Hain Celestial Group Inc (HAIN) 2008 Q4 法說會逐字稿

Good afternoon, my name is Lindsey and I will be your conference operator today. At this time, I would like to welcome everyone to the Hain Celestial fourth quarter and fiscal year 2008 conference call. All lines have been placed on mute to prevent any background noise. (Operator Instructions). I will now turn the call over to Mary Anthes, Vice President of Investor Relations.

Good afternoon. I'm pleased to be with you today to introduce our fourth quarter and full fiscal year 2008 earnings conference call discussion of our financial results, which were issued earlier today. We have several members of our management team here today to discuss our results. Irwin Simon, President and Chief Executive Officer; Ira Lamel, Executive Vice President and Chief Financial Officer; and John Carroll, Executive Vice President and Chief Executive Officer of Hain Celestial-United States.

Our discussion today will include forward-looking statements, which are current as of today's date. We do not undertake any obligation to update forward-looking statements, either as a result of new information, future events or otherwise. Our actual results may differ materially from those projected and some of the factors which may cause results to differ are listed in our publicly filed documents, including our 2007 Form 10-K filed with the SEC.

This conference call is being webcast and an archive of the webcast will be available on our website, at www.hain-celestial.com under Investor Relations.

Our call today will be limited to approximately one so please limit yourself to one question and one follow-up question. If time allows we will take additional questions and management will be available to answer the [phone] for further discussion.

Now let me turn the call over to Irwin Simon, our President and Chief Executive Officer. Irwin?

Thank you, Mary and good afternoon, everybody. I hope everybody had an opportunity to look at our fourth quarter for fiscal '08 and our full year, and our guidance for fiscal '09.

Our sales for the fourth quarter were $278.3 million versus $223.3 million(Sic-see press release), up 25.2%. And for the full year $1.06 billion versus $900 million, and we reached that milestone of $1 billion in sales, up 17.3%,. And what I must point out, that $278 million has been our biggest quarterly sales ever in the history of the Company.

Our gross margin for the quarter, 27.9% versus 28.7%. And half of that -- of the 8 bips, 0.8 bips is coming from input cost. And just fuel alone April May and June was up 22%. And we will show you later how we absorbed those costs, and how our freight rates and fuel was flat to last year.

For the year, 28.6% versus 29.1%, and up 50 bips and the majority of that is coming from input costs. Our operating income for the quarter, $20 million versus $18.5 million, up 8% for the year, $103 million versus $86 million, up 19.7%. Earnings per share for the quarter adjusted $0.34 versus $0.25, up 36%, and $1.40 versus $1.16, up 21%.

So a lot of [what] the quarter, let me talk about the quarter, let me share some of the great things that -- what a quarter it's been and what a year it's been. And what's happened with inflation, what's happened with ingredient costs, what's happened with fuel costs, what's happened to the consumer, and we'll talk a lot about that today.

So good topline growth, good bottom-line growth in the fourth quarter. We absorbed about $11 million of cost in the quarter, and as you can see we're able to offset it with costs, with price increasing productivity, increase in sales, fuel only, as you heard me say, up 22%.

In the quarter, we absorbed the MaraNatha acquisition, we started to integrate it, we were able to cut costs, but actually in the first quarter that we owned it, MaraNatha cost us some dollars. But we see this as a great acquisition, and we see a similar acquisition at Spectrum, Avalon, Alba.

Pilgrims Pride, which I'll spend some time talking about our poultry business, same thing. We see some good things happening in our chicken turkey business. Our Daily Bread business, which will help our UK operations, is seeing some good things there.

We dealt with distributor inventory reductions as distributors and retailers look to bring down their inventories, so in the quarter we have seen that. We made some management changes in the UK. As you know, the UK has not performed for us this year, probably one of our disappointing areas. We made some good management changes. I spent about three weeks over there in the summer and we're seeing some good things happening.

Our Canadian business is strong, up 7%. Strong growth came in our poultry business. Our Celestial Seasonings business grew 4% in the quarter.

And we had great growth, double-digit growth from brands like Garden of Eatin', Imagine, Arrowhead Mills, Earth's Best, Imagine Soups, Spectrum, Avalon, Alba, DeBoles, so some good growth coming from double-digit growth coming from all those.

Our European business was up 31%, our FreeBird business, which is our chicken business, up 24%, and our Plainville turkey operation, which we acquired last August was up 5%. So what did we do to drive up the costs, what do we do to drive topline?

We've improved distribution, we've grown a lot more among mass-market, supermarkets, foodservice, convenience store. We really went after sales and the consumer is still looking for healthy products. So I'll talk about that in a little while.

We drove productivity in the quarter. $11 million, we absorbed -- we really focused on our SG&A. Our SG&A in the quarter was down 1.2 bips. So we really focused on costs, we really focused on growth.

So let me talk about the brands. Celestial was up a little over 1% for the year. Up for the quarter, you heard me say up 4%. Profits for the year on Celestial were up about 5%, so what has happened?

We completed the packaging change for Celestial. There's some things we need to do on the flavor identifiers, there's some other things we need to do on vertical versus horizontal. And our big thing to do on Celestial is improve the distribution, through shelf, really go after foodservice, go after some of our -- fix our green key and consolidate some of the backroom issues.

You heard me mention before John Carroll is now taking over full responsibility of the Celestial operations, so we will consolidate a lot of the businesses here from our US side of the business. The big thing John is looking for next year, and he's going to talk about it, if I keep talking John will have nothing to talk about. But we are going to look at some of the innovation coming into [tea], and leverage a lot of our impact with our trade versus the consumer, and really how do we get the consumer, there's been a lot of tea choices up there.

And last not least we're praying for a real cold winter.

In Canada, great year in Canada. Topline up 7%, bottom-line up double digits. Numerous new products? Celestial in Canada grew 6%, our Terra business was up 39%, our soup business up 14% and that's Imagine. Spectrum up 10. We introduced 37 new products.

And here is something in the business today that is approaching $100 million in size, our Canadian business 10%, almost 10% of our business, where the only business we bought in our Canadian operations is, was Yves. So here's a business where we took existing brands, taking off to Canada, or taking some of the brands that are in Canada, and have grown them.

One of the great things I like to announce as we became a sponsor of the Olympics for 2010 in Vancouver, this will be in the Canadian market with Terra chips, Celestial, Yves, some personal care products, soup and MaraNatha, which products will be sold during venues, and we'll be able to use the Olympic logo. So with the success of the current Olympics in China and the Winter Olympics, we're looking forward to a real good marketing and tie-in with the Olympics in Vancouver in 2010.

