Clorox Q3 2010 Earnings Call Transcript

May. 4.10 | About: The Clorox (CLX)

Clorox (NYSE:CLX)

Q3 2010 Earnings Call

May 03, 2010 1:30 pm ET

Executives

Steve Austenfeld - Vice President of Investor Relations

Lawrence Peiros - Executive Vice President and Chief Operating Officer of North America Region

Donald Knauss - Chairman of the Board, Chief Executive Officer and Chairman of Executive Committee

Daniel Heinrich - Chief Financial Officer and Executive Vice President

Analysts

Lauren Lieberman - Barclays Capital

Ali Dibadj - Sanford C. Bernstein & Co., Inc.

Edward Kelly - Crédit Suisse First Boston, Inc.

William Schmitz - Deutsche Bank AG

Jason Gere - RBC Capital Markets Corporation

Douglas Lane - Jefferies & Company, Inc.

Wendy Nicholson - Citigroup Inc

Michael Kelter

Karen Lamark - Federated Investors

Leigh Ferst

Alice Longley - Buckingham Research

Christopher Ferrara - BofA Merrill Lynch

Operator

Good day, everyone, and welcome to the Clorox Third Quarter 2010 Earnings Release Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Steve Austenfeld. Please go ahead, sir.

Steve Austenfeld

Great. Thank you. Welcome, everyone, and thank you for joining Clorox's Third 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, www.thecloroxcompany.com.

On today’s call, Larry will start with comments on business unit performance, as well as perspective on the current category and share results. Dan will then follow with a review of the quarter’s financial performance, as well as comment on our updated fiscal year 2010 outlook and initial 2011 outlook, both of which were communicated in our press release this morning. Finally, Don will close with his perspective on a few key initiatives for the company. And after that, we'll open it up for your questions.

Let me remind you that on today's call, we will refer to certain non-GAAP financial measures including, but not limited to, free cash flow, EBIT margin and debt to EBITDA. Management believes that providing insights on these measures enables investors to better understand and analyze our ongoing results of operations. Reconciliation with the most directly comparable financial measures determined in accordance with GAAP can be found in today’s press release, this webcast, prepared remarks or supplemental information available in the financial results 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 information. And actual results or outcomes could differ materially from management's expectations and plans. 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 or outcomes to differ materially from management's expectations and plans. The company undertakes no obligation to publicly update or revise any forward-looking statements.

With that, let me turn it over to Larry.

Lawrence Peiros

Thanks, Steve, and welcome to all of you on the call. Firstly, I want [ph] (9:42) to focus my comments on our top line results, highlighting sales and market share trends.

Overall, we had a good quarter in what remains a tough economic climate. We delivered solid volume growth and increased sales despite the impact of the Venezuelan currency devaluation. We continue to invest in demand-building activities to build long-term brand equity, while addressing short-term competitive price gaps at the shelf.

Starting with the U.S., consumer takeaway in our categories in track channels was down slightly in Q3, similar to the flattish results we had seen over the last several quarters. We grew our health share in three of eight categories, and our overall U.S. share was down a bit. Private label share was flat versus the year-ago quarter.

For perspective, track channels account for only about a third of our U.S. business volume. Our total all-channel U.S. volume grew 3%, with shipments in non-track channels significantly outpacing track channels. On an all-outlet basis, our 52-week market share through February was up slightly versus the previous year.

In our International business, market share results are generally positive, and we have seen stronger category sales growth, primarily due to pricing. International volume was up 3%, driven by shipments of disinfectant and fragrance cleaning products in Latin America. International sales were up 9% due to the volume growth and price increases.

Overall, our categories in niche international markets are healthy. We grew share in a number of markets, most notably, bleach, dilutable cleaners and air fresheners in Latin America. Overall dollar share in Latin America increased almost a point.

Our total company volume was up 3% for the quarter with volume growth in each of our four segments. Key drivers included higher shipments across disinfecting wipes, all-time market shipments of Hidden Valley salad dressings and Fresh Step cat litter and higher shipments of Kingsford charcoal and Latin American cleaning products.

Sales for the quarter were up 1%. The net effect of foreign currencies on sales was slightly diluted as the Venezuelan currency devaluation was mostly offset by stronger currencies in other countries. Sales were reduced by 2 points due to higher level of trade spending in support of new products in response to competitive activity.

While we always see differences of performance across the portfolio, most of our businesses are performing well. Here's a few highlights. In our largest category, Home Care, we maintained our number one overall share position. Volume was up, but sales declined about 1 point due to higher trade promotion spending and unfavorable product mix. Pine-Sol cleaner had a great quarter, with strong volume growth and the brand's higher shares in the last eight quarters behind distribution gains and merchandising on scented varieties.

Clorox disinfecting wipes also had a strong quarter with an increase in market share and a double-digit increase in shipments. The sales growth in Wipes was significantly lower than what we saw in the first half of the year, but higher than what we expected following the end of the flu season. Looking ahead, we recognize we're coming off against several quarters of challenging volume comparisons to prior-year periods when consumers' concerns related to the H1N1 pandemic drove extremely strong double-digit growth in Wipes.

In our Laundry business, we continue to see some mixed results. On Clorox bleach, volume was down versus the year-ago period, driven primarily by category declines. On Clorox 2, we lost some share to new competition. However, we delivered a strong increase in Clorox 2 shipments behind category growth and the launch of single dose packs. Our new single dose packs provide consumers with greater convenience at a very good value. We've increased marketing investment to support this launch, as well as to defend the overall Clorox 2 franchise.

I'm glad we saw improved results on the Trash side of the business, which represents about 2/3 of the total business. These results were dragged down by weak performance on the food storage side. We grew share in Trash Bags and delivered solid volume growth, where particularly strong volume increases on our premium Trash Bags, ForceFlex and OdorShield. Sales growth was less robust due to price rollbacks taken in the previous fiscal year and higher trade promotion spending to address price gaps.

Competitive activity continues to be intense at selected retailers. So we have remained appropriately aggressive in addressing price gaps with promotional spending. However, with the recent increase in the price of resin, additional pricing on Glad may be necessary.

In Cat Litter, sales were up modestly driven by all-time record shipments of Fresh Step cat litter. However, we lost share in Cat Litter due to increased price gaps at shelf. In March, we lowered pricing, an average 8% to 9% on our Cat Litter brands to restore the right relative consumer value versus competition.

