JAKKS Pacific Inc (JAKK) 2006 Q2 法說會逐字稿

Ladies and gentlemen, welcome to the JAKKS Pacific second-quarter conference call. With us on the call today are Jack Friedman, Chairman and Chief Executive Officer of JAKKS Pacific, Stephan Berman, President and Chief Operating Officer of JAKKS Pacific, and Joel Bennett, Chief Financial Officer and Executive Vice President of JAKKS Pacific. We will begin with prepared remarks from the Company, and then open up to a question-and-answer session.

With that, I will turn the call over to Mr. Friedman. Sir, you may begin.

Good morning, ladies and gentlemen. This is Jack Friedman, Chairman and CEO of JAKKS Pacific. Thank you for joining us to review our results for the second quarter and six months ended June 30, 2006. With me on the call today are Stephan Berman, President and COO, and Joel Bennett, Executive Vice President and CFO.

I will provide an overview of the quarter and our operational results, and then Joel will provide detailed regarding the financial results. I will then conclude the prepared portion of the call with highlights of our product lines and current business trends before we open the call up for your questions.

Before I begin, I would like to point out that any comments made about future performance, events or circumstances, including estimates of sales and earnings per share for 2006, and forward-looking statements are subject to Safe Harbor protection under federal Security laws. These statements reflect our best judgment today based on current market trends and conditions and are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected and forward-looking statements. For details concerning these and other risks and uncertainties, you should consult our most recent Form 10-K and 10-Q filed with the SEC, as well as the Company's other reports subsequently filed with the SEC from time to time.

With that, I will begin. We are optimistic about our momentum going into the third and fourth quarters. Despite lower-than-anticipated sales for the first six months of the year, we will be introducing several new products at retail during the second half of the year to complement our rich portfolio of existing items. Based on initial responses from our retailers, we anticipate that they will be well-received by consumers this holiday season and beyond.

For the second quarter, net sales were $124 million and net income was $6.4 million or $0.22 per share. During the second quarter, we further integrated our recently acquired Creative Designs division as sales from the Creative Design lines offset certain shortfalls, mostly relating to lower year-over-year sales of some domestic and international items in our Fly Wheels and TV games categories. Also, certain segments of these categories accounted for large retail sell-ins in the first half of 2005, coupled with lower sell-in and sell-throughs in 2006, creating challenging year-over-year comparisons in the first half.

As previously reported, a number of our expected key drivers for 2006 will hit our top line in the second half of this year, including TeleStory, our new plug-and-play read learning system, our Speed Stacks sports line, the Vmigo, our new virtual pets gaming system, and our exciting flying XPV Xtreme Performance Vehicle, to name a few. All of these items have received positive initial responses from our retailers. We have excellent placement at retail, and we believe they will be major contributors in the latter half of 2006.

We had several product lines that performed well during the second quarter, including our Disney and Barbie Role Play lines from our new Creative Designs division, WWE action figures, Cabbage Patch dolls, and Doodle Bears from our Play Along division.

Our pet product line was also a good performer in the second quarter, primarily due to the popularity of our American Kennel Club-licensed products and an increasing number of retailers. We had a soft launch of our new White Bites oral care treats for dogs, and we will be rolling out a number of new pet items based on license agreements with Meow Mix, the Cat Fanciers Association, [BRAX] and Snoop Dogg. We expect to ship these new lines to various retail channels, including drug, pet specialty, mass and club stores later this year.

As we ramp up full production and distribution on a number of new products, we expect to see good placement at retail and on shopping and kids' wish lists this holiday season. I will tell you more about these and other new initiatives later in the call. But first, let me give you a quick snapshot of our balance sheet before I turn this call over to Joel for more detailed financial highlights.

Our financial position remains very strong at the end of the second quarter with approximately $239 million of working capital, including 110.3 million of cash and equivalents. We believe that we're well-positioned, both financially and operationally, to execute on our new product initiatives for back-to-school and the holiday season and continue to take advantage of product development, licensing and acquisition opportunities as they arise.

With that, I will turn the call over to Joel.

Thank you, Jack.

