Welcome to Mondelez International Second Quarter 2014 Earnings Conference Call. (Operator Instructions). I would now like to turn the call over to Mr. Dexter Congbalay, Vice President Investor Relations for Mondelēz International. Please go ahead, sir.

Good morning and thanks for joining us. With me are Irene Rosenfeld, our Chairman and CEO and Dave Brearton, our CFO. Earlier today, we sent out our earnings release in today’s slides which are available on our website mondelezinternational.com. As you know, during this call, we'll make forward-looking statements about the Company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K and 10-Q filings for more details on our forward-looking statements. Some of today's prepared remarks include non-GAAP financial measures. You can find the GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. With that, I'll now turn the call over to Irene.

Thanks Dexter. Good morning. Our second quarter reflected the continued challenges of a difficult macro environment that again tempered category and revenue growth. In fact the operating environment worsened in the quarter in a number of markets especially in Europe. But we continue to expand operating income margins and again delivered strong, high quality EPS growth in the face of these challenges. Adjusted OI margin was 12.6% that’s an increase of a 120 basis points driven by gains in North America and Europe. These operating gains drove a 19% increase in adjusted EPS on a constant currency basis. On the top line however we delivered modest organic revenue growth of 1.2%. While that’s below our expectations and below the overall growth of our categories, it reflects our decision to lead pricing to recover cost increases. Our pricing actions were the most significant influence on our revenue growth rate this quarter. As we said in the past our strategy is to increase prices to fully recover the impacts of input costs and currency overtime. Of course that’s the right thing to do for the long term health of the business and it's critical to driving sustainable profitable growth. Specifically it enables productivity savings to drive gross and operating margins as well as investments in innovation and brand equity. This year we’re experiencing significant inflation in many of our inputs, notably coco and dairy. This has been magnified by weakening currencies in many emerging markets. In fact nearly half of our input cost increase has been due to currency. This required us to take significant price increases especially in chocolate. Give our share positions in most markets we choose to leave those pricing action and what we anticipated that this would be disruptive in the short term it's been even more challenging…

Thanks Irene, and good morning. Over the next few slides I will walk you through our bottom line results and our updated outlook before turning it back to Irene for quick update on some of our strategic and operating initiatives. Adjusted gross profit dollars were down 1.6% for the quarter entirely due to mark to market adjustments but up 0.4% from the first half on a constant currency basis. Adjusted gross profit margin was down 90 basis points this quarter, again entirely due to mark to market adjustments on hedging contracts. In aggregate we fully price to recover commodity and Forex impacts this quarter in line with our strategy. Although the impact differs by region. Gross margins in North America and Europe were up sharply with aggressively productivity savings driving significant step ups versus prior year. However in AP and EMEA we weren’t able to fully offset higher input cost due to the impact of currency. The full benefit of our pricing actions will be realized over the course of Q3 and Q4 and will set us up well for 2015. Productivity was again strong in the first half with gross productivity over 4% of cost of goods sold. Net productivity which is our primary measure was about 2.5% of COGS exceeding our expectations. Adjusted operating income dollars grew nearly 12% for the quarter and nearly 14% in the first half on a constant currency basis. Adjusted OI margin expanded a 120 basis points in the quarter despite the 90 basis point impact from mark to market charges that I previously mentioned. Margin expansion was high quality, we significantly reduced overheads as a result of our ongoing cost management efforts. In addition we continue to drive efficiencies in advertising and consumer support by consolidating media providers, reducing non-working media cost…

