Good day, ladies and gentlemen, and welcome to The Clorox Company Third Quarter Fiscal Year 2014 Earnings Release Conference Call. [Operator Instructions] As a reminder, today's 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 your conference.

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; and Steve Robb, our Chief Financial Officer. We're broadcasting this call over the Internet, and a replay of the call will be available for 7 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. Reconciliation with the most directly comparable financial measures determined in accordance with GAAP can be found in today’s press release, this webcast's prepared remarks or supplemental information available in the financial results area of our website, as well as in our filings with the SEC. In particular, it may be helpful to refer to tables located at the end of today’s earnings release. Please recognize that today’s discussion contains forward-looking statements. 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. Turning to our prepared remarks. I'll cover today's highlights of our third quarter business performance by segment. Steve will then address our Q3 financial results, our updated financial outlook for fiscal '14 and our preliminary financial outlook for fiscal '15. Finally, Don will close with his perspective on the business followed by Q&A. In the third quarter, including the impact of negative…

Thanks, Steve, and welcome, everyone. So for the quarter, diluted earnings per share increased 5% despite the negative impact of an effective currency devaluation in Venezuela. In March, we started using the SICAD I rate of VEF 10.8 to USD 1 to record our Venezuela business operations. This devaluation reduced diluted earnings per share by $0.13. Excluding this charge, earnings per share from continuing operations is $1.18. With that, let me take you through the details of our third quarter financial results. Sales for the third quarter declined 2%, reflecting more than 3 points of foreign currency declines, and nearly 1 point of higher trade promotion spending, partially offset by about 1.5 points of pricing, primarily in international and 1 point of favorable mix. Excluding the impact of foreign currencies, sales were up more than 1%. Gross margin for the quarter came in at 41.8%, a decline of 30 basis points. We delivered $21 million in cost savings or 140 basis points and about 80 basis points from pricing, primarily in International markets. These benefits were more than offset by 120 basis points of commodity costs, primarily related to resin, as well as 120 basis points of higher manufacturing and logistics costs, due in part to continued inflation in International markets, particularly in Venezuela and Argentina. Selling and administrative expense for the third quarter was about 13% of sales, down 80 basis points versus a year ago, driven by a reduction in employee incentive compensation accruals, reflecting anticipated lower year-over-year payouts, consistent with our pay-for-performance philosophy. The total incentive compensation accrual reduction was about $25 million or about $0.12 of diluted earnings per share impact benefiting several lines on the P&L, including cost of goods sold, selling and administrative expense and R&D costs. Advertising spending for the current quarter was…

Okay, thanks, Steve, and hello to everyone on the call. Well, as Steve said, we delivered 5% diluted EPS in the quarter even with the impact of the devaluation of Venezuela. That said, we're certainly not satisfied with the results of these quarter. And looking ahead, our top priorities are building our market share, driving category growth and getting back to the trajectory to achieve our Strategy 2020 targets. Those are the targets we shared with you last fall on the Analyst Day out here in Pleasanton. So as we shared with you for several years now, we've looked at our growth strategy in terms of the financial algorithm, which rolls up on our U.S. Retail business, which represents about 75% of our business; our Professional Products business, which makes up about 5%; and then International, which contributes a little over 20% to overall sales. So what I thought I'd do is give you a look at how we anticipate each of those 3 legs of our business contributing to sales growth in fiscal '15. So in U.S. Retail, our 2020 goal that we laid out for you last fall was growth of 2% to 3% annually. And in FY '15, while it will certainly be challenging to achieve that, particularly in the first half of the year, we believe we have the plans in place to grow near the low end of that range for the full year. Now in the U.S., as you all know, we face an intensely competitive environment and sluggish categories, and the economy continues to be bumpy, just noting the GDP being basically flat for the first quarter as testament to that. Now despite a March uptick in consumer optimism, confidence again dipped slightly in April with consumers reporting less optimism regarding current business…

[Operator Instructions] Our first question comes from Steve Powers with UBS.

Steve, maybe just a quick clarifying question to begin with, did you -- if I missed it I apologize, but did you talk about or could you quantify the impact of if you aren't able to get the pricing in Venezuela or Argentina that you've assumed what the financial impact would be next year at '15?

Yes. So our assumption is for pricing next year, it's about 1 point of incremental sales growth for the company as a whole. I will tell you that a small piece of that is Venezuela from a total company perspective. So getting pricing in Venezuela is critical to the health of the Venezuelan business and our ability to continue to produce product for that country and those people. But it's a very small piece of the sales growth that we're counting on next year.

