UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED February 22, 2009.

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 (State or other jurisdiction of incorporation or organization)		41-0274440 (I.R.S. Employer Identification No.)
Number One General Mills Boulevard Minneapolis, MN (Mail: P.O. Box 1113) (Address of principal executive offices)		55426 (Mail: 55440) (Zip Code)

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

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   x	Accelerated filer   o

Non-accelerated filer     o   (Do not check if a smaller reporting company)	Smaller reporting company   o

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

Number of shares of Common Stock outstanding as of March 12, 2009: 328,978,674 (excluding 48,327,990 shares held in the treasury).

General Mills, Inc.

Table of Contents

PART I – Financial Information				Page
Item 1.		Financial Statements
		Consolidated Statements of Earnings for the quarterly and nine-month periods ended February 22, 2009, and February 24, 2008			3
		Consolidated Balance Sheets as of February 22, 2009, and May 25, 2008			4
		Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the nine-month period ended February 22, 2009, and the fiscal year ended May 25, 2008			5
		Consolidated Statements of Cash Flows for the nine-month periods ended February 22, 2009, and February 24, 2008			6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			32
Item 4.		Controls and Procedures			33
PART II – Other Information
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 6.		Exhibits			35
Signatures					36
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-10.8
EX-10.9
EX-10.10
EX-10.11
EX-10.12
EX-10.13
EX-10.14
EX-10.15
EX-10.16
EX-10.17
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Part I. FINANCIAL INFORMATION

Item 1.		Financial Statements.

GENERAL MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (In Millions, Except per Share Data)

										Nine-Month
		Quarter Ended								Period Ended
		Feb. 22,				Feb. 24,				Feb. 22,				Feb. 24,
		2009				2008				2009				2008
Net sales		$	3,537.4			$	3,405.6			$	11,045.6			$	10,181.0
Cost of sales			2,259.9				2,051.4				7,356.7				6,339.4
Selling, general, and administrative expenses			671.0				653.8				2,119.8				1,926.7
Divestiture (gain)			—				—				(128.8	)			—
Restructuring, impairment, and other exit costs			1.2				5.0				6.4				22.3
Operating profit			605.3				695.4				1,691.5				1,892.6
Interest, net			100.4				102.6				287.6				331.8
Earnings before income taxes and after-tax earnings from joint ventures			504.9				592.8				1,403.9				1,560.8
Income taxes			231.7				192.4				538.0				531.0
After-tax earnings from joint ventures			15.7				29.7				79.7				79.7
Net earnings		$	288.9			$	430.1			$	945.6			$	1,109.5
Earnings per share - basic		$	0.88			$	1.28			$	2.84			$	3.32
Earnings per share - diluted		$	0.85			$	1.23			$	2.73			$	3.19
Dividends per share		$	0.43			$	0.39			$	1.29			$	1.17

See accompanying notes to consolidated financial statements.

GENERAL MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Par Value)

		Feb. 22,				May 25,
		2009				2008
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	937.3			$	661.0
Receivables			1,136.0				1,081.6
Inventories			1,360.6				1,366.8
Deferred income taxes			35.1				—
Prepaid expenses and other current assets			419.9				510.6
Total current assets			3,888.9				3,620.0
Land, buildings, and equipment			2,973.6				3,108.1
Goodwill			6,607.5				6,786.1
Other intangible assets			3,680.4				3,777.2
Other assets			1,928.3				1,750.2
Total assets		$	19,078.7			$	19,041.6
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	716.1			$	937.3
Current portion of long-term debt			518.3				442.0
Notes payable			1,413.8				2,208.8
Deferred income taxes			—				28.4
Other current liabilities			1,379.9				1,239.8
Total current liabilities			4,028.1				4,856.3
Long-term debt			5,755.4				4,348.7
Deferred income taxes			1,420.4				1,454.6
Other liabilities			2,095.4				1,923.9
Total liabilities			13,299.3				12,583.5
Minority interests			242.3				242.3
Stockholders’ equity:
Common stock, 377.3 shares issued, $0.10 par value			37.7				37.7
Additional paid-in capital			1,230.1				1,149.1
Retained earnings			7,018.5				6,510.7
Common stock in treasury, at cost, shares of 48.6 and 39.8			(2,436.3	)			(1,658.4	)
Accumulated other comprehensive income (loss)			(312.9	)			176.7
Total stockholders’ equity			5,537.1				6,215.8
Total liabilities and equity		$	19,078.7			$	19,041.6

See accompanying notes to consolidated financial statements.

