Columbia Sportswear Co (COLM) 2009 Q1 法說會逐字稿

Good afternoon.

I will be your conference operator today.

At this time, I would like to welcome everyone to the first quarter 2009 earnings release conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

Thank you.

I would now like to turn the conference call over to Ron Parham, Director of Investor Relations.

Sir, you may begin your conference.

Thanks, Ashley.

Good afternoon, and thanks for joining us on today's call.

Earlier this afternoon, we issued an earnings release and financial schedules covering the result of our first quarter of 2009.

With me today to discuss those results and answer your questions are Columbia's Chairman Gert Boyle; President and CEO, Tim Boyle; Vice-President of Finance and Chief Financial Officer, Tom Cusick; and Vice-President and General Counsel, Peter Bragdon.

Before we begin, our Chairman, Gert Boyle has an important reminder.

Good afternoon.

I would like to remind everyone that this conference call will contain forward-looking statements regarding Columbia's business opportunities and anticipated results of operation.

Please bear in mind that forward-looking statement--forward-looking information is subject to many risks and uncertainties and actual results may differ materially from what is projected.

Many of these risks and uncertainties are described in Columbia's annual report on Form 10-K for the year ending December 31, 2008, and subsequent filing with the SEC.

Forward-looking statements in this conference call are based on our current expectations and beliefs and we do not undertake any duty to update any of the forward-looking statements after the date of this conference call to conform the forward-looking statements to actual results or to changes in our expectations.

Thank you, Gert.

I will hand the call over to Tim.

Thanks, Ron.

For those of you who have listened to our calls in the past, you recognize Bryan Timm is not with us.

He is traveling in Asia with members of his team as in his role as Chief Operating Officer.

So welcome, everyone, and thanks for joining us this afternoon to discuss the results of our first quarter and how we see 2009 playing out based on fall backlog and our current assessment of a very unpredictable market.

I will start by saying that we're pleased with how we managed our business in the first quarter producing operating income of $10.4 million and earnings per share of $0.20, which is $0.14 per share above the mid-point of the outlook we provided in January.

Tom will go into detail on what drove that performance, but I want to focus my comments on the conditions of the external retail environment and on the progress we believe we are making internally to return to growth.

Looking at the external environment, I'm not telling you anything you don't already know when I say that business remains challenging and that those challenges have spread well beyond the U.S.

over the past several months.

While the first quarter got off--got us off to a slightly better start than we anticipated, the fall backlog decline of 15% that we reported with today's Q1 results, suggest that we will continue to see deterioration in our top line over the remainder of the year.

As a category, apparel continues to be one of the weakest discretionary consumer spending sectors in the economy and we are working closely with our retail partners to plan our business under the assumption that things will remain challenging throughout 2009.

In addition, within the apparel segment, department stores especially those that are mall based have been the weakest channel for more than 12 months.

Over the past five to seven years, department stores have grown to represent approximately 30% of our U.S.

wholesale revenue base.

Consequently, this channel has presented the biggest challenge for us as they have taken steps to significantly reduce inventories and to raise cash to mitigate the effects of tight credit markets.

So far none of our large national department store partners has been forced into bankruptcy or liquidation, but a few of our large and longest running regional retail chain partners have not fared as well over the past couple of months.

We are working very closely with a number of retailers around the world to manage their credit limits and plan their payments and shipments carefully in order to keep our products on their shelves and available to consumers without incurring undue credit risks.

What is happening in the U.S.

is also playing out in key markets across Europe.

Some of which had been among our best growth markets over the past decade.

In addition, several economies in our distributor based business are under severe stress, suffering steep declines in consumer spending, currency devaluation, and even more troubled credit markets than here in the U.S.

As a result, we have seen significant declines in many of these markets.

Canada's credit market seem to be in better shape than the U.S., but consumers there have caught a bit of the U.S.

consumer's spending contagion as the Canadian dollar has weakened against the U.S.

dollar by roughly 20% over the past six months.

Japan and Korea remain relative bright spots for us.

Korea's reported Q1 net sales were punished by a greater than 30% decline in the value of the Won against the dollar more than offsetting the mid-teens growth rate they achieved in local currency for the quarter.

Conversely, Japan generated mid-single digit local currency growth and benefited further from a strengthening of the Yen against the U.S.

dollar to produce reported growth of more than 20% in the first quarter.

That's a quick review of the external environment, and only focusing on that could be pretty discouraging.

