通用磨坊 (GIS) 2007 Q4 法說會逐字稿

Good morning, everybody.

We're going to get started with the meeting this morning.

For the few that I haven't met I'm Kris Wenker, Investor Relations.

And I want to thank all of you for coming to Minneapolis and finding us at the General Mills headquarters.

We appreciate your time and your visit.

I also want to welcome everyone who is listening via webcast.

And of course there are some people listening via webcast who thought they were going to be listening here.

Really sorry about the weather and the flight issues and thanks to all of you who battled through that and sat on planes longer than you wanted to and all of those things.

Let me also say for those that are listening on the webcast, we are now going to audio stream the whole day because so many of you got trapped, and we're going to have the slides for the whole presentation out on the Web.

And so some of who you logged in early, there's a bigger slide file out there now so you may want to refresh your computer and make sure you're pulling down all the slides.

Our press release detailing fiscal '07 results was issued earlier this morning.

It's posted on the Web site, too, if you still need a copy.

And the slides include the one that's behind me now, or it will be in a minute, that reminds you that, of course, we're going to make forward-looking statements.

They are based on our current views and assumptions, and this slide will list the factors that says that some of our actual results might not be exactly what we're predicting today.

That's the end of my housekeeping for right now.

So let me turn it over to Steve Sanger, our Chairman and Chief Executive Officer.

Good morning.

Let me add my welcome to our home here in Minneapolis, to the one that Kris gave you, and I really appreciate your braving the elements and the airwaves to get out and join us today, those of you who are able to do so.

Today my colleagues and I will update you on General Mills' strong performance in 2007, and our plans for delivering another year of quality growth and good returns in 2008.

It was just two years ago that we conveyed to you this model, adopted this model, for General Mills long-term growth, and those performance targets, to re-remind everybody, are consistent low single-digit growth in net sales, mid single-digit growth in segment operating profit, high single-digit growth in earnings per share.

And we believe this sales and earnings growth coupled with our attractive dividend yield will result -- should result in consistent double-digit returns to our shareholders.

Now, in 2006 we posted a good first year performance against this model.

And as you've seen from today's press release, we have seen growth on growth in 2007.

For this latest year, net sales grew 6% to $12.4 billion, segment operating profits grew faster than sales, increasing 7% to nearly $2.3 billion, and our earnings per share rose 10% to reach $3.18.

The EPS results for both years include accounting rule changes that affect comparability.

Results for 2006 include the impact of accounting for contingently convertible debt that used to be part of our capital structure.

And this impact ended for us in the middle of 2006 but it reduced our EPS that year by $0.08.

Now, in 2007 our EPS results include adoption of the new accounting rule for stock-based compensation.

The incremental impact of this rule change totaled $0.12 per share in 2007.

So if you exclude the impact of these accounting items, our EPS growth would still be double-digit.

So our financial results met or exceeded our long-term targets in 2007.

In addition to that, we achieved all of the key operating objectives that we had set for the year.

Now, I shared these with you all at our June meeting a year ago, but just let me reiterate those.

They were first to renew net sales growth for Big G and Pillsbury USA.

Those were the only two divisions that didn't achieve top line growth in 2006.

Second, to get stronger sales and profit contributions from our new products.

Third, to take advantage of the growth opportunities for our brands in new retail formats and in foodservice channels and international markets.

And finally, to continue expanding margins by focusing on mix management and productivity.

So let's look at the results against these.

In 2007 both Big G and Pillsbury USA posted sales gains, and in fact, we achieved sales growth in every one of General Mills major operating divisions including double-digit growth in Snacks, in International, and in our Small Planet organic foods division.

We introduced 440 new products around the world last year, and in total they accounted for more than 5% of our unit volume.

And that's consistent with our target for annual volume from new items.

Our brands achieved strong sales gains in fast-growing non-supermarket channels during 2007.

In particular, we posted high single-digit growth in the natural and organic channel, and our business grew double digits in drug stores, in convenience stores, in super centers, and in dollar stores.

Outside the U.S.

we posted sales growth in every region where we compete.

Excluding the impact of currency, we grew 5% in Canada, 13% in Europe, 12% in Asia, 21% in Latin America.

Add in 4 points of favorable currency impact and our reported International sales increased 16% in 2007 and crossed the $2 billion mark for the first time.

And below the top line, we recorded increases in both gross margin, which rose by 50 basis points, and segment operating margin, which was up 20 basis points for the year.

These gains represent continued improvement beyond the margin expansion that we had in 2006.

And we posted this second year of margin expansion despite continued cost inflation.

For 2007 our ingredient, energy and labor costs rose at a combined rate of nearly 4% which we offset primarily through productivity and strong plant operating performance.

Our segment operating margin grew even after significant increases in consumer marketing spending.

As our results ran ahead of our plan throughout the year, we reinvested additional funds in consumer brand building.

In total, our consumer marketing spending grew 8%, and that was on top of increased brand building levels in 2006.

So we met all of our operating objectives for the year, and as a result we delivered quality growth in net sales, in segment operating profits and earnings per share.

We want to achieve our long-term growth targets while also improving returns on invested capital.

Specifically, we target a 50 basis point improvement in our annual return on capital.

And we've met that goal in each of the past two years with a 50 basis point increase in 2006, and a further 60 point gain in 2007.

In fact, if you exclude the impact of the stock option accounting changes, this year's ROC would have been up 100 basis points.

We return a significant portion of the cash we generate to shareholders through share repurchases and dividends.

In 2007 we repurchased approximately 24 million shares of our common stock and paid more than $500 million in shareholder dividends.

These initiatives are both important factors in General Mills total shareholder return.

For 2007 we delivered a strong double-digit return of over 19% for our shareholders, and over the past three years our return to shareholders has compounded at a 12% rate.

So to sum up our results for 2007, it was a year of quality growth for General Mills.

We generated broad-based gains in both unit volume and net sales.

We expanded margins despite significant input cost inflation, and we increased our levels of consumer marketing, and we delivered double-digit growth in earnings per share, and a double-digit shareholder return.

Most important, we generated this growth in ways that position us to achieve another year of attractive growth and returns in 2008, and here's why I say that.

We see our current growth momentum as a result of good execution against great fundamentals.

Winning in the food business today means giving consumers the products that they want, products that offer great taste along with convenience and health and wellness benefits.

Product categories like ready-to-eat cereal and ready-to-serve soup, frozen vegetables, yogurt, grain snacks, organic foods, these are advantaged places to compete.

