9
Latin America and South Africa		+21			+9
Total International		+16	%		+6	%

    In fiscal 2007, net sales in Europe grew 20 percent reflecting 15 percent growth in net sales of Häagen-Dazs ice cream and continued strong performance from Old El Paso and Green Giant across the region, and especially in the United Kingdom. The acquisition of Saxby Bros. Limited, a chilled pastry company in the United Kingdom, contributed less than 1 point of net sales growth. Net sales in Canada increased 8 percent, led by 35 percent net sales growth on Nature Valley snack bars, 6 percent net sales growth in cereals and 11 percent net sales growth on Old El Paso products. Asia/Pacific net sales increased 14 percent led by 17 percent net sales growth for Häagen-Dazs in China. Latin America

19

and South Africa net sales increased 21 percent led by 20 percent growth in our Diablitos product line and the re-launch of Häagen-Dazs in Latin America.

    Operating profit for fiscal 2007 grew to $216 million, up 11 percent from fiscal 2006, with foreign currency exchange contributing 5 points of that growth. The growth was led by a $48 million increase from higher volumes driven by increases in consumer marketing spending. Net price realization offset supply chain and administrative cost increases.

    Operating profit for fiscal 2006 grew to $194 million, up 19 percent from the prior year, with foreign currency exchange effects contributing 2 percentage points of that growth. Improvement in unit volume contributed $24 million, net price realization of $46 million more than offset the effects of supply chain cost changes, and consumer marketing spending increased $24 million.

BAKERIES AND FOODSERVICE SEGMENT   In our Bakeries and Foodservice segment we sell branded ready-to-eat cereals, snacks, dinner and side dish products, refrigerated and soft-serve frozen yogurt, frozen dough products, branded baking mixes, and custom food items. Our customers include foodservice distributors and operators, convenience stores, vending machine operators, quick service and other restaurant operators, and business and school cafeterias in the United States and Canada. In addition, we market mixes and unbaked and fully baked frozen dough products throughout the United States and Canada to retail, supermarket and wholesale bakeries.

    The components of the change in net sales are shown in the following table:

Components of Bakeries and Foodservice
Change in Net Sales

	Fiscal 2007 vs. 2006	Fiscal 2006 vs. 2005
Unit Volume Growth	+2 pts	Flat
Price/Product Mix	+6 pts	+3 pts
Divested Product Lines	–2 pts	Flat
Trade and Coupon Promotion Expense	–1 pt	Flat
Change in Net Sales	+5%	+3%

    For fiscal 2007, net sales for our Bakeries and Foodservice segment increased 5 percent to $1.8 billion. The growth in fiscal 2007 net sales was driven by: increased sales of higher margin, branded products and the introduction of new products to customers such as schools, hotels, restaurants, and convenience stores; improved innovation in foodservice products; and favorable net price realization.

    Net sales increased slightly from fiscal 2005 to fiscal 2006. Fiscal 2006 unit volume was flat as compared to fiscal 2005, with net price realization and product mix causing the increase in net sales.

    Net sales growth for our Bakeries and Foodservice segment by customer segment is shown in the following tables:

Bakeries and Foodservice Net Sales by Customer Segment

Dollars in Millions, Fiscal Year	2007		2006		2005
Distributors and restaurants	$	872	$	894	$	890
Bakery channels		773		681		648
Convenience stores and vending		182		163		154
Total Bakeries and Foodservice	$	1,827	$	1,738	$	1,692

Bakeries and Foodservice Changes in Net Sales by Customer Segment

	Fiscal 2007 vs. 2006			Fiscal 2006 vs. 2005
Distributors and restaurants		–2	%		Flat
Bakery channels		14	%		5	%
Convenience stores and vending		12	%		6	%
Total Bakeries and Foodservice		5	%		3	%

    Operating profits for the segment were $148 million in fiscal 2007, up 28 percent from $116 million in fiscal 2006. The business was able to offset record levels of input cost inflation with a combination of pricing actions, sourcing productivity and manufacturing improvements.

    Fiscal 2006 operating profits for the segment were $116 million, up 7 percent from $108 million in fiscal 2005. Unit volume was flat, and pricing actions essentially covered supply chain cost inflation of $41 million.

UNALLOCATED CORPORATE EXPENSES   Unallocated corporate expenses include variances to planned corporate overhead expenses, variances to planned domestic employee benefits and incentives, all stock compensation costs, annual contributions to the General Mills Foundation, and other items that are not part of our measurement of segment operating performance.

    For fiscal 2007, unallocated corporate expenses were $163 million, compared to $123 million in fiscal 2006. Fiscal 2007 included $69 million of incremental expense relating to the impact of the adoption of SFAS 123R, and fiscal 2006 included $33 million of charges related to increases in environmental reserves and a write-down of the asset value of a low-income housing investment. Excluding these items, unallocated corporate expenses were essentially unchanged from fiscal 2006.

    Unallocated corporate expenses were $123 million in fiscal 2006 compared to $32 million in fiscal 2005. Fiscal 2006 included: higher domestic employee benefit expense, including incentives, which increased by $61 million over fiscal 2005; increases in environmental reserves of $23 million; and a $10 million write-down of the asset value of a low-income housing investment.

20

JOINT VENTURES   In addition to our consolidated operations, we manufacture and sell products through several joint ventures.

International Joint Ventures   We have a 50 percent equity interest in CPW that manufactures and markets ready-to-eat cereal products in more than 130 countries and republics outside the United States and Canada. CPW also markets cereal bars in several European countries and manufactures private label cereals for customers in the United Kingdom. Results from our CPW joint venture are reported for the 12 months ended March 31. On July 14, 2006, CPW acquired the Uncle Tobys cereal business in Australia for approximately $385 million. 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 undivided interest in certain intellectual property for $58 million (classified as acquisitions on the Consolidated Statements of Cash Flows). We funded the advances to CPW and our equity contribution from cash generated from our international operations, including our international joint ventures.

    We have 50 percent equity interests in Häagen-Dazs Japan, Inc. and Häagen-Dazs Korea Company Limited. We also had a 49 percent equity interest in HD Distributors (Thailand) Company Limited. Subsequent to its fiscal year end, we acquired a controlling interest in this joint venture. These joint ventures manufacture, distribute, and market Häagen-Dazs frozen ice cream products and novelties. As noted on page 15, in fiscal 2007, we changed the reporting period for the Häagen-Dazs joint ventures. Accordingly, fiscal 2007 results include only 11 months of results from these joint ventures compared to 12 months in fiscal 2006 and 2005.

    We have a 50 percent equity interest in Seretram, a joint venture for the production of Green Giant canned corn in France. Seretram’s results are reported as of and for the 12 months ended April 30.

    On February 28, 2005, SVE was terminated and our 40.5 percent interest was redeemed. Fiscal 2005 after-tax joint venture earnings include our share of the after-tax earnings of SVE through that date.

Domestic Joint Venture   We have a 50 percent equity interest in 8th Continent, LLC, a joint venture to develop and market soy-based products. 8th Continent’s results are presented on the same basis as our fiscal year.

    Our share of after-tax joint venture earnings increased from $69 million in fiscal 2006 to $73 million in fiscal 2007. This growth was largely driven by strong core brand volume and organic net sales growth, new product innovation, and increases in brand-building consumer marketing spending, partially offset by a $2 million impact of the change in reporting period for the Häagen-Dazs joint ventures.

    Our share of after-tax joint venture earnings decreased from $94 million in fiscal 2005 to $69 million in fiscal 2006 reflecting the absence of SVE earnings and the inclusion of $8 million of restructuring costs for CPW in fiscal 2006.

    The change in net sales for each joint venture is set forth in the following table:

Joint Ventures Change in Net Sales

	Fiscal 2007 vs. 2006			Fiscal 2006 vs. 2005
CPW		+18	%		+4	%
Häagen-Dazs (11 months in fiscal 2007 and 12 months in fiscal 2006 and 2005)		–7			–7
8th Continent		+3			+14
Ongoing Joint Ventures(a)		+13	%		+2	%

(a) Excludes SVE net sales. See page 33 for our discussion of this measure not defined by GAAP.

    For fiscal 2007, CPW net sales grew by 18 percent reflecting the introduction of new products and favorable currency translation. The acquisition of Uncle Tobys in Australia also contributed 6 points of CPW’s net sales growth. Net sales for our Häagen-Dazs joint ventures declined 7 percent from fiscal 2006, reflecting the change in our reporting period for these joint ventures.

IMPACT OF INFLATION

We believe that changes in the general rate of inflation have not had a significant effect on profitability over the three most recent fiscal years other than as noted above related to ingredients, packaging, energy, and employee benefit costs. We attempt to minimize the effects of inflation through appropriate planning and operating practices. Our risk management practices are discussed in Item 7A on pages 35 through 36 of this report.

LIQUIDITY

The primary source of our liquidity is cash flow from operations. Over the most recent three-year period, our operations have generated $5.4 billion in cash. A substantial portion of this operating cash flow has been returned to stockholders annually through share repurchases and dividends. We also use this source of liquidity to fund our annual capital expenditures. We typically use a combination of available cash, notes payable, and long-term debt to finance acquisitions and major capital expansions.

21

Cash Flows from Operations

In Millions, for Fiscal Year Ended	May 27, 2007			May 28, 2006			May 29, 2005
Net earnings	$	1,144		$	1,090		$	1,240
Depreciation and amortization		418			424			443
After-tax earnings from joint ventures		(73	)		(69	)		(94	)
Stock-based compensation		128			45			38
Deferred income taxes		26			26			9
Distribution of earnings from joint ventures		45			77			83
Tax benefit on exercised options		–			41			62
Pension and other postretirement costs		(54	)		(74	)		(70	)
Restructuring, impairment and other exit costs		39			30			84
Divestitures (gain)		–			–			(499	)
Debt repurchase costs		–			–			137
Changes in current assets and liabilities		77			184			251
Other, net		15			74			110
Net Cash Provided by Operating Activities	$	1,765		$	1,848		$	1,794

    Our cash flow from operations decreased $83 million from fiscal 2006 to fiscal 2007 as an increase in net earnings of $54 million and the net benefit to operating cash flow from stock compensation of $42 million were more than offset by a reduction in our cash flows from working capital of $107 million and a $32 million decrease in distributions of earnings from joint ventures. Changes in working capital were a reduced source of cash flow from operations in fiscal 2007 versus fiscal 2006 primarily reflecting a $32 million decrease in cash flows from accounts receivable, and a $69 million reduction in the source of cash from other current liabilities, primarily from a smaller increase in accrued taxes in fiscal 2007 than in fiscal 2006.

    A key measure that we manage is the growth rate in core working capital. We strive to grow core working capital at or below our growth in net sales. For fiscal 2007, core working capital grew 4 percent, less than our net sales growth of 6 percent. In fiscal 2006, core working capital grew 5 percent, compared to net sales growth of 4 percent, and in fiscal 2005, core working capital decreased 2 percent and net sales grew 2 percent.

    The increase in cash flows from operations from fiscal 2005 to fiscal 2006 was primarily the result of increases in accrued compensation and accrued income taxes.

Cash Flows from Investing Activities

In Millions, for Fiscal Year Ended	May 27, 2007			May 28, 2006			May 29, 2005
Purchases of land, buildings and equipment	$	(460	)	$	(360	)	$	(434	)
Acquisitions		(85	)		(26	)		–
Investments in affiliates, net		(100	)		1			1
Proceeds from disposal of land, buildings and equipment		14			11			24
Proceeds from disposition of businesses		–			–			799
Proceeds from dispositions of product lines		14			–			–
Other, net		20			5			23
Net Cash Provided (Used) by Investing Activities	$	(597	)	$	(369	)	$	413

    In fiscal 2007, capital investment for land, buildings, and equipment increased by $100 million to $460 million, as we increased manufacturing capacity for our snack bars and yogurt products and increased spending on cost-saving projects. We expect capital expenditures to increase to approximately $575 million in fiscal 2008, including projects to: consolidate manufacturing for our Old El Paso business; enhance distribution capabilities at one of our United States plants; increase our yogurt and chewy snack bar manufacturing capacity; and begin an upgrade of our information technology systems in Latin and South America and Asia.

    During fiscal 2007, we funded our share of CPW’s acquisition of the Uncle Tobys cereal business in Australia (reflected in acquisitions and investments in affiliates, net) and acquired Saxby Bros. Limited, a chilled pastry company in the United Kingdom. In addition, we completed an acquisition of our master franchisee of Häagen-Dazs shops in Greece. We also sold our frozen pie product line, including a plant in Rochester, New York, and our par-baked bread product line, including plants in Chelsea, Massachusetts and Tempe, Arizona.

22

Cash Flows from Financing Activities

In Millions, for Fiscal Year Ended	May 27, 2007			May 28, 2006			May 29, 2005
Change in notes payable	$	(280	)	$	1,197		$	(1,057	)
Issuance of long-term debt		2,650			–			2
Payment of long-term debt		(2,323	)		(1,386	)		(1,115	)
Proceeds from issuance of preferred membership interests of subsidiary		–			–			835
Common stock issued		317			157			195
Tax benefit on exercised options		73			–			–
Purchases of common stock for treasury		(1,321	)		(885	)		(771	)
Dividends paid		(506	)		(485	)		(461	)
Other, net		(8	)		(3	)		(13	)
Net Cash Used by Financing Activities	$	(1,398	)	$	(1,405	)	$	(2,385	)

    Details of each fiscal 2007 financing are described in Note 8 to the Consolidated Financial Statements on pages 54 to 55 of this report.

    On April 25, 2007, we redeemed or converted all of our zero coupon convertible debentures due 2022. The redemption price was settled in cash. For the debentures that were converted, we delivered cash equal to the accreted value of the debentures, including $23 million of accreted original issue discount, and issued 284,000 shares of our common stock worth $17 million to settle the conversion value in excess of the accreted value. This premium was recorded as a reduction to stockholders’ equity, net of the applicable tax benefit. There was no gain or loss associated with the redemption or conversions. We used proceeds from the issuance of commercial paper to fund the redemption and conversions. During fiscal 2006, we repurchased a significant portion of these debentures pursuant to put rights of the holders for an aggregate purchase price of $1.33 billion, including $77 million of accreted original issue discount. We incurred no gain or loss from this repurchase. We used proceeds from the issuance of commercial paper to fund the purchase price of the debentures.

    On April 11, 2007, we issued $1.15 billion aggregate principal amount of floating rate convertible senior notes. The notes bear interest at an annual rate equal to one-month London Interbank Offered Rate (LIBOR) minus 0.07 percent, subject to monthly reset. The notes will mature on April 11, 2037. Each $1,000 note is convertible into ten shares of our common stock, subject to adjustment in certain circumstances, on any business day prior to maturity. Upon conversion, each holder would receive cash up to the calculated principal amount of the note, and cash or shares at our option for any excess conversion value over the calculated principal amount of each note as described in the note agreement. The notes are unsecured and unsubordinated. The holders of the notes may put them to us for cash equal to the principal amount plus accrued and unpaid interest upon any change of control and on April 11, 2008 and several anniversary dates thereafter. We used the proceeds from the notes to repay outstanding commercial paper. Based on the terms of the notes, we expect them to be put to us on April 11, 2008.

    In January 2007, we issued $1.0 billion of 5.7 percent fixed rate notes due February 15, 2017 and $500 million of floating rate notes due January 22, 2010. The proceeds of these notes were used to retire $1.5 billion of fixed rate notes which matured in February 2007. The floating rate notes bear interest equal to three-month LIBOR plus 0.13 percent, subject to quarterly reset. The floating rate notes cannot be called by us prior to maturity. The fixed rate notes may be called by us at any time for cash equal to the greater of the principal amount of the notes or a specified make-whole amount, plus, in each case, accrued and unpaid interest. We had previously entered into $700 million of pay-fixed, forward-starting interest rate swaps with an average fixed rate of 5.7 percent in anticipation of the fixed rate note refinancing. We are amortizing a loss deferred to accumulated other comprehensive income (loss) of $23 million associated with these derivatives to interest expense on a straight-line basis over the life of the fixed rate notes. We expect to reclassify $2 million of the deferred loss to earnings over the next 12 months.

    We used cash from operations to repay $189 million of debt in fiscal 2006.

    In fiscal 2005, we commenced a cash tender offer for our outstanding 6 percent notes due in 2012. The tender offer resulted in the purchase of $500 million principal amount of the notes. Subsequent to the expiration of the tender offer, we purchased an additional $260 million principal amount of the notes in the open market. We incurred a loss of $137 million from this repurchase.

    In fiscal 2007, our Board of Directors approved a new authorization to repurchase up to 75 million shares of our common stock. This replaced a prior authorization, which permitted us to repurchase shares up to a treasury share balance of 170 million. Purchases under the new authorization can be made in the open market or in privately negotiated transactions, including the use of call options and other derivative instruments, Rule 10b5-1 trading plans, and accelerated repurchase programs. The authorization has no specified termination date. During fiscal 2007, we repurchased 25 million shares for an aggregate purchase price of $1,385 million, of which $64 million settled after the end of our fiscal year. Under the prior authorization in fiscal 2006, we repurchased 19 million shares of common stock for an aggregate purchase price of $892 million. A total of 162 million shares were held in treasury on May 27, 2007.

23

    Dividends paid in fiscal 2007 totaled $506 million, or $1.44 per share, a 7.5 percent increase from fiscal 2006 dividends of $1.34 per share. Dividends paid in fiscal 2006 totaled $485 million, or $1.34 per share, an 8 percent increase from fiscal 2005 dividends of $1.24 per share. Our Board of Directors approved a quarterly dividend increase from $0.37 per share to $0.39 per share effective with the dividend payable on August 1, 2007.

CAPITAL RESOURCES

Capital Structure

In Millions	May 27, 2007		May 28, 2006
Notes payable	$	1,254	$	1,503
Current portion of long-term debt		1,734		2,131
Long-term debt		3,218		2,415
Total debt		6,206		6,049
Minority interests		1,139		1,136
Stockholders’ equity		5,319		5,772
Total Capital	$	12,664	$	12,957

The following table details the fee-paid committed credit lines we had available as of May 27, 2007:

In Billions	Amount
Credit facility expiring:
October 2007	$	1.10
January 2009		0.75
October 2010		1.10
Total Committed Credit Facilities	$	2.95

    Commercial paper is a continuing source of short-term financing. We can issue commercial paper in the United States, Canada, and Europe. Our commercial paper borrowings are supported by $2.95 billion of fee-paid committed credit lines and $351 million in uncommitted lines. As of May 27, 2007, there were no amounts outstanding on the fee-paid committed credit lines and $133 million was drawn on the uncommitted lines, all by our international operations.

    Our credit facilities, certain of our long-term debt agreements, and our minority interests contain restrictive covenants. As of May 27, 2007, we were in compliance with all of these covenants.

    We have $1.7 billion of long-term debt maturing in the next 12 months that is classified as current, including $1.25 billion of notes that may mature based on the put rights of the note holders. We believe that cash flows from operations, together with available short- and long-term debt financing, will be adequate to meet our liquidity and capital needs for at least the next 12 months.

    As of May 27, 2007, our total debt, including the impact of derivative instruments designated as hedges, was 50 percent each in fixed-rate and floating-rate instruments compared to 63 percent fixed-rate and 37 percent floating-rate as of May 28, 2006. The change in the fixed-rate and floating-rate percentages were driven by refinancing our fixed-rate zero coupon convertible debentures in April 2007 with commercial paper and also refinancing $500 million of fixed rate notes that matured in February 2007 with floating rate notes.

    We have an effective shelf registration statement on file with the Securities and Exchange Commission (SEC) covering the sale of debt securities, common stock, preference stock, depository shares, securities warrants, purchase contracts, purchase units, and units. As of May 27, 2007, $3.7 billion remained available under the shelf registration for future use.

    We believe that growth in return on average total capital is a key performance measure. Return on average total capital increased from 10.5 percent in fiscal 2006 to 11.1 percent in fiscal 2007 due to earnings growth and disciplined use of cash. We also believe important measures of financial strength are the ratio of fixed charge coverage and the ratio of operating cash flow to debt. Our fixed charge coverage ratio in fiscal 2007 was 4.37 compared to 4.54 in fiscal 2006. The measure declined from fiscal 2006 as a $72 million increase in earnings before income taxes and after-tax earnings from joint ventures was more than offset by the impact of a $32 million decrease in distributions of earnings from joint ventures and a $35 million increase in fixed charges. Our operating cash flow to debt ratio decreased to 28 percent in fiscal 2007 from 31 percent in fiscal 2006, as cash flows from operations declined slightly from fiscal 2006 and year end debt balances increased slightly over the same period.

    Currently, Standard and Poor’s (S&P) has ratings of BBB+ on our publicly held long-term debt and A-2 on our commercial paper. Moody’s Investors Services (Moody’s) has ratings of Baa1 for our long-term debt and P-2 for our commercial paper. Fitch Ratings (Fitch) rates our long-term debt BBB+ and our commercial paper F-2. Dominion Bond Rating Service in Canada currently rates us as A-low. These ratings are not a recommendation to buy, sell or hold securities, are subject to revision or withdrawal at any time by the rating organization and should be evaluated independently of any other rating. We intend to maintain these ratings levels for the foreseeable future.

    Third parties hold minority interests in certain of our subsidiaries. General Mills Cereals, LLC (GMC) owns the manufacturing assets and intellectual property associated with the production and retail sale of Big G ready-to-eat cereals, Progresso soups and Old El Paso products. In May 2002, we sold 150,000 Class A preferred membership interests in GMC to an unrelated third-party investor in exchange for $150 million. In June 2007, we sold an additional 88,851 Class A preferred membership interests in GMC to the same

24

unrelated third-party investor in exchange for $92 million. In October 2004, we sold 835,000 Series B-1 preferred membership interests in GMC to an unrelated third-party investor in exchange for $835 million. The terms of the Series B-1 and Class A interests held by the third-party investors and the rights of those investors are detailed in the Third Amended and Restated Limited Liability Company Agreement of GMC (the LLC Agreement). Currently, we hold all interests in GMC (including all managing member interests), other than the Class A interests and the Series B-1 interests.

    The Class A interests receive quarterly preferred distributions based on their capital account balance at a floating rate equal to the sum of three-month LIBOR plus 65 basis points. The rate of the distributions on the Class A interests must be adjusted by agreement between the Class A interest holder and GMC, or through a remarketing, every five years. The first adjustment of the rate occurred in June 2007 and the next adjustment is scheduled to occur in July 2012. GMC, through its managing member, may elect to repurchase all of the Class A interests at any time for an amount equal to the holder’s capital account, plus any unpaid preferred returns and any applicable make-whole amount. Upon a failed remarketing, the rate over LIBOR will be increased by 75 basis points until the next scheduled remarketing, which will occur in 3 month intervals until a successful remarketing. As of May 27, 2007, the capital account balance of the Class A interests held by the unrelated third party was $150 million, and it was $248 million as of June 28, 2007, reflecting the third party’s purchase of $92 million of additional Class A interests and a $6 million increase in the capital account balance associated with the previously owned interests.

    The Series B-1 interests of GMC are entitled to receive quarterly preferred distributions based on their capital account balance at a fixed rate of 4.5 percent per year, which is scheduled to be reset to a new fixed rate through a remarketing in August 2007. The capital account balance of the Series B-1 interests was $835 million as of May 27, 2007, and will be increased to $849 million in August 2007 in connection with the remarketing. Beginning in August 2012, we may elect to reset the preferred distribution rate through a remarketing or to repurchase the interests. If we do not conduct a remarketing or repurchase the interests, the preferred distribution rate will be reset to a floating rate. As the managing member of GMC, we may elect to repurchase the Series B-1 interests for an amount equal to the holder’s then current capital account balance (i) in August 2007 and in five year intervals thereafter, and (ii) on any distribution date during a period in which the preferred return is set at a floating rate. The holders of the Series B-1 interests cannot require us to repurchase the interests.

    The Series B-1 interests will be exchanged for shares of our perpetual preferred stock as a result of: our senior unsecured debt rating falling below either Ba3 as rated by Moody’s or BB- as rated by S&P or Fitch; our bankruptcy or liquidation; a default on any of our senior indebtedness resulting in an acceleration of indebtedness having an outstanding principal balance in excess of $50 million; failing to pay a dividend on our common stock in any fiscal quarter; or certain liquidating events described in the LLC Agreement.

    If GMC fails to make a required distribution to the holders of Series B-1 interests when due, we will be restricted from paying any dividend (other than dividends in the form of shares of common stock) or other distributions on shares of our common or preferred stock, and may not repurchase or redeem shares of our common or preferred stock, until all such accrued and undistributed distributions are paid to the holders of the Series B-1 interests.

    GMC may be required to be dissolved and liquidated under certain circumstances, including: the bankruptcy of GMC or its subsidiaries; GMC’s failure to deliver the preferred distributions; GMC’s failure to comply with portfolio requirements; breaches of certain covenants; lowering of our senior debt rating below either Baa3 by Moody’s or BBB– by S&P; and a failed attempt to remarket the Class A interests as a result of a breach of GMC’s obligations to assist in such remarketing. In the event of a liquidation of GMC, each member of GMC would receive the amount of its then current capital account balance. As managing member, we may avoid liquidation of GMC in most circumstances by exercising our option to purchase the Class A interests.

    General Mills Capital, Inc. (GM Capital) was formed for the purpose of purchasing and collecting our receivables and previously sold $150 million of its Series A preferred stock to an unrelated third-party investor. In June 2007, we repurchased all of the Series A preferred stock. We used commercial paper borrowings and proceeds from the sale of the additional interests in GMC to fund the repurchase.

    In October 2004, Lehman Brothers Holdings, Inc. (Lehman Brothers) issued $750 million of notes that are mandatorily exchangeable for shares of our common stock. In connection with the issuance of those notes, an affiliate of Lehman Brothers entered into a forward purchase contract with us, under which we are obligated to deliver between 14 million and 17 million shares of our common stock, subject to adjustment under certain circumstances. These shares will be deliverable by us in October 2007 in exchange for $750 million of cash, assuming the Series B-1 interests in GMC are remarketed as planned in August 2007. If the remarketing is not successful, we will receive securities of an affiliate of Lehman Brothers. We expect to use the cash we receive from Lehman Brothers to repurchase shares of our stock, or to the

25

extent we have already reached our share repurchase objective for the year, to retire outstanding debt.

    For financial reporting purposes, the assets, liabilities, results of operations, and cash flows of GMC and GM Capital are included in our Consolidated Financial Statements. The return to the third party investors is reflected in interest, net in the Consolidated Statements of Earnings. The third party investors’ Class A and Series B-1 interests in GMC are classified as minority interests on our Consolidated Balance Sheets. We may also call these instruments in exchange for a payment equal to the then-current capital account value, plus any unpaid preferred return and any applicable make-whole amount. We may only call the Series B-1 interests in connection with a remarketing or on distribution dates in the event of a floating rate period. If we repurchase these interests, any change in the unrelated third party investors’ capital accounts from their original value will be charged directly to retained earnings and will increase or decrease the net earnings used to calculate EPS in that period.

    See Note 9 to the Consolidated Financial Statements on pages 56 and 57 in Item 8 for more information regarding our minority interests.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

As of May 27, 2007, we have issued guarantees and comfort letters of $606 million for the debt and other obligations of consolidated subsidiaries, and guarantees and comfort letters of $266 million for the debt and other obligations of non-consolidated affiliates, primarily CPW. In addition, off-balance sheet arrangements are generally limited to the future payments under noncancelable operating leases, which totaled $279 million as of May 27, 2007.

    As of May 27, 2007, we had invested in 5 VIEs. We are the PB of GM Capital, a subsidiary that we consolidate. As discussed previously, in June 2007 we repurchased its outstanding securities. We have an interest in a contract manufacturer at our former facility in Geneva, Illinois. We are the PB and have consolidated this entity as of May 27, 2007. This entity had property and equipment with a fair value of $37 million and long-term debt of $37 million as of May 27, 2007. We also have an interest in a contract manufacturer in Greece that is a VIE. Although we are the PB, we have not consolidated this entity because it is not material to our results of operations, financial condition, or liquidity as of May 27, 2007. This entity had assets of $3 million and liabilities of $1 million as of May 27, 2007. We are not the PB of the remaining 2 VIEs. Following our repurchase of the GM Capital preferred stock, our maximum exposure to loss from the remaining 4 VIEs is limited to the $37 million of long-term debt of the contract manufacturer in Geneva, Illinois and our $3 million equity investments in two of the other VIEs.

    On August 17, 2006, the Pension Protection Act (PPA) became law in the United States. The PPA revised the basis and methodology for determining defined benefit plan minimum funding requirements as well as maximum contributions to and benefits paid from tax-qualified plans. Most of these provisions are first applicable to our domestic defined benefit pension plans in fiscal 2008 on a phased-in basis. The PPA may ultimately require us to make additional contributions to our domestic plans. However, due to our historical funding practices and current funded status, we do not expect to have significant statutory or contractual funding requirements for our major defined benefit plans during the next several years. No 2008 domestic plan contributions are currently expected. Actual 2008 contributions could exceed our current projections, and may be influenced by our decision to undertake discretionary funding of our benefit trusts versus other competing investment priorities, or by future changes in government requirements. Additionally, our projections concerning timing of the PPA funding requirements are subject to change and may be influenced by factors such as general market conditions affecting trust asset performance, interest rates and our future decisions regarding certain elective provisions of the PPA.

    The following table summarizes our future estimated cash payments under existing contractual obligations, including payments due by period.

Payments Due by Fiscal Year In Millions	Total		2008		2009-10		2011-12		2013 and Thereafter
Long-term debt(a)	$	4,942	$	1,728	$	818	$	1,252	$	1,144
Accrued interest		165		165		–		–		–
Operating leases		279		74		117		51		37
Capital leases		28		8		7		5		8
Purchase obligations		2,403		2,148		153		66		36
Total	$	7,817	$	4,123	$	1,095	$	1,374	$	1,225

(a) Excludes $23 million related to capital leases and $13 million of bond premium and dealer discount.

    Principal payments due on long-term debt are based on stated contractual maturities or put rights of certain note holders. The majority of the purchase obligations represent commitments for raw material and packaging to be utilized in the normal course of business and for consumer marketing spending commitments that support our brands. The fair value of our interest rate and equity swaps was a payable of $154 million as of May 27, 2007, based on fair market values as of that date. Future changes in market values will impact the amount of cash ultimately paid or received to settle those instruments in the future. Other long-term obligations

26

primarily consist of liabilities for uncertain income tax positions, accrued compensation and benefits, including the underfunded status of certain of our defined benefit pension, other postretirement benefit, and postemployment benefit plans, and miscellaneous liabilities. We expect to pay $24 million of benefits from our unfunded postemployment benefit plans in fiscal 2008. Further information on all of these plans is included in Note 13 to the Consolidated Financial Statements appearing on pages 61 through 65 in Item 8 of this report.

SIGNIFICANT ACCOUNTING ESTIMATES

For a complete description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements appearing on pages 43 through 47 in Item 8 of this report. Our significant accounting estimates are those that have meaningful impact on the reporting of our financial condition and results of operations. These policies include our accounting for promotional expenditures, intangible assets, stock compensation, income taxes, and defined benefit pension, other postretirement and postemployment benefits.

PROMOTIONAL EXPENDITURES   Our promotional activities are conducted through our customers and directly or indirectly with end consumers. These activities include: payments to customers to perform merchandising activities on our behalf, such as advertising or in-store displays; discounts to our list prices to lower retail shelf prices and payments to gain distribution of new products; coupons, contests, and other incentives; and media and advertising expenditures. The media and advertising expenditures are recognized as expense when the advertisement airs. The cost of payments to customers and other consumer activities are recognized as the related revenue is recorded, which generally precedes the actual cash expenditure. The recognition of these costs requires estimation of customer participation and performance levels. These estimates are made based on the forecasted customer sales, the timing and forecasted costs of promotional activities, and other factors. Differences between estimated expenses and actual costs are normally insignificant and are recognized as a change in management estimate in a subsequent period. Our accrued trade, coupon, and brand-building consumer marketing liabilities were $289 million as of May 27, 2007, and $294 million as of May 28, 2006. Because our total promotional expenditures (including amounts classified as a reduction of revenues) are significant, if our estimates are inaccurate we would have to make adjustments that could have a material effect on our results of operations.

    Our unit volume in the last week of a quarter can be higher than the average for the preceding weeks of the quarter in certain circumstances. In comparison to the average daily shipments in the first 12 weeks of a quarter, the final week of each quarter may have as much as two to four days’ worth of incremental shipments (based on a five-day week), reflecting increased promotional activity at the end of the quarter. This increased activity includes promotions to assure that our customers have sufficient inventory on hand to support major marketing events or increased seasonal demand early in the next quarter, as well as promotions intended to help achieve interim unit volume targets. If, due to quarter-end promotions or other reasons, our customers purchase more product in any reporting period than end-consumer demand will require in future periods, our sales level in future reporting periods could be adversely affected.

INTANGIBLE ASSETS   Goodwill represents the difference between the purchase price of acquired companies and the related fair values of net assets acquired. Goodwill is not subject to amortization and is tested for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. Impairment testing is performed for each of our reporting units. We compare the carrying value of a reporting unit, including goodwill, to the fair value of the unit. Carrying value is based on the assets and liabilities associated with the operations of that reporting unit, which often requires allocation of shared or corporate items among reporting units. If the carrying amount of a reporting unit exceeds its fair value, we revalue all assets and liabilities of the reporting unit, excluding goodwill, to determine if the fair value of the net assets is greater than the net assets including goodwill. If the fair value of the net assets is less than the net assets including goodwill, impairment has occurred. Our estimates of fair value are determined based on a discounted cash flow model. Growth rates for sales and profits are determined using inputs from our annual long-range planning process. We also make estimates of discount rates, perpetuity growth assumptions, market comparables, and other factors. We periodically engage third-party valuation consultants to assist in this process.

    During fiscal 2007, we changed the timing of our annual goodwill impairment testing from the first day of our fiscal year to December 1. This accounting change is preferable because it better aligns this impairment test with the timing of the presentation of our strategic long-range plan to the Board of Directors. During fiscal 2007, we performed this annual impairment test on May 29, 2006, and again on December 1, 2006. The fair values for all of our reporting units exceed their carrying values by at least 20 percent.

    We evaluate the useful lives of our other intangible assets, primarily intangible assets associated with the Pillsbury, Totino’s, Progresso, Green Giant, Old El Paso and Häagen-Dazs brands, to determine if they are finite or indefinite-lived. Reaching a determination on useful life requires

27

significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, known technological advances, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets.

    Our indefinite-lived intangible assets, primarily brands, are also tested for impairment annually and whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We performed our fiscal 2007 assessment of our brand intangibles as of December 1, 2006. Our estimate of the fair value of the brands was based on a discounted cash flow model using inputs which included: projected revenues from our annual long-range plan; assumed royalty rates that could be payable if we did not own the brands; and a discount rate. We periodically engage third-party valuation consultants to assist in this process. All brand intangibles had fair values in excess of their carrying values by at least 20 percent, except for the Pillsbury brand, which we estimated had a fair value less than 3 percent higher than its carrying value. This brand comprises nearly one-half of our total indefinite-lived intangible assets.

    If the growth rate for the global revenue from all uses of the Pillsbury brand decreases 50 basis points from the current planned growth rate, fair value would be reduced by approximately $165 million, assuming all other components of the fair value estimate remain unchanged. If the assumed royalty rate for all uses of the Pillsbury brand decreases by 50 basis points, fair value would be reduced by approximately $130 million, assuming all other components of the fair value estimate remain unchanged. If the applicable discount rate increases by 50 basis points, fair value of the Pillsbury brand would be reduced by approximately $175 million, assuming all other components of the fair value estimate remain unchanged. As of May 27, 2007, we reviewed each of the assumptions used in the annual impairment assessment performed as of December 1, 2006, and found them to still be appropriate.

    As of May 27, 2007, we had $10.5 billion of goodwill and indefinite-lived intangible assets. While we currently believe that the fair value of each intangible exceeds its carrying value and that those intangibles so classified will contribute indefinitely to our cash flows, materially different assumptions regarding future performance of our businesses could result in significant impairment losses and amortization expense.

STOCK COMPENSATION   Effective May 29, 2006, we adopted SFAS 123R, which changed the accounting for compensation expense associated with stock options, restricted stock awards, and other forms of equity compensation. We elected the modified prospective transition method as permitted by SFAS 123R; accordingly, results from prior periods have not been restated. Under this method, stock-based compensation expense for fiscal 2007 was $128 million, which included amortization related to the remaining unvested portion of all equity compensation awards granted prior to May 29, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), and amortization related to all equity compensation awards granted on or subsequent to May 29, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. The incremental effect on net earnings in fiscal 2007 of our adoption of SFAS 123R was $69 million of expense ($43 million after-tax). All our stock compensation expense is recorded in SG&A expense in the Consolidated Statement of Earnings.

    Prior to May 29, 2006, we used the intrinsic value method for measuring the cost of compensation paid in our common stock. No compensation expense for stock options was recognized in our Consolidated Statements of Earnings prior to fiscal 2007, as the exercise price was equal to the market price of our stock at the date of grant. Expense attributable to other types of share-based awards was recognized in our results under SFAS 123. The weighted-average grant-date fair values of the employee stock options granted were estimated as $10.74 in fiscal 2007, $8.04 in fiscal 2006, and $8.32 in fiscal 2005 using the Black-Scholes option-pricing model with the following assumptions:

Fiscal Year	2007		2006		2005
Risk-free interest rate		5.3%		4.3%		4.0%
Expected term		8 years		7 years		7 years
Expected volatility		19.7%		20.0%		21.0%
Dividend yield		2.8%		2.9%		2.7%

    The valuation of stock options is a significant accounting estimate which requires us to use significant judgments and assumptions that are likely to have a material impact on our financial statements. Annually, we make predictive assumptions regarding future stock price volatility, employee exercise behavior, and dividend yield. Our methods for selecting these valuation assumptions are explained in Note 11 to the Consolidated Financial Statements on pages 58 through 60 in Item 8 of this report.

    For fiscal 2007 and all prior periods, our estimate of expected stock price volatility is based on historical volatility determined on a daily basis over the expected term of the options. We considered but did not use implied volatility because we believed historical volatility provided an appropriate expectation for our volatility in the future. If all other assumptions are held constant, a one percentage point increase or decrease in our fiscal 2007 volatility assumption

28

would increase or decrease the grant-date fair value of our fiscal 2007 option awards by 4 percent.

    For our fiscal 2008 annual option grant made in June 2007, we have included implied volatility in our determination of expected volatility. We have weighted implied volatility and historical volatility equally in determining our volatility assumption. We have included implied volatility in our determination of this assumption because exchange-traded options on our stock are widely traded, and we believe the implied volatility placed on our stock by the marketplace is a reasonable indicator of expected future volatility in our stock price. We have more heavily weighted the last several years of historical volatility data to reflect a significant decrease in both our historical and our implied volatility trends following our completion of the Pillsbury acquisition in October 2001 and our operating results thereafter.

    Our expected term represents the period of time that options granted are expected to be outstanding based on historical data to estimate option exercise and employee termination within the valuation model. Separate groups of employees have similar historical exercise behavior and therefore were aggregated into a single pool for valuation purposes. The weighted-average expected term for all employee groups is presented in the table above. A change in the expected term of 1 year, leaving all other assumptions constant, would not change the grant date fair value by more than 3 percent. Our valuation model assumes that dividends and our share price increase in line with earnings, resulting in a constant dividend yield. The risk-free interest rate for periods during the expected term of the options is based on the U.S. Treasury zero-coupon yield curve in effect at the time of grant.

    To the extent that actual outcomes differ from our assumptions, we are not required to true up grant-date fair value-based expense to final intrinsic values. However, these differences can impact the classification of cash tax benefits realized upon exercise of stock options, as explained in the following two paragraphs. Furthermore, historical data has a significant bearing on our forward-looking assumptions. Significant variances between actual and predicted experience could lead to prospective revisions in our assumptions, which could then significantly impact the year-over-year comparability of stock-based compensation expense.

    SFAS 123R also provides that any corporate income tax benefit realized upon exercise or vesting of an award in excess of that previously recognized in earnings (referred to as a “windfall tax benefit”) is presented in the Consolidated Statement of Cash Flows as a financing (rather than an operating) cash flow. If this standard had been adopted in fiscal 2006, operating cash flow would have been lower (and financing cash flow would have been higher) by $41 million as a result of this provision. For fiscal 2007, the windfall tax benefits classified as financing cash flow were $73 million. The actual impact on future years’ financing cash flow will depend, in part, on the volume of employee stock option exercises during a particular year and the relationship between the exercise-date market value of the underlying stock and the original grant-date fair value previously determined for financial reporting purposes.

    For balance sheet classification purposes, realized windfall tax benefits are credited to additional paid-in capital within the Consolidated Balance Sheet. Realized shortfall tax benefits (amounts which are less than that previously recognized in earnings) are first offset against the cumulative balance of windfall tax benefits, if any, and then charged directly to income tax expense, potentially resulting in volatility in our consolidated effective income tax rate. Under the transition rules for adopting SFAS 123R using the modified prospective method, we were permitted to calculate a cumulative amount of windfall tax benefits from post-1995 fiscal years for the purpose of accounting for future shortfall tax benefits. We completed such study prior to the first period of adoption and currently have sufficient cumulative windfall tax benefits to absorb projected arising shortfalls, such that we do not currently expect fiscal 2008 earnings to be affected by this provision. However, as employee stock option exercise behavior is not within our control, it is possible that materially different reported results could occur if different assumptions or conditions were to prevail.

INCOME TAXES   Our consolidated effective income tax rate is influenced by tax planning opportunities available to us in the various jurisdictions in which we operate. Management judgment is involved in determining our effective tax rate and in evaluating the ultimate resolution of any uncertain tax positions. We are periodically under examination or engaged in a tax controversy. We establish reserves in a variety of taxing jurisdictions when, despite our belief that our tax return positions are supportable, we believe that certain positions may be challenged and may need to be revised. We adjust these reserves in light of changing facts and circumstances, such as the progress of a tax audit. Our effective income tax rate includes the impact of reserve provisions and changes to those reserves. We also provide interest on these reserves at the appropriate statutory interest rate. These interest charges are also included in our effective tax rate. As of May 27, 2007, our income tax and related interest reserves recorded in other current liabilities were slightly more than $700 million. Reserve adjustments for individual issues have generally not exceeded 1 percent of earnings before income taxes and after-tax earnings from joint ventures annually. Nevertheless, the accumulation of individually insignificant discrete adjustments throughout a particular year has historically impacted our consolidated effective income tax rate by up to 80 basis points.

29

    The Internal Revenue Service (IRS) recently concluded field examinations for our 2002 and 2003 federal tax years. These examinations included review of our determinations of cost basis, capital losses, and the depreciation of tangible assets and amortization of intangible assets arising from our acquisition of Pillsbury and the sale of minority interests in our GMC subsidiary. The IRS has proposed adjustments related to a majority of the tax benefits associated with these items. We believe we have meritorious defenses and intend to vigorously defend our positions. Our potential liability for this matter is significant and, notwithstanding our reserves against this potential liability, an unfavorable resolution could have a material adverse impact on our results of operations or cash flows from operations.

DEFINED BENEFIT PENSION, OTHER POSTRETIREMENT, AND POSTEMPLOYMENT BENEFIT PLANS   We have defined benefit pension plans covering most domestic, Canadian, and United Kingdom employees. Benefits for salaried employees are based on length of service and final average compensation. Benefits for hourly employees include various monthly amounts for each year of credited service. Our funding policy is consistent with the requirements of applicable laws. We made $11 million of voluntary contributions to these plans in fiscal 2007. Our principal domestic retirement plan covering salaried employees has a provision that any excess pension assets would vest if the plan is terminated within five years of a change in control.

    We also sponsor plans that provide health care benefits to the majority of our domestic and Canadian retirees. The salaried health care benefit plan is contributory, with retiree contributions based on years of service. We fund related trusts for certain employees and retirees on an annual basis and made $50 million of voluntary contributions to these plans in fiscal 2007.

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

    We account for our defined benefit pension, other postretirement, and postemployment benefit plans in accordance with SFAS No. 87, “Employers’ Accounting for Pensions,” SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions,” and SFAS No. 112, “Employers’ Accounting for Postemployment Benefits – An Amendment of FASB Statements No. 5 and 43,” in measuring plan assets and benefit obligations and in determining the amount of net periodic benefit cost, and SFAS 158, which was issued in September 2006 and is effective for us as of May 27, 2007. SFAS 158 requires employers to recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income (loss), which is a component of stockholders’ equity. As a result of the implementation of SFAS 158, we recognized an after-tax decrease in accumulated other comprehensive income (loss) of $440 million for all of our defined benefit pension, other postretirement, and postemployment benefit plans. This includes the incremental impact of recognizing our share of the underfunded status of CPW's defined benefit pension plan in the United Kingdom. Prior periods were not restated.

    We recognize benefits provided during retirement or following employment over the plan participants’ active working life. Accordingly, we make various assumptions to predict and measure costs and obligations many years prior to the settlement of our obligations. Assumptions that require significant management judgment and have a material impact on the measurement of our net periodic benefit expense or income and accumulated benefit obligations include the long-term rates of return on plan assets, the interest rates used to discount the obligations for our benefit plans, and the health care cost trend rates.

Expected Rate of Return on Plan Assets   Our expected rate of return on plan assets is determined by our asset allocation, our historical long-term investment performance, our estimate of future long-term returns by asset class (using input from our actuaries, investment services, and investment managers), and long-term inflation assumptions. We review this assumption annually for each plan, however, our annual investment performance for one particular year does not, by itself, significantly influence our evaluation. Our expected rates of return are revised only when our future investment performance based on our asset allocations, investment strategies, or capital markets change significantly.

    The investment objective for our defined benefit pension and other postretirement benefit plans is to secure the benefit obligations to participants at a reasonable cost to us. Our goal is to optimize the long-term return on plan assets at a moderate level of risk. The defined benefit pension and other postretirement portfolios are broadly diversified across asset classes. Within asset classes, the portfolios are further diversified across investment styles and investment organizations. For the defined benefit pension and other postretirement benefit plans, the long-term investment policy allocations are: 30 percent to equities in the United States; 20 percent to international equities; 10 percent to private equities; 30

30

percent to fixed income; and 10 percent to real assets (real estate, energy and timber). The actual allocations to these asset classes may vary tactically around the long-term policy allocations based on relative market valuations.

    Our historical investment returns (compound annual growth rates) for our United States defined benefit pension and other postretirement plan assets were 18 percent, 14 percent, 11 percent, 12 percent, and 12 percent for the 1, 5, 10, 15, and 20 year periods ended May 27, 2007.

    For fiscal 2007, we assumed, on a weighted-average basis for all defined benefit plans, a rate of return of 9.4 percent. For fiscal 2006 and 2005, we assumed, on a weighted-average basis for all defined benefit plan assets, a rate of return of 9.6 percent. Our principal defined benefit pension and other postretirement plans in the United States have an expected return on plan assets of 9.6 percent. During fiscal 2007, we lowered the expected rate of return on one of our other postretirement plans in the United States based on costs associated with insurance contracts owned by that plan.

    Lowering the expected long-term rate of return on assets by 50 basis points would increase our net pension and postretirement expense by $20 million for fiscal 2008. A 50 basis point shortfall between the assumed and actual rate of return on plan assets for fiscal 2008 would result in a similar amount of arising asset-experience loss. Any arising asset-experience loss is recognized on a market-related valuation basis, which reduces year-to-year volatility. This market-related valuation recognizes investment gains or losses over a five-year period from the year in which they occur. Investment gains or losses for this purpose are the difference between the expected return calculated using the market-related value of assets and the actual return based on the market-related value of assets. Since the market-related value of assets recognizes gains or losses over a five-year period, the future value of assets will be impacted as previously deferred gains or losses are recorded. Our outside actuaries perform these calculations as part of our determination of annual expense or income.

Discount Rates   Our discount rate assumptions are determined annually as of the last day of our fiscal year for all of our defined benefit pension, other postretirement, and postemployment benefit plan obligations. Those same discount rates also are used to determine defined benefit pension, other postretirement, and postemployment benefit plan income and expense for the following fiscal year. We work with our actuaries to determine the timing and amount of expected future cash outflows to plan participants and, using AA-rated corporate bond yields, to develop a forward interest rate curve, including a margin to that index based on our credit risk. This forward interest rate curve is applied to our expected future cash outflows to determine our discount rate assumptions.

    Our weighted-average discount rates were as follows:

Weighted-Average Discount Rates

	Defined Benefit Pension Plans			Other Postretirement Benefit Plans			Postemployment Benefit Plans
Obligation as of May 27, 2007, and fiscal 2008 expense		6.18	%		6.15	%		6.05	%
Obligation as of May 28, 2006, and fiscal 2007 expense		6.45	%		6.50	%		6.44	%
Fiscal 2006 expense		5.55	%		5.50	%		5.55	%

    Lowering the discount rates by 50 basis points would increase our net defined benefit pension, other postretirement, and postemployment benefit plan expense for fiscal 2008 by approximately $28 million. All obligation-related experience gains and losses are amortized using a straight-line method over the average remaining service period of active plan participants.

Health Care Cost Trend Rates   We review our health care trend rates annually. Our review is based on data and information we collect about our health care claims experience and information provided by our actuaries. This information includes recent plan experience, plan design, overall industry experience and projections, and assumptions used by other similar organizations. Our initial health care cost trend rate is adjusted as necessary to remain consistent with this review, recent experiences, and short-term expectations. Our current health care cost trend rate assumption is 11 percent for retirees age 65 and over and 10 percent for retirees under age 65. These rates are graded down annually until the ultimate trend rate of 5.2 percent is reached in 2015 for retirees over age 65 and 2014 for retirees under age 65. The trend rates are applicable for calculations only if the retirees’ benefits increase as a result of health care inflation. The ultimate trend rate is adjusted annually, as necessary, to approximate the current economic view on the rate of long-term inflation plus an appropriate health care cost premium. Assumed trend rates for health care costs have an important effect on the amounts reported for the other postretirement benefit plans.

31

    A one percentage point change in the health care cost trend rate would have the following effects:

In Millions	One Percentage Point Increase		One Percentage Point Decrease
Effect on the aggregate of the service and interest cost components in fiscal 2008	$	7	$	(7	)
Effect on the other postretirement accumulated benefit obligation as of May 27, 2007		89		(78	)

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

Financial Statement Impact   In fiscal 2007, we recorded net defined benefit pension, other postretirement, and postemployment benefit plan expense of $36 million compared to $25 million in fiscal 2006 and $6 million in fiscal 2005. As of May 27, 2007, we had cumulative unrecognized actuarial net losses of $407 million on our pension plans, $269 million on our other postretirement benefit plans, and $2 million on our postemployment benefit plans, primarily as the result of decreases in our discount rate assumptions. These unrecognized actuarial net losses will result in decreases in our future pension income and increases in postretirement expense since they currently exceed the corridors defined by GAAP.

    As of May 27, 2007, we changed to the Retirement Plans (RP) 2000 Mortality Table projected forward to 2007 for calculating the fiscal 2007 year end defined benefit pension, other postretirement, and postemployment benefit obligations and fiscal 2008 expense. The impact of this change increased our defined benefit pension obligations by $2 million and had no impact on any of our other plans. The change also increased fiscal 2008 defined benefit pension expenses by $1 million.

    Actual future net defined benefit pension, other postretirement, and postemployment benefit plan income or expense will depend on investment performance, changes in future discount rates, changes in health care trend rates, and various other factors related to the populations participating in these plans.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In the first quarter of fiscal 2008, we will adopt Financial Accounting Standards Board (FASB) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). Among other things, FIN 48 requires application of a more likely than not threshold to the recognition and derecognition of tax positions. For the periods presented, our policy was to establish reserves that reflected the probable outcome of known tax contingencies. Favorable resolution was recognized as a reduction to our effective tax rate in the period of resolution. As compared to a contingency approach, FIN 48 is based on a benefit recognition model, which we believe could result in a greater amount of benefit (and a lower amount of reserve) being initially recognized in certain circumstances. Provided that the tax position is deemed more likely than not of being sustained, FIN 48 permits a company to recognize the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement. The tax position must be derecognized when it is no longer more likely than not of being sustained. It further requires that a change in judgment related to prior years’ tax positions be recognized in the quarter of such change. We anticipate $705 million of our accrued income taxes will be reclassified as long-term liabilities upon adoption. Significant tax reserve adjustments impacting our effective tax rate would be separately presented in the rate reconciliation table of Note 14 to the Consolidated Financial Statements appearing on pages 65 through 66 in Item 8 of this report. We are currently evaluating the impact of adopting FIN 48.

    In June 2007, the FASB approved the issuance of Emerging Issues Task Force Issue No. 06-11 “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (EITF 06-11). EITF 06-11 requires that tax benefits from dividends paid on unvested restricted shares be charged directly to stockholders’ equity instead of benefiting income tax expense. EITF 06-11, which will be effective for us in the first quarter of fiscal 2009, is expected to increase our effective income tax rate by 20 basis points, or from 34.3 percent to 34.5 percent based on our actual 2007 effective tax rate.

    In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of SFAS No. 115” (SFAS 159). This statement provides companies with an option to measure, at specified election dates, many financial instruments and certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS 159 will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This statement is effective for fiscal years beginning after November 15, 2007, which for us is the first quarter of fiscal 2009. We do not believe that the adoption of SFAS 159 will have a material impact on our results of operations or financial condition.

32

    In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS 157). This statement provides a single definition of fair value, a framework for measuring fair value, and expanded disclosures concerning fair value. Previously, different definitions of fair value were contained in various accounting pronouncements creating inconsistencies in measurement and disclosures. SFAS 157 applies under those previously issued pronouncements that prescribe fair value as the relevant measure of value, except SFAS 123R and related interpretations and pronouncements that require or permit measurement similar to fair value but are not intended to measure fair value. This pronouncement is effective for fiscal years beginning after November 15, 2007, which for us is the first quarter of fiscal 2009. We are evaluating the impact of SFAS 157 on our results of operations and financial condition.

    In September 2006, the SEC released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB 108). SAB 108 provides interpretive guidance on the process and diversity in practice of quantifying financial statement misstatements resulting in the potential carryover of improper amounts on the balance sheet. The SEC staff believes that registrants should quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 is effective for us in the first quarter of fiscal 2008. We do not believe that the adoption of SAB 108 will have a material impact on our results of operations or financial condition.

NON-GAAP MEASURES

We have included in this report measures of financial performance that are not defined by GAAP. For each of these non-GAAP financial measures, we are providing below a reconciliation of the differences between the non-GAAP measure and the most directly comparable GAAP measure, an explanation of why our management or the Board of Directors believes the non-GAAP measure provides useful information to investors, and any additional purposes for which our management or Board of Directors uses the non-GAAP measure. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable GAAP measure.

TOTAL SEGMENT OPERATING PROFIT   This non-GAAP measure is used in reporting to our executive management and as a component of the Board of Directors’ measurement of our performance for incentive compensation purposes. Management and the Board of Directors believe that this measure provides useful information to investors because it is the profitability measure we use to evaluate segment performance. A reconciliation of this measure to operating profit, the relevant GAAP measure, is included in Note 16 to the Consolidated Financial Statements included on pages 67 through 68 in Item 8 of this report.

ONGOING JOINT VENTURES   Our interest in SVE was redeemed in February 2005. To view the performance of our joint ventures on an ongoing basis, we have provided certain information excluding SVE. The reconciliation of this non-GAAP measure is shown in the following tables:

In Millions, Fiscal Year	2007			2006			2005
After-tax earnings from joint ventures:
As reported	$	73		$	69		$	94
Less: SVE		–			–			(28	)
Ongoing joint ventures	$	73		$	69		$	66
Net sales of joint ventures (100% basis):
As reported	$	2,016		$	1,796		$	2,652
Less: SVE		–			–			(896	)
Ongoing joint ventures	$	2,016		$	1,796		$	1,756
Fiscal Year	2007 vs. 2006			2006 vs. 2005
Change in net sales of joint ventures (100% basis):
As reported		+13	%		–32	%
Ongoing joint ventures		+13	%		+2	%

33

RETURN ON AVERAGE TOTAL CAPITAL   This ratio is not defined by GAAP, and is used in internal management reporting and as a component of the Board of Directors’ rating of our performance for management and employee incentive compensation. Management and the Board of Directors believe that this measure provides useful information to investors because it is important for assessing the utilization of capital.

Dollars In Millions, Fiscal Year	2007			2006			2005			2004			2003			2002
Net earnings	$	1,144		$	1,090		$	1,240		$	1,055		$	917
Interest, net, after-tax		281			261			289			330			378
Earnings before interest, after-tax	$	1,425		$	1,351		$	1,529		$	1,385		$	1,295
Current portion of long-term debt	$	1,734		$	2,131		$	1,638		$	233		$	105		$	248
Notes payable		1,254			1,503			299			583			1,236			3,600
Long-term debt		3,218			2,415			4,255			7,410			7,516			5,591
Total debt		6,206			6,049			6,192			8,226			8,857			9,439
Minority interests		1,139			1,136			1,133			299			300			153
Stockholders’ equity		5,319			5,772			5,676			5,248			4,175			3,576
Total capital		12,664			12,957			13,001			13,773			13,332			13,168
Less: Accumulated other comprehensive (income) loss		120			(125	)		(8	)		144			342			376
Adjusted total capital	$	12,784		$	12,832		$	12,993		$	13,917		$	13,674		$	13,544
Adjusted average total capital	$	12,808		$	12,913		$	13,455		$	13,796		$	13,609
Return on average total capital		11.1	%		10.5	%		11.4	%		10.0	%		9.5	%

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

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

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

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

    Our future results could be affected by a variety of factors, such as: competitive dynamics in the consumer foods industry and the markets for our products, 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; changes in laws and regulations, including labeling and advertising regulations; impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets; changes in accounting standards and the impact of significant accounting estimates; product quality and safety issues, including recalls and product liability; changes in 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; volatility in the market value of derivatives used to hedge price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; failure of our information technology systems; 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.

34

    You should also consider the risk factors that we identify in Item 1A on pages 5 through 10 of this report, which could also affect our future results.

    We undertake no obligation to publicly revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events.

ITEM 7A   Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk stemming from changes in interest rates, foreign exchange rates, commodity prices and equity prices. Changes in these factors could cause fluctuations in our earnings and cash flows. In the normal course of business, we actively manage our exposure to these market risks by entering into various hedging transactions, authorized under established policies that place clear controls on these activities. The counterparties in these transactions are generally highly rated institutions. We establish credit limits for each counterparty. Our hedging transactions include but are not limited to a variety of derivative financial instruments.

INTEREST RATE RISK

We are exposed to interest rate volatility with regard to future issuances of fixed rate debt, and existing and future issuances of variable rate debt. Primary exposures include U.S. Treasury rates, LIBOR, and commercial paper rates in the United States and Europe. We use interest rate swaps and forward-starting interest rate swaps to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, and to achieve a desired proportion of fixed- versus floating-rate debt, based on current and projected market conditions. Generally under these swaps, we agree with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed notional principal amount. As of May 27, 2007, we had $3.7 billion of aggregate notional principal amount outstanding. This includes notional amounts of offsetting swaps that neutralize our exposure to interest rates on other interest rate swaps. See Note 7 to the Consolidated Financial Statements on pages 51 through 54 in Item 8 of this report.

FOREIGN EXCHANGE RISK

Foreign currency fluctuations affect our net investments in foreign subsidiaries, and foreign currency cash flows related to third party purchases, intercompany loans, and product shipments. We are also exposed to the translation of foreign currency earnings to the U.S. dollar. Our principal exposures are to the Australian dollar, British pound sterling, Canadian dollar, Euro, and Mexican peso. We primarily use foreign currency forward contracts to selectively hedge our foreign currency cash flow exposures. We generally do not hedge more than 12 months forward. We also have many net investments in foreign subsidiaries that are denominated in Euros. We hedge a portion of these net investments by issuing Euro-denominated commercial paper. As of May 27, 2007, we had issued $402 million of Euro-denominated commercial paper that we have designated as a net investment hedge and thus deferred net foreign currency transaction losses of $27 million to accumulated other comprehensive income (loss).

COMMODITY PRICE RISK

Many commodities we use in the production and distribution of our products are exposed to market price risks. We utilize derivatives to hedge price risk for our principal ingredient and energy costs, including grains (oats, wheat, and corn), oils (principally soybean), non-fat dry milk, natural gas, and diesel fuel. We manage our exposures through a combination of purchase orders, long-term contracts with suppliers, exchange-traded futures and options, and over-the-counter options and swaps. We offset our exposures based on current and projected market conditions, and generally seek to acquire the inputs at as close to our planned cost as possible.

EQUITY INSTRUMENTS

Equity price movements affect our compensation expense as certain investments owned by our employees are revalued. We use equity swaps to manage this market risk.

VALUE AT RISK

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

    The VAR calculation used historical interest rates, foreign exchange rates and commodity and equity prices from the past year to estimate the potential volatility and correlation of these rates in the future. The market data were drawn from the RiskMetrics™ data set. The calculations are not intended to represent actual losses in fair value that we expect to incur. Further, since the hedging instrument (the derivative) inversely correlates with the underlying exposure, we

35

would expect that any loss or gain in the fair value of our derivatives would be generally offset by an increase or decrease in the fair value of the underlying exposures. The positions included in the calculations were: debt; investments; interest rate swaps; foreign exchange forwards; commodity swaps, futures and options; and equity instruments. The calculations do not include the underlying foreign exchange and commodities-related positions that are hedged by these market-risk-sensitive instruments.

    The table below presents the estimated maximum potential VAR arising from a one-day loss in fair value for our interest rate, foreign currency, commodity and equity market-risk-sensitive instruments outstanding as of May 27, 2007, and May 28, 2006, and the average fair value impact during the year ended May 27, 2007.

	Fair Value Impact
In Millions	May 27, 2007		Average during fiscal 2007		May 28, 2006
Interest rate instruments	$	10	$	10	$	8
Foreign currency instruments		4		2		2
Commodity instruments		4		4		2
Equity instruments		1		1		1

36

ITEM 8   Financial Statements and Supplementary Data

REPORT OF MANAGEMENT RESPONSIBILITIES

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

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

    The Audit Committee of the Board of Directors meets regularly with management, internal auditors and our independent auditors to review internal control, auditing and financial reporting matters. The independent auditors, internal auditors and employees have full and free access to the Audit Committee at any time.

    The Audit Committee reviewed and approved the Company’s annual financial statements and recommended to the full Board of Directors that they be included in the Annual Report. The Audit Committee also recommended to the Board of Directors that the independent auditors be reappointed for fiscal 2008, subject to ratification by the stockholders at the annual meeting.

