Christopher J. Ryan - Chief Executive Officer, President, Secretary and Director Gary Pokrassa - Chief Financial Officer and Principal Accounting Officer.

Douglas Ruth John H. Curti - Singular Research Quinton Mathews.

Good afternoon, and welcome to the Lakeland Industries Third Quarter Fiscal Year 2014 Earnings Call. [Operator Instructions] Please note, this call is being recorded.

Before we begin, parties are reminded that statements made during this call contain forward-looking information within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.

Forward-looking statements are all statements other than statements of historical facts, which reflect management's expectations regarding future events and operating performance and speak only as of today, December 12, 2013.

Forward-looking statements are based on current assumptions and analysis made by the company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under circumstances.

These statements are subject to a number of assumptions, risks and uncertainties and factored in the company's filings with the Securities and Exchange Commission, general economic and business conditions, the business opportunities that may be presented to you and pursued by the company, changes in law or regulations and other factors, many of which are beyond the control of the company.

Listeners are cautioned that these statements are not guarantees of future performance, and the actual results or developments may differ materially from those projected in any forward-looking statements.

All subsequent forward-looking statements are attributable to the company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. At this time, I would like to introduce your host for this call, Lakeland Industries' President and Chief Executive Officer, Christopher Ryan. Mr. Ryan, you may begin..

Good afternoon to you all, and thank you for joining our fiscal 2014 third quarter financial results conference call. We're going to have a brief opening statement, and then we'll open the floor to questions.

Looking at Lakeland on a global basis, we have over 20 operating units around the world, of which, for the last 9 months, only 3 had significant losses, Brazil, India and Qingdao, China. Qingdao was sold in May, and India was partially sold in July.

In India, we are starting what we hope will be profitable operations there by the second half of next year. However, the Indian operation will be done with no material investment or exposure. That leaves 17 other business units, all of which were profitable.

So if you believe we can turn around or sell the Brazil assets like we did with the Chinese and Indian assets in the next 6 months, then you have a reasonably profitable company with $6.2 million of adjusted EBITDA for the 9 months ended October 31, 2013, a net book value of $8.24, hopefully with all 17 business units producing greater EBITDA and profits in calendar 2014 and 2015.

Roughly, an 18- to 24-month timeframe from where we are today, at about $5.30 to $5.60 per share to trading at net book value, would be a gain in share price of approximately 40%.

In the last 9 months in Brazil, specifically, we have dumped the prior management in total; reduced headcount from 247 to 159, with a few more adjustments by January 2014; and initiated numerous cost savings and revenue-generating strategies there. This does not even count the significant cuts we made in January of 2013 in Brazil.

So in a capsule, the strategy is fix Brazil and/or sell it, while simultaneously continuing the positive trajectory of the 17 other business units. That concludes my remarks. I will now pass the call to our CFO, Gary Pokrassa, to provide a review of the company's financial results in the third quarter..

$353,000 for an overhead rate revision and a $375,000 reserve for discontinued product line in disposables. Management has followed the practice of reviewing its overhead rates on a quarterly basis.

In order to properly revise overhead rates, a stabilized period of reliable historical data is needed both for sales volume and for the overhead cost pool due to the extended loss in volume resulting from the DuPont license termination in July of 2011 and the ensuing cost-reduction measures taken in the U.S., management determined better data was now available only in Q3 of this year, at which point management revised its overhead rates relating to U.S.

inventory. As a result, inventory valuation was reduced by $353,000 overall in the U.S., primarily in the disposable division. Such adjustment was only applied to inventory produced and purchased this year.

While this may represent a hit to earnings this quarter, it is also very good news for the future since this chart reflects lower overhead costs prevailing in the U.S.A. The Brazil operations in Q3 of this year included inventory adjustments of $1,158,000.

Further, Brazil incurred a loss of $213,000 on sales of raw material from inventory in order to raise cash for Brazil. In Q3 of this year, sales of Lakeland worldwide decreased 6% and, excluding Brazil, increased 4.6% year-over-year. Net sales, including Brazil, were $22.8 million this year Q3 compared with $24.2 million in Q3 last year.