They're good categories.

In addition, our brands hold leading positions in these on-trend, on demand categories.

In demand categories.

Our healthy and convenient products aren't niche businesses.

We play in categories with broad household penetration and wide demographic appeal.

As a result, introductions like Fiber One bars or low sodium Progresso soups can quickly become sizable new businesses.

We have been long-term investors in our brands and in recent years we've been increasing our levels of consumer marketing.

That's possible thanks to a sharpened focus on cost savings and on product mix and on margins.

And this company-wide focus has already strengthened our profit base and we've identified a strong pipeline of initiatives to sustain and grow margins as we go forward as well.

So that's a quick overview of our good performance in 2007 and our outlook for 2008.

Now I'm going to turn the program over first to Jim Lawrence, our Vice Chairman and Chief Financial Officer, and Jim will share more details on the financial results in 2007 and provide guidance for 2008.

And Jim will be followed by Ken Powell, General Mills President and Chief Operating Officer, who will conclude with a review of the key business initiatives for next year.

So Jim, the floor is yours.

Steve, thank you, and good morning, everyone, here in the auditorium.

Thank you very much for coming out to Minneapolis to join us and hello to everybody on the webcast.

I'm going to begin my part of the program with a review of fourth quarter results.

Now, as reported in our press release earlier this morning, net sales for the final quarter of 2007 grew at a strong 7% rate.

Segment operating profits matched prior year results despite input costs that were significantly higher year-over-year and a double-digit increase in consumer marketing expense.

Our net earnings grew 1% and diluted EPS grew 2% to $0.62 for the quarter.

This next slide shows our fourth quarter results by business segment.

For the U.S.

Retail businesses, net sales grew 6% and operating profits, after the additional consumer marketing investment, were down slightly for the period but still up nicely for the year in total.

International segment results were strong in the final quarter.

Sales were up 19% and operating profits grew at a strong double-digit rate.

Finally, Bakeries & Foodservice sales grew slightly, but unit volumes and operating profits were down due to the loss of contributions from divested businesses.

Looking at the consolidated income statement, you see the cost of goods were up 6% in the quarter, and that reflects our 5% unit volume growth in the period along with higher input costs.

SG&A was also up in the fourth quarter due in part to a 16% increase in consumer marketing expense.

We took the opportunity which was provided to us by above plan operating performance to make additional investments in media and other consumer marketing support in the quarter.

This reinvestment should help our growth momentum continue into 2008.

Also in the fourth quarter we reported restructuring and impairment charges of $41 million, well above the year ago expense.

Corporate unallocated expense in the quarter totaled $45 million.

That was below last year's level and I'm going to give you some detail on each of these last two items.

Total restructuring and impairment expenses in the fourth quarter were $41 million, as I said.

By the way, all non-cash.

That's composed of a $37 million non-cash impairment charge for certain product lines in our Bakeries & Foodservice segment and loss of $4 million on the sale of a frozen pie business.

Earlier in the year we recorded a $6 million loss associated with the divesture of a par-baked bread business.

These costs were partially offset by adjustments to previous restructuring reserves and a gain on the sale of a plant in Spain.

That brings the net expense for the full-year to $39 million which is slightly higher than the zero to $30 million range which we gave you as guidance one year ago.

Now, turning to the unallocated corporate expense that was lower in the fourth quarter by $20 million.

Please remember that in this period a year ago we reported roughly $20 million increase into reserves for potential costs of environmental clean up.

For the year in total corporate unallocated expense grew by roughly $40 million.

The incremental impact from stock option expensing was $69 million in 2007.

So excluding the impact of that accounting change, corporate unallocated expense also would have been down for the year.

I might note that it was another good year for our pension plan.

The total return on pension fund assets was up 18% in 2007.

Over the past five years our average annual return has been 14%, and as a result our pension plans remain fully funded.

Our joint ventures contributed after-tax earnings of $15 million in the fourth quarter, and $73 million for the year.

That is a 6% increase in annual earnings recorded on a GAAP basis.

Both this year and last year include restructuring expenses for a CPW plant consolidation project in the U.K.

If you exclude restructuring expenses from both years, joint venture profits declined in the fourth quarter.

That is due to a tax adjustment, a small one, in CPW, and more importantly, a change in consolidation of Haagen Dazs joint venture earnings.

What we have done is moved to a calendar quarter schedule for Haagen Dazs so that the 2007 results, which we show here, include only 11 months of business compared to 12 last year and in the fourth quarter we have just two months of that business not three.

Now, Steve mentioned earlier that we bought back more than 24 million shares this past year.

That brings our average shares outstanding to 360 million for the year, and that is down more than 5% from 2005, and that is slightly ahead of the goal that we set to reduce average shares by a net 2% per year.

And so on the bottom line we delivered earnings of $3.18 per share.

That is well above the targeted range which we set in our June meeting a year ago which was $3.03 to $3.08.

That's thanks to the stronger sales growth, to input cost inflation that came in slightly less than we had planned, great performance by our plants, and cost savings initiatives.

These pluses allowed us to deliver these higher earnings for shareholders and to invest additional consumer marketing support behind the brands.

So with that, I'm going to shift gears and turn to expectations for fiscal '08.

Now, to begin with, these expectations do include an assumption of ongoing input cost pressure.

In fact, we are today estimating roughly 5% input cost inflation for the year.

That's slightly higher than rate of cost inflation that we had in this past year, but not as bad as two years ago.

This chart looks at total supply chain cost inflation.

That includes raw materials, energy, wages and benefits and some other expenses.

In the last couple of years we have broken out for you just the commodity and energy cost inflation so that you can have some visibility on that, and I will do this for the coming year.

Last year, you recall in the June meeting we stated that our plan included $145 million of combined raw material and energy inflation, and as I mentioned a moment ago, actual inflation came in lower.

It was roughly $115 million above year-on-year.

What we are forecasting as part of that 5% is for the raw material and energy costs to go up by $250 million year-on-year in 2008.

Now, within that the primary drivers are grain costs and dairy cost increase.

Now, we intend to offset these pressures in the supply chain with a combination of pricing and productivity.

Our plans include price realization through list price increases, reduced merchandising price discounts or frequency, and a positive sales mix.

And you'll hear much more about that through the course of the day.

Further, we will continue our company-wide focus on margin expansion and productivity.

So here is the most important slide of my presentation where we summarize our overall earnings guidance for fiscal 2008.

