Question: Interpreting Interest Rate Swap Disclosures Note 7 to General Mills' fiscal 2011 consolidated financial statements includes the following: Required a. Based on the data above,

Interpreting Interest Rate Swap Disclosures Note 7 to General Mills' fiscal 2011 consolidated financial statements includes the following:

Required
a. Based on the data above, explain whether the overall swap position seems more or less beneficial to General Mills in fiscal 20 ll compared with fiscal 2010. Which are the fair value hedges? The cash flow hedges?
b. General Mills states that the amount of hedge ineffectiveness in each year and on each type of swap was less than $1 million. It also states that "effective gains and losses on these derivatives [fair value hedges] and the underlying hedged items are recorded as net interest. Comment on the propriety of General Mills' "net interest" treatment.
c. Elsewhere in Note 7 General Mills states that a total of $29.4 million of after tax unrealized losses from interest rate cash flow hedges are recorded in AOCI at the end of fiscal 2011. Explain the effect of the eventual reclassification of these amounts from AOCI to earnings.

fin millions) May 29, 2011 May 30, 2010 $2,155.6 4.8% 0.3% $1,600.0 0.3% 7.3% Pay-floating swaps-notional amount. . . . . $838.0 1.8% 0.296 . . Average receive rate Average pay rate...

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