Thank you for standing by and welcome to the Clorox Company fiscal year 2007 second quarter earnings release conference call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded. I would like to introduce your host for today’s conference, Steve Austenfeld, Vice President of Investor Relations for The Clorox Company. Mr. Austenfeld, please go ahead.

Thank you. Welcome everyone and thank you for joining Clorox’s second quarter conference call. I’m Steve Austenfeld, Vice President of Investor Relations, and on the call with me today are Don Knauss, Clorox's Chairman and CEO; Larry Peiros, Executive Vice President and Chief Operating Officer of Clorox North America; and Dan Heinrich, our Chief Financial Officer. We are broadcasting this call over the Internet and a replay of the call will be available for seven days at our website, thecloroxcompany.com. On today’s call, Larry will start with comments on the second quarter operating results, providing key business highlights as well as perspective on the near-term cost, pricing, and competitive plan. Dan will follow with a review of second quarter financial performance, as well as additional details supporting our fiscal year 2007 outlook as communicated in our press release this morning. Don will then wrap up with observations from his first 120 days at Clorox, as well as share his perspective on our year-to-date performance, future expectations, and our strategy renewal project. We will then open it up for your questions. Let me remind you that on today’s call we will refer to certain non-GAAP financial measures, including but not limited to adjusted operating profit and free cash flow. Management believes providing insight in these measures enables investors to better understand and analyze our ongoing results of operations. Reconciliation with the most directly comparable financial measure to determine in accordance with GAAP can be found in today’s press release, this webcast’s prepared remarks, or supplemental information available in the financial information and results area within the investors section of our website, as well as in our filings with the SEC. Lastly, let me remind you that today’s discussion contains forward-looking statements. Actual results could differ materially from management’s expectations. Please review…

Thanks, Larry. With that operating review from Larry, let me walk you through our financial results. We delivered $0.62 in earnings per diluted share, which included $0.03 related to the sale of the company’s residual assets in a Brazilian subsidiary. We discontinued our operations in Brazil in fiscal 2003. Excluding discontinued operations, we delivered $0.59 in earnings per diluted share from continuing operations, which was above our EPS outlook range for the quarter. This was due in part to lower-than-expected commodity and manufacturing costs, although these costs were still higher on a year-over-year basis. Additionally, we reflected a lower-than-anticipated tax rate and some gains that are reflected in the other income line on our P&L, including a gain on the sale of an international trademark. On the top line, second quarter sales increased 3% compared with the year-ago period and in line with our outlook. Consistent with the past several quarters, this quarter’s sales growth was driven by price increases, which primarily were taken in January and February of 2006. Gross margin improved in the second quarter to 42%, compared with 41% in the year-ago quarter. Let me break down the 100 basis point increase for you. Cost savings contributed 240 basis points to gross margin improvement, while the net impact of price increases contributed another 160 basis points of improvement. While commodity costs are coming down from their peaks, they still increased versus year ago, and impacted us by a negative 190 basis points. For perspective, this compares with a negative 400 basis point impact from commodities costs in the year-ago period. Manufacturing and logistics, which includes diesel costs, impacted us by a negative 110 basis points. In line with gross margin, adjusted operating margin increased to 14.9% for the quarter, compared with 14.2% in the year-ago period. As…

Hello, everyone, and thanks for joining us. Before I open it up for Q&A, I would like to take a few minutes just to talk about my first four months here at Clorox and the leadership changes we recently announced, as well as give you a bit of an update on our strategy renewal efforts. Before I do that, I would like to take a minute and recap what I think you should take away from Larry’s and Dan’s remarks. First, we are obviously very pleased with our second quarter results. We exceeded our expectations and reflected an improving commodities environment and importantly increased market share in five of our eight U.S. categories, as Larry noted. Second, we are achieving strong results from our innovation programs, which are contributing about two points of annual incremental sales growth, which is in line with the targets we have talked to you about in the past. Third, we are experiencing, as you know, an intensely competitive environment in several categories and we believe, as Larry noted, we are taking the right steps to support our brands in the short-term and to really help ensure the long-term health and growth of our business. And finally, we continue to execute our cost reduction strategies and remain I think very disciplined on the use of capital. So looking ahead to the balance of the year, we certainly feel good about the second-half. We believe we have some good momentum and we are optimistic about the new products we are launching. We are working toward a smooth transition with the bleach business acquisition, which is clearly a really great investment for us, one right in the center of our bulls-eye. Last quarter when I spoke with you, I gave you an overview of how I plan to…

(Operator Instructions) Our first question will come from Chris Ferrara with Merrill Lynch.