GENERAL MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)
(Unaudited) (In Millions, Except per Share Data)

		$0.10 Par Value Common Stock
		(One Billion Shares Authorized)
		Issued												Treasury												Accumulated
										Additional																Other
						Par				Paid-In												Retained				Comprehensive
		Shares				Amount				Capital				Shares				Amount				Earnings				Income (Loss)				Total
Balance as of May 27, 2007			502.3			$	50.2			$	5,841.3				(161.7	)			($6,198.0	)		$	5,745.3				($119.7	)		$	5,319.1
Comprehensive income:
Net earnings																							1,294.7								1,294.7
Other comprehensive income, net of tax:
Net change on hedge derivatives and securities																											(1.8	)			(1.8	)
Foreign currency translation																											246.3				246.3
Amortization of losses and prior service costs																											12.5				12.5
Minimum pension liability adjustment																											39.4				39.4
Other comprehensive income																											296.4				296.4
Total comprehensive income																															1,591.1
Cash dividends declared ($1.57 per share)																							(529.7	)							(529.7	)
Stock compensation plans (includes income tax benefits of $55.7)											121.0				6.5				261.6												382.6
Shares purchased															(23.9	)			(1,384.6	)											(1,384.6	)
Retirement of treasury shares			(125.0	)			(12.5	)			(5,068.3	)			125.0				5,080.8												—
Shares issued under forward purchase contract											168.2				14.3				581.8												750.0
Unearned compensation related to restricted stock awards											(104.1	)																			(104.1	)
Adoption of FIN 48											57.8												8.4								66.2
Capital appreciation paid to holders of Series B-1 limited membership interests in General Mills Cereals, LLC (GMC)																							(8.0	)							(8.0	)
Earned compensation											133.2																				133.2
Balance as of May 25, 2008			377.3				37.7				1,149.1				(39.8	)			(1,658.4	)			6,510.7				176.7				6,215.8
Comprehensive income:
Net earnings																							945.6								945.6
Other comprehensive loss, net of tax:
Net change on hedge derivatives and securities																											31.5				31.5
Foreign currency translation																											(531.2	)			(531.2	)
Amortization of losses and prior service costs																											10.1				10.1
Other comprehensive loss																											(489.6	)			(489.6	)
Total comprehensive income																															456.0
Cash dividends declared ($1.29 per share)																							(437.8	)							(437.8	)
Stock compensation plans (includes income tax benefits of $91.0)											40.6				9.2				416.0												456.6
Shares purchased															(18.9	)			(1,232.5	)											(1,232.5	)
Shares issued for acquisition											16.4				0.9				38.6												55.0
Unearned compensation related to restricted stock awards											(74.5	)																			(74.5	)
Earned compensation											98.5																				98.5
Balance as of Feb. 22, 2009			377.3			$	37.7			$	1,230.1				(48.6	)			($2,436.3	)		$	7,018.5				($312.9	)		$	5,537.1

See accompanying notes to consolidated financial statements.

GENERAL MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In Millions)

		Nine-Month Period Ended
		Feb. 22,				Feb. 24,
		2009				2008
Cash Flows - Operating Activities
Net earnings		$	945.6			$	1,109.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			333.6				348.7
After-tax earnings from joint ventures			(79.7	)			(79.7	)
Stock-based compensation			98.5				109.6
Deferred income taxes			(19.6	)			(28.0	)
Tax benefit on exercised options			(91.0	)			(28.3	)
Distributions of earnings from joint ventures			29.9				50.1
Pension, other postretirement, and postemployment benefit costs			(45.2	)			(20.7	)
Divestiture (gain)			(128.8	)			—
Gain on insurance settlement			(41.3	)			—
Restructuring, impairment, and other exit costs			(1.6	)			7.8
Changes in current assets and liabilities			139.8				(536.8	)
Other, net			(10.3	)			(18.3	)
Net cash provided by operating activities			1,129.9				913.9
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment			(351.1	)			(299.2	)
Acquisitions			—				1.4
Investments in affiliates, net			(6.8	)			5.3
Proceeds from disposal of land, buildings, and equipment			2.0				11.7
Proceeds from divestiture of product line			192.5				—
Proceeds from insurance settlement			41.3				—
Other, net			(34.2	)			(13.2	)
Net cash used by investing activities			(156.3	)			(294.0	)
Cash Flows - Financing Activities
Change in notes payable			(775.7	)			1,171.4
Issuance of long-term debt			1,850.0				700.0
Payment of long-term debt			(358.1	)			(480.0	)
Settlement of Lehman Brothers forward purchase contract			—				750.0
Repurchase of Series B-1 limited membership interests in GMC			—				(843.0	)
Repurchase of General Mills Capital, Inc. preferred stock			—				(150.0	)
Proceeds from sale of Class A limited membership interests in GMC			—				92.3
Proceeds from common stock issued on exercised options			286.6				111.5
Tax benefit on exercised options			91.0				28.3
Purchases of common stock for treasury			(1,232.4	)			(1,428.6	)
Dividends paid			(437.8	)			(395.0	)
Other, net			(9.5	)			(3.8	)
Net cash used by financing activities			(585.9	)			(446.9	)
Effect of exchange rate changes on cash and cash equivalents			(111.4	)			30.3
Increase in cash and cash equivalents			276.3				203.3
Cash and cash equivalents - beginning of year			661.0				417.1
Cash and cash equivalents - end of period		$	937.3			$	620.4
Cash Flow from Changes in Current Assets and Liabilities
Receivables		$	(130.4	)		$	(165.3	)
Inventories			(61.5	)			(442.9	)
Prepaid expenses and other current assets			72.1				(48.7	)
Accounts payable			(137.6	)			6.7
Other current liabilities			397.2				113.4
Changes in current assets and liabilities		$	139.8			$	(536.8	)

