Simon Burton - Executive Officer of Snacks business unit John A. Bryant - Chief Executive Officer, President, Director and Member of Executive Committee Ronald L. Dissinger - Chief Financial Officer and Senior Vice President Paul T. Norman - Senior Vice President and President Kellogg International

David Driscoll - Citigroup Inc, Research Division Bryan D. Spillane - BofA Merrill Lynch, Research Division Robert Moskow - Crédit Suisse AG, Research Division Eric R. Katzman - Deutsche Bank AG, Research Division Andrew Lazar - Barclays Capital, Research Division Christopher R. Growe - Stifel, Nicolaus & Co., Inc., Research Division Jason English - Goldman Sachs Group Inc., Research Division Kenneth Goldman - JP Morgan Chase & Co, Research Division Lucia von Reusner

Good morning, welcome to the Kellog Company Second Quarter 2013 Earnings Call. [Operator Instructions] Please note, this event is being recorded. Thank you. At this time, I will turn the call over to Mr. Simon Burton, Kellog Company Vice President of Investor Relations. Mr. Burton, you may begin your conference, sir.

Great, thank you, Mike. Good morning, and thank you, everyone, for joining us today for a review of our second quarter 2013 results. I'm joined here today by John Bryant, President and CEO; Ron Dissinger, Chief Financial Officer; and Paul Norman, President of Kellogg International, who has been primarily focused on stabilizing and turning around our European business over the last year. The press release and slide that support our remarks this morning are posted on our website at www.kellogcompany.com. As you're aware, 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, 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, August 5. The call will also be available via webcast, which will be archived for 90 days. And now, I'll turn it over to John. John A. Bryant: Thanks, Simon, and thank you, everyone, for joining us. As you have seen, today we announced results for the second quarter, which is the final quarter that we will be affected by comparisons to periods before we earned Pringles. Results met our expectations for both operating profit and earnings in the quarter. Underlying reported operating profit increased by 11% and underlying internal operating profit increased by 3.4%. However, sales growth was slower than we expected. As you've seen in recent public consumption data, some of the larger categories in which we compete, particularly in the U.S., saw lower rates of growth in the quarter. We continue to expect good rates of long-term growth from our categories, but we recognize the short-term weakness that we've seen and have taken a pragmatic approach with guidance. We just launched increased levels of innovation that will add to results in the second half, and we're increasing rates of advertising, particularly in the third quarter. So we expect improvement, but realize that it could be a slower process through the balance of the year than we originally expected. We're on track to achieve our guidance for currency-neutral earnings per share as a result of continued good performance from Pringles and the work we've been doing on our cost base. This will allow us to cover the impact of the sales outlook, while continuing to invest in the future growth of the business. This is important as we continue to focus on our margins and plan for further investment in the future. Let's turn to Slide 4 and a quick update on the Pringles acquisition. As you know, we've now owned Pringles for more than a year. So our third quarter 2013 results will be lapping the fourth full [ph] quarter of ownership last year. We've made great progress with the integration. The transition service agreements that we had with Procter & Gamble have now all ended, and the business is operating on Kellogg's systems. This was a major initiative, as this acquisition was a carve-out, which required us to quickly integrate the business into our structure. The entire organization, including the Kellogg business units, the new employees that joined us from Pringles and the transition team, have all done a great job. Thanks too to P&G for all their help throughout the transition. Reported global sales increased in a low double-digit rate in Q2, reflecting a difficult comparison due to pre-close adjustments in the second quarter of last year. However, we saw good underlying rates of consumption growth. For example, consumption in the U.S. increased by approximately 7% in the quarter. And as you know, the business has continued to run smoothly all year. Our sales and marketing execution has been good and the sales growth we've seen has exceeded our expectations. We saw more accretion than we originally anticipated in the first half and we're tracking to the higher end of our synergy range for the full year. This is a great brand with untapped potential. We are increasing innovation and investing in capacity and we have visibility into improving margins over time. So I'd just like to thank everyone involved in the acquisition and the transition for all their hard work. Now I'll turn it over to Ron for a discussion of our financial results. Ronald L. Dissinger: Thanks, John, and good morning, everyone. Slide 5 is a recap of our performance for the quarter and year-to-date. Reported sales growth was 6.9% and internal sales declined by 0.5%. We've owned Pringles from June 1, 2012, so Pringles adds the benefit of 2 months of sales and profits to our reported results. We saw some weakness in several segments in the U.S. and trade inventory declined in several regions around the world. But we had solid results in Latin America, Asia Pacific and in Frozen Foods and Specialty in the U.S. Underlying reported operating profit increased by 10.9%, which included a benefit from lower Pringles integration costs. Underlying internal operating profit, which excludes the impact of the acquisition of Pringles, increased by 3.4%, as we expected, and included the impact of cost inflation net of productivity in our supply chain, as well as effective management of costs and some timing in SG&A. And finally, comparable earnings per share, which excludes integration costs, was $1, in line with our expectations. Comparable growth was 5.3% and this included a $0.02 adverse impact from currencies. Slide 6 shows the components of the quarter's 6.9% reported sales growth. Internal volume declined 1.6%, with nearly 1/2 of the decline being driven by trade inventory reductions in the U.S., France and Mexico. It's worth noting that we saw a good volume growth in our Asia-Pacific region and we did see price mix improvement in the quarter across most of the regions. Of course, Pringles is the primary driver of the 7.9 points of growth related to acquisitions in the second quarter. While we expect that our innovation will contribute to results in the second half of the year, we do expect that sales growth will continue to be a bit slower for the balance of the year than we originally anticipated. I'll provide more detail regarding our outlook later. Finally, currency translation reduced sales growth by 0.5 point in the quarter. Slide 7 shows the shape of the net inflation we'll see this year and it's the slide that we showed you last quarter. You remember that we recognized net cost inflation in the first half of the year, and as you can see on the chart, we continue to expect net deflation in the second half of the year, which should provide a benefit to our gross margins. We have better visibility into our cost structure for the balance of the year and now expect a small amount of net inflation in the third quarter and a net deflation in the fourth quarter. The slower sales growth we have seen so far this year has led to reduced operating leverage. We saw the impact of this in the second quarter and expect it to have an impact on margins in the second half of the year, particularly in the third quarter. In the second quarter, our underlying reported gross margin declined by 140 basis points. Of this, approximately 50 basis points was due to the impact of the Pringles acquisition and approximately 90 basis points was due to the impact of net inflation, operating leverage and some country and product mix. Slide 8 highlights some of the brand building activity we have planned for the second half of the year. Obviously, this is just a small sample, but it highlights the breadth of activity we expect in the business. As you know, we launched a significant amount of innovation around midyear, and we will support these products over the balance of 2013 with strong support planned for the third quarter. As we've mentioned a few times over the past year, we have been doing a lot of work increasing the efficiency of our investment in brand building. This work continued in the second quarter, and we have seen encouraging results. This work included savings in working media through mix improvements, digital purchasing, negotiations and the moves to pan-regional purchasing. We have also realized savings in non-working media by leveraging copy across multiple markets where practical. And in addition, we've done a lot of work with consumer promotions around the world. As a result, we expect that advertising will be up in the second half and flat to up for the full year despite the savings that I have mentioned. Now, let's turn to Slide 9, which shows quarterly internal operating profit performance for each of the regions. Overall, total company underlying internal operating profit growth of 3.4% was broadly in line with our expectations. And underlying operating margins were solid at 15.5%, up more than 50 basis points from last year. North America's internal operating profit increased by 3.2%, a sequential improvement from the first quarter. We saw a good cost discipline and we benefited from Pringles synergies. The Morning Foods, Specialty and North America Other segment, which includes Frozen Foods and Canada, all posted operating profit growth. Operating profit in the Snacks business was flat due to sales performance. We have a stronger innovation pipeline and increased advertising planned for the second half of the year in North America, although we do expect the environment to remain challenging. Internal operating profit grew by 1.8% in Europe and included a mid-single-digit increase in advertising. The restaging of Special K across Europe that we've spoken about before began in the U.K. in Northern Europe at the end of the second quarter, and we've seen early signs of improvement. Internal operating profit in Latin America decreased by 8.3% in the quarter, due to significant commodity inflation and the impact from reductions in retailer inventories. Much of this is behind us, so we expect improved performance in Latin America across the second half of the year. And then Asia Pacific, we saw an increase in internal operating profit of 11.3%. Growth was driven by solid sales across key businesses and included increased levels of advertising. Slide 10 provides detail of our year-to-date cash flow performance. Cash flow from operations before capital spending was $705 million in the first half of the year. This was an increase of $25 million from the first half of last year. And remember, we benefited last year from the structure of the Pringles transaction with the addition of approximately $100 million of cash flow in the second quarter of 2012. Capital spending was $238 million, an increase of $83 million over the first half of last year and in line with our plan. We still expect to spend slightly more than 4% of sales for the full year. And we have now repurchased more than $500 million of shares so far this year. We still expect to repurchase shares in line with proceeds from options for the full year. Our share repurchases in the first quarter were well below options proceeds. And while we are currently tracking ahead of proceeds for the year-to-date period, we expect that this will balance out as we progress through the second half. Now let's look at Slide 11, which shows our guidance for 2013. Due to the slower sales growth we saw in the second quarter, expectations for the remainder of the year and increased currency headwinds, we now expect that reported sales growth will be approximately 5%, 2 points lower than our original guidance. The decline in sales growth is split evenly, 1 point from currency and 1 point from internal growth expectation. Although our underlying reported earnings per share has come down by 2 points, our currency-neutral earnings per share is consistent with original guidance. We have been able to manage the 1 point of internal sales shortfall through improved performance from Pringles and disciplined cost management. We haven't changed our estimate for full year cost inflation at approximately 5% and cost savings of around 4%, but inflation is a little lower and savings are slightly higher. And as I mentioned, we still expect to see net deflation in the second half as a result of lower cost pressures and slightly higher cost savings. We now expect the gross margin for the full year will be down 75 to 100 basis points, a change from our original guidance of down 50 basis points. Pringles is still contributing approximately 50 basis points to the decline, due to the lower margin structure. Slide 12 shows more detail regarding our full year earnings per share guidance. Previously, we gave guidance for underlying earnings per share growth of between 5% and 7%. This included a $0.02 negative impact from currency. We always expected currency neutral earnings per share growth, excluding integration costs, to be between 6% and 9% or $3.84 to $3.93 per share, and that has not changed. However, over the course of the last quarter, currencies have moved against us more significantly. This means that instead of a full year negative impact of $0.02, we now expect the impact to be $0.09. Our guidance for reported earnings per share has gone from 5% to 7% growth to 3% to 5% growth. This change is completely due to the $0.07 extra headwind in currencies. Obviously, currency translation will remain volatile, so I'll update you regarding the effect as the year progresses. Now let's go to Slide 13 in some additional detail on our guidance. As we mentioned last quarter, we expected that estimates for the full year tax rate might improve, and that has been the case. We now expect that the full year tax rate will be between 29% and 30%. We continue to expect that interest expense will be between $230 million and $240 million. We still expect annual cash flow to be between $1.1 billion and $1.2 billion and total capital spending to be slightly more than 4% of sales. In the second half, we have increased innovation, more advertising and Pringles will be included in the base. As for the phasing of earnings over the remainder of the year, we expect reported earnings per share, including the