Helen of Troy Ltd (HELE) 2008 Q4 法說會逐字稿

Good morning, and welcome ladies and gentlemen to the Helen of Troy fourth quarter and year end conference call for fiscal 2008.

At this time, I would like to inform you that all participants are in a listen-only mode.

At the request of the company, we will open a conference up for questions and answers after the presentation.

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

I will now turn the conference over to Robert Spear.

Please go ahead, sir.

Good morning, everyone.

Welcome to Helen of Troy's fourth quarter and year end financial results conference call for fiscal 2008.

This morning's agenda will be a brief forward-looking statement, a review, followed by Mr.

Rubin, who will discuss our fourth quarter earnings release and related results of operations for Helen of Troy, followed by a financial review of our income statement and balance sheet for the quarter by Tom Benson, our Chief Financial Officer.

Finally, we will open it up for questions and answers for those of you with questions and answers after the conference call.

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 and 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 our actual results.

Factors that could 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 fourth quarter and fiscal year ended February 29th, 2008.

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

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

The release can be accessed by selecting the Investor Relations tab on the 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.

Thank you Bob, and good morning to everyone.

Helen of Troy Limited today reported sales and earnings for the fourth quarter and fiscal year ended February 29th, 2008.

Fourth quarter sales increased to $144.106 million from $143.882 million in the same period of the prior year.

Fourth quarter sales in the housewares segment increased 21.9% to $44 million, compared to $36 million for the same period last year, reflecting continued strength in our OXO brands worldwide.

Sales in the personal care segment decreased 7.1% to $100 million in the fourth quarter, compared to $108 million for the same period last year, reflecting the difficult retail environment.

Net earnings for the fourth quarter increased 5.9% to $10.297 million or $0.33 per fully diluted share, versus $9.721 million or $0.30 per fully diluted share for the prior year quarter.

Net earnings for the fourth quarter, excluding significant items as detailed in the press release that we put out, were $9.809 million or $0.31 per diluted share, compared to $9.721 or $0.30 per fully diluted share for the same quarter of the prior year.

Fourth quarter earnings before interest, taxes, depreciation, amortization, impairment charges, share-based compensation, the gain on land sale and litigation settlement increased 1.2% to $17.467 million, versus $17.264 million for the prior year quarter.

Full year net sales increased 2.8% to $652.548 million from $634.932 million in the prior year.

Net sales in the housewares segment for the full year increased 19.7% to $164.134 million compared to 137,000 - $137.108 million for the same period last year.

Net sales in the personal care segment for the full year decreased 1.9% to $488.414 million compared to $497.824 million for the same period last year.

Net earnings for the year increased 22.8% to $61.509 million or $1 93 per diluted share, compared with $50.087 million or $1 58 per diluted share in the prior fiscal year.

Net earnings for the full year, excluding the significant items which I mentioned, were $55.709 million or $1.75 per fully diluted share, compared to $49.175 million or $1.55 per fully diluted share for the prior year.

Full year earnings before interest, taxes, depreciation, amortization and impairment charge, share based compensation, gain on land sale and litigation settlement, increased 5% to $89.455 million versus $85.216 million for the prior year.

We are pleased with our fourth quarter results, considering the challenging retail environment.

We are also pleased with the progress that we've made in achieving our business initiatives during the past year.

We have maintained our inventory to last year's levels, and ended the year with a increase of $30.5 million more in cash and temporary investments, while at the same time paying down $35 million of debt and buying back stock.

At February 29th, 2008, the company's balance sheet including cash and temporary investments of $121.700 million.

Shareholder equity was $568 million or $17.87 per fully diluted share, which represents an increase of $41 million or 7.8% for the previous fiscal year.

Year-end inventory at February 29th, 2008, was $144.900 million versus $144.100 million the prior year.

Since January, we have purchased 554,397 shares of Helen of Troy stock, common stock, for $8.6 million for an average purchase price of $15.54.

Our ongoing efforts to reduce SG&A expenses as a percent of sales are reflected in our results for the full year, and we continue to focus on expense reductions.

The domestic retail environment continues to be challenging, and is expected to continue that way for the next two quarters.