Second-quarter net sales were roughly comparable to last year at $124 million in 2006, compared to $127.1 million in the second quarter of 2005. Net income for the second quarter of 2006 was $6.4 million or $0.22 per diluted share, compared to $11.6 million or $0.38 per diluted share for the same period last year. Topline revenue benefited from the addition of $21.5 million in sales from CDI, as Disney Princesses continues to be a top seller, as well as continued strong domestic sales of World Wrestling Entertainment action figures, our TV games, [kid-driven] titles and a nice contribution from our Stationery division as we (indiscernible) to sell for back-to-school. However, these gains were offset in part by declines in some of our other TV games titles, in Fly Wheels segments, both domestically and internationally, and earnings were impacted by incremental overhead and amortization relating to Creative Designs.

The Company's net sales for the six months ended June 30, 2006 were $231.8 million compared to $261.8 million during the same period in 2005. Net income for the first six months of 2006 was $8.7 million or $0.31 per diluted share, compared to the first six months of 2005 earnings of 21.7 million or $0.72 per diluted share.

Sales of traditional toys, which include Wheels, action figures, electronics, plush, dolls, promotional products and Role Play, were $80.8 million for the second quarter and $151.1 million for the first six months of 2006. This compares to $74.2 million for the second quarter and $171.8 million for the first six months of 2005. This represents approximately 65% of overall sales for the 2006 period. CDI contributed sales of $17.9 million in the second quarter and $26 million for the first six months of the year. Other contributors in this area were Play Along, wrestling, Dragon Ball, Road Champs, radio control and TV games, as we mentioned earlier.

In our seasonal products category, which includes Funnoodle, Go Fly a Kite and other outdoor products, sales were $5.3 million for the second quarter and $13.3 million for the first six months of 2006, as compared to $4.4 million for the second quarter and $13.6 million for the first six months of 2005. This represents approximately 4.3% and 5.8%, respectively, of overall sales for 2006. Funnoodle continued to gain strength and we saw sell-through as more target doors picked up the product, offsetting a decrease in kite orders from a major customer.

Our art Activities and Writing Instruments category, which consists primarily of our Pentech and Flying Colors division, had sales of $14 million for the second quarter and $25.9 million for the first six months of 2006. This compares to $17.4 million for the quarter and 27.6 million for the first six months of 2005. This represents approximately 11.3% of our overall sales in both the second quarter and the first six months of 2006. Some of the year-over-year declines are due to the loss of Hello Kitty and lower sales in our compound business versus last year.

Our JPI pets division contributed $3.8 million in sales for the second quarter and $6.2 million for the first six months of 2006. This compares to a nominal contribution of $1.1 million in the second quarter of 2005. Pet products represented approximately 3% of sales for both periods in 2006. We think this is a really exciting part of our business going forward, and while it's still small, the pets line is providing JAKKS with additional shelf space at existing retailers and an entry point into new distribution channels, such as pet stores and supermarkets.

Our international sales were $20.1 million for the quarter and $34.8 million for the first six months of 2006, as compared with $30 million for the first quarter and $47.6 million for the first six months of 2005. This represents approximately 15% of overall sales in both the second quarter and first six months of 2006. Sales were lower internationally due to lower year-over-year sales in some segments of our Fly Wheels and TV games, as well as softer same-period sales of our WWE product in Italy, where we did see a decline. CDI contributed $3.6 million for the quarter and $5.2 million for the first six months of 2006, internationally.

Gross margins for the second quarter and six months of 2006 were 39.7% and 40.4%, respectively, ahead of the 37.8% and 39.1% in the same periods in 2005. Lower product costs were offset in part by higher royalties and tooling amortization.

SG&A expenses for the quarter increased $6.9 million to $40.3 million, or 32.5% of net sales. This compares to 26.3% of net sales in the second quarter of 2005. SG&A expenses for the six months increased $8.2 million to $82.2 million, or 35.5% of net sales, which compares to 28.3% for the same period last year.

Direct selling expenses were lower compared to the second quarter and first six months of 2005 due to lower marketing and co-op expenses in support of product sell-through. However, this was more than offset by higher amortization and operating expenses added associated with the Creative Designs acquisition, as well as increases of $2 million and $3.9 million in stock-based compensation for the second quarter and first six months of 2006, respectively.

Our operating margin for the first six months in 2006 was 4.8%, compared to 10.8% in 2005. With operating leverage from our expected higher volume in the third and fourth quarters, our anticipated operating margin for the full year is approximately 13%, which is consistent with that of 2005.

For the quarter, our videogame joint venture provided a profit of $200,000, compared to $1.2 million in 2005. For the first six months, the JV profit was $1 million compared to $1.3 million for the same period last year. We expect to see the JV contribution to increase in the fourth quarter, when more new titles are released.

