Avient Corp (AVNT) 2002 Q4 法說會逐字稿

Good morning, my name is Matthew, and I'll be your conference facilitate or. At this time I would like to welcome everyone to the PolyOne earnings conference call. All lines have been placed on mute to prevent background noise. After the speaker remarks there will be a question and answer period. If you would like to ask a question press star and then the number one on your telephone key pad. If you would like to withdraw your question press star then the number two on your telephone key pad. Joining us on today's call is Mr. Dave Wilson , chief financial officer and Dennis Cocco, vice president of investor relation. Mr. Cocco , you may begin your conference.

Thank you , Andrew, and good morning to everyone , and first of all, thank you for joining us this morning, I know this is a busy morning and in fact you probably I guess in some cases have are having to listen to multiple conference calls at the same time so I appreciate it and I'm sorry that -- we're going to try to be doing a little bit little better and try to get these conference calls scheduled so we don't have conflicts. First of all, let me tell everybody as you might know we are webcasting this and it will be a preview -- post-view of this conference call is going to be on our website for a couple weeks after today.

I'd ask you , please, to look at our forward -looking statement that we put in our press release. It does talk about a number of the things that are possible and could happen and obviously today I'm sure we'll be discussing some possibilities of what we see in the market going forward and some of the things that we're doing within the company that are going to affect the company going forward so I'm actually pleased to look at that. I know that there are media on this call. And that's fine. We appreciate you joining us. I'd ask you, though, to hold your calls and to -- if you have questions come to us later. I'd like to let investors and analysts have the opportunity to talk to Dave and myself today. As most of you know and in case you don't , if you read, we are having a meeting in New York on February 11th. And if you are interested in attending that meeting , we would love to have you 'cause at that meeting Dave Wilson, myself joined with Tom and Lance will be discussing a number of issues and talking about where we're going with PolyOne. If you're interested please give Darlene Hampton if you want to join us our number is 216- 589- 216-589-4376. Dave and I are going to keep our comments brief. I think we've talked about a lot of issues since last months month since our prerelease in December. I'll limit my comments today. I'll ask Dave to make a few brief comments to -- and then we'll open up for Q&A. David?

Thank you , Dennis , and thank you all for listening in to our fourth quarter conference call. As you recall in December we projected a 17- 22 cent loss. We came in a little better than that at 16 cents. But still , the performance is nowhere near acceptable. Improvements versus the end of the year projection are operating earnings frankly we're about $6 million better than we were thinking they may have been in December.

Half of that is our residence intermediate business where some prebuy in December probably prebuy maintained volumes stronger than what would have been anticipated for typical December, plus the fact that the strength of the volume helped the resident price not go down. As we look forward on the resident intermediate side we know that there's two cents on the table for January and another couple, I believe, for February. And my understanding is that the January increases are taking. But we'll get into that more as we talk a little bit about our viewpoint.

I think one of the open questions in December was where we stood with our bank agreement. We mentioned the fact that we were needing to get a waiver or amendments for the interest coverage test in particular for the fourth quarter. I want to assure all listeners , investors that we did get that amendment approved by our bank group on December 26. We are in full compliance with the terms of that agreement. The fourth quarter compliance tests were waived. And for the fishes and second quarters this year we have amended covenant tests. There's a discussion on that in our supplement.

Briefly , the leverage test has been placed at 6X for both quarters. What we have is six months to determine how we can best refinance the 88 odd million dollars coming due in September. And we are working with our bank group on various options. One option, of course, that's available to us, and is not necessarily our preferred option in light of our objectives to be bringing debt down is simply to go to the capital markets and retire the current due maturities with a new issuance. That probably would bring with it maybe 100 basis points, maybe 150 basis points higher interest. That seems to be the worst case scenario for us. It's not our desire. But if that's the worst case, that's not a bad case. And so I'll assure you that the liquidity questions that have been circling around our earlier announcement really are, I believe , very manageable and behind us at the end of the fourth quarter you'll see that we had undrawn liquidity available of over $100 million and we would not expect that number to materially change over the first couple of quarters this year.

