John A. Bryant - Chief Executive Officer, President and Director Simon Burton - Executive Officer of Snacks business unit Ronald L. Dissinger - Chief Financial Officer and Senior Vice President

Andrew Lazar - Barclays Capital, Research Division Jason English - Goldman Sachs Group Inc., Research Division David Palmer - UBS Investment Bank, Research Division Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division David Driscoll - Citigroup Inc, Research Division Robert Moskow - Crédit Suisse AG, Research Division Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division Edward Aaron - RBC Capital Markets, LLC, Research Division Eric R. Katzman - Deutsche Bank AG, Research Division

Good morning. Welcome to the Kellogg Company Third Quarter 2011 Earnings Call. [Operator Instructions] At this time. I will turn the call over to Simon Burton, Vice President of Investor Relations. Sir, please go ahead.

Thanks, Karen. Good morning, and thank you for joining us today for a review of our third quarter 2011 results. I'm joined by John Bryant, President and CEO; and Ron Dissinger, our Chief Financial Officer. The press release and slides that support our remarks this morning are posted on our website at www.kelloggcompany.com. As you're aware, certain statements today such as projections for Kellogg Company's future performance, including earnings per share, net sales, margin, operating profit, interest expense, tax rate, cash flow, brand building, upfront costs, investments and inflation are forward-looking statements. Actual results could be materially different from those projected. For further information concerning factors that could cause these results to differ, please refer to the second slide of this presentation, as well as to our public SEC filings. As a reminder, a replay of today's conference call will be available by phone through Monday, November 7. The call will also be available via webcast, which will be archived for at least 90 days. And now I'll turn it over to John. John A. Bryant: Thank you, Simon. And it's really great to see you back in Kellogg. As we evaluate our business, we are pleased with our commercial performance, and in a moment, we'll discuss our progress and growth across both categories and regions of the world. That said, we are absorbing additional costs, which are primarily related to our increased investment in supply chain. Specifically, the third quarter offered some compelling signs of improvement, particularly from the top line and the end market perspective. However, the quarter was adversely impacted by investments in our supply chain and the lapping of last year's incentive compensation costs. We're encouraged by our underlying results, especially in the current environment and recognize that it takes time to regain momentum. While our sales grew 3% on an internal basis in the quarter, this actually understates our underlying performance due to some shifts in retail trade inventory. We achieved strong end market consumption growth across our U.S. business in the third quarter, gaining share in several key categories. We are also seeing improved momentum in Latin America, Continental Europe and Asia. However, the market continues to be difficult in the U.K., which adversely impacted our European results. Our strong innovation program and brand building are helping drive our top line in this difficult economic environment, and we have plans to continue our momentum. As mentioned on our last call, we are lapping a significant reduction in our incentive compensation costs in the third quarter of 2010. This adversely impacted operating profit by 12 points in the quarter and is a primary driver of our decline in operating profit year-on-year. Due to the timing of various hedges and commodity increases, we always expected the third quarter to have the highest level of inflation for the year. In addition to the underlying inflation, we have also increased our investments in supply chain across the back half. It is important to note that when we first gave guidance for 2011, we expected cost pressures of 6%. We have now increased our estimate to approximately 9%, which has placed significant pressure on our operating profit performance this year. If we step back and look at 2011, we are pleased with our top line in the U.S., with broad-based share gains. We are also seeing improved momentum in Latin America, Asia and parts of Europe. However, we underestimated how much work is required to regain momentum in the U.K. and have increased the level of investment in our supply chain. As we look forward, we are building our top line momentum and have an even stronger innovation pipeline in 2012 than in 2011. However, to gain sustainable top line momentum, we need to increase our investments in brand building and continue to make investments in our supply chain. As always, our focus is on the long-term health of our business. To that end, we're going to make the necessary investments to manage for the long term. Specifically, we are focusing additional time and investment in several areas: supply chain, SAP reimplementation and increased brand building. Let me share more detail on each of these 3 areas. Slide 5 is one that we showed you at the back-to-school conference. I want to highlight that we're doing a lot of work to build a stronger supply chain. Looking at our business from farm to fork or silo to spoon. This has resulted in several changes in our supply chain. We have increased our capital spending to improve our infrastructure and selectively expand capacity. We have selectively added people and resources in our plants. We are expanding our training and development programs. We have changed a number of suppliers and significantly increased our independent testing and ordering. We have changed the layout of our plants to improve environmental zoning and monitoring. As we work through the process, we have chosen to accelerate work in several plants to improve our environment. This has resulted in additional labor costs, asset write-offs, and in some cases, has temporarily increased logistics and sourcing costs. As we look into 2012, we expect to continue to invest in our supply chain, particularly in the areas of infrastructure capital, additional capacity and training, as well as a wraparound impact from investments made in 2011. In addition, we are investing in our Information Technology infrastructure through our SAP reimplementation to provide improved capabilities and drive efficiencies. Third, we will increase our investment and brand building to further drive our business momentum. Our increased brand building investments will also help support our successful ramp-up in innovation. As always, our focus is on the long-term health of our business. We are committed to brand building and driving innovation as the mechanisms to win sustainably in the marketplace. Turning now to our results, Ron will