S. W. Sanger Chairman of the Board and Chief Executive Officer	J. A. Lawrence Vice Chairman and Chief Financial Officer

July 26, 2007

37

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON THE
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED FINANCIAL STATEMENT SCHEDULE

The Board of Directors and Stockholders
General Mills, Inc.:

We have audited the accompanying consolidated balance sheets of General Mills, Inc. and subsidiaries as of May 27, 2007, and May 28, 2006, and the related consolidated statements of earnings, stockholders’ equity and comprehensive income, and cash flows for each of the fiscal years in the three-year period ended May 27, 2007. In connection with our audits of the consolidated financial statements we also have audited the accompanying financial statement schedule. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

    We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of General Mills, Inc. and subsidiaries as of May 27, 2007, and May 28, 2006, and the results of their operations and their cash flows for each of the fiscal years in the three-year period ended May 27, 2007, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the accompanying financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

    In fiscal 2007, as disclosed in Notes 1 and 2 to the consolidated financial statements, the Company changed its classification of shipping costs, changed its annual goodwill impairment assessment date to December 1, and adopted SFAS No. 123 (Revised), “Share-Based Payment”, and SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans an amendment of FASB Statements No. 87, 88, 106 and 132(R)”.

    We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of General Mills’ internal control over financial reporting as of May 27, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated July 26, 2007, expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

Minneapolis, Minnesota
July 26, 2007

38

Consolidated Statements of Earnings

GENERAL MILLS, INC. AND SUBSIDIARIES

In Millions, Except per Share Data Fiscal Year Ended	May 27, 2007		May 28, 2006		May 29, 2005
Net sales	$	12,442	$	11,712	$	11,308
Cost of sales		7,955		7,545		7,326
Selling, general and administrative expenses		2,390		2,179		1,998
Restructuring, impairment and other exit costs		39		30		84
Operating profit		2,058		1,958		1,900
Divestitures (gain)		–		–		(499	)
Debt repurchase costs		–		–		137
Interest expense, net		427		399		455
Earnings before income taxes and after-tax earnings from joint ventures		1,631		1,559		1,807
Income taxes		560		538		661
After-tax earnings from joint ventures		73		69		94
Net earnings	$	1,144	$	1,090	$	1,240
Earnings per share – basic	$	3.30	$	3.05	$	3.34
Earnings per share – diluted	$	3.18	$	2.90	$	3.08
Dividends per share	$	1.44	$	1.34	$	1.24

See accompanying notes to consolidated financial statements.

39

Consolidated Balance Sheets

GENERAL MILLS, INC. AND SUBSIDIARIES

In Millions	May 27, 2007			May 28, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	417		$	647
Receivables		953			912
Inventories		1,174			1,055
Prepaid expenses and other current assets		443			377
Deferred income taxes		67			50
Total current assets		3,054			3,041
Land, buildings and equipment		3,014			2,997
Goodwill		6,835			6,652
Other intangible assets		3,694			3,607
Other assets		1,587			1,778
Total assets	$	18,184		$	18,075
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	778		$	673
Current portion of long-term debt		1,734			2,131
Notes payable		1,254			1,503
Other current liabilities		2,079			1,831
Total current liabilities		5,845			6,138
Long-term debt		3,218			2,415
Deferred income taxes		1,433			1,690
Other liabilities		1,230			924
Total liabilities		11,726			11,167
Minority interests		1,139			1,136
Stockholders’ equity:
Common stock, 502 shares issued		50			50
Additional paid-in capital		5,842			5,737
Retained earnings		5,745			5,107
Common stock in treasury, at cost, shares of 162 in 2007 and 146 in 2006		(6,198	)		(5,163	)
Unearned compensation		–			(84	)
Accumulated other comprehensive income (loss)		(120	)		125
Total stockholders’ equity		5,319			5,772
Total liabilities and equity	$	18,184		$	18,075

See accompanying notes to consolidated financial statements.

40

Consolidated Statements of Stockholders’ Equity and Comprehensive Income

GENERAL MILLS, INC. AND SUBSIDIARIES

In Millions, Except per Share Data	$.10 Par Value Common Stock (One Billion Shares Authorized)													Retained Earnings			Unearned Compen- sation			Accumu- lated Other Compre- hensive Income (Loss)			Total
	Issued							Treasury
	Shares		Par Amount		Additional Paid-In Capital			Shares			Amount
Balance as of May 30, 2004		502	$	50	$	5,630			(123	)	$	(3,921	)	$	3,722		$	(89	)	$	(144	)	$	5,248
Comprehensive income:
Net earnings															1,240									1,240
Other comprehensive income, net of tax:
Net change on hedge derivatives																					99			99
Foreign currency translation																					75			75
Minimum pension liability adjustment																					(22	)		(22	)
Other comprehensive income																					152			152
Total comprehensive income																								1,392
Cash dividends declared ($1.24 per share)															(461	)								(461	)
Stock compensation plans (includes income tax benefits of $62)						104			7			232												336
Shares purchased									(17	)		(771	)											(771	)
Forward purchase contract fees						(43	)																	(43	)
Unearned compensation related to restricted stock awards																		(66	)					(66	)
Earned compensation and other																		41						41
Balance as of May 29, 2005		502	$	50	$	5,691			(133	)	$	(4,460	)	$	4,501		$	(114	)	$	8		$	5,676
Comprehensive income:
Net earnings															1,090									1,090
Other comprehensive income, net of tax:
Net change on hedge derivatives																					20			20
Foreign currency translation																					73			73
Minimum pension liability adjustment																					24			24
Other comprehensive income																					117			117
Total comprehensive income																								1,207
Cash dividends declared ($1.34 per share)															(484	)								(484	)
Stock compensation plans (includes income tax benefits of $41)						46			6			189												235
Shares purchased									(19	)		(892	)											(892	)
Unearned compensation related to restricted stock awards																		(17	)					(17	)
Earned compensation and other																		47						47
Balance as of May 28, 2006		502	$	50	$	5,737			(146	)	$	(5,163	)	$	5,107		$	(84	)	$	125		$	5,772
Comprehensive income:
Net earnings															1,144									1,144
Other comprehensive income, net of tax:
Net change on hedge derivatives																					22			22
Foreign currency translation																					194			194
Minimum pension liability adjustment																					(21	)		(21	)
Other comprehensive income																					195			195
Total comprehensive income																								1,339
Adoption of SFAS No. 123R						(84	)											84
Adoption of SFAS No. 158																					(440	)		(440	)
Cash dividends declared ($1.44 per share)															(506	)								(506	)
Stock compensation plans (includes income tax benefits of $73)						165			9			339												504
Shares purchased									(25	)		(1,385	)											(1,385	)
Unearned compensation related to restricted
stock awards						(95	)																	(95	)
Issuance of shares to settle conversion premium on zero coupon convertible debentures, net of tax						(11	)					11												–
Earned compensation and other						130																		130
Balance as of May 27, 2007		502	$	50	$	5,842			(162	)	$	(6,198	)	$	5,745		$	–		$	(120	)	$	5,319

See accompanying notes to consolidated financial statements.

41

Consolidated Statements of Cash Flows

GENERAL MILLS, INC. AND SUBSIDIARIES

In Millions Fiscal Year Ended	May 27, 2007			May 28, 2006			May 29, 2005
Cash Flows – Operating Activities
Net earnings	$	1,144		$	1,090		$	1,240
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		418			424			443
After-tax earnings from joint ventures		(73	)		(69	)		(94	)
Stock-based compensation		128			45			38
Deferred income taxes		26			26			9
Distribution of earnings from joint ventures		45			77			83
Tax benefit on exercised options		–			41			62
Pension, other postretirement, and postemployment benefit costs		(54	)		(74	)		(70	)
Restructuring, impairment and other exit costs		39			30			84
Divestitures (gain)		–			–			(499	)
Debt repurchase costs		–			–			137
Changes in current assets and liabilities		77			184			251
Other, net		15			74			110
Net cash provided by operating activities		1,765			1,848			1,794
Cash Flows – Investing Activities
Purchases of land, buildings and equipment		(460	)		(360	)		(434	)
Acquisitions		(85	)		(26	)		–
Investments in affiliates, net		(100	)		1			1
Proceeds from disposal of land, buildings and equipment		14			11			24
Proceeds from disposition of businesses		–			–			799
Proceeds from dispositions of product lines		14			–			–
Other, net		20			5			23
Net cash provided (used) by investing activities		(597	)		(369	)		413
Cash Flows – Financing Activities
Change in notes payable		(280	)		1,197			(1,057	)
Issuance of long-term debt		2,650			–			2
Payment of long-term debt		(2,323	)		(1,386	)		(1,115	)
Proceeds from issuance of preferred membership interests of subsidiary		–			–			835
Common stock issued		317			157			195
Tax benefit on exercised options		73			–			–
Purchases of common stock for treasury		(1,321	)		(885	)		(771	)
Dividends paid		(506	)		(485	)		(461	)
Other, net		(8	)		(3	)		(13	)
Net cash used by financing activities		(1,398	)		(1,405	)		(2,385	)
Increase (decrease) in cash and cash equivalents		(230	)		74			(178	)
Cash and cash equivalents – beginning of year		647			573			751
Cash and cash equivalents – end of year	$	417		$	647		$	573
Cash Flow from Changes in Current Assets and Liabilities:
Receivables	$	(24	)	$	8		$	(8	)
Inventories		(116	)		(6	)		30
Prepaid expenses and other current assets		(45	)		(33	)		1
Accounts payable		88			(28	)		(35	)
Other current liabilities		174			243			263
Changes in current assets and liabilities	$	77		$	184		$	251

See accompanying notes to consolidated financial statements.

42

Notes to Consolidated Financial Statements

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTE 1

Basis of Presentation and Reclassifications

BASIS OF PRESENTATION   Our Consolidated Financial Statements include the accounts of General Mills, Inc. and all subsidiaries in which we have a controlling financial interest. Intercompany transactions and accounts are eliminated in consolidation.

    Our fiscal year ends on the last Sunday in May. Fiscal years 2007, 2006, and 2005 each consisted of 52 weeks. Financial results for our International segment, with the exception of Canada, its export operations, and its United States and Latin American headquarters are reported as of and for the 12 calendar months ended April 30.

RECLASSIFICATIONS    During fiscal 2007, we made certain changes in our reporting of financial information. The effects of these reclassifications on our historical Consolidated Financial Statements are reflected herein and had no impact on our consolidated net earnings or earnings per share.

    We made a change in accounting principle to classify shipping costs associated with the distribution of finished products to our customers as cost of sales. We previously recorded these costs in selling, general and administrative (SG&A) expense. We made this change in principle because we believe the classification of these shipping costs in cost of sales better reflects the cost of producing and distributing our products and aligns our external financial reporting with the results we use internally to evaluate segment operating performance. The impact of this change in principle was an increase to cost of sales of $474 million in fiscal 2006 and $388 million in fiscal 2005, and a corresponding decrease to SG&A expense in each period.

    We shifted sales responsibility for several customers from our Bakeries and Foodservice segment to our U.S. Retail segment. Net sales and segment operating profit for these two segments have been adjusted to report the results from shifted businesses with the appropriate segment. The impact of this shift was a decrease in net sales of our Bakeries and Foodservice segment and an increase in net sales of our U.S. Retail segment of $55 million in fiscal 2006 and $60 million in fiscal 2005. The impact of this shift was a decrease of Bakeries and Foodservice segment operating profit and an increase of U.S. Retail segment operating profit of $22 million in fiscal 2006 and $26 million in fiscal 2005.

    We also reclassified (i) certain trade-related costs and customer allowances as cost of sales or SG&A expense (previously recorded as reductions of net sales), (ii) certain liabilities, including trade and consumer promotion accruals, from accounts payable to other current liabilities, (iii) certain distributions from joint ventures as operating cash flows (previously reported as investing cash flows), (iv) royalties from a joint venture to after-tax earnings from joint ventures (previously recorded as a reduction of SG&A expense), (v) certain receivables, including accrued interest, derivatives and other miscellaneous receivables, that were historically included in receivables to other current assets, and (vi) valuation allowances related to deferred income tax assets between current and non-current classification. These reclassifications were not material individually or in the aggregate. We have reclassified previously reported Consolidated Balance Sheets, Consolidated Statements of Earnings, and Consolidated Statements of Cash Flows to conform to the current year presentation.

CHANGE IN REPORTING PERIOD   We changed the reporting period for our Häagen-Dazs joint ventures in Asia to include results through March 31. In previous years, we included results for the twelve months ended April 30. Accordingly, fiscal 2007 results include only 11 months of results from these joint ventures compared to 12 months in fiscal 2006 and 2005. The impact of this change was not material to our results of operations, thus we did not restate prior period financial statements for comparability.

NOTE 2

Summary of Significant Accounting Policies

CASH AND CASH EQUIVALENTS   We consider all investments purchased with an original maturity of three months or less to be cash equivalents.

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

    Shipping costs associated with the distribution of finished product to our customers are recorded as cost of sales and are recognized when the related finished product is shipped to the customer.

LAND, BUILDINGS, EQUIPMENT, AND DEPRECIATION   Land is recorded at historical cost. Buildings and equipment, including capitalized interest and internal engineering costs, are recorded at cost and depreciated over estimated useful lives, primarily using the straight-line method. Ordinary maintenance and repairs are charged to operating costs.

43

Buildings are usually depreciated over 40 to 50 years, and equipment, furniture, and software is usually depreciated over 3 to 15 years. Fully depreciated assets are retained in buildings and equipment until disposal. When an item is sold or retired, the accounts are relieved of its cost and related accumulated depreciation; the resulting gains and losses, if any, are recognized in earnings. As of May 27, 2007, and May 28, 2006, assets held for sale were insignificant.

    Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows from the operation and disposition of the asset group are less than the carrying amount of the asset group. Asset groups have identifiable cash flows and largely independent of other asset groups. Measurement of an impairment loss would be based on the excess of the carrying amount of the asset group over its fair value. Fair value is measured using discounted cash flows or independent appraisals, as appropriate.

GOODWILL AND OTHER INTANGIBLE ASSETS   Goodwill represents the difference between the purchase price of acquired companies and the related fair values of net assets acquired. Goodwill is not amortized, and is tested for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. Impairment testing is performed for each of our reporting units. We compare the carrying value of a reporting unit, including goodwill, to the fair value of the unit. Carrying value is based on the assets and liabilities associated with the operations of that reporting unit, which often requires allocation of shared or corporate items among reporting units. If the carrying amount of a reporting unit exceeds its fair value, we revalue all assets and liabilities of the reporting unit, excluding goodwill, to determine if the fair value of the net assets is greater than the net assets including goodwill. If the fair value of the net assets is less than the net assets including goodwill, impairment has occurred. Our estimates of fair value are determined based on a discounted cash flow model. Growth rates for sales and profits are determined using inputs from our annual long-range planning process. We also make estimates of discount rates, perpetuity growth assumptions, market comparables, and other factors. We periodically engage third-party valuation consultants to assist in this process.

    During fiscal 2007, we changed the timing of our annual goodwill impairment testing from the first day of our fiscal year to December 1. This accounting change is preferable because it better aligns this impairment test with the timing of the presentation of our strategic long-range plan to the Board of Directors. During fiscal 2007, we performed this annual impairment test on May 29, 2006, and again on December 1, 2006.

    We evaluate the useful lives of our other intangible assets, primarily intangible assets associated with the Pillsbury, Totino’s, Progresso, Green Giant, Old El Paso and Häagen-Dazs brands, to determine if they are finite or indefinite-lived. Reaching a determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, known technological advances, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets.

    Our indefinite-lived intangible assets, primarily brands, also are tested for impairment annually, and whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We performed our fiscal 2007 assessment of our brand intangibles as of December 1, 2006. Our estimate of the fair value of the brands was based on a discounted cash flow model using inputs which included: projected revenues from our annual long-range plan; assumed royalty rates that could be payable if we did not own the brands; and a discount rate. We periodically engage third-party valuation consultants to assist in this process.

INVESTMENTS IN JOINT VENTURES   Our investments in companies over which we have the ability to exercise significant influence are stated at cost plus our share of undistributed earnings or losses. We also receive royalty income from certain joint ventures, incur various expenses (primarily research and development), and record the tax impact of certain joint venture operations that are structured as partnerships. In addition, we make advances to our joint ventures in the form of loans or capital investments as needed by the joint ventures. We also sell certain raw materials, semi-finished goods and finished goods to the joint ventures, generally at market prices.

VARIABLE INTEREST ENTITIES   As of May 27, 2007, we had invested in 5 variable interest entities (VIEs). We are the primary beneficiary (PB) of General Mills Capital, Inc. (GM Capital). In June 2007, we repurchased its outstanding securities. We have an interest in a contract manufacturer at our former facility in Geneva, Illinois. We are the PB and have consolidated this entity as of May 27, 2007. This entity had property and equipment with a fair value of $37 million and long-term debt of $37 million as of May 27, 2007. We also have an interest in a contract manufacturer in Greece that is a VIE. Although we are the PB, we have not consolidated this entity because it is not material to our results of operations, financial condition, or liquidity as of and for the year ended

44

May 27, 2007. This entity had assets of $3 million and liabilities of $1 million as of May 27, 2007. We are not the PB of the remaining 2 VIEs. Following our repurchase of the GM Capital preferred stock our maximum exposure to loss from the 4 remaining VIEs is limited to the $37 million of long-term debt of the contract manufacturer in Geneva, Illinois and our $3 million equity investment in two of the VIEs.

REVENUE RECOGNITION   We recognize sales revenue when the shipment is accepted by our customer. Sales include shipping and handling charges billed to the customer and are reported net of consumer coupon, trade promotion and other costs, including estimated returns. Sales, use, value-added, and other excise taxes are not recognized in revenue. Coupons are expensed when distributed, based on estimated redemption rates. Trade promotions are expensed based on estimated participation and performance levels for offered programs. We generally do not allow a right of return. However, on a limited case-by-case basis with prior approval, we may allow customers to return product in saleable condition for redistribution to other customers or outlets. Returns are expensed as reductions of net sales. Receivables are recorded net of an allowance for uncollectible amounts and prompt pay discounts. Receivables from customers generally do not bear interest. Terms and collection patterns vary around the world and by channel. The allowance for doubtful accounts represents our estimate of probable credit losses in our existing receivables, as determined based on a review of past due balances and other specific account data. Account balances are written off against the allowance when the amount is deemed uncollectible by management.

ENVIRONMENTAL   Environmental costs relating to existing conditions caused by past operations that do not contribute to current or future revenues are expensed. Reserves for liabilities for anticipated remediation costs are recorded on an undiscounted basis when they are probable and reasonably estimable, generally no later than the completion of feasibility studies or our commitment to a plan of action. Environmental expenditures for projects that contribute to current or future operations generally are capitalized and depreciated over their estimated useful lives.

ADVERTISING PRODUCTION COSTS   We expense the production costs of advertising the first time that the advertising takes place.

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

FOREIGN CURRENCY TRANSLATION   For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the period-end exchange rates. Income statement accounts are translated using the average exchange rates prevailing during the year. Translation adjustments are reflected within accumulated other comprehensive income (loss) in stockholders’ equity. Gains and losses from foreign currency transactions are included in net earnings for the period.

DERIVATIVE INSTRUMENTS   We use derivatives primarily to hedge our exposure to changes in foreign exchange rates, interest rates, and commodity prices. All derivatives are recognized on the Consolidated Balance Sheets at fair value based on quoted market prices or management’s estimate of their fair value and are recorded in either current or noncurrent assets or liabilities based on their maturity. Changes in the fair values of derivatives are recorded in net earnings or other comprehensive income, based on whether the instrument is designated as a hedge transaction and, if so, the type of hedge transaction. Gains or losses on derivative instruments reported in accumulated other comprehensive income (loss) are reclassified to earnings in the period the hedged item affects earnings. If the underlying hedged transaction ceases to exist, any associated amounts reported in accumulated other comprehensive income (loss) are reclassified to earnings at that time. Any ineffectiveness is recognized in earnings in the current period.

STOCK-BASED COMPENSATION   Effective May 29, 2006, we adopted SFAS No. 123 (Revised), “Share-Based Payment” (SFAS 123R), which changed the accounting for compensation expense associated with stock options, restricted stock awards, and other forms of equity compensation. We elected the modified prospective transition method as permitted by SFAS 123R; accordingly, results from prior periods have not been restated. Under this method, stock-based compensation expense for fiscal 2007 was $128 million, which included amortization related to the remaining unvested portion of all equity compensation awards granted prior to May 29, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), and amortization related to all equity compensation awards granted on or subsequent to May 29, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. The incremental effect on net earnings in fiscal 2007 of our adoption

45

of SFAS 123R was $69 million of expense ($43 million after-tax). All our stock compensation expense is recorded in SG&A expense in the Consolidated Statement of Earnings.

    SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as previously required, thereby reducing net operating cash flows and increasing net financing cash flows in periods following adoption. While those amounts cannot be estimated for future periods, the amount of cash flows generated for such excess tax deductions was $73 million for fiscal 2007, $41 million for fiscal 2006, and $62 million for fiscal 2005.

    Certain equity-based compensation plans contain provisions that accelerate vesting of awards upon retirement, disability, or death of eligible employees and directors. SFAS 123R specifies that a stock-based award is vested when the employee’s retention of the award is no longer contingent on providing subsequent service. Accordingly, beginning in fiscal 2007, we prospectively revised our expense attribution method so that the related compensation cost is recognized immediately for awards granted to retirement-eligible individuals or over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period. For fiscal 2006 and 2005, we generally recognized stock compensation expense over the stated vesting period of the award, with any unamortized expense recognized immediately if an acceleration event occurred.

    Prior to May 29, 2006, we used the intrinsic value method for measuring the cost of compensation paid in our common stock. No compensation expense for stock options was recognized in our Consolidated Statements of Earnings prior to fiscal 2007, as the exercise price was equal to the market price of our stock at the date of grant. Expense attributable to other types of share-based awards was recognized in our results under SFAS 123.

    The following table illustrates the pro forma effect on net earnings and earnings per share if we had applied the fair value recognition provisions of SFAS 123 to all employee stock-based compensation, net of estimated forfeitures:

In Millions, Except per Share Data Fiscal Year Ended	May 28, 2006			May 29, 2005
Net earnings, as reported	$	1,090		$	1,240
Add: After-tax stock-based employee compensation expense included in reported net earnings		28			24
Deduct: After-tax stock-based employee compensation expense determined under fair value requirements of SFAS 123		(48	)		(62	)
Pro forma net earnings	$	1,070		$	1,202
Earnings per share:
Basic – as reported	$	3.05		$	3.34
Basic – pro forma	$	2.99		$	3.24
Diluted – as reported	$	2.90		$	3.08
Diluted – pro forma	$	2.84		$	2.99

DEFINED BENEFIT PENSION, OTHER POSTRETIREMENT, AND POSTEMPLOYMENT BENEFIT PLANS   We sponsor several domestic and foreign defined benefit plans to provide pension, health care, and other welfare benefits to retired employees. Under certain circumstances, we also provide accruable benefits to former or inactive employees in the United States and Canada and members of our Board of Directors, including severance, long-term disability, and certain other benefits payable upon death. We recognize an obligation for any of these benefits that vest or accumulate with service. Postemployment benefits that do not vest or accumulate with service (such as severance based solely on annual pay rather than years of service) are charged to expense when incurred. Our postemployment benefit plans are unfunded. Refer to Note 13 for further information on these benefits and the amount of expense recognized during the periods presented.

    We account for our defined benefit pension, other postretirement, and postemployment benefit plans in accordance with SFAS No. 87, “Employers’ Accounting for Pensions,” SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions,” and SFAS No. 112, “Employers’ Accounting for Postemployment Benefits – An Amendment of FASB Statements No. 5 and 43,” in measuring plan assets and benefit obligations and in determining the amount of net periodic benefit cost and SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (SFAS 158), which was issued in September 2006 and is effective for us as of

46

May 27, 2007. SFAS 158 requires employers to recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income (loss), which is a component of stockholders’ equity. As a result of the implementation of SFAS 158, we recognized an after-tax decrease in accumulated other comprehensive income (loss) of $440 million for all of our defined benefit pension, other postretirement, and postemployment benefit plans. This includes the incremental impact of recognizing our share of the underfunded status of Cereal Partners Worldwide’s (CPW) defined benefit pension plan in the United Kingdom. Prior periods are not restated.

    We had previously applied postretirement accounting concepts for purposes of recognizing our postemployment benefit obligations. Accordingly, the adoption of SFAS 158 as of May 27, 2007, affected the balance sheet display of our defined benefit pension, other postretirement, and postemployment benefit obligations as follows:

In Millions	Before Application of SFAS 158(a)		SFAS 158 Adjustments			After Application of SFAS 158
Other assets	$	1,978	$	(391	)	$	1,587
Total assets		18,575		(391	)		18,184
Other current liabilities		2,077		2			2,079
Total current liabilities		5,843		2			5,845
Deferred income taxes		1,681		(248	)		1,433
Other liabilities		935		295			1,230
Total liabilities		11,677		49			11,726
Accumulated other comprehensive income (loss)		320		(440	)		(120	)
Total stockholders’ equity		5,759		(440	)		5,319
Total liabilities and stockholders’ equity		18,575		(391	)		18,184

(a) Includes additional minimum pension liability adjustment under pre-existing guidance of $33 million, which reduced accumulated other comprehensive income (loss) by $21 million on an after-tax basis.

    Our net earnings, cash flow, liquidity, debt covenants, and plan funding requirements were not affected by this change in accounting principle. We use our fiscal year end as the measurement date for our United States and Canadian defined benefit plans and will adopt the measurement requirements of SFAS 158 for our foreign plans in fiscal 2009.

USE OF ESTIMATES   Preparing our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from our estimates.

OTHER NEW ACCOUNTING STANDARDS   In June 2006, the Financial Accounting Standards Board (FASB) ratified the consensus of Emerging Issues Task Force Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)” (EITF 06-3). EITF 06-3 concluded that the presentation of taxes imposed on revenue-producing transactions (sales, use, value added, and excise taxes) on either a gross (included in revenues and costs) or a net (excluded from revenues) basis is an accounting policy that should be disclosed. We adopted EITF 06-3 in the fourth quarter of fiscal 2007, and it did not have any impact on our results of operations or financial condition.

    In the first quarter of fiscal 2007, we adopted SFAS No. 151, “Inventory Costs – An Amendment of ARB No. 43, Chapter 4” (SFAS 151). SFAS 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). The adoption of SFAS 151 did not have any impact on our results of operations or financial condition.

    In the second quarter of fiscal 2006, we adopted SFAS No. 153, “Exchanges of Nonmonetary Assets – An Amendment of APB Opinion No. 29” (SFAS 153). SFAS 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. The adoption of SFAS 153 did not have any impact on our results of operations or financial condition.

    In March 2005, FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (FIN 47). FIN 47 requires that liabilities be recognized for the fair value of a legal obligation to perform asset retirement activities that are conditional on a future event if the amount can be reasonably estimated. We adopted FIN 47 in the fourth quarter of fiscal 2006, and it did not have a material impact on our results of operations or financial condition.

47

NOTE 3

Acquisitions and Divestitures

During the fourth quarter of fiscal 2007, we sold our frozen pie product line, including a plant in Rochester, New York. We received $1 million in proceeds and recorded a $4 million loss on the sale in fiscal 2007.

    During the third quarter of fiscal 2007, we completed the acquisition of Saxby Bros. Limited, a chilled pastry company in the United Kingdom, for approximately $24 million. This business, which had sales of $24 million in calendar 2006, complements our existing frozen pastry business in the United Kingdom. In addition, we completed an acquisition in Greece for $3 million.

    On July 14, 2006, CPW completed the acquisition of the Uncle Tobys cereal business in Australia for approximately $385 million. 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 undivided interest in certain intellectual property for $58 million (classified as acquisitions on the Consolidated Statements of Cash Flows).

    Also during the first quarter of fiscal 2007, we sold our par-baked bread product line, including plants in Chelsea, Massachusetts and Tempe, Arizona. We received $13 million in proceeds and recorded a $6 million loss on the sale in fiscal 2007, including the write-off of $6 million of goodwill.

    During the fourth quarter of fiscal 2006, we acquired Elysées Consult SAS, the franchise operator of a Häagen-Dazs shop in France. During the second quarter of fiscal 2006, we acquired Croissant King, a producer of frozen pastry products in Australia. We also acquired a controlling financial interest in Pinedale Holdings Pte. Limited, an operator of Häagen-Dazs cafes in Singapore and Malaysia. The aggregate purchase price of our fiscal 2006 acquisitions was $26 million.

    The pro forma effect of our acquisitions and divestitures in fiscal 2007 and fiscal 2006 was not material.

    During the fourth quarter of fiscal 2005, we sold our Lloyd’s barbecue product line to Hormel Foods Corporation. During the third quarter of fiscal 2005, Snack Ventures Europe (SVE), our snacks joint venture with PepsiCo, Inc., was terminated and our 40.5 percent interest was redeemed. We received $799 million in cash proceeds from these dispositions and recorded $499 million in gains in fiscal 2005.

NOTE 4

Restructuring, Impairment, and Other Exit Costs

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

    In fiscal 2007, we recorded restructuring, impairment and other exit costs pursuant to approved plans as follows:

In Millions
Non-cash impairment charge for certain Bakeries and Foodservice product lines	$	37
Gain from our previously closed plant in San Adrian, Spain		(7	)
Loss from divestitures of our par-baked bread and frozen pie product lines		10
Adjustment of reserves from previously announced restructuring actions		(1	)
Total	$	39

    As part of our long-range planning process, we determined that certain product lines in our Bakeries and Foodservice segment were underperforming. In late May 2007, we concluded that the future cash flows generated by these product lines will be insufficient to recover the net book value of the related long-lived assets. Accordingly, we recorded a non-cash impairment charge of $37 million against these assets in the fourth quarter of fiscal 2007.

    In fiscal 2006, we recorded restructuring, impairment and other exit costs pursuant to approved plans as follows:

In Millions
Closure of our Swedesboro, New Jersey plant	$	13
Closure of a production line at our Montreal, Quebec plant		6
Restructuring actions at our Allentown, Pennsylvania plant		4
Asset impairment charge at our Rochester , New York plant		3
Adjustment of reserves primarily from previously announced fiscal 2005 restructuring actions		4
Total	$	30

48

    The fiscal 2006 initiatives were undertaken to increase asset utilization and reduce manufacturing costs. The actions included decisions to: close our leased frozen dough foodservice plant in Swedesboro, New Jersey, affecting 101 employees; shut down a portion of our frozen dough foodservice plant in Montreal, Quebec, affecting 77 employees; realign and modify product and manufacturing capabilities at our frozen waffle plant in Allentown, Pennsylvania, affecting 72 employees; and complete the fiscal 2005 initiative to relocate our frozen baked goods line from our plant in Chelsea, Massachusetts, affecting 175 employees.

    In fiscal 2005, we recorded restructuring and other exit costs pursuant to approved plans, as follows:

In Millions
Various supply chain initiatives	$	74
Bakeries and Foodservice severance charges from fiscal 2004 decisions		3
Other charges associated with restructuring actions prior to fiscal 2005		7
Total	$	84

    The fiscal 2005 initiatives were undertaken to further increase asset utilization and reduce manufacturing and sourcing costs, resulting in decisions regarding plant closures and production realignment. The actions included decisions to: close our flour milling plant in Vallejo, California, affecting 43 employees; close our par-baked bread plant in Medley, Florida, affecting 42 employees; relocate bread production from our Swedesboro, New Jersey plant, affecting 110 employees; relocate a portion of our cereal production from Cincinnati, Ohio, affecting 45 employees; close our snacks foods plant in Iowa City, Iowa, affecting 83 employees; close our dry mix production at Trenton, Ontario, affecting 53 employees; and relocate our frozen baked goods line from our plant in Chelsea, Massachusetts to another facility.

    These fiscal 2005 supply chain actions also resulted in certain associated expenses in fiscal 2005, primarily resulting from adjustments to the depreciable life of the assets necessary to reflect the shortened asset lives which coincided with the final production dates at the Cincinnati and Iowa City plants. These associated expenses were recorded as cost of sales and totaled $18 million.

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

In Millions	Severance			Other Exit Costs			Total
Reserve balance as of May 30, 2004	$	13		$	8		$	21
2005 Charges		12			17			29
Utilized in 2005		(16	)		(16	)		(32	)
Reserve balance as of May 29, 2005		9			9			18
2006 Charges		7			3			10
Utilized in 2006		(8	)		(5	)		(13	)
Reserve balance as of May 28, 2006		8			7			15
2007 Charges		–			(1	)		(1	)
Utilized in 2007		(5	)		(5	)		(10	)
Reserve balance as of May 27, 2007	$	3		$	1		$	4

NOTE 5

Investments in Joint Ventures

We have a 50 percent equity interest in CPW that manufactures and markets ready-to-eat cereal products in more than 130 countries and republics outside the United States and Canada. CPW also markets cereal bars in several European countries and manufactures private label cereals for customers in the United Kingdom. We have guaranteed a portion of CPW’s debt and its pension obligation in the United Kingdom. See Note 15 on pages 66 through 67. Results from our CPW joint venture are reported as of and for the 12 months ended March 31.

    We have 50 percent equity interests in Häagen-Dazs Japan, Inc. and Häagen-Dazs Korea Company Limited. We also had a 49 percent equity interest in HD Distributors (Thailand) Company Limited. Subsequent to its fiscal year end, we acquired a controlling interest in this joint venture. These joint ventures manufacture, distribute and market Häagen-Dazs frozen ice cream products and novelties. In fiscal 2007, we changed this reporting period to include results through March 31. In previous years, we included results for the twelve months ended April 30. Accordingly, fiscal 2007 results include only 11 months of results from these joint ventures compared to 12 months in fiscal 2006. The impact of this change was not material to our consolidated results of operations, so we did not restate prior periods for comparability.

    We also have a 50 percent equity interest in Seretram, a joint venture for the production of Green Giant canned corn in France. Seretram’s results are reported as of and for the 12 months ended April 30.

    We have a 50 percent equity interest in 8th Continent, LLC, a domestic joint venture to develop and market

49

soy-based products. 8th Continent’s results are presented on the same basis as our fiscal year.

    Fiscal 2005 results of operations includes our share of the after-tax earnings of SVE through the date of its termination on February 28, 2005.

    During the first quarter of fiscal 2007, CPW acquired the Uncle Tobys cereal business in Australia for approximately $385 million. We funded advances and an equity contribution to CPW from cash generated from our international operations, including our international joint ventures.

    In February 2006, CPW announced a restructuring of its manufacturing plants in the United Kingdom. Our after-tax earnings from joint ventures were reduced by $8 million in each of fiscal 2007 and 2006 for our share of the restructuring costs, primarily accelerated depreciation and severance.

    Our cumulative investment in these joint ventures was $295 million at the end of fiscal 2007 and $186 million at the end of fiscal 2006. Our investments in these joint ventures include aggregate advances of $158 million as of May 27, 2007 and $48 million as of May 28, 2006. Our sales to these joint ventures were $32 million in fiscal 2007, $35 million in fiscal 2006, and $47 million in fiscal 2005. We made net investments in the joint ventures of $103 million in fiscal 2007, $7 million in fiscal 2006, and $15 million in fiscal 2005. We received dividends from the joint ventures of $45 million in fiscal 2007, $77 million in fiscal 2006, and $83 million in fiscal 2005.

    Summary combined financial information for the joint ventures (including income statement information for SVE through the date of its termination on February 28, 2005) on a 100 percent basis follows:

In Millions, Fiscal Year	2007		2006		2005
Net sales	$	2,016	$	1,796	$	2,652
Gross margin		835		770		1,184
Earnings before income taxes		167		157		231
Earnings after income taxes		132		120		184

In Millions	May 27, 2007		May 28, 2006
Current assets	$	815	$	634
Noncurrent assets		898		578
Current liabilities		1,228		756
Noncurrent liabilities		82		6

NOTE 6

Goodwill and Other Intangible Assets

The components of goodwill and other intangible assets are as follows:

In Millions	May 27, 2007			May 28, 2006
Goodwill	$	6,835		$	6,652
Other intangible assets:
Intangible assets not subject to amortization:
Brands		3,682			3,595
Intangible assets subject to amortization:
Patents, trademarks and other finite-lived intangibles		19			19
Less accumulated amortization		(7	)		(7	)
Total intangible assets subject to amortization		12			12
Total other intangible assets		3,694			3,607
Total goodwill and other intangible assets	$	10,529		$	10,259

50

    The changes in the carrying amount of goodwill for fiscal 2005, 2006, and 2007 are as follows:

In Millions	U.S. Retail			International			Bakeries and Foodservice			Joint Ventures		Total
Balance as of May 30, 2004	$	5,024		$	126		$	1,205		$	329	$	6,684
Acquisitions		–			1			–			–		1
Other activity, including translation		(22	)		25			(4	)		–		(1	)
Balance as of May 29, 2005		5,002			152			1,201			329		6,684
Acquisitions		–			15			–			–		15
Deferred tax adjustment related to Pillsbury acquisition		(42	)		–			–			–		(42	)
Other activity, primarily translation		–			(29	)		–			24		(5	)
Balance as of May 28, 2006		4,960			138			1,201			353		6,652
Reclassification for customer shift		216			–			(216	)		–		–
Acquisitions		–			23			–			15		38
Deferred tax adjustment resulting from tax audit settlement		13			4			1			–		18
Divestitures		–			–			(7	)		–		(7	)
Other activity, primarily translation		14			(19	)		–			139		134
Balance as of May 27, 2007	$	5,203		$	146		$	979		$	507	$	6,835

    During fiscal 2007 as part of our annual goodwill and brand intangible impairment assessments, we reviewed our goodwill and other intangible asset allocations by country within the International segment and our joint ventures. The resulting reallocation of these balances across the countries within this segment and to our joint ventures caused changes in the foreign currency translation of the balances. As a result of these changes in foreign currency translation, we increased goodwill by $136 million, other intangible assets by $18 million, deferred income taxes by $9 million, and accumulated other comprehensive income (loss) by the net of these amounts.

    At the beginning of fiscal 2007, we shifted selling responsibility for several customers from our Bakeries and Foodservice segment to our 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.

    The changes in the carrying amount of other intangible assets for fiscal 2005, 2006, and 2007 are as follows:

In Millions	U.S. Retail			International		Joint Ventures			Total
Balance as of May 30, 2004	$	3,200		$	341	$	14		$	3,555
Other activity, including translation		(22	)		–		(1	)		(23	)
Balance as of May 29, 2005		3,178			341		13			3,532
Other activity, including translation		(3	)		79		(1	)		75
Balance as of May 28, 2006		3,175			420		12			3,607
Other intangibles acquired		–			1		45			46
Other activity, including translation		–			40		1			41
Balance as of May 27, 2007	$	3,175		$	461	$	58		$	3,694

    Future purchase price adjustments to goodwill may occur upon the resolution of certain income tax accounting matters. See Note 14 on pages 65 to 66.

    Intangibles arising from recent acquisitions are subject to change pending final determination of fair values.

NOTE 7

Financial Instruments and Risk Management Activities

FINANCIAL INSTRUMENTS    The carrying values of cash and cash equivalents, receivables, accounts payable, other current liabilities, and notes payable approximate fair value. Marketable securities are carried at fair value. As of May 27, 2007, a comparison of cost and market values of our marketable debt and equity securities is as follows:

In Millions	Cost		Market Value		Gross Gains		Gross Losses
Available for sale:
Debt securities	$	18	$	18	$	–	$	–
Equity securities		4		10		6		–
Total	$	22	$	28	$	6	$	–

Earnings include realized gains from sales of available-for-sale marketable securities of less than $1 million in fiscal 2007, $1 million in fiscal 2006, and $2 million in fiscal 2005. Gains and losses are determined by specific identification. Classification of marketable securities as current or non-current is dependent upon management’s intended holding period, the security’s maturity date, or both. The

51

aggregate unrealized gains and losses on available-for-sale securities, net of tax effects, are classified in accumulated other comprehensive income (loss) within stockholders’ equity. Scheduled maturities of our marketable securities are as follows:

	Available for Sale
In Millions	Cost		Market Value
Under 1 year (current)	$	7	$	7
From 1 to 3 years		2		2
From 4 to 7 years		3		3
Over 7 years		6		6
Equity securities		4		10
Total	$	22	$	28

    Cash, cash equivalents, and marketable securities totaling $24 million as of May 27, 2007, and $48 million as of May 28, 2006, were pledged as collateral. These assets are primarily pledged as collateral for certain derivative contracts.

    The fair values and carrying amounts of long-term debt, including the current portion, were $4,978 million and $4,952 million as of May 27, 2007, and $4,566 million and $4,546 million as of May 28, 2006. The fair value of long-term debt was estimated using discounted cash flows based on our current incremental borrowing rates for similar types of instruments.

RISK MANAGEMENT ACTIVITIES   As a part of our ongoing operations, we are exposed to market risks such as changes in interest rates, foreign currency exchange rates, and commodity prices. To manage these risks, we may enter into various derivative transactions (e.g., futures, options, and swaps) pursuant to our established policies.

Interest Rate Risk   We are exposed to interest rate volatility with regard to future issuances of fixed-rate debt, and existing and future issuances of variable-rate debt. Primary exposures include U.S. Treasury rates, London Interbank Offered Rates (LIBOR), and commercial paper rates in the United States and Europe. We use interest rate swaps and forward-starting interest rate swaps to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, and to achieve a desired proportion of fixed- versus floating-rate debt, based on current and projected market conditions. Generally under these swaps, we agree with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed notional principal amount.

    Variable Interest Rate Exposures – Except as discussed below, variable-to-fixed interest rate swaps are accounted for as cash flow hedges, as are all hedges of forecasted issuances of debt. Effectiveness is assessed based on either the perfectly effective hypothetical derivative method or changes in the present value of interest payments on the underlying debt. Amounts deferred to accumulated other comprehensive income (loss) are reclassified into earnings over the life of the associated debt. The amount of hedge ineffectiveness was less than $1 million in each of fiscal 2007, 2006, and 2005.

    Fixed Interest Rate Exposures – Fixed-to-variable interest rate swaps are accounted for as fair value hedges with effectiveness assessed based on changes in the fair value of the underlying debt, using incremental borrowing rates currently available on loans with similar terms and maturities. Effective gains and losses on these derivatives and the underlying hedged items are recorded as interest expense. The amount of hedge ineffectiveness was less than $1 million in each of fiscal 2007, 2006, and 2005.

    In anticipation of the Pillsbury acquisition and other financing needs, we entered into pay-fixed interest rate swap contracts during fiscal 2001 and 2002 totaling $7.1 billion to lock in our interest payments on the associated debt. As of May 27, 2007, we still owned $1.75 billion of Pillsbury-related pay-fixed swaps that were previously neutralized with offsetting pay-floating swaps in fiscal 2002.

    In advance of a planned debt financing in fiscal 2007, we entered into $700 million pay-fixed, forward-starting interest rate swaps with an average fixed rate of 5.7 percent. All of these forward-starting interest rate swaps were cash settled for $23 million coincident with our $1.0 billion 10-year fixed-rate note debt offering on January 17, 2007. As of May 27, 2007, $22 million pre-tax remained in accumulated other comprehensive income (loss), which will be reclassified to earnings over the term of the underlying debt.

    The following table summarizes the notional amounts and weighted average interest rates of our interest rate swaps. As discussed above, we have neutralized all of our pay-fixed swaps with pay-floating swaps; however, we cannot present them on a net basis in the following table because the offsetting occurred with different counterparties. Average variable rates are based on rates as of the end of the reporting period.

Dollars In Millions	May 27, 2007			May 28, 2006
Pay-floating swaps – notional amount	$	1,914		$	3,770
Average receive rate		5.8	%		4.8	%
Average pay rate		5.3	%		5.1	%
Pay-fixed swaps – notional amount	$	1,762		$	3,250
Average receive rate		5.3	%		5.1	%
Average pay rate		7.3	%		6.8	%

52

    The swap contracts mature at various dates from 2008 to 2016 as follows:

In Millions Fiscal Year Maturity Date	Pay Floating		Pay Fixed
2008	$	22	$	–
2009		20		–
2010		20		–
2011		17		–
2012		1,766		1,012
Beyond 2012		69		750
Total	$	1,914	$	1,762

Foreign Exchange Risk   Foreign currency fluctuations affect our net investments in foreign subsidiaries and foreign currency cash flows related primarily to third-party purchases, intercompany loans, and product shipments. We are also exposed to the translation of foreign currency earnings to the U.S. dollar. Our principal exposures are to the Australian dollar, British pound sterling, Canadian dollar, Euro, and Mexican peso. We primarily use foreign currency forward contracts to selectively hedge our foreign currency cash flow exposures. We generally do not hedge more than 12 months forward. The amount of hedge ineffectiveness was $1 million or less in each of fiscal 2007, 2006, and 2005. We also have many net investments in foreign subsidiaries that are denominated in Euros. We hedge a portion of these net investments by issuing Euro-denominated commercial paper. As of May 27, 2007, we have issued $402 million of Euro-denominated commercial paper that we designated as a net investment hedge and thus deferred net foreign currency transaction losses of $27 million to accumulated other comprehensive income (loss).

Commodity Price Risk   Many commodities we use in the production and distribution of our products are exposed to market price risks. We utilize derivatives to hedge price risk for our principal raw materials and energy input costs including grains (wheat, oats, and corn), oils (principally soybean), non-fat dry milk, natural gas, and diesel fuel. We also operate a grain merchandising operation. This operation uses futures and options to hedge its net inventory position to minimize market exposure. We manage our exposures through a combination of purchase orders, long-term contracts with suppliers, exchange-traded futures and options, and over-the-counter options and swaps. We offset our exposures based on current and projected market conditions, and generally seek to acquire the inputs at as close to our planned cost as possible.

    The amount of hedge ineffectiveness was a loss of $1 million in fiscal 2007, a gain of $3 million in fiscal 2006, and a loss of $1 million in fiscal 2005.

Other Risk Management Activities   We enter into certain derivative contracts in accordance with our risk management strategy that do not meet the criteria for hedge accounting, including those in our grain merchandising operation, certain foreign currency derivatives, and offsetting interest rate swaps as discussed above. Although they may not qualify as hedges for accounting purposes, these derivatives have the economic impact of largely mitigating the associated risks. These derivatives were not acquired for trading purposes and are recorded at fair value with changes in fair value recognized in net earnings each period.

    Unrealized losses from interest rate cash flow hedges recorded in accumulated other comprehensive income (loss) as of May 27, 2007, totaled $47 million after tax, primarily related to interest rate swaps we entered into in contemplation of future borrowings and other financing requirements (primarily related to the Pillsbury acquisition), which are being reclassified into interest expense over the lives of the hedged forecasted transactions. As of May 27, 2007, $17 million of after-tax unrealized gains from commodity derivatives were recorded in accumulated other comprehensive income (loss). Unrealized losses from cash flow hedges recorded in accumulated other comprehensive income (loss) as of May 27, 2007, were $6 million after-tax from foreign currency cash flow hedges. The net amount of pre-tax gains and losses in accumulated other comprehensive income (loss) as of May 27, 2007, that is expected to be reclassified into net earnings within the next 12 months is $1 million in expense. See Note 8 for the impact of these reclassifications on interest expense.

CONCENTRATIONS OF CREDIT RISK   We enter into interest rate, foreign exchange, and certain commodity and equity derivatives, primarily with a diversified group of highly rated counterparties. We continually monitor our positions and the credit ratings of the counterparties involved and, by policy, limit the amount of credit exposure to any one party. These transactions may expose us to potential losses due to the credit risk of nonperformance by these counterparties; however, we have not incurred a material loss and do not anticipate incurring any such material losses. We also enter into commodity futures transactions through various regulated exchanges.

    During fiscal 2007, Wal-Mart Stores, Inc. and its affiliates (Wal-Mart), accounted for 20 percent of our consolidated net sales and 27 percent of our sales in the U.S. Retail segment. No other customer accounted for 10 percent or more of our consolidated net sales. Wal-Mart also represented 5 percent of our sales in the International segment and 6 percent of our sales in the Bakeries and Foodservice segment. As of May 27, 2007, Wal-Mart accounted for 20 percent of our receivables invoiced in the U.S. Retail segment,

53

3 percent of our receivables invoiced in the International segment and 3 percent of our receivables invoiced in the Bakeries and Foodservice segment. The 5 largest customers in our U.S. Retail segment accounted for 54 percent of its fiscal 2007 net sales, the 5 largest customers in our International segment accounted for 41 percent of its fiscal 2007 net sales, and the 5 largest customers in our Bakeries and Foodservice segment accounted for 40 percent of its fiscal 2007 net sales.

NOTE 8

Debt

NOTES PAYABLE   The components of notes payable and their respective weighted-average interest rates at the end of the periods were as follows:

	May 27, 2007					May 28, 2006
Dollars In Millions	Notes Payable		Weighted- Average Interest Rate			Notes Payable		Weighted- Average Interest Rate
U.S. commercial paper	$	477		5.4	%	$	713		5.1	%
Euro commercial paper		639		5.4			462		5.1
Financial institutions		138		9.8			328		5.7
Total notes payable	$	1,254		5.8	%	$	1,503		5.2	%

   To ensure availability of funds, we maintain bank credit lines sufficient to cover our outstanding short-term borrowings. Our commercial paper borrowings are supported by $2.95 billion of fee-paid committed credit lines and $351 million in uncommitted lines. As of May 27, 2007, there were no amounts outstanding on the fee-paid committed credit lines and $133 million was drawn on the uncommitted lines, all by our international operations. Our committed lines consist of a $1.1 billion credit facility expiring in October 2007, a $750 million credit facility expiring in January 2009, and a $1.1 billion credit facility expiring in October 2010.

LONG-TERM DEBT   On April 25, 2007, we redeemed or converted all of our zero coupon convertible debentures due 2022 for a redemption price equal to the accreted value of the debentures, which was $734.45 per $1,000 principal amount of the debentures at maturity. The redemption price was settled in cash. For the debentures that were converted, we delivered cash equal to the accreted value of the debentures, including $23 million of accreted original issue discount, and issued 284,000 shares of our common stock worth $17 million to settle the conversion value in excess of the accreted value. This premium was recorded as a reduction to stockholders’ equity, net of the applicable tax benefit. There was no gain or loss associated with the redemption or conversions. We used proceeds from the issuance of commercial paper to fund the redemption and conversions of the debentures. During fiscal 2006, we repurchased a significant portion of these debentures pursuant to put rights of the holders for an aggregate purchase price of $1.33 billion, including $77 million of accreted original issue discount. We incurred no gain or loss from this repurchase. We used proceeds from the issuance of commercial paper to fund the purchase price of the debentures.

    On April 11, 2007, we issued $1.15 billion aggregate principal amount of floating rate convertible senior notes. The notes bear interest at an annual rate equal to one-month LIBOR minus 0.07 percent, subject to monthly reset, provided that such rate will never be less than zero percent per annum. Interest on the notes is payable quarterly in arrears, beginning July 11, 2007. The notes will mature on April 11, 2037. Each $1,000 note is convertible into ten shares of our common stock, subject to adjustment in certain circumstances, on any business day prior to maturity. Upon conversion, each holder would receive cash up to the calculated principal amount of the note, and cash or shares at our option for any excess conversion value over the calculated principal amount of each note as described in the note agreement. The notes are unsecured and unsubordinated. The holders of the notes may put them to us for cash equal to the principal amount plus accrued and unpaid interest upon any change of control and on April 11, 2008, 2009, 2012, 2017, 2022, 2027, and 2032. We also have the right to call the notes for cash equal to the principal amount plus accrued and unpaid interest on any date on or after April 11, 2008. We must make at least four quarterly interest payments before calling the notes. We used the proceeds from the notes to repay outstanding commercial paper. Our policy is to cash-settle the full principal amount of convertible instruments. These notes did not have a dilutive effect on our EPS in fiscal 2007.

    In January 2007, we issued $1.0 billion of 5.7 percent fixed rate notes due February 15, 2017 and $500 million of floating rate notes due January 22, 2010. The proceeds of these notes were used to retire $1.5 billion of fixed rate notes that matured in February 2007. The floating rate notes bear interest equal to three-month LIBOR plus 0.13 percent, subject to quarterly reset. Interest on the floating rate notes is payable quarterly in arrears. The floating rate notes cannot be called by us prior to maturity. Interest on the fixed rate notes is payable semi-annually in arrears. The fixed rate notes may be called by us at any time for cash equal to the greater of the principal amounts of the notes and a specified make-whole amount, plus, in each case, accrued and unpaid interest. The notes are senior unsecured obligations. We had previously entered into $700 million of pay-fixed, forward-starting interest rate swaps with an average fixed rate of 5.7 percent in anticipation of the fixed rate note refinancing. We are amortizing a $23 million pre-tax loss deferred to accumulated other comprehensive income (loss) associated with

54

these derivatives to interest expense on a straight-line basis over the life of the fixed rate notes. We expect to reclassify $2 million pre-tax of the deferred loss to net earnings over the next 12 months.

    Our credit facilities, certain of our long-term debt agreements, and our minority interests contain restrictive covenants. As of May 27, 2007, we were in compliance with all of these covenants.

    In fiscal 2005, we commenced a cash tender offer for our outstanding 6 percent notes due in 2012. The tender offer resulted in the purchase of $500 million principal amount of the notes. Subsequent to the expiration of the tender offer, we purchased an additional $260 million principal amount of the notes in the open market. We incurred a loss of $137 million from this repurchase.

    As of May 27, 2007, the $74 million pre-tax recorded in accumulated other comprehensive income (loss) associated with our previously designated interest rate swaps will be reclassified to interest expense over the remaining lives of the hedged forecasted transaction. The amount expected to be reclassified from accumulated other comprehensive income (loss) to interest expense in fiscal 2008 is $15 million pre-tax. The amount reclassified from accumulated other comprehensive income (loss) in fiscal 2007 was $34 million pre-tax.

    A summary of our long-term debt is as follows:

In Millions	May 27, 2007			May 28, 2006
6% notes due February 15, 2012	$	1,240		$	1,240
Floating rate convertible senior notes due April 11, 2037(a)		1,150			–
5.7% notes due February 15, 2017		1,000			–
Floating rate notes due January 22, 2010		500			–
3.875% notes due November 30, 2007		336			350
Medium-term notes, 4.8% to 9.1%, due 2006 to 2078(b)		327			362
3.901% notes due November 30, 2007		135			135
Zero coupon notes, yield 11.1%, $261 due August 15, 2013		135			121
Debt of contract manufacturer consolidated under FIN 46R		37			–
8.2% ESOP loan guaranty, due June 30, 2007		1			4
5.125% notes due February 15, 2007		–			1,500
2.625% notes due October 24, 2006		–			500
Zero coupon convertible debentures yield 2.0%, $371 due October 28, 2022		–			268
Other		91			66
		4,952			4,546
Less amount due within one year(a)(b)		(1,734	)		(2,131	)
Total Long-term debt	$	3,218		$	2,415

(a)	$1,150 million of our floating rate convertible senior notes may mature in fiscal 2008 based on the put rights of the note holders.
(b)	$100 million of our medium-term notes may mature in fiscal 2008 based on the put rights of the note holders.

    We guaranteed the debt of our Employee Stock Ownership Plan. Therefore, the guaranteed debt is reflected on our Consolidated Balance Sheets as long-term debt, with a related offset in additional paid-in capital in stockholders’ equity. The debt underlying the guarantee was repaid on June 30, 2007.

    Principal payments due on long-term debt in the next five years based on stated contractual maturities or put rights of certain note holders are $1,734 million in fiscal 2008, $315 million in fiscal 2009, $507 million in fiscal 2010, $8 million in fiscal 2011, and $1,249 million in fiscal 2012.

55

NOTE 9

Minority Interests

Third parties hold minority interests in certain of our subsidiaries. We contributed assets with an aggregate fair market value of $4 billion to our subsidiary, General Mills Cereals, LLC (GMC). GMC is a separate and distinct legal entity from us and our other subsidiaries. The contributed assets consist primarily of manufacturing assets and intellectual property associated with the production and retail sale of Big G ready-to-eat cereals, Progresso soups, and Old El Paso products. In exchange for the contribution of these assets, GMC issued the managing membership interest and preferred membership interests to our wholly owned subsidiaries.We hold all managing member interests, direct the business activities and operations of GMC, and have fiduciary responsibilities to GMC and its members. Other than rights to vote on certain matters, holders of the preferred membership interests have no right to direct the management of GMC.

    In May 2002, we sold 150,000 Class A preferred membership interests in GMC to an unrelated third-party investor in exchange for $150 million. In June 2007, we sold an additional 88,851 Class A preferred membership interests in GMC to the same unrelated third-party investor in exchange for $92 million. In October 2004, we sold 835,000 Series B-1 preferred membership interests in GMC to an unrelated third-party investor in exchange for $835 million. The terms of the Series B-1 and Class A interests held by the third-party investors and the rights of those investors are detailed in the Third Amended and Restated Limited Liability Company Agreement of GMC (the LLC Agreement). Currently, we hold all interests in GMC (including all managing member interests), other than the Class A interests and the Series B-1 interests.

    The Class A interests receive quarterly preferred distributions based on their capital account balance at a floating rate equal to the sum of three-month LIBOR plus 65 basis points. The LLC Agreement requires that the rate of the distributions on the Class A interests be adjusted by agreement between the Class A interests holder and GMC, or through a remarketing, every five years. The first adjustment of the rate occurred in June 2007 and the next adjustment is scheduled to occur in June 2012. GMC, through its managing member, may elect to repurchase all of the Class A interests at any time for an amount equal to the holder’s capital account, plus any unpaid preferred returns and any applicable make-whole amount. Upon a failed remarketing, the rate over LIBOR will be increased by 75 basis points until the next scheduled remarketing, which will occur in 3 month intervals until a successful remarketing. As of May 27, 2007, the capital account balance of the Class A interests held by unrelated third parties was $150 million, and was $248 million as of June 28, 2007, reflecting the third party’s purchase of $92 million of additional Class A interests and a $6 million increase in the capital account associated with the previously owned interests.

    GMC may be required to be dissolved and liquidated under certain circumstances, including, without limitation, the bankruptcy of GMC or its subsidiaries; GMC’s failure to deliver the preferred distributions; GMC’s failure to comply with portfolio requirements; breaches of certain covenants; lowering of our senior debt rating below either Baa3 by Moody’s Investors Service (Moody’s) or BBB- by Standard & Poor’s (S&P); and a failed attempt to remarket the Class A interests as a result of a breach of GMC’s obligations to assist in such remarketing. In the event of a liquidation of GMC, each member of GMC would receive the amount of its then current capital account balance. The managing member may avoid liquidation in most circumstances by exercising its option to purchase the Class A interests.

    The Series B-1 interests are entitled to receive quarterly preferred distributions based on their capital account balance at a fixed rate of 4.5 percent per year, which is scheduled to be reset to a new fixed rate through a remarketing in August 2007. The capital account balance of the Series B-1 interests was $835 million as of May 27, 2007, and will be increased to $849 million in August 2007. Beginning in August 2012, we may elect to reset the preferred distribution rate through a remarketing or to repurchase the interests. If we do not conduct a remarketing or repurchase the interests, the preferred distribution rate will be reset to a floating rate. The managing member of GMC may elect to repurchase the Series B-1 interests for an amount equal to the holder’s then current capital account balance in (i) August 2007 and in five year intervals thereafter, and (ii) on any distribution date during a period in which the preferred return is set at a floating rate. GMC is not required to purchase the Series B-1 interests, and the holders of the Series B-1 interests cannot require us to purchase the interests.

    The Series B-1 interests will be exchanged for shares of our perpetual preferred stock upon the occurrence of any of the following events: our senior unsecured debt rating falling below either Ba3 as rated by Moody’s or BB- as rated by S&P or Fitch Ratings; our bankruptcy or liquidation; a default on any of our senior indebtedness resulting in an acceleration of indebtedness having an outstanding principal balance in excess of $50 million; failing to pay a dividend on our common stock in any fiscal quarter; or certain liquidating events described in the LLC Agreement.

    If GMC fails to make a required distribution to the holders of Series B-1 interests when due, we will be restricted from paying any dividend (other than dividends in the form of shares of common stock) or other distributions on shares

56

of our common or preferred stock, and may not repurchase or redeem shares of our common or preferred stock, until all such accrued and undistributed distributions are paid to the holders of the Series B-1 interests. If the required distributions on the Series B-1 interests remain undistributed for six quarterly distribution periods, the managing member will form a nine-member board of directors to manage GMC. Under these circumstances, the holder of the Series B-1 interests will have the right to appoint one director. Upon the payment of the required distributions, the GMC board of directors will be dissolved. As of May 27, 2007, we have made all required distributions to holders of the Series B-1 interests. Upon the occurrence of certain events, the Series B-1 interests will be included in our computation of diluted earnings per share as a participating security.

    For financial reporting purposes, the assets, liabilities, results of operations, and cash flows of GMC are included in our Consolidated Financial Statements. The return to the third party investors is reflected in interest, net in the Consolidated Statements of Earnings. The third party investors’ Class A and Series B-1 interests in GMC are classified as minority interests on our Consolidated Balance Sheets. We may also call these instruments in exchange for a payment equal to the then-current capital account value, plus any unpaid preferred return and any applicable make-whole amount. We may only call the Series B-1 interests in connection with a scheduled remarketing or on distribution dates in the event of a floating rate period. If we repurchase these interests, any change in the unrelated third party investors’ capital accounts from their original value will be charged directly to retained earnings and will increase or decrease the net earnings used to calculate earnings per share in that period.

    GM Capital was formed for the purpose of purchasing and collecting our receivables and previously sold $150 million of its Series A preferred stock to an unrelated third-party investor. In June 2007, we repurchased all of the Series A preferred stock. We used commercial paper borrowings and proceeds from the sale of the additional interests in GMC to fund the repurchase.

NOTE 10

Stockholders’ Equity

Cumulative preference stock of 5 million shares, without par value, is authorized but unissued.

    In fiscal 2007, our Board of Directors approved a new authorization to repurchase up to 75 million shares of our common stock. This replaces a prior authorization, which permitted us to repurchase shares up to a treasury share balance of 170 million. Purchases under the new authorization can be made in the open market or in privately negotiated transactions, including the use of call options and other derivative instruments, Rule 10b5-1 trading plans, and accelerated repurchase programs. The authorization has no pre-established termination date. During fiscal 2007, we repurchased 25 million shares for an aggregate purchase price of $1.4 billion, of which $64 million settled after the end of our fiscal year. In fiscal 2006, we repurchased 19 million shares of common stock for an aggregate purchase price of $892 million. A total of 162 million shares were held in treasury as of May 27, 2007.

    In October 2004, we purchased 17 million shares of our common stock from Diageo plc (Diageo) for $750 million, or $45.20 per share. This share repurchase was made in conjunction with Diageo’s sale of 33 million additional shares of our common stock in an underwritten public offering.