See accompanying notes to consolidated financial statements.

GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1) Background

The accompanying Consolidated Financial Statements of General Mills, Inc. (we, us, our, or the Company) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the quarterly and nine-month periods ended February 22, 2009, are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2009. Fiscal 2009 consists of 53 weeks compared to 52 weeks in fiscal 2008. The additional week will be included in the fourth quarter of the year.

These statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended May 25, 2008. The accounting policies used in preparing these Consolidated Financial Statements are the same as those described in Note 2 to the Consolidated Financial Statements in that Form 10-K, except as discussed in Notes 6 and 18 to these Consolidated Financial Statements.

(2) Acquisitions and Divestitures

Subsequent to the end of the third quarter, we entered into an agreement to sell a portion of the assets of the frozen unbaked bread dough product line for our Bakeries and Foodservice segment. Certain assets being sold are shared with a frozen dinner roll product line for our U.S. Retail segment. Coincident with the sale, we will exit this product line. We expect the transaction to close during the fourth quarter of fiscal 2009. We expect to record a loss on this transaction of approximately $32 million after-tax in the fourth quarter of fiscal 2009. We will present this transaction as a divestiture in our Consolidated Statements of Earnings.

During the second quarter of fiscal 2009, we sold our Pop•Secret microwave popcorn product line for $192.5 million in cash. The transaction was completed on September 15, 2008, and we recorded a pre-tax gain of $128.8 million. We received cash proceeds of $158.9 million after repayment of a lease obligation and transaction costs.

During the first quarter of fiscal 2009, we acquired Humm Foods, Inc. (Humm Foods), the maker of Lärabar fruit and nut energy bars. We issued 0.9 million shares of our common stock with a value of $55.0 million to the shareholders of Humm Foods as consideration for the acquisition. We recorded the purchase price less tangible and intangible net assets acquired as goodwill of $42.8 million. The pro forma effect of this acquisition was not material.

During the third quarter of fiscal 2008, the 8^th Continent soymilk business was sold. Our 50 percent share of the after-tax gain on this sale was $2.2 million. In the third quarter of fiscal 2008, we recognized $1.7 million of this gain in after-tax earnings from joint ventures. We will record an additional after-tax gain of up to $0.5 million in the first quarter of fiscal 2010 if certain conditions are satisfied.

During the first quarter of fiscal 2008, we acquired a controlling interest in HD Distributors (Thailand) Company Limited. Prior to acquiring the controlling interest, we accounted for our investment as a joint venture. The purchase price, net of cash acquired, resulted in a $1.3 million cash inflow classified in acquisitions on the Consolidated Statements of Cash Flows. The pro forma effect of this acquisition was not material.

(3) Restructuring, Impairment, and Other Exit Costs

Restructuring, impairment, and other exit costs were as follows:

										Nine-Month
		Quarter Ended								Period Ended
		Feb. 22,				Feb. 24,				Feb. 22,				Feb. 24,
In Millions		2009				2008				2009				2008
Closure of Trenton, Ontario frozen dough plant		$	0.9			$	1.3			$	4.4			$	9.8
Restructuring of production scheduling and discontinuation of cake product line at Chanhassen, Minnesota plant			—				—				1.3				3.0
Closure of Poplar, Wisconsin plant			0.4				—				0.7				2.7
Closure of Allentown, Pennsylvania frozen waffle plant			—				0.7				—				10.8
Gain on sale of previously closed Vallejo, California plant			—				—				—				(7.1	)
Charges associated with restructuring actions previously announced			(0.1	)			3.0				—				3.1
Total		$	1.2			$	5.0			$	6.4			$	22.3

During the nine-month period ended February 22, 2009, we did not undertake any new restructuring actions. We incurred incremental plant closure expenses related to previously announced restructuring activities of $1.2 million in the third quarter of fiscal 2009 and $6.4 million in the nine-month period ended February 22, 2009.