While those macro-economic realities have certainly had an impact on how we are managing our business in the near term, our strong balance sheet has provided us with the financial flexibility to continue investing in our strategic initiatives to position our brands for when the global economy recovers.

We are continuing to build a multi-channel, multi-brand business model and the related operational capacities that we believe will provide sustainable profitable growth platforms.

We are using our technology portfolio to continue creating differentiated products with clear benefits and at a great value for a wide variety of outdoor consumers.

We are continuing to invest in our direct-to-consumer business in the form of additional branded stores and outlet stores.

We are also building eCommerce platforms for our Columbia and Sorel brands that are slated to launch in the second half of 2009.

All three of these direct-to-consumer channels are important avenues for us to communicate our innovation, demonstrate the benefits of our technologies, build excitement around the brands, and to drive consumer demand.

We are continuing to invest in our footwear business and believe there is a substantial opportunity to grow our Columbia, Sorel, and Montrail franchises.

The global outdoor footwear business is estimated at somewhere around $7 billion annually.

That means we currently have less than 4% market share.

We think the investments we have made, and continue to make to attract top footwear industry talent, may begin to pay back as early as 2010 and offer great long term potential.

Finally, we are continuing to invest in integrated marketing programs that will drive consumer demand for each of our brands.

I will turn the call over to Tom to review the financial

Thank you, Tim.

And good afternoon, everyone.

I will begin with a brief overview of the income statement and balance sheet.

First quarter net sales decreased 9% to $272 million.

With changes in foreign currency exchange rates contributing 5 percentage points of that decrease.

Looking at Q1 2009 net sales on a regional basis compared with Q1 2008, U.S.

sales increased less than 1% to $156.3 million.

U.S.

retail sales more than doubled as there were approximately 20 more U.S.-based retail stores operating in Q1 2009 compared to the same period last year.

U.S.

wholesale sales showed a high single digit percentage decline primarily attributable to the Columbia brand and concentrated in our sportswear and footwear categories, which typically account for the spring season business.

EMEA sales declined 24% to $49.8 million including an 8% drag from foreign currency exchange rates.

Net sales in our EME direct business showed a high 20%'s decline including a 10% negative affect from foreign currency exchange rates reflecting the difficult macro-economic conditions, the soft spring order book, and the misaligned product assortments and market positioning in the region that we've mentioned in previous calls.

We expect fall 2009 to continue to be challenging for us in this region.

Our EMEA distributor business declined mid-single digits which is due to the shift of the timing of shipments.

Advance orders for spring 2009 actually increased in the low double digits for this channel; however, a higher percentage of the business shipped in the business in December 2008 and was recorded as revenue in Q4 of 2008 compared to spring 2008 shipments, which shipped in January 2008 and were recorded as revenue in Q1 2008.

These timing shifts are common because the vast majority of our distributor shipment for both the EMEA and LAAP regions are factory direct with revenue being recognized on a cargo vessel's departure date over which we generally have little control.

The majority of our spring season shipments to the distributors occur in the months of December and January, while most fall distributor shipments occur in June and July.

Given the peak shipping periods overlap quarters, the quarterly sales for this channel are less predictable than our direct businesses.

Net sales in Canada declined 26% including an 18% currency headwind primarily due to planned reductions in some channels of distribution.

Net sales in our LAAP region decreased 6%.

Foreign currency exchange rates played a strong role in our Japan and Korea businesses in this region.

Low 20%'s growth in our Japan business was aided by mid-teens percentage growth from the affect of currency.

Conversely, the affects of currency on our Korea business turned high teen percentage constant dollar growth into a 20% decline for the quarter.

Net sales to our LAAP distributor showed a mid-20%'s decline which is consistent with our EMEA distributors predominantly due to the timing shipments as a higher proportion of spring 2009 orders shipped in December compared to spring 2008.

Advanced orders for spring 2009 from our LAAP distributors were up low teens.

Looking at first quarter net sales by product category compared with Q1 2008, sportswear net sales declined $22.9 million or 14% mostly related to Columbia brand net sales declines in both the EMEA direct and U.S.

wholesale businesses.

Outerwear net sales increased $7.2 million or 10% in the first quarter.

The increase was primarily driven by a higher volume of fall 2008 close-out product sales in the U.S.

Footwear net sales declined $11.3 million or 22% mostly due to EMEA direct and U.S.

wholesale shipments as expected based on our lower spring order backlog.

