Good morning ladies and gentlemen and welcome to Lifetime Brands fourth quarter earnings conference call. (Operator Instructions) I would now like to turn the conference over to [John Halthorn], please go ahead sir. [John Halthorn]: Thank you and good morning everyone and thank you for joining Lifetime Brands fourth quarter 2007 conference call. With us today from management are Jeffrey Siegel, Chairman, President and Chief Executive Officer, Larry Winoker, Senior Vice President and Chief Financial Officer and Chris Kasper, Senior Vice President Corporate Development. Before we begin I’ll read the Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. The statements that are about to be made in this conference call that are not historical facts are forward-looking statements and involve risks and uncertainties, including but not limited to product demand and market acceptance risks; the affects of economic conditions; the impact of competitive products and pricing; product developments; commercialization; technological difficulties; capacity constraints or difficulties; the results of financing efforts; the affects of the company’s accounting policies and other details contained in the filings with the Securities and Exchange Commission. The company undertakes no obligation to update these forward-looking statements. With that introduction I will turn the call over to Mr. Siegel. Please go ahead Jeff.

Thanks John and good morning everyone. Let me start by saying that we were very disappointed by the company’s overall performance in 2007 and we’re highly focused on fixing what is wrong as well as continuing our focus on growing those parts of our business that are highly profitable. That said, some of our businesses especially our Cutlery, Cutting Board, Kitchen Ware and Home Décor divisions in fact showed outstanding performance despite the difficult environment. We took decisive action to remedy those areas that did not meet our expectations. Moreover, the new product line initiatives that I’ll discuss in a moment have us extremely excited about our company’s prospects. As detailed in this morning’s release, Lifetime’s sales for the fourth quarter and consequently for 2007 as a whole, were significantly impacted by the unfavorable retail environment. As I mentioned in our call in early November most retailers adopted a very cautious wait-and-see approach to building inventory for the holiday season. And once the season came consumers did pull back severely on their spending resulting in significant lower than expected sales for the quarter and in Lifetime’s case having a dampening affect on our entire year. Disappointing sales from our Direct to Consumer and our Dinnerware and Glassware businesses also contributed to the shortfall. Our company has a high degree of operating leverage so the lower sales had an even larger impact on our bottom line. We’ve taken corrective action to remedy the DTC and Dinnerware issues and would like to take you through those actions before turning to our plans for achieving profitable growth in 2008. I’ll start with the changes we have made in the DTC area. While our DTC management team did make progress in 2007 in revitalizing our retail stores, in December we determined that certain locations…

Thanks Jeff. The audit of our 2007 consolidated financial statements is not yet completed. Our auditors expect to complete it within the next few days. Therefore my remarks are subject to the completion of their review. Net sales for the fourth quarter of 2007 were $155.1 million compared to $157.3 million in the 2006 period, a decrease of 1.4%. Net income was $5.4 million or $0.40 per diluted share for 2007 compared to net income of $9.5 million or $0.63 per diluted share in the 2006 period. For our wholesale segment net sales were $127.1 million for the fourth quarter of 2007 and $127.0 for the 2006 period. The Home Décor category improved due to new placement and programs with some major retailers. This increase was offset by lower volume in our other wholesale product categories largely due to the weak retail environment in the fourth quarter of 2007. In the Direct to Consumer segment net sales were $28 million for the 2007 quarter compared to $30.3 million for 2006. This decrease was primarily due to the lower store traffic partially offset by higher volume in the stores that we are closing under the restructuring plan. Web and catalogue sales were lower versus the comparable quarter last year due to late summer/fall shipments in 2006 and the late holiday orders in 2007 that were shipped in January, 2008. On a consolidated basis cost of sales for the fourth quarter of 2007 was $91.5 million or 59% of sales compared to $91.5 million or 58.1% of sales in the 2006 period. In the wholesale segment cost of sales was 62.7% of net sales in the 2007 quarterly period compared to 62.5% in the 2006 period. An improvement in cost of sales percentage due to increased emphasis on higher margin business in…