As we look from the fourth quarter to the first quarter , it's going to be a question of how much sales rebound. We've provided an estimate that says we ought to be in the neighborhood of a five -cent loss for the first quarter. That would represent a pretty significant improvement from the 16-cent loss we saw in the fourth quarter. And I would tell you that we're working diligently to bring that number closer to break -even. Losses are unacceptable. But I think realistically we want to make sure that we don't over-commit.

As we look at some of the levers in the first quarter, the high leverage variables which would be PVC resin pricing, cost of chlorine pricing, ethylene, natural gas, it's largely a push. We see resin going up a couple cents quarter to quarter, we see plastic going up 20, $25 quarter to quarter. Chlorine probably flat quarter to quarter. Ethylene, largely, with the energy push that we're seeing right now, probably will go up a penny and a half or so quarter to quarter , average. And natural gas , which we had an average in the fourth quarter of about $4. 25, we would expect it to average around $5 in the first quarter.

Now, when you do all the puts and takes, what we get is a little bit of earnings benefit on our resin intermediates business and a little bit of adverse effect on the performance businesses or the downstream operating businesses but netting the two together it's almost a push. So we would not expect to get much in the way of an earnings pickup or a detraction from our earnings from the high leverage variables. We look at some of the costs that we know are going up, pension funding , medical, retiree /medical costs, what have you, and those structural increases should be largely offset if not fully offset by a combination of the value capture initiatives principally Triple Crown (ph) should be taking into effect adding $6 million per quarter better structure for our North America operating base plus G&A we announced earlier this month, the combination of those ought to slightly more than offset the type of structural cost increases that we know we have.

And so really , earnings improvements for first quarter versus fourth quarter have got to be on top line. And where the top line goes is really the principal question. I can tell you that our January sales compared to December are up 30%. You know, a very strong rebound from a very low December. We saw that same phenomenon last year. Last year, January was the strongest sales month of the quarter. And this year I would tell you January is starting out very strong. February is showing some strength. But there's -- you know, there's a real question about sustainability at the top line with the uncertainties that we have in the world as well as the uncertainties in our own domestic economy.

So that's -- that's the call. If volume stays strong , you know, we're clearly clawing our way to break-even is a real possibility. If volume peters out at the end of the quarter for whatever reason , be it some of the global challenges that we're all facing, further dislocation in energy costs or just simply the U. S. economy just falters, the automotive production kind of continues to slide, then , you know, we're probably more at the range that we indicated. So with that as a viewpoint , to comment on the liquidity and discussion of the fourth quarter. I'll turn it back to Dennis for more Q&A.

Matthew , let's go ahead and start the Q and A.

At this time I would like to remind everyone if you would like to ask a question press star then the number one on your key pad. We'll pass for just a moment to compile the Q and A roster. Your first question comes from Allan Cohen.

Thank you.

Good morning, Allen.

Congratulations for hanging in there.

List en, it's a bright, new day, Allen, every day.

A little bit , you know, to the -- the critical issue is in PCC in North America. That was a group of acquired businesses that were held together moderately nicely and then under prior ownership a downward spiral and various business model changes put in place. And that's what you inherited. You You're clearly doing the right thing in fixing manufacturing base capability.

The question I'd have from that background is , as you close plants , a significant part of the business opportunity is done on a local basis , you know, the customer wants to know he's X number of hours away by truck. As you've rejiggered everything , how much of that , if you will, local opportunity have you changed that's available to you? In other words, have you decreased it, increased it, how do you look at that ?

Let me try to answer your question, Allen. First of all, I want to make sure it's clear when we look at North American PCC the biggest component came from Geon (ph) on vital component business, while we've never said that was broken, want to make sure it's clear that part of the North American , this triple crown project that we worked on really involved our vinyl compound business too. We had acquired a number of companies over the years , synergistic part of OxyVinyls , and we had not integrated those businesses and so part of triple crown was to do that and restructure the cost in our compound business. That's one part.

