Good day, ladies and gentlemen, and welcome to The Clorox Company first quarter fiscal year 2009 earnings release conference call. (Operator Instructions) I would now like to introduce your host for today's conference call, Steve Austenfeld, Vice President of Investor Relations for The Clorox Company. Mr. Austenfeld, you may begin your conference.

Great, thank you. Welcome, everyone, and thank you for joining Clorox's first quarter conference call. 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're 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 our first quarter volume and sales performance and also provide our perspective on the current consumer and retail environment. Dan will then follow with a review of the quarter's financial performance as well as additional detail supporting our updated fiscal year '09 outlook as communicated in our press release this morning. Included in Dan's discussion will be details on financing costs, commodities and the impact of foreign currencies. Finally, Don will comment on our progress against our Centennial Strategy before we 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 free cash flow, EBIT margin, debt-to-EBITDA and economic profit. Management believes that providing insights on these measures enables investors to better understand and analyze our ongoing results of operations. Reconciliation with the most directly comparable financial measures determined in accordance with GAAP can be found on today's press release, this webcast's prepared remarks, or supplemental information available in the Financial Results area of our website as well as in our filings with the SEC. In particular, it may be helpful to refer to tables located at the end of today's earnings release. Lastly, please recognize that today's discussion contains forward-looking statements. Actual results could differ materially from management's expectations. Please review our most recent 10K filing with the SEC and our other SEC filings for a description of important factors that could cause results to differ materially from management's expectations. With that, let me turn it over to Larry.

Thanks, Steve, and good morning to all. We had a very good first quarter, as detailed in our press release. We delivered double-digit sales growth, driven largely by strength in our base business. As anticipated, margins declined due to cost increases in raw materials, manufacturing and logistics. Net earnings increased by 15% and we delivered $0.91 in diluted earnings per share. All in all, we are very pleased with the progress we're making in this very challenging environment. As usual, I'm going to focus my comments on volume sales and market share and provide perspective on what drove our top line results. Total company sales were up 12% for the quarter on top of solid year ago growth. Our base business was up more than 8%, well above our long-term 3% to 5% annual target range. The other 3-plus points of sales growth was from the Burt's Bees acquisition. Volume for the quarter was up 4%. Excluding Burt's Bees, volume was up 1%. The difference in sales and volume growth was driven primarily by pricing and favorable mix along with about a half a point benefit from foreign exchange. Our volume performance is within expectations and consistent with our price elasticity models. Top line growth was broad based. We grew sales in 9 of 11 businesses during the first quarter, with two businesses down about 1%. Our largest business, Home Care, grew share in tracked channels versus the year ago quarter. Strong channel growth is driven by Green Works natural cleaners and price increases on many of our cleaning brands. Green Works continues to exceed our expectations. We have created a successful new brand that offers highly effective natural cleaning at reasonable prices. In August we extended Green Works into dishwashing liquid and early results have been very positive. This…

Thank you, Larry. Let me walk you through our first quarter financial results. For the quarter we delivered diluted earnings per share of $0.91, restructuring very strong top line performance and improved business mix. Our earnings results include restructuring-related charges of about $0.03 diluted EPS. In the year ago quarter we delivered $0.76 diluted EPS, which included restructuring-related charges of about $0.12. First quarter gross margin declined by about 200 basis points to 40.6% of sales compared with 42.6% in the year ago quarter. Excluding charges, gross margin for the quarter was 41% versus 42.7% in the year ago quarter, in line with our expectations. We again saw a significant year-over-year negative impact from commodities and energy costs that we were not able to fully offset through price increases, cost savings and improved business mix. While energy prices have recently begun to decline, the benefit is just now beginning to impact our commodity purchases. We continue to anticipate higher commodity costs in the second quarter, reflecting the increased input costs we've seen over the last four to five months. That said, with the recent retreat in energy prices and declining overall market demand for many of the raw materials we use, we anticipate lower commodity costs will provide a higher net benefit in the second half of our fiscal year than we previously anticipated. Cost savings for the quarter were $28 million, with $25 million on the gross margin line. We have identified additional fiscal year 2009 cost savings opportunities and are now increasing our fiscal year cost savings target to a range of $100 to $105 million. First quarter selling and administrative expense increased versus the year ago quarter. The increase is primarily related to the acquisition of Burt's Bees and incremental investments to support our Centennial Strategy, including…