During the nine-month period ended February 24, 2008, we approved a plan to transfer Old El Paso production from our Poplar, Wisconsin facility to other plants and close the Poplar facility. This action to improve capacity utilization and reduce costs affected 113 employees at the Poplar facility, and resulted in a charge of $2.7 million consisting entirely of employee severance. This project was completed in the third quarter of fiscal 2009. Due to declining financial results, we decided to exit our frozen waffle product line (retail and foodservice) and to close our frozen waffle plant in Allentown, Pennsylvania, affecting 111 employees. We recorded a charge of $10.8 million related to this closure, consisting of $3.9 million of employee severance, a $6.2 million non-cash impairment charge against long-lived assets at the plant, and $0.7 million of incremental plant closure expenses. We also completed an analysis of the viability of our Bakeries and Foodservice frozen dough facility in Trenton, Ontario, and closed the facility, affecting 470 employees. We recorded a $9.8 million charge for employee severance expenses and curtailment charges associated with a defined benefit pension plan. We expect to make limited use of the plant during fiscal 2009 while we evaluate sublease or lease termination options. These actions, including the anticipated timing of the disposition of the plants we closed, are expected to be completed by May 31, 2009. We also restructured our production scheduling and discontinued our cake product line at our Chanhassen, Minnesota Bakeries and Foodservice plant. These actions affected 125 employees, and we recorded a charge for employee severance of $3.0 million. This action was completed in fiscal 2009. Finally, we recorded additional charges of $3.1 million primarily related to previously announced Bakeries and Foodservice segment restructuring actions. This amount consisted entirely of employee severance for 38 employees. This action was completed in fiscal 2008.

During the nine-month period ended February 24, 2008, we sold our previously closed Vallejo, California plant and received $10.6 million in proceeds.

The charges we expect to incur with respect to previously announced restructuring actions are $17 million in fiscal 2009 and $1 million in fiscal 2010.

(4) Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill during fiscal 2009 were as follows:

										Bakeries and				Joint
In Millions		U.S. Retail				International				Foodservice				Ventures				Total
Balance as of May 25, 2008		$	5,107.0			$	146.4			$	955.7			$	577.0			$	6,786.1
Acquisition of Humm Foods			42.8				—				—				—				42.8
Divestiture of Pop•Secret product line			(17.8	)			(0.1	)			(0.7	)			—				(18.6	)
Deferred tax adjustment related to Pop•Secret divestiture			(44.2	)			(4.2	)			(12.2	)			—				(60.6	)
Other activity, primarily foreign currency translation			—				(34.9	)			—				(107.3	)			(142.2	)
Balance as of Feb. 22, 2009		$	5,087.8			$	107.2			$	942.8			$	469.7			$	6,607.5

Future adjustments to goodwill may occur upon the final resolution of certain income tax accounting matters.

The changes in the carrying amount of other intangible assets, primarily brand intangibles, during fiscal 2009 were as follows:

In Millions		U.S. Retail				International				Joint Ventures				Total
Balance as of May 25, 2008		$	3,175.2			$	518.8			$	83.2			$	3,777.2
Acquisition of Humm Foods			19.4				—				—				19.4
Other activity, primarily foreign currency translation			—				(102.8	)			(13.4	)			(116.2	)
Balance as of Feb. 22, 2009		$	3,194.6			$	416.0			$	69.8			$	3,680.4

(5) Inventories

The components of inventories were as follows:

		Feb. 22,				May 25,
In Millions		2009				2008
Raw materials and packaging		$	284.3			$	265.0
Finished goods			1,125.6				1,012.4
Grain			116.2				215.2
Excess of FIFO or weighted-average cost over LIFO cost			(165.5	)			(125.8	)
Total		$	1,360.6			$	1,366.8

(6) Fair Values, Derivatives, and Grain Inventories

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.

Commodity Price Risk. Many commodities we use in the production and distribution of our products are exposed to market price risks. We use 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, primarily for wheat and oats. 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.

Due to the rising compliance costs and the complexity associated with the application of hedge accounting, we elected to discontinue the use of hedge accounting for all commodity derivative positions entered into after the beginning of fiscal 2008. Accordingly, the changes in the values of these derivatives are recorded in cost of sales in our Consolidated Statements of Earnings currently.

Regardless of designation for accounting purposes, we believe all of our commodity hedges are economic hedges of our risk exposures, and as a result we consider these derivatives to be hedges for purposes of measuring segment operating performance. Thus, these gains and losses are reported in unallocated corporate items outside of segment operating results until such time that the exposure we are hedging affects earnings. At that time we reclassify the hedge gain or loss from unallocated corporate items to segment operating profit, allowing our operating segments to realize the economic effects of the hedge without experiencing any resulting mark-to-market volatility, which remains in unallocated corporate items. We no longer have any open commodity derivatives previously accounted for as cash flow hedges.

