Computer Task Group Inc (CTG) 2009 Q3 法說會逐字稿

Welcome to the 2009 third quarter financial results conference call.

At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions). As a reminder this conference is being recorded.

I would like to turn the conference over to your host, Miss Debbie Pawlowski, Investor Relations for CTG. Please go ahead.

Thank you. And good morning, everyone.

We certainly appreciate your time and interest in CTG. On the call today we have CTG's Chief Executive Officer, Jim Boldt; and Brendan Harrington, Senior Vice President and Chief Financial Officer. Jim and Brendan are going to review the results for the third quarter of 2009 and update you on the Company's strategy and outlook. We will follow with an opportunity for Q&A. If you don't have the news release discussing our financial results you can access it at the Company's website at www.ctg.com. Before we begin, I want to mention that statements in the course of this conference call that state the Company's or management's intentions, hopes, beliefs, expectations and predictions for the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected. Additional information concerning factors that could cause actual results to differ from those in the forward-looking statements is contained in our earnings release as well as in the Company's SEC filings. You can find these at our website or the SEC website at www.sec.gov. So please review our forward-looking statements in conjunction with these precautionary factors.

With that I would like to turn it over to Jim to begin a discussion. Jim.

Thanks, Debbie. And good morning, everyone. This is Jim Boldt. I want to thank you for joining us this morning for our third quarter earnings conference call.

As you saw in our earnings release, while we were at the mid-point of our guidance for revenue we were pleased that we acceded the high end of our guidance for earnings per share. As evidenced by our increase in headcounts, we are beginning to see the early stages of recovery in both our solutions and staffing business. We are going to talk more about our results and what we see for the rest of the year.

But first I am going to ask Brendan to start us off with a review of our financial performance. Brendan.

Thanks, Jim. Good morning, everyone.

For the third quarter of 2009 CTG's revenue was $66.8 million, a decrease of $22.4 million, or 25% compared with the third quarter of 2008. Operating income was $2.5 million, a decrease of $1 million, or 28%. Operating margin decreased to 3.7% of revenue from last year's 3.9%. However when compared with the trailing second quarter this year, both revenue and operating margin improved slightly. Net income was $1.6 million in the quarter, a decline of 23% from $2.1 million in the third quarter of 2008. On a per diluted share basis net income was $0.10 for the quarter, a 23% decrease over last year, and $0.01 above the high end of our earnings guidance range. On a per share basis earnings were up $0.01 from the trailing second quarter.

Solutions revenue in the third quarter of 2009 was $23.6 million, a 14% decline from last year's third quarter. Solutions represented 35% of total revenue in the quarter, an improvement from 31% a year ago. Compared with the trailing second quarter solutions revenue was up 2%. Staffing revenue was down 30% to $43.2 million as compared with last year's third quarter and down 1% compared with the trailing second quarter when staffing revenue was $43.5 million. Third quarter revenue from IBM, our largest staffing customer, was $17.2 million compared with $28.7 million in the third quarter of 2008, but up slightly from $17.1 million in the trailing second quarter. As a percent of total revenue IBM was down to 26% in the third quarter 2009, compared with 32% of total revenue in the third quarter of last year.

Revenue from our European operations was $14.8 million, a 21% decrease from the $18.7 million recorded in last years third quarter. Excluding foreign exchange fluctuations, European revenue in the quarter would have decreased by 16% over last year compared with the trailing second quarter. European revenue was down $0.3 million. The third quarter is typically a weaker quarter in the European operation because of the summer holiday schedule. SG&A as a percent of revenue was 19% compared with 18.1% a year ago. And 18.8% in the 2009 second quarter. We continue to manage cost very carefully as reflected in a 22% decrease in operating expenses compared to last year. Direct cost as a percentage of revenue decreased to 77.2% in the third quarter compared with 78% in the third quarter of 2008, and 77.5% in the second quarter of 2009.

The 2009 third quarter results include the equity compensation expense of approximately $0.02 per diluted share net of tax. The 2008 third quarter results included $0.01 per diluted share net of tax for equity compensation expense. The tax rate for the 2009 third quarter was 35% compared with 39% in the 2008 third quarter. The rate was favorably impacted by certain federal and state tax credits realized in the third quarter of 2009. We expect the tax rate for the full year 2009 to be between 38% and 40%, which is lower than we had noted in our second quarter call. We had approximately 2,800 employees at the end of the third quarter 2009 of which 88% were billable resources. This was up from 2,700 at the end of the second quarter. On the balance sheet our day sales outstanding was 60 days compared with 58 days at the end of the second quarter 2009 and with 56 days at the end of the third quarter of 2008. The increase was primarily the result of a change and mix of revenue.

