Steve Nicola – CFO Joe Bartolacci – President and CEO

Fred Buonocore – CJS Securities Liam Burke – Janney Montgomery Scott Clint Fendley – Davenport & Company LLC Jamie Clement – Sidoti & Company Jason Rogers

Ladies and gentlemen, welcome, and thanks for standing by. Welcome to the first period financial results conference call. At the request of your host, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) And as reminder, this conference is being recorded. I would now like to turn the conference over to your host, Matthews International CFO, Mr. Steve Nicola. Please go ahead, Mr. Nicola.

Thank you, George. Good morning. I'm Steve Nicola. On the call with me today is Joe Bartolacci, President and CEO of Matthews. Today's conference call has been set up for one hour. And we are conducting the call to comply with the Securities and Exchange Commission Regulation FD. This call will be available for replay at around noon today. To access the replay, dial 1-320-365-3844, and enter the access code 140903. The replay will be available until 11:59 pm, February 4, 2010. We have posted on our Web site, which is www.matw.com, the first quarter earnings release and financial information we will discuss this morning. In the last column of our homepage, under Investor Relations, you can click on Investor News to access the earnings release or click on the Reports to access the quarterly financial data. The financial data is presented under the heading "Current Quarterly Financial" -- or I'm sorry, "Current Quarterly Reports" in a PDF file format. Before beginning the discussion, at the advice of our legal counsel, I have been advised to read the following disclaimer as it pertains to forward-looking statements. Any forward-looking statements in connection with this discussion are being made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the company's actual results in future periods to be materially different from management's expectations. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the company's results to differ from those discussed today are set forth in the company's annual report on Form 10-K and other periodic filings with the SEC. In addition, please note that the balance sheet and income statement information provided today are preliminary data since our quarterly report on Form 10-Q for the period ended December 31, 2009 will not be filed with the SEC until the first week of February. To begin the conference, I will review the financial results for the quarter. Mr. Bartolacci will then provide general comments on our operations. Following that, we will open the discussion for questions. For the quarter ended December 31, 2009, the company reported earnings of $0.43 per share. Earnings for the same quarter a year ago were $0.37 per share. Earnings for the current quarter were negatively impacted by an increase in pension expense of $1.3 million or $0.03 per share, compared to the first quarter last year. Earnings for the prior year first quarter included unusual charges of $0.14 per share, which primarily consisted of costs related to the consolidation of memorial production operations within the company's bronze segment, cost structure initiatives in other segments, and certain asset adjustments. In addition, earnings in the first quarter a year ago included the one-time benefit of $0.03 per share related to a favorable adjustment in income tax expense, this adjustment related to the company's ability to utilize the European tax loss carry over. Consolidated sales for the first quarter of fiscal 2010 were $193 million, compared to $191 million for the same quarter a year ago. The increase in consolidated sales mainly reflected the impact of several small acquisitions made by the company at fiscal 2009 and the favorable effect of foreign currency rate changes. Excluding the impact of these items, sales were lower than a year ago, primarily reflecting the continued weakness in the economy. Changes in the values of foreign currencies against the US dollar had an estimated favorable impact of approximately $6.2 million, compared to the first quarter a year ago. In our memorialization businesses, sales for the bronze segment were approximately $49 million for the current quarter, compared to $50 million last year. Sales for our casket segment were approximately $51 million for the current quarter, compared to $53 million a year ago. The decline in sales for both the bronze and casket segments reflected lower unit volumes, excluding the acquisitions. While the overall death rate in the United States was estimated to be relatively flat, casketed and in-ground burial death rates were estimated to have declined again compared to a year ago, particularly in several principal markets such as the Northeast. In addition, both businesses experienced an unfavorable change in product mix as some customers continue to trend toward lower-priced products. Sales from the cremation segment in the first quarter of fiscal 2010 were $8.5 million, compared to $6.3 million a year ago. An increase in unit volume of equipment sales and the acquisition of a small European cremation equipment manufacturer, which was completed in the first fiscal quarter last year, were the principal contributors to the year-over-year improvement in the segment's sales. In the brand solutions group, first quarter sales for the graphics imaging segment were approximately $60 million, compared to $57 million a year ago. The increase was primarily attributable to favorable changes in foreign currency rates and the impact of the acquisition of the small graphics operation in Hong Kong in the fiscal 2009 fourth quarter. Excluding these items, sales declined from a year ago, primarily reflecting the current economic environment. The marking products segment reported sales of $11.6 million for the quarter ended December 31, 2009, which was relatively unchanged from the same quarter last year. The segment's sales benefited from the recent acquisition of a smaller European distributor and favorable currency rate changes. Since this segment provides industrial marking products and consumables, it continues to be one of the more economically sensitive businesses of Matthews. Order rates in this business have been inconsistent, but have shown intermittent signs recently that its markets may be stabilizing. Sales for the merchandising solutions segment were $13 million for the fiscal 2010 first quarter, compared to $14 million a year ago. Order rates in this segment have also been inconsistent as customers delay or in some cases cancel merchandising projects. However, similar to our marking products segment, recent quarter activity has shown signs that the market may be stabilizing. Consolidated operating profits for the quarter ended December 31, 2009 was $22.2 million, compared to $20.1 million for the same quarter a year ago. Operating profits for the current quarter reflected an increase in pension expense of $1.3 million, compared to the first quarter last year. Operating profits for the first quarter a year ago included approximately $5.8 million of the unusual charges discussed earlier. In addition, changes in foreign currency volumes against the US dollar had a favorable impact of approximately $600,000 on operating profits of the current quarter, compared to the first quarter a year ago. In our memorialization businesses, the bronze segment reported operating profit of $10.4 million for the fiscal 2010 first quarter, compared to $9.3 million a year ago. The prior period included unusual charges of $3.1 million. Excluding these charges, operating profit for this segment declined from a year ago as a result of lower sales and higher pension