Steve Austenfeld - Vice President, Investor Relations Larry Peiros - Executive VP and Chief Operating Officer, Clorox North America Dan Heinrich - Chief Financial Officer Donald Knauss - Chairman & Chief Executive Officer

Nik Modi - UBS Wendy Nicholson - Citigroup William Schmitz - Deutsche Bank Securities Chris Ferrera - Bank of America-Merrill Lynch Ali Dibadj - Sanford Bernstein Alice Longley - Buckingham Research Doug Lane - Jefferies Joe Altobello - Oppenheimer Andrew Sawyer - Goldman Sachs Victoria Collin - Atlantic Equities Connie Maneaty - BMO Capital Markets John Faucher - JP Morgan Lauren Lieberman - Barclays Capital Jason Gere - RBC Capital Markets

Good day, ladies and gentlemen, and welcome to The Clorox Company first quarter fiscal year 2010 earnings release conference call conference call. (Operator Instructions) I would now like to introduce your host for today’s conference call, Mr. 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 business unit performance as well as a perspective on the current commodity and retail environment. Dan will then follow with a review of the quarter’s financial performance as well as comment on updated fiscal year 2010 outlook, as communicated in our press release this morning. Finally, Don will close with a perspective on key initiatives driving overall company performance and after that, we will open it up for your questions. Let me remind you that on today’s we will refer to certain non-GAAP financial measures including but not limited to free cash flow, EBIT margin, and debt-to-EBITDA. 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 in today’s press release, this webcast prepared remarks, or supplemental information available in the financial results section 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 10-K 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 over to Larry.

Thanks, Steve and good morning to all of you on the call. As you saw in our press release, we had a very good quarter. We delivered solid sales and volume results on top of double-digit growth in the year-ago quarter and our earnings were up 23% as a result of our third consecutive quarter of gross margin expansion. Very strong results in what remains a very challenging economic environment. As usual, I am going to focus my comments on market share, volume, and sales and provide perspective on what drove our top line results. Starting with our U.S. categories, consumption remains stable. Versus year ago, consumer takeaway in U.S. track channels was about flat for Q1, a similar trend to what we have seen for the last several quarters. Our sales growth in untracked channels continues to significantly outpace sales in tracked channels with consumers migrating to value oriented retailers like Club and Dollar. In tracked channels, we grew our held share in four of the eight categories we measure in the U.S. Our overall U.S. share was down slightly in the quarter, primarily due to competitive activity in a few key categories and the growth of private label shares. For perspective, on an all outlet basis, we grew our overall market share nearly a full share point during the past 52 week period. In our international businesses, our market share results are positive and we generally have seen stronger category growth than anticipated, driven by pricing. Our volume was up 1% for the quarter. Gains were primarily due to higher shipments of disinfecting products due to the H1N1 flu pandemic, largely offset by lower shipments of Glad trash bags and our exit from the private label food bags business. The upside related to the H1N1 flu was well above our forecast given the rapid spread of the virus. Sales for the quarter were down about 1%. Without the negative impact of foreign exchange, we would have seen sales growth. This year’s results are up against a very strong 12% sales growth in the year-ago quarter, which was driven by healthy base business growth as well as the Burt’s Bees acquisition. Most of our businesses performed well in the quarter but as usual, we saw some differences across the portfolio. Here are a few highlights by business. In our largest category homecare, we held share and maintained our leadership share position. Volume and sales were up due to strong growth on disinfecting products. Clorox disinfecting wipes benefited the most with all-time record shipments. Volume was also up strongly in some of our base businesses like Pinesol Cleaner and Clorox toilet bowl cleaners. The positives in home care more than offset some volume losses on Green Works hard surface cleaners. The growth in the natural cleaning category has slowed as we lap our initial launch, although natural cleaners are still growing faster than traditional cleaners. Overall our core five Green Works cleaning products grew share within the natural homecare segment and we remain the number one player with a 45% share, about twice the size of the nearest competitor. In food, we continue to win in the salad dressing category, holding share despite a very competitive marketplace. Even with a significant premium to the competition, Hidden Valley salad dressings delivered double-digit volume and sales results, propelled by highly effective marketing and a great tasting product. In international, which now includes Canada, volume was up about 3% with growth primarily driven by disinfecting products in Latin America. Despite unfavorable foreign exchange rate, sales were up 4% due to price increases. On a constant currency basis, our sales grew 12%. Overall, our categories in international markets are healthy. We grew share in a number of markets, notably dilutable cleaners in bleach and Latin America. Overall dollar share in Latin America increased about 2.5 points for the quarter. In Glad, Q1 volume and sales were down due to a weak category and increased competitive activity. The category softness relates to significant category volume declines, as well as lost sales dollars due to price rollbacks and increased trade spending category wide. Also affecting Glad’s top line was our decision to exit from private label food bag the last fiscal year. That decision alone accounted for about a third of the Glad volume decline. Glad remains our most dynamic and challenging business, given the ebb and flow of resin costs, retail pricing, and competitive activity. We are working to restore Glad top line growth through innovation and demand building investment. In August, we began shipping a new Glad force flex trash bag that grips the top of the trash can and stays in place. We are offering this improvement to consumers without a price increase, a great example of how we are focused on driving greater value. We are also continuing to invest heavily in Glad advertising and trade promotion spending, including strong value-oriented message. Turning to laundry, the competitive dynamics and laundry additives has greatly intensified since last quarter, both from established players as well as new entries. We are vigorously defending this business, including marketing initiatives focused on the message that detergent alone is not enough and highlighting the benefits of Clorox 2 on stains. Despite the new competitive activity, both volume and sales were up in the quarter. Our share was down, however, with the overall category expanding significantly behind the heightened activity. Also in laundry, we started shipping Green Works natural laundry detergent and stain remover in July. The products are off to a slower start than we had anticipated. That said, it’s still very early. We are working through the challenges of being a premium priced offering in a highly competitive price sensitive category. We continue to support the launch through advertising and introductory marketing. The Brita brand is fundamentally healthy and continues to benefit from the sustainability mega trend and consumers’ focus on value given the significant savings Brita provides versus bottled water. Q1 volume and sales has climbed modestly, primarily due to the comparison with strong growth in the year-ago quarter. However, we grew share and [inaudible] trash remains one of our fastest growing categories. On Burt’s Bees, volume and sales were down slightly compared to strong 17% shipment growth on the brand in the year-ago quarter. While Burt’s Bees has been impacted by the current economic conditions, we remain confident about the fundamentals of this business and the long-term prospects. Consumption growth in our line of natural products has stabilized at high single digit growth over the last several quarters. While this is less than the double-digit growth we saw prior to the recession, it is much stronger growth than what we are seeing in the traditional personal care category. We continue to anticipate solid sales growth on this business in fiscal 2010 and we are laying a strong foundation for a more robust growth as the economic conditions improve. For example, when we acquired Burt’s Bees, the business had a significant presence in three countries. Currently Burt’s is in 14 countries and we plan to be in more than 20 countries by the end of this fiscal year. In addition, the new and natural acne solutions line is performing extremely well and in January 2010 we plan to introduce a full range of Burt’s Bees natural toothpaste that are clinically proven to improve oral health. Looking forward to the outlook for the full fiscal year, we continue to anticipate total company sales growth in the range of 1% to 2%. Let me walk you through a few of the key factors that we expect will impact our volume and sales. On the positive side, most of our businesses are performing well and we continue to see disinfecting product growth as a result of the H1N1 flu pandemic. In addition, our outlook around the negative impact from foreign exchange is moderated. We now anticipate the FX impact will be pretty much neutral for the year. Finally, our international categories are healthier than they had been and we have been able to increase prices in a number of international markets. On the negative side, our Glad business is particularly challenged. Pricing is down in the category, competitive spending is up, and yet category volume is soft. We are also challenged in laundry and have stepped up trace spending to address price gaps. Wrapping up, we feel good about our Q1 results, especially given the economic environment and the market volatility. While we have some puts and takes, we are confident that we can effectively manage our businesses to make our numbers on the year, as well as to maintain the investment to keep our brands healthy for the long-term. With that, I will turn it over to Dan to take you through the financial picture.

