Eastman Kodak Co (KODK) 2013 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, welcome to the Kodak investor call. At this time all participants are in listen-only. Later we will conduct questions and answers. (Operator Instructions). I also would like to remind you this conference is being recorded. I would now like to turn the conference over to our host, Mr. David Bullwinkle. Please go ahead.

Thank you, Rose. Good afternoon, my name is David Bullwinkle, Director of Global Financial Planning and Analysis and Investor Relations for Kodak. Welcome to the Kodak investor call.

At 4 PM this afternoon Kodak filed its annual report on Form 10-K and issued its release on financial results for the full year and for the fourth quarter of 2013. You may access the presentation for today's call on our Investor Center at investor.Kodak.com.

During today's call we will be making certain forward-looking statements as defined by the United States Private Securities Act of 1995. These forward-looking statements are subject to a number of uncertainties or risk factors which are clearly described in the Company's 10-K and in the Company's quarterly filings and which are qualified by the Safe Harbor provision in our filing.

We advise listeners to read these important cautionary statements in their entirety as any forward-looking statement needs to be evaluated in light of these important risk factors or uncertainties.

In addition, the release just issued and the presentation provided contain certain measures that are deemed non-GAAP measures. Reconciliations to the most directly comparable GAAP measures have been provided with the release and on our website in our Investor Center at investor.Kodak.com.

Speakers on today's call will be Jeff Clarke, Chief Executive Officer of Kodak, and Becky Roof, Interim Chief Financial Officer of Kodak. Jeff will provide some general opening remarks, Becky will take you throughout 2013 results and then Jeff will discuss the Company's 2014 projections and provide some closing remarks before we open it up to questions.

Some requests and information on Q&A. Jeff is now in day six of his tenure as CEO of Kodak. He is engaged in an intense process of assessing Kodak's operations and even the Company's management. He will soon be on the road reviewing our operations around the world. Until he has completed these reviews he will not be in a position to speak to the Company's historical performance or long-term strategies. I am sure everyone can understand that.

Becky Roof will take questions on the Company's financial performance for the full year and the fourth quarter of 2013. I will now turn this over To Kodak CEO, Jeff Clarke.

Thank you, Dave. Welcome, everyone. Kodak is fundamentally a new Company. I understand the last time Kodak held an investor call was in November 2011 and since that time Kodak has conducted an extremely complex reorganization, emerging last September from Chapter 11 as a technology Company focused on imaging for business with a new capital structure, new investors and a new stock.

I spent the last 10 years of my life living in Silicon Valley and I can tell you Kodak is in many ways like a startup -- it is creating proprietary technologies which I believe will transform their markets.

But this is a startup which has one of the world's most recognized brands, a highly developed supply chain, 25,000 loyal commercial customers around the world and an exceptional R&D operation which continues to invent technologies and solutions in anticipation of customer needs in Kodak's fast changing markets. That is why I came to Kodak and it is the basis upon which I ask you to evaluate our Company.

I look at Kodak as having two sets of businesses -- first, strategic technology businesses. These are businesses in which we are investing in technology. They include solid businesses where Kodak currently has significant market share such as graphics, both digital plates and our process free technology and workflow software.

It also includes the high-growth businesses such as Digital Printing Solutions, Packaging, Functional Printing, Intellectual Property and Brand Licensing and Enterprise Services.

Second, mature businesses, these are businesses which are expected to continue to decline significantly as their business or market transforms -- Entertainment and Commercial Film and Consumer Inkjet. I will discuss our plans for these businesses later.

With that let's turn this over to Becky Roof who will take you through our presentation on the financial results for 2013.

Good afternoon and thank you, Jeff, and welcome to Kodak. Effective September 1, 2013 Kodak adopted fresh start accounting upon its emergence from reorganization. Therefore, the full-year results shown in the 10-K are reported on a successor predecessor basis that is eight months as a predecessor Company while in reorganization and four months as a successor Company after emergence from reorganization. In our news release we report our results in the traditional quarterly presentation.

