金百利克拉克 (KMB) 2008 Q4 法說會逐字稿

Ladies and gentlemen, thank you very much for standing by, and welcome to the I-Flow fourth quarter 2008 results conference call.

(Operator instructions.) As a reminder, this conference is being recorded on Thursday, February 26, 2009.

It's now my pleasure to turn the conference over to Mr.

Don Earhart, Chief Executive Officer at I-Flow.

Thank you, Pemma.

Good morning, everyone, and thank you for joining us for I-Flow's fourth quarter and 2008 results conference call.

Chief Financial Officer, Jim Talevich, and I will be available to answer your questions following our prepared remarks.

We announced today that total revenue from continuing operations for 2008 increased 14% to a record $133.1 million, which exceeded our guidance for 2008 of 13% growth.

Regional anesthesia, or our RA sales of the Company's flagship ON-Q product lines, increased 11% for 2008 to a record $99.4 million, which met our guidance for 2008.

In addition, IV infusion therapy revenue increased 6% to $28.4 million.

We also met our guidance to be profitable in the fourth quarter of 2008 and for 2008 in total, excluding any special charges.

For the fourth quarter of 2008, excluding the loss contingency and non-cash impairment charge, the income from continuing operations before income taxes would have been approximately $615,000, as shown in the reconciliation table attached to today's press release.

For 2008 in total, excluding -- one, a $13.9 million of certain litigation and insurance charges -- two, a purchase accounting write-off of $11.6 million of in-process research and development costs associated with the purchase of AcryMed -- three, a $4.6 million impairment loss -- and finally, a $380,000 non-cash charge related to the impairment of intangible assets, the Company would have reported pretax profit of $894,000.

We are especially proud of our performance in view of the dramatic slowdown in elective surgeries and the postponement of some non-life-threatening surgeries being reported by surgeons and hospitals across the country.

This slowdown in surgeries put a damper on our revenue growth for 2008, especially in the fourth quarter.

We estimate that these two surgical categories combined represent more than 35% of the total market opportunity of surgical procedures that drive our ON-Q sales.

However, despite the slowdown, our regional anesthesia sales still increased 11%, with only about one-third of the revenue growth coming from increased average selling prices.

Gross margins for 2008 remained strong at 72%, and we maintained tight control over operating costs, with SG&A expenses up only 6% for 2008, even as the revenue grew 14%, or more than twice as much.

We expect to continue the benefit from our ability to leverage our SG&A expenses in the years to come.

Our solid performance in a weak environment speaks to the value that health care facilities, surgeons, anesthesiologists and their patients place on our ON-Q products for relieving post-surgical pain and reducing narcotic use after surgery, and is a tribute to the effectiveness of our sales and marketing organization and the entire I-Flow and AcryMed team.

And as I will discuss later in the call, we also believe that we have the opportunity to use this period of market weakness to our long-term advantage by leveraging ON-Q's clinical and economic benefits to address key customer needs like length-of-stay reduction and lower cost-per-discharge savings.

I am also pleased to report that the integration of AcryMed, which we acquired on February 15, 2008, has proceeded smoothly.

Sales for 2008 were approximately $5.2 million.

We believe that the combination of our two organizations is a giant step toward achieving our vision for I-Flow as an integrated acute care products company that develops and markets proprietary disposable medical devices that improve patient outcomes.

We are confident that our dedicated sales and marketing organization will be just as successful in selling new products from the AcryMed pipeline in the emerging acute care market as it has consistently been with our ON-Q products in the large and growing market for post-surgical pain relief.

We also plan to take advantage of any and all revenue opportunities available from licensing AcryMed's technologies for products that would be sold outside our distribution competency.

Our financial position remains strong.

Consider that as of December 31, 2008, I-Flow had more than $48 million in cash, cash equivalents and short-term investments, and we are essentially debt-free.

If you add to our cash and investments the $30 million note from the sale of InfuSystem, the result is $79 million, or $3.20 per share.

Because of our strong financial position, we believe we have the resources necessary to not only weather the present economic storm, but to possibly strengthen our market leading position.

In fact, as I will discuss after Jim reviews the fourth quarter and 2008 financial results in more detail, we are being smart and taking prudent advantage of our strong financial position during these difficult economic times to build our customer base, increase our market share, solidify our already dominant market leading position versus our competitors and develop or acquire additional products for our 300-person sales organization to sell.

Jim?

Thanks, Don.