Cash used by operations in the second quarter of 2006 was $12.8 million and $20.4 million for the first six months. This compares to cash flow provided by operations of $11.6 million for the second quarter and $18.5 million for the first six months of 2005.

Our financial position remains very strong and we ended the quarter with $110.3 million in cash and cash equivalents and $239 million in net working capital. Accounts Receivable increased to $85.5 million from 67.8 million at the end of the first quarter with DSOs of 62 days, up modestly from 57 days at the end of the first quarter. Building up the working capital -- or building upon the working capital management and planning of the first quarter, inventory increased to $76.8 million from March 31 in anticipation of the back-to-school and holiday seasons. DSIs were 112 days, up modestly from 106 days.

Capital expenditures for the quarter were $1.2 million, and we expect capital expenditures for the full year to be in the range of 8 to $9 million. In addition, other than for seasonal increases, we expect cash flow to increase and working capital needs to decrease over the long term, both of which will have a favorable impact on our return on equity.

With that, I will return to Jack for the balance of the call.

Thank you, Joel.

The second half of the year should be impactful for JAKKS Pacific. Retailer response to our lines across the board have been extremely positive, and as a result, we have great placement in many different aisles at the major retailers for the third and fourth quarters, especially for what we expect will be big contributors to revenue and earnings this year. Our new TeleStory plug-and-read learning system had initial shipments to target during the quarter with interactive end-cap displays that speak to moms at all their stores. As planned, we will be rolling out to the preschool aisles at more of our customers throughout the third and fourth quarters. We've already begun to receive wonderful accolades of TeleStory from child development experts and the press, including USA TODAY and the AOL for Kids. We have nice placement internationally on TeleStory as well for the second half of the year.

Our TV games category is running lower than last year Q2 but as we've said, the kid-driven titles are selling well and we did ship several new titles in the quarter, including Super Pac-Man, Power Rangers and Superman. We have premium real estate at our major customers, including end-caps at Target and Wal-Mart, and we continue to add new customers to this line.

Our new virtual pet gaming system, the Vmigo, which combines virtual pets with gaming using plug-and-play, has support from all of our major accounts worldwide and is expected to hit shelves in late September. We believe it will be a strong contributor in the second half of the year.

WWE sales in the US continued to be strong in the quarter, driven by the response of our Deluxe Aggression action figure assortment, which features excellent articulation and feature accessories. We have about 20 new assortments continuing through the third and fourth quarters as we enter into the busy holiday season with many of our major partners. These exclusives are a key component to our WWE retail strategy, which we will be able to achieve because of excellent tooling efficiencies.

We are shipping a collectible line of action figures of the Rocky franchise beginning in the third quarter and figures and other items are sure to have a nostalgic appeal to collectors and adult Rocky movie fans, as well as kids who we think will love the new Rocky boxing gloves with real sound effects just as much as their parents. We've created a line that is extremely realistic-looking and even marketing a side of meat as one of the figures, a call back from Rocky I when he trained in the meat locker. We will be launching the figure line with the help of Sylvester Stallone himself and thousands of fans in the heart of Philly at the steps of the Philadelphia Art Museum in early September.

Fly Wheels XPV is another one of our introductions shipping to retail now. Talk about wow factor -- XPV, which stands for Xtreme Performance Vehicle, rides on land or flies in the air up to 20 stories high and at speeds of up to 30 mph. XPV was modeled after hobby-grade vehicles that usually retail for hundreds of dollars, and we are bringing XPV to mass for about $60 retail. We have support from all of our major customers in the US, including some of the clubs and nice placement internationally as well. MXS business, which we've had in our line for the past seven years, is trending up and we will have expanded SKUs for this fall as well as other new vehicles from our Road Champs team.

In our Flying Colors area, Tuta Bella is our new small doll line developed internally, which was picked up by many of our major U.S. customers and is just shipping now to retail. Dora continues to be strong and our Dora line is getting placement in both the Dora aisle and activity aisle at retail. Our new magnetic paper ball assortment has proven to be a success and has exceeded our expectations so far. We are re-introducing our famous Creepy Crawlers, the classic boys activity line, with a new oven and full distribution at retail.

In stationery, we continue to see improvements and are pleased that OfficeMax confirmed the addition of several new items to their orders beginning later this year.