Thanks Dave. The headline is we’re on track. First we continue to make good progress on taking the steps necessary to successfully close our coffee transaction in 2015. As you know we intend to combine our coffee business with D.E Master Blenders to create the world’s leading Pure-Play Coffee Company. Both companies have been working closely to prepare for the combination including identifying the key leaders, and having discussions with works councils. Second, we remain firmly committed to delivery best in class costs in both our supply chain and in overheads. Our supply chain reinvention is on track to deliver $3 billion of gross productivity savings and 1.5 billion of net savings by 2016. We have already begun to see the impact of these efforts in the margin improvement in both Europe and North America. Our new biscuits facility in Salinas, Mexico is scheduled to open as planned in the fourth quarter and we’re on track to open new facilities next year in the Czech Republic and in India. As Dave mentioned we’re exceeding our productivity objectives with gross productivity over 4% of cost of goods sold and net productivity at about 2.5% in the first half. With respect to overheads, we’re also advancing our zero base budgeting initiatives. We have identified key areas of improvement in overhead cost assigned accountability for achieving those cost reductions and have already announced several policy changes to begin capturing some non-headcount related savings. We will announce additional changes in the coming month to further drive savings. Finally we are simplifying and standardizing our ways of working across the company. Last week we named Mark Clouse to a newly created position of Chief Growth Officer to ensure that growth remains at the forefront of our strategy and that we bring the same focus and…

(Operator Instructions). Your first question comes from the line of Chris Growe of Stifel. Chris Growe – Stifel Nicolaus: I had just two questions, if I could, for you, Irene. The first, just in relation to the softer category growth rates, I just want to get a better sense of how much you credit that to the pricing that's going through in this category. Are consumers shifting to other categories, as best you can tell? And I guess related to that, have you seen any stabilization of that market share performance through the quarter? It sounded like it remained pretty soft through the quarter.

I would say, actually I think our categories are holding up better than many. So in the world of food one of the reasons we continue to like participating in snacks is that it tends to have a better trajectory in those markets around the world. So yes our categories have softened but I think they are still outperforming many other food categories. With respect to our shares, it's a little bit of mix bag as you look at different countries around the world. Again the biggest issue is whether in fact our price gaps have widened more than we would like them to be and as we start to see those gaps close in various markets around the world we see our share recovering. So I think that’s what gives us great confidence that what we’re seeing right now is a temporary dislocation. We do think as the pricing gets out there and depending upon reactions out in the marketplace it will take us about another quarter or so to play that through but we would expect that our shares will revert. Chris Growe – Stifel Nicolaus: Okay. And just one quick follow-up-on to that, then would you expect to see any increase in, say, advertising spending or promotional spending to try and ease the progression to higher prices? Is that one of the solutions to the issues you are having some of these markets?

Well as Dave said we have been very careful to protect our AMC spending particularly in the challenging pricing environment and we will continue to do so. Any of the changes we have made in AMC have all been in non-working and in consumer oriented activities but our fundamental media spending is exactly where we need it to be to protect our market positions.

Your next question comes from Bryan Spillane of Bank of America. Bryan Spillane – Bank of America Merrill Lynch: I've got two questions. The first, just to follow up on Chris's question about organic sales growth -- is there anything different with the consumer in emerging markets today that's making it more difficult to raise prices and I guess above and beyond just the price gaps? And I guess my thinking was just, in the past, for Mondelez and really for most companies, a little bit of inflation at a local level is actually pretty good because it allows you to take maybe cost-plus type pricing. So is there just something different this time around that's making it more different in emerging markets to raise prices? And then I have a follow-up.

Bryan, I think a little of it just the magnitude. I mean again I talked about the coco being up about 20% and that together with the significant weakening of some of the local currencies has really put a lot of pressure on pricing. And so I think the magnitude is a big part of it but again we’re taking a number of steps aside from making sure that we’re continuing to support our franchise. We’re working very carefully with respect to pricing and sizing to make sure that we’re offering consumers a variety of options at different price points all of which we hope will make this dislocation temporary and allow us to mitigate some of the impacts. Bryan Spillane – Bank of America Merrill Lynch: Okay. And then just to follow up on the change into the category-led model, could you just clarify two things? One, does P&L responsibility at the division level change -- so is it still a regional P&L or is it a category P&L? And I guess similar, with Mark Clouse's new position and where he fits in the organization, does he have P&L responsibility?

So the P&L will continue to reside at our regional level and within that at the region category level. We really believe for us that is the best balance between capitalizing on local market knowledge and local market execution while at the same time leveraging our scale on a global basis so that’s how we’re going to play this out. Bryan Spillane – Bank of America Merrill Lynch: Okay. So how does Mark -- does he have P&L responsibility himself?