Our cash used in operations in the third quarter was approximately $2.9 million, as compared with cash provided from operations of $12 million in the third quarter of 2008. This difference was primarily due to the timing of payment of our payroll at quarter end. The third quarter of 2009 ended on a US payroll days whereas third quarter 2008 ended between the payroll payment dates. We had $804,000 in capital expenditures in the quarter focused mostly on solutions development and recorded depreciation expense of $416,000 in the quarter. We expect capital expenditures to be in the range of $3 million to $3.2 million for the full year. CTG's financial position remains very strong. At the end of the quarter we had approximately $10.8 million of cash on the balance sheet and no debt outstanding on our $35 million revolving credit agreement which is in place through April 2011. Also during the third quarter of 2009 while adhering to SEC imposed volume limitations, we repurchased approximately 255,000 shares of CTG common stock. During this most recent self-imposed blackout period prior to releasing earnings, we repurchased shares under our 10b5-1 plan. As of October 2, 2009 a repurchase authorization is for approximately 650,000 shares. Because it remains accretive to earnings we intend to continue our repurchase program through the remainder of 2009. Jim?

Thanks, Brendan.

In aggregate our solutions business declined by 14% in the third quarter of 2009 compared with the third quarter of 2008. As we reported on previous calls, the tight credit markets have negatively impacted demand for our solutions business particularly demand from the healthcare provider market. Not for profit hospitals financed a significant portion of their needs through the issuance of tax exempt (inaudible) bonds. Due to the credit crunch and rating downgrades these hospitals have not been able to access the tax exempt market for capital since the fourth quarter of last year. Without the needed capital, they have been deferring many of their IT capital projects. These deferrals have clearly effected our business.

The good news is that we are starting to see a change in that trend. In the third quarter of 2009 we won six new projects related to electronic medical records. And our pipeline for electronic medical record engagements continues to grow. While we are beginning to see some credit markets opening up for the financing of electronic medical records, the time it is taking providers to obtain financing is much longer than one would expect. As a result some of the projects that were expected to start up in the fourth quarter of 2009 have been delayed and are now are expected to start up in early 2010. We have three new solutions for the healthcare market that employ data analytics to identify the ways to improve the quality and efficiency of the healthcare delivery. The first offering is a medical care management model that improves patients outcomes while lowering cost. The second is an offering that connects (inaudible) tool for the more accurate underwriting of group medical plans resulting in more equitable pricing across our healthcare system. And the third is for the deflection of fraud, waste and abuse which is estimated to account for 3% to 10% of all healthcare expenditures annually.

We think that it is likely we will have the first sale of all three offerings in the fourth quarter. As the offerings are being sold as services, we will recognize revenues as we deliver the services to customers over the term of the contract. These new healthcare offerings are further evidence of our strategy to shift our mix of business towards solutions which have measurably higher margins than our traditional staffing would. Turning to our staffing business, it declined by 30% in the third quarter 2009 when compared to the third quarter of 2008. The global recession began to have an impact on our staffing business in the fourth quarter of 2008 and it continued to decline through April of 2009. Starting in May, however, our US staffing business bottomed out, and in August of 2009 we began to see headcount grow again. The improved demand that we started to see in the third quarter has continued into the October timeframe.

You can tell from our income statement during the period from October 1, 2008 through March 31, 2009 we were very aggressive in reducing our costs ahead of the expected revenue decline. In aggregate the total cost reductions during that period and the direct cost in Selling General and Administrative expenses were $71 million, or 21% of total expenses on an annualized basis. Disciplined cost management is one of the key reasons that our third quarter operating margin was 3.7%. Due to our outlook in the improving solutions and staffing business, we did not make any further cost reductions in the third quarter of 2009. As we stated before, clearly our largest opportunity going forward is the $19 billion included in the stimulus package in the United States for healthcare IT which should significantly advance our business. We are basing this assumption on the fact that CTG is one of the largest providers of IT services for electronic medical records in the US, and one of a small number of companies that are working on projects to install electronic medical records systems for an entire community.

