Jack in the Box Inc (JACK) 2007 Q2 法說會逐字稿

Good day, everyone, and welcome to the Jack in the Box Incorporated second quarter and fiscal year 2007 earnings conference call. Today's call is being recorded. A replay will be available on the Jack in the Box website starting today for those who could not attend the live event. (OPERATOR INSTRUCTIONS)

At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Jerry Rebel, Executive Vice President and Chief Financial Officer of Jack in the Box Incorporated. Please go ahead, sir.

Thank you. Good morning. And welcome to the Jack in the Box conference call. Joining me today are Chairman and CEO Linda Lang; and President and Chief Operating Officer Paul Schultz.

During this morning's session, we'll review the Company's operating results for the second quarter of our fiscal 2007. We'll also discuss guidance for the third quarter and full fiscal year. All of this information was provided in this morning's news release. Following today's presentation, we will take questions from the financial community.

Please be advised that our presentation contains forward-looking statements that reflect management's expectations for the future, which are based on current information. Actual results may differ materially from these expectations based on risks to the business.

The Safe Harbor statement in today's news release outlines some of these risks and uncertainties and is considered a part of this conference call. Other material risk factors, as well as information relating to Company operations, are detailed in our most recent 10-K and other public documents filed with the SEC. And now I'd like to turn the call over to Linda Lang. Linda?

Thank you, Jerry, and good morning. Jack in the Box today reported another strong quarter of operating results. In fact, our most profitable second quarter ever with net earnings per share up 31% versus our second quarter last year. For the first half of fiscal 2007, per share earnings are up 39% compared with a year ago. Strong product demand and improvement in operational execution are driving these impressive results.

We've made significant progress in reinventing the Jack in the Box brand through menu innovation, upgraded service initiatives, and enhancements to our restaurant facilities. And that progress is fueling the sales and earnings growth that we reported this morning. On menu innovation, for example, we've added high-quality products to all categories of our menu from shakes and finger foods, to burgers, breakfast items, and salads.

Our varied menu is attracting new customers to Jack in the Box while also proving popular among our loyal customers. For the quarter and year-to-date, average check and transactions are both up versus prior year. Our menu marketing and R&D teams are doing an incredible job of developing new products that are relevant to a broader base of customers; products like our 100% Sirloin Burger, which we introduced earlier this month.

Jack in the Box is the only major fast food chain offering a 100% sirloin patty. This product, along with other innovative menu offerings, continues to differentiate our brand from competitors. Our menu development teams are also doing a great job of enhancing our current products like Jack's Ultimate Salads. Next month Jack in the Box will launch an upgrade to our line of entree salads, which will feature a new blend of mostly romaine lettuce and spring mix. We'll also offer a choice of freshly grilled or crispy chicken breast strips on the side.

And to help relaunch our upgraded salad line, we'll be introducing a new Barbecue Ranch Chicken Salad. Along with enhancing our menu, we're also improving the guest experience by offering a higher level of customer service and by creating a more pleasant and inviting environment in which our guests can enjoy their meals. This holistic approach to reinventing the Jack in the Box brand is already generating positive feedback in markets where we have completely reimaged our restaurants and introduced new guest service initiatives.

We have a tremendous opportunity to benefit from this comprehensive reimaging program as we roll it out throughout our system. To date, we've reimaged more than 200 restaurants, including 56 in fiscal 2007 and we expect our entire system, including franchised locations will be reimaged in four to five years. In addition to brand reinvention, we're also progressing on a second major initiative of our strategic plans, profitably growing our business.

You can see the growth in sales, earnings, and restaurant operating margins that we've achieved this year. And we're adding new units for both of our Jack in the Box and Qdoba concepts. We're also growing the franchise side of our business. Through the sale of Company restaurants and new unit development, we have increased the franchise side of our Jack in the Box business to nearly 31% at the end of our second quarter.

Our long-term goals are to continue increasing franchise ownership by about 5% a year and to achieve a range of franchised ownership that's more closely aligned with that of the QSR industry. Our Qdoba brand also continues to grow sales and earnings while increasing the number of system restaurants by 24% from last year. Including a 3.5% increase in same store sales in the second quarter, Qdoba has now achieved 31 consecutive quarters of comparable sales growth.

