高樂氏 (CLX) 2008 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to The Clorox Company fourth-quarter and fiscal year 2008 earnings release conference call. At this time all participants are in a listen-only mode. At the conclusion of our prepared remarks we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder, this call is being recorded. I would 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.

Welcome, everyone, and thank you for joining Clorox's fourth-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.

Let me remind you that on today's call we will refer to certain non-GAAP financial measures including, but not limited to -- free cash flow, EBIT margin, debt to EBITDA and economic profit. Management believes that providing insights on these measures enables investors to better understand and analyze our ongoing results of operations.

Reconciliations 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 area of our website as well as in our filings with the SEC. In particular it may be helpful to refer to tables located at the end of today's earnings release.

Lastly, please recognize that today's discussion contains forward-looking statements. Actual results could differ materially from management's expectations. Please review our most recent 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 it over to Larry.

Thanks, Steve, and good morning to all. As you saw in the press release, we had a solid fourth quarter and a very solid fiscal year. Sales grew strongly with broad-based growth in the base business and incremental benefit from acquisitions. Margins declined given the acute cost increases in energy and raw materials. All in all we feel good about the progress we are making in a very difficult environment.

I'm going to focus my comments on volume and sales and provide perspective on what drove our topline results. Dan will cover details of the P&L as well as our fiscal '09 outlook. Finally, Don will provide a summary and wrap up before opening up for questions.

For the quarter total company sales were up 11%. Our base business was up 8%, well above our long-term 3% to 5% target range. The other 3 points of sales growth was from the Burt's Bees acquisition. Total volume for the quarter was up 6% with volume up 4% excluding Burt's Bees.

For the total fiscal year company sales were up 9%, sales growth was up 6% including the Burt's Bees and bleach acquisitions. On the volume side, the total fiscal year volume was up 6% with 3 points coming from acquisitions. Topline growth was broad-based; we grew sales in 10 of 11 business units during the fourth quarter.

Our home care business had a strong quarter with a double-digit sales increase. Green Works continues to track significantly ahead of expectations. [The program] received the 2008 Innovation and Creativity Award from the Grocery Manufacturers Association and a sustainability award from Wal-Mart. Natural cleaners have more than doubled in size and Green Works is the category leader at 50% share. This month the brand is being extended into dishwashing liquid.

Brita is benefiting from sustainability tailwinds and consumers' focus on value given the savings versus bottled water. The brand delivered strong double-digit volume and sales growth in Q4 and achieved an all-time record sales year for the fiscal year.

Burt's Bees exceeded plan with 36% sales growth versus the year-ago quarter and significant share growth in key segments including lip, skin, face, personal wash and baby. We remain extremely pleased with this acquisition.

In cat litter we delivered our sixth consecutive year of volume growth. This business continues to build on the momentum of the odor eliminating carbon innovation which has been added to Fresh Step regular clay litter as well as all of our scoopable litters.

Turning to our food business, we are winning in the Ranch dressing segment with bottled Hidden Valley showing double-digit volume growth and increased share. We continue to find innovative ways to reach consumers with our Love the Veggies campaign.

Moving on to our seasonal businesses, Kingsford was up in volume, sales and share for the quarter following softness in Q3 due to bad early-season weather.

In auto overall volume was slightly down due to category softness due to the price increases we took in January on Armor All and STP. However our shares in auto continue to be up.

In international we delivered 16% sales growth on top of 21% growth in the year ago quarter driven by volume growth, favorable foreign exchange rates and pricing.

Turning to our laundry business, shipments of Clorox liquid bleach were down versus the year-ago quarter. Although our share was up the category remained soft behind declining consumer relevance. We are taking actions to revitalize this business, including a campaign highlighting the benefit of using bleach versus detergent alone. We also continue to market bleach as a particularly effective broad-spectrum disinfectant. Bleach used for hard surface cleaning and disinfecting now makes up about half of all bleach sales.

Shipments of Clorox 2 color safe bleach were about flat for the quarter and share declined as retailers reduced inventory to prepare for the conversion to our two times concentrated formula. This new formula started shipping in July.

Finally, our Glad business was down in volume for the quarter, but grew sales due to price increases in consumer trade up to premium ForceFlex trash bags. Most of this favorable mix impact took place in the club channel which doesn't show up in tracked market shares.

Clearly our businesses have been impacted by the current commodity cost environment. Dan will discuss our outlook for commodities in a few minutes; first let me talk about the pricing actions we plan to take over the next few months.

To help offset the impact of commodity cost pressure we will increase prices on slightly more than half of the portfolio during fiscal '09 including Clorox bleach, Hidden Valley, Glad trash bags, cat litter, several home care products and multiple international brands. This is in addition to the price increases taken earlier this calendar year in charcoal, auto care, Glad trash bags and Pine-Sol cleaner.

We are well aware of the pressure the current economic environment is putting on the consumer. We're using our proven models to help predict consumer reaction and carefully execute pricing and marketing plans in a way that will lessen any negative volume impact.

Our models have proven to be very predictive on the more than 40 price increases we've executed in the last three years. We believe taking further pricing is necessary and appropriate given the cost situation and that the marketplace will support these pricing actions.

Most of our products are everyday staples that people buy even in tough economic times. We have leading brands and preferred products. Further, some of our brands, like Kingsford charcoal and Hidden Valley salad dressing, benefit from more people staying home. In fact, our recent share results are evidence that our brands have remained relatively healthy.

Our total Q4 share in tracked channels was up slightly and we've gained share in four of eight categories. Private-label share in our categories was up a bit, about 7/10 of a share point to just over 16%, and our brands grew share in two of the three categories that have the highest private-label presence -- hydrochloric bleach and charcoal.

We did lose share to private-label on Glad, but all outlet panel data shows relatively flat share given the strong increases on ForceFlex in the club channel. Overall we're very pleased with our Q4 and full-year results, especially given the intense cost environment and market volatility. With that I'll turn it over to Dan.

Thank you, Larry. I'll briefly discuss our fourth-quarter and fiscal year 2008 financial results followed by more detail on our updated outlook for fiscal year 2009.

Turning to our fourth-quarter results, for the quarter we delivered diluted earnings per share of $1.13. This includes a $0.01 impact from Burt's Bees dilution and a $0.04 impact from restructuring charges. Excluding these impacts diluted EPS for the fourth quarter was $1.18. In the year ago quarter we delivered $1.07 diluted EPS.