    Concurrently in October 2004, Lehman Brothers Holdings Inc. (Lehman Brothers) issued $750 million of notes, which are mandatorily exchangeable for shares of our common stock. In connection with the issuance of those notes, an affiliate of Lehman Brothers entered into a forward purchase contract with us, under which we are obligated to deliver to such affiliate between 14 million and 17 million shares of our common stock, subject to adjustment under certain circumstances. These shares will be deliverable by us in October 2007, in exchange for $750 million of cash assuming the Series B-1 interests in GMC are remarketed as planned. If the remarketing is not successful, we will receive securities of an affiliate of Lehman Brothers.

    The forward purchase contract is considered an equity instrument. The $43 million fee we paid for the forward purchase contract was recorded as a reduction to stockholders’ equity.

57

    The following table provides details of other comprehensive income:

In Millions	Pretax Change			Tax (Expense) Benefit			Other Compre- hensive Income
Fiscal 2005:
Foreign currency translation	$	75		$	–		$	75
Minimum pension liability		(35	)		13			(22	)
Other fair value changes:
Securities		2			(1	)		1
Hedge derivatives		(30	)		11			(19	)
Reclassifications to earnings:
Securities		(2	)		1			(1	)
Hedge derivatives		187			(69	)		118
Other comprehensive income	$	197		$	(45	)	$	152
Fiscal 2006:
Foreign currency translation	$	73		$	–		$	73
Minimum pension liability		38			(14	)		24
Other fair value changes:
Securities		2			(1	)		1
Hedge derivatives		(13	)		5			(8	)
Reclassifications to earnings:
Hedge derivatives		44			(17	)		27
Other comprehensive income	$	144		$	(27	)	$	117
Fiscal 2007:
Foreign currency translation	$	194		$	–		$	194
Minimum pension liability		(33	)		12			(21	)
Other fair value changes:
Securities		2			(1	)		1
Hedge derivatives		12			(5	)		7
Reclassifications to earnings:
Hedge derivatives		22			(8	)		14
Other comprehensive income	$	197		$	(2	)	$	195

    Except for reclassifications to earnings, changes in other comprehensive income are primarily noncash items.

    Accumulated other comprehensive income (loss) balances, net of tax effects, were as follows:

In Millions	May 27, 2007			May 28, 2006
Foreign currency translation adjustments	$	402		$	208
Unrealized gain (loss) from:
Securities		3			2
Hedge derivatives		(36	)		(57	)
Minimum pension liability		(49	)		(28	)
Impact of adoption of SFAS 158		(440	)		–
Accumulated other comprehensive income (loss)	$	(120	)	$	125

NOTE 11

Stock Plans

We use broad-based stock plans to help ensure management’s alignment with our stockholders’ interests. As of May 27, 2007, a total of 8,679,385 shares were available for grant in the form of stock options, restricted shares, restricted stock units, and shares of common stock under the 2005 Stock Compensation Plan (2005 Plan) through December 31, 2007, and the 2006 Compensation Plan for Nonemployee Directors (2006 Director Plan) through September 30, 2011. Restricted shares and restricted stock units may also be granted under the Executive Incentive Plan (EIP) through September 25, 2010. Stock-based awards now outstanding include some granted under the 1990, 1993, 1995, 1996, 1998 (senior management), 1998 (employee), 2001, and 2003 stock plans, under which no further awards may be granted. The stock plans provide for full vesting of options, restricted shares, and restricted stock units upon completion of specified service periods or in the event of a change of control. As of May 27, 2007, a total of 4,785,881 restricted shares and restricted stock units were outstanding under all plans.

    The weighted-average grant-date fair values of the employee stock options granted were estimated as $10.74 in fiscal 2007, $8.04 in fiscal 2006, and $8.32 in fiscal 2005 using the Black-Scholes option-pricing model with the following assumptions:

Fiscal Year	2007		2006		2005
Risk-free interest rate		5.3%		4.3%		4.0%
Expected term		8 years		7 years		7 years
Expected volatility		19.7%		20.0%		21.0%
Dividend yield		2.8%		2.9%		2.7%

    The valuation of stock options is a significant accounting estimate which requires us to use significant judgments and assumptions that are likely to have a material impact on our financial statements. Annually, we make predictive assumptions regarding future stock price volatility, employee exercise behavior, and dividend yield.

    For fiscal 2007 and all prior periods, our estimate of expected stock price volatility is based on historical volatility determined on a daily basis over the expected term of the options. We considered but did not use implied volatility because we believed historical volatility provided an appropriate expectation for our volatility in the future.

    Our expected term represents the period of time that options granted are expected to be outstanding based on historical data to estimate option exercise and employee termination within the valuation model. Separate groups of employees have similar historical exercise behavior and therefore were aggregated into a single pool for valuation purposes. The weighted-average expected term for all employee groups

58

is presented in the table above. Our valuation model assumes that dividends and our share price increase in line with earnings, resulting in a constant dividend yield. The risk-free interest rate for periods during the expected term of the options is based on the U.S. Treasury zero-coupon yield curve in effect at the time of grant.

    SFAS 123R also provides that any corporate income tax benefit realized upon exercise or vesting of an award in excess of that previously recognized in earnings (referred to as a “windfall tax benefit”) is presented in the Consolidated Statement of Cash Flows as a financing (rather than an operating) cash flow. If this standard had been adopted in fiscal 2006, operating cash flow would have been lower (and financing cash flow would have been higher) by $41 million as a result of this provision. For fiscal 2007, the windfall tax benefits classified as financing cash flow were $73 million.

    For balance sheet classification purposes, realized windfall tax benefits are credited to additional paid-in capital within the Consolidated Balance Sheet. Realized shortfall tax benefits (amounts which are less than that previously recognized in earnings) are first offset against the cumulative balance of windfall tax benefits, if any, and then charged directly to income tax expense, potentially resulting in volatility in our consolidated effective income tax rate. Under the transition rules for adopting SFAS 123R using the modified prospective method, we were permitted to calculate a cumulative memo balance of windfall tax benefits from post-1995 fiscal years for the purpose of accounting for future shortfall tax benefits.

STOCK OPTIONS   Options may be priced at 100 percent or more of the fair market value on the date of grant, and generally vest four years after the date of grant. Options generally expire within 10 years and one month after the date of grant. Under the 2006 Director Plan, each nonemployee director receives upon election and re-election to the Board of Directors options to purchase 10,000 shares of common stock that generally vest one year, and expire within 10 years, after the date of grant.

    Information on stock option activity follows:

	Options Exercisable (Thousands)		Weighted- Average Exercise Price per Share		Options Outstanding (Thousands)			Weighted- Average Exercise Price per Share
Balance as of May 30, 2004		37,191	$	33.73		69,113		$	38.97
Granted						4,544			46.94
Exercised						(8,334	)		29.27
Expired						(1,064	)		45.78
Balance as of May 29, 2005		36,506	$	36.08		64,259		$	40.68
Granted(a)						136			46.56
Exercised						(5,572	)		32.99
Expired						(620	)		45.67
Balance as of May 28, 2006		42,071	$	39.93		58,203		$	41.45
Granted						5,285			51.34
Exercised						(9,382	)		37.41
Expired						(333	)		46.11
Balance as of May 27, 2007		39,506	$	41.16		53,773		$	43.09

(a) In fiscal 2005, we changed the timing of our annual stock option grant from December to June. As a result, we did not make an annual stock option grant during fiscal 2006.

59

    Stock-based compensation expense related to stock option awards was $54 million in fiscal 2007.

RESTRICTED STOCK AND RESTRICTED STOCK UNITS   Stock and units settled in stock subject to a restricted period and a purchase price, if any (as determined by the Compensation Committee of the Board of Directors), may be granted to key employees under the 2005 Plan. Restricted shares and restricted stock units, up to 50 percent of the value of an individual’s cash incentive award, may also be granted through the EIP. Certain restricted stock and restricted stock unit awards require the employee to deposit personally owned shares (on a one-for-one basis) with us during the restricted period. Restricted stock and restricted stock units generally vest and become unrestricted four years after the date of grant. Participants are entitled to cash dividends on such awarded shares and units, but the sale or transfer of these shares and units is restricted during the vesting period. Participants holding restricted stock, but not restricted stock units, are entitled to vote on matters submitted to holders of common stock for a vote. Under the 2006 Director Plan, each nonemployee director receives 1,000 restricted stock units each time he or she is elected to the Board. These units generally vest one year after the date of grant.

    Information on restricted stock unit activity follows:

	Units (Thousands)			Weighted-Average Grant-Date Fair Value
Non-vested as of May 28, 2006		3,672			$46.87
Granted		1,771			$51.71
Vested		(497	)		$45.69
Forfeited		(160	)		$48.29
Non-vested as of May 27, 2007		4,786			$48.74

Fiscal Year	2007		2006		2005
Number of units granted (thousands)(a)		1,771		630		1,497
Weighted-average price per unit	$	51.71	$	49.75	$	46.73

(a) In fiscal 2005, we changed the timing of our annual restricted stock unit grant from December to June.

    The total grant-date fair value of restricted stock unit awards that vested during fiscal 2007 was $23 million. The total grant-date fair value of restricted stock unit awards that vested during fiscal 2006 was $32 million.

    As of May 27, 2007, unrecognized compensation costs related to non-vested stock options and restricted stock units was $150 million. This cost will be recognized as a reduction of earnings over 23 months, on average.

    Stock-based compensation expense related to restricted stock awards was $74 million for fiscal 2007, $45 million for fiscal 2006, and $38 million for fiscal 2005.

NOTE 12

Earnings Per Share

Basic and diluted earnings per share were calculated using the following:

In Millions, Except per Share Data, Fiscal Year	2007		2006		2005
Net earnings – as reported	$	1,144	$	1,090	$	1,240
Interest on zero coupon contingently convertible debentures, after tax(a)		–		9		20
Net earnings for diluted earnings per share calculation	$	1,144	$	1,099	$	1,260
Average number of common shares – basic earnings per share		347		358		371
Incremental share effect from:
Stock options(b)		10		6		8
Restricted stock and restricted stock units(b)		2		2		1
Forward purchase contract		1		–		–
Zero coupon contingently convertible debentures(a)		–		13		29
Average number of common shares – diluted earnings per share		360		379		409
Earnings per share – Basic	$	3.30	$	3.05	$	3.34
Earnings per share – Diluted	$	3.18	$	2.90	$	3.08

(a)

Shares from contingently convertible debentures are reflected using the if-converted method. On December 12, 2005, we completed a consent solicitation and entered into a supplemental indenture related to our zero coupon convertible debentures. We also made an irrevocable election: (i) to satisfy all future obligations to repurchase debentures solely in cash and (ii) to satisfy all future conversions of debentures (a) solely in cash up to an amount equal to the accreted value of the debentures and (b) at our discretion, in cash, stock, or a combination of cash and stock to the extent the conversion value of the debentures exceeds the accreted value. As a result of these actions, no shares of common stock underlying the debentures were considered outstanding after December 12, 2005, for purposes of calculating our diluted earnings per share. All outstanding debentures were redeemed or converted as of April 25, 2007.

(b)

Incremental shares from stock options, restricted stock, and restricted stock units are computed by the treasury stock method.

    The diluted earnings per share calculation does not include potential common shares of 6 million in fiscal 2007, 8 million in fiscal 2006, and 9 million in fiscal 2005 that were considered anti-dilutive.

60

NOTE 13

Retirement and Postemployment Benefits

DEFINED BENEFIT PENSION PLANS   We have defined benefit pension plans covering most domestic, Canadian, and United Kingdom employees. Benefits for salaried employees are based on length of service and final average compensation. Benefits for hourly employees include various monthly amounts for each year of credited service. Our funding policy is consistent with the requirements of applicable laws. We made $11 million of voluntary contributions to these plans in fiscal 2007. Our principal domestic retirement plan covering salaried employees has a provision that any excess pension assets would vest in plan participants if the plan is terminated within five years of a change in control.

OTHER POSTRETIREMENT BENEFIT PLANS   We sponsor plans that provide health-care benefits to the majority of our domestic and Canadian retirees. The salaried health care benefit plan is contributory, with retiree contributions based on years of service. We fund related trusts for certain employees and retirees on an annual basis and made $50 million of voluntary contributions to these plans in fiscal 2007. Assumed health care cost trend rates are as follows:

Fiscal Year	2007		2006
Health care cost trend rate for next year		10.0% and 11.0%		10.0% and 11.0%
Rate to which the cost trend rate is assumed to decline (ultimate rate)		5.2%		5.2%
Year that the rate reaches the ultimate trend rate(a)		2014/2015		2013/2014

(a) The year the ultimate trend rate is reached is 2014 for plan participants under age 65 and 2015 for plan participants greater than 65 years of age.

A one percentage point change in the health care cost trend rate would have the following effects:

In Millions	One Percentage Point Increase		One Percentage Point Decrease
Effect on the aggregate of the service and interest cost components in fiscal 2008	$	7	$	(7	)
Effect on the other postretirement accumulated benefit obligation as of May 27, 2007		89		(78	)

    We review our health care trend rates annually. Our review is based on data and information we collect about our health care claims experience and information provided by our actuaries. This information includes recent plan experience, plan design, overall industry experience and projections, and assumptions used by other similar organizations. Our initial health care cost trend rate is adjusted as necessary to remain consistent with this review, recent experiences, and short term expectations. Our current health care cost trend rate assumption is 11 percent for retirees age 65 and over and 10 percent for retirees under age 65. These rates are graded down annually until the ultimate trend rate of 5.2 percent is reached in 2015 for retirees over age 65 and 2014 for retirees under age 65. The trend rates are applicable for calculations only if the retirees’ benefits increase as a result of health care inflation. The ultimate trend rate is adjusted annually, as necessary, to approximate the current economic view on the rate of long-term inflation plus an appropriate health care cost premium. Assumed trend rates for health care costs have an important effect on the amounts reported for the other postretirement benefit plans.

    We use our fiscal year end as a measurement date for all our defined benefit pension and other postretirement benefit plans.

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

    Summarized financial information about defined benefit pension, other postretirement, and postemployment benefit plans is presented below. As of May 27, 2007, we changed to the Retirement Plans (RP) 2000 Mortality Table projected

61

forward to 2007 for calculating the fiscal 2007 year end defined benefit pension, other postretirement, and postemployment benefit plan obligation and fiscal 2008 expense. The impact of this change increased our defined benefit pension obligations by $2 million and had no impact on any of our other plans. The change also increased fiscal 2008 defined benefit pension expenses by $1 million. For fiscal 2006, the impact of plan amendments on the projected benefit obligation is primarily related to incremental benefits under agreements with the unions representing hourly workers at certain of our domestic cereal, dough, and foodservice plants covering the four-year period ending April 25, 2010.

	Defined Benefit Pension Plans						Other Postretirement Benefit Plans						Postemployment Benefit Plans
In Millions, Fiscal Year	2007			2006(a)			2007			2006			2007			2006
Change in Plan Assets:
Fair value at beginning of year	$	3,620		$	3,237		$	329		$	242
Actual return on assets		625			502			55			38
Employer contributions		11			8			50			95
Plan participant contributions		3			1			10			9
Divestitures/acquisitions		2			–			–			–
Benefit payments		(164	)		(154	)		(53	)		(55	)
Fair value at end of year	$	4,097		$	3,594		$	391		$	329
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year	$	2,916		$	3,082		$	950		$	971		$	90		$	47
Service cost		73			76			16			18			5			3
Interest cost		185			167			58			50			4			1
Plan amendment		–			31			–			(4	)		–			15
Curtailment/other		–			–			–			1			11			19
Plan participant contributions		3			1			10			9			–			–
Medicare Part D reimbursements		–			–			6			–			–			–
Actuarial loss (gain)		244			(315	)		(5	)		(43	)		–			1
Benefits payments from plans		(164	)		(154	)		(54	)		(52	)		(17	)		(9	)
Projected benefit obligation at end of year	$	3,257		$	2,888		$	981		$	950		$	93		$	77
Plan assets in excess of (less than) benefit obligation as of fiscal year-end	$	840		$	706		$	(590	)	$	(621	)	$	(93	)	$	(77	)
Funded status as of May 26, 2006:
Plan assets in excess of (less than) benefit obligation				$	706					$	(621	)				$	(77	)
Unrecognized net actuarial loss					464						317						2
Unrecognized prior service cost (credit)					69						(14	)					15
Net amount recognized				$	1,239					$	(318	)				$	(60	)

(a) Fiscal 2006 excludes certain international defined benefit pension plans. These plans had prepaid defined benefit pension assets of less than $1 million and accrued defined benefit pension plan liabilities of $4 million at the end of fiscal 2006. Pension expense associated with these plans was $3 million for fiscal 2006.

    The accumulated benefit obligation for all defined benefit plans was $3,007 million as of May 27, 2007 and $2,689 million as of May 28, 2006.

    Amounts recognized in accumulated other comprehensive income (loss) as of May 27, 2007, consist of:

In Millions	Defined Benefit Pension Plans			Other Postretirement Benefit Plans			Postemployment Benefit Plans			Total
Net actuarial loss	$	(281	)	$	(166	)	$	(1	)	$	(448	)
Prior service (cost) credit		(39	)		8			(10	)		(41	)
Amounts recorded in accumulated other comprehensive income (loss)	$	(320	)	$	(158	)	$	(11	)	$	(489	)

62

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

	Defined Benefit Pension Plans				Other Postretirement Benefit Plans				Postemployment Benefit Plans
In Millions, Fiscal Year	2007		2006		2007		2006		2007		2006
Projected benefit obligation	$	182	$	173		N/A		N/A		N/A		N/A
Accumulated benefit obligation		163		147	$	981	$	950	$	93	$	77
Plan assets at fair value		6		15		391		329		–		–

    Components of net periodic benefit (income) costs are as follows:

	Defined Benefit Pension Plans									Other Postretirement Benefit Plans									Postemployment Benefit Plans
In Millions, Fiscal Year	2007			2006			2005			2007			2006			2005			2007		2006		2005
Service cost	$	73		$	76		$	62		$	16		$	18		$	15		$	5	$	3	$	2
Interest cost		185			167			167			58			50			53			4		1		1
Expected return on plan assets		(334	)		(323	)		(301	)		(27	)		(24	)		(22	)		–		–		–
Amortization of losses		12			37			10			16			19			14			–		–		1
Amortization of prior service costs (credits)		8			5			6			(2	)		(2	)		(2	)		2		–		–
Other adjustments		–			–			–			–			–			–			20		–		–
Settlement or curtailment losses		–			–			2			–			2			2			–		–		–
Net periodic benefit (income) costs	$	(56	)	$	(38	)	$	(54	)	$	61		$	63		$	60		$	31	$	4	$	4

    We expect to recognize the following amounts in net periodic benefit (income) costs in fiscal 2008:

In Millions	Defined Benefit Pension Plans		Other Postretirement Benefit Plans			Postemployment Benefit Plans
Amortization of losses	$	22	$	15		$	–
Amortization of prior service costs (credits)	$	8	$	(1	)	$	2

ASSUMPTIONS   Weighted-average assumptions used to determine benefit obligations are as follows:

	Defined Benefit Pension Plans						Other Postretirement Benefit Plans						Postemployment Benefit Plans
Fiscal Year	2007			2006			2007			2006			2007			2006
Discount rate		6.18	%		6.45	%		6.15	%		6.50	%		6.05	%		6.44	%
Rate of salary increases		4.39			4.40			–			–			4.40			4.50

    Weighted-average assumptions used to determine net periodic benefit (income) costs are as follows:

	Defined Benefit Pension Plans									Other Postretirement Benefit Plans									Postemployment Benefit Plans
Fiscal Year	2007			2006			2005			2007			2006			2005			2007			2006			2005
Discount rate		6.45	%		5.55	%		6.65	%		6.50	%		5.50	%		6.65	%		6.44	%		5.55	%		6.65	%
Rate of salary increases		4.4			4.4			4.4			–			–			–			–			–			–
Expected long-term rate of return on plan assets		9.4			9.6			9.6			9.3			9.6			9.6			–			–			–

    Our discount rate assumptions are determined annually as of the last day of our fiscal year for all of the defined benefit pension, other postretirement, and postemployment benefit obligations. Those same discount rates also are used to determine defined benefit pension, other postretirement, and postemployment benefit income and expense for the following fiscal year. We work with our actuaries to determine the timing and amount of expected future cash outflows to plan participants and, using AA-rated corporate bond yields, to develop a forward interest rate curve, including a

63

margin to that index based on our credit risk. This forward interest rate curve is applied to our expected future cash outflows to determine our discount rate assumptions.

    Our expected rate of return on plan assets is determined by our asset allocation, our historical long-term investment performance, our estimate of future long-term returns by asset class (using input from our actuaries, investment services, and investment managers), and long-term inflation assumptions. We review this assumption annually for each plan, however, our annual investment performance for one particular year does not, by itself, significantly influence our evaluation. Our expected rates of return are revised only when our future investment performance based on our asset allocations, investment strategies, or capital markets change significantly.

    Weighted-average asset allocations for the past two fiscal years for our defined benefit pension and other postretirement benefit plans are as follows:

	Defined Benefit Pension Plans						Other Postretirement Benefit Plans
Fiscal Year	2007			2006			2007			2006
Asset category:
United States equities		29	%		34	%		34	%		24	%
International equities		23			20			18			16
Private equities		11			10			7			7
Fixed income		26			22			31			43
Real assets		11			14			10			10
Total		100	%		100	%		100	%		100	%

    The investment objective for our domestic defined benefit pension and other postretirement benefit plans is to secure the benefit obligations to participants at a reasonable cost to us. Our goal is to optimize the long-term return on plan assets at a moderate level of risk. The defined benefit pension and other postretirement benefit plan portfolios are broadly diversified across asset classes. Within asset classes, the portfolios are further diversified across investment styles and investment organizations. For the defined benefit pension and other postretirement benefit plans, the long-term investment policy allocations are: 30 percent to equities in the United States, 20 percent to international equities, 10 percent to private equities, 30 percent to fixed income and 10 percent to real assets (real estate, energy, and timber). The actual allocations to these asset classes may vary tactically around the long-term policy allocations based on relative market valuations.

CONTRIBUTIONS AND FUTURE BENEFIT PAYMENTS   We do not expect to make any contributions to our defined benefit plans in fiscal 2008. Actual 2008 contributions could exceed our current projections, as influenced by our decision to undertake discretionary funding of our benefit trusts versus other competing investment priorities and future changes in government requirements. We expect to pay $24 million of benefits from our unfunded postemployment benefit plans in fiscal 2008. Estimated benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

In Millions, Fiscal Year	Defined Benefit Pension Plans		Other Postretirement Benefit Plans Gross		Medicare Subsidy Receipts		Postemployment Benefit Plans
2008	$	169	$	55	$	6	$	14
2009		174		59		6		15
2010		180		62		7		16
2011		187		66		8		16
2012		193		69		8		17
2013 – 2017		1,118		394		51		93

DEFINED CONTRIBUTION PLANS   The General Mills Savings Plan is a defined contribution plan that covers salaried and nonunion employees. It had net assets of $2,303 million as of May 27, 2007, and $2,031 million as of May 28, 2006. This plan is a 401(k) savings plan that includes a number of investment funds and an Employee Stock Ownership Plan (ESOP). We sponsor another savings plan for certain hourly employees with net assets of $15 million as of May 27, 2007. Our total recognized expense related to defined contribution plans was $48 million in fiscal 2007, $46 million in fiscal 2006, and $17 million in fiscal 2005.

    The ESOP’s only assets are our common stock and temporary cash balances. The ESOP’s share of the total defined contribution expense was $40 million in fiscal 2007, $38 million in fiscal 2006, and $11 million in fiscal 2005. The ESOP’s expense is calculated by the “shares allocated” method.

    The ESOP uses our common stock to convey benefits to employees and, through increased stock ownership, to further align employee interests with those of stockholders. We match a percentage of employee contributions to the General Mills Savings Plan with a base match plus a variable year end match that depends on annual results. Employees receive our match in the form of common stock.

    The ESOP originally purchased our common stock principally with funds borrowed from third parties and guaranteed by us. The ESOP shares are included in net shares outstanding for the purposes of calculating earnings per share. The ESOP’s third-party debt is described in Note 8.

    We treat cash dividends paid to the ESOP the same as other dividends. Dividends received on leveraged shares (i.e., all shares originally purchased with the debt proceeds) may be used for debt service or reinvested in more shares, while dividends received on unleveraged shares are passed through to participants or reinvested in more shares.

    Our cash contribution to the ESOP is calculated so as to pay off enough debt to release sufficient shares to make our

64

match. The ESOP uses our cash contributions to the plan, plus the dividends received on the ESOP’s leveraged shares, to make principal and interest payments on the ESOP’s debt. As loan payments are made, shares become unencumbered by debt and are committed to be allocated. The ESOP allocates shares to individual employee accounts on the basis of the match of employee payroll savings (contributions), plus reinvested dividends received on previously allocated shares. The ESOP incurred interest expense of less than $1 million in each of fiscal 2007, 2006, and 2005. The ESOP used dividends of $3 million in fiscal 2007, $4 million in 2006, and $4 million in 2005, along with our contributions of less than $1 million in each of fiscal 2007, 2006, and 2005 to make interest and principal payments.

    The number of shares of our common stock in the ESOP is as follows:

In Thousands, Fiscal Year Ended	May 27, 2007		May 28, 2006
Unreleased shares		–		150
Allocated to participants		5,405		5,187
Total shares		5,405		5,337

EXECUTIVE INCENTIVE PLAN   Our EIP provides incentives to key employees who have the greatest potential to contribute to current earnings and successful future operations. All employees at the level of vice president and above participate in the plan. These awards are approved by the Compensation Committee of the Board of Directors, which consists solely of independent, outside directors. Awards are based on performance against pre-established goals approved by the Compensation Committee. Profit-sharing expense was $30 million in fiscal 2007, $23 million in fiscal 2006, and $17 million in fiscal 2005.

NOTE 14

Income Taxes

The components of earnings before income taxes and after-tax earnings from joint ventures and the corresponding income taxes thereon are as follows:

In Millions, Fiscal Year	2007			2006			2005
Earnings before income taxes and after-tax earnings from joint ventures:
United States	$	1,453		$	1,372		$	1,715
Foreign		178			187			92
Total earnings before income taxes and after-tax earnings from joint ventures	$	1,631		$	1,559		$	1,807
Income taxes:
Currently payable:
Federal	$	448		$	392		$	554
State and local		44			56			60
Foreign		42			64			38
Total current		534			512			652
Deferred:
Federal		28			38			14
State and local		9			(4	)		(3	)
Foreign		(11	)		(8	)		(2	)
Total deferred		26			26			9
Total income taxes	$	560		$	538		$	661

    The following table reconciles the United States statutory income tax rate with our effective income tax rate:

Fiscal Year	2007			2006			2005
United States statutory rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal tax benefits		2.6			2.6			2.0
Divestitures, net		–			–			1.8
Foreign rate differences		(2.7	)		(.9	)		.2
Other, net		(0.6	)		(2.2	)		(2.4	)
Effective income tax rate		34.3	%		34.5	%		36.6	%

65

    The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:

In Millions	May 27, 2007		May 28, 2006
Accrued liabilities	$	233	$	189
Restructuring, impairment and other exit charges		4		8
Compensation and employee benefits		499		318
Unrealized hedge losses		18		45
Unrealized losses		611		850
Tax credit carry forwards		–		51
Other		26		19
Gross deferred tax assets		1,391		1,480
Valuation allowance		612		858
Net deferred tax assets		779		622
Brands		1,277		1,292
Depreciation		264		257
Prepaid pension asset		373		482
Intangible assets		82		75
Tax lease transactions		77		61
Zero coupon convertible debentures		–		18
Other		72		77
Gross deferred tax liabilities		2,145		2,262
Net deferred tax liability	$	1,366	$	1,640

    Of the total valuation allowance of $612 million, $523 million relates to a deferred tax asset for losses recorded as part of the Pillsbury acquisition. In the future, when tax benefits related to these losses are finalized, the reduction in the valuation allowance will be allocated to reduce goodwill. The change in the valuation allowance was entirely offset by an equal adjustment to the underlying deferred tax asset. Of the remaining valuation allowance, $73 million relates to state and foreign operating loss carry forwards. In the future, if tax benefits are realized related to the operating losses, the reduction in the valuation allowance will reduce tax expense. As of May 27, 2007, we believe it is more likely than not that the remainder of our deferred tax asset is realizable.

    The adoption of SFAS 158 resulted in a $248 million decrease in the net deferred tax liabilities, as described in Note 2 on pages 43 to 47.

    The carry forward periods on the net tax benefited amounts of our foreign loss carry forwards are as follows: $24 million do not expire; $4 million expire in fiscal 2008; $23 million expire between fiscal 2009 and fiscal 2014; and $17 million expire in fiscal 2018.

    We have not recognized a deferred tax liability for unremitted earnings of $1.5 billion from our foreign operations because we do not expect those earnings to become taxable to us in the foreseeable future.

    Annually, we file more than 350 income tax returns in approximately 100 global taxing jurisdictions. Our consolidated effective income tax rate is influenced by tax planning opportunities available to us in the various jurisdictions in which we operate. Management judgment is involved in determining our effective tax rate and in evaluating the ultimate resolution of any uncertain tax positions. We are periodically under examination or engaged in a tax controversy. We establish reserves in a variety of taxing jurisdictions when, despite our belief that our tax return positions are supportable, we believe that certain positions may be challenged and may need to be revised. We adjust these reserves in light of changing facts and circumstances, such as the progress of a tax audit. Our effective income tax rate includes the impact of reserve provisions and changes to those reserves. We also provide interest on these reserves at the appropriate statutory interest rate. These interest charges are also included in our effective tax rate. As of May 27, 2007, our income tax and related interest reserves recorded in other current liabilities were slightly more than $700 million.

    The Internal Revenue Service (IRS) recently concluded field examinations for our 2002 and 2003 federal tax years. These examinations included review of our determinations of cost basis, capital losses, and the depreciation of tangible assets and amortization of intangible assets arising from our acquisition of Pillsbury and the sale of minority interests in our GMC subsidiary. The IRS has proposed adjustments related to a majority of the tax benefits associated with these items. We believe we have meritorious defenses and intend to vigorously defend our positions. Our potential liability for this matter is significant and, notwithstanding our reserves against this potential liability, an unfavorable resolution could have a material adverse impact on our results of operations or cash flows from operations.

    The IRS is currently auditing our income tax returns for the 2004 to 2006 federal tax years. In addition, certain other tax deficiency issues and refund claims for previous years in several jurisdictions remain unresolved.

NOTE 15

Leases and Other Commitments

An analysis of rent expense by property for operating leases follows:

In Millions, Fiscal Year	2007		2006		2005
Warehouse space	$	46	$	44	$	41
Equipment		27		27		30
Other		34		35		37
Total rent expense	$	107	$	106	$	108

    Some operating leases require payment of property taxes, insurance, and maintenance costs in addition to the rent payments. Contingent and escalation rent in excess of

66

minimum rent payments and sublease income netted in rent expense were insignificant.

    Noncancelable future lease commitments are:

In Millions	Operating Leases		Capital Leases
2008		$  74		$  8
2009		65		4
2010		52		3
2011		24		3
2012		27		2
After 2012		37		8
Total noncancelable future lease commitments		$279		28
Less: interest				(5	)
Present value of obligations under capital leases				$23

    These future lease commitments will be partially offset by estimated future sublease receipts of $44 million. Depreciation on capital leases is recorded as depreciation expense in our results of operations.

    We are contingently liable under guarantees and comfort letters for $606 million for the debt and other obligations of consolidated subsidiaries. We also are contingently liable under guarantees and comfort letters of $266 million for the debt and other obligations of non-consolidated affiliates, primarily CPW.

    We are involved in various claims, including environmental matters, arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters, either individually or in aggregate, will not have a material adverse effect on our financial position or results of operations. 

NOTE 16

Business Segment and Geographic Information

We operate in the consumer foods industry. We have three operating segments by type of customer and geographic region as follows: U.S. Retail, 68 percent of our fiscal 2007 consolidated net sales; International, 17 percent of our fiscal 2007 consolidated net sales; and Bakeries and Foodservice, 15 percent of our fiscal 2007 consolidated net sales.

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

    Our International segment is made up of retail businesses outside of the United States. In Canada, our major product categories are ready-to-eat cereals, shelf stable and frozen vegetables, dry dinners, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza snacks, and grain, fruit and savory snacks. In markets outside the United States and Canada, our product categories include super-premium ice cream, granola and grain snacks, shelf stable and frozen vegetables, dough products, and dry dinners. Our International segment also includes products manufactured in the United States for export internationally, primarily in Caribbean and Latin American markets, as well as products we manufacture for sale to our joint ventures internationally. These international businesses are managed through 34 sales and marketing offices. Revenues from export activities are reported in the region or country where the end customer is located.

    In our Bakeries and Foodservice segment, we sell branded cereals, snacks, dinner and side dish products, refrigerated and soft-serve frozen yogurt, frozen dough products, branded baking mixes, and custom food items. Our customers include foodservice distributors and operators, convenience stores, vending machine operators, quick service chains and other restaurants, and business and school cafeterias in the United States and Canada. In addition, mixes and unbaked and fully baked frozen dough products are marketed throughout the United States and Canada to retail, supermarket, and wholesale bakeries.

    Operating profit for the operating segments excludes unallocated corporate expenses (variances to planned corporate overhead expenses, variances to planned domestic employee benefits and incentives, all stock compensation costs, annual contributions to the General Mills Foundation, and other items that are not part of our measurement of segment operating performance), and restructuring, impairment and other exit costs because these items affecting operating profit are centrally managed at the corporate level and are excluded from the measure of segment profitability reviewed by executive management. Under our supply chain organization, our manufacturing, warehouse, and distribution activities are substantially integrated across our operations in order to maximize efficiency and productivity. As a result, fixed assets, capital expenditures for long-lived assets, and depreciation and amortization expenses are neither maintained nor available by operating segment.

67

In Millions, Fiscal Year	2007			2006			2005
Net sales:
U.S. Retail	$	8,491		$	8,137		$	7,891
International		2,124			1,837			1,725
Bakeries and Foodservice		1,827			1,738			1,692
Total net sales	$	12,442		$	11,712		$	11,308
Segment operating profit:
U.S. Retail	$	1,896		$	1,801		$	1,745
International		216			194			163
Bakeries and Foodservice		148			116			108
Total segment operating profit		2,260			2,111			2,016
Unallocated corporate expenses		(163	)		(123	)		(32	)
Restructuring, impairment and other exit costs		(39	)		(30	)		(84	)
Operating profit	$	2,058		$	1,958		$	1,900

    The following table provides financial information by geographic area:

In Millions, Fiscal Year	2007		2006		2005
Net sales:
United States	$	10,258	$	9,811	$	9,511
Non-United States		2,184		1,901		1,797
Total	$	12,442	$	11,712	$	11,308

In Millions	May 27, 2007		May 28, 2006
Land, buildings and equipment:
United States	$	2,576	$	2,584
Non-United States		438		413
Total	$	3,014	$	2,997

NOTE 17

Supplemental Information

The components of certain Consolidated Balance Sheet accounts are as follows:

In Millions	May 27, 2007			May 28, 2006
Receivables:
From customers	$	969		$	930
Less allowance for doubtful accounts		(16	)		(18	)
Total	$	953		$	912

In Millions	May 27, 2007			May 28, 2006
Inventories:
At the lower of cost, determined on the FIFO or weighted-average cost methods, or market:
Raw materials and packaging	$	242		$	226
Finished goods		899			813
Grain		111			78
Excess of FIFO or weighted-average cost over LIFO cost		(78	)		(62	)
Total	$	1,174		$	1,055

    Inventories of $806 million as of May 27, 2007, and $739 million as of May 28, 2006, were valued at LIFO.

In Millions	May 27, 2007		May 28, 2006
Prepaid expenses and other current assets:
Prepaid expenses	$	172	$	168
Accrued interest receivable, including interest rate swaps		166		112
Miscellaneous		105		97
Total	$	443	$	377

68

In Millions	May 27, 2007			May 28, 2006
Land, buildings and equipment:
Land	$	61		$	54
Buildings		1,518			1,430
Equipment		3,992			3,859
Assets under capital lease		24			–
Capitalized software		225			211
Construction in progress		276			252
Total land, buildings and equipment		6,096			5,806
Less accumulated depreciation		(3,082	)		(2,809	)
Total	$	3,014		$	2,997
Other assets:
Pension assets	$	1,019		$	1,323
Marketable securities, at market		23			25
Investments in and advances to joint ventures		295			186
Miscellaneous		250			244
Total	$	1,587		$	1,778
Other current liabilities:
Accrued payroll	$	356		$	351
Accrued interest		165			152
Accrued trade and consumer promotions		289			294
Accrued taxes		861			743
Miscellaneous		408			291
Total	$	2,079		$	1,831
Other noncurrent liabilities:
Interest rate swaps	$	152		$	196
Accrued compensation and benefits, including payables for underfunded other postretirement and postemployment benefit plans		988			638
Miscellaneous		90			90
Total	$	1,230		$	924

    Certain Consolidated Statements of Earnings amounts are as follows:

In Millions, Fiscal Year	2007		2006		2005
Depreciation	$	421	$	424	$	443
Research and development		191		178		165
Media and advertising (including production and communication costs)		543		524		481

    The components of interest, net are as follows:

In Millions, Fiscal Year	2007			2006			2005
Interest expense	$	397		$	367		$	449
Distributions paid on preferred stock and interests in subsidiaries		64			60			39
Capitalized interest		(3	)		(1	)		(3	)
Interest income		(31	)		(27	)		(30	)
Interest, net	$	427		$	399		$	455

    Certain Consolidated Statements of Cash Flows amounts are as follows:

In Millions, Fiscal Year	2007		2006		2005
Cash interest payments	$	407	$	378	$	450
Cash paid for income taxes		369		321		227

69

NOTE 18

Quarterly Data (Unaudited)

Summarized quarterly data for fiscal 2007 and 2006 follows:

In Millions, Except per Share and Market Price Amounts Fiscal Quarter Ended	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	2007		2006		2007		2006		2007		2006		2007			2006
Net sales	$	2,860	$	2,679	$	3,467	$	3,293	$	3,054	$	2,877	$	3,061		$	2,863
Gross margin		1,064		993		1,279		1,203		1,072		986		1,072			985
Net earnings		267		252		385		370		268		246		224	(a)		222
Net earnings per share:
Basic	$	.76	$	.69	$	1.12	$	1.04	$	.77	$	.69	$	.65		$	.62
Diluted	$	.74	$	.64	$	1.08	$	.97	$	.74	$	.68	$	.62		$	.61
Dividends per share	$	.35	$	.33	$	.35	$	.33	$	.37	$	.34	$	.37		$	.34
Market price of common stock:
High	$	54.21	$	51.45	$	57.25	$	49.38	$	59.23	$	50.49	$	61.11		$	52.16
Low	$	49.27	$	45.49	$	51.50	$	44.67	$	55.51	$	47.05	$	54.57		$	48.51

(a) Includes pretax impairment charge of $37 million for certain underperforming product lines in our Bakeries and Foodservice segment.

70

Glossary

Average total capital.   Notes payable, long-term debt including current portion, minority interests, and stockholders’ equity, excluding accumulated other comprehensive income (loss). The average is calculated using the average of the beginning of fiscal year and end of fiscal year Consolidated Balance Sheet amounts for these line items.

Core working capital.   Accounts receivable plus inventories less accounts payable, all as of the last day of our fiscal year.

Derivatives.   Financial instruments that we use to manage our risk arising from changes in commodity prices, interest rates, foreign exchange rates, and stock prices.

Equivalent case.   A unit of measure used to express quantities of material in standardized sales terms across our divisions.

Generally Accepted Accounting Principles (GAAP).   Guidelines, procedures, and practices that we are required to use in recording and reporting accounting information in our audited financial statements.

Goodwill.   The difference between the purchase price of acquired companies and the related fair values of net assets acquired.

Gross margin.   Net sales less cost of sales.

Hedge accounting.   Special accounting for qualifying hedges allows changes in a hedging instrument’s fair value to offset corresponding changes in the hedged item in the same reporting period. Hedge accounting is only permitted for certain hedging instruments and hedged items, only if the hedging relationship is highly effective, and only prospectively from the date a hedging relationship is formally documented.

LIBOR.   London Interbank Offered Rate

Minority interests.   Preferred stock and interests of subsidiaries held by third parties.

Net price realization.   The impact of list and promoted price increases, net of trade and other promotion costs.

Notional principal amount.   The principal amount on which fixed- or floating-rate interest payments are calculated.

Operating cash flow to debt ratio.   Net cash provided by operating activities, divided by the sum of notes payable and long-term debt, including current portion.

Product rationalization.   The elimination of low margin or low demand products in order to direct resources to higher margin or higher demand products.

Reporting unit.   An operating segment or a business one level below an operating segment.

Return on average total capital.   Net earnings, excluding after-tax interest expense, divided by average total capital.

Segment operating profit margin.   Segment operating profit divided by net sales.

Total debt.   Notes payable and long-term debt, including current portion.

Transaction gains and losses.   The impact on our Consolidated Financial Statements of exchange rate changes arising from specific transactions.

Translation adjustments.   The impact of the conversion of our foreign affiliates’ financial statements to U.S. dollars for the purpose of consolidating our financial statements.

Unit volume growth.   The year-over-year growth in equivalent case volume sold to our customers.

Variable interest entities (VIEs).   A legal structure that is used for business purposes that either (1) does not have equity investors that have voting rights and share in all the entity’s profits and losses or (2) has equity investors that do not provide sufficient financial resources to support the entity’s activities.

71

ITEM 9   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A   Controls and Procedures

We, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the 1934 Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of May 27, 2007, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is (1) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

    There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the 1934 Act) during our fiscal quarter ended May 27, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of General Mills, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control system was designed to provide reasonable assurance to our management and the Board of Directors regarding the preparation and fair presentation of published financial statements. Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of May 27, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.

    Based on our assessment using the criteria set forth by COSO in Internal Control—Integrated Framework, management concluded that our internal control over financial reporting was effective as of May 27, 2007.

    KPMG LLP, an independent registered public accounting firm, has issued an audit report on management’s assessment of the Company’s internal control over financial reporting.

S. W. Sanger Chairman of the Board and Chief Executive Officer	J. A. Lawrence Vice Chairman and Chief Financial Officer

July 26, 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REGARDING INTERNAL CONTROL OVER FINANCIAL REPORTING

The Board of Directors and Stockholders
General Mills, Inc.:

    We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that General Mills, Inc. and subsidiaries maintained effective internal control over financial reporting as of May 27, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). General Mills’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

    We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as

72

we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

    A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

    Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

    In our opinion, management’s assessment that General Mills maintained effective internal control over financial reporting as of May 27, 2007, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by COSO. Also, in our opinion, General Mills maintained, in all material respects, effective internal control over financial reporting as of May 27, 2007, based on criteria established in Internal Control—Integrated Framework issued by COSO.

    We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of General Mills, Inc. and subsidiaries as of May 27, 2007, and May 28, 2006, and the related consolidated statements of earnings, stockholders’ equity and comprehensive income, and cash flows, for each of the fiscal years in the three-year period ended May 27, 2007, and our report dated July 26, 2007, expressed an unqualified opinion on those consolidated financial statements.

Minneapolis, Minnesota
July 26, 2007

ITEM 9B   Other Information

None.

PART III

ITEM 10   Directors, Executive Officers and Corporate Governance

The information contained in the sections entitled “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” contained in our definitive Proxy Statement for our 2007 Annual Meeting of Stockholders is incorporated herein by reference.

    Information regarding our executive officers is set forth on pages 4 and 5 in Item 1 of this report.

    The information regarding our Audit Committee, including the members of the Audit Committee and audit committee financial experts, set forth in the section entitled “Board Committees and Their Functions” contained in our definitive Proxy Statement for our 2007 Annual Meeting of Stockholders, is incorporated herein by reference.

    We have adopted a Code of Conduct applicable to all employees, including our principal executive officer, principal financial officer, and principal accounting officer. A copy of the Code of Conduct is available on our website at www.generalmills.com. We intend to post on our website any amendments to our Code of Conduct within two days of any such amendment and to post waivers from our Code of Conduct for principal officers within two days of any such waiver.

ITEM 11   Executive Compensation

The information contained in the sections entitled “Executive Compensation” and “Director Compensation and Benefits” in our definitive Proxy Statement for our 2007 Annual Meeting of Stockholders is incorporated herein by reference.

73

ITEM 12   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information contained in the sections entitled “Ownership of General Mills Common Stock by Directors, Officers and Certain Beneficial Owners” and “Equity Compensation Plan Information” in our definitive Proxy Statement for our 2007 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 13   Certain Relationships and Related Transactions, and Director Independence

The information set forth in the sections entitled “Board Independence and Composition” and “Certain Relationships and Related Transactions” contained in our definitive Proxy Statement for our 2007 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 14   Principal Accounting Fees and Services

The information contained in the section entitled “Independent Registered Public Accounting Firm Fees” in our definitive Proxy Statement for our 2007 Annual Meeting of Stockholders is incorporated herein by reference.

PART IV

ITEM 15   Exhibits, Financial Statement Schedules

1.

Financial Statements: The following financial statements are included in this report in Item 8: Consolidated Statements of Earnings for the fiscal years ended May 27, 2007, May 28, 2006, and May 29, 2005. Consolidated Balance Sheets as of May 27, 2007 and May 28, 2006. Consolidated Statements of Cash Flows for the fiscal years ended May 27, 2007, May 28, 2006, and May 29, 2005. Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the fiscal years ended May 27, 2007, May 28, 2006, and May 29, 2005. Notes to Consolidated Financial Statements. Report of Management Responsibilities. Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements and Related Financial Statement Schedule.

2.

Financial Statement Schedule: For the fiscal years ended May 27, 2007, May 28, 2006, and May 29, 2005: II — Valuation and Qualifying Accounts

74

3. Exhibits:

Exhibit No.	Description
3.1	Restated Certificate of Incorporation of the Registrant, as amended to date (incorporated herein by reference to Exhibit 3.1 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 26, 2002).
3.2	By-laws of the Registrant, as amended (incorporated herein by reference to Exhibit 3 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 25, 2007).
4.1	Indenture, dated as of July 1, 1982, between the Registrant and U.S. Bank Trust National Association (f/k/a Continental Illinois National Bank and Trust Company), as amended by Supplemental Indentures Nos. 1 through 8 (incorporated herein by reference to Exhibit 4.1 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 26, 2002).
4.2	Indenture, dated as of February 1, 1996, between the Registrant and U.S. Bank Trust National Association (f/k/a First Trust of Illinois, National Association) (incorporated herein by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-3 filed February 6, 1996 (File no. 333-00745)).
4.3	Amended and Restated Exchange Agreement, dated as of November 29, 2004, by and between the Registrant and Capital Trust (incorporated herein by reference to Exhibit 4.3 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 28, 2004).
4.4	Indenture, dated as of April 11, 2007, between General Mills, Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to Registrant’s Report on Form 8-K filed April 11, 2007).
4.5	Registration Rights Agreement, dated as of April 11, 2007, between Morgan Stanley & Co. Incorporated and General Mills, Inc. (incorporated herein by reference to Exhibit 4.2 to Registrant’s Report on Form 8-K filed April 11, 2007).
4.6	Third Amended and Restated Limited Liability Company Agreement of General Mills Cereals, LLC, dated as of October 8, 2004, by and among GM Cereals Operations, Inc., RBDB, INC., The Pillsbury Company, GM Class B, Inc. and GM Cereals Holdings, Inc. (incorporated herein by reference to Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 28, 2004).
4.7	Dividend Restriction Agreement, dated as of October 8, 2004, between the Registrant and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 28, 2004).
10.1*	Annual Retainer for Directors (incorporated herein by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed December 16, 2005).
10.2*	1998 Employee Stock Plan, as amended to date.
10.3*	Amended and Restated Executive Incentive Plan, as amended to date.
10.4*	Form of Management Continuity Agreement (incorporated herein by reference to Exhibit 10.5 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 27, 2001).
10.5*	Supplemental Retirement Plan, as amended (incorporated herein by reference to Exhibit 10.6 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 28, 2000).
10.6*	Executive Survivor Income Plan, as amended to date (incorporated herein by reference to Exhibit 10.6 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 29, 2005).
10.7*	Executive Health Plan, as amended to date (incorporated herein by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 24, 2002).
10.8*	Supplemental Savings Plan, as amended (incorporated herein by reference to Exhibit 10.9 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 28, 2000).
10.9*	1996 Compensation Plan for Non-Employee Directors, as amended to date.
10.10*	1995 Salary Replacement Stock Option Plan, as amended to date.
10.11*	Deferred Compensation Plan, as amended to date.
10.12*	Supplemental Benefits Trust Agreement, amended and restated as of September 26, 1988, between the Registrant and Norwest Bank Minnesota, N.A. (incorporated herein by reference to Exhibit 10.12 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 29, 2005).

75

Exhibit No.	Description
10.13*	Supplemental Benefits Trust Agreement, dated as of September 26, 1988, between the Registrant and Norwest Bank Minnesota, N.A. (incorporated herein by reference to Exhibit 10.13 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 29, 2005).
10.14	Agreements, dated November 29, 1989, by and between the Registrant and Nestle S.A. (incorporated herein by reference to Exhibit 10.15 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 28, 2000).
10.15	Protocol and Addendum No. 1 to Protocol of Cereal Partners Worldwide, dated November 21, 1989, between the Registrant and Nestle S.A. (incorporated herein by reference to Exhibit 10.16 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 27, 2001).
10.16	Addendum No. 2 to the Protocol of Cereal Partners Worldwide, dated March 16, 1993, between the Registrant and Nestle S.A. (incorporated herein by reference to Exhibit 10.18 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 30, 2004).
10.17	Addendum No. 3 to the Protocol of Cereal Partners Worldwide, effective as of March 15, 1993, between the Registrant and Nestle S.A. (incorporated herein by reference to Exhibit 10.2 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 28, 2000).
10.18*	1990 Salary Replacement Stock Option Plan, as amended to date.
10.19*	Stock Option and Long-Term Incentive Plan of 1993, as amended to date.
10.20*	1998 Senior Management Stock Plan, as amended to date.
10.21*	2001 Compensation Plan for Non-Employee Directors, as amended to date.
10.22*	2003 Stock Compensation Plan, as amended to date.
10.23	Forward Purchase Contract, dated as of October 8, 2004, between the Registrant and Lehman Brothers OTC Derivatives Inc. (incorporated herein by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 28, 2004).
10.24	Five-Year Credit Agreement, dated as of January 20, 2004, among the Registrant, the several financial institutions from time to time party to the Agreement, JPMorgan Chase Bank, as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC and Citibank N.A., as Documentation Agents (incorporated herein by reference to Exhibit 99.2 to Registrant’s Report on Form 8-K filed February 12, 2004).
10.25	Amended and Restated Credit Agreement, dated as of October 17, 2006, among General Mills, Inc., the several financial institutions from time to time party to the agreement and Citibank, N.A., as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed October 17, 2006).
10.26	Five-Year Credit Agreement, dated as of October 21, 2005, among the Registrant, the several financial institutions from time to time party to the agreement and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated herein by reference to Exhibit 10.2 to Registrant’s Report on Form 8-K filed October 25, 2005).
10.27*	2005 Stock Compensation Plan, as amended to date.
10.28*	Amendment to General Mills, Inc. Supplemental Savings Plan (incorporated herein by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 26, 2006).
10.29*	Amendment to General Mills, Inc. Supplemental Retirement Plan (incorporated herein by reference to Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 26, 2006).
10.30*	2006 Compensation Plan for Non-Employee Directors, as amended to date.
10.31*	Aircraft Time Sharing Agreement, dated December 21, 2006, between General Mills Sales, Inc. and Stephen W. Sanger (incorporated herein by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed December 28, 2006).
10.32	Yoplait Manufacturing and Distribution License Agreement, dated September 9, 1977, between the Registrant and Société de Développements et d’Innovations des Marchés Agricoles et Alimentaires, as amended to date.†
12.1	Computation of Ratio of Earnings to Fixed Charges.
21.1	List of Subsidiaries of the Registrant.
23.1	Consent of Independent Registered Public Accounting Firm.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

76

Exhibit No.	Description
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Items that are management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 15 of Form 10-K.
†	Item in which confidential information has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the SEC pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain instruments defining the rights of holders of our long-term debt are not filed and, in lieu thereof, we agree to furnish copies to the SEC upon request.

77

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GENERAL MILLS, INC.
Dated: July 26, 2007	By: /s/ Siri S. Marshall Siri S. Marshall Senior Vice President, General Counsel and Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Stephen W. Sanger Stephen W. Sanger	Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)	July 26, 2007
/s/ James A. Lawrence James A. Lawrence	Vice Chairman and Chief Financial Officer (Principal Financial Officer)	July 26, 2007
/s/ Kenneth L. Thome Kenneth L. Thome	Senior Vice President, Financial Operations (Principal Accounting Officer)	July 23, 2007
/s/ Paul Danos Paul Danos	Director	July 26, 2007
/s/ William T. Esrey William T. Esrey	Director	July 22, 2007
/s/ Raymond V. Gilmartin Raymond V. Gilmartin	Director	July 24, 2007
/s/ Judith Richards Hope Judith Richards Hope	Director	July 23, 2007
/s/ Heidi G. Miller Heidi G. Miller	Director	July 18, 2007
/s/ Hilda Ochoa-Brillembourg Hilda Ochoa-Brillembourg	Director	July 19, 2007
/s/ Steve Odland Steve Odland	Director	July 20, 2007

78

Signature	Title	Date
/s/ Kendall J. Powell Kendall J. Powell	President, Chief Operating Officer and Director	July 19, 2007
/s/ Michael D. Rose Michael D. Rose	Director	July 23, 2007
/s/ Robert L. Ryan Robert L. Ryan	Director	July 20, 2007
/s/ A. Michael Spence A. Michael Spence	Director	July 20, 2007
/s/ Dorothy A. Terrell Dorothy A. Terrell	Director	July 23, 2007

79

General Mills, Inc. and Subsidiaries
Schedule II – Valuation and Qualifying Accounts

	Fiscal Year Ended
In Millions	May 27, 2007			May 28, 2006			May 29, 2005
Allowance for doubtful accounts:
Balance at beginning of year	$	18		$	19		$	19
Additions charged to expense		2			2			–
Bad debt write-offs		(2	)		(3	)		(2	)
Other adjustments and reclassifications		(2	)		–			2
Balance at end of year	$	16		$	18		$	19
Valuation allowance for deferred tax assets:
Balance at beginning of year	$	858		$	855		$	809
Additions (benefits) charged to expense and deferred tax asset		(3	)		15			31
Adjustments to acquisition amounts		(243	)		(12	)		15
Balance at end of year	$	612		$	858		$	855
Reserve for restructuring and other exit charges:
Balance at beginning of year	$	15		$	18		$	21
Additions (benefits) charged to expense		(1	)		10			29
Net amounts utilized for restructuring activities		(10	)		(13	)		(32	)
Balance at end of year	$	4		$	15		$	18
Reserve for LIFO valuation:
Balance at beginning of year	$	62		$	45		$	41
Increment		16			17			4
Balance at end of year	$	78		$	62		$	45

80

Exhibit Index

Exhibit No.	Description
10.2	1998 Employee Stock Plan, as amended to date.
10.3	Amended and Restated Executive Incentive Plan, as amended to date.
10.9	1996 Compensation Plan for Non-Employee Directors, as amended to date.
10.10	1995 Salary Replacement Stock Option Plan, as amended to date.
10.11	Deferred Compensation Plan, as amended to date.
10.18	1990 Salary Replacement Stock Option Plan, as amended to date.
10.19	Stock Option and Long-Term Incentive Plan of 1993, as amended to date.
10.20	1998 Senior Management Stock Plan, as amended to date.
10.21	2001 Compensation Plan for Non-Employee Directors, as amended to date.
10.22	2003 Stock Compensation Plan, as amended to date.
10.27	2005 Stock Compensation Plan, as amended to date.
10.30	2006 Compensation Plan for Non-Employee Directors, as amended to date.
10.32	Yoplait Manufacturing and Distribution License Agreement, dated September 9, 1977, between the Registrant and Société de Développements et d’Innovations des Marches Agricoles et Alimentaires, as amended to date.*
12.1	Computation of Ratio of Earnings to Fixed Charges.
21.1	List of Subsidiaries of the Registrant.
23.1	Consent of Independent Registered Public Accounting Firm.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Denotes that confidential information has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

EX-10.2

EXHIBIT 10.2

GENERAL MILLS, INC.

1998 EMPLOYEE STOCK PLAN

GENERAL MILLS, INC.

1998 EMPLOYEE STOCK PLAN

1. PURPOSE OF THE PLAN

The purpose of the General Mills, Inc. 1998 Employee Stock Plan (the “Plan”) is to attract and retain able employees by rewarding employees of General Mills, Inc., its subsidiaries and affiliates (defined as entities in which General Mills, Inc. has a significant equity or other interest) (collectively, the “Company”) and to align the interests of employees with those of the stockholders of the Company through compensation that is based on the Company’s stock. Grants may be made to employees under the Plan in lieu of salary increases and certain other compensation and benefits.

2. EFFECTIVE DATE AND DURATION OF PLAN

This Plan shall become effective as of September 28, 1998.

3. ELIGIBLE PERSONS

Only persons who are employees of the Company shall be eligible to receive grants of Stock Options, Restricted Stock or Restricted Stock Units (each defined below) and become “Participants” under the Plan.

4. AWARD TYPE

Under this Plan, the Compensation Committee of the Company’s Board of Directors (the “Committee”) may award Participants options (“Stock Options”) to purchase common stock of the Company ($.10 par value) (“Common Stock”). The grant of a Stock Option entitles the Participant to purchase shares of Common Stock at an “Exercise Price” established by the Committee. The Exercise Price for each share of Common Stock issuable under a Stock Option shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant. “Fair Market Value” shall equal the closing price of the Common Stock on the New York Stock Exchange on the date of grant. The Committee may also grant Participants shares of Common Stock or the right to receive shares of Common Stock subject to certain restrictions (“Restricted Stock” or “Restricted Stock Units”) (Stock Options, Restricted Stock and Restricted Stock Units are sometimes referred to as “Awards”).

5. STOCK OPTION TERM AND TYPE

Stock Options granted under the Plan shall be Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”). The term of any Stock Option granted under the Plan shall be determined by the Committee, provided that the term of a Stock Option shall not exceed 10 years and one month.

6. COMMON STOCK SUBJECT TO THE PLAN

a) Maximum Shares Available for Delivery. Subject to Section 6(b), the maximum number of shares of Common Stock available for issuance to Participants under the Plan shall be 28,000,000.

In addition, any Common Stock covered by a Stock Option granted under the Plan, which is forfeited, cancelled or expires in whole or in part shall be deemed not to be delivered for purposes of determining the maximum number of shares of Common Stock available for grants under the Plan.

If any Stock Option is exercised by tendering Common Stock, either actually or by attestation, to the Company as full or partial payment in connection with the exercise of the Stock Option under the Plan, only the number of shares of Common Stock issued net of the Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares available for grants under the Plan. Upon forfeiture or termination of Restricted Stock or Restricted Stock Units prior to vesting, the shares of Common Stock subject thereto shall again be available for Awards under the Plan.

b) Adjustments for Corporate Transactions. If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

c) Limits on Distribution. Distribution of shares of Common Stock or other amounts under the Plan shall be subject to the following:

(i) The total number of shares of Common Stock that shall be available for Restricted Stock and Restricted Stock Unit Awards under the Plan shall be limited to 15% of the total shares authorized for Awards hereunder.

(ii) Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity.

- 2 -

(iii) To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of shares of Common Stock or Restricted Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

d) The Committee, in its discretion, may require as a condition to the grant of Awards, the deposit of Common Stock owned by the Participant receiving such grant, and the forfeiture of such grants, if such deposit is not made or maintained during the required holding period. Such shares of deposited Common Stock may not be otherwise sold or disposed of during the applicable holding period or restricted period. The Committee may also determine whether any shares issued upon exercise of a Stock Option shall be restricted in any manner.

7. EXERCISE OF STOCK OPTIONS

a) Exercise. Except as provided in Sections 11 and 12 (Change of Control and Termination of Employment), each Stock Option may be exercised only in accordance with the terms and conditions of the Stock Option grant and during the periods as may be established by the Committee. Twenty percent of each Stock Option granted under the Plan in lieu of salary increases and certain other compensation and benefits may be exercised immediately upon granting and, subject to the Participant’s continued employment with the Company, additional 20% portions of such Stock Option shall become exercisable each year thereafter. All other Stock Options granted hereunder may be exercised only after three years of the Participant’s continued employment with the Company following the date of the Stock Option grant.

A Participant exercising a Stock Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company.

b) Payment. The Exercise Price shall be paid to the Company at the time of such exercise, subject to any applicable rule or regulation adopted by the Committee:

(i) in cash (including check, draft, money order or wire transfer made payable to the order of the Company);

(ii) through the tender of shares of Common Stock owned by the Participant (by either actual delivery or attestation); or

(iii) by a combination of (i) and (ii) above.

- 3 -

For determining the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.

c) Deferrals. The Committee may permit or require Participants to defer receipt of any Common Stock issuable upon exercise of a Stock Option, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred Common Stock equivalents.

8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS

With respect to Awards of Restricted Stock and Restricted Stock Units, the Committee shall:

a) select Participants to whom Awards will be made, provided that Restricted Stock Units may only be awarded to those employees of the Company who are employed in a country other than the United States;

b) determine the number of shares of Restricted Stock or the number of Restricted Stock Units to be awarded;

c) determine the length of the restricted period, which shall be no less than one year;

d) determine the purchase price, if any, to be paid by the Participant for Restricted Stock or Restricted Stock Units; and

e) determine any restrictions other than those set forth in this Section 8.

Subject to the restrictions set forth in this Section 8, each Participant who receives Restricted Stock shall have all rights as a stockholder with respect to such shares, including the right to vote the shares and receive dividends and other distributions.

Each Participant who receives Restricted Stock Units shall be eligible to receive, at the expiration of the applicable restricted period, one share of Common Stock for each Restricted Stock Unit awarded, and the Company shall issue to each such Participant that number of shares of Common Stock. Participants who receive Restricted Stock Units shall have no rights as stockholders with respect to such Restricted Stock Units until such time as share certificates for Common Stock are issued to the Participants; provided, however, that quarterly during the applicable restricted period for all Restricted Stock Units awarded hereunder, the Company shall pay to each such Participant an amount equal to the sum of all dividends and other distributions paid by the Company during the prior quarter on that equivalent number of shares of Common Stock.

- 4 -

9. TRANSFERABILITY OF STOCK OPTIONS

Except as otherwise provided by rules of the Committee, no Stock Options shall be transferable by a Participant otherwise than (i) by the Participant’s last will and testament or (ii) by the applicable laws of descent and distribution, and such Stock Options shall be exercised during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. Except as otherwise provided in Section 8, no shares of Restricted Stock and no Restricted Stock Units shall be sold, exchanged, transferred, pledged or otherwise disposed of during the restricted period.