costs. Operating profits for the casket segment was $5.8 million for the fiscal 2010 first quarter, compared to $6.4 million a year ago. Lower sales, including an unfavorable change in product mix, was the principal factor in the reduced operating profits from a year ago. Operating profits for the cremation segment was $1.1 million in the current quarter, compared to $813,000 a year ago. Higher sales and the fiscal 2009 acquisition of a European cremation equipment company were the principal contributors to the year-over-year operating profit improvement. In the brand solutions group, the graphics imaging segment reported operating profit of $4 million for the quarter ended December 31, 2009, compared to $2.6 million a year ago. The increase resulted primarily from improved performance by the segment's German operations, particularly Saueressig. Despite the continued negative effect of the economy on net sales, Saueressig reported an increase in operating profit as a result of cost reduction actions taken over the last 18 months. Saueressig reported generally breakeven results from operations in the first quarter a year ago. Favorable changes in currency exchange rates also were a factor in the improved results year-over-year. In addition, the prior period included unusual charges in connection severance costs and the integration of Saueressig. The merchandising solutions segment reported operating profit of $289,000 for the fiscal 2010 first quarter, compared to $299,000 in the first quarter last year. The prior period included unusual charges related to cost structure initiatives. The first quarter year-over-year decline in operating profit for this segment was also mainly attributable to lower sales. Operating profit for the marking products segment was $600,000 for the quarter ended December 31, 2009, compared to $671,000 a year ago. The decline in operating profits from last year resulted principally from slightly lower sales, costs related to a new small distribution operation in Germany, and higher pension expense. First quarter sales and operating income by segment are posted on our Web site. Our first quarter consolidated operating margin for fiscal 2010 was 11.5% of sales, compared to 10.5% in the first quarter last year. Unusual charges for the first quarter last year were approximately $5.8 million or 3% of sales. Gross margin for the quarter ended December 31, 2009 was 38% of sales, versus 35.5% for the same period a year ago. The improvement was attributable to inclusion of the unusual charges in the prior quarter and the current period benefits from the fiscal 2009 cost structure initiatives, particularly in the Saueressig operation. SG&A expense for the current quarter was 26.5% of sales, compared to 25% of sales in the same quarter last year. Higher pension costs, combined with lower sales in several of the company's segments adversely impacted the consolidated SG&A percentage relative to sales. In addition, SG&A costs for the casket segment were higher than a year ago as a result of the acquisition of a casket distributor in the Southeast region in fiscal 2009. Investment income for the fiscal 2010 first quarter was $1.2 million, compared to a net loss of $388,000 for the same period a year ago. Unusual charges for the prior year first quarter included a mark-to-market asset adjustment of approximately $800,000 representing unrealized losses in the value of investments held in long term trust for certain employee benefits claims. Under the company's accounting policies, unrealized gains and losses on these investments are recorded for the income statement. Interest expense for the current quarter was $1.9 million, compared to $3.3 million for the same period a year ago. The decline in interest costs principally resulted from lower interest rates and a reduction in the average level of debt, compared to a year ago. The deduction for net income from non-controlling interests, formally referred to as minority interests, was $660,000 for the quarter ended December 31, 2009. There is relatively no income from non-controlling interests for the same quarter last year. The increase related to improved profitability of Saueressig and the acquisition of an 80% interest in a small graphics operation in Hong Kong late in fiscal 2009. In the first quarter last year, subsidiaries with minority interests would generally break even in the (inaudible). The fiscal 2010 first quarter effective income tax rate was 36% pre-tax income, compared to 30.9% in the first quarter a year ago. The first quarter last year included the favorable impact of a one-time adjustment for the use the use of tax loss carry-overs in Europe. Excluding the favorable impact of one-time tax adjustments, the effective rate for all of fiscal 2009 was reported as 36.2%. The decline in the fiscal 2010 first quarter effective rate from the fiscal 2009 full-year rate basically reflects the change in accounting for non-controlling interests, which essentially resulted in the re-class of certain items on the income statement. Consolidated cash and cash equivalents at December 31, 2009 were approximately $59 million, compared to $58 million at September 30, 2009. Our current ratio was 2.3, both at December 31, 2009 and September 30, 2009. Outstanding accounts receivable at December 31, 2009 were approximately $126 million, which represented 59-day sales outstanding. Outstanding accounts receivable at September 30, 2009 were $139 million, (inaudible) 62-day sales outstanding. Consolidated inventories at December 31, 2009 totaled approximately $95 million, compared to $94 million at September 30, 2009. Long term debt at December 31, 2009, both current and long term portions, approximated $251 million. $181 million of this balance represented borrowings under our domestic revolving credit facility. The remainder is primarily debt on the books of our German and Italian subsidiaries. The maturity of the domestic revolving credit facility is September 2012. At December 31, 2009, the company had approximately 30,383,000 shares outstanding. During the fiscal 2010 first quarter, the company purchased approximately 147,000 shares of its share -- under its share repurchase program at a repurchase cost of approximately $5.1 million. Approximately 68,000 shares remain today under the existing repurchase authorization. As you may have read this morning, our Board of Directors has approved an additional 2.5 million shares in repurchase authorization. As such, the company now has authorization to repurchase 2,568,000 shares as of today. Depreciation and amortization for the quarter ended December 31, 2009 was approximately $6.3 million. Capital expenditures for the current quarter were $4.2 million. In summary, the company's operating results for the fiscal 2010 first quarter was slightly ahead of our internal expectations. Signs of stabilization in many of our businesses and the improved results for Saueressig were significant factors in the first quarter performance. In addition, the operating results for the first quarter were achieved despite an additional pension charge of $0.03 per share. Pension expense for the full fiscal 2010 year will be approximately $5.1 million or $0.11 per share higher than fiscal 2009. In November, we provided guidance that despite the increase in pension costs, our fiscal 2010 earnings per share was expected to be relatively consistent with 2009, excluding unusual items. Although our results for fiscal 2010 first quarter were slightly ahead of our internal expectations, based on our current projections, we are maintaining our earnings guidance at this time. This concludes the financial review. And Joe will now comment on our operations.

