General Mills (NYSE:GIS) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Input Cost Inflation
Christopher Growe – Stifel Nicolaus: I had two questions for you maybe first one for Don. Is there anything unique to the year in terms of maybe the way the input cost inflation is flowing or maybe the comparisons to fiscal ’13? We had a number of one-time items like the Venezuelan bolivar devaluation. Just trying to – understand the shaping of the earnings for the year and how that may – if there is any unique things we should be aware of?
Donal L. Mulligan – EVP and CFO: We say, we expect 3% for the year. It will be a little heavier in the front part of the year as we face it through as we come through some of the cost as you saw on our fourth quarter in Q4. So, as you model it, think about a little bit heavier inflation in the front half than the back half. But importantly think inflation not deflation throughout the year. It’s a little heavier in the front half.
Christopher Growe – Stifel Nicolaus: Is there sort of a hedging you have in place now on that input cost inflation done?
Donal L. Mulligan – EVP and CFO: Yeah. We are about 45% covered, which is a typical spot for us to be at this point in the year. So, we have a pretty good visibility particularly in the front half.
Christopher Growe – Stifel Nicolaus: My second question for you was on Yoplait in the U.S. in particular and you had another year of sales being down. And I just want to be clear on as you look at the new product pipeline, your core cup performance, maybe some marketing increases. I’m just trying to get an understanding of your expectations for your performance with Yoplait in fiscal ’14? Do you expect sales growth and how do you rate the new products this year versus last year?
Kendall J. Powell – Chairman and CEO: Chris, we do expect sales growth in 2014, and that’s built around a couple of pillars. First of all, we did see our core cup, the turns on our core cup business strengthened considerably over the course of this year high-single digit to low-double digit from months-to-months, as we moved into the second half. So, we’re very encouraged by that. That happened as we got those merchandising price points back into the correct zone and we believe that that improving turns performance will allow us to stabilize our distribution on that core cup line. So, we’re very encouraged by what we’re seeing there. Our kid businesses continue to be quite robust. We really like what we’re seeing from Liberte, as we continue to expand that business across the U.S. and believe we’re in about 50% of the country now and so obviously more to go there. Then finally, we have quite a good lineup of new products. The Yoplait Greek sort of traditional Greek product that we will be shipping here as we coming to July is a terrific product. It’s a filtered traditional Greek yogurt, it has absolutely terrific taste profile and we believe that will be very well received by consumers. Retailers are quite enthusiastic about it as we bring to market. We’re also going to be – we’ve really just started with Yoplait Greek 100. That’s been very successful for us, as we said in the presentation. We think that’s going to be well over a $100 million in year one and we just started on that. So, we’ll be bringing new flavors to that, multipacks, all the things that we can do to continue to give that product the shelf space, the growing shelf space that it will deserve. So, we feel quite good about the innovation that we’ve got on that business, so we’ll have high levels of advertising and we’re sort of loaded for bear here and feel optimistic about 2014.
Gross Margin Outlook
Andrew Lazar – Barclays: Just two things from me. I guess first I just wanted to dig into the gross margin expansion that you expect a little more for fiscal 14? I think you just said underlying gross margin ex the acquisition was roughly flat in fiscal ’13 and you expected up a bit in ’14. Inflation is expected to be pretty similar year-over-year. So, I’m trying to get a sense of what the more significant drivers of the improvement in gross margin will be in ’14. Does HMM look like it will be comparable to last year or perhaps greater or is it all really just expected better base business performance that will get you there?
Donal L. Mulligan – EVP and CFO: Well, it’s actually probably I’d say three components that I would point to, that you can really all put in the larger HMM bucket, because again, we talked about HMM, it’s about productivity mix and price. So, productivity, we continue to see our productivity grow. We are still very much on line to meet or exceed our commitment to get 4 billion of COGS productivity in this decade, so that will be a contributing factor certainly. The other two are more in the mix bucket. We continue to see strong performance out of our Bakeries and Foodservice business as we continue to even heighten our focus on the key product platforms and customer channels, where with our branded products in our direct sales force, we can make a difference both in terms of volume and importantly mix benefit. And then the other mix is – and we actually saw that as we came out of F ’13 a stronger baselines in our U.S. Retail business, which will contribute to a better gross margins as well. Matter of fact that’s the — that was probably the key reason that we were able to beat our previous guidance for F ’13 is that our baseline volume in U.S. Retail was better than we had originally anticipated at the beginning of the quarter. It allowed us to exceed our original guidance by $0.01 and it will help contribute to some margin expansion in F ’14 as well.
Andrew Lazar – Barclays: Then Ken, just a broader industry question. I guess, I’m curious, if you think this is a fair characterization of where sort of the industry is at, it’s that — perhaps the recovery in volume has not been as rapid as sort of the industry players would like to see, but that at least it’s been sort of moving forward. It may be a slow and steady pace. So, I’m trying to get a sense, is that a fair characterization and why do you think that the recovery has been maybe slower than everyone would like particularly as we’ve lapped a lot of the pricing?
Kendall J. Powell – Chairman and CEO: Thanks Andrew. As to why the recovery has been slower than we all would have liked. I mean I am not an economist, but I think we’ve all read about how this has just been a very troublesome and challenging recovery for the country and I think we have felt our share of it. But, the important thing as you said is that we are seeing steady improvement. We saw sequential improvement in our categories over the course of the year, particularly in the second half, and so the category and trends are improving, and as we enter F ’14, our situation basically is the categories generally are better as Don just — we’ve just commented a bit. Our prices are stable, inflation is moderate and we think it will be quite manageable for us from an HMM standpoint, and we’ve got a good lineup of innovation. So, we feel like – we feel that we, with this slow improvement and the steady improvement in the category fundamentals, we feel in quite a bit better position as we enter 2014, and both for the industry and also for our portfolio of brands and categories.