As Steve already indicated, we expect to deliver another year of sales and segment operating profit growth in line with our long-term growth model.

Restructuring costs, which has run between 30 and $40 million in each of the last two years, we estimate that we'll have a comparable level next year, and that is all included in our net EPS guidance.

We expect interest expense will show a mid single-digit increase next year, and we would suggest a tax rate estimate of between 34.5 and 35%.

That's what we see today.

We'll try to do better, but that's what we see today.

We expect joint venture profits to grow.

That will be led by continued sales and profit gains from CPW.

We expect to continue repurchasing shares in 2008.

We have a goal for this year, for 2008, to reduce average shares outstanding by a net 2% from where we ended in '07, and we now have guidance for you of 353 million shares for the year.

So we take all of this together.

These factors result in a targeted EPS range of $3.39 to $3.43 for fiscal '08.

Now, let's turn to cash flows and the uses of that cash.

In 2007 our cash from operations totaled nearly $1.8 billion.

That was down slightly from previous year.

Change in working capital was a source of cash in this last year, but it was less of a source than in the previous year.

In addition, tax benefits from option exercises are now taken out of operating cash flows and instead are reported in financing cash flows.

Nevertheless, this represents continued strong cash generation from our business.

What do we do with that cash?

We reinvest cash to cover essential fixed asset maintenance and to support high return capital projects for either cost savings or growth.

In 2007 our capital investments totaled $460 million with just over half of that used for essential projects.

17% then on cost savings, and roughly 30% for growth capacity.

In 2008 we expect capital investments will be higher overall with a budget of $575 million.

As you can see, productivity and growth projects now will account for over 60% of that increased budget, but I have to say this is a one-year bump, not a sustained increase in Cap Ex as a percent of sales.

Our current projections for '09 and 2010 show moderating levels of Cap Ex.

And this chart, which you now see before you, summarizes the Cap Ex of our recent years.

You can see that there's some lumpiness in the annual pattern, and I might remind you that 2004 represented the last year of the peak integration spending for the Pillsbury acquisition.

Take the three-year period from 2005 to 2007, our capital investment needs averaged less than 4% of sales, and we expect that will be true over the next three years.

After funding the growth and productivity opportunities that we see in our business, we then return cash to shareholders.

Over the last three years shareholder dividends have increased at a high single-digit rate which is consistent with our targeted rate of earnings growth.

This Monday we announced a further $0.02 increase in our quarterly dividend rate.

That will be effective with the August 1 payment, and the new annualized rate from that point going forward would represent an 8% increase over dividends which were paid in 2007.

And as most of you know, we have now paid dividends without interruption or reduction for 108 years.

I said a moment ago that we're targeting a further 2% net reduction in average shares outstanding for 2008.

As you heard me say before, our target for average shares includes the roughly 14 million shares that we expect to issue to Lehman Brothers this October.

Now, it's been a while since the front end of that transaction, which originated in October of 2004 calendar year, so let me take just a moment and recap both the originating event and what we expect will happen in the fall.

Just to refresh your memories, Lehman worked with us back in October 2004 to market a three-year Lehman note that would exchange into shares of General Mills stock.

This financing was designed to generate debt market participation and as a consequence, greater demand and better pricing than the sale of a 50 million-share block which was owned by Diageo which came from our purchasing Pillsbury from Diageo.

Some of you remember that 50 million share sale was completed in one day at a market price within $0.10 of the prior day's close.

The net effect of the Lehman/General Mills transaction enabled us to repurchase 16.6 million of Diageo's 50 million General Mills shares.

We put them into treasury and we delayed their flow into the market by three years.

This October the three years is up.

Under a forward contract that we have with Lehman, we expect them, they will give us $750 million in cash, and we will give them shares according to a pre-established scale presuming a then current market price for General Mills shares of $54.24 or higher.

We will owe Lehman 14.3 million out of those 16.6 million shares.

And that's it.

We'll be using cash from Lehman to help fund share repurchases, and we will hit our share count target for 2008.

As you've seen, we've made good progress toward our goal for average shares outstanding in 2007, and we are now expecting to beat the previously established 2008 target.

As you recall, we committed to a 6% reduction in our average share count from F'05 to F'08, excluding the impact of CoCo accounting.

With our F'08 plan we now will forecast to you that we will have achieved a 7% reduction.

I know you'll probably appreciate some guidance on the quarterly pattern of shares outstanding.

I do not have that to show today except to say that we think our average share count will be below year ago in each quarter of this year.

We have continued to repurchase shares in the early weeks of fiscal '08 under a 10b-51 plan, and we will probably be buying shares before, during, and after October.

For the full-year we expect to meet our target of 353 million average shares.

As we look forward, our plan now is to remain at our current Triple B Plus debt rating rather than to have the goal to improve that rating to Mid A.

We will be doing this by maintaining our current financial ratios, that is, we will grow our debt with our earnings and cash flow.

We will have that available then to use for funding share repurchases.

You'll note that our GAAP debt level increased in fiscal '07, we expect it to go up slightly again in fiscal '08.

So to summarize my remarks for this morning, General Mills financial results in fourth quarter and full-year were above planned levels.

They enabled us to deliver stronger earnings while reinvesting in our brands.

Our guidance for 2008 represents another year of good growth consistent with our long-term targets.

For the year we've given you earnings guidance of $3.39 to $3.43 per share.

As you know, we do not give specific quarterly guidance, but I would point out that from an EPS perspective the fourth quarter, which we just had, will be our easiest comparison.

In the first quarter will be a particularly tough comparison.

Remember that our first quarter EPS grew 16% in last fiscal year.

We'll also have some costs associated with our package size changes in Big G, and they fall primarily in the first half of the year.

From a cash standpoint we'll be prioritizing capital investment, dividend growth and share repurchases once again in 2008.

Now I'll turn the meeting over to Ken Powell, who'll be talking about our operating momentum in 2007 and our plans for sustaining it in 2008.

Ken?

Thanks, Jim, and good morning to one and all.

As you heard Steve say a few moments ago, one of the things that pleases us most about our financial results in 2007 is the way we got there with good execution that positions us for another strong year in 2008.

We drove our above planned performance with a strong top line.

Our unit volume growth at 4% was very solid.

Then we added a little benefit from price and mix.

Favorable currency exchange added one more point to our sales growth rate.

So in total, the 6% sales gain was well above our low single-digit growth goal.

In addition, our top line strength was broad-based as all three of our business segments posted both sales and volume gains for the year.