Thank you, Steve. During the first quarter of 2010, we began to see some stability in our operating revenues in many of our businesses. Our memorialization businesses saw lower volumes due to death rates in the areas where we have significant market share. But despite these lower volumes, we saw the benefits of our cost structure initiatives that we announced last year. And our operating profit for this segment was in line with our expectations. Similarly, our brand solutions business saw modest improvement in operating profits on slower sales volumes. Our European business has performed well and benefited from a good performance from Saueressig, which took significant steps during last year to adjust costs to a lower run rate. Our marking products and our merchandising solutions businesses continued to struggle with lower volume, but each had begun to see improvement in the growth rate at their customers. In all, we're not satisfied with our performance, and therefore remain vigilant in our efforts to align our costs with our current revenue run rate. We expect the balance of 2010 to continue to be challenging from a revenue standpoint. And we remain cautious in light of our poor visibility in several of our businesses. Nonetheless, we are comfortable with our guidance of earnings per share, which we expect to be at least equal to our adjusted earnings for 20009. Our 2010 guidance anticipates $5.1 million of additional expense and relative stability in our revenue stream. We look forward to seeing the benefits of some of our cost structure initiatives once our run rates return. With that, I'd like to open up to questions.

At this time, we would like to open the call to questions. For those of you who will be asking questions, we request that you limit them to one question and a follow-up question until all those who wish to participate in the Q&A session have had an opportunity to do so.

(Operator Instructions) Our first question is on the line of Mr. Bob Labick. Please go ahead, Mr. Labick. Fred Buonocore – CJS Securities: Yes. Good morning, Joe and Steve. This is actually Fred Buonocore calling in for Bob. How are you today?

Hello, Fred.

