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Helen of Troy Limited (NASDAQ:HELE)

F4Q08 Earnings Call

May 13, 2008 11:00 am ET

Executives

Gerald J. Rubin - Chairman, Chief Executive Officer and President

Thomas Benson - Senior Vice President and Chief Financial Officer

Robert D. Spear - Senior Vice President and Chief Information Officer

Analysts

Douglas Lane - Jefferies & Co.

Rommel T. Dionisio - Wedbush Morgan

Graham [Tanocka]

Steven O’Brien - J.P. Morgan

Steven Friedman - Wachovia Securities

Mimi Noel - Sidoti & Company, LLC

Operator

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 the 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.

Robert D. Spear

Good morning everyone, and welcome to Helen of Troy’s fourth quarter and year end financial results conference call for fiscal 2008. This morning the agenda will be a brief forward-looking statement review followed by Mr. Rubin who will discuss the 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, then finally we’ll 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 anticipate, believe, expect, 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 home page and then the News tab.

I’ll now turn the conference call over to Mr. Gerald Rubin, Chairman, CEO, and President of Helen of Troy.

Gerald J. Rubin

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 $144,106,000 from $143,882,000 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 $10,297,000 or $0.33 per fully diluted share versus $9,721,000 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 $9,809,000 or $0.31 per fully diluted share compared to $9,721,000 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 sales, and litigation settlement increased 1.2% to $17,467,000 versus $17,264,000 for the prior year quarter.

Full year net sales increased 2.8% to $652,548,000 from $634,932,000 in the prior year. Net sales in the housewares segment for the full year increased 19.7% to $164,134,000 compared to $137,108,000 for the same period last year. Net sales in the personal care segment for the full year decreased 1.9% to $488,414,000 compared to $497,824,000 for the same period last year.

Net earnings for the year increased 22.8% to $61,509,000 or $1.93 per fully diluted share compared with $50,087,000 or $1.58 per fully diluted share in the prior fiscal year. Net earnings for the full year excluding the significant items which I mentioned were $55,709,000 or $1.75 per fully diluted share compared to $49,175,000 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 sales, and litigation settlements increased 5% to $89,455,000 versus $85,216,000 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 at last year’s levels and ended the year with an increase of $30.5 million more in cash and temporary investments while at the same time paying down $35 million in debt and buying back stock.

At February 29, 2008 the company’s balance sheet included cash and temporary investments of $121,700,000. Shareholder equity was $568 million or $17.87 per fully diluted share which represents an increase of $41 million or 7.8% from the previous fiscal year. Year end inventory at February 29, 2008 was $144,900,000 versus $144,100,000 in the prior year.

Since January we have purchased 554,397 shares of Helen of Troy common stock for $8.6 million at 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 at least the next two quarters. However, we are committed to executing the strategic initiatives outlined during the pasta fiscal year with 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.

Thomas Benson

Thank you Jerry and good morning, everyone. We continue to face a difficult domestic retail environment in the fourth quarter where many of our retail partners face slowing same-store sales trends and reduce 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 US Internal Revenue Service which resulted in 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 0.2%. 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 to 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 evaluation allowance.

Net earnings before the above three items were $9.8 million in the fourth quarter 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 quarter four fiscal 2008 compared to $0.30 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 three items for the fourth quarter of fiscal 2008was $0.31 compared to $0.30 in the prior year quarter. That’s a $0.01 increase or 3.3%.

Now I’ll 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, 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 and Guy, Gold ‘N Hot, Sunbeam, Dr. Scholl’s, Hot Tools, Wigo, and Health-o-Meter. Grooming, skin care, 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 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 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%.

Fourth quarter net sales were down in all three product lines year-over-year. The Belson business, which we acquired effective May 1, 2007, contributed $6.1 million of net sales for the quarter. The decrease in personal care net sales compared to the same quarter 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 and 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, barbeque, bar ware, garden, automotive, storage, and organization. Brands that we sell include OXO Good Grips, OXO Steel, OXO Soft Works, 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 product 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 0.8% increase in dollar terms and 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 pre-tax 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 US 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 is 13.8% of pre-tax earnings for the fourth quarter 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 19, 2008 compared to $91.2 million at February 28, 2007 and we had no borrowings on our $50 million revolving line of credit. Accounts receivable were $105.6 million at February 20, 2008 compared to $115.9 million at February 28, 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 29, 2008 from 71.6 days at February 28, 2007.

Inventories at February 29, 2008 were $144.9 million, an increase of $797,000 from February 28, 2007. Inventory turnover improved to 2.4 times at February 29, 2008 compared to 2.2 times at February 28, 2007. Shareholders equity increased $41 million to $568 million at February 29, 2008 compared to the prior year.