Our biggest global business, ready-to-eat cereals, grew in nearly every channel and major geography where we compete.

We've already talked about the Big G division's 2% sales gain.

Sales for our Cascadian Farm line of organic cereals grew more than 50%.

Our foodservice cereal business was just below last year's level, and outside of the U.S.

we achieved 6% growth in cereal sales in Canada, while our Cereal Partners Worldwide joint venture posted an 18% sales gain.

In total, including our 50% share of CPW sales, General Mills worldwide cereal sales grew 6% last year and exceeded $3 billion.

We had a number of key health and wellness initiatives last year that made significant contributions to our top line growth.

Whole grain news was a driver of sales growth across our cereal businesses.

The Fiber One cereal franchise achieved strong share growth in the U.S.

market and new Fiber One snack bars are off to a great start.

Our Yoplait Kids yogurt with Omega 3, which is linked to brain development in young children, posted a 4% sales increase.

And the four lower sodium versions of Progresso soup that we launched last summer brought significant new users into our soup business.

We also introduced a number of new products with great convenience benefits.

These were a hit with U.S.

consumers, with foodservice operators, and with consumers in international markets.

We were also successful last year in driving positive sales mix in a number of our businesses.

For example, our Pillsbury team focused their marketing efforts behind some of our highest-margin refrigerated dough items with great results on both the sales and the profit line.

And in Baking Products, the innovative Warm Delights line, with its higher per unit selling price, along with more efficient trade strategies for core items like cake and frosting, added up to favorable mix for this business.

Below the top line our company-wide focus on margins paid off and we were able to grow our segment operating profits faster than sales overall.

As you see on this slide, total company segment operating margin grew by 20 basis points to just over 18%.

Our International segment margin contracted slightly reflecting strong levels of marketing investment, but this was more than offset by margin gains in U.S.

Retail and Bakeries & Foodservice.

With these results achieved in '07, it probably won't surprise you to hear that our key operating objectives for 2008 look an awful lot like last year's.

Our plans call for another year of broad-based growth on the top line with contributions from unit volume gains, mix, and a bit more net pricing than we had in 2007.

We want to build on last year's success in the newer retail formats and in foodservice channels.

We're targeting another year of strong sales growth and renewed margin growth for our International business.

We have a solid lineup of cost savings projects that will help us offset the higher input costs that we anticipate.

And finally, we're targeting strong levels of investment in media and other consumer directed marketing programs to build our brands and fuel continued top line growth.

Let me share a few specific 2008 initiatives beginning with the price increase and package size changes under way right now in Big G.

Here is a summary of this initiative.

We began shipping our new packages on Monday.

The new prices averaged to a low single-digit increase per ounce across the Big G line.

The new box sizes and suggested retail prices align more closely with other offerings on the shelf.

We expect these changes to improve baseline, or non-promoted sales, for Big G and for the overall cereal category.

Retailers are supportive of the plan, and many customers have moved to targeted price points already as I'll show you in just a moment.

We'll see some expenses in 2008 associated with the package size changes but still expect Big G to post sales and profit growth for the year, and we expect this initiative to deliver cost savings of $20 million annually.

So here's what happened in the cereal aisle in terms of package sizes.

Over the last several years the average weight of a box of Big G cereal has been going up.

At the same time, the average weight of our competitor's boxes has been going down.

So today, we've got a mix with bigger boxes on the shelf, and those bigger boxes often have higher shelf prices.

Those higher unit prices can blur consumer's perception of relative value.

Here's an example of two adult-targeted products.

On a per ounce basis, Raisin Nut Bran is the better buy, but most consumers compare the price per box not the price per ounce.

And on a per package basis the competitor's smaller box has the lower price.

Now, here's a comparison across the entire product line.

This chart compares the calendar 2006 average shelf prices per box for Big G and the other cereal category players, and as you can see, our average non-promoted price is above our branded competitors.

With the package sizes and price changes we've made, Big G will continue to have an average price per box and per ounce that is higher than our branded competitors, but our new prices per box will improve every day price comparisons.

We expect this change to result in increased baseline, or non-promoted sales, for Big G and therefore for the category overall.

We began talking about this with our individual trade customers many months ago to give them adequate time to prepare for the switch to new package sizes and prices.

I can tell that you as of today a number of our biggest customers already have new prices on their shelves.

In fact, customers representing an estimated 45% of our U.S.

Retail sales have moved to the new prices.

This includes broad reflection of targeted prices for a number of brands that we tested in market throughout last year using trade funds to get to the lower shelf prices.

The percentage of retail reflection will increase quickly as a number of accounts have their own conversion dates set for July.

We'll give you an update on our progress at the end of the first quarter.

Our fiscal 2008 plan for Big G includes some one-time costs associated with the conversion to new packages and new prices.

These costs include packaging equipment as well as specific trade merchandising funds designed to pull existing retail inventories through and get the new packages on shelf as quickly as possible.

We estimate these costs at approximately $30 million, the majority of which will fall in the first half.

However, the package size changes that we are making also create significant supply chain efficiencies, and these aren't one-time.

We estimate ongoing cost savings of $20 million annually.

Let me emphasize here that our targeted merchandised price points are not changing and neither is our merchandising frequency, but we will need less trade funding to reach our feature prices because of our new lower every day shelf prices.

We expect to sell more non-promoted packages in our overall mix of sale and so for the year in total Big G trade spending is planned to be down.

Let me summarize the Big G plan for 2008.

We expect another year of low single-digit net sales growth.

Profits are expected to increase faster than sales driven by pricing, mix, and productivity.

We have a strong program of health news and innovation which you'll hear more about later today.

So on summary, we expect Big G to be a good contributor to General Mills' overall sales and profit growth this year.

Let me turn now to another U.S.

Retail business where pricing is a component of our plans, and that's Yoplait yogurt.

You all know about the sharp increase in dairy prices and, of course, Yoplait is feeling that in their ingredient costs.

In response to that cost pressure we've announced pricing actions that represent a mid single-digit increase across the Yoplait line.

The new prices are effective July 2nd.

Product innovation is the other key to Yoplait's plan in 2008.

We're launching Yo-Plus, the first thin biotic yogurt.

Yo-Plus contains prebiotic inulin with probiotic cultures to help naturally regulate digestion.

And hot on the heels of our successful Yoplait Kid's reformulation, we're introducing a new drinkable version with Omega 3 for brain development and we're launching the first carbonated yogurt, a product called [Fizz-Its].