Okay, thank you, Dan, and welcome everyone. As Larry and Dan noted, we had a very good first quarter. I certainly think the Clorox organization has simply done a great job of managing the cost and economic headwinds we've faced through cost savings, the price increases we've taken, and our focus on key consumer trends to deliver, I think, some very strong results in a pretty volatile environment. We are continually assessing the potential impacts on our business from the financial markets and the pressure on consumers. Having said that, we remain optimistic about our ability to weather this volatile environment and let me tell you why. First, energy costs have come down and we're starting to see lower input costs, as Dan noted. We anticipate benefiting from lower input costs in the second half of the fiscal year resulting in that margin expansion he talked about. Second, certainly consumers are under pressure and will likely be so for several quarters. And while we haven't seen any material impact to date, our outlook already reflects that view. Third, while we're seeing currency devaluation in some markets, we've used our judgment to also reflect that in our outlook. Fourth, we have good liquidity and access to credit that we believe is more than sufficient to meet our near-term funding needs. And then fifth, given our strong cash flow, we're confident we can continue to reduce debt levels as we have talked about and support dividends for our shareholders. While managing our business in the current environment, we certainly remain committed to and focused on the long term. Importantly, our long-term strategies are just as appropriate for the current market conditions if not more so. Now more than ever we need to support our brands, partner effectively with retailers to bring excitement…

Thank you, Mr. Knauss. (Operator Instructions) Your first question comes from Chris Ferrara - Merrill Lynch.

I just wanted to ask you about, as the outlook changes it looks like if you take the benefits that you're getting from your change in commodities outlook coming, you know, getting $30 million more favorable, CCEM gets maybe $7.5 million more favorable, offset by interest expense, it looks like that's a bigger number than what would be implied by, say, a 2% negative FX hit. Is that right or is FX hitting profits harder than sales? I just want to get a feel for just, you know, what these puts and takes are.

Chris, I think you're doing the math essentially the right way. I mean, what we would say is we are anticipating that we'd see about $30 million more favorability in commodities. We will see more cost savings; again, the cost savings are probably offset by the interest impact. And by staying with the existing EPS outlook, we're reflecting the impact that the currency declines will have not only on the top line but also through the profit statement. So we're expecting those to be about a wash.

So is it fair that currency hits bottom line more than top line on a percentage basis?

Probably a little bit.

Also is there any or did you guys see any buy in ahead of the price increases that you guys ran through in August?

Very minimal. We have very good controls in place around that. So we always see a little bit of an uptick, but pretty minor and obviously it washes out over the course of the quarter.

And then just finally on the S&A line, it was a little higher than I was looking for. How do you think about that? I mean, obviously you're making incremental investments behind the business there, but was this quarter a particularly high quarter compared to what you'd expect as a percentage of sales or, I should say, the year-over-year trend as we go along, or is this kind of what you'd expect as the year goes on?

For the quarter it's probably a touch high. We still haven't fully anniversaried the incremental resources we put into the grocery channel and we're still making some incremental investments in some of the other strategy work that we're doing. You know, as I look over the balance of the year, we would anticipate that our SG&A is probably going to grow this year about in line with sales growth. That's probably the best way to model it for the year. So call it in the low 13% range is probably good for the year.

Chris, you should probably expect that there'll still be a relatively material increase as you move through Q2 because there's also a component of Burt's Bees in there that's incremental versus the year ago number. So at least through the second quarter that'll cause selling and admin to be a little bit higher than it traditionally would be.

We anniversary Burt's Bees, as you know, on November 30, so we'll have an outsized impact from Burt's in the second quarter.

Your next question comes from Ali Dibadj - Sanford C. Bernstein.

A couple of questions. One is, both in the release and Larry, you mentioned earlier, something around look, in tough times, consumers trust brands. You know, we have been starting to hear something very different from the retailers and obviously they don't specifically talk about your brand, but those types of things - household care, for example, some of your very core brands are the ones they do talk about a little bit. So I'm trying to understand, are you seeing something particularly about your brands that's different? Are you seeing something different this time versus other cyclical times, where we certainly have seen, for example, private label encroachment or more value brand encroachment? I'm just trying to get an understanding of how confident you are about that statement going forward.