Mark does not have direct P&L responsibility. Our global category teams will continue to steer the overall strategies of our categories out into the marketplace but the P&L will reside closer to the market with our region category leaders and our region presidents.

Your next question comes from David Driscoll of Citi. David Driscoll – Citi: Wanted just to ask a little bit more about pricing volume elasticity and compared to historical price increases. Can you comment on how the current chocolate price in Europe is going versus those historical periods where you've had to do it? And separately, can you comment on maybe the early read on coffee pricing? And if you can tease out the difference between the two -- I have always felt like coffee was a much safer place to take pricing. But I'd like to hear you comment on those two pieces in Europe specifically.

In Europe we have obviously faced chocolate pricing in the past. This would be of a magnitude this bigger than what we have done in the past because of the impact of coco going up, actually even the coco butter ratio within that went up, dairy cost went up. So essentially most of the raw materials that go into chocolate went up. And so chocolate has been particularly a hard hit and there has been fairly significant price increases. I would not say the difference this time though is consumer price elasticity. I think difference really is the trade, the trade has pushed back very hard and it reflects the tough environment in Europe and many of the retailers margins themselves are under pressure. So I think the bigger difference this time has been the trade push back and you see that in our shares. Our shares remain quite strong in Europe actually, the shipment is not so strong and that’s really the difference between consumers, so I think are more and less in line with what we expected versus retailers are pushing back much harder. And as you say it's much more, it goes up and down with markets. I think it will be also a little tougher in the past because of the retail environment but it is an easier thing to get a coffee price increased through than a chocolate one, for sure David Driscoll – Citi: One follow-up, on the revenue outlook I think you made the comment that Europe was the single biggest driver of your reduced overall revenue outlook. But it also seems fair to say that emerging markets are also a bit weaker than expected. Do I have the sequence and magnitude correct between the two pieces of why the revenue guidance is a little bit lower?

Yes, I mean the emerging markets for the quarter were up 4.7% so less than we would have liked but it's still fairly respectable and as we get into the back half we will continue to have a little bit of a pricing challenges but we’re going to get past that China headwind. So I think emerging markets will still have the pricing challenges but I think you know with the China headwind offsetting that that will be okay. It really is Europe, where we expect to continue to have some retailer pressure and where the pricing really has to flow through completely in the third quarter. So that’s the primary driver.

Your next question comes from David Palmer of RBC Capital Markets. David Palmer – RBC Capital Markets: Two questions from me as well, in the past, have you typically led pricing in all the categories you are implementing pricing today? Or is Mondelez taking a relatively more of a leadership position during this inflation cycle? And, relatedly, are the lags in pricing by competitors atypical this time around?

I think we have traditionally led pricing where we have market leadership position and that is the case in most of our category country combination. So we have normally led pricing and we did that this time as well. I can’t speak for the competition, they all have their own unique situations but they are facing the same cost increases. It is typical, that you would have some legs in some countries because they all are looking at through their own lens based on whatever their specific facts and circumstances are. I think this time the impact is a little bit bigger than normal just because of the size of the pricing. So if we price and create a bigger price GAAP that GAAP difference is bigger than it has been in the past because of just of the sheer magnitude of the pricing that’s happening and again it's particularly on chocolate. David Palmer – RBC Capital Markets: And second, you mentioned in your remarks the creation of the Growth Officer position, the need to be nimble and focused and the need for innovation. And all that makes sense. Is there something in terms of your own execution, a particular area that you would want to improve more than others? Perhaps it's the innovation side that you would like to spark. Perhaps it's other marketing. Could you just speak to that? Thanks.

You know David I think the single biggest opportunity -- I think there is a number of benefits of the new model I think the single biggest opportunities though will lie in growth and speed and very simply taking good ideas from one part of the world more rapidly to another will be a key enabler I think of accelerating growth. So I am quite optimistic about the ability of this new structure and this new position to be able to allow us to move ideas from one part of the world more rapidly to others.

