Joel Wittenberg - Investor Relations David Mackay – President, Chief Executive Officer John Bryant - Chief Financial Officer

David Driscoll - Citi Chris Growe - Stifel Nicolaus Jonathan Feeney - Wachovia Alexia Howard - Sanford Bernstein Ken Zaslow - BMO Capital Markets Vincent Andrews - Morgan Stanley Robert Moskow - Credit Suisse Eric Katzman - Deutsche Bank Andrew Lazar - Lehman Brothers David Palmer – UBS

Good morning and welcome to the Kellogg Company 2008 first quarter earnings call. (Operator Instructions) At this time I would like to turn the call over to Mr. Joel Wittenberg, Kellogg Company Vice President of Investor Relations.

Good morning, everyone and thank you for joining us for a review of our first quarter results and for some discussion regarding our strategy and outlook. With me here in Battle Creek are David Mackay, President and CEO; John Bryant, CFO; and Gary Pilnick, General Counsel. We must point out that certain statements made 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 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 our second slide of this presentation as well as to our public SEC filings. A replay of today’s conference call will be available by phone through Monday evening by dialing 888-203-1112 in the U.S. and 719-457-0820 from international locations. The passcode for both numbers is #2412355 and the call will also be available by webcast which will be archived for 90 days. Now let me turn it over to David.

Thank you, Joel and good morning, everyone. We’re pleased to announce strong first quarter results with solid, broad-based performance across all our regions. Last year’s business momentum continued into the first quarter and our reported sales increased 10% and 5% on an internal basis. We achieved our goal of mid single-digit operation profit growth, while absorbing significantly more cost inflation versus last year. As we said on our fourth quarter conference call, first half earnings comparisons would be difficult and you can see why we are pleased to have achieved earning per share of $0.81, which is slightly above last year’s very strong first quarter when we had the benefit of a significantly lower tax rate. For the remainder of this year we now anticipate incremental commodity, energy, fuel and benefit costs of approximately $0.80 per share versus our year end estimate of more than $0.65. However, despite these inflation headwinds we remain confident we will achieve our full year guidance of mid single-digit sales and operating profit growth and earnings per share of between $2.92 to $2.97. We will invest back into our brands to achieve sustainable and dependable growth and we continue to return cash to our shareholders. We took advantage of our lower share price in the first quarter to complete our full year share repurchases at very attractive levels and we are pleased to advise you that our board of directors plans to increase the dividend by 10% starting in the third quarter. Now I’d like to turn it over to John to take you through the financials.