10. TAXES

Whenever the Company issues Common Stock under the Plan, the Company may require the recipient to remit to the Company an amount sufficient to satisfy any Federal, state or local tax withholding requirements prior to the delivery of such Common Stock, or, in the discretion of the Committee, upon the election of the Participant, the Company may withhold from the shares to be delivered shares sufficient to satisfy all or a portion of such tax withholding requirements.

11. CHANGE OF CONTROL

Each outstanding Stock Option shall become immediately and fully exercisable for a period of one (1) year following the date of the following occurrences, each constituting a “Change of Control”:

a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Voting Securities; or

b) Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

- 5 -

c) The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

After such one (1) year period the normal Stock Option exercise provisions of the Plan shall govern. Notwithstanding any other provision of the Plan, but subject to Section 5, in the event a Participant’s employment with the Company is terminated within two (2) years of any of the events specified in (a), (b), (c) or (d), all outstanding Stock Options of such Participant at that date of termination shall be exercisable for a period of six (6) months beginning on the date of termination.

With respect to Stock Option grants outstanding as of the date of any such Change of Control which require the deposit of owned Common Stock as a condition to obtaining rights, the deposit requirement shall be terminated as of the date of the Change of Control and any such deposited stock shall be promptly returned to the Participant.

- 6 -

In the event of a Change of Control, a Participant shall vest in all shares of Restricted Stock and Restricted Stock Units, effective as of the date of such Change of Control, and any deposited shares of Common Stock shall be promptly returned to the Participant.

12. TERMINATION OF EMPLOYMENT

a) Resignation or Termination for Cause. If the Participant’s employment by the Company is terminated by either

(i) the voluntary resignation of the Participant, or

(ii) a Company discharge due to Participant’s illegal activities, poor work performance, misconduct or violation of the Company’s policies or practices,

then Participant’s Stock Options shall terminate three months after such termination (but in no event beyond the original full term of the Stock Options) and no Stock Options shall become exercisable after such termination, and all shares of Restricted Stock and Restricted Stock Units which are subject to restriction on the date of termination shall be forfeited.

b) Other Termination. If the Participant’s employment by the Company terminates for any reason other than specified in Sections 11, 12 (a), (c), (d) or (e), the following rules shall apply:

(i) In the event that, at the time of such termination, the sum of the Participant’s age and service with the Company equals or exceeds 70, the following shall apply:

(A) The Participant’s outstanding Stock Options shall continue to become exercisable (and remain exercisable), and shares of Restricted Stock and Restricted Stock Units subject to share deposit requirements shall continue to vest, each according to the schedule established at the time of grant, unless otherwise provided in the applicable Award agreement.

(B) Shares of Restricted Stock and Restricted Stock Units not subject to share deposit requirements or attributable to a Participant whose termination of employment is on or after August 1, 2003, shall fully vest.

(ii) In the event that, at the time of such termination, the sum of Participant’s age and service with the Company is less than 70, Participant’s outstanding unexercisable Stock Options and unvested Restricted Stock and Restricted Stock Units shall become exercisable or vest, as the case may be, as of the date of

- 7 -

termination, in a pro-rata amount based on the full months of employment completed during the full vesting period from the date of grant to the date of termination with such newly-vested Stock Options and Stock Options exercisable on the date of termination remaining exercisable for the lesser of one year from the date of termination and the original full term of the Stock Option. All other Stock Options, shares of Restricted Stock and Restricted Stock Units shall be forfeited as of the date of termination. Provided, however, that if the Participant is an executive officer of the Company, the Participant’s outstanding Stock Options which, as of the date of termination are not yet exercisable, shall become exercisable effective as of the date of such termination and, with all outstanding Stock Options already exercisable on the date of termination, shall remain exercisable for the lesser of one year following the date of termination and the original full term of the Stock Option, and all shares of Restricted Stock and Restricted Stock Units shall vest as of the date of termination.

c) Death. If a Participant dies while employed by the Company, any Stock Option previously granted under this Plan may be exercised by the person designated in such Participant’s last will and testament or, in the absence of such designation, by the Participant’s estate, to the full extent that such Stock Option could have been exercised by such Participant immediately prior to death. Any outstanding Stock Options granted on or after June 1, 2002, which, as of the date of death, are not yet exercisable, shall fully vest and become exercisable upon death. Outstanding Stock Options granted prior to June 1, 2002, which, as of the date of death, are not yet exercisable, shall fully vest and become exercisable in a pro-rata amount, based on the full months of employment completed during the full vesting period of the Stock Option from the date of grant to the date of death.

With respect to Stock Options which require the deposit of owned Common Stock as a condition to obtaining exercise rights, in the event a Participant dies while employed by the Company, such Stock Options may be exercised as provided in the first paragraph of this Section 12(c) and any owned Common Stock deposited by the Participant pursuant to such grant shall be promptly returned to the person designated in such Participant’s last will and testament or, in the absence of such designation, to the Participant’s estate, and all requirements regarding deposit by the Participant shall be terminated.

A Participant who dies during any applicable restricted period, for Restricted Stock or Restricted Stock Units granted on or after June 1, 2002, shall fully vest in such shares of Restricted Stock or Restricted Stock Units, effective as the date of death. A Participant who dies during any applicable restricted period, for any Restricted Stock or Restricted Stock Units granted prior to June 1, 2002, shall vest in a proportionate number of such shares of Restricted Stock or Restricted Stock Units, effective as of the date of death. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of death, as a percentage of the applicable restricted period.

- 8 -

d) Retirement. The Committee shall determine, at the time of grant, the treatment of the Stock Options, Restricted Stock and Restricted Stock Units upon the retirement of the Participant. Unless other terms are specified in the original Grant, if the termination of employment is due to a Participant’s retirement on or after age 55, the Participant may exercise a Stock Option, subject to the original terms and conditions of the Stock Option and shall fully vest in all shares of Restricted Stock or Restricted Stock Units effective as of the date of retirement (unless any such Award specifically provides otherwise).

e) Spin-offs. If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, shall determine the treatment of all outstanding Awards under the Plan.

13. ADMINISTRATION OF THE PLAN

a) Administration. The authority to control and manage the operations and administration of the Plan shall be vested in Committee in accordance with this Section 13.

b) Selection of Committee. The Committee shall be selected by the Board, and shall consist of two or more members of the Board.

c) Powers of Committee. The authority to manage and control the operations and administration of the Plan shall be vested in the Committee, subject to the following:

(i) Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from among the eligible Company employees those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by Section 14) to cancel or suspend Awards. In making such determinations, the Committee may take into account the nature of services rendered by the individual, the individual’s present and potential contribution to the Company’s success and such other factors as the Committee deems relevant.

(ii) The Committee will have the authority and discretion to establish terms and conditions of Awards as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States.

(iii) The Committee will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

- 9 -

(iv) Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding.

d) Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.

14. AMENDMENTS OF THE PLAN

The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board of Directors, where required, the Committee may at any time terminate, amend, or suspend the operation of the Plan, provided that no action shall be taken by the Committee to:

a) permit granting of Stock Options at less than Fair Market Value; and

b) except as provided in Section 6, permit the repricing of outstanding Stock Options.

No termination, modification, suspension, or amendment of the Plan shall alter or impair the rights of any Participant pursuant to an outstanding Award without the consent of the Participant. There is no obligation for uniformity of treatment of Participants under the Plan.

15. FOREIGN JURISDICTIONS

The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject to such laws and who receive Awards under the Plan.

16. NOTICES

All notices to the Company regarding the Plan shall be in writing, effective as of actual receipt by the Company, and shall be sent to:

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, Minnesota 55426

Attention: Corporate Compensation

- 10 -

EX-10.3

EXHIBIT 10.3

AMENDED AND RESTATED

GENERAL MILLS, INC.

EXECUTIVE INCENTIVE PLAN

AMENDED AND RESTATED

GENERAL MILLS, INC.

EXECUTIVE INCENTIVE PLAN

1. PURPOSE OF THE PLAN

The purpose of the General Mills, Inc., Executive Incentive Plan (the “Plan”) is to provide financial rewards to key executives of General Mills, Inc. (“General Mills”), its subsidiaries and affiliates (defined as entities in which General Mills, Inc., has a significant equity or other interest) (collectively with General Mills, the “Company”) in recognition of their contributions to the success of the Company, and to align the interests of such executives with the interests of the stockholders of the Company.

2. EFFECTIVE DATE AND DURATION OF PLAN

This Plan, as amended and restated herein, shall become effective as of September 25, 2000, subject to the approval of the stockholders of General Mills at the Annual Meeting of Stockholders on that date. This Plan is a successor to and replaces the Executive Incentive Plan, amended and approved by stockholders on September 30, 1996. Definitions used in the Plan can be found in Section 16. Awards may be made under the Plan until September 25, 2010.

3. ELIGIBLE PERSONS

All officers of the Company shall be “Participants” eligible to receive Awards under the Plan.

4. AWARD TYPE

Under this Plan, the Committee may award Participants Cash Bonuses and the right to receive shares of Common Stock subject to certain restrictions (“Restricted Stock” or “Restricted Stock Units”). Cash bonuses, Restricted Stock and Restricted Stock Units are sometimes referred to as “Awards.”

5. AWARDS OF CASH BONUSES, RESTRICTED STOCK AND RESTRICTED STOCK UNITS

(a) Performance Goal. In order for any Participant to receive an Award for a Performance Period, the Net Earnings of the Company must be greater than zero.

(b) Grants. At the end of the Performance Period, if the Committee certifies that the requirement of Section 5(a) has been met, each Participant shall be deemed to have earned Awards equal in value to the Maximum Amount, or such lesser amount as the Committee shall determine in its discretion to be appropriate. Such Awards shall

consist of Cash Bonuses, Restricted Stock or Restricted Stock Units, or a combination thereof, as determined by the Committee, subject to the limitation that Restricted Stock and Restricted Stock Units may not constitute more than 50 percent of each Participant’s Award. The Committee, in its discretion, may require, as a condition to the grant of Restricted Stock or Restricted Stock Units, the purchase and deposit of Common Stock owned by the Participant receiving such grant and the forfeiture of such grant if such deposit is not made or maintained during a required holding period. Such shares of deposited Common Stock may not be otherwise sold or disposed of during the applicable holding period. For purpose of computing the value of Awards, each Restricted Stock or Restricted Stock Unit shall be deemed to have a value equivalent to the Fair Market Value of one share of Common Stock on the Grant Date.

(c) Delivery of Awards. As soon as practicable following the end of the Performance Period, the Company shall cause Common Stock to be issued on an unrestricted basis in respect of Restricted Stock and all Restricted Stock Units earned by a Participant and shall pay each Participant all Cash Bonuses earned by the Participant, except to the extent the Participant elects to defer receipt of such Restricted Stock, Restricted Stock Units or Cash Bonuses pursuant to the General Mills, Inc., Deferred Compensation Plan.

(d) Maximum Amount. Notwithstanding any other provision of this Plan, in no event shall the total Awards value earned by any Participant for any one Performance Period exceed 0.5 percent of the Company’s Net Earnings for that Performance Period (such amount, the “Maximum Amount”).

(e) Profit Sharing Resolution. All awards under this Plan shall be subject to General Mills’ 1933 Shareholder Resolution on Profit Sharing, as amended.

6. RESTRICTED STOCK AND RESTRICTED STOCK UNITS

(a) Vesting. Subject to the provisions of Sections 10 and 11, the Vesting Date for Restricted Stock and Restricted Stock Units shall be a date set forth in the applicable Grant Agreement but which may not be earlier than 180 days after the applicable Grant Date. The period between the applicable Grant Date and the Vesting Date is referred to as the “Restricted Period.”

(b) Common Stock Issuance. As soon as reasonably practicable after the Vesting Date for a Grant, General Mills shall issue to the Participant a number of shares of Common Stock equal to the number of shares of Restricted Stock or Restricted Stock Units that vested on such Vesting Date, except to the extent the Participant has elected to defer receipt of the Common Stock pursuant to the General Mills, Inc., Deferred Compensation Plan.

(c) Dividends and Cash Dividend Equivalents. Subject to the restrictions set forth in Section 5(b), each Participant who receives Restricted Stock shall have all rights as a Stockholder with respect to such shares, including the right to vote the shares and

-2-

receive dividends and other distributions. A Participant who is credited with Restricted Stock Units shall have no rights as a stockholder with respect to such Restricted Stock Units until such time as share certificates for Common Stock are issued to the Participant. During the Restricted Period, however, the Company shall pay to the Participant, on a quarterly basis, an amount (the “Cash Dividend Equivalent”) equal to the sum of all cash dividends declared by General Mills with record dates during the prior quarter with respect to that number of shares of Common Stock equivalent to the number of Restricted Stock Units credited to the Participant’s Restricted Stock Units Account as of the applicable record date.

(d) Grant Agreement. Each Grant shall be confirmed by, and be subject to, the terms of an applicable Grant Agreement.

7. COMMON STOCK

(a) Adjustments for Corporate Transactions.

If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

(b) Limits on Distribution.   Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Common Stock under the Plan unless all of the following conditions have been fulfilled:

(i) Listing or approval for listing upon notice of issuance, of such shares on the New York Stock Exchange; or such other securities exchange as may at the time be the principal market for the Common Stock, if applicable;

-3-

(ii) Any registration or other qualification of such shares of General Mills under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification that the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and

(iii) Obtaining any other consent, approval or permit from any state, federal or foreign governmental agency which the Committee shall, in its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable.

(c) Noncertificated Issuance of Shares. To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of shares of Common Stock or Restricted Stock, the issuance may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

8. TRANSFERABILITY OF GRANTS

Except as otherwise provided by rules of the Committee, shares of Restricted Stock, Restricted Stock Units and other rights of Participants under this Plan shall not be transferable by a Participant otherwise than by (i)  the Participant’s last will and testament or (ii) by the applicable laws of descent and distribution.

9. TAXES

Whenever General Mills issues Common Stock under the Plan, the Company may require the recipient to remit to the Company an amount sufficient to satisfy any federal, state or local tax withholding requirements prior to the delivery of such Common Stock, or, in the discretion of the Committee, upon the election of the Participant, the Company may withhold from the cash payments and shares to be delivered cash and shares, respectively, sufficient to satisfy all or a portion of such tax-withholding requirements.

10. CHANGE OF CONTROL

(a) Upon a Change of Control:

(i) All shares of Restricted Stock and Restricted Stock Units shall immediately vest and Common Stock free of restrictions shall be distributed to Participants, effective as of the date of the Change of Control, and

(ii) The Committee may make such additional adjustments and/or settlements of outstanding Grants for the Performance Period within which the Change of Control occurs as it deems appropriate and consistent with the Plan’s purposes.

-4-

(b) “Change of Control” means the occurrence of any of the following events:

(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of General Mills where such acquisition causes such Person to own 20 percent or more of the combined voting power of the then outstanding voting securities of General Mills entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not be deemed to result in a Change of Control: (w) any acquisition directly from General Mills, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by General Mills or any corporation controlled by General Mills or (z) any acquisition by any corporation pursuant to a transaction that complies with clauses (x), (y) and (z) of subsection (iii) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Voting Securities reaches or exceeds 20 percent as a result of a transaction described in clause (w) or (x) above, and such Person subsequently acquires beneficial ownership of additional voting securities of General Mills, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20 percent or more of the Outstanding Voting Securities; or

(ii) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the shareholders of General Mills, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) The approval by the shareholders of General Mills of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of General Mills (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding

-5-

Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns General Mills or all or substantially all of the assets of General Mills either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, (y) no Person (excluding any employee benefit plan, or related trust, of General Mills or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv) Approval by the stockholders of General Mills of a complete liquidation or dissolution of General Mills.

11. TERMINATION OF EMPLOYMENT

The following rules regarding the effect of a Participant’s termination of employment on his or her Restricted Stock or Restricted Stock Units shall apply unless otherwise determined by the Committee.

(a) If the Participant’s employment by the Company is terminated by either:

(i) the voluntary resignation of the Participant or

(ii) a Company discharge due to Participant’s illegal activities, poor work performance, misconduct or violation of the Company’s policies or practices,

the Participant’s shares of Restricted Stock or Restricted Stock Units, which are unvested on the date of termination, shall be forfeited.

(b) If the Participant’s employment by the Company is terminated for any reason other than specified in Section 11(a), (c), (d) or (e), the following rules shall apply:

-6-

(i) In the event that, at the time of such termination, the sum of Participant’s age and service with the Company equals or exceeds 70, the Participant’s Restricted Stock and Restricted Stock Units shall continue to vest according to the schedule established at the time of grant, unless otherwise provided in the Grant Agreement.

In the event that, at the time of termination, the sum of Participant’s age and service with the Company is less than 70, Restricted Stock and Restricted Stock Units shall vest in a pro-rata amount based on full months of employment completed during the Restricted Period from the date of grant to termination, and the Participant’s remaining Restricted Stock and Restricted Stock Units shall be forfeited; except if the Participant is an executive officer of the Company, all Restricted Stock and Restricted Stock Units shall fully vest as of the date of termination.

(c) Death. A Participant who dies during the Restricted Period for any Restricted Stock or Restricted Stock Units granted on or after June 1, 2002 shall fully vest in such shares of Restricted Stock or Restricted Stock Units, effective as of the date of death. A Participant who dies during the Restricted Period, for any Restricted Stock or Restricted Stock Units granted prior to June 1, 2002, shall vest in a proportionate number of such shares of Restricted Stock or Restricted Stock Units, effective as of the date of death. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the Restricted Period prior to the date of death, as a percentage of the applicable Restricted Period.

(d) Retirement. The Committee shall determine, at the time of a Grant, the treatment of the Restricted Stock or Restricted Stock Units upon the retirement of the Participant during the Restricted Period. Unless other terms are specified in the original Grant or the Grant Agreement, if the termination of employment is due to a Participant’s retirement on or after age 55, the Participant shall fully vest in all Restricted Stock or Restricted Stock Units effective as of the date of retirement.

(e) Spin-offs. If the termination of employment during the Restricted Period for any Restricted Stock or Restricted Stock Units is due to the cessation, transfer or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, shall determine the treatment of such Restricted Stock and Restricted Stock Units.

12. ADMINISTRATION OF THE PLAN

(a) Administration. The authority to control and manage the operations and administration of the Plan shall be vested in the Committee in accordance with this Section 12, subject to the following:

(i) Subject to the provisions of the Plan, the Committee shall have the authority and discretion to select from among the eligible Company

-7-

employees those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the Target Amounts covered by the grants, to establish the terms, conditions, restrictions, and other provisions of such Grants, and (subject to the restrictions imposed by Section 13) to cancel or suspend Grants. In making such determinations, the Committee may take into account the nature of services rendered by the individual, the individual’s present and potential contribution to the Company’s success and such other factors as the Committee deems relevant.

(ii) The Committee shall have the authority and discretion to establish terms and conditions of Awards as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside the United States.

(iii) The Committee shall have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

(iv) Any interpretation of the Plan by the Committee and any decision made by it under the Plan shall be final and binding.

(b) Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may delegate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.

13. AMENDMENTS OF THE PLAN

The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board, where required, the Committee may at any time terminate, amend or suspend the operation of the Plan, provided that no action shall be taken by the Board or the Committee without the approval of the stockholders of General Mills which would amend the Maximum Amount, set forth in Section 5(d), that may be granted to any single Participant. No termination, modification, suspension or amendment of the Plan shall alter or impair the rights of any Participant pursuant to an outstanding Grant without the consent of the Participant. There is no obligation for uniformity of treatment of Participants under the Plan.

-8-

14. FOREIGN JURISDICTIONS

It is intended that in lieu of awarding Restricted Stock, the Committee may grant Restricted Stock Units to employees of the Company who are subject to the laws of foreign jurisdictions and entitled to receive Awards under the Plan. In addition, the Committee may adopt, amend and terminate arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject to such laws and who receive Grants under the Plan.

15. NOTICE

All notices to the Company regarding the Plan shall be in writing, effective as of actual receipt by the Company, and shall be sent to:

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, Minnesota 55426

Attention: Corporate Compensation

16. DEFINITIONS

For purposes of this Plan, the following terms shall have the meanings set forth below.

“1934 Act” means the Securities Exchange Act of 1934.

“Award” is defined in Section 4.

“Board” means the Board of Directors of General Mills.

“Business Combination” is defined in Section 10(b)(iii).

“Cash Dividend Equivalent” is defined in Section 6(c).

“Change of Control” is defined in Section 10(b).

“Committee” means the Compensation Committee of the Board, or such other committee as the Board may from time to time select, provided that the Committee must at all times be composed of two or more members of the Board, each of whom qualifies as an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.

“Cash Bonuses” means cash payments to Participants under this Plan.

“Common Stock” means the common stock, par value $0.10 per share, of General Mills.

“Company” is defined in Section 1.

-9-

“Fair Market Value” of a share of Common Stock as of any given date equals the closing price of the Common Stock on the New York Stock Exchange on the applicable date.

“General Mills” is defined in Section 1.

“Grant” means a grant to an eligible employee of the opportunity to earn Awards under this Plan for any Performance Period pursuant to Section 5(b), including the awarding of Restricted Stock and crediting of Restricted Stock Units to a Restricted Stock Units Account.

“Grant Agreement” is defined in Section 6(d).

“Grant Date” is the first business day after the end of the applicable Performance Period.

“Incumbent Board” is defined in Section 10(b)(ii).

“Maximum Amount” is defined in Section 5(d).

“Net Earnings” means the Company’s earnings from continuing operations before unusual items and after taxes.

“Outstanding Voting Securities” is defined in Section 10(b)(i).

“Participant” is defined in Section 3.

“Performance Period” means a fiscal year of the Company, or such other period as the Committee may from time to time establish.

“Person” is defined in Section 10(b)(i).

“Plan” is defined in Section 1.

“Restricted Period” is defined in Section 6(a).

“Restricted Stock” is defined in Section 4.

“Restricted Stock Unit” is defined in Section 4.

“Vesting Date” means the date on which Restricted Stock or Restricted Stock Units vest, pursuant to Sections 6, 10, or 11.

-10-

EX-10.9

EXHIBIT 10.9

GENERAL MILLS, INC.

1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

GENERAL MILLS, INC.
1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

PART I

GENERAL PROVISIONS

A. PURPOSE

          The purpose of the General Mills, Inc. 1996 Compensation Plan for Non-Employee Directors (the “Plan”) is to provide a compensation program which will attract and retain qualified individuals not employed by General Mills, Inc. or its subsidiaries (the “Company”) to serve on the Board of Directors of the Company (the “Board”) and to further align the interests of non-employee directors with those of the stockholders by providing that a portion of compensation will be linked directly to increases in stockholder value.

B. EFFECTIVE DATE, DURATION OF PLAN AND TRANSITION RIGHTS

          This Plan shall become effective as of September 30, 1996, subject to the approval of the Plan by the stockholders. The Plan will terminate on September 30, 2001 or such earlier date as determined by the Board or the Compensation Committee of the Board (the “Committee”); provided that no such termination shall affect rights earned or accrued under the Plan prior to the date of termination.

          This Plan supersedes and replaces the General Mills, Inc. Compensation Plan for Non-Employee Directors, effective as of January 1, 1979 (the “1979 Plan”), the General Mills, Inc. Retirement Plan for Non-Employee Directors, effective as of April 28, 1986 (the “1986 Plan”) and the General Mills Stock Plan for Non-Employee Directors, effective as of September 17, 1990 (the “1990 Plan”). Participant rights accrued as of September 30, 1996 under the 1979 Plan and the 1990 Plan shall remain in effect but no new rights or benefits shall accrue pursuant to such plans. The 1986 Plan was terminated in February 1996. Participants who have accrued rights under the 1986 Plan shall receive a one time grant of Stock Units (“Stock Units”) representing the right to receive shares of General Mills, Inc. Common Stock ($.10 per value) (“Common Stock”) equal to the value as of September 30, 1996 of the participant’s accrued benefit under the 1986 Plan. The value of each Stock Unit shall be deemed equal to the mean of the high and low price of shares of Common Stock on the New York Exchange on September 30, 1996. Common Stock issued in respect of Stock Units granted in lieu of accrued benefits under the 1986 Plan shall be distributed commencing on the director’s retirement from the Board, on the date or dates elected by the director at least one year prior to the date of his or her retirement from the Board. In the absence of such an election, such Common Stock shall be issued in ten substantially equal annual installments on the January 1 of each year following the year in which the participant ceases to be a director. Each participant awarded Stock Units shall receive, upon distribution, one share of Common Stock for each Stock Unit awarded, and the Company shall issue to and register in the name of each such participant a certificate for that number of shares of Common Stock. Participants receiving Stock Units

pursuant to this Part I, Section B shall have the same rights, protections and limitations as those provided participants receiving Stock Units pursuant to Part III, Section B.3. and Section C.1. hereof.

C. PARTICIPATION

          Each member of the Board who is not an employee of the Company at the date compensation is earned or accrued shall be eligible to participate in the Plan.

D. COMMON STOCK SUBJECT TO THE PLAN

          Common Stock to be issued under this Plan may be made available from the authorized but unissued Common Stock, shares of Common Stock held in the treasury, or Common Stock purchased on the open market or otherwise. Subject to the provisions of the next succeeding paragraph, the maximum aggregate number of shares authorized to be issued under the Plan shall be 250,000.

          If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

- 2 -

PART II

ANNUAL RETAINER AND MEETING FEES

A. COMPENSATION STRUCTURE

1.	Each non-employee director shall be entitled to receive an annual retainer and meeting fees as shall be determined from time to time by the Board.
2.	Each non-employee director of the Company may elect by written notice to the Company on or before each annual stockholders’ meeting to participate in the compensation alternative provisions of the Plan. Any combination of the alternatives -- Cash, Deferred Cash and/or Common Stock -- may be elected, provided the aggregate of the alternatives elected equals one hundred percent of the non-employee director’s compensation at the time of the election.
3.	The election shall remain in effect for a one-year period which shall begin the day of the annual stockholders’ meeting and terminate the day before the succeeding annual stockholders’ meeting (hereinafter “Plan Year”).
4.	The Plan Year shall include four plan quarters (hereinafter “Plan Quarters”). Plan Quarters shall correspond to the Company’s fiscal quarters.
5.	A director elected to the Board at a time other than the annual stockholders’ meeting may elect, by written notice to the Company before such director’s term begins, to participate in the compensation alternatives for the remainder of that Plan Year, and elections for succeeding years shall be on the same basis as other directors.
6.	Periodically, the Company shall supply to each participant an account statement of participation under the Plan.

B. CASH ALTERNATIVE

	1.	Each non-employee director who elects to participate under the cash compensation provision of the Plan shall be paid all or the specified percentage of his or her compensation for the Plan Year in cash, and such cash payment shall be made as of the end of each Plan Quarter.
	2.	If a participant dies during a Plan Year, the balance of the amount due to the date of the participant’s death shall be payable in full to such participant’s designated beneficiary, or, if none, the estate as soon as practicable following the date of death.
C.	DEFERRED CASH ALTERNATIVE
	1.	Each non-employee director may elect to have all or a specified percentage of his or her compensation for the Plan Year deferred until the participant ceases to be a director.

- 3 -

2. For each director who has made this deferred cash election, the Company shall establish a deferred compensation account and shall credit such account at the end of each plan quarter for the compensation due. Interest shall be credited to each such account monthly based on the following rates as specified by the Committee from time to time:

a.	the rate of return as from time to time earned by the Fixed Income Fund of the Voluntary Investment Plan of General Mills, Inc. (VIP); or
b.	the rate of return as from time to time earned by the Equity Fund of the VIP; or
c.	any other rates of return of other funds or portfolios established under a qualified benefit plan maintained by the Company which the Minor Amendment Committee, or its delegate, in its discretion, may from time to time establish.

3. Distribution of the participant’s deferred compensation account shall be as follows:

a.

at the time, and in the form of payment, elected by the participant at the time of deferral; or

b.

in the absence of an election at the time of deferral, in ten substantially equal annual installments beginning on January 1 of each year following the year in which the participant ceases to be a director; provided, however, that for compensation earned in Plan Years commencing after December 9, 1996, distributions must be made or commenced by the later of (i) the date the participant attains age 70 and (ii) five years after the director’s retirement from the Board.

4.

In the event of the termination of a participant from Board service other than by retirement, the Committee may in its sole discretion require that distribution of all amounts allocated to a participant’s deferred compensation account be accelerated and distributed as of the first business day of the calendar year next following termination.

5.

The Company has established a Supplemental Benefits Trust with Norwest Bank Minnesota, N.A. as Trustee to hold assets of the Company under certain circumstances as a reserve for the discharge of the Company’s obligations as to deferred cash compensation under the Plan and certain other plans of deferred compensation of the Company. In the event of a Change in Control as defined in Part IV hereinbelow, the Company shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund all cash benefits payable under the Plan. Any participant of the Plan shall have the right to demand and secure specific performance of this provision. All assets held in the trust remain subject

- 4 -

only to the claims of the Company’s general creditors whose claims against the Company are not satisfied because of the Company’s bankruptcy or insolvency (as those terms are defined in the Trust Agreement). No participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the participant and all rights created under the Trust, as under the Plan, are unsecured contractual claims of the participant against the Company.

D. GMI COMMON STOCK ALTERNATIVE

1.	Each participant may elect to receive all or a specified percentage of his or her compensation in shares of Common Stock, which will be issued at the end of each Plan Quarter.
2.	The Company shall ensure that an adequate number of shares of Common Stock are available for distribution to those participants making this election.
3.	Only whole numbers of shares will be issued, with any fractional share amounts paid in cash.
4.	For purposes of computing the number of shares earned each Plan Quarter, the value of each share shall be equal to the mean of the high and low price of shares of Common Stock on the New York Stock Exchange on the third Business Day preceding the last day of each Plan Quarter. For the purposes of this Plan, “Business Day” shall mean a day on which the New York Stock Exchange is open for trading.
5.	If a participant dies during a Plan Year, the balance of the amount due to the date of the participant’s death shall be payable in full to the participant’s designated beneficiary, or, if none, to the participant’s estate, in cash, as soon as practicable following the date of death.

- 5 -

PART III

STOCK COMPENSATION

A. NON-QUALIFIED STOCK OPTIONS

1. Grant of Options. Each non-employee director on the effective date of the Plan (or, if first elected after the effective date of the Plan, on the date the non-employee director is first elected) shall be awarded an option (an “Option”) to purchase 2,500 shares of Common Stock. As of the close of business on each successive annual stockholders’ meeting date after the date of the original award, each non-employee director re-elected to the Board shall be granted an additional Option to purchase 2,500 shares of Common Stock (or, beginning September 27, 1999, an Option to purchase 5,000 shares of Common Stock). All Options granted under the Plan shall be non-statutory options not entitled to special tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended.

2.	Option Exercise Price. The per share price to be paid by the non-employee director at the time an Option is exercised shall be 100% of the Fair Market Value of the Common Stock on the date of grant.
	“Fair Market Value” shall equal the closing price for the Common Stock on the New York Stock Exchange on the relevant date or, if the New York Stock Exchange is closed on that date, on the last preceding date on which the Exchange was open for trading.
3.	Term of Option. Each Option shall expire ten (10) years from the date of grant.
4.	Exercise and Vesting of Option. Each Option will vest on the date of the annual stockholders’ meeting next following the date the Option is granted. If, for any reason, a non-employee director ceases to serve on the Board prior to the date an Option vests, such Option shall be forfeited and all further rights of the non-employee director to or with respect to such Option shall terminate. If a participant should die while employed by the Company, any vested Option may be exercised by the person designated in such participant’s last will and testament or, in the absence of such designation, by the participant’s estate and any unvested Options shall vest and become exercisable in a proportionate amount, based on the full months of service completed during the vesting period of the Option from the date of grant to the date of death.
5.	Method of Exercise and Tax Obligations. Each notice of exercise shall be accompanied by the full purchase price of the shares being purchased. Such payment may be made in cash, check, shares of Common Stock valued using the Fair Market Value as of the exercise date or a combination thereof. The Company may also require payment of the amount of any federal, state or local withholding tax attributable to the exercise of an Option or the delivery of shares of Common Stock.
6.	Non-transferability. Except as provided by rule adopted by the Committee, an Option shall be non-assignable and non-transferable by a non-employee director other than by will or the laws of descent and distribution. A non-employee director shall forfeit any Option assigned or transferred, voluntarily or involuntarily, other than as permitted under this subsection.

- 6 -

B. DEFERRAL OF STOCK OPTION GAINS

          Under the Plan, Participants may defer receipt of the net shares of Common Stock to be issued upon the stock-for-stock exercise of an Option issued hereunder, as well as dividend equivalents on the net shares.

1.	Option Gain Deferral Election. A participant can elect to defer receipt of Net Shares (defined below) of Common Stock resulting from a stock-for-stock exercise of an exercisable Option issued to the participant by completing and submitting to the Company an irrevocable stock option deferral election at least six months in advance of exercising the Option (which exercise must be done on or prior to the expiration of the Option) and, on or prior to the exercise date, delivering personally-owned shares equal in value to the Option exercise price on the date of the exercise. “Net Shares” means the difference between the number of shares of Common Stock subject to the Option exercise and the number of shares of Common Stock delivered to satisfy the Option exercise price. A participant may not revoke an Option gain deferral election after it is received by the Company. A participant may choose to defer receipt of all or only a portion of the Net Shares to be received upon exercise of an Option. If only a portion of the Net Shares is deferred, the balance will be issued at the time of exercise.
2.	Distribution of Deferred Common Stock. At the time of a participant’s election to defer receipt of Common Stock issuable upon an Option exercise or upon the election to receive Stock Units as provided in Part III, Section C.1. a participant must also select a distribution date and a form of distribution. The distribution date may be any date that is at least one year subsequent to either the exercise date for the related Option or the date of grant in the case of Stock Units granted under Part III, Section C.1. but the distribution must be made or commenced by the later of (i) the date the participant attains age 70 and (ii) five year after the date of the director’s retirement from the Board.
	A participant may elect to have deferred Common Stock distributed in a single payment or in substantially equal annual installments for a period not to exceed ten (10) years, or in another form requested by the Participant, in writing, and approved by the Committee. In the absence of an election, Common Stock issued in respect of Stock Units shall be distributed in ten substantially equal annual installments beginning on January 1 of each year following the year in which the participant ceases to be a director. Common Stock issuable under a single Option grant or pursuant to a single grant under Part III, Section C.1. shall have the same distribution date and form of distribution. Notwithstanding the above, the following provisions shall apply:

a. If an Option as to which a participant has made an Option gain deferral election terminates prior to the exercise date selected by the participant, or if the participant dies or fails to deliver personally-owned

- 7 -

	shares in payment of the exercise price, then the deferral election shall not become effective.
b.	In the event of the termination of a participant from Board service other than by retirement, the Committee may, in its sole discretion, require that distribution of all Stock Units allocated to a participant’s Deferred Stock Unit Accounts (as defined in Part III, Section B.3.a. below) be accelerated and distributed as of the first business day of the calendar year next following the date of termination.
c.	At the time elected by the participant for distribution of Common Stock attributable to allocations under the participant’s Deferred Stock Unit Accounts, the Company shall cause to be issued to the Participant, within three (3) days of the date of distribution, shares of Common Stock equal to the number of Stock Units credited to the Deferred Stock Unit Account and cash equal to any dividend equivalent amounts which had not been used to “purchase” additional Stock Units as provided below. Prior to distribution and pursuant to any rules the Committee may adopt, a Participant may authorize the Company to withhold a portion of the shares of Common Stock to be distributed for the payment of all federal, state, local and foreign withholding taxes required to be collected in respect of the distribution.

3. Deferred Stock Unit Accounts and Dividend Equivalents.

a. A deferred stock unit account (“Deferred Stock Unit Account”) will be established for each Option grant covered by a participant election to defer the receipt of Common Stock under Part III, Section B.1. above and, for each Net Share deferred, a Stock Unit will be credited to the Deferred Stock Unit Account as of the date of the Option exercise. A Deferred Stock Unit Account will also be established each time a participant elects to receive Stock Units pursuant to Part III, Section C.1. hereof. Participants may make an election to receive dividend equivalents on Stock Units in cash or reinvest such amount, and any change to such election shall become effective six months after the date of the change. If the amounts are reinvested, on each dividend payment date for the Company’s Common Stock, the Company will credit each Deferred Stock Unit Account with an amount equal to the dividends paid by the Company on the number of shares of Common Stock equal to the number of Stock Units in the Deferred Stock Unit Account. Dividend equivalent amounts credited to each Deferred Stock Unit Account shall be used to “purchase” additional Stock Units for the Deferred Stock Unit Account at a price equal to the mean of the high and low price of the Common Stock on the New York Stock Exchange on the dividend date. No fractional Stock Units will be credited. The Committee may, in its sole discretion, direct either that all dividend equivalent amounts be paid currently or all such amounts

- 8 -

be reinvented if, for any reason, such Committee believes it is in the best interest of the Company to do so. If the participant fails to make an election, the dividend equivalent amounts shall be reinvested. Periodically, each participant will receive a statement of the number of Stock Units in his or her Deferred Stock Unit Account(s).

b.

Participants who elect under the Plan to defer the receipt of Common Stock issuable upon the exercise of Options or elect to receive Stock Units under Part III, Section C.1. below will have no rights as stockholders of the Company with respect to allocations made to their Deferred Stock Unit Account(s), except the right to receive dividend equivalent allocations under Part III, Section B.3.a. above. Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed.

C. RESTRICTED STOCK AND STOCK UNITS

1.

Awards. Until September 27, 1999, on the effective date of the Plan (or, if a non-employee director is first elected after the effective date of the Plan, on the date the non-employee director is first elected) and at the close of business on each successive annual stockholders’ meeting date, each non-employee director may elect to receive either (i) an award of five hundred (500) shares of Restricted Stock subject to vesting and restricted as described in subsection 2 hereof (the “Restricted Stock”) or (ii) an award of five hundred (500) Stock Units, subject to vesting as provided in subsection 2. Only non-employee directors re-elected to the Board shall be entitled to a grant under this Section III. C.1. of Restricted Stock or Stock Units awarded at the close of business on an annual meeting date after the date of the original grant to the non-employee director. Beginning September 27, 1999, only Stock Units and not Restricted Stock will be awarded under the Plan.

2.

Vesting of and Restrictions on Restricted Stock and Stock Units. A participant’s interest in the Restricted Stock and Stock Units shall vest on the date of the annual stockholders’ meeting next following the date of the award of the Restricted Stock or Stock Units (the “Restricted Period”). If, for any reason, a non-employee director ceases to serve on the Board prior to the date the non-employee director’s interest in a grant of Restricted Stock or Stock Units vests, such Restricted Stock and Stock Units shall be forfeited and all further rights of the non-employee director to or with respect to such Restricted Stock or Stock Units shall terminate. A participant who dies prior to the vesting of Restricted Stock or Stock Units shall vest in a proportionate number of shares of Restricted Stock or Stock Units, based on the full months of service completed during the vesting period of the Restricted Stock or Stock Units from the date of grant to the date of death. Restricted Stock may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed until the Restricted Period

- 9 -

	has expired and Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed until such time as share certificates for Common Stock are issued to the participants.
3.	Distribution of Stock Units.

a. Each participant electing the award of Stock Units under Part III, Section C.1. above must select a date of distribution and form of distribution as provided under Part III, Section B.2. The participant may also elect to have dividend equivalents payable on Stock Units paid currently or reinvested in Stock Units as provided under Part III, Section B.3.

4. Other Terms and Conditions. Any shares of Restricted Stock granted under the Plan may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of stock certificates, and may be held in escrow. Each participant granted Restricted Stock shall have all rights as a stockholder with respect to such shares, including the right to vote the shares and receive dividends and other distributions. The Company may require payment of the amount of any federal, state or local withholding tax attributable to the constructive or actual delivery of shares of Common Stock pursuant to the terms of this Agreement.

D. GENERAL PROVISIONS FOR DEFERRED CASH, OPTION GAINS AND RSU’s

          The following provisions shall apply to the deferral of cash compensation described in Part II, Section C hereof, the deferral of receipt of Common Stock issued upon exercise of Options described in Part III, Section B hereof and the treatment of Stock Units granted under Part III, Section C hereof.

1. A participant may, at any time prior or subsequent to the commencement of benefit payments or distribution of Common Stock in respect of Stock Units under this Plan, elect in writing to have his or her form of distribution under this Plan changed to an immediate single distribution which shall be made within one (1) business day of receipt by the Company of such request in the case of deferred cash and three (3) business days in the case of Common Stock; provided that the cash amount or number of shares of Common Stock subject to such single distribution shall be reduced by an amount or number of shares of Common Stock equal to the product of (X) the rate for set forth in Statistical Release H.15(519), or any successor publication, as published by the Board of Governors of the Federal Reserve System for one-year U.S. Treasury notes under the heading “Treasury Constant Maturities” for the first day of the calendar month in which the request for a single sum distribution is received by the Company and (Y) either (i) as to a cash distribution, the total single sum distribution otherwise payable (based on the value of the account as of the first day of the month

- 10 -

	in which the single sum amount is paid, adjusted by a pro-rata portion of the specified rate of return for the prior month in which the single sum is paid, determined by multiplying the actual rate of return for such prior month by a fraction, the numerator of which is the number of days in the month in which the request is received prior to the date of payment, and the denominator of which is the number of days in the month), or (ii) as to a distribution of Common Stock in respect of Stock Units, the number of Stock Units held on behalf of the participant multiplied by the mean of the high and low price of shares of Common Stock on the New York Stock Exchange on the date of the request or, if the date of the request is not a Business Day, on the Business Day preceding the date of the request.
2.	In the event of a severe financial hardship occasioned by an emergency, including, but not limited to, illness, disability or personal injury sustained by the participant or a member of the participant’s immediate family, a participant may apply to receive a distribution, including a distribution of Common Stock in respect of Stock Units, earlier than initially elected. The Committee may, in its sole discretion, either approve or deny the request. The determination made by the Committee will be final and binding on all parties. If the request is granted, the distributions will be accelerated only to the extent reasonably necessary to alleviate the financial hardship.
3.	If the death of a participant occurs before a full distribution of deferred cash amounts or Common Stock in respect of Stock Units is made, a single distribution shall be made to the beneficiary designated by the participant to receive such amounts. This distribution shall be made as soon as practical following notification that death has occurred. In the absence of any such designation, the distribution shall be made to the personal representative, executor or administrator of the participant’s estate.
4.	As to all previous and future Plan years, and subject to the last sentence of the first paragraph of Part III, Section B.2. hereof, a participant who (a) has elected a distribution date and distribution in either a single distribution or substantially equal installments and (b) is not within twelve (12) months of the date that such deferred amount, deferred Common Stock or the first installment thereof would be distributed under this Plan, shall be permitted to make no more than two amendments to the initial election to defer distributions such that his or her distribution date is either in the same calendar year as the date of the distribution which would have been made in the absence of such election amendment(s) or is at least one year after the date of the distribution which would have been made in the absence of such election amendment(s). A participant satisfying the conditions set forth in the preceding sentence may also amend such election so that his or her form of distribution is changed to substantially equal annual installments for a period not to exceed ten (10) years or is changed to a single distribution.

- 11 -

5. Notwithstanding any other provision of this Plan to the contrary, the Committee, by majority approval, may, in its sole discretion, direct that distributions be made before such distributions are otherwise due if, for any reason (including, but not limited to, a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his or her delegate, or a decision by a court of competent jurisdiction involving a participant or beneficiary), it believes that a participant or beneficiary has recognized or will recognize income for federal income tax purposes with respect to distributions that are or will be payable to such participants under the Plan before they are paid to him. In making this determination, the Committee shall take into account the hardship that would be imposed on the participant or beneficiary by the payment of federal income taxes under such circumstances.

E. CHANGE OF CONTROL

          Stock Options granted under the Plan will become immediately exercisable, restrictions on the Restricted Stock will lapse and Common Stock and dividend equivalents to be issued in respect of Stock Units will be immediately distributed upon the occurrence of a “Change of Control” as defined in Part IV hereinbelow.

- 12 -

PART IV

ADMINISTRATION

          The Plan shall be administered by the Committee. The Committee shall have full power to interpret the Plan, formulate additional details and regulations for carrying out the Plan and amend or modify the Plan as from time to time it deems proper and in the best interests of the Company, provided that after a “Change in Control” no amendment, modification of or action to terminate the Plan may be made which would affect compensation earned or accrued prior to such amendment, modification or termination without the written consent of a majority of participants determined as of the day before a “Change in Control.” Any decision or interpretation adopted by the Committee shall be final and conclusive. A “Change of Control” means:

1.

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (1), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (3) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Company Voting Securities; or

2.

Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the

- 13 -

	Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
3.	The approval by the shareholders of the Company of a reorganization, merger, consolidation, sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business combination of the Outstanding Company Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
4.	Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

- 14 -

PART V

ADDITIONAL PROVISIONS

A. GOVERNING LAW

          The validity, construction and effect of the Plan and any such actions taken under or relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable Federal law.

B. NOTICES

          Unless otherwise notified, all notices under this Plan shall be sent in writing to the Company, attention Corporate Compensation, P.O. Box 1113, Minneapolis, Minnesota 55440. All correspondence to the participants shall be sent to the address which is their recorded address as listed on the election forms.

- 15 -

EX-10.10

EXHIBIT 10.10

GENERAL MILLS, INC.

1995 SALARY REPLACEMENT

STOCK OPTION PLAN

GENERAL MILLS, INC.

1995 SALARY REPLACEMENT STOCK OPTION PLAN

1. PURPOSE OF THE PLAN

The purpose of the General Mills, Inc. 1995 Salary Replacement Stock Option Plan (the “Plan”) is to give management employees of General Mills, Inc. (the “Company”) and its subsidiaries the opportunity to receive stock option grants in lieu of salary increases and certain other compensation and benefits thereby encouraging focus on the growth and profitability of the Company and its Common Stock. Restricted stock is not permitted to be issued under the terms of this Plan.

2. EFFECTIVE DATE OF PLAN

This Plan shall become effective as of September 18, 1995, subject to the approval of the stockholders of the Company at the Annual Meeting on September 18, 1995.

3. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Compensation Committee (the “Committee”). The Committee shall be made up of non-management members of the Board of Directors (the “Board”) appointed in accordance with the Company’s Certificate of Incorporation. The Committee shall have authority to adopt rules and regulations for carrying out the purpose of the Plan, select the employees to whom grants will be made (“Optionees”), the number of shares to be optioned and interpret, construe and implement the provisions of the Plan; provided that if at any time Rule 16b-3 or any successor rule (“Rule 16b-3”) under the Securities Exchange Act of 1934, as amended (the “1934 Act”), so permits without adversely affecting the ability of the Plan to comply with the conditions for exemption from Section 16 of the 1934 Act (or any successor provisions) provided by Rule 16b-3, the Committee may delegate the administration of the Plan in whole or in part, on such terms and conditions, and to such person or persons as it may determine in its discretion. Decisions of the Committee (or its delegate as permitted herein) shall be final, conclusive and binding upon all parties, including the Company, stockholders and Optionees.

4. COMMON STOCK SUBJECT TO THE PLAN

The shares of “Common Stock” of the Company ($.10 par value) to be issued upon the exercise of a non-qualified option to purchase Common Stock granted hereunder (an “Option”) may be made available from the authorized but unissued Common Stock, shares of Common Stock held in the treasury, or Common Stock purchased on the open market or otherwise.

Approval of the Plan by the stockholders of the Company shall constitute authorization to use such shares for the Plan, subject to the discretion of the Board or as such discretion may be delegated to the Committee.

- 1 -

Subject to the provisions of the next succeeding paragraph, the maximum aggregate number of shares authorized under the Plan for which Options may be granted under the Plan shall be 7,000,000 shares. If an Option granted under the Plan is terminated without having been exercised in full, the unpurchased or forfeited shares or rights to receive shares shall become available for grant to other employees. The number of shares of Common Stock subject to Options granted under this Plan to any Optionee shall not exceed 5% of the total number of shares of Common Stock which may be issued under this Plan.

If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

5. ELIGIBLE PERSONS

Only persons who are officers or management employees of the Company or a subsidiary shall be eligible to receive grants under the Plan. No grant shall be made to any member of the Committee or any other non-employee director.

6. PURCHASE PRICE OF STOCK OPTIONS

The purchase price for each share of Common Stock issuable under an Option shall not be less than 100 percent of the Fair Market Value of the Shares of Common Stock of the Company subject to such option on the date of grant. . “Fair Market Value” as used in the Plan shall equal the closing price of the Common Stock on the New York Stock Exchange on the applicable date.

7. OPTION TERM

The term of each Option grant as determined by the Committee shall not exceed ten (10) years and one (1) month from the date of that grant and shall expire as of the last day of the designated term, unless terminated earlier under the provisions of the Plan.

- 2 -

8. OPTION TYPE

Option grants will be non-qualified stock options governed by Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision.

9. NON-TRANSFERABILITY OF OPTIONS

Except as provided by rule adopted by the Committee, no Option granted under this Plan shall be transferable by the Optionee otherwise than by the Optionee’s last will and testament or by the applicable laws of descent and distribution and an Option may be exercised during the Optionee’s lifetime only by the Optionee or his or her guardian or legal representative. An Optionee shall forfeit any Option assigned or transferred, voluntarily or involuntarily, other than as permitted under this Section.

10. EXERCISE OF OPTIONS

Except as provided in Sections 12, 13 and 14, each Option shall be vested and may be exercised in accordance with such terms and conditions as may be determined by the Committee for grants to officers or executives and by the Chief Executive Officer of the Company for grants to other management participants.

Subject to the provision of this Section 10, each Option may be exercised in whole or, from time to time, in part with respect to the number of then exercisable shares in any sequence desired by the Optionee without regard to the date of grant of stock options under other plans of the Company.

An Optionee exercising an Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company. At the time of purchase, the Optionee shall tender the full purchase price of the shares purchased. Until such payment has been made and either a certificate or certificates for the shares purchased has been issued in the Optionee’s name or the ownership of such shares by the Optionee has been entered by the Company’s transfer agent on the master stockholder records of the Company, the Optionee shall possess no stockholder rights with respect to any such shares. Payment of such purchase price shall be made to the Company, subject to any applicable rule or regulation adopted by the Committee:

(i) in cash (including check, draft, money order or wire transfer made payable to the order of the Company);

(ii) through the delivery of shares of Common Stock owned by the Optionee; or

(iii) by a combination of (i) and (ii) above.

- 3 -

For determining the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.

11. WITHHOLDING TAXES ON OPTION EXERCISE

Each Optionee shall deliver to the Company cash in an amount equal to all federal, state and local withholding taxes required to be collected by the Company in respect of the exercise of an Option, and until such payment is made, the Company may, in its discretion, retain all or a portion of the shares to be issued.

Notwithstanding the foregoing, to the extent permitted by law and pursuant to such rules as the Committee may adopt, an Optionee may authorize the Company to satisfy any such withholding requirement by directing the Company to withhold from any shares to be issued such number of shares as shall be sufficient to satisfy the withholding obligation.

12. EXERCISE OF OPTIONS IN EVENT OF CERTAIN CHANGES OF CONTROL

Each outstanding Option shall become immediately and fully exercisable for a period of one (1) year following the date of the following occurrences, each constituting a “Change of Control”:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Voting Securities; or

(b) Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

- 4 -

(c) The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other

disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

After such one (1) year period the normal option exercise provisions of the Plan shall govern. In the event an Optionee is terminated as an employee of the Company or a Subsidiary within two (2) years of any of the events specified in (a), (b), (c) or (d), all outstanding Options at that date of termination shall become immediately exercisable for a period of six (6) months, subject to the provisions of Section 7.

- 5 -

13. TERMINATION OF EMPLOYMENT OF AN OPTIONEE

(a) Resignation or Termination for Cause

If the Optionee’s employment by the Company is terminated by either

(i) the voluntary resignation of the Optionee, or

(ii) a Company discharge due to Optionee’s illegal activities, poor work performance, misconduct or violation of the Company’s policies or practices,

then the Options shall terminate three months after such termination (but in no event beyond the original full term of the Options) and no Options shall become exercisable after such termination.

(b) Other Termination

If the Optionee’s employment by the Company terminates for any reason other than specified in Sections 12, 13(a), (c), (d) or (e) or Section 14, the following rules shall apply:

(i) In the event that, at the time of such termination, the sum of the Optionee’s age and service with the Company equals or exceeds 70, the outstanding Options shall continue to become exercisable in accordance with the schedule established at the time of grant. The Options shall remain exercisable for the remaining full term of such Options.

(ii) In the event that, at the time of such termination, the sum of Optionee’s age and service with the Company is less than 70, the outstanding unexercisable Options shall become exercisable as of the date of termination, in a pro-rata amount based on the full months of employment completed during the full vesting period from the date of grant to the date of termination with such newly-vested Options and Options exercisable on the date of termination remaining exercisable for the lesser of one year from the date of termination and the original full term of the Option. All others shall be forfeited as of the date of termination. Provided, however, that if the Optionee is an executive officer of the Company, the outstanding Options which, as of the date of termination are not yet exercisable, shall become exercisable effective as of the date of such termination and, with all outstanding Options already exercisable on the date of termination, shall remain exercisable for the lesser of one year following the date of termination and the original full term of the Option.

- 6 -

(c) Death

If the termination of employment is due to the Optionee’s death, the Options may be exercised as provided in Section 14.

(d) Retirement

If the termination of employment is due to the Optionee’s retirement, the Optionee thereafter may exercise an Option within the period remaining under the original term of the Option.

(e) Discontinuation of a Complete Line of Business

If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, may determine that all outstanding Options granted to the Optionee prior to such termination shall immediately become exercisable for a period of up to five (5) years after the date of such termination, subject to the provisions of Section 7.

14. DEATH OF OPTIONEE

If an Optionee should die while employed by the Company or a subsidiary, any Option previously granted to the Optionee under this Plan may be exercised by the person designated in such Optionee’s last will and testament or, in the absence of such designation, by the Optionee’s estate, to the full extent that such Option could have been exercised by such Optionee immediately prior to the Optionee’s death, subject to the original term of the Option. Further, with respect to outstanding Options which, as of the date of death, are not yet exercisable, any such Option shall vest and become exercisable in a pro rata amount, based on the number of full months of employment completed during the full vesting period of the Option from the date of grant to the date of death.

15. AMENDMENTS TO THE PLAN

The Committee and the Board of Directors may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no amendment shall be made without stockholder approval if such stockholder approval is necessary to comply with any tax or regulatory requirement, including for these purposes any approval requirement that is a prerequisite for exemptive relief from Section 16(b) of the 1934 Act. Notwithstanding anything to the contrary contained herein, any amendment, suspension or termination made in accordance with this Section 15 that would adversely affect an Optionee’s rights under an Option granted under the Plan may not be made without such Optionee’s consent.

The Committee shall have authority to cause the Company to take any action related to the Plan which may be required to comply with the provisions of the Securities Act of 1933, as amended, the 1934 Act, and the rules and regulations prescribed by the Securities and Exchange Commission. Any such action shall be at the expense of the Company.

- 7 -

16. FOREIGN JURISDICTIONS

The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of laws of any foreign jurisdiction, to key employees of the Company who are subject to such laws and who are eligible to receive Option grants under the Plan.

17. DURATION OF THE PLAN

Grants may be made under the Plan until September 30, 2000.

18. NOTICE

All notices and communications to the Company shall be in writing, effective as of actual receipt by the Company, and shall be sent to:

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, Minnesota 55426

Attention: Corporate Compensation

If by Telex: 170360 Gen Mills

If by Facsimile: (612) 540-4925

19. SECTION 16 OFFICERS

With respect to persons subject to Section 16 of the 1934 Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

- 8 -

EX-10.11

EXHIBIT 10.11

GENERAL MILLS, INC.

DEFERRED COMPENSATION PLAN

GENERAL MILLS, INC.

DEFERRED COMPENSATION PLAN

1.	PURPOSE OF PLAN
	General Mills, Inc. (the “Company”) hereby establishes a Deferred Compensation Plan (the “Plan”) for a select group of the key management and highly compensated employees of the Company and its affiliates as a means of sheltering a portion of income from current taxation while accumulating resources for future investments or retirement. Under the Plan, Participants may defer cash incentives, common stock issued under the Company’s stock option plans, and restricted stock units issued under the Company’s various stock plans granting restricted stock, as they may be amended from time to time. In addition, Participants may “defer” shares of General Mills, Inc. common stock (“Common Stock”) attributable to restricted stock issued under the Company’s various stock plans granting restricted stock, as they may be amended from time to time, by cancellation of such shares in exchange for deferred restricted stock units under this Plan. As to deferred cash incentives, Participants shall earn a “rate of return” on the deferred amounts which track the investment return achieved under the General Mills 401(k) Savings Plan (“401(k) Savings Plan”) and/or rates equivalent to investment results of other funds or portfolios as may be made available from time to time pursuant to the provisions of the Plan. As to stock options, Participants may defer receipt of the net shares of Common Stock resulting from a Participant’s stock-for-stock option exercise and dividend equivalents on the net shares. As to deferrals related to restricted stock and restricted stock units, Participants may defer the receipt of shares of Common Stock attributable to such grants and to dividend equivalents on such shares. Under current tax law, amounts properly deferred and the “rate of return” or earnings credited to such amounts are not taxable (except for FICA taxation, as required) as income until they are distributed to the Participants. Under current tax law, distributions from this Plan will be taxed as ordinary income in the year in which they are received. In addition, this Plan is intended to be a successor plan with respect to certain liabilities on behalf of certain individuals who had deferred compensation accounts under the Nonqualified Plan for Pillsbury Management and the Pillsbury Deferred Compensation Program for Officers on U.S. Assignment immediately before April 1, 2002, which liabilities are being transferred to this Plan as a result of the merger of The Pillsbury Company and General Mills, Inc.
2.	ELIGIBILITY
	An individual is a Participant in the Plan if such individual (i) is a Participant in the Executive Incentive Plan, as it may be amended from time to time, (ii) has been selected by management to participate in “Compensation Plus,” or (iii) has an individual agreement, approved by the Minor Amendment Committee, which provides for participation in this Plan, and has elected to defer compensation or receipt of Common Stock pursuant to the provisions of any of these programs or the agreement. Former employees of the Company who have retired from the Company may also participate if they would have been eligible to participate at the time they retired from the Company. Notwithstanding the foregoing, the Minor Amendment Committee may exclude from participation employees or

1

	groups of employees of the Company who would otherwise be eligible under this Plan.
3.	PLAN ADMINISTRATION

(i)	Minor Amendment Committee. Except as provided below, this Plan shall be administered by the Minor Amendment Committee (the “Minor Amendment Committee”). The Minor Amendment Committee shall act by affirmative vote of a majority of its members at a meeting or in writing without a meeting. The Minor Amendment Committee shall appoint a secretary who may be but need not be one of its own members. The secretary shall keep complete records of the administration of the Plan. The Minor Amendment Committee may authorize each and any one of its members to perform routine acts and to sign documents on its behalf. To the extent necessary to maintain any exemption under Rule 16b-3 or any successor rule (“Rule 16b-3”) under the Securities Exchange Act of 1934 as to certain officers of the Company, the Compensation Committee of the Board of Directors (the “Committee”) shall administer certain portions of this Plan.
(ii)	Plan Administration. The Minor Amendment Committee may appoint such persons or establish such subcommittees, employ such attorneys, agents, accountants or investment advisors necessary or desirable to advise or assist it in the performance of its duties hereunder, and the Minor Amendment Committee may rely upon their respective written opinions or certifications.
	Administration of the Plan shall consist of interpreting and carrying out the provisions of the Plan. The Minor Amendment Committee shall, in its discretion, determine the eligibility of employees to participate in the Plan, the rights of Participants in the Plan, the nature and amount of benefits to be received therefrom, and decide any disputes that may arise under the Plan. The Minor Amendment Committee may provide rules and regulations for the administration of the Plan consistent with its terms and provisions. Any construction or interpretation of the Plan and any determination of fact in administering the Plan made in good faith by the Minor Amendment Committee shall be final and conclusive for all Plan purposes.
(iii)	Claims Procedure.

(a)	The Minor Amendment Committee shall prescribe a form for the presentation of claims under the terms of the Plan.
(b)	Upon presentation to the Minor Amendment Committee of a claim on the prescribed form, the Minor Amendment Committee shall make a determination of the validity thereof. If the determination is adverse to the claimant, the Minor Amendment Committee shall furnish to the claimant within a reasonable period of time after the receipt of the claim a written notice setting forth the following:

(1) The specific reason or reasons for the denial;

2

(2)	Specific reference to pertinent provisions of the Plan on which the denial is based;
(3)	A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
(4)	An explanation of the Plan’s claim review procedure.

(c)	In the event of a denial of a claim, the claimant may appeal such denial to the Minor Amendment Committee for a full and fair review of the adverse determination. The claimant’s request for review must be in writing and be made to the Minor Amendment Committee within 60 days after receipt by the claimant of the written notification required under subsection (b) above. The claimant or his or her duly authorized representative may submit issues and comments in writing which shall be given full consideration by the Minor Amendment Committee in its review.
(d)	A decision on a request for review shall be made by the Minor Amendment Committee not later than 60 days after receipt of the request; provided, however, in the event of special circumstances, such decision shall be made not later than 120 days after receipt of such request.
(e)	The Minor Amendment Committee’s decision on review shall state in writing the specific reasons and references to the Plan provisions on which it is based. Such decision shall be immediately provided to the claimant.
(f)	The Minor Amendment Committee may allocate its responsibilities among its several members, except that all matters involving the decision on claims and the review of the determination of benefits shall be made by the full Minor Amendment Committee. No member of the Minor Amendment Committee shall participate in any matter relating solely to himself or herself.

4.	DEFERRAL AND PAYMENT OF COMPENSATION
	(i)	Cash Incentive Deferral Election. A Participant can elect to defer cash incentive compensation by completing and submitting to the Company a cash deferral election form by December 31 of each year. Such election shall apply to the Participant’s cash incentive compensation, if any, to be paid in the next calendar year. A Participant’s cash incentive deferral election may apply to:

(a)	100% of the cash incentive compensation,
(b)	any amount in excess of a specified dollar amount,
(c)	any amount up to a specified dollar amount, or
(d)	a specified percentage (in whole numbers) of the cash incentive compensation.

3

For purposes of this Plan, the term “cash incentive compensation” shall be deemed to include all amounts of cash compensation, whether or not otherwise classified as incentive compensation, as permitted to be deferred under this Plan by the Minor Amendment Committee.