So to be clear, we have seen some pickup in private label shares across our categories and we noted the fact that we saw private label gains in laundry bleach as well as trash bags. Part of that's due to our pricing actions. You know, when we take pricing we tend to lead categories and private labels typically take some time to follow, so that's part of the story there. But the encouraging thing for us is if you look overall, we seem to be the only branded player, at least within our category set, that's actually holding share. All the other branded players are declining in share. And I would always that that the brand value equation is far more than pricing and there's lots of things that we do across the three Ds that help us either maintain or improve our price/value relationship that's either, you know, good advertising, good instore execution. Innovation plays a huge role in terms of brand advantage. And obviously, you know, when you have innovation like Green Works that's truly satisfying and needed and is a relatively great value versus what was out there before in the form of natural products, you get a lot of great consumer demand.

And do you see any threat to those - take Green Works for example - given some competitive pushes in that area and/or consumers potentially wanting to look for a lower-priced substitute for a green product, are you seeing any of that resistance yet or do you anticipate any?

I would have anticipated more competition within the Green Works cleaning space than we've seen to date. We expect more to come on, but the overall natural category is growing at a very rapid rate. It's more than doubled. You just look at natural cleaners, that category has more than doubled year-over-year and we remain the leading brand in that new growth segment. So I haven't seen anything as yet that would indicate we have a pricing or price/value kind of issue.

You mentioned that you've offset 60% roughly of your commodity costs right now across the businesses. At what level do you mean when you say that? At what kind of - I know you say you're not going to use oil anymore, but can you help me figure out at what level? Is it levels of three months ago, six months ago, is it at peak levels? What does the 60% refer to?

The 60%, Ali, is looking at the commodity and input cost pressure we've seen over roughly the last three years, so it's a cumulative look at the total pressure we faced and what we have passed through in the form of pricing. So for this year, as you know, as we've talked about in the past, we are actually pricing to recover, you know, at the current estimate of what we're pricing this year, we're probably pricing to recover about equal to the commodity cost pressure that we have. But when you look at it on a cumulative basis, that's what we're referring to, that we've seen a lot of cost pressure run up. We haven't priced to the peaks and therefore, as we look at this going forward, while we're certainly pleased that commodity costs are finally coming down, in terms of impact on our pricing, they need to come back quite a bit before I think we would be faced broadly with having to consider what to do on the pricing front. Having said that, with the decline in commodity costs and the anticipated commodity costs in the back half of the year, there were two price increases in our outlook that we've decided now that we're not going to move forward with. And as Larry mentioned earlier, we are under pressure in the trash bag business. That's an area that we continue to look at and we'll monitor that situation closely. But on a broad stroke basis, we haven't priced anywhere near the peak and we haven't seen the benefit yet of these lower commodity costs and won't see it well into the second half of the year. So, again, our thesis is our pricing is going to hold.

You mentioned they'd have to go down a ways. How far down would they have to go?

You know, it's a category-by-category look. Again, I guess, probably in the trash bag category it's going to be tied primarily to resin, so we'll have to look at that one in particular. We did see the market prices come off about $0.10 to $0.11, which is very encouraging, this past month, so we'll have to watch that one closely. And on the rest of them, again, we're not anticipating, frankly, in a lot of these, unless there really is a recession on commodities, which we're not anticipating at this point, we would anticipate that most of our pricing will hold at these levels, even with some normal declines to commodity costs.

It seems like you've systematically over years or the past few years at least taken down advertising as a percent of sales. It looked a little bit odd this quarter for sure, and some of that, you mentioned, may be because your top line came in a little bit stronger. How shall we think about that going forward? I know you mentioned kind of 9% to 10%, but more towards 9%. Does that overall strategy - obviously in the consumer world in general but certainly in this type of environment, where you are taking so much pricing, it seems to me to be a little bit risky. I just want to get a sense of how you're thinking about that.