Thank you, Larry. While economic conditions remain challenging, the company continues to perform very well, achieving strong first quarter results. Larry has already provided a recap of our top line and share performance, so I will comment on our first quarter financial performance and provide an update on our outlook for the fiscal year. I think there are three important takeaways on our first quarter results. First, we are reasonably pleased with our sales performance in the quarter. We are somewhat ahead of plan due to various factors, including very strong growth in disinfecting product sales driven by the H1N1 flu pandemic. We also saw double-digit growth in food product sales and strengthening foreign currencies in our international businesses. While we continue to be pressured by foreign currency headwinds in the quarter, those pressures were less than anticipated. Our international categories continue to show improvement and we returned to total company volume growth as we anniversaried the majority of the pricing actions from last fiscal year. Our top line momentum in the quarter was moderated somewhat by the factors Larry mentioned, including the challenges in the Glad business and increase in our trade spending to address a ramp-up in competitive activity and somewhat lower sales for our Green Works line. On balance, we feel good about our sales performance in the quarter as we compare with the 12% sales growth in the year-ago quarter. Second, we are very pleased that we are continuing to see a return to historical gross margin levels in a very tough climate. Q1 gross margin increased about 450 basis points to 45.1% of sales, compared with 40.6% in the year-ago quarter, driven by lower commodity costs, strong cost savings, and the continuing benefit from price increases. Our EBIT margin also continues to expand closer to historical norms, increasing to 20.3% for the quarter, benefiting from gross margin expansion and tight control of administrative spending. We are somewhat ahead of our margin expansion estimates at this point in the year and we are increasing our full year margin expansion outlook, as I will address in a moment. Third, our EPS growth, cash flow, and balance sheet remain very strong. Diluted EPS for the quarter increased 23% to $1.11 for the quarter, on top of 18% growth in the year-ago quarter. The current quarter includes about $9 million of net foreign currency transaction losses, primarily related to Venezuela, consistent with our estimates that I spoke to you about last quarter. Our outlook for the full fiscal year assumes about $28 million to $30 million in foreign currency transaction losses in the other expense line of the P&L, primarily related to Venezuela. The current quarter also reflects a 35.5% effective tax rate versus a 31.4% effective rate in the year-ago quarter, which benefited from some tax audit settlement activity. For the full fiscal year, we continue to anticipate that our tax rate will be in the 34% to 35% range. Cash flow from operations before a voluntary $33 million pension contribution increased about 35% from the year-ago period. We continue to use free cash flow to pay down debt. Our debt-to-EBITDA ratio at the end of the quarter was 2.6 to 1. We are well-positioned to be at or below our 2.5 to 1 debt to EBITDA target during the second half of the fiscal year. Now let me address four key elements of our updated financial outlook for the fiscal year. First, while conditions remain very volatile and make forecasting a challenge, we are cautiously optimistic about the full fiscal year and are pleased that our strong Q1 performance allows us to raise our EPS outlook range for the full fiscal year. As noted in today’s press release, we now anticipate fiscal year 2010 earnings per diluted share in the range of $4.05 to $4.20. This solid increase is projected on top of 17% diluted EPS growth last fiscal year. As a reminder, this outlook range includes a reduction of $0.02 diluted EPS as a result of adopting the new accounting standard that changes the way diluted EPS is calculated. We anticipate the strength we are seeing in foreign currencies, improving conditions in our international markets, strong growth and momentum in some of our key categories, and very strong disinfecting product sales will more than offset the impact of competitive issues and softness in a couple of our businesses. Second, continuing strong cost savings, more favorable business mix and foreign currencies, and very disciplined spending should allow us to deliver higher margins for the fiscal year. We now project gross margin to increase in the range of 100 to 150 basis points, on top of the 180 basis point improvement we achieved in fiscal 2009. As discussed during our last call, we anticipate that commodity and energy costs will be favorable for the full fiscal year. But you have all seen the recent rise in oil prices to around $80 per barrel. We now anticipate commodity costs to rise more than previously projected in the second half of the year and the net benefit from lower year-over-year commodity costs for the full fiscal year will now likely be lower than the $90 million to $110 million net benefit we previously anticipated. Third, top line sales growth will continue to be challenging but we do expect growth even in this environment. As Larry discussed, we are maintaining our sales growth for the fiscal year in the range of 1% to 2%. While we anticipate continued high demand for disinfecting products in the second quarter during the height of the flu season, it’s much too early to know how this will play out across the full fiscal year. We are mindful of the possibility of reduced consumption in the second half of the fiscal year as consumers work through their inventory of disinfecting products purchased in the first half. Our updated outlook assumes some drop-off in demand in the second half of the fiscal year. Our bags and wraps business is particularly challenged at present. Category pricing is down, competitive spending is up significantly, yet the category is quite soft. As Larry discussed, we have plans in place to restore the health of our business. However, we anticipate the category dynamics will remain challenging for the near-term. We continue to closely monitor our market share and price gaps versus competition. We are maintaining our healthy levels of brand building support and we are spending to defend our businesses, especially in the laundry and bags and wraps categories. We anticipate increased levels of fiscal year trade merchandising versus our previous projections. Although we still anticipate our full-year advertising to increase on a dollar basis, it will likely come in a little bit lower than previously anticipated as we shift some of our investments to trade spending to manage price gaps and address the other competitive factors Larry had discussed. [Technical Difficulties]