Before we continue, please note that this conference call will include forward-looking statements.

These statements are based on current expectations, estimates and projections about our business, based in part on assumptions made by management.

These statements are not guarantees of future performance, and actual results may differ materially.

A more detailed discussion of these risks and uncertainties is contained in this morning's press release and I-Flow Corporation's various filings with the SEC.

The statements made during this call are made only as of today's date, and we undertake no obligation to update these statements.

For the three months ended December 31, 2008, revenue from continuing operations increased 6% to $37.1 million from $34.9 million for the fourth quarter of 2007.

Sales of acute care products, which includes RA consisting of ON-Q and AcryMed revenues, increased 8% to $27.2 million, compared to $25.2 million for the fourth quarter a year ago.

Total revenue from RA increased 3% for the fourth quarter of 2008 versus the prior year quarter to $25.8 million from $25.2 million last year.

AcryMed revenues were $1.4 million for this year's fourth quarter.

IV infusion therapy revenue for the fourth quarter of 2008 increased 1% to $9.9 million, compared to $9.7 million for the fourth quarter of 2007.

Gross profit was 70% of total revenues for the fourth quarter of 2008 versus 71% for the fourth quarter of 2007.

SG&A expenses from continuing operations increased 3% to $24.7 million for the fourth quarter of 2008, from $23.9 million for the fourth quarter of 2007, reflecting effective control over operating costs.

The Company's loss of continuing operations before income taxes for the fourth quarter of 2008 was $1.4 million.

The $1.4 million loss amount included $1.6 million of loss contingency that the Company accrued in connection with ongoing litigation, which is recorded as part of surgeon litigation and insurance charges, and a non-cash charge of $380,000 related to the impairment of AcryMed intangible assets.

The loss contingency figure is preliminary, and will remain subject to change until a filing of the Company's financial statements on form 10-K.

Excluding the loss contingency and non-cash impairment charge, the loss from continuing operations before income taxes for the fourth quarter of 2008 would have been approximately $615,000 in income from continuing operations before income taxes, as shown in the reconciliation table attached to today's press release.

This compares to a loss from continuing operations before income taxes for the fourth quarter of 2007 of $4.5 million, which included a non-cash impairment loss of $6.1 million on the common shares of InfuSystem Holdings, Inc., formerly known as HAPC, Inc., owned by I-Flow.

Net loss for the three months ended December 31, 2008 was $3.9 million, or $0.16 per basic and diluted share.

This compares to net income for the three months ended December 31, 2007, including both continuing and discontinued operations of $40.4 million, or $1.66 per basic and diluted share, which included the gain on sale of InfuSystem.

At December 31, 2008, I-Flow reported net working capital of approximately $70.6 million, including cash and cash equivalents and short-term investments of $48.4 million, shareholders' equity of $119.5 million, and we are essentially debt-free.

On August 12, 2008, I-Flow announced that its Board of Directors has authorized the repurchase of up to an additional 1 million shares of the Company's common stock under the Company's share repurchase program, for a total of up to 2 million shares authorized for repurchase under the program.

The shares may be repurchased in open market or privately negotiated transactions in the discretion of management, subject to its assessment of market conditions and other factors.

The stock repurchase program was also extended to August 8, 2009, unless terminated sooner by the Board of Directors.

Through December 31, 2008, the Company had repurchased approximately 907,000 shares, for approximately $10.6 million under the program, which was initially announced on February 26, 2008.

Now I will turn the call back to Don Earhart for his final comments before we both take questions.

Thank you.

Don?

Thanks, Jim.

Those of you who have followed our Company over the years know that our success in establishing our proprietary ON-Q family of products as the new best practice for post-surgical pain relief, with the ultimate goal of replacing narcotics as the standard of care, is based on our diligent pursuit of a simple, well-defined strategy.

This strategy has helped us reach the $100 million revenue milestone in our regional anesthesia business, but we still believe that the market for narcotic-free relief of post-surgical pain is early in its development and is under-penetrated and remains a substantial long-term growth opportunity for I-Flow.

Our strategy has always revolved around the development of our direct sales force coupled with a steady introduction of new products that expand the range of surgical procedures where ON-Q can be efficacious.

We supplement these efforts with carefully targeted co-marketing and advertising campaigns to increase awareness of ON-Q.

In addition, we have consistently reported independent third-party clinical studies of our products to establish their value in the surgical setting.