Your next question comes from Eric Katzman at Deutsche Bank. Eric Katzman – Deutsche Bank: Dave, I was wondering last quarter you mentioned how many basis points lower A&P spending helped in terms of margin expansion. Can you give a little more detail about that this quarter year-over-year?

Yes I think through the first half as we said we are around 9% of revenue, that’s actually right in-line with what we said we will do on the full year, at the start of the year. The comparison year-over-year is actually impacted by timing last year. The last year we spent about half a point higher than that in the first half and then we spent less than that in the back half. So year-over-year I don’t think there will be a material change but this year it's very smooth, first half, second half. Last year it was much more front weighted and really that comes down to some of the programs we talked about last year led by China. So we’re pretty comfortable that we’re sustaining the AMC at the right level throughout the year this year and that we’re supporting our brands. I think the key is the share voice hasn’t moved and I think that’s the important metrics that we look at. Eric Katzman – Deutsche Bank: And then how long do you expect these EU disputes to go on?

I don’t want to get into predicting negotiations but I think -- the guidance we have given you gives us the flexibility to manage through that and I think it's important that we stick to our principles and we have always priced to recover input cost increases, it's important we stick to that because that’s -- if we don’t do that we don’t have the funding to drive growth for ourselves and our customers. So we will continue to push that through but the guidance we have given you today gives us the flexibility to manage through that. Eric Katzman – Deutsche Bank: Okay. Last question and I will pass it on. You’ve put in the 10Q about possibly having to change, I guess, how you account for the 49% interest you will have in the coffee JV. Is it possible at this point to run through what the implications of that are to the P&L, maybe not specifically but -- if you don't have that.

I can give you in principal what will happen. So when we get to a point where the deal is certain or it closes we will treat it as a discontinued business or a business held for sale depending on the situation next year probably mid-year. At that point we will strip it out as a discontinued operation, the same as we did when we have done other divestures and so all of our history will be restated to take it out. In terms of the go forward it would be handled in an equity method. So we own 49%, we will take 49% to the net income and that would be part of our EPS but it would be recorded below OI. So it would not be within our OI, it would not be within our OI margins. It would be between OI and EPS but it would be part of the EPS. So that’s how it will work starting and closing -- but we think by the first full year of operation which should be 2016 that it should be EPS accretive. Eric Katzman – Deutsche Bank: So it's still accretive even if it's now kind of a discontinued op? Do you have to lower the earnings base because it's a discontinued op going backward?

Yes when I say accretive I mean to where we would have been if we hadn’t done the deal, there is a lots of factors obviously. We lose the OI on coffee when we take it out of the base. We pick up the 49% minority interest and we have got $5 billion of cash coming back which has helped us obviously on the share and the interest side. So that combination of things should be accretive in 2016.

Your next question comes from John Baumgartner of Wells Fargo. John Baumgartner – Wells Fargo Securities: Irene, just in China, wondering if you can speak to maybe to your execution there. It seems a few quarters ago you were optimistic that maybe shipping some of the brand spend it back to the secondary biscuit brands could stabilize the market share losses. But it sounds as though maybe it hasn't happened quite yet. So just how would you characterize the fundamentals there, maybe your strategy going forward?

Look we’re not pleased with China’s performance I need to be clear but there is actually no new news there. As we told you last year we saw a quite dramatic slowdown in our biscuits category, we lost some share. We have taken a number of actions to try to address both of those issues but the facts are the biscuit category has not yet recovered in fact it's growing only about 1% to 2%. So the reality is that it's still a challenging situation, the good news is as we have said the toughest comps as we enter the second half of the year, the toughest comps will now be behind us so we’re not going to have the same kind of year-over-year headwind that we have had in the first half. And again we’re quite pleased with the performance of gum in China and that continues to be a really strong story for us. But net-net the China situation is essentially as we had shared it with you and we should start to lap those challenges, we starting to lap those challenging comps as we enter the back half of the year.

