Harte Hanks Inc (HHS) 2009 Q1 法說會逐字稿

Welcome and thank you for joining the first quarter 2009 earnings call. At this time all participants are in a listen-only mode. (Operator Instructions) Today's conference is being recorded . If you have any objections, you may disconnect at this time.

Now I'll turn the meeting over to Mr. Larry Franklin, President and CEO of Harte-Hanks. Sir, you may

Thank you. Good morning. On the call with me today is: Doug Shepard, our EVP and Chief Financial Officer; Jessica Huff. Vice President, Finance and Controller; Bryan Pechersky, Senior Vice President and General Council. And before I begin my remarks, Bryan will say a few things.

Thanks, Larry. Our call may include forward-looking statements. Examples may include statements about our: strategies, initiatives and business plans, adjustments to our cost structure, financial outlook and capital resources, competitive factors, business and industry expectations, the economic downturn in the US and other economies and other statements that are not historical facts. Actual results may differ materially from those projected or implied in these statements because of various risks and uncertainties including those described in our most recent form 10K and other documents filed with the Securities and Exchange Commission and any cautionary statement in today's earnings release. Our call may also include non-GAAP financial measures. Please refer to today's earnings release for the required reconciliations and other related disclosures. Our earnings release is available on the investors relations section of our website at www.Harte-Hanks.com. I'll now turn the call back over to Larry.

Thank you, Bryan. As we mentioned in the press release the first quarter as we expected is difficult. The economic uncertainty continues to make it difficult, if not impossible to predict when conditions will improve. And although our clients and direct marketing at Shoppers are different, they're both feeling the effects of the recession and are carefully controlling their marketing spending as evidenced by our revenue declines. In direct marketing we believe our data driven marketing solutions are even more necessary and effective in this environment. But the facts are that our clients have less money to spend and that leads to reduced activity, delayed programs and in some instances programs being eliminated.

And while there are differences in spending in the various verticles that Doug will cover, the common theme is our customers need us to help them generate revenue now at a better value. We're not pleased with 18% revenue decline in direct marketing. It's obviously a difficult revenue environment. But there are also some good things happening with our existing clients and also with some new clients. I have said this to this group before, we have a terrific client list. And in the first quarter, we expanded our relationships with several clients, building on our ability to deliver multi-channel solutions. There are two good examples of this in the highlight section of the press release. One of those is the global electronics company and the other global healthcare company and the programs that we've provided for them.

In the new client category, a major retailer that we won this quarter will be accountable for delivering fully integrated data driven solutions against multiple communications channels. We'll be providing a marketing database and data management insight and analytics, services from our direct agency, digital marketing and direct mail. The key to this win was the fact that we could bundle all of those solutions and be responsible for their CRM story. Additionally our people aggressively executed against the reduce our cost initiative that we discussed in the last quarter, and the results are obvious in this quarter. To only have a 10% reduction in operating income with 18% revenues reduction I believe is terrific. We'll have to do more because we're committed to being able to deliver more value to our clients at less cost. And I really believe that the big payoff from all of this will come when this recession is over. Because I'm confident that we will be stronger, a more efficient company with terrific growth opportunities.

Turning to Shoppers, California and Florida remain very difficult markets. Although the 16% -- or 16.3% same circulation decline was no worse than previous quarters, we see no signs that there will be any improvement in the near term. Again, I could not be more proud of the leadership of our people and what they've shown in this ongoing realignment of the cost structure. The aggressive cost reductions that started in the fourth quarter last year and actually have been going on throughout last year were also continued into the second quarter of this year. The encouraging thing to me about our Shoppers is that we get confirmation every week that this product works for our clients. And this encouragement comes in the form of testimonials also the fact we have 14,000-plus customers that use our product each week, and in any given week we'll distribute over 90 million inserts that we deliver to the homes in California and south Florida.

We have intense focus on increasing the customer count, since we know that most of our customers have less money to spend. We're also getting confirmation that our web products, especially the power sites, add tremendous value to the print product. And while the numbers are still small, our growth is exciting. And more importantly, our territory sales force are embracing the web strategy. I'm fully convinced that we will emerge from this recession and I do believe that California and Florida will, again, be good places to do business. We will emerge a more efficient and competitive business with tremendous long-term opportunities.