Burt's Bees had a good quarter with strong volume growth and solid sales growth. Our Natural Acne Solutions line continues to perform very well, and early results of our new line of Burt's Bees Natural Toothpaste are positive. We've dialed up marketing spending to support these launches and feel good about the traction we are getting with consumers. Burt's consumption growth remains in line with the Natural Personal Care category and Natural Personal Care continues to significantly outpace mainstream personal care products. We expect consumption to further strengthen, and along with Burt's international expansion, fuel future volume growth.

Kingsford also had a good quarter. We effectively managed the transition to our new Kingsford charcoal product, a lighter white briquet that lights more easily and reaches cooking temperature faster. Despite mixed early season weather, we delivered strong volume in sales for the quarter. We feel good about the plans we have in place for the rest of the grilling season.

In food, we delivered all-time record shipments of Hidden Valley salad dressing and increases in both sales and share. Even with a premium price, Hidden Valley continues to win with highly effective marketing and a great tasting product. The newly launched Hidden Valley Farmhouse Originals dressing line is thus far exceeding our expectation. The line expands Hidden Valley in the flavor profile that go beyond Original Ranch.

Wrapping up, we feel good about our future results, especially given the economic and competitive environment. We're confident that we're going to effectively manage our businesses to deliver our plans and maintain the investment we need to keep our brands healthy for the long term.

With that, I'll turn it over to Dan.

Daniel Heinrich

Thank you, Larry, and hello, everyone. I'd like to provide some perspective on our third quarter financial results and updated fiscal year 2010 outlook, and then discuss our initial financial outlook for fiscal 2011.

Looking at our third quarter results and our updated financial outlook for the current fiscal year, I want to highlight four key messages. First, we're encouraged by the improving fundamentals of our business. We continue to hold our own in a difficult economic environment. The external business environment remains challenging. Economic conditions continue to impact consumer demand, and competitive activity remains intense with the high level of price competition in the marketplace.

During this fiscal year, we've meaningfully increased our trade spending to support new products and maintain or increase our products' value and affordability on shelf, where we've been focused on narrowing price gaps versus competition in certain categories. These initiatives are working. We continue to invest heavily on the long-term vitality of our brands.

Overall, our year-to-date combined spending on advertising, sales promotion, trade spending and R&D is up significantly versus the prior year. We focused our advertising spending to support our new products such as Burt's acne and oral care lines, Kingsford's redesigned charcoal briquet, our litter packaging innovation, Clorox 2's new unit dose product and the affordability messaging on our core brands.

We also increased our global health and wellness and disinfection messaging during the recent H1N1 flu pandemic. As Larry mentioned, for the third quarter, volume grew 3% and sales grew 1%. Sales growth was lower than volume growth, primarily due to the Venezuela devaluation and higher levels of trade spending, partially offset by the benefit of pricing and other favorable foreign currency movements.

For the full fiscal year, we continue to anticipate sales growth in the range of 1% to 2%, although likely to be in the lower end of that range. For the full fiscal year, the Venezuela devaluation is anticipated to reduce sales by more than 1%.

Second, we're very pleased to have been able to keep the current quarter's gross margin about flat versus the year-ago quarter's gross margin level, which increased 550 basis points from the prior year. We were able to sustain our gross margin levels from the year-ago period despite the commodity cost reinflation that we're now beginning to see in the business. Factors positively impacting Q3 gross margin included our cost-savings program, which delivered about $23 million in Q3 savings; the benefits from higher pricing, primarily in our International businesses; and favorable foreign currency increases in countries other than Venezuela. These positive factors were offset by about $16 million of commodities cost inflation, increased levels of trade promotion spending and the gross margin impact of the Venezuela devaluation.

We continue on the path to restoring our gross margin to historical levels. For FY '10, we now anticipate gross margin expansion of 150 to 160 basis points. The slightly narrow gross margin expansion range reflects our updated view that recent increases in energy, resin and other input costs are likely to be greater than previously estimated.

Third, we delivered 7% diluted EPS growth for the quarter on top of an over 50% increase in the year-ago period. We delivered this EPS growth in a period that saw intense competitive activity, higher levels of trade spending, a return to commodities cost inflation and the Venezuela devaluation impact. We're very pleased with this EPS performance, given market conditions.

Our updated diluted EPS outlook range for fiscal 2010 is now $4.20 to $4.25 versus our previous range of $4.10 to $4.25. This updated range reflects our year-to-date performance and updated gross margin outlook. We're on track to deliver strong double-digit diluted EPS increase for the fiscal year, continuing our focus on delivering our annual EPS growth commitments.

Fourth, we continue to generate very strong cash flow that we've used to pay down debt, support dividend growth and acquire Caltech Industries. Net cash flow from operations was about $197 million or 14% in net sales for the quarter. And free cash flow, which we define as cash flow from operations less capital expenditures, was about $162 million or about 12% of net sales.

During the quarter, we completed the Caltech acquisition using about $19 million in free cash flow. We're very excited about the distribution and product expansion opportunities this acquisition brings to our Away from Home business, particularly with hospitals in the U.S. We also use free cash flow during the quarter to pay down debt and support dividends.

Let me now address our initial financial outlook for fiscal year 2011, which begins on July 1. Turning to the top line, we anticipate sales growth to be in the range of 2% to 4%. We anticipate the global financial and consumer markets will continue a slow recovery during the fiscal year. Many consumers continue to be under pressure, and the U.S. unemployment rate will likely remain very high. We're still seeing a limited growth in our U.S. categories and foresee only a slight improvement in that trend during fiscal '11. We also believe the competitive environment will remain intense as companies ramp up efforts to stimulate their top lines and try to grow share.

Fiscal 2011 sales growth will continue to be impacted by the Venezuela devaluation. For FY '11, we anticipate that this devaluation will reduce reported first-half total company sales by more than 2 percentage points with the full year impact anticipated to be more than 1 percentage point. Consistent with recent trends, we anticipate volume will grow at a faster rate in sales, particularly in the first half of the year, primarily due to the impact of the Venezuela devaluation. We also anticipate a continuing higher level of trade spending in the first half of the year. As commodity costs rise, our expectation is that the competitive intensity related to price gaps will decrease, allowing us to reduce trade spending levels later in the fiscal year.