In our pet area, we began a soft launch rollout of our White Bites oral care treats for dogs with a few of our customers, and we will be shipping to additional mass, drug, club and grocery customers in the coming quarters. Our AKC line is driving sales in this area with our major one of our majors accounting and other accounts adding AKC and other licensed items for the fall. We expect to continue to increase distribution for pets as the hew JPI products roll out.

Our Play Along division has a strong lineup for fall as well. Speed Stacks, the gear for the sport of cup stacking practice in schools nationwide, has been picked up by our majors and secondary accounts, as well as sporting good stores. We're looking forward to launching the product in late summer to coincide with back-to-school, the start of our TV advertising and a consumer launch event in New York City.

We have several grass-roots initiatives in place, including in-store events in August in 450 of K.B. stores and prime front window placement at the Toys R Us on Broadway in New York in September. Look for our televised special airing on ESPN later this summer.

Doodle Bear has been performing outstandingly, and we continue to update and innovate with new items within the brand. Consumer reaction is excellent with some new retailers now also carrying the line, including Bed Bath & Beyond and Linens-n-Things, to name a few.

Our Cabbage Patch kids line continues to grow and dominate the large doll category and is the number one large doll item in the marketplace. In the fall of this year, we will be introducing the newest member of the Cabbage Patch Kids family, our newborns, which join the rest of the kids on the shelf.

With the rerelease of Disney's Little Mermaid for the first time on DVD, the Disney Ariel Underwater Beauty Salon from our CDI line is destined to be a top seller this holiday season. Little girls can speak to their salon and the salon recognizes their voices, creating a magical experience for them. Many of our major retailers have dedicated incremental space to our Little Mermaid section. Our Black & Decker Workbench gives little workers pretend tools to cut, saw, drill and hammer. We have end-cap placement and believe this item will also do extremely well at retail.

Other CDI items we will have in the marketplace in the second half of the year include Role Play lines based on Disney faeries, such as dress-up outfits, shoes, cameras, phones, based on the world of Tinkerbell and her friends, a line of Role Play toys including a dance mat with instructional DVD featuring footage from the 12 Dancing Princess movie and hosted by a ballerina from the New York City Ballet, and our Builder Bear line, which we took over from Hasbro and which has been incredibly well received.

Looking forward into 2007, we recently announced new Master Toy licensees for Pokemon and Barney in the quarter, both of which were most comprehensive rights each property has granted to one company in the U.S. Both of these lines, along with many others, are being developed for spring 2007, and the initial response to JAKKS toys created for both Barney and Pokemon has been more than excellent, as a whole new generation is discovering the magic of these two distinct properties.

Pokemon is a global (indiscernible) culture phenomenon created with making Japanese animation mainstream in the U.S. With 52 new episodes and an addition of 100 new Pokemon characters being introduced in 2007, we have a fantastic platform from which our marketing and product development teams will develop the newest generation of Pokemon toys, games and other consumer products for a whole new generation of kids. We're very proud to have been selected over many of our industry peers who also vie for an opportunity to align with this incredible brand. We did a roadshow to our major customers throughout North America, and they are thrilled with the new items that we've showed them, which will begin hitting shelves after the first of the year.

In Flying Colors, we are capitalizing on the tween market with Jim Benton's brand Happy Bunny and Just Jimmy, for which we will ship tween activities and room decor to mass for the first time. A line of tween and adult scented stationery and activities based on Jelly Belly will also be launching in spring of '07, and who doesn't love jelly beans? We are one of the first companies to sign a licensing deal with Jelly Belly to expand their product offering beyond candy products, and we expect Office Depot, amongst others, will be adding additional Pentech items to their planograms beginning in '07 as well.

Barney joins our Evergreen brands, Teletubbies and Clifford, with which we will relaunch our child guidance preschool division in spring, '07.

In pets, we're planning to launch many initiatives next year, including organic Cat Fanciers Association cat food, and for WWE, we presented new Role Play items to retail buyers to an excellent response. We expect to roll out this expanded WWE Role Play category to hit shelves in '07.

Getting back to the second half of 2006, we believe we have a fantastic line-up for the holidays and are excited to see our products come to market. While we are disappointed that we had a delay in production and shipping relating to several of the Company's products and a shortfall in sales of some items in our Fly Wheels and TV games categories, we still expect to have approximately 17% growth this year with net sales of approximately 775 million, down from our previous guidance of 825 million, and earnings fully diluted per share now of approximately $2.32 per share from our previous 2000 guidance of approximate $2.63 per share.