I just wanted to ask about the trends. You talked about second-half trends looking better, but I guess in essence, since you have the acquisition benefit, you are really lowering your Q3 and Q4 organic sales growth rate. So when you say volume growth trends will look better, are you referring specifically to volume, and I guess sales don’t follow that because of the increased promotion that you are going to be seeing?

I think that’s pretty much the case. You have to remember that the acquisition does not play a big part in the second-half, given that we haven’t even closed on a big portion of it as yet. So that does not deliver a lot of benefit to the second-half, some but not a lot. But the biggest impact is probably the reduction on the sales side because of some increased trade spending and obviously the improvement in volume, largely because we are out from under the shadow of these pricing initiatives.

Okay, then just on bleach where you said obviously we are lapping the price increases, you said you are going to step up support. I just want to be clear. Are you referring to color-safe or -- you are also referring to, I imagine, regular chlorine bleach, right? If that’s the case, do you see yourself stepping up promo to higher than normal levels or just sort of getting back to it since the price increases are coming through or coming off?

I would say that the primary focus is on the color-safe bleach side. I don’t think we have an issue at this point on the liquid bleach segment, the Clorox bleach segment. In fact, we are actually growing share based on the benefit that we are getting from Ultimate Care. So it’s mostly focused on color-safe bleach. There’s an awful lot of competitiveness in the color-safe bleach segment in terms of bargain price brands. There is more indirect competition from brands like OxiClean and Tide To Go, so that’s where the focus is going to be. Clorox 2 is a large franchise for us. We have been doing some advertising behind it, largely in the form of advertising tags. So we’ve actually just put on the air some dedicated advertising. We are increasing our advertising. We are also launching the Free line extension that I mentioned, the Free and Clear line extension that I mentioned. So it is much more on the color-safe part of the business that we are talking about.

Finally, the manufacturing logistics pressure of 110 in the quarter, that seems pretty high. It looks like the worst you had seen it was last year at 120. Is there a reason why, given where crude and fuel are, that you would have gotten hit so hard this quarter?

Well, the way to think about the manufacturing and logistics costs, keep in mind we have a pretty robust cost savings program, and so when we report out our results, some of those cost savings are in those areas but we report them as part of the cost savings bucket. Second of all, in manufacturing and logistics, we do report our diesel costs as part of that as well, so certainly there has been the pressure on the diesel component in manufacturing and logistics.

Thanks a lot.

Our next question is from Amy Chasen with Goldman Sachs.

Just wondering if you could give us a little bit more detail on what oil price assumption you are using. In other words, could there be more upside over the next several quarters, and I’m not just talking about the back-half but into next year, given what oil has done?

Let me take that one, Amy, and I will talk more about resin and natural gas, frankly, than oil. Although oil does impact us in some commodities, it is really natural gas and resin. Post the hurricane, we saw highs in the resin market in the $0.70 to $0.80 per pound range. Certainly resin has come off of those highs fairly quickly, and I think a lot of that had to do with some near-term over-supply in the resin market, certainly housing has gone soft, and I think there was a build-up of resin supply in anticipation of a bad storm season which didn’t come to pass, so certainly prices have come off more quickly and we have seen those dip into the, probably the mid-$0.60 range, maybe even drifting down a little to be the low-60s. As we look at it going forward, we are not seeing that resin is going to return to historical averages, which for us has probably been in the $0.35 to $0.40 range, call it mid- to high-$0.30 range. We still believe the demand/supply equation in the sector will keep prices higher than what we have seen historically. Having said that, our outlook does assume that we are going to see some drifting lower over the next three to four quarters. We still believe there is going to be some continuing downward pressure on resin prices. You know, the caveat we have is there are two announced price increases in the market today. We certainly do not believe the operating conditions in the resin market should support those increases, but you never know exactly how much those are going to stick. So basically we do see some softening, some drifting down but not coming back to what we had seen historically.