Finally, from a top line growth perspective, I want to remind you that our first-half sales we'll be comparing against the high-based period, when the impact of the H1N1 flu pandemic drove significantly increased sales of disinfecting products. While we believe that the H1N1 flu concerns have brought new users to our products, and we have strong plans to address retailer and the consumer influenza needs next fiscal year, we're not expecting a similar sales lift in the first half of fiscal '11.

For fiscal year 2011, we anticipate a modest gross margin increase of 25 to 50 basis points. As the economy continues to recover, we expect further inflationary pressure on resin and energy costs, as well as cost increases for other commodity inputs. Our fiscal year 2011 margin outlook anticipates $60 million to $70 million in commodity cost increases next fiscal year, compared with an estimated net benefit of $35 million to $40 million from lower commodity costs in fiscal 2010. If commodity costs move maturely above our current projections, we're prepared to move quickly on additional pricing.

We anticipate that the gross margin impact of increased commodity costs will be more than offset by cost savings. Our fiscal year 2011 outlook includes anticipated cost savings in the range of $90 million to $100 million. Our FY '11 financial outlook also includes some increases in infrastructure spending to support the long-term health of the business, enable growth and provide a foundation for further efficiency and cost savings.

In addition to our normal $20 million to $30 million expense budget for ongoing restructuring charges, we're projecting two areas of increased spending. The first is related to increased investment in our information technology applications and infrastructure. The largest component of this increase will be to bring our International businesses onto our SAP platform. This multi-year global IT improvement plan will result in about $15 million to $20 million in incremental IT capital expenditures and about $15 million to $17 million in incremental expense in fiscal year 2011. Once fully implemented, we anticipate these IT investments will reduce future costs related to foundational and operational IT activities, as well as enable growth, particularly in our international markets.

The second area of increased spending is an estimated $10 million to $12 million in expenses related to our Pleasanton R&D campus to ensure we have the right environment to deliver the innovation that's essential to the company's success. In total, we're anticipating total fiscal year 2011 capital expenditures in the range of $240 million to $250 million versus our estimated FY '10 range of $190 million to $200 million.

Let me cover some additional financial assumptions included in our fiscal year 2011 outlook. We anticipate that advertising spending will remain solidly in the 9% to 10% range for the fiscal year, continuing strong advertising support for our brands and new product launches. For the fiscal year, we currently anticipate an effective tax rate of about 34%, although we're likely to see some variability among the quarters. The Venezuela devaluation will reduce first-half pretax earnings by an estimated $25 million to $30 million. This compares against the first half of FY '10 when we absorbed nearly $30 million in foreign exchange transaction losses and balance sheet remeasurement charges due to Venezuela currency changes.

We anticipate free cash flow as a percent of sales in the range of 10% to 12%, although likely to be in the lower end of that range due to the increases in fiscal year 2011 capital spending that I just mentioned. We plan to use some of our free cash flow to reduce debt, which will create significant flexibility to fund potential bolt-on acquisitions or repurchase sales. We currently anticipate share buybacks in fiscal year 2011 to offset stock option dilution.

Net of all these factors, we anticipate diluted EPS in the range of $4.50 to $4.65. This diluted EPS outlook range represents about 7% to 9% growth for fiscal 2011 on top of the anticipated double-digit growth we're projecting for fiscal 2010.

In summary, we had a very solid quarter, and we're on track for strong fiscal year 2010 results. We're projecting solid financial performance in fiscal year 2011 with continued unit volume growth, increased sales and modest gross margin expansion, while maintaining strong cash flow. We're continually working hard to manage the business well in a challenging environment, while also maintaining flexibility.

Let me now turn it over to Don.

Donald Knauss

Thank you, Dan, and hello, everyone. I think as both Larry and Dan have noted, we had a strong third quarter performance. I feel very good about how well we managed through a weak economic environment, and I'm certainly encouraged by the signs we're seeing that the U.S. economy appears to be on a path to recovery, noting the 3.6% increase in consumer spending that was reported for the first quarter of the calendar year. We do anticipate that the economic recovery will likely be slow, and the marketplace will continue to be dynamic with intense competition going forward.

Now in this difficult economic and competitive environment, I certainly believe Clorox is well positioned across retail channels, with about 90% of our brands holding number one or strong number two leadership positions. I also feel very good about our Away from Home business, particularly in acute care facilities and hospitals and our focus on the growth platform we call stopping the spread of infection.

I and the team look forward to building on the track record we have established for solid annual performance. In FY '09, we grew the top line in margins and achieved double-digit earnings per share growth. With today's updated FY '10 outlook, I believe we're well on track for our top line margin and double-digit EPS growth, again, this year as well. And as Dan noted, I have confidence in our plans to deliver our top line margin and EPS growth targets for fiscal year '11.

Now before I open it up for questions, I would like to comment on our plans for our Auto Care business. As we have acknowledged in the past, our Auto Care business made up of the Armor All and STP brands do not really participate in categories that put us closely with the key consumer megatrends we've been focused on for the last three years such as health and wellness and sustainability. We have drawn share over the past 52 weeks, and the business maintains strong growth and operating margins.

However, growing both the top line and economic profit has been challenging. Consequently, we believe it is in the best interest of shareholders that we explore some strategic options for this business. Now to be clear, we have not made a decision. Ultimately, we may conclude the best option is to retain the business in its current configuration and operating model, and our exploration may not lead to a transaction. As we move forward, while we do not plan to provide updates, we certainly will communicate if and when a decision has been reached.

And I'll now ask the operator to open the lines up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] We will take our first question from Andrew Sawyer with Goldman Sachs.

Michael Kelter

It's Mike Kelter for Andrew today. The first question was really around gross margin for next year. I was very surprised by your forecast for growth despite commodity reinflation. Maybe you could help bridge the gap, not just on the cost savings side and the commodity side, but more detail about what you're expecting in the way of pricing and trade and things like that, help get confidence around your forecast?

Daniel Heinrich

Sure, Mike. Let me take that question on. So the outlook, again, is an increase in our gross margins of 25 to 50 basis points. The cost savings that we've talked about should benefit our margins, call it 160 to 170 basis points. And then we'll see an offset of probably 110 to 125 basis points from higher commodities. The other factors that you cite, we actually expect pricing to be slightly positive for the full year. So even though we're taking a little rollback this year, we do have other pricing actions, primarily in the international markets to help offset that. We do expect trade that will be -- will continue to be negative in the first half but will be lower in the second half. And all of those factors, both pricing and trade will help offset the Venezuela impact. So all those, we're expecting to net into a positive. We'll also be able to cover the normal inflationary pressures that we'll see in gross margins. So net of all those factors, we would anticipate being up about 25 to 50 basis points.