I want to inform you of a couple of items that could have an impact on our fiscal 2009 results. On May 2, 2008, Linens Holding Company filed for protection under Chapter 11 of the US Bankruptcy Code. As of May 2, 2008, we had an accounts receivable balance from Linens of $4.1 million. The $4.1 million balance consisted of $3.1 million for sales originating on or before February 29, 2008 and $1 million for sales originating after February 29, 2008. The Linens accounts receivable are unsecured and the amount that the company will ultimately recover, if any, is not presently determinable. Although the company maintains an allowance for doubtful accounts to cover our customers’ inability to pay all or a portion of their accounts receivable, no additional specific reserve was established as of February 29, 2008 for Linens. In addition, Linens is a significant customer of the company with fiscal 2008 net sales of approximately $18.6 million.

The company historically has completed its analysis of the carry in value of our goodwill and other intangible assets during the first quarter 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 non-cash 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 the fiscal quarter ended May 31, 2008. These charges will reflect the amounts by which the carry in values of these assets exceed their estimated fair values determined by their estimated future discounted cash flows.

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

Gerald J. Rubin

Operator, we are now available for questions.

Question-and-Answer Session

Operator

The question and answer session will begin now. (Operator Instructions) Your first question comes from Doug Lane.

Douglas Lane - Jefferies & Co.

Tom, just to finish up on the Linens impact. You mentioned the total sales. Are you still shipping to Linens and still expect to get sales from them while they’re in bankruptcy?

Thomas Benson

Doug, we have had some shipments since they filed bankruptcy on cash in advance. We’re currently reviewing their bankruptcy and looking at how we’re going to work with them in the future to continue to supply them without taking on undue credit risks, so we plan on doing business with them ongoing.

Douglas Lane - Jefferies & Co.

Okay, so the risk now really is $1 million of previous sales that you haven’t collected on.

Thomas Benson

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

Douglas Lane - Jefferies & Co.

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

Thomas Benson

t could be a potential write off, yes.

Douglas Lane - Jefferies & Co.

Okay, I just wanted to be clear on that. Jerry, 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?

Gerald J. Rubin

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 and for those of you that track retail discounters, you’ll know that there are few that are doing very well and there’s a lot that are doing very poorly on comp stores and so I think it’s just the economy and not the competition. We’re s till very strong in the businesses that we compete in and as soon as the economy turns around I think we know that our business will turn around also. There’s just less traffic. All the retailers that I talk to just say that there’s less traffic in the stores and of course that’s something that they do publish.

Douglas Lane - Jefferies & Co.

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. Can you comment on your sourcing in China? I noticed you didn’t give ’09 guidance. Maybe you can give us some comments on why that’s 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 performance 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 margins than we saw in ’08.

Gerald J. Rubin

As you know, our goal is always to increase the gross profit. I would say right now that we’re trying to hold the gross profit steady. We’re doing everything that we possibly can. The negatives that we’re fighting against of course are the high oil prices which does affect freight costs in and out and also the plastic prices and we use a lot of plastic. Copper prices are higher and we use a lot of copper in our products and then of course the weak dollar in China compared to the Yen also affects the price of goods so with all that, we have to build in higher prices into our products and hopefully get price increases which we’re working on, and that’s our challenge, is to offset the price increases that we get from our factories with price increases to our vendors.

Douglas Lane - Jefferies & Co.

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

Gerald J. Rubin

We’re very, very optimistic. As you know, we’re not giving out specific numerical guidance because of the business environment that we’re in. It’s not that we know all that we should know but I wouldn’t want anybody to read more into it than there really is. Our long-term goal is to increase sales, gross profit, and lower expenses. We just feel this is going to be a difficult year. It doesn’t mean that you can look at it both ways. We are optimistic that we can have a good year. We just don’t have the numbers down and we 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 and it’s very possible that as time goes on, we’ll give a yearly number, but right now we don’t have that number to give you.

Douglas Lane - Jefferies & Co.

Mostly because of the uncertain macro environment.

Gerald J. Rubin

Right. Business is... I don’t want to leave you with a bad feeling, business is good and we’re shipping every day and sales are steady, but we just have to play it and see what happens as the price of oil goes up and how the environment is. Are we in an inflationary period, which I believe we are, are we in a recession? You can argue both ways. How are the retailers doing? That’s really the big pictures. Some of our retailers are doing very well. Others are not doing well. As Tom mentioned, Linens N Things decided to file bankruptcy. Hopefully they’ll be healthier after they reorganize and get rid of their bad stores because they’re a very good customer of ours and OXO plays a very big part in there mixed in their housewares department.

Douglas Lane - Jefferies & Co.