Okay, and just on the competitive issue, I think you spoke about the color-safe bleach issues. Can you tell us in the other categories, obviously you have talked about bags and wraps and you have talked about disinfecting wipes: are there any other categories besides those three where competition has really stepped it up, or are those the three where we are going to see the bulk of the incremental spending?

There are some other competitive battles going on, but those are the three primary ones. I don’t think the other ones scale up to be worth talking about.

Thank you.

Our next question is from Bill Schmitz with Deutsche Bank.

Good morning. Could you just talk a little bit about the promotions you are using? Are these temporary price reductions or is more display work? Is it brand dilutive stuff to take some share back, or is it more thoughtful display type activity?

I would like to think it is all thoughtful. It varies by category and I will just talk in broad strokes because obviously I don’t want to divulge a lot to our competitors, but in the cases of Glad and to some degree in wipes, we are really talking about pricing and we are talking about pricing even more specifically in some specific customers. So on Glad, for example, we had chosen not to take a price rollback. We may make that call at some point but at this point it seems more prudent for us to deal with that with some specific pricing actions more on the trade side. On wipes, it’s pricing activity by competition that we’re responding to. There has also been some aggressive claims in advertising that we are trying to address, both from a product standpoint as well as an advertising standpoint. So it is a combination of things, but there is definitely some trade spending component involved in the near-term.

Great. I’m just having a tough time with the math on this Colgate bleach acquisition, because it sounds like you are using cash to pay for it, so I assume that is a 4% cost on capital, and then you will pay $126 million for it. If I kind of back into the margin on that business, it is like 6% or 7%. So what I do not understand is, is there a big sort of purchase accounting adjustment where you have to mark the inventory up or is it just you have to plow a ton of resources back in to try to grow the business again?

I think the way to think about it, Bill, is these were non-core brands to Colgate, and so what we need to do is we need to do some near-term investments to revitalize those brands. We just closed on the Canadian piece right at the end of December. We anticipate closing on the Latin America piece some time in the third quarter, and there will be some revitalization investments, both on the trade spending line as well as advertising against those brands. So that’s really near-term, what’s impacting the margins on the acquired business.

Okay, so there is no material purchase accounting adjustment or mark-up or any of that kind of stuff?

Obviously we are getting good will and intangibles with the transaction but there is no mark-up in inventory. There is very little inventory, frankly, that is coming over as far as the transaction because of the turns of the business.

Okay, and then just one final quick one, is the 500 million pounds of resin number still a good one to use, the 50-50, high density and low density?

Probably 450 to 500 million pounds.

Yes, that’s correct.

That 50-50 split is still right?

No, it’s probably three-quarters low and a quarter high density.

Great, thanks very much.

Our next question is from Connie Maneaty with Prudential Securities.

I have a couple of questions. Could you tell us in last year’s fourth quarter, the one-time impact of the severance and options so we can figure out how they affect this year?

Yes, the stock option charge a year ago, the non-cash stock option charge was $25 million, Connie, and the CEO related costs were $11 million, both of those pre-tax.

Okay, great. Also, on Glad, I know that volume is supposed to pick up in the third quarter, but when do you suspect Glad volume will pick up?

I think we would hope to see a return to volume on Glad in the third quarter. Again, we are addressing the competitive situation I think more surgically at this point. I know it hasn’t shown up much in the IRI numbers but quite frankly, most of the battleground is in the untracked customers, not in the tracked customers. We have already picked some of our pricing differentials, probably effective mostly in December and so they are starting to show up at retail now, so I would expect some volume growth in the third quarter.

Should we expect that what is going on with Glad is more than Hefty, that that private label is able to reflect lower spot prices quickly on store shelves and there is that dynamic going on as well?

Definitely an impact from private label. They have always been obviously a big share in this category, so if you look at the differences versus a year ago, private label has spun off significantly less than Glad or Hefty. We went up the most, so our differentials, or our depth versus private label are pretty significantly above what they were a year ago. So private label was definitely an issue. The good news is Force-Flex remains a very strong item for us. Recall that we built our share up five points over the last two years. Force-Flex is still gaining share, still growing shipments, so a lot of this pricing pressure is on the base brand where our differentiations versus the competition is less than it would be on Force-Flex.