Okay. I guess my real question is more around innovation and the challenges you're facing in categories like Wipes and Brita, Cat Litter. Just given how focused you are on innovation, I just -- I guess I struggle with how you've seemingly exceeded the innovation lead in those categories, opening the door to rivals and/or copycat private label-type imitations. I guess my real question is why weren't those categories better protected? Or maybe that narrative is incorrect, so if you could set me straight, that'd be helpful.

Yes. Steve, let me start. This is Don. Let's take it one by one. On Wipes, I don't think we ceded the innovation agenda at all in Wipes. I think what we saw in Wipes after about 1.5 years ago, we hit almost a 60% share just before the start of the '13 flu season. We were pounding on competitors pretty good. And what we saw and basically our Wipes issues are focused in 2 or 3 customers, is we saw an onslaught from private label on pricing. We've always maintained that our brands have the ability to command a price premium. And when we're in the 25% to 30% premium range like we are on bleach, for example, and we're gaining share again, we can do that. When we start getting outside that 25% to 30% band, which is exactly what happened to us in Wipes, we got hammered. Now we've rolled out glass Wipes, which are doing quite well, tub and shower. We've also launched just a new 4 pack, for example, in our largest customer. That's doing extremely well. We're launching a new 5 pack in club, and we're getting much more declarative in terms of our benefits versus competition on that packaging. So I think it's been more of a victim of our own success in Wipes and creating a bit of a pricing umbrella, which we are managing now. But I think from an innovation standpoint in terms of the quality of the Wipe, getting into different Cleaning occasions like glass and tub and shower, I don't think anybody touches us there. So that's Wipes. On Litter, I think this is again a value issue. If you look at our share loss over the last year, 2 share points, it's all in Fresh Step Scoop…

We will take our next question from Nik Modi with RBC Capital Markets.

So 2 questions for me. Just talking about the Wipes distribution losses. My understanding is, a very large customer but their category growth has really slowed since the transition has occurred, and I'm just curious kind of if you think perhaps you might be able to get back distribution just given some of the category trends. And then the second question is kind of more bigger picture is I've always regarded Clorox as best-in-class when it comes to category management. You guys do a great job of managing the businesses you're in. And I just wondered just given the top line has been struggling for quite some time, and I get the macro environment, I understand that. But it just seems like you could put your capabilities more to use by being a little bit more acquisitive in other categories within the supermarket, and I just -- Don, I was wondering if you can just philosophically explain kind of how you think about that?

Yes, okay. Thanks, Nik. Yes, on the first question, the customer that we lost distribution in and I've lived through this in other companies. It's typically -- this is an annual program. We'll see if it -- if we can make an adjustment inside that 12 months. But to your point, their category is down in significant double digits. And interestingly, the distribution that we picked up in another large customer, their Wipes category is now larger as a total category in Wipes than the other customer. But we don't have an 80% share in that customer. So we haven't made up totally the volume there. But I think we've not only gained distribution in another top 5 customer, but we've also picked up in another top 10 -- 2 other top 10 customers, some incremental distribution. So I think it'll play out over the course of the next 3 to 6 months as we build that back. We always have hope that we'll be able to go in where we lost the distribution, especially after a 6-month check-in with this customer to see, if those trends continue at the current rate, we would expect and hope that they would be open to that discussion. But I think with the distribution we have gained in other customers, and that continues to build and with the innovation around the 4 pack and the new 5 pack and glass, et cetera, I think we feel much better about our position. And in fact, I would say to you just like we told you folks in October that we would see share gains on bleach again in this quarter, which we delivered on. I think we're confident that you will see share gains again from us on Wipes in May and June as we cycle through this. So feel good about that. As far as the other thing, Nick, on igniting these categories and getting more category growth, we are pushing harder into adjacencies. Let's take Hidden Valley as an example. We now have the #2 brand in pasta kits, for example. We have the #2 in sandwich spreads or the #3 in sandwich spreads now. So our dry dip and dry salad business is growing 14%, 15%. So we are starting to push into these adjacencies and you'll see more of that as we go forward. We're doing everything we can to ignite the growth by looking at adjacencies. We'll also continue to look at acquisitions that are down the middle of the fairway for us like we did with Soy Vay. Clearly, that's a small business, but it's really growing at double digit rates. So beyond Personal Care or Healthcare, the second priority for us is acquisitions that are in those core categories for us.

Our next question comes from Jason English with Goldman Sachs.

Two quick questions. First, a housekeeping item. I think I heard you when you're talking about fiscal '15 guidance say that you're assuming continued currency erosion in Venezuela and Argentina. Did I hear that correctly?

Yes.