Cash, another key focus area, and the results again are very good. Doug will provide you more detail. But it's important to note that our focus on accounts receivable collection is paid dividends. Our focus on limiting capital expenditures to those that are necessary to deliver our services more efficiently are to generate and keep revenue as working. This allows is to add-- or allowed us to add $19 million to the cash balance during the quarter and reduce outstanding debt by $7 million. While we don't underestimate the challenges that we face and the difficulty of the environment, I could not be more pleased with the way our people are making the hard decisions. Because we also know that there are more ahead of us and they are hard and difficult decisions. Doug?

Thank you, Larry, and good morning. Here is a company-wide overview of our first quarter. Revenues decreased 18.9% for the quarter. Direct marketing revenue decreased 18% for the quarter. Shoppers revenue decreased 20.7% for the quarter, and 16.3% for circulation during the same period for the first quarter in 2009 and 2008. Operating income decreased 46.7% for the quarter. For the quarter direct marketing declined 9.5%, while Shoppers declined $10.2 million, including $3.5 million of charges during the quarter. Our free cash flow was $14 million versus $16.7 million in 2008. Our net debt, total debt less cash, declined $26.7 million during the quarter. We reduced our capital expenditures in the quarter $2.2 million compared to $6.7 million in the 2008 first quarter.

Turning to our businesses, in the quarter, direct marketing revenue decreased 18% and operating income decreased 9.5%. Operating income margin increased to 13.1% compared to 11.9% in the first quarter of 2008. The charge of $1.9 million was incurred in the first quarter related to head count reductions as a result of adjusting expenses to our revenue decline. Removing this charge would have resulted in operating income margins of 14.4% for the quarter. The improvement in operating margins is due to our across the board expense reduction initiatives.

In the quarter our high-tech telecom verticle represented 30% of direct marketing revenue. Retail was 23%, select markets were 20%, financial was 14% and healthcare pharma was 13%. All vertical markets experienced revenue declines in the first quarter compared to the first quarter of 2008. Our pharma and healthcare expands to revenue healthcare decline in the single digits while our retail and select markets both had decreases in had the low teens. The high tech telecom verticals decreased in the high teens while financial service revenues declined 35% for the quarter. The top 25 direct marketing customers represented 41% of direct marketing revenue for the quarter. Our largest customer in the quarter represented approximately 7% of our total direct marketing revenue.

Turning to Shoppers, our performance for the quarter was disappointing. Shoppers first quarter revenue decreased 20.7% based on circulation distributed for the same period in the first quarter 2009 and 2008, Shoppers revenue for that circulation declined 16.3% in the first quarter. Shoppers operating income margin for the quarter declined $10.2 million, including $3.5 million of charges compared to the prior year quarter. Removing the charges would have resulted in an operating income of $1 million. In February 2009, approximately 650,000 circulation was closed in southern California. At the end of the first quarter of 2009, we consolidated two Florida production facilities into one. The expected 2009 savings from this consolidation will be offset by the 2009 first quarter charges.

During the fourth quarter earnings call we gave guidance to expect $2.25 million of charges of primarily related to our Florida production facility consolidation during the first quarter. We actually incurred about $3.5 million charges. This increase is due to additional head count reductions in the lease reserve for a facility we are no longer using. We estimate the first quarter charges outlined in our press release negatively impacted first quarter earnings by approximately $0.054 per share. On the balance sheet of March 31st, we're showing a net debt balance of $213.8 million versus $240.5 million December 31st, a reduction of $26.7 million. Net accounts receivable were $144 million versus $169.4 million at year end.

Day sales outstanding at end of March was 61 days, a slight increase compared to the 59 days outstanding in March 2008. We ended the quarter with a leverage ratio of 1.8 times versus a covenant of three times and an interest coverage rate of 11.3 times versus a covenant of 2.75. We currently have all $125 million available under our revolver, in addition to a cash balance of $49.7 million at the end of the quarter. We believe our conservatively leveraged balance sheet and free cash flow provide us good operational flexibility. With that, operator, we'll turn the call over for questions.

Thank you. (Operator Instructions) One moment, please, for the first question. Thank you. Our first question comes from Alexia Quadrani with JPMorgan.

Thank you. A couple questions. First in the direct marketing business, you guys did a very impressive job in the margin side despite the revenue falloff, and I'm trying to get a better sense of how sustainable it is if the cost-cutting efforts that you've done, will they carry through the year, or it just depends on the revenue environments? You can talk to that a little bit.