Based on the results achieved during the first half of fiscal 2007 and our optimism in maintaining this momentum over the next two quarters, we have raised our sales and earnings guidance for the full year. I want to give credit to our dedicated employees and franchise operators for the improvements that we've seen in our operation. Their commitment in executing our strategic plan has Jack in the Box heading toward another record year of earnings.

And now I'll turn the call back over to Jerry to discuss the second quarter in more detail and update our guidance for the remainder of the year. Jerry?

Thank you, Linda. As Linda mentioned, Jack in the Box experienced significant growth in a number of areas during the second quarter, driven primarily by a 6.4% increase in same store sales at Company-operated Jack in the Box restaurants. For the quarter, net earnings increased to $0.80 per diluted share versus $0.61 a year ago. Profits exceeded the high end of the range forecast by the Company and analysts' First Call consensus by $0.10, nearly all of which is due to the higher restaurant sales and higher restaurant operating margin.

Through the first half of fiscal 2007, earnings were $1.83 per diluted share versus $1.31 for the same period last year, a 39% improvement. We repurchased approximately 3.2 million shares of stock in the second quarter under a 10b5-1plan, which brings the number of Jack in the Box shares repurchased in the first half of the year to about 5.5 million. You may recall that this with the approximate number of shares that we intended to acquire through a dutch auction tender offer last December.

In the second quarter, we paid down $60 million of our $475 million term loan, which reduced the interest rate spread to LIBOR on the remaining balance by 25 basis points. With respect to our guidance, we believe that Jack in the Box will continue to experience solid sales growth for the balance of the year. The same store sales at Company restaurants expected to increase 5% to 6% in the third quarter and 5% to 6% for the year.

We are beginning to see some cost pressures on the commodity side, which began late in the second quarter for us and are expected to continue through the third quarter. For example, we're expecting beef costs in the third quarter to run about 5% to 6% higher than in 2006 before moderating somewhat in the fourth quarter. Our tax rate for the third quarter is expected to be around 36% to 37% compared with 34.1% a year ago. Last year's rate, which benefited from tax planning initiatives and tax credits, positively impacted year ago EPS by about $0.04.

Due primarily to our strong sales performance, we're raising our full year earnings guidance to $3.45 to $3.50 per diluted share. Our guidance for the third quarter is $0.85 to $0.89 per diluted share. And now I'd like to turn the call back over to Linda. Linda?

Thank you, Jerry. And now we'll take your questions.

Thank you very much. (OPERATOR INSTRUCTIONS) One moment, please, for our first question. Larry Miller, you may ask your question and please state your company name.

Company's RBC. Thank you. Hey, guys, how you doing?

Good, Larry. How are you doing?

Good, Larry.

Very well, thanks. Jerry, if I could just follow up on the beef price question just for a second. What was beef price pressure in fiscal Q2? And why do you expect it to ease in the fourth quarter?

Well, we had -- we had beef costs -- let me go back to Q1. Q1 for us beef costs were actually down about 5%. In Q2, they were essentially flat with the prior year. And we started to see some pressure coming in late in the second quarter. Prior to that, actually beef costs had been under where they were in the prior year for the first two-thirds of the quarter.

What we believe was the cause for that is winter weather taking some weight off the cattle and, therefore, overall cattle weight production fell off in late Q2. And we expect that to continue on into Q3. What our guys are telling us is that the cattle weights are beginning to increase and that should increase production into Q4 versus what it was in Q3 on a year-over-year basis, and we believe that the Q3 cattle weight production will be down around 3% to 4%. We think that's what's driving the pressure in the third quarter.

When you look out into the fourth quarter, we believe that the cattle production will come back up somewhat flattish with where it was in the fourth quarter last year and also with respect to our beef complex. We have a blend of 90s and 50s, and we're pretty well protected with contracts on our 90s throughout much of the summer.

And the 50s, which you guys know historically trades around $0.50 per pound, we've been trading around $1.00 per pound a day and we expect that will not be long-lived on that portion of the complex.

Can you talk about some of the other commodities you might have contracted or hedged?

Yes, most of our chicken is, in fact, contracted. We are, like many others, starting to see some pressure on cheese, which has been up somewhat this year, but we think at that point to get a little higher in the third quarter also.

Okay. Great. You guys mentioned on the press release and again on the call here that the remodels you've done, or the reimaging more accurately, you're seeing a sales benefit. Could you put any parameters around that? Give us any color about what the mix might be in those stores and what is contributing to the sales trend?