Thanks, David and good morning, everyone. Reported sales increased by a strong 10% in the first quarter and internal sales growth, which excludes the effect of foreign exchange and our recent acquisitions, was 5%, building on last year’s strong 7% growth. Reported operating profit rose by 9% and internal growth was 6%. As David mentioned, we achieved this despite significantly higher commodity prices versus last year. We also continue to identify upfront investment opportunities. This quarter we continued to implement our European restructuring program and we completed a new program in Latin America. Upfront charges for these investments were about $0.04 per share versus last year’s $0.01. The higher upfront investments reduced our internal operating profit growth by about 3 points to 6%. Our first quarter earnings per share rose $0.01 to $0.81 compared to last year’s strong $0.80 performance. You may remember that last year’s results were driven by a lower tax rate due to some discrete items. Cash flow was $181 million for the quarter and we still anticipate full year cash flow to be between $1 billion and $1.075 billion. Let’s look at the results in more detail starting on slide 5. Slide 5 shows our net sales growth. For the first quarter net sales growth was a strong 10%. Internal sales growth was 5.4%. Tonnage and price mix were driven by our strong advertising and innovation, as well as our recent price increases. Tonnage rose 1% and price mix was a solid 4.4%. Of our 4.4% price mix, 2.7% was from price, roughly twice what we saw across 2007. Foreign exchange had a 3.2% impact on sales. As we indicated at CAGNY our acquisitions of United Bakers in Russia and Bear Naked and Gardenburger in the US had a positive impact on sales. In fact, during the first quarter they added 1.4% to sales. Let’s turn to slide 6 to discuss our advertising spending. As you can see, we continue to increase our investment in advertising with first quarter growth of mid single-digits on top of last year’s double-digit first quarter growth and ahead of our long-term sales growth target. We remain committed to both advertising and promotions to help drive sustainable and dependable growth. While spending more in absolute terms, we are also driving a series of initiatives across brand building, further improving the efficiency and effectiveness of our investments. Let’s turn to slide 7 to discuss gross profit. Our gross margin for the quarter declined by 80 basis points to 41.9%. This was impacted by our recent acquisitions which lowered gross margin by 40 basis points and by the quarter’s upfront charges which reduced our gross profit margin by another 40 basis points. Our focus, however, is on gross profit dollars as this is what allows us to continue to grow our investments in advertising and innovation. Our gross profit for the quarter was $1.4 billion, a $100 million or 8% increase over the first quarter of last year. For the full year, we anticipate the gross profit dollars will grow at mid single-digits. Now let’s turn to slide 8 and a discussion of operating profit by region. Total operating profit rose by 6%, as a result of the quarter’s strong sales. This was impacted by higher commodity inflation, as well as higher investments in advertising and upfront charges. This quarter’s higher upfront charges reduced our operating profit growth by 3%. Our North American business turned in a strong quarter with internal operating profit rising by 10%, driven by 5% sales growth. Our European internal operating profit declined slightly versus last year. This was a result of higher upfront investments this year, which lowered our operating profit growth by more than 3 points. We are very pleased with this performance when compared to last year’s 18% first quarter growth. In Latin America, operating profit declined by almost 7%. However, about half of our fist quarter’s upfront charges were taken in Latin America, reducing operating profit by almost 22 points. Finally in Asia Pacific internal operating profit rose by almost 4% on top of last year’s 4% growth. Let’s turn to slide 9 to review cash flow. You can see the cash flow for the first quarter was a strong $181 million, but below last year’s unusually high $289 million. We continue to drive underlying improvement in core working capital as a percent of sales. For the full year we continued to expect cash flow of between $1 billion and $1.075 billion. Now let’s turn to page 10 to discuss our full year outlook. Our expectation for the full year incremental commodity, energy, fuel and benefits inflation has grown from more than $0.65 per share last quarter to approximately $0.80. The first quarter’s results included about $0.15 per share of the full year’s expectation, leaving about $0.65 of incremental inflation that we expect to be realized for the remainder of the year. We are confident that we will offset the higher inflation estimate with our underlying business momentum, strong cost and mix programs, our solid first quarter performance and fewer shares outstanding. We now expect gross margin will be down approximately 150 basis points year over year for the full year, reflecting our increased impact from commodities. The expected decline for the full year is due to several factors: First, gross margin will be impacted by about 60 basis points due to our recent acquisitions. Secondly, higher levels of upfront costs recorded in cost of goods this year will have a 30 basis point impact. Finally, we had also expected productivity initiatives and our recent pricing to more than offset commodity inflation. However, the increase in the expected inflation obviously resulted in some additional margin pressure. We remain confident in our business model. Despite even higher cost pressures and volatility we have not changed our sales, operating profit and earnings guidance and still expect to achieve a full year mid single-digit sales and operating profit growth as well as earnings per share of $2.92 to $2.97. We still anticipate total upfront costs of about $0.14 per share in 2008 consistent with our historical levels. In addition, as we indicated, we are continuing to evaluate our options for the 53rd week’s profits. We currently expect about half of the benefit to be invested in new acquisitions with the remaining portion yet to be determined. Below the operating profit line we expect net interest expense to be unchanged compared with the last year and our full year tax rate is still expected to be approximately 31%. So to summarize, despite the volatile cost environment we will continue to reinvest back into the business for sustainable and dependable growth. This is the right way to run the business for the long term. Now I’d like to turn it back over to David on slide 11.