take you through our financial highlights. Ronald L. Dissinger: Thanks, John, and good morning. In the third quarter, we delivered solid top line growth, with reported net sales growth of 5% and internal net sales growth of 3%. Operating profit declined 14% on a reported basis and 16% on an internal basis, driven primarily by increased cost of goods sold, lapping the adjustment we made in third quarter 2010 to reduce our incentive compensation costs and reinstatement of those costs in 2011. As we expected, our input inflation peaked in the third quarter, but we also accelerated some investments in our supply chain infrastructure. To give you a sense for the impact of these items, the incentive compensation costs created a 12-point headwind, and the supply chain costs created an approximate 8-point headwind to third quarter results. Earnings per share declined 11% on a reported basis and 13% on a currency neutral basis. This included a benefit from reduced average shares outstanding as a result of our share repurchase program. Now let's review the components of our financial performance. Slide 8 shows the components of our net sales growth. Our volume decreased by 1.9% within the quarter for 2 key reasons: first, we saw customer trade inventory reductions in the U.S.; and second, our volume in Russia and China declined due to our continued conversion to value-added formats in these markets. Excluding these items, our volume was relatively flat. We experienced strong volume growth in Eggo, offset by volume softness in the U.K. Overall, we are seeing what we expected in terms of volume elasticity due to consumer price increases. The only exception is in the U.K., where we have seen more elasticity in cereal and some softness in our snacks business. Price and mix contributed 5 points of growth in line with our expectations. Currency contributed 2 points of growth for the quarter. So overall, our third quarter sales performance is consistent with our previous full-year outlook for both volume and internal net sales. Slide 9 shows our gross profit and gross margin performance. Reported gross profit dollars were $1.3 billion, down from 2010. Internal gross profit dollars declined 3% in the quarter. Our inflationary cost pressures peaked in the third quarter at 11%, higher than we had anticipated. Commodities, energy and fuel costs were key contributors to inflation. And we invested in our supply chain infrastructure. These items contributed to the decline in our reported gross profit margin, which contracted 270 basis points for the quarter to 40.7%. In the third quarter, we made incremental investments in our supply chain infrastructure across our U.S. network. These investments resulted in onetime costs, increased logistics costs and reduced operating leverage, while some production lines were down for refurbishment, and accounted for approximately 1/2 the decline in gross margin. One example of our increased investment in supply chain was the actions we took at our Augusta plant. We reduced the volume in the facility as we made significant improvements. This resulted in lost volume absorption, asset write-offs and higher labor costs as we renovated this facility. We also took the lessons learned and are applying them across our network. While we are fully hedged for commodities for 2011, we now expect cost pressures to be approximately 9%, up 1 point from our previous estimate of nearly 8%. Full-year gross margin is now expected to be down a little more than 100 basis points. This includes the incremental supply chain investments in both the third quarter and fourth quarters. These investments are the primary drivers of a change in both cost pressures and gross margin from our second quarter update. Now let's turn to Slide 10 to review brand building. Our third quarter brand building as a percent to net sales was the highest quarter on a year-to-date basis. Our brand building is down 9% year-over-year for the quarter, but this is due to our investments being more back-end weighted last year and we're lapping the highest quarter as a percent to net sales in Q3 2010. Brand building is up 1% year-to-date, and we expect brand building to be up slightly for the year. As we look to 2012, we intend to invest more in brand building to help fuel our strong commercial plans and improve momentum. Internal operating profit declined 16% for the quarter, primarily driven by the peak in input inflation, investments in our supply chain and the year-over-year incentive compensation costs I discussed earlier. North America internal operating profit declined 13% in the quarter, driven by these 3 items and despite contributions from strong price improvements. Europe's internal operating profit declined 21% due to the continued difficult operating environment in the U.K. While we have taken prices up across the region, our price increases have not fully covered the impact from higher cost pressures this year, which increased nearly 13% in just a quarter. In Latin America, internal operating profit jumped 19% for the quarter, driven by strong sales growth and including a double-digit increase in brand building investment. In Asia Pacific, our internal operating profit decreased 14%. While we saw operating profit growth across most of our markets in Asia, our business in Australia declined as we work through a customer trading issue. Now let's turn to Slide 12 to discuss cash flow. Our year-to-date cash flow was $877 million, $50 million higher than last year. We now expect cash flow for the full year to be at the low end of our guidance range of $1.1 billion to $1.2 billion, as a result of a revised outlook for operating profit. Our capital spending continues to be in the range of 4% to 5% of net sales. Year-to-date, we have purchased approximately $690 million in shares, and we continue to expect to reduce average shares outstanding by 3% to 4% for the year. Now let's turn to our 2011 full-year outlook. We continue to expect net sales to grow at approximately 4% to 5%, driven by our price and mix visibility. Our volume for the year is still expected to be approximately flat. As I mentioned earlier, we now expect cost pressures to be approximately 9%. This increase is driven primarily by the additional supply chain investments occurring over the second half of the year. These investments have contributed approximately 1 point to our cost pressures in the year. Our estimate of productivity savings remains at approximately 4%. And while I typically would not comment on upfront costs, we still expect approximately $0.12, which now includes onetime expenses associated with capital projects across our supply chain network. Gross margin is expected to decline by a little more than 100 basis points versus last year. And we now expect internal operating profit to be down 2% to 4% based on our increased supply chain investments. Consistent with the revised outlook for