Good day, ladies and gentlemen, and welcome to the third quarter 2010 Oil-Dri Corporation of America earnings conference call. My name is Chantelle and I will be your coordinator for today's call. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Daniel Jaffee, President and CEO. Please proceed, sir.

Okay, thank you. And welcome, everybody, to the third quarter and nine months teleconference. Joining me today on the call, representing Oil-Dri is Andy Peterson, our CFO; and Charlie Brissman, our VP and General Counsel; and Ronda Williams, who heads up our Investor Relations activities. And Ronda, would you cover the Safe Harbor, please?

I sure will. Thanks, Dan. On today’s call, comments may contain forward-looking statements regarding the company’s performance in future periods. Actual results in those periods may materially differ. In our press release and our SEC filings, we highlight a number of important risk factors, trends, and uncertainties that may affect our future performance. We urge you to review and consider those factors in evaluating the company’s comments and in evaluating any investment in Oil-Dri stock. Thanks again. Back to you.

Great, thanks. And before I turn it over to Andy for a snapshot of the quarter and the nine months, let me just cover one thing that seems to – or could potentially be a hot topic of conversation, which is our potential involvement in helping to clean up the spill in the Gulf. We have clearly made ourselves available to BP and the governmental agencies there. To date, we've had no direct involvement in that cleanup whatsoever. Indirectly, through distributors, we certainly have sold product into that effort, but from a direct standpoint, we have had no involvement in the cleanup. Andy?

Thanks, Dan. We had sales of $56.3 million in the quarter, down 3% compared with last year's $58.1 million. We had a gross profit margin in the quarter of 23.4%, up from last year's 22.8%. The margin improvement was due to a favorable sales mix of our higher-value products combined with lower fuel costs used to dry our clay-based products. Operating expenses were 16.7% of sales, which was about the same at 16.6% in last year's third quarter. Our effective tax rate in the quarter was 30% of pretax income, up slightly from 29% in last year's third quarter. Net income was 4.6% of sales, up from 4.2% in last year's third quarter. EPS in the quarter was $0.35, up 6% compared with $0.33 last year. Through the first nine months of fiscal 2010, $20.1 million of cash was provided from operations, up from $8.3 million last year. This was primarily due to positive changes in working capital components. Capital expenditures of $8 million were down $4.7 million compared with last year. Debt payments of $3.2 million were down $2.4 million compared with last year. Purchases of treasury stock of $2 million were up $1.3 million compared with last year. Dividends paid of $3 million were $200,000 or 8.5% – or up 8.5% compared with last year. Cash and investments at April 30th was $25.6 million, which was up $10 million compared to last year. At quarter-end, we had $7.3 million more in cash and investments than notes payable. Dan?

Andy, thank you. Before I open up to the Q&A, just some comments on what you presented. I'm very proud of what the team has delivered in the first nine months. When you think about when you make investment decisions, you are trying to find something that resonates with you and why is this investment different from other investments. And I would say one of the things that makes Oil-Dri most different as an investment opportunity is our long-term view. You look at all of our fellow companies when the market started – or the economy started to slip, it was just mass layoffs. It was, we were laying off 10%, 15%, 20% of our workforce and we are going to manage for the next quarter, the next 90 days, the next 180 days. We didn’t do that and we got peppered for not laying off anybody. Here, we lost a big piece of business with our single largest account and as I said back then in either one or two teleconferences ago, we are not laying off anybody. We didn’t take any increases, but we didn’t lay off any full-time workers, and because we are in this for the long haul. Certainly, if a year or two or three years from now the business is truly down that much that it requires a reduction in force, well, we are prudent business people, we'll have to do what we have to do. But we are not in it for the long run and then making knee-jerk decisions based on very short-term input. And I think this nine months has validated that decision. I mean, yes, had we laid off a bunch of people, we'd be up a little bit. You get out a few pennies a share to where we'd…

(Operator Instructions). And your first question comes from the line of Robert Smith of Center for Performance. Please proceed. Robert Smith – Center for Performance: Hi, good morning. Dan, can you give us the quarterly figures that you've been giving us for a while – I mean, on the new products?