impact of currency but excluding integration costs, to be roughly equal in the third and fourth quarters. Our current expectations are that integration costs and the impact to currencies will be approximately balanced between the third and fourth quarters. As has been the case all year, our guidance for comparable operating profit and earnings per share excludes the impact of adjustments from mark to market. And finally, on Pringles, we continue to expect that integration costs will be between $0.12 and $0.14 per share, but synergies will be toward the high end of our $50 million to $75 million range for the year. And now I'll turn it back over to John for a discussion of our segments. John A. Bryant: Thanks, Ron. Slide 14 shows the internal net sales growth posted by Kellogg North America. As we mentioned, performance was mixed in the quarter. Let's look at the segments in more detail starting with Slide 15 in the U.S. Morning Foods business. Growth in the cereal category in the second quarter was disappointing. Although we did expect it to be challenging given the timing of innovation, scheduled for launch at midyear, and the need for additional activity. Special K saw consumption growth of approximately 2% in the quarter as a result of growth posted by Special K Protein, which we relaunched in the second half of last year and Special K Chocolate Strawberry, which launched this year. Frosted Flakes continued to perform well as did Raisin Bran. We saw a high single-digit consumption growth as a result of our recent healthy dividends campaign. Healthy dividends has targeted adult health-conscious consumers and focuses on bringing boomers into the cereal category. For example, the campaign highlights the benefits that come from a balanced diet, including cereal and a healthy lifestyle. As I mentioned last quarter, we've seen some weakness in the adult cereal segment. In addition to the healthy dividends campaign, we also have innovation that will help to address this, including Raisin Bran containing Omega-3, Kashi Cheer Heart to Heart and Multi-Grain Special K. Special K is a great brand that travels well around the world. So in addition to all the activity I've mentioned, we've also just launched Special K Nourish Hot Cereals in the U.S. And as you'll hear from Paul, we're also launching Hot Cereals in Europe. In the U.S., we've launched 3 varieties, which are a healthy blend of oats and grains, including quinoa. They also include inclusions such as cranberries, which you add after preparation. We've only just introduced these cereals, but acceptance has been good and we have activity planned for the fall. We've also launched Kellogg's breakfast beverages and off to an encouraging start. ECV is good and brand building has started. Obviously, it's early but we're optimistic that these will be successful and will generate a meaningful amount of incremental sales growth. Finally, Pop-Tarts had an excellent quarter. Consumption increased at a mid-single-digit rate. We introduced 2 kinds of peanut butter Pop-Tarts in May. And again, although it's early, both are exceeding our expectations. Now let's turn to Slide 16, which shows the internal net sales performance of the U.S. Snacks segment. The segment posted an internal sales decline on the most difficult comparison of the year. Internal sales in the cracker business were down slightly, partially because we were lapping very strong growth from Special K Cracker Chips last year. However, we've seen improvement in distribution and quality merchandising in the business in recent weeks, and the innovation we launched around midyear is off to good start. Cheez-It Zings and Town House Pita are both getting good rates of trial and we're selling all the crackers in our new cup packaging that we can make. The cookie business also declined in the quarter. Again, the innovations we've just launched, including Keebler Simply Made cookies, Jumbo Fudge Shoppe and Cookies In A Cup are all off to a good start. And the decline we saw in the wholesome snacks business was at least partially due to the strong 7% sales growth posted last year. We did see some good growth this quarter from Special K Pastry Crisps and new Nutri-Grain crunch bars also contributed. Our Pringles business saw a good consumption growth of approximately 7% in the quarter, which outpaced the category's growth and we gained share as a result. The core grew and our Pringles Stix innovation also added to the results. We've got good activity planned for the second half and more innovation planned for introduction toward the end of the year. We always knew the second quarter would be a difficult one for the Snacks business. We've got innovation that's just launched and more coming. This, in combination with additional support and Pringles now being included in internal sales growth, should help results in the second half. Of course, it will continue to be a difficult environment, and we continue to expect that improvement will take some time. Slide 17 shows the net sales performance of the U.S. Specialty segment. We posted internal net sales growth of 1.9% in the second quarter. We posted good results in the Convenience channel, driven by cereal in a cup and our 5 SKUs of Special K Cracker Chips in single-serve packs, which is doing very well. We've just launched Special K Nourish Bars in this channel and have more innovation planned for later in the year. In addition, our Foodservice business has good plans for the second half of the year, and we're optimistic that the Specialty Channels business as a whole will improve over the balance of the year. Finally, Pringles, which has done very well in these channels since the acquisition, continued to post growth in the quarter, and our expectations are for continued good performance in the second half. Slide 18 shows detail regarding the North America Other segment, which includes the Canadian and U.S. Frozen Food businesses. The segment posted 3.9% internal sales growth in the quarter. In Canada, we've seen some good results from innovation, including share gains in the Frozen category as a result of the launch of Special K Flatbread sandwiches and Eggo Minis waffles, growth in crackers due to the introduction of Special K Cracker Chips and good early performance from breakfast beverages. We saw a high single-digit internal sales growth in the Frozen Foods business in the quarter. We saw good volume growth in the frozen breakfast business and also posted gains in price mix. Growth in the frozen breakfast business was driven by the continued success of the Special K Flatbread sandwiches, and we've got a new version being introduced later this year. Now let's move to the international business. As you know, we've had a difficult start to 2012 in Europe. We've been doing a lot of work over the last year to stabilize the business and we saw growth at the end of last year and early this year. So now, I'd like to turn it over to Paul Norman, who will provide more color regarding our plans for the European business. Paul T. Norman: Thanks, John, and good morning, everyone. Back in November at Day at K, we discussed some of issues affecting performance in Europe over the past few years and we shared our strategy to change all that, highlighting 3 key where to play choices: One, sustainably grow cereal in and beyond the bowl; two, explosively grow snacks; and three, accelerate growth in select emerging markets. To win, we said we would need to operate differently by designing for scale, by developing and executing ideas at a pan-European level. Finally, to enable this, we needed to reorganize the way we worked. The acquisition of Pringles provided the catalyst for us to do so. Several months on, and Pringles is now integrated. The region is organized around 2 category hubs, namely cereal and snacks. And we are bringing pan-European ideas to market in cereal, in and beyond the bowl and in snacks, as well as increasing levels of investment in key emerging markets. Our overall rate of innovation will increase significantly in 2013, and we have good visibility to 2014 and beyond. I would like to run quickly through a few slides on key initiatives coming in the back half of 2013. Let's start with cereal on Slide 20. In the second half, we will be looking to drive momentum behind key adult brands. On Crunchy Nut Corn Flakes, our leading taste brand in the U.K., we will accelerate momentum via new advertising from the proven "the trouble is they taste too good" campaign, as well as with innovation in the form of the recently launched Glorious Oat Granola and soon-to-be launched chocolate curls variety. In France and Italy, the Extra brand will benefit from an all-new advertising campaign backed by significant year-on-year increases in investment. Finally, in the U.K., Spain and the Nordic region, we will be launching the 5-day challenge on All-Bran, offering consumers faster, more effective relief from digestive discomfort. Moving on to Slide 21. We will also continue to reinvigorate our largest brand, Special K. As you know, we launched renovated base food, including whole grain and fiber in recent quarters. And this rollout continues in more countries, as we speak. We are expanding our presence within the cereal category to Hot Cereal. With the launch of Special K Multi-Grain porridge coming to selected countries in September. A differentiated food offering in 3 varieties and 2 different packaging formats, we feel confident we will attract new users to the Special K brand over the coming months. As 2014 comes, we will be expanding further into additional formats in various parts of the region with the Special K brand. More to come on this soon. Moving to Slide 22. Our aim is also to compete more broadly in breakfast beyond the bowl. As a result, we are just launching on the continent a full range of new Nutri-Grain handheld breakfast solutions. We recognize that sometimes consumers don't have time for a bowl of cereal and milk. That's why we developed foods that provide the benefits of cereal in a portable and convenient format that better meets their needs. These are delicious, toastable and dunkable whole-grain foods designed to better fit the local breakfast occasion. The range will include breakfast biscuits but also unique, new to market propositions too, including toastable pastries. Now, let's talk snacks on Slide 23. First up is Pringles, where things continue to go well. Following another quarter of mid-single-digit consumption growth driven by some great in-store focus from our local sales teams, selected innovations like the Xtra subline and continued geographic expansion in emerging markets, we feel good about the future. We're adding capacity in 2014 to further fuel the brand in terms of growth in existing geographies and in new ones and to enable a strong pipeline of innovation that you will hear more about in the coming months. Moving to Slide 24 on Special K snacks and an update on a couple of key pan-European initiatives. Firstly, Biscuit Moments, which we launched in the U.K. last year and now can be found across the region in 2013. This is a great example of an idea designed and delivered consistently across the region and it's an idea that has worked in other regions, too. For example, this idea was launched in the U.S. under the Special K Pastry Crisps brand and has been doing very well. Another example is Special K Cracker Crisps, which are shown on Slide 25 and which will roll out across the region later this year. These are similar to the Special K Cracker Chips you will know in the U.S. This idea has obviously been successful and has now traveled to Europe but has also now been launched in Canada, Mexico and soon in Australia, too. So when you put it all together, on Slide 26, you will see a good cross-section of activity in and beyond the bowl of breakfast and an exciting set of initiatives across snacks to accelerate growth. And all of this is being done with the benefits of scale, both in development and delivery. To close, I pulled back my summary slide from Day at K last year in November. We continue to transform our company in Europe into a cereal and a snacking company, leveraging ideas with scale across the region by operating differently. Change takes time and effort, and I would like to recognize the entire team in Europe for what they're doing to make it happen and bring our strategy to life. Thank you. I'll now turn it back over to John. John A. Bryant: Thanks, Paul. Now, let's turn to Slide 28 in our other international businesses. Internal net sales increased by 4.1% in Asia Pacific in the second quarter, driven by strong volume growth. The Australian business contributed to this growth as the breakfast drinks we launched last year continue to do well. Nutri-Grain, our core cereal brand in Australia, gained category share in the quarter, and we've got more innovation planned for introduction in Australia, including Special K Cracker Chips, which is similar to the ones you know in the U.S. In Asia, we saw good growth in India, Southeast Asia and South Africa. South Africa posted double-digit net sales growth as the Corn Flakes brand, including Corn Flakes Porridge, did very well. We also saw double-digit growth in India, due to strong growth from Chocos, Muesli and the Special K brand. And Pringles also posted mid-single-digit sales growth in the quarter, driven by both volume growth and price realization. The Latin American business posted 5% internal sales growth, although this included some unusual items, including the reduction of trade inventories, as I've mentioned before. Without these items, both sales and operating profit growth would have been much higher. The economic environment in Mexico remains difficult but cereal consumption growth remains good. We've had some recent gains in distribution and cost of innovation is working well and we've got more plans for introduction before the end of the year. We also saw growth in Brazil, the Andean region, Venezuela and Chile. And Pringles also did well in the quarter, exceeding our expectations. Now let's turn to Slide 29 and the summary. We met our goals to operating profit and earnings in the second quarter. We have better plans for the second half, including more innovation and increased levels of advertising. However, we recognize that the difficult environment we saw in the first half will continue through the balance of the year. We have completed the majority of the Pringles integration and the business is performing very well. And we have reaffirmed our full year target for earnings, excluding the impact of currency translation. So finally, I'd like to say thank you to all the Kellogg employees around the world for all their hard work and dedication. Together, we're building the plans and laying the foundation necessary for future growth. And now, we'll open up for questions.