Good morning, Fred. Fred Buonocore – CJS Securities: Yes. First question just related to the bronze memorialization margins, clearly down over prior year levels than -- lower than what we had been looking for. And I'm just wondering, have you elaborated a little bit? You talked about an unfavorable mix shift in the press release and in your prepared remarks. Is this a transient shifter -- this low 20% operating margin level what we should we expect through the year?

A couple of things you need to think about when you think about our first quarter margins, first is that our first quarter for bronze is generally seasonally the slower of the quarters for that division. Secondly, we do have, this year, the extra pension costs that we didn't have a year ago. So on a comparable basis, those margins are lower for both of those reasons. And the third, you mentioned already, which was the shift in product mix. Fred Buonocore – CJS Securities: Is this a level to think about going forward through the year?

Well I think the margins as seasonally -- the revenues generally get better again in the second and third quarters. You should expect a little better margin in both of those quarters because of the additional volume. But we'll still potentially be dealing with the product mix issue and we also know that we will be -- we will have the extra pension expense. Fred Buonocore – CJS Securities: Of course, got it. Thanks for that clarification. And then just secondly, can you give us some color on your outlook for raw materials as it relates to steel and copper? Are you hedging or buying forward? How are those prices looking for what you have in inventory right now?

Due to the nature of the commodities and how we purchase, we have not hedged and it's difficult for us to hedge for reasons I think we discussed in the past. But we do, do our best to buy out when we can for some extended period of time with respect to bronze back in -- up to a couple of months and with respect to steel. Those are contracts, although the pricing on those contracts tend to move with the market more currently than maybe some of arrangements that we have when we bought bronze ahead. Steel is still relatively low. But as you know, copper has been higher lately. And for that reason, we will be dealing with the higher bronze costs as the fiscal year progresses. Fred Buonocore – CJS Securities: Great. Thank you very much.

You're welcome.

Our next question is from the line of Mr. Liam Burke. Please go ahead, Mr. Burke. Liam Burke – Janney Montgomery Scott: Thank you. Good morning, Joe. Good morning, Steve.

Good morning, Liam. Liam Burke – Janney Montgomery Scott: Steve, could you talk a little bit about the acquisition of the granite on the first quarter and how it fits in to the memorialization -- or the bronze memorialization business for the rest of the year?

Sure. The acquisition that you're referring to is United Memorial Products. We purchased that in mid-December. It's about a $10 million to $11 million-dollar business, principally granite, although they do sell some caskets and some bronze in their headquarters on the West Coast and generally a supplier to the West Coast region in the United States. Not much to report here in the first quarter because we only -- because we only owned them for several weeks. It was acquired mid-December. But it provides us an additional product line in addition -- obviously, in addition to the bronze memorials that we sell. Liam Burke – Janney Montgomery Scott: Are you good about -- obviously, it's the distribution side of the business that you like. But is it -- is it going to be restricted to West Coast? Or how do you see the upright business, the granite business growing? Are you going to limit to a single geography or--?

Liam, we have -- in fact, we have a number of phone calls from some of major customers who are very pleased in their acquisition, so. We're going to get our arms around the first acquisition here as it relates to the West Coast. And then take a look both at organic opportunities across the United States as well as our other smaller acquisitions continue to fulfill a broader strategy of providing upright memorials throughout the US. Liam Burke – Janney Montgomery Scott: Great. Thank you.

You're welcome.

Our next question is from the line of Mr. Clint Fendley. Please go ahead, Mr. Fendley. Clint Fendley – Davenport & Company LLC: Thank you. Good morning, Joe and Steve.

Hi, Clint.

Good morning, Clint. Clint Fendley – Davenport & Company LLC: I just wondered if you could comment on the mix shift that we saw in the quarter and how you see that progressing from here as it relates to your casket segment.

On the casket side, what we -- what we're seeing, frankly, if you knew a little bit about the casket product mix is they range on features, and metals, and different wood, and things of that nature, and obviously, would have different price points within that. We are taking steps, although I think it's a slow transition, to try shift our marketing strategies to find mid point products in between the higher-priced and the lower-priced trying to encourage people up as well as trying to find incentives to bring our funeral directors in that situation upstream. It is in both of our interest, frankly, both the funeral director and the casket manufacturer's interest to sell a higher, greater product. So I think that this is probably a slow long term trend down, but it will continue to come back up as we start to move our merchandising another way. Clint Fendley – Davenport & Company LLC: I think most in the industry had seen maybe a bit of an acceleration in the trend towards cremation back earlier in 2009. I mean what do you think we are in that? Has it stabilized? Has it begun to maybe return to more of a normal shift? If you could comment on that please.