In fact, in just the past five years, more than 80 published or presented clinical studies have documented the significant reduction in narcotics intake, and significantly better pain relief when ON-Q or a similar product is used to manage post-surgical pain in surgeries like cardiovascular, thoracic, bariatric, colorectal, trauma and other non-elective and often life-threatening procedures.

This is also true of many elective surgeries and surgeries that are not necessarily elective but can be postponed for some period of time, and therefore nonlife-threatening.

Many of these studies show that the use of ON-Q is associated with patients getting well faster and leaving the hospital sooner, a benefit that is becoming increasingly more important in today's cost-conscious environment where efficiency as well as better patient care are the mandate.

When patients recover and leave the hospital sooner, the cost per discharge goes down for the hospital, and the patient's chances of acquiring a hospital-acquired condition or never event becomes less as well, a benefit that has gained urgency with the recent implementation of the new rule for Centers for Medicaid and Medicare Reimbursement related to hospital-acquired conditions or HACs, or many referred to as never events.

All of these are no longer reimbursed.

Private insurance companies are following Medicare's lead, and slowly but surely are refusing to pay for never events as well.

Let me emphasize again, shorter hospital stays mean increased efficiencies, lower cost-per-discharge and fewer never events.

These findings together with demonstrated cost savings are particularly important for us now during this present economic environment as we seek to generate higher ON-Q sales and bolster our already dominant position in the market we serve.

We are a leader in better clinical and economic outcomes because ON-Q significantly reduces narcotic use while doing a better job relieving the pain following surgery, resulting in patients going home sooner.

Hospitals today are reeling from unprecedented financial, economic and government pressures that present unique opportunities for ON-Q and other products that are proven to save hospitals and other health care facilities money.

While we have traditionally directed our sales and marketing efforts towards surgeons and anesthesiologists, we now have a chance to expand our call points to include hospital administration, to deliver an economic and cost savings message that we believe will resonate.

By using our strong clinical study findings and ongoing evidence-based medicine results, we can demonstrate to hospital administrators how ON-Q can help them to reduce the length of stay, increase efficiencies, lower cost-per-discharge and contain costs on a facility-wide basis.

The new call points for sales management include hospital CEOs, chief financial officers, chief medical officers and chief nursing officers, while our 200 quota carrying territory managers will begin calling on case managers, hospitalists and quality control directors.

The process of educating a new audience will take time to reach its full potential, but there has never been a better time than now to be selling a product that contributes to the hospital's profitability, and does so in numerous identifiable ways.

We believe hospital administrators are looking for help, and therefore will listen and, if in agreement, will become yet another advocate to help us drive adoption, leading to growth going forward.

ON-Q is redefining recovery following surgery, and our cost savings benefits are uniquely suited to help our customers meet their financial and patient care objectives during these difficult economic times.

Moving to a new subject, we remain excited about the stream of products that are becoming available from our new subsidiary, AcryMed.

The patented oxygen dressing is now being manufactured in small quantities for March distribution to numerous wound centers that have agreed to participate in a trial to determine its effectiveness.

Once we understand its ability to heal chronic wounds versus the use of hyperbaric oxygen, we will begin the selling process.

AcryMed also has a new high-strength silver gel, new thin film dressings, both with and without silver-coated fluid absorption pads, as well as numerous other products too early in the development process to be publicly disclosed.

And they will continue to develop new products for other companies, as well.

As stated earlier, we now have more than 80 published or presented clinical trials proving ON-Q's benefits versus the traditional use of narcotics to treat the pain following surgery.

And now more than ever, new evidence is surfacing that proves the use of ON-Q at the time of the surgery may lead to fewer incidences of chronic pain in future years.

A recent publication from Rush University Medical Center in Chicago, in the Journal of Spine, investigators found that the use of ON-Q resulted in prolonged pain relief for up to four years.

This represents the third published study that we are aware of that demonstrates a long-term benefit when ON-Q is used to treat the pain following surgery.

In addition, we continue to enroll patients in our cardiovascular multi-center surveillance study to compare the incidence of pneumonia, surgical site infections, narcotic use and length of stay when ON-Q is used versus traditional narcotics only to treat the pain following surgery.

Twelve centers have approved IRBs, and almost 200 patients have been enrolled to date.

We hope to complete enrollment in quarter four of 2009 and publish the data in 2010.

One more important fact to remember before I close for questions is that I-Flow's products are disposable and designed for one-time use only, and therefore not considered a capital item by our customers.