I think if you looked at -- it depends on the [inaudible] you are looking at. I think if you looked at the mid-cap, which is the 20-count bags, it really is not our price differential versus Hefty year-over-year. It is private label, as you alluded to. You get to the 40-count, then you start to see a bit of a swing, a little bit of a swing versus Hefty but it’s private label where the gap is clearly the larger.

Okay, and my final question is on your fourth quarter preliminary outlook, because it is considerably below the consensus, not that the consensus is always right, but the factors don’t quite make sense to me yet. You are going to have a higher tax rate in the fourth quarter, and we figure that might hurt earnings maybe by $0.03 or so, but your gross margin expansion ought to be higher in the fourth quarter than in anything you have seen so far this year. So what else is going on in Q4 such that the outlook is lower than what we thought?

Connie, I don’t think there is really anything material from an operating or really anything else standpoint in Q4 that’s of note. Just to reiterate some of Dan’s comments, sales expectations, 35%, that’s pretty consistent with our long-term trend. Looking at a few of the analyst numbers, the consensus numbers, that might be a bit shy of where folks are, so that might help in terms of getting back into the range, but to echo your comments, we would expect gross margin to grow at a healthy rate, probably a little bit better than we have seen in the first-half of the year. Our selling and administrative costs will be down because due to the one-time charges a year ago that we noted, and the other item is the tax rate, which you also noted, which is probably closer to maybe a $0.04 differential versus consensus, given the tax rate will be higher in a quarter. From an operating standpoint, I don’t think there is anything materially different or unusual.

It sounds like it is primarily non-operating things than any change in the operating environment or new products or ways you might be supporting your sales?

Nothing is top of mind. What I might suggest is maybe we can talk after the call and just review assumptions.

Okay, fine. Thanks very much.

Our next question is from Lauren Lieberman with Lehman Brothers.

Thanks. I just wanted to know, as you guys are looking into the second half and you have made all of your spending plans, to what extent is that based on your outlook for raw material costs inflation, deflation, or is it a separate decision-making process from what is going on with commodity costs?

I think as you know we have hung pretty tough to that rate of spending that we established of about 10%, despite all the commodity pressures. That is essentially what we generally target, again despite the commodity situation. I would say that we are increasing some components of spending because of some of these competitive pressures, more on the trade side, which is not included in that 10% overall number, so there is some increase there, but my guess is our spending, our advertising spending will be about the 10% rate or slightly above or slightly below that number in the second half, and where you will see a pick up is maybe on the trade spending component. But we kind of hang to a fairly consistent spending rate over the corporate portfolio, despite the commodity issues.

It is the trade promotion piece I am trying to get at. You absolutely continue to spend very consistently on the advertising line.

The trade promotion piece does vary over time.

But it is based on what we think we need to do to support our brands. It is not tied to any limit in terms of if we get favorability from commodities cost, then that is the amount that we have to spend. The investment in building those brands and supporting those brands is based on what we need to do to keep them healthy.

I think in the context of commodity cost, what we look at, as Dan and Larry said, is trade spending is kind of the flexible marketing mix element there, but if we don’t get our pricing right and we understand I think fairly clearly what our price elasticity are by these brands and where we gain share, where we hold share, where we lose share. So it’s kind of the trade spending piece in the context of commodity cost is kind of the flex that we have to say okay, how do we make real sure that we are not getting our pricing out of whack based on our modeling so we know we can hold gaining share?

Then tying that back to some of the comments you made on the outlook for cost inflation at this point, we are not crossing any line to say you are going to be spending back over 100% of any kind of raw material cost relief that you might be getting at this point?

No.

Okay, great. Thank you.

Our next question is from Bill Pecoriello with Morgan Stanley.

Good afternoon, everybody. When you talk about the volume growth possibly being ahead of sales growth in the third quarter in the release, what are you seeing in January in terms of volume growth? Are you seeing the sticker shock starting to subside? Were you counting on the volume response into February and March as you increase this trade spending?