However, we are committed to executing the strategic initiatives outlined during the past fiscal year, with a renewed sense of focus and dedication for this fiscal year.

I now would like to turn this conference call over to Tom Benson, our CFO, for financial highlights.

Thank you, Gerry, and good morning everyone.

We continued to face a difficult domestic retail environment in the Q4, where many of the retail partners face slowing same-store sales trends, and reduced the amount of inventory in their pipelines.

This contributed to lower overall sales year-over-year, after adjusting for the Belson acquisition.

Our OXO and international businesses continue to grow, and gross profit margins improved year-over-year, excluding the Belson acquisition.

Fourth quarter selling, general and administrative expense as a percentage of sales increased slightly year-over-year.

This increase was attributable to increased costs incurred for cooperative advertising activities with our customers.

We closed two years of open tax audits with the U.S.

Internal Revenue Service, which resulted in a no-adjustment to either year.

Fourth quarter net sales increased 0.2% year-over-year.

This includes $6.1 million of sales from the newly-acquired Belson business.

Net sales in the fourth quarter of fiscal 2008 were $144.1 million, compared to $143.9 million in the prior year quarter.

This is an increase of $224,000 or point 2%.

Our fourth quarter operating income decreased by 2.3% in dollar terms year-over-year.

Operating income in the fourth quarter of fiscal 2008 was $13.4 million or 9.3% of net sales, compared to $13.8 million or 9.6% of net sales in the prior year.

This is a decrease of $314,000 or 2.3%.

Fourth quarter net earnings increased 5.9% in dollar terms year-over-year.

Net earnings for the fourth quarter of fiscal 2008 was $10.3 million, which is 7.1% of net sales, compared to $9.7 million or 6.8% of net sales in the prior year quarter.

This represents an increase of $576,000 or 5.9%.

During the quarter, we had three items that impacted our net earnings that we do not expect to incur in the normal course of business.

We closed the internal revenue audits for fiscal years 2003 and 2004, which resulted in a reversal of tax provisions, including penalties and interest, and a benefit of tax expense of $1.4 million.

We had an after tax gain on litigation of $102,000.

We also had $977,000 of tax expense resulting from a net operating loss valuation allowance.

Net earnings before the above three items were $9.8 million in the fourth quarter of fiscal 2008, which is 6.8% of net sales, compared to $9.7 million or 6.7% of net sales in the prior year quarter.

This is an increase of $88,000 or 1%.

Fourth quarter diluted earnings per share was $0.33 for Q4 fiscal 2008, compared to $0.30 cents in the prior year quarter.

This is an increase of $0.03 or 10%.

Excluding the impact of the tax provision reversal, the valuation allowance and the gain on litigation, diluted earnings per share increased by 3.3%.

Diluted earnings per share excluding the 3 items for the fourth quarter of fiscal 2008 was $0.31, compared to $0.30 in the prior year quarter.

That's a $0.01 increase or 3.3%.

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

Our Personal Care segment includes following product lines.

Appliances - products in this group include hair dryers, curling irons, thermal brushes, hair straighteners, massagers, spa products, foot baths and electric clippers and trimmers.

Key brands in this category include Revlon, Vidal Sassoon, Bed Head, Tony&Guy, Golden Hot, Sunbeam, Dr.

Scholl's, Hot Tools, Wigo and HealthOMeter.

Grooming, skin care and hair products are included in the Personal Care segments.

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

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

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

Key brands include Revlon, Vidal Sassoon, Bed Head, and Karina.

Personal care net sales in the fourth quarter of fiscal 2008 were $100.1 million, compared to $107.8 million in the prior year quarter.

This represents a decrease of $7.7 million or 7.1%.

Q4 net sales were down in all three product lines year-over-year.

The Belson business, which we acquired effective May 1st, 2007, contributed $6.1 million of net sales for the quarter.

The decrease in Personal Care net sales compared to the same quarter of last year was due to a difficult domestic retail environment, a reduction in the amount of inventory held by certain key retailers, a decrease in sales in our grooming and wellness appliance categories, and expanded product line offerings by certain competitors in a move by certain professional customers to replace branded merchandise with private label.

