Good morning. Welcome to the Mondelez International First Quarter 2015 Earnings Conference Call. Today's call is scheduled to last for about an hour, including remarks by Mondelez management and a question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Dexter Congbalay, Vice President, Investor Relations for Mondelez International. Please go ahead, sir.

Good morning. Thanks for joining us. With me are Irene Rosenfeld, our Chairman and CEO; and Brian Gladden, 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 form 10-K and 10-Q filings for more details on 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.

Thank you, Dexter. Good morning. As you know, 2015 is a year of big change for us and we're off to a solid start. We've continued to make good progress in a challenging environment by focusing on what we can control. This includes executing our transformation agenda, prioritizing margin expansion, and strong constant currency earnings growth while delivering solid revenue growth. Specifically, organic net revenue grew 3.8% driven by pricing actions to recover currency driven input cost increases. We significantly expanded adjusted operating income margins, up 160 basis points to 13.8%. Importantly, adjusted gross margin contributed more than half of the increase while lower overheads contributed the rest. Adjusted EPS was $0.41 up nearly 26% on a constant currency basis, driven almost entirely by operating gains. As we discussed at CAGNY, we're executing three transformation priorities that will further leverage our advantage portfolio and geographic footprint while setting us up to deliver top-tier financial performance as global demand improves. Let me give you a quick update on each of our transformation initiatives. To further focus our portfolio on snacks, to reduce our supply chain and overhead costs, and to continue investing for growth. On the portfolio front, we expect our Jacobs Douwe Egberts coffee joint venture to close this year, likely in the third quarter. We're working to secure the necessary regulatory approvals from the European commission and are awaiting the results of the Phase II review. We anticipate closing our acquisition of Kinh Do’s Biscuit business in Vietnam around mid-year and are looking forward to leveraging the growth opportunities of this attractive business. With about $175 million in sales, Kinh Do is one of the largest snack companies in Vietnam with iconic brands and leading positions in biscuits and moon cakes. Going forward we intend to accelerate its growth…

Thanks, Irene. Good morning, everyone. Building on what Irene just said, we're feeling confident about our execution especially the strong progress we're making to drive down costs, expand margins, and grow earnings per share. Starting with slide eight, you can see that adjusted gross margin increased 90 basis points to 38%. Pricing, including the carryover benefit of actions taken in 2014, more than offset the increase in commodity and currency related cost inflation this allowed strong productivity of more than 3% of COGS or about $175 million to fall through. Adjusted OI margin was up 160 basis points to 13.8%. Adjusted gross margin expansion accounted for more than half of the increase, the rest was driven by lower overheads as we continued to aggressively reduce expenses by leveraging our zero-base budgeting approach and other cost saving tools. Looking at margin performance by region, you can see that North America, Europe, and Latin America drove our adjusted OI expansion. North America was up 400 basis points, more than half of this improvement was driven by strong net productivity with the remainder largely due to lower overheads. Europe was up 180 basis points as strong net productivity positively impacted adjusted gross margins. Latin America increased 120 basis points predominantly driven by overhead leverage. In contrast EMEA declined 240 basis points. The sudden and severe devaluation of Ukrainian and Russian currencies made it difficult to fully recover input cost inflation in the near-term without sacrificing volume declines or share losses. As we exit the quarter, we're in a much better position with margins in these markets. We expect margin will improve as the year progresses as we continue to implement additional price increases to cover higher costs. In Asia-Pacific, margin was down 30 basis points, while we improved gross margin and lowered overheads,…

Certainly. [Operator Instructions] Your first question comes from the line of Andrew Lazar with Barclays.

Two questions if I could. First, Irene, you mentioned most European competitors have now started to take pricing and follow some of your moves and that's a new development and clearly positive one. But you also mentioned I guess promotional spend, it will be needed to narrow price gaps. I'm trying to get a sense of whether the pricing that others have taken are not enough to get the gaps still where you want? Or if it's one player in particular that maybe hasn't yet moved, I'm trying to just connect those two dots.