You did. We're assuming double-digit decreases in both the Argentine peso and the Venezuelan bolivar next year. To be really clear about it, we moved to SICAD I, and we expect that as more of a free-floating rate, it'll continue to devalue. So we're not assuming it'll go to SICAD II, but we are expecting ongoing devaluation.

Got it. Sounds like a pretty prudent assumption. Now I want to turn my attention to a category you haven't really talked about, liquid cleaners. It's the category that by our data, just looking at the Nielsen numbers, you've been losing quite a bit of share in for a pretty persistent period of time with private label gaining, SC Johnson gaining, P&G gaining. Can you talk about some of the dynamics in that category, and what may stem those share losses?

Yes. Well, let me start by saying this, Jason. I think in Home Care, we actually -- we've been hit by share losses primarily because of Wipes. But to your point, on dilutables in particular, we lost share on Pine-Sol. Although there is light at the end of the tunnel. In March, we saw actually a total -- in total Home Care, we saw a share gain of 0.2 share point. And I would say this on Pine-Sol. I think what's -- we've seen a lot of innovation from Procter on Mr. Clean, and we've seen a lot of competitive pricing from other competitors in that space, right, from Fabuloso from Colgate. So clearly, we're focused on innovation around Pine-Sol, the squirt mop thing we just rolled out, it's too early to tell how that's going. But you'll see new fragrances from us. You'll see different bottle shapes and sizes down the road from us. But it's clearly going to be -- it's an innovation game, and it's also a pricing, same kind of issue I talked about in the other categories where we've let our price gap drift up too much, and that's one of the things we're going to reference. Now as I said, I think we feel good about the fact now that Home Care shares in total are growing again. And I do think you'll see our Wipes shares regain and rebound in May and June. And the dilutable piece is something we're focused on but with an innovation bend, as well as looking at our trade spending and how we deploy those funds to get the pricing on shelf right.

Our next question comes from Olivia Tong with Bank of America Merrill Lynch.

Quick question first. You talked about the fact that embedded in your fiscal '15 outlook is your assumption that you will get some pricing. So you've obviously had a couple of discussions with the government around getting pricing in Venezuela, Argentina. But what's sort of plan of action if those discussions don't turn out fruitful and pricing isn't an option?

Okay, let me take that, Olivia. We have been in high-level discussions with the government. I think we want nothing more than what the Government of Venezuela wants, which is to be able to make a fair profit. And I think they recognize the straits that our business is in and the fact that something has to give or certainly the business, in its current form, is not sustainable. So I think we'll be able to give you a much better update when we get to the August call as we work through these issues with the government. But given the recent price increases they awarded to the Food segment in that country, I think we have some level of optimism that we're going to be able to get this pricing through. But I want to be really clear for everyone and with our investors that I just want to build this algorithm for you so that there's no confusion or that there's any conclusion that we're overly dependent on getting pricing in any given market. When we put the top line algorithm together, we said, look, we've got about 3 points of growth from innovation and 1 point of growth from pricing, and about 90% of that pricing is in International markets. Now that gives us 4 points of growth. We've got more than 2 points of currency headwinds in this thing. So let's just round it to about 2.5 points of currency, and that includes these double-digit assumptions on devaluations in Venezuela and Argentina, which as Jason noted, we think is prudent. That gets us down to about 1.5 points. The reason we're not coming out with a higher top line estimate than the flat that we put out there is given the competitive intensity in the U.S. and the volatility of foreign currency, we don't think it's prudent to promise more to investors than that. So we may be accused of being somewhat prudent in these assumptions, but we think that's the right way to go.

And then you mentioned a couple times about price gaps drifting up too much between you and private label and some of your other competitors.

Yes.

And with that, you've got a fiscal '15 outlook for 25 to 50 basis points of EBIT margin expansion despite the fact that FX will still be a near-term drag. So can you talk about some of the puts and takes within that margin? If you've got to spend more, you've got to promote and price more, is cost saves coming up to offset that delta or what else is going on in the equation to help offset that?

Sure. This is Steve. Let me lead off on that. So it starts with the gross margin expansion. As we look into next year, we, number one, have very good cost savings programs planned. So we feel very good about that. And as Don and as I noted earlier, we are also anticipating about 1 point of pricing. And we think those 2 factors are going to be sufficient to kind of overcome inflation and commodity cost increases and should lead to solid gross margin expansion next year. And I think if you let that just flow through the bottom line and again we're going to continue to aggressively pursue savings on the SG&A line, we think the combination of those 2 things should translate into solid EBIT margin expansion.

Our next question comes from Wendy Nicholson with Citi Research.

My 2 questions. First of all, just on Venezuela. I think you've already been taking some pricing on a piece of your portfolio. Is that not correct?