Pursuant to this policy, unallocated corporate items for the quarterly and nine-month periods ended February 22, 2009, and February 24, 2008, included:

										Nine-Month
		Quarter Ended								Period Ended
		Feb. 22,				Feb. 24,				Feb. 22,				Feb. 24,
Change in Unallocated Corporate Income (Expense), in Millions		2009				2008				2009				2008
Net gain (loss) on mark-to-market valuation of commodity positions		$	(28.4	)		$	103.8			$	(300.4	)		$	145.9
Net loss (gain) on commodity positions reclassified from unallocated corporate items to segment operating profit			81.9				(16.6	)			47.2				(46.6	)
Net mark-to-market revaluation of certain grain inventories			17.7				64.0				(36.2	)			68.8
Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items		$	71.2			$	151.2			$	(289.4	)		$	168.1

As of February 22, 2009, the net notional value of commodity derivatives was $150.0 million, of which $104.0 million relates to agricultural inputs and $46.0 million relates to energy inputs. These hedges are related to inputs that generally will be utilized within the next 12 months.

Interest Rate Risk. We are exposed to interest rate volatility with regard to future issuances of fixed-rate debt, and existing and future issuances of floating-rate debt. Primary exposures include U.S. Treasury rates, London Interbank Offered Rates (LIBOR), and commercial paper rates in the United States and Europe. We use U.S. Treasury rate lock contracts, 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-rate versus floating-rate debt, based on current and projected market conditions. Generally, we agree with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed notional principal amount.

Floating Interest Rate Exposures — Except as discussed below, floating-to-fixed interest rate swaps are accounted for as cash flow hedges, as are all hedges of forecasted issuances of debt. Effectiveness is assessed based on either the perfectly effective hypothetical derivative method or changes in the present value of interest payments on the underlying debt. Amounts deferred to accumulated other comprehensive income (loss) are reclassified into earnings over the life of the associated debt. As of February 22, 2009, the total notional value of our pay-floating swaps was $1.9 billion.

Fixed Interest Rate Exposures — Fixed-to-floating interest rate swaps are accounted for as fair value hedges with effectiveness assessed based on changes in the fair value of the underlying debt, 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 net interest. As of February 22, 2009, the total notional value of our pay-fixed swaps was $2.3 billion.

The swap contracts mature at various dates from 2009 to 2015 as follows:

		Fiscal Year Maturity Date
In Millions		Pay Floating				Pay Fixed
2009		$	9.9			$	—
2010			18.9				500.0
2011			17.6				—
2012			1,753.4				1,000.0
2013			14.6				750.0
Beyond 2013			37.6				—
Total		$	1,852.0			$	2,250.0

In anticipation of our acquisition of The Pillsbury Company (Pillsbury) 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 February 22, 2009, we still owned $1.8 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 $700.0 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 $22.5 million coincident with our $1.0 billion 10-year fixed-rate note offering on January 24, 2007. As of February 22, 2009, $17.7 million pre-tax loss remained in accumulated other comprehensive income (loss), which will be reclassified to earnings over the term of the underlying debt.

The net amount of pre-tax gains and losses in accumulated other comprehensive income (loss) as of February 22, 2009, that is expected to be reclassified into net earnings within the next 12 months is $20.2 million of income.

Foreign Exchange Risk. Foreign currency fluctuations affect our net investments in foreign subsidiaries and foreign currency cash flows primarily 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, Chinese renminbi, euro, Japanese yen 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 18 months forward. As of February 22, 2009, the total notional amount of our foreign currency forward contracts was $550.8 million.

Fair Value Measurements and Financial Statement Presentation. In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (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. SFAS 157 applies to instruments accounted for under previously issued pronouncements that prescribe fair value as the relevant measure of value.

We adopted SFAS 157 at the beginning of fiscal 2009 for all instruments valued on a recurring basis, and our adoption did not have a material impact on our financial statements. The FASB also deferred the effective date of SFAS 157 until the beginning of fiscal 2010 as it relates to fair value measurement requirements for nonfinancial assets and liabilities that are not remeasured at fair value on a recurring basis. This includes fair value calculated in impairment assessments of goodwill, indefinite-lived intangible assets, and other long-lived assets.