In addition, the U.S.

decline was further magnified by a shift in the timing of shipments into the second quarter.

Accessories and equipment net sales increased $1.6 million or 10%.

From a brand perspective, the 9% decline in first quarter net sales can be primarily isolated to the Columbia brand which was down $25.6 million or 10%.

Mountain hardware net sales grew 6%, Sorel, Montrail, and Pacific Trail net sales were insignificant in the first quarter of each year.

Gross margin decreased by 330 basis points in the first quarter primarily due to an increased volume of fall 2008 closeout product sales at lower comparative margins resulting from higher than normal order cancellations, and a more promotional retail environment.

SG&A expense decreased 2% to $102 million representing 37.5% of first quarter net sales compared to 34.9% in last year's first quarter.

In absolute dollars this decrease was driven by cost reductions, initiatives executed over the past several months to mitigate further erosion in our operating profitability.

The cost reduction initiatives which began in mid-2008 included reductions in head count, incentive compensation, benefits, and other discretionary costs as well as our planned marketing spend for 2009.

Costs associated with our direct-to-consumer initiatives essentially offset these cost savings measures.

As a percentage of sales, the SG&A expense deleverage is largely the result of revenue contraction in our wholesale businesses in the U.S.

and Europe coupled with an increased fixed cost base resulting from our expanded retail business.

Operating income for the first quarter of 2009 was $10.4 million or 3.8% of net sales compared to 9.2% of net sales for the comparable quarter in 2008.

Income tax expense for the first quarter of 2009 was $4.4 million, equating to a 39% tax rate compared to $9.8 million or a 33% tax rate for the first quarter of 2008.

The increase in our first quarter 2009 tax rate was due to a higher expected full year mix of U.S.

income, which is generally taxed at a higher rate than international income.

Net income for the first quarter 2009 was $6.9 million, or $0.20 per diluted share compared to $19.9 million or $0.56 per diluted share for the first quarter of 2008.

Turning to the balance sheet in comparing March 31, 2009 balances to March 31, 2008.

The balance sheet remains very strong with cash and short-term investments totaling $299.8 million versus $278.1 million at the same time last time.

Consolidated accounts receivable at March 31, 2009 declined 13% to $213.5 million versus $246.2 million a year ago.

This decrease is largely related to the decrease in our wholesale sales for the quarter.

Consolidated DSO decreased to 71 days from 75 days at March 31, 2008.

During the first quarter of this year, we wrote off approximately $2.5 million in uncollectible accounts receivable related to customers in bankruptcy.

We continue to actively manage our credit risk and cash collections, and have slightly increased our reserve for doubtful accounts to approximately 4% of accounts receivable.

Consolidated inventories decreased 6% to $223.7 million compared to $238.1 million last year.

This decrease is largely attributable to lower finished goods inventory on hand in the U.S.

and Europe.

We expect that consolidated inventory levels will continue to decline on a year-over-year comparative basis through the end of the year as we believe we have bought more tightly for fall 2009.

During the first quarter, we generated approximately $58.8 million in cash from operations compared to $60.9 million in Q1 2008.

CapEx was $10.3 million for the first quarter of 2009 compared to $14.2 million in the same period last year with the majority of our current year CapEx related to our retail expansion in the U.S.

and Europe.

Depreciation and amortization expense for the quarter was $8.2 million versus $7.9 million in last year's first quarter.

Today, we announced that Columbia's Board of Directors approved a second quarter dividend of $0.16 per share.

Now let's turn our attention to the outlook for 2009.

The worldwide economic environment has created a high degree of uncertainty around consumer demand and other factors that affect our business significantly limiting our visibility.

Therefore, we are not providing as much detail about our expectations for the rest of the full year as we have in the past.

However, we will discuss how we are managing our business today and how we intend to manage it through this period of uncertainty under the assumption that the global economy does not deteriorate further from current levels.

Actual results could differ perhaps materially from our current outlook.

Based on our earlier discussion of the 15% decline in our combined order backlog, we expect our full year wholesale business to decline in the mid-teens on a percentage basis including the anticipated negative affects of foreign currency exchange rates, and to be slightly offset by growth in our direct-to-consumer business.

As a result, we expect full year 2009 net sales to decline in the low double digits on a percentage basis compared with 2008.

We expect full year operating margin to decline approximately 300 to 350 basis points from 2008 including last year's impairment charge recorded in Q4.

This decline is primarily due to SG&A deleverage and to a lesser degree, some contraction in gross margins.