We are a little bit down versus our target range in the quarter and, as we said, a lot of that's because of the great growth we got. And obviously, we're still getting great growth despite the fact that we're a little bit below our range. We anticipating being within that 9% to 10% range in the year, and we tried to stick to a plan to basically solidly support our brands despite the pressure in the commodity area over the last several years. So we've spent at a pretty good rate and what we think is a very good competitive rate, and I think, as you know, within that rate we have very different spend rates by brand based on a lot of work we do in terms of ROI. So very big differences by brand in terms of level of spending, and we change that on a routine basis based on what we're learning in the marketplace on return on investment.

Ali, the thing I would add on that is we also know that investing in our brands is not just what we spend on consumer communication, but also what we spend on product quality. One of the things we've learned from some basic research is that the most effective way to communicate with consumers is word of mouth, and that's why we're putting so much emphasis on 60/40 wins. So when you look at the innovation we're putting out there, like Green Works, ForceFlex, etc., the product performance of our brands continues to go up and we think that's another key reason that our brand strength will continue to build. So it's not just about the investment purely behind traditional marketing or advertising. It's the investment we're putting behind product quality as well.

And the last thing I'll mention - and I mentioned it in my remarks - is this fact that for several years we've been really focused on trying to shift as much of our spending out of what we call the nonworking area, which is preparing print ads, preparing media, and putting it into what we call working media, which is actually getting it out there in front of the consumer. And we've had good success over the last couple of years of being able to shift the mix inside ad spending so that there's less on the back office production costs and more out in front of consumers. And that's been one of our cost efficiency programs that we've been running, so we do feel good about the returns we're getting.

Your next question comes from Joe Altobello - Oppenheimer & Co. Joe Altobello - Oppenheimer & Co.: My first question is on commodity costs. It sounds like if you kind of do the math and progress it out for the next few quarters that commodities could actually be positive for you in the fourth quarter. Is that the case?

Yes. We saw a big run up, if you recall, in the year ago fiscal year. Most of the commodity cost impact hit in the January to June timeframe. This year it's hitting us most in the first half of the year, so it should be a positive. Joe Altobello - Oppenheimer & Co.: And then secondly, in terms of your categories, looking at past recessions, has the private label gains you've seen in your categories been consistent with the pattern in '91-'92, for example, '81'82?

I don't have all the data but, based on my memory, I would say it's pretty much in line with what we saw back then. Joe Altobello - Oppenheimer & Co.: Okay, so it's no worse.

No. Joe Altobello - Oppenheimer & Co.: And then lastly, in terms of the margin differentials between the categories you're losing share and the categories you're gaining share, it sounds like, given the positive mix, that the margin is actually better in the categories you're gaining share than the ones you're losing.

Yes, that's part of it. I mean, we feel very good about the business mix impact that we've seen in margins. It's throughout all of our businesses, so our food business; our charcoal business is doing well. We've obviously added Burt's Bees, which has given us margin accretion. We've been pursuing the trade up strategy in ForceFlex, which is adding to our margins. We've driven efficiency in trade spending in our categories. So overall we feel very good about the contribution the business mix is having on our margins.

The only point I'd add on ForceFlex, which Dan mentioned, Joe, is that we saw strong double-digit growth on ForceFlex this quarter. In fact, it's now approaching a 50/50 mix split between the premium side of our trash business and our base trash.

And we also exited, as you know, the private label food bag business, which had been a drag on our margins for some time. Joe Altobello - Oppenheimer & Co.: Any impact on channel mix? I imagine club is picking up a little bit.

Actually, didn't see a big difference across untracked and tracked channels this quarter. And that may be just some merchandising effect that's going on, quarter by quarter stuff, but didn't see a big swing to what you might term the value channels this quarter.

Your next question comes from Lauren Lieberman - Barclays Capital.

I was actually curious because earlier in the prepared remarks, I think it was, you said that you're growing faster in grocery than in untracked, and so I'm guessing, based on what you just said, that that's more of a longer-term comment rather than necessarily in the quarter?

No, grocery grew at a greater clip than the total business did in the quarter.

That's the base volume, Lauren, of 1%. So excluding Burt's Bees.

And this is U.S. numbers only.

So then, given your comments around category growth, are you losing share or relatively more share - I guess losing share in the untracked channels at this point?