operating profit, we expect currency neutral earnings per share to be approximately flat. We still expect share repurchases to provide a 3% to 4% improvement to earnings per share, and our tax rate is still expected to be approximately 29%. Our latest estimate of the benefit from currency is approximately $0.08 per share. And this suggests reported earnings per share in the range of $3.35 to $3.41. Now let's discuss our outlook for 2012. As John mentioned, we plan to make a number of investments across our business in 2012. We expect to make investments in our supply chain similar to those executed over the back half of 2011. These investments may be flat to up slightly due to new initiatives, as well as the full-year impact of investments made in 2011. The anticipated cost impact of our SAP reimplementation is in the range of $20 million to $30 million. We expect to incur the costs for the implementation in 2012, but will not begin to recognize the benefits until 2013. And we plan to step up our brand building investment at a rate equal to or greater than sales growth to support our strong innovation pipeline and great commercial plans. As we turn to our broader outlook for 2012, we are continuing on the path to rebuild our momentum and are focused on the long-term health of the business. Reflecting our confidence, we expect another year of internal net sales growth above our long-term targets. Specifically, we expect internal net sales growth to be in the range of 4% to 5%, driven by our innovation pipeline for 2012, which is stronger than 2011, as well as improvements in price and mix. We expect our operating profit to be flat to up slightly as we continue to invest in supply chain, reimplement SAP and increase our brand building. Consequently, our outlook for currency neutral earnings per share is for growth of 2% to 4%. We expect to continue to pursue aggressively our policy of returning cash to shareholders via the dividend and our multi-year share repurchase authorization. Now, let me turn it over to John to discuss our North America and international businesses. John A. Bryant: Thanks, Ron. Before we discuss the individual businesses, I'd like to provide an update on our innovation performance and upcoming launches on Slide 16. We have an outstanding innovation program in 2011 and an even stronger broad-based program coming out in 2012. We expect to exceed our $800 million innovation sales target for 2011. We are seeing great successes from products across our categories, like Special K Cracker Chips, Crunchy Nut cereal and Eggo Thick & Fluffy waffles. For 2012, we expect nearly $900 million in innovation, driven by proven ideas such as Krave cereal in the U.S. and expansion of our Special K Cracker Chips line. We also expect our rate of innovation to increase across our international business. On the slide, you will see some of the new products we have scheduled to launch in the second half of 2011 and the beginning of 2012. Turning to Slide 17, you'll see our top line results for North America. Internal net sales grew 4% in the third quarter and were up 5% year-to-date. The third quarter net sales increase of 4% was driven by growth in Retail Snacks and our Frozen and Specialty Channel. Slide 18 walks you through details of North America Retail Cereal. We believe our underlying consumption growth in the U.S. across all channels in the quarter was approximately 5%, in line with Nielsen data for measured channels. The difference between flat shipments and 5% consumption growth is primarily trade inventory related. We experienced market share growth of 1 point in measured channels in the quarter and achieved strong growth in non-measured channels. We experienced a double-digit consumption growth in the drug and dollar channels, which were up in category share 8 points and 2.6 points, respectively. Category trends improved within the quarter, driven by strong price realization. The average price per pound in the category has increased over 6% in the quarter and 4% year-to-date. This was driven by improvement in both shelf prices and promoted price points. Our advertising performance continues to be strong, with programs such as our Frosted Flakes father and son football advertising campaign. We also executed a highly successful in and out of chocolate Zucaritas, with bilingual packaging, leveraging Hispanic consumer appeal. We demonstrated strong share growth from our innovation. Our recently-launched Crunchy Nut brand is at a 0.6 market share, while Special K Oats & Honey achieved a 0.3 market share in measured channels. Looking forward to 2012, we're also very excited about our upcoming launch of the Krave brand, which has demonstrated strong success in Europe. Turning to Retail Snacks, we had another solid quarter with 3% internal net sales growth, driven by growth in crackers, cookies and wholesome snacks. However, similar to cereal, Pop-Tarts experienced a trade inventory decline, which depressed the North America Retail Snacks net sales by approximately 1%. We are pleased by our third quarter consumption and share performance, with broad-based consumption growth and share gains. Third quarter cracker internal net sales grew by 7% and gained 0.8 share points in measured channels, driven by the success of Special K Cracker Chips and growth in Cheez-It. Special K Cracker Chips is shaping us as one of our most successful launches ever. We are planning to launch 2 new SKUs in January to help build on this success. We continue to see improving trends in our cookie growth, with the strength of the Keebler master brand initiative as we discussed during the second quarter call. While our Keebler brand is gaining share, we did see some softness in some peripheral brands, and so our total share is down slightly year-on-year. Our wholesome snacks net sales grew approximately 3% in the quarter on top of a strong 7% comparison, driven by double-digit growth in Special K Fruit Crisps and FiberPlus bars. Kellogg share is relatively flat, but we saw a strong performance from Special K, FiberPlus and Keebler granola bars. In January, we'll be introducing 2 new SKUs of Specialty K granola bars with fiber and protein. Pop-Tarts net sales declined 3%, driven primarily by trade inventory. But it's important to note that consumption was up 6% in the quarter. Turning to Page 20, our Frozen and Specialty business posted strong 12% growth in the third quarter, driven by growth in our Frozen Foods business. Our Eggo business posted internal net sales growth for the quarter of over 25%, driven by strong innovation and brand building. And our share of the waffle category is back to all-time highs. We continue to launch new innovation. In January, we are launching 6 new items, including an away-from-the-table waffle called wafflers, a natural ingredient waffle called simply Eggo and an Eggo protein waffle to name a few. The veggie category remains strong, growing