However, typical of government initiatives, it is taking some time before the majority of those projects will start. We also know that following selection to run a large project we first have to create a vision of the end result and then build a detailed project plan of all the tasks to be completed before we can fully step up an engagement. That means that while we expect to see some of the benefit from the electronic medical record projects that we are currently engaged at in the fourth quarter of 2009, a significant increase in our revenue from electronic medical record projects will not occur until 2010. Currently we are forecasting revenue in the fourth quarter of 2009 to be in the range of $67 million to $69 million. In the fourth quarter of 2009 we will have 62 billing days versus the 64 billing days in the third quarter of 2009, and 66 days in the fourth quarter of 2008. As one billing day equates to approximately a little over $1 million in revenue. Losing two billing days versus the third quarter of 2009 is lowering our fourth quarter revenue by approximately $2.1 million. If you look at our projected daily sales in the fourth quarter of 2009 versus the third quarter, our daily sales are expected to increase at the mid-point of our guidance by 5%, sequentially. Given the revenue forecast and the expected business mix, we are forecasting earnings in the fourth quarter of 2009 to be in the range of $0.09 to $0.11 per diluted share.

For the year our revenue forecast is in the range of $275 million to $277 million. Due to the higher margins for new solutions projects fitted this year and our strict financial discipline, we expect that net income per diluted share in 2009 will be in the range of $0.37 to $0.39. Due to the largest variable affecting our ability to forecast revenue in 2009, there has been the amount of credit that's available to providers to finance their electronic medical record projects. And the slower processing of credit applications given the additional caution currently being exercised by the financial services industry. While we won six new electronic medical record projects in the third quarter of 2009, one of the projects which was initially scheduled to start up at the beginning of October has been pushed back to start up in early January based upon the clients cash flow projections.

Additionally, one of the largest engagements we have been pursuing began what we thought would be a two to three-month process of obtaining financing in June. While there is every indication that they will receive their financing, it will most likely now take six months from start to finish. While the projects are taking significantly longer to start up than usual, the good news on the EMR front is that our pipeline is building and we're seeing more financing companies willing to finance electronic medical record projects.

With that I would like to open the call for questions if there are any. Operator, would you please manage our question-and-answer period.

Thank you.

(Operator Instructions).

Our first question is from Peter Larsen, Columbia Management. Please go ahead.

Good morning, Jim.

Good morning, Pete, how are you.

Good. Just a couple of little things. On the healthcare side, I am assuming that the revenue contribution in the fourth quarter from the proprietary, I guess we call it software, is going to be, there might be some but it will be fairly minimal. Is that a fair - -

Exactly. It is minimal in the fourth quarter. As it delivered services that will help it out over the terms of the contract. There's not much in our forecast now.

On the ramp of the EMR, it sounds like the revenue there is going to at least, to some degree, be delayed because of the financing issues and it also appears that that revenue will be recognized over the life of the contract so there won't be any big up front or anything like that.

That's correct. Actually the electronic medical records engagements are the reverse of the big up front.

Yes.

Yes. Generally, when you start a project you've only got a couple of people on it to do the detailed plan. And all the projects are kind of in mixed stage. We really have two where theres only probably in the fourth quarter forecast a couple people in two of the projects just, again, to do the product plans. And then with that, probably two of the projects that are fully staffed up for the full quarter and two are in between. So we are going to get some revenue from those projects in the fourth quarter. But again most of it is going to come next year and the year after.

Okay. Sounds like everything else - - let's hope the economic pick up is going to continue to reflect itself, albeit slowly.

Yes. We actually, quite frankly we were somewhat surprised when the staffing business started to come back in August. What we are seeing I think is the typical beginnings of of the cycle changing. Staffing generally comes back before the rest the economy. And we think that many of our clients may have cut too much when the downturn happened, and in some cases were actually staffing their own employees back at the sites on a staffing engagement to sit in their old seats. And that generally happens at the beginning of an economic recovery. So we are just surprised that it came back in August and also the demand came up so much. We would have expected it to be a little bit weaker at the beginning. It's perhaps too soon to tell if it's going to continue on in a straight kind of linear fashion or whether we are seeing a blip. But certainly in the month of October, all of our recruiters are busy. Actually in October I wish we probably had more recruiters that we had.

Always the way.

Yes.

Have you thought about it or determined how you are going to handle the pricing on your proprietary products.

