Helen of Troy Ltd (HELE) 2008 Q1 法說會逐字稿

Good morning and welcome, ladies and gentlemen, to the Helen of Troy first-quarter earnings conference call for fiscal 2008.

(OPERATOR INSTRUCTIONS).

Our speakers for this morning's conference call are Gerald Rubin, Chairman, Chief Executive Officer and Vice President -- excuse me -- President; Thomas Benson, Senior Vice President and Chief Financial Officer.

I will now turn the call over to Mr.

Tom Benson.

Please go ahead sir.

Good morning, everyone, and welcome to Helen of Troy's first-quarter earnings conference call for fiscal 2008.

The agenda for this morning's conference call is as follows.

We will have a brief forward-looking statement review, followed by Mr.

Rubin, who will discuss our first-quarter earnings release and related results of operation for Helen of Troy, followed by myself, who will discuss the financial review of our income statement and balance sheet for the quarter; and finally, an open question-and-answer session for those of you with any further questions.

Safe Harbor statement.

This conference call may contain certain forward-looking statements that are based on management's current expectation with respect to future events or financial performance.

A number of risks or uncertainties could cause actual results to differ materially from historical or anticipated results.

Generally, the words anticipates, believes, expects, or other similar words, identify forward-looking statements.

The Company cautions listeners to not place undue reliance on forward-looking statements.

Forward-looking statements are subject to risks that could cause such statements to differ materially from actual results.

Factors that cause actual results to differ from those anticipated are described in the Company's Form 10-K, filed with the Securities and Exchange Commission for the year ended February 28, 2007, and our other filings with the SEC.

Before I turn the conference call over to our Chairman, Mr.

Rubin, I'd like to inform all interested parties that a copy of today's earnings release has been posted to our Web site at www.hotus.com.

The release can be accessed by selecting the investor relations tab our homepage, and then the news tab.

I will now turn the conference call over to Mr.

Gerald Rubin, Chairman, CEO and President of Helen of Troy.

Good morning, everybody, and welcome to our first-quarter conference call.

Helen of Troy today reported record sales and increased net earnings for the quarter ended -- ending May 31, 2007.

First-quarter sales increased 7.5% to a record $140 million, versus sales of $130 million in the same period of the prior year.

First-quarter net earnings were $10,117,000, or $0.32 per fully diluted share, compared with $6,679,000, or $0.21 per fully diluted shares -- per share for the same period in the prior year, an increase in fully diluted earnings per share of 52.4%.

First-quarter earnings before interest, taxes, depreciation and amortization, EBITDA, increased 18% to $18 million versus $15,300,000 for the prior-year quarter.

We are extremely pleased with our results for the first quarter.

During the period we experienced sales increases in both our Personal Care segment and our Housewares segment.

SG&A -- selling, general and administrative expense -- declined to 32.6% of sales this quarter compared to 36.1% of sales for the first quarter of last year, or a 3.5% point improvement.

The improvement is mostly due to an improved distribution cost structure, outbound freight cost improvement, and lower information technology outsourcing costs.

Operating income for the first quarter increased to $14,301,000 versus $10,916,000 in the prior-year first quarter, an increase of 31%.

This resulted in operating income of 10.2% of sales for the quarter compared to operating income of 8.4% of sales for the first quarter of last year.

During the month of May we started shipping the exciting new Bed Head by TIGI appliance product line.

During the second fiscal quarter, we will begin to see the consumer sellthrough of this product line as we initiate our advertising campaign for Bed Head.

For the fiscal year ending on February 29, 2008, we are now projecting total company sales, including sales from the Belson Products business, in the range of $680 million to $690 million, and annual net earnings in excess of $2 for fully diluted share.

As of May 31, 2007, Helen of Troy's balance sheet remained strong, with cash and temporary investments of $59 million compared to $26 million at the end of the first fiscal quarter of the prior year, an increase of $33 million, and stockholders equity of 528 million, an increase of 47 million from the comparable period last year.