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, bar ware, garden, automotive, storage and organization.

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

The Housewares segment net sales in the fourth quarter of fiscal 2008 were $44 million compared to $36.1 million in the fourth quarter of fiscal 2007.

This represents an increase of $7.9 million or 21.9%.

The sales increase resulted from a continuing trend of product mix expansion and geographic expansion in the United Kingdom and Japan.

Gross profit for the fourth quarter of fiscal year 2008 was $63.4 million or 44% of net sales, compared to $63.3 million, also 44% of net sales, in the prior year quarter.

This represents an increase of $89,000 or a 0.1% increase in dollar terms.

We continue to experience produce source and cost pressures due to raw material price increases, changes in exchange rates and labor cost increases.

Despite these pressures, gross profit margin, excluding the Belson acquisition, improved 50 basis points compared to the same quarter last year.

To compensate for rising costs we are implementing selling price increases when possible, introducing new products, securing from alternative suppliers and focusing on our internal costs.

Selling, general and administrative expenses for the fourth quarter of fiscal 2008 were $49.9 million or 34.7% of net sales, compared to 49.5 million or 34.4% of net sales in the prior year quarter.

This is an increase of $403,000 or a 0.8% increase in dollar terms, and a 0.3% increase in percentage points.

The increase in SG&A expense as a percentage of sales is mostly due to higher cooperative advertising expense and personnel costs, partially offset by improved distribution cost structure.

Interest expense for the fourth quarter of fiscal 2008 was $3.5 million or 2.4% of net sales, compared to $4.2 million or 2.9% of net sales in the prior year quarter.

The decrease in interest expense is due to lower amounts of debt outstanding in the fourth quarter of fiscal 2008, compared to the fourth quarter of fiscal 2007.

Income tax expense for the fourth quarter of fiscal 2008 was $1.2 million, compared to $517,000 in the prior year quarter.

Fourth quarter 2008 income tax expense was 10.4% of pretax earnings, compared to 5% in the same quarter last year.

The effective tax rate for the current quarter was impacted by the closing of two years of tax audits with the U.S.

Internal Revenue Service, which provided a tax benefit of $1.4 million, partially offset by $1 million of tax expense resulting from a net operating loss valuation allowance.

Excluding these items, tax expense was 13.8% of pretax earnings for the fourth quarter of fiscal 2008.

The year-over-year increase in tax expense is due to shifts in the mix of taxable income earned between the various high tax rate and low tax rate jurisdictions in which we conduct our business.

I will now discuss our financial position.

Our cash and temporary investment balance was $121.7 million at February 29th, 2008, compared to $91.2 million at February 28th, 2007.

We had no borrowings on our $50 million revolving line of credit.

Accounts receivable were $105.6 million at February 29th, 2008, compared to $115.9 million at February 28th, 2007, on sales in the fourth quarter of the current fiscal year that were $224,000 higher than the same period last year.

Accounts receivable turnover improved to 69.3 days at February 29th, 2008, from 71.6 days at February 28th, 2007.

Inventories at February 29th, 2008 were $144.9 million, an increase of $797,000 from February 28th, 2007.

Inventory turnover improved to 2.4 times at February 29th, 2008, compared to 2.2 times at February 28th, 2007.

Shareholders equity increased $41 million to $568 million at February 29th, 2008, compared to the prior year.

I want to inform you of a couple of items that could have a impact on our fiscal 2009 results.

On May 2nd, 2008, Linen's Holding Company filed for protection under Chapter 11 of the U.S.

bankruptcy code.

As of May 2nd, 2008 we had an accounts receivable balance from Linen's of $4.1 million.

The $4.1 million balance consisted of $3.1 million for sales originating on or before February 29th, 2008, and $1 million for sales originating after February 29th, 2008.

The Linen's accounts receivable are unsecured and the amount the company will ultimately recover, if any, is not presently determinable.

Although the company maintains an allowance for doubtful accounts to cover a customer's inability to pay all or a portion of their accounts receivable, no additional specific reserve was established as of February 29th, 2008, for Linens.