Your next question comes from Ken Goldman of JPMorgan. Ken Goldman – JPMorgan: Irene, you talked about the grocers rejecting pricing and maybe taking some products off shelf as a cost of doing business. And that's fair, but I guess it doesn't happen that often. So I'm just curious to understand a bit how it took place. Did your marketing team maybe underappreciate some of the customers' will in this case? And I guess more importantly, where does your confidence come from that this will get resolved? You said you expect your competitors to take pricing eventually. But why would they if they just saw what happened to the industry leader?

Pricing is always a difficult proposition and we don’t take it lightly particularly in a tough macro environment. What gives us the confidence is that our brands are stronger, traffic drivers for our customers and after a certain point in time it's going to be important to our customers overall growth to have these brands back on the shelf. So we didn’t take those decisions lightly, we made them because it's critical as Dave has said for the long term success and health of our franchise and our ability to continue to invest in them. It was critical to make sure that we’re recovering the cost increases that we’re experiencing. But we are optimistic given the strength of our brands and the role that they play in driving traffic for our customers that we will be able to successfully resolve this dispute but we’re also allowing in our guidance as Dave said for the fact that it's not necessarily happening tomorrow and we want to acknowledge that.

It has historically happened and we did identify at the quarter one call that we expected some disruption. I think so the tactics are actually the same that we have seen in prior times. The difference this time is it's quite brand across many more retailers and it's quite deep. So it is a typical reaction to dealers, SKUs in France or stop shipments or stop buying for a period of time in France. I think it is more dramatic than we anticipated but it's not a completely new tactic. Ken Goldman – JPMorgan: One quick one on the U.S. -- at least according to Nielsen data, some traditional snacking categories, all of them, right, cookies, crackers, chocolates, salty snacks, they have all really decelerated. I’m curious if you can talk about what his have been in your view there. We’re seeing some strength in nuts, dried fruit, healthier snack things like that. So just any thoughts you would have on whether there's a share shift within snacking would be helpful. Thank you.

Actually our snacking business has performed quite well within as you rightly point out a challenging environment, so there is no question, the categories are slowing. We have been outperforming the categories for quite some time and I think it's for couple of reasons. I think we have had a very strong marketing and innovation pipeline in North America. I think or DSD network is operating extremely effectively. And so we believe that we can continue to drive our growth at or above category rates. Our year-to-date biscuit share is up almost a point and our biscuits organic revenue was up about 4% in the first half and it's because of the factors that I mentioned. So I think there is some slowdown in some of the categories but we have been able to capture a more than our fair share and that’s been driving our overall revenue performance.

Your next question comes from Matthew Grainger of Morgan Stanley. Matthew Grainger – Morgan Stanley: Just one regional question, I was hoping to get a bit more color on the weaker sales this quarter in Asia. I know you faced an easier prior-year comparison. You have been working through your issues in China for several quarters now and we hopefully are past the worst, but top line did decelerate further, which I'm guessing is attributable mostly to this Australia and New Zealand issue you called out. So is that the case? And if so, can you characterize the impact that's having, what's going on and what we should expect there over the balance of the year?

Let me start with the fact that actually through the first half as we said, China was actually massive headwind we were up about 8% year ago in the first half in 2013 in China and so that’s a big headwind to us as we experienced some of the challenges that we said and that continues to be the biggest factor but certainly in the quarter some of what happened in Australia, New Zealand is just a essentially a consequence of some of the same pricing conversations that we have been having about our European customers and again it's something that we think will resolve itself as the year goes on. We did see some fairly significant destocking in some of our Australian customers and that was what caused some of the dislocation in the second quarter. Matthew Grainger – Morgan Stanley: Okay. But just to be clear, given some of your competitors over the years have had de-stocking issues that have been extremely difficult to resolve in that market, would you say you have an equivalent level of confidence that you would have in Europe going forward as far as getting those products back on shelf and resolving those quickly?

These are brands that have very strong market positions, they do drive traffic and quite frankly as we look at some of the inventory positions they are well below healthy level. So, it's reasonable confidence, again we’re not necessarily predicting timing but we do expect that in the guidance that we have given to you we would expect to see that resolve itself in the coming months.