The SG&A deleverage is primarily the result of the revenue contraction in our wholesale business in the U.S.

and Europe as well as our international distributor business; and an increasing fixed cost base resulting from our direct to consumer initiatives.

We are planning our marketing and advertising spend at just over 5% of sales for 2009, down slightly from 2008 levels.

The gross margin contraction is primarily due to a higher volume of closeout product sales, a more promotional retail environment, and the negative affects of foreign currency hedge rates.

We are currently estimating the full year income tax rate to be approximately 30%; however, it could be higher or lower than that in each of the remaining quarters of 2009 based on the geographic mix of taxable income and specific events occurring in each quarter.

We are currently planning on approximately $55 million in capital spending during 2009, essentially flat with 2008 with approximately $35 million of that related to retail expansion, and approximately $20 million related to maintenance and infrastructure projects.

Looking specifically at Q2, which is our lowest volume and most volatile quarter of the year as we wind down spring shipments and begin fall deliveries.

We expect net sales to contract in the low to mid-20% range due to the decrease in our order backlog reported today, timing shifts, and a lower volume of international distributor shipments in the quarter.

The deleveraging of our fixed cost base, coupled with continued investment in our direct-to-consumer initiatives will result in a significantly higher operating loss in Q2 2009 as compared to last year's Q2.

While our strategic initiatives will pressure profitability in the near term we firmly believe that they're the right thing to do and will be beneficial in the years to come.

That concludes my remarks and I will now hand the call back to Tim for his closing comments.

Thanks, Tom.

I will close quickly by simply acknowledging that it's already quite clear that 2009 is not going to be remembered as a great year for Columbia Sportswear from a financial standpoint.

But it's our intention that 2009 will be remembered as a year in which our strong financial position allowed us to continue investing in strategies that will help set us on the path toward renewed growth and profitability.

We remain committed to using our fortress balance sheet and strong cash flows to pursue growth opportunities while reducing operating costs wherever possible.

Thank you.

Operator, could you please begin the Q&A?

(Operator Instructions).

Our first question comes from Bob Drbul with Barclays Capital.

Hi.

Good afternoon.

Good afternoon.

Tim, just a couple of questions for you.

First, on the backlog.

Can you give us any ideas in terms of some of the commentary or feedback from the retailers?

Was it--how much of it do you think was macro related versus pricing, versus the product?

Any thoughts around that?

Well, I would say that if you took the overall mood of retailers globally it's one of extreme caution.

So that's definitely a very impactful on backlog this year.

I had many retailers tell me that, in fact, almost every one said they plan to chase inventory throughout the balance of the year.

Secondarily, we lost a few customers due to bankruptcy here in the last quarter, and we want to make sure that we have the appropriate caution in our accounts receivable credit extensions.

But we still have work to do on our product and we recognize that, and many of the investments that we are making throughout the year are going to be to continue to improve the differentiation and quality of our products.

And of the doors or the customers that you lost for 2009, can you give us an idea in terms of like how many less--how many less doors you're selling to or how many doors you lost as a percentage of the total?

I think on a door count basis it's probably not significant.

We have so many doors we are selling to, but we have a number of strong regional players that we lost in the first quarter of '09.

So it's not so significant on a door count, just another contributor to the impact of the reduced backlog.

Okay.

And then what's the cash on the balance sheet?

Can you just give us an idea in terms of is acquisitions, are they still part of your game plan here going forward in terms of growth opportunities up to this on buy back thoughts, etc?

Well, Bob, in this environment and with the bad news that we are talking about today it's very comforting that we have the kind of balance sheet that we have today, which we know will protect us and give us the opportunity to first and foremost focus on our existing business and brands; and make sure that we are giving those businesses the proper investment, which is going to be required and frankly will be a positive for the Company when other companies cannot invest.

Secondarily, we do have a strong balance sheet and it allows us to be opportunistic so we will be handling our plans as it relates to the future sort of in that order.

Okay.

And then, Tim, you said a lot of your retailers are hoping to chase product in the back half.

How are you approaching your inventory buys as you consider those type of commentaries from your customers?

Well, we have been much more conservative in terms of our approach to inventories as it relates to the back half of '09.

So our hope is that the economy becomes more robust and that customers will take more inventory from us than they currently have on order, but we were not planning for that.

We are planning that the business remains at about the same level and we really don't have any speculative there--we have very little speculative inventory and much leaner than in prior periods.