I’ll expand on Jeff and Larry’s remarks by giving more detail on the number of Lifetime’s initiatives and their expected impact on our 2008 financials. Similar to my comments on our last earnings call, the focus remains on first, addressing underperforming businesses in particular our Direct to Consumer division. Second aggressively managing our working capital and capital expenditures to improve free cash flow and third maximizing the value of our acquisition. But first let me review and comment on our 2008 sales and earnings guidance. We are currently projecting 2008 sales to be in the range of $510 million to $525 million. This guidance assumes the following. First our wholesale business representing 80% of our total sales is projected to increase between 6% and 10%. Second our bricks and mortar retail business on a comparable store basis is projected to increase between 2% and 4%. And third, our internet and catalogue business is projected to increase 6% to 10%. As for EPS, our guidance is for $0.86 to $1.06 per share. But this included a $0.19 BTC restructuring expense. Our operating results are expected to be $1.05 to $1.25 per share. Based on a fully diluted share count of 14.6 million shares including the 2.7 million shares attributable to the 4 ¾ % convertible notes this equates to a full year net income of approximately $13 million to $16 million excluding restructuring expense. In addition to the projected growth of the wholesale business the other big driver of increased profitability is the restructuring of our DTC division. As Jeff already mentioned we announced in December that we are closing 30 of our 78 factory stores for approximately 40% of our total retail doors. In doing this we are closing every store that was expected to have a negative four-wall contribution.…

Your first question comes from Derek Leckow - Barrington Research

Just trying to calculate the EPS on an operating basis here and you’ve got a number of items obviously with the gain on the sale, and you’ve got the charge in here, you also mentioned something else on the SG&A line, could you remind me what that was and help me get to an operating EPS number?

The SG&A line are you referring to the unallocated corporate expenses?

I think that’s what you mentioned. I think you said it during your prepared remarks, I’m not sure what that was.

Yes, I said that the unallocated corporate was up $1.9 million in part due to a one-time charge related to license termination. That was approximately about $1.5 million.

Okay and so when you look at operating EPS what number, what do you guys come up with?

Well in our numbers we only remove the sale of the building as well as the restructuring of DTC and Chris the…?

$0.61, if you back out the sale of the building and the DTC restructuring you go from a $0.68 on a diluted per share basis to about $0.61.

Okay thank you. And as it relates to the loss from DTC for the year, could you remind me what the net loss was for the full year and as well what it was in ’06?

Okay well what we report from segment, last year we reported $8 million we’ll report $8 million plus $2 million for the restructuring charges.

So $10 million from that.

Yes.

Okay and then looking at next year, you said you’re going to reduce that by $2 million is that right or did you have a larger improvement in mind for ’08 in your guidance?

We certainly had a larger improvement in mind. What we referred to on the call was that the $2 million reduction was a result of just closing the stores which we’ve already announced the closing for. It would be, the other initiatives that we discussed including addressing the distribution, supporting the Direct to Consumer business would all be additive to that $2 million improvement.

So you’re still coming out a loss in your guidance for next year right?

That’s correct.

Okay and then just if you can help out with the quarterly breakdown this year for earnings as far as I can tell it looks like you’re going to have a substantial increase in revenue I guess in the first couple of quarters based on some of these new products, but just maybe help me with the breakdown for the earnings progression throughout the year.

Well first of all the new products that we’re introducing at the House Wares Show, some were introduced already in the first quarter, and some will be introduced at the House Wares Show next week, they’re not for shipment in the first quarter. Most of them are for shipment late second quarter, beginning third quarter. None of it will be in the first quarter.

Okay so that comparison with the first quarter is probably going to be down then versus last year is that right?

Yes, I mean Derek, as you know business is very seasonal. Most of the improvements in the top line in the growth of the wholesale business that Jeff spoke to you earlier, we will be realizing in the third and fourth quarters of 2008. Further to that it’s probably worth noting that there are some additional expenses that we will be incurring in the first and second quarters of 2008 that will be a drag on results in those two quarters. First and foremost the fact that as a result of our restructuring of the distribution in southern California we’re affectively running duplicate distribution centers as we transition from the old DC to the new DC. We will be out of all the old leases before the end of the second quarter of 2008 but there will be a period where we will be running duplicate expenses there. And again, this is a business where Q1 and Q2 we have and expect to continue to lose money in the first and second quarter of the year.

Okay that’s helpful and as far as the third quarter is concerned, that’s where we should see that improvement in the expenses related to the distribution center, is that right?