[Operator Instructions] The first question we have comes from David Driscoll of Citi. David Driscoll - Citigroup Inc, Research Division: Would you please comment on the cereal merchandising outlook? It seems like General Mills captured a lot of merchandising activity during your second quarter period. Can you just give us some comments on how you see the merchandising outlook in North America for the rest of the year? John A. Bryant: David, it's very hard to predict how the merchandising activity will change as we go through the back half of the year. What I'll say on cereals, we're focused on driving our business the way that we've seen the business respond historically, which is through brand building, innovation, both food and packaging, as well as nutrition. I believe that's the right way to drive the cereal business. Obviously, cereal is always an intensely competitive category. We'll be competitive in that category. But I wouldn't say that there's any trends around merchandising that concern us. David Driscoll - Citigroup Inc, Research Division: Related to the -- to cereal category on new products, how have the new products performed and would you call this out as a reason for the soft sales in any way? Or more importantly, are the new products more of a second half event? Maybe if you could help me out a little on that on? John A. Bryant: David, the new products are really a second half event. They only started shipping towards the end of the second quarter, and the brand building won't be turned on until we get well into the third quarter and we have the right level of distribution across the U.S. stores. David Driscoll - Citigroup Inc, Research Division: Okay. Final question for me is just a detail on advertising. What was the advertising change during the second quarter? Ronald L. Dissinger: So David, this is Ron. Our advertising was down just slightly in the second quarter, and that was a function of the innovation -- timing of innovation launches that John mentioned. So we do expect advertising growth in the third quarter. David Driscoll - Citigroup Inc, Research Division: So then the nice operating margin performance relative to the gross margin was not related to like a giant decline in advertising? It was other factors, namely Pringles, savings and/or other savings? Is that correct? Ronald L. Dissinger: And/or other savings. David, particularly we've been very focused and cost disciplined around overhead. We've executed some initiatives early in the year knowing that we were facing high inflation in the front part of the year.