(ii)	Stock Option Gain Deferral Election. A Participant can elect to defer receipt of Net Shares (defined below) of Common Stock resulting from a stock-for-stock exercise of an exercisable stock option issued to the Participant by completing and submitting to the Company an irrevocable stock option deferral election at least six months in advance of exercising the stock option (which exercise must be done on or prior to the expiration of the stock option) and, on or prior to the exercise date, delivering personally-owned shares equal in value to the option exercise price on the date of the exercise. At the time of the deferral election, the Participant can also choose to use some of the shares subject to the stock option to satisfy any FICA, Medicare or any other taxes due upon the exercise. “Net Shares” means the difference between the number of shares of Common Stock subject to the stock option exercise and the number of shares of Common Stock delivered to satisfy the exercise price less any shares used to satisfy FICA, Medicare or any other taxes due upon the exercise. A Participant may not revoke a stock option gain deferral election after it is received by the Company. A Participant may choose to defer receipt of all or only a portion of the Net Shares to be received upon exercise of a stock option. If only a portion of the Net Shares is deferred, the balance will be issued at the time of exercise.
(iii)	Restricted Stock/Restricted Stock Unit Deferral Election. A Participant can elect to defer receipt of the shares of Common Stock of the Company attributable to nonvested restricted stock or restricted stock units under the Company’s restricted stock plan(s) by completing and submitting to the Company an irrevocable restricted stock deferral election within the period specified by the Minor Amendment Committee on the applicable deferral election form and prior to the date such restricted stock or restricted stock units become vested as determined under the Company’s various stock plans granting restricted stock, as they may be amended from time to time. A Participant may not revoke a restricted stock or restricted stock unit deferral election after it is received by the Company. A Participant may choose to defer receipt of all or only a portion of the shares of Common Stock attributable to nonvested restricted stock or the restricted stock units that have been granted to the Participant by the Company. Any election to defer receipt of shares of Common Stock attributable to restricted stock shall result in the restricted stock being cancelled and replaced with the promise of the Company to pay deferred compensation (in the form of deferred restricted stock units) pursuant to the terms of the Plan.
(iv)	Distribution of Deferred Cash Incentive and Common Stock. At the time of a Participant’s deferral election, a Participant must also select a distribution date and a form of distribution. The distribution date may be any date that is at least one year following: (1) in the case of cash incentive compensation, the date the cash incentive would otherwise be payable; (2) in the case of stock option gain deferrals, the exercise date for the related stock option; and (3) in the case of deferrals related to

4

restricted stock or restricted stock units, the date such restricted stock or restricted stock units are otherwise vested under the terms of the Company’s various stock plans granting restricted stock, as they may be amended from time to time; provided that, in all cases, the Participant’s deferral election must provide that distribution shall be made or commenced no later than the date the Participant attains age 70.

A Participant may elect to have deferred cash amounts paid or Common Stock distributed, as the case may be, in a single payment or in substantially equal annual installments for a period not to exceed ten (10) years, or up to fifteen (15) years for elections made until December 31, 1985, or in another form requested by the Participant, in writing, and approved by the Minor Amendment Committee. Common Stock issuable under a single stock option grant or a single restricted stock or restricted stock unit grant shall have the same distribution date and form of distribution. Notwithstanding the above, the following provisions shall apply:

(a)	If the employment of a Participant terminates for any reason other than retirement at or after age 55 prior to the date any cash incentive compensation award would otherwise have been made, then any cash deferral election made with respect to such incentive compensation award shall not become effective.
(b)	If a stock option, as to which a Participant has made a stock option gain deferral election, terminates prior to the exercise date selected by the Participant, or if the Participant dies or fails to deliver personally-owned shares in payment of the exercise price, then the deferral election shall not become effective.
(c)	In the event of the voluntary resignation of a Participant (other than retirement at or after age 55 or if age plus years of service equals or exceeds 70) or a Company discharge due to a Participant’s illegal activities, poor work performance, misconduct or violation of the Company’s policies or practices, distribution of all cash and Stock Units (as defined in Section 7(i) below) allocated to a Participant’s Deferred Cash Accounts or Deferred Stock Unit Accounts (as defined in Section 7(i) below) shall be paid the earlier of the date elected in the deferral election or the first business day of the calendar year next following the date of termination. The Minor Amendment Committee may, in its sole and complete discretion, require alternate distributions if it determines that such alternate distributions are in the best interest of the Company.
(d)	As to all previous and future Plan years, a Participant who (A) has elected a distribution date and distribution in either a single distribution or substantially equal installments and (B) is not within twelve (12) months of the date that such deferred amount, deferred Common Stock or the first installment thereof would be distributed under this Plan, shall be permitted to make no more than two amendments to the initial election to defer distributions such that his or her distribution date is either in the same calendar year as the date of the distribution which would have been made in the absence of such election amendment(s) or is at least one year after the date

5

	of the distribution which would have been made in the absence of such election amendment(s). A Participant satisfying the conditions set forth in the preceding sentence may also amend such election so that his or her form of distribution is changed to substantially equal annual installments for a period not to exceed ten (10) years or is changed to a single distribution.
(e)	A Participant may, at any time prior or subsequent to the commencement of cash benefit payments under this Plan, elect in writing to have his or her form of payment of any or all amounts due under this Plan changed to an immediate lump-sum distribution which shall be paid within one (1) business day of receipt by the Company of such request; provided that the amount of any such lump-sum distribution shall be reduced by an amount equal to the product of (X) the total lump-sum distribution otherwise payable (based on the value of the account as of the first day of the month in which the lump-sum amount is paid, adjusted by a pro-rata portion of the rate of return for the prior month in which the lump-sum is paid, determined by multiplying the actual rate of return on the last business day for such prior month by a fraction, the numerator of which is the number of days in the month in which the request is received prior to the date of payment, and the denominator of which is the number of days in the month), and (Y) the rate set forth in Statistical Release H.15(519), or any successor publication, as published by the Board of Governors of the Federal Reserve System for one-year U.S. Treasury notes under the heading “Treasury Constant Maturities” for the first day of the calendar month in which the request for a lump-sum distribution is received by the Company.
(f)	A Participant may, at any time prior or subsequent to the commencement of distribution of Common Stock under this Plan, elect to have his or her form of distribution of any or all distributions of Common Stock to be made under this Plan changed to an immediate single distribution which shall be made within three (3) days of receipt by the Company of such request; provided, that the number of shares of Common Stock to be distributed in the single distribution shall be reduced by the number of shares equal in value to the product of (X) the number of Stock Units allocated to the Participant’s Deferred Stock Unit Account, (Y) the closing price of the shares of Common Stock as quoted on the New York Stock Exchange on the date of the request, and (Z) the rate set forth in Statistical Release H.15(519), or any successor publication published by the Board of Governors of the Federal Reserve System for one-year U.S. Treasury notes under the heading “Treasury Constant Maturities” for the first day of the calendar month in which the request for a single Common Stock distribution is received by the Company. Only whole numbers of shares will be issued, with any fractional share amounts paid in cash.
(g)	At the time elected by the Participant for distribution of Common Stock attributable to allocations under the Participant’s Deferred Stock Unit Account, the Company shall issue to the Participant, within three (3) days of the date of distribution, shares of Common Stock equal to the number of Stock Units credited to the Deferred

6

Stock Unit Account. Prior to distribution and pursuant to any rules the Committee may adopt, a Participant may authorize the Company to withhold a portion of the shares of Common Stock to be distributed for the payment of all federal, state, local and foreign withholding taxes required to be collected in respect of the distribution.

	(v)	Rabbi Trust. The Company has established a Supplemental Benefits Trust with Wells Fargo Bank Minnesota, N.A. (f/k/a Norwest Bank Minneapolis, N.A.) as Trustee to hold assets of the Company under certain circumstances as a reserve for the discharge of the Company’s obligations as to deferred compensation under the Plan and certain other plans of deferred compensation of the Company. In the event of a “Change in Control” (as defined in Section 11 below), the Company shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund all cash benefits payable under the Plan. Any Participant in the Plan shall have the right to demand and secure specific performance of this provision. All assets held in the Trust remain subject only to the claims of the Company’s general creditors whose claims against the Company are not satisfied because of the Company’s bankruptcy or insolvency (as those terms are defined in the Trust Agreement). No Participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the Participant and all rights created under the Trust, as under the Plan, are unsecured contractual claims of the Participant against the Company.
	(vi)	Common Stock Distribution. In the event of a Change of Control, shares of Common Stock and cash attributable to Stock Units and dividend equivalents credited to each Participant’s Deferred Stock Unit Account shall be immediately distributed to the Participant.
	(vii)	Vesting of Matching Contributions. In connection with the transfer of deferred compensation liabilities under the Nonqualified Plan for Pillsbury Management and the Pillsbury Deferred Compensation Program for Officers on U.S. Assignment, except as provided in individual written agreements, all deferred amounts attributable to credited Company matching contribution deferrals made under such plans and interest thereon, which amounts are held in a Participant’s Deferred Account shall be fully vested as of April 1, 2002 for those Participants who are employed by the Company on April 1, 2002.
5.	DEFERRED CASH ACCOUNTS AND INVESTMENT RETURNS ON AMOUNTS IN DEFERRED ACCOUNTS
	A deferred cash incentive compensation account (“Deferred Cash Account”) will be established on behalf of each Participant electing to defer cash incentive compensation under Section 4(i) above, and the amount of deferred cash incentive compensation will be credited to each Participant’s Deferred Cash Account as of the first of the month coincident with or next following the month in which the deferral becomes effective. Each Participant’s Deferred Cash Account will be credited monthly with a “rate of return” on the total deferred cash incentive amount accruing as of the first of the month coincident with or next following the date deferred cash incentive compensation is credited to the Participant’s

7

Deferred Cash Account. Such “rate of return” shall be based upon the actual investment performance as of the last business day of the prior month of 401(k) Savings Plan funds or portfolios established under a qualified benefit plan maintained by the Company which the Minor Amendment Committee may establish as an available rate of return under this Plan. Participants may elect to have any combination of the above “rates of return” accrue on amounts in their Deferred Cash Account, from 1% to 100%, provided that the sum of the percentages attributable to such rates with respect to each account equals 100%. A Participant may change the “rate(s) of return” to be credited to his or her Deferred Cash Account as of the first day of any month by notifying the Company, in writing, of such election by the last business day of the preceding month.

Each Participant’s Deferred Cash Account will be credited monthly with the “rate(s) of return” elected by the Participant until the amount in each Participant’s Deferred Cash Account is distributed to the Participant on the distribution date(s) elected by the Participant. Each Participant shall receive a periodic statement of the balance of his or her Deferred Cash Account.

6.	COMPANY CONTRIBUTIONS TO DEFERRED ACCOUNTS
	With respect to cash incentive compensation, deferred restricted stock or restricted stock units under this Plan which, in the absence of a deferral hereunder, would have been included as “earnable compensation” under the 401(k) Savings Plan, additional deferrals shall be credited to Participants as follows, without regard to Internal Revenue Code limitations:

(i)	Deferred Cash Accounts
	Base Allocation. As of the first of the month coincident with or next following the month in which a deferral is made hereunder, each Participant’s Deferred Cash Account will be credited with an additional amount that will equal the value of the “Base Allocation” (as that term is defined in the 401(k) Savings Plan), which would have been allocated to the Participant if the Participant had contributed such deferred cash incentive compensation amount to the 401(k) Savings Plan in such year.
	Variable Allocation. In addition, as soon as practicable following the end of each fiscal year of the Company, each Participant’s Deferred Cash Account will be credited with an additional amount that will equal the value of the “Variable Allocation” (as that term is defined in the 401(k) Savings Plan), if any, which would have been allocated to the Participant if the Participant had contributed such deferred cash incentive compensation amount to the 401(k) Savings Plan in such year.
(ii)	Deferred Stock Unit Accounts
	Base Allocation. As of the first of the month coincident with or next following the month in which a deferral is made hereunder, each Participant’s Deferred Stock Unit Account will be credited with additional Stock Units in an amount equal

8

		to the value of the “Base Allocation” (as that term is defined in the 401(k) Savings Plan), which would have been allocated to the Participant if the Participant had contributed the cash equivalent of such deferred restricted stock or restricted stock units to the 401(k) Savings Plan in such year.
		Variable Allocation. In addition, as soon as practicable following the end of each fiscal year, each Participant’s Deferred Stock Unit Account will be credited with Stock Units in an amount equal to the value of the “Variable Allocation” (as that term is defined in the 401(k) Savings Plan, if any, which would have been allocated to the Participant if the Participant had contributed the cash equivalent of such restricted stock or restricted stock units to the 401(k) Savings Plan in such year.
	(iii)	Impact on General Mills International Retirement Plan
		Company contributions under this Section 6 shall not be made as to deferrals that were included in a Participant’s earnable compensation under the General Mills International Retirement Plan or to accounts established for the benefit of the Participants in the Pillsbury Deferred Compensation Program for Officers on U.S. Assignment.
7.	DEFERRED STOCK UNIT ACCOUNTS AND DIVIDEND EQUIVALENTS
	(i)	A deferred stock unit account (“Deferred Stock Unit Account”) will be established for each stock option grant covered by a Participant election to defer the receipt of Common Stock under Section 4(ii) above and, for each Net Share deferred, a Stock Unit (“Stock Unit”) will be credited to the Deferred Stock Unit Account as of the date of the stock option exercise. In addition, a Deferred Stock Unit Account will be established for each grant of restricted stock or restricted stock units covered by a Participant election to defer under Section 4(iii) above and, for each share of Common Stock of the Company attributable to deferred restricted stock or restricted stock units, a deferred Stock Unit will be credited to the Participant’s Deferred Stock Unit Account. Participants may make elections, which shall become effective six months after they are made, either to receive dividend equivalent cash amounts on Stock Units currently or to have the amounts reinvested. If the amounts are reinvested, on each dividend payment date for the Company’s Common Stock, the Company will credit each Deferred Stock Unit Account with an amount equal to the dividends paid by the Company on the number of shares of Common Stock equal to the number of Stock Units in the Deferred Stock Unit Account. Dividend equivalent amounts credited to each Deferred Stock Unit Account shall be used to hypothetically “purchase” additional Stock Units for the Deferred Stock Unit Account at a price equal to the mean of the high and low price of the Common Stock on the New York Stock Exchange on the dividend date. The Minor Amendment Committee may, in its sole discretion, direct either that all dividend equivalent amounts be paid currently or all such amounts be reinvested if, for any reason, such Committee believes it is in the best interest of the Company to do so. If the Participant fails to make an election, the dividend equivalent amounts shall be reinvested. Each

9

		Participant will receive a periodic statement of the number of Stock Units in his or her Deferred Stock Unit Account(s).
	(ii)	The Plan governs the deferral of receipt of Common Stock issuable upon the exercise of stock options of the Company. The stock options are governed by the stock option plan under which they are granted. The Plan also governs the deferral of restricted stock and restricted stock units issued by the Company. The granting of restricted stock and restricted stock units are governed by the Company’s various stock plans granting restricted stock, as they may be amended from time to time. No stock options, restricted stock, restricted stock units, or shares of Common Stock are authorized to be issued under the Plan. Participants who elect under the Plan to defer the receipt of Common Stock issuable upon the exercise of stock options and Participants who elect under the Plan to defer shares of Common Stock attributable to restricted stock or the receipt of restricted stock units will have no rights as stockholders of the Company with respect to allocations made to their Deferred Stock Unit Account(s) except the right to receive dividend equivalent allocations under Section 7(i) above.
	(iii)	If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.
8.	FINANCIAL HARDSHIP PAYMENTS
	In the event of a severe financial hardship occasioned by an emergency, including, but not limited to, illness, disability or personal injury sustained by the Participant or a member of the Participant’s immediate family, a Participant may apply to receive a distribution, including a distribution of Common Stock related to allocations of Stock Units under his or her Deferred Stock Unit Accounts earlier than initially elected. Subject to Section 3(i), the Minor Amendment

10

	Committee may, in its sole discretion, either approve or deny the request. The determination made by the Minor Amendment Committee will be final and binding on all parties. If the request is granted, the distributions will be accelerated only to the extent reasonably necessary to alleviate the financial hardship.
9.	DEATH OF A PARTICIPANT
	If the death of a Participant occurs before a full distribution of the Participant’s Deferred Cash Account(s) or Deferred Stock Unit Account(s) is made, a single distribution shall be made to the beneficiary designated by the Participant to receive such amounts. This distribution shall be made as soon as practical following notification that death has occurred. In the absence of any such designation, the distribution shall be made to the personal representative, executor or administrator of the Participant’s estate.
10.	IMPACT ON OTHER BENEFIT PLANS
	The Company may maintain life, disability, retirement and/or savings plans under which benefits earned or payable are related to earnings of a Participant.
	Life and disability plan benefits will generally be based upon the earnings that a Participant would have earned in a given calendar year in the absence of any deferral hereunder.
	Retirement benefits under a qualified pension plan maintained by the Company or an affiliate will be based upon earnings actually paid to a Participant during any given Plan year. If a person terminates employment with a right to a vested benefit under a qualified plan maintained by the Company or an affiliate, and if the actual income for pension purposes was reduced because of a cash deferral under this Plan, the Company will provide a supplemental pension equal to the difference between the actual benefit payable from the pension plan and the benefit that such Participant would have been received had income not been deferred. If such a supplemental benefit is due, such benefit would be subject to all of the provisions and in accordance with the terms and conditions of the Supplemental Retirement Plan of General Mills, Inc. This supplemental retirement benefit will not apply to Participants who terminate before becoming vested under the qualified pension plan.
11.	NON-ASSIGNABILITY OF INTERESTS
	The interests herein and the right to receive distributions under this Plan may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process, and if any attempt is made to do so, or a Participant becomes bankrupt, the interests of the Participant under the Plan may be terminated by the Minor Amendment Committee, which, in its sole discretion, may cause the same to be held or applied for the benefit of one or more of the dependents of such Participant or make any other disposition of such interests that it deems appropriate. Notwithstanding the foregoing, in the event a Participant has received an overpayment from the Supplemental Retirement Plan of General Mills, Inc. and has failed to repay such amounts upon written demand of the Company, the Company shall be authorized and empowered, at the discretion of the Company, to deduct such amount from the Participant’s Deferred Cash Account(s).

11

12.	AMENDMENTS TO PLAN
	The Company, or if specifically delegated, its delegate, reserves the right to suspend, amend or otherwise modify or terminate this Plan at any time, without notice. However, this Plan may not be suspended, amended, otherwise modified, or terminated after a Change in Control without the written consent of a majority of Participants determined as of the day before such Change in Control occurs. A “Change in Control” means:
	(i)	The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not be deemed to result in a Change in Control: (a) any acquisition directly from the Company, (b) any acquisition by the Company, (c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (d) any acquisition by any corporation pursuant to a transaction that complies with clauses (a), (b), and (c) of subsection (iii) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (a) or (b) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Company Voting Securities; or
	(ii)	Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
	(iii)	The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (a) all or substantially all of the individuals

12

		and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business combination of the Outstanding Company Voting Securities, (b) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (c) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
	(iv)	Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
	Notwithstanding any other provision of this Plan to the contrary and except as provided in Section 3(i), the Minor Amendment Committee may, in its sole discretion, direct that distributions be made before such distributions are otherwise due to be made if, for any reason (including, but not limited to a change in the tax or revenue laws of any foreign jurisdiction or the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, or a decision by a foreign or United States court of competent jurisdiction involving a Participant or beneficiary), such Committee believes that Participants or their beneficiaries have recognized or will recognize income for federal income tax purposes with respect to distributions that are or will be distributed to such Participants under the Plan before such distributions are scheduled to be paid. In making this determination, the Minor Amendment Committee shall take into account the hardship that would be imposed on Participants or their beneficiaries by the payment of federal income taxes under such circumstances.
13.	CONTROLLING LAW
	Except to the extent superseded by the laws of the United States, the laws of Minnesota shall be controlling in all matters relating to the Plan.
14.	EFFECTIVE DATE AND PLAN YEAR
	This Plan became effective as of May 1, 1984. It shall operate on a calendar year basis thereafter. The Plan was amended and restated effective as of January 1, 1986; and amended as of February 9, 1987; July 1, 1987; June 21, 1990; April 29, 1991; May 1, 1991; November 15, 1991; December 15, 1992, December 1, 1994, January 1, 1995, June 3, 1996, November 7, 1996, March 31, 1998 and December 1, 1999. The Plan has been amended and restated effective as of January 1, 2001, and as of April 1, 2002; and amended as of January 27, 2003 and January 1, 2007.

13

EX-10.18

EXHIBIT 10.18

GENERAL MILLS, INC.

1990 SALARY REPLACEMENT

STOCK OPTION PLAN

GENERAL MILLS, INC.

1990 SALARY REPLACEMENT STOCK OPTION PLAN

1. PURPOSE OF THE PLAN

The purpose of the General Mills, Inc. 1990 Salary Replacement Stock Option Plan (the “Plan”) is to give key employees of General Mills, Inc. (the “Company”) and its subsidiaries who are primarily responsible for the management of the business of the Company the opportunity to receive stock option grants in lieu of salary increases, and, as to employees who are not subject to Section 16 of the 1934 Act (each as hereinafter defined), an opportunity to receive stock option grants in lieu of certain other compensation and employee benefits thereby encouraging focus on the growth and profitability of the Company and its Common Stock.

2. EFFECTIVE DATE OF PLAN

This Plan shall become effective as of September 17, 1990, subject to the approval of the stockholders of the Company at the Annual Meeting on September 17, 1990.

3. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Compensation Committee (the “Committee”). The Committee shall be made up of non-management members of the Board of Directors (the “Board”) appointed in accordance with the Company’s Certificate of Incorporation. The Committee shall have authority to adopt rules and regulations for carrying out the purpose of the Plan, select the employees to whom grants will be made (“Optionees”), the number of shares to be optioned and interpret, construe and implement the provisions of the Plan; provided that if at any time Rule 16b-3 or any successor rule (“Rule 16b-3”) under the Securities Exchange Act of 1934, as amended (the “1934 Act”), so permits without adversely affecting the ability of the Plan to comply with the conditions for exemption from Section 16 of the 1934 Act (or any successor provisions) provided by Rule 16b-3, the Committee may delegate the administration of the Plan in whole or in part, on such terms and conditions, and to such person or persons as it may determine in its discretion, as it relates to persons not subject to Section 16 of the 1934 Act, or any successor provision. Decisions of the Committee (or its delegate as permitted herein) shall be final, conclusive and binding upon all parties, including the Company, stockholders and Optionees.

4. COMMON STOCK SUBJECT TO THE PLAN

The shares of “Common Stock” of the Company ($.10 par value) to be issued upon the exercise of a non-qualified option to purchase Common Stock granted hereunder (an “Option”) may be made available from the authorized but unissued Common Stock, shares of Common Stock held in the treasury, or Common Stock purchased on the open market or otherwise.

Approval of the Plan by the stockholders of the Company shall constitute authorization to use such shares for the Plan, subject to the discretion of the Board or as such discretion may be delegated to the Committee.

Subject to the provisions of the next succeeding paragraph, the maximum aggregate number of shares originally authorized under the Plan for which Options could be granted under the Plan shall was 3,000,000 shares. As of June 1, 1992, and subject to the provisions of the next succeeding paragraph, there remain 4,493,000 shares authorized to be issued under the Plan (as adjusted for stock splits). If an Option granted under the Plan is terminated without having been exercised in full, the unpurchased or forfeited shares or rights to receive shares shall become available for grant to other employees.

If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

5. ELIGIBLE PERSONS

Only persons who are officers or key employees of the Company or a subsidiary shall be eligible to receive grants under the Plan. No grant shall be made to any member of the Committee or any other non-employee director.

6. PURCHASE PRICE OF SALARY STOCK OPTIONS

The purchase price for each share of Common Stock issuable under an Option shall not be less than 100 percent of the Fair Market Value of the Shares of Common Stock of the Company subject to such option on the date of grant. “Fair Market Value” as used in the Plan shall equal the closing price of the Common Stock on the New York Stock Exchange on the applicable date.

7. OPTION TERM

The term of each Option grant as determined by the Committee shall not exceed ten (10) years and one (1) month from the date of that grant and shall expire as of the last day of the designated term, unless terminated earlier under the provisions of the Plan.

8. OPTION TYPE

Option grants will be Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision.

9. NON-TRANSFERABILITY OF OPTIONS

No Option granted under this Plan shall be transferable by the Optionee otherwise than by the Optionee’s Last Will and Testament or by the laws of descent and distribution. An Optionee shall forfeit any Option assigned or transferred, voluntarily or involuntarily, other than as permitted under this Section. Each Option shall be exercised during the Optionee’s lifetime only by the Optionee or his or her guardian or legal representative.

10. EXERCISE OF OPTIONS

Except as provided in Sections 12, 13 and 14, each Option shall be vested and may be exercised in accordance with such terms and conditions as may be determined by the Committee for grants to officers or executives and by the Chief Executive Officer of the Company for grants to other management participants.

Subject to the provision of this Section 10, each Option may be exercised in whole or, from time to time, in part with respect to the number of then exercisable shares in any sequence desired by the Optionee without regard to the date of grant of stock options under other plans of the Company.

An Optionee exercising an Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company. At the time of purchase, the Optionee shall tender the full purchase price of the shares purchased. Until such payment has been made and a certificate or certificates for the shares purchased has been issued in the Optionee’s name, the Optionee shall possess no stockholder rights with respect to any such shares. Payment of such purchase price shall be made to the Company, subject to any applicable rule or regulation adopted by the Committee:

(i) in cash (including check, draft, money order or wire transfer made payable to the order of the Company);

(ii) through the delivery of shares of Common Stock owned by the Optionee; or

(iii) by a combination of (i) and (ii) above.

For determining the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.

11. WITHHOLDING TAXES ON OPTION EXERCISE

Each Optionee shall deliver to the Company cash in an amount equal to all federal, state and local withholding taxes required to be collected by the Company in respect of the exercise of an Option, and until such payment is made, the Company may, in its discretion, retain all or a portion of the shares to be issued.

Notwithstanding the foregoing, to the extent permitted by law and pursuant to such rules as the Committee may adopt, an Optionee may authorize the Company to satisfy any such withholding requirement by directing the Company to withhold from any shares to be issued such number of shares as shall be sufficient to satisfy the withholding obligation.

12. EXERCISE OF OPTIONS IN EVENT OF CERTAIN CHANGES OF CONTROL

Each outstanding Option shall become immediately and fully exercisable for a period of six (6) months following the date of the following occurrences, each constituting a “Change of Control”:

(i) if any person (including a group as defined in Section 13(d)(3) of the 1934 Act) becomes, directly or indirectly, the beneficial owner of twenty (20) percent or more of the shares of the Company entitled to vote for the election of directors;

(ii) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were Directors of the Company just prior to such event cease to constitute a majority of the Company’s Board of Directors; or

(iii) the stockholders of the Company approve an agreement providing for a transaction in which the Company will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Company occurs.

After such six (6) month period the normal option exercise provisions of the Plan shall govern. In the event an Optionee is terminated as an employee of the Company or a Subsidiary within two (2) years of any of the events specified in (i), (ii) or (iii), all outstanding Stock Options at that date of termination shall become immediately exercisable for a period of three (3) months.

13. TERMINATION OF EMPLOYMENT OR LEAVE OF ABSENCE OF AN OPTIONEE

(a) Normal Termination

If the Optionee’s employment by the Company or a subsidiary terminates for any reason other than as specified in subsections (b), (c), (d) or (e), the Options shall terminate three (3) months after such termination. If the employment by the Company or a subsidiary of an Optionee, other than an Optionee subject to Section 16 of the 1934 Act, is terminated for the convenience of the Company, as determined by the Committee, and, at the time of termination the sum of the Optionee’s age and service with the Company equals or exceeds 70, the Committee, in its sole discretion, may permit any Option previously granted to the Optionee under the Plan to be exercised to the full extent that such Option could have been exercised by such Optionee immediately prior to the Optionee’s termination and may permit such Option to remain exercisable until the expiration of the Option in accordance with its original term.

(b) Death

If the termination of employment is due to the Optionee’s death, the Options may be exercised as provided in Section 14.

(c) Retirement

If the termination of employment is due to the Optionee’s retirement, the Optionee thereafter may exercise an Option within the period remaining under the original term of the Option.

(d) Spin-offs

If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, may determine that all outstanding Options granted more than one (1) year prior to the date of such termination shall immediately become exercisable for a period of three (3) years after the date of such termination, subject to the provisions of Section 7.

(e) Leave of Absence

Unless the Committee shall otherwise determine, if an Optionee is placed on an unpaid leave of absence, such Optionee’s Options shall terminate at the expiration of the unpaid leave of absence.

If an Optionee is placed on an unpaid leave of absence, retires during such leave, and the Committee had decided not to terminate the Optionee’s right to exercise an Option at the date of the inception of said leave of absence, then such Optionee may exercise an Option in accordance with subsection (c).

14. DEATH OF OPTIONEE

If an Optionee should die while employed by the Company or a subsidiary or after retirement, any Option previously granted to the Optionee under this Plan may be exercised by the person designated in such Optionee’s Last Will and Testament or, in the absence of such designation, by the Optionee’s estate, to the full extent that such Option could have been exercised by such Optionee immediately prior to the Optionee’s death, subject to the original term of the Option.

15. AMENDMENTS TO THE PLAN

The Plan may be terminated, modified, or amended by the Board of Directors of the Company.

Subject to the approval of the Board of Directors, the Committee may at any time terminate, modify or suspend the operation of the Plan, provided that no such amendment, alteration or discontinuation shall be made without the approval of the stockholders of the Company:

(i) if such approval is necessary to comply with any legal, tax or regulatory requirement, including any approval requirement which is a prerequisite for exemptive relief from Section 16(b) of the 1934 Act; or

(ii) to materially increase the number of shares which may be issued under the Plan or materially modify the requirements as to eligibility for participating in the Plan.

The Board of Directors shall have authority to cause the Company to take any action related to the Plan which may be required to comply with the provisions of the Securities Act of 1933, as amended, the 1934 Act, and the rules and regulations prescribed by the Securities and Exchange Commission. Any such action shall be at the expense of the Company.

No termination, modification, suspension or amendment of the Plan shall alter or impair the rights of any Optionee pursuant to a prior grant, without the consent of the Optionee.

16. FOREIGN JURISDICTIONS

The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of laws of any foreign jurisdiction, to key employees of the Company who are subject to such laws and who are eligible to receive Option grants under the Plan.

17. DURATION OF THE PLAN

Grants may be made under the Plan until September 30, 1995.

18. NOTICE

All notices and communications to the Company shall be in writing, effective as of actual receipt by the Company, and shall be sent to:

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, Minnesota 55426

Attention: Corporate Compensation

If by Telex: 170360 Gen Mills

If by Facsimile: (612) 540-4925

19. SECTION 16 OFFICERS

With respect to persons subject to Section 16 of the 1934 Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

EX-10.19

EXHIBIT 10.19

GENERAL MILLS, INC.

STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1993

- 1 -

GENERAL MILLS, INC.

STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1993

1. PURPOSE OF THE PLAN

The purpose of the General Mills, Inc. Stock Option and Long-Term Incentive Plan of 1993 (the “Plan”) is to attract and retain able employees by rewarding employees of General Mills, Inc., its subsidiaries and affiliates (defined as entities in which General Mills, Inc. owns an equity interest of 25% or more) (collectively, the “Company”) who are responsible for the growth and sound development of the business of the Company, and to align the interests of all employees with those of the stockholders of the Company.

2. EFFECTIVE DATE, DURATION AND SUMMARY OF PLAN

A. Effective Date and Duration

This Plan shall become effective as of September 20, 1993, subject to the approval of the stockholders of the Company at the Annual Meeting on September 20, 1993. Awards may be made under the Plan until October 1, 1998.

B. Summary of Option Provisions for Participants

The stock option that will be awarded to employees under this Plan gives a right to an employee to purchase at a future date shares of General Mills, Inc. common stock at a fixed price. As an employee, you will receive an “option certificate” in your own name, which will contain the term and other conditions of the option grant. In general, each certificate will state the number of shares of General Mills that you can purchase from the Company, the price at which you can purchase the shares, and the date you can make your purchase. You will not have any taxable income when you receive the option certificate.

The price at which you may buy the General Mills shares will be equal to the market price of the Company shares on the New York Stock Exchange as of the day the option was awarded to you. If during the period that you must hold the option certificate before you can use it, the price of General Mills stock has risen, you will make a gain on exercising the option certificate equal to the difference between the price shown on the option certificate and the market price of General Mills shares on the date you use your option to buy shares under the terms of the option certificate. This gain is taxable to you.

You will never be obligated to buy shares of General Mills if you do not wish to do so. After the necessary holding period before you can use the certificate, you can continue to hold the option certificate as an employee for up to ten years and one month before making the decision whether or not to buy shares of General Mills. After the full term of ten years and one month, the rights under the certificate will lapse and cannot then be used by the employee.

- 2 -

In general, you cannot sell or assign the option certificate to any other person, and the specific provisions which cover your rights in the option certificate are covered in the full text of the Plan.

3. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Compensation Committee (the “Committee”). The Committee shall be comprised solely of non-employee, independent members of the Board of Directors (the “Board”) appointed in accordance with the Company’s Certificate of Incorporation. Subject to the provisions of Section 14, the Committee shall have authority to adopt rules and regulations for carrying out the purpose of the Plan, select the employees to whom Awards will be made (“Participants”), determine the number of shares to be awarded and the other terms and conditions of Awards in accordance with the Plan provisions and interpret, construe and implement the provisions of the Plan; provided that if at any time Rule 16b-3 or any successor rule (“Rule 16b-3”) under the Securities Exchange Act of 1934, as amended (the “1934 Act”), so permits, without adversely affecting the ability of the Plan to comply with the conditions for exemption from Section 16 of the 1934 Act (or any successor provisions) provided by Rule 16b-3, the Committee may delegate its duties under the Plan in whole or in part, on such terms and conditions, to the Chief Executive Officer and to other senior officers of the Company; provided further, that only the Committee may select and make other decisions as to Awards to Participants who are subject to Section 16 of the 1934 Act and to other executives of the Company. The Committee (or its permitted delegate) may correct any defect or supply any omission or reconcile any inconsistency in any agreement relating to any Award under the Plan in the manner and to the extent it deems necessary. Decisions of the Committee (or its permitted delegate) shall be final, conclusive and binding upon all parties, including the Company, stockholders and Participants.

4. COMMON STOCK SUBJECT TO THE PLAN

The shares of common stock of the Company ($.10 par value) (“Common Stock”) to be issued upon exercise of a Stock Option, awarded as Restricted Stock, or issued upon expiration of the restricted period for Restricted Stock Units, may be made available from the authorized but unissued Common Stock, shares of Common Stock held in the Company’s treasury, or Common Stock purchased by the Company on the open market or otherwise. Approval of the Plan by the stockholders of the Company shall constitute authorization to use such shares for the Plan.

The Committee, in its discretion, may require as a condition to the grant of Stock Options, Restricted Stock or Restricted Stock Units (collectively, “Awards”), the deposit of Common Stock owned by the Participant receiving such grant, and the forfeiture of such Awards, if such deposit is not made or maintained during the required holding period or the applicable restricted period. Such shares of deposited Common Stock may not be otherwise sold, pledged or disposed of during the applicable holding period or restricted period. The Committee may also determine whether any shares issued upon exercise of a Stock Option shall be restricted in any manner.

- 3 -

Subject to the provisions of the next succeeding paragraph, the maximum aggregate number of shares of Common Stock authorized under the Plan for which Awards may be granted under the Plan is 8,000,000; provided that if during the term of the Plan the Company repurchases shares of Common Stock, on the open market or otherwise and in compliance with the rules and regulations of the Securities and Exchange Commission, additional Awards may be granted equal to the number of shares repurchased, subject that no more than 4,000,000 additional shares of Common Stock shall be authorized for Awards hereunder; and provided further that the total number of shares of Common Stock that shall be available for Restricted Stock and Restricted Stock Unit Awards under the Plan shall be limited to 4% of the total shares authorized for Award hereunder. The number of shares of Common Stock subject to Stock Options granted under this Plan to any one Participant shall not exceed 10% of the total number of shares of Common Stock which may be issued under this Plan. Upon the expiration, forfeiture, termination or cancellation, in whole or in part, of unexercised Stock Options, or forfeiture of Restricted Stock or Restricted Stock Units, the shares of Common Stock subject thereto shall again be available for Awards under the Plan.

If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

5. ELIGIBLE PERSONS

Only persons who are employees of the Company and, except as expressly approved by the Committee, having three or more years of service, shall be eligible to receive Awards under the Plan (“Participants”). No Award shall be made to any member of the Committee or any other non-employee director of the Company.

- 4 -

6. PURCHASE PRICE OF STOCK OPTIONS

The purchase price for each share of Common Stock issuable under a Stock Option shall not be less than 100% of the Fair Market Value of the shares of Common Stock on the date of grant. “Fair Market Value” as used in the Plan shall equal the closing price of the Common Stock on the New York Stock Exchange on the applicable date.

7. STOCK OPTION TERM AND TYPE

The term of any Stock Option as determined by the Committee shall not exceed 10 years and one month from the date of grant and shall expire as of the close of business on the last day of the designated term, unless terminated earlier under the provisions of the Plan. Stock Option grants under the Plan shall be Non-Qualified Stock Options governed by section 83 of the Internal Revenue Code of 1986, as amended (the “Code”).

8. EXERCISE OF STOCK OPTIONS

Except as provided in Sections 12 and 13 (Change of Control and Termination of Employment), each Stock Option may be exercised only after five years of the Participant’s continued employment with the Company.

An optionee exercising a Stock Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company. At the time of purchase, the Participant shall tender the full purchase price of the shares purchased. Until such payment has been made and a certificate or certificates for the shares purchased has been issued in the Participant’s name, the Participant shall possess no stockholder rights with respect to such shares. Payment of such purchase price shall be made to the Company, subject to any applicable rule or regulation adopted by the Committee:

(i) in cash (including check, draft, money order or wire transfer made payable to the order of the Company);

(ii) through the delivery of shares of Common Stock owned by the Participant; or

(iii) by a combination of (i) and (ii) above.

For determining the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.

9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS

With respect to Awards of Restricted Stock and Restricted Stock Units, the Committee shall:

(i) select Participants to whom Awards will be made, provided that Restricted Stock Units may only be awarded to those employees of the Company who are employed in a country other than the United States;

- 5 -

(ii) determine the number of shares of Restricted Stock or the number of Restricted Stock Units to be awarded;

(iii) determine the length of the restricted period, which shall be no less than three years;

(iv) determine the purchase price, if any, to be paid by the Participant for Restricted Stock or Restricted Stock Units; and

(v) determine any restrictions other than those set forth in this Section 9.

Any shares of Restricted Stock granted under the Plan may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of stock certificates, and may be held in escrow.

Subject to the restrictions set forth in this Section 9, each Participant who receives Restricted Stock shall have all rights as a stockholder with respect to such shares, including the right to vote the shares and receive dividends and other distributions.

Each Participant who receives Restricted Stock Units shall be eligible to receive, at the expiration of the applicable restricted period, one share of Common Stock for each Restricted Stock Unit awarded, and the Company shall issue to and register in the name of each such Participant a certificate for that number of shares of Common Stock. Participants who receive Restricted Stock Units shall have no rights as stockholders with respect to such Restricted Stock Units until such time as share certificates for Common Stock are issued to the Participants; provided, however, that quarterly during the applicable restricted period for all Restricted Stock Units awarded hereunder, the Company shall pay to each such Participant an amount equal to the sum of all dividends and other distributions paid by the Company during the prior quarter on that equivalent number of shares of Common Stock.

Subject to the provisions of Section 12, for awards of Restricted Stock or Restricted Stock Units which have a deposit requirement, a Participant will be eligible to vest only in those shares of Restricted Stock or Restricted Stock Units for which personally-owned shares are on deposit with the Company as of the date the Participant’s employment with the Company terminates.

10. NON-TRANSFERABILITY

Except as otherwise provided in Section 9, no shares of Restricted Stock and no Restricted Stock Units shall be sold, exchanged, transferred, pledged, or otherwise disposed of during the restricted period. No Stock Options granted under this Plan shall be transferable by a Participant otherwise than (i) by the Participant’s last will and testament or (ii) by the applicable laws of descent and distribution, and such Stock Options shall be exercised during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. Other than as set forth herein, no Award under the Plan shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void.

- 6 -

11. WITHHOLDING TAXES

It shall be a condition to the obligation of the Company to deliver shares upon the exercise of a Stock Option, the vesting of Restricted Stock or Restricted Stock Units and the corresponding issuance of shares of unrestricted Common Stock, that the Participant pay to the Company cash in an amount equal to all federal, state, local and foreign withholding taxes required to be collected in respect thereof.

Notwithstanding the foregoing, to the extent permitted by law and pursuant to such rules as the Committee may adopt, a Participant may authorize the Company to satisfy any such withholding requirement by directing the Company to withhold from any shares of Common Stock to be issued, all or a portion of such number of shares as shall be sufficient to satisfy the withholding obligation, provided that in the case of the vesting of Restricted Stock or Restricted Stock Units, the number of shares of Common Stock to be issued equals or exceeds 500.

12. CHANGE OF CONTROL

Each outstanding Option shall become immediately and fully exercisable for a period of one (1) year following the date of the following occurrences, each constituting a “Change of Control”:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Voting Securities; or

- 7 -

(b) Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

- 8 -

(d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

After such one (1) year period the normal option exercise provisions of the Plan shall govern. In the event an Optionee is terminated as an employee of the Company or a Subsidiary within two (2) years of any of the events specified in (a), (b), (c) or (d), all outstanding Options at that date of termination shall become immediately exercisable for a period of six (6) months, subject to the provisions of Section 7.

With respect to Stock Option grants outstanding as of the date of any such Change of Control which require the deposit of owned Common Stock as a condition to obtaining rights: (a) said deposit requirement shall be terminated as of the date of the Change of Control and any such deposited stock shall be promptly returned to the Participant; and (b) any restrictions on the sale of shares issued in respect of any such Stock Option shall lapse.

In the event of a Change of Control, a Participant shall vest in all shares of Restricted Stock and Restricted Stock Units, effective as of the date of such Change of Control, and any deposited shares of Common Stock shall be promptly returned to the Participant.

13. TERMINATION OF EMPLOYMENT

A. Resignation or Termination for Cause

If the Participant’s employment by the Company is terminated by either

(i) the voluntary resignation of the Participant, or

(ii) a Company discharge due to Participant’s illegal activities, poor work performance, misconduct or violation of the Company’s policies or practices,

then Participant’s Stock Options shall terminate three months after such termination (but in no event beyond the original full term of the Stock Options) and no Stock Options shall become exercisable after such termination, and all shares of Restricted Stock and Restricted Stock Units which are subject to restriction on the date of termination shall be forfeited.

B. Other Termination

If the Participant’s employment by the Company terminates for any reason other than specified in Sections 12, 13 A, C, D or E, the following rules shall apply:

(i) In the event that, at the time of such termination, the sum of the Participant’s age and service with the Company equals or exceeds 70, the Participant’s outstanding Stock Options shall continue to become exercisable, and shares of Restricted Stock and Restricted Stock Units subject to share deposit requirements shall continue to vest, each according to the schedule established at the time of grant, unless otherwise provided in the applicable Award agreement. Shares of Restricted Stock and Restricted Stock Units not subject to share deposit requirements shall fully vest as of the date of termination. Stock Options shall remain exercisable for the remaining full term of such Stock Options.

- 9 -

(ii) In the event that, at the time of such termination, the sum of Participant’s age and service with the Company is less than 70, Participant’s outstanding unexercisable Stock Options and unvested Restricted Stock and Restricted Stock Units shall become exercisable or vest, as the case may be, as of the date of termination, in a pro-rata amount based on the full months of employment completed during the full vesting period from the date of grant to the date of termination with such newly-vested Stock Options and Stock Options exercisable on the date of termination remaining exercisable for the lesser of one year from the date of termination and the original full term of the Stock Option. All other Stock Options, shares of Restricted Stock and Restricted Stock Units shall be forfeited as of the date of termination. Provided, however, that if the Participant is an executive officer of the Company, the Participant’s outstanding Stock Options which, as of the date of termination are not yet exercisable, shall become exercisable effective as of the date of such termination and, with all outstanding Stock Options already exercisable on the date of termination, shall remain exercisable for the lesser of one year following the date of termination and the original full term of the Stock Option, and all shares of Restricted Stock and Restricted Stock Units shall vest as of the date of termination.

C. Death

If a Participant should die while employed by the Company, any Stock Option previously granted under this Plan may be exercised by the person designated in such Participant’s last will and testament or, in the absence of such designation, by the Participant’s estate, to the full extent that such Stock Option could have been exercised by such Participant immediately prior to death. Further, with respect to outstanding Stock Option grants which, as of the date of death, are not yet exercisable, any such option grant shall vest and become exercisable in a pro-rata amount, based on the full months of employment completed during the full vesting period of the Stock Option from the date of grant to the date of death.

With respect to Stock Option grants which require the deposit of owned Common Stock as a condition to obtaining exercise rights, in the event a Participant should die while employed by the Company, said Stock Options may be exercised as provided in the first paragraph of this Section 13C, subject to the following special conditions:

- 10 -

(i) any restrictions on the sale of shares issued in respect of any such Stock Option shall cease; and

(ii) any owned Common Stock deposited by the Participant pursuant to said grant shall be promptly returned to the person designated in such Participant’s last will and testament or, in the absence of such designation, to the Participant’s estate, and all requirements regarding deposit by the Participant shall be terminated.

A Participant who dies during any applicable restricted period shall vest in a proportionate number of shares of Restricted Stock or Restricted Stock Units, effective as of the date of death. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of death, as a percentage of the applicable restricted period.

D. Retirement

The Committee shall determine, at the time of grant, the treatment of the Stock Option upon the retirement of the Participant. Unless other terms are specified in the original Stock Option grant, if the termination of employment is due to a Participant’s retirement on or after age 55, the Participant may exercise a Stock Option, subject to the original terms and conditions of the Stock Option, including any Stock Option granted under the Plan prior to such retirement. With respect to Stock Option grants which require the deposit of owned Common Stock as a condition to obtaining rights, any restrictions on the sale of shares issued in respect of any such Stock Option shall lapse at the date of any such retirement.

A Participant who retires on or after the date he or she attains age 65 shall fully vest in all shares of Restricted Stock or Restricted Stock Units, effective as of the date of retirement (unless any such award specifically provides otherwise).

A Participant who takes early retirement (after age 55, but prior to age 65) during any applicable restricted period may elect either of the following alternatives with respect to Restricted Stock or Restricted Stock Units (unless any such award specifically provides otherwise):

(a) Leave owned shares on deposit with the Company and vest in all shares of Restricted Stock or Restricted Stock Units, effective as of the earlier of the date the Participant attains age 65 or the termination date of the applicable restricted period; or

(b) Withdraw owned shares and vest in a proportionate number of shares of Restricted Stock or Restricted Stock Units, effective as of the date the shares on deposit are withdrawn. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of early retirement, as a percentage of the applicable restricted period.

- 11 -

E. Spin-offs

If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, shall determine the treatment of all outstanding Awards under the Plan.

14. AMENDMENTS OF THE PLAN

The Plan may be terminated, modified, or amended by the Board of Directors of the Company. The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board of Directors, the Committee may at any time terminate, modify, or suspend the operation of the Plan, provided that no action shall be taken by the Board of Directors or the Committee without the approval of the stockholders of the Company which would:

(i) materially increase the number of shares which may be issued under the Plan;

(ii) materially increase the benefits accruing to Participants under the Plan; or

(iii) materially modify the requirements as to eligibility for participating in the Plan.

The Board of Directors shall have authority to cause the Company to take any action related to the Plan which may be required to comply with the provisions of the Securities Act of 1933, as amended, the 1934 Act, and the rules and regulations prescribed by the Securities and Exchange Commission. Any such action shall be at the expense of the Company.

No termination, modification, suspension, or amendment of the Plan shall alter or impair the rights of any Participant pursuant to a prior Award without the consent of the Participant. There is no obligation for uniformity of treatment of Participants under the Plan.

15. FOREIGN JURISDICTIONS

The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject to such laws and who receive Awards under the Plan.

16. NOTICE

All notices to the Company regarding the Plan shall be in writing, effective as of actual receipt by the Company, and shall be sent to:

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, Minnesota 55426

Attention: Corporate Compensation

- 12 -

EX-10.20

EXHIBIT 10.20

GENERAL MILLS, INC.

1998 SENIOR MANAGEMENT STOCK PLAN

GENERAL MILLS, INC.

1998 SENIOR MANAGEMENT STOCK PLAN

1. PURPOSE OF THE PLAN

The purpose of the General Mills, Inc. 1998 Senior Management Stock Plan (the "Plan") is to attract and retain able employees by rewarding employees of General Mills, Inc., its subsidiaries and affiliates (defined as entities in which General Mills, Inc. has a significant equity or other interest) (collectively, the "Company") who are responsible for the growth and sound development of the business of the Company, and to align the interests of employees with those of the stockholders of the Company.

2. EFFECTIVE DATE AND DURATION OF PLAN

This Plan shall become effective as of September 28, 1998, subject to the approval of the stockholders of the Company at the Annual Meeting on September 28, 1998. Awards may be made under the Plan until October 1, 2005.

3. ELIGIBLE PERSONS

Only persons who are employees of the Company shall be eligible to receive grants of Stock Options (defined below) under the Plan. The Compensation Committee of the Company's Board of Directors (the "Committee") shall administer the Plan, in accordance with Section 12, and shall exercise the power to determine and designate, from time to time, from among the employees, those who will be granted Stock Options under the Plan and become "Participants" in the Plan.

4. AWARD TYPE

Under this Plan, the Committee may award Participants options (“Stock Options”) to purchase common stock of the Company ($.10 par value) (“Common Stock”). The grant of a Stock Option entitles the Participant to purchase shares of Common Stock at an "Exercise Price" established by the Committee. The Exercise Price for each share of Common Stock issuable under a Stock Option shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant. "Fair Market Value" shall equal the closing price of the Common Stock on the New York Stock Exchange on the date of grant.

5. STOCK OPTION TERM AND TYPE

Stock Options granted under the Plan may be either Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code of 1986, as amended (the "Code") or Incentive Stock Options described in Section 422(b) of the Code. The term of any Stock Option granted under the Plan shall be determined by the Committee, provided that the term of a Non-Qualified

- 1 -

Stock Option shall not exceed 10 years and one month and the term of an Incentive Stock Option shall not exceed 10 years. The maximum number of shares that may be issued by Incentive Stock Options granted under the Plan is 15,000,000.

6. COMMON STOCK SUBJECT TO THE PLAN

a) Maximum Shares Available for Delivery. Subject to Section 6(c), the maximum number of shares of Common Stock available for issuance to Participants under the Plan shall be equal to the sum of:

(i) 12,600,000;

(ii) 2,400,000, being the number of shares of Common Stock still available for grants under the Company's 1993 Stock Option and Long-Term Incentive Plan as of the effective date of this Plan; and

(iii) any shares of Common Stock subject to Stock Options granted under any prior stockholder – approved plan of the Company adopted prior to the effective date of this Plan which are forfeited, expire or are cancelled without the delivery of Common Stock.

In addition, any Common Stock covered by a Stock Option granted under the Plan, which is forfeited, cancelled or expires in whole or in part shall be deemed not to be delivered for purposes of determining the maximum number of shares of Common Stock available for grants under the Plan.

Further, if any Stock Option is exercised by tendering Common Stock, either actually or by attestation, to the Company as full or partial payment in connection with the exercise of the Stock Option under the Plan, only the number of shares of Common Stock issued net of the Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares available for grants under the Plan.

b) Other Share Limits. The number of shares of Common Stock subject to Stock Options granted under the Plan to any one Participant shall not exceed 5,000,000.

c) Adjustments for Corporate Transactions. If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or

- 2 -

exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

d) Limits on Distribution. Distribution of shares of Common Stock or other amounts under the Plan shall be subject to the following:

(i) Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity.

(ii) To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

e) The Committee, in its discretion, may require as a condition to the grant of Stock Options, the deposit of Common Stock owned by the Participant receiving such grant, and the forfeiture of such grants, if such deposit is not made or maintained during the required holding period. Such shares of deposited Common Stock may not be otherwise sold, pledged or disposed of during the applicable holding period or restricted period. The Committee may also determine whether any shares issued upon exercise of a Stock Option shall be restricted in any manner.

7. EXERCISE OF STOCK OPTIONS

a) Exercise. Except as provided in Sections 10 and 11 (Change of Control and Termination of Employment), each Stock Option may be exercised only in accordance with the terms and conditions of the Stock Option grant and during the periods as may be established by the Committee, and only after three years of the Participant's continued employment with the Company following the date of the Stock Option grant.

A Participant exercising a Stock Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company.

b) Payment. The Exercise Price shall be paid to the Company at the time of such exercise, subject to any applicable rule or regulation adopted by the Committee:

(i) in cash (including check, draft, money order or wire transfer made payable to the order of the Company);

- 3 -

(ii) through the tender of shares of Common Stock owned by the Participant (by either actual delivery or attestation); or

(iii) by a combination of (i) and (ii) above.

For determining the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.

c) Deferrals. The Committee may permit or require Participants to defer receipt of any Common Stock issuable upon exercise of a Stock Option, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred Common Stock equivalents.

8. TRANSFERABILITY OF STOCK OPTIONS

Except as otherwise provided by rules of the Committee, no Stock Options shall be transferable by a Participant otherwise than (i) by the Participant's last will and testament or (ii) by the applicable laws of descent and distribution, and such Stock Options shall be exercised during the Participant's lifetime only by the Participant or his or her guardian or legal representative.

9. TAXES

Whenever the Company issues Common Stock under the Plan, the Company may require the recipient to remit to the Company an amount sufficient to satisfy any Federal, state or local tax withholding requirements prior to the delivery of such Common Stock, or, in the discretion of the Committee, upon the election of the Participant, the Company may withhold from the shares to be delivered shares sufficient to satisfy all or a portion of such tax withholding requirements.

10. CHANGE OF CONTROL

Each outstanding Stock Option shall become immediately and fully exercisable for a period of one (1) year following the date of the following occurrences, each constituting a "Change of Control":

a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related

- 4 -

trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) below; and provided, further, that if any Person's beneficial ownership of the Outstanding Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Voting Securities; or

b) Individuals who, as of the date hereof, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

c) The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company ("Business Combination") or, if consummation of such Business Combination is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

- 5 -

d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

After such one (1) year period the normal Stock Option exercise provisions of the Plan shall govern. Notwithstanding any other provision of the Plan, but subject to Section 5, in the event a Participant's employment with the Company is terminated within two (2) years of any of the events specified in (a), (b), (c) or (d), all outstanding Stock Options of such Participant at that date of termination shall be exercisable for a period of six (6) months beginning on the date of termination.

With respect to Stock Option grants outstanding as of the date of any such Change of Control which require the deposit of owned Common Stock as a condition to obtaining rights, the deposit requirement shall be terminated as of the date of the Change of Control and any such deposited stock shall be promptly returned to the Participant.

11. TERMINATION OF EMPLOYMENT

a) Resignation or Termination for Cause. If the Participant’s employment by the Company is terminated by either

(i) the voluntary resignation of the Participant, or

(ii) a Company discharge due to Participant’s illegal activities, poor work performance, misconduct or violation of the Company’s policies or practices,

then Participant's Stock Options shall terminate three months after such termination (but in no event beyond the original full term of the Stock Options) and no Stock Options shall become exercisable after such termination.

b) Other Termination. If the Participant's employment by the Company terminates for any reason other than specified in Sections 10, 11 (a), (c), (d) or (e), the following rules shall apply:

(i) In the event that, at the time of such termination, the sum of the Participant's age and service with the Company equals or exceeds 70, the Participant's outstanding Stock Options shall continue to become exercisable in accordance with the schedule established at the time of grant. Stock Options shall remain exercisable for the remaining full term of such Stock Options.

(ii) In the event that, at the time of such termination, the sum of Participant's age and service with the Company is less than 70, Participant's outstanding unexercisable Stock Options shall become exercisable as of the date of termination, in a pro-rata amount based on the full months of employment completed during the full vesting period from the date of grant to the date of termination with such

- 6 -

newly-vested Stock Options and Stock Options exercisable on the date of termination remaining exercisable for the lesser of one year from the date of termination and the original full term of the Stock Option. All other Stock Options shall be forfeited as of the date of termination. Provided, however, that if the Participant is an executive officer of the Company, the Participant's outstanding Stock Options which, as of the date of termination are not yet exercisable, shall become exercisable effective as of the date of such termination and, with all outstanding Stock Options already exercisable on the date of termination, shall remain exercisable for the lesser of one year following the date of termination and the original full term of the Stock Option.

c) Death. If a Participant dies while employed by the Company, any Stock Option previously granted under this Plan may be exercised by the person designated in such Participant's last will and testament or, in the absence of such designation, by the Participant's estate, to the full extent that such Stock Option could have been exercised by such Participant immediately prior to death. Any outstanding Stock Options granted on or after June 1, 2002, which, as of the date of death, are not yet exercisable, shall fully vest and become exercisable upon a Participant’s death. Any outstanding Stock Option granted prior to June 1, 2002 shall vest and become exercisable in a pro-rata amount, based on the full months of employment completed during the full vesting period of the Stock Option from the date of grant to the date of death.

With respect to Stock Options which require the deposit of owned Common Stock as a condition to obtaining exercise rights, in the event a Participant dies while employed by the Company, such Stock Options may be exercised as provided in the first paragraph of this Section 11(c) and any owned Common Stock deposited by the Participant pursuant to such grant shall be promptly returned to the person designated in such Participant's last will and testament or, in the absence of such designation, to the Participant's estate, and all requirements regarding deposit by the Participant shall be terminated.

d) Retirement. The Committee shall determine, at the time of grant, the treatment of the Stock Option upon the retirement of the Participant. Unless other terms are specified in the original Stock Option grant, if the termination of employment is due to a Participant's retirement on or after age 55, the Participant may exercise a Stock Option, subject to the original terms and conditions of the Stock Option.

e) Spin-offs. If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, shall determine the treatment of all outstanding Stock Options under the Plan.

- 7 -

12. ADMINISTRATION OF THE PLAN

a) Administration. The authority to control and manage the operations and administration of the Plan shall be vested in Committee in accordance with this Section 12.

b) Selection of Committee. The Committee shall be selected by the Board, and shall consist of two or more members of the Board.

c) Powers of Committee. The authority to manage and control the operations and administration of the Plan shall be vested in the Committee, subject to the following:

(i) Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from among the eligible Company employees those persons who shall receive Stock Options, to determine the time or times of receipt, to determine the types of grants (including status as Non-Qualified or Incentive Stock Options) and the number of shares covered by the grants, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such grants, and (subject to the restrictions imposed by Section 13) to cancel or suspend grants. In making such determinations, the Committee may take into account the nature of services rendered by the individual, the individual's present and potential contribution to the Company's success and such other factors as the Committee deems relevant.

(ii) The Committee will have the authority and discretion to establish terms and conditions of awards as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States.

(iii) The Committee will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

(iv) Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding.

d) Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.

13. AMENDMENTS OF THE PLAN

The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board of

- 8 -

Directors, where required, the Committee may at any time terminate, amend, or suspend the operation of the Plan, provided that no action shall be taken by the Board of Directors or the Committee without the approval of the stockholders of the Company which would:

(i) materially increase the number of shares which may be issued under the Plan;

(ii) permit granting of Stock Options at less than Fair Market Value;

(iii) except as provided in Section 6, permit the repricing of outstanding Stock Options; and

(iv) amend the maximum shares set forth in Section 6(b) which may be annually granted as Stock Options to any single Participant.

No termination, modification, suspension, or amendment of the Plan shall alter or impair the rights of any Participant pursuant to an outstanding Stock Option without the consent of the Participant. There is no obligation for uniformity of treatment of Participants under the Plan.

14. FOREIGN JURISDICTIONS

The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject to such laws and who receive Stock Options under the Plan.

15. NOTICE

All notices to the Company regarding the Plan shall be in writing, effective as of actual receipt by the Company, and shall be sent to:

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, Minnesota 55426

Attention: Corporate Compensation

- 9 -

EX-10.21

EXHIBIT 10.21

GENERAL MILLS, INC.

2001 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

GENERAL MILLS, INC.
2001 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

1. PURPOSE

          The purpose of the General Mills, Inc. 2001 Compensation Plan for Non-Employee Directors (the “Plan”) is to provide a compensation program which will attract and retain qualified individuals not employed by General Mills, Inc. or its subsidiaries (the “Company”) to serve on the Board of Directors of the Company (the “Board”) and to further align the interests of non-employee directors with those of the stockholders by providing that a portion of compensation will be linked directly to increases in stockholder value.

2. EFFECTIVE DATE, DURATION OF PLAN

          This Plan shall become effective as of September 24, 2001, subject to the approval of the Plan by the stockholders. The Plan will terminate on September 30, 2006 or such earlier date as determined by the Board or the Compensation Committee of the Board (the “Committee”); provided that no such termination shall affect rights earned or accrued under the Plan prior to the date of termination.

3. PARTICIPATION

          Each member of the Board who is not an employee of the Company at the date compensation is earned or accrued shall be eligible to participate in the Plan unless prohibited from participating by the terms of their employment.

4. COMMON STOCK SUBJECT TO THE PLAN

          a) General. The common stock to be issued under this Plan is Company common stock (“Common Stock”) ($.10 par value) to be made available from the authorized but unissued Common Stock, shares of Common Stock held in the treasury, or Common Stock purchased on the open market or otherwise. Subject to the provisions of the next succeeding paragraphs, the maximum aggregate number of shares authorized to be issued under the Plan shall be 700,000.

If any Option (defined below) is exercised by tendering Common Stock, either actually or by attestation, to the Company as full or partial payment in connection with the exercise of an Option under the Plan, only the number of shares of Common Stock issued net of the Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares available for grants under the Plan. Upon forfeiture or termination of Stock Units prior to vesting, the shares of Common Stock subject thereto shall again be available for awards under the Plan.

          b) Adjustments for Corporate Transactions. If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

5. ANNUAL RETAINER

          a) General. Each non-employee director shall be entitled to receive an annual retainer as shall be determined from time to time by the Board. Each non-employee director of the Company shall elect by written notice to the Company on or before each annual stockholders’ meeting how he or she shall participate in the compensation alternative provisions of the Plan. Any combination of the alternatives — Cash, Deferred Cash and/or Common Stock — may be elected, provided the aggregate of the alternatives elected equals one hundred percent of the non-employee director’s compensation at the time of the election. The election shall remain in effect for a one-year period which shall begin the day of the annual stockholders’ meeting and terminate the day before the succeeding annual stockholders’ meeting (hereinafter “Plan Year”). The Plan Year shall include four plan quarters (hereinafter “Plan Quarters”). Plan quarters shall correspond to the Company’s fiscal quarters. A director elected to the Board at a time other than the annual stockholders’ meeting may elect, by written notice to the Company before such director’s first attendance at a Board meeting, to participate in the compensation alternatives for the remainder of that Plan Year, and elections for succeeding years shall be on the same basis as other directors. Periodically, the Company shall supply to each participant an account statement of participation under the Plan.

          b) Cash Alternative. Each non-employee director who elects to receive cash compensation under the Plan shall be paid all or the specified percentage of his or her compensation for the Plan Year in cash, and such cash payment shall be made as of the end of each Plan Quarter. If a participant dies during a Plan Year, the balance of the amount due to the date of the participant’s death shall be payable in full to such

- 2 -

participant’s designated beneficiary, or, if none, the estate as soon as practicable following the date of death.

          c) Deferred Cash Alternative.