Fourth-quarter gross margin before charges declined about 150 basis points to 42.7% of sales compared with 44.2% in the year-ago quarter as we again saw a significant year-over-year negative impact from commodities and energy costs that we were not able to fully offset through price increases and cost savings.

Fourth-quarter selling and administrative expense increased on a dollar basis, but came in about flat as a percent of sales versus the year ago quarter. About half of the dollar increase is related to the acquisition of Burt's Bees; the balance is due to a variety of factors including incremental investments in the grocery channel.

Fourth-quarter restructuring charges came in at $10 million which is consistent with what we had estimated. Of the $10 million in total restructuring charges $8 million are reflected in gross margin and $2 million on the restructuring line of the income statement. About $6 million of the charges are non-cash.

Interest expense increased versus year ago due to higher debt levels associated with financing the Burt's Bees acquisition and the accelerated stock repurchase. Other income in the quarter was $9 million. While this line contains a number of smaller items, the largest impact in the fourth quarter was related to net foreign currency transaction gains which were factored into our outlook.

Our effective tax rate for the quarter was about 34% compared with 31% in the year-ago quarter. The higher Q4 tax rate was principally due to the release of accruals in the year-ago quarter due to the settlement of certain tax matters.

Turning to cash flow, our cash flow from operations was $254 million compared with $282 million in the year-ago quarter. Free cash flow for the quarter was $187 million, or about 13% of sales compared, with $231 million, or about 17% of sales in the year-ago quarter. The lower cash flow versus the year-ago quarter was primarily due to the timing of tax payments partially offset by improvements in working capital.

As a reminder, we define free cash flow as cash provided by operations less capital expenditures. Q4 capital expenditures were $67 million compared with $51 million in the year-ago quarter. Higher capital expenditures were due primarily to the home care manufacturing network consolidation into our Atlanta plant.

For the full fiscal year we delivered diluted EPS of $3.24, this includes a $0.09 impact from Burt's Bees dilution and a $0.26 impact from restructuring charges. Excluding these impacts we delivered earnings per share of $3.59, this includes a $0.05 benefit from the accelerated stock repurchase.

Our full-year results also reflect the contribution of cost savings which totaled $93 million for the year and was in line with our target as well as the benefit of favorable foreign exchange. Full-year restructuring-related charges came in at $59 million, consistent with our previous estimate. Of the $59 million in total restructuring charges, $23 million are reflected in gross margin and $36 million on the restructuring line of the income statement. About $48 million of the charges are non-cash.

Cash flow from operations for fiscal year 2008 were $730 million compared with $709 million a year ago. The increase was primarily due to improvements in working capital partially offset by the timing of tax payments. Free cash flow for the year was $560 million or about 11% of sales within our 10% to 12% target range. Capital expenditures for the fiscal year were $170 million or about 3.2% of sales compared with $147 million in fiscal 2007.

We use most of our free cash flow during the second half of the year to pay down debt. As of July 1, 2008 our debt to EBITDA ratio was down to 3.2 to 1 and anticipated. More than a year ago in May 2007 we communicated our initial fiscal year 2008 EPS outlook of $3.52 to $3.67 before charges. We're very pleased to have delivered within this original range, particularly in light of commodity cost increases of more than $100 million above our initial outlook estimates.

With that I'll turn to our fiscal year 2009 outlook which we updated in today's press release. On the top line we continue to anticipate sales growth of 6% to 8%. Included in this range is about 3 to 4 percentage points in the first half from Burt's Bees averaging to about 2 percentage points of total company sales growth for the year.

We anticipate the balance of sales growth primarily to be achieved through price increases with some benefit from mix. Our outlook projects that the incremental pricing actions we're taking will have an impact on volumes with shipments coming in about flat to up slightly for the full fiscal year.

The benefit from foreign exchange in fiscal year 2009 is expected to be less than fiscal year 2008 and any benefit on the top line will likely be offset by completing the exit of our remaining private label food bags business.

Taking these factors into consideration we now expect earnings per diluted share in the range of $3.60 10 $3.75. This revised outlook takes into account our latest view of the commodities cost environment. As you know, commodities continue to be extremely volatile. In the last three months oil has ranged above the roughly $115 per barrel price estimate we had included in our initial outlook.

Many of our commodities are not directly tied to oil. For those commodity inputs that are linked to oil, we're using an estimated range of $135 to $145 per barrel in our current outlook. In addition to the impact of oil, our current outlook also includes an updated view on other commodity cost increases.

For fiscal year 2009 our updated outlook for commodity and diesel cost increases is now $180 million to $200 million versus our initial estimate of $100 million to $120 million. More than half of these costs fall in the first half of the fiscal year. We anticipate that our gross margins will be down in the first half of the fiscal year, up somewhat in the second half and about flat for the full fiscal year.

We've taken the following into consideration with respect to our commodities cost outlook. Energy costs are still very high versus historical norms. Developing economies are creating increased demand and market pricing remains extremely volatile with price projections uncertain. The global supply of resin is expected to increase as new capacity comes on line in the Middle East. Demand in the US for many commodities, including resin, may further decrease given the economic environment which includes declines in housing, autos and other sectors.

If commodity costs move higher than our outlook range contemplates there are other mitigating actions we'll pursue. Conversely, if commodity costs drop below our outlook range for a sustainable period of time we're likely to use at least a portion of the benefit to reinvest in category growth and demand building activities.

As previously discussed, we plan to be more aggressive in recovering cost increases through pricing in fiscal 2009. Our current financial outlook assumes we'll price to recover about 75% of the commodity cost increases we now anticipate. We are considering further pricing actions in the second half of the fiscal year to recover more of the cost increases. Anticipated cost savings, targeted at $90 million to $100 million for fiscal 2009, will also help offset some of the commodity cost headwinds.

Our outlook for fiscal year 2009 restructuring-related charges remains in the range of $20 million to $25 million or about $0.09 to $0.11 diluted EPS, primarily related to the previously announced consolidation of our manufacturing network. More than half of these charges are anticipated to be reflected in cost of goods sold on the P&L. As I said last quarter, we anticipate the restructuring actions we're taking to ultimately generate ongoing cost savings of about $22 million to $24 million when fully phased in.

Let me now turn to economic profit. As part of our Centennial Strategy we're targeting double-digit annual increases in economic profit. As we've previously discussed for fiscal year 2008, we did not anticipate achieving our annual economic profit growth target due to the level of restructuring charges we were taking and the impact of the Burt's Bees acquisition.