Our financial position remains strong and our outlook for 2006, although slightly lower than previously announced, is expected to still be a year of topline growth for JAKKS Pacific. We will continue to remain focused on all aspects of our business that have enabled us to become one of the major consumer products companies in our short history. Over the past 11 years now, we have consistently used our brand management and positioning expertise to adapt and cultivate our product portfolio with a compelling and diversified product mix, and we believe this ability will also enable us to build long-term value for our shareholders over the next decade as well.

With that, we will open the call to questions. Thank you all very much.

(OPERATOR INSTRUCTIONS). Sean McGowan, BMO Capital.

Two questions, if I can? Joel, would you mind going over the CDI numbers again? (technical difficulty) -- for the half and for the quarter? I just want to make sure I got them adding up right.

Second, maybe this is for Jack. Could you talk about where the production problems were, what problems specifically?

CDI provided 21.5 million for the quarter and 31.2 for the six months.

How did that break out, US versus international?

International was 3.6 million for the quarter and 5.2 million for the year.

Okay, thank you.

(indiscernible). This is Jack, Sean. Our production problems arose in XPV with governmental approvals that we needed and some reinforcements to a couple of the specifics on it. Number two, the Vmigo, our software -- our software development -- has taken slightly longer than anticipated.

Okay. Are these products that are contributing to the reduction in the sales guidance? Because those would strike me both as real strong second-half items anyway, so does the production delay there contribute to the overall reduction in sales?

Well, I think one has to look at things from a conservative point of view, and the last thing we would want to do would -- (technical difficulty) -- have to scale down further in the year, guidance for the year. You lose two weeks, you do lose two weeks at retail, and you lose the -- you lose some opportunity for reorders. So that would apply both to Vmigo and to XPV. Additionally, we have had a fall-off in Italy on our WWE line, probably off by 50%.

Okay. All right, thank you.

Edward Woo, Wedbush Morgan.

Right, I had a question in terms of the additional overhead and acquisition charges for the quarter. How much of it was actual overhead? How much of it was actual amortization charge? the incremental overhead -- will it be I guess decreasing in future quarters or not?

The overhead for the quarter was 3.1 million, and it was -- it is not expected to change dramatically. It's just that, based on comparable sales, there was more overhead and amortization related to CDI.

All right, that sounds good. Then the last question I have is do you have any update on the THQ joint venture royalty renegotiation?

None other than it is still in process.

This is Jack. I have little more heads-up on it. We are in the process of arranging a meeting in September to have [unheld] mediation meetings with THQ in New York.

Until that is resolved, are you guys currently using the existing royalty rates?

The current structure is in place until June 30, so the first reporting date that will be affected by this will be the September quarter. So at this point, there's nothing different than the treatment or amount of the -- (technical difficulty).

Okay, then. Thank you.

Tony Gikas, Piper Jaffray.

Good morning, guys. Just a follow-up on that JV question -- does your guidance for the back half of the year and I guess your full-year guidance, in effect, does it include any change to the structure of that JV?

This is Jack, Tony. It does not include any change for the JV.

Okay. Could you give us an update on what percentage of sales for calendar '06 you expect to come from the WWE productline, excluding the JV venture?

No, I wouldn't be able to give you that, Tony. It's part of our traditional toy line.

Yes.

A comment I can give you on it -- it's going nicely; WWE is doing -- our people I think are doing a great marketing job on it and keep rolling out our new products and keep rolling it. Even though the ratings of WWE on TV are pretty flat, our guys seem to be doing a good job of continually building demand for it. We did mention on the call we're doing over 20 specials for various retailers on WWE for the fall.

Then as it relates to your guidance, you indicated that some of the Fly Wheels products were delayed. Could you be a little more specific there? Can you give us an update on the XPV, when that will actually be on store shelves?

Yes. The first part of your question -- Fly Wheels, there weren't delays; some of the larger Fly Wheels sets did not sell well at retail, so there was no follow-up reorders on those -- not an inventory problem, by the way, on that.

In terms of XPV, we're just beginning to ship it now; we shipped a few pieces the very end of the quarter, and I really mean a few pieces. I guess, in the next week or so, we start shipping it in significant quantities.