With most hospitals mandating the reduction, in some cases the elimination of capital spending in 2009, I-Flow and our family of disposable infusion pumps are in an enviable position to possibly capture business that would normally go to electronic pump manufacturers.

Our disposable infusion pumps are an efficient and efficacious alternative for use -- to use versus capital-intensive electronic infusion pumps for the delivery of IV drugs, which includes antibiotics; chemotherapy and traditional narcotics; and the delivery of epidurals, which includes labor and delivery, and with ON-Q delivering a local anesthetic, nerve blocks and surgical site bathing.

In closing, market conditions remain highly volatile, and therefore difficult to predict, making the job of forecasting the future more challenging than usual.

Saying all of that, we currently expect I-Flow to be profitable in 2009, excluding any special charges; cash flow positive on growth and total revenue of approximately 5% to 7%, including growth in regional anesthesia of approximately 5% to 10%.

And now, Pemma, we are ready for the first question.

Thank you, sir.

(Operator instructions.) I'm pleased to state that our first question comes from the line of [Steve Kruger] of Foresight Investing.

Please go ahead, sir.

Your line is open.

Hi, Don.

Steve.

I think it's probably evident to all of us who've been following the Company that the lawsuits concerning the chondrolysis are hanging over the Company and the stock like a dark cloud.

I wonder if you can shed any light on when this might be resolved one way or the other?

For example, could you share with us when, if at all, any of the 60-some cases that are pending are -- when is the first one scheduled for trial?

Or are any of them scheduled for trial yet?

The first one scheduled for trial for I-Flow is, I believe, in the latter part of this year.

So the second half of the year sometime is what we've been told.

But in the meantime, some of the cases have been resolved.

And again, there's no proof anywhere in the literature that pain pumps delivering a local anesthetic causes chondrolysis.

We are being listed as one of probably a dozen items that can potentially cause the problem.

And as more and more studies come forward, it's proving even harder that it's a multi problem, probably based on many different things happening in the shoulder, and not just the delivery of a local anesthetic by a pain pump.

So that's all I can really tell you, Steve.

Okay, Don.

You -- well, let me ask you one other question.

You mentioned that the first case involving I-Flow is scheduled for later this year.

Can you be any more specific?

And also, are there any cases not involving I-Flow -- involving your competitors that are scheduled for trial sooner than that?

Again, I'm not at liberty to give you that kind of information, but ours is in the second half of the year.

And it hasn't been set yet, the exact schedule.

Okay.

Thank you, Don.

Uh-huh.

Thank you for your question, sir.

Our next question comes from the line of Bill Miller with Hartwell.

Please go ahead, sir.

Your line is open.

Hi, Don.

Yeah, Bill.

I have a series of questions, but the -- I think all of us who are shareholders are absolutely convinced that the product is a great product and it should be taken up by everybody that wants to get patients out of the hospital sooner.

But what is the problem with the hospitals?

Because the growth doesn't seem to have really been maintained or accelerate as the sales still seem to be missionary sales.

And I wonder how the message is going to get through to the hospital administrators and the surgeons and everybody else involved.

Because, as you have pointed out, this is a perfect time to try to cut costs, reduce infection and do all the other things that the I-Flow products accomplish.

So how do you -- how do you handicap this thing?

Because it certainly seems to me they're not getting the clue.

I think, Bill, what you're seeing today is, you're seeing patients drying up at the hospital level.

For example, our Michigan and Detroit area is a disaster.

With so many people out of work, the way they're going into the hospital is through the emergency room.

And many of them are postponing or not doing surgeries at all.

So all over the country, hospitals right now are under the gun, because patients have dried up in many cases.

What that's going to lead to is, that's going to lead to the closing of hospitals.

And now there's going to be fewer hospitals to treat the same number of patients.

And now you're going to see hospitals become busy again.

But in the meantime, we have changed the way we sell by adding a separate piece.

We've expanded our message to include the cost savings, and we're making calls on the CEO, the CFO and the higher administration levels with my management team.

And with the territory managers, we're now calling on case managers, purchasing and the quality people, the people who are responsible for implementing the programs to increase efficiency at the lower levels.

So it's going to be interesting to see if this environment, when everybody's under the gun to become more profitable and more efficient, whether or not we'll be able to sell that message.

Because we do have proof we make a huge difference from a cost-saving standpoint.