Michael Kelter

And then on the pricing side, I saw Cat Litter and Green Works -- the Green Works amounts were pretty substantial. I mean, is that -- it almost smacks of desperation on the brand. Is there something that's just not working? Do you think that taking a price down this much will solve it or is it just a proposition that's just not working at this point?

Lawrence Peiros

So the price rollbacks on the Cleaning side, the Hard Surface Cleaning side, was relatively modest and gets it to more like a 10% premium versus competition, traditional competition from about 15% to 20%. So I wouldn't call that a rollback extreme. It was more extreme on the detergent side. That was essentially funded by a major cost reduction on the product, which actually delivers the same efficacy that allows us to reduce the cost of the formula. That one is much more substantial, more like a 30% kind of range, which essentially puts us in line with the premium detergents in that category. So we continue to be optimistic about the long-term prospects around Green Works. We think we've gotten the value which [ph] (34:07) equation right at this point, partially funded by cost savings. We're getting traction on the business. It's obviously the very early going, but we're getting more traction in the business recently than we have in some time. So we continue to be optimistic about this. This is what I would term a premium niche opportunity in detergents and a broader niche opportunity in Cleaning.

Donald Knauss

One thing, Mike, I would add on Green Works. On the detergent side, as Larry brought up, that 30% decline takes us back into, as he said, more in line with the premium side of the category. When we launched that brand, we felt we have about a 10% to 20% premium. It ended up about 50% because of all the heavy spending in the laundry detergent aisle. I think one of the other benefits of getting that pricing right is we recently gained distribution in a good segment of Wal-Mart stores with Green Works laundry detergent and started scanning product. So I think getting realistic on the pricing, even though it's still at the premium, and it has helped continue to keep our customers' interest in the brand.

Michael Kelter

And I have one last question on the divestiture, a potential divestiture on Auto. I guess it struck us when you mentioned one of the things you didn't like about it is that it didn't fit into the health, wellness and sustainability bucket. And neither does Trash Bags. And I know that scenario you thought about divesting in the past, when you have these strategic conversations, at what point do you consider something more substantial like the Trash Bag business or do you want to hold on to that for the long haul?

Lawrence Peiros

So we're obviously continuously assessing whether certain parts of our portfolio fit the portfolio, whether we'd better off selling or not selling. Having said that, we feel particularly good about the pipeline of innovation we have had in the past on Glad and we have going in the future on Glad. And so our ability to differentiate on Glad and command a premium price versus competition, we think is real. And we think we have a better growth prospect on Glad than we have on current Auto business.

Donald Knauss

And one thing I'd add on the Glad business, Mike, when you look at the trade-up strategy on Glad, we now have over 50% of that Trash business, which is 2/3 of the brand in the premium end of the business, with ForceFlex and with OdorShield. And those gross margins are on par with the company average. So when you look at that and you look at the fact that the Auto business is probably one of the more discretionary pieces of our portfolio, I think Trash Bags fit more into the daily staple side of our business. So when you combine the inability to see growth in that category on the Auto side and the fact that it is more discretionary, that's what leads us to looking at that piece of the portfolio first.

Operator

We will take our next question from Wendy Nicholson with Citi.

Wendy Nicholson - Citigroup Inc

My first question is just did you say what the tax rate was going to be in the fourth quarter?

Daniel Heinrich

Tax rate should be in the 34% to 35% range for the fourth quarter and should average out to be about roughly 34% for the full year.

Wendy Nicholson - Citigroup Inc

And then my bigger picture question is if we go back kind of two years ago or 18 months when raw materials were really dramatically on their way up, you guys didn't raise your prices right away, and I thought one of the big learnings that you talked about last year at the Analyst Meeting and whatnot was that next time there was an inflationary cycle for raw materials, one of the big takeaways was, hey, we dragged our feet too much, we were too worried about market share and relative pricing, and we need to act more aggressively next time around. And outside of the Green Works, the Cat Litter price rollbacks, which seem much more sort of tactical and specific to those brands. It still feels like you're dragging your feet in being proactive, certainly, on the Glad side in terms of actually taking real price increases. So I know you're expecting some in the back half of 2011. But that seemed so far away. So what's the matter or how do you think about that, and maybe leading price increases so that you protect that gross margin even more than it looks like you will?

Lawrence Peiros

Couple of responses. You mentioned that pricing is specific individual brands and categories, and that's absolutely correct. They're always evaluating pricing based on the circumstances of the competitive set and the growth prospects and what we got on the cost side of the equation, et cetera. Specific to the Glad, there have been some significant ups and downs in trade spending, which to some large extent, really is pricing or a component of pricing. So we have made some movements on the trade spending side that are really kind of pricing-related. And I don't want to talk to the specific pricing plans on Glad. But in the event that resin stays at current levels, I think we're prepared to take further pricing on Glad trash or other areas of the Glad portfolio relatively quickly.

Wendy Nicholson - Citigroup Inc

But in terms of your guidance for sales growth for next year, I mean, it doesn't sound like the categories are expected to accelerate all that fast. So the 2% to 4% sales growth implies that you're going to be gaining more share than you're losing. It just strikes me that, that could be a hard objective to realize certainly in any balance right through the year.

Lawrence Peiros

So I think the growth is a mix of things. Obviously, we have some impact of the Venezuela situation, which impacts the results. We have some impact of the H1N1 high base going out in the current year. But net of everything, we're pretty confident that, that sales rate is achievable, given the plans we have in place, and a lots of puts and takes across the portfolio in terms of pricing, trade spending and even marketing investment, which net to that number.

Donald Knauss

I think the other thing, Wendy, we feel good about for FY '11 in terms of the top line growth is the innovation pipeline. We feel that, that pipeline is pretty robust. And as we put into the release, we're looking at, at least two points of growth coming out of innovation. So we feel good about that as well.

Operator

And we'll take our next question from Chris Ferrara from Bank of America.