Not only will you see an improvement in expenses, but you will also see the impact of the sales for many of the new products that we have placed and just to reiterate, when we talk about the improvement in distribution expenses, the press release we issued in December of 2007 spoke to a pro forma improvement of approximately $1 million as a result of the realignment of our distribution in California.

Okay thank you and then as far as the cash flow guidance that you gave, it sounds like most of it is coming from the reduction in working capital. It’s a pretty huge drop from 2007 to 2008, and then you said that that was going to be the average we should probably maintain going forward from that point, the $7 million?

Well the big improvements are the fact that capital expenditures are coming back to historical levels. And that’s really a very substantial change but also the continued benefit from our focus on working capital but really primarily inventory levels. Those two impacts themselves will have a very substantial impact on free cash flow in 2008. And those are things that we feel very comfortable taking to the bank right now.

Okay, outside of any upside to your guidance that is, right?

Right.

Okay thanks let me stop there, thanks a lot. Good luck

Your next question comes from Bill Chappell - SunTrust Robinson Humphrey Bill Chappell – SunTrust Robinson Humphrey: I guess first question on the inventory side, help me understand how much of the inventory improvement or if any came from just the clearance sales from the retail or the DTC and then how much you would expect in the first quarter?

Let me just comment on the change for the year on inventory with respect to the DTC, it was basically flat. Most of the benefit we’ll get from the structuring going out of business has been seen during the first quarter of ’08. So the reduction came really from on the wholesale side of our business.

Bill if you remember, we really kicked off the going out of business and store closing sales sort of at the early part of December so they were just getting ramped up. We will see most of the inventory in those closed stores going out during the first quarter of 2008. Bill Chappell – SunTrust Robinson Humphrey: Okay so I guess maybe looking at the other way is of your $5 to $10 million expected this year, how much would come from that and how much is just from operating improvements?

I would say $3 million to $4 million of inventory will be reduced as a result of the going out of business sales and I think its probably worth saying as well and I know Jeff would agree, that you know our internal targets are much more aggressive than this but we feel like these are good numbers for us to go out with, numbers that we feel confident we can hit. But clearly there’s greater opportunity for us to continue to bring down inventory levels while still growing the business. Bill Chappell – SunTrust Robinson Humphrey: Okay and then on a tax rate, can you give us a little more clarification in the quarter and then what the expectations are for ’08?

Well the quarter is not really indicative of the rate, that was you know a change in an estimate so we took a significant higher rate in the fourth quarter. The 45½ % was had we known what we know now, we would say it was 45½%. With respect to going forward that’s something that we really need to evaluate but it will not, I don’t think it’s going to be 38½% which we had in the past. Bill Chappell – SunTrust Robinson Humphrey: If I’m just, and bear with me, just kind of doing the bill from ’07 to ’08, say we have an operating net income of about $8 million going to about $13 to $16, $2 million is just for improvement on the DTC, so say $1.5 to $2 million is coming from the equity invested in Ekco and then probably maybe $0.50 million from improved tax rates so that gets me pretty close to what, $12 million right there. And I’m assuming just easier comparisons, operating efficiency gets me the rest of the way, is that the best way to look at it or are there any other big pieces that I’m missing?

Yes, I mean in a nutshell, the business when we look at 2008, the organic growth that we get in the business we get a tremendous amount of operating leverage out of. We have, as we’ve spoke to, made a number of investments and built up the SG&A in the company to support a large business platform. When we look to 2008 we don’t look to substantially grow SG&A. We believe with the infrastructure we have will support that higher top line and the elements that you spoke to plus the increase in organic growth gets you to that number. Bill Chappell – SunTrust Robinson Humphrey: Okay great. And finally just on the new EcoWorld products is that something where you’ve already gotten some orders or this is going to be brand new at the House Wares Show next week and then what’s the target market. Is this like a whole foods type customer or is it a high end or would it even go to the mass?

This is every end. All this is, is really a taking what we normally do, which is use oil-based plastics like polypropylene, polyethylene to make gadgets. With the material research that we’ve done, we found a material that we can mold very similarly to oil-based plastics with a slight change in equipment, slight change in molds, we’ve already done test molds. We’ve been working on this for a long time. We found we can produce the same exact quality product but made out of basically a bio fuel, not an oil-based fuel which has many, many advantages. Both environmental advantages, both ways, in producing the product as well as it being biodegradable at the end of the life of the product. We have not really shown it to anybody. It’s going to be shown for the first time on Sunday but we have had discussions with two retailers that are very different levels because we’re going to have several lines of this and they’re more than enthusiastic to say the least. This is going to cover every level. It’s not going to be one level. Bill Chappell – SunTrust Robinson Humphrey: Got it, all right, thanks a lot.