I was going to ask you, are you bigger in OXO than you are in the personal care side at Linens N Things?

Gerald J. Rubin

Oh yes. Personal care is very small compared to the housewares, OXO brand.

Operator

Your next question comes from Rommel T. Dionisio – Wedbush Morgan.

Rommel T. Dionisio - Wedbush Morgan

During your prepared comments you talked about some inventory de-stock at retailers. I wonder if you could just give us a little more color on that. Is that largely done with? Do you get the sense that now retail uptake equals selling to retailers or are they still continuing to de-stock as of the last couple months?

Gerald J. Rubin

Well 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’s a recession coming and he buys less product, guess what, he sells less product. So then he fulfilled his request there. I think retailers are trying to hold their inventory steady. I don’t think there’s any big decline. In some cases we’ve had some retailers beef up their inventory because they’d been too hesitant to buy and they’ve noticed they’ve lost sales so they’re going the reverse, so we have both, retailers who are very tight in inventory and others that think they need to beef it up, but it’s not going to be something that we’re going to have any problems with in the future.

Operator

Your next question comes from Graham [Tanocka].

Graham [Tanocka]

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

Thomas Benson

There’s 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. Our goal is to offset any increase from the factories with higher cost to the retailer. Of course, we do our best there but in all the new products, and we come up with a lot of new products, the new cost that we’re paying for that product is built into the product and we hope to keep the gross profit steady because of that reason, so it’s a product by product challenge rather than a corporate challenge where we raise all the prices a certain percentage.

Graham [Tanocka]

Let me ask you this. 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.

Thomas Benson

I would say between the old products and the new products, the answer is yes, but it’s a mix.

Graham [Tanocka]

I don’t know how to ask this question without putting you on the spot except to ask what your general concern is with other retailers vis a vi a Linens type of situation and if you could have any kind of protection. I’m just concerned that there might be other Linens out there.

Thomas Benson

We’ve looked at all our retailers. We don’t think there’s anybody like Linens 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. Of course, the big are getting bigger, as you know, and 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.

Operator

Your next question comes from Steven O’Brien– J.P. Morgan.

Steven O’Brien - J.P. Morgan

You’ve given us a kind of cautious outlook at least on the economy and the challenges you face and 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 on some new initiatives whether on the top line or the cost containment. I was wondering if you could share those with us.

Thomas Benson

The answer is yes, we have a lot of new products. We’re optimistic. Some of the products that we recently rolled out look good. They’re doing well, the retailers are happy. We also, as you know, have $120 million in the bank. We’re 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 s tock and 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 spent what, over $8 million in stock and I think that from time to time you’ll 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 hopefully we’ll have $200 million approximately at the end of the year for acquisitions, and we are looking for acquisitions and we would l 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’re looking at and hopefully that comes during this year. We’ll have a big pop in our income. So there’s a lot of good positives that we’re looking at.

Steven O’Brien - J.P. Morgan

I normally don’t particularly like to congratulate somebody in public but you guys have shown a lot of discipline on when to buy your stock and I guess recognizing that it is an alternative to capital expenditures or acquisitions at times and I think you’ve done the shareholders a good job in showing the discipline on when to use that discretion.

Thomas Benson

Thank you and as I’ve mentioned from time to time, I’m sure we will be buying more stock back. A lot of it just depends on the price of the stock and what we have going on and whether we’re working on a big acquisition or not.

Operator

Your next question comes from Steven Friedman - Wachovia Securities.

Steven Friedman - Wachovia Securities

I just wanted to see if you could comment a little on the first quarter that we’re two-thirds done with. Tom, you had mentioned some SKUs that you would have a $7 million to $9 million impairment charge. Could you expand on that just a bit as to the lines?

Thomas Benson

The company under its 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 our goodwill and business unit values and we have to go through the calculations to look at the discounted cash flow based on future assumptions and present [valley in] back, and as a result of that calculation, on a preliminary basis we’re still doing our final reviews on it. We anticipate that we’ll have potential impairment between $7 million and $10 million. What it is, it’s a non-cash charge and the accounting rule changes number 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 in stead of writing them off so now companies are going to have the write offs when they do their testing at various periods of time. The areas in our lotions and liquids business were concentrating on some key brands and some smaller brands we’re putting less emphasis on and as a result of that, some of those are having decreasing sales and that’s what’s resulting in this impairment hat we’re looking at at this time.

Steven Friedman - Wachovia Securities

Okay and back to the Belson line which it made several comments regarding the margins on the Belson line. Have you been successful in bringing the margins on the Belson producers back to what your core products in the personal care lines are or are you making progress there?