And that is near completion or that part of it has been completed on the vinyl side. The other two, the other two components of that and of course now we're now aligned our businesses and our commercial organizations are aligned around vinyl compounds , color products and engineered materials which is different than when we put the merger together but is quite frankly similar to what the structure was in many respects prior to the merger. But as PolyOne. In the case of vinyl compound , I think that that business unit has , you know, each one of those business units have a slightly different agenda, a slightly different strategy. When we go to -- come to New York here in a couple of weeks we're going to talk about each one of those in a little more detail and we can certainly talk about it today but the truth being the vinyl compound business is very competitive, you've heard all these stories of us getting prices up for the past year, we know that we have to be low- cost, we have to be extraordinarily competitive and we have to be very responsive to customers. And I think our asset, manufacturing asset base, is structured to do that.

The one area , and I think what you're probably referring to most is in our color business. We haven't announced yet but we're about to announce some new capabilities within our color business. And that's not a -- and this is not material , but we're going to talk -- especially this is more important to customers, our ability to do very shortly , orderly times , our ability to do 24- hour color matches. Things that you need to do if you're going to be in that business. And it doesn't matter whether you're going five miles from your customer or five -- or 150 miles from your customer , if you can deliver those products over on time and deliver it at the quality they need it , we think we've made a major sea change in that business. And the manufacturing asset base that we've , you know, spent quite a bit of money here , 50 million over the whole project , we think addresses that that. We now have a manufacturing base in color and we think in all shortly engineered materials that will be able to deliver the quality, service, and cape capability to respond to customers and to give them 24-hour response.

In fact, in the color business, we have lines set up that we can actually give 24- hour turn around turnaround. Color order comes in, we have short order lead time now capability that we're going to be able to deliver a product within 24 hours to a customer anywhere in the United States. So we spent a lot of time working on that issue. I know there's some people thinking you need to be a small regional player to compete. We think we can do it with the structure we've put in place.

I look forward to seeing the results.

So do we.

Your next question comes from Fred Seimer (ph).

How you doing ?

Well, you keep plugging along. It's a tough time here in quarter 1 again , it's déjà vu all over again, I guess. Your raw material assumptions , the increases you talked about ethylene chlorine and whatever are somewhat more optimistic than some of the -- some other projections. Do you have those raw material prices locked in for the quarter, or could you be surprised ?Would you just say ethylene only a penny?

Ethylene a penny and a half quarter-to-quarter, but they aren't locked in. You know, contract price , you know, contract supplies supply. But , you know, the market -- you know, there are expectations for what's happening in the marketplace. I think the -- you know, there clearly is some -- there's downside pressure , or if you will , cost push pressure on Olafson (ph) feed price where gas where it is, easily why should understood. Our forecast takes that into consideration. But it could be surprised. And a penny -- a penny change in ethylene , you know, for -- for a quarter is -- is around $2 million.

Yeah, right. Okay, good luck.

Thank you.

Thanks, Fred.

Your next question comes from Robert Ottenstein from Morgan Stanley.

Hey, guys.

Good morning , Robert.

As I look through this and go through your in-depth analysis , I'm trying to keep everything straight. It looks like you've got a number of cash commitments, about 50 million per capex , interest expense is going to run at least 50 billion, is that right?

Yep.

Restructuring charge, 50 million. Pension, I was a little bit unclear. It said there's a minimum amount but you expect it expected to , you know, put in more than the minimum.

Yep.

How much would that be?

We are targeting or at least in our planning assumptions , we've got a 20 million dollar payment expected to be made in September. That's over and above the ERISA requirements by a substantial amount, as you saw. But what we want to do is put in the level so that we avoid a big premium as well as participant notification. Point out too that in 2002 we put 10 million in.