The way it works is first of all, we've now seen most of our competitors announce as I mentioned but till it plays through, it takes some time. And in fact, it's one of the reasons I said we would still expect to see share softness in the second quarter. It'll take probably till the back half. In selected markets we want to continue to make sure that we're protecting our market position. So we've been very disciplined in looking market by market and seeing where we stand, and on that basis we're making that decision. But I feel quite confident that we will see our chocolate shares rebound in the back half of the year.

Brian, initially, I knew you expected margins to get sequentially better as the year progressed, they obviously expanded quite a bit more in the first quarter than even the full-year target would suggest. Where was the primary source of that upside in the quarter to margins? And do you expect the expansion therefore, to be less pronounced in future quarters on a year over year basis? And if so, why would that be?

Yes, Andrew. I think we did see for probably the first time in a while, pricing is in a good position to cover inflation that we've seen driven by commodities and currency, which allowed net productivity to really drop through. I think that's the big one. As I mentioned in my comments, I think we were a bit ahead in terms of executing in a couple areas. One is supply chain and some of the reinvention activities helped contribute to that productivity. I think some of that is timing and executing a bit earlier, which helps, and then on overheads. We slightly beat our targets for overhead reductions, and that's really as ZBB is playing out, and our visibility and transparency to spending, and moving the culture to more cost-conscious culture I think is paying dividends for us. So those are the things I think that give us a little bit of tailwind in the quarter. And again as we talked about, I think the supply chain reinvention is clearly a second half impact that we still expect to see. We may be pulled a little bit of that into the first part of the year, which is great but there will be more to come in the second half.

So nothing necessarily one-off that we should expect starts to take down the rate of margin improvement necessarily as we move through the year, even though you're only looking for 100 basis points on a full-year basis of margin improvement? Because you start off the year quite a bit stronger than that?

I would just say the first quarter, 13.8 in the first quarter is a pretty solid number, not a lot of one-off items that contributed to that number were hurt in the quarter. It's a pretty clean quarter.

Thanks very much.

Your next question comes from the line of David Palmer, with RBC Capital Markets.

Good morning. A couple questions. First on gross margins, do you foresee 2015 as being a year of sequentially improving gross margin trend as you get new production up and running like the one you talked about at CAGNY in Mexico? And perhaps as you get the pricing in place and past some of these initial transactions effects, you talked about, for instance, in Russia, any color on sequential gross margin trends would be helpful.

Yeah, David, I think it's more of a first half/second half dynamic as we talked about the supply chain. I think there's clearly some markets where there continues to be volatility and some areas were going to have to continue to work pricing to offset mostly currency-driven pressures. So it's a dynamic environment. We clearly looked at the second half as being more advantaged given the supply chain dynamic and we feel good about the start. Without getting into quarter-by-quarter trend I think this is a bit of a first half/second story for us.

But I would say, David, I do think you can see the algorithm start to play through and that's why we feel quite pleased with the quarter. The facts are that we're covering our cost increases through pricing as best we can. That's starting to play through and that's allowing our productivity to drop and you should see that dynamic continue to play through for the balance of the year.

Just to follow up on your comment about reinvesting and ANC. I know you don't want to share too much with your competition, but where have you've seen the best ROI on spend? Where should we generally think about you spending that money? Thanks.

Well, what I'll tell you is we will be spending it where we get the best ROI and where we have capacity so I wouldn't know. There's certainly a number of our power brands like Oreo and belVita – we've got strong capacity coming in the back half and you'll see us spend behind those businesses. In the near-term though, I would say in a number of our markets I'm particularly pleased with the performance in EMEA, where we had to price quite aggressively in response to the rapid devaluation, and those are some of the markets where we were able to continue to make our ANC investments which than helped to protect our share. So I think as you see our aggregate share performance around the world, much of that was due to the fact that we continue to spend and in some cases increased our spending behind franchises. But net-net, we will be spending where we get the best return of where we have good capacity support.