Yes, on the Amlin? I'm ready for you. Robert Smith – Center for Performance: Okay.

I – here we go. Very happy that we broke the $1 million in sales mark for the first time in the product's trajectory. As you recall, in the prior quarter, we were down a little bit, but we felt it was a timing thing. So I'll just give you the last few, going back four quarters. We did $450,000 in the fourth quarter of '09, $920,000 in the first quarter of this fiscal year, then a drop to that $875,000, we did just under $1.2 million in the third quarter. So clearly, the team is continuing to build momentum with the new product line and we are continuing to gain registrations and gain portfolio signals that we are going to be able to fill in some of our missing geographies with product registrations, which then ultimately leads to more areas to drive sales. So very portfolio from an Amlin, from the Calibrin-A and Calibrin-Z mycotoxin binder front in the quarter. Robert Smith – Center for Performance: And all in?

All in? Robert Smith – Center for Performance: Is that a separate thing or –?

I mean, that was our all-in initiative from two years ago, I think it was. I – Verge, which is our engineered granule, is our all-in initiative really this year and has very developmental startup for the – through the second quarter. Happy to announce, it's still developmental and startup, but we are making huge progress. The process is being – we are working out all the kings, we are actually taking orders, shipping orders, and receiving positive feedback, and even repeat orders from customers. So it's still not material, let's say, next quarter, I'll probably start to report some of those sales. But at least we are in the commercial – getting closer to the full commercial stage with Verge. Robert Smith – Center for Performance: Okay. How many doors have you been able to reenter in Wal-Mart?

Okay. We give you a relative thumbnail. When we were at full distribution prior to their most – to their August change on Project Impact, we had 8,000 points of distribution roughly. So – I mean, at a little over 4,000 stores, we had a couple of items in every store. At August, we dropped to 1,000. So we lost 87% of our distribution with the brand. We were then reinstated back up to a total of 3,000. So they gave us another 2,000, but we are still down. I mean, yes, I agree with you, it's a bit better than a chopstick in the eye, but we are still down. I mean, we lost five-eighths of our distribution. And we have been given signals that we could expect when the new Planogram [ph] comes in August to pick up more stores. We don't know what that is yet, I don't think it will be national. But I am – again, it's a game of momentum and clearly, they are seeing what we said all along was the strength of our Cat’s Pride brand with the consumer base and with the national consumer base. And so we are confident and hopeful we will be picking up more stores come this August, probably we'd be able to report that for you next quarter. Robert Smith – Center for Performance: Okay. So you said, 4, 1, and 3? 4,000 before 1,000 and the middle of the estimate, 3,000 now?

No, 8. Robert Smith – Center for Performance: Oh, 8? Okay.

8, 1, 3. Robert Smith – Center for Performance: 8, 1, 3? Okay.

And who knows where August of '10 will be, but something north of 3. Robert Smith – Center for Performance: Okay. Is there any way to identify actual product sales in the Gulf Coast to date?

Immaterial. That's all I can tell you. Robert Smith – Center for Performance: All right. Are you interested in pursuing this through another avenue that I might be able to speak to you subsequent – I mean, later?

Well, Bob. Let's – you've already asked three questions now. Let's let somebody else ask the question and then we'll kick off. Robert Smith – Center for Performance: Okay. Can I call you later?

You can always call me. Robert Smith – Center for Performance: Sure. Okay.

I may not answer.

Your next question comes from the line of Ethan Starr [ph], private investor.

Good morning. Great quarter.

Thank you, Ethan.

Regarding the Wal-Mart sales, the stores you added in the beginning of Q3, any idea how the sales of Cat's Pride are in those stores?

Very good. I mean, the good thing is what we added were the best performing stores historically. So while we have only gotten back 37% of the stores, we feel on an annualized we will get back more than 37% of the total business because these are our best performing stores. And so far it's proving out. Our business has been reaccepted, re-moving, we actually hired a retail workforce to make sure the product got cut in and everything as quickly as it could. So, so far so good on that front.

Okay. And the retail workforce is temporary?

Yes, yes. As you can – they are out there. These firms that go in and blitz and make sure that the product is where it needs to be with the tags, because if the tags aren't there, they can reorder it. And so you've got to get all that right.