One comment I'd like to make on that -- we've demo-ed it to all of our major retailers and many people around here. It's probably the most amazing toy I've ever seen.

Okay. Then on the new Pokemon and Barney licenses, how big have those product lines been, you know, on an annual basis I guess with their current manufacturers? Can you give us a little bit of an idea of the size of those businesses?

Yes, but the guidance that I give you, Tony, will create lack of guidance. Pokemon at its peak did about over $1 billion, maybe close to 2 billion worldwide. Barney probably was in the 100 to $200 million range at one time. We don't have any number at this point. We have a terrific confidence, particularly in Pokemon, that with 52 new shows, 100 new characters, new kids -- and we are -- our marketing people have a great zest behind it, we have a good confidence in but no idea of any kind of revenue range. We will hope to begin shipping it in December of this year to hit shelf in January.

Okay. Then the last question -- I don't know if you broke this down; I may have missed it on the call. How much of the 5.4 million was overhead versus charges?

3.1 million was overhead.

3.1 million. Okay, thanks, guys.

Arvind Bhatia, Sterne.

First question -- Jack, I know you mentioned TV games running below last year. I wonder if you can quantify that a little bit. Also, are you including TeleStory within that line when you talk about running below last year?

The second question is how much of this change in guidance do you think relates to your sense of what you're seeing at retail from a consumer standpoint? Is there softness that you're seeing? Are you getting feedback from retailers suggesting that there is some softness in various categories? You know, just sort of a macro question I guess more than anything else.

The first part of (indiscernible) there was a lot of components and I might miss one. Arvind, please ask me again if I do.

Regarding the Plug and Play games, our kids stuff is selling equal or better to last year in total POS sales. Our hard-core gamer stuff is virtually gone. Thank goodness that is out of the marketplace and hopefully it opens up more shelf space to us in the fall. But the sell-ins were less while customers were still getting out of the older games. There's also a sense of it's not hot now; it's selling well. When it's not hot, they don't buy it in big chunks; the retailers buy it as they need it, and that's the way they are buying it. One of our major customers has switched their program on it to domestic rather than letter of credit, and that has a big switch on it as well.

In terms of TeleStory, you know there are virtually no sales on TeleStory; it's just at one retailer and it will be fully distributed over the next four to six weeks. I wanted to add, Arvind, our TV Plug and Play business is a great business and continues to be.

So if we were to include TeleStory within that category, how would that look like versus last year?

We don't know yet because we don't know the sell-through rates.

The other part of your question, Arvind, is probably our more cautious view of the year comes from some lack of revenue in the first half that didn't come, but I'd say particularly we have had and I believe other people have had some production problems in the Far East. There seems to be some glitches this year. If I had to guess, I would say it's more governmental control of making sure they have the right environment, etc., but we have had some shortages in terms of production.

Okay, got it. On the consumer question, are you getting any feedback in general on that front from retail?

I think there's a conservative attitude from the retailers. I don't think we are a big enough company to feel a direct impact from the consumer (indiscernible) of our products selling up to expectations or not, but I would say there's a conservative feeling from the retailers. They would rather be short than long on something is what we are feeling.

Got it. Last question, on that Pokemon/Barney licenses, obviously that's a big part of your story going forward. If you could maybe walk us through what enabled you to get those big licenses from your competitors. Were you able to show product ahead of time? What is it that allows you to get that and beat the competition on that?

Particularly on Pokemon, I would have to say our team did I think a spectacular presentation not of actual products but on storyboards and showed a total understanding of the product line and how to roll it out and in some degree use WWE is an example. We've done a great job of marketing and merchandising WWE toys, and Pokemon, which has many, many characters, will be rolled out in a similar fashion. Plus and most importantly, the whole line will be a line of product that has never been done in the way it will be released.

When do you think you'll get a better sense of how that line can perform or what kind of potential it has? Once you start shipping in December, will we have --?

Oh, I don't think we would be able to get a handle on it until spring of '07. It won't hit shelf probably until January/February, and it's not likely to take off the first day -- probably spring next year.

Got it.

Our guess is it's anywhere between a double and a home run, and we never bet on home runs.

Got it. Thanks, guys.

(OPERATOR INSTRUCTIONS).

With that, I'd like to thank everyone very much for their time and attention. Thank you all.

Thank you, ladies and gentlemen. That does conclude today's conference call. You may now disconnect.