Our inventory level was 156 million, which was a decrease of $8 million, or 4.8%, from last year, even with the added inventory from the Belson purchase.

I would now like to turn over the conference call to our CFO, Tom Benson.

Thank you, Gerry, and good morning, everyone.

First-quarter net sales grew 7.5% year-over-year.

Our Personal Care segment had 1.4% growth in sales and the Housewares segment had 32.8% growth in sales.

Net sales for the first quarter of fiscal 2008 was 140.2 million, compared to 130.4 million in the first quarter of fiscal 2007.

This represents an increase of $9.8 million, or 7.5%.

Our first-quarter operating income increased 31% year-over-year.

Operating income in the first quarter of fiscal 2008 was 14.3 million, which is 10.2% of net sales, compared to 10.9 million, or 8.4% of net sales in the prior-year quarter.

This is an increase of $3.4 million, or 31%.

The operating income percentage increased 1.8 percentage points as a percent of net sales.

The increase in operating income of 1.8 percentage points is comprised of a reduction in gross profit of 1.6 percentage points, more than offset by a 3.5 percentage point reduction in selling, general and administrative expenses.

First-quarter net earnings increased 51.5% in dollar terms year-over-year.

Net earnings for the first quarter of fiscal 2008 was $10.1 million, which is 7.2% of net sales, compared to $6.7 million, or 5.1% of net sales in the prior-year first quarter.

This is an increase of $3.4 million, or 51.5%.

First-quarter diluted earnings per share increased 52%.

Diluted earnings per share for the first quarter of fiscal 2008 was $0.32 compared to $0.21 in the first quarter of the prior year.

This is an increase of $0.11 diluted earnings per share.

Now I will provide a more detailed review of various components of our financial performance.

Our Personal Care segment includes the following product lines.

Appliances.

Products in this group include hair dryers, straighteners, curling irons, thermal brushes, hair straighteners, massagers, spa products, footbaths and electric clippers and trimmers.

Key brands in appliances include Revlon, Vidal Sassoon, Bed Head, Sunbeam, Health o meter, Dr.

Scholl's, Hot Tools, Fusion Tools, Wigo, and Gold 'N Hot.

Grooming, skincare and hair products are included in the Personal Care segment.

Products in this line include liquid hair styling products, men's fragrances, men's deodorants, foot powder, body powder and skincare products.

Key brands include Brut, Sea Breeze, SkinMilk, Vitalis, Ammens, Condition 3-in-1, Final Net and Vitapointe.

Brushes and accessories are also included in the Personal Care segment.

Key brands in the product category include Revlon, Vidal Sassoon, Karina and Bed Head.

The Personal Care segment net sales were 106.8 million for the first quarter of fiscal 2008 compared to 105.3 million in the prior-year first quarter.

This is an increase of $1.5 million, or 1.4%.

Appliance net sales were up, partially offset by declines in grooming, skincare and hair products, and brushes and accessories.

Our Housewares segment consists of the OXO business.

OXO is a leader in providing innovative consumer product tools in a variety of areas, including kitchen, cleaning, barbecue, barware, garden, automotive, hardware, storage and organization.

Brands that we sell include OXO Good Grips, OXO Steel and OXO SoftWorks.

The Housewares segment's net sales were 33.4 million in the first quarter of fiscal 2008 versus 25.1 million in the first quarter of fiscal 2007.

This is an increase of 8.2 million, or a 32.8% increase.

Our Housewares segment sales increase was helped by comparison to a weak first quarter in fiscal 2007, when distribution center shipping issues resulted in an estimated loss of between 4.5 to 5 million in net sales for the quarter, some of which were subsequently shipped in the second quarter of fiscal 2007.

Sales increases also resulted from a continuing trend of expanding our Housewares product mix to higher-priced goods, growth with existing accounts, and geographic expansion in the United Kingdom and Japan.