Right. Now, , you know, you obviously could have some working capital needs here. Number one , are there any other cash needs that you foresee of a material nature that we haven't just outlined here, again , capex, interest expense, restructuring, pensions, possibly working capital , and the second part of the question is what are your plans if , you know, things don't quite work out, whether it's due to the economy or implementation, to, you know, cut back -- where can you cut back in these commitments, and how would that play out?

Well, if things don't turn out, you know, the first -- the first thing that's not going to happen is the working capital bill. Internally we've got projections for working capital build because we anticipate that our sales this year will be going up. As far as cutting back on cap ex there is certainly room to do that. In the 15 plus million dollar range I don't think that that's going to be necessary. And on some of the restructuring restructuring, there's at least $10 million of play there as well. But frankly , as we look at the year and those type of cash commitments , we are projecting that '03 ought to be a cash positive year. Point in fact, the proceeds from the Techmer investment have been received , and so that's certainly going to help the first quarter cash flow.

Can you remind us what that amount was, again ?

I don't think we told you. We haven't publicly disclosed what that amount was. But what I would -- what I could tell you is between the Techmer and the softer divestitures whether it was either buy or sell and we've sold both, that , you know, there's a cash flow sing of around $40 million between cash and debt.

Great. Thank you very much.

Certainly.

Okay, Robert.

Your next question comes from Saul Ludwig from McDonald & Company Investments.

Good morning, guys.

Good day, Saul.

In your comment 5-cent a share loss projection for the fourth -- for the first quarter , what is the commensurate volume assumption that was used let's say relative to the fourth quarter , relative to the first quarter a year ago that was a part of that earnings outlook?

Well, if we look at first quarter last year , you know, we had -- we had sales in the range -- just shy of $600 million. And it's certainly our expectation that we'll beat that, Saul. You know, I think that , you know, being -- pushing towards 3- 5% better than that would be on an aggressive part. What we found is that , you know, in the fourth quarter and third quarter last year we trended 1% year over year type comparisons. We would expect to do better than that in the first quarter but , you know, with the macro situation as it is , you know, what -- what's going to -- what's going to drive that? Now, there is one key that we're looking at, and that is the transcolor acquisition which is roughly $10 million of sales per quarter. And so that will be helping to bolster our year over year sales levels.

What did you pay for Transcolor ?

We didn't disclose that either. But what I would tell you is on an EBITDA perspective , it's my expectation that we will see it between 3 1/2 and 4. 25 turns on 2003 profitability.

Relative to the planned assets sales , do you have any update on which ones and where that stands and do you need those proceeds to meet your financial obligations for this year ?

You know, the first -- the first part of that is we -- you know, we don't comment over and above what we've already done. So, you know, we have not disclosed anything new on the divestiture front. And on the second question, it's very important for everyone to realize the -- you know, the debt reduction targets that we've talked about are PolyOne- PolyOne-driven. And we're doing that to be able to have the flexibility to re-deploy those assets when the economy tarts starts to turn up. Those -- the timing of that is solely up to us. The divestitures that we have and we're pursuing are not fire sale. We absolutely are under no pressure to divest any piece of any asset or any business for under value. That's no way to create value for our shareholders. And so the timing of the divestitures is really going to be based upon the market and us being able to negotiate a fair value deal. We're under no pressure by anybody or any dictates by anybody that say we have to sell X amount in X amount of time. There's absolutely no cause on us to do that.

And just finally , will there be another restatement of continuing operations reflecting the disposition of Techmer as you report your '03 results and compare them to '02 ?

Techmer is an equity and it was deconsolidated as of 2000.

But it was included as a one-liner , wasn't it , in the equity income ?

Yeah, we don't -- we don't need to deal with that, no. It's, you know, softer -- softer was a different matter entirely.

You're going to give us a restated first , second , third quarters for revenue up income reflecting that?

For 2002, yes.

Great.

And in fact, you would have seen that in our fourth quarter and total year , whole year sales was 2 1/2 versus 2. 6.

Right. But we don't have it for the first three-quarters which will then rejiggle our numbers.