Unfortunately, we don't have the category data in the untracked channels, which is why they're untracked. Our growth rate in the untracked in total is about even to what we're seeing in the tracked channels. Recall the tracked channels include other things than grocery, other mass channels like Target.

The International business, the decline in operating profit, can you explain kind of what happened there this quarter?

On the International business, the impact of commodities and other costs had typically lagged what we've seen in the U.S., so what you're seeing the quarter is a bit of an outside lagging impact, particularly on commodities and some other costs. We are anticipating, though, that the International margins will return to the normal trends that you've seen over time. Obviously, we have the impact of currencies that we'll need to deal with. And one of the issues we have in the International business is that a portion of our cost of goods sold are U.S. dollar denominated. So although we see declines in the currencies on the top line and other parts of the P&L, the U.S. dollar amounts won't change. That will put near term a little bit more pressure on the International margins. But we're also taking a fair bit of pricing this year - we'd already planned to do that because of our view of commodity and other cost increases - and we'll continue to do that over the course of the year. So again, we would expect International to return to more normal trends after we get through this lag period, but there will a little bit of an impact from currencies because of the U.S. dollar-denominated portion of cost of goods sold.

Lauren, the only thing I'd add to that is we've got a pretty strong pipeline of new products going into International as well through the balance of the fiscal year, so I think, to Dan's point, you'll see a return to more normal growth rates, if you will, on the top and the bottom line as we go forward, excluding the currency impacts.

And then on new product activity, the Green Works, that launched in August, right? So what you guys have said before about the size of that category, could that launch have added as much as a point to volume growth in the quarter?

No. It's a big category. It's over a billion in sales. We just basically kind of started to get on the shelf in the quarter. We're doing well; we're looking good. But this is kind of a niche premium play, so we're not going to overtake leading brands in that category, but we're going to have hopefully a very profitable niche.

And then just my final question was on inventory levels. I know you definitely on the call and in the press release commented a bit on why inventory levels were up faster than sales, but a further question I had was Wal-Mart and actually a lot of other retailers we're hearing are trying to push back a bit on their suppliers in terms of inventory levels yet again. I know it's an ongoing saga. But has there been any increase in that that impacted the quarter or that you're sort of already planning for looking forward?

No, nothing dramatic. We're very efficient on the logistics side, and I think that's absolutely reflected in the Cannondale survey that Don alluded to earlier. So we have very good systems. We have very low inventories. We have high turn on most of our products. We see some minor blips, but nothing that we would regard as significant.

And as I look at inventory, Lauren, the one new aspect that we have, obviously, is Burt's Bees coming into the portfolio. They have a little different dynamic in that they have some seasonality in their sales, particularly in the second quarter, because of gift packs, so there's some prebilled associated with that. And then obviously, as we're taking Burt's and launching the distribution, increase in the distribution, we need to support that pipeline build, and so that has had an impact on it. But nothing that I would say is a longer-range trend.

I don't think we've seen anything material at all. There has been some drawdown at Wal-Mart, Kroger, some of the key customers of ours, but, as Larry said, we're pretty efficient at managing inventory and it has had no material effect.

Your next question comes from Jason Gere - Wachovia Capital Markets, LLC.

I know you were talking about the advertising being, I guess, the low end of the 9% to 10%. Could you just talk about maybe total marketing spending, including the instore communication, which is more of a gross to net? Do you expect that and the advertising to be greater than your sales growth for this year?

So the in-store advertising that we would regard as kind of advertising communication would be included in that overall advertising number. What is not included in the advertising number is trade spending, and that's up a tick but pretty flat versus the year ago period.

So at this point there's no plan for any step up with trade spending or anything of that nature?

No.

Can you just kind of disaggregate between I guess what we'd call some of your staple products versus more discretionary? I mean, I think this quarter you saw Clorox 2 obviously did pretty well and then bleach was a little bit softer. Can you kind of disaggregate the two buckets because I know you have some products that are a little bit more trade up that you would call a little bit more discretionary and just give a little color around that?