Our trade spending plans are, obviously we did some of those, started to implement it in second quarter and they are ramping up here in Q3, Q4. Our outlook reflects what we think the response to that will be. As you think about volume growth in the back-half of the fiscal year, Q3 and Q4, we are expecting volume in sales, the delta between the two probably to be in about a 1% to 2% range. In fact, with the additional ramp-up in trade spending, we could see volume growth being ahead of sales growth because of the spending that we are doing. Also because of the spending we are doing on the revitalization of the acquired brands. That will have an impact as well.

What kind of negative price can we see move through the P&L from this increased trade spending in some of these areas like trash bags and wipes through the back half? In this quarter even, there was one division with the water auto division. Price was only up two but you had that 17% increase in STP, so what kind of price decreases are we seeing in some of these categories?

Bill, the given category, it will be mid- to low-single digits. For the entire company, we do not expect volume in sales to be off by more than a point or two at the very most.

Negative 1% or so on the price mix at the corporate level?

Correct. That is our assumption.

And then, the question on the commodities, when we are seeing Pactiv, who just reported earnings and they are already seeing a pretty nice margin benefit from the lower resin move to their P&L, is the lag that we see in your P&L more related to hedges or contracts or different accounting methodology than we are seeing in their P&L?

Bill, that is certainly some of it. As we said before, because of our contracting, hedging and other techniques, we tend to lag on the way up and lag on the way down. I think the other factor to keep in mind is resin is just one component of commodities and there are many others that we have had to cycle through these peaks, like chloralkali and other things. How it plays out in our P&L, it can be different than say Pactiv, which is more resin.

Great. I just have one final one on the innovation front. When you are looking out to ’08 and beyond, you have talked about having a game changer in ’08. Where is your focus area in terms of categories? Where should we look for you on those game changers going ahead?

I would say broadly and in general, game changers tend to come in the category we have designated as the best categories, which would be categories like home care and Glad. That’s not to say that game changes cannot come elsewhere, but they are more likely to come there because that is where we have the innovation and R&D focus.

The other point I would make, Bill, is while we are certainly continuing to focus on delivering a game changer in ’08, I think the broader point for us is that we are trying and we are comfortable with getting over two points of incremental growth out of innovation. That’s a combination of not only a game changer but other core initiatives that we are driving. I mean, if you take for example the litter success that we are having right now. That was never described as a game changer but it is certainly having broad success on the market. So I think it is more about are we getting, are we feeling very comfortable that our program is delivering 2% or north of that in innovation.

Thank you.

Our next question is from Alice Longley with Buckingham Research.

Could you give us more color on the litter food charcoal category and that 11% increase? Was there any forward buying ahead of expected price increases in charcoal in there? Can you tell us more about the cat litter market, how fast that is growing and your share in that category?

Let me start with cat litter. It’s a pretty healthy category, growing more than 5%. Our share is up over a share point in total, driven by the Fresh Step franchise where we have this improvement and where we are advertising the improvement, so if you look at the Scoopable portion of Fresh Step, it is up over 30%.

And that is all retailers in, Wal-mart, et cetera?

No, I’m sorry, I’m quoting track information, IRI information. We do not have good quarterly data all outlets. It is just not that reliable. We look at it on a 52-week basis but not on a quarterly basis.

I think the other interesting thing about it, Alice, on the litter, as Larry said about 5% growth in the category full year, but when you look at -- the category was essentially flat the first three months of the calendar year and then it really started to ramp up into the 6% to 9% range. So we think that was clearly driven by this innovation, so the category looks pretty robust.

Okay, and then, any forward buying going on?

On charcoal, we have controls in place to limit any forward buy on announced price increase, and there was nothing material in charcoal. Charcoal did benefit in the quarter from some favorable weather around the country and some early season/off season consumption.

Okay, and then did I hear you say that there are no rollbacks, price rollbacks going on with Glad? Because I have seen quite big ones at Wal-Mart.

Specifically what we have been doing is doing some trade promotion temporary price reductions to affect our retail shelf price. What we have not done as yet is take a truckload, permanent truckload discount with price rollback. Again, that is a choice we may make but we have not yet made at this point.

Okay, thank you.

Our next question is from Wendy Nicholson with Citigroup.