Yes, we – the -- with that 2/3 of our products, a little over 2/3 are under price controls, 1/3 is not. We've been able to get very small limited amounts of pricing in the non-controlled categories historically.

And Wendy, one thing I would note, too, that of the pricing that we've assumed for Venezuela next year, almost half of it is carryover pricing that we've already gotten this year.

Got it. Okay, fine. And then turning to the Wipes business, if I'm not mistaken and I may have a faulty recollection here, but I think you used to do some private label manufacturing for the Wipes business for certain customers and then you decided to exit that. But given how private label is gaining share and seems to sort of be a more persistent thorn in your side, I guess, number one, does that reflect your loss of control over private label since you're no longer doing it? And would you entertain bringing that back in house?

Yes, we didn't do private label on Wipes, Wendy. We did private label on Food bags in Glad that we exited about 5 years ago. So we've never done private label on Wipes. I would say that with the tremendous focus on private label in a couple of key customers, what is happening is the category is now slowing to -- I mean, the category grew in the last quarter just 0.5, and this is a category that was growing in the mid-singles consistently for quarter after quarter after quarter. So I think the retailers who have driven this hard are recognizing that it's almost impossible to drive a category forward if you don't have the 50 share branded guy who's premium priced driving with you. So I think as I said, I'm pretty confident as we sit here today that you're going to see our shares rebound there. But I think private label has its role to play, but I think you'll see a resurgence from us as we lap through this last year.

Next question is from Chris Ferrara with Wells Fargo.

Can you, I guess, characterize the type of competition you're seeing? Look, it's not a new concept obviously, we've heard that from a bunch of companies this quarter. Obviously, you've said you're promoting more but what do you see from competitors? I mean, is it your sense that this is just a momentary reaction to weaker volume in the near term? Or are you seeing anything that might make it sound or seem a little bit different from what you've seen in the past?

Well, I think let me start, Chris. I think there are a few things going on. First of all, why these categories in general, not just ours but across the CPG space, are fairly sluggish. And I think there are a few things obviously going on. We talked about the fragile consumer, the fact that wages are stagnant. We've talked about the fact that government assistance programs have been whacked back. We've talked about the horrible weather in the quarter, which obviously had an impact on GDP. I think the other thing is we've seen a spike in the number of people 18 to 34 living at home. I mean, 6 years ago it was 27% of people of that age group living at home with their parents, now it's 31%. We think there's about 1.5 million to 2 million households that haven't been formed that should have been formed. You add up all those factors and I think you get sluggish categories. So people are chasing volume. The other thing is you look at the volatility in emerging markets and the currency issues and people are refocused on the U.S. market and driving -- trying to drive growth in the U.S. market. So I think you put all those factors together, and you get kind of a perfect storm of events going on. And then if you look at the last year, the pattern in CPG for the previous 4 years had been a fairly good consistent pattern of pricing and volume was kind of sluggish to declining. Now you're seeing volume and pricing almost matching up with each other because people are chasing that volume. And I think that's more of a temporary phenomenon than not, hopefully as we see the economy pick up. But we are seeing that there's such a lack of pricing in the category because of all those other events that I mentioned. You've got a fragile consumer out there. So it's pretty tough. So I think that's what's going on.

That helps and actually leads to sort of a follow-up, right. I mean gross margins, and I know there's only 1 quarter left in '14, but gross margins you're still looking for them to be modestly down. That's unchanged. But there's more pressure, right? And you guys obviously have said you're going to promote more, right. It sounds like pricing may be positive, but it's probably going to be less than you thought it was going to be and maybe that's wrong, but can you talk through that, I mean, your ability to sustain that gross margin guidance despite the fact that there seems to be more incremental drags than there are helpers to gross margin?

Yes. So for fiscal '14, as you say we're 3 quarters into it, and gross margins in the third quarter were down about 30 basis points. We would expect gross margins to be down modestly in the fourth quarter. I think the difference in fiscal '15 around gross margins is in commodity costs. Commodity costs are running well north of 1 point this fiscal year, fiscal '14. And as we look to fiscal '15, we think commodity prices are likely to continue to trend up but not at the level we've seen. And so then when you take the cost savings programs, call it 150 basis points, and you add to that the point of pricing and the other things that we're doing, it gives us some reason to believe that our gross margins should start normalizing and start building back again. And again, we'll have to get into the year and see how things play out from a commodity standpoint but that's the assumption we're working with at this point.

Chris, one other thing just to keep in mind is that the price increase we put through in Glad to help offset some of the commodity pressure that Steve just noted, that just went into effect in March. So we'll effectively get about a year's benefit of that going forward.