Thanks, John. I am moving now into the business results. You can see that our sales growth was broad-based around the world despite the difficult economic environment. As we mentioned at CAGNY, our businesses generally perform well during recessionary periods and the long-term growth of the business will continue to be driven by our commitment to investing in great ideas and keeping consumers engaged and aware of our brands and their unique benefit. In addition, we’re aggressively taking actions across our global portfolio and stepping up our focus on cost-saving initiatives, productivity gains and SG&A optimization. Despite the difficult cost and economic environment, we remain confident in our ability to deliver. Now let’s turn to slide 12 which shows the internal growth posted by our North American businesses during the first quarter. We posted a solid 5% growth on top of last year’s strong 7% comp. Our growth was broad-based across all the business units. Let’s discuss each business unit in more detail, if we could start with slide 13. As you can see, this quarter’s 4% North American cereal sales growth builds on last year’s 4% growth. We continue to be pleased with the strength of our North American cereal business and are committed to its future success. For the first quarter, the category grew about 3% and we gained IRI share through solid innovation and growth in our core brand. In fact, our share grew to more than 35% this quarter driven by an increase in share performance and a 0.5 point increase due to our acquisition of Bear Naked. Both base and incremental sales growth was strong this quarter. We achieved solid price mix performance as a result of recent price increases and great innovation including Frosted Flakes Gold and All-Bran Strawberry Medley. In addition, our overall Special K line performed well behind the January Resolution Event and the introduction of Special K Cinnamon Pecan. As we announced last year, we are proactively reformulating some of the products marketed to children to meet our global nutrition criteria. We’re committed to delivering the same great taste consumers enjoy and expect from our brands and this effort will be accompanied by continued strong advertising and marketing programs and selective box size adjustments. Turning to Kashi, we posted another great quarter with double-digit sales increases. Recent innovations like GoLean Honey Almond Crunch continue to perform very well and we have more innovation in the pipeline. For the second quarter, we’ll run a trial event around our two new Kashi Granolas, and our new innovation includes Kashi U for adults and Honey Sunshine cereal for the entire family. Also, our Canadian business continued its solid performance with mid single-digit internal growth against tough 2007 comps. This performance was driven by innovations like Special K Satisfaction and Mini-Wheats Cinnamon Streusel as well as double-digit increases in our Kashi business. Let’s turn to slide 14 to discuss snacks. Snacks sales rose 4% in Q1 on top of last year’s very strong 11% comp. We’ve now completed the move of Kashi snacks and fruit snacks into the DSD system. As we mentioned previously, the move resulted in some anticipated sales disruption that affected the first quarter sales. However, now that the transition is behind us, we’re seeing a positive impact. For example, Kashi cookie sales are up sharply due to a 20 point increase in distribution. We are also seeing significant increases in distribution, quality merchandising and resulting sales for Kashi crackers and wholesome snacks. Obviously we continue to be positive about these moves and the state of our overall snacks business. If we turn to slide 15, we can see more detail on the quarter starting with our Pop-Tarts business which posted sales in line with last year. We continue to see good growth behind our core Pop-Tarts, however we are lapping last year’s Go-Tarts performance. Our cracker business posted double-digit sales growth in the first quarter resulting in another quarter of IRI reported share growth. Innovations performed well ahead of expectations with product like Cheez-It Duoz and Town House Flipsides pretzel crackers doing very well. Our cookie business achieved low single-digit sales growth during the first quarter in a tough competitive environment with strong performance from focused brands like Fudge Shoppe as well as on-the-go packs like Grips Variety Packs and Right Bites 100-calorie pack. We introduced our new Chips Deluxe and Pecan Sandies take-along packs during the first quarter and they are off to a good start. Our Wholesome Snacks business grew at mid single-digits against tough 2007 comps, driven by our Special K Bliss and Nutri-Grain innovations. During the quarter base sales rose as well. For the second half of the year, we have even more exciting snacks innovations including Special K Cinnamon Pecan bars, Sandies Diet Chocolate Cookies and White Cheddar Reduced Fat Cheez-Its. If you turn to slide 16 we can discuss our frozen and specialty performance. Frozen and specialty channels had a great quarter with sales rising 10% above last year’s 5% comp. Our frozen sales grew at double-digits driving share gains across the business. Eggo waffles, pancakes and french toast varieties achieved solid base and incremental sales growth. In addition, new innovations performed well including Eggo French Toast Waffles and our new Eggo Muffin Tops resulting in frozen breakfast IRI share gains of more than 1 point during the quarter. During the second half, we will introduce new Eggo Bake Shoppe Swirls. The Morningstar Farms veggie foods business also performed well. Innovation continues to be strong with breakfast bites and Asian Veggie burgers. Our Kashi All-Natural Frozen Entrees continue to perform ahead of our expectation. Over the past year, the success of our entrees and pizzas have led to double-digit IRI share gain. We will continue to expand the frozen Kashi business in the second half with the introduction of Kashi Handheld Sandwiches. In addition, our foodservice, convenience, and drug businesses achieved broad-based first quarter growth in these competitive channels. You can see on slide 17 that our international business posted another solid quarter with internal sales growth rising 6% above last year’s 5% growth. Sales growth was broad-based around the world. If we turn to slide 18, we can discuss that in further detail. In Europe, we achieved solid 5% internal sales growth on top of 6% growth last year. The strong performance was driven by growth in both cereal and snacks. We saw good growth from the UK, France, and Italy as well as the Mediterranean, Nordics, and Benelux regions. In the UK we achieved share gains behind our Special K Slimmer Jeans Challenge and the introduction of Special K Oats & Honey. In addition, our strong snacks performance resulted in share gains in the UK, France and Ireland. In Latin America, we posted 7% internal sales growth above last year’s strong 8% increase. We saw solid growth in Mexico behind our core brand. In addition, we saw good growth in Central America, the Caribbean and Brazil. Our Asia Pacific business unit posted solid 5% internal sales growth. In the very competitive Australian market, our cereal business grew, driven by our core brands and innovation like Coco Pops Chex and Special K Advantage. In Japan, we launched Special K Red Berries in cereal and snack bars and both are off to a good start. Our India business once again achieved double-digit growth as did our cereal business in South Africa. For the rest of 2008, we will continue to invest in advertising and innovation to drive further growth in these markets. We’re pleased with our broad-based growth across our business around the world. We executed on every level growing sales, operating profit and earnings per share despite the impact of higher inflation and a higher tax rate. Focusing on sustainable and dependable performance is even more important in the current economic environment of volatile energy and commodity markets. We remain confident in our ability to deliver our goals and we will continue to demonstrate an ability to manage through this tough environment. Our employees’ commitment to the successful Kellogg business model is steadfast. This year’s innovation is strong and we’ll continue to invest in the business through strong advertising. We feel well positioned to deliver another year of sustainable, dependable growth. With that I’d like to open it up for questions.