Could you talk a little bit more about the international business, the strength that we saw in the second quarter? Those volumes were awesome. I wonder how you are thinking about this second half. Is that just great category growth for some particular reason, or what is driving that? Then, secondarily, why we would not have seen more margin expansion there? I would have thought with just favorable operating leverage, the margins would be up year over year as opposed to down.

Wendy, we are very pleased with the international results in the second quarter. There were really two things underway. There was actually very good volume growth, and we also saw some pretty strong category growth in a couple of the Latin American countries, so we feel very good about that. We are also, on the margin front, we are supporting a series of new products, particularly in Latin America, which is impacting, some spending we are doing there does impact what you see on the margins, so there is both new products as well as brand building underway there. And then also on the margin side, the international, while it had some increases in commodity costs a year or so ago, they are fairly benign and actually it is lagging a bit what we saw in the U.S., but we are actually seeing some upward pressure on commodities cost. So the combination really of the investment, buying new products, growing brands and some of the commodities that we are seeing in international impact the margins that we reflected there in the second quarter.

Could you give us a sense for what you are looking in terms of volume growth for the international business in the second half?

You know, what we said about international, which continues to be true, although we have had a couple of quarters where it has been a little bit lower and a little bit higher, is we still are anticipating that international, that volume and sales growth will grow at or above the company average as we look out. That is probably a fair estimate to use.

Terrific. Then, very last question, did you say there was a gain on the sale of a trademark in the SG&A? How much was that? It has to be tiny, I assume.

Very small, I think it was worth maybe $0.01 in EPS. It was a very small gain, $1 million to $2 million, a non-strategic trademark.

Got it.

To be clear though, that was down on the other income line. It wasn’t in SG&A, so it is one of the reasons why you saw some favorability in other income.

Got it. Fair enough. Thank you very much.

Our next question is from Kathleen Reed with Stanford Financial.

Good afternoon. Quick question on the sales line, could you just break out, volumes were down 1. How much was the currency, price and what the trade promotion spending was in the December quarter?

Kathleen, the delta, the 4 point delta between the 1% volume decline and sales being up was almost solely due to pricing. Mix, currency, trade spending really did not have much of an impact.

On your new products that you talked about that are going to be launching in your third quarter, can you just give us any idea what categories they are in? I know they are not the game changer ones, but any specific category or information you can tell us without divulging too much?

I talked about the Clorox 2 product, the Free and Clear product, which is a line extension of our color-safe bleach. We are also launching the organic Hidden Valley Ranch product, which I think I mentioned. We have the Clorox disinfecting cleaners. This is really a line of cleaners, both a spray version and a dilutable version. So they are disinfecting products that do not contain bleach. Obviously we have bleach-based disinfecting cleaners in that area, but we do not have any non-bleach products. We also have some smaller items coming out. We have an odor shield extension on our trash business, with a vanilla scent. We have a light version of our bottled Hidden Valley Ranch buttermilk product. We have a new scent on our Pinesol product. We are restaging our Clorox toilet bowl cleaners with a new formula and an improved package. We also launched a hand sanitizer in our institutional business, Clorox Anywhere hand sanitizer.

Great. I think on your last call, you talked about you were going to re-launch the Anywhere spray during the March quarter. Has that already happened? If you can give us any information on how that is going.

We have done some things on a kind of broad-scale basis in Anywhere. We have actually taken the bottle out of the box and we have seen some improvement on shelf just by doing that. We actually have changed the packaging a bit, which should be hitting the shelf relatively shortly. We did it in a couple of test markets and tried some new advertising approaches. We are encouraged by those results. My guess is we will probably turn those on at the beginning of next fiscal year versus this fiscal year, although that is still to be determined as yet. But still a solid item on shelf. We still get pretty excited about this one because the consumer playback, those who use it over time, consumer playback is just really incredibly positive, so we are pretty committed to keep focusing on this one. Once we get the equation right, we will bedeck the marketplace with some heavier spending, although we are spending on the product today.

Thank you.

Our next question is from John Faucher with J.P. Morgan.