Next question comes from Ali Dibadj with Bernstein. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: So trying to dig a little bit deeper in this competitive environment that looks like it's gotten tougher. Clearly, you mentioned things like the macro environment. Are there other elements? So for example, do you guys have a sense of the manufacturing capacity utilization for the nonwoven, so for the Wipes, for resins, that's out there right now. Is that all driving some of this pressure?

Yes, I think it's probably more retailers looking to lean into private label as a way of getting a little bit more margin than it is excess capacity chasing the system based on what we know today. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And then on that, so does it sound like -- you mentioned the price gaps in some categories up to 50%, that's not sustainable, totally makes sense. How much of that is you guys innovating over the years versus a quick change by the private label manufacturers and/or the retailers and expanding it downwards? How much of it that you guys going up versus retailers taking the prices down in private label?

Well, it's interesting, Ali, where we've really seen private label focus is where we have branded shares north of 50%. So we look at Wipes, the most extreme pressure we've seen from private label has been in bleach, in Wipes and in Brita. And each one of those is a brand that has north of 50% share. And so when you have that kind of leadership share, I think that people really think that there certainly is a pricing or margin umbrella created, and I think that's where we've seen the most pressure. So we haven't seen that same level of pressure, for example, in salad dressing, where we even -- while we have a leadership brand, it's south of a 25% share. So it's really where we have these high share brands that we've seen the pressure, and I think sometimes – and seen in Charcoal as well with a 70%-plus share. So you think of all those businesses where we have those kinds of leadership shares, and I think you've just got to -- we've got to double down and be very prudent that we don't let that create a pricing or margin umbrella where people can crawl underneath them. But I think private label really focuses there because there's not a lot of other branded competitors to focus on. And so I think they obviously believe there's an opportunity there and certainly on the Wipes example and the 3-pack filter example on Brita and you look at lump and some of the other things that are going on in Charcoal with private label there, I think that's where you see the focus. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: Okay. So this is great because this is something you guys know I struggle with because those categories are where you also have your highest margins, and so effectively it's been...

I would stop you there and say that's not necessarily true, Ali. If you think about, all right, let's think about bleach, Wipes, Charcoal and Brita. Clearly, Brita has high margins. The other 3 are in the middle of the pack. Food has much higher margins. Burt's Bees has much higher margins. So we're not seeing it there. It's really more of the share position you have and the lack of other branded competition in those markets. And I think us just being -- needing to be much more watchful about keeping a pricing umbrella narrowed down so people can't crawl underneath it. And keeping the innovation up, keeping the innovation up so we continue to offer new offerings that people want to buy. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: Okay, and that's helpful. The question I did have on -- just separate question on professional. If you could give us an update on that it sounds like that was certainly a jewel in the crown that's growing for you guys for the CAGNY presentations and before that, how is that proceeding? How is the growth going in that category? And particularly from a margin perspective is it still holding in at above company or is it trending downwards? And if you could also mention because on the M&A discussion a second ago, you mentioned a lot of other core categories. Professional used to always be your #1 it sounded like, has that shifted a little bit from an M&A priority perspective?

Okay. On Professional, we expect another double-digit growth year out of that business, Ali. And we also expect that trend to continue in fiscal year '15. The margin structure of that is business actually accretive to the company margin structure. So we feel good about the margins in that business as well. I think that we just -- as you may recall, we talked about it at CAGNY, we just launched the UV light partnership. We think there's a lot of upside in some of these different channels and categories as we drive that business. So I think we remain very bullish on that business. As far as the -- I'll let Steve talk about the acquisition pipeline and the focus there.

Yes. And Ali, you know that one of the things that we really like about this business is the fact that when we look at a category, it's still fairly fragmented. So we think there's an opportunity to roll up some of the small family-held businesses. Certainly, we did that with AppleCare, HealthLink and then a few years ago obviously, the Caltech bleach acquisition, which has wildly exceeded our expectations since we acquired it, and I think we feel like we've got a healthy pipeline of bolt-on acquisitions ahead of us. It's going to take some time to shake these free. They don't always come in when you want. And sometimes you have to get into long-term discussions with people, which is what we're doing, but I think we feel very good about the M&A pipeline in Professional Products, and you'll see more activity there over time.

And we certainly -- at a 2.2 debt to EBITDA, Ali, as you know, we certainly got enough dry powder there if we need it.