The fair value framework requires the categorization of assets and liabilities into one of three levels based on the assumptions (inputs) used in valuing the asset or liability. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are defined as follows:

	Level 1:		Unadjusted quoted prices in active markets for identical assets or liabilities.
	Level 2:		Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
	Level 3:		Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The fair values of our financial assets, liabilities, and derivative positions in the scope of SFAS 157 as of February 22, 2009, were as follows:

		Fair Values of Assets																Fair Values of Liabilities
In Millions		Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Derivatives designated as hedging instruments:
Interest rate contracts (a) (d)		$	—			$	—			$	—			$	—			$	—			$	(4.7	)		$	—			$	(4.7	)
Foreign exchange contracts (b) (c)			—				34.4				—				34.4				—				(4.3	)			—				(4.3	)
Total			—				34.4				—				34.4				—				(9.0	)			—				(9.0	)
Derivatives not designated as hedging instruments:
Interest rate contracts (a) (d)			—				197.2				—				197.2				—				(268.8	)			—				(268.8	)
Foreign exchange contracts (b) (c)			—				—				—				—				—				(4.5	)			—				(4.5	)
Equity contracts (a) (e)			—				—				—				—				—				(1.6	)			—				(1.6	)
Commodity contracts (b) (g)			—				—				—				—				(6.3	)			(67.3	)			—				(73.6	)
Total			—				197.2				—				197.2				(6.3	)			(342.2	)			—				(348.5	)
Other assets and liabilities reported at fair value:
Marketable investments (f)			11.7				40.6				—				52.3				—				—				—				—
Grain contracts (g)			—				11.1				—				11.1				—				(17.5	)			—				(17.5	)
Total			11.7				51.7				—				63.4				—				(17.5	)			—				(17.5	)
Total financial assets, liabilities, and derivative positions		$	11.7			$	283.3			$	—			$	295.0			$	(6.3	)		$	(368.7	)		$	—			$	(375.0	)

(a)		These contracts are recorded as other assets or as other liabilities, as appropriate, based on whether in a gain or loss position.
(b)		These contracts are recorded as prepaid expenses and other current assets or as other current liabilities, as appropriate, based on whether in a gain or loss position.
(c)		Based on observable market transactions of spot currency rates and forward currency prices.
(d)		Based on LIBOR and swap rates.
(e)		Based on LIBOR, swap, and equity index swap rates.
(f)		Based on prices of common stock and bond matrix pricing.
(g)		Based on prices of futures exchanges and recently reported transactions in the marketplace.

We did not significantly change our valuation techniques from prior periods.

Information related to our cash flow, net investment, and other derivatives not designated as hedging instruments for the quarterly and nine-month periods ended February 22, 2009, follows:

		Quarter Ended February 22, 2009
		Interest				Foreign
		Rate				Exchange				Equity				Commodity
In Millions		Contracts				Contracts				Contracts				Contracts				Total
Derivatives in Cash Flow Hedging Relationships:
Amount of gain (loss) recognized in OCI (a)		$	1.1			$	( 1.5	)		$	—			$	—			$	(0.4	)
Amount of gain (loss) reclassified from AOCI into earnings (a) (b)		$	4.0			$	( 6.8	)		$	—			$	—			$	(2.8	)
Amount of gain (loss) recognized in earnings (c) (d)		$	—			$	( 0.2	)		$	—			$	—			$	(0.2	)
Derivatives in Net Investment Hedging Relationships:
Amount of gain (loss) recognized in OCI (a)		$	—			$	—			$	—			$	—			$	—
Derivatives Not Designated as Hedging Instruments:
Amount of gain (loss) recognized in earnings (e)		$	(0.4	)		$	0.3			$	—			$	(28.4	)		$	(28.5	)

		Nine-Month Period Ended February 22, 2009
		Interest				Foreign
		Rate				Exchange				Equity				Commodity
In Millions		Contracts				Contracts				Contracts				Contracts				Total
Derivatives in Cash Flow Hedging Relationships:
Amount of gain (loss) recognized in OCI (a)		$	(0.7	)		$	48.2			$	—			$	—			$	47.5
Amount of gain (loss) reclassified from AOCI into earnings (a) (b)		$	11.7			$	(12.3	)		$	—			$	—			$	(0.6	)
Amount of gain (loss) recognized in earnings (c) (d)		$	(0.1	)		$	(0.2	)		$	—			$	—			$	(0.3	)
Derivatives in Net Investment Hedging Relationships:
Amount of gain (loss) recognized in OCI (a)		$	—			$	6.0			$	—			$	—			$	6.0
Derivatives Not Designated as Hedging Instruments:
Amount of gain (loss) recognized in earnings (e)		$	2.6			$	(74.5	)		$	0.1			$	(300.4	)		$	(372.2	)

(a)		Effective portion.
(b)		Gain (loss) reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A for foreign exchange contracts.
(c)		All gain (loss) recognized in earnings is related to the ineffective portion of the hedging relationship. No amounts were reported as a result of being excluded from the assessment of hedge effectiveness.
(d)		Gain (loss) recognized in earnings is reported in interest, net for interest rate swaps and in SG&A for foreign exchange contracts.
(e)		Gain (loss) recognized in earnings is reported in interest, net for interest rate and foreign exchange contracts; in cost of sales for commodity contracts; and in SG&A for equity contracts.