Thank you.

Your next question comes from the line of Brian Spillane of Bank of America.

Hey. Good morning, everyone.

Hi, Brian.

Just one question just to understand a little bit about what's happened on the gross margin line this quarter, and I guess to try to bridge the balance of the year. If I did this analysis or calculation right, you got about $560 million benefit from pricing on gross margin and $175 million of net productivity gains, you did a $435 million currency headwind just translation, so is the gap there – assuming that your pricing covers your commodity costs – is the gap there in terms of the drag the transaction effect on gross margin?

The numbers we would talk but would include the transaction impact of currency not translation. That said, the transaction impact is the pressure we're seeing mostly in the COGS line. Commodities are still up year-over-year in the quarter although they've been slightly down in the short-term so that is also a headwind. And when you think about the pricing that Irene talked about offsetting; it's really offsetting that transaction impact on our commodity prices and labor costs and other elements of the P&L.

I guess what I was trying to get at was as we look at gross margins going forward and assuming that there is not any incremental pricing or maybe even a little bit of promotional activity just how does the currency – how should we think about the currencies will affect gross margin over the balance of the year? Is it potentially more of a drag because currencies are a little bit more averse? Or is it more neutralized going forward because you've taken some pricing in some of the markets where the currency has moved a lot?

I think that becomes a market-by-market conversation. It's obviously our intent to use pricing to keep our margins whole as we see currency move around. So as currency stabilized over the last couple of months here a bit, we've caught up. And I think that's one of the contributing factors in the quarter. I think we just have to watch it quarter-by-quarter. There's some markets where we're still having to price, given that currencies have moved recently or we're still playing catch-up given how we can price in those markets. So I can't really answer the question on a global basis, I think it's market-by-market and I think we're in a reasonable spot in terms of covering currency right now. The ones I highlighted: Ukraine and Russia are places where it's taking time to get that through given the magnitude and the suddenness of those currency moves.

Okay. Thank you.

Your next question comes from the line of Chris Growe with Stifel.

Hi. Good morning.

Hey, Chris.

I had a question for you if I could first on North America. It was a very strong margin performance in North America, obviously a little softer revenue growth. I just want to get a sense of how the new plant would be contributing to that. Is that a major contributor in the quarter? It's a little sooner than I expected, but certainly nice improvement in the quarter.

No, actually it's not a contributor yet. As we keep talking about the fact that supply chain reinvention will have more of a back half impact, that Salinas is one of the prime examples of that. The team has done an excellent job of cost control and particularly overhead management, and that was the key contributor to the very strong margin performance. As we're starting up the plant, we're expensing those startup costs with a lot of volume, without up a lot of leverage in this plant. It's actually a drag in the first half of the year and that's part of why we expect improvement in the second half.

Okay. That's good color. Thank you. I have a general question on the emerging markets. You've had a much stronger performance this quarter than many of your competitors and your peers, even in light of macroeconomic challenges. I'm just curious, is it your categories that are performing well? Is it your own internal performance? Just any color you can give on the stronger performance there, given in light of the challenges in those markets.

We're very pleased with the performance in our emerging markets particularly given the significant inflationary pressures. I think our team has executed well both in terms of jumping on the pricing opportunity, managing that through very smart price architecture, as well as managing the cost line quite actively so that we can continue to invest behind the franchises. There's no question though, as was we look at markets like Russia and Brazil for example, and you see the GDP trends, we're cautious about that. We've got our eyes very carefully focused on inventory levels, making sure sell-in and sell-out are perfectly balanced. But there's no question that our teams have done an excellent job in this first quarter in managing our business in the face of quite a number of challenges in those markets.

Okay. Thank you.

Your next question comes from the line of Ken Goldman with JPMorgan.