Well, Don, on the infection side as well, when are the hospitals going to feel any sense of urgency, as you put it, to cope with the infection possibilities or the probabilities?

(Inaudible) expecting that catalyst to come to play right now in the quarter as the hospitals are not getting reimbursed for (inaudible).

Has that happened in the first quarter?

Are you seeing any evidence of this happening?

Or is it just still a wait and see?

No, I think we're still in the period, Bill, where hospitals are feeling the shock of fewer patients.

And they're now putting in place programs to offset that, because fewer patients means that they've got to cover that overhead with fewer bodies, and their costs go up.

So we are in there today with the new message.

The new message is that we can help you through that process by saving you money.

Remember, if I can get a patient out early, there's less chance of a never event happening.

Right.

I understand that.

[On the other hand], if I can get you out early, that bed becomes available for another patient.

So there's a lot of advantages to our message.

And we just trained the sales force two weeks ago.

We trained the last group on the new message.

So we'll see how that plays out.

Do you have any evidence that that is going to play out, Don?

Is there an indication that the message about something as simple as the infection aspect of your product is getting any traction at all?

Or is it still a we'll have to wait and see?

Because the first quarter -- I think you said in the fourth quarter, the first quarter was going to be the time when you expected to see some results.

And I'm just asking whether you've seen some results or not.

Yes, I think we've seen some results, Bill.

But remember now, we're fighting against a headwind where surgeries are becoming fewer.

So if I can deliver the guidance I talked about, that means I'm making progress.

And I think as we get to the second, third and fourth quarter, as the message gets out there to more places and begins to resonate, I think we will have an opportunity.

Don't forget that there are other areas of the hospital that uses infusion pumps that we're also going after with our IV products.

Because hospitals don't have money to buy electronic pumps anymore, that gives us the opportunity of substituting our disposable pumps.

Mm-hmm.

So again, this will play out over the year.

But our goal is to at least continue to grow while we think the market is going to shrink.

Yeah.

I've got some other questions, so I'll get back in line, Don.

Thanks a lot.

Okay.

Thank you, sir.

(Operator instructions.) Mr.

Earhart, there appears to be no further questions from our audience.

I'll return the conference -- oh, I stand corrected.

It appears that Mr.

Bill Miller has a second question.

Mr.

Bill Miller from Hartwell, your line is open once again.

Okay.

I'm sorry, I don't mean to [grab some more of your time].

That's okay, Bill.

Let's go down through all your questions.

Okay.

Well, I'll give you a few more.

The other question is the -- what is the current carrying value of the InfuSystem stock in your balance sheet versus the current market of InfuSystem?

And since you repurchased a huge amount of -- or 100,000 out of the 2 million shares of common stock at average price, which looks as though it's over 11, almost 12 in fact, what's intruding on you now since the current capitalization as I read it on your Company is around $70 million and you have $48 million in cash and notes?

Do you want to take that, Jim?

Sure, Bill.

Bill, the exact numbers are -- as of December 31 is our cash and investments is $48.363 million, our note from HAPC is $30.250 million, so the two together is $78.613 million, which is $3.20 a share.

And with regard to your question on the value of HAPC's common stock, that's included in that cash investments, and that's $5.703 million.

Okay, Jim.

But that doesn't quite answer my question.

My question really is, with as much cash as you have in the balance sheet and all the other notes, et cetera, you have $78 million by your own account.

The marketing cap of the common stocks right now is somewhere around, what, 80-odd (inaudible) $92 million, something like that.

And I'm wondering why you're not being more aggressive in repurchasing stock.

You've got $48 million in cash.

You're going to be cash flow positive next year.

You're going to earn money, but more importantly the [cash flow positive].

Are you saving this for a rainy day?

Or what is the -- what is preventing you from not only buying another million shares, but buying 10 million shares?

Yeah, Bill.

Let me take that.

Right now I'm sitting on the cash until I understand what's going to be happening from an economic situation.

Plus, remember I live in an area out here in California where we have hundreds of medical device companies within a 200-mile radius.

Many of those medical device companies between now and the end of the year are going to be in financial trouble.

The venture capitalists are not stepping up.

They can't find investors.

They can't do PIPEs.

They can't do IPOs.

And I am now in the process of looking at some of those companies to get distribution rights to their products if I can sell those products into my existing call points.

So I think I can do something better for the Company by finding products to sell than I can by buying back my stock at this time.