In addition, Linen's is a significant customer of the company, with fiscal 2008 net sales of approximately $18.6 million.

The company historically has completed analysis of the carrying value of our good will in other intangible assets during the Q1 of each fiscal year.

Our analyses are not yet complete, however, based upon preliminary work done to date, we expect to recognize impairment charges during the first quarter of fiscal 2009.

We currently estimate that the noncash charge will range between $7 million and $10 million, and will be recorded as a component of operating income in the company's income statement for fiscal quarter ended May 31st, 2008.

These charges will reflect the amounts by which the carrying values of these assets exceed their estimated fair values, determined by their estimated future discounted cash flows.

I will now turn it over to Gerry for additional comments and questions.

Operator, we are now available for questions.

(OPERATOR INSTRUCTIONS)

Our first question from the line of Doug Lane.

Please go ahead, sir.

Good morning everybody.

Tom, just to finish up on the Linen's impact.

You mentioned the total sales, are you shipping to Linen's and still expect to get sales from them while they are in bankruptcy?

Doug, we have had some shipments since they filed bankruptcy on cash in advance.

We are currently reviewing their bankruptcy and looking at how we are going to work with them in the future to continue to supply them without taking on undue credit risk.

We plan on doing business with them ongoing.

Okay, so the risk now really is a million dollars of previous sales that you haven't collected on?

No, we had - when they filed bankruptcy, we had $4.1 million of receivables due from them.

Okay, so that whole amount technically could be a potential write-off down the road?

It could be a potential write off, yes.

Okay.

I just wanted to be clear on that.

Gerry, can you give us more color on the competition in the retail stores that you had mentioned?

Who has come in there and does it look like it's impacted your market share of the category?

Yeah, I don't think it's competition that is hurting the sales.

I think it's just the way the retail environment is in the United States today.

With higher gas prices, people are spending less in retail stores.

For those of you that track retail discounters, you will know that there are a few doing very well and there is a lot that are doing very poorly on comp stores.

So I think it's just the economy and not the competition.

We are still very strong in the businesses that we compete in.

As soon as the economy turns around, I think our business will turn around also.

There is just less - all the retailers I talk to just say that there is less traffic in the stores, and of course that's something that they do publish.

No, that's right.

That's fairly widespread.

I just want to make sure that your shares are holding up while the consumer is pulling back here a little bit.

Coming to your sourcing in China, do you expect - I notice you didn't give '09 guidance.

Maybe you can give us some comments on why there is not even just an EPS range out there, but for more color, can you talk about the gross margins.

With the puts and takes that you mentioned, and the good gross margin recently where they've been up excluding Belson.

Is that sustainable throughout fiscal '09, or should we be looking for perhaps more pressure in '09 on gross margin than we saw in '08?

As you know, our goal is always to increase the gross profit.

I would say right now that we are trying to hold the gross profit steady.

We are doing everything that we possibly can.

The negatives that we are fighting against of course are the higher oil prices, which does affect freight costs in and out and also the plastic crisis.

We use a lot of plastic.

Copper prices are higher and we use a lot of copper in our products.

And of course the weak dollar in China compared to the Yuan also affects the price of goods.

With all that, we have to build in higher prices into our products and hopefully get price increases, which we are working on.

That's our challenge, is to offset the price increases that we get from our factories with price increases to our vendors.

Okay.

And on the '09 outlook, can you at least tell us whether you think earnings will be up next year versus this year?

Well, we are very, very optimistic.

As you know, we are not giving out specific numerical guidance because of the business environment we are in.

It's not that we know all that we should know, but I wouldn't want anybody to read more in to it than there really is.

Our long-term goal is to increase sales, gross profit and lower expenses.

We just feel it's going to be a difficult year.

It doesn't mean that - you can look at it both ways.

I mean we are optimistic that we can have a good year.

We just don't have the numbers down, and we just are getting away from managing the business on a quarter-to-quarter basis and being up one penny or down one penny, which we and others have done.

It's very possible that as time goes on we will give a yearly number, but right now we don't have the number to give you.

Mostly because of the uncertain macro environment?