Good morning, everyone. Irene, you talked about a big retailer, I assume Wal-Mart offering fewer opportunities for displays and promotions, and I appreciate this retailer has talked about doing this across the board. But do you think and maybe, maybe not, the cookie and cracker categories were hit by disproportionate amounts? I'm curious if you see risk of further promo de-loading down the road or is this more of a one-time shift?

I think it was a near-term shift, Ken. And I think as you look at the impact that some of those decisions had on categories it, had a pronounced impact on the category and I do think that the opportunity to revisit some of those decisions and particularly in our categories which are highly impulse driven. We're big traffic generator and we contribute to overall growth. I do think that our teams are working through what the appropriate merchandising strategy should be and that's an important part of our optimism about the back half.

Thank you for that. One more if I can. I want to ask you about the specific media reports. I know you can't address them directly but I'm curious if you can help us understand how integrated the Philadelphia brand is with the rest of your European grocery business. I'm curious on a hypothetical basis, how hard would be to disassociate that brand and that brand alone from everything you're doing over there?

That's a very hypothetical question. I would say that as we are basically dealing with the transformation in the European region, we are setting up a standalone cheese and grocery unit because I believe that is the best way for us to focus uniquely on those assets as distinct from some of our other assets. So as coffee moves into the joint venture, we'll have a snacking unit and a cheese and grocery unit, and I think that's the best way to manage those businesses going forward.

Okay. Thanks very much.

Your next question comes from the line of Rob Moskow with Credit Suisse.

Thank you. I guess a couple of questions, Irene. Your results in China after the last three quarters have been quite strong, up high single-digit. A lot of your peers have experienced significant inventory de-loading because of retailer slowdowns. Can you tell us about why you're bucking the trend there? Is this an easy comp from a year ago? Or is there something particular happening to your market share over there? And then the second question is on copy, I think the last time we talked about the divestiture, it would be accretive but maybe dilutive for the first six months. Can you give us any update there? Thanks.

I'm very pleased with the perform of our business in China. I think actually we're not bucking the trend we actually live that trend. If you recall about a year and a half ago we ran into challenges as we saw demands slowing down quite rapidly and our inventories were not keeping pace with that. So as we talked about it we implemented a number of management tools and measurement tools to ensure that we had a good handle on sell in and sell out and that serving is exceptionally well so I think in many respects we were ahead of that curve and we've now got back behind us. I'm particularly pleased though with the resurgence of the biscuit business which is a critically-important business for us. Oreo had a very strong quarter and is a strong contributor to the overall business performance and gum just continues to be on fire and so net/net I think our Chinese business we learned a lot in the early days as we observed what happens when consumption slows down. I think we've got a much better balance between sell in and sell out the team is executing well and I'm extremely pleased with their performance. So we're cautiously optimistic but the continued performance of the biscuit category is important to us. On coffee, Rob, we don't really have an update what we had said was we expected in 2016 that it will be accretive, we have no reason to believe that's not true at this point and the business has performed well. They had a very good first quarter for us and we'll wait to see really we get the approval from the European commission and then that will trigger our ability to get in and really do more detail planning with our partners.

Great. Thank you.

Your next question comes from the line of Eric Katzman with Deutsche Bank.

I guess first, just a specific question, Brian. You kind of mentioned in the Asia-Pacific that a tax incentive helped gross margin, or the phase out of the tax incentive, why is a tax incentive an operating factor?

It was a hurt in the quarter. We had historically an attack structure in place in China that allowed us, it basically showed up in our operating results and reduced our costs. That has been phased out in a decision by the government. We began to face into that at the end of last year and it had a relatively significant impact in the quarter on AP's results. I would say, as I said, they did have strong gross margin improvements they also reduced overheads, if you take that out, they had margins up in the quarter.

Okay. Just in terms of – I realize obviously currency is a massive headwind to earnings, but I think last quarter, maybe you had kind of said that in dollar terms, earnings per share for the year would be at least $1.70 and that included $0.30 of at least FX headwind but it also included the coffee still being in the base, but you're also suggesting that between – interest expense will be a benefit by a couple of pennies, currency is worse, your tax rate is growing now as a slight negative. So can you give us a sense as to what you're thinking on a dollar earnings basis for the year? Is it basically unchanged also with all those things moving around?