…met in New York at the analyst day and I talked about how our strong leaders and business model have proven agility and flexibility to respond in any economic environment and we have continued to remain agile to adapt our plans and tactics to really address the rapidly changing environment while staying focused on the long-term and true to our strategies. Now in Q1, our people clearly demonstrated the ability to course correct after the volatility of the past year and execute and take action in a pretty dynamic marketplace. I think our response to the H1N1 pandemic is a great example of that capability. For several months now, teams company wide have been working to anticipate demand and take steps to ensure our disinfecting and sanitizing products are really available not only where consumers shop but also for our institutional customers as well, certainly as this primary flu season will continue to hit the southern hemisphere and now takes hold up here in the North. And in recent weeks, we have significantly increased manufacturing capacity for Clorox disinfecting wipes to really help us stay ahead of the strong demand we are seeing. Now, knowing that disinfecting products are critical in fighting the spread of viruses that can cause the flu, we are working closely with a number of public health agencies and others supporting efforts to educate people on how to protect themselves, including a few key things I want to highlight for you. First of all, we work with the National Education Association to distribute canisters of Clorox disinfecting wipes to U.S. based teachers and received 100,000 requests from teachers for product within four days. Secondly, partnering with the visiting nurse association of America and families fighting to encourage families to get vaccinated. Third, partnering with the American Red Cross to develop public service announcements about flu preparedness and then creating educational materials for retailers to distribute to shoppers. And lastly, we’ve just created some new advertising to demonstrate how our disinfecting products can help spread protection, if you will, during the flu season. I think another example of our agility is our new operating model which is designed to help us move quickly and decisively to anticipate, initiate, and benefit from change. I think as most of you know, we streamlined our structure and certainly clarified our decision rights and roles within the organization which is helping drive lower year over year selling and administration cost that Dan highlighted. Agility is also a factor in how well the organization is balancing our near-term response to the competitive environment without losing sight of the long-term health of our business. One thing I want to reiterate is that we are absolutely committed to profitable share growth and I really want to be clear on one point, and that is that we are going to be spending more on advertising and trade promotion this fiscal year than we did last fiscal year. We are being more aggressive in communicating the value of our brands to consumers and to managing price gaps at the point of deciding where many of the purchase decisions are made. And while we certainly focused on delivering good results each quarter, we are also committed to ensuring we have a healthy company for the long-term. We are continuing to strongly support our brands with advertising and meaningful innovation, which has manifested itself in a gain of almost a full share point on an all-outlet basis. We are also investing in our infrastructure such as the bleach plant modifications we also announced today. We are beginning to transition our plants from chlorine to high strength bleach as a raw material for making Clorox bleach. Now that decision was really driven by a commitment to not only strengthen our operations but also to add another layer of security. At the same time, it’s obviously a very dynamic environment out there and I don’t want to minimize the challenges we are facing, primarily in two areas -- commodity costs remain unpredictable and of course the consumers continue to remain under pressure. Now, having said all of that, let me echo what Dan and Larry said -- we are still optimistic certainly about our ability to deliver in this environment, as evidenced by the first quarter results, and execute our plans and drive long-term shareowner value throughout the year. Now in summary, I think I would certainly describe this as a great quarter, particularly in light of the consumer environment and continued weak economic conditions out there. As Dan noted, we are projecting that our fiscal ’10 results will be better than previously anticipated. It’s obviously quite early in our fiscal year. We’ve only got one quarter under our belt and I believe we are being prudent in our updated assumptions while taking appropriate steps to manage our business in this environment, as well as for the long-term health of the company. So with that, why don’t I ask the operator to open the lines up for your questions.

(Operator Instructions) Our first question comes from the line of Nik Modi with UBS. Nik Modi - UBS: Just a couple of questions -- can you provide any context on the upside from the H1N1, just kind of relative to what you were looking for, how the business played out during the quarter?

So we think H1N1 accounted for about two points of growth in the quarter and obviously that came across several business units, including homecare in the U.S., a lot of international volume, particularly in Latin America, as well as our away from home business. Nik Modi - UBS: And then just another quick question -- outside of trash bags and laundry, where else did you see the most heightened competitive activity during the quarter?

Those are probably the biggies. I would say there were some skirmishes in some parts of different categories. There’s some aggressive pricing or trade spending in cat litter but I would say the two biggies are really laundry and Glad.