Your next question comes from Robert Moskow of Credit Suisse. Robert Moskow – Credit Suisse: Irene, I think it was a year and a half ago at CAGNY that you established some pretty bold targets for points of distribution gains in emerging markets. And since then there has been some SG&A overhead cuts. I wanted to make sure that you are comfortable that you can still achieve those distribution gains, despite the overhead reductions. And have you kept track of those goals? And where do you think you are tracking on them? And then I had a quick follow-up.

Absolutely Rob. I mean we’re not cutting our investments in the emerging markets. We have significantly as you know last year we significantly stepped up our investments early in the year, many of that was much of that was in route to market and we are benefiting from those investments. We are continuing to make the necessary investments -- we’re protecting sales to a large extent as we look at some of the overhead initiatives but the end in mind is to make sure that we are making the necessary foundational investments in these key markets to capitalize on the opportunities that will emerge as the economies recover. So we continue to feel good about the investments that we made in route to market, in places like Russia, like Brazil, like India and you will continue to see those investments and making sure that we’re getting an adequate return but this is not about cutting back on those investments. This is again it's the focus is no headcount elsewhere in the world into a large extent as well as some non-people related overhead costs. Robert Moskow – Credit Suisse: Okay. And then the follow-up is you said that your share of voice is still at high levels. But you've shifted a lot of money into digital. And I'm sure your competitors have also. Are you comfortable that your ability to measure share of voice is still good? And are you able to measure digital in share of voice? And then also -- you know, you were in market research. Do you feel comfortable that the return you are getting on digital marketing is sufficient? Or is that still in its infancy in terms of measurement?

It's a fair question Rob, I have to tell you, we actually are quite able to measure the ROI of our digital investments and we’re finding it's paying back about twice the rate of our traditional media investments not to mention the fact that we’re seeing quite significant media inflation in a number of our emerging markets and so the benefits of going to digital as that explodes in markets like China and Brazil is a positive because that’s where our consumers are. So I think the evidence that we have is quite compelling and it gives us great confidence that as we continue to shift our spending into digital that we will get actually an even better return on many of those investments

Your next question comes from Alexia Howard of Sanford Bernstein. Alexia Howard – Sanford Bernstein & Company: Can I ask about the leadership changes that we've seen in China and India recently? I think recently you brought somebody in from the outside into China. We've seen some changes recently in India as well. What specifically were you looking for in terms of capabilities? How confident are you that you've got the right people in place now? Just any color that you can give us on that would be great. Thank you.

I feel quite good about the leaders that we have placed in both of those countries and in number of our other key emerging markets. As I mentioned India is performing well, continues to grow at a double digit rate and Manu Anand has have a great deal of experience in operating within that country and he has done a great job in continuing to drive the momentum in that market. China we mentioned that we brought in Stephen Maher. He is about four weeks old, I would say in his new role but he has got 16 years of SPG experience most of that -- much of that actually is in China and as a result he brings to t task a very great seasoning in a variety of the disciplines of general management as well as understanding the Chinese market and so I’m quite confident that Stephen will be able to deliver on the ambitious agenda that we have in China. Alexia Howard – Sanford Bernstein & Company: And then just a quick follow-up, can you give us the run-rate or the current run-rate of gum in China? I think the last time you talked about it, it was about $100 million kind of level. Where are we now?

We’re forecasting about 150 for the year, Alexia we’re feeling quite good. We have got about 9% share and we are quite pleased with the performance of our gum business there.

(Operator Instructions). Your next question comes from Jason English of Goldman Sachs. Jason English – Goldman Sachs: There has been a lot of rhetoric about decelerating category growth on the call. You've given us some data in your slides, I guess it's slide 16, suggesting that your category growth, end market growth accelerated from 2.8% in the first quarter to around 3.8% for the full first half, suggesting in the quarter it may actually even have been approaching close to 5%. So is that the right way to think about it? If so, where is the disconnect with the data in the commentary? And also where are you seeing that acceleration from a market perspective?