Your first question comes from David Driscoll - Citi. David Driscoll - Citi: When you talked about the guidance and you talked about the increase to your commodity costs, the message that I got with John’s comment was gross margin is going down because of the incremental commodity hit. It sounds to me like you are not planning additional price increases given the incremental increase in commodity costs thus the gross margin guidance. When we put it all together, does this reduce some of the -- and I don’t know a better word here -- some of the cushion in the guidance that you previously had and that’s how you are maintaining the number today? The second question just relates on private label pressures, if you would make a comment on that?

Firstly we don’t comment on future pricing and I think everyone has seen the volatility in commodities and we’ve reflected that in our guidance and feel very confident about the year. On your second question relating to the private label, we have seen no consistent trends in the categories in which we compete. Our business was very strong across the board in the first quarter in every category and every geography around the world. As we said in the last conference call, we’ve executed pricing in almost every market and every category in which we compete. John, do you want to talk about margin a little?

Just going back, David, to your comment on the guidance, the way I think about it is the $0.15 of commodity increase, we’re probably covering about $0.05 of that from things like lower shares outstanding and foreign exchange; good news versus where we were probably three or four months ago. The remaining $0.10 we are going to cover through underlying business momentum, which includes a range of activities such as cost-saving initiatives, margin improvements and pricing.