And next, we have Bryan Spillane, Bank of America. Bryan D. Spillane - BofA Merrill Lynch, Research Division: Just one clarification and a question. I think Ron, you had mentioned in your prepared remarks that in facing the back half of the year, the third quarter earnings would be the same as the fourth quarter. I just want make sure it's clear. Is that the absolute? Or is it the year-on-year growth rates that you're referring to? Ronald L. Dissinger: That is the absolute earnings per share, Bryan. Bryan D. Spillane - BofA Merrill Lynch, Research Division: Okay, great. And then just a question on Pringles. It's been an important sort of revenue growth contributor since the acquisition and profit growth contributor since the acquisition and still -- and it's an important component as we look into the second half, especially now that becomes internal -- part of the internal calculation. Can you talk a little bit about first, sort of where you stand today on capacity, whether you're capacity constrained at all? And then second, now that you're completely free from the Procter's shared service arrangement, how effective you've been at filling in some of the whitespace, so the markets where you've had to sort of find-your-own distribution now that you've kind of pulled away from Procter? So just those 2 things as we look at Pringles going forward, please. John A. Bryant: Thanks for the question, Bryan. I'm going to answer the very high level, then Paul might end up with some questions on Europe -- or some comments on Europe, specifically around Pringles. First, as you said, the Pringles acquisition has gone incredibly well for us. The integration is largely complete, where now Pringles is operating on our systems and that's enabling us to generate the synergies that we're seeing come through on the cost side. So remember, a lot of the cost synergies from Pringles was unhooking the P&G shared activity, hooking it on to the Kellogg systems and support processes and be able to run the business without adding a lot of additional cost. We're absolutely seeing that come through. Also when we acquired the business, we were concerned about the top line growth of the business given that's been through a difficult transition. So we were relatively conservative in setting out top line growth expectations. The good news is this business has responded incredibly well to our merchandising, with our sales force and bring to life those programs in store. So that's working very well for us. As you pointed out, we have been capacity constrained in this business. We do have new capacity coming on. We've also been able to run the plants a little bit harder and get more capacity out of them, which has also worked well in terms of supplying the market. So as we look at Pringles around the world from a consumption perspective, in the second quarter, we saw 7% growth in the U.S., good growth in Asia-Pacific and Latin America and also some very good growth in Europe. In terms of the whitespaces, there's some good Pringles opportunities in Europe as well. So why don't I let Paul just talk a little bit about the Pringles experience in Europe? Paul T. Norman: Bryan, if you think about outside of the Kellogg go-to-market salespeople and you think further, a feel into emerging markets, remember, Pringles for us was pretty transformational in several markets. It will have almost doubled the size of our business. So we find ourselves today with a great opportunity. We have Kellogg distributors and we inherited Pringles' distributors. The process we're going through now, as you can imagine, is to consolidate, given our newfound scale to, drive more capability to go further to grow. And obviously, there's cost to serve benefits to come. So I don't think the business has been left exposed anywhere. In fact, we've ended up with more distributors than we probably have before. And the opportunities now, I would say, in emerging markets and Europe but also the same case of Latin America and parts of Southeast Asia, the opportunity to consolidate, build capability and hopefully improve cost to serve and invest to grow further.