Yes. We are working it out. Essentially, it will probably be based upon the size of the customer and the number of uses that we anticipate. But these products for all three of them we really don't think that there is any offset in the market. We believe each one of them saves our customer a substantial amount of money. So each one of them is really being priced on the value that the customer should see.

Okay. Very good.

The next question is from Bill DiTullio and Boenning & Scattergood.

Yes, my name is Bill DiTullio.

Good morning, Bill. How are you?

Thanks for taking my question. Just real quick on staffing. Did you see an increase in a particular sector or kind of across the board.

No, that is what surprised us. It was across the board. Most of our large staffing companies that we provide staff to. Most of the clients that we provide staffing to, we saw demand pick up starting in August.

Okay. And that continued right through the quarter.

Through the quarter and actually through October.

Okay. I know like you say, it is just too early to tell. Your gut feeling, do you think it will continue or - -

It is hard to say. Traditionally even when the staffing business is good November and December, you don't place many people. A combination of things, most of our customers have burnt through most of their budgets by the end of the year. So they don't have any additional budget to use. And most project managers don't want to take on a new person in the middle of November knowing that they may be off for a couple of weeks for the next couple of months. So, generally, the staffing business slows down in November and December. We're expecting that October has been a good month. So I don't think we'll find out really until January whether this is a change in the trend or just a temporary anomaly.

Okay.

Our staffing guys though think it may be a change in the trend.

Okay. Then turning to the healthcare solutions, with the EMR, you said you started six projects this quarter. Could you give a little more color on the type of projects maybe in size or type of clients.

Right. All of the projects are with kind of our sweet spot electronic medical record offering. So we really target hospital chains with about a thousand beds. So they probably have three to five hospitals. They probably have a $1 billion, close to it in revenue. There is generally a physician's practice attached to it. We often do those at the same time, usually 200 to 500 doctors. We usually figure for that type of an engagement that we will probably get about $2 million to $3 million a year for two to three years of revenue, depending on how fast they are doing the implementation. So if we have six projects we believe in aggregate, that we will probably get somewhere between $12 million and $18 million of revenue next year in 2010 and also in 2011 from those projects.

Okay. And just kind of looking in 2010, because you had said some of the projects had been delayed. What can you see as a run rate, maybe per quarter of how many products that CTG can do?

I don't. I can't answer that at this time. First, we are still in the process of doing our budget. So I haven't seen what the fields people are projecting for next year. Certainly in a quarter we usually can start up six to ten projects in a quarter. I think at the moment, the bigger variable here is going to be how many of them can get financing.

Right.

The stronger ones seem to be able to. But it's just taking a long period of time. So - - until we get a better sense of how much financing is out there, it is going to be somewhat difficult for us to project. I think probably by the time we get to the February call we will be able to give you some better flavor for it.

Okay. In terms of financing. What is the I guess biggest hang up and what do the lenders need to see before they can be more free to start lending.

Well I guess most of the companies that we see now - - it's somewhat difficult for you to get acid-based financing on these projects. Typical of any IT project, probably a third is services, a third software, and a third hardware. So if the project fails and you have to go in and grab what you have security in, you can't sell the services, most likely, resell them. You can't sell the software because it was (inaudible) to a party. And the hardware you are not going to get dollar for dollar on, nor reselling PC's and servers and things like that. So the finance companies what they are really looking at is the entity itself. Their looking at the cash flows of the entity and whether they think they are going to be able to pay back. Unfortunately for us as I said this week, a lot of our businesses are kind of billion dollar hospital chains. They tend to have much better cash flows than the smaller hospitals.

What could cause a product to fail. What would be something they would be worried about.

The biggest problem would be the doctor's not accepting changing what they are doing. Electronic medical records, and that's - - clinical areas are really our strength. We've historically practiced there. So people including doctors and nurses, etc. will go in and help the people change what they are doing in order to use the electronic medical record applications. Under the governments reimbursement, initially at least 10% of the doctors have to be using CPOE. So the physician has to be entering initially the information into the system. And for many doctors, particularly doctors who may have gone to school after PC's came about. Switching from writing a note to typing something into a PC is sometimes challenging or at least it slows them down, considerably. So sometimes you get pushed back from the doctor's themselves having to do that kind of entry. I have actually seen things like one doctor, for instance decided, he was a specialist, needed (inaudible) decided he would pay for a medical assistant and she would sit there and type and he would kind of do more patients in the course of a day. In terms of the technology though, this is not new technology. We have been installing this technology for six years. I can't imagine anything that would cause any crash in the system. But the technology and the software is stable. It runs on servers. The lapse of installations in the United States - - even the government estimates about 8% of all hospitals are using this type of software. So the technology is definitely stable, and the software is definitely stable. It is really a task of getting the physicians and nurses that have to use it to adapt to it.