For fiscal year 2008 we generated $362 million in economic profit, down somewhat from $379 million in fiscal 2007. Although Burt's Bees has a dilutive near-term effect on economic profit, we feel very good about the acquisition. We believe Burt's Bees and the natural personal care category position us well for higher topline, margin and economic profit growth over the longer term.

Burt's Bees is running ahead of our valuation case and we feel very good about the growth prospects in the natural personal care category. Restructuring actions we're taking in fiscal years 2008 and 2009 will help improve future year margins, profits and cash flow. Let me now turn it over to Don.

Thank you, Dan. Good morning, everybody. I obviously feel very good about the results we delivered in FY '08, especially given the volatile cost environment we all see out there. At the end of the day we achieved the earnings per share target we announced almost 15 months ago when we saw you in New York in May of '07, despite the fact that we had commodity cost increases of more than $110 million above our initial projections.

Now looking back, our 9% sales growth is testament, I think, to the strength of our brands and the direct outcome of our strategic decisions to pursue these key consumer megatrends I've been talking about since I got here, notably sustainability in health and wellness. You can see that in the launch of Green Works, the repositioning of Brita for robust growth and acquiring Burt's Bees. And as Dan just noted, we're very pleased the Burt's Bees business is performing ahead of our expectations to date.

Now looking ahead, let me give you my perspective on FY '09. It's clear we've been significantly impacted by commodity cost increases for a couple of years now. We believe we've taken a balanced approach to projecting commodity cost for FY '09 and we feel good about the actions we're taking to achieve our goals including price increases.

Many of you have expressed concerns about the impact of price increases on the consumer. To be clear, we do expect an impact on volume, as Dan just noted. However, I have confidence we can successfully implement our '09 pricing actions for the following reasons.

First, I believe we're doing as good a job as anyone recognizing and capitalizing on key consumer trends including health and wellness, sustainability and convenience. These trends run across our portfolio and it's not just in the more obvious areas such as Green Works, Brita and Burt's Bees.

Our togetherness platform for Kingsford, Hidden Valley and KC Masterpiece is all about inspiring families to eat together at home. Not only is eating at home more sustainable and less costly for families given this cost environment, but research shows this simple act is strongly linked to lower incidences of things like teenage drug and alcohol use and greater emotional stability.

The togetherness platform is certainly good for retailers also, making it easier for them to connect these brands in store with a home-built solution. And obviously this togetherness platform is working as evidenced by the results on Kingsford and Hidden Valley Ranch that Larry talked about earlier.

The second reason we believe we can successfully implement our pricing actions is that we have strong brands consumers trust and retailers truly want. We still have in this country 11 number one brands in 15 categories and over 25 number one brands internationally.

Third, our overall shares are holding their own in this economic climate and despite the pricing actions we have implemented today. And finally, we really have strong customer capability that our retail partners value. Just to give you some perspective -- our investing behind the customer-generated 19 new retail advisory positions in fiscal year '08.

Of these category captains, 17 are in the grocery channel where you all know with incremental investment, and that channel represents about a third of our US sales but more than half our US economic profit. Importantly I think is to note that our emphasis on grocery has resulted in a 5 point turnaround for the past four-year trend where we had been trending a 96 index and this year we're at a 101 for fiscal year '08.

There are several things I hope you'll take away from this call today. First of all that FY '08 was a very good year. It was our seventh consecutive year of sales growth at or above our target range. It was our seventh consecutive year of strong cost savings. Despite commodity increases of more than $100 million above our initial estimates, we delivered EPS results excluding one-time charges solidly within our original outlook.

Second, I think we're confident certainly that we can deliver FY '09. We anticipate another year of strong overall topline growth. We anticipate continued strong results from Burt's Bees, which will be accretive for that year. International remains strong, and I think international, as well as domestically, we're capitalizing on the consumer megatrends, including the launch of Green Works now in Australia, New Zealand, Mexico, Puerto Rico, certainly in Canada and about to go into Ireland. We also have a lot of upside internationally with Burt's Bees is going into Australia and working on Japan right now as we speak.

We have a strong new product pipeline including several new product introductions planned for Burt's Bees. And as Larry mentioned, the new Green Works LDL product will be going out starting next week.

The third reason I believe we can really make this work is we anticipate another year of unprecedented commodity cost increases, but we think we have a realistic outlook on where commodity increases will be. And I think you would all admit that we have a proven strong track record for managing our business well in difficult environments and we're taking the right steps to mitigate these impacts.

First, we are taking a significant level of pricing that will provide more benefit in the second half than the first. This will, however, put some pressure on volumes. While our margins will be pressured, particularly in the first half, we do anticipate some expansion in the second half with flat margins overall for the year. And certainly we anticipate a lower level of restructuring in FY '09.

Finally, we remain focused on driving shareowner value over the long term. In FY '09 you will see from us that we will continue to pay down our debt as promised and we will also support our dividend growth. Importantly, we remain committed to our centennial strategy, we're changing the nature of our portfolio with a focus on higher growth, higher margin businesses.

I feel good about how we're allocating resources to focus on the highest opportunities to deliver EP growth over the long term, including our choices to focus on the key consumer megatrends; secondly to pursue 60-40 innovation wins; third, continue to invest in the grocery channel; fourth, drive out waste through our cut cost and enhance margins initiative; and lastly, make investments to keep our brands strong and growing.

I'd like to thank you all for joining us today and I'll now ask the operator to open up the lines for questions.

(OPERATOR INSTRUCTIONS). Chris Ferrara, Merrill Lynch.

I was just wondering, relative to your last outlook, the cost outlook is $80 million higher for '09. And the guidance I guess on a pretax basis is down by $30 million and cost savings are the same. So it implies I guess $50 million of price. Is that right and, I guess, where's the incremental pricing today that you're thinking about relative to when you talked to us in early May?

Yes, I think you have the math right, Chris. To cover -- part of it is obviously we're taking our outlook down. The balance we intend to recover with higher pricing than when we last spoke to you, as well as some belt-tightening and some spending cuts in other areas of the Company. So we anticipate probably a little more than half of that gap will be made up with pricing and the rest will be adjustments we're making in the rest of the business.

The most notable change in pricing plans is we're taking a price increase on our Glad trash business given the increase in resin, it will be about 10% effective in October.

I think the other thing, Chris, Don here, I would suggest that as our mix continues to shift to higher margin products, Green Works, Brita, Burt's Bees, you'll see some benefit from mix too enabling us to cover some of that gap. So I think it's all three of those elements combined -- pricing, cost and mix.