Christopher Ferrara - BofA Merrill Lynch

I just wanted to see if we could, I guess, pull together some of your comments around the promotional environment. It sounds like you're saying the environment is tough. But when you look at the fiscal '11 outlook, I mean I know there's going to be some international pricing, but you generally don't expect more erosion. I guess, what are you seeing broadly following the 200 basis points of increased trade spending you saw this quarter? I guess, how was it trending? Is trade spending and promotion higher or about in line with what you thought this quarter? How do you feel like it's trending in the near term? Do you feel like it's easing at all? Or do you feel like the environment remains just as competitive as you might have feared it was three months ago?

Lawrence Peiros

So I would say that the situation remains competitive, but highly variable by category. And we've talked about kind of the hotbeds of competitive activity in the past, and that would be, certainly, the Glad business and the Clorox 2 category through the wash additives. We do expect trade spending to come down in the course of fiscal '11. Some of that will happen in the first half. Some of that will happen in the first half, but the first half will largely be at kind of the same similar kind of high rates we're experiencing in the second half of this fiscal year. And we expect it'll be significantly lower than the second half of fiscal '11. At least, that's based on our planning assumptions today.

Christopher Ferrara - BofA Merrill Lynch

But I guess, are you seeing any specific categories where any competitor or even private label is doing anything that would indicate that, that promotional spending would ease at all, or it's the easing of promo spending and talking about simply just an anniversarying of the increased trade that you saw over the past year?

Lawrence Peiros

So the trash category is definitely getting more rational than it has been over the last several quarters. So we're definitely seeing some pullback in spending. It's obviously a reflection of the increase in resin costs. And also, I think there was not a lot of good payback on that trade spending investment over the last year. So we're seeing some pull back there. I think the activity in the Clorox 2 category will probably dissipate as we start to anniversary the launch of the new Tide product and the competitive response to that. And the two categories where, I think, we have experienced the highest level of competitive trade activity, I think we'll see some of that dissipate in fiscal '11.

Christopher Ferrara - BofA Merrill Lynch

Finally, the Manufacturing and Logistics line, that's been pretty consistently negative for most of the quarter so I've seen it broken out. This quarter, it was zero. Can you talk about why that is and whether there is anything that would be sustainable in that line?

Daniel Heinrich

Chris, the reason it's flat for the third quarter is that we had some diesel favorability that's included in that number that guided to zero. We're not expecting that to repeat in the out quarters. So you'll see a return to the normal level of inflation that you see on that line.

Operator

We'll take our next question from Bill Schmitz with Deutsche Bank.

William Schmitz - Deutsche Bank AG

The first thing that -- the big uptick in accounts receivables towards the end of the quarter, does that mean that sales came in really strong towards the end of the quarter? And did that continue into April?

Daniel Heinrich

Bill, we had a number of rather large merchandising events that happened in the second half of March. So probably about half of the receivables growth that you see there was due to the merchandising events. That's just the timing on when they fell.

William Schmitz - Deutsche Bank AG

And then on the -- I know this is kind of ancient history now, but the loss of the private label Sandwich Bag business at Wal-Mart, when do you lap that? Because I think it's almost $40 million annualized, if you look at some of the scanner data or the all-outlet panel data.

Donald Knauss

Bill, I think we've got another two to three quarters to go before that'll be behind us.

William Schmitz - Deutsche Bank AG

And then we can argue with salad dressing really as a Lifestyle choice because I know it's in the Lifestyle segment. But can you just talk about -- how much of the extra promotional spending this quarter was due to the some of the slotting fees to get some of those extra flavors in there? I know it's kind of a, sort of a food-centric business?

Lawrence Peiros

So first of all, Hidden Valley encourages you to eat more vegetables, which is healthy. Secondly, there are some slotting fees or introductory fees, but I wouldn't call them material. I think, overall, maybe probably slightly less than a point. And the total company was driven by such fees on charcoal and Hidden Valley Ranch and a couple of other places.

William Schmitz - Deutsche Bank AG

Did you say what the growth margin impact was from a higher promotional spending? I know it's in that all other line when you break out the bridge for gross margin?

Daniel Heinrich

On the quarter, it's about a point.

William Schmitz - Deutsche Bank AG

And then just lastly, I know you report total debt-to-EBITDA, but your cash balance is building pretty dramatically. And so, I think, net debt-to-EBITDA was closer to two, sort of two, one call it. I mean why wouldn't you do more than just offset the option dilution with the share repurchase?

Daniel Heinrich

Well, Bill, we may. It's still under consideration. We certainly have a lot of flexibility to either repurchase chairs or if we have a bolt-on acquisition. So we're certainly evaluating that now.

William Schmitz - Deutsche Bank AG

Just curiously, why do you use total debt-to-EBITDA instead of net-debt-EBITDA. That was the way the indentures are written.

Daniel Heinrich

We've reported both metrics. We generally use the gross number. It's certainly a little more conservative. And the cash build-out that you cited is primarily in in our International businesses, and that has to do more with the timing of cash repatriations during the year.

Operator

We'll take our next question from Lauren Lieberman with Barclays Capital.

Lauren Lieberman - Barclays Capital

Just a quick question first on an old and boring topic at this point but Venezuela. Can you break out how much of what you saw from Venezuela in your numbers this quarter? Could you mention the gross margin impact that was related to sort of the mismatch in the value of inventory versus the rate of which you're selling them? Because now it's gotten to a point where it feels like most of your peer group companies, for better or worse, are excluding that portion of Venezuela expense or charges, however, you want to phrase it from their reported numbers. And then I'm trying to find a way to look at everyone on an apples-to-apples basis.

Daniel Heinrich

No, our numbers are, obviously, all inclusive of the impact from Venezuela. Just to kind of run through the Q3 impacts on Venezuela, the top line was impacted about 2.3 percentage points. So that was, call it, sales impact. It was a little bit north of $30 million on the quarter. The pretax impact on the quarter was about $16 million or $0.07 EPS. As we look at the full year impact in fiscal '10, we would expect that the back half, the second half impact on the top line will be a little bit more than 2%, which will average out to be a little more than 1% on the top line for the full fiscal year. We're anticipating that the pretax impact of Venezuela in the back half will be in the negative range of $30 million to $35 million. And so we saw about $16 million of that in the third quarter, so we expect roughly the same amount in the fourth quarter. Now in Q3 and the second half, most of the impact of Venezuela, particularly on the top line, is being offset by other favorable currency movements plus pricing actions that we're taking. So we've included it in total there. In the first half of the fiscal, just to remind everybody, we took about $26 million or so of pretax charges in the first half. That was related to both cash conversion, the transaction losses, as well as the balance sheet remeasurement that we took. So that's what's embedded in our numbers. I can't help you too much in trying to compare how everybody else is doing, that's the full impact. And as we look at next year, we'll have a continuing impact from Venezuela in the first half. We would anticipate in the first half of fiscal '11 that we'll continue to see more than about a 2% impact on the top line, which will translate to a little bit more than 1%. We're anticipating right now a $25 million to $30 million pretax profit impact in the first half of fiscal '11. Now I'll say, we won't repeat the $26 million in transaction losses and balance sheet remeasurement that we saw in the first half of fiscal '10. So on a year-over-year basis, it should be relatively flat. So I hope that helps.

