General Mills (GIS)

For the third quarter, unallocated corporate items totaled $105.9 million of income in the third quarter of fiscal 2008 compared to $35.8 million of expense in the same period in fiscal 2007. We recorded net mark-to-market gains of $87.2 million related to hedges on open commodity positions that will offset future input cost inflation, and $64.0 million from the revaluation of our grain inventories to market.

For the nine-month period ended February 24, 2008, unallocated corporate items totaled $26.0 million of income, compared to $118.6 million of expense for the same period last year. We recorded net mark-to-market gains of $99.3 million related to hedges on open commodity positions that will offset future input cost inflation and $68.8 million from the revaluation of our grain inventories to market. We also recognized a previously deferred gain on the sale of a corporate investment of $10.8 million in fiscal 2008. These items were partially offset by $17.4 million of accelerated depreciation on long-lived assets associated with our previously announced restructuring action at our plant in Trenton, Ontario and $10.9 million of costs related to the remarketing of the Class A and Series B-1 interests in GMC.

Unallocated corporate items totaled $19 million expense in the third quarter of 2006 compared to $19 million income in 2005. The primary reason for the change quarter-over-quarter and year–over-year is the result of allocations of SG&A costs to the operating segments. Unallocated corporate expense includes any variance between actual SG&A expenses incurred versus amounts allocated to operating segments based on budgeted amounts and allocation methods. In the third quarter of fiscal 2006, this variance was $4 million in net expense compared to $18 million in net income in the third quarter of fiscal 2005, primarily as employee benefit costs, including incentives, not allocated to the operating segments were lower in fiscal 2005.

For thirty-nine weeks, unallocated corporate expenses were $58 million this year compared to $21 million last year primarily as a result of higher employee benefit expense, including incentives, and a $10 million write-down of the asset value of a low-income housing investment.

Corporate unallocated expense in the second quarter totaled $2 million. In last year’s second quarter, corporate unallocated expense totaled $20 million, including $8 million of expense, primarily accelerated depreciation associated with restructuring and exit activities. For twenty-six weeks, corporate unallocated expense items were essentially unchanged.

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