Net sales, however, excluding Brazil, increased 4.6% from $19.95 million last year to $20.87 million this year. In Q3 of this year, gross margin for Lakeland worldwide was $22.1 million compared to $30.1 million last year. Excluding Brazil, gross margin decreased from 30.7% last year to 24.8% this year.

However, excluding Brazil and excluding the inventory charges in the U.S. described above, gross margin increased to 31.9% as compared to 30.7% in Q3 last year. Operating expenses worldwide decreased by $947,000 and decreased as a percent of sales to 26.7% from 29.0% last year.

Operating expenses for Lakeland worldwide, excluding Brazil, decreased by $448,000. SGA as a percent of sales, excluding Brazil, decreased from 27.5% to 24.1%. In Q3 this year, adjusted EBITDA increased to $1.6 million this year, up from $1.0 million last year.

Adjusted EBITDA for Lakeland worldwide, excluding Brazil, increased from $1.289 million last year to $2.102 million this year. Most of the improvement in adjusted EBITDA was generated in the U.S. and Canada. We had a net loss reported of $1.8 million or $0.31 a share in Q3 this year versus $300,000 profit or $0.05 a share last year.

In the quarter, the company completed its refinancing with BDC in Canada for USD 1.06 million and closed a new loan in China for $800,000. During the quarter ending October 31 this year, Lakeland terminated the previous management in Brazil and hired a new CEO specializing in turnaround situations.

We adopted a strategy emphasizing industrial and smaller government agency orders, deemphasizing large bid contracts. Accordingly, throughout the current fiscal year, there has been major cost-cutting in Brazil to right size the operation to appropriate levels for the new lower volume strategy.

Net book value per share, counting shares underlying the warrant with a nominal exercise price, is $8.24. And next to last quarter, Q2, excluding Brazil and inventory charges, third quarter was the best quarter in respect to adjusted EBITDA in over 3 years..

Thank you, Gary. I will now turn over the call to the operator for the Q&A session..

[Operator Instructions] Our first question comes from Doug Ruth at Lenox Financial services..

The reports a little complicated, but I have a general idea of what's happening.

Do you think that there are any more charges of inventory charges, or is that the end of that?.

I'm pretty comfortable, Doug, we've done a real thorough cleaning this quarter. We made a real effort, so I'm not aware of anything that could come at this point. I'm not expecting anything, no..

How much as a percentage were the fire sales up in the quarter in America?.

As a percentage -- ah, you got me, Doug. But it was up about $500,000 or $600,000. It's up a pretty good percentage. It was very strong. As a percentage, I mean, I don't recall, but it was up very strong..

Okay.

Well, I mean, the fire -- and you feel that, that trend could continue?.

In fire sales? Yes..

Yes. You're having....

Hold on 1 second. I'll get you an answer. Bear with me 1 second. Fire sales actually were up 53%....

That's terrific....

Year-over-year in the current quarter..

But the customers are coming to you for the protective clothing for the -- with the frac-ing.

Is that correct? Is that the turnout gear?.

No, the frac-ing isn't turnout gear, Doug. The fire -- this is the turnout gear. The frac-ing isn't worn for refrac-ing -- I'm sorry, the turnout gear is not worn for frac-ing. The turnout gear is worn by the fire departments..

Oh, fire department, okay.

Is there a reason why they were up so much?.

Basically, we put out a new design called our stealth design, which is really being picked up by the fire department. It's probably the best designed coat out there now, and that's what's attracting the business and the reorganization of the sales force that's been going on behind the scenes for the last year. I mean, all the U.S.

sales force has been reorganized to be more aggressive, selling better products in more prices, and we're just beginning to see the beginning of it. This was a company that was losing money -- or a business unit that was losing money 6 to 9 months ago..

The improvement in the U.S. is very impressive. You're getting revenue growth, and you're getting -- and you've turned it from a negative to a positive..