Our next question comes from John Faucher with JPMorgan. John A. Faucher - JP Morgan Chase & Co, Research Division: Wanted to sort of continue the theme here, and Don, you have talked a lot about product preference as something that you're really focus on in terms of getting consumer -- in terms of getting your products to where consumers really prefer them. And I guess as we look at this, you've worked hard on that and yet is it just that the consumer has changed, and that's becoming less important? And therefore, you won't be able to charge the type of premiums that you think that product preference deserves? And then you also talked a little bit about the brand investment going up, can you talk a little bit about some of your marketing mix analysis? It's continued to come up over the years that your ad to sales has moved down, should we expect the continued shift from that standpoint more toward the trade promotion? And if we do see that, is that permanent price cuts or is that going to be just sort of hitting hard at certain points of the year where you know you need to drive that value equation?

Yes. Okay, John, let me take the second part of your question first. If you look at the incremental spend that we're putting in for next year, the majority of that spend is going into advertising and consumer promotion, not into trade. So we want to get comfortably back into the 9% to 10% range in total for the company and to get back near the 10% level for the U.S. Retail business. So that's what we're doing there. On the preference question, we still think that the 60-40 wins, the superiority of our products is extremely meaningful. I think where we got out of whack a little bit in the last year is these price premiums is only so much you can ask from a consumer especially in tough times. And I think that we did not, especially on high share brands, we did not stay focused enough on the price point delivery at the shelf. We also did not have packaging that was really hard hitting visually on what our benefit advantage is versus our competitors. At the end of the day, we've got to be able to -- as you know, we've got to be able to answer this fundamental question that consumers have. Why should I buy your brand in preference to that one? And I think while we've got great products in terms of 70-30 wins on Glad OdorShield, for example, and the same thing we have on Hidden Valley, if we let these premiums drift above 30%, we're asking too much especially in this environment. So I think we're going to continue that focus on 60-40 wins. We're going to continue to drive for price superiority, but we're getting to be damn sure that we've got these price points relevant to people where we're just not asking them to stretch too far. John A. Faucher - JP Morgan Chase & Co, Research Division: Okay. And then one sort of further follow-up on this. One of the things you guys have historically talked about is wanting to focus in categories with more private label. You talked about that strategically and I guess this kind of goes back to Nik's question, which is, is that still the right structure, the best structure for you guys to be in longer term? Those types of categories where you guys have big shares and with private label.

Yes. I still think it is, John. I think that we still would say that if you gave us a preference to competing against private label versus competing like in Home Care with 5 different national branded and International branded companies, I think it's -- we would say yes, we'd still want to compete against private label because -- not because they're easier, but because they have a more clearly defined unique role. We each have a unique role. We're the innovator, they're the opening price point. You get into a Home Care situation where you've got 4 or 5 other multinational companies, everybody's got the same role. So I think that we want that model. We think that model works, and I think we didn't build a 60% share 1.5 years ago in Wipes, a 60%-plus share in bleach and a 70% share in Charcoal and a leadership branded share in Glad because we can't compete with private label. We've done that very well, we just got to re-sharpen ourselves in terms of making sure the balance between product superiority and price point is right. And we're getting there. And I think bleach is a good proof point of that, I think you'll see the Wipes coming back in May and June and it'll be another proof point.

Our next question comes from Bill Schmitz with Deutsche Bank.

Is there any share repurchase in your 2015 guidance because as Don said, I know you're sort of at the low end of your debt to EBITDA range?

Yes. We're at about 2.2. So we certainly have dry powder for M&A, and we've got dry powder to be able to do share repurchases. What I would say is that certainly people should expect that in the outlook we're going to continue to soak up dilution from stock options. Going beyond that, I think we have to look at the M&A pipeline, and I think we just have to look at how much excess cash we build up. As we've said for many years, and I think as we've consistently done, if we build up excess cash that we don't need in the M&A environment, we'll go ahead and look for ways to get that back to the shareholders either through the dividend or through share repurchases. But at this point, there's a range of expected outcomes, and share repurchases are certainly one thing that we look at.

And then as a follow-up to the M&A question, are there any opportunities for you guys to get bigger in sort of niche food categories? Because if you kind of look back the last 5 years probably the All-Star in the portfolio has been Hidden Valley. And you've done a terrific job extending it. I mean, is that something you'd kind of open up to be on like little small stuff like Soy Vay?

Yes, we would be open to that, Bill. And in fact, as you say, we know how to do and compete in that category quite well. I would classify that as down the middle of the fairway for us. So clearly that is something we would be interested in.

Okay. Are there any other sort of subcategories that you've targeted as being sort of complementary to the Hidden Valley business? Or is it too much detail?

I think for competitive reasons, I wouldn't want to get into that one, Bill. But clearly, where you're poking at is something that we have interest in.

Got you. Great. And then just a last one, I know you still want 3 points of growth from innovation. I know you talked about the lightweight charcoal. But is there anything else you can talk about that can help drive that 3 points that's already been announced or is about to be announced?