at a healthy 5% consumption in measured channels. Our internal net sales also posted mid single-digit growth within the quarter, driven by Morningstar Farms. We are launching new items in January, including MorningStar Farms veggie meatballs and veggie hotdogs. Our Retail Frozen Kashi business, internal net sales grew double digits within the quarter. In January, Kashi will introduce steamed meals with 4 new flavors. Our Foodservice business grew approximately 6% within the quarter. Turning to Slide 21 and our international business, we posted 2% internal net sales growth, driven by strong top line growth in Latin America and growth in Asia Pacific. This helped offset Europe's 2% internal net sales decline. We are disappointed by our results in Europe in the third quarter. We essentially have 3 different regions in Europe: the U.K., Continental Europe and Russia. Russia performed in line with expectations, with modest top line growth despite anticipated lower volumes as we continue to move from a bulk to package format. We continue to see positive trends on the continent in Europe. Our internal net sales in France, Spain and Italy all grew mid single digits in the quarter. However, the U.K. continues to be a difficult operating environment, a tough economy, combined with a highly competitive retail landscape. As a result, our cereal consumption was down 3% in the third quarter. To address the continued challenges, we are accelerating our rate of innovation in the fourth quarter and across 2012. In the fourth quarter of 2011, we are launching 2 flavors of a new kids brand similar to Mini-Wheats in the U.S. called Mini Max, which is centered around the U.S. full and focused positioning. We are also launching an all bran, Golden Crunch, and a Krave choose-your-chocolate campaign. Snacks in the U.K. has had a very difficult year. We have seen aggressive new entrants into the category, which has adversely impacted our business. Snacks is inherently an innovation-driven category, and we've not had the necessary level of innovation. However, as we go into 2012, we have a much stronger innovation plan. Kellogg Latin America posted internal net sales growth of 9% in the third quarter, with double-digit gains in markets such as Venezuela, Mexico and Colombia. Strong price realization helped offset high cost inflation and funded a double-digit increase in brand building. We ramped up advertising, promotion and innovation activity. Notable in the quarter was the launch of Krave cereal in Mexico, continued support behind Special K and consumer promotions in several markets. In Asia Pacific, third quarter internal net sales growth of 2% was driven by double-digit growth in Korea, South Africa and India. Our Australian business experienced a slight decline due to a recent customer issue. In summary, we are committed to the long-term health of our business. We are making progress in regaining our momentum in 2011 and remain on track for the long term. As we go into 2012, we have exciting commercial plans, expect to continue to drive sales at a 4% to 5% growth rate above our long-term growth goal. The required reinvestments will keep profit and EPS growth below our long-term goals for 2012. We remain committed to running the business for the long term. I'd like to thank our 30,000 Kellogg employees for their dedication and hard work, and I'd like to open up the line for questions.

[Operator Instructions] Our first question comes from the line of Robert Moskow of Crédit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: I hate to ask this question, but I think most people recognize that the year wasn't coming in according to plan. But none of us expected a reduction in guidance to this degree. And one of the reasons was, it felt like there was this big cushion on executive compensation, up $100 million in the third quarter. Given that you're not hitting your targets, was there any discussion about whether executive comp should be up as much as it is this year? John A. Bryant: I think the way, Rob, that the executive compensation works is, last year, we basically zeroed out our bonus program. And so I'm not sure I'd describe it as a cushion so much as a headwind coming into 2011. As we've gone through this year, we are reducing our guidance slightly for the year. And that will have an adverse impact to our executive compensation programs, but not to the degree of zeroing them amount. So it remains a headwind. Robert Moskow - Crédit Suisse AG, Research Division: Okay, John. But is this a rebasing to a normal level of executive comp, up $100 million? Or is it rebasing to maybe a little bit below a normal comp? John A. Bryant: Well, we -- again, last year, we zeroed out the executive comp -- the total company bonus program. And this year, we reset it back to a 100% payout at target. That's what we did. So that's the extent of the adjustment for this year. Robert Moskow - Crédit Suisse AG, Research Division: Okay. And then one last question on -- K-LEAN, the program that you had in years past was a productivity program, a cost efficiency program. And now it seems like there's more than expected investment necessary in the supply chain. John, in the beginning of the year, if you rebased earnings, and everyone thought it was the right idea, do you feel again like the K-LEAN program may be -- hurt the assets more than it helped? And do you feel now you have the right level of investment that you need to put in? John A. Bryant: Rob, I think it's a very good question. And if you go back and say, "How did we get ourselves in a situation that we're in and the need to reinvest even more money back into our supply chain in the back half of the year?" I think there are 2 root causes if you go back over time. One was we did cut too many people from our facilities as part of the U.S. implementation of K-LEAN. I think our international implementation of K-LEAN was a little bit different. It was more employee engagement oriented, less headcount reduction oriented. And so I think a lot of the issues we have actually are in our U.S. network. As a result of that, we have added more people into the plants this year and are engaging that workforce more effectively going forward. So there's certainly -- I think K-LEAN cut too deep in the U.S. network. And we reversed direction on that, and added people back into those facilities. The second root cause driver is that we probably worked the assets a bit too hard. We're running a bit too tight on capacity. And so you saw us add additional waffle capacity earlier this year. And as a result of that, we've increased our capital spend both this year, the next few years at around 4% to 5% of sales. So I think we're making the right investments for the long term. I think we have gone back and identified the root causes of some of the issues that we have. And I think you can see us addressing those root causes as we go forward here.