Come back on the other side, let's look at the UK. Not a great year for the UK after last year. We're off about $7.5 million in budget. With that, came some changes.

Peter McPhillips, who joined us with the Daily Bread acquisition and, in August, who took over as executive chairman of Europe, Peter brings a lot of years of experience. Peter brings a lot of good trade relationships, both in retail and foodservice.

And I had the opportunity to spend three weeks working with Peter in Europe and the UK. I've got to tell you, we have some great opportunities. We've got some work to do -- I feel the integration of (inaudible), which I said did not go well due to cost pressures, I'm not sure we have the right plan in place. We lost some volume, we had some private-label volume that was not profitable.

With personnel changes now and a true strategic plan, I feel most of that is behind us. And throughout the first quarter, it will all be behind us. We have to go after volume on the McCartney brand, we have to go after for some volume on the Roth brand and we have to go after some private-label business. And we've made visits to Sainsbury, Tesco, Oza, everybody over there.

And we have some good opportunities, a lot of new products in the pipeline. So I think we really can turn the UK around, because we have the people, we have some good products, we have a good plan, and with our relationships, I'm sure we can do that.

The acquisition of Daily Bread, which gave us unbranded fresh business, has the opportunity to expand our [Luton] facility. Daily Bread, which is centrally located, was maxed out basically on capacity, didn't have the opportunity to expand on a national basis. And we can do a lot more production in Luton on the branded side from Daily Bread, and we look forward to that. We also went into a lot of other fresh meal.

The other big opportunity for us is our branded business. Celestial is in the UK now, Terra is in the UK, and Rice Dream. We look to expand Earth's Best, we also have [Jason's] and Avalon in the UK today. Jason's is a good size business for us, Avalon is mostly natural foods. So we really look to focus on our branded business in the UK markets.

If you look at Europe, our Europe business was up 21%. Lima, up 21%, Hain Europe, 35. Natumi, up 11%, Celestial up 31%, and our Grains Noirs business up 20%. We took pricing, we absorbed over $5 million of costs there, so the group was really focused on costs and really took the pricing where we had to.

In Europe today we're in countries Belgium, Netherlands, Luxembourg, France, Germany, Spain and Scandinavia. And we look to expand. And we're looking for some major things out of Europe this year.

One of the big things, Grains Noirs, which is up for us, we're really looking for profitability out of that business. And one of our fresh business and they're doing some tie-ins and working together with our UK operation, I think we can do that. And that's been a bit of a laggard for us on our European side of the business.

On our protein side of the business, protein excluding New Oxford was about $90 million this year. On an EBIT it was 8% on EBIT, and we absorbed over $2 million of grain cost. That came from pricing productivity and higher sales. Our chicken business, antibiotic-free, which is probably about 90% of our sales, up 24%. Our turkey business which was just Plainville was up 5%.

So with the acquisition of New Oxford in late March, we will now become the largest antibiotic free chicken -- turkey facility, and what we're seeing is the consumer trading down from red meat and poultry and turkey, and we're seeing good demand. Pricing has gone up substantially. We're basically covered to the end of December on our grain and 70% of our sales are done between June and the end of December.

So with that, I think we've got a good handle on things. And with the availability of antibiotic-free turkey now, and the Plainville brand, the FreeBird name, we can expand into deli and further other types of products. And that's what we look to do. One of the big problems before was the availability of products and the availability of turkey products. So we definitely do have that and definitely we're pretty excited.

So let's go back to fiscal '08 and our accomplishments. Sales up over 17%. We took two to three price increases, a lot of our business and most of them while they all stuck and feel good about that. And if you sit back last year this time, and it was a few days later that I was on the call and giving guidance, diesel was about $3 a gallon. Corn was about $3 a bushel.

Today we're sitting with diesel at close to $5 a gallon, we're sitting with corn at $6 a bushel, we're sitting with soy and we absorbed these costs. And we grew our business.

So with that I feel good about what our accomplishments and what a difference a year makes, and what we had to absorb. So we absorbed over $33 million of cost as a total company this year. And we absorbed it through topline growth, mixed price increases, productivity and really watching our costs.

We completed acquisitions -- Plainville in August, TenderCare -- which is going to be a great business for us in the diaper business, we rolled out Earth's Best diapers -- and seeing some good results from that, and some great opportunities with diapers and wet wipes.

The MaraNatha business, which I've got to tell you, pretty excited about that. And if you go back and look at Spectrum, we acquired Spectrum in 2005. And Spectrum is basically almost double for us. And if you go back and look at the EBITDA on that business, it's triple or quadrupled on that. So great opportunities in MaraNatha, like Spectrum.

Daily Bread, which will be a great branded business -- is a great branded business, will help our Luton facility in the UK. And we saw some good things coming from that in our first quarter owning it.

In regards to Avalon Alba, we've now owned that since January '07. And sales in that business have almost doubled. And EBITDA has almost doubled. So when you do good acquisitions and you may pay a little higher for them, you see great results coming from it and good results coming from Avalon Alba.

John will take you through some of the sales numbers and what's continuing to happen with that. We announced the SKU rationalization in the third quarter, and it was our first SKU rationalization in the Personal care side of the business as we put these two businesses together, and you heard what I said before. Our EBITDA is almost doubling that.

And that was without SKU rationalization, so with SKU rationalization in place, we expect to continue more. And we will improve margin by almost 2 points into 2009.

We introduced many new products into the Company. And what I always say, innovation is key. When you're green, you're growing. When you're ripe, you rot.

With that, we've introduced to the Company almost $30 million in new products. Just think about how many acquisitions you've got to do at $30 million in -- Maureen Putman and the group in Boulder and the chicken group and the group in Europe. With the group what they have done with new products has just been great, but just not only new products, it's innovative products.

We've really watched our costs. You heard me say about our SG&A being down 1.2 bips. Our earnings per share on an adjusted basis for the year, up 21%. Strong balance sheet. We did $102 million in acquisitions. And our debt to equity ratio is still 42%.

So we have a lot to do and we can do a lot with our balance sheet, whether it's acquisitions, buying back stock, or etc. So we're really out there with our strong balance sheet.

And throughout the year I think what people don't realize is how difficult in what was going on with product shortages. And how difficult it was to get ingredients and how we took positions on inventories to make sure. And our service levels ran as a total company of in the 98, 99% level, which kept our customers happy, where I think a lot of people just didn't take positions and we were able to do that.

So '08, good accomplishments, disappointments in '09. The UK was definitely a disappointment. We started off the year and thought, concerned with what happened last year, but I think we put a lot of good things in place and we've put a lot of good action plans in place. And I think we've done an acquisition to have the people in place now really to take the UK back where it should go.