Your next question comes from Chris Growe - Stifel Nicolaus. Chris Growe - Stifel Nicolaus: On the price realization, if you’d start with how well hedged you are on your input cost inflation for the year? Related to that, it’s just that you saw this unusual spike in the first quarter and you just can’t keep up. I know you don’t want to concentrate on future pricing trends, but there are a lot of companies -- including one this morning -- that talked about having to take another round of pricing. If you could comment on that, that would be great. Thank you.

I think on the commodities there while we had an increase in the first quarter we did say in the call that there was about $0.15 and that means you’ve got $0.65 left to go, so we’re going to see more through the balance of the year. John just explained how we’re covering that with shares outstanding, FX, and just productivity and momentum of the business. On price mix, we’re up 4.4%, 2.7% of that came from price which was twice what we saw in the 2007 year so we are seeing very strong price come through. We feel as we said on the call, very confident about the year. Commodities remain volatile. We think we are over 80% hedged. There clearly are some things you can’t hedge, so we feel in pretty good shape for the year, Chris.

Your next question comes from Jonathan Feeney - Wachovia. Jonathan Feeney - Wachovia: John, you mentioned in your comments the movement of Kashi cookies to the DSD network and it seems like there are a number of moves you’ve made like that over the past few years which clearly have a positive impact in terms of operating profit per unit. How much more is left as far as optimizing that DSD network? Can you give us a sense of are there other products in your portfolio that you could move through DSD at a higher profit per unit like Kashi? What inning are you in in terms of optimizing that if we look over the past five years of improving that network?

I think all I’d say is that our DSD team has done just an outstanding job over the last three, four years in optimizing across all of the levers you can pull in DSD. The recent move came on top of our insourcing the independent routes that we talked about last year. That was a big initiative and then to bring Kashi and fruit snacks onto DSD, to change all of the routes, to go through all of that reconfiguration, a lot of work and effort. They did a great job and I mentioned on the call the 20-point increase we saw in Kashi cookies. We also saw 9 points of incremental distribution on crackers and 6 points of incremental distribution on the Kashi bars. If you look at the IRI data against those three Kashi cookies, crackers and bars they’re up anywhere between 26% or 80% in the first quarter, so the results are starting to come through. I think if you were speaking to that team, they’d tell you that they can continue to improve and they’re always looking for opportunities to optimize what they do. We’re probably just going to absorb and focus on all of the work we’ve done in the last six months this year and then any new initiatives we’ll communicate as we go forward.

Your next question comes from Alexia Howard - Sanford Bernstein. Alexia Howard - Sanford Bernstein: A question on advertising spending, it seems as though that was up a bit less than sales growth this quarter. How do you see that developing going forward as we go through the rest of the year and how is that linked to the timing of new product launches during 2008?

I think looking at the year we’re targeting to be up with sales around mid single-digit growth as we’ve told you before. When you look at our budgeted spend over $1 billion we’d always anticipate to be within a point or two of that as far as the year goes. The first quarter the only thing of major significance there was we’re still up mid single-digits on very strong double-digit growth last year. If you remember we launched the Special K bars and protein beverage last year so we were lapping that. That had a couple of points impact on advertising in the first quarter versus year ago. So we still have a very strong commitment to advertising and investing behind our brands and talking to consumers. We’ve also said and importantly when you’re spending $1 billion that we are looking at any ways that we can drive our efficiency gains and effectiveness in all that we do so we can optimize the returns that we get on that investment and there are some programs that are going on during the course of this year that we feel very good about. Alexia Howard - Sanford Bernstein: The timing of the new product launches this year are we on pace? It’s not going to speed up or slowdown as we go forward?

No it is fairly consistent, very steady through the first quarter and we’ll see more around mid-year and we feel very good about our innovations, very strong. It’ll be strongly supported, so not a dramatic change but a very strong slate of innovation for 2008.

Your next question comes from Ken Zaslow - BMO Capital Markets. Ken Zaslow - BMO Capital Markets: The Kashi brand you talked about it in little pieces of it here and there. Can you just give us a feeling, because it seems like that is one brand that continues to be able to expand beyond its current categories. Can you give us a view on what other categories you think it can go to, how large you think the brand can be, and do you think it’ll expand geographically?