Next, we have Robert Moskow of Crédit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: I was curious about the gross margin guidance coming down to, I guess, a decline of 75 to 100 basis points. And the grain cost futures markets would indicate that -- and you said it yourself that your costs are lower than you thought and your productivity seems to be coming in lower than you thought. So is this an issue where it's just a volume and deleveraging is causing gross margin to be lighter than you thought? And then I had a question on Kashi consolidation. Ronald L. Dissinger: Yes. Rob, it's really a factor of our operating leverage. So we have very good visibility to our cost structure as we look at back half of the year, seeing our net deflation in the fourth quarter, as I mentioned. A little bit of inflation in the third quarter, and that's because of the operating leverage impact as a result of the sales coming down in a couple of the key U.S. businesses. So it's nothing more than that. Pringles is still about 50 basis points dilutive impact on the margin as well. So the underlying margin is down about 25 to 50 basis points. Robert Moskow - Crédit Suisse AG, Research Division: Okay. And then regarding Kashi, I heard that you've consolidated headquarters into Battle Creek. Can you talk a little bit about the cost benefit of that? Kashi had a very strong culture in La Jolla and sales have been weak lately. When do you think performance will improve and what are you doing internally to make sure that you retain what made it strong to begin with? John A. Bryant: We think Kashi is a great opportunity for us to drive additional growth. I think the opportunity with Kashi is to play its role within our portfolio. One of the benefits of having it viewed within the broader Kellogg portfolio is we can more clearly have some Kellogg brands play in some places and then Kashi play where it needs to play. An opportunity for Kashi is really in the area of pioneering nutrition, putting the value back in the food, whether it be GMO or organic or new age grains, et cetera. And that's the opportunity that Kashi can play. And by having it viewed within that broader portfolio, we can actually more clearly define and articulate the job that we need Kashi to go out and achieve for us. Now also Kashi now is a very large business and we can more effectively leverage the scale and benefits of the Kellogg Company by putting it into the broader context of Kellogg. So we feel very good about the longer-term growth opportunity for Kashi. And if anything, we think this gives us a better opportunity to achieve its long-term growth potential.