And our next question comes from the line of Eric Katzman from Deutsche Bank. Eric R. Katzman - Deutsche Bank AG, Research Division: I guess, first question, I don't think it's appropriate, given that the stock is down 7% and so many people are frustrated out there to limit us to 1 question. But besides that, the U.K., your biggest competitor there just a couple of weeks ago talked about that market actually showing signs of recovery. And so how is it that you're finding yourself in like the exact opposite position? John A. Bryant: Well, I think the U.K -- I do believe the U.K. economy is a tough economy, and I think the U.K. consumer is under pressure. And if you look at the U.K., really 2 different issues in there. One is cereals, second is snacks. And our cereal consumption is down about 3%, which is obviously not where we want it to be. And we are increasing the rate of innovation in the U.K. with the launch of Mini Max here in the fourth quarter and additional innovation going to 2012. And the second issue is really our snacks business in the U.K. And we've had 2 new competitors enter that category in 2011. And the impact of that on our businesses as the category leader has been fairly significant. So I think there's some broader economic issues in the U.K., and there's some Kellogg company-specific issues within the snacks category. Eric R. Katzman - Deutsche Bank AG, Research Division: Okay. And then I guess getting back to Rob's question on the investment in the business. I guess we've always had this question about the upfront costs and what kind of return they were going to give. And, I mean, I guess it's now fair to say that CapEx has been way underspent. These upfront costs aren't really returning that much. And I guess I just -- Dave Mackay isn't there to speak to this. But John, you've been around. And so like -- like it seems like the more rocks that are turned over, there's more ugly stuff underneath. And it's amazing that a company like Kellogg with its reputation is actually going through this. So I guess I just -- I don't understand how things like underworking or overworking assets and underinvesting could have occurred. I mean, I just -- I guess -- I wonder, is there more information here? And why is it happening? And how come you didn't kind of recognize this, let's say, that CAGNY 9, 10 months ago when you've been around? John A. Bryant: I think, Eric, you come back again. There are 2 root causes here. One is, I think, we did cut too many people in our facilities in the U.S. network due to the lean initiative and we reversed course on that. And second is, we've worked assets a little bit harder than what we probably ought to have. And we've changed direction on that. If you think about what we've gone through this year, we have been aggressively looking across our supply chain from farm to fork or silo to spoon to try to move from a reactive situation over the last couple of years to proactively identifying and finding these issues. As you do that, we find things, find opportunities, and we address those opportunities. The second element is, as you're aware, we did receive a letter on our Augusta facility. We sat back and looked at Augusta, got to the root causes within the Augusta facility and took the lessons learned, fixed Augusta and took it across our broader network. That result is identifying further opportunities for us to invest in our supply chain. So I think what you're seeing here is our desire to make the right investments, to create the supply chain for the future. So we are addressing these issues in a proactive rather than reactive way. And we believe that by doing this, we're going to have a much stronger supply chain for the future that's more reliable, where we have better people safety, food safety, even productivity, because it all comes down to people engagement within these facilities.

And our next question comes from the line of Chris Growe from Stifel, Nicolaus. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Let me ask you first -- I guess what I'm still trying to understand is, do you have your arms around the cost required to fix the supply chain? And I guess if I could add to that, you were talking about $30 million of incremental investment in 2011 for supply chain. It looks like it was over $40 million in this quarter alone. So can you talk about -- I guess answer that broader question and then maybe give us a few more numbers, like what you expect for the year, maybe what could lap into next year, if you could help with that. Ronald L. Dissinger: Yes, Chris, this is Ron. In terms of the supply chain investments that we're making, remember, what we said was that our cost pressures move from approximately 8% up to 9%. So about 1 point, roughly $70 million. This $70 million is over the third and the fourth quarters. About 60% of it is falling in the third quarter and 40% is falling in the fourth quarter. And we did talk about an incremental $30 million previously when we did the second quarter conference call. So that was already embedded within the approximate 8% cost pressures that we discussed. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Okay. So the 9% does include that. And I guess the bigger question then John, do you feel like you've now quantified -- given what you've done, say, in Augusta and you spread it across the network, what you've done internationally, do you feel like there's any more surprises there? I thought we knew it last quarter. I guess it's what I'm getting at. How did that change again this quarter? John A. Bryant: I understand that, Chris. And we gave our best estimate on the second quarter conference call. And now we've gone through a significant amount of work going through the Augusta learnings and the review of our supply chain to identify opportunities. And we've invested an additional $70 million that we have partially absorbed within this year's outlook and had to unfortunately lower our guidance as a result. As we go into 2012, we expect to have some wraparound investment increase year-on-year because we have added people back into the plants this year, there will be additional wraparound impact from that. There will be some depreciation expense next year as well, because we put capital in. And obviously we'll have some flexibility to continue to invest in our supply chain in 2012 because we spent the $70 million this year. So we are working through this. We're making the best decisions that we can. We are addressing issues as they arise. I think what is worth recognizing here is that we're investing what is appropriate and not what we can afford to invest in the context of guidance. So it's not like we only invest in what we could afford to invest in 2011. We actually invested $70 million and dropped our guidance. So we're not leaving issues on the table to be addressed at some point in the future. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Are these costs also reflected in upfront costs? Or is that separate of what you're doing in supply chain? Ronald L. Dissinger: There are some onetime costs that are reflected in upfront costs, Chris. And then there is the $70 million that's just ongoing expense. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then my last question is just in relation to U.S. cereal inventory. And just to understand, was that a broad category decline in inventory with the certain retailers? And I also wonder, was the big increase in 2Q volume -- I know you had the recall. Was that -- did you find out in hindsight there was a little extra inventory shipped in, in 2Q? John A. Bryant: Chris, I think what's happening on the trade inventory is actually had more to do with the 2010 comparative than the 2011 results. So in 2010, we had the cereal recall, which had officially reduced inventory in the second quarter, and then it had to get reloaded in the third quarter. And so we're just lapping a shipment profile from last year that's a little unusual. If you look at our absolute level of trade inventory, the end of the third quarter is in line with our normal sort of trade inventory ranges. Chris, if I could just add to that also, on a year-to-date basis, actually, our cereal shipments and cereal consumption are actually pretty consistent with each other.

And our next question comes from the line of Jason English from Goldman Sachs. Jason English - Goldman Sachs Group Inc., Research Division: So a lot of incremental expense coming in next year, and this year, most of it is supply chain, which is a little bit surprising. I'm looking at some of the measure media data, and it shows your share of voice within the category, cereal category here in the U.S. slipping. And your share of voice or share of market now lagging both Mills and Post. And John, you talked about the non-advertising brand building cuts that happened between 2008 and 2010 at a recent conference. So my question is, why not more investment in brand building next year? Do you think you're going to be at a sustainable level by just growing maybe in line or slightly above the rate of sales? John A. Bryant: Well, I think our intention is to significantly increase brand building in 2012. That's our plan, that's our goal. That's why we're giving the guidance we have for 2012. So at this stage, I'm not quantifying by how much brand building will go up. But we're saying at or above the rate of sales growth. The other thing to remember when you look at that share of voice data is we've shifted a significant amount of money into digital, which is not really captured in the share-of-voice type metrics. Jason English - Goldman Sachs Group Inc., Research Division: Okay, that's helpful. And one more question. Another surprise for me at least was the rather robust rate of organic growth that you're forecasting for 2012. Can you give us a little more color on maybe the components or the source or the -- I'll just leave it there, the components or the source of that growth? John A. Bryant: We don't want to go into too much detail on 2012 guidance. This is just preliminary. But as we look out to 2012, we are seeing another year of inflation. And with that, we have taken additional pricing actions. And so a good portion of our 4% to 5% growth in 2010 will be price mix.

And our next question comes from the line of Andrew Lazar from Barclays Capital. Andrew Lazar - Barclays Capital, Research Division: John, does some of the comments around supply chain and some of the many actions that you're taking, do those ultimately change the way that Kellogg is able to generate productivity going forward? So you're still looking for -- I think Ron said approximately 4% of cost of goods and ongoing productivity this year. Is that the appropriate number going forward? Or should that be lower as a result of some of the things that you're doing? John A. Bryant: Andrew, I think if you look at the last couple of years, we've been closer to 5% productivity, which I think is an unsustainable and probably unhealthy level of productivity. If you look back over 10 years, we've sustained or been able to generate around 3% to 4% productivity. And we believe that's the appropriate long-term productivity guidance. Also, as we look in our facilities and we add people back into our facilities, improve the training and engagement of those employees, we believe that, in itself, will help us drive productivity over time. Andrew Lazar - Barclays Capital, Research Division: If you can talk about it, how are you hedged at this stage or how far forward into 2012? And at this stage, what would you expect your -- at least the commodity cost portion of your cost of goods to be up next year? Ronald L. Dissinger: Sure, Andrew. In terms of commodity inflation, we do expect inflation, as John had said next year. We expect commodity inflation to be slightly less than what we experienced in 2011. Right now, and it's still early obviously, but at this point in time, we're hedged at about 50% on our commodities for next year. For comparison, I think we were a little over 40% at this time last year. Andrew Lazar - Barclays Capital, Research Division: Okay. And then all the supply chain investment that you're doing, John, does that get you back to simply industry standard operating procedure? Or do you think that it gets you something beyond where the industry is or incremental capabilities that your peers either don't or won't have? John A. Bryant: Andrew, it's very hard for me to do a peer comparison. We're looking at what we need to do. We're confident that we're making the right decisions that will enable us to be more effective and productive in the future. I believe in some areas, we are ahead of the industry. But it's hard for me to make a broad statement as to where the industry is. Andrew Lazar - Barclays Capital, Research Division: And last thing is -- I guess I was a little surprised to see the overall corporate price sort of decelerate a bit from the second quarter, just because I know pricing has continued to build as you've talked about and you took some incremental pricing during the course of the quarter. So I'm just trying to get a sense of what drove that. And are we going to see that sort of reaccelerate going forward, given some of the new pricing that you took? Ronald L. Dissinger: Yes, actually, Andrew, the price mix benefit that we experienced in the third quarter is very consistent with what we expected and stronger than what we saw over the front half. We do expect it to accelerate as we move into the fourth quarter, and we have taken some additional pricing in October in a couple of key markets.