Looking forward, into fiscal '09, sales have been strong for July and August. I keep hearing about the consumer trading down. I keep seeing reports, keep talking about -- talking to consumers, where consumers are concerned about health. And you've got to remember one thing within the HAIN. Basically in takeaway -- from our turkey business, but over 85% of our products are under $5.

And if you see where the trade down is coming to in private-label, it's more in [produce]. It's more in red meat, that is not products we're in. Where you see the consumer pulling back today it's more on fresh products as prices have gone up tremendously, and consumers are concerned that they're going to spoil.

One thing -- just to point out our rice milk business has grown in double digit numbers, as I see consumers buying more and more rice milk instead of buying fresh milk today. So we're really seeing good growth and what we're seeing is the consumer staying home and cooking from scratch instead of buying prepared foods.

Our DeBoles business, up tremendously. One, because they're gluten-free, but two because of good pasta, whole wheat, whole grains, etc. Our Arrowhead Mills business, exact same. We have pricing in place today. As we say, we have two to three price increases that we've taken throughout the year. So we're much farther than we are than last year.

We have strong brands, strong organization. So what do we have to do? We have to grow our sales. And growing sales comes from demand and distribution, and the group is focused on that, and I got to tell you, sales sales sales, and it's tremendous how many places you walk in today and see some of the HAIN products.

Productivity is something that's a word around here we pledge every morning is how we take costs out of this business and productivity, and it's something we show in 2008, something we will continuously show in 2009. Cost control is something else. Innovation, HAIN just can't be another me too company.

Every company today wants to get into health and wellness and everybody's talking about it. We wake up every morning and natural and organic is our life, so we will continue to do that. Smart people in tough times like this, you need to have smart people. And we will continue to do that.

In regards to commodities, we're hedged on about 67% of our commodities on our Grocery, Frozen and Snack business. And with that, that's -- other ones we just didn't want to hedge on and John will talk about that in a little while.

As you heard me say before, in regards to our protein business we're hedged out till the end of December, that's where 70% of our sales are done. So with that, we're in good categories, we absorbed fuel costs in the fourth quarter, flat even though fuel costs were up 22%, it showed you what our group can do.

So pretty excited going into fiscal '09, and pretty exciting, some of the opportunities out there and I got to tell you -- I'm happy where we are this year this time, rather than where we were last year this time.

I'll turn it over to John. He'll take you through Grocery, Frozen, Snacks and Personal Care.

Today, I'll give you an overview of our Q4 and full-year results for Hain Grocery and Snacks, Hain Personal Care, and further outline our plans for Celestial Seasonings.

Starting with Hain Grocery and Snacks, Q4 was very strong quarter with top growth up 8% which reflects organic year-on-year growth as the acquired brands -- MaraNatha, SunSpire and TenderCare -- were not included in this calculation. Q4 topline growth, including the acquired brands, was 18%.

As Irwin talked about our -- we saw growth across our brand portfolio. And our growth was driven by a combination of velocity increases, alternate channel gains and as he also mentioned, new product sales.

Moving to the middle of the Grocery and Snacks P&L, pressure for commodity costs and fuel-related expenses reached its highest point in Q4. We saw year-on-year increases on almost all commodities, including organic corn, soybeans, wheat, canola oil, fruit and dairy, as well as packaging and diesel fuel.

In fact, our Q4 ingredient inflation was $10 million versus a year ago which was double the rate we experienced in Q3. Despite these challenges, our Q4 organic gross margin was actually flat versus a year ago. As pricing taken in Q2 in Q3, and continued productivity savings offset rising commodity and fuel costs.

Moving on down the P&L, our Q4 SG&A expenses as a percent of sales were flat versus a year ago. We continue to exercise strong discipline on our operating costs which is essential in this inflationary environment. Our Q4 inventories were higher than a year ago, primarily due to an additional $6.5 million in Earth's Best inventory. This is consistent with what we discussed in previous calls, where we said we would maximize our fresh pack production in September through December to ensure supply for our fastest-growing brand.

We will again look to increase our fresh pack production in FY '09 to ensure supply as we expect the brand to continue to grow very quickly.

Finally, we integrated integration -- completed integration of the MaraNatha and SunSpire acquisitions in fourth quarter, on time and on budget, and are already realizing synergy benefits.

To conclude, Q4 brought close to a very strong year for Hain Grocery and Snacks. FY '09 topline growth prior to acquisitions was 8%. Our top 10 brands are showing double-digit consumption growth. And we achieved record new product sales.

Our full-year organic gross margin was flat versus a year ago, despite absorbing $25 million in ingredient inflation and our SG&A was down almost 50 bips versus a year ago. Our FY '09 [HG&S] outlook is for continued profitable growth. We have consumption momentum on all our core brands, our new product queue is full, and there are still new distribution expansion opportunities available. We have fully integrated our MaraNatha and SunSpire acquisitions, and are positioned for growth on these brands.

Now while year-on-year pressure on input costs and fuel-related expenses is still challenging, we expect to offset them with more productivity. A price increase that was announced in July and continued tight SG&A controls. We have also taken positions on approximately two-thirds of our FY '09 commodity needs as Irwin discussed, to ensure supply and cost certainty.

We're going to continue to monitor our commodity and fuel cost quarterly and we're prepared to execute more pricing if required to ensure margin maintenance.

Now moving to Personal Care, our Q4 topline was up 11% ex our SKU rationalization, driven by our top three brands. JASON, Alba and Avalon. Alba led the way with year-on-year growth of over 20%. The growth on our top three brands reflected gains across all three channels. Natural, Grocery, Drug, (inaudible) and [Club]. We also saw growth on our high-end niche brand, Zia, for the first time in two years.

Moving to the middle of the P&L, gross margin expanded over 100 basis points, driven by improved mix, conversion savings and to a lesser extent pricing. Our gross margin improvement was in part an immediate reflection of our SKU rationalization as we have begun to eliminate -- and we did this in the fourth quarter -- the lower margin slower moving SKUs from the Hain Personal Care portfolio.

While personal care was also being pressured with cost inflation in Q4, it was not with the same severity we experienced on Grocery and Snacks. We have, however, begun to experience increased pressure in FY '09 particularly on packaging and co-packer conversion costs.

Our Personal Care SG&A was down 100 basis points for the quarter, as we continue to realize the benefits of the JASON and Avalon acquisitions and consolidation. We will lap these benefits in the first half '09.

As I mentioned, the Personal Care SKU rationalization is underway. We will eliminate 30 to 40% of our SKUs. We expect a decrease in the sales volume from the discontinued SKUs will ultimately be offset by an acceleration of sales of continuing SKUs with higher margins, along with sales of new products.