I apologize for beating a dead horse on this thing. I’m just trying to get a better handle. It seems as though the three categories where you are highlighting the higher promotional spend have just entirely different dynamics in terms of what is going on. So I just want to make sure I have this, because it seems like the wipe thing is much more of a competitive issue in terms of a brand re-launch, which is less raw material related. The bags and wipes thing is more just an existing price gap given previous pricing, and then the color-safe bleach is more of a traditional sort of negative price war type of environment. Is that a fair way to look at it?

I think I would call the color-safe bleach a hybrid, because we did take a couple price increases on color-safe bleach. So a bit of that issue is on competing brands that are simply lower price within the color-safe bleach segment, and a portion of it are premium products playing a competitive game.

John, I think your description on the Glad side and the disinfecting wipes is pretty accurate.

So it does not sound yet like the activity is really -- I guess if you could put a percentage on the raw material related activity that we are seeing here, it sounds like it is probably lower than what people would initially think. Is that a fair statement to make?

I think it probably is. I think if you look at Clorox disinfecting wipes, I think a lot of the activity going on there from Lysol is just due to the success of Clorox disinfecting wipes. The fact that that product category is very much on consumer trend and people want a slice of that pie, regardless of what the cost environment is. So I think your description is accurate.

Then, one follow-up on the Lysol wipe piece, which is you guys have always felt very comfortable in terms of your product quality and your consumer acceptance relative to Lysol. So as you look at their relaunched product, where do you feel you guys are now, sort of top two box relative to the Lysol guys?

On a blind product basis, we are probably at parity. Branded, we are still significantly preferred. Clorox is still a much more powerful equity and what we have established in that business is a pretty substantial difference versus Lysol.

Okay, great. Thank you very much.

Our next question is from Linda Bolton Weiser with Oppenheimer. Linda Bolton Weiser - Oppenheimer & Co.: Thank you. I was just curious in terms of after you complete the bleach acquisition, in addition to reinvestment behind the brands, what other actions might you initially take? For example, are there any opportunities to take some of your other brands into the channels where Colgate had presence with the bleach?

It’s a little different by country, so there is in one case -- let me speak to Canada specifically. We are buying the leading bleach brand. We do not have a Clorox presence there of any significance. Our hope would be to revitalize that bleach business and then take on what we have done in the home care side within the U.S. into Canada based on this health and wellness or disinfecting germs platform. So that’s the big opportunity for us, not only to revitalize the business but also to expand the health and wellness platform. It will give us some additional scale in several of the Latin American countries that I think we can build upon with not only home care type products but also potentially some other Clorox lines.

I think if you look at Venezuela where we have a really good basic business in Venezuela, we do not have any bleach business in Venezuela, so we’ve got really good infrastructure in that country, and I think this will give us something -- it’s a really great opportunity and it is right in our wheelhouse. Linda Bolton Weiser - Oppenheimer & Co.: Okay, thanks.

Why don’t we take one more call?

Very good, and it is from Alec Patterson with RCM.

I have six questions. Just quickly, the IT charges in the second quarter, $0.04 to $0.05 roughly per share, is that right?

Yes, pre-tax basis, charges in the second quarter were about $9 million, split between $5 million in selling and admin $4 million in restructuring, and we see another $8 million to $9 million in the third quarter, and I think about, if I recall the math correctly, it is going to be about $6 million probably in the selling and admin line and the balance down in restructuring.

Okay. Then, your S&A comment for Q4, are you still looking for S&A to up year over year when you back out those one-time options charges?

Yes, we would anticipate that selling and admin will be up when you back that out. We have some incremental investment in our strategy. We obviously have the admin impact of the bleach acquisition, and then there are a few other things that will be there, but yes, we are expecting year over year to be up after you adjust for those charges.

Okay. Then, the CCM, up 240 basis points contribution, that is a pretty strong run-rate on the comp basis. Can one take that as a run-rate? In other words, are you running ahead of plan this year or should we expect the back-half of the year to see those benefits ease off?

I think the best way to think about it is for full year, we are still in this $90 million to $100 million cost-savings range. It can be a little lumpy by quarter, so if you are thinking about it, I would think about $90 million to $100 million. We certainly are trying to deliver at the high-end of that range but it is always difficult to exactly quantify what will hit in any one particular quarter, but we still fee good about the 90 to 100 for the full year.