Sure. We had indicated before that we don't really provide a detailed financial results, for example sales results on the reimage restaurants and that we have stated that it's really both an offensive and defensive strategy. Defensively, really part of our whole repositioning or reinvention for the brand to achieve an overall improvement in all of the brand attribute ratings.

And we are absolutely seeing that improvement in our image ratings in these markets where we've done consumer research. However, on the offensive side, we would expect that we would achieve results that are in line with our internal targets. And I can say that at this point we are on track to achieve our internal hurdle rate, which is a 20% return on investment.

Okay. That's helpful. Is there any different usage at those stores in terms of product mix or something like that that might be interesting?

Well, we don't provide details on the product mix. Part of the strategy is to increase our overall dine-in incidence, because those transactions are more profitable for us. And we believe we have excess capacity in the dining room. We are seeing those positive trends for dine-in visits.

Okay. Great. Is there a day part shift, as well? Maybe more dinner?

Not necessarily. Although, I believe, actually, we're doing pretty well in breakfast.

Thanks, that's helpful. Last question and I'll hop off. The distribution and fuel margins, were actually a little higher in the quarter. And that was sort of surprising to me given that the gas prices rose sequentially throughout the quarter. Jerry, can you help me understand that?

It's primarily driven by the distribution business. The sales growth that we're seeing on the Company side is also being enjoyed on the franchise side, Larry. That's driving more distribution volume out there. That was a key driver there.

Thank you very much.

Our next question comes from Chris O'Cull. Please state your company name.

Yes. SunTrust Robinson Humphrey. Good morning?

Hi, Chris.

Hey, how are you?

Good, thanks.

Given you guys had increased your media support on the breakfast day part this quarter, are you seeing any significant mix shifts in your products from those items?

We have seen an improvement in our breakfast day part with the launch of our kind of subcampaign. And the message there is breakfast is served all day. So that's been a very positive and effective campaign for us. And we did launch a promotion around "2 for 2" buttermilk biscuits. So that was a successful promotion for us.

Is that -- is the media support going to continue through the balance of this year, for the breakfast items?

Yes, I believe so. We have additional spots in this campaign that would support, again, the message of breakfast being the most important meal of the day and served all day.

Okay. Okay. And then, Linda, looking out over the next couple of years, do you expect franchise openings to eventually outpace the Company openings for Jack?

We haven't really guided beyond this year. We would give more color on that towards the end of this fiscal year, but our plan is to over time shift the development from Company, primarily Company development, which has been historically our development, to more franchise development. And we are already beginning to see that as we build out our franchise markets and we get more franchise development agreements in place.

Okay. In terms of refranchising the outlook, any major markets sales opportunities here? I know the Hawaii market was the last major market sold.

We're always in conversations with franchise operators that are interested in buying our Company restaurants.

And with regard to franchising the entire markets, it involves a much more complex and lengthy negotiation process. And, therefore, it's really hard to predict any timing of larger market deals. So we have said that on an opportunistic basis if someone is interested and we can negotiate a deal, that we would be open to selling a whole market similar to the Hawaii transaction.

Okay. Okay. Jerry, the franchise business line, it continues to see better profitability year-over-year. Can you provide some insights into what margin level you eventually expect this business line to achieve? And I'm talking about franchise revenues less the cost.

The increasing margin at a somewhat decreasing rate over the past few years. And we've added some additional infrastructure this year, primarily around the franchise sales process. We sell Company restaurants to franchisees. But without giving you specific targets on margin rates, Chris, that is the beauty of the franchise model is we would expect that we would continue to see some additional leverage as we continue to increase the rate of franchise ownership.

Okay. Okay. And in terms of leverage in refranchising, the G&A, while it was lower year-over-year as a percent of sales, it was a little higher than, I guess, I was projecting for this quarter and relative to the run rate on a dollar per week basis compared to the first quarter. Did you guys see an increase in maybe the bonus accrual during the quarter?

We did.

Okay.

The earnings, as you have seen, are a little better than we had originally guided to this year. So, yes, we are seeing some increase in the incentive comp. I can tell you that our internal numbers on G&A, while we don't provide that in guidance any longer, were pretty close where we actually came out.

And you can see that year-over-year we are essentially flat for the quarter and essentially flat year-to-date versus the G&A spend for last year; which I might add is with an increase in the advertising and promotional expense, which is required at about a 5% of total sales.

