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"We finished the year in-line with the expectations that we outlined last quarter," said E. Scott Beattie, chairman, president and CEO, Elizabeth Arden, Inc. "Our international business grew 9.2%, or 4.2% in constant currency rates this year. Our North America fragrance business declined 1.5%, largely due to the decline in the U.S. department store business, while our mass retail business was flat year on year, reflecting the difficult consumer environment."
In May 2008, the company announced an exclusive long-term global licensing agreement for the Liz Claiborne fragrance brands, which became effective on June 9, 2008. In the fourth fiscal quarter, the company incurred expenses related to the Liz Claiborne transaction of $19.6 million (pre-tax). In addition, in connection with this new license, the company discontinued certain brands and products resulting in a product discontinuation charge of $7.5 million (pre-tax). The reported results also include restructuring charges, primarily relating to the company's previously announced supply chain re-engineering project, of $3.0 million (pre-tax). The non-cash portion of these above mentioned charges was $11.5 million.
"As we look to fiscal 2009, we expect the Liz Claiborne transaction to provide us with significant incremental sales and earnings growth, particularly in our North America fragrance business," said Beattie. "The integration of the Liz Claiborne fragrance business is currently on track. We have strengthened our sales organization with minimal incremental headcount additions to our sales force, and all of the key marketing personnel associated with the Liz Claiborne fragrances already have joined us in our New York City offices. Lastly, we are scheduled to exit the Liz Claiborne distribution facility as originally planned by the end of August 2008."
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