Okay. I'm sorry, just to be clear -- so, commodity costs are $80 million higher. The guidance comes down by $30 million. So that $50 million spread you have to make up for, you're saying half of that is pricing, so like maybe $25 million in incremental pricing and $25 million from things like mix and other cost savings that fall outside of CCEM, is that right?

A little bit higher than the $25 million on pricing, but those are the general items that will help offset it.

I'd kind of think of it as 60-40 Chris, about $30 million coming from pricing in round numbers and the other $20 million in cost and mix.

Okay, great. And then just on the A&P spend, I think you guys had said that you'd expect '09 to have been at the higher end of the 9 to 10 range, is that still the case?

I think in fiscal '09 we're still targeting that 9% to 10% range, hopefully toward the middle of that range -- a little bit the low end for the current fourth quarter. We feel good about the level of support we have behind our brands, we continue to focus on the working part of the mix, done a lot of work on the efficiency of the nonworking component. So we're seeing pretty good shift between non-working and working. But overall we feel good about the level of support, we hope to stay within that 9% to 10% range.

I think, Chris, if you -- I think the thing we're really looking at is -- is the money we're spending effective. And I think the topline growth is what we're most happy about. I think it's exceeding people's expectations about the topline growth. Excluding the acquisitions our base growth is as strong as it's ever been, at least in the last few years and the fourth quarter.

So we feel good about the effectiveness and the efficiency of the spend we have out there. As Larry said, we're still committed to the 9% to 10% range. If there is any mitigation of commodities we'll continue to be looking at additional investments in consumer brand building. And we're also looking at -- I think like most CPG companies people have between 10% and 20% of their budgets in nonworking dollars, we continue to squeeze those dollars and feel good about that. Our marketing ROIs are up 9% for the year, so we feel very good about the way we're deploying the money.

And then I just wanted to ask real quick question about resin and then I'll leave you alone. With the recent pullback in the hydrocarbon costs, obviously even our chemical analyst internally here is saying that there are reports that the resin buyers are saying the August price increase has no shot and the July price increase is expected to be rolled back a little.

Then you have Newell Rubbermaid on their call yesterday saying that they don't believe that with resin where it is now that even reflects oil at 120, that they expect resin prices to go up in July and August and again in September. And there's such a disconnect from someone who's obviously not a chemicals analyst. I was wondering if you could just give a little color as to how you see all of these dynamics.

It definitely is hard to call. Obviously we have a lag effect in our P&L because of inventory that we carry. There have been some announced price increases historically, a lot of the price increases haven't stuck. We are optimistic that some of the longer-term price increases in the marketplace won't stick based on oil coming down. However, we are seeing obviously current resin going up.

Chris, let me try to talk a little bit about the progression and how we're thinking about it playing out in fiscal '09. If you went back to Q4 of last year, Q1 of this year -- and I'll talk about market prices because that's easier to talk about -- so market prices were probably in the mid $0.70 per pound range. We then saw upward pressure on resin in Q2, we saw that jump up to about the mid $0.80 range.

There were some announced price increases earlier in the calendar year, most of those did not stick. But then in the fourth quarter we did see another jump, probably $0.10 to $0.11 in the market pricing that got us up to the mid $0.90 range.

There are two more announced price increases in the market, and I'm talking primarily linear low-density polyethylene here. I think there's an $0.08 increase in August and $0.05 increase in September. Now as we look at those from a supply/demand standpoint, we do not believe that those prices should stick. Having said that, we've seen earlier price increases that, based on supply and demand, should not have stuck and some of that has.

So as we look out over the next quarter or two with these announced price increases, our view right now is from a supply/demand standpoint there's not a basis for those increases. We also still believe in the thesis that in the back half of the fiscal year we will start to see some declines in resin as that Mideast supply comes on line.

What we are saying now in our outlook is that's likely to happen a little bit later in the fiscal year. And because of the way we contract our hedging, inventory lags, things like that, we're not projecting right now in the current commodity cost outlook any material benefit from those declines, but we do expect them to continue.

So it is kind of an uncertain world right now in resin. And supply/demand would suggest that prices should come down. They have been sticky, but we do still anticipate in the back half of the fiscal we'll start to see some declines.

Great, thanks a lot, guys.

Ali Dibadj, Sanford Bernstein.

(technical difficulty) questions. One is just a clarification on what you just said around resin. So in the $180 million to $200 million you're essentially banking on resins where they are today, is that right?

What I'd say is fairly steady pricing over the next couple of quarters. The thing you need to keep in mind is we do have lags on when these costs come through the P&L. So as you think about the first half of the year, the increased run-up that you saw in Q4 has not really flown through the P&L; we'll see that probably in the first quarter.

So even though we're projecting out that resin may stay at these levels, we don't think the pricing will stick and will decline in the back half. As you're thinking about a P&L though, the run-up that you saw in the fourth quarter, you will see that flow through our P&L in the first quarter.

So up, then down a little bit. Great. So now on to a couple other questions. Particularly on volumes, you mentioned hydrochloric bleach and the declining consumer relevance there. Can you give us a sense of what the volume actually was, and similarly on the Glad business, please?

So again, on Clorox liquid bleach our share was up, the category was down kind of 6% or 7% at a volume range and pretty similar to what the category did, although our share was up slightly. On the Glad overall category, down about 2% which is actually about in line with the rest of track channel categories. Our volume was down a couple of points, but our sales were up pretty significantly given pricing and the shift to a ForceFlex.

Okay. And those are just under about a quarter of your business, right, if you add it all up just in terms of sales?

Correct.

So then translating that forward to the price increases which you kindly always putting your releases here, you're taking pricing on some of those same categories. Is it because the [outlook] was a little bit better than you thought or is it because you're pumping back more trade spend so you're not getting back enough in terms of commodities? How should we think about the stability of those volumes given the pricing that you're taking going forward?

So we are accounting for some volume losses as a result of pricing. We're obviously taking pricing where we're seeing the most margin pressure, the most commodity pressure, obviously Glad being top of the list in terms of commodity pressure. So we are assuming a decline in volume in both those businesses as a result of pricing. The net effect with pricing will probably be positive in terms of the sales growth. (multiple speakers) definitely seeing some volume declines.

But you would expect a little bit of acceleration of the decline going forward as you take more pricing?

My guess is that in both those categories we will see matching by the competitive set. So our shares will remain stable or hopefully improve over the course of the fiscal year. So I don't know that it will be much different than what we're seeing this year in terms of the overall picture.