Okay. And 8,000 points of distribution refers to just Wal-Mart total?

Yes. Yes, I mean, they have about 4,000 stores and if you add two items in every store, you would have 8,000 points of distribution.

Okay. The 10-Q mentions several new opportunities of – in R&D. Can you talk about that?

Well, I mean, we talked about Verge, we talked about Amlin. You know me. I'm not going to talk about anything else that's really going to ultimately hurt your investment because all it's going to do is alert the competition to what we are working on. So I don't think nothing else is ready to be talked about at this stage, but just suffice it to say we are excited. If you ask me when could I talk about it, maybe next quarter, maybe the quarter after. It's pretty eminent, one of them. That's pretty big and we are just not ready to talk about it yet.

Okay. Can you – is that – would the prospective margin be as high as the Calibrin and Verge?

The percentage margin would not, but due to the large potential size of the market that it would go after, the total margin would be equal to or greater.

Wow. Okay, I'll get back in the queue.

Okay, thanks.

Your next question comes from the line of Robert Smith of Center for Performance. Please proceed. Robert Smith – Center for Performance: Yes, hi. So can you give us some color on the – on Calibrin based on the last month or so? In other words, how could we extrapolate this forward?

Well – Robert Smith – Center for Performance: How do you think we should anyway?

Look. I mean, I gave you the quarterly information. So we did $1.2 million in the quarter. Robert Smith – Center for Performance: How much of that is reorder so to speak?

Don't know the answer to that. Robert Smith – Center for Performance: Is it an important factor?

Well, I mean, it's always an important. And if it were just pure pipeline fill, but it can't be. So I really don't know the answer to it, but a good percentage of it is repeat business, most of it is repeat business. So the product is clearly moving, it's clearly selling, we have – are already working on next generation so that we can have – stay ahead of the product life curve. And like I said, we are expecting some new registrations, can't talk about those yet, but when we get them, we'll tell you about them. Robert Smith – Center for Performance: Any seasonality there?

Not much. Robert Smith – Center for Performance: Okay. So your run rate is around $5 million now?

Yes. Robert Smith – Center for Performance: Okay. Okay, I'll step back.

Okay. Thanks, Bob.

Your next question comes from the line of Kathy Buck of Wayne Hummer Asset. Please proceed. Kathy Buck – Wayne Hummer Asset: Hi. I wanted to ask a little bit about the natural gas hedging. I see in the Q that you've put like 320,000 – or 360,000 Btu at $5.52 for 2011. How are you guys approaching hedging or what's the inclination here with natural gas prices? Trending well?

Yes, the inclination is to stay short-end. There seems to be a – the farther out you go, the uncertainty factor or the uncertainty penalty seems to hammer you. So we are – we have been staying close-end, maybe going out two, three, four months and as they roll, then going out another two, three, four months. We are very happy with our natural gas position. We are very glad that we are in the ability – have the ability to burn natural gas. The delta between natural gas and oil is huge and so, we've been benefitting from that. That's – a lot of what you are seeing in the margins is due to the favorable natural gas position. Kathy Buck – Wayne Hummer Asset: If certain months spiked up and the curve went a little bit more flat, would you guys hedge more aggressively just to lock it in or are you guys taking to a view when you stay short? Do you know what I'm saying?

Yes. I mean, we are not all that savvy at this. We are very open to input, we reach out to people that are savvy to it, but if you look historically how we've done and we look at this, we look at, "Okay, we've hedged, let's look backward. Has it been a good thing, a bad thing or a neutral thing for us"? It's been a bad thing for us in reality. I mean, we are in a – we did it because we thought we needed the sort of buffer in our cost of goods so that if there was ever a big spike, we would have time to go out to the marketplace and adjust our pricing according. The reality of it is we are in a pretty rational market where our competition is sort of in the same boat we are in. So if they – if we are getting a hammer, they are sort of getting a hammer and then we are all going to have to do what we got to do. So we are really buying an insurance that we don't need. Kathy Buck – Wayne Hummer Asset: Okay. That's helpful.

Yes. So we are staying short. Thanks, Kathy.