Okay. Okay. On the bonus accrual, how did the second quarter this year compare to last year?

Without giving you details, it was higher than what it was last year for the bonus accrual.

Okay, okay. Thanks, guys.

Thanks, Chris.

Jeff Omohundro, you may ask your question. And please state your company name.

Company name is Wachovia. First, just, I guess, another question on that on the breakfast campaign. The advertising was around breakfast all day. I'm not sure if I caught it, but did you say what the response was to breakfast offerings during non-traditional breakfast hours? That's my first question.

Right. Overall, our breakfast -- the breakfast products are increasing. So we're getting a lift in the mix of breakfast products. So the campaign is effective in driving breakfast products. So that's across all day parts.

Okay. And I guess my other question is, what's your assessment of the opportunity to leverage some of your product development capabilities in other areas? In particular, I'm thinking of the snack market, thanks.

We have -- we are looking at the snack day part because I think there is an opportunity there, Jeff. So we have several items and platforms, I guess, you can call in development and tests at this point in time without going into detail.

Perfect. Thanks.

You're welcome.

Rachael Rothman, your line is open for your question, and please state your company name.

Merrill Lynch, thank you. Can you talk about -- it looked like you guys bought back a fair number of shares in the quarter. I think you talked about it being under your 10b5-1. Were all 3.2 million shares done under the 10b5-1, or was that just a portion?

No, they were all under the 10b5-1plan.

Perfect. And a longer term question. If you could in terms of -- I know you won't give a number. Just thinking qualitatively about your ability to reduce your capital expenditures going forward as you guys refranchise more of your assets and complete the remodel program. How should we think about what that number or what a normalized rate of kind of maintenance plus, I don't know -- ?

Yes. What we've -- what we said before is that clearly we will be spending at similar rates, if not somewhat higher going forward until we complete the rest of our reimage program. What we states was that that would be about $150 million to $180 million a year until we get the restaurants reimaged.

And then you would expect that to fall off to more historic levels where if you look at that it's more in the $120 million to $150 million range. Now that does not assume that there would be any expansion in the rate of refranchising. So they would be lower as a result of that.

Would it be fair to say that --

But we can't even talk about what that might look like yet.

On a per unit basis, would there be any reason for the kind of maintenance CapEx to change? So if you owned fewer units in the future, should we look at it on a per unit CapEx? Or should we continue to think about it in the aggregate?

I don't know that the per unit CapEx on maintenance capital would change as a result of refranchising because we're refranchising a mix of stores that looks very much like the age of the overall chain. So I wouldn't expect that per unit number to change significantly.

Okay. So if you owned fewer stores a few years from now, then your historical normalized rate it would be fair that the CapEx rate would be somewhat lower?

That would be fair to say.

Excellent. And then I know you guys don't talk specifically about any particular region. But can you say whether or not your same store sales growth was uniformly distributed? Or did you see spikes in certain regions maybe where you were taking more price because of minimum wage, or where the remodels were being done? Or was it kind of consistent across the overall portfolio?

There is some slight variation in same store sales, but we're happy with the sales across our system.

Okay. And has the minimum wage allowed you guys to take any additional price in California? I've heard from some of the competitors that they've all been a little more aggressive on the price front than they would normally given the increases in minimum wage.

This is Jerry. We did take price increases in mid-December in advance of the California minimum wage increase January 1. And we took that across the chain, which was roughly about 20 basis points. And we haven't taken anything since then, but on the other hand, we always look for opportunities to adjust price where we think it's appropriate.

Okay. And you guys have done such a great job in driving same store sales. Do you have a sense for who you're taking the market share from? Or would you say that your same store sales are growing faster than your competitors in the region?

Some of it could be coming from casual dining. And just given the products that we're offering, the quality and the premium nature of them, it's definitely on par with some of the product quality or the product quality that you get at casual dining.

So I think some of it is from there and some of it is from other competitors that just haven't been doing as well in terms of their product offerings or their execution.

Great. And then finally if you could just talk about your opportunities for leverage in the Qdoba brand as you build out the franchise system, how we should think about growth in operating profit versus unit growth or versus same store sales and revenue growth? Do you see opportunities for you guys to leverage the scale there?

Not quite sure of the question. In terms of growing Qdoba and what kind of leverage can we get?

Yes, so would you be able to leverage your G&A? Or as you grow the number of franchise units, should we expect the EBIT margin for that segment to expand? Or EBIT growth to outpace revenue growth?