In essence we're not really – we haven't updated the outlook for EPS, what we did highlight is the fact that interest expense will be down a bit, tax will be up a bit. I think those things would basically offset the change relative to currency is about a $0.03 difference from when we last updated you, so $0.30 going to $0.33.

Okay. All right. I'll pass it on. Thank you.

Thanks, Eric.

Your next question comes from the line of Ken Zaslow with Bank of Montreal.

Good morning, everyone.

Good morning.

North America as you said seems to be expanding margins before the Salinas plant and I didn't really understand for sure but it seems like maybe that is going – that margin expansion is actually going ahead of schedule. Does that mean that you think that of the areas out there that North America has the greatest opportunity to expand margins on top of where we're going from today? Is that a fair point?

I'm not sure I'd say that. I think we've highlighted the opportunity related to Salinas and how much margin impact we would have. I mean as we've talked about and Daniel talked about at CAGNY, as we implement lines of the future, those opportunities exist broadly across the other regions as well. They will be likely one of the first to feel the benefit of the new supply chain capabilities and the lower cost. The team has done a nice job managing through productivity, they've done a nice job managing through overheads and I would say they're a bit ahead in the process.

And also, Ken, that's one of the areas that we have of greatest return on our marketing investments and we're going to continue as our capacity comes on stream, as I mentioned a few minutes ago, as our capacity comes on stream that's an area where we're going to continue to invest as we see the margin progression.

Great. And on that point and I just want to – you also said the back of the year you're expecting to increase your advertising spend behind new product innovation. Can you talk about, assuming you're not going to tell us what new product innovation, but can you talk about region and categories where you'd see the acceleration of new product innovation?

You're going to see it around the world. I mean one of our strong suits has been the strong performance of our innovations and I think as we continue to move to a region category model, we are finding that we're able to expand our proven platforms even faster. So as you think about different innovations within our categories, Oreo thins in China is performing exceptionally well and you'll start to see that make its way around the world. I talked about the belVita line extensions that are doing well and that continues to be an area of opportunity. Within chocolate, we've got continued terrific response, continued terrific response in Bubbly and Marvellous Creations and you'll see us expanding those. And gum and candy we've got a series of innovations. Trident Unwrapped here in the U.S. is the first slab gum that you can get in the bottle and it's off to a good start and so that you'll see that when we'll play an important role as well as in China for example where we're actually going to launch a second line. We've got our Stride brand that has done exceptionally well. We're now going to be launching Trident in China. So in many cases what we're talking about are the expansion of proven platforms around the world.

Great. I appreciate it. Thank you.

Your next question comes from the line of David Driscoll with Citi.

Great. Thank you and good morning. Just two detailed questions and then a bigger picture question for you, Irene. Brian, on the share repurchase I think your slide said you did $1.75 billion of share repo in the quarter. I think your target for the year was between $1 billion and $2 billion. So would this mean that you've done the share repurchase that you wanted to do for the full year or is there any more to go?

Yeah, we've done 1.5 in the quarter and what we said was we do up for two so I would suspect it will do up to two. That's what we said.

Okay. So there's a little bit more to go. Fine. Now marketing, Irene I think you said on the quarter it was flat on a constant currency basis. Does that mean that with FX it was down about 14%?

Directionally I don't know quite how the currencies flow through the medium money but it would be, you know, and obviously particularly in the emerging markets it would be down a little bit. I think the important point is that particularly given the aggressive pricing, we have really focused on making sure that we've got adequate marketing support behind our brands, and particularly our power brands, and that's been a key driver of their strong performance. The aggregate A&C that I reference that was down slightly, again, that was primarily nonworking spending that we will continue to look for efficiency opportunities. So A&C is a key driver of the strong performance of our power brands which are up about 6 % in the quarter and they will continue to be the focus of our investment as we look out to the balance of the year.