Your next question comes from Alvin Concepcion - Citigroup Global Markets

Would you be able to give us some color on what organic sales were in the quarter?

Well our wholesale sales were substantially unchanged quarter over quarter and so I would say it was relatively flat. We didn’t do any acquisitions.

Organic was flat in the quarter, approximately flat in the quarter.

Okay great and it sounds like you’re planning on accelerating organic sales growth in ’08, much of that will be driven by market share gains it sounds like, but is there an expectation that industry sales growth will also improve?

I expect modest improvement in the industry sales. That house wares industry in general doesn’t suffer too much in a recession but right now we’re facing a consumer who on many levels is very stressed by the costs of living. So it’s hard to say, it really is hard to say.

Alvin I think the way I would characterize it is to say that given what we know about 2008 right now and kind of what the general tenure is of the market, that’s what we baked into our earnings guidance for the year. It doesn’t anticipate a dramatic depression but it also doesn’t factor into significant growth in the industry either. So I think it’s a conservative approach that takes into account the realities of what we see today.

Okay and then if you have a comment on your inventory levels at retail, are you pretty comfortable with those levels?

At retail yes, retail inventory levels right now are on the low side.

And then if you have any comments on pricing pressure in Asia and commodities?

Yes, it’s been a constant pressure for the last year, I think we’ve done a great job. It’s taken a tremendous amount of effort and so it takes a lot of resources in order to redesign products and move things around and move factories and we’ve done a tremendous amount of that. We’ve moved thousands and thousands of products to lower cost facilities in order to counter act the increases in raw materials and the increases that are forced by social issues within the Orient. I think we’ve done a really good job overall. We don’t expect margins to deteriorate. But it’s been a tremendous amount of redesign effort and efforts in moving products to different factories. Changing materials where it’s appropriate. It’s been an all encompassing effort by many, many people within the company.

Yes, it’s been a constant pressure for the last year, I think we’ve done a great job. It’s taken a tremendous amount of effort and so it takes a lot of resources in order to redesign products and move things around and move factories and we’ve done a tremendous amount of that. We’ve moved thousands and thousands of products to lower cost facilities in order to counter act the increases in raw materials and the increases that are forced by social issues within the Orient. I think we’ve done a really good job overall. We don’t expect margins to deteriorate. But it’s been a tremendous amount of redesign effort and efforts in moving products to different factories. Changing materials where it’s appropriate. It’s been an all encompassing effort by many, many people within the company.

Thank you.

Your next question comes from Gary Giblen - Goldsmith & Harris Gary Giblen - Goldsmith & Harris: Just a follow-up on some of the questions on Ekco. Are you suggesting that the cost of goods is less because it’s not petroleum based?

No but it won’t follow the ups and downs of the price of oil necessarily. The material is in some ways, on a per pound basis, the material is about the same price as oil-based plastics that it’s replacing. It’s a denser material therefore you can use a little bit less of it and you have to adjust some molds to give you, to end up with the same product. But there are some additional costs in producing it. The material is produced in the United States and we’re shipping it to China so the cost of shipping from the United States to China is very, very low because those containers go back empty. We expect that the products overall and we’ve told the retailers that we’ve talked to would be somewhere around 10% to 15% higher than comparable products that are made from oil-based plastics. There is no resistance to that. Gary Giblen - Goldsmith & Harris: Okay so your cost of goods is about that much higher too?

Yes it is. We’re certainly not going to make extra profit on it but we certainly aren’t going to work on a lower margin either. Gary Giblen - Goldsmith & Harris: Okay and you think that the consumer even in a recessionary type environment won’t push back on it being more?

No, because we’re mainly doing this in the kitchen ware business and we don’t find the resistance for that. If we move an item from $1.79 to $1.89 or from $2.49 to $2.69, it’s not an area that you get resistance in. Gary Giblen - Goldsmith & Harris: Okay and then in terms of chain customer orders, have they stabilized and are you getting handful led orders or is it just less replenishment?