Just on Kashi we did say I think at CAGNY that over the last five, six years we’ve seen 40% compound annual growth in that brand. It’s been a very strong growing brand for us. Not sure we’ve actually given exact size but it’s over $0.5 billion as a brand, well over and it continues to grow very strongly. We’re cognizant that we’ve moved into some new categories. Actually, it’s interesting that if you look at the frozen entrees and pizzas that those attracted new users into the Kashi franchise. Everything we do with that brand has to be consistent with its heritage. It’s typically always seven whole grains, more natural, organic and so the opportunities have to be consistent with the overall essence of the brand. We’ve got a lot on our plate. We are very happy with it. We’ll keep driving that and anything new, we’ll advise as we go forward. Ken Zaslow - BMO Capital Markets: Can it go international?

It’s gone into Canada and it’s starting to really pick up momentum in Canada, very good performance through the first quarter and we believe it will continue to grow strongly there. As far as the whole natural and organic opportunities, we’re exploring a variety of options there and when and if we conclude those, we’ll tell you about them.

Your next question comes from Vincent Andrews - Morgan Stanley. Vincent Andrews - Morgan Stanley: I understand that to-date you haven’t seen any negative impact from consumers trading down to private label across the business, but there’s obviously a lot of pricing still yet to go through across the industry through the balance of the year. At what point do you think you can declare victory that the consumer isn’t going to materially change his or her purchasing behavior? Or is that not a realistic assumption that there won’t be some sort of disruption at some point in time from all the pricing going through?

It’s a hard one to answer. I think all we’d say, Vincent, is we’ve got strong brands. We have heavy investments in consumer engagement. As I said, we’ve seen no consistent trends in private label categories in which we compete; some are down, some are flat, some are up. Our products mix was very strong through the first quarter. The pricing was actually reflected in market for more than half of the quarter and in some areas and some categories for the whole quarter. We are seeing broad-based pricing across all players, both branded and non-branded. Given the economic environment in which we’re in, could you see some trading down? Possibly, but we believe our business model and focus on driving our brands and engaging consumers will keep our business healthy and growing. Vincent Andrews - Morgan Stanley: As a follow-up to that, Safeway, you’ve probably heard the comments last week that in their particular stores they were seeing substantial trade down, almost 6:1 in the center of the store versus branded sales growth. What do you think when you hear something like that? Do you think it’s just isolated to perhaps they’re overweight in California which one could argue is kind of the epicenter of the real estate bubble, but how do you respond to retailers speaking like that?

When we’ve typically looked at private label and where it has grown and why, the trends are very, very similar quarter to quarter and year to year. It’s typically two to four retailers in a given quarter that are driving the growth in private label and that’s normally because they’ve taken a position that they want to expand or focus on it. When that happens that normally goes on for two to three quarters. They reach whatever their target is and then they start to ease back and then a couple of other retailers might pick it up. We have not seen, as we track back through history, we’ve looked at the last two or three recessionary periods, private label has done well in a couple and not so well in another. We’ve done pretty consistently well. Very hard to answer what will happen this year, but we feel very good about our business.

Your next question comes from Robert Moskow - Credit Suisse. Robert Moskow - Credit Suisse: Your leading competitor in biscuits specifically said that they would have to reduce their trade spending in that category. It also looks like they caught on wheat. Have you changed any of your promoted price points already in biscuits? Is that part of your strategy? Have you seen any kind of unusual benefit this quarter in what the trade was willing to let you merchandize in biscuits perhaps at the expense of competition because of the cuts that they have made in their trade spending?

Well unfortunately we didn’t see any dramatic easing off in the competitive nature of the category. We took pricing at the end of last year, early this year, our promoted price points did go up. We grew slightly in cookies, even though on IRI data we lost a little bit of share. Crackers were up double-digits, very strong performance. Again for us we priced as we felt we had to. We drove the business hard with some very positive innovation, Cheez-It Duoz and Flipsides pretzel crackers did very, very well. So I think it was a competitive category through the first quarter and we performed pretty well. Robert Moskow - Credit Suisse: Do you think that they are doing anything dramatically different from what you are doing in terms of your price strategy or your promoted price strategy?