And then, Irene, just – Kraft tie-ins uncovered a fairly massive cost savings in their merger announcement. You do have a rather unique position in analyzing kind of what they've done. The question here is a Mondelez question, though. In thinking about Mondelez, do you see further opportunities for larger cost savings and higher EBIT margins after you hit the 15% to 16% target?

Yeah, Dave, clearly the Heinz model is something that the entire industry is watching. And we are watching very closely just to see how that plays out. At the moment, we're quite comfortable with our approach. I think we've got a good balance between top line and bottom line. I think the margin performance that we're delivering both in terms of gross margin as well as operating margin is strong and where we'd hoped it was going to be. And so I'm quite confident that the programs as we have laid them out today leave us well-positioned not only to deliver our 2015 targets but also to deliver the targets that we've laid out into the future. So we'll keep watching and learning, but I'm quite confident with the approach and the path that we're on.

Okay. Thank you.

Your next question comes from the line of Jason English with Goldman Sachs.

Hey. Good morning, folks.

Good morning, Jason.

Irene, I want to pick up on a comment you just made in response to the last question, a good balance of top line and bottom line growth. Looking at results over the last year or so, it really felt like the balance was not really balanced at all but shifted heavily towards priming the pumps for margin expansion, with the top line faltering as a result of whether it be executional issues, conscious decisions to exit things, et cetera. Do you think that's a fair characterization, first? And then secondly, do you truly believe that we're getting back into a better balanced algorithm on a go forward? And if so, what's the enabler that's allowing you to shift more focus back to driving sales in conjunction with margin?

Jason, I think it's a fair characterization. I think we were very clear to say first things first. We needed to get our gross margins on our key franchises where we wanted them to be. And then we were going to be in a position to start to spend back, and that's exactly what we're doing. And so certainly, as we've said, there'll be more opportunity to spend back in the back half as more things kick in on the cost side. But even now, we're already starting to make some adjustments to our spending and making sure we're focusing it on the target areas that we think we can get the best return and where we think we need to protect the franchises. So I think you're seeing the algorithm play through in a more balanced – you will see the algorithm play through in a more balanced way this year than perhaps you would have seen last year, but we were just getting ourselves essentially staged to be able to deliver the cost profiles that we need so we have the fuel to invest in our franchises.

Thank you. That's helpful. One more, then I'll pass it on. As you were going through your prepared remarks, you listed a lot of things that should get better on a go forward. You're strategic decisions to exit business, the headwind is more pronounced, it should get easier. You're looking for better category growth in a number of markets as consumers adjust to price points. You're looking for better market share improvement on a go forward. Lots of things you talked about in terms of anticipation of getting better. I guess my question is do you need it all to get better to deliver your numbers? Or are is there enough flexibility in the algorithm of go forward to absorb a few of those things maybe not going the right way and still hit your numbers?

I think were well-positioned if you do the math. Given our strong start to the year, we feel quite comfortable with the guidance that we've laid out. It's a solid start. We're executing well, and there are some things that we believe will go our way in the back half. But we continue to believe that the guidance that we're giving you is quite prudent, and we feel quite confident in the full-year projections.

Okay. I'll pass it on. Thank you.

Your next question comes from the line of Alexia Howard with Bernstein.

Good morning, everyone.

Good morning, Alexia.

Hi, Alexia.

So just a quick question on the Enjoy Life acquisition. If I think back to when you were still with combined with Kraft, there were a number of those sort of health and wellness oriented brands, like Back to Nature that never really seemed to find their place properly in the portfolio. They kind of got lost. As you think about buying Enjoy Life and try to figure how to scale that, what's different this time around? And do you have an appetite for doing more of those kinds of deals over time? Thank you very much and I'll pass it on.