Okay. Shifting gears to a part of your business which is growing pretty well here, Burt's Bees and Green Works; particularly on Burt's Bees, just an understanding question. What's the seasonality to that business?

It's slower seasonality in the fourth quarter than the third quarter, so we're seeing very, very good growth in both quarters, but the absolute sales in the fourth quarter less than the third quarter just because of seasonality. The largest sales quarter for Burt's is our fiscal second quarter and that's due to all the gift kits that go out for the holiday season.

Okay. And then my last question on the other piece of business, Green Works. How much did that contribute to your topline growth?

Green Works was about 1% overall total company growth. We had a very strong quarter in our home care business so even though Green Works has been a terrific success it actually was less than half of the double-digit growth in our home care business in this quarter, a lot of good information shipment growth.

And for fiscal '09 we're again anticipating about -- a little more than 2 points of growth in new products and it would include the incrementality from Green Works including the launch into dish.

Just a note on the dish launch, Ali. The current five SKUs of Green Works compete in about $1.4 billion of categories. By going into the LDL category we'll be adding another $1.4 billion of category space. So now the Green Works brand will be exposed to almost $3 billion of sales which we think, even with a modest -- if we get anywhere near the kind of success we had with the original five into LDLs where I think the product is unique, it could have a nice impact for us on the top line.

Okay. Thanks, guys.

Bill Schmitz, Deutsche Bank.

Can you just talk about the strategic importance of Glad? It doesn't really fit into health and wellness and whether or not you think strategically about parting ways with the business?

Obviously it has its challenges from a sustainability standpoint. We are doing some testing in terms of biodegradable compostable bags up in Canada with some success. And it may be that over the long term as prices come down on those alternatives that becomes a larger part of the category.

Obviously we're seeing some people go away from plastic bags in grocery stores, etc. On the short-term that seems to be helping our business a little bit because people still need plastic bags, still want plastic bags so now they're purchasing plastic bags versus getting them free. But obviously this is a business that is less sustainable than other businesses which over time we need to focus on how to make it more sustainable.

Bill, Don here. The one trend that we have been focused on where we're trying to push Glad is the whole convenience trend. And obviously things like ForceFlex Odor Shield, which are now about 40% plus of our mix of trash, are helping push into that direction and provide a solution for consumers around convenience.

So clearly there are some challenges on the sustainability side. We are doing what Larry suggested with compostable bags, etc. But we're also trying to be mindful of the convenience trend that's going on and as more municipalities eliminate plastic bags in grocery channels, a lot of those bags are currently being used in home for trash bucket liners, etc. We think that could have some minor upside for the branded business. But we're clearly focused on the convenience trend and mindful of the sustainability trend.

And Bill, from a margin standpoint, as you know, we're exiting the private label component there which will be accretive to margins and EP and we have the overall trade-up strategy underway within Glad and obviously we're taking some price increases because of the cost increases that we're seeing.

Would you take the dilution if a good offer came through for Glad in this environment?

How much money have you got?

I don't have very much, but a lot of people out there do. Dan, can you also just put some more color behind some of the commodity assumptions? Like we didn't really talk about the agricultural commodities for the charcoal business, obviously Hidden Valley, what are your thoughts there?

Obviously we came in thinking it was going to be $100 million to $120 million, we're now up to $180 million to $200 million. The biggest movers in there, obviously we're seeing some continued impact from diesel. Resin is probably the biggest mover that's in there. We are seeing sort of across the board general increases in most, if not all, of our commodity categories. There's a little bit of pressure on chlor-alkali, certainly on soybean oil and things like that we're seeing some further increases.

So it's kind of across the board. I wouldn't say any one category is huge, but just sort of the general tide is rising on most commodity costs. But the biggest drivers for us in the change in the outlook is going to be in the resin diesel primarily.

Okay, great. Thanks very much.

Nik Modi, UBS.

Good morning, guys. Just a couple of quick questions. Are there any repeat metrics you can share with us on Green Works? And then on the category captaincy, can you help us illustrate how winning those captaincies could manifest in the P&L as we look at fiscal '09?

Then just on the share buyback, I know obviously you have the authorization. Just curious as to how we should think about that over the next year, year and a half. Thanks.

Let me talk to the Green Works. We track both trial and repeat, and both those sectors are right on track with our expectations. And all of the anecdotal evidence is very positive. We continue to get great reviews from consumers about the effectiveness of these products, particularly versus other environmentally friendly products they are used to using. So it looks very good from both a trial and repeat standpoint.

On the category captaincies, Nik, obviously, the focus there and what our customers believe in our capabilities is that we best know how to grow their overall categories. I think where we see the manifestation on our own P&L, given the number one stable of brands we have, is we tend in those situations going through the analysis to pick up assortment, which our business is 90% plus-based business. So when one picks up assortment of additional SKUs, we are also seeing expansion of sets in different retailers.

For example, we have a retailer on the West Coast that just committed to larger trash bag sections. And once those sections are enlarged, obviously Glad picks up additional SKUs and facings.

So you see it across AMPS, what we call AMPS -- assortment, merchandising, pricing and shelving -- but you see it manifest itself on an assortment and shelving standpoint. And that is what really gives you sustainable build over time.

Nik, let me address your question on share repurchases. So the outlook that we updated today assumes that we are using our free cash flow to support dividend growth and to retire debt. So there is no assumption right now that we are buying back shares.

Having said that, early in the third quarter we will be back to 3.0 debt to EBITDA or less. So at that point, we certainly have more flexibility to consider some share repurchases in the back half of the year, depending on our view of the share price. But for right now, the outlook does not assume that we are buying back shares.

Thanks a lot.

Lauren Lieberman, Lehman Brothers.

Good morning. Can we talk a little bit maybe about SG&A leverage. Remember in last year's first quarter, there was quite a bit of SG&A leverage which took a lot of us by surprise, because we were all expecting to see the beginning of the step-up in reinvestment, particularly in the grocery channel.

So as I think about '09, it feels like you need a pretty good amount of cost savings or overhead control at the SG&A line or for advertising to be down further as a percentage of sales. I mean, can you maybe give us a little bit more specifics in what will drive that?

Let me address the SG&A question. So as we look at SG&A year-over-year, obviously FY '08 was an investment year for us. We did acquisitions, we did the bleach acquisition. We had about half a year of costs for that. We did the Burt's Bees acquisition. We also had some impacts on SG&A from currencies and then just sort of general inflation.

