Part I.   FINANCIAL INFORMATION

Item 1.   Financial Statements.

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

			Thirteen Weeks Ended
			August 29, 2004			August 24, 2003
Net Sales			$	2,585		$	2,518
Costs and Expenses:
Cost of sales				1,581			1,474
Selling, general and administrative				611			591
Interest, net				113			134
Restructuring and other exit costs				40			—
Total Costs and Expenses				2,345			2,199
Earnings before Taxes and Earnings
from Joint Ventures				240			319
Income Taxes				83			112
Earnings from Joint Ventures				26			20
Net Earnings			$	183		$	227
Earnings per Share – Basic			$	.48		$	.61
Average Number of Common Shares				379			372
Earnings per Share – Diluted			$	.47		$	.59
Average Number of Common Shares –
Assuming Dilution				387			382
Dividends per Share			$	.310		$	.275

See accompanying notes to consolidated condensed financial statements.

GENERAL MILLS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited) (In Millions)

			August 29, 2004			August 24, 2003			May 30, 2004
ASSETS
Current Assets:
Cash and cash equivalents			$	480		$	565		$	751
Receivables				1,053			1,047			1,010
Inventories:
Valued primarily at FIFO				302			364			298
Valued at LIFO (FIFO value exceeds LIFO by
$53, $27 and $41, respectively)				944			970			765
Prepaid expenses and other current assets				160			169			222
Deferred income taxes				185			195			169
Total Current Assets				3,124			3,310			3,215
Land, Buildings and Equipment, at Cost				5,347			5,032			5,319
Less accumulated depreciation				(2,282	)		(2,035	)		(2,208	)
Net Land, Buildings and Equipment				3,065			2,997			3,111
Goodwill				6,693			6,653			6,684
Other Intangible Assets				3,638			3,620			3,641
Other Assets				1,831			1,812			1,797
Total Assets			$	18,351		$	18,392		$	18,448
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable			$	1,086		$	1,258		$	1,110
Current portion of long-term debt				180			82			233
Notes payable				456			1,364			583
Other current liabilities				801			657			831
Total Current Liabilities				2,523			3,361			2,757
Long-term Debt				7,426			7,523			7,410
Deferred Income Taxes				1,787			1,701			1,773
Other Liabilities				943			1,098			961
Total Liabilities				12,679			13,683			12,901
Minority Interests				299			300			299
Stockholders’ Equity:
Cumulative preference stock, none issued				—			—			—
Common stock, 502 shares issued				5,695			5,698			5,680
Retained earnings				3,787			3,204			3,722
Less common stock in treasury, at cost, shares
of 122, 129 and 123, respectively				(3,887	)		(4,125	)		(3,921	)
Unearned compensation				(89	)		(48	)		(89	)
Accumulated other comprehensive loss				(133	)		(320	)		(144	)
Total Stockholders’ Equity				5,373			4,409			5,248
Total Liabilities and Equity			$	18,351		$	18,392		$	18,448

See accompanying notes to consolidated condensed financial statements.

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

			Thirteen Weeks Ended
			August 29, 2004			August 24, 2003
Cash Flows – Operating Activities:
Net earnings			$	183		$	227
Adjustments to reconcile net earnings to cash flow:
Depreciation and amortization				108			93
Deferred income taxes				(4	)		61
Changes in current assets and liabilities
excluding effects of businesses acquired				(288	)		(465	)
Tax benefit on exercised options				11			17
Pension and other postretirement activity				(20	)		(15	)
Restructuring and other exit costs				40			—
Other, net				9			13
Net Cash Provided (Used) by Operating Activities				39			(69	)
Cash Flows – Investment Activities:
Purchases of land, buildings and equipment				(67	)		(119	)
Investments in businesses, intangibles and affiliates,
net of investment returns and dividends				7			(10	)
Purchases of marketable investments				—			(3	)
Proceeds from sale of marketable investments				25			40
Proceeds from disposal of land, buildings & equipment				9			4
Other, net				(9	)		(25	)
Net Cash Used by Investment Activities				(35	)		(113	)
Cash Flows – Financing Activities:
Change in notes payable				(128	)		131
Issuance of long-term debt				1			75
Payment of long-term debt				(54	)		(104	)
Common stock issued				28			47
Purchases of common stock for treasury				(4	)		(2	)
Dividends paid				(118	)		(102	)
Other, net				—			(1	)
Net Cash (Used) Provided by Financing Activities				(275	)		44
Decrease in Cash and Cash Equivalents			$	(271	)	$	(138	)
Cash Flows from Changes in Current Assets and
Liabilities, Excluding Effects of Businesses Acquired:
Receivables				(62	)		(58	)
Inventories				(180	)		(251	)
Prepaid expenses and other current assets				43			15
Accounts payable				(34	)		(10	)
Other current liabilities				(55	)		(161	)
Changes in Current Assets and Liabilities			$	(288	)	$	(465	)

See accompanying notes to consolidated condensed financial statements.