Lauren Lieberman - Barclays Capital

What you saw this quarter, is any of this -- the balance sheet remeasurement is a one-time, is a charge, but then it takes time for the inventory to flow through the P&L. So as inventory purchased at the prior exchange rate, has that been worked through at this point? Was that in this quarter or was that all taken care of previously?

Daniel Heinrich

A lot of that was taken care of in Q2. So whatever residual was there has bled through in Q3.

Lauren Lieberman - Barclays Capital

And then the other just final piece was -- and my memory may just be wrong, but was the total number for Venezuela in the second half of this year the pretax number. That's higher than what you previously said. I thought it was $0.09 for the second half originally.

Daniel Heinrich

Lauren, it is a little higher. And basically, that's because the parallel rate continues to deteriorate in Venezuela. So when we provided last quarter's -- on last quarter's earnings call, when we talked about the second half outlook, we had an estimate of the parallel rate being in sort of the 6.7, 6.8 range. Today, as we sit here, we're slightly ahead of 7x. So we have seen some further deterioration in the currency.

Lauren Lieberman - Barclays Capital

And then the other piece I wanted to talk about for a minute was, what product launch activity is still to come in the fourth quarter? Because there was a mention in the release about inventory build ahead of launches, and so it looks like I'm guessing advertising spending may be up significantly in Q4 versus the dollar level in the first nine months of the year. So just needed a refresher on what may still be left for Q4 launches?

Lawrence Peiros

Q4, what you'll see is basically a continuation of what we've already launched. Nothing significant that will be introduced in Q4. So we're talking continuation of the ForceFlex improvement on Glad trash, the conversion of litter pails to film, the improved charcoal briquet, the Burt's items, Acne and Toothpaste, and the new flavors in Hidden Valley Ranch would be the major ones.

Donald Knauss

Another piece, Lauren, of the inventory build was we've gotten off to a fast start on Kingsford for the season. And there is some -- as Dan pointed out, we had some merchandising events in the second half of March on Kingsford we didn't have last year. And so that's resulted in some of the inventory build as we get ready for the season.

Operator

We'll take our next question from Ali Dibadj with Bernstein.

Ali Dibadj - Sanford C. Bernstein & Co., Inc.

I'm taking a little bit of a step-back, and we spent a lot of time over the past several quarters, past few years, really hearing about how Clorox's non-commoditized categories, brand is very important, you're number one and, for sure, many of your categories have great shares, et cetera. But when you get to a quarter like this, and frankly, a quarter like the past few ones and what we're contemplating going forward as well. You see price and trade spend becoming more and more how it seems like consumers are deciding in your categories until you need to do something about it. You need to monitor price gaps even more aggressively. It feels like you can't rely as much on brand. I'm just trying to understand whether there's anything in your thinking that has changed, given what's happened on the past few quarters as you look forward, given that dynamic?

Lawrence Peiros

So I think, overall, I would say that we're obviously suffering a bit from a very tough economy, which is why we have relatively flat categories in the U.S. compared to categories that were growing 3% to 4% a couple of years ago. And we're kind of slogging it out with the consumer and with the competitive set. Having said that, obviously, it varies a lot by category. But we have some extraordinary examples of brand power and the top two, I would say, are Hidden Valley Ranch, which has a very, very significant premium and has been growing share for, I think, about three to four years now, straight. Kingsford charcoal also has a very substantial premium versus competition. And through innovation and great marketing, we've essentially been accelerating that business over the last several years. So if there is a lot across the business, on the Glad business, where I think we have kind of the most commoditization, so to speak, we think we've had good success where we've been able to differentiate, and that's been on the premium trash side. Obviously, less success on the base trash side and parts of the portfolio like the food bags. They are less differentiated. But I'd say, overall, the effect that we have essentially held or slightly increased our all-outlet share over the last year speaks to the power of our brands. And while we have done some increased trade spending and some adjustments, I think the net impact of slightly growing share in a very tough economic situation is a testament to the power of our brands.

Donald Knauss

I think the other thing I would add, Ali, on this is that, I think in this recession, everyone has gotten sharper on price points. And I think, based on the brand analytics, we do. And looking at our pricing elasticities, I think we know that when we operate typically in a 25% to 35% premium versus retailer brands, we can maintain or build a share. And I think we're starting to see those gaps tighten up. And in fact, if you look at the track channel data, and I think this replicates what you just published, if you look at the track channel data, which now is only about 35% of our volume, but even in the track channel data where private label is the most developed product, when we look at the 52-week trends there, at 52 weeks, they were going three and a half and we were declining two and a half to the latest four-week trend, where they're declining two and a half and we're declining about a half a point. I think it evidences the fact that we're sharpening those price points up. We're still commanding significant premiums. And as Larry pointed out, we're gaining all-outlet share, and we're doing it with our gross margins getting back into historical high ranges. So I think we're all about protecting and gaining share, and I think we're doing a pretty good job of it.

Ali Dibadj - Sanford C. Bernstein & Co., Inc.

How do you think about that as you go forward? And commodities are going up, obviously, and the plan is to take pricing. I mean is there a potential? Are you starting to see anything, the gap creep up a little bit or creep wider a little bit and trade down starting up again?

Donald Knauss

Well, I think we're going to, obviously, be very mindful of that. I think the other thing we're focused on and I think you hear this from a lot of our peer companies, too, as the pace of innovation is picking up, and I think we feel very good about our innovation pipeline for FY '11. So I think you'll see us continuing to really focus on this 3D approach we have talked about, desire, decide and delight, on all our core businesses, keeping price gaps in certainly front and center in our attention span, but the innovation pipeline is critical to this as well.