Nothing that I have observed.

Your next question comes from Ken Goldman - Bear Stearns. Ken Goldman - Bear Stearns: So it seems like a strong quarter across geographies, categories and brands; even Australia is doing a little better. Dave, I am wondering which specific brands in your opinion are performing below your expectation and what will it take, whether it’s innovation marketing, maybe even more rational competition to drive their growth to their potential?

That’s a tough one as you get into specific brands. We talked about categories. I mean, I think the broad-based nature of our growth was across every category in which we compete and almost every geography. So while some things did better in a given quarter than others, brands and/or segments of the business, it’s not like anything is performing in such a poor fashion that I would call it out, Ken. It is unusual for us to see the consistency and breadth of performance that we saw in the first quarter; it’s great and I think it’s a reflection of the strength of our brands and commitment to drive consumer interest in the categories across everything we do, but there wouldn’t be anything that I’d particularly single out.

Your next question comes from Eric Katzman - Deutsche Bank. Eric Katzman - Deutsche Bank: Just to clarify something, John. The gross margin in the first quarter year-over-year ex acquisition and ex upfront costs, you said gross margins were actually flat?

Yes, that’s right. We’re down 80 basis points, but 40 basis points is because of acquisitions; another 40 basis points because of the impact of upfront costs. Eric Katzman - Deutsche Bank: That’s actually a very, very strong result relative to what most companies are putting up. They are seeing gross margins actually down. I know you focus on the dollars, but what accounts for, even though you’re raising up the input cost outlook, I mean is it mix and leverage across your fixed assets that’s allowing the margin to be flat ex those two items? It’s pretty good performance, the market doesn’t seem to be reflecting that. I want more clarity on what is driving that performance.

Eric, I think there are a couple of things in there. One is on the commodity outlook for the year we are saying about $0.80 of additional inflation, only $0.15 in the first quarter so there is obviously a heavier impact in the back three quarters of the year than the first quarter. Also we did have a very good underlying operating performance in the first quarter so we were very pleased with that. The other big factor as Dave had mentioned as well was our net price realization of about 2.7% in the first quarter was roughly twice what we saw last year and even more than that compared to 2006 so we feel very good about that performance in the first quarter. Eric Katzman - Deutsche Bank: David, if I could just follow up on an unrelated question, but Nestle and General Mills with their CPW joint venture have really expanded that business for years. It sounds like based on their comments that they are pretty comfortable with their factories or production facilities around the world. They’re in the markets that they generally need to be in. Can you characterize the non-US cereal markets and the level of competition, given their seeming focus on bringing more profit out of that business after years of investment, what that means for you longer term and the category?

Eric, when you look at where we compete head-to-head, I think both of us are growing and doing pretty well. The categories in many markets in Europe are growing quite positively. They are growing throughout Latin America and Asia Pacific. There are a couple of geographies where they are very strong and we have currently little or no presence and that can skew the growth of theirs relative to ours. But I think overall, we are both seeing good growth. The category remains quite vibrant. In many of the markets, the less developed markets, per capita consumptions are still low so the growth potential going forward is very high. We’ve entered the Russian markets through an acquisition there. It’s cookies, crackers and cereal and we believe over time that platform gives us a great opportunity. We are looking at some of the other markets where we don’t participate and trying to develop an appropriate entry strategy there. So I think the international markets from a cereal perspective remain vibrant, relatively strong and I think there is room for us to grow and for them to grow too.

Your next question comes from Andrew Lazar - Lehman Brothers. Andrew Lazar - Lehman Brothers: I think you’d mentioned with respect to the 53rd week, if I am not mistaken but correct me if I’m wrong, in the last conference call I think you said that you would reinvest the full amount of that 53rd week. I think here you said you are not sure what you are going to do with half of it and half of it might be in acquisitions. I didn’t know if that meant additional acquisitions. I am trying to get a sense of why the change and what will drive your decision on what you do with the other half?