And our next question comes from the line of Wendy Nicholson with Citigroup. Wendy Nicholson - Citigroup: My first question is with regard to the pricing, I think you said in the international markets you are benefiting from higher pricing but are you planning now that the dollar has weakened to have to roll back some of that pricing?

At this point, no, we are not anticipating any price rollbacks. In fact, right now we are staying with the original plan we had in terms of price increases in the international market, so even though foreign exchange has improved versus our expectations, we are still planning to move forward with the pricing actions that we had planned for the year.

And our next question comes from the line of William Schmitz with Deutsche Bank. William Schmitz - Deutsche Bank Securities: Could you just give some context on how you sort of see the volume versus pricing play out in the back half of the -- or the remaining three quarters of the year?

We expect the volume will be stronger than the sales line, probably by a point or two would be our best guess. So talking about the sales in the 1% to 2% range and probably volume in the 3% to 4% range would be our best guess at this point.

And our next --

Excuse me, one question for the Operator, or one comment -- there’s no need to limit ourselves to just one question going forward. Thanks.

Okay, I do apologize. Our next question is Chris Ferrera with Bank of America-Merrill Lynch. Chris Ferrera - Bank of America-Merrill Lynch: Hey, great timing on that!

So ask all nine of your questions, Chris. Chris Ferrera - Bank of America-Merrill Lynch: Okay. So you basically on Glad, I mean, it sounds like you guys are saying promotion has kicked up a lot and just trying to understand this in the broader context of what is going on there -- there have been a lot of tests going in the market, not just in Walmart but lots of other places. I mean, is this kind of a battle ground right now for who is going to win some of those tests? Can you just give a little color around that?

I would say it definitely is a bit of a battleground. Obviously you’ve got the impact of pricing coming down and people trying to reflect the new pricing on shelf. We do have some assortment tests going on in the marketplace that people are probably reacting to. We are obviously in the best position to survive the onslaught over the long-term, given our share position and the portfolio that we have but I would say we are in a unique situation in which category spending is up, both advertising and trade dollars and yet [inaudible] is going down, and [retail dollars] are going down even more as a result of the price declines.

I think the only thing I would add to that is we have seen this movie before. I mean, we know how to react in this category and I suppose I would also take a little -- where we take a little bit of heartened response, if you will, is the fact that on an all outlet basis, Glad trash is gaining share. So while the category is really soft, we think the brand is healthy. Chris Ferrera - Bank of America-Merrill Lynch: I mean, I guess given what is at stake, which seems like a more permanent issue of shelf space within the larger retails, I mean, is that why you are seeing such heavy competitive spending as commodities are going up and if that’s true, is it something that I guess you’d expect to continue just because of how much is at stake here?

Your speculation is probably as good as ours. I am sure some of the competition has reacted to some of the assortment tests going on. One would expect that over time, it gets to a more normalized range of activity.

And I have to think that these tests that are going on, I mean, they are not going to go on forever so I think somewhere in the next three to six month window, people are going to make a determination what they want to do with this category. Chris Ferrera - Bank of America-Merrill Lynch: Got it. Thanks, guys.

And our next question comes from the line of Ali Dibadj. Ali Dibadj - Sanford Bernstein: I guess I want to push a little bit on the pricing point because as far as I can tell, if you strip out private label, foreign exchange, private label, divestiture of private label, foreign exchange, pricing was already down or at least price mix including trade spend was already down this quarter and it sounds, Larry, from your comments that it is going to get a little bit worse. Now what we had heard from you guys at the analyst day was you know what, it is only Glad where we are going to have issues. It feels like it is becoming more pervasive. How far do you anticipate it going as it has gone beyond what you originally thought of only being a Glad issue? How should we think about that pervasiveness in terms of price pressure on other categories including maybe even cat litter, et cetera, et cetera?

I would not call it pervasive. I would say that we push this button up and down depending on what is going on with respect to our total value equation as well as what is going on in the competitive front. So beyond the Glad category and the laundry category and a few small places, maybe cat litter included, I would not call this movement pervasive. Overall though our trade spending will go up significantly in the second half of the year, primarily a result of those businesses. Ali Dibadj - Sanford Bernstein: But if you take laundry plus cat litter plus the Glad business, that’s a -- I mean, I guess depending on how you --

It’s a good chunk. Ali Dibadj - Sanford Bernstein: Yeah, so -- okay, so maybe I’ve got my definition of pervasive wrong but it looks like it’s a pretty big issue.

Well Ali, remember coming into this year we had planned for an increase in trade spending, so what we are saying is we are increasing off a base that was already increased. We also had the Glad price rollback that went into place May 1st, which is still bleeding into the marketplace. So we came into the year anticipating a higher level of spend and now based on what we are seeing in laundry and Glad, we are increasing that spend. Ali Dibadj - Sanford Bernstein: And then thinking forward, I guess I’m concerned about that inflection point for two of your big drivers going in the opposite direction, I guess. One is pricing getting tougher and perhaps more trade spend it sounds like having to be taken and on the flip side commodities going up, and it feels like déjà vu, I guess, back to a year ago or so where you are getting again commodities going up, pricing this time going down. Have you thought through that? Is that what you are anticipating in terms of you are unfortunately being forced to take pricing down at a time where commodities are going up and that could be a very difficult situation, even more difficult than we had seen last year, perhaps? Given the economic -- the consumer economic situation that is out there?

I would say that the pricing actions that we are taking, the trade spending reductions or the trade spending approach we are taking, it is still pretty surgical. It’s focused on certain brands and you know, [inaudible] laundry, for example, really the focus is on the Clorox 2 side of the equation. It doesn’t really affect very much the Clorox liquid bleach side of the equation, so it’s pretty surgical, it’s pretty focused on activity that is going on in those categories. Overall we still expect to have a commodity benefit this year, maybe a bit less than what we anticipated a few months ago but we still see a significant commodity benefit for the full year.