I think the slide we showed for the first half was about 3.8%, you’re right, the first quarter was lower than that but it's basically Easter. So there was a big flip between March and April, huge actually and that’s what’s driving the second quarter to be a higher growth rate from the first quarter, the first half in aggregate is the best way to look at it and it's about 3.8%. And when we talk about the category slowdown I think we saw -- in North America we saw that, in a lot of the European markets, we saw it in a lot of the emerging markets as well particularly in the May-June months. So I think we can’t really look at only one quarter given the Easter shift but clearly I think we wanted to make sure that we reflect that in the outlook we give you. Jason English – Goldman Sachs: Turning real quick to gum, I imagine you’re not taking much price on gum, just given the cost basket there. Is that fair to say?

Yes it is. Jason English – Goldman Sachs: Yet in gum you are still lagging the market by a substantial chunk, down low-single digits. The market has turned up around 1% now through the first half. Why shouldn't we be concerned that there is something other than just price gaps and retailer pushback that is driving the market share weakness?

I think you need to look at that on a market by market basis Jas, and I talked about the performance in the U.S., we have had three quarters of solid share growth -- I have talked about what’s going in China and our major gum markets were continuing to make good progress behind the initiatives that I have laid out and as I have said we’re still not pleased with our gum performance, it is still negative year-over-year but the good news is that it's less negative and we’re starting to see it moving in a better direction.

And I think the two places that are negative, we talked about the positives, Europe is still negative and actually the other one probably surprise you, it's Venezuela because it's an important product and it's a struggle to get the currency. So the Venezuela volume is down quite a bit but those are really the two, they are offsetting a good numbers we’re seeing in China and North America.

Your next question comes from Jonathan Feeney of Athlos Research. Jonathan Feeney – Athlos Research: Over the course of the quarter, would you say that volume, particularly in developing markets, improved month-to-month? And is that what gives you confidence in the second half that this deceleration won't be sustained? It looks like you're guiding to for the full year in organic net rev, what you have done year-to-date, despite the decel first and second quarter? Or is it more the pricing side, maybe where you have a little bit more control, you know prices are going to be going up, and you know that the second half of the year -- I understand comps get a little bit easier in China. But they get a little bit tougher, particularly on a stacked basis, in the third and fourth quarter other places. So just parsing out those volume versus pricing in your net rev regime? I appreciate it.

Jon, again, pricing is the big variable here because you’re correct in saying that we do see that it will pick up some tailwinds in the back half as we lap China and as we cycle the coffee as we see higher prices in coffee. That’s going to be offset as we look at the outlook by the continuous slow category growth as well as the continued dislocation as our pricing makes its way through the system and those are the puts and takes but the big impact offsetting the tailwinds is really the pricing continually to play through and as we have said we would expect even in Q3 that we would expect our share performance will continue to soften as we work our way through some of these customer disputes and more of our pricing impact hits the shelves. We do believe this is temporary but it will have an impact, a continued impact in Q3. Jonathan Feeney – Athlos Research: And volume in Asia-Pac and Latin America, did that improve over the course of the quarter or can you say?

I think the volume in Asia-PAC is primarily China item, a little bit Australia and then Latin America the volume is really two fold. It's Venezuela and Argentina with the hyperinflation there and that’s been a sort of ongoing trade off on low-margin product as we've priced that away and Mexico to some degree as we adjust to the VAT. I think the important thing in Latin America is Brazil which is really our powerhouse continues to grow vol mix and most of the other countries do as well. So it's kind of Mexico VAT and it's Venezuela/Argentina which are kind of anomalies. Jonathan Feeney – Athlos Research: But can you say whether it improved over the course of the quarter? I'm just talking month to month. Did we leave June on a high note or did we leave just average?

We left it where we expect it to be. I mean the China issues was really a question of comparisons to a year ago. It wasn’t so much about improvements this year and I think last year we had a very strong June month so we were down in China year-over-year. I would expect with the absence of those tough comps going into Q3 we are pretty comfortable with the run-rate in China, is where it needs to be that the numbers we gave you today.

