Operator

And our next question comes from David Driscoll of Citi Investments. Please state your question.

Cornell Burnette for David Driscoll - Citi Investments

Good morning. This is actually Cornell Burnette calling in for David. Just wanted to ask you guys – just getting back to commodities, in your guidance, is any of that including the sell off that we''ve seen in the grain markets post the January 12 USDA report, or have you already been significantly hedged so you''re not experiencing any of that benefit.

A. D. David Mackay

Yeah, we''re about 70% hedged on a global basis at this point in time, Cornell, and the markets you''re talking about have bumped around from low-ish to the much higher and back down a little bit. But for us, it''s never our expectation when we take hedges we''ll get it perfect at the top or the bottom but we''re 70% hedged, so very comfortable where we''re hedged and it puts us in a good position for 2010.

Cornell Burnette for David Driscoll – Citi Investment

Okay and then another question if I may, just moving on to the consumer marketing side. I noticed obviously that gross profit margins were up 350 bps in the quarter but operating margins weren''t, were actually down. I know you had some higher upfront costs here at running through the SG&A line, but it also would also seem that advertising was up significantly in the quarter. Just wondering, was a lot of that concentrated in the international markets and particularly did you witness a big bump up in advertising spending in your developing markets kind of in line with the strategy to fund future growth there?

A. D. David Mackay

Yeah, well our fourth quarter advertising was up very, very strongly and I think that was across the board. But I know in Europe it was up very strongly as it was in Asia Pacific and Latin America but it was also up strongly in North America. So our belief in advertising is that we have to invest in our brand to sort of keep the brand equity strong, continue to reinforce the value, the quality of the products we sell, particularly in an environment where consumers need to be reminded of these things on an ongoing basis. So we think that puts us in good stead as we head into 2010.

Cornell Burnette for David Driscoll - Citi Investment

Thank you.

A. D. David Mackay

Thank you.

Operator

Our next question comes from David Palmer of UBS. Please state your question. Hello, David, are you on the line? Okay our next question comes from Alexia Howard of Sanford Bernstein. Please state your question.

Alexia Howard - Sanford Bernstein

Hello there and good morning everyone. Can I ask about the competitive dynamics in the cereal segment that you are seeing? I mean, it seems as though advertising spending is increasing fairly significantly. I guess we''re seeing some of the smaller competitors maybe taking pricing downwards I guess to try and secure their share positions. Is that the main reason that we''re going to see another bump in advertising spending next year as a percentage of sales given that you are already at fairly lofty levels versus the other packaged food companies in the U.S.?

A. D. David Mackay

Well, I think firstly strong advertising and brand building is a fundamental part of our belief that underpins our ability to drive sustainable and dependable performance, so that''s something you''re going to see every year. We did get significant productivity benefits in 2009 plus a lot of cost saving benefits. So while you''re looking at a number for the year around 7% I mean our impressions were significantly higher. We see that as a very positive thing. The cereal category remains strong. We gained share in Q4 and for the year just a little. We did see Quaker and to a lesser extent Post come back quite heavily but you''ve got to remember that this has always been a competitive category, nothing unusual. And Quaker had been out of the market for I think the back half of 2008 because of the floods, so for them that was just a return to being in the market. And Post had had some disruptions for the first half, so they were probably just getting back into it a little too. So nothing unusual and we think the category will remain strong, it''s a very positive category to be in this sort of an environment.