I think the other thing to keep in mind is if our outlook is correct and we see some increases in commodities in the second half of the year, it’s going to -- we believe it will over time dampen some of these competitive actions that we are seeing because the margin structure just won't support long periods of times with some of the competitive spending that we have seen. So assuming that goes up a bit, we would assume over time that our trade spending will come back to more normal levels. Ali Dibadj - Sanford Bernstein: Okay, and then just my last question and I’ll get back in the queue is can you give us a sense, given FX was a little better here, what your organic sales guidance is then going forward?

On the organic side? Ali Dibadj - Sanford Bernstein: Yes, sorry.

Let’s see -- if I think about the components on the year, so we came into the year assuming foreign exchange would be about a two point headwind for the full year, we are now saying that’s about flat. We came into the year saying we had about an extra point of trade spending -- now that’s likely to be in the two to three point range there. And as Larry said on the volume side, we are still anticipating the three to four percent range on the volume side. Does that help? Ali Dibadj - Sanford Bernstein: It does, yes. Thank you.

And our next question comes from the line of Alice Longley with Buckingham Research. Alice Longley - Buckingham Research: For the second half of the fiscal year, if I back out the fact that currency actually should help you a little bit there and look at what you are saying was for volume, it looks like the combination of price and promotion should be down 3% to 4% in North America -- is that accurate?

I don’t have a -- Alice Longley - Buckingham Research: Pricing is going to be up in offshore.

Alice, is your question around what is going to happen to margins in the second half or are you trying to -- Alice Longley - Buckingham Research: No, it’s the impact on top line of price plus promotion. It looks like it’s a 3% to 4% hit for North America.

Pricing actually is a small positive for us for the full year, so while it is down a little bit from what we originally expected, price in and of itself will be positive for the year. Alice Longley - Buckingham Research: I’m asking about the second half of the year.

I’m referring to the second half as well. We will have some continuing benefit on pricing in the second half of the year and a lot of that will be in the international markets. We will have higher trade spending levels though in the back half than what we previously projected. But I would not add it up to be three to four points in the second half of the year. Alice Longley - Buckingham Research: But if you just look at North America alone without international, wouldn’t it be about that much of a hit?

You know, Alice, I think to a great degree if you are looking at our sales equation, as we’ve noted we are going to see favorable currency versus order expectations but to a great degree, that is going to be offset by the higher trade spending that we’ve indicated. We are only one quarter into the fiscal year. It’s difficult to predict with precision exactly what those are going to be but I think directionally, that’s the right way to think about it, a more favorable currency environment offset by higher trade spending. Alice Longley - Buckingham Research: Okay, and my other question is will the ad ratio still be up for the year?

Sorry, the what?

Say that again, Alice? Alice Longley - Buckingham Research: Ad ratio.

The ad percentage? We will still be in the 9% to 10% range. We are shifting a little bit of our ad dollars, so the total spending will on the advertising will be about the same. We are shifting a little bit of the spend, however, into trade spending but we will still be solidly in the 9% to 10% range, perhaps not as high in the higher end of the range as we talked about last quarter. Alice Longley - Buckingham Research: Okay. Thank you.

And our next question comes from the line of Doug Lane with Jefferies. Doug Lane - Jefferies: Can you refresh our memory on the for new products that you are introducing in the second half of this year, what the impact will be on the various quarters -- December quarter, March quarter, and June quarter? And maybe I misunderstood something you said earlier but it seems to me with the new products hitting the shelves in the second half of the year, coupled with the easy comparisons, your actual base business growth should be better in the second half than in the first half. Is that correct?

Let me walk you through the new products that we’ve got going on. We started the launch of the natural detergent stain remover under the Green Works name. That started in July. Obviously it will carry over to the second half. I think we’ve talked about that particular launch not meeting expectations. We also have the new improved force flex bag which has that stay in place feature, which started in August. That’s a base brand improvement, so we will expect some improvement in our base brand growth, but it’s not technically a brand new product. We have a couple of conversions on our littler line where we are converting from one type of packaging to another packaging that again is our base brand kind of improvements that we expect to add some health to our base brands. We have a fairly major conversion on our charcoal business to an improved product, faster lighting that’s actually a lighter weight charcoal but performed better than the current charcoal. And then on the Burt’s line we have the acne launch which we started in July and then in January 2010 we will be starting with our toothpaste launch. Doug Lane - Jefferies: So just to follow-up, also with the easier comparisons on last year, shouldn’t I have a better base business growth in the second half than in the first half? That’s basically organic growth excluding foreign exchange?

Well, we have the impact of the H1N1 flu, so we are up quite a bit in the first half on volume and project we will have a strong second quarter as well. Our outlook does assume that there is probably some consumption [trough] in the second half. Consumers are loading up their inventory and they will need to bleed that off so you’ve got that factor impacting first half versus second half. Doug Lane - Jefferies: I got it -- so that’s the offset. Okay. Thank you.

And our next question comes from the line of Joe Altobello from Oppenheimer. Joe Altobello - Oppenheimer: My first question I guess is on the trade spend situation, it sounds like most of the spending is to combat branded competition but I think earlier when you talk about your overall market shares dipping modestly, you also cited a shift to private label and I had thought the trade-down to private label, at least the impact, that it was starting to wane. Is that not the case?

Private labels are still growing but they are definitely growing at a lower rate than they were previously. Private labels are really a threat for us in three major categories and that would be hyperchloride bleach, the trash bag business, and the charcoal business. I would say that in the Glad business, we are dealing with competitive activity on both the private label and as well as the branded end. Within the laundry category, more specifically in the kind of stain remover aspect of that category, it’s more around branded competition, both new entries as well as the reaction to those new entries by branded competition.

But I think you are right though -- when we look at the FDKT data, of course that’s about half of our business. If you look at the 13 weeks ending March of this year, private label grew in our categories 1.8 points. If you look at the last 13 weeks ending in September, they grew 0.9. If you look at the last four to five weeks, the September month, they grew 0.6, so clearly sequentially the impact is going down fairly significantly. Joe Altobello - Oppenheimer: Okay, and in terms of the H1N1, you mentioned the impact in the quarter. In October, did you guys still see elevated levels of shipments or has that started to slow as well?