We did drive some cost savings, however, on that line item. As we look at SG&A out into this next year, obviously we still have the inflationary effects that we will face on wages and benefits. And we will have a half a year's worth of impact or so from Burt's Bees. But we are certainly looking at all areas of spending in our belt tightening to see where we can trend and be more efficient on our spending.

And in terms of advertising, I think Larry addressed that. We expect to be in the 9% to 10% range on our advertising, and that is an area where we are really -- we are looking at the efficiency of the spend. As he described, it is really about generating higher returns for the level that we are spending. So it is an area we continue to look at in terms of efficiency, but we certainly want to support our brands.

The way we think about SG&A is we're trying to limit any growth in SG&A to half the growth rate of sales. So if you think about the projected strength of our top line in fiscal '09, we're trying to limit our SG&A growth to half that rate or less, and certainly we have got a lot of people focused on trying to reduce that number as we go into '09.

Okay, that helps a lot. Thanks. In terms of the -- I know you guys are talking more about the two halves of the year, but Q1 is actually a pretty tough comparison even just from that SG&A leverage standpoint, and you had a pretty big revenue quarter. Should we be thinking about Q1 because of that tougher comp end, because you describe Q4 resin inflation flowing through then; that that will probably be the toughest quarter of the year?

I guess it depends on how you define toughest quarter of the year.

Not a lot of growth, I mean earnings growth.

I don't want to get back -- we've gotten away from talking a lot about detailed quarters. Let me talk about the halves, because I think it is a little easier to talk about the halves. So if you think about the halves, most of the commodity cost inflation that we saw in fiscal '08 hit in the back half of the year.

We did see a fairly significant run-up in the fourth quarter of costs that will flow through our P&L mostly in the first quarter, somewhat into the first half. So when you think on a year-over-year comparison, commodities are a lot higher and we were lower in the year-ago period.

You also pointed out the SG&A. So certainly, our margins will be under pressure in the first half, and then as we get out into the second half as we look at our commodity projections there, we are going to be comping against some pretty high levels in the year-ago period.

Certainly we are driving cost savings as hard as we can, and we might see a little bit more of those cost savings in the first half versus the second half. And then just from a top-line standpoint, a lot of the pricing is going into effect in August, and there is a lot of it and it is going in. There is some in the back half, but a lot of it is going into place in August. So we are going to see a fair amount of that benefit in the first half of the year.

Okay. Then the last thing I just wanted to clarify on volume is if I just make the assumption that the 2 points of growth from innovation is mostly you are talking about the volume and mix there. And if I assume international say grows at 5%'ish -- it's probably going to be better, but let's be relatively conservative -- then the core business volume growth is probably down something like 1% to 3%. Is that how you guys are thinking about it? Sorry, core US business; I'm sorry. Core is the wrong word. I mean non-innovation --.

That is probably about right.

Sorry.

I think we are seeing probably slightly down volume on the base business, obviously as a result of the pricing actions that were taken. Better sales results, but definitely volume will be soft as a result of the [pricing].

Okay. Thank you.

Connie Maneaty, BMO Capital.

Good morning. Could you talk a little about the flow of restructuring through the year, the $0.09 to $0.11? Is it even in every quarter? And what are the projects you are undertaking?

The projects in restructuring are really primarily a continuation of the announced manufacturing and restructuring actions that we had in fiscal '08. So most of that is tied to the home cleaning consolidation of our manufacturing into the Atlanta plant. And we would anticipate that the lion's share of those charges will come through in the first half of the year.

Have another $0.09 in the first half?

A good portion of it will be in the first half of the year.

Also, on the concentration of liquid bleach if I heard all of that correctly, are you concentrating liquid bleach by two times the way liquid detergent was?

No, actually we are concentrating our Clorox 2 Color Safe Bleach.

Oh, Clorox 2.

Yes, not the basic hydrochloric bleach. There's quite a bit of technical challenge of doing that.

Yes, that is what I recall from the old days. That is it for me. Thanks.

Filippe Goossens, Credit Suisse.

Good morning, gentlemen. Sorry, starting with a cold here today. I also kind of second Bill's suggestion here to definitely compete, look at opportunities to find someone who is willing to pay you lots of money for the Glad business. But anyhow, Don, as you know, the two areas that I still continue to struggle with, and I hope that once again you can try to raise my level of comfort; the first one being the impact of the economy today on Burt's Bees and Green Works. I think these are great products, great initiatives.

But I am just still kind of wondering to what extent you are relying on the success of these two product lines on Wal-Mart? In other words, is the Wal-Mart customer today willing to pay the type of premium that you need to make these products successful?

Then the second question relates to commodity prices. But if you can just touch again on how dependent are you on Wal-Mart and the Wal-Mart customer being willing to pay that premium in order to make Burt's Bees?

Secondly, also Green Works, the success that you all believe these lines can deliver eventually.

Let me take the last part first, Filippe, on Burt's Bees and Wal-Mart. We are really not very dependent at all yet, in the sense that today Wal-Mart is selling less than 5% of Burt's Bees. So we have only been in a few hundred stores. We are testing 2-foot, 4-foot and 8-foot sections in those markets where we believe the demographics are right.

Clearly, Burt's Bees will not be rolled out across the entire 3500 stores, because the demographics simply wouldn't work. So we are still in a testing mode, so there really hasn't been much impact yet in fiscal year '08 and as we go into fiscal year '09. So I don't think we are very dependent at all there.

We are seeing obviously in our traditional customers who have done a great job that new target resets are doing extremely well. The three main drug chains are doing extremely well. And, of course, Whole Foods and the other outlets where this brand was built initially are continuing to do well.

I think the bigger upside potentially is in the grocery channel where, of course, we have 35,000 supermarkets and we are doing less than 10% of our volume on Burt's Bees in supermarkets. So I think we have a lot of opportunity to spread the wealth on Burt's Bees, so not very dependent at all yet on Wal-Mart.

As far as Green Works goes, Wal-Mart has obviously taking the lead given their sustainability emphasis. They have done a terrific job with it. What I think that has done is forced the rest of the industry to really pay attention to it. I don't know that I would suggest that we are overly dependent. I think the grocery channel has jumped on it, all of our top 25 grocers are investing heavily behind Green Works and the international side is also starting to take off.

So we feel very good that we've kind of spread the wealth, if you will, and all of these retailers understand how well these brands link in with the current trends and I think they're really trying to push them hard.

The only think I'd add to that is if you look at the -- it's really a value equation versus pricing. So innovation and offering added values have been a big way we've offset price increases for absolute price. So ForceFlex is growing double-digits even though that's a 15% premium, Green Works is doing really well even though that's a premium product. Burt's is doing exceptionally well even though that's a brand -- that's a better value from a consumer's perspective because of what they offer.