And our next question comes from the line of Alexia Howard from Sanford Bernstein. Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division: Can I ask about the state of the U.S. cereal category? I know your consumer takeaway data was pretty healthy this quarter. But as I see breakfast in general, there's a lot of things going on right now. We've got the rise of Greek yogurt. Frozen breakfast also seems to be picking up. How are you thinking about the future growth rate of U.S. cereals in the context of those changes? John A. Bryant: Well, I think the U.S. cereal category is a long-term growth category. There's lots of reasons to believe that category can continue to grow. There's an aging population trend here and older people eat more cereal than younger people. There's an opportunity to drive cereal consumption outside the breakfast occasion. And in some of the trends right now, like Greek yogurt, is actually -- can be complementary to cereal. And then people will add cereal to Greek yogurt. So I see it's a very versatile and long-term growth potential category. So in the third quarter, I think it was up 3%. So I am quite positive on the long-term potential of the category. Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division: And just as a quick follow-up, you have a new Head of Supply Chain, Steve Sterling, that joined from Pepsi, I guess, in April. Were there things that he saw in the supply chain system that led to the sort of immediate and urgent step-up in spending that we've seen this time? John A. Bryant: Well, I think we've been going through a process for a while now. I do believe that Steve has helped us, and as being part of this, helped drive this process as well. So clearly, he's taken on that leadership role within our supply chain. Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division: And there was nothing that he -- it was more the Augusta plant and the learnings from that, that led to the step-up, not what we saw in terms of the differences between Pepsi and the Kellogg? John A. Bryant: Yes, I believe we've been working down this path for a while now. And I think he's certainly helped us make some improvements. I think he's really been part of saying, "Hey, some of the people engagement practices are not what they could be." So some areas like that, he's been particularly active. But he's our new Head of Supply Chain for the company. He's driving the changes that we need to make as a company to be better long term.

And our next question comes from the line of Ed Aaron from RBC Capital Markets. Edward Aaron - RBC Capital Markets, LLC, Research Division: Great. Just to follow up on the supply chain, I guess I could understand the investments, but these are initiatives that I would think are pretty -- usually pretty well planned out in advance. So just to see the incremental spending show up at this magnitude in the quarter so fast is a pretty big surprise. Can you just kind of maybe address the planning process a little bit more just so that we can understand the surprise factor a little bit? John A. Bryant: I think if you go back again, we received the letter on Augusta, I think, in June. As we said, we've been going through farm-to-fork or silo-to-spoon process. As we identified opportunities going through the third quarter, we went after those opportunities. And we sort of finalized our plans for the year, sort of early October. That was the first time we had sort of full-year look as to where we were. But obviously, a lot of activities were underway across the third quarter. Edward Aaron - RBC Capital Markets, LLC, Research Division: And then just a real quick follow-up. Was there a negative mix effect in the quarter just with the cereal deroding [ph] in the U.S.? John A. Bryant: Actually, the third quarter was one of our best mix performances for over a year.

And our next question comes from the line of David Driscoll from Citi Investment Research. David Driscoll - Citigroup Inc, Research Division: I want to clarify a definition on something. So when you say the phrase supply chain, I think what's being embedded in this phrase is both the raw material cost inflation, and in addition to that, these increased costs related to the safety of the product itself. So Ron, am I correct on just what the definition is? Ronald L. Dissinger: As we talk about our cost pressures in relation to supply chain, absolutely. It includes the material components of our product, as well as the factory and operating costs and these increased investments. John A. Bryant: Dave, just to be clear, the additional $70 million of investment is not raw material related. That is investment in the 4 walls of our facilities. David Driscoll - Citigroup Inc, Research Division: Yes, I'm going there next. So I'm just trying to put some things together, but you got to make sure you have the definitions right. Okay. So Ron, in your prepared script, you said that revenues were coming in line with expectation. The constant currency guidance is reduced by $0.07 versus last quarter. But the supply chain is up $70 million, that 9% figure you referenced. Quick math here says that's about $0.13. So then the guidance is not fully reduced by the magnitude of the supply chain hit. What's coming in better? And then let me stop there and I'll have a follow-up. Ronald L. Dissinger: That's correct, David. So we have been able to absorb some of that increase within the context of our profit and loss statement. As I mentioned also, our brand building has come down a little bit, but we still expect it to be up year-over-year. David Driscoll - Citigroup Inc, Research Division: Okay. So then the follow-up then is -- I'm amazed I got everything right while on the call. So if I look at all of this and I say that from all of us on the outside, I find it relatively impossible to know exactly what you guys needed to do on the supply chain. And so this surprise here is not that the consumer is so much worse, it's not that the price increases are not being accepted, it is this internal company-specific issue on supply chain. I think the math says that, but do you guys agree to the qualitative statement? John A. Bryant: I agree with that, absolutely. I think our underlying business performance is strong, the innovation is working, we have broad-based sales and share growth, we are gaining momentum on