No they’re somewhat stabilized. As we’ve said we expect our increases really to come towards the second half of the year, probably starting in the second quarter, but really the second half of the year we should really focus our business because that’s the way we look at it. It’s the size of the prize. If you make a lot of efforts in the first two quarters and get nothing for it, in the second half of the year you make the efforts you get a tremendous amount of return. And that’s our focus. Gary Giblen - Goldsmith & Harris: Okay and I know that private label is not a, hasn’t been a factor competition much for you in the past, but is it increasing versus perhaps other players in the market. Is it becoming a viper gated market where you either have strong brand and design like yourself or more private label and then [inaudible]?

There’s two parts to private label. The part that we really do well with is when a retailer wants to have a private label so they can stand out and not just has the lowest price in town. We’re great at that and they know we’re great at it and they come to us. That’s how we got the Kohl’s, the Food Network line, the Kohl’s and the Martha Stewart line at Macy’s. If a retailer wants a private label to have the opening price point low end line, we don’t do it. It’s not our strength. We don’t bring anything to the table for the retailer and we don’t want that business. We never did want it and that’ll continue. So when retailers want a private label that is not opening price point low end, they look to us in our fields and that’s what we do. Gary Giblen - Goldsmith & Harris: Okay great and then finally, it looks like Macy’s as a whole is doing poorly, so does that translate at all to, I mean you said Martha Stewart is doing very well so.

It’s doing well. The Martha Stewart line, I can’t speak for the whole line, you’d have to ask the people at Macy’s about the whole line, but the parts that we’re supplying which is mostly kitchen ware and same bake ware items are doing very well. Gary Giblen - Goldsmith & Harris: Okay well do you have any programs like that proprietary brands that might be, might enter with other chains?

We do, we’re working on things right now and we can’t disclose them but we are. There is one significant line that we will be doing this year in one part of our business but it’s not something that we can disclose. Gary Giblen - Goldsmith & Harris: Understood, okay thanks, good luck in the current quarter.

Your next question comes from [Adam Deland] – Moorehead Capital [Adam Deland] – Moorehead Capital: Just a couple of questions for you, I was wondering if you could tell me given the operating leverage in the business what the breakeven point is regarding sales.

For 2008? [Adam Deland] – Moorehead Capital: Just generally, I mean you had a you said a 1.5% decline in sales and something like a 40% or 50% decline in net income, I was just wondering how far down does that go? At what point do you start losing money for the year on sales?

Yes, I don’t know that we give specific breakeven point I mean, the reality is when you look at all the moving pieces, that’s not something that I think we’ve given commentary on. [Adam Deland] – Moorehead Capital: Okay and what kind of visibility do you think you have in sales and earnings for 2008 given that everybody was a little surprised in 2007 across the board but it seems to be a bigger surprise for you guys than a lot of people. Do you have a lot of confidence in your guidance for the year?

We’re confident, we’ve gone over it many times. We’ve scrubbed the numbers many times and we’re very comfortable with what we’ve put out. We expect the environment to be a very, very difficult environment and that’s baked into our numbers. [Adam Deland] – Moorehead Capital: Okay, and do you in those, do you see, how soon do you see the roll out of Eco products being sold in the US and Lifetime products being sold in Mexico?

The Eco products we’re talking about is, there’s a similarity in the name but it’s not the same. This is not E-K-C-O. The EcoWorld that we’re talking about in the United States is E-C-O World. It has nothing to do with the Mexican brand. [Adam Deland] – Moorehead Capital: Right, but I mean the Mexican brand of products specifically, are they already being sold?

Yes, the Vasconia products we will begin shipping in the second quarter. Our major shipments are really the third and fourth quarter but we will begin shipping it in the second quarter, possibly the end of the first but most likely the second quarter and the Mexican company has already started aggressively purchasing lines direct through out facilities in the Orient. [Adam Deland] – Moorehead Capital: Okay, excellent and that’s going well?

That’s going very well.

But just to clarify Ekco SAB buying and selling product in Mexico does not directly flow through the sales and cost of sales line on our P&L; it only impacts our income statement through the equity method accounting. Okay so Ekco has been doing very well. They’ve been selling product at the end of last year and this year, from our brand and with products that we have licensed to them, but they buy and sell those products on their own P&L of which at the end of the year we’ll get our 30% corresponding to our equity ownership. [Adam Deland] – Moorehead Capital: Okay, so the sales aren’t consolidated at all.