More importantly, this initiative will position Hain Personal Care to leverage its Culver City manufacturing facilities' competitive advantage and to integrate volume currently [co-produced] by copackers when the co-packer contracts expire.

To conclude, Q4 brought to close another strong year on Hain Personal Care. We continue to see strong topline growth on our key brands, and there are significant distribution expansion opportunities in front of us. The consolidation of JASON and Avalon into Hain Personal Care is behind us, and we have realized the SG&A synergies that we targeted.

Our SKU rationalization program is underway, and already producing margin expansion. And we're positioned to integrate currently co-pack volume into our Culver City plant to further strengthen our margin.

Now in Personal Care we expect cost pressures will escalate in FY '09, and we're already seeing that, and we will implement a 4 to 6% of price increase in September to offset that. Additionally, just as with Grocery and Snacks, we're implementing a make productivity a priority program in Personal Care to drive [savings].

Overall, we believe we're well-positioned at Hain Personal Care to take advantage of the growth of natural personal care in all channels and to drive profitable growth in FY '09.

Finally, moving to Celestial Seasonings, Irwin has already talked about the achievements on the business in FY '08. My focus is on '09, and specifically it's on restarting profitable consumption growth on our base Celestial Tea business.

In the last two months we've done extensive analysis of the [base tea] business. We'll implement the following initiatives to make this happen.

First, we're going to fix our Celestial tea presence on shelf. Our customers' biggest complaint is they can't find their favorite tea flavor or segment. We're going to fix this by doing the following things.

First, we're going to fix our mix on shelf. 20 SKUs account for 75% of the volume on Celestial. So we got to make sure we've got the right 20 on shelf every time.

Secondly, we're going to strengthen our flavor communication on the new package with revised graphics. The package itself and the whole new graphic structure is great. Problem is, we're not screaming out our flavor strongly enough. So you'll see you won't miss it as we go forward and we put in some new communication elements to make that happen.

The third thing we're going to do is we're going to reemphasize the sale of prepack displays and we're looking to reach a record level of this in-store. This is something we have not been as strong on in previous years and it's a key to driving Celestial sales, particularly during tea season.

We're also going to put into place a high impact consumer and trade tea season promotion program, to [halt] consumption and share losses, we will be improving our green tea product line with a better taste profile, higher antioxidants content, and stronger flavor and segment communication. We're going to be reducing our distributor buyouts, just as we did on Grocery and Personal Care to reallocate over time our support against consumption driving program.

We're going to be implementing a productivity priority program across tea supply chain and SG&A to ensure we're driving savings across all levels. We will be strengthening our marketing sales on the brand by recruiting a new talent to head those functions. And, finally, we're going to restart the innovation pipeline on base Celestial tea.

We've had great success with the innovation engine on Grocery and Snacks, and we seek to duplicate that same success on Celestial.

Let me just conclude. Celestial is a great business within the Hain portfolio. Again, our objective is simply to restart profitable consumption growth. I look forward to updating all of you further on these initiatives as they get underway.

Now I will turn it over to Ira Lamel.

Good afternoon, everyone. I'm going to review for you the details of our adjustments to earnings as well as the 2009 guidance.

Our earnings on a GAAP basis were $0.16 per share in the quarter, and $0.99 per share for the full year. On an adjusted basis, earnings were $0.34 for the quarter and $1.40 for the year. The adjustments we've made are those we identified for you in our third quarter call.

In the fourth quarter we've added back $2.3 million pretax, which is $1.6 million after-tax or $0.04 a share for the personal care SKU rationalization severance and other reorganization costs. Of this amount, $900,000 went to cost of goods, and $1.4 million to SG&A.

For the full year we added back $10.8 million pretax which is $7.9 million after-tax, or $0.16 per share for this program. The charges included inventory we will not go forward with, the write-off of certain assets related to the inventory, such as packaging design costs and costs related to the reduction in force.

We continue to believe, as we said when we announced this in our third quarter release, that this program is going to benefit gross margins in the future. Probably a bit more than 200 basis points in the Personal Care unit and approximately 100 basis points in the consolidated margin line.

We also anticipate that we will get additional benefit to the operating income line from the personnel reduction which should save approximately $2 million annually. This, of course, is absent any other cost pressures that we may encounter in the inflationary environment in Personal Care.

As we've discussed in recent quarters, we continue to incur integration and start-up costs through the fourth quarter, in connection with consolidating our manufacturing facilities and processes into one facility in the UK in Fakenham. These arose in connection with our acquisition of the [Haldane] food brands in the UK, after which we determined to eliminate two facilities of Haldane, one of which we sold.

Our progress in this project has taken longer than we anticipated and costs have been higher than expected.

In the fourth quarter, we incurred $2.5 million pretax, or $2 million after-tax of start-up costs, which pressured earnings by $0.06. For the full year we added back $7.5 million which is $5.5 million after-tax or $0.13 per share. These costs -- that have been added back are separate from the other items that Irwin discussed earlier in the call, such as the need to increase volumes on existing products.

The project in Fakenham is now largely completed but there will be some continuing costs in the first quarter.

In addition, with the expiration of the co-pack agreement with the former owner of the Fakenham facility, we will need to add volume to cover unabsorbed overhead that we may incur in fiscal '09, approximating $1 million to $1.2 million. As previously disclosed during -- as previously disclosed, during the fourth quarter in April, our Board of Directors approved new equity grants for the first time in over three years. At the same time the Board and the CEO agreed to satisfy what had been ungranted options over that three-year period, which the Company was obligated to grant under an employment agreement.

During our third quarter earnings call, we estimated that approximately $4 million of expense would be charged to the fourth quarter. After a more careful and detailed review, as well as consultation, on the appropriate method of charging expense in the quarter and for advertising expense going forward, it was determined that such expense should be $2.3 million in a quarter.

Since there are components of this pretax charge that are nondeductible, the after-tax charge is larger than the pretax charge. Therefore the impact on earnings was $2.9 million after-tax or $0.07 in the fourth quarter. The impact for the full year was the same.

We have also added back professional fees we incurred during the inquiry into our past options practices. In the fourth quarter we incurred $1.1 million of such fees, which is $600,000 after-tax or $0.02 per share. For the full year we incurred $5.8 million in fees, which is $3.5 million after-tax, or $0.09 per share.

The inquiry remains ongoing.

We have given you guidance for the full year of fiscal '09. We expect our sales to come in between the range of $1.2 billion to $1.3 billion, and we anticipate earnings per share will come in at $1.54 to $1.61. As with the case in fiscal '08 where we saw a $0.07 charge for stock compensation, we expect that fiscal '09 will bear an $0.08 per share charge, subject to adjustments for our forfeiture experience and any additional grants which may be made.