Gross profit for the first quarter was 60 million, which is 42.8% of net sales, compared to 57.9 million, or 44.4% of net sales in the first quarter of fiscal 2007.

This is a dollar increase of $2.1 million.

This represents a 3.6% increase in dollar terms and a 1.6 percentage point decline in gross profit margin.

The decrease in gross profit percent of 1.6 percentage points is primarily due to cost increases in certain products, selling price pressures and product mix changes.

For the first quarter, selling, general and administrative expenses decreased in total and as a percentage of sales.

Selling, general and administrative expenses were 45.7 million, or 32.6% of net sales, compared to 47 million, or 36.1% of net sales in the prior-year first quarter.

This represents a dollar decrease of 1.3 million and a percentage point decrease of 3.5 percentage points.

The 1.3 million decrease in SG&A costs is mostly due to an improved distribution cost structure, outbound freight cost improvements, and lower information technology outsourcing costs.

Interest expense decreased in the quarter.

The interest expense was 4.1 million, or 2.9% of net sales for the first quarter of fiscal 2008, compared to 4.5 million, or 3.5% of net sales in the prior-year first quarter.

The decrease in interest expense is due to lower amounts of debt outstanding in the first quarter of fiscal 2008, and a 279,000 interest cost associated with a Hong Kong tax settlement expensed in the first quarter of fiscal 2007.

Tax expense for the first quarter of fiscal 2008 was 1.3 million, which is 11.6% of income before taxes, compared to 0.5 million, or 7.2% of income before taxes in the prior-year fiscal quarter.

The quarterly year-over-year 4.4 percentage point increase in tax expense as a percent of pre-tax income is due to more of our income in fiscal 2008 being taxed in higher tax rate jurisdictions, and a 2.7 percentage point impact of a reversal of 192,000 of tax provision previously established in connection with a Hong Kong tax settlement in the period ended May 31, 2006.

I will now review our financial position.

Our cash and temporary investment balance was 59.4 million at May 31, 2007, and we had no borrowings on our 75 million revolving line of credit.

In June 2007, we made a 25 million prepayment without penalty on our 100 million senior notes that mature June 2008.

Also in June 2007, based upon a review of our expected cash flows, we reduced our 75 million revolving line of credit facility 25 million, to 50 million.

Accounts receivable were 111.5 million at May 31, 2007, compared to 114.2 million at May 31, 2006.

Sales for the -- I'm sorry -- sales for the first quarter of fiscal 2008 were 9.7 million higher than the first quarter of fiscal 2007, and accounts receivable are $2.7 million lower.

Accounts receivable turnover days were 71 at May 31, 2007, compared to 75.1 days at May 31, 2006.

The inventories at May 31, 2007 were 156.2 million and increased 12.1 million from February 28, 2007, and decreased 7.8 million from May 31, 2006.

Normally, inventory levels increase in the first fiscal quarter of the year as we build up for late summer and fall new product introductions and holiday sales.

We have had some of this normal buildup, but inventories were also impacted by the Belson purchase, which included inventories.

Shareholders equity increased 46.9 million to 528.4 million at May 31, 2007, compared to May 31, 2006.

I'll now turn it over to Gerry for questions.

Thank you, Tom.

We'd like to now take calls.

Operator?

(OPERATOR INSTRUCTIONS).

Gary Giblen, Goldsmith & Harris.

What led to the somewhat higher-than-usual other income (technical difficulty)

The other income was higher due to more interest income received this year for two reasons.

We had more investable cash, and also, the interest rates we earned on our investments were higher this year.

What's your outlook on materials costs, raw materials price increases, which is something that many consumer companies are thinking about looking ahead?

Are they going up a lot?

Can you pass them through?

There are price increases because of different commodities that we use in our products.

And, yes; we are passing them on as much as we can to the customers.

Mimi Noel, Sidoti & Company.

A few questions for you.

If I could follow up on Gary's, can you comment at all what -- to what extent your ability to pass through the first quarter would have represented?