I could tell you what we've seen at least. We think our markets where we serve the most have been relatively stable in line with expectation with what we had long term expectations of cremation. What we saw more so has been up in the Northeast where we have a large majority of our -- our market share, especially on the casket side of the business, a little lower death rate, frankly, 122-city CDC analysis if you take a look at that. In some cases where we have good market share, we're down 4% just on death rate. Now obviously, that's not a long term trend or it's not a population shift going anywhere else so we expect that to come back. But those two factors, the consistent trend in cremation and the lower volume rate as a result of slower death rate in that area has helped impact our volumes on the casket side. Clint Fendley – Davenport & Company LLC: Thanks, guys.

You're welcome.

Our next call is from the line of Mr. Jamie Clement. Please go ahead. Jamie Clement – Sidoti & Company: Joe, Steve, good morning.

Good morning, Jamie. Jamie Clement – Sidoti & Company: Hey, Joe, can you give us a little bit more color on how you see the primary graphics market go over the next couple of quarters? Have you seen some signs that some of your historical clients are going to be getting out there in the market a little bit more?

We have, Jamie. In fact, some of our larger brand accounts have started to at least talk about new packaging, new offerings. And without naming names for a lot of reasons, their need to repackage and remarket on the shelf is important right now, whether it'll be just to provide more value or provide a newer look, whatever it may be. We've landed some new business. And we expect that over the course of time, Jamie, that'll start to help us. It'll probably start to see some of that benefit, probably I would say, more in the third quarter and the fourth rather than in the second as these things ramp up very, very, very slowly. But our customer bases, we're starting to see on the primary side -- for example, we've been mentioning the packaging for cigarettes in Europe. One of the reasons we did well in Saueressig this quarter aside from our cost structure initiatives has been a nice order for picture packs on cigarette packaging for Poland. And that was a pretty good benefit for us. So we are expecting that to continue. It's just a lot slower than we had earlier expected. Jamie Clement – Sidoti & Company: It just sounds though in some that you expect the graphics business overall to get better as the year progresses and that you actually think you have some evidence that that seems to be the case, right?

Yes. We have not lost customer base. We've lost volume within the customers. But we had in fact regained a couple of customers, so. We think that longer term throughout this year will be a little bit better for all of us and -- both in Europe and in the United States. We'll cross our fingers and hope at this point. Jamie Clement – Sidoti & Company: Okay. Great. Thanks a lot for your time.

All right.

Our next question is from the line of Jason Rogers. (Operator Instructions). Mr. Rogers.

Good morning.

Good morning.

Good morning, Jason.

Looking at the memorialization side, I was wondering about this whole movement towards green products, biodegradable caskets, and so forth that is having an impact or if you're seeing that to potentially be an issue going forward, even looking beyond the economic downturn?

Jason, we have a wonderful product line that's biodegradable. It's called our wood line. In fact, we have been promoting that -- we have a separate line of biodegradable wood caskets as you might expect, no nails, no glues. We use that in a number of our -- of situations. We have not seen a major trend toward -- right now, we hear a lot of noise around it. But if it were to come, we're prepared.

Okay. And then looking at uses for cash with the reauthorization today, I'm wondering if you're planning on getting a little more aggressive with share repurchases and just your general thoughts currently on acquisitions?

We are constantly, in the market, looking for acquisitions. We took about a year off. I mean last year we didn't do a whole line in terms of anything of consequence. We just acquired something here in December with United Memorial. We have a few more things that we're working on, nothing I would say that are big move -- needle-type acquisitions, but parts of the puzzle that we'll continue to add. To the extent those don't look favorable to us, we will be in the marketplace buying back our shares.

And Jason, just to add to that, the reauthorizations by the Board shouldn't -- isn't a signal that we intend to get more aggressive. It's simply that our current -- our existing authorization had about run out. And the Board as well as management continue to believe that active share repurchase program is an integral part of the company's long term strategy.

Okay. Thank you.

(Operator Instructions).

Okay. George, well if there are no more questions at this time. I'd like to take the opportunity to thank the participants and the listeners to the call. And we look forward to our first quarter -- or I'm sorry, our second quarter earnings release and conference call in April. Have a great day.

Ladies and gentlemen, this conference will be available for replay after today through Thursday, February 4th at midnight. You may access the AT&T teleconference replay system at any time by dialing 320-365-3844, and entering the access code of 140903. Those numbers again are 320-365-3844, with the access code of 140903. That concludes our conference for today. Thank you for your participation and for using the AT&T executive teleconference center. You may now disconnect.