Correct..

That's very impressive.

So we're saying that the fire sale, based on that new design, you feel like it could gain traction and could expand?.

Yes, I do..

Okay. You talked about, in the press release, that you have a big sale to an Asia-Pacific distributor.

Can you quantify how big that sale might be?.

No. It's an existing customer, Doug. It's not a one-time customer. It's just a normal customer. The reason why China sales were a little weak in Q3 was because this is a normal customer, who deferred -- who didn't buy much in Q3, but deferred the orders until Q4. So this would be the normal orders, but coming through in Q4 rather than in Q3.

So Q4 should have higher-than-normal sales for this customer in China..

Okay. Well, actually, the sales were -- you had a decent increase in sales, but not that much of an increase in operating profit in China.

Is that correct?.

That's correct, yes..

How much of a difference will it make with the -- in Argentina with you injecting the capital -- the working capital?.

It's made a big difference in one sense and then we hit another roadblock. We've been hogtied for the last 1.5 years, I guess, in Argentina by a lack of working capital there.

And right after our financing was closed at -- in Q2, we did an internal recapitalization with Argentina and sent some more capital down there, which alleviated our internal issues. But then, the Argentine government decided to pick that exact time to put a clamp on all imports, I mean, literally, all imports into Argentina.

And it's still going on today. The commerce minister -- there was such a clamor down there from virtually every industrial aspect in the economy there. The commerce minister, I believe, resigned about 2 weeks ago. We're starting to clear up the logjam the sales in November have, kind of, opened up the floodgates a bit from Argentina.

We've had a huge amount of items sitting in our bonded warehouse, awaiting customs processing. And again, we had the cash to do it. The Argentine government simply put a clamp on all imports. That is being resolved slowly, but it's still a problem..

Okay. But Chile is doing reasonably well at this point.

Is that correct?.

That's correct. Yes..

Could you comment about your experience with the new management in Brazil and how you feel this turn-around person is doing?.

He is a breath of fresh air. I have to tell you, we are absolutely delighted with his work so far. He's taken absolute charge. He's a strong leader. And our confidence level in turning Brazil around has gone way up from where it was 3 or 4 months ago..

That's encouraging..

I believe we're looking at something like a breakeven in Q1. That's our goal in Brazil, get it to a breakeven in Q1..

[Indiscernible] represents all the losses in the company. If that gets to a breakeven, then you're going to see the real earnings prior to the first time..

Our next question comes from John Curti at Singular Research..

Regarding Brazil, the operating expense level is running about $1 million -- a little over $1 million a quarter. Is that about what you envisioned heading into next year as kind of a base level? Are there more....

No, no. Much, much lower. The operating level here includes a number of non-repetitive things. We have -- as I've said, we terminated the management. There's some severance in that, and I think that's one of the reconciling items in the table in the press release. You'll see that this recruiting things that we had, and we've made major cost-cutting.

So -- and I think you'll see a much lower level of expenses going forward in Brazil. $1 million a quarter is much too much..

Okay.

In terms of gross margins under the new strategy of industrial and smaller government orders, what are you kind of shooting for there? Where do you think you'll end up?.

In terms of revenue?.

Well, in terms of either revenue and/or gross margins?.

Well, the gross margins, we're looking at 35% to -- a little north of 35%, maybe, as our target. And we believe we will be able to achieve that. In terms of revenue, if you look at the revenue that's currently reported, that's kind of -- we've hit bottom there, so moderate growth from that, not huge growth. We're trying to avoid huge growth, actually.

But it's very steady, very steady and reasonably strong growth from this quarter going forward is a reasonable assumption, and that's our target..

So a base of around $2 million -- or $8 million plus annually and growing from there?.

It sounds a little on the harsh side, but....

Tell me in the most recent....

I'm sorry, that's -- yes, about $2 million. That's right. $2 million a quarter. That's correct. That's correct. I have to think in terms of reels and dollars. I'm sorry. Yes, that's right..