Ali Dibadj - Sanford C. Bernstein & Co., Inc.

I guess innovation is my last question, actually quite fittingly. You mentioned that fiscal year '11, 2% to 4% growth, including about 2% of innovation. And I totally understand you can't -- I'd love for you to talk about innovation that you are going launch, but I'm sure you can't in detail. But I guess I'm trying to understand the historical precedence for this. So I thought every year, it's roughly 2%. And this year, I don't think it happened, although please tell me if that's not correct. It would be helpful. I don't know if it happened a year before, so I'm just trying to get a sense of how much confidence to put in this 2% from innovation within the context of 2% to 4% growth and this pricing that you're describing?

Lawrence Peiros

We have actually been very consistent in delivering about between two and four points in innovation this year, last year, and we are projecting essentially the same next year. And the way we track this is, this is innovation both on the form of new items, as well as improvements on existing brands that deliver incremental sales. So when we improve Charcoal, we don't include all of charcoal volume but the incremental volume we get based on the innovation. And so we're pretty confident that we can deliver at historical rates in innovation as we have for a number of years.

Ali Dibadj - Sanford C. Bernstein & Co., Inc.

Where is the institutional position of like Caltech and some of that growth? Just what segment?

Lawrence Peiros

It's in the Cleaning segment, and we're seeing good growth in the Away From Home business, particularly kind of the disinfecting portion of that business. Although it's still a relatively small business, but we're seeing pretty significant growth in a small base.

Operator

We'll take our next question from Doug Lane with Jefferies & Company.

Douglas Lane - Jefferies & Company, Inc.

I know Caltech is relatively small, but can you give us an idea of what it contributed to sales in the quarter?

Daniel Heinrich

I think the impact was probably around $3 million or so.

Douglas Lane - Jefferies & Company, Inc.

And then on the input costs, two questions. One, where did gross margins come in vis-à-vis budgets? Did you see a lot of variability throughout the quarter? And secondly, what are the top, maybe three or four, inputs that are exhibiting the most pressure these days?

Daniel Heinrich

Let me take the last question first. I mean, obviously, it's resin that we've seen the most impact during the quarter. We saw a number of price increases taken into market for various reasons, so most of the pressure was there. And as it relates to what we are forecasting, obviously, we did come in higher on commodity costs than we had anticipated in the quarter.

Douglas Lane - Jefferies & Company, Inc.

And anything beyond resins? I know you have a variety of input costs that are going all different directions. But maybe just two or three others?

Daniel Heinrich

Doug, I think, sort of across the board, we're seeing a little bit kind of everywhere. Pine oil continues to go up. We're seeing chlor-alkali starting to come off of its floor and starting to tick up. We also have the input costs for Charcoal business, which is wood waste that we're now having to pay for when we used to get that input for basically free. As I'd say just generally across the board, we're starting to see some modest reinflation.

Douglas Lane - Jefferies & Company, Inc.

And then lastly, it's the first time we've talked about Burt's Bees being a significant contributor here, contributor to growth. Can you put a little bit more color on it? Was it mostly the new innovation? Or is there something else going on at Burt's Bees?

Lawrence Peiros

We're seeing solid growth in the U.S. business driven in part by the innovation. But obviously, the natural personal care category seemed to grow at a faster pace than traditional personal care. We're also seeing the impact of expansions in international markets. So both of those are going out at the same time.

Operator

We'll take our next question from Alice Longley, Buckingham Research.

Alice Longley - Buckingham Research

I think you said the Bleach category was down in the quarter. Is that right? And you said that the color-safe bleach together with the chlorinated bleach, or is it just one or the other? And could you comment on that? I think the Bleach category was growing.

Lawrence Peiros

The hypochlorite bleach portion of the category was down, and that's where we suffered some volume losses, chiefly driven by that overall category decline. On the Clorox 2 business or the Color-Safe Through-The-Wash Additive business, we continue to see pretty strong increases in that category, driven by the new competition and the response of new competition, so quite different performance in the subcategories of Laundry.

Alice Longley - Buckingham Research

Wasn't the hydrochloride bleach category growing because people were using it increasingly for cleaning floors? I mean I'm just -- why is it suddenly down?

Lawrence Peiros

So it's actually not suddenly down. It hasn't been a healthy category for some time, a little bit faster decline in this quarter than previous quarters. There is a significant portion of our Bleach business that's used for disinfecting chores. We estimate it's about 30%. It's been about that rate of usage for quite a long time. That's not a new phenomenon.

Alice Longley - Buckingham Research

And then in the Lifestyle group where your sales were up 5%, volume, up 8%. Are you expecting that kind of growth, especially the 8% volume? Do you think that, that might continue through fiscal '11?

Lawrence Peiros

So we've got some very strong performing businesses in that business segment. And Brita continues to generally be on a very good trend based on sustainability concerns and concern about bottled water waste. The Food business continues to be a very good performer for us, and we expected the results out of Burt's Bees. So I'd be pretty optimistic about our performance on Lifestyle in fiscal '11.

Alice Longley - Buckingham Research

So that kind of maybe mid- to high-single digit volume growth, is that in your budget for fiscal '11?

Donald Knauss

Alice, I don't really want to pin down this point to a specific range, except to say that it's probably going to be one of our faster-growing segments next year.

Alice Longley - Buckingham Research

Why was the price mix trade dealing negative three there? You wouldn't think you need it very much in that segment. I think you've said it was slightly negative. But why was it negative three? Where was it negative three?

Donald Knauss

Alice, the bulk of that for that quarter was really behind innovation. I think we already noted that we've expanded the Hidden Valley line on the Food business. And in addition, we've got two pretty substantial launches going on at Burt's right now, behind the Acne and Oral Care line. So both of those got a significant amount of introductory marketing.

Alice Longley - Buckingham Research

So it's sort of slotting fees, basically?

Donald Knauss

I wouldn't it describe as slotting as much as I've described it as just marketing support.

Alice Longley - Buckingham Research

And is Burt's Bee still getting expanded distribution here in the U.S. into the channels?

Donald Knauss

There is new channel distribution going on that has also increased shelving in existing channels, particularly in the mass and supermarket trade. So yes, you're seeing see a combination of some new channel development, but also more commitment to the sections in store that's currently trading in that category. So we're seeing expanded shelf sets.

Operator

We'll take our next question from Leigh Ferst with Dudack Research Group.