Andrew, sorry for the confusion there. Just to clarify there, our position actually hasn’t changed. The 53rd week was about $0.05 of good news to this year, about half of that will be spent back integrating the acquisitions that we’ve spoken about before such as Gardenburger, Bear Naked, Russia and other acquisitions we may yet make this year. The remaining half, we have not decided yet how we’re going to invest that back into the business. When we make that decision, we will communicate that at that time. Andrew Lazar - Lehman Brothers: The targets, obviously, that you talk about around the full year are excluding the 53rd week anyway in terms of the mid single-digit internal sales and operating profit growth?

That’s right. Andrew Lazar - Lehman Brothers: What is the best way to think about the base productivity that you’re generating separate from the specific projects that you do and that you call out in your upfront costs? How do we get a sense of how to quantify the base productivity? Is it, do you look at it as a percent of cost of goods annually that you can take down? Have you published anything specifically on that? Because it would seem like that’s got to be also a very big driver of how you’re covering this extreme commodity cost environment, aside from pricing?

Andrew, I am not sure how much we’ve talked specifically about it, but our global supply chain and R&D group and the purchasing group do a wonderful job of driving efficiencies. We have about a 3% productivity target across the board as a company and that clearly is a critical factor ongoing to helping us offset the volatility and increases in commodities and energy and something that we are very much focused on continuing well into the future.

Your next question comes from David Palmer - UBS. David Palmer - UBS: When you look at your business mix today and think about where Kellogg might be in five to ten years, are you comfortable? I suspect you are comfortable with your brands, categories and the productivity opportunities and even geographies, but how would you want to shift that mix, not just organically by growing what you have got but perhaps rounding that out through M&A or other joint ventures, alliances, whatever as you think about the Kellogg of down the road? Thanks.

David, without giving you our specific internal targets and desires, we have stated that there is a significant opportunity for us in markets like Russia and Central and Eastern Europe. Through parts of Latin America where we have a very strong business we still see vast growth opportunities and in Asia, including China and India and other markets in Asia we believe that we are sub-scale, that there are opportunities for us to grow and given the faster growth rate of some of those markets that if we can get to where we’d like to be that will enhance our long-term ability to drive sustainable and dependable performance. That’s something we’ll be working on diligently as we go forward. David Palmer - UBS: Is a lot of this is going to have to happen just because of the eating patterns overseas and the cultural norms really more in the snacking, particularly?

Yes, in some market like China for example where cereal, really to eat cereal does not really resonate, clearly other parts of the portfolio will be our primary focus.

Your next question comes from David Driscoll - Citi. David Driscoll - Citi: Retail sales for the cookie portfolio in the food/drug/mass channels plus Wal-Mart estimates were down about 7.2% for the quarter according to our data, although you guys reported I think it was 4% North American retail snacks growth. Can you describe what the discrepancies are? I am getting a lot of questions on this. Are there parts of the snack portfolio or just describe what’s the difference here? Either is the data just completely off or is it the other pieces of the portfolio are making that retail snacks number of 4%, it’s skewing it so much higher because the other pieces are so much stronger?

David, really if you look at the channel mix compared to the IRI data that will explain cookies where we grew but yet if you looked at IRI it looks like we declined. Crackers, we just had a very, very strong quarter and again if you look at IRI consumption that was broad-based and we did better across the total business than just in the IRI data which does typically tend to understate. Likewise on wholesome snacks we said mid single-digits against tough comps year ago. So some of it was because of the strength in non-measured channels and just a general probably understatement of the overall growth of the categories that you typically see in IRI versus what we would see and that’s consistent across many of the categories in which we compete, so that’s really the simple answer. David Driscoll - Citi: So bottom line then is looking at this minus 7 number on cookies is just not talking about the true strength of the business across all channels because that number was a bit concerning, but it doesn’t sound like it’s really indicative of the overall business?

No, the number we’re looking at is minus 6.2 but probably the data difference, we grew our overall shipments in cookies across all channels and all categories.

There are no further questions at this time. I’d like to turn the conference back over to our speakers for any additional or closing remarks.

Thank you very much everybody for listening in.