No, we are still seeing elevated shipments. As Dan alluded to, it’s just hard to call this one. It is difficult to call the impact of the virus but what we are assuming is that some of the inventories we are building in both retail customers as well as consumers’ homes may over time cause a bit of a trough once the flu season winds down. That’s our best guess at this point. Joe Altobello - Oppenheimer: Okay, and just lastly, the Green Works laundry launch you mentioned was not up to your expectations and I think part of that had to do with Walmart not taking it and it sounded like you guys were at least somewhat optimistic that there was a chance maybe later in calendar ’09 or early calendar ’10 that that might be reversed. Are you hearing anything from Walmart on that?

Don’t expect to get distribution at Walmart anytime soon I guess would be my bottom line answer. You know, there’s an awful lot of activity going on detergent these days in terms of [inaudible] and pricing, some very -- so this is probably not the best time in the world to be launching a premium priced detergent, given what is going on in the category as well as what is going on with the economy. So obviously our discussion with Walmart is private but that’s not in our expectations at this point. Joe Altobello - Oppenheimer: Okay.

I think the good news about it, if there’s some good news in this, is while the trial, consumer trial is off to a slower start, where we are getting the trial, what we have seen from some retailer data is that our repeat is significantly higher than we anticipated, so we know we’ve got a great product. It’s just getting trial in this pricing environment that is most difficult and that’s what we are -- that’s what tactically we are trying to address now is to get some trial. Joe Altobello - Oppenheimer: Got it. Thank you.

And our next question comes from the line of Andrew Sawyer with Goldman Sachs. Andrew Sawyer - Goldman Sachs: Don, I was wondering if you could speak a little bit about some of the natural or green derived businesses, not just Green Works but Burt’s Bees and also Brita. It just felt like at the margins, some of these things have slowed a bit and I was wondering if you could break that up. Are you guys in your consumer studies picking up any less interest in that theme or do you think it is just that the economic situation outweighs it? And how should we think about the path to recovery and how that jives with the consumer economic situation or consumer retail spending power?

Let me start off, Andrew, and then I’ll turn it over to Larry. I think in general it is more the economic situation out there. Let’s take the hard surface cleaning category, those that add up to the core five segments we’ve launched, Green Works and I think Larry noted this, while that category has come down obviously in the growth rates, it is still growing at quite a faster clip than the conventional cleaners and we are still maintaining or gaining slightly in share at about a 45 share level. But I think consumers are looking for more value brands and that category has slowed. But where we take heart is that it is still growing at a faster clip than conventional players, so we feel good about that. As far as Burt’s Bees go, the encouraging thing there for the last 24 weeks, and this has maintained over the last 12 weeks as well, we are seeing consumption in the high-single digits on Burt’s returning, so it isn’t the double digits we saw before the recession but it is far outpacing the conventional personal care categories, which are flattish. So we feel very good about where Burt’s is competing and we are gaining significant international presence with Burt’s as well, so we feel good about that. As far as laundry itself goes, as Larry said there is so much pricing activity going on around value brands in that segment, it is a difficult time to be launching a brand with significant absolute price points in the -- on the larger size in the $12 to $14 range, and getting trial for that. But those categories -- or that category, natural in general is still outpacing the conventional cleaning segment. As far as Brita goes, we are gaining share in Brita. I think a bit of an anomaly in we had some merchandising shifts from the first quarter into the quarter on Brita and that has slowed down some of the shipments but we were lapping double-digit growth in year-ago and we are gaining share and in the second quarter, we are off to a good start on Brita, so that continues to gain momentum. I think that is one of those things where it is not just a sustainability story but the value story is kind of almost overtaking now the sustainability benefits of water filtration. It’s just people don’t want to spend that kind of money to drink bottled water at home. Andrew Sawyer - Goldman Sachs: And then just kind of a question on -- thanks a lot of that, Don -- a separate question for Dan; could you talk a little bit about getting down towards your leverage targets, are we thinking about potentially buying stock again as we get into the latter parts of this fiscal year?

Andrew, we will certainly take a look at that. We will -- we anticipate probably in the third quarter we will be at or below our 2.5 to 1 and we will balance our view on how to use that cash based on what the M&A agenda might look like and other needs for the cash but certainly we bought back shares in the past and I think we have a long track record if we don’t need it in the business, we will return it to shareholders. So we will consider that in the second half of the year. No change right now but we will consider that in the second half of the year. Andrew Sawyer - Goldman Sachs: Are you seeing more decent quality M&A books come across your guys’ desks at this point?

You know, we are seeing a little bit of an up-tick in the activity. As to quality, it’s still a pretty mixed bag right now. As you know, we are focused really on a couple of key areas that we have talked to you in the past about, natural personal care. So the opportunities there tend to be pretty small. We are also focused on the away-from-home business, the institutional business -- again, some of the opportunities there are relatively small. And then the third area is obviously looking outside the U.S. and that’s always a question of whether you can action any of those ideas but we are seeing a little bit of an up-tick in terms of some properties on the market. Andrew Sawyer - Goldman Sachs: All right, well, thank very much, guys.

And our next question comes from the line of Victoria Collin with Atlantic Equities. Victoria Collin - Atlantic Equities: A couple of my questions have been answered but if I could just ask you would you mind splitting out the Burt’s Bees the percentage of sales that is international versus the U.S.? And also just a question on the price points of Green Works. Obviously they are on a little bit of a premium due to the natural elements of the business but would you consider doing trade promotions in this area or are you prepared to keep the prices where they are to maintain this sort of more prestige higher priced elements despite the softness in the market at the moment? Thanks.

So let me start with Green Works; on the base cleaning products, we’re at about a 15% to 20% premium, and I would not say that’s an area where we are heavily focusing trade dollars, so we are comfortable with that premium. We still have growth in that segment, so that’s not an area where we are dealing more heavily than we did previously.