Well, Alexia, without a doubt, better-for-you snacking is on trend. It's resonating well with our consumers around the world, and therefore, it will continue to be an important focus area for us. We've learned a lot from the Back to Nature experience, and in fact, we still have an ownership of that business. As we bring Enjoy Life into the portfolio we've announced that we're going to keep the management separate and I think that's an important enabler to make sure that we get the lessons that we need, we learn the lessons but at the same time we're allowing the team that has been so successful to continue to drive the business. So I think you should expect to continue to see us building on our Better For You snacks both organically and through M&A and enjoy life becomes an important cornerstone of that effort.

Thank you very much. I'll pass it on.

Our final question comes from the line of Rob Dickerson with Consumer Edge.

Thank you very much. Just a bit of a follow-up question that Jason had, it seems like at the end of last year I think your categories were growing I believe it was 3.6% and you had said 2015 might be a little bit lower around 3% than in Q1 you're putting up 4.8% in global category growth. I think you'd said even expect to potentially see the chocolate accelerate in the back half of the year. So if you expect – if we're seeing much faster growth that you saw in 2014 in Q1 in your categories and you're also expecting some of those categories to accelerate and you expect to gain share as price gaps narrow, why wait or why not really increase your top line organic sales growth guidance especially if comps aren't becoming more difficult? Thank you.

Rob the first point is over the long-term there is no question we expect to grow at or above category rates. As we said though in 2015, we are very clearly prioritizing margin expansion over revenue growth. It reflects the challenging environment and we've got a very significant transformation we want to make sure that in all cases that our managers are able to make the appropriate trade-offs. So we feel good about the revenue growth in the first quarter, we're very pleased to see that the snacks business in particular is up around 4.5% which is a trend change from the end of last year but I think you also need to get underneath the covers a little bit on that number. A big driver of that 4.5% improvement was the 6.5% growth in chocolate which is largely price driven as we've said, also benefited somewhat from the Easter shift. So the good news is we are starting to see pricing coming through and that's critical to our overall algorithm as we're said. Our mix is still soft and we're taking some actions in the coming months and quarters to make sure that we start to see our shares rebound. So net, we're cautiously optimistic about the improved category growth, but we'd like to see more than the first quarter to feel confident about that.

Okay. Great. Fair enough. Just a quick technical question and hopefully I'm explaining this the right way. But it looks like in the first quarter you bought back the 1.5 billion in shares part of that you could argue was funded by the proceeds that you got from the currency hedges off the coffee divestiture. Without that you might be apt to raise more debt to buy back the stock or whatever and not buyback. So I'm just curious, when you announced the coffee JV, the euro was close to 140. Now current market it's around 111 so it seemed like and I think you put this within the footnotes of the release, it seems like the cash proceeds now you would receive on a dollar basis our less, which could potentially mean that you'd be able to buy back less stock with those proceeds. But at the same time you're buying back more stock in Q1 off of the benefit of this currency hedge. So it would seem like – I guess the question is, is it fair to say that maybe some of that accretion just off of the shift in the euro has already occurred? Thank you.

I mean, the simple way to think about it is, we locked in the rate last spring, and I think we locked it in, in the range of 1.37 euro which basically protected our dollar proceeds from the transaction. So what we did was really take that favorability from a timing standpoint and just basically cash some of that in during the course of the fourth quarter and the first quarter. So we locked in our proceeds, our proceeds will not go down given what's happening currency that was the intent of the hedge all along was to lock that in and it locks it in – the value is in the range of $5.5 billion.

Yeah, you just hopefully get more of a benefit upfront off of just weighted average shares outstanding. Okay.

Just liquidity in the short-term, yeah.

Fair enough. All right, thank you very much. I appreciate it.

We've reached the allotted time for questions and answers today. I would now like to turn the conference over to Dexter Congbalay. Please go ahead.

Thanks, everyone, for joining. I'll be available via phone for obviously all day today and over the next few days. I just ask for a little bit of patience. I'm all but lonesome right now. So if you have any questions, just give me a call later. Thank you.