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General Mills Reports Fiscal 2013 Second Quarter Results

International Segment ResultsSecond-quarter net sales for General Mills’ consolidated international businesses grew 19 percent to reach $1.38 billion. Pound volume contributed 26 points of net sales growth, reflecting the addition of Yoki and Yoplait Canada. Price realization and mix reduced net sales growth by 4 points and foreign-currency translation subtracted 3 points of net sales growth. On a constant-currency basis, International segment net sales grew 22 percent overall, with sales more than doubling in Latin America including Yoki, and an increase of 16 percent in Canada including Yoplait. Constant-currency net sales grew 3 percent in Europe, and 8 percent in the Asia / Pacific region. (Please see Note 8 below for reconciliation of this non-GAAP measure). International segment operating profit grew 4 percent to $139 million including a $17 million investment associated with transitioning Yoplait Canada from the former licensee to direct ownership. Excluding this expense, which has been included in the company’s 2013 financial guidance, International segment operating profit would have grown at a double-digit rate.

Through the first six months of 2013, International segment net sales grew 22 percent to $2.47 billion, and segment operating profit increased 24 percent to $265 million.

Bakeries and Foodservice Segment ResultsSecond-quarter net sales for the Bakeries and Foodservice segment totaled $516 million, 1 percent below year-ago results. Price realization and mix contributed 1 point of net sales growth, while lower pound volume reduced net sales growth by 2 points. Segment operating profits grew 24 percent in the quarter to $96 million, reflecting lower wheat costs year-over-year, favorable mix, and higher grain merchandising earnings.

Through the first six months of 2013, Bakeries and Foodservice segment net sales declined 2 percent to $987 million, and segment operating profits increased 18 percent to $164 million.

Joint Venture SummaryCombined after-tax earnings from the Cereal Partners Worldwide (CPW) and Haagen Dazs Japan (HDJ) joint ventures totaled $33 million in the second quarter, up 14 percent from year-ago levels. Constant-currency net sales for CPW grew 3 percent. Constant-currency net sales for HDJ grew 5 percent. Through the first six months of 2013, after-tax earnings from joint ventures totaled $56 million.

Corporate ItemsUnallocated corporate items totaled $127 million net expense in this year’s second quarter compared to $155 million net expense a year ago. Excluding the effects of mark-to-market valuation of certain commodity positions in both years, unallocated corporate items totaled $79 million net expense this year compared to $61 million net expense a year ago. The increase primarily reflects higher pension expense.

This year’s second-quarter results included $3 million of restructuring expense related to actions taken in the previous fiscal year. Net interest expense declined to $76 million in the second quarter, reflecting changes in debt mix. The effective tax rate was 32.6 percent, compared to 33.3 percent a year earlier. Excluding certain items affecting comparability, the second quarter effective tax rate was 32.8 percent in 2013 and 33.7 percent in 2012. (Please see Note 8 for reconciliation of this non-GAAP measure).

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