But don't be concerned for the lenders. I guess my question is more, why would they be hesitant to lend the money. I mean adoption is one thing, but to pay for plan - - I imagine the ones that where the practice implemented it, they would want to go ahead with it, they wouldn't want to back out of it.

No. Right. One of the selling features actually we've had with financing companies that we are using. And both of them know us from the past that we are going to be in there making sure that the thing works. It isn't that it will work. It's not even that the hospitals will get the money back. It's just that at the moment banks are just very hesitant to lend anybody money unless they are absolutely sure that they can get the money back. And I have never seen so many credit checks and questions come out of a bank before.

Has the government indicated that they are willing to kind of guarantee or back the system. Or - - actually I'm saying, have they done anything to help move this process along as far as - -

No, actually. There was some talk of the government guaranteeing the loans which would have done wonders actually for the whole system but they decided not to do it. They believe that the hospitals and physicians practices ultimately will get the financing.

And my final question is. Just - - my understanding of - - to get the funding they had to meet a level of significance as far as implementing EMR. And also, to be that there is still a lot of - - there's still not a lot of clarity as far as what level significance meant from the hospital practice and the physician practice. Has the government tightened up their definition of that as far as what levels it means as far as implementing EMR.

Actually I have seen two issuances of that. They came out with their first one and then their second one and then they eased up actually on their second one. The very first one that the government came out with said that 80% of the physicians had to be using CPOE. And so entering the data on themselves would be pretty difficult really to get 90% physicians up and running by the beginning of 2011. When they came out with the second requirements of meaningful use, they actually dropped the 90% down to 10%. So they must have gotten a lot of feedback and they seemed to be a little more bit more realistic as to what was possible. But they still haven't come out with the final regs. But I suspect that they will be the same as they're probably out there now maybe a little easier.

That's a very achievable target for most physicians.

Absolutely.

Great, thank you, Jim.

Thank you.

The next question is from Frank [Sparacino] of First Analysis. Please go ahead.

Hi, guys. Just want to clarify the six new wins in Q3, those were all EMR wins.

Yes.

What was the number last quarter?

In the second quarter?

Yes.

None. Zero. We really hadn't seen any projects of any significance start up from November of last year through June.

Okay. And then I just wanted to sort of turn to the hospital - - state of hospital finances right now. I mean there are some indications that things were improving from a hospital standpoint whether it be admissions, and other factors as well. Obviously, the stock market is up so I'm guessing returns are up. So I guess that would help the finances of hospitals. But it doesn't sound like from what you are saying that you're seeing that - - I just wanted to see if you had any more color around that.

Well I don't think many hospitals at all borrowed between November of last year and - - probably June. Most of them were not for profits just use the (inaudible) and bond market. And that still is fairly dead so it is very difficult for them to borrow. And last November Moody's down-rated not for profit hospitals in th US which are most of them, from stable to unstable as a group. So that certainly doesn't help when they go to a commercial bank. But we - - It is turning positive. The fact that many of them have foundations in them - - equities have come back. There's definitely a plus - - one of the six projects actually isn't borrowing money. They are getting the money from their foundation. I am not sure that the foundation would have been as likely to lend them the money six months ago when the market wasn't as high.

So that's getting a little bit better. And banks, as we said, and financial institutions are starting to step up and lend to them against their cash flows again, Mark. I don't think many of them would have done the first six months of the year. So it's getting better. But it isn't a deluge yet. They are looking at each hospital separately and their credit and cash flows. While you're right, most of the hospitals saw a significant decline in, particularly in their discretionary surgery, elective surgery in the fourth quarter of last year. I don't think - - they have come back a little bit but what the hospitals did was go through like most companies. The have restructured their cost so they're living with the revenue that they have so their income statement and balance sheets look a lot better now than they did six months ago. We think it will be a slow process. - - probably mimic the financing in the country in general. Hospitals are just one class of companies that are having a difficult time or slow time to get financing at the moment. We're concerned, fortunately for us it's not a matter of focus for us but the small regional hospitals, we think it is going to be very difficult for them to get financing. Most of our customers and target customers - - the billion dollars of revenue, they can pretty much cut enough costs so that they look profitable. So we think most of them ultimately will get financing.