Credit-Risk-Related Contingent Features. Certain of our derivative instruments contain provisions that require us to maintain an investment grade credit rating on our debt from each of the major credit rating agencies. If our debt were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position on February 22, 2009, was $37.5 million. We have posted collateral of $26.7 million in the normal course of business associated with these contracts. If the credit-risk-related contingent features underlying these agreements were triggered on February 22, 2009, we would be required to post an additional $10.8 million of collateral to the counterparties.

Counterparty Credit Risk. We enter into interest rate, foreign exchange, and certain commodity and equity derivatives, primarily with a diversified group of highly rated counterparties. The maximum amount of loss due to the credit risk of the counterparties, should the counterparties fail to perform according to the terms of the contracts, is $46 million against which we hold $3 million of collateral. Under the terms of master swap agreements, some of our transactions require collateral or other security to support financial instruments subject to threshold levels of exposure and counterparty credit risk. Collateral assets are either cash or U. S. Treasury instruments and are held in a trust account which we have access to in the event the counterparty defaults.

(7) Debt

The components of notes payable were as follows:

		Feb. 22,				May 25,
In Millions		2009				2008
U.S. commercial paper		$	646.3			$	687.5
Euro commercial paper			645.6				1,386.3
Financial institutions			121.9				135.0
Total		$	1,413.8			$	2,208.8

Our commercial paper borrowings are supported by fee-paid committed credit lines consisting of a $1.8 billion facility expiring in October 2012 and a $1.1 billion facility expiring in October 2010. The credit facilities contain several covenants with which we are in compliance, including a requirement to maintain a fixed charge coverage ratio of at least 2.5. As of February 22, 2009, we did not have any outstanding borrowings under these credit facilities.

In January 2009, we sold $1.2 billion aggregate principal amount of our 5.65 percent notes due 2019. In August 2008, we sold $700.0 million aggregate principal amount of our 5.25 percent notes due 2013. The proceeds of these notes were used to repay a portion of our outstanding commercial paper. Interest on the notes is payable semi-annually in arrears. These notes may be redeemed at our option at any time for a specified make-whole amount. These notes are senior unsecured, unsubordinated obligations and contain a change of control provision, as defined in the instruments governing the notes.

Certain of our long-term debt agreements contain restrictive covenants. As of February 22, 2009, we were in compliance with all of these covenants.

(8) Minority Interests

There were no capital transactions that impacted our minority interests in fiscal 2009.

On August 7, 2007, we repurchased for a net amount of $843.0 million all of the outstanding Series B-1 limited membership interests (Series B-1 Interests) previously issued by our subsidiary General Mills Cereals, LLC (GMC) as part of a required remarketing of those interests. The purchase price reflected the Series B-1 Interests’ original capital account balance of $835.0 million and $8.0 million of capital account appreciation attributable and paid to the third party holder of the Series B-1 Interests. The capital appreciation paid to the third party holder of the Series B-1 Interests was recorded as a reduction to retained earnings, a component of stockholders’ equity, on the Consolidated Balance Sheets, and reduced net earnings available to common stockholders in our basic and diluted earnings per share (EPS) calculations. We used commercial paper to fund the repurchase.

We and the third party holder of all of GMC’s outstanding Class A limited membership interests (Class A Interests) agreed to reset, effective on June 28, 2007, the preferred rate of return applicable to the Class A Interests to the sum of 3 month LIBOR plus 65 basis points. On June 28, 2007, we also sold $92.3 million of additional Class A Interests to the same third party. There was no gain or loss associated with these transactions. As of February 22, 2009, the carrying value of all outstanding Class A Interests on our Consolidated Balance Sheets was $242.3 million, and the capital account balance of the Class A Interests, upon which preferred distributions are calculated, was $248.1 million.

On June 28, 2007, we repurchased for $150.0 million all of the outstanding Series A preferred stock of our subsidiary General Mills Capital, Inc. using proceeds from the sale of the Class A Interests and commercial paper. There was no gain or loss associated with this repurchase.

Our minority interests contain restrictive covenants. As of February 22, 2009, we were in compliance with all of these covenants.

(9) Stockholders’ Equity

The following table provides details of total comprehensive income (loss):

		Quarter Ended												Quarter Ended
		Feb. 22, 2009												Feb. 24, 2008
In Millions		Pretax				Tax				Net				Pretax				Tax				Net
Net earnings										$	288.9											$	430.1
Other comprehensive income (loss):
Foreign currency translation adjustments		$	23.0			$	—			$	23.0			$	4.3			$	—			$	4.3
Other fair value changes:
Securities			2.8				(1.1	)			1.7				3.2				(1.1	)			2.1
Hedge derivatives			(0.4	)			(0.8	)			(1.2	)			11.7				(3.8	)			7.9
Reclassification to earnings:
Hedge derivatives			(2.8	)			1.4				(1.4	)			(21.5	)			8.0				(13.5	)
Amortization of losses and prior service costs			6.1				(2.3	)			3.8				12.1				(4.2	)			7.9
Other comprehensive income		$	28.7			$	(2.8	)		$	25.9			$	9.8			$	(1.1	)		$	8.7
Total comprehensive income										$	314.8											$	438.8