(i)	Each non-employee director may elect to have all or a specified percentage of his or her compensation for the Plan Year deferred until the participant ceases to be a director.
(ii)	For each director who has made this deferred cash election, the Company shall establish a deferred compensation account for the compensation due. Interest shall be credited to each such account based on the rate earned by the fund or funds selected by the participant from among funds or portfolios established under the General Mills, Inc. Savings Plan or any other qualified benefit plan maintained by the Company which the Minor Amendment Committee, or its delegate, in its discretion, may from time to time establish.
(iii)	Distribution of the participant’s deferred compensation account shall be at the time, and in the form of payment, elected by the participant at the time of deferral. The distribution date may be any date that is at least one year subsequent to the date of deferral of such compensation, but the distribution must be made or commenced by the later of (i) the date the participant attains age 70 and (ii) five years after the director’s retirement from the Board.
	A participant may elect to have the deferred compensation account distributed in a single payment or in substantially equal annual installments for a period not to exceed ten (10) years, or in another form requested by the Participant, in writing, and approved by the Committee.
(iv)	In the event of the termination of a participant from Board service other than by retirement, the Committee may in its sole discretion require that distribution of all amounts allocated to a participant’s deferred compensation account be accelerated and distributed as of the first business day of the calendar year next following termination.
(v)	The Company has established a Supplemental Benefits Trust with Wells Fargo Bank Minnesota, N.A. as Trustee to hold assets of the Company under certain circumstances as a reserve for the discharge of the Company’s obligations as to deferred cash compensation under the Plan and certain other of deferred compensation plans of the Company. In the event of a Change in Control as defined in Section 11 below, the Company shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund

- 3 -

all cash benefits payable under the Plan. Any participant of the Plan shall have the right to demand and secure specific performance of this provision. All assets held in the Trust remain subject only to the claims of the Company’s general creditors whose claims against the Company are not satisfied because of the Company’s bankruptcy or insolvency (as those terms are defined in the Trust Agreement). No participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the participant and all rights created under the Trust, as under the Plan, are unsecured contractual claims of the participant against the Company.

          d) GMI Common Stock Alternative. Each participant may elect to receive all or a specified percentage of his or her compensation in shares of Common Stock, which will be issued at the end of each Plan Quarter. The Company shall ensure that an adequate number of shares of Common Stock are available for distribution to those participants making this election. Only whole numbers of shares will be issued, with any fractional share amounts paid in cash. For purposes of computing the number of shares earned each Plan Quarter, the value of each share shall be equal to the mean of the high and low price of shares of Common Stock on the New York Stock Exchange on the third Business Day preceding the last day of each Plan Quarter. For the purposes of this Plan, “Business Day” shall mean a day on which the New York Stock Exchange is open for trading. If a participant dies during a Plan Year, the balance of the amount due to the date of the participant’s death shall be payable in full to the participant’s designated beneficiary, or, if none, to the participant’s estate, in cash, as soon as practicable following the date of death.

6. NON-QUALIFIED STOCK OPTIONS

          a) Grant of Options. Each non-employee director on the effective date of the Plan (or, if first elected after the effective date of the Plan, on the date the non-employee director first attends a Board meeting) shall be awarded an option (an “Option”) to purchase 10,000 shares of Common Stock. As of the close of business on each successive annual stockholders’ meeting date after the date of the original award, each non-employee director re-elected to the Board shall be granted an additional Option to purchase 10,000 shares of Common Stock. All Options granted under the Plan shall be non-statutory options not entitled to special tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended.

          b) Option Exercise Price. The per share price to be paid by the non-employee director at the time an Option is exercised shall be 100% of the Fair Market Value of the Common Stock on the date of grant. “Fair Market Value” shall equal the closing price for the Common Stock on the New York Stock Exchange on the relevant date or, if the New York Stock Exchange is closed on that date, on the last preceding date on which the Exchange was open for trading.

- 4 -

          c) Term of Option. Each Option shall expire ten (10) years from the date of grant.

          d) Exercise and Vesting of Option. Each Option will vest on the date of the annual stockholders’ meeting next following the date the Option is granted. If, for any reason, a non-employee director ceases to serve on the Board prior to the date an Option vests, such Option shall be forfeited and all further rights of the non-employee director to or with respect to such Option shall terminate. If a participant should die during his or her term of service on the Board, any vested Option may be exercised by the person designated in such participant’s last will and testament or, in the absence of such designation, by the participant’s estate and for Options granted on or after June 1, 2002, any unvested Options shall fully vest and become exercisable upon death. For Options granted prior to June 1, 2002, any unvested Options shall vest and become exercisable upon death in a proportionate amount, based on the full months of service completed during the vesting period of the Option from the date of grant to the date of death.

          e) Method of Exercise and Tax Obligations. A participant exercising an Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company. The exercise price shall be paid to the Company at the time of such exercise, subject to any applicable rule or regulation adopted by the Committee:

(i)	in cash (including check, draft, money order or wire transfer made payable to the order of the Company);
(ii)	through the tender of shares of Common Stock owned by the participant (by either actual delivery or attestation); or
(iii)	by a combination of (i) and (ii) above.
For determining the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise. The Company may also require payment of the amount of any federal, state or local withholding tax attributable to the exercise of an Option or the delivery of shares of Common Stock.

          f) Non-transferability. Except as provided by rule adopted by the Committee, an Option shall be non-assignable and non-transferable by a non-employee director other than by will or the laws of descent and distribution. A non-employee director shall forfeit any Option assigned or transferred, voluntarily or involuntarily, other than as permitted under this subsection.

- 5 -

7. DEFERRAL OF STOCK OPTION GAINS

          Under the Plan, Participants may defer receipt of the net shares of Common Stock to be issued upon the stock-for-stock exercise of an Option issued hereunder, as well as dividend equivalents on the net shares.

          a) Option Gain Deferral Election. A participant can elect to defer receipt of Net Shares (defined below) of Common Stock resulting from a stock-for-stock exercise of an exercisable Option issued to the participant by completing and submitting to the Company an irrevocable stock option deferral election at least six months in advance of exercising the Option (which exercise must be done on or prior to the expiration of the Option) and, on or prior to the exercise date, delivering personally-owned shares equal in value to the Option exercise price on the date of the exercise. “Net Shares” means the difference between the number of shares of Common Stock subject to the Option exercise and the number of shares of Common Stock delivered to satisfy the Option exercise price. A participant may not revoke an Option gain deferral election after it is received by the Company. A participant may choose to defer receipt of all or only a portion of the Net Shares to be received upon exercise of an Option. If only a portion of the Net Shares is deferred, the balance will be issued at the time of exercise.

          b) Distribution of Deferred Common Stock. At the time of a participant’s election to defer receipt of Common Stock issuable upon an Option exercise or upon the award of Stock Units, as provided in Section 8(a), a participant must also select a distribution date and a form of distribution. The distribution date may be any date that is at least one year subsequent to either the exercise date for the related Option or the date of grant in the case of Stock Units granted under Section 8(a) but the distribution must be made or commenced by the later of (i) the date the participant attains age 70 and (ii) five years after the date of the director’s retirement from the Board.

          A participant may elect to have deferred Common Stock distributed in a single payment or in substantially equal annual installments for a period not to exceed ten (10) years, or in another form requested by the Participant, in writing, and approved by the Committee. In the absence of an election, Common Stock issued in respect of Stock Units shall be distributed in ten substantially equal annual installments beginning on January 1 of each year following the year in which the participant ceases to be a director. Common Stock issuable under a single Option grant or pursuant to a single grant under Section 8(a) shall have the same distribution date and form of distribution. Notwithstanding the above, the following provisions shall apply:

(i) If an Option as to which a participant has made an Option gain deferral election terminates prior to the exercise date selected by the participant, or if the participant dies or fails to deliver personally-owned shares in payment of the exercise price, then the deferral election shall not become effective.

- 6 -

(ii)

In the event of the termination of a participant from Board service other than by retirement, the Committee may, in its sole discretion, require that distribution of all Stock Units allocated to a participant’s Deferred Stock Unit Accounts (as defined in Section 7(c)(i) below) be accelerated and distributed as of the first business day of the calendar year next following the date of termination.

(iii)

At the time elected by the participant for distribution of Common Stock attributable to allocations under the participant’s Deferred Stock Unit Accounts, the Company shall cause to be issued to the Participant, within three (3) days of the date of distribution, shares of Common Stock equal to the number of Stock Units credited to the Deferred Stock Unit Account and cash equal to any dividend equivalent amounts which had not been used to “purchase” additional Stock Units as provided below. Prior to distribution and pursuant to any rules the Committee may adopt, a Participant may authorize the Company to withhold a portion of the shares of Common Stock to be distributed for the payment of all federal, state, local and foreign withholding taxes required to be collected in respect of the distribution.

          c) Deferred Stock Unit Accounts and Dividend Equivalents.

(i) A deferred stock unit account (“Deferred Stock Unit Account”) will be established for each Option grant covered by a participant election to defer the receipt of Common Stock under Section 7(a) above and, for each Net Share deferred, a Stock Unit will be credited to the Deferred Stock Unit Account as of the date of the Option exercise. A Deferred Stock Unit Account will also be established each time a participant receives Stock Units pursuant to Section 8(a) hereof. Participants may make an election to receive dividend equivalents on Stock Units in cash or reinvest such amount, and any change to such election shall become effective six months after the date of the change. If the amounts are reinvested, on each dividend payment date for the Company’s Common Stock, the Company will credit each Deferred Stock Unit Account with an amount equal to the dividends paid by the Company on the number of shares of Common Stock equal to the number of Stock Units in the Deferred Stock Unit Account. Dividend equivalent amounts credited to each Deferred Stock Unit Account shall be used to “purchase” additional Stock Units for the Deferred Stock Unit Account at a price equal to the mean of the high and low price of the Common Stock on the New York Stock Exchange on the dividend date. The Committee may, in its sole discretion, direct either that all dividend equivalent amounts be paid currently or all such amounts be reinvested if, for any reason, such Committee believes it is in the best interest of the Company to do so. If the participant fails to make an election, the dividend equivalent amounts shall be reinvested.

- 7 -

			Periodically, each participant will receive a statement of the number of Stock Units in his or her Deferred Stock Unit Account(s).
		(ii)	Participants who elect under the Plan to defer the receipt of Common Stock issuable upon the exercise of Options or elect to receive Stock Units under Section 8(a) below will have no rights as stockholders of the Company with respect to allocations made to their Deferred Stock Unit Account(s), except the right to receive dividend equivalent allocations under Section 7(c)(i) above. Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed.
8.	STOCK UNITS

          a) Awards. On the effective date of the Plan (or, if a non-employee director is first elected after the effective date of the Plan, on the date the non-employee director first attends a Board meeting) and at the close of business on each successive annual stockholders’ meeting date, each non-employee director shall be awarded the right to receive one thousand (1,000) shares of Common Stock on a deferred basis (“Stock Units”), subject to vesting as provided in Section 8(b). The maximum aggregate number of shares authorized to be issued under the Plan upon vesting of Stock Unit awards shall be 80,000. Only non-employee directors re-elected to the Board shall be entitled to a grant under this Section 8(a) of Stock Units awarded at the close of business on an annual meeting date after the date of the original grant to the non-employee directors.

          b) Vesting of and Restrictions on Stock Units. A participant’s interest in the Stock Units shall vest on the date of the annual stockholders’ meeting next following the date of the award of the Stock Units (the “Restricted Period”). If, for any reason, a non-employee director ceases to serve on the Board prior to the date the non-employee director’s interest in a grant of Stock Units vests, such Stock Units shall be forfeited and all further rights of the non-employee director to or with respect to such Stock Units shall terminate. A participant who dies prior to the vesting of Stock Units granted on or after June 1, 2002 shall fully vest in such Stock Units, effective as of the date of death. A participant who dies prior to the vesting of Stock Units granted prior to June 1, 2002 shall vest in a proportionate number of shares of Stock Units, based on the full months of service completed during the vesting period of the Stock Units from the date of grant to the date of death. Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed until such time as share certificates for Common Stock are issued to the participants.

          c) Distribution of Stock Units. Each participant receiving an award of Stock Units under Section 8(a) above must select a date of distribution and form of distribution as provided under Section 7(b) above. The participant may also elect to have dividend equivalents payable on Stock Units paid currently or reinvested in Stock Units as provided under Section 7(c)(i).

- 8 -

          d) Other Terms and Conditions. The Company may require payment of the amount of any federal, state or local withholding tax attributable to the constructive or actual delivery of shares of Common Stock pursuant to the terms of this Agreement.

9. GENERAL PROVISIONS FOR DEFERRED CASH, OPTION GAINS AND STOCK UNITS

          The following provisions shall apply to the deferral of cash compensation described in Section 5(c) hereof, the deferral of receipt of Common Stock issued upon exercise of Options described in Section 7 hereof and the treatment of Stock Units granted under Section 8 hereof.

          a) A participant may, at any time prior or subsequent to the commencement of benefit payments or distribution of Common Stock in respect of Stock Units under this Plan, elect in writing to have his or her form of distribution under this Plan changed to an immediate single distribution which shall be made within one (1) business day of receipt by the Company of such request in the case of deferred cash and three (3) business days in the case of Common Stock; provided that the cash amount or number of shares of Common Stock subject to such single distribution shall be reduced by an amount or number of shares of Common Stock equal to the product of (X), the rate set forth in Statistical Release H.15(519), or any successor publication, as published by the Board of Governors of the Federal Reserve System for one-year U.S. Treasury notes under the heading “Treasury Constant Maturities” for the first day of the calendar month in which the request for a single sum distribution is received by the Company and (Y) either (i) as to a cash distribution, the total single sum distribution otherwise payable (based on the value of the account as of the first day of the month in which the single sum amount is paid, adjusted by a pro-rata portion of the specified rate of return for the prior month in which the single sum is paid, determined by multiplying the actual rate of return for such prior month by a fraction, the numerator of which is the number of days in the month in which the request is received prior to the date of payment, and the denominator of which is the number of days in the month), or (ii) as to a distribution of Common Stock in respect of Stock Units, the number of Stock Units held on behalf of the participant multiplied by the mean of the high and low price of shares of Common Stock on the New York Stock Exchange on the date of the request or, if the date of the request is not a Business Day, on the Business Day preceding the date of the request.

          b) In the event of a severe financial hardship occasioned by an emergency, including, but not limited to, illness, disability or personal injury sustained by the participant or a member of the participant’s immediate family, a participant may apply to receive a distribution, including a distribution of Common Stock in respect of Stock Units, earlier than initially elected. The Committee may, in its sole discretion, either approve or deny the request. The determination made by the Committee will be final and binding on all parties. If the request is granted, the distributions will be accelerated only to the extent reasonably necessary to alleviate the financial hardship.

- 9 -

          c) If the death of a participant occurs before a full distribution of deferred cash amounts or Common Stock in respect of Stock Units is made, a single distribution shall be made to the beneficiary designated by the participant to receive such amounts. This distribution shall be made as soon as practical following notification that death has occurred. In the absence of any such designation, the distribution shall be made to the personal representative, executor or administrator of the participant’s estate.

          d) As to all previous and future Plan years, and subject to the last sentence of the first paragraph of Section 7(b) hereof, a participant who is not within twelve (12) months of the date that such deferred amount, deferred Common Stock or the first installment thereof would be distributed under this Plan, shall be permitted to make no more than two amendments to the initial election to defer distributions such that his or her distribution date is either in the same calendar year as the date of the distribution which would have been made in the absence of such election amendment(s) or is at least one year after the date of the distribution which would have been made in the absence of such election amendment(s). A participant satisfying the conditions set forth in the preceding sentence may also amend such election so that his or her form of distribution is changed to substantially equal annual installments for a period not to exceed ten (10) years or is changed to a single distribution.

          e) Notwithstanding any other provision of this Plan to the contrary, the Committee, by majority approval, may, in its sole discretion, direct that distributions be made before such distributions are otherwise due if, for any reason (including, but not limited to, a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his or her delegate, or a decision by a court of competent jurisdiction involving a participant or beneficiary), it believes that a participant or beneficiary has recognized or will recognize income for federal income tax purposes with respect to distributions that are or will be payable to such participants under the Plan before they are paid to him. In making this determination, the Committee shall take into account the hardship that would be imposed on the participant or beneficiary by the payment of federal income taxes under such circumstances.

10. CHANGE OF CONTROL

          Options granted under the Plan will become immediately exercisable, and Common Stock and dividend equivalents to be issued in respect of Stock Units will be immediately distributed upon the occurrence of a “Change of Control” as defined in Section 11.

11. ADMINISTRATION

          The Plan shall be administered by the Committee. The Committee shall have full power to interpret the Plan, formulate additional details and regulations for carrying out the Plan and amend or modify the Plan as from time to time it deems proper and in

- 10 -

the best interests of the Company, including amending the Plan to increase or decrease the size of annual Option or Stock Unit grants made to non-employee directors, provided that after a “Change of Control” no amendment, modification of or action to terminate the Plan may be made which would affect compensation earned or accrued prior to such amendment, modification or termination without the written consent of a majority of participants determined as of the day before a “Change of Control.” Any decision or interpretation adopted by the Committee shall be final and conclusive. A “Change of Control” means:

          a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (1), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (3) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Company Voting Securities; or

          b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

          c) The approval by the shareholders of the Company of a reorganization, merger, consolidation, sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination

- 11 -

pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business combination of the Outstanding Company Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

          d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

12. GOVERNING LAW

          The validity, construction and effect of the Plan and any such actions taken under or relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable Federal law.

13. NOTICES

          Unless otherwise notified, all notices under this Plan shall be sent in writing to the Company, attention Corporate Compensation, P.O. Box 1113, Minneapolis, Minnesota 55440. All correspondence to the participants shall be sent to the address which is their recorded address as listed on the election forms.

- 12 -

EX-10.22

EXHIBIT 10.22

GENERAL MILLS, INC.

2003 STOCK COMPENSATION PLAN

GENERAL MILLS, INC.

2003 STOCK COMPENSATION PLAN

1.	PURPOSE OF THE PLAN
	The purpose of the General Mills, Inc. 2003 Stock Compensation Plan (the “Plan”) is to attract and retain able individuals by rewarding employees of General Mills, Inc., its subsidiaries and affiliates (defined as entities in which General Mills, Inc. has a significant equity or other interest) (collectively, the “Company”) and to align the interests of employees with those of the stockholders of the Company.
2.	EFFECTIVE DATE AND DURATION OF PLAN
	This Plan shall become effective as of October 1, 2003, subject to the approval of the stockholders of the Company at the Annual Meeting on September 22, 2003. Awards may be made under the Plan until December 31, 2005.
3.	ELIGIBLE PERSONS
	Only persons who are employees of the Company shall be eligible to receive grants of Stock Options, Restricted Stock, Restricted Stock Units or Recognition Awards (each defined below) and become “Participants” under the Plan. The Compensation Committee of the Company’s Board of Directors (the “Committee”) shall exercise the discretionary power to determine from time to time the employees of the Company who are eligible to participate in this Plan.
4.	AWARD TYPES
	(a)	Stock Option Awards. Under this Plan, the Committee may award Participants options (“Stock Options”) to purchase common stock of the Company ($.10 par value) (“Common Stock”). The grant of a Stock Option entitles the Participant to purchase shares of Common Stock at an “Exercise Price” established by the Committee.
	(b)	Stock Option Exercise Price. The Exercise Price for each share of Common Stock issuable under a Stock Option shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant, and may exceed the Fair Market Value on the grant date, at the Committee’s discretion. “Fair Market Value” shall equal the closing price of the Common Stock on the New York Stock Exchange on the date of grant.
	(c)	Restricted Stock Awards. The Committee may also grant Participants shares of Common Stock or the right to receive shares of Common Stock subject to certain restrictions (“Restricted Stock” or “Restricted Stock Units”).

- 1 -

	(d)	Recognition Awards. The Committee hereby authorizes the Corporate Secretary to approve and distribute Common Stock to Participants as a bonus or reward, subject to Section 13(d) and Committee ratification of such Awards in accordance with Section 20. No Participant may receive as Recognition Award(s) more than 20 shares in the aggregate, in any calendar year.
	(e)	Stock Options, Restricted Stock, Restricted Stock Units and Recognition Awards, as defined above, are sometimes referred to as “Awards”.
5.	COMMON STOCK SUBJECT TO THE PLAN
	(a)	Maximum Shares Available for Delivery. Subject to Section 5(c), the maximum number of shares of Common Stock available for issuance to Participants under the Plan shall be 15,000,000.
		In addition, any Common Stock covered by a Stock Option granted under the Plan, which is forfeited, cancelled or expires in whole or in part shall be deemed not to be delivered for purposes of determining the maximum number of shares of Common Stock available for grants under the Plan.
		If any Stock Option is exercised by tendering Common Stock, either actually or by attestation, to the Company as full or partial payment in connection with the exercise of the Stock Option under the Plan, or if the tax withholding requirements are satisfied through such tender, only the number of shares of Common Stock issued net of the Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares available for grants under the Plan. Upon forfeiture or termination of Restricted Stock or Restricted Stock Units prior to vesting, the shares of Common Stock subject thereto shall again be available for Awards under the Plan.
	(b)	Individual Share Limits. The number of shares of Common Stock subject to Stock Options or available for Restricted Stock, Restricted Stock Unit or Recognition Awards granted under the Plan to any single Participant over the duration of the Plan shall not exceed 10 percent of the total number of shares available under the Plan.
	(c)	Adjustments for Corporate Transactions. If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other

- 2 -

		property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.
	(d)	Limits on Distribution. Distribution of shares of Common Stock or other amounts under the Plan shall be subject to the following:
		(i)	The total number of shares of Common Stock that shall be available for Restricted Stock, Restricted Stock Unit and Recognition Awards under the Plan shall be limited to 25% of the total shares authorized for Awards hereunder.
		(ii)	Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity.
		(iii)	To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of shares of Common Stock or Restricted Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.
	(e)	Stock Deposit Requirements and other Restrictions. The Committee, in its discretion, may require as a condition to the grant of Awards, the deposit of Common Stock owned by the Participant receiving such grant, and the forfeiture of such grants, if such deposit is not made or maintained during the required holding period. Such shares of deposited Common Stock may not be otherwise sold or disposed of during the applicable holding period or restricted period. The Committee may also determine whether any shares issued upon exercise of a Stock Option shall be restricted in any manner.
6.	STOCK OPTION TERM AND TYPE
	(a)	General. Stock Options granted under the Plan shall be Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”). The term of any Stock Option granted under the Plan shall be determined by the Committee, provided that the term of a Stock Option shall not exceed 10 years and one month.
	(b)	No Reload Rights. Stock Options granted under this Plan shall not contain any provision entitling the optionee to the automatic grant of additional options in connection with any exercise of the original option.

- 3 -

	(c)	No Repricing. Subject to Section 5(c), outstanding Stock Options granted under this Plan shall under no circumstances be repriced.
7.	GRANT, EXERCISE AND VESTING OF STOCK OPTIONS
	(a)	Grant. Subject to the limits otherwise imposed by the terms of this Plan, the Committee has discretionary authority to determine the size of a Stock Option grant, which may be tied to meeting performance-based requirements.
	(b)	Exercise. Except as provided in Sections 11 and 12 (Change of Control and Termination of Employment), each Stock Option may be exercised only in accordance with the terms and conditions of the Stock Option grant and during the periods as may be established by the Committee. A Participant exercising a Stock Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company.
	(c)	Vesting. Stock Options shall not be exercisable unless vested. Subject to Sections 11 and 12 Stock Options shall be fully vested only after four years of the Participant’s continued employment with the Company following the date of the Stock Option grant.
	(d)	Payment. The Exercise Price shall be paid to the Company at the time of such exercise, subject to any applicable rule or regulation adopted by the Committee:
		(i)	in cash (including check, draft, money order or wire transfer made payable to the order of the Company);
		(ii)	through the tender of shares of Common Stock owned by the Participant (by either actual delivery or attestation); or
		(iii)	by a combination of (i) and (ii) above.
		For determining the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.
	(e)	Deferrals. The Committee may permit or require Participants to defer receipt of any Common Stock issuable upon exercise of a Stock Option, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred Common Stock equivalents.
8.	RESTRICTED STOCK AND RESTRICTED STOCK UNITS
	Restricted Stock and Restricted Stock Units may be awarded on either a discretionary or performance-based method.

- 4 -

(a)	Discretionary Awards. With respect to discretionary Awards of Restricted Stock and Restricted Stock Units, the Committee shall:
	(i)	Select Participants to whom Awards will be made;
	(ii)	Determine the number of shares of Restricted Stock or the number of Restricted Stock Units to be awarded to a Participant;
	(iii)	Determine the length of the restricted period, which shall be no less than four years;
	(iv)	Determine the purchase price, if any, to be paid by the Participant for Restricted Stock or Restricted Stock Units; and
	(v)	Determine any restrictions other than those set forth in this Section 8.
(b)	Performance-Based Awards. With respect to Awards of performance-based Restricted Stock and Restricted Stock Units, the intent is to grant such Awards so as to satisfy the requirements for “qualified performance-based compensation” under Internal Revenue Code section 162(m). Performance-based Awards are subject to the following:
	(i)	The Committee has exclusive authority to determine which Participants may be awarded performance-based Restricted Stock and Restricted Stock Units.
	(ii)	In order for any Participant to be awarded Restricted Stock or Restricted Stock Units for a Performance Period (defined below), the net earnings from continuing operations excluding items identified and disclosed by the Company as non-recurring or special costs and after taxes (“Net Earnings”) of the Company for such Performance Period must be greater than zero.
	(iii)	At the end of the Performance Period, if the Committee determines that the requirement of Section 8(b)(ii) has been met, each Participant eligible for a performance-based Award shall be deemed to have earned an Award equal in value to the Maximum Amount, or such lesser amount as the Committee shall determine in its discretion to be appropriate. The Committee may base this determination of grant size on performance-based criteria. For purposes of computing the value of Awards, each Restricted Stock or Restricted Stock Unit shall be deemed to have a value equivalent to the Fair Market Value of one share of Common Stock on the date the Award is granted.
	(iv)	In addition to the limitation on the number of shares of Common Stock available for Awards under section 5(b) hereof, in no event shall the total value of the performance-based Restricted Stock or Restricted Stock Unit Award granted to any Participant for any one Performance Period exceed 0.5 percent of the Company’s Net Earnings for that Performance Period (such amount is the “Maximum Amount”).

- 5 -

		(v)	The Committee shall determine the length of the restricted period which, subject to Sections 11 and 12, shall be no less than four years.
		(vi)	“Performance Period” means a fiscal year of the Company, or such other period as the Committee may from time to time establish.
	Subject to the restrictions set forth in this Section 8, each Participant who receives Restricted Stock shall have all rights as a stockholder with respect to such shares, including the right to vote the shares and receive dividends and other distributions.
	Each Participant who receives Restricted Stock Units shall be eligible to receive, at the expiration of the applicable restricted period, one share of Common Stock for each Restricted Stock Unit awarded, and the Company shall issue to each such Participant that number of shares of Common Stock. Participants who receive Restricted Stock Units shall have no rights as stockholders with respect to such Restricted Stock Units until such time as share certificates for Common Stock are issued to the Participants; provided, however, that quarterly during the applicable restricted period for all Restricted Stock Units awarded hereunder, the Company shall pay to each such Participant an amount equal to the sum of all dividends and other distributions paid by the Company during the prior quarter on that equivalent number of shares of Common Stock.
	The Committee may permit Participants to defer receipt of any Common Stock issuable upon the lapse of any restriction of Restricted Stock or Restricted Stock Units, subject to such rules and procedures as it may establish.
9.	TRANSFERABILITY OF AWARDS
	Except as otherwise provided by rules of the Committee, no Stock Options shall be transferable by a Participant otherwise than (i) by the Participant’s last will and testament or (ii) by the applicable laws of descent and distribution, and such Stock Options shall be exercised during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. Except as otherwise provided in Section 8, no shares of Restricted Stock and no Restricted Stock Units shall be sold, exchanged, transferred, pledged or otherwise disposed of during the restricted period.
10.	TAXES
	Whenever the Company issues Common Stock under the Plan, the Company may require the recipient to remit to the Company an amount sufficient to satisfy any Federal, state or local tax withholding requirements prior to the delivery of such Common Stock, or, in the discretion of the Committee, upon the election of the Participant, the Company may withhold from the shares to be delivered shares sufficient to satisfy all or a portion of such tax withholding requirements.

- 6 -

11.	CHANGE OF CONTROL
	Each outstanding Stock Option shall become immediately and fully exercisable for a period of one (1) year following the date of the following occurrences, each constituting a “Change of Control”:
	(a)	The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Voting Securities; or
	(b)	Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
	(c)	The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from

- 7 -

		such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
	(d)	Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
	After such one (1) year period the normal Stock Option exercise provisions of the Plan shall govern. Notwithstanding any other provision of the Plan, but subject to Section 6, in the event a Participant’s employment with the Company is terminated within two (2) years of any of the events specified in (a), (b), (c) or (d), all outstanding Stock Options of such Participant at that date of termination shall be exercisable for a period of six (6) months beginning on the date of termination.
	With respect to Stock Option grants outstanding as of the date of any such Change of Control which require the deposit of owned Common Stock as a condition to obtaining rights, the deposit requirement shall be terminated as of the date of the Change of Control.
	In the event of a Change of Control, a Participant shall vest in all shares of Restricted Stock and Restricted Stock Units, effective as of the date of such Change of Control.
12.	TERMINATION OF EMPLOYMENT
	(a)	Resignation or Termination for Cause. If the Participant’s employment by the Company is terminated by either
		(i)	the voluntary resignation of the Participant, or
		(ii)	a Company discharge due to Participant’s illegal activities, poor work performance, misconduct or violation of the Company’s Code of Conduct, policies or practices,
		then Participant’s Stock Options shall terminate three months after such termination (but in no event beyond the original full term of the Stock Options) and no Stock Options shall become exercisable after such termination, and all shares of Restricted Stock and Restricted Stock Units which are subject to restriction on the date of termination shall be forfeited.

- 8 -

(b)	Other Termination. If the Participant’s employment by the Company terminates for any reason other than specified in Sections 11, 12 (a), (c), (d) or (e), the following rules shall apply:
	(i)	In the event that, at the time of such termination, the sum of the Participant’s age and service with the Company equals or exceeds 70, the Participant’s outstanding Stock Options shall continue to become exercisable according to the schedule established at the time of grant unless otherwise provided in the applicable Award agreement, and all shares of Restricted Stock and Restricted Stock Units shall vest. Stock Options shall remain exercisable for the remaining full term of such Stock Options.
	(ii)	In the event that, at the time of such termination, the sum of Participant’s age and service with the Company is less than 70, Participant’s outstanding unexercisable Stock Options and unvested Restricted Stock and Restricted Stock Units shall become exercisable or vest, as the case may be, as of the date of termination, in a pro-rata amount based on the full months of employment completed during the full vesting period from the date of grant to the date of termination with such newly-vested Stock Options and Stock Options exercisable on the date of termination remaining exercisable for the lesser of one year from the date of termination and the original full term of the Stock Option. All other Stock Options, shares of Restricted Stock and Restricted Stock Units shall be forfeited as of the date of termination. Provided, however, that if the Participant is an executive officer of the Company, the Participant’s outstanding Stock Options which, as of the date of termination are not yet exercisable, shall become exercisable effective as of the date of such termination and, with all outstanding Stock Options already exercisable on the date of termination, shall remain exercisable for the lesser of one year following the date of termination and the original full term of the Stock Option, and all shares of Restricted Stock and Restricted Stock Units shall vest as of the date of termination.
(c)	Death. If a Participant dies while employed by the Company, any Stock Option previously granted under this Plan shall fully vest and become exercisable upon death and may be exercised by the person designated in such Participant’s last will and testament or, in the absence of such designation, by the Participant’s estate.
	With respect to Stock Options which require the deposit of owned Common Stock as a condition to obtaining exercise rights, in the event a Participant dies while employed by the Company, such Stock Options may be exercised as provided in the first paragraph of this Section 12(c) and any deposit requirement shall be terminated.
	A Participant who dies while employed by the Company during any applicable restricted period, shall fully vest in such shares of Restricted Stock or Restricted Stock Units, effective as of the date of death.

- 9 -

	(d)	Retirement. The Committee shall determine, at the time of grant, the treatment of the Stock Options, Restricted Stock and Restricted Stock Units upon the retirement of the Participant. Unless other terms are specified in the original Grant, if the termination of employment is due to a Participant’s retirement on or after age 55, the Participant may exercise a Stock Option, subject to the original terms and conditions of the Stock Option and shall fully vest in all shares of Restricted Stock or Restricted Stock Units effective as of the date of retirement (unless any such Award specifically provides otherwise).
	(e)	Spin-offs. If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, shall determine the treatment of all outstanding Awards under the Plan.
13.	ADMINISTRATION OF THE PLAN
	(a)	Administration. The authority to control and manage the operations and administration of the Plan shall be vested in the Committee in accordance with this Section 13.
	(b)	Selection of Committee. The Committee shall be selected by the Board, and shall consist of two or more members of the Board.
	(c)	Powers of Committee. The authority to manage and control the operations and administration of the Plan shall be vested in the Committee, subject to the following:
		(i)	Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from among the eligible Company employees those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by Section 14) to cancel or suspend Awards. In making such determinations, the Committee may take into account the nature of services rendered by the individual, the individual’s present and potential contribution to the Company’s success and such other factors as the Committee deems relevant.
		(ii)	The Committee will have the authority and discretion to establish terms and conditions of Awards as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States.
		(iii)	The Committee will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

- 10 -

		(iv)	Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding.
	(d)	Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.
14.	AMENDMENTS OF THE PLAN
	The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board of Directors, where required, the Committee may at any time terminate, amend, or suspend the operation of the Plan, provided that no action shall be taken by the Board of Directors or the Committee without the approval of the stockholders which would:
	(a)	except as provided in Section 5(c) materially increase the number of shares which may be issued under the 2003 Plan;
	(b)	permit granting of Stock Options at less than Fair Market Value;
	(c)	except as provided in Section 5(c), permit the repricing of outstanding Stock Options; or
	(d)	amend the maximum shares set forth in Section 5(b) which may be granted to any single Participant.
	No termination, modification, suspension, or amendment of the Plan shall alter or impair the rights of any Participant pursuant to an outstanding Award without the consent of the Participant. There is no obligation for uniformity of treatment of Participants under the Plan.
15.	FOREIGN JURISDICTIONS
	The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject to such laws and who receive Awards under the Plan.
16.	NON-ALIENATION OF RIGHTS AND BENEFITS.
	Subject to Section 9, no right or benefit under the Plan shall be subject to alienation, sale, assignment, pledge, or encumbrance and any attempt to do so shall be void. No right or benefit under the Plan be subject to the debts, contacts, liabilities or torts of the person entitled to such rights or benefits.

- 11 -

17.	LIMITATION OF LIABILITY OR OBLIGATION OF THE COMPANY.
	Nothing in the Plan shall be construed:
		(a)	to give any employee of the Company any right to be granted any Award other than at the sole discretion of the Plan Committee;
		(b)	to give any Participant any rights whatsoever with respect to shares of Common Stock except as specifically provided in the Plan;
		(c)	to limit in any way the right of the Company or any Subsidiary to terminate, change or modify, with or without cause, the employment of any Participant at any time; or
		(d)	to be evidence of any agreement or understanding, express or implied, that the company or any Subsidiary will employ any Participant in any particular position at any particular rate of compensation or for any particular period of time.
	Payments and other benefits received by a Participant under an Award shall not be deemed part of a Participant’s regular, recurring compensation for purposes of any termination, indemnity or severance pay laws and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar arrangement provided by the Company or any Subsidiary, unless expressly so provided by such other plan, contract or arrangement.
18.	NO LOANS
	The Company shall not lend money to any Participant to finance a transaction under this Plan.
19.	NOTICES
	All notices to the Company regarding the Plan shall be in writing, effective as of actual receipt by the Company, and shall be sent to:
			General Mills, Inc.
			Number One General Mills Boulevard
			Minneapolis, Minnesota 55426
			Attention: Corporate Compensation
20.	RECOGNITION AWARDS
	The Committee hereby authorizes the distribution of up to 10,000 shares of Common Stock as Recognition Awards in any calendar year during the duration of the Plan. A Company officer may identify employees of the Company who have made special contributions to the business and/or performance of the Company and request that the Corporate Secretary deliver Recognition Awards to such Participants in recognition of such contributions. Each year, the Committee shall review the grants of

- 12 -

Recognition Awards made in the prior year. Recognition Award shares may be fully vested upon grant or subject to such vesting conditions as the Committee may authorize.

- 13 -

EX-10.27

EXHIBIT 10.27

GENERAL MILLS, INC.

2005 STOCK COMPENSATION PLAN

1. PURPOSE OF THE PLAN

The purpose of the General Mills, Inc. 2005 Stock Compensation Plan (the “Plan”) is to attract and retain able individuals by rewarding employees of General Mills, Inc., its subsidiaries and affiliates (defined as entities in which General Mills, Inc. has a significant equity or other interest) (collectively, the “Company”) and to align the interests of employees with those of the stockholders of the Company.

2. EFFECTIVE DATE AND DURATION OF PLAN

This Plan shall become effective as of September 26, 2005, subject to the approval of the stockholders of the Company at the Annual Meeting on September 26, 2005. Awards may be made under the Plan until December 31, 2007.

3. ELIGIBLE PERSONS

Only persons who are employees of the Company shall be eligible to receive grants of Stock Options, Restricted Stock or Restricted Stock Units (each defined below) and become “Participants” under the Plan. The Compensation Committee of the Company’s Board of Directors (the “Committee”) shall exercise the discretionary power to determine from time to time the employees of the Company who are eligible to participate in this Plan.

4. AWARD TYPES

(a) Stock Option Awards. Under this Plan, the Committee may award Participants options (“Stock Options”) to purchase common stock of the Company ($.10 par value) (“Common Stock”). The grant of a Stock Option entitles the Participant to purchase shares of Common Stock at an “Exercise Price” established by the Committee.

(b) Stock Option Exercise Price. The Exercise Price for each share of Common Stock issuable under a Stock Option shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant, and may exceed the Fair Market Value on the grant date, at the Committee’s discretion. “Fair Market Value” shall equal the closing price of the Common Stock on the New York Stock Exchange on the applicable date.

(c) Restricted Stock Awards. The Committee may also grant Participants shares of Common Stock or the right to receive shares of Common Stock subject to certain restrictions (“Restricted Stock” or “Restricted Stock Units”) (Stock Options, Restricted Stock and Restricted Stock Units are sometimes referred to as “Awards”).

5. COMMON STOCK SUBJECT TO THE PLAN

(a) Maximum Shares Available for Delivery. Subject to Section 5(c), the maximum number of shares of Common Stock available for issuance to Participants under the Plan shall be 15,000,000. The Company will repurchase a number of shares of Common Stock at least equal to the number of shares of Common Stock issued under this Plan.

In addition, any Common Stock covered by a Stock Option granted under the Plan which is forfeited prior to the end of the vesting period shall be deemed not to be delivered for purposes of determining the maximum number of shares of Common Stock available for grants under the Plan. If (i) any Stock Option that is exercised through the delivery of Common Stock in satisfaction of the exercise price, and (ii) withholding tax requirements arising upon exercise of any Stock Option are satisfied through the withholding of Common Stock otherwise deliverable in connection with such exercise, the full number of shares of Common Stock underlying any such Stock Option that is exercised shall count against the maximum number of shares available for grants under the Plan.

- 1 -

Upon forfeiture or termination of Restricted Stock or Restricted Stock Units prior to vesting, the shares of Common Stock subject thereto shall again be available for Awards under the Plan.

(b) Individual Share Limits. The number of shares of Common Stock subject to Stock Options or available for Restricted Stock or Restricted Stock Unit Awards granted under the Plan to any single Participant over the duration of the Plan shall not exceed 10% of the original number of shares available under the Plan.

(c) Adjustments for Corporate Transactions. If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

(d) Limits on Distribution. Distribution of shares of Common Stock or other amounts under the Plan shall be subject to the following:

(i) The total number of shares of Common Stock that shall be available for Restricted Stock and Restricted Stock Unit Awards under the Plan shall be limited to 25% of the total shares authorized for Awards hereunder.

(ii) Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity.

(iii) To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of shares of Common Stock or Restricted Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

(e) Stock Deposit Requirements and other Restrictions. The Committee, in its discretion, may require as a condition to the grant of Awards, the deposit of Common Stock owned by the Participant receiving such grant, and the forfeiture of such grants, if such deposit is not made or maintained during the required holding period. Such shares of deposited Common Stock may not be otherwise sold or disposed of during the applicable holding period or restricted period. The Committee may also determine whether any shares issued upon exercise of a Stock Option shall be restricted in any manner.

6. STOCK OPTION TERM AND TYPE

(a) General. Stock Options granted under the Plan shall be Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”). The term of any Stock Option granted under the Plan shall be determined by the Committee, provided that the term of a Stock Option shall not exceed 10 years and one month.

(b) No Reload Rights. Stock Options granted under this Plan shall not contain any provision entitling the optionee to the automatic grant of additional options in connection with any exercise of the original option.

(c) No Repricing. Subject to Section 5(c), outstanding Stock Options granted under this Plan shall under no circumstances be repriced.

- 2 -

7. GRANT, EXERCISE AND VESTING OF STOCK OPTIONS

(a) Grant. Subject to the limits otherwise imposed by the terms of this Plan, the Committee has discretionary authority to determine the size of a Stock Option grant, which may be tied to meeting performance-based requirements.

(b) Exercise. Except as provided in Sections 11 and 12 (Change of Control and Termination of Employment), each Stock Option may be exercised only in accordance with the terms and conditions of the Stock Option grant and during the periods as may be established by the Committee. A Participant exercising a Stock Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company.

(c) Vesting. Stock Options shall not be exercisable unless vested. Subject to Sections 11 and 12 Stock Options shall be fully vested only after four years of the Participant’s continued employment with the Company following the date of the Stock Option grant.

(d) Payment. The Exercise Price shall be paid to the Company at the time of such exercise, subject to any applicable rule or regulation adopted by the Committee:

(i) in cash (including check, draft, money order or wire transfer made payable to the order of the Company);

(ii) through the tender of shares of Common Stock owned by the Participant (by either actual delivery or attestation); or

(iii) by a combination of (i) and (ii) above.

For determining the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.

8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS

Restricted Stock and Restricted Stock Units may be awarded on either a discretionary or performance-based method.

(a) Discretionary Awards. With respect to discretionary Awards of Restricted Stock and Restricted Stock Units, the Committee shall

(i) Select Participants to whom Awards will be made;

(ii) Determine the number of shares of Restricted Stock or the number of Restricted Stock Units to be awarded to a Participant;

(iii) Determine the length of the restricted period, which shall be no less than four years;

(iv) Determine the purchase price, if any, to be paid by the Participant for Restricted Stock or Restricted Stock Units; and

(v) Determine any restrictions other than those set forth in this Section 8.

(b) Performance-Based Awards. With respect to Awards of performance-based Restricted Stock and Restricted Stock Units, the intent is to grant such Awards so as to satisfy the requirements for “qualified performance-based compensation” under Internal Revenue Code section 162(m). Performance-based Awards are subject to the following:

(i) The Committee has exclusive authority to determine which Participants may be awarded performance-based Restricted Stock and Restricted Stock Units.

(ii) In order for any Participant to be awarded Restricted Stock or Restricted Stock Units for a Performance Period (defined below), the net earnings from continuing operations excluding items identified and disclosed by the Company as non-recurring or special costs and after taxes (“Net Earnings”) of the Company for such Performance Period must be greater than zero.

- 3 -

(iii) At the end of the Performance Period, if the Committee determines that the requirement of Section 8(b)(ii) has been met, each Participant eligible for a performance-based Award shall be deemed to have earned an Award equal in value to the Maximum Amount, or such lesser amount as the Committee shall determine in its discretion to be appropriate. The Committee may base this determination of grant size on performance-based criteria. For purposes of computing the value of Awards, each Restricted Stock or Restricted Stock Unit shall be deemed to have a value equivalent to the Fair Market Value of one share of Common Stock on the date the Award is granted.

(iv) In addition to the limitation on the number of shares of Common Stock available for Awards under section 5(b) hereof, in no event shall the total value of the performance-based Restricted Stock or Restricted Stock Unit Award granted to any Participant for any one Performance Period exceed 0.5% of the Company’s Net Earnings for that Performance Period (such amount is the “Maximum Amount”).

(v) The Committee shall determine the length of the restricted period which, subject to Sections 11 and 12, shall be no less than four years.

(vi) “Performance Period” means a fiscal year of the Company, or such other period as the Committee may from time to time establish.

Subject to the restrictions set forth in this Section 8, each Participant who receives Restricted Stock shall have all rights as a stockholder with respect to such shares, including the right to vote the shares and receive dividends and other distributions.

Each Participant who receives Restricted Stock Units shall be eligible to receive, at the expiration of the applicable restricted period, one share of Common Stock for each Restricted Stock Unit awarded, and the Company shall issue to each such Participant that number of shares of Common Stock. Participants who receive Restricted Stock Units shall have no rights as stockholders with respect to such Restricted Stock Units until such time as share certificates for Common Stock are issued to the Participants; provided, however, that quarterly during the applicable restricted period for all Restricted Stock Units awarded hereunder, the Company shall pay to each such Participant an amount equal to the sum of all dividends and other distributions paid by the Company during the prior quarter on that equivalent number of shares of Common Stock.

The Committee may in its discretion permit a Participant to defer receipt of any Common Stock issuable upon the lapse of any restriction of Restricted Stock or Restricted Stock Units, subject to such rules and procedures as it may establish. In particular, the Committee shall establish rules relating to such deferrals intended to comply with the requirements of Internal Revenue Code §409A, including without limitation, the time when a deferral election can be made, the period of the deferral, and the events that would result in payment of the deferred amount.

9. TRANSFERABILITY OF AWARDS

Except as otherwise provided by rules of the Committee, no Stock Options shall be transferable by a Participant otherwise than (i) by the Participant’s last will and testament or (ii) by the applicable laws of descent and distribution, and such Stock Options shall be exercised during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. Except as otherwise provided in Section 8, no shares of Restricted Stock and no Restricted Stock Units shall be sold, exchanged, transferred, pledged or otherwise disposed of during the restricted period.

10. TAXES

Whenever the Company issues Common Stock under the Plan, the Company may require the recipient to remit to the Company an amount sufficient to satisfy any Federal, state or local tax withholding requirements prior to the delivery of such Common Stock, or the Company may in its discretion withhold from the shares to be delivered shares sufficient to satisfy all or a portion of such tax withholding requirements.

11. CHANGE OF CONTROL

Each outstanding Stock Option shall become immediately and fully exercisable for a period of one (1) year following the date of the following occurrences, each constituting a “Change of Control”:

- 4 -

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Voting Securities; or

(b) Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

After such one (1) year period the normal Stock Option exercise provisions of the Plan shall govern. Notwithstanding any other provision of the Plan, but subject to Section 6, in the event a Participant’s employment with the Company is terminated within two (2) years of any of the events specified in (a), (b), (c) or (d), all outstanding Stock Options of such Participant at that date of termination shall be exercisable for a period of six (6) months beginning on the date of termination.

With respect to Stock Option grants outstanding as of the date of any such Change of Control which require the deposit of owned Common Stock as a condition to obtaining rights, the deposit requirement shall be terminated as of the date of the Change of Control.

In the event of a Change of Control, a Participant shall vest in all shares of Restricted Stock and Restricted Stock Units, effective as of the date of such Change of Control.

- 5 -

12. TERMINATION OF EMPLOYMENT

(a) Resignation or Termination for Cause. If the Participant’s employment by the Company is terminated by either

(i) the voluntary resignation of the Participant, or

(ii) a Company discharge due to Participant’s illegal activities, poor work performance, misconduct or violation of the Company’s Code of Conduct, policies or practices,

then Participant’s Stock Options shall terminate three months after such termination (but in no event beyond the original full term of the Stock Options) and no Stock Options shall become exercisable after such termination, and all shares of Restricted Stock and Restricted Stock Units which are subject to restriction on the date of termination shall be forfeited.

(b) Other Termination. If the Participant’s employment by the Company terminates for any reason other than specified in Sections 11, 12 (a), (c), (d) or (e), the following rules shall apply:

(i) In the event that, at the time of such termination, the sum of the Participant’s age and service with the Company equals or exceeds 70, the Participant’s outstanding Stock Options shall continue to become exercisable according to the schedule established at the time of grant unless otherwise provided in the applicable Award agreement, and all shares of Restricted Stock and Restricted Stock Units shall vest. Stock Options shall remain exercisable for the remaining full term of such Stock Options.

(ii) In the event that, at the time of such termination, the sum of Participant’s age and service with the Company is less than 70, Participant’s outstanding unexercisable Stock Options and unvested Restricted Stock and Restricted Stock Units shall become exercisable or vest, as the case may be, as of the date of termination, in a pro-rata amount based on the full months of employment completed during the full vesting period from the date of grant to the date of termination with such newly-vested Stock Options and Stock Options exercisable on the date of termination remaining exercisable for the lesser of one year from the date of termination and the original full term of the Stock Option. All other Stock Options, shares of Restricted Stock and Restricted Stock Units shall be forfeited as of the date of termination. Provided, however, that if the Participant is an executive officer of the Company, the Participant’s outstanding Stock Options which, as of the date of termination are not yet exercisable, shall become exercisable effective as of the date of such termination and, with all outstanding Stock Options already exercisable on the date of termination, shall remain exercisable for the lesser of one year following the date of termination and the original full term of the Stock Option, and all shares of Restricted Stock and Restricted Stock Units shall vest as of the date of termination.

(c) Death. If a Participant dies while employed by the Company, any Stock Option previously granted under this Plan shall fully vest and become exercisable upon death and may be exercised by the person designated in such Participant’s last will and testament or, in the absence of such designation, by the Participant’s estate.

With respect to Stock Options which require the deposit of owned Common Stock as a condition to obtaining exercise rights, in the event a Participant dies while employed by the Company, such Stock Options may be exercised as provided in the first paragraph of this Section 12(c) and any deposit requirement shall be terminated.

A Participant who dies while employed by the Company during any applicable restricted period, shall fully vest in such shares of Restricted Stock or Restricted Stock Units, effective as of the date of death.

(d) Retirement. The Committee shall determine, at the time of grant, the treatment of the Stock Options, Restricted Stock and Restricted Stock Units upon the retirement of the Participant. Unless other terms are specified in the original Grant, if the termination of employment is due to a Participant’s retirement on or after age 55, the Participant may exercise a Stock Option, subject to the original terms and conditions of the Stock Option and shall fully vest in all shares of Restricted Stock or Restricted Stock Units effective as of the date of retirement (unless any such Award specifically provides otherwise).

- 6 -

(e) Spin-offs. If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, shall determine the treatment of all outstanding Awards under the Plan.

13. ADMINISTRATION OF THE PLAN

(a) Administration. The authority to control and manage the operations and administration of the Plan shall be vested in the Committee in accordance with this Section 13.

(b) Selection of Committee. The Committee shall be selected by the Board, and shall consist of two or more members of the Board.

(c) Powers of Committee. The authority to manage and control the operations and administration of the Plan shall be vested in the Committee, subject to the following:

(i) Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from among the eligible Company employees those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by Section 14) to cancel or suspend Awards. In making such determinations, the Committee may take into account the nature of services rendered by the individual, the individual’s present and potential contribution to the Company’s success and such other factors as the Committee deems relevant.

(ii) The Committee will have the authority and discretion to establish terms and conditions of Awards as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States.

(iii) The Committee will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

(iv) Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding.

(v) The Plan shall at all times be managed and operated in accordance with applicable laws.

(d) Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.

14. AMENDMENTS OF THE PLAN

The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board of Directors, where required, the Committee may at any time terminate, amend, or suspend the operation of the Plan, provided that no action shall be taken by the Board of Directors or the Committee without the approval of the stockholders which would

(a) except as provided in Section 5(c), materially increase the number of shares which may be issued under the Plan;

(b) permit granting of Stock Options at less than Fair Market Value;

(c) except as provided in Section 5(c), permit the repricing of outstanding Stock Options; or

(d) amend the maximum shares set forth in Section 5(b) which may be granted to any single Participant.

No termination, modification, suspension, or amendment of the Plan shall alter or impair the rights of any Participant pursuant to an outstanding Award without the consent of the Participant. There is no obligation for uniformity of treatment of Participants under the Plan.

- 7 -

15. FOREIGN JURISDICTIONS

The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject to such laws and who receive Awards under the Plan.

16. NON-ALIENATION OF RIGHTS AND BENEFITS

Subject to Section 9, no right or benefit under the Plan shall be subject to alienation, sale, assignment, pledge, or encumbrance and any attempt to do so shall be void. No right or benefit under the Plan shall be subject to the debts, contacts, liabilities or torts of the person entitled to such rights or benefits.

17. LIMITATION OF LIABILITY OR OBLIGATION OF THE COMPANY

Nothing in the Plan shall be construed

(a) to give any employee of the Company any right to be granted any Award other than at the sole discretion of the Committee;

(b) to give any Participant any rights whatsoever with respect to shares of Common Stock except as specifically provided in the Plan;

(c) to limit in any way the right of the Company or any Subsidiary to terminate, change or modify, with or without cause, the employment of any Participant at any time; or

(d) to be evidence of any agreement or understanding, express or implied, that the Company or any Subsidiary will employ any Participant in any particular position at any particular rate of compensation or for any particular period of time.

Payments and other benefits received by a Participant under an Award shall not be deemed part of a Participant’s regular, recurring compensation for purposes of any termination, indemnity or severance pay laws and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar arrangement provided by the Company or any Subsidiary, unless expressly so provided by such other plan, contract or arrangement.

18. NO LOANS

The Company shall not lend money to any Participant to finance a transaction under this Plan.

19. NOTICES

All notices to the Company regarding the Plan shall be in writing, effective as of actual receipt by the Company, and shall be sent to:

Attention: Corporate Compensation

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, MN 55426

20. RECOGNITION AWARDS

Up to 10,000 shares of Common Stock may be awarded as Recognition Awards in any calendar year during the duration of the Plan. A Company officer may identify employees of the Company who have made special contributions to the business and/or performance of the Company and request that the Corporate Secretary deliver Recognition Awards to such Participants in recognition of such contributions. Each year, the Committee shall review the grants of Recognition Awards made in the prior year. Recognition Award shares may be fully vested upon grant or subject to such vesting conditions as the Committee may authorize.

- 8 -

EX-10.30

EXHIBIT 10.30

GENERAL MILLS, INC.

2006 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

GENERAL MILLS, INC.
2006 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

1. PURPOSE

          The purpose of the General Mills, Inc. 2006 Compensation Plan for Non-Employee Directors (the “Plan”) is to provide a compensation program which will attract and retain qualified individuals not employed by General Mills, Inc. and its subsidiaries (the “Company”) to serve on the Board of Directors of the Company (the “Board”) and to further align the interests of non-employee directors with those of the stockholders by providing that a portion of compensation will be linked directly to increases in stockholder value.

2. EFFECTIVE DATE, DURATION OF PLAN

          This Plan shall become effective as of September 25, 2006, subject to the approval of the Plan by the stockholders. The Plan will terminate on September 30, 2011 or such earlier date as determined by the Board or the Compensation Committee of the Board (the “Committee”); provided that no such termination shall affect rights earned or accrued under the Plan prior to the date of termination.

3. DEFINITIONS

          Wherever used in this Plan, the following terms have the meanings set forth below:

          “Board” means the Board of Directors of the Company.

          “Change of Control” has the meaning set forth in Section 11.

          “Code” means the Internal Revenue Code of 1986, as amended.

          “Committee” has the meaning set forth in Section 2.

          “Common Stock” means Company common stock ($.10 par value).

          “Company” means General Mills, Inc. and its subsidiaries.

          “Deferred Compensation Account” has the meaning set forth in Section 6(d).

          “Election Form” means a written form provided by the Committee pursuant to which a Participant may elect the form and timing of distributions with respect to his or her retainer, Stock Units and dividend equivalents under the Plan.

          “Fair Market Value” means the closing price of the Common Stock on the New York Stock Exchange on the applicable date.

          “Option” has the meaning set forth in Section 7(a).

          “Plan” means the General Mills, Inc. 2006 Compensation Plan for Non-Employee Directors as set forth herein and as amended.

          “Plan Year” has the meaning set forth in Section 6(a).

          “Separation from Service” or “Separate from Service” means a “separation from service” within the meaning of Code section 409A.

          “Stock Unit Account” has the meaning set forth in Section 8(a).

          “Stock Units” has the meaning set forth in 8(a).

4. PARTICIPATION

          Each member of the Board who is not an employee of the Company at the date compensation is earned or accrued shall be eligible to participate in the Plan unless prohibited from participating by the terms of their employment (a “Participant”).

5. COMMON STOCK SUBJECT TO THE PLAN

          a) General. The Common Stock to be issued under this Plan is to be made available from the authorized but unissued Common Stock, shares of Common Stock held in the treasury, or Common Stock purchased on the open market or otherwise. Subject to the provisions of the next succeeding paragraphs, the maximum aggregate number of shares authorized to be issued under the Plan shall be 700,000 and the maximum number of shares authorized to be issued under the Plan in a single Plan Year shall be 160,000.

          Upon forfeiture or termination of Stock Units prior to vesting, the shares of Common Stock subject thereto shall again be available for awards under the Plan.

          b) Adjustments for Corporate Transactions. If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to a Stock Unit Account; and (iv) the exercise price of outstanding Options provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to,

- 2 -

any dividend or other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction. Notwithstanding anything in this Section to the contrary, an adjustment to an Option under this Section 5(b) shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.

6. RETAINER

          a) General. Each non-employee director shall be entitled to receive a retainer with respect to each one-year board term, beginning the day of each annual stockholders’ meeting and ending the day before the succeeding annual stockholders’ meeting (the “Plan Year”) in an amount determined from time to time by the Board. Retainers shall be earned and paid at the end of each of the Company’s fiscal quarters.

          b) Normal Payment Terms. The normal payment terms for retainers are cash in a lump sum. In the absence of an affirmative election to the contrary, the retainer (or the portion not subject to such elections) shall be paid 10 business days following the last day of each quarterly period described above in (a).

          c) Deferral Elections. Each Participant may elect an alternative form (lump sum vs. installments) in which a retainer may be delivered and the timing for such delivery, pursuant to the terms of Section 9. Participants shall make such election by filing an irrevocable Election Form with the Committee before the calendar year in which a Plan Year begins. The election shall apply to amounts earned in a period described in (a) above that begins during the Plan Year. Notwithstanding the foregoing, in the first year in which a non-employee director becomes eligible to participate in the Plan, an election may be made with respect to services to be performed subsequent to the election, to the extent permitted under Code section 409A. Such an election must be made on an Election Form within 30 days after the date the non-employee director becomes eligible to participate in the Plan.

          d) Deferred Cash Alternative. For each Participant who affirmatively elects to defer receipt of his or her retainers in the form of deferred cash, the Company shall establish a separate account (a “Deferred Compensation Account”) and credit such deferred cash compensation into that Account as of the date the amounts would otherwise be paid. A separate Deferred Compensation Account shall be established for each Plan Year a Participant makes such a deferral election. Earnings, gains and losses shall be credited to each such Deferred Compensation Account based on the rate earned by the fund or funds selected by the Participant from among funds or portfolios established under the General Mills, Inc. 401(k) Savings Plan or any other qualified benefit plan maintained by the Company which the Minor Amendment Committee, or its delegate, in its discretion, may from time to time establish.

- 3 -

Distributions from a Deferred Compensation Account shall be made in accordance with Section 9.

          The Company has established a Supplemental Benefits Trust with Wells Fargo Bank Minnesota, N.A. as trustee to hold assets of the Company under certain circumstances as a reserve for the discharge of the Company’s obligations as to Deferred Compensation Accounts under the Plan and certain other deferred compensation plans of the Company. In the event of a Change in Control as defined in Section 11 below, the Company shall be obligated to immediately contribute such amounts to the trust as may be necessary to fully fund all Deferred Compensation Accounts payable under the Plan. Any Participant in the Plan shall have the right to demand and secure specific performance of this provision. All assets held in the trust remain subject only to the claims of the Company’s general creditors whose claims against the Company are not satisfied because of the Company’s bankruptcy or insolvency (as those terms are defined in the trust agreement). No Participant has any preferred claim on, or beneficial ownership interest in, any assets of the trust before the assets are paid to the Participant and all rights created under the trust, as under the Plan, are unsecured contractual claims of the Participant against the Company.

          e) Common Stock Alternative. Each Participant may affirmatively elect to receive all or a specified percentage of his or her retainers for a Plan Year in shares of Common Stock, which, if elected, will be issued 10 business days following the last day of each quarterly period during the Plan Year described above in (a). Only whole numbers of shares will be issued, with any fractional share amounts paid in cash. For purposes of computing the number of shares earned each quarter during the Plan Year, the value of each share shall be equal to the Fair Market Value on the third Business Day preceding the last day of each quarter described above in (a) during the Plan Year. For the purposes of this Plan, “Business Day” shall mean a day on which the New York Stock Exchange is open for trading.

          f) Death. Notwithstanding any other provision of the Plan, if a Participant dies during a Plan Year, the balance of the amount due for the full quarter in which death occurs shall be payable in full to the Participant’s estate, in cash, 60 days following the date of death.