And do you think that the new product introductions started shipping in May will be enough to offset the expected rise in input costs through the balance of the year?

As I mentioned, the new Bed Head introduction that we're real excited about, the main shipments started in June.

And they are new products.

And because they are new products, we're able to pass on any price increases that we get through the cost of these new products.

So I believe you will see the price increases, or the new prices on the Bed Head, will come through in the second quarter.

As you know, there's two parts of the business.

There's the new products that we have.

We build in our -- whatever the cost is of that product into the cost that we sell it for.

And with existing products, what we do is try to increase the prices to our customers.

And I was referring more to the former than the latter, but thank you for clarifying that.

Also, I wanted to know, with the Chinese safety standards in the headlines a lot recently, is that something that keeps you awake at night?

Or is there anything that abates any concerns that people should have?

It's nothing that we worry about here.

All our products meet certain codes of UL or ETL, as we have always done for years and years.

I think the safety standards they're setting up is for things that people take in their mouths rather than consumables, rather than the products that we make.

Two kind of housekeeping questions.

Can you provide the contribution from Belson in the quarter?

And also, why did the share count, if my numbers are correct, decline sequentially from the February quarter?

On the share count, the weighted average, of course, is based on the price.

The calculation of the fully diluted shares is -- we do it on the treasury method.

And what happens is, as the share price goes up, there's a higher potential tax benefit that the Company can earn on that.

And the calculation assumes that you take all of your tax benefits --

In your repurchase?

-- in your repurchase.

So the tax benefit, that potential tax benefit, was really higher than the increase in number of shares that went into the calculation because of the price rising.

We had some shares that were excluded in the prior quarter; we still have some shares that are excluded in this quarter because their exercise price is higher than the average price for the quarter.

But the tax benefits did grow quarter-over-quarter.

And the Belson question.

The Belson question -- we do not separately state the contribution.

But, we had one month of sales.

And as we are transitioning the Belson business into Helen of Troy, we are incurring certain costs.

And we expect that over time, as we hire the people and work closely with the customers and work closely with our suppliers, we feel we're going to be able to improve that contribution on the business.

Currently that contribution is below our other professional line.

But it was not -- we're anticipating for the full year it will be slightly accretive.

I'm sorry; maybe I wasn't being clear.

I meant on the sales line.

Sales?

It was -- let me see.

It was $3.5 million.

And that was for a single month?

For a single month.

Graham Tanaka, Tanaka Capital.

Great quarter, guys.

A few housekeeping items.

The tax rate.

Is that going to be trending back up over time towards sort of the '04, '05 levels in the teens, or what?

What's the direction on that, and maybe a little color?

The tax rate -- we have consistently said we think it's in a range from 10 to 12%.

It can jump around by quarter, depending upon where the income is generated and what tax jurisdictions.

You also have adjustments over time for audits and refinement of estimates.

We think a good range to use ongoing is 10 to 12%.

But it could jump around each quarter.

So it's not heading back up to 14 to 17%?

We're not anticipating that.

Great.

That's terrific.

I just want to make clear -- the debt is about how much?

The net debt right now is currently --?

As of May 31st, or as of today?

As of May 31st.

Just a minute; I want to --

(multiple speakers)

The net debt with the total long-term liability was 251 million, and we had cash of close to 60 million.

Our total debt is $250 million as of May 31st.

As I mentioned, we paid off 25 million of that debt in June.

What's the rate on that debt?

That's all in our filings.

We have -- most of it is around 6%, and then we have about 25 million that's slightly over 7%.

Thank you.

In terms of the gross profit trends, congratulations on having your outbound freight costs go down; I don't know how you did that.

But what is the outlook for freight and that kind of more energy-sensitive cost?

The reason that we were able to lower our freight cost in the environment of increased fuel is we're doing more consolidated shipments.

We're a little more sophisticated, now that we're in our new warehouse, on shipping to customers.

So we've been able to get some savings out of the consolidations.

That leads to sort of segue into the new warehouse facility.