Your next question is a follow-up from Ethan Starr. Please proceed.

Yes. I'm wondering if the regulatory environment in the clay mining has been affected by the coal mine tragedy in West Virginia earlier this year.

Ethan, hi. It's Charlie Brissman. It’s a good question and let me take a whack at it. The regulatory environment for non-coal miners was already pretty hostile before the disaster at Upper Big Branch. And just maybe the short history is if you go back unfortunately a couple tragedies to the Sago and Crandall Canyon disasters a couple of years ago, MSHA's reaction, perhaps understandable, perhaps not, was one of almost hysterics and the field inspection force really had a very observable change in approach to all mine operators in our view and really went on a citation writing frenzy. Now, the coal industry, for obvious reasons, is a lot different than the mining business that we are in. But if you were to sort of describe the current state of play in a sentence, it's MSHA's failure to distinguish between non-coal mining where the safety trends have been positive for a very, very long time and in clay, have been remarkably strong for decades. Their ability to distinguish that from what has been going on in coal has made the regulatory environment for all miners, including clay miners, very difficult. If there is any sort of hope on the horizon, it's that the concerns of non-coal miners have been heard and are starting to be heard, at least based on some public comments we see from MSHA officials. But like many governmental agencies, it's a big shift, it takes a lot of time to make even a short course correction.

Okay, that's helpful. I'm hopeful you – I'm hoping you can increase the dividend again this year and I'm also, in connection with that, wondering what's happening with the salary freeze, if you can lift that.

We will be addressing that. I mean, we put it into effect for the fiscal year. So we will be addressing that 8/1. We have let our hourly workers know that we are lifting it and that they will be receiving a – an hourly increase and they obviously received that very well and our salaried people have the same expectations. So yes, the salary freeze coming into fiscal '11, which starts 8/1, will be lifted given no new inputs, everything I can see. So that –

Okay. And how about the dividend? I hope – I'm hopeful there as well.

That’s always an agenda item in the June meeting. So I'm sure it will come up.

Okay. I'll get back in the queue.

The issue will come up, I'm not sure the dividend.

Your next question is a follow-up from Mr. Robert Smith. Robert Smith – Center for Performance: Hi. Anything of meaning happening in the broad cat litter business that we might know about?

No, not that – nothing that's out there in the public arena that's significant. Robert Smith – Center for Performance: Okay. Can you – and maybe in some facilities, can you put a wind turbine or anything that might help you?

Bob, it's Charlie Brissman again. I mean, the answer is in concept, at any of our facilities, you could do that. As a practical matter and given the investment required to get up even the first turbine, I don't think that actually would have any financial payoff for us. Robert Smith – Center for Performance: Okay, not right now. Yes, because – you know, you can resell power to the utility and things like that.

Well – Robert Smith – Center for Performance: Okay.

Yes, I actually have in my prior life experience with independent power development and it – the dynamics of that market, as you can imagine, are very, very different now than they were even 10 years ago. I think from Oil-Dri's standpoint, a co-generation opportunity or something like that isn't something that's even on the long-term thinking list. Robert Smith – Center for Performance: Okay. Thanks. Good luck.

Great. Thank you.

Your next question is a follow-up from Ethan Starr. Please proceed.

Yes. I was wondering if anything is happening with cat litter on the – with Target Corporation.

Nothing – nothing to speak of. I mean, we would love – they are number one on our hit list of companies we don't supply that we would love to supply. We are in there indirectly. We make Fresh Step coarse cat litter for Clorox and they are in target. But our Cat’s Pride brand is not in there and nor do we make the private label and we would love to do one or both. So we keep knocking on the door and I'll let you know if we get them. But so far we are on the outs.

Okay. Has Calibrin succeeded in being registered in China?

No.

No.

No?

No, not yet. We are still working that process.

Okay. Well, I look forward to in future quarters. It sounds like good things are happening.

Yes. I mean, you are right, it's a good issue on China. I mean, the fact that we've – we are achieving the sales rate we are and we are not registered in China is an opportunity going forward.

Okay. Thank you.

Thanks, Ethan.