Okay. Good question, Alexia. The cost cutting that we -- well, as I said started in, I guess, toward mid-last year and then accelerated, we got the benefit of that in the first quarter. We had some costs that Doug referred to that actually are the one-time charges that we won't have next quarter. But those savings, they will play out over the remainder of the year. Now, what we know is that we've got to keep intensely focused on our revenue strings and where those are going. And we feel reasonably good about the ability to continue to right size, if you will, our operations as the revenue picture changes.

We are literally looking at every system that we have, everything that we do, every way we deliver our services, and the fact that we know we need to deliver our services at better value to our customers. And we think there are ways to continue to improve that. We're taking those actions as we speak. And we'll continue to monitor them very carefully.

And then if you look at the revenue declines in the direct business, is there a sense you can get about how much is added to pull-back of spending from the different verticals which you highlighted, or how much that might be putting pressures on your fees or what they pay you, given the overall environments, where you can qualify that a little bit?

Yes. The financial performance which was down how much?

35%.

35%. That is -- and it's now I think 14% of our revenue. Those pull-backs were credit cards, vertical side finance, insurance, mutual funds and those were all customer mailings, etc. So that is pull-back in volumes. And in some cases just eliminating some programs. In the other verticals, it is a -- it's a mix of volume reductions and it's a mix of some delays. In the retail vertical where -- what were we down in retail, mid teens, we had some good growth with some customers. And then the ones where we had the reductions that led to the 14%, those were primarily volumes and delays on some programs. The high tech telecom, the results there, really high tech had a fairly good quarter. Telecom, we had a large program that we were running for a company that ended in the first quarter of last year. So that was a reduction in just programs. And then the last part of your question, we are seeing price compression and we are responding.

And then just lastly jumping to the shopper business, if I understand correctly, you may be approaching a bottom. But there is no sign of a recovery any time soon. I guess if that is the case, if you sort of stay at a bottom here and you no longer see further deterioration, will it be easier to manage the expense base a bit more, manage the margin going forward? And then, secondly, still on Shoppers, when we see an eventual recovery, do you have any sense in what sort of shape that will take? Have some of the clients completely disappeared and gone out of business and therefore be a very modest recovery? Any color you can give me on that will be great.

Can I add a couple more comments about our direct marketing before I do that?

Sure.

Because we in the quarter I was talking about it's kind of hard to say that everything is not bad when you have 18% reduction, but everything is really not bad. We had some really good wins and they were throughout our service line offerings. So they were -- and several of those, particularly where we're selling additional services to our existing clients that are the more traditional clients where we're doing first line direct mail, targeted mail, and some of those sorts of services where we're adding the higher value but lower revenue-based programs, it makes that revenue, we think, a lot more sticky, and it adds a lot more value. So there are some good things. It's just that when you have that kind of revenue reduction, it's hard to -- it's very difficult to make that up.

On the Shoppers side of the business, when I mentioned that we have 14,000 plus customers, I can tell you that that customer count is down 10% plus. So there have been a lot of these small to medium-size businesses that have gone out of business. And then we also, because our revenue is down more than that, the ones that we have and are keeping, they are spending less. But, again, the anecdotal testimonials of why they continue to advertise with us is encouraging when we see some upswing here. Our, what we call national accounts are really regional accounts, some of the larger ones, they're actually performing better than our local people, and that just says that the local people are having to watch every single nickel they spend.

As to what this -- it is true what you said that it may not go down further or much further. We don't see any catalyst at the moment that is going to make it move back up. We can all talk about some housing sales one month may be up a little bit, but at 30% less price. And then you have to ask how quickly is the person that bought that home going to start painting it and put the driveway in, etc., when unemployment rates continue to increase in those two states. But what we know is, and having gone through other recessions, nothing like this, but other recessions, when it does come back, these people will start spending money. And with the combination of what we're doing with the print product and also the web, I'm convinced that we're going to have a strong franchise. We still have 400-plus sales people in California and south Florida. Those people know those markets. They know the customers. They're with the customers, and the product works.

So I feel -- I don't know how long we're going to be in this, the position that we're in. But I can tell you that our people that are running our Shoppers business, they are really good at not just controlling costs and cutting costs. Because when you're in an environment like this where we're combining production facilities, we're combining operations, you make two or three passes through those as you take the actions, you get the expense reductions and then you go back and see where is the efficiency, etc. So there are all kinds of opportunities to continue to right-size, but I can also tell you there are difficult decisions being made.

Thank you very much.