Right.

Okay.

Business is - I don't want to leave you with a bad feeling, business is good.

We are shipping every day, and sales are steady.

We just have to play it and see what happens as the price of oil goes up and how the environment is.

For sure.

Picture - are we in an inflationary period, which I believe we are.

Are we in a recession, you can argue both ways, and then how are the retailers doing.

So that's really the big picture.

Some of our retailers are doing very well.

Others are not doing well.

As Tom mentioned, Linen's and Things decided to file bankruptcy.

Hopefully they'll be healthier after they reorganize and get rid of their bad stores, because they are a very good customer of ours, and OXO plays a very big part in their mix in their housewares department.

I was going to ask you, are you bigger in OXO than you are in the Personal Care side?

Oh, yes.

At Linen's?

Okay.

Personal Care is very small there compared to the housewares OXO brand.

And we'll take our next question from Rommel Dionisio.

Please go ahead.

Good morning.

During your prepared comments you talked about some inventory destocking at retailers.

I wonder if you could give us a little more color on that?

Is that largely done with?

Do you get the sense that now retail are taking full [selling] to retailers, or are they still continuing to destock over the last couple of months.

It's actually a retailer by retailer environment.

Some retailers have decided they want to lower their inventories for whatever reason.

As I travel around the country, I find that there's more out of stocks than normal.

It's the old adage of, if the buyer thinks there is a recession coming and he buys less product, guess what?

He sells less product.

So then he fulfills his request there.

But I think retailers are trying to hold their inventory steady, I don't think there is any big decline.

In some cases we have had some retailers beef up inventory because they have been too hesitant to buy and they've noticed they've lost sales, so they're going into reverse.

So we have both retailers who are very tight in inventory and others that think that they need to beef it up.

But it's not going to be something that we are going to have any problems with in the future.

Thanks very much.

And we'll take our next question from Graham Tanaka.

Please go ahead.

I just was wondering on the cost price pressure, what are you budgeting for cost pressures this year and what kind of pricing do you think you need to get for the coming year?

There is no actual number that we put in for prices.

Each item is looked at individually.

Some items have increased cost in them, some don't.

We - our goal is to offset any increase from the factories with a higher cost to the retailer.

Of course, we do our best there but in all the new products, and we come out with a lot of new products, the new costs that we're paying for our product is built into the product.

We hope to keep the gross profit steady because of that reason.

It's a product by product challenge, rather than a corporate challenge where we raise all the prices a certain percentage, it depends on the items.

Let me ask it this way.

Overall, then, as you look across the product line, are you able to offset cost pressures with price increases?

It sounds like you did in the last quarter.

I would say between the old products and the new products, the answer is yes.

But it's a mix.

I don't know how to ask this question without trying to put you on the spot, except if I ask if - what your general concern is with other retailers vis-a-vis, you know, a Linen's type of situation.

And the kind of - if you could have any kind of protection?

I'm just concerned that there might be other Linen's out there?

We've looked at all our retailers, you know, we don't think there is anybody like Linen's out there that we think is going bankrupt.

There are some that are having a harder time than others but they've never discussed bankruptcy, I think.

And of course, the big are getting bigger, as you know.

It's just the environment.

I just don't see anybody that we have on our look list that we think is going to be filing bankruptcy.

Great.

Thank you.

Our next question comes from Steven O'Brien.

Please go ahead.

Good morning.

You've given us kind of a cautious outlook, at least on the economy and the challenges you face, but you also have some hope that you might be able to get an earnings gain this year, which would indicate you've got some optimism either on some products or some new initiatives, whether on the top line or the cost containment.

I was wondering if you could share those with us?

The answer, Steve, is yes, we have a lot of new products.

We are optimistic.

Some of the products that we recently rolled out look good.

They are doing well, the retailers are happy.

We also - as you know, we have $120 million in the bank.

We are building up a war chest.

Based on cash flow this year, because our CapEx is very, very small, we should probably end the year with $200 million if we don't buy back stock.

That's the thing that I wanted to tell everybody, that - they were asking when we were going to buy back stock, and yet we did - so far this year we've spent a little over $8 million in stock, and I think from time to time you will see that we will buy stock, we just don't announce it in advance.

