This summary is based on the second quarter fiscal 2008 earnings call conducted by General Mills Inc. (GIS: chart) on December 19, 2007

President, CEO and COO: Ken Powell
EVP and CFO: Don Mulligan
EVP and COO of International: Chris O''Leary
VP of Investor Relations: Kris Wenker

Key Investors Issues

- Earnings per share rose from $1.08 in prior year to $1.14.
- Revenue of $3.7 billion was an improvement of 7% from previous year.
- Through the first half, the firm has repurchased a net 7 million shares and paid dividend of $259 million.

Second Quarter Fiscal 2008 Financial Highlights

The earnings per share totaled $1.14 for the second quarter, representing a 6% gain.

This increase was on top of double-digit growth in last year''s second quarter. Net earnings totaled $391 million, including restructuring and associated costs of $20 million pre-tax, $13 million after tax. During the quarter, retail profit fell 2%, including a recall impact. International posted another quarter of strong double-digit profit growth and Bakeries and Foodservice profits declined 14%. That reflects high input cost in very tough comparisons of 40% profit growth in last year.

The sales grew 7% to $3.7 billion, reflecting a strong contribution from price and mix of six percentage points.

Foreign exchange added another point of growth. Each of the three business segments contributed to the sales increase. US Retail sales were up 3%, International segment posted 22% growth, and Bakeries and Foodservice sales grew 8%.

The second quarter gross margin of 36% was below the comparable period a year ago.

Cost of goods for the quarter included $17 million of accelerated depreciation expense related to restructuring actions. It also includes virtually all of the expenses related to the voluntary recall of pepperoni pizzas on November 1st. Total recall expense, including the cost booked in SG&A, was $20 million pre-tax and 4 cents per share. The company resumed shipment of pepperoni pizza SKUs at the end of November and sales of other pizza varieties were not interrupted.

The results for the quarter also included 10% increase in consumer marketing expense.

The firm believes that this strong investment in its brands will help fuel continued growth in sales, particularly baseline or non promoted sales. Through the first half of this year, combined baseline sales for the major US retail businesses are up 3% in measured channels.

Restructuring, impairment, and other exit costs totaled $3 million in the quarter, compared to $1 million of income last year.

Corporate unallocated expense is in total $26 million, which includes $17 million of cost associated with restructuring that appear in cost and income statement. The decrease in unallocated corporate expense for the quarter reflects a net $15 million mark-to-market gain on commodity hedges and $11 million gain on the sale of a corporate investment.

The firm’s joint ventures, particularly cereal partners worldwide, contributed strong double-digit earnings growth in the quarter.

After-tax earnings from joint ventures totaled $28 million, and these results include $1 million after-tax charge related to previously announced CPW restructuring in the UK. Sales for CPW grew 21% in the period.

In total, core working capital was up 12% from last November''s levels.

This reflects higher sales levels and higher prices for inventories. For the full year, the firm now expects core working capital to grow slightly faster than sales due to the same input cost increases that the firm is witnessing.

During the first quarter, General Mills repurchased a net $897 million minority interest and refinanced that piece of its capital structure with commercial paper and five-year note.