Where are you vis-a-vis where you want to be on (technical difficulty) costs as a percent of sales?

Are you part-way there, halfway there, most of the way (multiple speakers)

The results in our distribution costs were down year-over-year, as we expected.

We're constantly working to improve that area, but we are pleased with the results, and it came in as we expected.

So, we expect for the full year we're going to do better than the prior year.

But quarter-over-quarter there's not going to be significant percentage changes in our distribution costs -- I mean our warehouse costs.

We have achieved a lot of what we expected.

The other is price increases kind of across the board.

Is there sort of an average price increase that you've got [achieved] across the line, say, 1 or 2%?

We're actually trying for a little higher number than that, and we're working towards that.

The reason I can't give you a percent is because it varies from product category to product, to customer, whatever.

I guess the real question is on a net basis -- and Mimi was sort of touching on it -- is to what extent -- somebody was -- to what extent your average price increases will offset the cost increases.

In other words, are you having a cost price squeeze as we go further into the year, or are you kind of neutralizing that?

I think that all the price increases, I think, we've already gotten.

We usually get them right after Chinese New Year.

So I think that we're already buying at the new prices.

And again, we are passing them onto the customer as far as existing products.

Where we make up the difference is in new products.

Congratulations.

Thanks.

Mike Jacobs, Avondale Partners.

Can you give us the initial reaction from the Bed Head line that launched in May?

And also, when specifically will you launch the advertising campaign for that?

Our major shipments started to the retailers starting in June.

June was a good shipping month for us.

Advertising did actually start this month.

We're actually in national magazines for the August issue, but I've seen some where the August issue is already out on the street with some of them.

So we are in about -- I think we're in seven or eight magazines.

And then our national TV has just started also.

We haven't shipped to all the customers.

Some of the customers actually don't want the merchandise until September for the fall season.

But a good part of the retailers did take it in June.

We'll be shipping them in June, July and August, and probably the last ones in September.

And we're encouraged.

It's a great product and all the stores are excited about it.

They're giving us endcaps in many of the major stores, and we're looking forward to a good year with the Bed Head line.

Rommel Dionisio, Wedbush Morgan.

I just want to ask about a couple of sales trends you've talked about.

First, on the Housewares line, you talked about geographic expansion in the UK and Japan.

Could you just talk a little bit more about that?

Was part of the growth in the quarter sell-in to new retailers in those markets?

In the UK, we used to go through a distributor there.

And at the end of the last calendar year, we took that business over ourselves and we're selling directly to the retailers.

So that business, we're putting more attention to it.

And we're growing not only the customers, but we're also growing the product line that they carry.

And the same thing in Japan.

So those are areas that we're just putting more attention to and expanding the product lines.

Thanks, Tom.

Also, on the men's grooming, I think you mentioned there was a slight decline there.

Given that you were launching Brut Revolution, can you just talk about what some of the drivers were, and what the outlook is for that business going forward as well?

Brut is our major brand in our Idelle Labs division, and we have -- we're real excited about it, because we think Brut is certainly well known throughout the country.

And we are spending money promoting it.

We're in different facets of sports where we promote the brand.

It just -- it's one of our seven or eight brands that we do sell.

We don't give you any figures on anything, but we break it out.

We're optimistic that they'll have increases this year over last year.

[Steve Friedman], Wachovia Securities.

Nice quarter.

Partly my question, I think, has been answered, but I may ask you again.

How encouraged are you by the Bed Head sales introduction and the new OXO products, especially [the lighted] products or so, looking to the second half of the fiscal year?

As we mentioned on the OXO, we're looking for double-digit, mid-double-digit increases, which we should obtain.

We did -- what was our -- our percentage, although -- it was almost 33% increase in the OXO division.

But a lot of that, as Tom mentioned to you, was because of our poor shipping, which we made up in June.

But, sales are strong there, and we should have double-digit, mid-double-digit increases there.