7. NON-QUALIFIED STOCK OPTIONS

          a) Grant of Options. Each non-employee director on the effective date of the Plan (or, if first elected after the effective date of the Plan, on the date the non-employee director first attends a Board meeting) shall be awarded an option (an “Option”) to purchase shares of Common Stock, in an amount determined from time to time by the Board, or its delegate. As of the close of business on each successive annual stockholders’ meeting after the date of the original award, each Participant who is re-elected to the Board shall be granted an additional Option to purchase shares of

- 4 -

Common Stock. All Options granted under the Plan shall be non-statutory options not entitled to special tax treatment under Code section 422.

          b) Option Exercise Price. The per share price to be paid by the Participant at the time an Option is exercised shall be 100% of the Fair Market Value on the date of grant, or on the last date preceding the date of grant on which the Common Stock was traded.

          c) Term of Option. Each Option shall expire ten (10) years from the date of grant.

          d) Exercise and Vesting of Option. Each Option will vest on the date of the annual stockholders’ meeting next following the date the Option is granted. Upon vesting, a Participant shall be given the full ten (10) year term to exercise the Option without regard to whether he or she continues to serve on the Board. If, for any reason, a Participant ceases to serve on the Board prior to the date an Option vests, such Option shall be forfeited and all further rights of the Participant to or with respect to such Option shall terminate. Notwithstanding the foregoing, if a Participant should die during his or her term of service on the Board, any vested Option may be exercised by the person designated in such Participant’s last will and testament or, in the absence of such designation, by the Participant’s estate, and any unvested Options shall fully vest and become exercisable upon death for the remainder of the Option’s full term.

          e) Method of Exercise. A Participant exercising an Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company. The exercise price shall be paid to the Company at the time of such exercise, subject to any applicable rule or regulation adopted by the Committee:

(i)	in cash (including check, draft, money order or wire transfer made payable to the order of the Company);
(ii)	through the tender of shares of Common Stock owned by the Participant (by either actual delivery or attestation); or
(iii)	by a combination of (i) and (ii) above.

To determine the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.

          f) Non-transferability. Except as provided by rule adopted by the Committee, an Option shall be non-assignable and non-transferable by a Participant other than by will or the laws of descent and distribution. A Participant shall forfeit any Option

- 5 -

assigned or transferred, voluntarily or involuntarily, other than as permitted under this subsection.

8. STOCK UNITS

          a) Awards. On the effective date of the Plan (or, if a Participant is first elected after the effective date of the Plan, on the date the Participant first attends a Board meeting) and at the close of business on each successive annual stockholders’ meeting, each Participant shall be awarded the right to receive shares of Common Stock (“Stock Units”), subject to vesting as provided in Section 8(b). Only a Participant who is re-elected to the Board shall be entitled to a grant under this Section 8(a) of Stock Units awarded at the close of business on an annual meeting date after the date of the original grant to Participants. A separate Stock Unit Account will be established for the Participant each time an award of Stock Units is made.

                    The maximum aggregate number of shares authorized to be issued under the Plan upon vesting of Stock Unit awards shall be 175,000. Participants receiving Stock Units will have no rights as stockholders of the Company with respect to allocations made to their Stock Unit Account(s), except the right to receive dividend equivalent allocations under Section 8(d).

                    Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of until such time as share certificates for Common Stock are issued to the Participants.

          b) Vesting of Stock Units. A Participant’s interest in the Stock Units shall vest on the date of the annual stockholders’ meeting next following the date of the award of the Stock Units. If, for any reason, a Participant ceases to serve on the Board prior to the date the Participant’s interest in a grant of Stock Units vests, such Stock Units shall be forfeited and all further rights of the Participant to or with respect to such Stock Units shall terminate. Notwithstanding the foregoing, a Participant who dies while serving on the Board prior to the vesting of Stock Units shall fully vest in such Stock Units, effective as of the date of death.

          c) Election Concerning Receipt of Common Stock. Each Participant receiving an award of Stock Units under Section 8(a) may elect the time and form (lump sum vs. installments) of distribution of Common Stock attributable to such Stock Units, pursuant to the terms of Section 9. If no affirmative election is made, all Stock Units shall be paid in shares of Common Stock 10 days following vesting.

          d) Dividend Equivalents. The Participant may also elect to have dividend equivalents payable on Stock Units paid currently in cash or reinvested in Stock Units. If the amounts are reinvested, on each dividend payment date for the Common Stock, the Company will credit each Stock Unit Account with an amount equal to the dividends that would have been paid had the Stock Units been actual shares of Common Stock,

- 6 -

which shall be used to “purchase” additional Stock Units at a price equal to the Fair Market Value on the dividend date. Such additional Stock Units shall be distributed at the same time and in the same form as the rest of the Stock Unit Account balance. If the Participant fails to make an election, the dividend equivalent amounts shall be paid in cash currently.

          e) Timing of Elections. In order to make an election under Sections 8(c) and/or 8(d) with respect to Stock Units awarded for a Plan Year, a Participant shall file an irrevocable Election Form with the Committee before the calendar year in which the Plan Year begins. Notwithstanding the foregoing, in the first year in which a non-employee director becomes eligible to participate in the Plan, a deferral election may be made with respect to services to be performed subsequent to the election, to the extent permitted under Code section 409A. Such an election must be made on an Election Form within 30 days after the date the non-employee director becomes eligible to participate in the Plan.

9. DISTRIBUTION PROVISIONS FOR DEFERRED CASH AND STOCK UNITS

          The following distribution provisions shall apply to Deferred Compensation Accounts and Stock Unit Accounts:

          a) Timing. Distributions from Deferred Compensation Accounts shall normally commence at Separation from Service, however, a Participant may affirmatively elect a specified date for commencement, provided said date is not later than age 70. The same rule applies to Stock Units which have been deferred beyond the vesting period described in Section 8(b). Elections as to the timing of benefit commencement shall be made in accordance with Sections 6 and 8, as appropriate.

          b) Form of Distribution. Distributions shall normally be made in a lump sum. However, a Participant may affirmatively elect to receive substantially equal annual installments over a period of up to 10 years. Such elections shall be made in accordance with Sections 6 and 8, as appropriate.

          c) Manner of Distribution. Amounts credited to Deferred Compensation Accounts shall be paid in cash. Amounts credited to Stock Unit Accounts shall be paid in Common Stock based on the number of Stock Units credited to the Stock Unit Account and paid in cash equal to any dividend equivalent amounts which had not been used to “purchase” additional Stock Units.

          d) Distribution Upon Death. Notwithstanding any elections by a Participant or provisions of the Plan to the contrary, if a Participant dies before full distribution of a Deferred Compensation Account or Stock Unit Account, such accounts shall be distributed to the Participant’s estate in a lump sum 60 days following the date of death.

          e) Changes in Time or Form of Distribution. A Participant who has elected to have an Account payable as of a specified date in (a) above (but not a Participant who

- 7 -

has elected Separation from Service as the payment timing) may make any number of subsequent elections to change the time of commencement and/or form (lump sum vs. installments) of a distribution; provided, however, that such an election shall be effective only if all of the following conditions are satisfied:

          (i) the election may not take effect until at least twelve (12) months after the date on which the election is made;

          (ii) a distribution may not be made earlier than at least five (5) years from the date the distribution would have otherwise been made;

          (iii) the election must be made at least twelve (12) months before the specified date; and

          (iv) the newly elected specified commencement date may not be beyond the Participant’s 70^th birthday and no new election may be made after the Participant’s 65^th birthday.

For purposes of elections made under this Section, installment distributions shall be treated as a single distribution.

          g) Permitted Payment Delays. Notwithstanding any provision of this Plan to the contrary, any distribution to a Participant under the Plan shall be delayed upon the Committee’s determination that one or more of the following events may occur:

          (i) the making of the payment would violate a term of a loan agreement to which the Company is a party, or other similar contract to which the Company is a party, and such violation would cause material harm to the Company; or

          (ii) the making of the payment would violate Federal securities laws or other applicable law;

provided, that any payment subject to this Section 9(g) shall ultimately be paid in accordance with Code section 409A.

          h) Payment Acceleration. If amounts deferred under the Plan must be included in a Participant’s income under Code section 409A prior to the scheduled distribution of such amounts, distribution of such amount shall be made to the Participant.

10. CHANGE OF CONTROL

          Notwithstanding a Participant’s election or provisions of the Plan to the contrary, upon the occurrence of a “Change of Control” (as defined in Section 11), all Options and Stock Units shall fully and immediately vest, and shall be exercisable or paid pursuant to the terms of the Plan that are otherwise applicable. If the Change of

- 8 -

Control is also a “change in control” as defined under Code section 409A(a)(2)(A)(v) and official guidance thereunder, all Stock Unit Accounts shall be distributed in a single payment 30 days following such Change of Control.

11. ADMINISTRATION

          The Plan shall be administered by the Committee. The Committee shall have full power to interpret the Plan, formulate additional details and regulations for carrying out the Plan and amend, modify or terminate the Plan as from time to time it deems proper and in the best interests of the Company, provided that after a “Change of Control” no amendment, modification of or action to terminate the Plan may be made which would affect compensation earned or accrued prior to such amendment, modification or termination without the written consent of a majority of Participants determined as of the day before a “Change of Control.” Any decision or interpretation adopted by the Committee shall be final and conclusive. A “Change of Control” means:

          a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (1), the following acquisitions shall not be deemed to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (3) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Company Voting Securities; or

          b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

- 9 -

          c) The approval by the shareholders of the Company of a reorganization, merger, consolidation, sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business combination of the Outstanding Company Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

          d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

12. GOVERNING LAW

          The validity, construction and effect of the Plan and any such actions taken under or relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable Federal law.

13. NOTICES

          Unless otherwise notified, all notices under this Plan shall be sent in writing to the Company, attention Corporate Compensation, P.O. Box 1113, Minneapolis, Minnesota 55440. All correspondence to the Participants shall be sent to the address which is their recorded address as listed on the election forms.

- 10 -

14. PLAN TERMINATION

          Upon termination of the Plan, distribution of Deferred Compensation Accounts and Stock Unit Accounts shall be made as described in Section 9, unless the Committee determines in its sole discretion that all such amounts shall be distributed upon termination in accordance with the requirements under Code section 409A.

15. COMPLIANCE WITH CODE SECTION 409A

          It is intended that this Plan shall comply with the provisions of Code section 409A and the Treasury regulations relating thereto so as not to subject the Participants to the payment of additional taxes and interest under Code section 409A. In furtherance of this intent, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

- 11 -

EX-10.32

EXHIBIT 10.32

[***] – Indicates confidential information. Confidential treatment requested under Rule 24b-2.

Portion omitted filed separately with the Securities and Exchange Commission.

YOPLAIT MANUFACTURING AND

DISTRIBUTION LICENSE AGREEMENT

Between the undersigned:

Société de Développements et d’Innovations des Marchés Agricoles et Alimentaires – SODIMA-Union de Coopératives Agricoles, previously named Société de Diffusion de Marques – SODIMA - a union of agricultural cooperatives under French law, with variable capital, registered under N° 1274 N, with its registered offices at 170bis, Boulevard du Montparnasse, Paris 14°, France

hereinafter referred to as “SODIMA”

on the one hand, and

General Mills, Inc. a Delaware corporation, with principal Executives Offices at 9200 Wayzata Boulevard, Minneapolis, Minnesota 55440, U.S.A.

hereinafter referred to as “the Licensee” on the other hand.

For purposes of this Agreement, Licensee shall include General Mills, Inc. and all of its more than 50% - owned or controlled (directly or indirectly) domestic subsidiaries for which General Mills, Inc. shall guarantee the full performance of the terms and conditions of this Agreement.

WHEREAS:

A. SODIMA has developed and may continue to develop manufacturing processes, formulas and techniques, methods of merchandising and promotion, distinctive shapes of containers and packaging, and advertising and promotional materials (hereinafter sometimes collectively referred to as the “SODIMA know-how”), relating to [***] (“the Products, the further definition and main types of which are listed in Exhibit A hereto, which Exhibit forms an integral part of this Agreement), which are produced and distributed under the “YOPLAIT” Trademark, presently registered in the United States of

- 1 -

America (“United States”) or other trademarks pertaining to the YOPLAIT line registered or in the process of registration in the United States for the Products listed in Exhibit B hereto (collectively, the “Trademarks” – Exhibit B forms an integral part of this Agreement), which have attained a favorable reputation and extensive goodwill outside the United States; and

B. SODIMA proposes to grant to the Licensee and the Licensee wishes to acquire, a license for the manufacture and distribution of the Products (as hereinafter defined) using the aforementioned SODIMA know-how, promotional information and Trademarks, upon the terms and conditions hereinafter set forth, in all of the United States and its territories and possessions, excluding Puerto Rico (hereinafter called the “Territory”).

NOW, THEREFORE, on the basis of the foregoing recitals and the mutual agreements hereinafter set forth, the parties agree as follows:

I – Grant of License

I.1 SODIMA hereby grants to the Licensee, on the terms and conditions set forth in this Agreement, a License:

a) to manufacture, in the Territory, and only in the Territory, the Products under the Trademarks;

b) to distribute and sell, in the Territory, and only in the Territory, the Products under the Trademarks;

c) to use, in the Territory, and only in the Territory, for the foregoing purposes, the manufacturing processes, formulas and techniques, methods of production, quality control, methods of merchandising and promotion, the Trademarks, any copyrights and patents owned by SODIMA in the United States, product names, distinctive shapes of containers and packaging, advertising and promotional materials, which have been or may hereafter be developed, by or for SODIMA and made available to the Licensee in accordance with the terms of this Agreement for use in connection with the manufacture and sale of the Products.

- 2 -

I.2 The License granted pursuant hereto shall be an exclusive license, even as to SODIMA, within the Territory so long as this Agreement shall remain in effect. SODIMA also agrees that so long as this Agreement shall remain in effect it will not grant to any other party any license under the Trademarks for any product and/or service in the Territory, which latter obligation shall extend to any trademarks now in existence or any new or modified trademarks of the Yoplait line which SODIMA may from time to time adopt as provided for in paragraph VI.9 for the Products as well as any trademarks in the Territory which incorporate “YO” or “YOP” as an element thereof. SODIMA warrants that it has the right to grant the licenses hereunder in accordance with paragraphs I.1 and I.2 including the process, products improvements and other know-how specified in paragraph I.1a), b) and c) and other paragraphs originated and owned or to be originated by SODIMA’s corporate or cooperative members and their corporate or cooperative manufacturing members. SODIMA also warrants that trademarks for the YOPLAIT line with respect to the Products originated and owned or to be originated by SODIMA’s corporate or cooperative members and their corporate or cooperative manufacturing members will not be licensed by such members to any third party in the Territory.

II. - License Fee and Royalties

II.1 License Fee

As consideration for the initial disclosure of know-how in accordance with paragraph III.1 and the initial technical assistance in accordance with paragraphs III.2, III.3 and III.4 by SODIMA, the Licensee shall pay SODIMA [***] United States dollars as follows:

a) [***]; and

b) [***].

- 3 -

Such payments are to be made in Paris in such manner as SODIMA shall specify. The effective date of this Agreement means the date when Licensee acquires (by purchase or otherwise) the last of the rights in connection with the Products previously granted by SODIMA within parts of the Territory to Summit Foods Company and Michigan Cottage Cheese, Inc. For purposes of this definition of effective date, acquire shall include any reversion of such previously granted rights to SODIMA. Upon being acquired, such rights shall then be cancelled and superseded by the rights granted herein and the parties agree that this Agreement shall become effective only if all of the said previously granted rights are acquired as aforesaid within a period of three (3) months after the date of execution of this Agreement; provided, however, that if Licensee is diligently attempting to complete the acquisition of said previously granted rights SODIMA agrees to extend such time period for an additional three (3) months. SODIMA agrees that it will not withhold approval of the assignment or transfer to Licensee of the rights previously granted to Summit Foods Company and Michigan Cottage Cheese, and SODIMA also warrants that except for the said grants, no rights under the licensed subject matter herein have been granted to any other party in the Territory. SODIMA agrees that upon the effective date of this Agreement the License fee payments to be made by Licensee under this paragraph II.1 supersede and cancel any such license (or franchise) fee payment obligation of Summit Foods Company under agreements between SODIMA and Summit Foods Company.

II.2 Royalty

As further consideration for this Agreement, Licensee agrees to pay to SODIMA a royalty in United States dollars on the Licensee’s Gross Revenues as hereinafter defined from sales of the Products, which will be calculated as follows:

[***]. Thereafter, the royalties shall be calculated in accordance with the following schedule on an annualized fiscal year basis:

- 4 -

Gross Revenues Per Fiscal Year In United States Dollars	Royalty Rate Percent (%) of Gross Revenues
[***]	[***]

Fiscal year shall mean the period from June 1 in any one calendar year to May 31 in the next calendar year. The first such full fiscal year shall commence on June 1, 1978. Fiscal quarter shall mean the three calendar month periods commencing on June 1, September 1, December 1 and March 1 of each fiscal year.

The royalty shall be payable to SODIMA in Paris within 30 days after the end of each fiscal quarter during the term of the Agreement.

II.3 “Gross Revenues” means the gross sales price invoiced by Licensee to purchasers of the Products minus any credits or allowances given as a result of return of such Products, any quantity discounts allowed (but not promotional allowances), and any applicable sales or use taxes.

II.4 The Licensee shall furnish to SODIMA monthly statistics reflecting the Licensee’s total sales of the Products in units, and quarterly reports of Gross Revenues. Such statistics shall be furnished not later than twenty (20) days after the end of the calendar month in which such sales were made and such reports shall be furnished not later than thirty (30) days after the end of the fiscal quarter in which such sales were made.

The Licensee shall keep true and accurate accounts and records of all sales of the Products, and such accounts and records shall be available for inspection by SODIMA, its authorized agents or representatives, at all times during normal business hours, provided that such SODIMA agents or representatives shall first have to be approved by Licensee (such approval not the be unreasonably withheld).

- 5 -

II.5 In the event Licensee is required by the United States Government or requested by SODIMA to pay on SODIMA’s behalf any withholding taxes imposed by the United States governmental authorities on royalty income to SODIMA hereunder, Licensee shall deduct the amounts so paid from the royalties due to SODIMA and Licensee shall provide SODIMA with the appropriate receipt for the payments of such taxes. In the event of a significant change in the United States tax laws affecting royalty income to SODIMA to SODIMA’s detriment, the parties shall renegotiate in good faith the royalty rates provided for herein; provided, however, that any such renegotiated royalty rates shall not have a material adverse effect on either of the parties.

SODIMA agrees to be responsible for any other taxes which may become due and payable by SODIMA in regard to any sums received hereunder by SODIMA and accordingly, SODIMA indemnifies and holds Licensee harmless from the payment of any such taxes.

II.6 To the extent permitted by applicable law, any amount not paid when due by the Licensee hereunder shall bear interest at the official discount rate of the Bank of France in effect on the date payment was due.

In the event that, by reason of applicable law or regulations relating to exchange controls, the Licensee shall be unable to pay the amounts due under Article II herein in France, said amounts shall be paid to an account designated by SODIMA with a bank in the United States and shall constitute payment of such amounts. The Licensee shall instruct such bank to advise SODIMA promptly of the credit.

III – Undertakings of SODIMA

III.1 Throughout the term of this Agreement, and subject to the provisions of paragraph III.4 hereof, SODIMA shall furnish and communicate to Licensee the SODIMA know-how and requisite information with respect to the manufacturing processes, formulas, techniques and merchandising, and promotion methods for the Products covered by the License granted hereunder.

- 6 -

III.2 Subject to the provisions of paragraph III.4 hereof, SODIMA shall furnish all technical assistance to the Licensee necessary for manufacture of the Products including:

a) assistance in the selection and installation of equipment and machinery;

b) assistance in the planning, start-up, adjustment and control of manufacturing operations;

c) assistance in the determination of initial quantities and available sources of supply for raw materials and packaging materials;

d) assistance in the establishment and implementation of quality control with respect to raw materials, packaging and finished products;

e) assistance in the development of improved productivity and profitability;

f) assistance in the development of the Products and in their adaptation to applicable laws and regulations and to consumer tastes;

g) analysis of personnel functions, definition of personnel profiles and training of the head of manufacturing operations of the Licensee; and

h) after the commencement of operations, continuing assistance in connection with quality control, the training of key personnel, and the procurement of raw materials.

III.3 Subject to the provisions of paragraph III.4 hereof, throughout the term of this Agreement, SODIMA shall furnish technical assistance to the Licensee in connection with the merchandising and promotion of the Products in the Territory including the following:

a) assistance in the development and application of sales techniques;

b) assistance in preparing and conducting market studies;

- 7 -

c) assistance in the development of plans for advertising, promotion and sales operations and organization of distribution and delivery systems;

d) assistance in the selection and investigation of sales outlets;

e) assistance in the analysis of and the determination of such adjustments as may be required;

f) a study of personnel functions, the definition of personnel profiles and the training of the head of sales operations of the Licensee; and

g) continuing assistance in the merchandising and promotion techniques after the commencement of production.

III.4 The assistance to be provided by SODIMA pursuant to paragraphs III.1, III.2 and III.3 hereof shall be carried out at such time and in such manner as SODIMA shall reasonably determine and during the start-up period, such assistance shall be provided as necessary to meet the needs of Licensee in achieving the start-up of production and marketing of the Products under the schedule of Exhibit C (which Exhibit forms an integral part of this Agreement).

SODIMA shall assign two fully qualified technical representatives (one in the production field and one in the marketing field) to coordinate the providing of assistance to the Licensee in achieving the start-up production and marketing of the Products under the schedule of Exhibit C hereto. These representatives will be made available according to the judgment of SODIMA to meet all reasonable requests of the Licensee in achieving such start-up of production and marketing provided however, that such technical representatives will devote 80% of their working time (holidays deducted) to such assistance, unless the parties from time to time mutually agree in good faith that some lesser % is needed by Licensee or unless SODIMA is prevented for unforeseen reasons from supplying the full 80%.

Such representatives shall respectively have a background in the production and marketing of the Products and shall be reasonably fluent in the English language. SODIMA shall also provide such other necessary assistance by its qualified personnel during the start-up period as shall be reasonably determined by mutual agreement between SODIMA and Licensee to be necessary

- 8 -

to meet the needs of Licensee in achieving the start-up of production and marketing of the Products under the schedule of Exhibit C hereto.

III.5 SODIMA shall bear the expenses of furnishing the assistance to be provided by it pursuant to paragraphs III.1, III.2, and III.3 and III.4 hereof insofar as they relate to the cost (including salary, travel and temporary living costs) of qualified personnel of SODIMA; the cost of documentation and written materials furnished by SODIMA; and the cost of any raw materials and packaging of the Products consumed or used in reasonable quantities in connection with such technical assistance in any of the pilot plants of SODIMA and its affiliated companies. All other costs of such technical assistance, including salary, travel and temporary living costs of the Licensee’s employees, and the use of packagings, materials and equipment at the Licensee’s plant, shall be borne by the Licensee.

III.6 SODIMA shall provide further assistance in connection with the License granted hereunder from time to time upon the request of the Licensee, at the times and to the extent that SODIMA shall reasonably determine to be practicable.

For this purpose, the Licensee shall bear the cost of such extra assistance which will be based on a mutually agreed upon cost per day. In addition, such expenses as travel and temporary living costs of personnel providing the extra assistance shall be borne by the Licensee.

III.7 Subject to the other provisions in this Agreement including the provisions of paragraph VI.3, nothing contained in this Agreement shall be deemed to obligate SODIMA to furnish to the Licensee any advice, technical assistance or information of any kind whatsoever, other than that which SODIMA shall reasonably be able to furnish on the basis of its know-how in the manufacture and sale of Products, and SODIMA shall not be liable to the Licensee for any loss, damage or expense of any nature suffered or incurred by the Licensee as a result or consequence of advice, technical

- 9 -

assistance or information furnished to it by SODIMA in good faith and without serious negligence to be proved by Licensee.

IV – Undertakings of the Licensee

IV.1 The Licensee accepts the License granted herein on the terms and conditions set forth in this Agreement and acknowledges that the rights and privileges granted hereunder are to be used only to the extent, for the purposes and in the manner herein set forth.

The Licensee undertakes:

a) To commence production and marketing of the Products in the Territory as soon as reasonably possible and in any event, to commence such production and marketing of the Products in the Territory at least in accordance with the schedule annexed hereto as Exhibit C, unless Licensee demonstrates diligence in attempting to follow the schedule but for valid business reasons has been unable to adhere to the same, such reasons including economic conditions, competitive situation, strategic changes, unforeseen events and the like. Licensee will keep SODIMA appraised of the status of plans in regard to the schedule.

b) To promote sales of, and to use its best efforts to increase demand for, the Products in the Territory by making the Products available and be positioned as quality products.

c) To keep SODIMA informed on a regular and continuing basis of the Licensee’s activities in manufacturing and marketing the Products.

IV.2 The Licensee will not engage directly or indirectly in any activity which constitutes an infringement, appropriation, copying or imitation of any of the distinctive packaging, Trademarks or trade names provided by SODIMA hereunder or which otherwise injures the value of SODIMA’s interest therein. For a period of five years from the effective date of the Agreement, the Licensee will not without the prior written consent of SODIMA, manufacture, distribute or sell products identical or substantially similar to the Products,

- 10 -

provided that direct sales by Licensee’s restaurants to their customers or direct sales through Licensee’s vending machines are excluded from the latter commitment. [***].

IV.3 The Licensee undertakes to comply at all times with all applicable laws and regulations in connection with the manufacture, distribution, sale and promotion of the Products and to be responsible in case of failure to comply with such laws and regulations for SODIMA’s assistance (see paragraph III.2).

IV.4 The Licensee shall keep confidential and shall not cause or permit the disclosure of the processes, formulas, techniques, and methods, and customer and marketing information, furnished to it by SODIMA to any person other than those whose duties require possession of such information.

Said confidentiality requirement shall not apply to any information which Licensee can show (a) was in the possession of Licensee prior to receipt of any disclosure to it pursuant to this Agreement and not heretofore directly or indirectly derived from SODIMA, or (b) is or becomes without disclosure by Licensee part of the public knowledge or literature, or (c) otherwise lawfully becomes available to Licensee without restriction or disclosure by Licensee, from sources other than SODIMA, which sources did not acquire such information directly from SODIMA.

IV.5 The Licensee shall make every reasonable effort to employ as key people in connection with the manufacture and sale of the Products personnel fully qualified to perform the responsibilities of their positions. SODIMA will assist Licensee in this regard by furnishing advice as to the qualifications of such key personnel.

The Licensee undertakes to send at its own expense its key people to one YOPLAIT plant selected by SODIMA during a period of time selected by mutual consent in the event that both Licensee’s and SODIMA’s technical representatives deem it reasonably necessary.

- 11 -

IV.6 The choice of packaging, graphics and designs on, with respect to the Products must be provided to SODIMA in the United States, or if so instructed to SODIMA in Paris for approval (which approval shall not be unreasonably withheld) before any production or distribution of the Products hereunder. With respect to minor changes in such packaging, graphics and designs, SODIMA will have three (3) business days after the reception of such materials in the United States to give its approval or refusal (which approval shall not be unreasonably withheld). If SODIMA shall not have responded within this three-day period, SODIMA’s approval will be deemed to have been given for the submitted materials.

V – Improvements and New Products

V.1 The term “new product or process” shall mean any product or process (including packaging and equipment) within the scope of the Products and the SODIMA know-how licensed hereunder, the development of which would not be obvious to a person, skilled in the art, who is thoroughly familiar with SODIMA’s techniques. In regard to the formulas of new products, it shall be clearly demonstrable that the same have peculiarity and originality over the SODIMA formulas through the inventive efforts of the person or persons developing such new product formulas where such person or persons shall have used the SODIMA formulas as a starting point, provided that any such new product or process developed by Licensee shall not be known by SODIMA-members (hereinafter defined) or shall not have already been developed by SODIMA-members at the time Licensee made such new product or process, the burden of proof in this respect always residing in SODIMA-members. Licensee shall have the burden of proving when such new product or process was made by Licensee.

- 12 -

For purposes of this Agreement, the term “obvious” shall be construed according to the Patent Laws of the United States.

V.2 Any innovation or change which does not meet the requirements of paragraph V.1 for new product or process shall be termed an “improvement” and therefore shall not be deemed a new product or process for purposes of this Agreement for example any product within the scope of the Products licensed hereunder, of which the profitability, the quality or characteristics, including the form of presentation and conservation of the product (liquid, gaseous, solid, ice, etc.) shall merely have been improved or modified, whether by modification of the percentage of ingredients, or by the mere addition or deletion of any element, shall not be deemed a “new product”, regardless of the process or means used.

V.3 SODIMA shall grant to the Licensee all the rights and privileges described in this Agreement with respect to any of its new products or processes and to each improvement in any of the Products made or developed by SODIMA.

V.4 SODIMA shall have the right, from time to time upon reasonable written notice to the Licensee, to request Licensee to add products within the scope of the Products already developed by SODIMA or which SODIMA may develop during the course of this Agreement to the Products. Licensee shall have the right, however, to decline to produce such products if Licensee deems it economically inadvisable to do so. The parties may, however, agree to conduct test marketing for any such product and if such test marketing demonstrates sufficient market potential including economic feasibility, Licensee cannot decline to produce such product. Expenses for any such test marketing shall be shared equally between Licensee and SODIMA.

- 13 -

V.5 SODIMA shall provide technical assistance to the Licensee in the manner contemplated in Article III of this Agreement with respect to all such improvements and new products and processes.

V.6 a) The Licensee shall promptly communicate to SODIMA and hereby grants to SODIMA and its cooperative and corporate members and their cooperative and corporate manufacturing members (hereafter SODIMA members) the non-exclusive, irrevocable, right to use, manufacture and sell, including the right to grant sublicenses without any restriction as to Territory (with the exception of Licensee’s Territory) during the term of this Agreement and subject to the provisions of paragraphs V.7 (a) and V.7 (d)) or field of application within the scope of the Products and SODIMA know-how licensed hereunder, all new products and processes, as well as all improvements which the Licensee may develop in any of the Products or in connection with the manufacturing and distribution thereof. The rights granted hereunder in respect of improvements shall be royalty-free. The rights granted hereunder to SODIMA members in respect to new products and processes shall be royalty-free provided however that such new products are manufactured in France and that such new processes are carried out in France.

b) Licensee agrees that the right to grant sublicenses under Licensee’s new products and processes as defined in paragraphs V.1 and V.2 hereinabove to licensees or franchisees of SODIMA-members resides in SODIMA-members and Licensee will not undertake to grant licenses under Licensee’s new products and processes to such licensees and franchisees of SODIMA-members. SODIMA-members agree that the sublicensing of the new products and processes of Licensee to the licensees and franchisees of SODIMA-members is conditioned on the receiving of the prior agreement or approval as set forth herein below of Licensee.

- 14 -

With respect to receiving the prior agreement of Licensee, SODIMA members and Licensee agree to negotiate in good faith concerning the payment of a lump-sum for the use of Licensee’s new products or processes by any or all of the licensees or franchisees of SODIMA-members; if any such agreement is consumated, then SODIMA-members will not be required to share any further royalties, lump-sum payments or both with Licensee, from any of its licensees or franchisees for the new product or process covered by such agreement. With respect to receiving the prior approval of Licensee for a sublicense for the new products or processes of Licensee, SODIMA-members agree to provide Licensee in writing with the names of the proposed licensees or franchisees to be sublicensed and the countries in which such sublicense would be effective and Licensee shall have the right to approve or disapprove any such sublicense, provided however, that the Licensee’s approval will not be unreasonably withheld. On further regard to such sublicenses, SODIMA-members agree to use their best efforts to obtain from the licensees and franchisees of SODIMA-members royalties or lump-sum payments or both under any such sublicense consistent with the royalties and lump-sum payments received or being received by SODIMA-members under existing agreements with the respective licensees or franchisees. It is hereby agreed and understood that SODIMA-members shall at their absolute discretion have the right to determine whether they will use the rights granted under this paragraph V.6, particularly as regards the right to grant sublicenses for the manufacture, sale and use of new products and processes as defined in paragraph V.1.

V.7. a) Any process or product developed or improved by the Licensee within the scope of the Products and the SODIMA know-how licensed hereunder, except new products or processes described in paragraphs V.1 and V.2 hereinabove, shall be subject to the terms and conditions of this Agreement in the same manner and to the same extent as any other process and Products under this Agreement.

b) New products and processes described in paragraphs V.1 and V.2 developed by the Licensee shall belong to the Licensee and the Licensee shall be free to patent them, subject to the provisions of paragraphs IV.2, IV.4, V.6, V.7 (a) and VI.1.

- 15 -

c) New products and processes described in paragraphs V.1 and V.2 developed by the Licensee may be marketed freely by the Licensee subject to the provisions of paragraphs IV.2, IV.4, V.6, V.7 (a) and VI.1. The conditions for any use of the Trademarks and the availability of any SODIMA technical assistance, with regard to any new products described in this subparagraph V.7 (c), shall be negotiated in good faith between the parties.

d) To the extent that SODIMA-members receive royalties or lump-sum payments or both under sublicenses for new products and processes granted in accordance with paragraph V.6 (b), Licensee shall be entitled to share in said royalties and lump-sum payments, the share of which will be negotiated in good faith between SODIMA and Licensee, provided, however, that in the absence of factors indicating some other division, Licensee shall receive one-half (1/2) of such royalties and/or lump-sum payments. No royalties shall be payable by SODIMA-members to Licensee under any such sublicense after expiration of the patent covering such new product or process.

V.8. SODIMA-members shall keep confidential and shall require its or their sublicensees to keep confidential the new products and processes and improvements of Licensee furnished to them hereunder by Licensee (hereinafter the “Licensee information”). Additionally, SODIMA-members and said sublicensees shall not cause or permit the disclosure of the Licensee information to any person other than those whose duties required possession of such information.

Said confidentiality requirement shall not apply to any information which SODIMA-members and its or their sublicensees (hereinafter collectively “SODIMA-sublicensees”) can show (a) was in the possession of SODIMA-sublicensees prior to receipt of the disclosure of the Licensee information to them hereinunder, or (b) is or becomes without disclosure by SODIMA-sublicensees part of the public knowledge or literature, or (c) becomes available to SODIMA-sublicensees without restriction or disclosure by SODIMA-sublicensees, from sources other than Licensee, which sources did not acquire such information directly from Licensee.

- 16 -

The confidentiality provisions of this paragraph V.8 and paragraph IV.4 shall apply while this Agreement remains in effect and for a period of five (5) years after termination hereof.

V.9 Licensee agrees that SODIMA-members and their licensees or franchisees may use Licensee’s promotional ideas and creative ideas in advertising, provided that Licensee has no valid business or legal reason for withholding the use of same. SODIMA-members and their licensees or franchisees shall not have the right to use Licensee’s specific advertising and promotional materials and copy unless Licensee gives its prior written consent for such use. Extra copies of Licensee’s advertisements and promotional materials will be provided at cost to SODIMA-members at their request, provided that such copies are available.

IV- Industrial Property

VI.1 The Licensee and SODIMA shall use their best efforts to protect and preserve the exclusive and distinctive character of any of the Products, processes, formulas, techniques, methods, patents, design registrations, copyrights, Trademarks, or similar rights covered by this Agreement.

The Licensee shall inform SODIMA within a reasonable period of time of any applications for patents, design registrations, copyrights, trademarks, or similar rights made by it, with respect to any of the Products, processes, formulas, techniques and methods or any design, advertising material, name, mark or symbol obtained by it from SODIMA or used by it in connection with its business activities pursuant to this Agreement, it being understood that the Licensee shall have to obtain the prior written consent of SODIMA where a patent specification or similar title to be obtained includes proprietary, confidential information given to the Licensee by SODIMA.

VI.2 The Licensee shall promptly notify SODIMA in writing of:

a) Any suit or proceeding brought or threatened against the Licensee or SODIMA in the Territory claiming infringement of another’s trademark, tradename, patent, design patent, copyright or other similar right, and

b) any infringement or other unauthorized use in the Territory by any other person of any of the Trademarks or any tradename,

- 17 -

patent, design patent, copyright or other similar right of SODIMA licensed hereunder.

VI.3 Subject to paragraph VI.2 (a) in the event that Licensee is held liable as an infringer of a third party’s trademark, copyright or patent by reason of the use of the Trademarks or SODIMA’s promotional material or the SODIMA know-how as licensed herein, SODIMA agrees to indemnify Licensee against and save Licensee harmless from the damages payable by Licensee to such third party pursuant to a voluntary settlement or a judgment or arbitration award in such third party’s favor and provided that whether held liable or not SODIMA shall bear, or reimburse Licensee for,all legal and counsel fees and expenses (not including house counsel or internal costs).

VI.4 SODIMA shall have the option to undertake and conduct the defense of any suit so brought as covered by the provisions of paragraph VI.3 and no settlement of any such claim or suit is to be made without the prior written consent of both SODIMA and Licensee, which consent will not be unreasonably withheld.

VI.5 Licensee shall, upon SODIMA’s request and expense, protect SODIMA’s rights as set forth in paragraph VI.2 (b) in the Territory against any infringement or other unauthorized use, by instituting and prosecuting judicial proceedings or otherwise, as appropriate.

SODIMA shall be entitled, at its request, and at its own expense, to conduct any such proceedings. Should Licensee request SODIMA to initiate, or to authorize Licensee to initiate at SODIMA’s expense, legal proceedings to protect SODIMA’s rights in the Territory against infringement or any other unauthorized use, SODIMA may not unreasonably withhold such action or authorization, provided that should SODIMA authorize Licensee to conduct such proceedings, SODIMA shall be entitled to participate in any such proceedings.

VI.6 The proceeds from any successful infringement suits or proceedings in connection with matters covered in paragraph VI.5 shall be shared equally as between SODIMA and Licensee after the deduction therefrom of any and all expenses incurred by SODIMA and Licensee in connection therewith and provided, further, that neither Licensee nor SODIMA shall settle any claims in connection with the matter covered in paragraph VI.5 without the prior written consent of the other party, which

- 18 -

consent will not be unreasonably withheld.

VI.7 a) SODIMA warrants that the Trademarks granted to the Licensee pursuant hereto are SODIMA’s property and that SODIMA has the right to grant the licenses provided for herein and that the YOPLAIT Trademark is presently in effect in the United States. SODIMA undertakes to do its best to maintain in effect the YOPLAIT Trademark in the United States during the term of the present Agreement as well as the other Trademarks pertaining to the YOPLAIT line which are now registered or will subsequently be registered in the United States for the Products, provided however, that such Trademarks are used by the Licensee.

b) Should any of the Trademarks, the YOPLAIT Trademark excepted, be declared invalid or cancelled by applicable law or as a result of any action initiated by third parties or otherwise, Licensee agrees that such declaration shall not effect this Agreement or any provisions therein and Licensee shall not be entitled to any compensation or damages or reimbursement in regard to any sums already paid or to be paid to SODIMA.

However, should the YOPLAIT Trademark be declared invalid or cancelled by applicable law or as a result of any action initiated by third parties or otherwise, the parties will renegotiate in good faith to lower the royalty rate, provided hereunder with respect exclusively to the Products sold under the YOPLAIT Trademark, it being understood that Licensee shall not be entitled to any compensation or damages or reimbursement in regard to any sums already paid or to be paid to SODIMA.

VI.8 The Licensee shall not use any of the Trademarks in connection with any other trademark or tradename not owned by SODIMA (with the exception of the business name of Licensee) and shall not use any of the Trademarks as corporate titles.

VI.9 Any new trademarks or modified trademarks pertaining to the YOPLAIT Line which SODIMA shall adopt for use in connection with the Products shall be offered to Licensee by mutual consent (which consent will not

- 19 -

be unreasonably withheld) and all such new or modified trademarks shall be deemed to be licensed hereunder and subject to all the provisions hereof, it being understood that SODIMA shall have the exclusive right to register such new trademarks and modified trademarks in the United States.

VI.10 All uses of the Trademarks by the Licensee shall inure to the benefit of SODIMA, its successors and assigns.

VI.11 SODIMA shall promptly notify Licensee in writing of any suits or proceeding brought or threatened against SODIMA in the Territory claiming misuse by Licensee of the Trademarks or SODIMA’s patents or copyrights. In the event that SODIMA is held liable in any such suit, Licensee agrees to indemnify SODIMA against and save SODIMA harmless from the damages payable by SODIMA to such third party pursuant to a voluntary settlement or a judgment or arbitration award in such third party’s favor and provided that whether held liable or not Licensee shall bear, or reimburse SODIMA for, all legal and counsel fees and expenses (not including house counsel or internal costs). Licensee shall have the option to undertake and conduct the defense of any suit so brought as covered by the provisions of this paragraph VI.11 and no settlement of any such claim or suit is to be made without the prior written consent of both Licensee and SODIMA which consent will not be unreasonably withheld.

VII – Advertising

VII.1 The Licensee shall be entitled to the use in the promotion, sale and distribution of the Products in the Territory, of all written, visual or audiovisual promotional material furnished to it by or on behalf of SODIMA for that purpose, including photoplates, type, bromide papers, matrices, films and other materials intended for the reproduction of the Trademarks on any supporting material.

However, Licensee will bear the expenses due to any alterations or additions to the materials described above which may be necessary for their use by Licensee.

- 20 -

All uses made by the Licensee of such materials shall conform to SODIMA’s “YOPLAIT TRADEMARK IMAGE – GRAPHICS AND TRADEMARKS STANDARDS” (a copy of which is attached hereto as Exhibit D, which Exhibit forms an integral part of this Agreement), provided that such IMAGE AND STANDARDS are not in conflict with United States laws and regulations. All such materials shall remain the property of SODIMA and shall be returned to SODIMA upon its request by registered, insured mail, return receipt requested. The Licensee shall be responsible for any loss, theft, or damage to or deterioration of such materials given to it by SODIMA and shall reimburse SODIMA for all expenses which SODIMA may incur, in France or elsewhere, in recovering, reconstituting or replacing such material.

VII.2 a) SODIMA shall give the Licensee its advice on the selection of the advertising agency for the Products and as to the quality of the advertising and promotional material for the Products.

b) Licensee shall not engage in any advertising or promotional activities detrimental or counter to the general policy of SODIMA, defined as the freshness, natural quality and image of the Products, provided that such policy is not counter to the laws and regulations of the United States.

VIII – Working Procedures

Every six months, there will be a meeting at the place of business of Licensee between SODIMA and Licensee in order to discuss the major points regarding the carrying out of the business under this Agreement. SODIMA shall keep minutes of such working meeting between the parties, and shall send a copy of such minutes to the Licensee, who shall be deemed to have approve such minutes unless it shall have notified SODIMA in writing of its exception within fifteen (15) days after receipt by it of such copy.

- 21 -

IX – Quality Control

IX.1 It is recognized and understood by the parties hereto that for the purpose of protecting their mutual interest in their good will and reputation in the United States and abroad, of the business, the Products, the Trademarks and the methods, processes, formulas and techniques and similar rights covered by this Agreement, as well as for the protection of all other persons who may be or become franchisees or licensees of SODIMA with respect to the Products, or any of them, substantial uniformity in the quality and nature of the Products and in operations under this License, and observance of appropriate standards and rules, are necessary. The Licensee therefore undertakes:

a) That in the manufacture of the Products it will procure and use cultures from SODIMA or from sources approved in writing by SODIMA, and such approval shall not be unreasonably withheld;

b) That in the manufacture of the Products, it will use only materials, ingredients, packaging and accessories of such quality, designing, standard and composition as are currently approved in writing by SODIMA (so long as they are competitive as to cost and quality) and will comply with the standards of manufacture, processing, packaging and distribution which may be reasonably prescribed by SODIMA from time to time.

However, SODIMA, on Licensee’s request may grant in writing some particular conditions to take into consideration the uniqueness of the United States market.

c) That SODIMA shall have the right to visit the manufacturing plant and control laboratory for the Products of the Licensee from time to time, at all reasonable business hours, to inspect the premises and equipment of the Licensee, to inspect, test and obtain samples of the Products and raw materials, ingredients and packaging materials relating thereto, to observe the manner of operation of the Licensee’s establishment for the production of the Products, and to cause its duly authorized agents or representatives to carry out any of the foregoing. The cost of a reasonable number of such samples shall be borne by Licensee, provided that said samples are needed by SODIMA to determine whether or not the Products produced

- 22 -

by Licensee meet the quality standards set forth herein and provided further that SODIMA agrees to report to Licensee results of inspections and analyses of said samples including the giving of advice to Licensee on any suggested changes to be made in the Products. Licensee may agree to provide to SODIMA samples in addition to the above or larger quantities of the Products at SODIMA’s expense.

X – Third Party Liability

Except as to matters represented, warranted or to be performed by SODIMA under this Agreement including the provisions of paragraphs III.7 and VI.3, the Licensee agrees to indemnify SODIMA, hold SODIMA harmless and protect SODIMA from and against any liability, expenses, damage or loss arising in connection with or resulting from the Licensee’s operations pursuant to this Agreement. The Licensee shall, at its expense, procure and maintain liability insurance to be written by a reputable insurance company or companies, with coverage of not less than U.S. dollars 500,000 combined personal injury and property damage arising out of any one incident including a broad form vendors endorsement. The provisions of the first sentence of this Section X shall survive the termination of this Agreement.

XI – Assignment and Transfer

XI.1 The Licensee shall not have any right to sublicense its rights hereunder, nor to assign, transfer or otherwise dispose of the License or any other right granted to it pursuant to this Agreement without the prior written consent of SODIMA; provided, however, that Licensee shall have the right to assign its rights hereunder with the approval of SODIMA (which approval will not be unreasonably withheld), to the purchaser of its entire business involved in the performance of this Agreement.

XI.2 SODIMA may assign this Agreement, or any portion thereof, or delegate all or any part of its obligations hereunder to any company which it controls, and to any company with which it may merge or consolidate or to which it may sell or transfer all or substantially all of its assets,

- 23 -

provided that such company shall assume and agree to perform the obligations of SODIMA hereunder and, provided further, that should such assignment or transfer be made to a competitor of Licensee in the United States, Licensee is relieved of the obligation to supply new products and processes and improvements covered by this Agreement to said competitor.

XII – Term and Termination

XII.1 This Agreement is entered into for an initial period of fifteen (15) years from the effective date of this Agreement and shall thereafter be renewed automatically for successive ten-year periods, in the absence of written notice to the contrary by Licensee to SODIMA not less than twelve (12) months prior to the expiration of such initial period or any such subsequent period. The fifteen (15) year initial period is dictated by the large capital investment expected to be made by Licensee for the manufacture and sale of the Products. Notwithstanding the foregoing:

a) Either party may terminate this Agreement in the event of material breach by the other, provided that it shall first have given to such other party one hundred eighty (180) days written notice of such breach and such other party shall have failed to cure such breach within said period, or if said breach is incurable, shall have failed to take all reasonable steps within said period necessary to prevent a recurrence of said breach, it being understood and agreed, however, that if there is a dispute as to the occurrence or existence of such a material breach, the time within which such other party must cure such breach or take such steps shall be extended until ninety (90) days after final resolution of such dispute by arbitration; and

b) SODIMA shall be entitled to terminate this Agreement as of any date by notice in writing to the Licensee in the event that (1) the Licensee shall attempt to transfer or assign this Agreement or any right thereunder in violation of paragraph XI.1 hereof or

- 24 -

(2) the Licensee shall be subsequently controlled, directly or indirectly, by a competitor of SODIMA in France.

c) Either party hereto shall be entitled to terminate this Agreement as of any date by notice in writing to the other party in the event that the other party shall become insolvent or shall make an assignment for the benefit of creditors, or a voluntary or involuntary petition in bankruptcy or insolvency shall be filed by or against the other party, or a receiver or trustee of the business of the other party shall be appointed or an attachment shall be levied against the property of the other party and such receivership, trusteeship or attachment shall not be dissolved within fifteen (15) days from the date thereof.

XII.2 Upon the termination of this Agreement for any reason, the Licensee shall cease the manufacture, sale and promotion of the Products, the use of the techniques, processes, formulas and methods furnished by SODIMA pursuant hereto (this restriction shall not apply to the use of information not subject to the confidentiality and disclosure restrictions in paragraph IV.4 hereto), and the use of the Trademarks and any trade names, copyrights, patents, design patents and similar rights of SODIMA, and shall surrender to SODIMA forthwith all rights of SODIMA, and shall surrender to SODIMA all models, drawings, plans, manuals, materials furnished to the Licensee by SODIMA hereunder, and SODIMA shall remain the sole owner of all such property and rights and shall be fully entitled to dispose of them freely, and the Licensee shall deliver or destroy upon SODIMA’s instructions all advertising, promotional, packaging and other materials bearing any of the Trademarks or any trade name, mark, design or logo of SODIMA, at its own expense provided, however; (1) in the event of termination not caused by a material breach of the parties then during a period of ninety (90) days from the date of such termination, Licensee shall have the right to sell all Products in inventory, whether completed or in the process of manufacture, as well as to use all material then on hand or on order and applicable to the Products for the manufacture and sale thereof (such post termination sales shall be subject to the terms of this Agreement, including the royalty provisions hereof);

- 25 -

and (2) that in the event this Agreement is terminated due to a material breach on the exclusive part of SODIMA, Licensee shall be (a) entitled to continue to use the techniques, processes, formulas and methods (i.e., the SODIMA know-how) previously furnished to Licensee by SODIMA in the manufacture and sale of the Products without the payment of any further royalty to SODIMA and (b) entitled to continue the use of the Trademarks, such use to be upon terms and conditions to be negotiated in good faith among the parties hereto provided that such terms and conditions are consistent with the terms and conditions hereunder (including the payment of a royalty one-half the rate set forth herein).

XIII – Other Provisions

XIII.1 Neither party hereto shall have any liability to the other party for any delay or failure of performance hereunder as the result of any cause beyond its control, upon the condition that the party whose performance is affected thereby shall promptly inform the other party by notice in writing of such event. For the purpose of this Agreement causes considered beyond the control of the parties include, but are not restricted to, the following: acts of God, governmental regulation or restrictions, labor disputes such as strike or lockout, shortages or rationing of supplies or materials, war, rebellion, insurrection, riot, sabotage, invasion, quarantine restrictions, transportation embargoes, failure or delays in transportation, fire, storm, flood, earthquake.

XIII.2 Any notices, reports or other communications under or in connection with this Agreement shall be given in writing and sent by air mail (and, in the case of notices, by registered mail), postage prepaid and addressed as follows:

a) if to SODIMA, at 170 bis, Boulevard du Montparnasse – 75014 Paris (France), and

b) if to the Licensee, at 9200 Wayzata Boulevard, P.O. Box 1113, MINNEAPOLIS, Minnesota 55440, U.S.A.

or to such other address as such party shall have specified by notice in writing.

- 26 -

XIII.3 Nothing contained herein or done pursuant to this Agreement shall be deemed to constitute the Licensee or any shareholder, officer, director or employee of the Licensee, an agent, employee, partner or joint venturer of SODIMA.

XIII.4 This Agreement constitutes the entire Agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior understandings, oral or written, with respect thereto. The official text of this Agreement shall be in the English language.

XIII.5 This Agreement shall be governed by and construed in accordance with French laws, provided, however, that all questions of construction or interpretation of any United States trademark, copyright or patent shall be determined according to the laws of the United States and provided, further, that the parties have agreed not to avail themselves of the French law of October 14, 1943 limiting to ten (10) years the provision of exclusivity in supply contracts.

XIII.6 Any disputes concerning the present Agreement shall first be settled by good faith negotiations between the parties. In the event that any such dispute cannot be resolved by such negotiations, then the same shall be conclusively settled by arbitration. Arbitration shall take place in New York, New York, and regulations of the International Chamber of Commerce shall apply thereto. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdictions of the dispute so arbitrated.

XIII.7 This Agreement can be amended only by a written instrument signed by a duly authorized officer of each party.

- 27 -

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in quadruplicate by their duly authorized representatives as of the ninth (9^th) day of September, 1977.

	GENERAL MILLS, INC.
/s/ [illegible]
WITNESS	By	/s/ James G. Fifield
		James G. Fifield Vice President

SOCIETE DE DEVELOPPEMENTS ET
D’INNOVATIONS DES MARCHES
AGRICOLES ET ALIMENTAIRES

/s/ [illegible]
WITNESS	By	/s/ André Gaillard
		André Gaillard Président du Conseil d’Administration

- 28 -

EXHIBIT A

+++++++++

I – DEFINITIONS OF THE [***] PRODUCTS

[***]

II – LIST OF MAIN TYPES OF PRODUCTS FALLING WITHIN THE DIFINITIONS ABOVE

[***]

[product images]

EXHIBIT B

REGISTERED TRADEMARKS IN THE U.S.A.

Trade-marks	N° and Date of Registration	Renewal Date	International Class
YOPLAIT & flower	930 605 March 7, 1972	March 7, 1992	29 & 30
YOP	I 043 659 July 13, 1976	July 13, 1996	29

Two other brand names: YOPI

YOPFLAN

are in registration process in the U.S.A.

EXHIBIT C

PROJECTED SCHEDULE OF MARKETING OF THE PRODUCTS IN THE TERRITORY

1) Sales to be consolidated during 1977/78 period in areas previously served by MICHIGAN COTTAGE CHEESE, Inc. and SUMMIT FOODS COMPANY.

2) Sales expansion into West Coast area during 1978/79 period.

3) Sales expansion into Southeast area and/or Mid-Atlantic area during 1979/80 period.

4) Completion of national roll-out from 1980 on.

A projected schedule for construction of manufacturing facilities will be provided to SODIMA within six (6) months from the effective date of this Agreement, consistent with the above projected sales expansion schedule.

First Amendment To

YOPLAIT MANUFACTURING AND

DISTRIBUTION LICENSE AGREEMENT

WHEREAS, Société de Développements et d’Innovations des Marchés Agricoles et Alimentaires (herein “SODIMA”) and General Mills, Inc. on behalf of itself and all of its more than 50%-owned or controlled (directly or indirectly) domestic subsidiaries (herein “Licensee”) have executed on September 9, 1977 the YOPLAIT MANUFACTURING AND DISTRIBUTION LICENSE AGREEMENT (herein the “Agreement”); and

WHEREAS, SODIMA and Licensee desire to amend the Agreement in minor respects to correct particularly typographical errors and the like.

NOW, THEREFORE, the parties agree to amend the Agreement by changing the below designated lines of the pages of the Agreement to read as follows:

Page 1, line 26:

“[***] (“the Products”, the further”

Page 3, line 1:

“I.2 The License granted pursuant hereto shall be an exclusive license,”

Page 3, line 13:

“ing the process, products, improvements and other know-how specified”

Page 3, line 29:

“a) [***]”

Page 4, line 15:

“sition of said previously granted rights, SODIMA agrees to extend”

Page 5, line 31:

“agents or representatives shall first have to be approved by Licensee (such”

Page 6, line 8:

“income to SODIMA to SODIMA’s detriment, the parties shall renegotiate”

Page 6, line 10:

“ver, that any such renegotiated royalty rates shall not have a material”

Page 8, line 23:

“the start-up of production and marketing of the Products under the”

Page 9, line 3:

“bit C hereto.”

Page 9, line 29:

“advice, technical assistance or information of any kind”

Page 10, line 19:

“schedule.”

Page 10, line 23:

“c) To keep SODIMA informed on a regular and continuing basis of”

Page 11, line 4:

[***]

Page 11, line 9:

“case of failure to comply with such laws and regulations. For”

Page 11, line 10:

“SODIMA’s assistance see paragraph III.2 f).”

Page 12, line 24:

“MA formulas as a starting point, provided that any such new pro-”

Page 13, line 6:

“or process for purposes of this Agreement. For example any pro-”

Page 13, line 26:

“agree to conduct test marketing for any such product and, if

Page 14, line 8:

“SODIMA-members) the non-exclusive, irrevocable, right to use,”

Page 14, line 11:

“of Licensee’s Territory during the term of this Agreement and”

Page 14, line 12:

“subject to the provisions of paragraphs V.7 (a) and V.7 (d)) or”

Page 14, line 19:

“to SODIMA-members in respect to new products and processes shall”

Page 14, line 27:

“under Licensee’s new products and processes to such licensees and”

Page 15, line 2:

“members and Licensee agree to negotiate in good faith concerning”

Page 15, line 5:

“SODIMA-members. If any such agreement is consumated, then SODIMA-”

Page 15, line 13:

“countries in which such sublicense would be effective and Licensee”

Page 15, line 14:

“shall have the right to approve or disapprove any such sublicense”

Page 15, line 16:

“nably withheld. In further regard to such sublicenses, SODIMA-”

Page 16, line 25:

“require possession of such information.”

Page 19, line 33:

“shall be offered by SODIMA to Licensee and added to the trademarks licensed hereunder by mutual consent (which consent will not”

Page 21, line 5:

“STANDARDS are not in conflict with United States laws and regulations.”

Page 21, line 17:

“detrimental or counter to the general policy of SODIMA defined as”

Page 21, line 27:

“approved such minutes unless it shall have notified SODIMA in writing of”

Page 23, line 26:

“(which approval will not be unreasonably withheld), to the purchaser of”

Page 27, line 15:

“provision of exclusivity in supply contracts.”

Exhibit A, page 1, line 5:

“[***]”

Exhibit A, page 1, line 6:

“[***]”

Exhibit A, page 1, line 7:

“[***]”

Exhibit A, page 1, line 22:

“[***]”

Exhibit A, page 1, line 40:

“[***]”

Page 2, line 23:

“techniques, methods of production quality control, methods of”

Page 8, Line 33:

“Such representatives shall respectively have a background in the production”

Page 13, line 8:

“which the profitability, the quality or characteristics, inclu-”

Page 13, line 18:

“Products made or developed by SODIMA.”

Page 19, line 22:

“faith to lower the royalty rate provided hereunder with respect”

Page 25, line 9:

“business of the other party shall be appointed or an attachment”

This First Amendment shall be effective as of September 9, 1977.

IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed in quadruplicate by their duly authorized representatives.

Société de Développements et d’Innovations des Marchés Agricoles et Alimentaires		GENERAL MILLS, INC.
By	/s/ [illegible]	By	/s/ [illegible]
Title:		Title:		Vice President Gen Mgr.

SECOND AMENDMENT TO THE YOPLAIT

MANUFACTURING AND DISTRIBUTION

LICENSE AGREEMENT

SIGNED ON SEPTEMBER 9th, 1977

Between the undersigned:

SODIMA, SOCIETE DE DEVELOPPEMENTS ET D’INNOVATIONS DES MARCHES AGRICOLES ET ALIMENTAIRES, Union de Cooperatives Agricoles - registered under n° 1274 N with its registered Offices at 170 bis, boulevard du Montparnasse 75014 PARIS

hereinafter referred to as “SODIMA”

on the one hand,

and

GENERAL MILLS Inc.

a Delaware corporation, with principal Executives Offices at 9200 Wayzata Boulevard - MINNEAPOLIS, MINNESOTA 55440 (U.S.A.)

hereinafter referred to as “the LICENSEE”.

on the other hand.

WHEREAS

SODIMA and the LICENSEE after having run the YOPLAIT business for five years under the September 9, 1977 License Agreement (hereinafter “the Agreement”) acknowledge that a major full-time assistance, is not as much necessary and that new concepts of YOPLAIT Products may be developped in the U.S.A. under general technical assistance of SODIMA.

Now, therefore, the Parties have agreed as follows:

ARTICLE 1

The second and third sub paragraphs of article III-4 are deleted and replaced by the following:

“For this purpose SODIMA undertakes to send in the Territory anyone of its “qualified people at times of the year mutually agreed upon.”

Any other part of the Agreement relating to the former full-time assistance shall be construed accordingly.

ARTICLE 2

In order to compensate the deletion of former major full-time assistance SODIMA agrees that instead of paying part of LICENSEE’s researchs which may prove useless for SODIMA, to allow LICENSEE a cut-down royalty upon new concept of Products, developped by LICENSEE and incorporated within the YOPLAIT line.

Such cut-down to be calculated in the following manner:

• LICENSEE shall declare to SODIMA the Gross Revenues corresponding to the sales of such Products.

• SODIMA shall invoice, at the usual rate of royalty, taking into account [***] of the Gross Revenues arising of such sales of new concepts - during [***].

Aferwards the total Gross Revenues will be generating the usual royalty.

For construing purpose, the term “new concept” used in this agreement shall exclude new presentation of packagings and addition of any new flavor and/or fruit variety and/or sugar for the existing line of Products as of this date.

Made in quadruplicate

in PARIS

On August 1st, 1981

/s/ [illegible] /s/ [illegible]

SODIMA The LICENSEE

THIRD AMENDMENT TO THE YOPLAIT

MANUFACTURING AND DISTRIBUTION LICENSE AGREEMENT

SIGNED ON SEPTEMBER9, 1977

Between the undersigned:

SOCIETE DE DEVELOPPEMENTS ET D’INNOVATIONS DES MARCHES AGRICOLES ET ALIMENTAIRES SODIMA - Union de Coopératives Agricoles, an Union of Agricultural Cooperatives organized under French law, with variable capital, registered under n° 1 274 N, with its registered offices at 170 bis, boulevard du Montparnasse, 75014 PARIS FRANCE, represented by Mr Raymond COCHET

and

SODIMA International S.A., a Joint-Stock Company governed by the articles 118 to 150 of the french Commercial Company Law, with a capital of 250.000 FF - RCS PARIS B 332 390 145, with its registered offices at 170 bis, boulevard du Montparnasse, 75014 PARIS - FRANCE, represented by Mr Bernard GAUD

on the one hand,

and

GENERAL MILLS INC. with its registered offices at 9200 Wayzata Boulevard - MINNEAPOLIS, MINNESOTA U.S.A.

represented by Mr Steve ROTHSCHILD

on the other hand.

WHEREAS:

SODIMA Union and GENERAL MILLS have entered on September 9, 1977 a YOPLAIT Manufacturing and Distribution License Agreement for [***] Products within the Territory of the U.S.A.

SODIMA Union created a subsidiary of its, SODIMA International to take over the international part of its business and transferred to it the rights to use its foreign-registered trademarks and to resume the rights and obligations deriving from the Franchise agreements.

GENERAL MILLS, on the other side, would be interested in exportations of [***] Products, under the Trademark YOPLAIT, to Puerto Rico.

Now the Parties agreed upon the following:

ARTICLE 1

The Parties agree that, from January 1st, 1986 onwards and during the remaining term of the 1977 License Agreement, SODIMA Union has assigned said Agreement to SODIMA International which it controls, according to the terms and conditions of article XI - 2 of the License Agreement.

SODIMA International shall assume and agrees to perform the obligations of SODIMA Union. It shall have in return same rights as formerly held by SODIMA Union.

Any and all reference to “SODIMA” in the Agreement, its Amendments or in any document in writing for the purpose of implementation of the Agreement shall be construed as a reference to SODIMA International.

ARTICLE 2

SODIMA International authorizes as a specific derogation to the preamble, part B, of the 1977 License Agreement, the exportation of YOPLAIT Products to the Puerto Rican Territory, made an integral part of the contractual Territory.

ARTICLE 3

The Parties hereto agreed that the Puerto Rican sales be submitted to a [***] royalty on Gross Revenues instead of the contractual rate set forth in Article II-2 of the Franchise Agreement.

ARTICLE 4

All and any provision of the 1977 License Agreement which shall not have been altered by this Amendment shall remain valid and binding upon the Parties.