I would say most of our categories are pretty much staples. We some interesting impact from the soft economy on places like food, where people tend to eat home more. We're actually seeing very robust growth in both our Hidden Valley Ranch business as well as our charcoal business, I think probably as a result of that. The one category that I would say is probably a bit on the discretionary side is our auto care category, and we have been seeing some softness in that category. We're tending to grow share; we've been growing share pretty consistently over the last year or two, but we are definitely seeing a softening category and that probably is because that's a bit more of a discretionary item versus our other categories.

Just wondering if you could talk about maybe the manufacturing logistics. Should we anticipate that that could even turn a little bit sooner than what you're expecting for raw materials on the P&L?

Well, the diesel component that sits in manufacturing logistics, certainly we would expect to start seeing some declines later in the back half of the year. The way we report our manufacturing and logistics is we report that as a gross number, but we're doing a lot of things, like world class manufacturing and other cost savings things, and we actually count those savings. To the extent that they're structural, we count those as our cost savings. So embedded in those cost savings numbers that we report are a fair bit of savings that would go against that manufacturing and logistics line, so you kind of have to consider them more on a net basis than a gross. So we would expect to see in the back half of the year some improvement on diesel and some other things, and we're certainly driving hard on our cost savings. And, in fact, part of the increase in the target cost savings range has to do with some further opportunities that we've identified in the manufacturing and logistics areas.

Your next question comes from Connie Maneaty - BMO Capital Markets.

On which two products had you thought you would raise prices and now you've decided not to?

I think for competitive reasons we'd rather not talk about that.

Were they already announced to the trade?

No. No, no, no.

No, they were not.

What did the lower tax rate - I'm sorry, I haven't had a chance to calculate this - what did the lower tax rate add to earnings in the first quarter?

About $0.04. It was $0.04 to $0.05, Connie.

And the increase in SG&A in the first quarter of 19%, how much of that was due to onetime startup types of investments and how much will continue for the rest of the year?

Again, as I mentioned before, Connie, probably the right way to think about our SG&A this year is it's going to grow about in line with the growth rate in sales, so that would put it probably in the low 13% of sales range. Once we anniversary grocery, which we'll anniversary most of that in the second quarter, that will level off and it'll be in the run rate. The biggest impact that we've had, obviously, is the Burt's Bees impact coming in, and that was probably in the $10 to $11 million range for the quarter. So once we hit the anniversary on that, we won't see that kind of increase. But think about our SG&A on a run rate basis of growing about in line with sales.

And then just to be clear, on the short-term impact in the second quarter of both still high commodity costs and the translation and transaction impact of these currencies, it makes sense that earnings ought to decline year-over-year for this one quarter. Is that about right?

I think you're understanding it, Connie, correctly in terms of us not getting the benefit of lower commodity costs until the back half of the year. But the currency devaluation is obviously impacting us right now, so I think taking that into account would be consistent with what you were saying.

And then finally, a quarter or two ago you talked about the rollout of Burt's Bees into Wal-Mart.

Yes.

How is that going and especially about, what was it, the hives that were going into around 350 stores? What are the results of that?

So we feel great about the Wal-Mart distribution gains, and it's driving a lot of the growth in the business. We continue to expand distribution within Wal-Mart and, in particular, they tend to be setting natural category sets, so they're expanding the entire natural personal care category, not just Burt's Bees, and we're obviously benefiting in a disproportionate way. So that's all green, from our standpoint.

And Connie, it looks like another 400 to 500 stores in September is what we added to the mix. So, again, to Larry's point there, they're tending to gravitate to more 8-foot natural personal care sections than 2 to 4 feet; all those ranges were tested earlier in the year. But we feel very good where it's going.

So the 8 feet of natural products isn't all Burt's Bees?

No.

And you've got a portion of it.

Correct.

So the extra 400 to 500, are they getting more of the in-line?

Yes.

So what does that bring the total in-line shelf space dedicated?

We're in the 800 to 1,000 range.

Your next question comes from William Schmitz - Deutsche Bank Securities.

Can you just talk about how consumer usage patterns might change in an economic slowdown, especially if unemployment keeps going up? So like will people use bleach to clean or other household cleaners instead of wipes? Will people get rid of their Ready Mop and start using a mop bucket?