As far as the Bed Head, the initial readings look good.

It's only been out for one month.

And as I mentioned, it's not at all the retailers yet.

We're still shipping to some of the major retailers between now and September.

But, initial response looks good.

Great.

I noticed in your release that you had started shipping some of the Bed Head line in May.

Is that a little earlier than you expected, as opposed to in June?

No.

We just -- we shipped a small quantity to one customer in May that -- our -- the major shipments began in June and will continue, certainly, as I mentioned, through September.

It was very small in May.

Stephen O'Brien, Wellington Management.

Could you go in, again, to the weakness in the accessories and grooming?

What's causing that, and what's the outlook?

In the accessory area, there was a private-label program we had with one retailer that's being discontinued.

The retailer has chosen to go another direction on that.

And there is -- there was another distributor customer that we lost some placement with.

So, that was the reason for the decrease there.

In the grooming and skincare we have a number of different brands.

And we're putting a lot of focus on the Brut brand that we are continuing to grow not only domestically, but in Latin America.

And some of the other brands that we are not supporting, promoting or focusing on much, some of those are having some sales decreases.

Are you going to be shifting resources into those brands?

Or are they -- is the profitability such that if they slip a little, it's not a big deal?

That's basically it.

We're going to promote the brands that we think will give us the best bang for the dollar in advertising.

[John Curti], Principal Global Investors.

I've got some questions regarding the gross margin and SG&A expenses.

On the gross margin, I think, on the last conference call you had talked about, on an annualized basis for the year, hoping to be able to stay in the 44 to 45% area.

And given first-quarter numbers which are well below that, I'm wondering if you could maybe explain why you have confidence in maybe that that is still going to happen, based on maybe new product introductions with higher margins, partially offset by Belson Products, which probably has lower margins.

And then we'll move onto the SG&A.

Our forecast currently, as I told you in the last conference call, between 44 and 45%; we still believe that's the number.

A little slightly less in the first quarter, but remember that our first-quarter sales are probably the weakest of the whole year.

Second quarter is better and, of course, our third quarter is our best quarter.

But we're still in this 44 to 45% GP area.

Some of the selling price increases that we implemented on existing products, they were not in effect for the whole quarter.

And also, as new product come out, as Gerry mentioned, we look at our costs and we set our prices based on that.

On some of these existing products, costs go up, and we're trailing behind to try to implement price increases, and we always can't.

Would you say that typically you introduce a lot of new products in second and third quarter?

Yes.

That's usually when it happens.

That's when the retailers take it.

Also, when we had our last conference call, we did not have the Belson business.

Belson business is going to -- has lower gross profit margins than our existing business.

So, as they -- as we have full quarters of their sales, that is going to have an impact on the gross profit margin.

On the selling, general and administrative expenses, obviously, last year you were going through lots of different things.

Is there any way to kind of isolate from last year's numbers how much of those SG&A costs were kind of onetime in nature, where you had duplicate costs, outsourced things that you couldn't be doing in-house because of the transition, etcetera?

We have mentioned in prior calls that our overall SG&A costs, we saw 7 to $10 million savings coming on costs.

Not necessarily dollar for dollar -- as the business grows, it could go up -- but on certain costs.

Those costs were made up of both warehouse costs, distribution costs, certain royalty costs.

And so, some of those costs were saved last year.

The ones that were not saved were really the distribution and some of the ongoing outbound freight costs through our consolidation efforts and order size work we're doing.

So the ones that we're really going to see this year are really the warehouse costs.

And that is maybe half of the 10 million, or 60% of it.

And that will be anniversaried by the end of, say, the third quarter, largely?

No.

We had duplicate warehouses all the way through February of last year.

So it's going to take the full four quarters to anniversary.

Okay.

Just a point of clarification on the revolving credit line.

You didn't -- did you pay it down, or you just reduced the amount?

We reduced the amount of the facility from 75 million to 50 million.

We have no borrowings on that line currently.

Kathleen Reed, Stanford Financial.