Your next question comes from the line of Mr. Robert Smith with a follow-up. Please proceed. Robert Smith – Center for Performance: Yes. Just as a closing statement, when we bring up the question of the dividend, there is always this kind of chuckle and there will be – an increase will be considered, but you guys know how I feel and I really think it's really, really important to get those annual increases in and I would almost look at it as gospel, I mean, that you should. That would really be a priority. So again, just a reminder.

Well, I heard it, Bob. And I'm not saying that won't happen. I'm just telling – Robert Smith – Center for Performance: No, I understand it.

Right. But don't forget, we have gone heavy with the stock buyback and I think that's delivered value to the shareholders, because since we started it, it's created some liquidity in the stock, whether or not the stock price has responded well and an increase in the dividend is immaterial compared to what we've been spending on the stock buyback. So we may do both and – or if we do one, you may have to discontinue the other. So we are always having the shareholders in mind. We really do and – Robert Smith – Center for Performance: Dan, I'm telling you. The question of annual dividend increases since year X is extremely important in my opinion on total return from looking at an investment as I approach the market. So that's all I can share with you. If there was a question between one or the other, I would opt for the dividend increase and I feel very strongly about that.

Okay. What are you hearing, if anything – I'll ask you a question, on the tax rate for going forward? Are we hearing –? Robert Smith – Center for Performance: I'm not the guy to talk to about that.

Okay. I'm not either. I've heard rumblings, I've heard the articles. I mean, that's sort of going to weigh in the decision when we meet in June – probably not because it’s too soon to know. But everything I'm hearing is they are talking about significantly increasing that tax – Robert Smith – Center for Performance: I honestly don't feel it should weigh. I think the most vital and critical element in that is that you haven't increased the dividend since year so and so. I mean, this has the weight.

Bob, I hear you. But to say it should not weigh, well, hypothetically if they raise the tax to 100%, then you would admit that it would be very inefficient for the shareholders for us to keep raising the dividend. Robert Smith – Center for Performance: I'm going to Australia.

Right. You are welcome. And there, they are talking about a super mining tax. So you don't get into the mining business. Robert Smith – Center for Performance: You can't win, right?

Right. Robert Smith – Center for Performance: Okay.

But – so I'm just saying it is a factor, we have to weigh it. You – we are – our job is to as efficiently as possible get returns into the shareholders' hands. And the question is, is that a combination or is it through buyback, is it through dividends, is there – how do we best deliver value back to the shareholders and for thanking – or rewarding them for investing in our business. So if the tax rate were to go to some crazy number, say it shouldn't factor in, you and I both know it would have to factor in, because – Robert Smith – Center for Performance: Sure.

– it's very inefficient. Robert Smith – Center for Performance: Yes. I don't foresee that, though. Okay.

Okay, good. Robert Smith – Center for Performance: Thank you, again. Good luck.

Good conversation. Thank you. Good, are we – Chantelle, I think – well, just closing statements now and I just want to thank everybody and looking forward to closing out the fiscal year and frankly, it's a little tribute to one of my idols, which is John Wooden. John Wooden was always asked which of his teams that he think was most successful. And it was not really any of the ones you would think it was. It was really in a year when he felt his team achieved the greatest potential of what they were able to versus necessarily letting external people say, "Oh, it must have been one of the eight of the 10 national championship teams," and that wasn't the case with him. He felt he did his best coaching jobs with some of the less talented teams. I will tell you that this fiscal year, sales are going to be down; earnings, at the moment, we are pretty much flat with prior year; but I will tell you I think this was – if we finish the three months the way the first nine months have gone, as Winston Churchill says, the people look back and say, "This was our finest hour," because like I said at the outset, we could have done things that would have made this fiscal year look better to the detriment of the future. We didn’t do that. And I believe when we are sitting here on these teleconferences 12, 24, and 36 months out, we are going to look back and say, all the good things we were able to deliver in 11, 12, and 13 really were because of what we did or did not do in fiscal 2010. So I'll get off my soapbox [ph], but a little shout-out to John Wooden, who passed away at 99 and just an incredible human being. If you guys don't know much about him, I encourage you to read about him. Thank you very much and we'll talk to you in 90 days.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a wonderful day.