These new products are all priced above the Yoplait per ounce line average so they represent positive mix and we think good incremental sales potential.

Let me highlight some other sales drivers in our U.S.

Retail business.

Snack bars were one of General Mills fastest growing businesses in 2007 and we expect that momentum to continue in 2008.

Our granola and snack bar lines are now a $470 million business in measured channels alone, and non-measured channels are an even bigger piece of this business.

The Progresso ready-to-serve soup business has been another strong grower for us with retail sales up 10% in 2007 and up 11% compounded over the past three years.

New, lower sodium varieties helped drive Progresso's growth last year, and so we'll be adding two new flavors to that line in 2008.

We're expanding our assortment of soups in microwave-ready bowls, and we'll also launch a brand new line of Progresso light soups.

These are full-flavor soups but they're lower in calories.

Low enough, in fact, that they counted as zero point foods in the Weight Watchers diet program.

Sales for our Helper dinner mixes grew 8% in 2007 due in part to strong incremental sales from the new microwave single-serve varieties.

That's just the latest installment in a great long-term growth story for this quick and convenient family meal.

Also in 2008 we're expanding the dinner mix category with a new line of Wanchai Ferry Chinese dinner kits.

We're excited about this line which let's consumers fix their favorite Chinese food at home.

So these are some of the examples of initiatives we have to drive top line growth in 2008.

Let me move now to our second objective which is to fuel continued good growth for our brands in faster-growing retail formats and foodservice channels.

Sales for our Small Planet Foods organic business grew 21% overall in 2007 and roughly half of those sales are generated in organic and natural specialty stores.

We continue to grow our distribution and market shares in this channel.

We're also building our business in club stores in part by developing new products and portion sizes that meet the needs of club store shoppers.

And our sales to convenience stores continue to grow at a double-digit rate led by snacks and cereal products.

We're also expanding sales for our brands in channels for food eaten away from home.

The U.S.

foodservice industry now generates sales of more than $500 billion a year and we're beginning to really drive growth for our brands in these various foodservice segments.

Our third objective is to sustain the fabulous sales and profit growth we've been generating in our International business.

We'll do that by building on our three global brand platforms.

They are super premium ice cream where we have the pre-eminent brand in Haagen Dazs, world cuisine, where we compete with Old El Paso and Wanchai Ferry, and healthy snacking where our international brands range from popcorn and Cheerios snack mixes in Canada to Nature Valley granola bars, which are now marketed in more than 50 markets worldwide.

Our international cereal business is a sales and profit growth driver, too.

We're increasing our cereal market share in Canada and through our Cereal Partners Worldwide joint venture we hold strong and growing share positions in more than 130 countries around the globe.

This venture is making increasingly important contributions to General Mills earnings growth.

The drive for margin expansion is something we're pursuing in a comprehensive and holistic way across the Company.

As I shared with you at CAGNY, the process is embedded across the organization and we're measuring our progress here very closely.

Our managers understand very clearly that strengthening gross margins is the key to generating resources to drive our top line growth.

We're also achieving increasing efficiency in our trade promotion spending.

In our U.S.

Retail segment we've reduced our trade costs per case in each of the past two years, and we have a goal of reducing it further in 2008.

We're also increasing our levels of consumer marketing support.

In 2007 consumer spending to support our brands grew 8%.

This investment fuels continued top line momentum and a virtuous circle of increasing sales and profits.

Our 2008 plans call for a further increase in consumer marketing investment.

So I'd summarize the 2008 operating outlook for General Mills this way: we're looking to deliver another year of quality sales and operating profit growth consistent with our long-term growth model.

Our plan includes broad-based unit volume and net sales gains.

We expect continued focus on holistic margin management and that will help us grow profits faster than sales.

And we plan to continue funding strong levels of consumer marketing support for the brands.

We're really excited about the momentum we're seeing across our business portfolio today and about the new products and marketing programs we have lined up for next year.

So that concludes our prepared remarks this morning.

I'm going to join Steve and Jim.

We'll open up the floor to questions.

I think Kris is going to direct the microphones around the audience so that everybody can hear.

Give us one second to get going here.

Remember, we've got so many people listening on the Web, I want to make sure you're all speaking into a microphone when we do questions.

And you're going to have to be brave so we can pass them into the aisles on you.

Anybody want to get us started?

Alexia way over here.

Hi, there.

Thanks, Kris.

Quick question about the mix improvements.

It seems to have been a big theme of the presentation remarks this morning.

Can you tell us a little bit about how you see your percentage of sales from new products evolving over time?

What your goal is, perhaps what it has been over the last couple of years and where you see it going from here?

Well, our overall goal for new product volume in the U.S., Alexia, is around that 5% level.

I think two years ago it was a little below 5.

Last year it was 5.

This year it will be over 5.

So we're seeing that increase gradually over time as a percentage.

I think more importantly, what we're seeing is the incremental contribution from those new products is growing, and so we had more incremental volume from the products that we launched in '07 than in '06, and we believe our lineup going into '08 is even more incremental.

We're also focusing our teams on making sure that these products have the right margin (and) profile, so we are earlier in the game kind of eliminating new product programs where the business model just isn't exactly right, and we're really focusing on those higher margin accretive new products.

I would like to add to Ken's remarks in addition to being sure that the new products are margin enhancing, we're also making sure that the base business doesn't slip away as we add the new products.

So thinking, you know, if you go back a few years we had new products but some of the base slipped away.

That's one of the reasons we feel so encouraged by the extra spending we did in fourth quarter, by the overall spending we did for the year, by the budgeted spending we've got for next year that the base is going to grow, and we layer new products on top of it.

Okay.

Can we sneak a microphone in and maybe we'll start with Chris and then pass it down the aisle there?

Thank you.

I just wanted to ask a question about your low single-digit sales outlook for 2008.

You've very strong category growth rates that occurred throughout the last couple of years actually.

Are there any categories that you think are going to actually slow down or are you just being prudent the start of the year with your low single-digit sales growth goal?

And just to follow-on to that, have you seen any, did you see market share gains, particularly in U.S.

Retail, do you have like a broad number you have for market share growth in U.S.

Retail categories?

Let me start with the category.

We're seeing, over the last two or three years, aggregate category development in the low single-digit range, and we expect to continue to see that going forward.

The mix changes from year-to-year, one year one will be a little better and one might be a little slower, but we've consistently seen what we think is a good solid category development in that low single-digit area.

This year our net sales growth overall brought us, I would say, pretty close to share parity.