In terms of Green Works, are you pretty much done with the initial shipments into the channels that you have targeted or there's more to come here?

I think the distribution at this point is pretty broad based. There's still probably some distribution opportunity in the drug channel which is typically a channel we get to later in new product launches. But distribution is pretty broad at this point and pretty deep.

Okay. Then the question I had with regard to commodity prices, can you just give us a little bit of a better feel where you stand in terms of diversification in terms of suppliers? Are you still pretty much right now tied to Dow Chemical, or the diversification has already been much more advanced than what I think it is at this moment?

Specific to resin we have tried to broaden our supplier base, also change some of the specs of our resin requirements in order to do that. So we have a wider variety of suppliers today including many suppliers than we did previously. And in terms of -- we have different strategies by area, in most cases we have multiple suppliers for any kind of key ingredient.

I would think it's safe to say, Filippe, on resins that we're much more diverse in our supplier base than you might think.

Okay. And then you mentioned earlier, I think it was Dan, about the two price increases that are still scheduled, August and September, that you think they might not stick. When you gave us the updated guidance for commodity prices in 2009, does that include that these two scheduled price increases will stick or you're assuming that they won't stick?

I'm probably not going to answer that question directly. Our outlook has our best estimate of what we think commodities are going to do over the course of fiscal '09. There's a range of scenarios that are embedded into that range, and so I wouldn't really say there's a specific point that we're taking with respect to that.

We've developed a range based on the volatility that we see in the market and some of the trends that are currently there. And we do -- we feel as comfortable as you can be with that $180 million to $200 million, that that gives us flexibility in there depending upon whether individual commodities move up or down versus what we may currently believe?

Okay. Then my final question, if I may, today -- can you just talk a little bit about what you're currently seeing in terms of channel dynamics? We all know the comments that Costco made recently within the context of higher energy prices. One would argue that the grocery channel should actually benefit as people are not going to be willing to make the larger trips to the club channel given that you continue to invest in the grocery store channel. Can we expect that in fiscal '09 you might perhaps see more traction with the grocery channel as compared to the club channel? Thank you.

We've definitely seen a bit of a recovery in the grocery channel which is one of the reasons why we've been focusing on that channel. Our business in grocery has seen a significant turnaround versus trend. We're up about 1% for the year which is about a 5 point turnaround from the three previous years.

Overall we continue to see higher growth in what we term the untracked channels than the tracked channels. So untracked would include the club channel and the dollar channel. In the current quarter that's true as well. It's narrower than it has been historically, but we're still talking high single-digit differences in terms of the overall growth rate in the untracked universe versus the tracked universe.

I would just add -- I think your instinct is right on grocery in the sense that there are roughly 35,000 grocers in this country and less than 1,000 club stores and less than 3,000 -- or roughly 2,500 Wal-Marts. Obviously with $4 gasoline people are tending to stay closer to home. I think we're seeing that in our own trends in grocery. Our investment timing I think was very good based on what's going on out there with that trend. And as retailers get away from -- grocery retailers get away from insult pricing in the center of the store, I think it bodes well they're being much more competitive with the guys who have set the pricing floors like Wal-Mart and Target and the club channel.

Okay. Thank you, gentlemen.

John Faucher, JPMorgan.

Good morning, everyone. So two quick questions here; first off if I look at the reduction in charges it looks as though your underlying gross margin, excluding the impact of charges year-over-year, should be down about 50 to 60 basis points. And I'm wondering if that lines up with what you guys are thinking.

And then, on Green Works, I think you mentioned that it's half the category and the category has doubled. So would that basically imply that you're not really taking much share from the existing cleaner businesses, at least the environmentally friendly cleaner businesses? And then can you also give us an idea in terms of how much of the environmental cleaner category growth is coming from the regular cleaner business? I assume that's a fairly cannibalistic situation?

Let me try the gross margin, see if I answer it for you, John. So as we look at the restructuring charges that are going through margins, we had about $23 million in fiscal '08. Most of the charges or the majority of the charges that we're looking at in '09 are also going to go through cost of goods sold.

So at least on the gross margin line on a year-over-year basis there's not a big impact or not a big delta, if you will, between the level of restructuring charges that are going to flow through. So our margins -- again, we're expecting to be down first half, up second half and about flat for full year and I don't think restructuring will be a big impact either way.

Let me take a stab at your Green Works --.

Sorry, just one quick second. Does that include the Burt's Bees charges as well or is that just the restructuring piece of it?

That's just the restructuring. On the Burt's Bees we had the $19 million charge this past year if you want to include that in there as well. You will see that impact on a year-over-year basis.

Let me try and answer your Green Works question. If you basically add up all of the products in home care that either are natural or purport to be natural or green, that overall category has more than doubled and we have a 50% share of that category. We account for obviously the bulk of the growth of that segment, but the other guys are growing as well. They are losing substantial share obviously because obviously Green Works has taken the bulk of the share away.

Overall, if you looked at our home care share, most of their share growth from Green Works is incremental to our total home care business. That gives you some sense of the cannibalization of (inaudible), at least in our own business.

We're seeing, for example, John, if you take the last period we're seeing 409 and Tilex shares flat. So we're not obviously cannibalizing those spray cleaners. There is some cannibalization, but our original number around 75% to 80% or so incremental seems like it's holding true.

Are you seeing a dramatically different source of volume depending in what was available in the channel previously? So if you look at places where Method was available, can you tell us you're sourcing a lot more share from Method in those particular outlets versus a regular grocery store where they probably didn't have anything from that standpoint?

Probably don't have enough reliable data to give you an accurate answer on that, quite frankly. In this natural category Method would be the number two brand with about a 20% share per perspective. So it gets down fairly small pretty quick.

Thank you very much.

Andrew Sawyer, Goldman Sachs.

I just had a real quick one on Burt's Bees. I was wondering if you could just help us through how you'd perceive taking the mid 30s growth rate in what you consider distribution driven versus the natural same-store sales or whatever you want to call it. And also if you could just give us some -- maybe a little color on what type of growth rate you're building in or expecting into fiscal '09. Thank you very much.

Our base plan on Burt's, what we put together for the original acquisition was in the teen kind of growth rate. We're obviously seeing more than that right now. A significant chunk of that is driven by new distribution. The overall natural personal care category, however, is growing at something like 10% to 15% growth rates.