Great.

Thank you very much.

Good luck.

Thanks, Bob.

Our next question comes from Michelle Tan with Goldman Sachs.

Great.

Thanks.

Just following up on Bob's question.

On the regional players that were lost, I'm sorry if I missed this on the call; but were there still sales to those players in the 1Q numbers?

Or was that something that was already basically gone by the time--spring sales?

I think there were some sales in Q1 to those customers.

They may not have been significant.

I don't have that number with me, but we didn't have the bankruptcy notification until later in the quarter.

Okay.

Great.

And then as you look at the fall backlog relative to the first quarter sales trend, what do you think is the potential deterioration?

Is it more on the side of retailers battening down even more than they did for first quarter, or where do you see the slide and the fall order book?

I'm sorry.

So our customers typically, in fact, are required if they want merchandise from us in the back half of the year, they have to buy it early in the year and so our backlog reflects basically our future view of the business.

Our customers have been cautious in their purchasing.

They typically can come back to us and we encourage them once they've sold out of the merchandise that they bought to come back and buy more if we have it.

In historical periods we would have been more aggressive about carrying a larger inventory in the event of those orders, but we are taking much more cautious approach this year than we ever have.

And so it's our expectation that the outlook we have given you today is really our view of the business for the balance of the year.

Okay.

That's helpful.

And then I guess my last question would be on the first quarter of the sales upside versus your plan.

Anything additional to call out there in terms of color?

That was really just a function of timing.

So it doesn't have any impact really on Q2 or rest of year.

Okay.

All right.

Great, thanks for the help and good luck.

Thank you.

Our next question comes from Mitch Kummetz with Robert W.

Baird.

Hey, guys.

Thank you for taking this question.

It's actually Kevin Kim calling in for Mitch.

Just a quick question about the inventory number.

I know going into the quarter you were planning on liquidating the excess fall inventory, and it seems like you were successful in doing that.

How does that compare to your plans and how--I guess that's the question?

Really our closeout sales came in for Q1 as we planned the last time we talked from both a sales perspective and a margin perspective.

Okay.

And then you guys are continuing to expect improvements throughout the year?

Relative to volume of closeouts?

Just in terms of the inventory number.

Are you still planning on having improvements throughout the year?

Yes.

We currently expect inventory to comp down for the balance of the year.

Okay.

And as far as the end season cancellation rates during the quarter, how does that compare to what you saw during Q4?

Just as bad, or has that gotten better?

Are you speaking specifically to spring?

Yes.

I would say our cancel rates have picked up somewhat from normal levels to date this spring.

And how does that compare to the levels that you saw in Q4?

Q4 was really--was a fall phenomena and we are now into spring.

Okay.

And then one last quick question.

As far as FX impact in Q1 on EPS.

I'm sorry, can you repeat that question?

Yes.

Just one last question.

What was the FX impact on the EPS.

It was roughly $0.05.

Okay.

All right.

Thanks, guys.

Thank you.

Our next question comes from Bill Dezellem with Tieton Capital Management.

Thank you.

It's Tieton Capital Management, and a couple of questions.

First of all, the shoe business was down significantly and given the opportunity that you see there, would you discuss what happened here in this quarter that made the shoe business worse than the other areas?

And then number two, how would you characterize the retailers inventory at this point in time?

Certainly.

Well, footwear we believe is one of the biggest opportunities for the Company on a product category and, frankly, we have been talking about it for sometime.

And we've had a number of different teams working on footwear over the last several years.

We have a team working on it now that we have a high degree of confidence in.

The bulk of our reduction in volumes was as re--was related to our international business and our distributor business shifting periods against last year.

So while we don't have the kinds of robust growth that we would expect in footwear, a portion of that shortfall was a function of timing against prior periods.

I forgot the second part of your question.

Retailer inventory.

Yes.

I believe that certainly on a look forward basis as we talk about fall, which is really the balance of our year, our retailers have very clean inventories I would suggest.

So the expectation is that we are not looking at a bunch of carry over inventory sitting on retailer shelves.

They are very clean.

One final question if I may.

In the past you have highlighted the retailers' interest in your technology based products.

How--in this environment, what has their level of interest been in those products relative to the less sophisticated products?

Well, our business has continued to grow in those differentiated products from us, and when I say differentiated that's primarily differentiated by technology.

So that continues to be a bigger part of our business and a stronger part the more commodity products have been under pressure, frankly.