Yes, we get some fixed cost leverage.

Perfect, thank you so much.

We are still, though, because of the size, we are building some infrastructure for Qdoba.

Okay. Perfect. Thank you.

That will continue over the next couple of years or so.

I appreciate it. Thank you so much.

Sure. Thank you.

Joe Buckley, you may ask your question and please state your company name.

Hi, this is actually Joe Fisher with Bear Stearns. Just a couple of questions. One, to clarify, when you talk about the breakfast day part, are you talking about breakfast products or a specific time of day?

Well, both. Both. One is we're growing the breakfast day part, which is the time of day, but we're also growing the sales of breakfast products.

Okay. So when you say breakfast day part, you are talking about a time of day, though?

Yes.

Okay. Cool. Another question, have you told us what markets you're doing the reimaging in? I know initially it was Seattle and Waco. Have you told us anything else about those?

No, we haven't talked specifically about what markets. We are doing a couple of smaller markets. And then we're doing several kind of clusters of restaurants throughout our system.

Okay. So not -- you're not wholesale markets specifically? And then just one final question, Jerry, maybe could you tell me the all-in interest rate on that $475 million of debt that was -- that you had during the second quarter there?

The all-in interest rate, yes. Hang on just a second. Do you have another question while we grab that number real quick?

Anything you can tell us on franchisee demand for either Jack in the Box or Qdoba?

This is Paul Schultz. We continue to have very strong demand from both our existing franchisees who are capable and qualified to expand, and lots of interest from prospective new franchisees.

Is there any variance or any distribution you can tell us on the Qdoba side in terms of demand might be stronger in one particular region than another?

No, it's really across the board.

Okay. Great.

We continue to sign up new franchisees for development agreements.

Okay. Sounds good.

Joe, the average all-in rate here was about 6.74% for the quarter. I will tell you that we did enter into a couple hundred million dollar swap agreements, which effectively locks in for the next three years at LIBOR plus 1and 1/8 now. So that locks it in at about a 6% rate going forward.

Okay. And then that won't get that 25-basis-point decrease then, or is that -- ?

The old LIBOR spread was 1 and 3/8.

Oh, okay, I understand.

So the swap (INAUDIBLE) gets it also, and the all-in at 6.74% was reflective of the 1and 3/8 spread.

Okay. Great. Thank you.

Harry DeMott, you may ask your question, and please state your company name.

Hi, there. Harry DeMott from King Street. Good quarter, thanks for that. Couple questions. You paid down $60 million in debt this quarter.

You obviously also bought a ton of stock. How did you sort of think about paying down debt versus buying stock? Why pay down the debt, why not buy more stock? Or was there a specific trigger you sort of had to pay down at that debt?

With respect to the debt pay down. One is we had purchased up to the amount that was authorized under the Dutch tender, which is what the intention was on this particular traunch of our share repurchase program.

We have about just under $300 million worth of remaining capability to repurchase stock under the existing terms of our credit facility. With respect to the debt pay down, we do have a certain scheduled debt payments that were to kick in beginning next year and then the following year. Essentially, what we did is we took advantage of our growth in EBITDA, and coupling that with a $60 million debt pay down reduced the borrowing rate by that 25 basis points.

So it cuts down on your grid?

Yes. Exactly. So we paid down to get to that lowest interest rate spread on the grid and that was the reason for the $60 million reduction.

Okay. Also, can you talk about the -- you have a certain leverage level, obviously, as you grow EBITDA that comes down. Can you talk about sort of where you're comfortable in terms of debt to EBITDA, or debt to EBITDAR depending on, you probably look at both I would assume?

Yes, debt to EBIT, because of our leases when we went to two times debt to EBITDA with the new credit facility, we were just under four times debt to EBITDAR. And we're comfortable with both of those numbers.

Okay. And that's sort of the upper limit you're comfortable with, is that basically what you're telling me?

We're more comfortable, I would say with increasing the debt to EBITDA above 2, but it gets the debt to EBITDAR well above 4 and that gets outside of what most in our peer group are doing.

Okay, and I've got one other one or two other ones, I guess. You, obviously, have said that you're refranchising at sort of 5% a year. You'd like to get to industry norms, which would probably be sort of 80/20, 70/30. So you're talking about eight to 10 more years of sort of doing this.