Okay.

Thank you. Our next question comes from Dan Leben with Robert W. Baird.

Great. You guys hinted towards this, but could you talk a little bit more about the products performance within direct marketing in terms of just what the magnitude more the traditional business versus some of the more date intensive type businesses?

Yes. Dan, just because of the magnitude of revenue, the more traditional business is where we had more of the decline. And that's what was driving the downward pressure. And a lot of it was just -- a lot of the decline was in just lower volumes. Now, where we saw some upside and where we had gains, and we had some good gains with some clients, those were pretty broad spread among the lead gen, the data base, the programs that we have added to existing clients, some more contact center work. Those -- it was fairly broad spread.

On the new business that we got that will be on-boarding over the next few quarters, and, again, keeping in mind that it takes time to get these on and you're losing the larger volume accounts, so these are not extremely large revenue streams over any short-term period. But those are -- I mean, they're across the base on tech support, data base, sales lead management, several agency and digital additions to existing clients. So that part was pretty broad spread.

Great.

The volume-related transactional businesses are down.

So, is it safe to assume that on the actual some of the data side and some of those things you were mentioning if you just look at those pieces you are moderately positive, or not down nearly as significantly?

Not down nearly as significantly.

Okay. Fair enough. And then just on the the Shoppers business, obviously some customers going away and volumes are down, have you made any changes to pricing on the products?

I can safely say we have not increased prices.

What about the other way?

We compete aggressively.

Okay. Fair enough. And then could you just talk a little bit about DSO trends, particularly within the Shoppers business. Your up a little bit now, but I want to get a sense of how that broke down between the two businesses.

Yes. The direct marketing was slightly down and Shoppers was slightly up. It's not anything unexpected. And as we said in our previous call, we've got steps in there to monitor it tightly and to stay on top of it. But even the slight image just a slight increase in shoppers. It's nothing of material or alarming magnitude.

Okay. And then you mentioned some programs delays within the retail vertical. How many of those were delays where people were pulling back spending versus customer bankruptcies or on the verge of bankruptcy and just absolutely had to halt spending?

No. It was more of the former. The reduced volumes and the waiting and changing plans. But not -- I don't know of any.

There were no large new bankruptcies in the first quarter that impacted us. You would have the carry-over of what happened in the third and fourth quarter, but --

Which would have affected the comparisons, but those were the ones that everybody already knew about and we'd taken on. There is no new list that I'm aware of.

Okay.

You've obviously got to look at it all of the time.

Yes. Fair enough. Now, on the circulation declines, do you guys feel pretty good about where you're at today, and kind of feel like this is the stable level you can maintain even as trends remain weak, that kind of looking forward, this is the base you want to grow off of when things do improve in those markets?

It's something that we look at frequently. But we have no, at this moment, planned further circulation reductions.

Great. Thanks, guys.

Thank you. Our next question comes from Michael Kupinski from Nobel Financial.

Thanks for taking my questions. Larry, I was wondering, can you give me what the sequential month-to-month declines were in direct marketing? Did it start off slow in January and finish a little bit better in March, or was it just pretty consistent throughout the quarter?

Mike, it's really interesting when you track it and you think there has got to be some pattern it. But actually January was a little bit better. We're talking about now the ups and downs from last year, so I'd have to go back and look at what happened in January last year. But it was a little bit better in January, down a little more in February and March was about the same. So we went back and looked over several months and there are those -- it's just not evenly distributed either up or down. And that's the same thing that is true in Shoppers as well.

Okay. And then in terms of -- it sounds like you have a significant win with one retailer. I thought, Larry, that you had all of the retailers. so a little surprised by that. But usually you have to ramp up expenses to support the business development. Will that be significant in the coming quarters like in the second and third quarter particular?

No.

And where would we see that, would it be in payroll, for instance?

No. Nothing there.

Okay. And in terms of the Shoppers, what would be the key component that you would look for to kind of when you think we're out of the woods and maybe start to see some improvement? Will it be the real estate market, because being in Florida now and talking to real estate agents here, they're telling me that the prices aren't going down anymore and that the homes are actually starting to move, which I would have thought might show some signs that the Shoppers business might even start to see some improvement. What do you think would be the key category to get the Shoppers business kind of moving in the right direction again?

Well, there's probably a number of things. But as long as unemployment is high and rising, people are nervous. And I think those home sales are in the -- there are still a lot of homes on the market that have to be absorbed.