My last question is just anything to report a note with respect to the UK.

No, it is still absolutely stalled. They haven't selected a prime for the southern region. What's happened, and I don't know how long this will happen for. Initially, the NHS took all control away from the trust to local hospitals. They couldn't engage IT services from us independently. They had to just stick with the primes. And they have loosened up substantially. But basically they told the hospitals, you can begin to spend money again because the big project just isn't on the floor. I have said this before, I truly hope that it stays this way five years. Because when we begin to do the installs over in the UK, we took people from the United States and sent them over to the UK for some of them as long as three years. And with the projects about to start up in the United States, we need all those people. The senior people to run the projects here in the US. So if the UK could hold off four or five years until there were more people trained up and could go over to Europe and to run projects in the UK. That would actually be good for us and probably good for them as well.

Thank you.

Thanks, Frank.

Thank you. We have a question from Bill Sutherland at Boenning & Scattergood.

Close enough. So I think I may have missed a couple of things if you don't mind going back. I was uncertain about you said about October had and you added since the end of the quarter.

Yes. We expect October to be up again. Typical of staffing, probably November and December to be flat on the staffing side of the business.

Okay. The little trail off in Q over Q revenue in Q3 despite the increasing Q over Q headcount for staffing. Was that Europe?

Actually. Part of it was in Europe but it's just the traditional more people took vacations in the third quarter.

Just the seasonality.

Seasonality.

Did you speak to the sales pipeline in Q4 for EMR?

It's increasing. We don't actually give out number in pipelines and various areas. But the pipeline for EMR engagements is absolutely building in the fourth quarter.

So, with any luck - - some number of new wins in Q4 that add to - - the incremental picture for 2010. And I am thinking six wins in Q3 are mostly just impactful for 2010 revenue.

Right. It's going to be hard to predict because most customers feel like they have to have their financing in line though won't actually go over the contracts. Clearly they are in the process of trying to figure whether they're going to get the money to do this.

But aren't you along a continuum there as far as you have got a couple where it is all just waiting for I's to dot and T's to cross.

Yes. Some of them are close.

Now the new solutions. The economic impact on the client, I would think. Since, I know at least one is a hosted model and none of them have significant up front from the client perspective. It is kind of ROI that probably makes for quicker sales cycle - - decision process.

Absolutely. When you see some of the returns that some of our customers have even - - potential customers. Some of the offerings they have come up with, you would think they would make a pretty quick decision on it. The one that has the longest sales cycle we are finding out is fraud, waste, and abuse. In the medical model and in the actuary model. When we get done we generally will run their data and give them a report as to how much money they can save. Obviously they go through that. And they take issue with a few items. But generally, we think we have been right on. And when you are done with fraud, waste, and abuse, and we run the reports, etc., we give them 2,000 or 3,000 individual claims that they have to look into. And we're finding the process of them going through that is just taking a lot longer than the other two offerings.

So that looks like a sale cycle more like EMR, or the others could be a month or two.

Yes. It could even be longer than EMR. It takes a long time to go through a couple thousand claims individually. And decide which ones you can get the money back and which ones you can't, etc.

What was I going to ask? So the three sales you have got, probably in the quarter. Are they just selling through to the beta customer?

Yes, generally, yes.

So from the pipeline perspective, kind of hard to say how impactful in 2010 still for these three?

Yes.

All right. Thanks, Jim.

(Operator Instructions). There are no further questions. Please continue.

Thank you. Since the recession began in the later half of 2007, CTG has performed significantly better than many companies in and outside of our sector. We have proven ourselves to be very adept in managing our business and our costs in economic downturns. For us the good news is that we have seen finance lenders begin to finance electronic medical records projects. In 2010, the US government is expected to begin spending some of the $19 billion in a stimulus package for electronic medical record. In addition, we have a pipeline of clients that want to avail themselves of the estimated $40 billion to $45 billion that is expected to be paid from the Medicare and Medicaid systems in the 2011 through 2014 period for the use of Electronic Medical Records. Given the magnitude of the funds to support Electronic Medical Record implementations and our new medical info medics offerings. We see our healthcare solutions business driving growth in CTG's revenue and profitability for several years. I would like to thank you for your continued support and joining us this morning. Have a great day.

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