Okay, okay.

In your inventory levels of about $40 million for the -- at quarter end, how much of that is Brazil?.

That's come down a lot. And as you can see, we took -- we sold off a lot just to raise cash there because we're not investing anything from the U.S, and we took a lot of write-offs. The inventory in Brazil is just below $5 million now out of the $40 million..

Okay. And it looks as though you're no longer, at least, in the Q, unless I'm missing something. You're no longer showing India as a separate profit or loss center, although you're showing it as assets.

What, kind of, is the loss on an annual basis right there now in India?.

Let me explain because India is getting a little complicated. What we had before was just simply the glove manufacturing operation, and we showed it as a discontinued operation and the losses in reserves, we took on the sale of the assets. We've pretty much sold it all -- we've sold off the inventory.

It's down to actually a book value of literally only $20,000 at this point. There are still 2 full real estate plots that are left that we own. There were 3 -- the 1 that was sold was the larger of the 3. We still own 2 full land and building plots in the economic zone, and it's remaining on the books at only $20,000.

We did not take any gains or anything on that. I'll try to be conservative on that. So that's what's left. You shouldn't have any more losses on any of the discontinued operations. We've had -- for the entire year, we've had a small sales office that we established in new lease space just outside that area in a different space.

And that's totally different. That's a brand-new startup sales office, selling the entire line of Lakeland-branded products, not the Indian Nitrosol gloves that we've had. And with -- now Chris is looking at setting up some very light manufacturing in the 2 vacant zones that we have..

This would be captive manufacturing for a captive customer. So they're guaranteed to have sales..

Yes. At this point, we have the buildings and the only CapEx, we'll throw in a few sewing machines. Nothing of any consequence, and we will not make a major investment in India at this point. But we believe we can get another manufacturing operation going with the minimum of CapEx and working capital..

Okay. And you mentioned that you sold 1 operation in China that was operating at loss.

Was some of that business then transferred to the remaining operation in China?.

All of it was, yes..

Okay.

So you're expecting improved profitability in the next fiscal year out of the Chinese operation?.

Yes..

And how are things going in Mexico now that you've completed the expansion there?.

They're going very well. Their capacity has been expanded by 30%. They're making the products that they can make more profitably than China can. That's usually a function of tariffs and turn time. So Mexico is becoming more and more profitable each quarter, as they really sort of move toward 100% capacity.

And also, we have a sales office in Mexico that's been now selling domestically into Mexico. It's taken a little while, but they're starting to get some traction....

Yes..

In their sales in Mexico..

So now, the Mexican sales operation have turned to profit for the first time this quarter. And the Mexican manufacturing operations, profits are expanding..

And most of the products that's been manufactured in Mexico, is that being shipped to Latin America and the United States?.

Mostly the U.S. because of naphtha at this point. We are looking into having Mexico start to supply the rest of Latin America, not Brazil. They make their own, but we're getting into having Mexico supply the rest of Latin America, yes..

There's a lot of new big treaties about being ready to be signed by various countries, and that will really help Mexico be able to sell into South America. I mean, Mexico may be able to sell into places like Vietnam, believe it or not..

Okay. And then, with respect to U.S. operations, where do you feel you are on your gross margin improvement story there in terms of the U.S.

gross margins and the product mix?.

Well, from a cost viewpoint, as I said, we've really lowered our cost structure, which should add 1 point or 2 to the margins in the U.S. just from a lower cost viewpoint. On the other hand, there are market conditions out there that are fairly competitive.

And if you want to tackle that, Chris?.

It depends by product line. We've been improving our gross margin in the United States steadily quarter by quarter, and we're only seeing some softness here in the year end in the non-woven's division. So it's hard to speculate whether we can grow our gross margins in the fourth quarter, but that was also a trend last year.

Business all of a sudden dropped off in the fourth quarter last year and then boomed again in the spring. I'm beginning to think that the customers are holding back, so they can negotiate lower increases..