And I'm also keeping it handy just in case things get even worse.

So that's really our strategy right now.

That doesn't mean tomorrow we might buy some stock, but we're being very careful.

Mm-hmm.

But we will have opportunities this year, we believe, to buy products to put in our bag from companies that are in financial trouble, many of them in our neighborhood.

Well, it sounds like a good strategy.

I wish you could do both.

(Inaudible) can also buy those products or get the products for distribution.

Well, we didn't say we're not going to do that.

We just said we're being very careful right now.

Yeah, but (inaudible) when you have cash at the current stock price to buy back 9 or 10 million easily without even going into the [note] or other assets that you have.

The other area, Don, is the AcryMed area.

And you had $5.2 million last year.

What -- how fast can you expand the business now that you've got (inaudible) for the oxygen dressing, et cetera?

Can that business be (inaudible) $10 million or $15 million of [price selling] licensing or whatever (inaudible) the other people -- Johnson & Johnson, whoever -- that have a product that would love to have the silver coating?

Well, there's two things there.

The revenue that we report does not include the revenue that they generate for us with products they give us to sell to our sales force.

Their revenue is actually on the I-Flow side.

So their actual revenue, if there were a stand-alone business would be much greater than the $5.2 million.

The way we are treating AcryMed is, we are treating them more as an R&D facility than we are as a revenue generator.

They will give us products, including the oxygen product, that we will then find a way to sell to the I-Flow organizations.

We haven't figured all of that out yet.

But first of all, we've got to find out what claims we can make on the oxygen dressing.

So we are also working with other companies to develop products for them, and that's really the revenue that they book.

But our big home-run opportunities we think are products that we can put to our sales force.

Okay.

So you're going to see the growth in revenue on the I-Flow side, not on their side.

Okay.

And is that going to be materials, too, Don?

Is that included in the estimates that we've had for the Company?

Or is there something beyond that we should expect?

Or how should we try to see how (inaudible)?

Well, none of the new AcryMed projects that we talked about in the conference script are included in our projections for this year.

That's all upside.

So if the oxygen turns out to be truly a competitor against hyperbaric oxygen, then we may have a home run.

How fast that happens, we can't tell you right now.

But we'll have to get that into distribution.

But I think that could be a huge product for I-Flow.

Yeah.

So it sounds it like it could be pretty significant.

And the new dressing--

I'm going to--

And the new dressings also have -- I'm sorry, go ahead.

No, I'm not -- I'm unimportant.

But the only other question, Don, is you had a little, apparently, reaction from the FDA.

And I wondered if that (inaudible) cleared up in any way, shape or form?

We have responded to all of their requests on time, just like they wanted us to.

And now we're waiting for an in-person meeting so that we can discuss our response and make sure we understand what, if anything, more they want.

So we believe we're in pretty good shape, at least from a response standpoint.

And we think they would've gotten back to us by now if they had some major issues.

So we're waiting for the in-person meeting.

And after that in-person meeting, we'll know what our next step is.

Yeah.

And in the meantime, you've been able to (inaudible) from your facilities, et cetera?

Yeah.

It has not changed our ability to manufacture or ship or any other way.

And again, if they were that concerned, we believe by now they would've hindered that.

Sure.

But we're taking this very seriously, Bill.

And we're responding as requested.

And we expect to clear this up, which will probably take us until the end of the year.

Okay.

Sounds good.

Well, good luck.

May the wind be at your back.

And (inaudible).

Thank you, Bill.

And thank you, Mr.

Miller, for your question.

Gentlemen, there appears to be no further questions now from our audience.

Mr.

Earhart, I'll return the presentation back to you once again.

Thank you, sir.

Thank you, Pemma.

Two thousand eight was a challenging year, yet we generated solid revenue growth, positive cash flow and built a strong and enviable balance sheet.

It looks like 2009 will be even more challenging than 2008, but with every new challenge comes an opportunity.

And we are determined to make the most of this opportunity.

We are confident that we have the products, the sales organizations, the financial resources and the determination at every level to deliver a solid performance in 2009, despite the ever increasing economic headwinds.

And as always, we look forward to reporting our progress to you in the near future on our 2009 first quarter results conference call.

Thank you for attending and listening.

Thank you, Mr.

Earhart.

Ladies and gentlemen, that does conclude the conference call for today.

We thank you all for your participation, and ask that you please disconnect.

Thank you once again.

Have a great day.