The '09 guidance, we look at depreciation and -- amortization to be around $20 million with an equal amount of $20 million for CapEx.

There are a couple of other things I'd like to discuss. During the fourth quarter we experienced continuing and accelerating and inflationary pressures on our input costs. The rise in diesel -- was almost 20% in the quarter when compared to the March 31 cost of diesel.

These increases have accelerated in their effect on our costs. And during the fourth quarter we saw 388 basis points of pressure on our gross margin from input costs. For the full year the pressure was 310 basis points on gross margin.

These pressures have been offset in large measure by productivity improvements of 132 basis points in the quarter and 157 basis points in the year. As well as with price increases, we have been successful in implementing.

Celestial Seasonings continues to become a smaller percentage of our total sales and is now 8.8% of consolidated sales for the year this year as compared to 10.2% last year. Our gross profit percentage was impacted by approximately 60 basis points by the dilutive effect of increased revenues in our Hain Pure Protein division, which operates at lower gross margins. The Hain Pure Protein unit temporarily sells certain of its products at below-market rates under a contractual obligation for a specified period and therefore is currently unable to sell these products at market prices. Had we processed and sold the same products into the market at market prices, which we expect to do in the future, we believe that pretax income would have been approximately $1.6 million higher in the quarter.

Our ability to sell at market begins on October 1st.

Despite increased costs, both operating and pretax income as adjusted were up 10 basis points for the full year. EBITDA as adjusted came in at $125 million this year, versus $103 million adjusted last year. Our operating free cash flow was reduced this year on GAAP basis for $5 million.

However, we think it should be viewed after adding back to nonrecurring items that we faced during the year. These nonrecurring items totaled $42 million. The adjustments I discussed earlier had a significant impact on cash flow.

First, the nonrecurring items, $7.5 million of start-up costs, $3.8 million in the cash portion of the Personal Care reorganization, the $4 million cash component of our ungranted stock option obligations, and the $5.8 million we incurred in professional fees in the inquiry. And in addition to the adjustments we made, significant investments in our inventory.

We added $11 million to support the longer, grow-out season for turkey products at New Oxford. We made an investment of $6.5 million in our Earth's Best inventories as John discussed, and there was an overall $7 million increase in inventories due to the inflationary pressures in buying ingredients and other items that go into inventory.

With that, we'll open up the call for questions.

(Operator Instructions). Ed Aaron, RBC Capital Markets.

A couple of questions. First, I want to ask about the tax [rates] to make sure I'm clear on it. It looks like it accounted for about $0.08 relative to where you expected the tax rate to be. Is that accurate?

And if so, is the variance between that and what you reported on an adjusted basis, would that entirely be the impact of unexpected additional increasing costs in the quarter?

I think the $0.08 is not quite the right conclusion. If you were to take out all of the adjustment items because of the varying tax rates of those items, there is a component of the stock compensation that's nondeductible; there are different rates for the start-up costs, because it's in the UK; and if you just normalized what the rate would have been for the full year, there was a $0.02 impact on earnings for the quarter on both a GAAP and adjusted basis. So it's not $0.08 -- it's $0.02.

Okay. Thanks for the clarity. And then, the difference between the reported adjusted gross margin and the number that you used in the same brand calculation. When you talked about that 28.6 number in the press release. There's like about a 300 basis point difference there? Is that entirely the impact of Hain Pure Protein, because it doesn't seem like I could account for that much (multiple speakers) --.

The reason I label it as same brand computation is we look at the brands we operated last year and the brands we operated this year. So it takes out both Hain Pure Protein, because of its lower margin results, and it takes out the businesses that did not operate on the Hain Celestial Group for the full year this year and the full year last year.

So what it shows is what we have been able to do on a continuum with the brands that we've operated in the full fiscal years.

It's an apples-to-apples basis, Ed. So the brands this year that we own versus the brands last year in comparing the margin last year -- if we own those same brands, what they were for the full year.

Ed? (Operator Instructions).

Can we take the question? Can we take the next question? Hello?

Christine McCracken, Cleveland Research.

Just following up on your comment that you've hedged, it sounds like about two-thirds of your hedgeable commodities, wondering -- I just want to clarify, that is just that portion of your exposure that you're able to hedge.

Is that accurate? I'm not clear on how you hedge organic (multiple speakers).

Since you're one of the commodity gurus out there can I think it a good question. When we use the word hedge we're not really hedging in the traditional sense of buying against each other with forwards and so on.

What we're able to do is actually buy the commitments from the producers of the ingredients that we utilize. So it's not a pure hedging play, it's locking in our price for a period of time and locking in the source of supply for that same period of time.

We actually execute contracts with farmers and other types of suppliers at fixed prices. So when we say hedge, we really mean we've locked it in as opposed to the pure play on these derivative contracts in the hedging world.

To be clear, that's not including kind of like diesel or oil-based packaging, and that kind of thing? Is that included?

No. we're not really buying diesel ourselves, we look at diesel and fuel inflation as it comes to us from -- let's call it the trucking industry. We know what the cost of diesel is by tracking it on the market, number one, and number two, by tracking it in the delivery bills that we get from those truckers, third party truckers who deliver products for us.

We also see the same inputs on the freight bills on our inputs as well, where ingredients are being delivered to us or products that are co-packed are being delivered to us -- yes -- .

(multiple speakers)

When you look at packaging the we're not measuring the specificity the packaging component that includes petroleum.

And then just one point of clarification.

John, I think you talked about if you saw increase commodity pressure into next year, you're more than willing to take another round of price increases, and you've done a great job with that thus far.

I'm just curious, at what point -- do you think you're not close to kind of where you'll see that demand destruction as prices hit kind of a level -- or maybe you could comment on how you measure that and how that goes into your pricing equation.

A couple of points. First, I believe the percentage is 85% of our products are sold at $3.99 or less. So that's bursting. We don't think we're really breaking any real price barriers yet.

Secondly, we look and we compare ourselves to do things. We compare ourselves to our competition in the natural organic space, as well as our conventional counterparts. And we manage deltas against each of them. As long as we don't push a delta above where we have been successful in the past, we're comfortable pushing through the pricing.

The third thing is most of our competitors have the same commodity pressures as we do. And they're not in a better position than we are. So we're pretty comfortable if we take and leave pricing in natural organics, they will follow. We've seen that as the experience in the past.

Thanks a lot.

Simeon Gutman, Goldman Sachs.

Question on the guidance. Is it the midpoint for the topline guidance is 18%, I think high teens. The midpoint on the earnings guidance is more low teens. Is that a -- what does that reflect? Is that more of the ingredient inflation that just won't be fully priced through?