And then, from a cash flow standpoint, how quickly do you think you'll be -- are able -- going to be able to begin to reduce some of the debt that you've incurred over the last year as part of the arbitration settlement and some of the other loans that you've taken out to expand capacity, et cetera?.

Well, the arbitration is payable $250,000 a quarter. So that will be paid down on its terms. And so, that definitely will be -- we'll reduce that $1 million over the next year based on its terms. I think we can probably manage that out of operating cash flow, so I would not anticipate an overall level of debt increase.

But there might be increases in one place and decreases in another. I'd say, other than that, everything should be fairly steady. I would not anticipate major decreases, but no major increases either..

And we do have other assets that we've looked at....

Oh, that's right..

That could pretty much go up in sale, and we'll announce them when they actually occur..

Okay. So you haven't -- looking at the balance sheet, you've not segregated them off and....

No..

Discontinued or anything like that?.

No, no. We're not talking about discontinued operations. We don't expect that at this point, unless we sell Brazil, which is -- we've always said our strategy is fix it and then either fix it and keep it or fix it and sell it. At this point, we're still working on fixing it..

Got it. Okay.

But the other assets that you're talking about possibly selling are just kind of extraneous things here and there?.

Yes, exactly, yes..

[Indiscernible] real estate here and there. Extraneous product lines that we feel may not fit..

Okay.

Are we likely to see those over the next quarter, or is that more like over the course of the next year?.

Well, on the real state of being in the course of the next 4 or 5 months and the product line in the course of the next 6 to 12..

Our next question comes from Quinton Mathews with QKM, L.L.C..

Most of the granular stuff I would cover but I have to ask just a couple more things. I'm not at my desk, I'm looking at the Q on my phone. Can you just describe me, on the cash flow statement, the deferred income tax rather large minus $4.6 million or so? Can you just describe? I'm just trying to break....

Yes, that's an easy one, actually. If you go back to the year end, because we had the going concern issue when we reported our year end.

When you have a going concern, that means there's some doubt as to whether we would be -- a corollary of the going concern is that, that cast some doubt onto the probability that we would be able to realize the deferred taxes.

And of course, the only way you could realize the deferred taxes is to keep operating in the future and earn a profit in the future, which will then be taxable and you then use up all the carry forwards.

So you have a going concern issue that cashed out on the realizability of the deferred tax asset, and we took what's called a valuation allowance at year end because of that.

In June, when we did our financing, right after that, as a result of the financing, that financing removed the going concern issues and we amended our 10-K, filed a 10-K/A, with a clean opinion announcing the financing.

With that, once we had the going concern issue removed, and I believe it was in Q2 just last quarter, that allowed us to then revert back and say, "Okay. If there's no more going concern, then it's more likely than not that we will be able to realize that." And we reinstated that asset, and that's the accounting.

So unfortunately, it was a roller coaster it was off than it was back, so that's just a reversal of what we have before. So I would just discount that....

Yes, yes. I get it. I understand it.

Gross margins, I mean, it sounds like -- I mean, if we get rid of all the, kind of, granularity and the things that are changing in the business as you guys try to right size your different operations, I mean, are we -- I mean, should this industry -- I mean, are we in the 30% to 32% gross margin? And I know you guys said that in the U.S.

you may, outside of competitive pressures, have a couple of 100 basis points here and there, but you made it -- it was kind of cost management. I mean, are we looking about where we should be going forward on gross margins? Or....

I think that's a reasonable range, yes..

Okay. And then, also just kind of removing -- looking more macro, where are you guys seeing -- adjusted -- backing everything out, you guys are seeing a 4.6% growth.

What do you see going into this year? Is there anything in particular with government spending as -- if this new bill passes, reversing some of the sequestration that would be a benefit to you? Any tailwinds or headwinds that you see on a macro level that would cause the industry to be kind of at or below general inflation or kind of at or below where you guys are at now?.