Leigh Ferst

I wanted to ask you about Green Works and how you have adjusted your plans for that brand. It sounded like such a great idea when you launched it, but maybe the timing wasn't quite right. How's the strategy and the plans change for that brand?

Lawrence Peiros

So Green Works set off to a very fast start, and it's really on the Cleaning side, with regard to major success. It did take a pretty significant hit in the economy headed downturn. And so our recent actions are probably focused on the area of pricing and reducing our premiums versus the alternatives. We've done that in both the cleaning products and the hard surface cleaners. And so we're now about a 10% premium versus traditional cleaners versus a 15% to 20% premium previously. And we have dramatically reduced the price on our detergent products to bring that in line with the premium detergents in the category.

Leigh Ferst

And in terms of market share, can you share with us what your goals are?

Lawrence Peiros

I would say we are still the leading natural cleaners. Certainly, in that hard surface cleaner, we are the leading natural cleaner, have been quite for quite some time and elected to maintain a significant share of that category.

Donald Knauss

Yes, right now, we're in the low 40s in terms of share, which is about double what our closest competitor has.

Operator

We'll take our next question from Ed Kelly with Crédit Suisse.

Edward Kelly - Crédit Suisse First Boston, Inc.

My question is on Homecare. We've had a bit of a weak flu season after getting off to a fairly strong start. And I've heard some retailers talk about having too much flu-related inventory, not you specifically but generally. Which gets me to my question, how do you feel about your inventories in the channel in Homecare? And then how do we think about this business over the next few quarters? Is this a business that might actually be down modestly the next few quarters?

Lawrence Peiros

So we saw some terrific gains on our Clorox Wipes business in the first half of the year. We anticipated, quite frankly, less robust growth in the third quarter, and we actually saw double-digit increases. So actually the strength of the business was stronger in the third quarter than we anticipated, because we did anticipate a bit of a trough. We do a lot of analytics on inventories and consumption, and we're basically seeing that our sales are tracking with the consumption. And our best guess is what we did is essentially drive new household usage during the H1N1, and we're seeing some of the benefit and consumption among those new households. As we go forward, we start indexing off a very high basis that were driven by the H1N1 issues. And so while we'll see very good performance on Wipes indexing off, the year-ago periods will be difficult. And so we probably are likely to see some declines on our Wipes business going into the future quarters.

Donald Knauss

One of the encouraging things we've seen on that business, as Larry noted, we had significant growth in the third quarter, better than we expected. When we looked at some of our larger retailers data and our own data, it looks like about 75% of the H1N1 spike was driven by new users coming into the category. So I think we're certainly speculating that they'll continue that regimen as they go forward. But that was even higher than we thought. Clearly, H1N1 had an impact on people's habits.

Operator

The next question will come from Jason Gere with RBC Capital Markets.

Jason Gere - RBC Capital Markets Corporation

One, I think Larry, we were talking back in January about the planogram resets for January through May, and I think at that time, you had some guesstimates about some of the increases. I was just wondering if you could talk about what changed maybe in the last couple of months. It should be pretty concrete by now in terms of distribution gains and how that gives you confidence in terms of volume growth being in that really low- to mid-single digit going forward.

Lawrence Peiros

Probably the most material change we've seen is in the Glad category at Wal-Mart. There's a simplified shelf set, and I think it's much more favorably positioned toward Glad and the other products, and so I think we're benefiting from that. Broadscale, I don't think we saw the kind of assortment changes than we anticipated across the industry. So the weather, there has been some reduction at some retail accounts. I don't think it's been dramatic. So we continue to fare well based on the fact that we are typically the number one brands in these categories. So we've hung on to distribution or done some incremental distribution. But we haven't seen the dramatic simplification that now may have been anticipated six months ago.

Jason Gere - RBC Capital Markets Corporation

And then just the second question, and before you were talking, obviously, we're hearing in the industry the pace of innovation creeping up. So can you just talk about -- and obviously the topic this whole earnings season has been about increased promotional spending to drive volumes. So can we just talk about that incremental investment where the balance between trade spending and advertising going forward because, obviously, both are necessary to drive volumes? But how do you make those decisions and what your kind of budgeting going forward in select categories?

Lawrence Peiros

So these days, we have a lot of good data on advertising ROIs. And we obviously look at our trade spending pretty intently by category, by customer, to figure out what kind of return we're going to get. So we've seen a tick up in our trade spending. We've kept our advertising essentially at the same kind of 9% to 10% rate for a number of years now. We think that's about the right target. It might vary by quarter, but it's probably about the right target. So we feel good about the mix. So ideally, overtime, the trade spending component would come down a bit. As we've talked about, some of that may be replaced by pricing actions that we take in the market. But expect the trend spending to come down a bit and advertising to be essentially maintained with historical numbers.

Jason Gere - RBC Capital Markets Corporation

The 2 to 4 sales for next year, so that doesn't include a price on Glad but just a little bit less trade promotion on Glad in the back half of the year. That's the assumption right now.

Lawrence Peiros

Sorry, I don't think we want to talk about our specific pricing actions or what specifically has baked in because we're not ready to go public with that information.

Daniel Heinrich

With that, there is pricing in our International businesses and there is some level of pricing in the Domestic business.

Operator

We will take our final question from Karen Lamark with Federated Investors.

Karen Lamark - Federated Investors

I've got a couple of questions about your contract manufacturing. Can you remind us, first of all, what percentage you're up to?

Donald Knauss

Karen, it's about 15% to 20% of our domestic manufacturing.

Karen Lamark - Federated Investors

And who owns the inventory? Do you sort of contract for a certain amount?

Daniel Heinrich

Our contracts vary. In some cases, we own raw materials all the way through. In other cases, we pick it up when finished goods are shipped in. So it just depends on the contract.

Karen Lamark - Federated Investors

And then do you do any factoring for your contract manufacturers?

Daniel Heinrich

No.

Operator

This will conclude today's question-and-answer session. Mr. Knauss, I will turn the conference back to you for any closing comments.

Donald Knauss

I'd just like to thank everyone for participating in the call. We look forward to speaking with you again in August. And obviously, by then, we'll share our full year, fiscal year '10 results, and then we'll revisit the FY '11 plans and targets with you then. Thanks, everyone.

Operator

Ladies and gentlemen, this will conclude today's conference call. We thank you for your participation.

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