There is certainly going to be a carryover of the ingredient inflation, certainly in the first half of the year before some of our pricing increases take hold. And then we still will have a period of time where the acquisitions that we made essentially in Q4 will not be accretive to earnings in the front half of the year.

Okay. And then the Fakenham start-up costs, is that going to continue to dwindle as the quarters progress here?

We think it's going to be largely completed in the first quarter, and that we won't have any of these start-up costs from the second quarter on.

Maybe for John, as far as the velocity versus channel games, can you comment on that a little bit further? What are you seeing with respect to channels? Are you seeing consumer shopping patterns move out of one channel into others?

We're seeing a pretty good split between the two in terms of driving our growth. Only on a handful of brands are we starting to see volume move away from certain channels. Other than that, we're just seeing new consumers coming into the natural organic area.

How well are you positioned to [where] that volume is moving towards?

I would argue we're probably as well positioned as anybody in the natural organic area. Because in some places, in many, many channels, we're the first natural organic area they put in. Particularly in the area of baby food.

And I think what's happening is all retailers there are looking for additional business. And looking for different unique brands. So with that, where our brands were not before, they're looking to bring our brands into their stores.

Thanks.

Scott Mushkin with Jefferies.

[Begley] Smith filling in for Scott who is unfortunately traveling today. Just as a quick detail question, I'm still a little unclear on the stock compensation. The $0.08 -- is that included in the guidance, or is that excluded?

The guidance of [154] to [161] is before you deduct stock compensation.

Great. And my other question is a little bit following on what Christine was asking about.

I understand that you are not seeing demand falling off, and you guys have done a good job of staying in front of the trends, but what kind of things do you think about in '09 that either, A, could happen, or B -- and what would you do in the event that you just started to see demand fade away as we've seen with some of these other aspirational products?

Not natural organic, but referring to restaurants and these kind of things -- because it seems like the consumer's taking a step back. You know it is possible it could visit natural organic.

I think (inaudible) demand falling off is something that always could happen out there. I think as we step back today, we're not thinking about how demand falls off, we're thinking about how to grow our demand and you can see by our guidance and our organic growth, and our guidance for next year.

Our plan for next year is strong growth, innovation, new products. If you come back and look, we're a diversified group of products, diversified group of brands, and if you look at Hain -- our business today -- a little more than half of our business today only goes through mass market and supermarkets. So we think we have tremendous distribution gain of opportunities out there.

And at the other end we think there is tremendous opportunities in Canada and Europe. And I keep hearing about sales falling off. Again, you heard John say it and you heard me say it in my remarks, over 85% of our products are less than $5.

If you come back and really think about it, if our baby food -- if our baby food is $0.10 more and the average mother buys four to six jars of baby food $0.60 a week, $4.20. So yes, we watch it. Yes. We're watching the consumer out there.

But I think our focus continues on how we grow our distribution, how we expand our brands.

Great, thanks very much and congrats on a good quarter and good year.

[Shawn Tesoro]. BlackRock.

On the $33 million you identified out of absorbed costs in FY '08, the $11 million in FY Q4, how much were you able to recover -- given the four to five variables mentioned, topline growth mix, price increases, etc.?

In that 33, probably 12 to 15 came from pricing. And the remaining came from productivity and mix and topline growth.

And that was for the year. How about in Q4? Similar kind of breakdown?

Yes, in Q4, probably a little more. Because we're able to start to catch up on pricing, because there's a lag time. Unfortunately we get the price increases right away. We don't get to pass them on right away.

So there was some catching up in Q4, in Q4 probably at 11 -- 7 to 8 probably came from pricing and probably 4 came from productivity.

That's it, thank you.

I think the important thing is it shows that we're able to get pricing through pricing sticks. It's showing that, with our pricing, we're still getting good topline sales, which I am really proud of the group here is the productivity that we've been able to do.

I think one thing that is important to point out. We just didn't start looking for this productivity on July 1st, 2008 or 2007. This is something that's been in place a long time.

And we're looking for a lot of productivity again this year. And we're also looking for pricing. And our hope is commodities come down.

Understood, thank you.

Greg Badishkanian, Citigroup.

Thank you. Two questions here. First one, in acquisitions sales, I'm calculating about $23 million. Am I missing anything?

That's real close.

So that gets me to about a midteen -- I don't know it you mentioned, I think the mentioned Grocery, but a midteen organic sales. Am I in the ballpark or am I pretty far off?

You're a little high, but I don't want to comment on organic growth. But I guess you can come back and see we had a good topline quarter for the quarter. So I think you can pretty well figure it out what the $20 million -- I think you got to put some pricing in there. And I think that will get you to --.

And again also in the quarter there's some SKU rationalization adjustments. The other on the positive side of the quarter, you heard me say before and you've seen it, where one of our biggest customers took down their inventories and reduction in inventories. So from a growth standpoint, it was a good quarter on growth.

(multiple speakers). July and August were strong, you mentioned that. Any color on channels or products that in particular were doing a little better?

And then, as a follow-up to that, even if it's not midteens it was still very strong. The Whole Foods actually saw deteriorating trends in the second calendar quarter in July. I'm showing accelerating trends for you guys. Any thoughts on why this might be the case?

We continuously see strong sales in July and August again, back to similar brands. And Rice Milk, Earth's Best, Spectrum, Garden of Eatin' was (inaudible). Arrowhead Mills -- I have my group here and there yelling out to me. DeBoles. We're definitely seeing that, we're seeing some good strong growth continuously on Avalon and Alba. JASON's on adjusted after SKU [rats], seeing mid single digit growth on JASON's. Seeing some good growth on our chicken business.

So all around, I think what I continuously say people are staying home and cooking.

In regards to the natural channel, we're seeing some good growth on our products and actually interesting, what we think is people are buying groceries and cooking instead of buying prepared foods and fresh foods and produce. And that's what we're seeing. So in the natural channel, we are seeing in regards to independent and the banners of Whole Foods etc., we're seeing some good growth coming from that also.

Any -- I know it's not the easiest question to answer, but one of your biggest customers, but -- any reason for their kind of a disconnect while you're seeing very nice accelerating sales growth? They have been seeing deteriorating growth.

If I answer it I win and lose. So I guess I'll take the Fifth.

I didn't mean to put you in a tough spot. Thank you very much, good job in the quarter.

Scott Van Winkle, Canaccord Adams.

A question for John. John, you mentioned that the plans to improve I think you said profitable consumption in the base Celestial business. One, what is included in that base Celestial business?

And second, what percentage of the sets you currently have do you have your top 20 selling SKUs?