The next question we have comes from Eric Katzman of Deutsche Bank. Eric R. Katzman - Deutsche Bank AG, Research Division: I guess, one thing I haven't heard from you yet on Pringles is the revenue synergies that you expect a little longer term. I think you started to talk about it qualitatively but not quantitatively. And obviously, you bought Pringles for -- not for its cost savings but for the revenue potential. So perhaps, let's start with that. John A. Bryant: Eric, I think there are significant revenue synergies coming out of the Pringles acquisition. We've not quantified those for external purposes, but think of it in a number of waves. The first wave is a benefit of putting Pringles into the Kellogg sales system and driving our initial growth. That's what we're seeing come through. The second wave is a little bit dependent upon broader capacity coming online for Pringles, which is innovation on the Pringles business itself. And there's a third wave out there, which we're also going after aggressively, which is leveraging the Pringles infrastructure to drive Kellogg's snacks more aggressively around the world. I think Europe is a great example of where we're doing a lot of that today. Eric R. Katzman - Deutsche Bank AG, Research Division: Well, I'd just say I think it would be helpful at some point, sooner versus later, if you could give some quantification on that. And then this is a, I think, a question that's been asked in the past. But given the poor core results out of the business versus your advertising spend relative to sales, you've talked for a couple of years about "optimizing your advertising spend." But the reality is despite a lot of new products and effort, the core business volume has been pretty weak for an extended period, whether it's Europe or U.S. or what have you. And I just -- I kind of wonder like, I mean, what would sales at your company be like if, God forbid, your advertising spend wasn't nearly as strong as it is? I mean, why isn't such high spending giving a better lift to the portfolio? I just -- it still makes me scratch my head. John A. Bryant: Eric, we're very comfortable with the level of advertising we spend as a company. And that advertising is becoming even more effective and efficient each year as we drive more into digital and we activate the brands even more effectively through those programs. If you look at where some of our weakness has been on the volume side, it's really been back in cereal. So as we think about cereal, and this is true in the U.S. and some of the other large developed markets we have around the world, the good news for cereal is the breakfast occasion is, in general, growing, particularly here in the U.S. And within breakfast, cereal has the single largest share. And there's reasons to believe that there's long-term growth potential in the cereal category, whether it be Asian population, health and wellness or desire for value. However, there has been some short-term pressure over the last couple of years on the cereal category from alternatives at the breakfast occasion. So how are we addressing that as a company? Because this will help us get back to volume growth long term. One is to win with cereal at breakfast. And we take adult, which is the biggest source of opportunity, we're driving increased adult consumption around cereal, moving with 4 levers: innovation, advertising, food and packaging. And innovation, as you can see here and this year, there's Special K Multi-Grain, Kashi Cheer, Raisin Bran Omega-3 coming out. On advertising to your question, about advertising effectiveness, the healthy dividends program was in place in the second quarter. It drove strong growth in Raisin Bran, which was heroed in that particular piece of advertising. On foods, as we mentioned before, in Kashi, our focus is on pioneering health. And we're seeing the benefits, again, to food right. We have seen Bear Naked growing double digits in the second quarter. And then on packaging, whether it be resealable bags, easy-open liners or more portable solutions like cups, all helps us drive that cereal consumption. And it's more than just winning with cereal breakfast. It's also winning in breakfast beyond cereal. So we have a number of warm breakfast alternative, such as Eggo, Pop-Tarts, the Special K breakfast sandwiches. And now we have Special K Hot Cereal launching both in the U.S. and in U.K. And within that as well, we're looking at portability, whether it be wholesome snacks, hand-held breakfast that Paul mentioned in Europe, or breakfast beverages here in the U.S. So we're confident we can do both in the breakfast occasion. We can grow cereal at breakfast as we did across the 2000s and we can leverage our strong cereal brands into other formats to meet consumer needs at that breakfast occasion. And we believe if we do this well, we can get ourselves back to volume growth as a company.