That's coming.

Thank you.

Your next question comes from Rosemarie Morbelli.

He doesn't recognize the name, you will recognize the accent.

Regarding the inventory reduction estimates, I am a little puzzled every quarter we hear about the fact that there is no inventory build up to your customer site and yet the following quarter we talk about customers reducing inventory. So where do we really stand and what are you looking at to be off every single quarter on that particular point?

I think what we saw in December was a much greater than usual draw-down of inventories. I mean, customers have some inventories. But I would -- from the depth of the sales decline in December and the spring- back in January, the only thing you can conclude from that , because there really hasn't been anything that's changed from a -- from a primary demand standpoint that we can see in the economy, is that for whatever reason, our customers took their inventories as absolutely low as possible. Shut down downs in the last half of December were common. And now we're seeing them restock and rebuild. But , you know, where we have to be cautious is until there's signs of primary demand improvement , once the replenish replenishment has happened and, you know, frankly we've seen that across the board in January, the question is where does it go from there.

Are there any bright sides any in any parts of the marketplace you serve?

You know, we ought to be -- one of the things that we have to be really cautious of as we talk about our markets and so forth is that , you know, when we talk about inventories , we talk about this slowdown in business demand and we talk about with all PolyOne is experiencing that we're really talking about our North American businesses. Unit truth of the matter is that our international businesses , as we pointed out many times , especially our Asian businesses, are very strong and are doing reasonably well. Europe obviously is not as strong as Southeast Asia. So , you know, those areas look like they're snapping back quite well here in the first quarter , both Southeast Asia and Europe. And it's only the North American component that is really lagging here. And I think we, we sometimes forget to mention that to everyone.

We keep hearing that Europe is actually slowing down. So is that the next shoe to drop?

You know what, you look at our fourth quarter numbers , it may be. But we've had good year -- last year that business had good year over year performance, you know, if it's slowing down, it's certainly not as robust as anybody would like to see it but it's -- it's had a good -- you know, and our performance there as well has been very good. So either we're taking market share or the economy isn't quite as bad as it is , but , you know, it's a -- you know, we're real pleased with how that operation's going.

And lastly, if I may , you talk about lower pricing in automotive applications. Do you see an end to the price pressure in that particular market ?And if not, which my guess is probably the answer, what can you do about it in-house in order to --

Encourage you to buy more expensive cars.

Well, I don't even own one, Dennis.

Well, that's the problem. You know what , I mean, you -- you've heard recently General Motors is going to continue to extend their incentive programs in an attempt to continue to move their market share. I think the automotive industry is always going to be a very, very competitive place to do business. The only way you are successful in Detroit is if you bring some unique value- added product to them that -- you know, that is -- you know, that -- you know, that they can see value in. The more commodity products that you try to sell to Detroit, if you're trying to sell nuts and bolts to Detroit , you're going to have to be extraordinarily low cost and I don't see that changing.

But you don't seem to be extraordinary low cost.

Well, I think we are. I think we're low cost for what we provide in Detroit as anybody. And I will tell you that in our automotive film business we think we have products that we have -- that Detroit is willing to pay value for. We're not -- our automotive film business is not based on a cost basis, it's based on performance.

Okay. Thanks.

Your next question comes from Chuck Harris.

Good morning.

Good morning.

One quick question, I want to make sure I heard this correctly but you were he is discussing the incremental costs you were expected to incur this year for pensions , et cetera, et cetera , et cetera and I think you said or the way you phrased it you expected to allow the SG&A initiatives that you would discussed would at a minute offset those incremental costs and then you were hoping to get a little bit more off of that. I guess what I'm trying to wonder is when you articulate the SG&A program, reducing it , I still was thinking that was above and beyond everything so you could get that 200 basis points that you were looking for above and beyond any incremental costs. I just want to make sure we should flesh this out a little bit. It didn't sound quite what I thought.

No, the G&A that we talked about the reduction that we announced in the middle of January is over and above what we've talked about before as value capture.