Given the fact that you talked about how it takes a long time to sell a whole market, it's a much more complex sale, it deals with distribution, other field staff, et cetera, et cetera. And yet you've been at this for, what, 18 to 24 months.

Is there -- does there come a point where those lengthier discussions start to hit and that 5% a year actually gets accelerated because of the type of conversations that you have? Or do you think it'll literally just be, you'll find a few markets or a few stores per year that you'll slowly do?

Yes. Absolutely, potentially. That could absolutely happen. Where I think Linda was going on the taking more time because the deals are a bit more complex to [sell] a whole market versus, to a new franchisee versus five or six stores at a time to an existing franchisee. It's not just that it takes a little longer to negotiate, it's more difficult to predict the exact timing when that deal's going to close.

I would also like to -- this is Paul, I would like to add to that. Our selection process is also part of what adds some complexity and time to the process. We are being very, very selective about folks who we bring into the system.

Well, that's good. You want to protect the brand. Last question, if you'll answer it, is the reimaged stores, relatively speaking, higher or lower than the average same store sales in the quarter? I would assume higher just given if you're hitting the 20% ROI.

That would be a good assumption.

Thank you.

Larry Miller, your line is open for your question. And please state your company name.

RBC, my question was answered, thank you very much.

Thank you. Steven Rees, your line is open and please state your company name.

Hi, it's JPMorgan. Linda, perhaps you can talk about your marketing plans for the remainer of the year and how you specifically think about balancing higher-priced premium product promotions with perhaps more value-oriented promotions? Is the national focus still going to be on the premium products?

We continue to support kind of a two-tier marketing strategy where we have our higher quality, higher-priced premium products, but we also come in with the more value-oriented products. We still have a value menu, we still promote our tacos, we did the "2 for 2" biscuits and we have other transaction builders planned for the rest of the year. It's really a mix.

Okay. Ask then I don't know if you talked about this already. But the Sirloin Burger, can you talk about how performed in test markets perhaps as a percentage of menu mix versus some of your other major product introductions like the Ciabatta Burgers and sandwiches?

We really don't share details on menu mix, but we're very happy with the results in test. It really truly is a very unique high quality product. I'd put it against any hamburger out there in casual dining or QSR.

Great. And then did you comment on beef costs yet? I know you said it was going to be up 5% to 6% for the third quarter. But could you talk about any contracts you have in place and what that could potentially mean for the fourth quarter and 2008 as we look out?

Yes. As far as the contracts go, we have a -- we have a blend with 90s and 50s. The 90s we're pretty well protected on with contracts through much of the summer. The 50s float and the 50s are floating high right now at $1.00 per pound. And a more typical trading range is in the -- call it a $0.50 per pound.

We expect after the third quarter those 50s will start to moderate back down as we believe the beef weights will increase and, therefore, the production will increase at a corresponding level. We'd expect those to fall off from where they're trading now and get towards the $0.50 per pound rate.

Okay. Great. Thanks. Congratulations on a good quarter.

Thank you.

(OPERATOR INSTRUCTIONS)

Okay, thank you very much for joining us this morning.

Excuse me, we do have a question from Dean Haskell. Sir, please state your company name.

I'm sorry. Hi, Dean. Go ahead.

Sir, your line is open.

Yes, congratulations on a great second quarter, Linda.

Thank you.

My question twofold. One being the expectations for 10-5b purchases over the next two quarters? And then with corn costs, feed stock being 75% higher than last year, why would you expect the 50s to fall back to $0.50?

Well, what our guys are telling us is that the beef can be both grain fed and also grass fed. And that the weights were, the cattle supply in total is not the problem, it was the production going to slaughter that was the problem beginning late in the second quarter into the third quarter.

So with the winter, particularly with that horrid late March and April that we had, we believe that the cattle weights will increase, and while not increasing to higher levels of what they were last year, will improve in the fourth quarter versus the third quarter. So that's our read on it, Dean. For right or wrong.

Okay. And then the 10-5b?

We, the only thing we can tell you is that we still have about $297 million worth of authorization under our -- under our credit facility, and the board has an authorization through the end of, I think '08 for another $100 million. So that's all I can tell you.

Okay. Thank you very much.

Okay.

Thank you.

At this time, I would like to turn the call back over to Linda Lang for closing remarks.

Great. Thank you for joining us this morning. Good-bye.

That concludes today's call. Thank you all for joining. You may disconnect your lines at this time.