The next question we have comes from Andrew Lazar of Barclays. Andrew Lazar - Barclays Capital, Research Division: John, I think that the general expectation to your earlier -- just the answer you just gave, by many investors, is that the cereal category will ultimately bounce back to a rate of growth, whether it's the low single-digit rate that it's had historically, even though thus far that recovery has been slower than you would have liked. But if this slower cereal category growth rate continues for a bit of time or longer than planned, I guess, do Kellogg and the investment community have to wait through perhaps a longer period of profit pressure as you launch and transition to a lot of this new outside the bowl initiatives and formats? As necessary as they may be, but requires spending and may have potentially negative mix issues given the excellent profitability of your core cereal franchise. So I guess in other words, can Kellogg's long-term EPS growth target of 7% to 9% be hit and sustained during a transition like I've described and as you talked about in your -- just in the previous answer? John A. Bryant: I think it's definitely our intent to, over the long term, get back on a sustainable growth model. We are making the investments we need to make in order to get back on that model and we recognize the need to drive our growth more aggressively in the cereal and breakfast occasion, and we're making the investments we need to make. What I think you're seeing within that investment model is we are using cereal equities to help drive our growth in some of the non-cereals spaces. So for example, leveraging the Kellogg master brands, launch the Kellogg to-go beverages in the U.S. That would then enable us to have a more efficient investment model, so we don't need to add a significant amount of additional brand building in order to drive that growth. This will hail us back on the cereal business as well. At the same time, within the advertising line, we continue to move money between digital, consumer databases and so on, which makes that spending even more efficient, which also enables us to free up investment. Also, we'll continue to look within our company on the cost side to be more effective and efficient to identify opportunities, to provide fuel for growth in our organization going forward. Andrew Lazar - Barclays Capital, Research Division: And I know that you switched over to using a third-party broker for some of the in-store work around your Morning Foods business, I think, maybe back in April or so. Just trying to get a sense if that transition has gone relatively smoothly. I don't know if you've got any metrics to point to around distribution or merchandising effectiveness. But has it basically delivered on what you had hoped you'd get from it? John A. Bryant: Andrew, I think any transition like that always has its bumps early in the process, but I feel like it's working very well today.

The next question we have comes from Chris Growe of Stifel. Christopher R. Growe - Stifel, Nicolaus & Co., Inc., Research Division: Just wanted to ask you first on the revenue growth for the business and looking out, I think what I heard from you so far, I think we heard this consistent theme, is a very heavy level of innovation, marketing and it's picking up in the second half of the year. I had assumed some of that started in Q2. I think a little bit it sounds like it started late in the quarter. I guess, what I'm getting too, John, is it as simple as you'd increase your marketing even more, your advertising? Or do you think these new products is what's going to help fix, what are, in some cases a category issue, like in cereal or just the competitive or slower dynamic, in say, cookies and crackers in the U.S.? John A. Bryant: I believe that the innovation we're putting in the marketplace here in the second half, as well as the commercial plans we have in the second half, will lead to a better sales growth rate in the second half than what we had in the first half. I also believe it's going to take more innovation and pressure over time to get the categories fully back into the growth rates we'd like to see. So this is not a short-term easy fix. This is a longer-term journey that we're on. But we're absolutely doing the right thing. So we've seen the ability to grow these categories over time back in the 2000s, and it's a case of engaging and exciting the consumer and bringing them back in. Christopher R. Growe - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then just a follow-up to that. You've had a fairly heavy level of productivity savings this year and it sounds like it's a little higher than maybe what you thought initially. Is there anything unique that's helping drive that? And I guess, a lot of us remember back to periods where the supply-chain maybe just cut a little too far. So I'm just trying to understand what's driving that and how sustainable this level of savings is. Ronald L. Dissinger: Now the tick-up in savings, productivity savings is only slight, Chris. It's not significant. So we're quite comfortable with the programs that are in place and the things that the supply-chain is doing to generate their savings. John A. Bryant: And Chris, on the supply chain, I feel very good about the state of our supply chain. The investments that we've made over the last 2 years have enabled us to run these plants even more effectively. And quite frankly, the work that we did on those plants is enabling to run even more efficiently this year, and that's a little bit of a source of some of the productivity benefits.