Right.

Initiatives. You know, my comments were in the first quarter , where the G&A savings really don't start in the end the end of the quarter and so the pension and the other cost increases , what have you , you know, they're in place as of January and so it was really a first quarter. And those will largely be offset by the triple crown savings that we see in manufacturing.

Okay.

And then going forward , you know, it's very favorable to income and in fact we would be expecting that on the G&A earnings benefits Q2 , 3, and 4, you know, you're looking somewhere in the neighborhood of 10 or $11 million between personnel and non-personnel savings.

So it's more of a matter of first quarter getting things going and subtracting?

Yeah.

Got it. Wasn't sure it was timing or something else there. Thank you very much.

No problem , Chuck.

Uh-huh.

Again, if you have a question please press star, then the number one on your telephone key pad. Your next question comes from William Young from Credit Suisse First Boston [?].

I was curious, I noticed your accounts receivable went way , way up year to year and your accounts payable went way, way down year to year. What's going on?

Okay. A couple things. One , we, not dissimilar to our customers , stopped buying a lot of raw materials in November, and so our payables , frankly, in November and December fell about 40 plus million dollars. At the end of last year, 2001, on our payables, we held them, and so there was a -- more of an artificial level there. So that's the payable one. In terms of the receivables , what you're probably looking at is a balance sheet that is a necessary net -- is a net of the receivable facility. And so what we have to look at is , you know, year over year receivables increased -- get some help here. Hold on one second , will , we've got a lot of help here.

What I want to do is GAAP the numbers for you. But the answer is there was a significant decrease of around $60 million of our receivable facility which, if you're looking at a net number, if you're looking at a receivable number in the 200 range versus 400 or 350, it's -- there's a 60 million dollar decrease in our receivables. And when you look at it on a D SO basis , frankly, the end of the year we finished much stronger than we did last year. We finished at a little under 46 days as -- I'm sorry, a little under 56 -- 56 days as compared to around 60 days last year. That wasn't very articulate. Does that -- does that help you?

Sure. I appreciate it.

Your next question comes from Laura Brownen.

Yes, hi. Just a quick -- two quick questions, I guess , going off of that. How much do you have outstanding on your accounts receivable , then, at this point?

The end of the year we had a little under $160 million.

Okay. And on your bank -- bank line with the amendment , was the borrowing base reduced from the 150 at all or -- and the second part of that is, then , how much is actually available to you as of the end of the year?

We had nothing drawn on our bank facility and we had the entire facility available to us of 125.

Is 25?

125, yeah.

All right, thank you.

Uh-huh.

Your next question is a follow-up from rose Maria Morbelli

Your name keeps changing.

The liquidity is tight at the moment and yet you made an acquisition in Spain. Are we going to be looking at more acquisitions or are you not going to do anything until things actually start improving?

I think we're probably not going to be doing acquisitions until we , you know, solidify how our -- you know, our cash position going forward. The Spanish acquisition which frankly is a good reflection of the liquidity, you don't make such discretionary expenditures if you're really tight , has been in the process for about a year and so it became due in December and we bought it and now our color business in Europe is much stronger.

And on the other side , how much more do you think the customers can take back in-house? I thought they were already just about done and everything that could leave your shores , so to speak, was already gone but every quarter there is some more that they are taking in.

Well, the type of merchant and custom compound in that you have is always potentially subject to some reversion. But , you know, the pace of reversion , most of that occurred, you know, with the tire -- losing the tire business, you know. I really don't think , Rosemarie, that we would expect to see much net loss going forward. You know, it's always possible. But the expectation that we have of the last team and the plans they put together is start to regain market share in the marketplace. And so I'm not expecting to see a net reversion , I'm look to see more conversion.

Yeah, and they do have a number of very active programs that continue to convert people from in-house compounding to -- our compounding. I don't think the trend is going to dramatically change. Hopefully they'll be going in the more positive direction going forward.