As we stated in our news release, we had significant improvement in our operating performance from 2012 to 2013 with an improvement in year-over-year operational EBITDA of $375 million.

Our sales declined by $372 million year over year primarily due to an accelerated decline in our motion picture film business; decline in our revenues from consumer inkjet printers and ink as we made the decision in 2012 to exit from the printer business and focus on only ink sales; and loss of revenues due to customer reluctance to make commitments to us while we were in bankruptcy proceeding.

I would like to talk more about our results for 2013 and how we performed against our expectations for the year as previously provided. First, I would like to clarify the target for 2013 against which our actual operational EBITDA results should be measured.

On slide 3 the first column of numbers reflects the revenue and operational EBITDA previously furnished which are approximately $2.5 billion for projected revenue and $167 million for projected operational EBITDA.

Included in operational EBITDA was a non-cash credit or income amount of $24 million related to the amortization of prior service costs associated with the Company's US OPEB, or other postemployment benefits, that had accrued over a number of years as planned changes were made. This credit was historically included in segment results on both an actual and a projected basis.

During the second quarter of 2013, as discussed in previous SEC filings, we changed our segment measure of earnings to exclude the amortization of the prior service credits. Then as a result of fresh start accounting, prior service credits were eliminated.

Therefore in order to make an apples-to-apples comparison of actual results to 2013 and 2014 in future year projections which excluded fresh start adjustments, the same annual adjustment of $24 million needs to be made.

Slide 4 compares 2013 actual results against 2012 actual results and also shows that even with the shortfall in sales we were able to exceed our 2013 operational EBITDA target by $17 million. From 2012 to 2013, revenues declined $372 million or 14%. The largest dollar declines were in Consumer Inkjet, Entertainment and Commercial Films, and Graphics.

In Consumer Inkjet, sales will continue to decline as a result of our decision in 2012 to stop consumer printer production and focus only on ink sales to the existing installed base of consumer printers.

In Entertainment and Commercial Films, we are exposed to a faster fall off in movie studio film purchases as that industry continues to rapidly migrate to digital distribution.

Our Graphics business, which is our plates -- computer to plate equipment and workflow software products, declined primarily due to the loss of contracts due to customer reluctance to commit to us while we were in bankruptcy.

For our strategic technology businesses sales were flat or slightly improved year over year. Jeff will comment on our expectations for these businesses going forward.

As I mentioned, our year-over-year EBITDA performance improved by $375 million with improvements recognized in all of our businesses except for our legacy consumer film business and functional printing, an area we are investing in significantly. We are pleased with our EBITDA improvement as it reflects the result of our focus on profitability including product mix improvement, intellectual property arrangements and cost reductions.

Now I'd like to turn to a discussion on how 2013 performed against our expectations as put forth in our business emergence plan. I am still on slide 4. we had initially hoped to emerge from bankruptcy earlier in 2013 than when we actually did, which we have projected would lead to an earlier uptick in sales particularly in equipment sales which then leads to an ongoing annuities revenue stream. We did not see this uptick come as fast as we had projected.

As we mentioned in our press release, we did exit 2013 with strong momentum. Entertainment & Commercial Films sales fell off faster than we had projected. In our product businesses we lost business during the bankruptcy and sales as a result of delayed product launches. We also had a negative impact from foreign exchange in revenues primarily due to the Japanese yen.

On a more positive note, sales of ink for our installed base of consumer inkjet printers were stronger than we had expected. Our 2013 actual versus expected EBITDA performance was of course affected by the revenue factors I just mentioned.

However, stronger-than-expected manufacturing performance, high margins in consumer ink, stronger-than-expected performance in intellectual property and brand licensing, good SG&A cost controls and favorable commodity pricing in silver over expectations allowed Kodak to perform positively against EBITDA expectations, beating the target by $17 million.