But just as we spent the $8.6 million, we will probably do more because we believe the stock price is low.

But with the -- hopefully we will have $200 million approximately at the end of the year for acquisitions.

And we are looking for acquisitions.

We would like a big acquisition, because we do have low lines due on borrowing.

So besides the $200 million, we can certainly borrow more.

So that's something that we are looking at.

And hopefully if that comes during this year, we will have a big pop in our income.

So there is a lot of good positives that we are looking at.

Normally like to - don't particularly like the congratulate somebody in public, but you guys have shown a lot of discipline on when to buy your stock.

I guess recognizing that it is an alternative to capital expenditures and acquisitions at times, and I think you've done the shareholders a good job in showing in showing the discipline on when to use that discretion.

Thank you.

And as I mention from time to time, I'm sure we will be buying more stock back.

A lot of it depends on the price of the stock, and what we have going on and whether we are working on a big acquisition or not.

Sure.

Thanks, Steve.

We'll take our next question from Steven Friedman.

Please go ahead.

Good morning, all.

I just wanted to see if you could comment a little on the first quarter that we are two-thirds done with.

Tom, you had mentioned some SKUs, that you have a 7 to a 9 million, I think, impairment charge.

Could you expand on that just a bit as to the lines or - why?

The company under it's accounting policies takes a look at its intangible assets in the first quarter of each year.

And we go through each one of our trademarks and each one in our goodwill and our business unit values, and we have to go through calculations to look at the discounted cash flow based on future assumptions and present value [unit back].

And as a result of that calculation, on a preliminary basis, we are still doing our final reviews on it, we anticipate we will have potential impairment between 7 and $10 million.

What it is?

It's a noncash charge.

The accounting rules changed a number of years ago; you used to write your intangibles off over a period of time, and they changed the rules to go into this annual testing, instead of writing them off.

So now companies are going to have write-offs when they do their testing at various periods of time.

The areas in our lotions and liquid business, we're concentrating on key brands, and some smaller brands we are putting less emphasis on.

And as a result of that some of those are having decreasing sales, and that is what is resulting in this impairment that we are looking at, at this time.

Okay.

Back to the Belson line, which you were - you made several comments regarding the margins on the Belson line.

Have you been successful in bringing the margins on the Belson products back to what your core products in the Personal Care lines are, or - are you making progress there?

We are making progress.

It's higher now than when we bought it.

It's not to the same extent what we have in our other professional area.

But we're working on it.

So it does - it is increasing over what we had, and we're looking for a nice increase this year also to keep increasing the gross profit.

Finally, since the quarter is two-thirds - a little over two-thirds done, have you seen any effect from the stimulus checks that the government has, I think, started sending out?

And a lot of them hit toward the end of April and beginning of May.

Maybe has there been a spike that you've noticed at all?

No, as far as the checks they are getting from the government, no, we haven't seen anything, and maybe it's too soon, and maybe we will never see it.

Maybe they will take the money and pay down their credit cards.

But as far as the quarter you're right, two-thirds of it is over.

We haven't seen any deterioration in the business, our business is steady.

As the quarters go on, we are looking for increases.

Just a tough environment today trying to get those increases, but the business is steady and our products are selling.

Do you feel that with all the work that - on the macroeconomic picture, with all the work that the Federal Reserve has done, and the government with the stimulus package, that you might be more optimistic that the second half of the calendar year might start to see the consumer coming back or actually some of the stimulative effect of the government might start to kick in?

Are you optimistic about that?

Yeah, in the macro picture, of course, there are so many things going on in the United States.

Interest rates are going down.

On the other hand, you read in the paper about people losing their houses because their interest rate went up, when in truth interest rates are going down.

There are just too many things in the environment.

People who have money in the bank are now receiving less income - interest income than they had before.

I'm sure that affects a lot of things.

But I think to the average family, from what we hear, it's the price of gas.

When they have to spend $80 to fill up their tank, and they have two cars, and it's $160 week to fill up their two cars, and it used to be half that, that they have less money to spend on other things.