Your next question comes from Ken Zaslow of Bank of Montreal. Ken Zaslow – Bank of Montreal: Just talking more about the things that you could do in your control, I know as you go through ZBB, a lot of times as I think through the process companies tend to find a greater deal of cost savings through this process. Can you talk about have you seen a greater opportunities than you initially thought? And at what point do you think there's a potential for an acceleration of even greater savings, because it seems like you guys have done, actually a pretty good job on this front?

Ken, I would say we have set some fairly aggressive targets. We have laid out our targets of approximately 300 to 400 basis points over the next three years and that’s a fairly aggressive agenda. The good news is I would tell you as we continue to work our way through the specific initiatives I have great confidence that we will deliver those targets but I think the we just need to continue to make progress quarter-after-quarter. I’m pleased as I said in the programs and the impact it has had in just even in our Q2 results and I think we still continue to see that play through. Ken Zaslow – Bank of Montreal: And just a follow-up, I know in parts of the business, are you actually adding infrastructure? I know you’re adding a Growth Officer. Is there other levels that are somewhat being funded by this whole cost savings opportunity? Or was that always part of the plan of having maybe not another layer of management but another layer of infrastructure?

Simple answer is no, we’re not adding a layer of infrastructure and in fact there is some puts and takes that go with the creation of the Chief Growth Officer role. But it is a fact that as we look at our opportunity within the context of the new operating model we’re continuing to invest in sales and route to market and so we’re taking disproportionately, we’re taking some of our savings disproportionately from some of the other areas into the operation in favor of those key front line investments. So you will see that slide through but we’re not creating another layer in with the creation of the Chief Growth Officer.

Your final question comes from David Hayes of Nomura. David Hayes – Nomura: Two questions, if I can, first a broad one and then a specific one on Europe. Just in terms of the broader question, obviously you've got some moving parts in terms of the disappointment in terms of sales growth through the year. But is there any anxiety at all internally that there's too much demand on the cost saving side, the margin delivery side in the organization and that is what is basically defocusing the business from performing as well as maybe it could do more has done in terms of sales and market share delivery? And then the second question just going back to the EU, two things on this. Firstly, you mentioned France and then Europe interchangeably. Just to understand, is it just France that these issues are existing in terms of the retailers or where there are other markets as well? And then just in terms of the dynamic, you made the point yourself that the consumer off take is still good, that the shipments effectively are lagging now because of negotiations. To some extent you would have thought, with your brands being mass stock in many cases, to your point earlier, that you would just catch up the shipments and therefore the second half would bounce. So the question to some extent is that the dynamic? And is your guidance for the second half therefore very cautious in your view? And actually you could be better than the 2% – 2.5% as that dynamic plays out? Thank you.

Let me answer your last two questions and then I will come back to the first. It is about France and should the shipments catch up? The simple answer is, we hope so. But the speed with which we resolved some of these disputes is kind of not something that I wanted to predict. So we believe in the guidance we have given to you, we have adequately reflected the reality that someday we will get ourselves through these conversations but we’re not counting it necessarily happening tomorrow and so I hope that gives you some perspective on that question. With respect to the question of is there too much focus on margin and to what extent is that putting creating more pressure on our top line, there is question. We’re doing a lot right now but I really do believe that it's much better to move quickly and decisively rather than leaving a lot of uncertainty out in the organization. We’re certainly -- experiencing some disruption but our focus is to protect the long term health of our business and our ability to invest in our franchise and in our people. And so again we believe that the dislocation that we’re experiencing is temporary, we will work our way through it but most importantly we believe we’re doing the right things for the long term health of the business and as I mentioned our strategic initiatives are moving along on track consistent with what we had expected.

This does conclude our question and answer session. I will now turn the floor back over to Mr. Congbalay for any closing remarks.

Any follow-up questions Nick and I will be around for the rest of the day and we will be happy to take any callers or emails that you might have. Thanks everyone for joining us.