Well, I think, yes, I think I'll give you another example. The lip crayons for Burt's Bees that are rolling out, we think it's quite a big deal actually. There's not a 100% -- that we're aware of, there's not a 100% natural lip crayon for women out there. And as you know, lipstick is such a huge category and the lip crayon continues to push that Burt's Bees brand into beauty away from just functionality. So we think there's a big opportunity there. I think obviously the lightweight litter we think is a big opportunity. The Aloha scent, excuse me, we just launched on Glad, which is doing extremely well, which is Procter & Gamble's #2 scent on Febreze, that carries over mostly into fiscal '15. And we could go through the list by brand. But I think you're going to see a pretty full package, across every major brand we'll have news. I talked about Brita earlier. Bleach, one of the things on bleach that continues to do extremely well and we're expanding this into new scents is the Splash-less part of our portfolio, is up over 3 share points. That's one of things that's driving our overall bleach share. So Splash-less has clearly resonated with consumers. Smart Seeking, it's a little early to tell. A lot of that's carry over to next year, but all these Smart Seeking and outdoor have added in about 1 share point plus already. So I think all in all, we're feeling pretty confident in the pipeline as we go forward.

Great. And if I can just sneak in one quick other one, kind of to John Faucher's question. When you look at the kind of basis [ph] testing before you guys do these launches, are you seeing that once you launch them that the results are materially worse in this environment than they were sort of prior to this consumer malaise?

I'm trying to think of an example, Bill, that would be even worse or much better. I can't -- I think that the models are still fairly predictive because -- and I think the reason is if you look at the category growth, now this quarter was a bit of an anomaly given, we grew 0.4% all our categories but the categories were negative 1.8% in February because of the weather. If you look at the fiscal year-to-date our categories are growing 1%. I mean, the historical average is 1% to 2%. So it's nothing like there's some massive deceleration in these categories, they're softer. And we're assuming kind of flat to up 1% next year, but I don't think there's anything dramatic going on. So I don't want to read too much into it. We haven't seen anything in the predictive models on any of the major launches that we've done that would say they're way out of whack.

We'll take our next question from Connie Maneaty with BMO Capital.

All my questions have been answered.

We'll move next to our question from Javier Escalante with Consumer Edge Research.

I would like to revisit this issue of the relationship with the retailers. First, a clarification, we saw a drop in ad spending in the third quarter. There was a commensurate increase in trade spending in the third quarter is what…

Yes.

There was?

Yes.

Okay. So then the question is if you can, to the extent that it's not confidential, talk about what exactly was the point of the retailer when you lose distribution for the Wipes you having 80% share? I would like to understand what is the other side of the conversation, why is it that you couldn't get into an agreement that essentially didn't – avoided this loss of distribution? That is point number one. And point number two is trade spending overall it seems like there is an increase in the Laundry aisle, there is an increase in Litter because of innovation, and most of these monies are not seen by the consumer. So is this a new normal that essentially the retailers are asking more money just to put the same products on the shelf?

Yes. On the first question, let me see how I can answer this for you, Javier. I think what we saw in that case was an offering from a competitor that was on a cost per wipe basis. We thought that we could not replicate that price for other customers. And while we wanted certainly to maintain distribution in that customer where we had been for over a decade and had been doing quite well obviously, being the lion's share leader in share in general, we thought competing at that price level, particularly in a category where there is only 50% household penetration, we thought that was the wrong strategy for that category. And we also thought, as I said, that we could not deliver that price point to other customers. And we are a fair and equitable company in terms of allowing everyone to compete. So we just didn't think we could make it work, and we thought it would have channel repercussions that would be serious that we wouldn't be able to deal with. And we also thought it was wrong in terms of the dynamics in the category, that you didn't need to push pricing that low for a product that was on trend and had only 50% household penetration. So we chose not to go that route and told our story differently at other retailers, and that's why we're picking up distribution at other retailers. So that's to question number one. We thought it was the wrong strategy. On your second question, we have not seen an increase, that I'm aware of, in any of our top 20 customers in terms of slotting fees or any other incremental costs. Haven't seen any of that. I think people are getting even more and more everyday low cost, every day low price, pushing money into cost of goods as most they can. Certainly we have, in our top 20 customer set, high/low competitors, as well as everyday low price competitors. But I have been out with 4 retailers the last 3 weeks across the country, 4 different major retailers all in our top 20, and that has not come up at all.

And as a follow-up, in the case of the Laundry aisle, Church & Dwight did say that they're going to increase a slotting fee or spending in trade in the trade.

Yes.

And my understanding is, is that there is a situation also with Procter with regards to Tide Simply with some retailers. So to what extent are you getting kind of like hurt in the crossfire or not? I mean, that, I mean, for your Laundry additives?