And our international sales, Victoria, about 20% are outside the U.S. Victoria Collin - Atlantic Equities: So 20% is international?

It pretty much mirrors the company on average. Victoria Collin - Atlantic Equities: Okay, that’s great. And just to clarify, your increased trade spend is going to be targeted mainly at the laundry and the trash business, as well as perhaps some of the cat littler?

Correct. Victoria Collin - Atlantic Equities: Okay, great. Thank you very much.

And our next question comes from the line of Connie Maneaty from BMO Capital Markets. Connie Maneaty - BMO Capital Markets: Could you talk a little bit about the Burt’s Bees toothpaste launch? What kind of distribution you are going to get with that -- excuse me, I mean, is it going to go into natural type outlets that compete with [inaudible] main or are you thinking it is going to be placed in the regular toothpaste aisle?

I think it is going to go along with the rest of the Burt’s Bees line, so we would look for a pretty similar distribution pattern to what we have in the rest of our Burt’s Bees products. I think there are six items in the line, two are focused on kind of multi-care, two on whitening, and two focused on kids, which is obviously important within natural toothpaste.

And one of the things that really appeals about that segment is that the size of that segment is over $150 million just on the natural side, so it’s obviously a white space that we think Burt’s has some real credibility for. Connie Maneaty - BMO Capital Markets: Who is making this for you? I mean, are you contracting this?

It’s self-manufactured. Connie Maneaty - BMO Capital Markets: Okay. If I could also ask you about the bleach plants and the new process that you are going to go through. Could you describe what you mean by it’s going to provide you with more security? What is -- what did you call it, high impact bleach?

Well, it’s high strength bleach. I think what we mean by higher security is that it is more reliability in the supply chain, if you will. Obviously as we look out in the years, looking out into the future, we could see or we would forecast that the cost of transporting chlorine gas around the United States is going to go up. I think it’s a higher risk proposition for railroads, et cetera so as we look at it, when we talk about security, it’s really about continuity of supply and making sure that we can have both capabilities, if you will, retaining still the capability of converting but transitioning over time to where we manufacture high strength bleach. So that’s what it really means. It’s around continuity of supply and making sure we can continue that. Connie Maneaty - BMO Capital Markets: So does high strength bleach mean you are buying something that is further along in the process than --

Yes, that’s exactly what it means, is you are buying something and then we dilute it down a little bit further but we are not converting chlorine gas into sodium hyperchloride bleach. Connie Maneaty - BMO Capital Markets: And are the economics of this favorable to you? Are there patents and can -- do you have some advantage over your private label competitor with this?

Given the increasing costs in terms of rail transportation of chlorine, given the risks involved and the insurance rates, et cetera, this will probably be a -- about a break-even proposition for us by the time all is said and done.

Connie, ideally there is a cost avoidance in the future on the increasing cost structure that we see with chlorine. Connie Maneaty - BMO Capital Markets: Okay. Thank you.

And our next question comes from the line of John Faucher with JP Morgan. John Faucher - JP Morgan: I just want to follow-up on the heightened competitive activity in trash. Can you talk about the form that you are seeing it? I think you guys had talked about higher levels of couponing, maybe as opposed to just straight price discounting. Is that still the case? And when you look at that, I guess why isn’t it driving better category consumption at this point? It seems as though -- is this something that just in the recent economic environment people just pulled back on their use of trash bags?

I think there is definitely an economic impact. We took the cost of trash bags pretty high as a result of resin costs going up and so I think there may have been a bit of a shelf shock when you just went to the shelf and see how much it costs to buy 40 trash bags. So I think part of it is economic. We are seeing the competitive activity from the branded competition I would say across the spectrum, so there is a lot of pricing activity, so that our value equation or price value relative to them has gone down versus year ago. We are also seeing some increase in advertising as well as couponing. And then on the private label side, most of this is in the form of just pricing, just more aggressive pricing or more promotion activity by individual retailers. John Faucher - JP Morgan: Thanks.

And our next question comes from the line of Lauren Lieberman with Barclays Capital. Lauren Lieberman - Barclays Capital: I just have one quick question remaining -- on the hard conversion, can you just remind us which of the new products you are launching, I think it is maybe just cat litter and charcoal where there is going to be a sort of concerted draw-down or retail inventory, and what quarter that is going to be in? Is it still second quarter?

So charcoal begins in the second quarter and that is a hard pull-down of inventories and replacements, so that will -- it starts in the second quarter and will continue into the third quarter. And then on the litter side, the packaging change that Larry referenced is more of a rolling roll-in of the SKUs starting in the third quarter. Lauren Lieberman - Barclays Capital: Okay, and is that the only two where this is an issue to think about?

Yes, for this year, yes. We had a third hard conversion that we had talked about before. That was intended to be a late fiscal year conversion. That likely now will be in fiscal ’11. Lauren Lieberman - Barclays Capital: Okay, great. Thanks so much.

And our next question comes from the line of Jason Gere with RBC Capital Markets. Jason Gere - RBC Capital Markets: Just two questions, one just on volumes I guess following up kind of with Lauren’s question -- if we strip out H1N1 and then we look at the conversions, I mean, I think this quarter your volumes sequentially improve from negative 2 to negative 1. I mean, with the spending that’s [been on there], I mean, should we be assuming that you will see volumes sequentially improve once you strip out the H1N1? And factoring in all the conversions, how that, the timing plays through of bleeding down the inventories?

I’m not exactly sure how to strip put H1N1. I think that we are concerned about some draw-down in H1N1 inventories in consumers homes and in retailers warehouses in the second half as a result of the build-up we are seeing in the first half, so that’s part of our outlook for volume in the second half of the year.