That’s correct. [Adam Deland] – Moorehead Capital: Just the earnings at the end of the year?

That’s correct. [Adam Deland] – Moorehead Capital: Okay. When you, going forward you have the plan to acquire another 30% of the company at that point would they be consolidated?

Well the agreement that we entered into with Ekco does give Lifetime certain rights in regard to exercising a call option on the shares of the primary shareholders who own the vast majority of the company. We would, those rights begin in a time period starting two years from the signing of the agreement and at that point we will make a determination about whether we want to acquire the remainder of the business. If we did sell and took over 51% ownership then we would be consolidating their financials into ours. Until that time or until that event occurs we will just be accounting for the investment under the equity method. [Adam Deland] – Moorehead Capital: Okay and then just one last quick question on capital structure, with the stock where it is do you think it might not make sense to suspend the dividend and just do further share repurchases?

I don’t think that’s something we anticipate at this point. The dividend being what it is about $3 million I think from what we’ve heard, that’s not something that would make sense for us to consider at this point. [Adam Deland] – Moorehead Capital: Okay, that’s everything I’ve got, thank you so much.

Your next question comes from Kathleen Reed - Stanford Group Co.

Can you talk a little bit about when you were talking about all of the improvements and changes you’ve made for your Direct to Consumer division, your stores, I think you did make a statement though that if this division doesn’t continue to improve how you think you will just close it down. Do you have a timeline that you can share for that or is it the whole year, half a year, just something else that you can, that you’ll judge it by.

Because this is a division that we’ve had a problem with we watch it continually. It’s not something, we don’t have a specific point in time that we’re going to do an analysis right now. We are watching this on a continual basis. The emphasis is going to continue to shift towards the internet and catalogue part of the business. We believe that has tremendous potential and we will continue to shift in that direction. As you know, we’ve closed a substantial number of the stores and we will watch the rest of the stores. If the division does not perform it’s not going to be part of our future at least the brick and mortar part.

Okay and then also just back to share repurchase it seems that other than reinvesting in your business and paying down debt, it was kind of a very and then it was even after acquisition, it was kind of a very distant number four. Can you talk a little bit about your thought process there, why again just with the depressed stock why it would kind of be a distant number four as opposed to maybe moving up higher than acquisition opportunities?

Well I think the way that we look at is there’s, first it’s paying down debt. Okay and that’s the no-brainer because we carry very little cash in the balance sheet and it reduces the, goes right to the reduction in the revolving credit facility. Second are the opportunistic aspects of the business in terms of acquisitions or partnerships or investments and the like. Those are really unplanned but come along and we look for those which can give us a substantial return. When it comes to repurchasing the stock, that’s something that we will continue to evaluate. As you know we have been under a black out period since early December under our trading rules. And we will emerge from that a few days from today and then we and the Board will make a determination as to what the most prudent course of action is in terms of repurchasing shares based on what the share price is, based on what our expectations are about the future, based on the timing of the free cash flow generation that we discussed earlier. All those factors go into the mix when we evaluate what’s the prudent thing to do with our shareholders’ capital.

But you have a $40 million authorization and if I’m right you spent $22.7 million last year.

Correct.

Okay and then just lastly, over kind of a bigger picture question, retailers like in January reported same stores sales I believe below expectations, some of the discounters did better in February, just and again this is a questions that’s already been asked but just given that in back part of your year we saw some earnings revisions to the downside, how confident or I guess how conservative are your numbers for the full year given that you don’t have a significant order backlog right now and we’re seeing mixed results in retail and more negative news in the press everyday.