I would now like to turn back over to Jeff for a few comments on our 2014 outlook.

Thank you, Becky. I would like to discuss our expectations for 2014 now. As we looked forward to 2014 it was clearly a year of transition for the Company with continued momentum in many ways. We are projecting total Company revenue between $2.1 billion and $2.3 billion and operational EBITDA between $145 million and $165 million.

Turning to slide 6, we segregated our businesses into our strategic technology businesses and our mature businesses. The strategic technology businesses include Digital Printing Solutions, Packaging, functional printing, enterprise services, Intellectual Property & Brand Licensing and Graphics.

The mature businesses include Entertainment & Commercial Films and consumer inkjet. In 2014 the growth of our strategic technology businesses will mitigate the reduction in revenue and EBITDA which we will experience in our mature businesses and provide momentum for solid revenue and EBITDA growth in later years. The strategic technology businesses are the basis for my excitement in the opportunity for growth at Kodak.

We are planning to make significant investments in these businesses, including approximately $90 million of R&D investments this year in the next generation of our PROSPER press and writing system improvements, OEM partnership arrangements with digital printing and functional printing, packaging product enhancements including smart packaging solutions and continued developments in our process replace and workflow software.

In addition to the investments which we will make in technology development we will also execute on our plans to provide productivity improvements in our sales force, information technology systems and general administrative costs.

As you can see, the strategic technology businesses' revenue is projected to grow up to $150 million or 8% with operational EBITDA growth of over $100 million. The mature businesses will continue to provide a solid EBITDA contribution to the Company and we will continue to address the revenue declines through focused cost management to ensure positive EBITDA contribution.

Stepping back for a moment. Here is what I think are the key takeaways. The Company sets out on its next phase with momentum as demonstrated by its $375 million year-over-year improvement in operational EBITDA. We expect to grow sales in our strategic technology businesses with dramatic improvement in EBITDA. While sales will continue to decline in our mature businesses they will provide continuing EBITDA contribution.

We will continue to invest in technology areas to provide growth for the future for our customers, our shareholders and our employees. To reiterate, I am on day six as the CEO of Kodak. Over the next several weeks I will be engaged in an intense operational review of our global businesses. I also assure you that I will be a CEO who engages with investors.

Following a period of robust work with customers, employees and other stakeholders we will market a new investor program starting with another quarterly call in Q1. We would now be happy to take your questions. Dave.

Thanks, Jeff. Greta, we are now ready to open the Q&A. (Multiple speakers) for instructions.

(Operator Instructions). Trent Porter.

Forgive me if the answer to this is staring me in the face. But in your July presentation that you were reconciling to for 2013, your 2014 forecast was $209 million of EBITDA. And I was hoping you could just bridge your new forecast versus that. Is it just an acceleration and a decline of the mature businesses versus what you expected or am I just missing something obvious?

Well, Trent, it is Becky Roof. The first thing that has to happen is that you need to make the same $24 million adjustment for the OPEB credits that I described (inaudible), which brings you back to $185 million on a comparable operational EBITDA basis. So and then therefore then you would compare that to our estimates of [1.5] to [1.65] for an apples-to-apples comparison.

Okay. And just then that $209 million -- I'm sorry, the $189 million to your $245 million to $165 million -- I'm sorry $145 million to $165 million forecast, does anything stand out as a reason for that -- the more conservative forecast?

The primary factor is an accelerated decline in the sales of motion picture film as that industry converts to digital distribution. And it is also true because equipment placements and other sales were impacted during reorganization; there is an ongoing impact in our annuities revenue. But as we noted, we saw strong sales momentum at the close of 2013.

Understood, okay. That is a great answer, thank you. And then I wonder if I could ask one more. The decline in Graphics, I was hoping you could give me a better understanding on what is going on in the plates business. And I think some of it is because of your focus on the SONORA plates but I was hoping you could clarify for me why the focus on the SONORA plates would result in a decline in the overall plates business? And then any other color on what is causing that decline.