Next, we have Jason English, Goldman Sachs. Jason English - Goldman Sachs Group Inc., Research Division: More innovation coming to try and rejuvenate growth. We've been hearing a lot about innovation for a number of years now. If we look at the cereal category, which is clearly a point of weakness, TDP growth suggests it's been pretty explosive expansion of the varieties in the category. Meanwhile, velocity is falling off a cliff. Why shouldn't we be bracing for maybe some skew rationalization in that category rather than banking on innovation to turn it around? John A. Bryant: Well, Jason, I think that in a category like cereal, which is a high repertoire in category, you always have a level of innovation and a level of ongoing rationalization on the shelf. So the shelf is not growing and it's not declining. It is an element of bringing new news to the category and continuing to bring consumers in. In some parts of the business, such as Special K, where you need a high level of choices to keep people excited, interested in eating Special K each day, there is a wider level of varieties out there than you might have in some other brands. Also Jason, when we talk about innovation we're not just talking about another line extension. We are talking about beverages. We're talking about hot cereals. We're talking about breakfast sandwiches. So I think if you compared our innovation pipeline this year to, say, last year or the year before, there's a greater proportion of incrementality within the innovation pipeline. Plus, when you look at the international innovation, we are ramping up from a relatively low base and within that and some of the things that Paul talked about in Europe, that innovation is significantly more incremental than some of the historical cereal-based line extensions. Jason English - Goldman Sachs Group Inc., Research Division: I wanted to come back with one more question, and it's really picking up where kind of growth relied into with your sustainable growth model, it worked for a number of years. It hasn't really proven to drive very sustainable growth recently. An important pillar of that is grow brand building, continue to increase the investment. Yet over the last 5 years, advertising up at a 1% CAGR, well below sales, down so far this year. So I guess back to Chris's question, why shouldn't we think that we need just a lot more reinvestment to really get this thing going, to get your back on the sustainable growth wheel? John A. Bryant: Well, within that advertising line over the last 5 years, there has been a pretty significant shift under the surface between traditional 30-second advertising and digital and engaging consumers more effectively with different -- a different media mix. Having said that, I mean, we'll constantly look for fuel for growth in the organization. And say, how do we continue to drive effectiveness and efficiency to enable us to invest more in the business over time?

And the next question we have comes from Ken Goldman, JPMorgan. Kenneth Goldman - JP Morgan Chase & Co, Research Division: You aren't the first company to experience some sluggishness in your legacy categories and brands. At the same time, you're integrating a new one, in this case, Pringles. As you look back on some of the challenges you faced in those legacy, cookies, crackers, cereals lately, would you have done anything differently, John, over the last year in terms of your time focused on legacy products and your whole management team's focus versus toward the integration? Or in your view, maybe those challenges facing those categories have taken place, whether Pringles was taken on or not? John A. Bryant: Ken, it's a very difficult question to answer. Certainly, Pringles being the second largest acquisition in our history and being a carve-out bolt-on was more intense integration, particularly in some parts of the world, such as Europe. I don't think that some of the issues we've seen in cereal more recently were impacted by the Pringles acquisition. But certainly, it has been something that the organization has been focused on with the integration. Kenneth Goldman - JP Morgan Chase & Co, Research Division: Okay. And then quickly, Latin America, almost all of your growth over the last few years has come from price mix, your volumes have been down. Can you talk a little bit about the breakdown between price and mix in that line and to what extent you're comfortable with volumes not really growing in a region where a lot of companies are seeing their tonnage up over the last few years? John A. Bryant: Over time, as we go forward in Latin America, we are looking for more volume growth. I think when you look in the second quarter, it's a little distorted by lapping the trade inventory build that happened in Q2 last year that we spoke about on the second quarter call last year. The -- in particular, in Mexico, shipments are down quite significantly and now consumption was actually [indiscernible] I think if you're looking at a full basis, the volume performance will be much better. And certainly, our strategy going forward in Latin America is to be in volume growth.

The next question or last question that we have comes from Lucia von Reusner of Green Century Capital Management.

I'm just curious as a company publicly committed to sustainability, how will Kellogg ensure that the Kellogg brand is not associated with the illegal deforestation that it's partner, Wilmar, has been accused of? How will you ensure that the Kellogg brand remains sustainable and all that? John A. Bryant: Well the Kellogg Company has a very strong track record on sustainability and we have a sustainability report that I would turn your attention to. In terms of palm oil, we actually buy green certificates to cargo all our palm oil purchases, and we feel very good about our practices in that area. We work with a number of partners and suppliers around the world, and I'll leave it to you to talk to Wilmar directly if you have any questions for them. But we feel very good about the Kellogg Company's position on this topic.

Okay. Everyone, thanks very much for dialing in, and we'll be available throughout the rest of the day and tomorrow for questions. Thank you.

And we thank you, sir, and to the rest of the management team for your time today. The conference call is now concluded. At this time, you may disconnect your lines. Thank you, and have a great day, everyone.