We agree that the news is certainly negative and we aren’t anticipating a strong spring but, and neither is anyone else in our industry but then we’re looking towards the fall. We look at the placement we have, some of our business as I said in the beginning of my prepared remarks, some of our businesses performed well last year and those businesses are continuing to perform well. You really have to break our business down into parts. They would have performed a lot better but the ones that did well, for instance the kitchen ware division, the cutlery division for last year, cutting boards, the home décor division, if the economy, they did well. If we were to measure them separate from the rest of our business taking everything [inaudible] they really did well. They would have done a lot better if the economy was better. Now we had two parts of our business that performed very poorly. They both lost a lot of money. One was DTC and the other was the dinner ware division. If those two businesses were just flat, we would have had an excellent year. We’re not in an industry that suffers that much as the economy turns down but there is a little bit of suffering and we’re anticipating that it will be a bad year. It’s baked into our numbers that it will be a bad year. We just look at the additional placement we have and the new offerings that we have that we know are well received. The ones that have been seen are well received already and the ones that we, like the EcoWorld which we’re 100% sure will be well received because of a few very short conversations that, I can talk about more at the next conference call, but I can’t talk about it now. So we put that altogether to come up with our estimates as well as getting things from sales. We’re comfortable with the numbers. We’re very comfortable. That’s all I can say.

Okay, that’s very helpful thank you.

Your next question comes from [John Cardy] – Principal Global Investors [John Cardy] – Principal Global Investors: I have three questions for you, first off how much of the Direct to Consumer business sales comes from the catalogue and the internet part of the business?

For a full year basis, about one-third comes from internet and catalogue. [John Cardy] – Principal Global Investors: Okay second you mentioned that the stores that you closed lost I guess about $2 million, you’ve also done some overhead reductions I guess in the field et cetera, how much more in terms of cost reduction was that and how much more maybe yet to come so that is there more upside to reducing expenses by the $2 million that you’re talking about or the $2 million in losses?

There are a number of areas which we anticipate will improve the performance of that position. As you point out there are opportunities for cost reduction both within the divisional overhead and within the distribution center but there are also opportunities for us to improve the margin and top line in that business which can also have a very substantial impact on the profitability. The team that is in there now has been there for over a year and many of the changes which they implemented last year will be having a full year affect in 2008 and so we anticipate that would be an added benefit to the performance in that division in ’08. [John Cardy] – Principal Global Investors: Did the stores that you are keeping open, the 46 stores, did most of those stores comp positively last year? I noticed that you were saying you’re looking for positive same store sales from the stores this year.

Yes, they were down about $1 million, flat to slightly down on comp stores for the full year. [John Cardy] – Principal Global Investors: Okay and then my last question had to do with respect to the DC that I guess the lease runs out in July of next year in Pennsylvania for the DTC segment, would that involve consolidating those operations into an existing DC or would you have to go out and find yourself another one and if so would you be looking to acquire one that was smaller than the existing facility but more efficient?

It’s much more complex than that. The DC we acquired is old fashioned and very, very high cost and it has severely impacted both the DTC divisions profitability and the dinner ware and glass ware divisions profitability. So we’re looking at two parts to improvement in those businesses. One part is just to improve the overall business and the second part is to improve the distribution for those businesses. The distribution for those businesses unfortunately won’t be substantially improved this year. There will be improvements this year and we’re getting the improvements by reducing the inventory levels to make the current warehouse more efficient which is very important to us. But the real improvement will come next year and it might be a new facility. We’re doing a very thorough analysis. It might be a consolidation into an existing facility. It might be an expansion of an existing facility. There’s many possibilities.

Just to build on Jeff’s comment, when we talk about inefficiencies, one thing to just put a little color on it, when we talk the York distribution center, its actually two separate buildings that are across the street from each other. So there is a structural inefficiency there. Our York distribution, distribution team has been working very hard on this and doing a good job but there are structural issues which we can address when the lease runs out. Then there are other operational issues that as Jeff mentioned we’re going to be able to deal with in this current year.

We might remain in York with a new facility. We might find a way to improve one of the current facilities and make it very efficient. It has old fashioned systems in it. We need to improve the efficiency of the facility to get it down to the percentage expense that the rest of our distribution is for the rest of the company. That would have a dramatic improvement on both DTC and the dinner ware, glass ware divisions. [John Cardy] – Principal Global Investors: But that would be in place by the time that the lease runs out next year?

Absolutely. [John Cardy] – Principal Global Investors: Okay, thank you gentlemen.

There are no questions at this time. I would now like to turn it back over to management for closing remarks.

Thanks again for joining us this morning. As I noted we are aggressively focusing on innovative and exciting products as a key driver of profitable growth. The evidence of our initiatives will be on display at the International House Wares Association Trade Show in Chicago starting this Sunday. If any of you are in Chicago on Sunday, Monday or Tuesday, please stop by and see us. Thank you.