the top line, we're investing for the long term. I think issue that we had in the third quarter and the year was really this reinvestment in supply chain components. David Driscoll - Citigroup Inc, Research Division: All right. Final question, all on this topic then is, in 2012, is the incremental increase to the supply chain x commodity inflation, did you -- if you did, I apologize, what's the quantification of this number that we need to think about in 2012? Is it the same magnitude or even higher from the $70 million you've called out? Ronald L. Dissinger: Yes, David, we said it would be consistent, perhaps up slightly. David Driscoll - Citigroup Inc, Research Division: Okay. So $70 million, $80 million, something like that, can't say. But in that ballpark, that's the headwind. And then that would be the principal factor in driving the below normal long-term guidance on the EPS front in terms of 2012 earnings growth. Is that correct? Ronald L. Dissinger: Well, there are a number of things that are impacting us in terms of our 2012. As we discussed, we talked about stepping up our brand building investment and also the SAP reimplementation. The supply chain impact year-over-year is not a significant change. John A. Bryant: David, the way I think about it is, early in the year, we said we had $30 million of additional supply chain investment. We've increased that by $70 million. So we're now at $100 million up year-on-year. As we going to 2012, we're basically saying we're going to hold that level of investment. That gives us the flexibility to reinvest in the supply chain as we need to. There will be some things that will impact us. We'll have year-on-year depreciation drag, and we'll have year-on-year impact from investments. But also, we have the flexibility to make additional investments in our supply chain if we need to within that guidance. The real reason that 2012 guidance is a little bit below -- was below our long-term aspiration is because we are looking to invest aggressively back in the brand building. David Driscoll - Citigroup Inc, Research Division: Final clarification. The SAP investment, is that over and above the normal upfront costs that you guys typically have? So if upfront costs are $0.12 this year, do I take this SAP? I think it's $30 million. And that's on top of 2012 upfront of, let's assume, it's $12 million to $14 million, like you guys normally are. Is that the right way to think about it? Ronald L. Dissinger: Yes, David, that's the right way to think about it.

And our next question comes from the line of David Palmer from UBS. David Palmer - UBS Investment Bank, Research Division: I just wanted to ask you a big picture question on emerging markets and also on Kashi. The emerging markets have been pretty good for some of these other food companies. It doesn't look like your emerging market businesses is -- it's tough to tease them out from some of your division numbers. But it doesn't look like they're really hitting above their weight lately for Kellogg. If I'm right in that supposition, why is that, do you think? John A. Bryant: Well, I think our emerging markets actually are doing pretty well and have potential to do even more. If you look at our emerging markets, really all of Latin America is in emerging markets in the Kellogg Company. I think we had a very strong quarter in Latin America. You go across Asia Pacific -- and really, Australia is bringing down the results of Asia. If you looked at Asia in isolation, we've got strong sales growth and profit growth, very strong growth in India, South Africa, Korea. So we're very happy there. And then you go across to Europe, and as we've said before, in some respects, while it sounds strange, Continental Europe is a little bit of an emerging cereal market. And we're seeing mid single-digit growth there. Russia and China, Russia and China both saw a little bit of volume decline in the quarter, which is what we anticipated. But we are making the right long-term progress in Russia. And as we said before in China, we're probably looking at taking a slightly different approach. And in that context, in terms of what we want to do as a company going forward, is to take the lessons learned from our Turkish joint venture and say there are opportunities for us to even more aggressively open up some emerging markets around the world by working with other companies in joint venture type situations. David Palmer - UBS Investment Bank, Research Division: And just briefly on Kashi, that's slowed in the last few months or so. And we've seen so many brands that are high, index high to women and to higher income women, in particular, that do pretty well in this environment. In Kashi, I would think would be that. Why isn't Kashi more of an engine these days? John A. Bryant: Well, I think Kashi has an opportunity to get back to be more of an engine. I think we need to, again, pick up the rate of innovation on the Kashi business. And we're driving very strong plans for 2012. I think we saw Kashi actually did pretty well in the first half. It did have a tougher third quarter, and we're hoping to have a stronger fourth quarter and get back on track.

Sorry, Karen, we have time for 1 more question, please.

Our final question comes from the line of Diane Geissler from CLSA. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: I just wanted to ask about your long-term growth targets. If we assume commodities sort of level off some time in 2012 and your top line returns to sort of a more low single-digit range, maybe 1/2 price mix, 1/2 volume, and maybe your productivity isn't a 5% benefit, maybe it's more like a 4%, are you -- and you got a couple of points for share repurchase. Is that -- should we be thinking sort of 7% to 8% long-term EPS growth? Or do you think it will be in the more 8% to 10% range? Ronald L. Dissinger: Our long-term growth targets for earnings per share will be in the 7% to 9% range, and we fully expect we'll be well within that as we move back with them. Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division: Okay. So no change due to the increased investment in supply chain and... Ronald L. Dissinger: No. John A. Bryant: All right, everybody. Thanks for joining us on the call. We look forward to seeing or speaking to you over the next few days.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.