Yes. We haven't really seen that, Javier. We're not really -- as you know, we don't really play much in that aisle. Well, certainly not in detergent, but the Laundry additives seem to be a separate deal, and we certainly have seen no bleed over into the bleach section. In fact, I think one of the reasons our shares are back to over 60% is we are now back to historical levels on merchandising and we're actually starting to see Household penetration decline slowing in bleach now, and dosing seems to be at the right amount. So we're not seeing that kind of effect in our segments.

Our next question comes from Leigh Ferst with Wellington Shields. Leigh Ferst - Wellington Shields & Co., LLC, Research Division: I also wanted to ask about the Professional Cleaning business, and I'm wondering if the infection rates are going down at the hospitals and other facilities and if not if that's still an opportunity for you? And if healthcare reform is helping drive demand?

Yes. Leigh, on the first part of the question, clearly, the 100,000 people dying every year from hospital-acquired infections is not really moderating very much, at least we don't see a discernible trend down. We do see -- in fact, last night, I was watching NBC Nightly News and they had a segment on about MRSA and MRSA killing itself I think, it was over 23,000 people last year. So that opportunity, that issue of public health is still front and center with infection control people across acute care facilities in this country and other countries. So that continues to be a very important opportunity for us and really a really important public health issue that we could help resolve. We have seen, in tests that we've done, for example with the Mayo Clinic, where we have greatly reduced those infection levels using our products and the protocols that we recommended. So clearly, bleach is the most inexpensive and effective disinfecting agent against all those bad bugs. So that we feel good about. Leigh Ferst - Wellington Shields & Co., LLC, Research Division: And is healthcare reform helping and are the protocols being followed?

Yes, I think it's a little early to tell on that one. I think -- I'm not sure that the healthcare reform is going to materially affect that business one way or the other. I would say that one of the things that has happened under the Obama administration about 3 years ago is federal government Medicare changed the -- changed their policy that they will not -- they won't reimburse hospitals for preventable injuries, right. And they classified these acquired infections as a preventable injury. So clearly, the folks who have to deal with these protocols and infection control in hospitals are much -- even more focused on it now because of the expense of one of these, not to mention somebody potentially dying is massive. So none of that has changed, and so I think it's a very fertile opportunity for us.

Your final question comes from Erin Lash with Morningstar.

I was wondering if you could speak a little bit about the Burt's Bees business, and I apologize if I say this wrong, but particularly within the context of how gud is performing relative to Burt's Bees in that sort of mix?

I'm sorry. I didn't hear the last part, Erin.

Okay. Just within the context, and I apologize if I say it incorrectly, but within the context of how gud is performing or gud is performing relative to Burt's Bees.

Right, I got you. Well, Burt's, over 90% of our personal care business is obviously Burt's Bees. Burt's is continuing to perform extremely well. I think this will be our fourth year in a row, assuming we continue on forecast for the fourth quarter, our fourth year in a row of big double-digit growth for Burt's. The International business now doing extremely well, north of 25% growth. gud is challenged. It's a very small piece, as I said, of the business. The shampoos and conditioners seem to be hanging in there fairly well. I think distribution is challenged on the other items in that business. But clearly, Burt's is the engine that drives our personal care business and with the innovation we have coming like lip crayons, we're very bullish about FY '15 for Burt's Bees.

This concludes the question-and-answer session. Mr. Knauss, I would now like to turn the conference back over to you.

Yes. Well, thanks, everyone, for joining us on the call. I would like to just say this, I would like our investors and all of you folks who cover this company to understand that we are focused on 3 things like a laser, and I wish you'd take these away. And that is first, the value propositions of our brands and our categories is centermost in our minds. And I think the 1 point of incremental spending we're putting in next year is testimony to that. And all of that spending is going to be oriented around the guiding principle of never give consumers a reason to choose another brand. So that's number one. Number two, we're going to ensure that our cost structure is as lean as possible to provide additional fuel to reinvest in growth. So I think you all know that we have quite a track record on cost savings, and we will redouble our efforts there to ensure we've got the fuel for growth. And third, we're going to ensure that our people, who we think are the best in the business, that they can and are able to focus only on the work that the consumer is willing to pay for and get rid of a lot of this other extraneous work that doesn't really add value to the consumer or to the customer. So we're going to focus on those 3 things. Certainly, better days are ahead. But with that focus, we believe we can not only deliver on the FY '15 expectations, but hopefully in our investors' mind and yours exceed them. So with that, we look forward to talking to you in August. Take care.

And thank you, that does conclude today's conference. Thank you for your participation.