I think you'll see all different kinds of dynamics. So generally people do hang with tried-and-true brands but, you know, we do expect to see some trade down, as we've already seen, and we'll see some tick up in private label. As I said earlier, some of our categories will benefit because people do tend to stay home more, so salad dressing and charcoal business will benefit in a softer economy as a result. We'd expect more pressure on the premium trade up products, in cleaning in particular. So we did see kind of basically flat wipes growth. We grew share in wipes, but the overall segment was about flat. We just had a bit of a slowdown. So that's the kind of thing you might expect in the cleaning category. You know, bleach is an incredible value from a product standpoint. It does incredible things, not just in laundry but across non-laundry uses. I talked about our effort to communicate more about non-laundry uses. It's an incredible disinfectant, relatively cheap compared to alternatives. So we're trying to pump up our activity in that area. So you've got kind of a wide range of consumer responses in economic uncertainty, but overall, again, we've been holding share for the last quarter and pretty much for the last several quarters, and we'd probably expect that to continue.

I would add two things, Bill. One, on the food size of the business - and this is Kingsford and, obviously, Hidden Valley and KC Masterpiece - obviously we're seeing the trend of people staying home more, consequently the double-digit growth on volume in Kingsford in the quarter, which is a pretty sporty number, as people stay home. Internationally I think we're seeing people making shorter trips, if you will. And grocery and mom and pop are down the trade trend accelerating and people buying smaller sizes, which we'll react to as well. So that just adds a couple of other points to what Larry already talked.

The only other thing I'd build on - I probably sound like a broken record on this - but I'd talk about the value equation. Don mentioned earlier that ForceFlex grew a lot in the quarter. It actually grew more than 30% in the quarter. A lot of that was in untracked channels not reflected in the tracked universe. That's a trash bag that's got a 15% - 20% premium versus regular trash bags, but it's got a value equation that's obviously generating that kind of growth.

And then, you know, we've heard from Wal-Mart and some others - actually, what Wal-Mart's doing - but, you know, we've heard that they're getting a lot of customers into the store because of the value proposition, but they're also trying to remodel the stores and keep those customers when the economy turns and it sounds like they're trying to extract a little bit of the toll from some of the suppliers. So as they kind of retrofit the stores, put in universal fixtures, lower the shelves, widen the aisles, it's going to come out of the gross to net, and they're also asking for people to take a hard look at their cost savings as well. How does that impact you guys in the industry as that kind of gets rolled out more aggressively?

We haven't paid for any store remodeling that I know about.

Not even the fixtures, though, because I thought the fixtures were a gross to net, especially on the cosmetic side.

No, we've been pretty consistent in our trade promotion practices, and we will invest in incremental marketing programs with Wal-Mart and other retailers if there's a good return on investment. We have a great relationship with Wal-Mart. We add a lot of value. We focus on building not just our brands but building their categories with our brands, and they look to us to drive that growth and obviously drive the efficiency in their supply chain as well.

Okay, so is this stuff just overblown, that they're trying to extract an additional toll or is it happening and you guys just aren't [inaudible].

Well, as relative to us I'd say it's overblown. I'm not sure about other folks. But I would say this, too. I think, given the fact that we've got 11 number one brands in the 15 segments we compete in in this country and Wal-Mart uses national brands to promote their price leadership, we're playing right into their strategy, I think, and they're executing it very well. And I think other retailers are starting to do it as well.

And then, you know, it's only a scanned channel so obviously it's probably just directional, but if I take out the [dish] launch this quarter in the Green Works data, it looks like the business was flat sequentially. So did it grow faster in unscanned channels or is the data just wrong or kind of what's going on there?

Year-over-year growth?

In sequential growth. So from 2Q to 3Q in Green Works, if I take out the dish launch and just look at the dollar sales in Green Works, it looks like its flat in scanned channels quarter to quarter.

We're going to have to get back to you because I don't have the sequential numbers. That would surprise me, but I just don't have the data so I don't want to give an inaccurate response.

I think, Bill, we'll check the data, but I think it's more around merchandising shifts from quarter to quarter, particularly around Earth Month. We had tremendous support behind that, so you're going to see some shifts there. But we can get back to you and clarify it.