Okay, Brad who runs the business, I am going to have Brad (inaudible).

Thanks, Jeff. So if I can explain. So two things that happened, first we do have SONORA and the product was launched, we have been ramping it, it has continued to grow. But however, during the first three quarters that we were in bankruptcy we could not have the ramp that we were expecting.

But we did see that ramp pick up in the fourth quarter and that is part of the momentum we saw as we came out of the chapter 11 proceedings. So first, it was just a delayed ramp up in SONORA. We have seen that very strong and in fourth quarter and continue to expect that and we built that into the plan for 2014. But it is a delayed ramp, so if you're delayed by three months, it delays that into 2014.

How does that impact the traditional digital plates business then?

So it does not -- that one is just -- it is a growing segment. We continue to have the remaining part of our portfolio of plates, we ended up focusing on profitability and so we ended up making a trade-off and not taking some lower priced freight business in terms of improving our overall profitability for our plate business. And so, that was the other piece of this piece. So we have overall a little lower revenue but we have improved profitability for that.

Okay, that makes sense. Okay, thank you very much. I will get back in queue.

(Inaudible).

Thank you, I guess Trent asked some of the questions I wanted to ask. But in terms of cash, how much of the cash is in the US? And for the overseas cash are there any plans for repatriating it back to the US? Thanks.

Thank you for the question. As discussed in the 10-K we ended 2013 with $307 million cash in the US and $537 million cash outside the US, but approximately $254 million of that in China. We have had success historically repatriating cash back to the US on a tax-free basis and we expect to have access to adequate cash.

We are very comfortable with our cash balances at the end of 2013 on our balance sheet. We expect to end 2014 with our cash balance essentially flat with our year-end balance of $844 million and that would be after paying items such as debt service, our investments in R&D and are capital expenditures. We also expect to remain in compliance with all of our debts covenants as we are today.

Okay, thanks. Can you comment a bit more on the recent news that you are opening a new plant for some other process to take place and how, and maybe a bit more detail around how the demand for that product is and what you expect in terms of gross revenue from that product?

Brad.

Certainly. It's Brad Kruchten again. So we announced that we had original plans in the UK, we have now upgraded a plant in (inaudible) Germany to support SONORA and we are also -- they've just completed the construction of the updated line in charming China to support the expansion for Sonora.

So now we are being able to have in many other regions that we operate today. So in support of this growth that we have seen and will be expect to see during 2014 that we have upgraded and added capacity to those two sites.

Yes. And so overall going forward in 2014 we expect about $50 million of CapEx and that covers what Brad just covered. It also covers our manufacturing capabilities in functional printing. And for the next (technical difficulty) for next-generation prices. So at the $50 million investment. We see actually pretty good paybacks on this it immediately starts satisfying demand.

Next question, please.

That is it for me, thanks.

Shannon Cross.

My first is just can you talk a little bit about how you are thinking about 2014 from balancing profitability versus revenue? And I am just thinking about the guidance that you put out there in terms of the ability to hit the top or bottom of your range. How are you sort of thinking about where your priorities lie (multiple speakers).

As you can see after significant declines over the last several years in overall revenue, we are going to see a growth in our strategic technology businesses. And this is a result of some of the momentum we saw at the end of the year. I don't know if you look at the quarters you will see that Q4 had increased profitability and allowed us to also have a little bit of growth in these areas.

For example, one thing that is exciting is we expect in our really high-end more strategic property products -- our PROSPER presses that sell for between $1 million and $3 million each and drive significant annuities, we expect to nearly double the installed base of that product line. And that will have a benefit for the Company for years to come.

So what I am getting at is the balance is going to be we want to grow profitably. We want to make sure that when we make investments that they come back in a profitable way and in a continuously sustainable profitable way. Part of that is the gross margin improvement. You saw 10 points of gross margin last year, we continue to be optimistic about increased manufacturing improvements.