I read food prices are up, and inflation is up.

There is that big, big picture, and interest rates are going down.

So you have to put it all together, you know, what does it really mean?

I don't have all the answers.

Maybe Mr.

Bernanke has the answers.

Thank you very much, Gerry.

We'll take our next question from Mimi Noel.

Please go ahead.

Hi, thank you.

Just a couple of questions for Tom.

Can you tell me what OXO domestic sales did in the fourth quarter?

We don't break OXO domestic sales out, Mimi.

Can you provide me with some context relative to the total business?

Is it slower than the aggregated segment or faster?

Truthfully, I haven't looked at OXO sales breaking it down by each specific geography.

As you know, OXO sales were up 22% for the quarter, which is very strong.

Our expansion that we've been working on in the U.K., in Japan, has pretty much anniversaried after this quarter.

The preponderance of business is still domestic, right?

Yeah, I would say over 90% is domestic.

Okay.

That's helpful.

Then the weakness in the Personal Care grooming category, could you elaborate a little bit on that?

I think it was in the Q3 it had a tough comp internationally with some pipeline filling, or perhaps domestically, can you talk about the fourth quarter weakness?

Well, it wasn't in any particular area of - I think the U.S.

got hit more than our international business.

But as I mentioned several times, I think it has to do with the economy at large and the price of oil more than what we are doing, and what the competition is doing.

Why would it be, if these are relatively low price point products, why would it - are they gift-giving products, is that why you think they would be susceptible?

Gift giving - they are replacement products, but as I mentioned I think that, you know, and you can see what the big retailers are doing, they are just having less traffic for whatever reason and they are all struggling with same-store comps.

As I mentioned, there is a few of course that are doing very well.

But the average retailer is having a tough time making their numbers.

Okay.

And then just what is the authorization remaining on the buy back program now?

We still have a lot of shares to buy, and when we use it up we just go to the Board and ask for more.

So that is really is not a concern.

So there is no official number?

No - well, we started with 3 million.

We're probably down to a half million.

153,000 left.

Once we finish the -

I'm sorry, Tom, you were saying about 153,000 shares remaining?

There's 153,000 approximately left, and as Gerry is saying, once we use that allotment, we need to go to the Board and get approval for a stock buy back, and we anticipate that they would approve that.

So we don't see that as a constraining factor.

Okay.

And then Tom, the cash from operations, either on the quarter or annual perspective, and as well the CapEx?

As you will see in our filings that are going to be done a little later today, our cash provided by operating activities was just under $110 million, and our CapEx for the year was $7.7 million.

Okay, very nice.

Thank you very much.

(OPERATOR INSTRUCTIONS)

We will take the next question from Doug Lane.

Please go ahead.

Just a quick follow-up, Gerry, on the acquisition front.

How would you characterize the deal flow these days?

Is it active, not so active?

And are they bigger or smaller type opportunities?

I think it's more or less active.

We almost get every week, one or two packages on people selling their companies, or companies up for sale.

It's a mixed bag.

There is big ones, there is small ones, there is good ones, there is bad ones.

Sometimes I think there is more bad ones up for sale because if the economy gets hurting and their sales start dropping and their profits are dropping, I think the Boards decide that they want to sell their companies and get out.

So we are looking at everything - every one that comes across our desk we are looking at.

And then you mentioned your balance sheet, which is obviously stellar; a lot of cash, a lot of cash flow, very comfortable.

Is there some point where no acquisition happens and you think about initiating a dividend?

You know, this always comes up, it's always on the table.

We like acquisitions, then the next thing in line would be stock buy backs and then the next thing would be, certainly, dividends.

They're all on the table.

Thank you.

It appears we have no further questions.

I will turn the conference back to Gerald Rubin.

I wanted to thank everybody for participating in our fourth quarter and year-end conference call.

I look forward to talking to you again after we finish our first quarter and have our conference call in July.

Thank you again.

Ladies and gentlemen, if you wish to access the replay for this call, you may do so by dialing 1-888-203-1112, with replay pass code 9093984.

This concludes our conference call for today.

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

All parties may disconnect now.