So we're benefiting from distribution, the overall growth rates of natural personal care as well as obviously the new products that are being introduced on the Burt's Bees line. So it's probably all three components; I don't know if we can break it down specifically which is driving the most, but we still have opportunity in all three of those vectors for fiscal '09.

But you're still embedding a mid-teens case in your numbers?

We're able a bit higher than that for fiscal '09. The valuation case that we did assume that we would have higher levels of growth in the earlier years, averaging down over time to a CAGR of about 15%. So you're going to still see very robust sales growth numbers from Burt's in fiscal '09.

All right. Thank you very much, guys.

[Pria Gupta].

Good morning. Just a quick question you had noted that you will continue to pay down debt in fiscal '09. Now given your current [CP], your short-term debt balance of $755 million, would you look to pay this amount down entirely or could you potentially look to refinance some of this in the term debt markets later this year? Thank you.

On the CP, that's where all of paydown will come from as we look out over the next year. There are no current plans to go and term that debt out, we just have plans to pay it down to create greater flexibility.

Thank you.

Jason Gere, Wachovia.

Good afternoon. Can you just talk about the progression of the sales and your market shares during the course of the month and maybe just how that extended from June into July?

I don't have a breakdown by month, but I wouldn't say it's been dramatically different. We've seen some slight improvements on some businesses, but overall shares aren't all that different month by month.

Okay. And secondly, can you just talk maybe a little bit more between the marketing mix between advertising and promotional spending? Certainly with second round of price increases going through, just your outlook in terms of will there be a little bit more promotional dollars needed to give back to the retailers at this time? And I got the clarification on advertising earlier.

At this point, as we've said previously, we hope to hang onto that 9% to 10% range for advertising. At this point we're not expecting a big tick-up in our trade spending. Some of incremental trade spending that went into fiscal '08 because of competitive situations we don't think will exist in fiscal '09. Obviously that's dependent on what we see over the course of the year and could change should we see some competitive introductions that we want to address. But overall not a big change and certainly not an uptick in terms of trade spending.

There's absolutely no uptick in trade spending. In fact, the sales organization has been working very hard the last two years to get very explicit guidelines out there event by event and we're actually seeing much more efficiency out there than we had say three years ago in how we manage that spend. So you won't see any uptick in trade spending but I think you'll see better deployment of the spending we use.

Okay. And has there been any pushback from retailers just with the additional price increases going in in August?

We've been out with a lot of retailers obviously and I can tell you I've never seen an environment like this where it's just kind of slide the piece of paper over the table and let's talk about what the amount is. Everybody is under the same pressure, there's not a CPG company out there that's not taking somewhat significant pricing versus pass-through teens.

So we really haven't gotten into any drawn out negotiations, if you will, with any of our retail partners. They're in the same situation with their own retail brands and what they're trying to do in terms of pricing those brands. So it's been a pretty benign environment from that standpoint of getting a price increase accepted.

Great. And then just a last question, if you could talk about the seasonal products, I guess the Hidden Valley, the charcoal in particular, can you just talk about the actual growth in the quarter and in terms of other type of vacation type programs that you're expecting through the rest of -- I guess through September? Thanks.

Both charcoal and food had high single-digit growth rates in the quarter. Our charcoal business remains very healthy, we're growing share. Our Hidden Valley business remains very healthy, we're growing share. The categories were slightly down in both cases but our brands grew very well.

Okay, thank you.

Ali Dibadj, Sanford Bernstein.

Thanks very much for taking the follow-up. A couple of questions. One is just clarification on the commodities. You said $180 million to $200 million in the release and obviously today. Does that include or exclude logistics costs?

If you're referring to diesel that would include diesel.

So what does that compare to for this year in terms of a number?

Specific to diesel you mean?

No, no, the $180 million to $200 million, what's the apples-to-apples comparison for fiscal year '08?

We ended up in the $130 million to $135 million range in total commodity cost increases.

So it's that number, okay. Other question, you mentioned one thing which was interesting to me, grocery is about a third of your sales but half of your EP. Can you talk about that a little bit more? That's a little bit of a surprise to me. Is it the mix? So Burt's Bees, for example, really pushes it that far over?

It's not Burt's Bees. Burt's Bees is a very small piece of the grocery makeup. It's really the breadth of line that those grocery retailers carry versus a club account, for example, where you may just have a handful of SKUs. We will typically have well over 100 to 200 SKUs across our brand in a number of our key grocery partners.

A lot of those brands don't have significant trade support hooked to them. They sell more full price off the shelf. So when you look at the mix that goes on in those stores it's fundamentally different from the mix that would go on in a club store or a mass store where you have less SKUs on shelf.

It's all mix. We have a fair and equitable policy with respect to trade spending. So what you're looking at is the effect, as Don said, of the mix in grocery versus other channels.

Okay, thanks very much.

Bhupinder Bahra, Banc of America Securities.

Good morning, guys. I have two questions for you. The first one is actually on -- could you talk about your Glad product mix? Like the regular trash bag and the premium, what the mix is actually in that business?

So the overall trash volume for the quarter was down. We saw very good growth, double-digit growth, on our ForceFlex trash bags which are premium. Also strong double-digit growth on our Odor Shield bags which are also premium, but did see a pretty dramatic decline in our base trash business. So we're definitely seeing the continued migration to the premium trash bags, but the overall volume was down because of the larger amount of growth in the base trash business.

Okay. And the pricing, which you guys mentioned in October, increase; is that for the overall or just for the premium or the regular?

That's across the line.

Across the line, okay. And the second question actually would be -- you mentioned about global resin capacity coming online. Just kind of give us some flavor on that, like how big is that and when is it exactly going to hit? Like second half of your fiscal or like calendar '09?

The increase in the worldwide supply of resin is projected by most folks to be in a range of 30% to 40% over the next several years. There are various plants coming online at various times. We should see the bulk of that capacity coming on in calendar 2009 and 2010.

Thanks a lot, guys.

I think that's the last question for the day. I'd just like to thank everyone for joining us today. While we know we have certainly challenges ahead of us, like most of our competitors, particularly in the first half of this fiscal year, I've got a lot of confidence in our brands and their ability to connect with the trends that are out there and the consumers and I think we're demonstrating that with our topline growth.

I'm also really convinced that we've got a long-standing proven track record of dealing with high cost environments and I think this organization is more than capable of doing it in FY '09. So I look forward to speaking to you next quarter when we share our Q1 results. Thanks, everyone.

That does conclude our conference call. Thank you for joining us today.