The base -- it's the core tea business, so it does not include [Safora], it does not include coffee. So it is -- it wouldn't include (multiple speakers) Zingers, bag tea. Exactly.

One of the things we see on that, what happened is [Sophara] I mean, and some of these things, we look for innovation on some of these things. And we just stuck to tea, and the money we spent on some of those innovations our profits would be up even more.

So I think if we could sell more, John's point -- I'm answering for John, but if we sold more green tea, sold more herb tea and focus on that, that's where we're going to see a lot of profitability and a lot of growth come from.

Your second question -- in terms of what percentage of sales sets has a core 20, Scott, it's a very low number. And that's -- it's like any other item. We just need to have some real discipline about these are the 20 items we have to have in, no matter what.

Is it because your average set is less than 20, or is it because the retailers just ask for what they ask for?

Our average set is more than 20, Scott. You know what? It just comes down to not great category management in some instances, where they don't know what the best sellers are in the category.

And when's the timing on the Personal Care co-pack contract ending this year?

They stagger throughout the year. So it's just -- we will be seeing them -- most of them start to come up in the second half.

Great, thank you.

Jacklyn Rider, Lazard Capital Markets.

A question on your guidance for -- a quick question on your guidance for 2009, on the sales side. You're looking at about 14% to 23% sales growth, and there are obviously a bunch of items such as acquisitions and SKU rat in there. I'm looking at about $40 million in SKU rationalization, $100 maybe a little more million in acquisitions.

If that's in the ballpark, you're looking at about 7% to 17% organic growth next year. How do you get from one end of that to the other? Is the 7.5 kind of price increases, and then you get up to 17% and that's strong volumes and price increases? If you could break that down a little more.

I think you're a little high on a top end. I think you're right on the bottom from 7%, I think we've said 7% to 10%, 7% to 11%. And I have John pushing me down, but 7% to 10% organic growth. And --.

Just if you take the acquisition revenue out and you take the SKU rat out of the high end of your guidance, just whatever is left. I kind of look at organic growth, and is the $40 million in SKU rat and $100 million in acquisitions in the ballpark?

Right. Listen, you're high on that, and I think to getting to that of how we get to the organic growth, and I think we've seen it this year in regards to organic growth. And we think with our new products, with product growth in the acquisitions, MaraNatha, I mean, 70% of MaraNatha today is only natural food stores.

We also -- a big thing is our business, our volume was down substantially in the UK. We're looking to recover some of that. We're looking to recover some of the JASON business. We were off in our fourth quarter on Terra Chips, some of the promotions at club stores versus a year ago, to pick up some of that.

So there's some one-offs that we had that we did not have this year that we're looking to pick up this year. And we see tremendous opportunities.

Also we're looking for some good growth on our baby formula, we're also looking for some real good growth on our diapers. That really is from an Earth's Best standpoint, really some substantial stuff there. We've introduced a whole line of gluten-free products unfrozen, which we're looking for some good things.

We continuously see where Spectrum is. So I feel good going into the year with some of the things that we have. We're a little late in getting some of the new Health Valley products out where our sales lagged last year. So we're looking for some major execution from a sales side and from a product side on Health Valley.

So we're feeling good on the growth for next year.

Great. One other question. On your EBIT margins for '09, we're looking for some contraction maybe in the 100 basis point overall range. And it really should be -- we should see leverage on SG&A. But we are going to have a pretty tough time on the gross margin line. Going into '09.

We think a gross margins as we said are going to continue to be pressured in the first half of the year as we lap, if you will, very heavy inflationary effects we saw in the back half of the '08 fiscal year. So we're being cautious on that.

And I don't think what you're seeing -- you've got to look on apples-to-apples basis, and whereas poultry brought down the overall margins. But on the other hand, whereas poultry offset some of the SG&A margin I think that what you've got to look at -- if the overall EBIT door overall EBIT margins from a standpoint. And I think we could take you through that.

So by the fourth quarter of next year we should start to see it as we've lapped all of these items, the New Oxford edition we should really start to see at least the stabilization or an improvement especially with the SKU rat going on in the personal products business.

You should see that beginning in the January quarter where basically you got totally SKU rat and then you see price increase on that starting to take effect after that.

Okay, thank you.

Preston Wilkinson, BB&T Capital Markets.

Andrew Wolf. Can you hear me all right? Good afternoon. Congratulations on managing through a year with so much coming at you from all sides.

The team appreciates it, because they understand it.

It's a lot going on, I tell you and the growth of the core business -- of the business is -- to be commended.

Most of my are obviously follow-ups at this point. But I wanted to start with John Carroll on -- the way he's talking about Celestial, getting it going next year. To my hearing it sounds like, at least strategically or hypothetically, not too hard a fix if it's all about going into the retailers, buyers, and showing them how they can move more product through better category management.

So my question on that is, how analogous -- has this kind of a fix if you will, to getting some of the other brands, be a lot more profitable and have better velocity or some productivity -- how analogous is that to some of the other brands? You have other brands you can point and say yes, this is pretty much what we had to do here, and it worked.

That's really my curiosity there. And secondly, is tea different because it's much more competitive than some of these other? If that's the case, and it's just a category management fix, and it's worked before, what does the competitiveness of the category mean for that?

A couple of points. First, this is a really profitable business. Even -- today it is a very profitable business for Hain. So it is an opportunity for us to really start driving some consumption growth.

And in terms of what it's analogous to, it's analogous to some of the categories that we ran into in Grocery and Snacks, it's analogous to some of the issues we worked our way through on JASON. It's just a matter of refocusing our efforts on the consumer in a really meaningful way.

I think, as Irwin said, there's been a lot of great progress on the Celestial business. The question is, are we getting the most out of our marketing and sales investment to drive consumption? And -- or are we spending it in too many areas, or are we spending against distributors as opposed to retailers?

There is -- these are the issues we tackled on both Grocery and Snacks and Personal Care. And I think air the same issues in the same opportunities and same leverage points exist on tea.

I think if we were here talking about tea today alone as a public company, I think we would be talking about some good numbers. It's just -- it's a tougher category, and when you're number one or number two, it's what do you do?

I think [contiguously] what Celestial tried to do is win the categories and how do I innovate and how do I innovate? And at the end of the day we kept innovating, and we did not make any money on these.

And we make a lot of money on selling green tea, herbal tea and black tea. But how do we make more money going into other areas, and as we focused on Zingers To Go or maybe [Safar] and places like that, did we take our eye off green tea, herbal tea and was it worth it?

I think that's what John is saying. That's kind of the blueprint -- John was able to do on Personal Care with JASON's SKU rat, and get the line skinny down, and improve margins and take it to a whole other level. I think he's got the playbook for that them and he's done it with and then a lot of brands within Hain.