Okay. On government spending, government spending has pretty much, in on our industry, gone to almost zero because of sequestration. So if that gets lifted, we would see a real bump in sales, probably of 5% of the U.S. sales, okay? Now U.S. sales is only about 1/2 of total sales. So we're looking at various business units. The U.S.

would benefit greatly if sequestration sort of went away partially or wholly, but the U.S. is still looking at very, very nice growth in every business segment, probably except disposables. And the international growth, I know we're going to grow very quickly in Russia. We're going to be growing quickly in China.

Just about everywhere internationally, we're going to be growing at a more than 10% rate..

Very good. And then, I'm not going to ask the acquisition question, but I do want to ask, as you guys -- best adjusted EBITDA -- in your comments in the past, people have said if you don't have EBITDA, your assets aren't worth anything, that whole conversation.

I mean, are you seeing that the people who would be interested maybe are starting to see the benefit of what you guys are doing? I mean, again, I don't -- I'm not going to beat a dead horse on the acquisition.

But I mean, just -- are those conversations still going on to where you're starting to look more attractive because of the movement you guys have made?.

Well, there's always conversations. But the -- what I'm looking at is really fixing up the company. It's pretty apparent that we can really fix this company in the next 18 months. At which point, you're going to get the best price as a shareholder. It's that simple. And I'm a large shareholder.

So therefore, I think I can wait 18 months if I want to increase the price by 40%. I don't think the Dow is going to go up that much, so....

Well, I mean, you've done shares longer than me, but I've been on these calls for a long time. And the only -- I'm always very appreciative of everything you guys do.

But the one thing that worries me, I think, that was the blindside, Brazil is the blind side and as you guys discuss about the different tariffs in certain countries, with your small operations that you have, we can no longer export and we can't import. And you have all these -- I mean, those are very tough challenges for a small company.

And are there any of those challenges that you see at -- above a 25% probability that would be major hiccups over that next 18 months, as you guys shore up everything? Is there another....

I can't talk the black swan events like the 2008 financial crisis..

Well, no -- I mean, not just Brazil. I'm talking about -- I mean, Brazil, wasn't a black swan a bit. I mean, it was unexpected. I mean, certainly, you guys would assume that you were going to win that arbitration, but I wouldn't call that a black swan event..

The only thing I could say is, looking at Argentina, for example, that the government there is very iffy and there easily could be a major devaluation coming, and we're planning as best as we can for that to minimize any impact, if that does happen.

And in fact, much of the assets in Argentina are in inventory, which will actually benefit from devaluation because we just raise the price in local currency. So -- and we're doing some other things to minimize the exposure in Argentina and maximize the profits.

Argentina has been profitable for the last couple of quarters now, and we expect the cork to be out of the bottle in terms of the restrictions on the imports, which should allow us to sell pretty much everything that's sitting in the warehouse right now almost as soon as we get it out..

In China, we sold the assets that the value we carried it on the books for. But everybody else says it's worth zero. We have an offer on real estate here that everybody says is worth zero, but it's going to go for more than what's on the books for. So....

No. I mean, look, I'm not....

What value is zero? Then it's zero, okay?.

Believe me, I'm not -- I mean, I'm not criticizing you guys. I will play devil's advocate to say that the Chinese assets that were sold, you did take a write-down on those assets a foot[indiscernible] so they sold....

No, we did not take a write-down on the assets. We did not take a write-down. We sold it at book value. Is it there was some....

No, no, no.

I thought there has been a write-down?.

[indiscernible]A loss after legal fees and everything, but we sold it at book value..

Our next question comes from Bob Sales [ph] at Lmk Capital [ph]..

I got on a little bit late, I apologize.

Did you breakdown the revenue by country? And could you, if you did not?.

If you look in the 10-Q, there's a footnote by segment. It breaks down the -- it breaks it down by reporting segment. It doesn't have every individual country, but it has pretty much what I think you'd want to see..

Okay.

And then, the second question is, can you just discuss one more time where -- what your covenants are on the debt and where you stand relative to those covenants?.