Thank you.

Our next question comes from Steven Martin with Slater Capital.

Hi, Tim.

I got on a little late.

I just want to clarify the guidance for '09.

When you say that it's a 300 to 350 basis point operating margin decline from '08, you are talking '08--the operating profit dollars being 118.7, not the 143 which excluded the impairment charge, correct?

That comparative includes the prior year, the prior year impairment charge.

If you exclude it would be, I think, that charge is roughly 187 basis points.

So that would be additive.

Right.

So with the charge in there, the operating margin was almost exactly 9%.

Correct.

So you are saying that the operating margin will be between 5.5 and 6?

Correct.

Fine.

I just wanted to make sure I had the inclusion, exclusion right.

Thanks a lot.

Sure.

Our next question comes from Sam Poser with Sterne, Agee.

Thanks for taking the call.

This is actually Ken Stumbauser for Sam Poser.

I was wondering if you guys could just maybe give us a little bit of color about opportunity to cut costs and SG&A over the balance of 2009?

If we could expect to maybe see comparable declines as we saw in the first quarter and then further whether you have any--if FX gives you any kind of beneficial impact on that spend?

Sure.

With regard with FX and as we look at the back half of the year we expect FX currently to be less detrimental than it will be to the first half as we anniversary the devaluation of the Canadian dollar as well as the Won; and then just really how we--the seasonality of the different regions of our business plays a big factor into that as well.

Okay.

And then as far as cost cutting goes over the course--over the course of the year, could we expect to see similar declines in absolute terms that we saw in the first quarter; or do you think that we might actually see a tick up?

As we look at SG&A for the balance of the year, I think the guidance would imply that it's up very slightly year-over-year.

And our current plans are that the economy is not going to get any worse than it is currently.

To the extent that it does then we will have to re-evaluate our SG&A spend for the year.

And so the nominal increase is largely a function of the increased retail store base?

Yes.

So when we look at SG&A change year-over-year we have a decrease happening in our bearable selling costs as a result of the decline in sales, and that's essentially offset by the investment in the retail expansion direct-to-consumer initiatives.

Okay.

And then finally if you could talk about--you might have mentioned this and if you did I apologize, but the cadence of the direct-to-consumer over the balance of the year so the store openings?

Excuse me.

Sure.

As we look at the U.S., we've got for the second quarter we've got one store planned, five in Q3, and two in Q4.

Okay.

Thanks for taking the call.

Sure.

(Operator Instructions).

And we do have a question from the line of Sara Hasan with McAdams Wright Ragen.

I'm just wondering if you could talk about the impact of the decline in labor and commodity costs and how that's impacting your costs of goods and where it's being offset in the gross margin?

Sure, Sara, this is Tim.

Well, we've talked a lot about from a historical basis the price increases, and I think we've been pretty clear that our philosophy is that the demand will have much more impact on these price increases than any of the commodity costs.

I think what we are seeing today as our operations people are in Asia that we should not expect any price increases.

In fact, we are very likely to start seeing some price decreases.

Now, strategically for us whether or not we keep those lower costs as gross margin for the Company or whether or not we pass them to be more competitive, we haven't yet determined that.

But certainly we will have the ability to make that decision here, I believe, because I think costs are going to be moderating and, in fact, falling.

Thanks.

There are no further questions in the queue at this time.

There is one.

I'm sorry.

We do have one from the line of Tara Gary with RBC Capital Markets.

Hi, thanks for taking my call.

I just have a quick question about the product innovations.

I know you just launched Omni-Shield.

Anything else that we can look forward to for the remainder of the season and specifically maybe in sportswear anything new that we can look forward to?

Thanks.

Certainly.

Well, Omni-Shield was really the focus for the Company for coming this season, being fall '09 as it related to improvements in our sportswear business.

And it's been well received by our customers.

We have two or three more specific technologies in the pipeline which are in the process of being tested.

But those will be for future seasons primarily for spring '10 and beyond.

But it looks like right now there will be a significant amount over the next call it 12 months that we can talk to our--talk about.

Right now we were focusing on the Omni Shield and Omni-Tech components for fall '09.

Okay.

Great.

Thanks so much.

Good luck.

Okay.

And there are no further questions at this time, sir.

Thank you, very much, for listening in.

Look forward to seeing all of you over the next quarter and talking to you again at the end of the quarter.

This concludes today's first quarter 2009 earnings release conference call.

You may now disconnect.