I guess I can’t help but think of it as these are cost savings and once you have achieved them through whatever structural changes, et cetera, you have taken, that they should be in place and thus ongoing, and thus the run-rate you’ve got on a couple of years basis now would suggest some good benefits in the second-half of the year, but am I misinterpreting the way the CCM flows through? Is it lumpy? Next quarter could not have anything to do with the prior quarter?

The timing is strictly dependent on the nature of the activities that we’re driving. To your earlier point though, CCM is -- yes, it takes costs out of the base, but then we can improve upon as we go forward. So this is incremental cost savings over the balance of this year.

Okay. Just to clarify the response you had to Bill’s question about volume and price and the sales mix, I just want to make sure I understood it. If, for example, sales are up 4%, you are suggesting that might be a mix of volume up 3 and price up 1 to give you that delta that you were talking about. Is that roughly what you, as an example, talking about?

We were really saying we would see volume up 4 and price down 1, for a net 3.

I see, okay. Lastly, just an overarching question, the strategy you guys had in taking the price increases you took over the past two years has theoretically reflected your perception of kind of where the raw material environment might go over time, and you were trying to price up to kind of the midpoint of an ongoing range. Theoretically, the pricing didn’t capture the peak in the raw materials we recently had, theoretically. So as raw materials come back down, there was supposed to be some cushion in your pricing strategy, but now that seems to be changing a little bit, talking about the price gaps. Is that overarching strategy of your pricing versus raw material on the long-term, is that changed?

I think the overarching strategy is basically still in place and I think it is broadly true. I think the one obviously big exception is Glad, where we have just seen so much increase in commodities, so much increase in pricing in a relatively short period of time. We are still well above the historical average in terms of resin costs on the Glad business. Our pricing has not nearly approached capturing all that back, so we are still below from a margins standpoint versus historical trends, so some correction there given how much pricing we have taken is not to be surprising. Generally speaking, I think our strategy has played out. We have tried to price to what we thought would be kind of the ongoing normal pricing, not pricing to the peaks. I think that has largely held true with the exception of Glad where we have just seen a much more dynamic environment.

But even in Glad, Alec, as you look at it, we are probably still up 70% percent from historical resin costs averages, and if you look particularly at the trash business, probably our price increases that we have taken over the last two years are probably in the 35% to 40% range, so we are still well below what we have seen in the cost run-up. Certainly we have to pay attention to the price gaps and we do have to respond.

I understand the response and maybe it is a short-term issue, but is it your impression then over the next say 12 to 24 months that the raw material rollover, or getting to the point where you have tried to price the product -- that is, your theoretical long-term cost of raw materials, if it gets to that, are you suggesting that you are not looking to spend 100% of that raw material back into the market? I’m sorry. I don’t know if I asked that question clearly.

Could you restate that?

Again, along the lines of the notion that your pricing strategy has been for a long-term raw material environment. Raw materials are rolling off of a peak down to whatever that theoretical long-term raw material price point is. Are you looking at spending 100% of that raw material rollover back into the marketplace? Or are you, because of your pricing strategy, hoping to capture some of that?

I think it’s a combination of both, trying to capture some of that and looking at gross margin improvement over time.

If you think about the Glad business more broadly, obviously the place where we would have the most commodity issues and the most pricing pressure, our long-term strategies that differentiate our product line in a way that drives value to the consumer so we are not so much in this commodity pricing game, and we obviously have done that very successfully with our Force-Flex business, which is improving our margins. It’s still growing after being in the marketplace for more than two years, so at the end of the day, that would be our long-term solution to getting out of this box we have in simply responding to commodity pressure and pricing pressure by competition. In the short-term, we obviously need to play in a way that we are still keeping our brands healthy until we get all the way to [bright], but we are making some good progress on the Glad business, certainly since ownership.

All right. Thanks for answering all my questions.

With that, this does conclude today’s question-and-answer session. Mr. Knauss, I would like to turn the call back to you for any additional or closing remarks.

Okay, thanks. I would like to echo my thanks from everybody around the table for all of you being with us today. We look forward to talking to you again in early May for the third quarter results, and then of course on the 24th of May we will be in New York, and I’m assuming we will see many of you there. Thanks for being with us today.