We were a little bit low in measured channels.

I think we were down 150, 180 basis points.

We believe that we were a little stronger in some of these growth channels, and overall we were about even.

I guess my question's for you, Ken, it goes to cereal.

Could you give us a little bit more clarity on what to expect as we go through the next several months with ready-to-eat?

The concern there is that perhaps we might go through an abnormally aggressive pricing period as you move some of the old packaging off the shelf to make way for the new?

Yes.

I don't think we should see abnormal or aggressive pricing as we move through that period.

Let me tell you how the process will work.

We, as you know, have been working very closely with our customers, really, over the last six months or more.

We met some of these guys early in December of last year to go through this program and how it was going to unfold.

They, as you know, decide in the end what they're going to do, and all of them have told us that they're going to adjust their prices.

They've told us when they're going to do that, and further, they often ask our help in that process because it is, you know, you got to go into the stores and reset tags and this sort of thing.

So we actually offer our merchandising force to go in and help them do this.

So it's a, this is a process that we partner with them on.

We know the dates.

We know how it will unfold over June and July, and we believe that reflection is going to occur very nicely over the course of the summer.

We've given them some allowance to promote getting the, you know, help get the old stuff off and the new stuff on, but I think that these are very normal, I don't think there's anything unusual about that.

It helps the process, and we feel we have a very good line of sight on our major customer's plans for that conversion over the first quarter.

That's part A.

Part B is, as you know, there'll be a period of time where we have double the number of SKUs on the shelf as we phase out the old and we bring in the new.

And that means that it is going to be -- it will be very, very difficult to know what's going on if you're looking at Nielsen.

So what we're doing is we're employing an external third party service to go into the stores and monitor and track prices as they change over the summer, so we'll have the data.

We'll do that three or four times, and we'll report to you at the end of the first quarter on how that process is going.

But as I said to you, we have a very good line of sight on how we think it's going to unfold, and we feel very confident that it's going to work just fine.

Let me just add something, Terry on your question of increased competitive intensity, though, I think it's important to remember that the competitive pricing intensity in cereal is generally merchandise, in merchandising, and merchandise price points.

It's half the category sales are typically on a discount of some kind, and our merchandise price points are not changing.

So there's no change either in our intent in terms of frequency or merchandising price points on smaller boxes.

That will mean that the price per ounce on merchandising will actually be a bit higher than it was.

So it seems to me that other than increasing the ratio of baseline to merchandising, there really is not likely that you would have an increased kind of price competitive intensity in the category.

Okay.

Let's do this.

Let's get a microphone to Eric Serrota and to Steve Kron and then, Terry, can you hand yours over to Andrew and we'll get to Ken next after that?

So Steve.

My question, Jim, is directed to you.

The $250 million cost inflation that you cited from an ingredient and energy related costs, can you just try to put a bit little of context around it for us as to kind of the visibility that you might have into that relative to perhaps last year?

I mean given that this year a lot of that inflation is coming from the dairy component, which is a difficult commodity to contract, what items would you give us as far as visibility and is it safe to assume that really the first half would see the greatest pressure assuming that dairy remains at or above levels where it is today?

Sure.

Thanks for the question.

We showed you before that at this meeting a year ago we gave you an estimate of what those commodities and (inaudible) would be, and it turned out we were wrong.

We ended up having estimated higher than it turned out.

So what we're giving you is an estimate and it will be what it will be.

What we can tell you is that we have got 50% of the coverage.

So as to 50%, we know what that will be because we either bought it or we got hedges or whatever, so we're locked for 50%.

Then 50% will be what it is either when we buy it in the futures market or when we buy it off the market.

Also just one more detail, I'll tell you our energy prices actually are going to be down (briefly) next year.

That 250 is net, it's a net of 260 up on commodities, and a gain, or a deflation, actually, in energy.

Energy we've got 70% locked for the year, so we feel pretty confident about what that will be.

Ann I should remind you that is a portion of our total cost inflation which (we) grew wages and benefits and other things which we're estimating a 5%.

I think it's a little bit higher than we might have suggested back at CAGNY, but we're coming closer to the start, well, we are at the start of the year, so we have that much more visibility for the year.

So we give you the best estimate that we can.

We have taken pricing, and we have productivity programs going.

We get cost savings through capital investments, and we know what we're going to get out of that, so we think that we're going to be able to offset these increases sufficiently both to cover them and actually to improve margins.

So let's go to Eric and then up to Andrew.

Hi.

This is Eric Serrota from Merrill Lynch.

Following up on Terry's question on Big G, if you do a little bit of, not too complicated math, you could get to a fourth quarter Big G number that's up in the 5, 6% range.

Just wondering whether you could comment on how much of that was baseline sales growth and how much of that was perhaps some of the incremental marketing or incremental merchandising dollars that you put out there to clear the shelves?

And then I have a quick follow-up question.

We had good baseline progression, Eric, in Big G and, frankly, across our entire portfolio over the course of the year.

Our fourth quarter baselines were very good for U.S.

Retail and for Big G we had additional marketing programs in fourth quarter as we've already mentioned.

Some of that was advertising.

Some of that was sampling.

Some of it was a few new products that we launched in the third quarter and we started to see that gain.

We also had a terrific promotional event in the fourth quarter around the release of the Spiderman movie that was focused on cereal and on the Snacks division.

So we just had a lot of good top line building initiatives in the fourth quarter that gave us good baselines and good consumer movement.

Great.

And one of the concerns that I frequently hear about your pricing strategy for next year is that it's relying upon, it's simplistically relying upon an increase in units sold or boxes sold.

I realize that you're now targeting an increase in overall tonnage or volume in cereal, but could you give us some sort of sensitivity or some sort of gauge as to what you're assuming for a pickup in overall unit sales given that in order to grow profitability in sales, given that you're also expecting a big boost on the baseline side?

Yes.

Well, I look at it -- here's how we're looking at it.

We've got -- we're counting on unit sales increase for Big G in the low single-digit, very much in line with what we had in '07, so we're really not planning for a change in that trend at all.

We're then, on top of that, counting on -- we'll get the low single-digit pricing on top of that that we already mentioned.

And then the last point, Eric, is the new strategy is more efficient from a trade standpoint.

And so, as you already heard in my comments, that just as when we take a list price increase, we trade much of that back to reach the price points from the new higher retail prices.

In this case where we have relatively lower prices, it's more efficient to get to our merchandise price points, so there is trade efficiency in this as well that will bring us to that overall sales growth.

