Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Arnie Ursaner with CJS Securities.
Arnold Ursaner - CJS Securities
How Dana, How are you?
Dana Messina
Good.
Arnold Ursaner - CJS Securities
And Dennis?
Dennis Hanson
Hi, Arnie.
I have a quick question to ask you. Can you walk us through the impact to currency which had tremendous movements since you reported your Q3 results and you have got a lot of different cross currents between yen, euros and dollars, can you walk us through your currency and its impact?
Dana Messina
Because we are naturally hedged across a lot of our different businesses, we didn’t have much of any impact in the third quarter for currencies and the areas where were not naturally hedged, we have gone out and hedged ourselves for the next 18 months. So we don’t really see a lot of volatility and the currencies affecting us one way or the other.
Arnold Ursaner - CJS Securities
Your tax rate was much lower and I know you always try to guide conservatively on tax rate but Dennis what are you thinking for tax rate in the Q4?
Dennis Hanson
Well, let me turn to over to Donna and just to make sure everybody can understand the answer but what you are saying is a rate of 39% for general, for our normal operations, the normal income and then the impact of 1048 and I will let Dana kind of explain on that.
Donna Lucente
Arnie, the 1048 basically results from accruals we have made in the past. We had accrued several years of liabilities and then we settled this with various state taxing authorities so what you are saying is this huge benefit coming through in the current period. We are forecasting a normal of approximately 39 given the dollar value of the benefit that we had this year, we are going to run in the mid 30s for an effective total year rate unless something else changes.
Arnold Ursaner - CJS Securities
See what else, Dana your business generates tremendous free cash flow normally in Q4 as you wind down the seasonal issues related to back-to-school. Can you give us a sense of your priorities for free cash flow in this environment and specifically highlight on your ability to buyback bonds that with discount?
Dana Messina
As you said, we do generate a lot of cash in the fourth quarter and we expect our cash balance to be pretty heavy at the end of the year. We did, in the second quarter, buyback some bonds in the mid 80s. The bonds are again trading in around those levels and so I would expect that we will either maintain the cash balance that is if the credit markets and the banking markets are as crazy as they are now but if we get an opportunity, we probably will buy some of those bonds back. We probably will not be buying stock back in this environment just because of the nervousness in the credit markets but the bonds are good opportunity for us.
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