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

(1)   Background

The accompanying consolidated condensed financial statements 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 thirteen weeks ended August 29, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending May 29, 2005.

These statements should be read in conjunction with the consolidated financial statements and footnotes included in our Form 10-K for the year ended May 30, 2004. The accounting policies used in preparing these consolidated condensed financial statements are the same as those described in Note One of our Form 10-K.

Certain amounts in prior-period consolidated condensed financial statements have been reclassified to conform to the current period classifications.

Stock-based Compensation Expense for Stock Options

We use the intrinsic value method for measuring the cost of compensation paid in Company common stock. This method defines our cost as the excess of the stock’s market value at the time of the grant over the amount that the employee is required to pay. Our stock option plans require that the employee’s payment (i.e., exercise price) be the market value as of the grant date. The following table illustrates the pro forma effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation.

			13 Weeks Ended
In Millions, except per share data			Aug. 29, 2004			Aug. 24, 2003
Net earnings, as reported			$	183		$	227
Add: Stock-based employee compensation
expense included in reported net
earnings, net of related tax effects				5			3
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all
awards, net of related tax effects				(14	)		(14	)
Pro forma net earnings			$	174		$	216
Earnings per share:
Basic – as reported			$	.48		$	.61
Basic – pro forma			$	.46		$	.58
Diluted – as reported			$	.47		$	.59
Diluted – pro forma			$	.45		$	.57

No options were granted in the first quarter fiscal 2005. The weighted average fair value at grant date of the options granted in the first quarter fiscal 2004 was estimated as $9.27, using the Black-Scholes option-pricing model.

(2)   Restructuring and Other Exit Costs

In the first quarter of fiscal 2005, we recorded restructuring and other exit costs of $40 million, consisting of $38 million of charges associated with first-quarter supply chain initiatives and $2 million of charges associated with restructuring actions previously announced. The first-quarter initiatives were undertaken to further increase asset utilization and reduce manufacturing and sourcing costs, resulting in decisions regarding plant closures and production realignment. The charges included severance and curtailment costs of approximately $13 million for 323 employees being terminated and asset write-off costs of approximately $21 million. The supply chain actions included decisions to: close our flour milling plant in Vallejo, California, affecting 43 employees; close our par-baked bread plant in Medley, Florida, affecting 42 employees; relocate bread production from our Swedesboro, New Jersey plant, affecting 110 employees; relocate a portion of our cereal production from Cincinnati, Ohio, affecting 45 employees; and close our snacks foods plant in Iowa City, Iowa, affecting 83 employees.

Additional restructuring charges related to the above actions of approximately $5 million are expected to be recognized over the remainder of fiscal 2005 related to these first-quarter initiatives.

These supply chain actions are also resulting in certain associated expenses, primarily adjustments to the depreciable life of the assets necessary to reflect the shortened asset lives which now coincide with the final production dates at the Cincinnati and Iowa City plants. These associated expenses are being recorded as cost of sales. In the first quarter of fiscal 2005, the expense recorded in cost of sales was $5 million. We expect to record an additional $19 million of expense in cost of sales, primarily accelerated depreciation expense, during the remainder of fiscal 2005 associated with the anticipated production schedules of these two plants.

(3)   Comprehensive Income

The following table summarizes total comprehensive income for the periods presented (in millions):

			Thirteen Weeks Ended August 29, 2004									Thirteen Weeks Ended August 24, 2003
			Pretax			Tax			Net			Pretax			Tax			Net
Net Earnings									$	183								$	227
Other Comprehensive Income    (Loss):
Foreign currency
translation adjustments			$	9		$	—		$	9		$	(13	)	$	—		$	(13	)
Other Fair Value Changes:
Securities				—			—			—			6			(2	)<