Great.

Thanks a lot.

I'll pass it on.

Andrew?

Thanks.

Jim, just want to get a little more clarity on the one-year bump in capital spending that you're talking about.

I guess the biggest increases are around the productivity side.

Are there one or a couple of specific projects that, I'm assuming that you've got visibility to, if you'd give us a little more clarity.

And then, more importantly, I guess, what the pay back is from a time frame, how quick the pay back might be on some of those projects so we can get a little better visibility in the next year or two.

And then second, maybe for Ken and Steve, a little bit about, I guess there have been some changes around compensation around the sales force to make it even more profit weighted metric-type of compensation scheme, and I'm just trying to get a better sense of what that was about because those types of changes have shown to have pretty big impacts at some other food companies when they've done it.

Thanks.

The first point I'd make about the Cap Ex is that we do not believe that we're changing our fundamental Cap Ex model as a percent of sales were relative to depreciation-amortization.

Back a couple of CAGNY's ago, we said that we believe we could run a business model with Cap Ex running slightly below, at or below 4% of sales at between 11.1 times depreciation-amortization.

We pointed out as well that there's a cycle to that, that can be low in certain years and higher certain years (that) particular projects come up.

And so we are very clearly pointing to the next year as being a higher year of Cap Ex, and we're saying it'll go down in the subsequent years, and we've said ,and I'll reiterate, that over the course of a three-year period of time it should be 4% or less of sales.

And that is all baked into the model of low single-digit sales growth, it's not capital to support that growth, mid single-digit operating profit growth.

There are productivity savings which come out of some of those investments to improve your margins, and there's enough cash left over so that we can buy back shares sufficient to reduce on average net shares by 2% even after options exercising.

And in this particularly year, even after the Lehman deal.

So the capital which we're going to use for the capital, the cash (inaudible) allows all those other things to happen.

Specifically next year we do have some cost savings investments, some of where we're taking production away from contract packers bringing in-house and as a consequence lowering our cost.

Those are very clear, very easy to see and basically you start to get them as soon as you have the capital up and running.

You have some growth projects, for example, in bars, Nature Valley granola bars are growing like crazy and we're putting some capacity in to allow for that growth.

So as to the general level of returns we don't say what they are, but we view those capital investments being an excellent return for (our shareholders).

Andy, on your question on the sales organization, our sales team is incented on quality growth in net sales, and that is unchanging for, you know, over many years.

We want them to grow net sales, and the way they do that is to grow volume and to make their trade spending as efficient and as productive as they possibly can.

So we've got an incentive in there for -- we look closely at cost per case.

And so those are unchanged as we go into the new year and we have no intention of playing with those.

What we have done is we've given them an equivalent case, a new equivalent case metric that gives them a better line of sight on margin.

And so they're out there with, you know, our hundreds of products and all of their many merchandising programs over the year, and what this helps them do is decide should I promote the large size or the mid size or small size or where is the most net sales and margin for the Company.

And so it's really something they've been asking from us for a while, and we think it's going to be a very, very helpful tool, and it comes out of this margin focus that we have at General Mills.

Right in the middle of the crowd there.

Thanks.

What percentage of your cereal SKUs are getting this size reduction?

It's 90% plus.

It's virtually all of them.

Okay.

Great.

And you mentioned the migration in size change for you and your major competitor.

I was wondering as it stands today, what is the average size difference for you versus your largest competitor?

Gosh, I don't know that we have that data.

What we do know is that our sizes crept up, as I said in my remarks, and so ours were growing as an average number of ounces increased slightly while our competitors declined.

And I think if you wander through the store, you'll see that we have quite a, we have a preponderance of larger sizes, and so that is what this is designed to address and it brings those sizes more in line and it brings, of course, the every day prices in a much more comparable place.

You mentioned in the slide there was over the last six years there was a 7/10th-ounce widening the gap presumably but you're larger overall.

How much of that or what is the dimensions or how much of an ounce or ounces do you see that changing this next year?

You know, honestly, I don't know exactly the number.

I would guess that we would largely close that gap.

And I guess the last thing is would you, given that the that migration occurred over six years and that this will happen in one year, is there any concern, not from the retail or customer perspective, but from the consumer perspective that that will be more noticeable and there may be a reaction?

You know, we've looked at this very, very closely, and it's absolutely clear that consumers buy boxes of cereal, and so these are really pretty subtle changes.

Obviously the way we've crafted the changes, the boxes look roughly the same, and so we don't see an issue there at all.

They're the same size this way but just a little (inaudible).

A little thinner.

And by the way did you --

And that again, brings them more in line with the competitive set.

Did you say, by the way, that over half, that more of your snack bars are sold in non-measured channels than in measured channels?

I believe it's about half and half.

Okay.

Thanks very much.

And in fact you'll hear more about that later today.

Any other questions?

Back here in the corner, Todd?

Jim, thank you for your comments on the credit rating and specifically as you talk about going forward, instead of growing into a Mid A rating you expect your debt levels to grow in lock-step essentially with your cash flow and with your operating income.

Could you just provide some color maybe in terms of how you expect to get there?

It could be something like a small debt financed acquisition.

It could be debt financed share repurchases.

Can you just provide us with a little color on that?

Sure.

Happy to do that.

Just to reiterate, we are now rated Triple B Plus by S&P and the equivalent by Moody's.

It's a strong investment grade rating, and we are happy with that rating.

We had heretofore said that we were going to essentially freeze our debt levels and grow into a Mid Single A.

We never had any particular time frame in which to do it.

We simply said we're not going to pay down debt, we're just going to hold it relatively steady, and then we're going to grow and as these operating cash flows get bigger, we would grow our way into that.

What we've concluded is that is not a sensible goal, that Triple B Plus is a fine place to be, and so we are going to maintain that rating.

As to next year our uses of cash as quite straightforward.

I've described the Cap Ex in some detail.

I've said where we're going to end up in terms of net shares outstanding.

We will see our debt rise a bit next year, just as it did on a GAAP basis at the end of this past year.

Beyond next year we will basically try to keep a ratio together, and that will mean that we can take on additional debt which we will use as a default to buy back shares.

We have a growth model which is sustainable over the long-term which we've described as the level of Cap Ex and share buyback that's a long-term sustainable (inaudible).

We will consider acquisitions.

We have no plans for any acquisitions.

We have not built that into our operating model.

We don't count on acquisitions to do anything for us.

If we think using cash for an acquisition would be better than buying back shares, then we will do that.