Yes.

And in talking with our California people and looking at home sales statistics and that's a data point. Our question is when you buy that house, how long is it going to be before you paint it, build a pool, buy some new furniture, trade your car? And those people spending money is going to tell us that.

Yes.

And we sure see a lot of cautious people in California and Florida.

Right.

And people are just -- they're just not spending money.

Right.

And so then as I said with our sales force, we're in that market every single day of the week. And while there's -- I think it's very safe to say that there's less doom and gloom than there was, but it's not directionally positive where we see it.

Yes. And in terms of just going back for the direct marketing as you go into the second quarter, we've already started into the quarter, do you have any insights on how the quarter, let's say, just like look at the last month, how that pace relative to the first quarter is about the same? Have you seen some stabilization? Have you started to see some improvement? Because in the past cycles it seemed like direct marketing did have a couple of quarters where you had some significant double-digit declines in the last cycle. But then we started to see some bounce back pretty nicely just in a matter of just three to four quarters.

Yes.

What are your thoughts about that business, particularly what you saw the last month and how it might look? Is it similar to the last cycle, do you think?

This might sound really strange, but we obviously anxiously await our financials every month. But we are not getting excited or especially depressed on one month's activities. Because we are in a long-term game that is very short-term focused here. And so we are constantly looking at what products and services we're selling our clients and how do we be more effective for them, and that keeps us focused on structure. It keeps us focused on cost. It keeps us focused on our client's cost. And it keeps us trying to add more value to each of these customers. But it is just -- it's amazing when you go back month-by-month and look at the fluctuations and what's happening in the revenue stream. I can tell you that in the first quarter of this year, we were really, really close to our Shoppers revenue plan.

Yes.

The 18% -- what was direct marketing? 18% in direct marketing. Slightly more than we would have thought. But then we go back and look and say there is no big surprise given some these -- where some of the fluctuations came from. So, I know that doesn't help you at all. But month trends are just -- now as we look back four months and you kind of normalize some of those, maybe there's something there. But we don't see it based on what -- the last three months or four months, we don't see, as I said in the remarks, we don't see the -- this is a statement now for the total business, not individual clients or individual verticals, but we don't see any directional change at this point.

And the business you want from the retailer, how did you win that? Hopefully I would imagine it was based on price. But I would just like to have your thoughts on what allowed you to win that business?

Well, we won -- the important thing and the reason that it is spiked out there is because it is a bundled solution, totally all of the services that we provide from the traditional to the digital, it is a total solution. And so that was done through a long process of RFPs and presentations. And so the significance, again, is the fact it's the bundle solution.

Okay. All right. Thanks, Larry. I appreciate it.

You bet.

Thank you. The next question comes from Ed Atorino with Benchmark.

Hi, Larry. How are you?

Good. How are you?

Okay. Am I reading correctly, do you think that the $70 million range for Shoppers is sort of a temporary bottom here or a bottom? And secondly if you look at the cost structure, the two biggest cost are mail and distribution or mail and people?

Right.

And are you at a cost base that is going to stay at this level barring a change in the top line?

Okay. The $70 million is it the bottom? I don't know. But again, as I've said, I don't see it, the $70 million other than just the fact that there's some slight variations throughout the year. But, again, we don't see that moving, or we don't see any indication that would say it would be moving up.

On the cost side, the postage goes up, when? May. 1.4%. So at today's circ, postage increase on just the base postage, will go up 1.4%. And the people cost, we continue as we indicated in the press release there was some further reductions in the first quarter. Some of them we talked about in the fourth quarter, but there were some additional reductions, so there will be some further reduced expense there. And then we are literally are, Ed, literally as we speak, we're consistently looking at how we're doing. If you look at what happened in Florida where we've combined those facilities, we have gotten that done.

Yes.

But we are not as efficient yet, because it just was completed in March.

Got you.

So we're still working the productivity issues. We're working the structure and the staffing of that structure. So there's still opportunities to impact the cost structure, but obviously less than there were.

What's mail is percent of total cost, about a third?

Yes. Yes, it is.

On the direct marketing, as I think some of the -- in fact, we talked about this once before, I think. Some of the problems have to do with the credit crunch and people afraid to spend money. Are you sensing that, A, assuming I'm right, B, are you sensing people are starting to at least think about spending money again, sort of taking the checkbook out of the drawer, so to speak? The market is up. The government is throwing $1 trillion at the world and spring is here and all of that stuff? You get my point?