And anything new in the film business which is really losing money ?

Well, we are having some successful market entry of high - high-value custom going into some wall covering [inaudible] applications and we're in the process of launching five auto platforms that , you know, will offset some of the buildouts that we experienced in the second half of last year. So , you know, the film business , you know, we're working on it from a strategic perspective , but from the operations side, we're seeing improvements.

So it is going to stay ?

I'm sorry, what did you say Rosemarie?

So it is going to stay? Well, we don't talk about any business --

It is going to stay profitable.

All right. Okay. That's a good way of phrasing it. Thank you.

Your next question is a follow-up from Robert Ottenstein.

Just a couple points of clarification. Can you give us a little bit more details of what's going on in Mexico with the distribution business , the kind of problems there and what happened in Canada ?

I'm not sure what you're referring to in Canada. The comments about rubber side.

The comments about taking down the plant and losing market share.

Yeah, that was last year, when we took down tills en berg and that was part of the risk when you close a plant, we have a Canadian competitor that was able to come in and take some share. The Mexican situation really is one where there's a cost -- cost issue and also market demand. It would appear that demand in the Mexican market has been effective in two things. One, the general driftdown that we've seen in the U. S. affecting them but also more of the business that had been in Mexico going to Southeast Asia. And so what we're in the process of doing is assessing the business model. You know, it's not satisfactory for that business to lose multimillion dollars , couple million dollars -- $3 million last year and $3 million this year. We need to change the structure of it. We're about doing that. Mike Rademacher (ph) , our vice president in RJ that of our distribution business, has got a team together and we're , you know, assessing the business model, determining what it takes to make that business profitable and then we're going to be taking those actions in the first half of this year.

Okay, thank you very much.

Okay.

And your next question is from Saul Ludwig.

Where was the accounts receivable facility at the end of the year , it was 195 million at the end of the third quarter.

It was about -- it was a little under 160 or so.

And what was it at the end of '01?

It was 217.

Change here.

I'm sorry?

I mean, if we sort of add that number to your receivables.

They went down year to year.

Yeah, that would be a true number for receivables , right?

Right. Okay. Next question, on your flow of funds statement , in the fourth quarter it shows that you spent $11 million for a business that you acquired.

Okay. Next question, on your flow of funds statement , in the fourth quarter it shows that you spent $11 million for a business that you acquired. What was that ?

That's a net number, Saul , between the acquisition of transcolor and the divestiture of softer.

No, no, that's two separate lines. I'm just talking about businesses acquired , net of cash received , 11. 4 million.

That's transcolor.

Yep.

That's transcolor.

Yep.

And do you have to pay any more or that's the whole shebang?

It's not material , Saul , it's -- there was a secondary payment but that's , you're, you know, you're trying to drive through on what we paid for it and that's really not a, you know, a disclosed number.

It will show up on the first quarter.

But you're in -- you understand the range.

Okay. Next question, on the sale of assets , it shows the 12. 8 million received. And there's one other question, on your flow of funds, it showed you had a 4 million dollar debt reduction in the fourth quarter but your balance sheet show that you had a 23 million dollar debt reduction in the fourth quarter. Would that imply that softer assumed $19 million of debt and that you got the 12. 8 million cash and that would constitute the softer transaction?

That's pretty close, Saul. Softer was a combination of debt reduction and cash proceeds.

And that debt reduction would be the difference between balance sheet reduction in debt and the flow of funds reduction in debt?

Generally, yes, and there's some other movements , but, yes, that's the right range.

Okay, very good , thank you.

Thanks, Saul.

We'll take one more question.

At this time there are no further questions.

All right. Well, listen , everyone , we want to thank everybody for joining us. And also remind everybody one more time that we're if you're interested in coming to New York to join us and talk a little more about these issues we'll be pleased d to that. Dave and I will be available for the balance of the day if anybody has any further follow-up questions. Thank you , have a great day today , we'll talk to you soon.

This concludes today 's conference call. You may now disconnect.