But we have to have to view that will pay out for the acquisition an amount which is fair to the seller, but we will get something which is worth more to us and it will be sufficiently more, but that's a better investment than buying back our own shares we know very, very well what they're worth and (inaudible).

Mary Ann and then (inaudible) maybe.

Just stay on the debt line of thinking, can you talk about the progress you've made in fixing your rates on your debt and what is the average cost of your debt now?

We've, next year will be paying about 6% across the different forms of debt that we have.

We have one refinancing to do with regard to the Lehman deal by October, and we're working on that and feel very confident about that (inaudible).

Rod?

Thank you.

Just doing the math on the Cap Ex pie charts that you showed.

In 2007 you had about $78 million of cost savings projects and then next year it goes up to 184, and the only project that you mentioned, Jim, was taking some production away from co-packers and bringing it in-house.

Is there anything else going on or is this really the bulk of the spending, and if so, are you increasing cereal capacity as a result?

There's more going on than just that, and, Kris, I don't know to what degree we want to go into specific projects in that area.

I think it's fine to list a couple of the bigger ones, and we don't do much co-packing on cereal.

That wouldn't be what we're bringing in.

The other thing I should say that there is a, Ken, I'm going to let you talk about some of the cost savings Cap Ex.

But what I want to just say in general was that one of the reasons we feel some confidence about being able to grow our margins in the face of the $250 million of input costs is that we do believe we're going to be able to get productivity both through the capital investments that we're making as well as other productivity initiatives.

What I would tell you about the other cost savings is we have a myriad of cost savings initiatives across many of the business driven by the focus on margin, so we're looking for ways to improve line speeds and improve line efficiencies.

We've got some projects in the meals division that we think will increase the -- will be good productivity generators in some of those meal businesses.

We also have a Helper in Old El Paso.

We have a logistics project that is designed to increase the efficiency and the numbers of times that we can ship full truckloads to our customers, and that's good for us and good for them, so it's the snack project that Jim mentioned.

It's some other efficiency projects in other divisions, and it's some logistics projects that are going to make that whole logistics system work more efficiently.

The material component of this is very small?

It is this year.

We do have some cost saving projects going in cereal, but right now we're okay on cereal capacity, obviously, we monitor that closely, but we're okay on that one this year.

But as you heard from Jim capital's lumpy, and one year it's yogurt and the next year it's snacks and the next year it's cereal, but for right now we're okay in cereal.

Thank you.

Trish, way in the middle we had to scoot a microphone that way.

Hi.

I was just wondering just looking back on the cost of goods what came in better than you had expected last year on the cost piece?

And then for the 250 and the 50% hedge, would you say that that's kind of evenly distributed across maybe energy, grains, et cetera, or is it heavily based in kind of one piece of that COGS basket?

Let me take the latter one, and, Ken, I'll let you comment on the front if that's okay.

As to the 250, we have 50% in total covered.

70% of energy is covered.

And within commodities, you have more coverage in terms of grains than do you in terms of dairy because of the nature of the forward markets.

That's what we prepared to say about that.

One of the, I'll just say one of the reasons the COGS are better this year is that we, in fact, had less increase in commodity inputs last year than we're expect being when we started off the year.

That's one thing.

Can you just talk about like just in terms of which ones came in better, I mean was it -- I'm just kind of looking at the 250 and it looks like a pretty big number, and I'm just wondering kind of what the nature of that is?

Is it kind of --

On the 250 it's grains, it's oils, it's dairy.

Those are the three.

Dairy's the big (inaudible)?

(inaudible)

It's corn, wheat and oats.

I mean so the grain complex is all up, and then primarily the results are the food to fuel and ethanol which is driving corn prices which has knock-on effects (across us).

That's a big piece of it and in dairy.

This year we were better than we thought I mean you just, we make our best estimates.

It came in better.

We hedged well, I think packaging was better, logistic costs were better than we thought they would be because we were more efficient, and the way we were forecasting was better and that saved a lot of money in fuels, so it was a number of things that helped us beat that number.

I'd say it's not so much that the markets came in better but that we were able to buy better as much as that was that we were able to but better in the markets.

And the thing that has changed since we talked at CAGNY as to 2008 is concerned, because as we had talked about 4.5% range of increase, and it's moved up, and the big thing that's moved up in that time frame has been dairy.

You also had a question about gross margin.

This past year our plants run extraordinarily well.

And as we have greater volume you get greater leverage, and we both had the benefit of more volume and greater leverage and also there was a smooth growth over the course of the year and smoothness is also appreciated in the plants, and frankly, we did a better job forecasting and as a consequence of planning (out production).

So things went great at the plant level.

Okay.

Let's do this.

Let's take one more from Holly, and then we're going to go on a little break and I'll do a little housekeeping so you know when we're coming back those of you out on the Web.

I'm just wondering on this U.S.

Retail business the margins were down 150 basis points in the quarter.

I know you had a 16% increase in consumer spending.

So I'm trying to get some color behind that differential.

I was just wondering if there's any costs associated with the new cereal packaging strategy?

And then, $30 million of conversion costs, is that above and beyond the $39 million in restructuring?

Well, in the fourth quarter you heard already about the marketing and consumer spending, but also I think as we told you and as we, our COGS and commodity costs were starting to go up as the year went on and so we had a higher cost basis in the fourth quarter than we did, as we went into, came into new contracts, and so we didn't have the same level of margin growth in the fourth quarter as we did in the early quarters, in fact, I think our margins, direct margins were down a little bit.

So there is a cost component in there.

Then on the $30 million conversion, what was the detail of your question again?

$30 million relative to the sizing of the cereals which Ken mentioned?

No, I think she's asking the $30 million conversion cost for Big G, that's embedded in Big G's targets for the year which is, you remember, are for sales growth and profit growth.

And then we're telling you the restructuring line, which is a different animal, comparable to that 30, $40 million range we've run the past couple years.

But Big G's got that conversion cost captured in their profit goal.

All right.

Let me do a little housekeeping for the group here.

So we're going to go on break and we're going to get back together in this room at 9:45.

So if you're listening on the Web, this is your chance to go to the bathroom and type on your computer.

If you're here you can do those same things, too.

You can phone home if you need to do that.

We have a ton of snack products out in the way which you need to sample because otherwise Kim Nelson is going to be very sorry that you didn't try them.

Let us know, any of us that are wearing the yellow tags if there's anything we can do to help you out, if you need anything, and we'll see you back in here at 9:45.