Your next question comes from Linda Weiser - Caris & Company. Linda Weiser - Caris & Company: I was just curious about your increased cost reduction goal. You said you had $28 million in the quarter. If you kind of multiply that by four you get more than - I think the upper end of your range is $100 - you get more than $100 million. Can you just talk about the timing as it flows? Should we expect more in the second quarter?

As we look at our cost savings for the full year, it can be lumpy by quarter depending on when those projects come online or deliver. So we had $28 million in the first quarter. We're probably looking at another $28 to $30 million in the second quarter, with the balance pretty equally in Q3 and Q4. So, again, the lumpiness is just based on when these things deliver, but we have taken it up and those are kind of how we expect the dollars to fall in the quarters.

And we did take the range up to $105 from the $90 to $100. Linda Weiser - Caris & Company: And then, Don, in our early meetings with you when you first became CEO, you really seemed fairly urgent about the need to get bigger internationally in order to sustain 3% to 5% top line growth. Has your view changed on that given the situation and the credit crunch and really, quite frankly, the strength in your core business? I mean, you've been growing well without additional acquisitions internationally. Can you just comment on that?

Yes, I think the focus is still there for the long term. It certainly is a pivotal point of our Centennial Strategy to have International to be in the range of 25% of our mix by the time we get to 2013. You know, one of the first things we did when I got here was complete the Colgate bleach acquisition, which added about $70 million in revenue to the International side, so it was about a 9% increase to International. As we look out and we pay down our debt-to-EBITDA, as Dan noted, and we expect to be down in the 2.5 to 2.75 range by the end of the fiscal, the priorities for investing in growth initiatives clearly still fall with International as one of those key components for additional bolt-on acquisitions. So we'll continue to press it. Right now we're obviously digesting the Burt's Bees acquisition, which we think has big international opportunities as well, and paying down the debt. But clearly, we're focused there and will continue to be so. Linda Weiser - Caris & Company: Is there any thought - can you remind us how much Burt's Bees has internationally now and what would be the timing for expanding that?

Well, about 10% of the overall revenue of Burt's Bees today is international and it's really in a handful of markets, so we've got tremendous opportunity there. And we're going through and updating the international component of that strategy and we'll have that update done in the first quarter of the calendar year in '09. But we think it is a key component. The other one is Green Works, which we've expanded into a host of countries almost simultaneously with the U.S. launch, and we'll continue to build it out as well. So we think the combination of Green Works and Burt's Bees gets us into some very high growth categories for International where we don't have really embedded competition in either one of those categories.

Your last question comes from Andrew Sawyer - Goldman Sachs.

I just have a quick one on trade spend. You guys commented it was flat in the quarter. Is that the 120 basis points of gross margin in the other - in the reconciliation?

No, the majority of that 120 basis point benefit in gross margin really came from mix. And I think you heard earlier from Dan and Larry, in particularly, in none of the areas were we seeing positive mix benefit across the portfolio.

And just kind of following up on, you said trade spend was flat versus a year ago, is that -

It's up slightly.

Is that where, you know, if commodities do pull back, is that where you'd probably see the money go first rather than any pullback in list pricing?

Typically we go with temporary reductions before we go with price declines. But it just depends.

It could be. You know, it's going to be based, Andrew, on the dynamics of the brand and the category. But as I said earlier, I think one of the things I would ask you to take away from this is we will not give consumers a reason to choose another brand. We're going to defend our brands. So as these things come down, we'll certainly look at the price-value relationship of our brands first. And, if we use temporary funding increases to manage that, that's typically what we've done in the past before, as Larry said, we go with a list price decline.

Is Green Works still in the VPI program at Wal-Mart and what are the prospects for keeping it in that?

I don't think it's currently technically in the VPI program, but it's very well supported by Green Works and they have particularly done a great job behind our dishwashing launch.

Mr. Knauss, I would now like to turn the program back over to you.

Yes, just thanks everyone for joining us today on Halloween. Happy Halloween to you and, as I said, we feel very good about the quarter and the progress we're making. We've got - I think you should certainly take away from the questions today - solid plans in place and remain on track for the balance of the year. So we're going to remain focused on delivering the year and on the long term and driving our strategy and look forward to speaking to you next quarter. Thanks, everyone.

This does conclude today's conference. Thank you for your participation. You may now disconnect.