Made on quadruplicate
In
On

/s/ [illegible]
GENERAL MILLS, INC.
By	/s/ Steven M. Rothschild
	Steven M. Rothschild

FIFTH AMENDMENT TO THE YOPLAIT

MANUFACTURING AND DISTRIBUTION LICENSE AGREEMENT

WHEREAS, Société de Développements et d’Innovations des Marchés Agricoles et Alimentaires (SODIMA) and General Mills, Inc. on behalf of itself and all of its more than fifty percent (50%) owned or controlled (directly or indirectly) domestic subsidiaries (GMI) have executed on September 9, 1977 the YOPLAIT MANUFACTURING AND DISTRIBUTION LICENSE AGREEMENT (Agreement) relating to the use of various trademarks including the YOPLAIT denomination, the YOPLAIT flower device, the YOPLAIT broken oval design and any combination thereof, (Trademarks); and

WHEREAS, the rights of SODIMA in the Agreement have been transferred to SODIMA International (SODIMA International) with SODIMA remaining the owner of the TRADEMARKS, AND

WHEREAS, the Agreement provided in Article VI.8 that GMI could not use any of the Trademarks in connection with any other trademarks or trade name not owned by SODIMA; and

WHEREAS, GMI now wishes to use the GMI owned trademarks [***] (GMI Trademarks) in connection with the Trademarks in the advertisement and sale of a [***] yogurt (the yogurt); and

WHEREAS, SODIMA and SODIMA International are willing to permit GMI to use the GMI Trademarks in connection with the Trademarks in the advertisement and sale of the yogurt.

NOW, THEREFORE, in consideration of the promises herein contained, it is agreed as follows:

1.Notwithstanding Article VI.8 of the Agreement, GMI may use the GMI Trademarks in connection with the Trademarks in the advertisement and sale of the yogurt so long as GMI complies with the other terms of the Agreement.

2.         SODIMA and SODIMA International acknowledge that GMI owns the GMI Trademarks and neither SODIMA nor SODIMA International shall claim any rights therein anywhere in the world.

3.         So long as the Agreement continues, GMI shall always use the GMI Trademarks with the YOPLAIT trademark in the advertisement and sale of the yogurt. GMI will not use the GMI Trademarks in connection with any other Products covered by the Agreement without the prior written approval of SODIMA International.

4.         If the Agreement is ever terminated, GMI will either discontinue the use of the GMI Trademarks in connection with the advertisement and sale of the yogurt or pay to SODIMA International a royalty as provided for below.

Gross Revenues of the Yogurt Sold Using the GMI Trademarks Per GMI Fiscal Year in United States Dollars	Royalty Rate Percent of Gross Revenues
[***]	[***]

(The definition of Gross Revenues and royalty reporting shall be that set forth in the Agreement.)

5.         This Fifth Amendment shall be effective upon execution by the parties.

6.         In the event of termination of the Agreement, this Fifth Amendment shall survive on its own as a binding Agreement.

IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to be executed in triplicate by their duly authorized representatives.

GENERAL MILLS, INC.		SODIMA INTERNATIONAL
By	/s/ [illegible]	By	/s/ [illegible]
Date	4/14/92	Date	[illegible]
		SODIMA
		By	/s/ [illegible]
		Date	[illegible]

Seventh Amendment to the YOPLAIT Manufacturing and Distribution

license Agreement Signed on September 9^th 1977

*****

Between the undersigned:

- SODIMA International, a private company limited by shares, organized under French laws with a directorate and supervisory board, with a capital of 149.550.000 FF, registered n° RCS PARIS B 332 390 145, with its head office located in 75014 PARIS, France, 170 bis Boulevard du Montparnasse,

Represented by Mr Nicolas Le Chatelier

hereinafter referred to as “SODIMA”

and on the one hand,

- General Mills Inc. with its registered office at N° 1 General Mills Boulevard, MINNEAPOLIS - MINNESOTA 55426 — U.S.A., on behalf of itself and of its more than fifty percent owned or controlled domestic subsidiary Yoplait USA Inc.

represented by Mr

hereinafter referred to as “the Licensee”

on the one hand,

WHEREAS:

On September 9^th 1977, a YOPLAIT Manufacturing and Distribution License Agreement (hereafter referred to as “the License”) for [***] products within the Territory of the U.S.A. was entered into.

Licensee noticed that Yoplait branded Products were shipped by distributors to different countries outside of the granted contractual Territory with little or no control over the code or quality.

In order to formally organise such exportations, Licensee asked SODIMA to alter the License and extend the territorial coverage.

NOW the Parties agreed upon the following:

Article 1

SODIMA authorizes, as a specific derogation to Article I.1 of the License, the exportation of Yoplait Products to the following territories, made an integral part of the Territory:

Bahamas, Barbados, Bermuda, British West Indies, Granada, Jamaica, Netherland Antilles, and Trinidad & Tobago.

Article 2

This Amendment shall be effective upon execution by both Parties.

Article 3

All and any provision of the 1977 License left unaltered by this Amendment shall remain in force and binding upon the Parties.

Made in quadruplicate in Paris,

On March 25^th 1999.

For SODIMA International SA,		For General Mills Inc.,
/s/ Nicholas Le Chatelier		/s/ Ian R. Friendly
By:	Nicholas Le Chatelier	By:	Ian R. Friendly 4/6/99
			/s/ [illegible] 4/6/99

EIGHTH AMENDMENT TO

YOPLAIT MANUFACTURING AND

DISTRIBUTION LICENSE AGREEMENT

Between the undersigned:

- Société de Diffusion Internationale Agro-Alimentaire, a private company limited by shares, organized under French laws with a capital of 297 930 039 Euros, registered n° RCS PARIS B 352 726 194, with its head office located in 75014 PARIS, France, 170bis Boulevard du Montparnasse, acting as for itself as for and on behalf of its subsidiary Sodima Internationale

Represented by Mr. Didier Lefevre

Hereinafter referred to as “SODIMA”

on the one hand,

and

- General Mills, Inc., a U.S. Corporation, incorporated in Delaware with its head office located at Number One General Mills Boulevard, Minneapolis, Minnesota 55426, United States of America on behalf of itself and all of its more than fifty percent (50%) owned or controlled (directly or indirectly) domestic subsidiaries,

Represented by Mr. Robert Waldron

Hereinafter referred to as “LICENSEE”

on the other hand,

WHEREAS, SODIMA and LICENSEE executed on September 9, 1977 a YOPLAIT MANUFACTURING AND DISTRIBUTION LICENSE AGREEMENT (herein the “Agreement”) relating to the use of Trademarks and Sodima Know-How (as those terms are defined in the Agreement).

WHEREAS, SODIMA and LICENSEE have also amended the Agreement on various occasions throughout the years, including an amendment dated August 1, 1981 (herein the “Second Amendment”).

WHEREAS, SODIMA is a major, worldwide producer of dairy products and has developed dairy products and processes in its France based R&D Centre, which it licenses throughout the world by a network of franchises under contracts with its wholly owned subsidiary Sodima International S.A.

WHEREAS, SODIMA is willing to boost the pace of innovation in developing new dairy products.

WHEREAS, LICENSEE is a major U.S. based enterprise with a wide range of businesses, including [***] product businesses, and has developed a significant R&D effort in support of its fresh dairy product businesses.

WHEREAS, SODIMA and LICENSEE have already experienced a long term cooperation in the [***] product business pursuant to the Agreement where both consider they are neither existing nor potential competitors, under which Agreement LICENSEE was granted an exclusive franchising arrangement for the manufacture and distribution of dairy products in the Territory utilizing the Trademarks.

1

WHEREAS, SODIMA and LICENSEE desire to enter into a long-term cooperation/partnership in the development of new technology (products, processes, etc.) in the [***] product area in order to maximize synergies associated with each Parties' R&D effort, thereby allowing for the efficient development of new products within the framework of the Yoplait network and providing to both Parties a fair incremental source of business revenue from their respective R&D efforts.

WHEREAS, SODIMA and LICENSEE also wish to clarify certain aspects of their previously existing contractual relationship, including (1) how the Parties determine whether an invention is a “new product or process” or an “improvement” as such terms are defined in the Agreement; (2) how LICENSEE shall be compensated if SODIMA and/or its licensees elect to use such new LICENSEE sourced product or process or improvement; and (3) under what conditions (and for what length of time) LICENSEE shall be entitled to a reduced royalty rate for its sale of Products in the Territory (as both terms are defined in the Agreement).

NOW, THEREFORE, the Parties hereby agree as follows:

As of the Effective Date, Article II.2, Article V (the entire Article) and Article XI (the entire Article) of the Agreement and Article 2 of the Second Amendment are deleted in their entirety and are replaced by the Articles set forth below. Furthermore, the reference to paragraph XI.1 in Article XII.1(b) in the Agreement shall be amended so as to refer to Article 7.1 of the Amendment and Article IV.4 of the Agreement shall be amended to include as set forth in Article 5.2, below. All other portions of the Agreement, including all amendments thereto (including all remaining portions of the Second Amendment) which have not been altered by this Amendment shall remain valid and binding upon the Parties. Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Agreement or any amendment thereto.

Article I – DEFINITIONS

For purposes of this Amendment the following words shall have the meanings set forth hereunder:

1.1           “FDP Field” shall mean certain [***] (the further definition and main types of which are as listed in Exhibit A of the Agreement).

1.2           “LICENSEE Core Competency Project” shall mean a project which is undertaken by LICENSEE to develop products outside of the FDP Field or is undertaken by an R&D component of LICENSEE other than the Yoplait R&D Team and adapted for products within the FDP Field.

1.3            “Yoplait R&D Team” shall mean that R&D component of LICENSEE whose primary task is to support LICENSEE's Yoplait [***] business.

1.4           “Native Field Project” shall mean a project which is undertaken by the Yoplait R&D team to develop products within the FDP Field.

1.5           “New Products” shall mean Products developed by LICENSEE which are new SKUs (Store Keeping Units) sold by LICENSEE under new sub-brand names, excluding flavor and pack size variations as well as existing Product relaunches.

1.6           “Products” shall mean products in the FDP Field sold by LICENSEE in the Territory which are either produced and distributed using Sodima Know-How or are produced and distributed under the Trademarks.

1.7           “New Technology” shall mean any invention or improvement (including products, formulas,

2

processes, packaging and equipment) within the FDP Field, or adapted to such Field from another domain, the development of which would not be obvious to a person skilled in the art and thoroughly familiar with technology associated with the FDP Field. For purposes of this Amendment, an invention or improvement shall be considered “not obvious” if it contains a significant inventive step with regard to the existing state of technology in the FDP Field. To be considered “not obvious” for purposes of this Amendment, an invention or improvement must either (i) be the subject matter of a claim or claims in an issued patent granted by the US Patent Office; (ii) be agreed to be as such by the R&D Committee pursuant to the provisions of Article 4.5, below; (iii) be agreed to be as such by a third party expert pursuant to the provisions of Article 4.5, below; or (iv) be the subject of a new Health Claim. For purposes of this Amendment, the term “obvious” shall be construed according to the patent laws of the United States.

1.8         “Improvements” shall mean any invention or improvement (including products, formulas, processes, packaging and equipment) within the FDP Field, or adapted to such Field from another domain, which does not constitute New Technology.

1.9           “Health Claim” shall mean a claim suitable for use in promoting health benefits associated with Products, which claim has been approved by the United States Food and Drug Administration (or similar regulatory body) and is supported by successful clinical studies.

1.10         “R&D Committee” shall mean a committee consisting of the head of R&D for SODIMA's Yoplait branch and the head of the Yoplait R&D Team. Such Committee shall have the responsibilities set forth in the provisions of Article 2.2, below.

1.11          “Steering Committee” shall mean a committee consisting of the head of R&D for SODIMA's Yoplait branch, the head of the Yoplait R&D Team, one member of senior management from Sodiaal International and one member of senior management from LICENSEE, which member of senior management from LICENSEE shall be selected from the Yoplait Division of General Mills, Inc. Such Committee shall, further, have the responsibilities set forth in the provisions of Article 2.3, below.

1.12         “New Product Launch” shall mean that date which is twelve (12) months after the first sale (other than Test Market Sales) of a New Product in the Territory or upon which LICENSEE achieves seventy percent (70%) ACV (weighted distribution), whichever comes first.

1.13         “Test Market Sales” shall mean sales by LICENSEE of New Products which take place in markets representing less than ten percent (10%) ACV (weighted distribution).

1.14         “Third Party Technology” shall mean any New Technology or Improvement which is developed by a third party and then licensed either exclusively or non-exclusively by LICENSEE.

1.15         “Effective Date” shall mean 15 February 2002.

1.16          “Bridging Studies” shall mean any clinical studies conducted by SODIMA or by a third party on SODIMA's behalf, the purpose of which studies shall be to establish that the results of any clinical studies conducted by LICENSEE (or conducted by a third party at LICENSEE's request) for purposes of obtaining a Health Claim are applicable for obtaining similar health claims in a country or countries outside the United States.

3

Article 2 – R&D COLLABORATION

2.1           Since both SODIMA and LICENSEE conduct research efforts in the FDP Field, the Parties believe significant synergies are potentially available by coordinating their respective research efforts. As such, one purpose of this Amendment is to define how the Parties will collaborate in the development of New Technology (product, processes, etc.) in the [***] product area in order to maximize synergies associated with each Parties' R&D effort. In this respect, the strategic R&D directions of the Parties in the FDP Field, to the extent appropriate, will be coordinated by the Steering Committee and the R&D Committee, as described below, on a long-term basis and the management of the R&D project portfolio in the FDP area will be shared by the Parties in order to develop synergies and create incremental business resources from each Parties' respective R&D efforts.

2.2            Implementation of the R&D cooperation described above shall be initially managed through the efforts of the R&D Committee, which Committee shall have the following responsibilities: (i) monitoring of any research projects undertaken by SODIMA, LICENSEE or jointly by SODIMA and LICENSEE; (ii) allocating appropriate resources to such projects; (iii) identifying potential synergies in each Parties' R&D efforts; (iv) review of any research project undertaken by LICENSEE to determine whether such project is a Native Field Project or a GMI Core Competency Project; (v) determine whether an invention or improvement is “not obvious” pursuant to the provisions of Article 4.5, below; (vi) determine whether a Health Claim provides a significant competitive advantage for the product associated with such Health Claim; (vii) determine whether New Technology which is owned solely or jointly by LICENSEE provides a significant competitive advantage to LICENSEE in its sales of New Products incorporating same; and (viii) whatever other responsibilities are allocated to the R&D Committee by the Steering Committee. The R&D Committee shall meet twice a year, at times and in a place mutually agreed upon on an alternate basis in Paris and in Minneapolis or in any other convenient place. The meetings shall be convened in writing or by e-mail by the Party most desirous of having such meeting. Decisions of the R&D Committee shall be taken by mutual agreement. In case of disagreement, the decision shall be referred to the Steering Committee. Confidential minutes of each working meeting shall be kept and a copy thereof sent to the Steering Committee members.

2.3            Supervising the efforts of the R&D Committee shall be the Steering Committee, which Committee shall have the following responsibilities: (i) identify and define synergies in each Parties' strategic direction in conducting R&D in the FDP Field; (ii) determine the patent filing strategy in countries other than the US for any inventions jointly owned by the Parties pursuant to the provisions of Article 3.5, below; (iii) determine the patent filing strategy in countries other than the US for inventions owned by LICENSEE pursuant to the provisions of Article 3.7, below; (iv) determine targets and objectives for the R&D Committee to achieve; and (v) arbitrate in the case of disagreement among the R&D Committee. The Steering Committee shall meet at least once per year at a time and in a place mutually agreed upon. The meetings shall be convened in writing or by e-mail by the Party most desirous of having such meeting. Decisions of the Steering Committee shall be taken by a majority. In case no majority appears, the dispute shall be resolved as follow:

a) In the event of a dispute over what research projects should be undertaken, how such research projects should be resourced and/or how such research projects should be conducted, each Party shall have the ultimate right to control its own research efforts and make its own decisions regarding same.

b) In the event of a dispute over (i) whether a research project undertaken by LICENSEE is a Native Field Project or GMI Core Competency Project; (ii) whether an invention or improvement is “not obvious”; (iii) whether a Health Claim provides a significant competitive advantage for the product associated with such Health Claim; or (iv) whether New Technology which is owned solely or jointly by LICENSEE provides a significant competitive advantage to LICENSEE in its sales of New Products incorporating same, each Party shall appoint within thirty (30) days a patent counsel of his choice with the mission to express in

4

writing a common opinion, with grounds, within ninety (90) days from their appointment. Whenever same cannot be achieved, each of the counsels shall render his written opinion, with grounds, and both shall appoint together a third arbitrator within fifteen (15) days and then resign. The third arbitrator shall be an engineer or food scientist fluent in the English language, trained in dairy technology and shall neither be French nor American. All reports shall be in English. The decision made by the third arbitrator, which decision shall be made within ninety (90) days of such arbitrator's appointment, shall be final and binding upon the Parties. ICC rules of arbitration shall apply to the procedure for any points not covered above. In case the disagreement occurs with respect of knowing whether a Health Claim or New Technology owned solely or jointly by LICENSEE provides a significant competitive advantage, the patent counsels and third arbitrator may be replaced by medical or marketing experts whichever would be most appropriate according to the Parties' mutual consent. Those experts will act in the same conditions and within the same time limits as the patent counsels.

c) In the event of a dispute over the patent filing strategy for any inventions jointly owned by the Parties or for countries other than the US for inventions owned by LICENSEE, such dispute shall be resolved pursuant to the provisions of Articles 3.5 or 3.7, below.

Article 3. OWNERSHIP AND USE

3.1           SODIMA shall own any New Technology or Improvements which are conceived and reduced to practice solely by its employees and shall have the right to patent such New Technology or Improvements (including the decision as to in which countries patent coverage will be sought) at its sole discretion and expense. SODIMA shall grant to LICENSEE all the rights and privileges described in the Agreement (and any amendments thereto) with respect to any such New Technology and Improvements conceived or reduced to practice solely by SODIMA employees.

3.2            SODIMA shall have the right, from time to time upon reasonable written notice to LICENSEE to request LICENSEE to add products within the scope of the Products already developed by SODIMA or which SODIMA may develop during the course of the Agreement to the Products. LICENSEE shall have the right, however, to decline to produce such products if LICENSEE deems it economically inadvisable to do so. The Parties may, however, agree to conduct test marketing for any such product and, if such test marketing demonstrates sufficient market potential, including economic feasibility, LICENSEE cannot decline to product such product. Expenses for any such test marketing shall be shared equally between LICENSEE and SODIMA.

3.3             SODIMA shall provide technical assistance to LICENSEE in the manner contemplated in Article III of the Agreement with respect to all such Improvements and New Technology conceived or reduced to practice solely by SODIMA employees.

3.4            SODIMA and LICENSEE shall jointly own any New Technology or Improvements which are conceived and/or reduced to practice jointly by employees of SODIMA and LICENSEE. Unless modified pursuant to the provisions of Article 3.5, below, SODIMA and LICENSEE shall each have the right to use such jointly owned New Technology or Improvements as each sees fit, subject to any restrictions on use imposed under the Agreement and any amendments thereto (e.g., such New Technology and Improvements shall be licensed exclusively to LICENSEE in the Territory). LICENSEE shall have the right to patent such jointly owned New Technology and Improvements in the United States at its sole discretion and expense.

3.5            The Steering Committee shall determine whether to file patent applications in countries

5

other than the United States on such jointly owned New Technology or Improvements (including the decision as to in which countries patent coverage will be sought). LICENSEE shall be in charge of the patent registration process for all patent applications filed pursuant to the provisions of this Article 3.5 and all out-of-pocket expenses incurred by LICENSEE on such applications shall be shared equally with SODIMA. Should the Steering Committee disagree on whether to file patent applications on such jointly owned New Technology or Improvements (either whether to file for patent coverage at all or whether to file in a particular country or countries) the Party desiring patent coverage shall have the option to proceed to obtain such coverage on its own. In such case, the filing Party will be solely responsible for all costs associated with obtaining such patent coverage. Likewise, if at any time in the process of obtaining patent coverage, one of the Parties decides that it no longer wishes to continue to pay for its share of the expenses associated with obtaining such patent coverage (either for all patents associated with such technology or for patents associated with such technology in a particular country or countries), the Party electing to discontinue payment shall notify the other Party of its decision, in writing. Such other Party shall then have the option to proceed to obtain patent coverage on its own and at its sole expense. In the event one Party alone is paying all expenses associated with obtaining patent coverage in any particular country or countries, such Party bearing all expenses shall have sole ownership of any patents which issue in such country or countries, and the other Party shall have no rights in such patent except as otherwise provided in the Agreement and any amendments thereto.

3.6            LICENSEE shall own any New Technology or Improvements which are conceived and reduced to practice solely by its employees and shall have the right to patent and/or use such New Technology or Improvements in the United States at its sole discretion and expense.

3.7            The Steering Committee shall determine whether to file patent applications in countries other than the United States on New Technology or Improvements which are solely owned by LICENSEE (including the decision as to in which countries patent coverage will be sought). LICENSEE shall be in charge of the patent registration process for all patent applications filed pursuant to the provisions of this Article 3.7 and all out-of-pocket expenses incurred by LICENSEE on such applications shall be shared equally with SODIMA. Should the Steering Committee disagree on whether to file patent applications on such New Technology or Improvements which are solely owned by LICENSEE (either whether to file for patent coverage at all or whether to file in a particular country or countries) the Party desiring patent coverage shall have the option to proceed to obtain such coverage on its own. In such case, the filing Party will be solely responsible for all costs associated with obtaining such patent coverage. Likewise, if at any time in the process of obtaining patent coverage, one of the Parties decides that it no longer wishes to continue to pay for its share of the expenses associated with obtaining such patent coverage (either for all patents associated with such technology or for patents associated with such technology in a particular country or countries), the Party electing to discontinue payment shall notify the other Party of its decision, in writing. Such other Party shall then have the option to proceed to obtain patent coverage on its own and at its sole expense. In the event LICENSEE alone is paying all expenses associated with obtaining patent coverage in any particular country or countries, SODIMA shall have no rights in such patent. In the event SODIMA alone is paying all expenses associated with obtaining patent coverage in any particular country or countries, SODIMA and LICENSEE shall jointly own any patents which issue in such country or countries and LICENSEE shall not receive any compensation for the use of the New Technology covered by such patent which it would otherwise have received pursuant to the provisions of Article 4.8, below.

3.8            SODIMA and its licensees shall have no right to use New Technology or Improvements owned solely by LICENSEE in the Territory. Outside the Territory, to the extent such New Technology or Improvements result from a Native Field Project, SODIMA and/or its licensees shall have the exclusive right to use such New Technology and/or Improvements for the manufacture and sale of Products in the FDP Field, subject to any payment obligations set forth in Article 4, below. If for same valid business reason, LICENSEE elects not to allow SODIMA and/or its licensees to use such Native Field Project New Technology, outside the Territory, LICENSEE shall forfeit its right to any extended royalty discount on New Products incorporating such New Technology as described in Article 4.3, below. Finally, to the extent such

6

New Technology or Improvements result from a LICENSEE Core Competency Project, LICENSEE shall have the option to allow SODIMA and/or its licensees to use on an exclusive basis such New Technology and/or Improvements for the manufacture and sale of products in the FDP Field outside the Territory. Such option, shall be exercised at LICENSEE's sole discretion, with payment for SODIMA's and/or its licensees' use of such New Technology and/or Improvements to be determined as set forth in Article 4, below.

3.9            LICENSEE shall have no obligation to allow SODIMA and/or its licensees to use Third Party Technology. To the extent SODIMA desires access to Third Party Technology (either for its own use or use by its licensees), SODIMA shall have the right to request access to such Third Party Technology. Should LICENSEE agree to provide such access to Third Party Technology to SODIMA and/or its licensees, SODIMA and LICENSEE shall negotiate the specific terms and conditions upon which access will be provided. However, nothing set forth herein shall be construed as requiring that LICENSEE provide SODIMA and/or its licensees access to such Third Party Technology.

3.10          LICENSEE agrees that SODIMA and its licensees may use LICENSEE's promotional ideas and creative ideas in advertising, provided that LICENSEE has no valid business or legal reason for withholding the use of same. SODIMA and its licensees shall not have the right to use LICENSEE's specific advertising and promotional materials and copy unless LICENSEE gives its prior written consent for such use. Extra copies of LICENSEE's advertisements and promotional materials will be provided at cost to SODIMA and its licensees at their request, provided that such copies are available.

3.11          To the extent that SODIMA and/or its licensees use New Technology or Improvements owned solely by LICENSEE (regardless of whether such New Technology or Improvements result from a Native Field Project or a LICENSEE Core Competency Project), LICENSEE shall transfer such New Technology or Improvements to SODIMA and SODIMA shall then be responsible for transferring such New Technology or Improvements to its licensees. Further, unless LICENSEE agrees otherwise, the Parties agree that LICENSEE need not utilize any of its resources when transferring New Technology or Improvements to SODIMA.

Article 4 – FINANCIAL COMPENSATION

4.1            LICENSEE agrees to pay to SODIMA a royalty in United States dollars on LICENSEE's Gross Revenues from sales of Products in the Territory. Such royalty shall be calculated as follows:

Gross Revenues per Fiscal Year (United States dollars)	Royalty Rate (Percent of Gross Revenue)
[***]	[***]

Such royalties shall be payable to SODIMA in Paris within thirty (30) days of the end of each Fiscal Quarter during the term of the Agreement. For purposes of this Article 4.1, Fiscal Year shall mean the period from June 1 in any one calendar year to May 31 in the next calendar year and Fiscal Quarter shall mean the three calendar month periods commencing June 1, September 1, December 1 and March 1 of each Fiscal Year.

4.2            With respect to New Products, LICENSEE shall be entitled to a royalty reduction on sales of such New Products in the Territory. Such royalty reduction, which

7

shall be a [***] reduction for the [***] from New Product Launch, shall be calculated as follow:

a)             LICENSEE shall declare to SODIMA the Gross Revenues corresponding to the sales of such New Products; and

b)             SODIMA shall then invoice, at the usual rate of royalty, taking into account [***] of the Gross Revenues arising from such sales of New Products.

Upon completion of [***] from New Product Launch of any New Product, the royalty reduction procedure described above shall terminate unless an extended royalty discount is appropriate pursuant to the provisions of Article 4.3; below.

4.3            To the extent a New Product sold by LICENSEE in the Territory incorporates New Technology which is owned solely or jointly by LICENSEE and which provides a significant competitive advantage to LICENSEE in its sales of such New Product, LICENSEE shall be entitled to an extended royalty discount on sales of such New Product in the Territory. Such extended royalty reduction, which shall be [***] from the time the [***] royalty reduction set forth in Article 4.2; above, expires, shall be calculated as follows:

a)             LICENSEE shall declare to SODIMA the Gross Revenues corresponding to the sales of such New Products; and

b)             SODIMA shall then invoice, at the usual rate of royalty, taking into account [***] of the Gross Revenues arising from such sales of New Products.

Such extended royalty reduction described above, further, shall terminate [***] after New Product Launch of such New Product to the extent LICENSEE has not obtained patent coverage in the United States on the New Technology incorporated into such New Product or upon expiration of all United States patents which cover the New Technology incorporated into such New Product, whichever is applicable.

4.4            One key factor in determining the level of financial compensation appropriate for technology developed by LICENSEE (either solely by LICENSEE or jointly in combination with SODIMA), is whether that technology is New Technology or an Improvement. Should LICENSEE elect to obtain patent coverage in the United States on such technology, such technology shall be considered New Technology when such technology is the subject matter of a claim or claims in an issued patent granted by the US Patent Office, regardless of any previous decision made by the R&D Committee, the Steering Committee, each Parties' patent counsels or a third party expert pursuant to the provisions of Article 2, above, with respect to the obviousness of such technology. Once a patent issues on such New Technology, LICENSEE shall be entitled to (i) any future royalty reduction on New Products which incorporate such New Technology pursuant to the provisions of Article 4.3 above; (ii) any future royalty payments (either lump sum or ongoing) on sales of products by licensees of SODIMA which incorporate such New Technology pursuant to the provisions of Article 4.8 below; (iii) a retroactive payment for any royalty reduction which LICENSEE would have received pursuant to the provisions of Article 4.3, above, if the patent would have issued the same date it was filed; and (iv) a retroactive payment for any royalty payments which would have been owed LICENSEE on sales of products by licensees of SODIMA pursuant to the provisions of Article 4.8 below, if the patent would have issued the same date it was filed. With respect to the retroactive payments set forth in (iii) and (iv), above, such payments shall cover the period in which LICENSEE was undergoing the patent application procedure (i.e., from the date of filing of a patent application until the date a US patent issues from such application) and SODIMA shall make such payments to LICENSEE within ninety (90) days of the time LICENSEE provides SODIMA with written notice of the date any patent application at issue was filed and the date any patent at issue was issued.

4.5            To the extent LICENSEE either elects to keep technology developed by LICENSEE (either solely by LICENSEE or jointly in combination with SODIMA) a trade secret (hence foregoing the ability to obtain patent coverage on such technology) or desires to obtain a determination that such technology is “not obvious” at as early a time as possible in order to avoid having to wait for retroactive payments as described in Article 4.4 above, LICENSEE may bring such technology to the attention of the R&D Committee seeking a determination from that Committee that such technology is “not obvious.” Should the R&D Committee fail to reach agreement on whether such technology is “not obvious,” such dispute shall then be resolved pursuant to the provisions of Article 2.3 [including Article 2.3(b)]. To the extent the R&D Committee, the Steering Committee, each Parties' patent counsels or the third party arbitrator described in Article 2.3(b) determine that such technology is “not obvious,” such technology shall be considered New Technology and LICENSEE shall be entitled to (i) any future royalty reduction on New Products which incorporate such New Technology pursuant to the provisions of Article 4.3, above and (ii) royalty payments (either lump sum or ongoing) on sales of products by licensees of SODIMA which incorporate such New Technology pursuant to the provisions of Article 4.8, below. However, to the extent the R&D Committee, the Steering Committee, each Parties' patent counsels or the third party arbitrator described in Article 2.3(b) determine that such technology is obvious, such technology shall be considered to be an Improvement until such time as LICENSEE is able to obtain an issued patent granted by the US Patent Office having a claim or claims covering such technology, at which point in time the provisions of Article 4.4 shall apply.

4.6            LICENSEE hereby grants to SODIMA an exclusive, irrevocable, right to use, manufacture and sell, including the right to grant sublicenses to its licensees, all Improvements owned solely by LICENSEE. Such exclusive license shall be limited to areas outside the Territory and shall be further limited to the FDP Field. Such exclusive license granted hereunder in respect of Improvements shall be royalty-free.

4.7            LICENSEE hereby grants to SODIMA an exclusive, irrevocable right to use, manufacture and sell, with no right to sublicense, all New Technology owned solely by LICENSEE which results from a Native Field Project. Such exclusive license, which shall be royalty-free, shall be limited to France and shall be further limited to the FDP Field. The provisions of this Article 4.7 shall also apply to New Technology owned solely by LICENSEE which results from a LICENSEE Core Competency Project, to the extent LICENSEE elects to allow SODIMA to use such New Technology pursuant to the provisions of Article 3.8; above.

4.8            LICENSEE hereby grants to SODIMA an exclusive, irrevocable right to use, manufacture and sell, including the right to grant sublicenses to its licensees, all New Technology owned solely by LICENSEE which results from a Native Field Project. Such exclusive license shall be limited to areas outside the Territory and France and shall be further limited to the FDP Field. Such exclusive license granted hereunder in respect of New Technology shall be royalty bearing, which royalty shall consist of a [***] in any payments (royalty or otherwise) which SODIMA receives from its licensees for sales of products which incorporate such New Technology. Such [***] arrangement shall continue on a country by country basis for the longer of (i) the life of the patent on such New Technology which LICENSEE might have in the relevant country where sales of products incorporating such New Technology occur or (ii) [***] from the date a patent application covering such New Technology was filed in the US Patent Office for those countries where sales of products incorporating such New Technology are not covered by a patent on such New Technology (either because LICENSEE did not seek patent protection in such country or was unsuccessful in obtaining such patent coverage). If SODIMA and LICENSEE mutually agree, that a form_' of compensation other than the [***] in payments received by SODIMA is appropriate (e.g., payment of a lump sum by SODIMA), the Parties may substitute such alternate form of compensation for the [***] arrangement described above. The provisions of this Article 4.8 shall also apply to New Technology owned solely by LICENSEE which results from a GMI Core Competency Project, to the extent LICENSEE elects to allow SODIMA to use such New Technology pursuant to the provisions of Article 3.8; above.

4.9            LICENSEE agrees that the right to grant sublicenses to New Technology solely owned by

LICENSEE to licensees of SODIMA resides with SODIMA and LICENSEE will not undertake to grant licenses to such New Technology to SODIMA's licensees. SODIMA agrees to provide LICENSEE, in writing, with the names of any of its licensees to whom such New Technology has been sublicensed pursuant to the provisions of Article 4.8 above. SODIMA agrees to use its best efforts to obtain in the due course of its existing franchisee agreements from such licensees royalties, lump sum payments or both consistent with the royalties and lump sum payments received or being received by SODIMA under existing agreements with such licensees.

4.10          Further clarification as to how the procedures for determining whether technology is New Technology or an Improvement and to what extent LICENSEE is entitled to compensation for New Technology apply may be found in the chart appended hereto in Exhibit A, entitled “Enclosure: R&D Scenarios Chart”, which Exhibit is hereby made a part of this Amendment.

Article 5 - CONFIDENTIALITY

5.1           SODIMA shall keep confidential and shall require its licensees to keep confidential the New Technology and Improvements of LICENSEE furnished to them hereunder (hereinafter the “LICENSEE Information”). Additionally, SODIMA and said licensees shall not cause or permit the disclosure of the LICENSEE Information to any person other than those whose duties require possession of such information. Said confidentiality requirement shall not apply to any information which SODIMA or its licensees can show (i) was in their possession prior to receipt of the disclosure of the LICENSEE Information to them hereunder; (ii) is or becomes without disclosure by SODIMA or its licensees part of the public knowledge or literature; or (iii) becomes available to SODIMA or its licensees without restriction or disclosure, from sources other than LICENSEE, which sources did not acquire such information directly or indirectly from LICENSEE. The confidentiality provision of this Article 5.1 shall apply while the Agreement remains in effect and for a period of five (5) years after termination or expiration thereof.

5.2            Article IV.4 of the Agreement shell be amended such that the confidentiality provision set forth therein shall apply while the Agreement remains in effect and for a period of five (5) years after termination or expiration thereof.

Article 6 – HEALTH CLAIMS

6.1            Should LICENSEE elect to obtain a Health Claim for any New Product which it sells in the Territory, LICENSEE shall bear [***] associated with obtaining such Health Claim. Should SODIMA desire to utilize the results of any clinical studies conducted by LICENSEE, (or conducted by a third party at LICENSEE's request) in order to try to obtain similar health claims in countries outside the United States (either for the benefit of SODIMA or its licensees), before any publication of same in the scientific literature (which would make the results of such studies public domain information), SODIMA shall have the right to do so provided it (i) notifies LICENSEE, in writing, of its intent to use the results of such clinical studies and (ii) pays either upfront or retroactively the sum of [***] incurred by LICENSEE in conducting such studies or having such studies conducted minus the out-of-pocket costs of any Bridging Studies incurred by SODIMA.

6.2            To the extent a New Product sold by LICENSEE in the Territory is based on a Health Claim which provides a significant competitive advantage to LICENSEE in its sales of such New Product, LICENSEE shall be entitled to an extended royalty discount on sales of such New Product in the Territory. Such extended royalty reduction, which shall be [***], shall be calculated as follows:

a) LICENSEE shall declare to SODIMA the Gross Revenues corresponding to the sales of

such New Product; and

b) SODIMA shall then invoice, at the usual rate of royalty, taking into account [***] of the Gross Revenues arising from such sales of New Product.

Such extended royalty reduction described above, further, shall terminate [***] after New Product Launch of such New Product.

Article 7 – ASSIGNMENT AND TRANSFER

7.1           LICENSEE shall not have the right to sublicense its rights hereunder or its rights under the Agreement, nor to assign, transfer or otherwise dispose of the License or any other right granted to it pursuant to the Agreement or this Amendment without the prior written consent of SODIMA; provided, however, that LICENSEE shall have the right to assign its rights hereunder, as well as its rights under the Agreement, with the approval of SODIMA (which approval will not be unreasonably withheld) to the purchaser of its entire business involved in the performance of the Agreement. As a condition of approval for any such assignment, SODIMA shall have the right to unilaterally terminate the R&D collaboration described in Article 2.1, above. For purposes of clarity, termination of the R&D collaboration will not terminate those portions of Article 2 which cover the responsibilities of the R&D Committee with respect to determining whether an invention or improvement is “not obvious” pursuant to the provisions of Article 4.4 above; determining whether a Health Claim provides a significant competitive advantage for the product associated with such Health Claim; or determining whether New Technology which is owned solely or jointly by LICENSEE provides a significant competitive advantage to LICENSEE in its sales of New Products incorporating same, the responsibilities of the Steering Committee to arbitrate in the case of disagreement among the R&D Committee and the dispute resolution provisions set forth in Article 2.3(b), which portions shall survive termination of the R&D collaboration.

7.2           SODIMA may assign this Agreement, or any portion thereof, or delegate all or any part of its obligations hereunder or under the Agreement to any company which it controls, provided that such company shall assume and agree to perform the obligations of SODIMA hereunder and under the Agreement. SODIMA may assign or transfer the Agreement, or any portion thereof, or delegate all or any part of its obligations hereunder or under the Agreement to any company with which it may merge or consolidate or to which it may sell or transfer all or substantially all of its assets, provided, however, that such company shall assume and agree to perform the obligations of SODIMA hereunder and under the Agreement and, further, provided that (i) LICENSEE shall be relieved of its obligations to SODIMA with respect to New Technology, Improvements and/or Third Party Technology set forth in Articles 3.8, 3.9, 4.6, 4.7 and 4.8 above, and (ii) LICENSEE shall have the right to unilaterally terminate the R&D collaboration describe in Article 2.1, above. For purposes of clarity, termination of the R&D collaboration will not terminate those portions of Article 2 which cover the responsibilities of the R&D Committee with respect to determining whether an invention or improvement is “not obvious” pursuant to the provisions of Article 4.4, below; determining whether a Health Claim provides a significant competitive advantage for the product associated with such Health Claim; or determining whether New Technology which is owned solely or jointly by LICENSEE provides a significant competitive advantage to LICENSEE in its sales of New Products incorporating same, the responsibilities of the Steering Committee to arbitrate in the case of disagreement among the R&D Committee and the dispute resolution provisions set forth in Article 2.3(b), which portions shall survive termination of the R&D collaboration.

SODIAAL INTERNATIONAL		GENERAL MILLS, INC.
/s/ Didier Lefévre		/s Robert Waldron
By:  Mr. Didier Lefévre		By:  Mr. Robert Waldron
Title:  General Manager		Title:  President, Yoplait Division
Date:	5/2/02	Date:	5/2/02

Exhibit A

R&D Scenarios Chart

[Charts]

[***]

[SODIMA International S.A. Letterhead]

[illegible] Mr. Gary RODKIN, President YOPLAIT USA 4SW GENERAL MILLS INC. N°1 General Mills Boulevard MINNEAPOLIS-MISSESOTA 55426 U.S.A.

24th September 1993

Dear Mr. President,

We are pleased to inform you of the restructuring operation that came into force on June 30, 1993 in the SODIAAL Group.

As you know, our mother-company, SODIMA Union, used to own the YOPLAIT Trademarks (for Fresh Dairy Products) and CANDIA (for fluid milks, butter and creams). It also owned the International Research Center (“CRIAG”) and supplied services to its members and, among others, to SODIMA International.

We were in charge of SODIMA’s Trademarks international development, through franchising or export.

On June 30, 1993, SODIMA Union merged into YOPLAIT SA, a wholly owned subsidiary of SODIAAL, and disappeared.

YOPLAIT SA, our new mother-company, now owns the YOPLAIT Trademarks and the CRIAG.

Should you have printed on the packaging cups or on advertising material property a footnote indicating that the Trademarks are SODIMA’s property, when cylinders and packaging are changed (upon their normal renewal time) please replace SODIMA by YOPLAIT SA. 3, rue de l’Anthémis, 60200 COMPIEGNE (France).

On the other hand, the footnotes such as “manufactured under license of SODIMA France” or the like will not need to be altered as they may apply to SODIMA International.

YOPLAIT SA, on the other hand, made a contribution in kind to the benefit of a new company within the SODIAAL group, CANDIA SA, for the milk activity and CANDIA Trademarks, so as to achieve the split of the two business (Fresh Dairy Products/Milk) activities.

SODIMA International remains in charge of the YOPLAIT international development and shall go on supplying, through its assistance teams, all the services to its licensees as before, so that the operation shall not alter our relationship in any way as far as YOPLAIT business is concerned.

For order’s sake, it is advisable to note here that, for the construing of the YOPLAIT Franchise Agreement, any reference to SODIMA Union as the owner of the Trademarks or supplier of research services, shall in the future be designated as YOPLAIT SA, the other provisions of the agreement being unaltered.

Therefore, we are sending you this letter in duplicate, thanking you to send us back the attached copy, duly signed and with company seal affixed, as an addendum to our agreement.

We remain at your disposal for any further information you might wish to have.

Very truly yours.

	The President of the Directorate
/s/ Gary M. Rodkin
11/19/94	/s/ Nicolas Le Chatelier
	Nicolas LE CHATELIER

[GENERAL MILLS, INC. LETTERHEAD]

May 1, 2002

Mr. Didier Lefèvre

Sodiaal International S.A.

Paris Nord II

22, avenue des Nations

B.P. n°50394 – Villepinte

95943 Roissy CDG Cedex

France

RE: [***] Royalty Payments from Yoplait™ USA

Dear Didier:

The purpose of this letter is to confirm our previous discussions around [***] royalty payments from Yoplait™ USA to Sodima International S.A. and, in particular, the royalty reductions applicable to such product. To summarize our previous discussions, I believe we have agreed as follows:

1) General Mills will continue to receive a [***] royalty reduction on its sales of [***] until [***].

2) As of [***] the royalty reduction on sales of [***] by General Mills will decrease to [***] which reduction shall continue until [***].

3) As of [***] General Mills shall be entitled to no further royalty reductions on its sales of [***].

In addition to our previous discussions around [***], I believe we should also use this opportunity to clarify the royalty situation around the [***] and [***] products presently sold by General Mills. In particular, we propose the following arrangements with respect to such products.

[***] Product

Since this product is part of the [***] line, and may contain patentable technology around the [***] of the product which is not included in the traditional [***] product:

1) General Mills will continue to receive a [***] royalty reduction on its sales of the [***] product until [***].

2) As of [***] the royalty reduction on sales of the [***] product by General Mills will decrease to [***] which reduction shall then continue until [***].

3) Upon [***], General Mills shall be entitled to no further royalty reductions on its sales of the [***] product.

[***]

Since this product is sold under a different trademark than [***], but does not contain patentable technology over and above that already present in the traditional [***] product:

1) General Mills will continue to receive a [***] royalty reduction on its sales of [***] until [***].

2) Upon reaching the date obtained from point (1), above, the royalty reduction on sales of [***] by General Mills will decrease to [***] which reduction shall continue until [***].

3) As of [***] General Mills shall be entitled to no further royalty reductions on its sales of [***].

If you agree with the summary of our discussions with respect to [***] set forth above, and, further, agree to our proposals with respect to [***] and the [***] product, please sign and date both copies of this letter in the spaces provided below and return one copy to the attention to Douglas J. Taylor at the address set forth above, for our records.

	Very truly yours,
	/s/ Robert F. Waldron
	Robert Waldron
SODIMA INTERNATIONAL S.A.
/s/ Didier Lefèvre
Didier Lefèvre
Date: 5/2/02

EX-12.1

EXHIBIT 12.1

Computation of Ratio of Earnings to Fixed Charges

	Fiscal Year Ended
In Millions	May 27, 2007		May 28, 2006		May 29, 2005		May 30, 2004			May 25, 2003
Earnings before income taxes and after-tax earnings from joint ventures	$	1,631	$	1,559	$	1,807	$	1,502		$	1,310
Plus: Distributed income of equity investees		45		77		83		60			95
Plus: Fixed charges (1)		497		462		524		569			619
Plus: Amortization of capitalized interest, net of interest capitalized		–		2		1		(5	)		(5	)
Earnings available to cover fixed charges	$	2,173	$	2,100	$	2,415	$	2,126		$	2,019
Ratio of earnings to fixed charges		4.37		4.54		4.61		3.74			3.26
(1) Fixed charges:
Interest and minority interest expense, gross	$	461	$	427	$	488	$	537		$	589
Rentals (1/3)		36		35		36		32			30
Total fixed charges	$	497	$	462	$	524	$	569		$	619

For purposes of computing the ratio of earnings to fixed charges, earnings represent earnings before income taxes and after-tax earnings of joint ventures, distributed income of equity investees, fixed charges, and amortization of capitalized interest, net of interest capitalized. Fixed charges represent gross interest expense (excluding interest on taxes) and subsidiary preferred distributions to minority interest holders, plus one-third (the proportion deemed representative of the interest factor) of rent expense. Calculations are based on underlying numbers.

EX-21.1

EXHIBIT 21.1

List of Subsidiaries of the Registrant

Company Name	Jurisdiction
AESR, LLC	Delaware
BOURNAZI PASTRIES S.A.	Greece
CEREAL PARTNERS FRANCE B.V.	Netherlands
CEREALES PARTNERS COLOMBIA LTDA.	Colombia
CEREALES PARTNERS L.L.C. - UTE	Argentina
CEREALES PARTNERS LATIN AMERICA LLC	Delaware
COLOMBO, INC.	Delaware
CROISSANT KING PTY LIMITED	Australia
D.H. AUSTRAL (URUGUAY) SOCIEDAD ANONIMA	Uruguay
ELYSEES CONSULT SAS	France
GARDETTO’S BAKERY, INC.	Delaware
GCF SERVICIOS DE MEXICO S. DE R.L. DE C.V.	Mexico
GENERAL MILLS (GIBRALTAR) LIMITED	Gibraltar
GENERAL MILLS (SUISSE) SVE SARL	Switzerland
GENERAL MILLS ARGENTINA L.S., LLC	Delaware
GENERAL MILLS ARGENTINA S.A.	Argentina
GENERAL MILLS ASIA PACIFIC LIMITED	Hong Kong
GENERAL MILLS ASIA PTE. LTD.	Singapore
GENERAL MILLS AUSTRALIA PTY LTD	Australia
GENERAL MILLS BAKERY & FOOD SERVICE PTY LTD	Australia
GENERAL MILLS BAKERY AND FOODSERVICE MANUFACTURING PTY LIMITED	Australia
GENERAL MILLS BELGIUM, SNC	Belgium
GENERAL MILLS BERWICK LIMITED	Scotland
GENERAL MILLS BRASIL LTDA	Brazil
GENERAL MILLS CANADA B.V.	Netherlands
GENERAL MILLS CANADA CORPORATION	Canada
GENERAL MILLS CAPITAL, INC.	Nevada
GENERAL MILLS CEREALS HOLDING (AUSTRALIA) PTY LIMITED	Australia
GENERAL MILLS CEREALS PROPERTIES, LLC	Delaware
GENERAL MILLS CEREALS, LLC	Delaware
GENERAL MILLS CHINA HOLDINGS LIMITED	Mauritius
GENERAL MILLS CHINA LIMITED	Hong Kong
GENERAL MILLS COLOMBIA LTDA	Colombia
GENERAL MILLS CONTINENTAL SA	Chile
GENERAL MILLS CONTINENTAL, INC.	Delaware
GENERAL MILLS DE MEXICO, S. DE R.L. DE C.V.	Mexico
GENERAL MILLS DE VENEZUELA, C.A.	Venezuela
GENERAL MILLS DIRECT MARKETING, INC.	Delaware
GENERAL MILLS DL GP	Delaware
GENERAL MILLS EASTERN EUROPE s.r.o.	Czech Republic
GENERAL MILLS ESPANA B.V.	Netherlands
GENERAL MILLS FINANCE, INC.	Delaware
GENERAL MILLS FINCO, LIMITED	Bermuda
GENERAL MILLS FOODS (NANJING) CO. LTD.	China
GENERAL MILLS FOODS ASIA LIMITED	Hong Kong
GENERAL MILLS FOODS, INC.	Philippines

Company Name	Jurisdiction
GENERAL MILLS FOUNDATION	Minnesota
GENERAL MILLS FRANCE (SAS)	France
GENERAL MILLS GLOBAL FINANCE LTD.	Bermuda
GENERAL MILLS GLOBAL HOLDINGS LTD.	Bermuda
GENERAL MILLS GLOBAL HOLDINGS ONE GP	Bermuda
GENERAL MILLS GLOBAL HOLDINGS TWO LTD.	Bermuda
GENERAL MILLS GMBH	Germany
GENERAL MILLS GUAM, INC.	Guam
GENERAL MILLS HD JAPAN B.V.	Netherlands
GENERAL MILLS HELLAS S.A.	Greece
GENERAL MILLS HH LLC	Delaware
GENERAL MILLS HOLDING (AUSTRALIA) PTY LIMITED	Australia
GENERAL MILLS HOLDING (FRANCE) SAS	France
GENERAL MILLS HOLDING (SPAIN) ETVE, S.L.	Spain
GENERAL MILLS HOLDING (U.K.) LIMITED	United Kingdom
GENERAL MILLS HOLDING A (NETHERLANDS) B.V.	Netherlands
GENERAL MILLS HOLDING B (NETHERLANDS) B.V.	Netherlands
GENERAL MILLS HOLDING B.V.	Netherlands
GENERAL MILLS HOLDING ONE (GERMANY) GmbH	Germany
GENERAL MILLS HOLLAND B.V.	Netherlands
GENERAL MILLS HONG KONG LIMITED	Hong Kong
GENERAL MILLS IBERICA, S.A. UNIPERSONAL	Spain
GENERAL MILLS ICF SARL	Switzerland
GENERAL MILLS INDIA PRIVATE LIMITED	India
GENERAL MILLS INTERNATIONAL (FRANCE) SAS	France
GENERAL MILLS INTERNATIONAL A, INC.	Delaware
GENERAL MILLS INTERNATIONAL B, INC.	Delaware
GENERAL MILLS INTERNATIONAL BUSINESSES TWO, INC.	Delaware
GENERAL MILLS INTERNATIONAL BUSINESSES, INC.	Delaware
GENERAL MILLS INTERNATIONAL FINANCE, LLC	Delaware
GENERAL MILLS INTERNATIONAL HOLDINGS, LLC	Delaware
GENERAL MILLS INTERNATIONAL LIMITED	Delaware
GENERAL MILLS INTERNATIONAL SARL	Switzerland
GENERAL MILLS INTERNATIONAL Y COMPANIA S. EN N.C. DE C.V.	Mexico
GENERAL MILLS IP HOLDINGS I, LLC	Delaware
GENERAL MILLS IP HOLDINGS II, LLC	Delaware
GENERAL MILLS ISRAEL LTD	Israel
GENERAL MILLS ITALIA SRL	Italy
GENERAL MILLS KOREA CO., LTD.	Korea
GENERAL MILLS LANDES (SAS)	France
GENERAL MILLS LEBANON S.A.L.	Lebanon
GENERAL MILLS LUXEMBOURG S.A.R.L.	Luxembourg
GENERAL MILLS MAARSSEN B.V.	Aruba
GENERAL MILLS MAARSSEN HOLDING, INC.	Delaware
GENERAL MILLS MAGHREB SARL	Morocco
GENERAL MILLS MALAYSIA SDN. BHD.	Malaysia
GENERAL MILLS MANUFACTURING AUSTRALIA PTY LIMITED	Australia
GENERAL MILLS MARKETING, INC.	Delaware

Company Name	Jurisdiction
GENERAL MILLS MAURITIUS, INC.	Mauritius
GENERAL MILLS MIDDLE EAST SAL	Lebanon
GENERAL MILLS MISSOURI, INC.	Missouri
GENERAL MILLS N.A., N.V.	Netherlands Antilles
GENERAL MILLS NETHERLANDS B.V.	Netherlands
GENERAL MILLS NEW ZEALAND LIMITED	New Zealand
GENERAL MILLS NORTH AMERICA AFFILIATES	Canada
GENERAL MILLS NOVA SCOTIA COMPANY	Canada
GENERAL MILLS OPERATIONS, INC.	Delaware
GENERAL MILLS PENSION TRUSTEE LIMITED	United Kingdom
GENERAL MILLS PRODUCTS CORP.	Delaware
GENERAL MILLS PROPERTIES, INC.	New York
GENERAL MILLS RH, INC.	Delaware
GENERAL MILLS RIGHTS HOLDINGS, LLC	Delaware
GENERAL MILLS RUSSIA HOLDING, INC.	Delaware
GENERAL MILLS SALES, INC.	Delaware
GENERAL MILLS SAN ADRIAN, S.L. UNIPERSONAL	Spain
GENERAL MILLS SCANDINAVIA AB	Sweden
GENERAL MILLS SERVICES (UK) LTD.	United Kingdom
GENERAL MILLS SERVICES, INC.	Delaware
GENERAL MILLS SNACKS HOLDING B.V.	Netherlands
GENERAL MILLS SOUTH AFRICA (PROPRIETARY) LIMITED	South Africa
GENERAL MILLS SWISS ONE GMBH	Switzerland
GENERAL MILLS SWISS TWO GMBH	Switzerland
GENERAL MILLS TAIWAN LIMITED	Taiwan
GENERAL MILLS TRADING (SHANGHAI) CO. LIMITED	China
GENERAL MILLS UK LIMITED	United Kingdom
GENERAL MILLS VENEZUELA B.V.	Netherlands
GENERAL MILLS VENTAS DE MEXICO, S. DE R.L. DE C.V.	Mexico
GENERAL MILLS, INC.	Delaware
GIGANTE VERDE, INC.	Delaware
GIGANTE VERDE, S de RL de CV	Mexico
GLOBAL HOLDINGS ONE MANAGEMENT LLC	Delaware
GM CEREALS HOLDINGS, INC.	Delaware
GM CEREALS OPERATIONS, INC.	Delaware
GM CLASS B, INC.	Delaware
GMEAF SNC	France
GMSNACKS, SCA	France
GOLD MEDAL INSURANCE CO.	Minnesota
GREEN GIANT ASIA PACIFIC LTD.	Taiwan
GREEN GIANT INTERNATIONAL, INC.	Minnesota
GUANGZHOU PILLSBURY V. PEARL FOODS CO., LTD.	China
HAAGEN-DAZS ARRAS SNC	France
HAAGEN-DAZS BELGIUM (S.A. N.V.)	Belgium
HAAGEN-DAZS INTERNATIONAL SHOPPE COMPANY, INC.	Minnesota
HAAGEN-DAZS NEDERLAND N.V.	Netherlands
HAAGEN-DAZS TAIWAN LIMITED	Taiwan

Company Name	Jurisdiction
HANGZHOU H.D. FOOD COMPANY LTD	China
HD CHINA B.V.	Netherlands
HD DISTRIBUTORS (THAILAND) CO., LTD.	Thailand
HD MARKETING & DISTRIBUTION PHILIPPINES, INC.	Philippines
HD MARKETING & DISTRIBUTION SDN. BHD.	Malaysia
HDIP, INC.	Delaware
INMOBILIARIA SELENE, S.A. DE C.V.	Mexico
INO FITA GMBH	Germany
KAMPOS ESTIASI S.A.	Greece
KIFISSIA PASTRIES S.A.	Greece
LA SALTENA S.A.	Argentina
MILLS ONLINE, INC.	Delaware
NORTHGATE PARTNERS L.L.C.	North Dakota
OLD EL PASO FOODS B.V.	Netherlands
PET INCORPORATED	United States
PILLSBURY FROZEN FOODS HOLDINGS (GUANGZHOU) LIMITED	Virgin Islands, British
PILLSBURY FROZEN FOODS HOLDINGS (SHANGHAI) LIMITED	Virgin Islands, British
PILLSBURY MEXICO, S.A. DE C.V.	Mexico
PILLSBURY PHILIPPINES INTERNATIONAL, INC.	Philippines
PILLSBURY PUERTO RICO, INC.	Puerto Rico
PILLSBURY SHANGHAI FROZEN FOODS, LIMITED	China
PINEDALE HOLDINGS PTE LIMITED	Singapore
PINEDALE TRADING PTE LIMITED	Singapore
POPCORN DISTRIBUTORS, INC.	Delaware
RDL COAL LLC	Delaware
SAXBY BROS LIMITED	England and Wales
SHANGHAI GENERAL MILLS CONSULTING LTD.	China
SHANGHAI H.D. FOOD COMPANY LIMITED	China
SHANGHAI HAAGEN-DAZS FOOD TRADING CO., LTD.	China
SHANGHAI SHANMEI HAAGEN-DAZS ICE CREAM COMPANY LIMITED	China
SHAW COAST BUSINESS - SGPS LDA	Portugal
SMALL PLANET FOODS, INC.	Washington
SUPER FITNESS INTERNATIONAL S.A.	Panama
SWEETGRASS GRAIN PARTNERSHIP	Montana
THE PILLSBURY COMPANY	Delaware
WASHBURN INVESTMENT OFFICE INCORPORATED	Delaware
WIN/WIN RADIO, INC.	Delaware
YOPLAIT USA, INC.	Delaware
JOINT VENTURES
8th CONTINENT, LLC	Delaware
C.P. HELLAS EEIG	Greece
C.P.A. CEREAL PARTNERS HANDELSGESELLSCHAFT m.b.H & Co. OHG	Austria
C.P.A. CEREAL PARTNERS HANDELSGESELLSCHAFT m.b.H.	Austria
C.P.D. CEREAL PARTNERS DEUTSCHLAND GmbH & Co. oHG	Germany
C.P.D. CEREAL PARTNERS DEUTSCHLAND VERWALTUNGSGESELLSCHAFT mbH	Germany
C.P.W. MEXICO S. de R.L. de C.V.	Mexico

Company Name	Jurisdiction
CEREAL ASSOCIADOS PORTUGAL, A.E.I.E.	Portugal
CEREAL PARTNERS (MALAYSIA) SDN. BHD.	Malaysia
CEREAL PARTNERS (THAILAND) LIMITED	Thailand
CEREAL PARTNERS AUSTRALIA PTY LIMITED	Australia
CEREAL PARTNERS CZECH REPUBLIC, s.r.o.	Czech Republic
CEREAL PARTNERS ESPANA, A.E.I.E.	Spain
CEREAL PARTNERS FRANCE, SNC	France
CEREAL PARTNERS GIDA TICARET LIMITED SIRKETI	Turkey
CEREAL PARTNERS HUNGARIA TRADING LIMITED LIABILITY COMPANY	Hungary
CEREAL PARTNERS LLC	Russia
CEREAL PARTNERS MEXICO, S.A. DE C.V.	Mexico
CEREAL PARTNERS POLAND TORUN-PACIFIC Sp. z.o.o.	Poland
CEREAL PARTNERS SLOVAK REPUBLIC, s.r.o.	Slovakia
CEREAL PARTNERS TRADING, LLC	Russia
CEREAL PARTNERS U.K.	United Kingdom
CEREAL PARTNERS VENEZUELA	Venezuela
CEREALES C.P.W. BOLIVIA S.R.L.	Bolivia
CEREALES C.P.W. CHILE LIMITADA (SRL)	Chile
CEREALES CPW PERU LIMITADA	Peru
CP COLOMBIA ACP	Colombia
CP MIDDLE EAST FZCO	United Arab Emirates
CP SUISSE	Switzerland
CPW AUSTRALIA	Australia
CPW BRASIL LTDA.	Brazil
CPW DOMINICAN REPUBLIC	Dominican Republic
CPW ECUADOR	Ecuador
CPW HONG KONG LIMITED	Hong Kong
CPW NEW ZEALAND	New Zealand
CPW OPERATIONS S.A.R.L.	Switzerland
CPW PARAGUAY S.R.L.	Paraguay
CPW PHILIPPINES, INC.	Philippines
CPW ROMANIA	Romania
CPW S.A.	Switzerland
CPW SINGAPORE (PTE.) LTD.	Singapore
CPW TIANJIN LIMITED	China
CPW TRINIDAD AND TOBAGO, LTD.	Trinidad and Tobago
CPW URUGUAY S.A.	Uruguay
HAAGEN-DAZS JAPAN, INC.	Japan
HAAGEN-DAZS KOREA CO., LTD.	Korea
MESI FUEL STATION NO. 1, L.L.C.	Ohio
PT CEREAL PARTNERS INDONESIA	Indonesia
SERETRAM (SAS)	France

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

General Mills, Inc.:

We consent to the incorporation by reference in the Registration Statements (Nos. 33-75808, 333-102675, and 333-116779) on Form S-3 and Registration Statements (Nos. 2-13460, 2-50327, 2-53523, 2-95574, 33-27628, 33-32059, 33-50337, 33-62729, 333-13089, 333-32509, 333-65311, 333-65313, 333-90010, 333-90012, 333-102695, 333-109050, 333-131195 and 333-139997) on Form S-8 of General Mills, Inc. of our reports dated July 26, 2007, relating to the consolidated balance sheets of General Mills, Inc. and subsidiaries as of May 27, 2007 and May 26, 2006 and the related consolidated statements of earnings, stockholders’ equity and comprehensive income, cash flows, and the financial statement schedule for each of the fiscal years in the three-year period ended May 27, 2007 and the effectiveness of internal control over financial reporting as of May 27, 2007 which reports are included in the May 27, 2007 annual report on Form 10-K of General Mills, Inc.

Our report dated July 26, 2007 on the consolidated financial statements refers to a change during fiscal 2007 in the classification of shipping costs, a change in the Company’s annual goodwill impairment assessment date to December 1, and the adoption of Statement of Financial Accounting Standards No. 123 (Revised), “Share-Based Payment,” on May 29, 2006 and Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans an amendment of FASB Statements No. 87, 88, 106 and 132 (R)” on May 27, 2007.

/s/ KPMG LLP

Minneapolis, Minnesota

July 26, 2007

EX-31.1

EXHIBIT 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stephen W. Sanger, certify that:

1.	I have reviewed this annual report on Form 10-K of General Mills, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 26, 2007

Stephen W. Sanger
Chairman of the Board and
Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James A. Lawrence, certify that:

1.	I have reviewed this annual report on Form 10-K of General Mills, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 26, 2007

James A. Lawrence
Vice Chairman and
Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Stephen W. Sanger, Chairman of the Board and Chief Executive Officer of General Mills, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)	the Annual Report on Form 10-K of the Company for the fiscal year ended May 27, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 26, 2007

Stephen W. Sanger
Chairman of the Board and
Chief Executive Officer

 

EX-32.2

EXHIBIT 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, James A. Lawrence, Vice Chairman and Chief Financial Officer of General Mills, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)	the Annual Report on Form 10-K of the Company for the fiscal year ended May 27, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 26, 2007

James A. Lawrence
Vice Chairman and
Chief Financial Officer