And then G&A is not done. We still have significant restructuring to do on G&A and I think we have an opportunity to improve, as I noted in my remarks, improve our sales force productivity as well. So there are lots of ways to grow. We want to grow profitably, we want to build annuity streams going forward, we want to invest in expanding in some of our key growth geographies.

And we are going to invest in $50 million in CapEx and $90 million in R&D at the same time as you can see we do expect a material $100 million improvement in our strategic technology businesses going forward. And that is a very -- that really bodes well for later years.

Okay, great. And then just my second question is on some of your more mature businesses, the ones that are in decline but you are looking at for profitability in terms of inkjet, motion picture films, what have you. How should we think about like for inkjet, for instance how do you think about the life or how long you are going to be getting the ink from it?

I mean for Lexmark for instance it has lasted a lot longer than I think they had anticipated albeit they expected sort of (technical difficulty) this year. So am curious as to how you are thinking about that and if it is trending in line with your expectations and if we will see stair step changes or sort of consistent declines?

Our retail partners like our product out in the marketplace and they are doing a great job of helping us extend this annuity base as long as possible. We have a series of people who are working very closely on this and it was a piece of upside in the last six months of last year, and it is an area that it will decline but it is very profitable and we are going to manage this as best we can.

You do see -- if you look at the projections on page 6 you can see that these two businesses combined go from roughly $800 million of revenue down to $521 million. The service is going to relatively rapidly. But you also see us from a profitability perspective manage it much better in 2013 than in 2012. And while we will drop roughly $100 million in profit if we can manage that better that would be upside.

Okay, great. Thank you very much.

(Technical difficulty).

Hi, thanks for taking the question. Just a little bit more on the 2014 projections. I was just wondering, maybe you could talk a little bit about sort of what -- the sort of growth businesses like what areas are going to contribute most to the EBITDA growth. Is it going to be packaging, is it going to be visual printing? Like just maybe expand a little bit on that.

Yes, of course. I mean it is -- the primary thing is going to be in the digital printing area. I mean the functional printing is an important brand-new market, so growth from zero looks real good. But that is not going to happen until the second half of the year. And so, right now what we are counting on is our digital printing platform and packaging. And packaging, again, off a lower base will grow faster than the digital printing business.

Let's not forget in the strategic technology businesses we also have our Graphics business. And here this business is going to grow slower than some of the more emerging technologies. But that is a business that has been managed -- that I think we can manage better and particularly with some of the processes replaced that are now in the marketplace.

I am also excited (inaudible) but our workflow software. We are looking at after further flat performance over time we are looking at some growth in that business as well and that is a business that I think with a little that of additional sales investment we can get a lot more growth, we have a very strong install base there and it is an industry-leading opportunity.

So all in all it is across the board. Digital printing will drive it and the key factor of whether we really go to the high end of this metric of our guidance or more in the midrange will be our success in functional printing.

Okay, great. And just so my memory is refreshed, the packaging on the digital printing side, a lot of those are already kind of in the books like you have contacted out, is that correct?

Brad, do you want to --?

It is still going, I think we will continue to see growth in our packaging business.

Yes.

Well I made like in other words like sort of I think it was on the digital printing side where it was like you have like deals with like two major suppliers and like Containerboard and packaging and corrugated board. Like basically like instead of replacing the ink head printers for those guys is that where sort of that -- what is driving that growth for the most part?

What you are really referring to is something that is very, very exciting about some of our ability going forward to use (inaudible) technology to print on corrugated and on flex packaging and so forth. That is still in the future, that is things that we are investing in and that has not had a big impact to date.

And it will be very dependent on our ability to build relationships with certain partners, we have talked in the past about the increased use of OEM. And those of you who have been in the industry for a long time, any technology you realize that OEM design in wins, partnerships take a long time when they work they have nice strong annuities and have lower sales costs and it is good partnerships. So that will be part of our growth really over the more medium term than in the immediate term.