Gerald J. Rubin

Steve, we are making progress. It’s higher now than when we bought. It. It’s not to the same extent that we have in our other professional area but we’re working on it so it is increasing over what we had and we’re looking for a nice increase for this year also to keep increasing the gross profit.

Steven Friedman - Wachovia Securities

Okay and finally, since the quarter is a little over two-thirds done, have you seen any affect from the stimulus checks that the government has I think started sending out and a lot of them hit the end of April, beginning of May. Maybe has there been any spike that you’ve noticed at all?

Thomas Benson

Gerald J. Rubin

No, as far as the checks they’re getting from the government, we haven’t seen anything and maybe it’s too soon and maybe we’ll never see it, maybe they’ll just 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 of the business. Our business is steady and as the quarters go on we’re looking for increases. It’s just a tough environment today, trying to get those increases, but the business is steady and or products are selling.

Steven Friedman - Wachovia Securities

Do you feel that with all the work on the macro economic picture with all the work that the Federal Reserve is 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 stimulating effect of the government might start to kick in? Are you optimistic about it?

Gerald J. Rubin

Yes, I mean in the macro picture of course there’s 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’s just too many things in the environment. People who have money in the bank are now receiving less income, interest income, than they have 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 $80.00 to fill up their tank and they have two cars and it’s $160.00 a week to fill up their two cars and it used to be half that, that they have less money to spend on other things, but then 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. What does it really mean? I don’t have all the answers. Maybe Mr. Bernacki has the answers.

Operator

Your next question comes from Mimi Noel - Sidoti & Company, LLC.

Mimi Noel - Sidoti & Company, LLC

Just a couple questions for time. Can you tell me what OXO domestic sales did in the fourth quarter?

Thomas Benson

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

Mimi Noel - Sidoti & Company, LLC

Can you provide me with some context relative to the total business? Was it slower than the aggregated segment or dossier?

Thomas Benson

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 UK, even Japan has pretty much anniversaried out this quarter.

Mimi Noel - Sidoti & Company, LLC

The preponderance of the business is s till domestic, right?

Thomas Benson

I’d say over 90% is domestic.

Mimi Noel - Sidoti & Company, LLC

Okay, that’s helpful and then the weakness in the personal care grooming category. Can you elaborate a little bit on that? I know I think it was in the third quarter, maybe ahead of a tough comp internationally with some pipeline or perhaps domestically. Can you talk a bit about the fourth quarter weakness?

Thomas Benson

It wasn’t in any particular area of... I think the US got hit more than our international business. As I mentioned several times, I think it has to do with the economy at large and the price if oil more than what we’re doing and what the competition is doing.

Mimi Noel - Sidoti & Company, LLC

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

Thomas Benson

I think they’re gift-giving, they’re replacement products, but as I mentioned, I think, and you can see what the big retailer is doing, they’re just having less traffic for whatever reason and they’re all struggling with same-store comps. As I mentioned, there’s a few of course that are doing very well. Average retailer is having a tough time making their numbers.

Mimi Noel - Sidoti & Company, LLC

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

Thomas Benson

We still have a lot of shares to buy and when we use it up we’ll just go to the Board and ask for more, it’s not really a concern.

Mimi Noel - Sidoti & Company, LLC

So there’s not an official number?

Thomas Benson

No. Well, we started with 3 million. We’re probably down to about half million. There’s like 153,000 left. Once we finish --

Mimi Noel - Sidoti & Company, LLC

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

Thomas Benson

There’s 153,000 approximately left and as Jerry’s 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.

Mimi Noel - Sidoti & Company, LLC

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

Thomas Benson

As you’ll 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.

Operator

Your next question comes from Doug Lane – Jefferies & Co.

Doug Lane – Jefferies & Co.

Just a quick follow up , Jerry, 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?

Thomas Benson

I think it’s more 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’s big ones, there’s small ones, there’s good ones, there’s bad ones. Sometimes I think there’s more bad ones up for sale because of the economy hurting and their sales start dropping and their profit start dropping. I think the boards decide that they want to sell their companies and get out. So we’re looking at every one that comes across our desk, we’re looking at.

Doug Lane – Jefferies & Co.

And 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?

Thomas Benson

This always comes up. It’s always on the table. We like acquisitions and then the next thing in line would be stock buy backs and then the next thing would certainly be dividends. They’re all on the table.

Operator

It appears we have no further questions. I will turn the call back over to Gerald Rubin.

Gerald J. Rubin

I want to thank everybody for participating in our fourth quarter and year end conference call and I look forward to talking to you again after we finish our first quarter and have our conference call in July. Thank you again.

Operator

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 passcode 9093984. This concludes our conference call for today. Thank you all for participating and have a nice day. All parties may disconnect now.

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