Absolutely, that's what I heard and that's kind of exciting. I guess what I want to get beyond that was some of your competitors are so big making kind of buy some shelf space. And can they kind of -- knock that back just through size or how have they been doing that? Or do you think if you could persuade the retailers getting velocity up on these high margin items it's just better to go with the velocity?

We hope the brand means something. At the end of the day we hope Celestial part of Hain that we have relationships out there with Kroger, and our other retailers that help the brand grow. And I think what's important today, again, half of our volume of Celestial goes through other markets, whether it's mass market, other retail channels. So it's just not supermarkets.

And then on the guidance, you mentioned the stock comp is out of this -- the options are excluded. Can you give any sense of what the range on the expectation from Fakenham in Q1 is, start-up costs there?

I'll give on that. Listen, hopefully it's minimal, and that it is behind us. And, like I said, as Ira said, within the first quarter, $0.5 million to $1 million. That's a lot, but that needs to be behind us. And as a company it needs to be behind us. I think we've got the people in place to really get that behind us.

We know what we need to do in regards to volume and new products and that in there. So that's basically behind us.

I think Ira mentioned $1 million to $2 million of unabsorbed overhead (multiple speakers) .

I said $1 million to $1.2 million, Andy.

Is that something that will also be excluded from the adjusted number?

No. I just pointed that out because the co-pack agreement has expired, we had been pointing out that co-pack agreement in the past. And we just know that we need to replace the volume as we go forward.

It's important to say, and that's a good point. In regards to this year's onetime items, and it's important going into next year, other than some of those legal costs with regards to the inquiry, and one or two months into the first quarter in regards to Fakenham, our one-timers hopefully are all behind us.

That's where I was getting to. Great, thank you.

Terry Bivens, JPMorgan.

Hi everyone. A couple of quick things here. When I had to -- I could not join the call until late. I don't know if you commented at all, Campbell has Wolfgang Puck now. I understand there may be some capacity issues there.

Do you see anything in their acquisition that you're going to have to do anything strategically with Health Valley on?

I think what it shows, and we have seen Wolfgang Puck Organic, where they made the [presence], I think I would be more concerned with Campbell's Organic than Wolfgang Puck Organic. And we're seeing good soup numbers, which is interesting during the summer, where people are staying at home, and ultimately are cooking with soup.

And some of our research shows that Wolfgang may come after me with a knife, but chefs' branded products are perceived as unhealthy. So that's one of the things that we see out there when we do some of our testing.

So you have not really had to do anything significantly different as a result of that, it sounds like you're not planning to for this fall.

I think from a capacity standpoint it something we're going to continuously do. Because our [aseptic] soup business is something that continues to grow for us, and we're going to look for more capacity. The other thing that we're doing this year, and we have announced it and it is out there, we've introduced a whole line of Imagine soups for the first time in cans, which are all organic because of the strength of the Imagine name on the aseptic line.

So with that, we've now come out with Imagine, and we have Health Valley, we have Walnut Acres which will basically be skewed to natural food stores. But we have basically a very strong branded Imagine can soup.

And just one last thing. Did you give -- I apologize if I missed it, did you give the number of personal product sales, how that topline did?

We said it was up 11% ex-SKU rat, Terry.

What's the ACV on that now?

It's still below 40% in Grocery.

What we did say, Terry, since we acquired Avalon and Alba, our sales have somewhat almost doubled on that business. Our profitability has doubled on that business. And that's only since January 2007.

Thanks a lot, gents.

Last question.

Ed Aaron, RBC Capital Markets.

Can you hear me this time?

We do know what happened, we thought you went to the Democratic convention so you left us.

Sticking around for a little while. So -- one quick one. You mentioned, I think, that the price increases from July are not expected to help until the second quarter. Why would that be, if we are -- if July was obviously the first month of the quarter, so why not see any impact this quarter?

And then, secondly, on the commodity environment in general, there has been a pullback over the last month or so in some of the key commodities. But I didn't really hear a sense from you that you really feel like your cost picture has loosened up at all. Could you maybe provide a little clarity on that?

Very quickly, the reason why we won't realize anything (technical difficulty) Q2, the most part, most of it -- we announced it in July, it takes effect at the end of July, late August. Early August.

And the net of it is most of the promotions we can't touch at all. So at this point, we're going to realize very little benefit in Q1.

Secondly, in regard to commodity prices softening, that's on conventional commodities. Organic commodities are under really, really high demand right now. So we're not seeing any softening on organic commodity prices at all.

Thanks for the clarity.

Thank you, everybody, for listening to our call today for our year end fiscal '08 and our Q4. Like I said at the beginning, what a year it has been. And there have been numerous times I've sat there and said going into our planning and our planning starts back in December and planning a fuel, and planning commodities, prices, and -- healthcare costs, etc. And where we have been able to come out at, I think this group has done a fabulous job.

It shows the power of our brands, it shows the strategy we have in place, and yes, the UK operation did not deliver. And we're not happy about that. But we have taken a lot of steps, we've made people changes and where we need to make personnel changes we're not afraid to do that.

I think going into '08, the question asked about organic growth, I feel good about the growth. I feel good about the opportunity expansion to many classes of trade and many channels whether Canada, US, Europe, Asia which we didn't really talk about. We're being cautious here and we should be because we've seen corn go from $8.50 down to $5 and we've seen it back to over $6 today.

We have seen crude oil come down from $1.50 to $1.15, but we still see -- $115, and we still see fuel at the pump $4.09 for -- .

So not knowing where anything is going, we are somewhat being cautious and optimistic out there. On the other hand, like I said, we feel the consumer is staying at home eating healthy. The consumer is Personal Care products, continuously buying Personal Care products, because they're educated and aware of the ingredients. And we feel consumer is trading down from red meat or reducing their red meat intake and eating chicken and turkey, so we feel we're really in good places.

And we also feel the retailer is looking for additional brands and looking to bring in a good line of natural organic products. So

going into 2009, we're focused on growing topline sales. We're really focused on cost containment, we're really focused on productivity, we showed everybody what we could do on productivity in 2008. And we're looking to repeat that and then some in 2009.

We're continuously looking at innovation. You heard me say before, as a company we introduced over $30 million of new products, and looking to duplicate that.

And last but not least, we appreciate our shareholders and those that follow us for your support in 2008, and look forward to delivering in 2009. Enjoy the rest of the summer, and we look forward speaking to each of you soon. Thank you

This concludes today's Hain Celestial fourth quarter and fiscal year 2008 conference call. You may now disconnect.