Okay. The covenants were structured by the bank where -- the key covenant, the most important one is the minimum EBITDA covenant. And the second one, which is largely based on the EBITDA, is the -- adjusted EBITDA, is the fixed charge coverage ratio. Both of those, we are well in compliance with, well and above the excess amount.

And the way they were designed is the bank excluded Brazil. We had -- those 2 covenants are designed with the EBITDA based on Lakeland worldwide, excluding Brazil. And the way the bank got to that, which allowed them to do it that way, is there's another covenant that restricts any cash -- new cash investment or advances going into Brazil.

We can't make -- so that's how the bank....

What was your EBITDA as measured by that covenant? Where -- can you quantify what it is?.

There's a chart -- very easily. There's a chart in the P&L that has the adjusted EBITDA, and that's the same number I reported to the bank..

Okay.

That is the figure we use?.

Lakeland consolidated as reported; then Brazil; and then Lakeland worldwide, excluding Brazil. That third column excluding Brazil is the number that goes to the bank..

Got you. Okay. And then, can you talk a little bit -- just a couple of these details with respect to the U.S. business? In the press release, it talks about disposals were down largely due to lower sales of Tyvek as remaining stock was depleted.

Can you shed a little light on what that means?.

We used to be a licensee of DuPont, which....

I remember that...[indiscernible].

So we -- our license was terminated in July of 2011, and we had very large stocks at that time. And we were working off our remaining inventory. Even though our license was terminated, it took a while to clear out the remaining inventory.

So our sales in this quarter are virtually nil, and they were significantly less than they had been a year ago, but not zero. So essentially, the prices of winding that inventory down just means that there is virtually nil sales from Tyvek in this quarter..

Got you. Okay. I did not realize you were still selling the Tyvek product out of inventory..

Very, very little. Just clearing -- DuPont allowed us to do that. We had inventory when they cut us off, and we've -- I think, we've cleared our inventory. That's all..

Yes. And then, what is the percentage of the U.S.

business that is disposable versus non-disposable?.

More than 1/2, I guess..

More than 1/2 is disposable?.

More than 1/2 is disposable, yes -- or about 1/2 is disposable, I'd say in the U.S..

Okay. And as you look forward for the next couple of quarters relative to Q3, what is your sense of the -- your -- the general sense of bookings and interest and tone of business, both in the U.S.

and internationally?.

In the U.S., the tone of business, I would say, on a scale of 1 to 10 is a 6, okay? It's not great, but it's -- seemingly every fourth quarter, it slows down. It did last year and then booms in the first quarter, and that's sort of seasonal. We've seen that seasonally in the United States on disposables and many other things.

So I'd say it's a 6 in the U.S. When you get to China, we're talking 9; Russia, 9; the U.K. -- I mean, Europe, about a 5. And so, the tone is different all over the world.

It's a little slower in Canada because it's slower in the United States, so -- but when you average it out, you're looking at probably a 10% growth in sales, much higher internationally and a little bit slower in North America.

We're just not seeing a boom here in the fourth quarter, but same thing happened last year and that's not necessarily normal. As I said, I'm beginning to think that a lot of customers are just not buying in the fourth quarter, so they can negotiate a lower price increase..

At this time, I show no further questions.

Do you like to make any closing remarks?.

Well, we appreciate your participation on Lakeland's fiscal 2014 third quarter financial results conference call -- do we have another question?.

Doug Ruth just signed in again. We'll take a question from him, operator..

Okay. Go ahead, Mr. Ruth, with your question..

Has there been any update at all from Ansell? Do we know if they still own their shares?.

They still own their shares, as far as we know, because they'd have to file a 13-D to disclose that they sold their shares..

There's been no SEC filing from them. So we're at their mercy. We can only assume if they haven't filed anything, then there's been no change in their holdings..

So as we are committed to delivering value for our shareholders, we believe Lakeland will continue to effectively manage its balance sheet, control expenses and execute its strategy for long-term growth. Thanks again, and goodbye..

Thank you, all..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..