		Nine-Month Period Ended												Nine-Month Period Ended
		Feb. 22, 2009												Feb. 24, 2008
In Millions		Pretax				Tax				Net				Pretax				Tax				Net
Net earnings										$	945.6											$	1,109.5
Other comprehensive income (loss):
Foreign currency translation adjustments		$	(531.2	)		$	—			$	(531.2	)		$	154.6			$	—			$	154.6
Other fair value changes:
Securities			(2.6	)			1.0				(1.6	)			2.2				(0.8	)			1.4
Hedge derivatives			47.5				(14.5	)			33.0				50.2				(17.7	)			32.5
Reclassification to earnings:
Hedge derivatives			(0.6	)			0.7				0.1				(49.8	)			18.1				(31.7	)
Amortization of losses and prior service costs			16.3				(6.2	)			10.1				35.2				(12.6	)			22.6
Other comprehensive income (loss)		$	(470.6	)		$	(19.0	)		$	(489.6	)		$	192.4			$	(13.0	)		$	179.4
Total comprehensive income										$	456.0											$	1,288.9

Except for reclassifications to earnings, changes in other comprehensive income (loss) are primarily non-cash items.

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

		Feb. 22,				May 25,
In Millions		2009				2008
Foreign currency translation adjustments		$	117.2			$	648.4
Unrealized gain (loss) from:
Securities			3.2				4.8
Hedge derivatives			(6.1	)			(39.2	)
Pension, other postretirement, and postemployment benefits:
Net actuarial loss			(393.0	)			(400.4	)
Prior service costs			(34.2	)			(36.9	)
Accumulated other comprehensive income (loss)		$	(312.9	)		$	176.7

On December 10, 2007, our Board of Directors approved the retirement of 125.0 million shares of common stock in treasury effective December 10, 2007. This action reduced common stock by $12.5 million, reduced additional paid-in-capital by $5,068.3 million, and reduced common stock in treasury by $5,080.8 million on our Consolidated Balance Sheet.

(10) Stock Plans

We have various stock-based compensation programs under which awards, including stock options, restricted stock, and restricted stock units, may be granted to employees and non-employee directors. These programs and related accounting are described on pages 63 to 65 of our Annual Report on Form 10-K for the fiscal year ended May 25, 2008.

Compensation expense related to stock-based payments recognized in selling, general, and administrative expenses in the Consolidated Statements of Earnings was as follows:

										Nine-Month
		Quarter Ended								Period Ended
		Feb. 22,				Feb. 24,				Feb. 22,				Feb. 24,
In Millions		2009				2008				2009				2008
Compensation expense related to stock-based payments		$	27.6			$	23.0			$	114.3			$	109.6

As of February 22, 2009, unrecognized compensation expense related to non-vested stock options and restricted stock units was $217.6 million. This expense will be recognized over 26 months, on average.

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

		Nine-Month
		Period Ended
		Feb. 22,				Feb. 24,
In Millions		2009				2008
Net cash proceeds		$	287.3			$	112.2
Intrinsic value of options exercised		$	221.1			$	64.1

We estimate the fair value of each option on the grant date using the Black-Scholes option-pricing model, which requires us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option, excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. For fiscal 2008 and all future grants, we have excluded historical volatility for fiscal 2002 and prior, primarily because volatility driven by the acquisition of Pillsbury does not reflect what we believe to be expected future volatility. We also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting the other valuation assumptions is explained on pages 63 and 64 in our Annual Report on Form 10-K for the fiscal year ended May 25, 2008.

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

		Nine-Month
		Period Ended
		Feb. 22,				Feb. 24,
		2009				2008
Estimated fair values of stock options granted		$	9.42			$	10.56
Assumptions:
Risk-free interest rate			4.4	%			5.1	%
Expected term		8.5 years				8.5 years
Expected volatility			16.1	%			15.6	%
Dividend yield			2.7	%			2.7	%

Information on stock option activity follows:

										Weighted-average
						Weighted-				remaining				Aggregate
		Shares				average				contractual term				intrinsic value
		(thousands)				exercise price				(years)				(millions)
Balance as of May 25, 2008			53,021.2			$	45.35
Granted			3,239.1				63.52
Exercised			(8,276.3	)			39.19
Forfeited or expired			(85.8	)			54.02
Outstanding as of Feb. 22, 2009			47,898.2			$	47.63				4.66			$	402.7
Exercisable as of Feb. 22, 2009			34,311.6			$	43.88				3.22			$	383.5