I got on the call late, so I apologize if this was already repeated.

On the Belson Products sales expectations for the full year '08, has that changed slightly since your last call, when I think we were talking about annualized -- I know annualized versus 10 months -- but annualized sales in the $40 million range?

I think that we did give you that number, and that would probably be annualized starting later in the year.

We're looking at all the products, we'll be changing a lot of products, and we believe that the number that we gave you will start annualizing later in the year.

I guess, can you give us any other clarity on what you're doing to their product line?

How many -- what -- if there's some older products, if you think they have obsolescence issues.

Or if you're just -- you have new products that are already going to ship later in the year that will replace some of those products to get to the annualized 40 million run rate?

It's a little of everything.

I can't give you all the information because of trade confidentiality, but we are going to refresh their line.

They did not have a lot of new products in the last year.

They will have a lot of new products going forward.

They should start showing up in the marketplace in about six months.

But it will be a whole new line of expanded and, let's say, better products, and fresher products and newer products.

Is that being run out of your warehouse in Mississippi?

Currently -- when we took over the Belson business it was with a third-party warehouse, which is very close to our warehouse in Mississippi.

We are leaving it there through this year and busy season, and then we're going to look at what makes the most sense for the long-term.

But it is through a third-party warehouse that, actually, we have done business with in the past, so we're comfortable with them.

Last thoughts on Belson, if you have any initial opinions that you can share just regarding read or demand or integration of those products to your existing retailers; if you're getting increased shelf space because now you have more products to offer, more salon types of products; if there's any other changes since your last call in May.

Just more information on Belson.

The Belson division and the Helen of Troy Professional division are going to be run separately, have separate sales and marketing, although it will certainly be run out of El Paso when we transition it from Florida.

They sell to different segments of the market.

In many cases they don't compete with each other, and that's why we like the Belson Products; it's heavily oriented towards ethnic and some customers that we weren't selling.

So it's very compatible with Helen of Troy.

They'll have their own separate products.

There will be no duplication of the products.

As I mentioned, they'll have their own sales and marketing, so they'll have their own divisions to run.

Finally, as you learn more about the Belson cost structure and infrastructure -- and I know even on the previous call you said it was a lower-margin business than your existing professional business and overall Helen of Troy -- what -- has that changed at all?

Is it any more margin dilutive, or are those perceptions still the same?

I think the perception is still the same.

And I think that for us to have any impact or change on it, it's going to -- we don't see a change until late in the fiscal year or early next fiscal year, because it takes time to come up and introduce new products, manufacture them, design them.

We're getting the personnel in place.

We're transitioning it from Florida to El Paso.

So there's -- we have a lot of activities going on, but we're not really going to see the results of them until the next fiscal year.

(OPERATOR INSTRUCTIONS).

Mimi Noel, Sidoti.

I have a quick one.

I don't know if this is for Gerry or Tom, but have you guys heard any talk from Washington recently regarding the reversal to favorable implication from the Jobs Creation Act of 2004 as it pertains to your own corporation in Bermuda?

We're not aware of any pending legislation that would impact us.

Okay.

It's not a debate that, as far as you know, has been revitalized in the last couple of months?

There's been ongoing discussions about inverted companies and corporate structures, and there was some changes to that, I don't know, 18 months ago.

But our transaction was well before the period that they were looking at.

And at this time we feel that we're not aware of anything that's going to impact that.

That's helpful.

That's what I was looking for.

Thank you.

If there are no further questions, I will turn the conference back over to Mr.

Rubin for any additional or closing remarks.

Thank you to everybody that participated, and thank you to everybody else for listening in to our first-quarter conference call.

Thank you again, and look forward to talking to you at the end of the second quarter.

Ladies and gentlemen, if you wish to access the replay for this call, you may do so by dialing 888-203-1112, with replay passcode 803-4432.

This concludes our conference call for today.

Thank you all for participating, and have a nice day.

All parties may disconnect now.