Justin Craigwell-Graham Charles Gambino Jacob Rapp 12/3/2009 General Mills, Inc. (GIS)

Introduction Company, Industry, Competitor, and Macroeconomic Analysis Company, Industry, Competitor, and Macroeconomic Analysis Financial Statement Analysis Financial Statement Analysis – DuPont Analysis – Pro Forma Analysis Valuation Valuation – DCF Valuation – Multiples Valuation – Dividend Discount Model Recommendation Recommendation

Company Overview  Founded in 1866  Based in Minneapolis, MN  Approximately 30,000 employees  Website:

Famous Products

Company Overview Three Segments – US Retail (68% of sales) – International (18%) – Bakeries & Food Service (14%) Trends – Healthy/Organic – Convenient products

Industry Overview Consumer Food & Food Processing Industry – Large & Mature – Stable – Trends Divestitures Consolidations – Main Competitors Kellogg, Kraft Foods, Campbell Soup, & HJ Heinz

Competitors CompanyMarket Cap*Annual SalesBrands Kellogg$20.10B$12.822BRice Krispies, Frosted Flakes, Cheez-It, Pop-Tarts, Eggo, Nutri-Grain Kraft Foods39.33B42.401BKraft, Oscar Meyer, Nabisco, Oreo, Maxwell House Campbell Soup12.10B7.586BCampbell’s, Pepperidge Farm, Prego, Swanson, V8 HJ Heinz13.56B10.148BHeinz, Bagel Bites, Ore- Ida, Smart Ones General Mills22.38B14.691BBetty Crocker, Bisquick, Cheerios, Yoplait Intraday 12/1/09

Macroeconomic Overview Subject to fluctuations in input prices and foreign exchange rates – GIS has done well historically in hedging these risks. General Mills has the potential to perform well even during recessions – As consumers try to save money during economic downturns, they typically eat out less and buy more products to cook at home As economy recovers in 2010 and beyond, strong product lines and broad distribution networks allow the company to maintain growth through expansion into international markets such as China Product categories have historically grown 3-4% regardless of economic conditions

SWOT Strength Weaknesses  Successful international expansion  Strong leadership training programs and high employee retention  Brand recognition  Distribution networks  Older product lines can suffer from lack of innovation  Fierce and constant competition in food industry  High marketing costs to retain market share OpportunitiesThreats  Continued international expansion  Healthy food segment  Innovative internet research techniques  Gluten-free offerings  Consolidation of retail environment  Dependence on few large customers for sales  Increasing commodity prices

Price Movement YTD

S&P and Competitors

DuPont Analysis

Management Evaluation Growth Objectives:How they did: Low single digit growth in annual net sales2009: 8% 2008: 10% 2007: 6% Mid single digit growth in operating profit2009: -1% 2008: 8% 2007: 5% High single digit growth in EPS2009: 2% 2008: 19% 2007: 8%

Relative Valuation

Valuation Summary DCF – $65.45 to $79.99 Multiples – P/E: $64.41 to $72.31 – P/B: $26.55 to $ – P/S: $44.28 to $72.90 – EBITDA: $39.34 to $86.17 DDM – $39.47 to $48.24

Recommendation Closing price on 12/01/09: $68.68 Recommendation: Add to Watch List – GIS is currently fairly valued – Possible Benefits: Large dividend Diversification benefits Costs are well managed Growth during all market cycles