Yes, and swine flu is waning, right?

Hopefully.

I think we're seeing a few programs added back. But what we don't know is what is taking place.

Yes.

The customers that we're not seeing movement one way or the other. Because not only do we have to watch the performance of our client and how well they're doing. And we're fortunate, again. And I cannot overemphasize this enough, our client list is terrific.

Yes. It's always been.

So we think that's a plus, but it's not any kind of given that things are about to turn around.

With you sitting on a ton of cash and you have got some debt, are you inclined to pay down debt in the short run, or take a look at the stock again? Can you answer that?

Yes. There's no change anticipated. We are -- said we will accumulate cash and we plan on continuing to accumulate cash.

Okay. Thank you.

(Operator Instructions) Our next question does come from Dan Salmon with BMO Capital Markets.

Good morning, guys, and thanks for taking my question.

Hi.

I'll dance a little bit more around this cost question and see if you have it broken down like this, a breakdown just straight up between fixed cost and variable cost. We've heard some of the little bits and pieces that are within that, but I'm wondering if that type of breakdown you have available.

Are you talking about direct marketing?

Well, I guess if you could break it down between the two, that would be great, but as well for the company as a whole.

Well, coming up with the direct marketing part of it, obviously the head count reductions are significant. And we think those are somewhere between 35% and 40% of the savings -- And then if you look at production and distribution which is the cost of everything that we do with the product, that's probably in the 35% and 40%, and then it's G&A. Now, within those buckets, there is just a multitude of expense line items that are down without very many of them being up.

And in the Shopper side of the business, it's probably not much different from that as far as percentages go. There's more -- within the payroll with all of the changes that have taken place in the consolidations of production facilities and the way we manage the production process, there's a fair number of less people involved in that particular function. There is some leases associated with the property that we've -- with the changes we've made in Shoppers. I don't have it on the tip of my tongue as fixed or not, but I would assume, Doug, that probably in Shoppers there's more of a fixed part of it would be reduced.

And then when we've reduced circulation by, what, $1 million in the last year, $1.2 million, something like that, then the base postage against that is out, which is in the production and distribution. Paper cost the same thing. So I think probably the 40%, 40%, 20% somewhere like that would be a fair assessment of both of them.

Okay. That detail helps. Thanks very much.

Thank you. Our next question comes from Danny [Anuck] with BlackRock.

Hey, Larry. Great job. I was actually wondering why you guys are holding an elevated cash position and why you wouldn't pay down some more debt?

Well, first of all, our term facilities there's no -- it's a permanent pay down. So that's one discouraging fact for us at this point. And then the second, which is consistent with what we've said over the last couple of quarters, is to have the flexibility build that cash up and be able to address any issues that arise.

And what gives us a lot of encouragement is the fact that in this environment we have the flexibility to respond to circumstances that we don't now see. Whether they're opportunities on the CapEx side to do something to do some revenue, "we are focusing on keeping our cash," as Doug just said. And then that permanent pay down makes it not terribly attractive at this time.

Okay. Thanks.

Thank you. Our next question comes from Andrew Cash with Point Clear Value Management.

Good morning. I was just wondering within your financial vertical in direct marketing, I assume that some of your customers have tarp money.

Yes. That would be yes.

Okay. Well, I'm just kind of curious have you noticed any difference in behavior between the tarp-related customers are thinking about advertising and how the non-tarp customers are thinking about it?

We really, really haven't, because our financial vertical is 14% of our total revenue and then that's split among five different categories within financial. So we haven't seen any at all. Now, I don't know that we would, given the magnitude of our business with them. But I've heard nothing from our financial sales force that would indicate that that's the case.

Okay. I really appreciate that. And thanks for doing a great job.

Thank you.

Thank you. Our next question comes from Edward Atorino with Benchmark.

I got my answer. You said the charges were $0.05 total charges?

Yes.

Okay. I just figured it out myself. Thanks a lot.

Thank you. Now I would like to turn the meeting back over to Larry Franklin for closing comments.

Okay. I just want to, again, emphasize how significant I feel that our performance is, as it relates to our people's initiative, the effort and their commitment to run this company for the benefit of our customers, and to assure us that we will emerge from this recession even stronger and with terrific growth opportunity. And it's just a really good group of folks. So to them, thank you, and thank you for your interest in our company.

This concludes today's conference. You may disconnect at this time. Thank you.