I would just go back and reiterate what Larry said earlier, Jason -- on volume for the year, we are still seeing 3% to 4% volume growth. We had 1% volume growth in the first quarter, so you could project out from there but we’ve seen fairly strong volume growth in the out three quarters. Jason Gere - RBC Capital Markets: Okay, fair enough. And then if we could just talk maybe about the household margins. Clearly over the last year and with the new segment reporting, the margins have been kind of all over the place, given all the puts and takes in there. So as we look to the rest of the year with commodities starting to go less favorable and I guess competitive activity stepping up, I mean, would you anticipate that the margin structure, at least in near term, is going to be back down to the single-digit range? I guess at what point do you want to not sacrifice as much margin in order to maintain your market share? I was just wondering if you could add a little color to that and the dynamics of that segment.

So the Glad business, if you look at the last half of last fiscal year, obviously we saw some pretty nice expansion in margins as commodity costs begin to come down. We are still actually seeing decent margins in the Glad business, although the ramp-up in trade spending and now the softness in the category definitely will squeeze our margins, particularly as we get into the second half of the year. I guess the question on margin is sort of the mid-term and longer ranger perspective of the competitive activity that we are seeing today, how long will that continue. As we are ramping up our trade spending to address some of the competitive activity, how long will that competitive activity sustain itself? So as we look at the second half of the fiscal year, we’ve already said we are forecasting some increase in resin in the back half of the year and we think that should have a dampening effect on some of this competitive activity, assuming that does occur. So while we are certainly spending to make sure we have the value equation right and to address some of the price gaps, we are not currently anticipating that that is going to -- we are going to have to have that level of spending for an extended period of time. But obviously this is a volatile category, resin can move around. We’ve seen it move incredibly over the last 12 months but based on what we see today, near-term we believe the increase in trade spending is the right thing to do. It will pinch our margins a little bit longer range if our outlook is correct and resin has kind of a slow rise to it. We think that will probably dampen some of the competitive activity.

And I think you’ve got to take those margin comments on Glad into the context of the entire company, so as we are taking guidance up overall on our margin, we still see healthy margin expansion back to historical levels, though I wouldn’t read too much into what is going on on Glad, which that particular part of our business, that trash part of our business is about 12% to 13% of our revenue. Jason Gere - RBC Capital Markets: Okay and if I can just add one housekeeping, just as we look at other expense and the Venezuela piece that’s in there, I think there was a $0.04 FX -- what should we anticipate for the full year in terms of other expense flowing through to the P&L? Thank you.

Jason, as Dan noted in his comments, I believe, the Venezuela impact at this point we are projecting somewhere between a $28 million and $30 million impact. And then there’s a few other relatively smaller expense items that tend to flow through other expense on an annual basis, so again, it’s always been a difficult line to predict but you ought to be thinking around $30 million, plus or take, would be our best projection right now for that line item. Jason Gere - RBC Capital Markets: Okay, great. Thanks.

And our next question comes from the line of William Schmitz with Deutsche Bank. William Schmitz - Deutsche Bank Securities: Can you just talk about gross margin guidance for the second quarter? Is it going to be down considerably sequentially? Is it going to be up? What is the outlook there?

It should be up it the second quarter but we won't see the kind of expansion that we saw in the first quarter. William Schmitz - Deutsche Bank Securities: Okay, how about just from like the first quarter level, just the sequential margin trends?

Sequential on a year-over-year growth or on an absolute basis? William Schmitz - Deutsche Bank Securities: On an absolute basis quarter to quarter.

I’m not sure if I have that in front of me here.

It will be down, Bill, versus the roughly 45% number for Q1. A couple of things come into effect -- we will have anniversaried a good portion of the pricing that we took last year in August. That will no longer be an incremental benefit this year. And then with the higher trade promotion spending that we spoke to as well, some of that will begin to factor into Q2 as well, so as Dan said, we still expect a pretty healthy increase but probably not the level of increase in Q2 nor would you see the absolute gross margin being quite as high as in Q2 as it was in Q1. William Schmitz - Deutsche Bank Securities: Okay, great. And then we all kind of know how this game is played -- I mean, the promotional spending levels, is that kind of what you could spend or what you will spend?

I think, Bill, that we are trying to -- I’ll put it this way; we’re committed to share growth, as I said. It needs to be profitable share growth. I think given how we had such a solid first quarter, I would say we are being conservative about what we are going to spend but we are going to keep some dry powder available so that we don’t let this brand share erode. William Schmitz - Deutsche Bank Securities: Okay, good, that makes sense. And then lastly, I promise, did you give a number for your sort of restructuring and restructuring related charges for the year? I mean, is there going to be anything related to this high strength bleach changeover in the year? And also what the absolute number is you think for restructuring, both the -- what you would report and also the restructuring related?

Bill, our outlook still has the $20 million to $30 million range and it’s not impacted by the shift over to high strength bleach. In fact, the -- that shift over shouldn’t have any significant impact on fiscal ’10. William Schmitz - Deutsche Bank Securities: Okay, and how about CapEx?

CapEx, we’re still right around our $200 million to $210 million for the year. Over the next three years, there will be a little bit of capital involved with the shift over to high strength bleach but our forecast for CapEx is unchanged relative for the next couple of years, even including that project. William Schmitz - Deutsche Bank Securities: Okay, great, thanks. Sorry for jumping back on.

And our next question comes from the line of Chris Ferrera with Bank of America. Chris Ferrera - Bank of America-Merrill Lynch: Sorry, I promise I’ll be quick -- just the timing of the restructuring -- so I guess Q1 was smaller than we had thought, and I think you guys said first half loaded, so how do you think that 20 to 30 is going to flow for the year?

Let’s see, if I think about it from a quarter standpoint, I think we had -- you know, my guess is, Chris, the second quarter will be -- will see about the same level of charges that we saw in the first quarter and then it will be down a little bit in Q3 and Q4 of next year and again, we’ll be in that $20 million to $30 million range. Chris Ferrera - Bank of America-Merrill Lynch: Great, thanks a lot.

And this concludes the question-and-answer session. Mr. Knauss, I would now like to turn the program back to you.

I just want to thank everybody for joining us today. Obviously we feel very good about this quarter and feel very good about the balance of the year, so we will look forward to talking with you on the next quarter. Take care, everyone.

This concludes today’s conference call. Thank you for your participation.