Okay. And then in terms of the graphics side, that is on -- because of the SONORA that is on the -- that is in the mature businesses or not isn't it the strategic technology businesses?

No, we have got that in our strategic technology businesses.

Okay.

Some of the graphics business will be slower growing than certainly our functional printing and our digital printing. But it is still a business that we would be very strategically, we are investing in, and it is a very large piece of our business, as you know.

Right, okay. And then basically like the growth there is like (inaudible) from kind of old lines of a SONORA?

Yes, absolutely.

Okay. And so I think that is -- I think that has done it for me. Thanks.

[Paul Krause].

Just a couple of modeling questions. What kind of depreciation and amortization, D&A, for 2014 should we be modeling? And then where does the NOL of the Company stand from a cash taxes perspective?

Give me just a minute, I am referring to the schedules that are attached to the presentation. If you look at the reconciliation of our operational GAAP to GAAP basis you will see we are using a depreciation and amortization number on an annual basis of $197 million.

And then in terms of your question on net operating loss, we have not yet completed our returns for last year. And as I am sure you can appreciate, with the impact of fresh start accounting, it's a cancellation of indebtedness income, we don't have more to disclose. On that right now. But we do expect to remain in an NOL position for US tax purposes.

Okay, and pretty substantial, in other words that you probably wouldn't be paying cash taxes for several years?

I can't comment on that right now.

No problem. And then would you mind just giving us, as you look at your prior experience and before you came to Kodak here, which experiences do you look back and say are maybe the most relevant to this situation here as you have come on board?

Yes. So I have had 30 years of experience in large technology companies, Digital, Compaq, Hewlett-Packard, Computer Associates and then most recently Travelport. From a scale of businesses with 8,000 employees very similar to the size Travelport was, about the same in 2.5 billion, so from a scale of business that is relevant. It is also relevant in the sense that both are very much enterprise sales companies as were most of these companies.

So what clearly comes from it is technology sales at an enterprise level is something I have had a lot of experience at. When I was the Chief Operating Officer of Computer Associates, now CA Technology, we had roughly 6,000 Enterprise salespeople selling into accounts, they were very similar to these in scale, in the size of contract, in the annuity coming off it.

All of the companies have had experience with plates to the relevance of working around productivity improvements and general administrative expenses and in the day-to-day hands-on, roll up your sleeves execution of a Company.

And I think that is really the most important experience I bring to this Company is when your technology businesses like I have been in that have fast product cycles you need to be adept in how you make your investments, how you ensure that there is a great ROI in every investment that you are prioritized with absolute rigor when you make your decisions around investments and deploying resources.

And so, a lot of this is old-fashioned making the trains run on time, a lot of this is getting to know the technologies and making those investments well. And then the last piece that a bit of gravy is I believe that we do have some opportunities to incent our teams, our sales forces, a little bit more for growth than we have had in the past and we will make sure that is profitable growth. So --.

Bed is great. And so, that is actually very helpful, thank you. And is there as you do your due diligence do you think there is room for cost reduction things or the fact that the Company has been through bankruptcy do they kind of already really get into the reducing all waste and that kind of stuff?

There is never a Company you will find that has worked hard enough on cost reduction or productivity improvement. Clearly the legacy costs Kodak has certainly addressed. But I would not go into any Company and believe that everything is at Benchmark.

Kodak is not at benchmark nor were most of the companies I worked with before, and so you have to work very hard to get at that. We will put the right key performance metrics in, we will measure our people with rigor and we will improve the cost structure of this Company.

Thank you very much.

I think we have time for one more caller.

[Amir Tijuana].

My first question is regarding your cash position. Obviously there is a significant amount of cash and I'm just wondering what level of cash are you comfortable with on the books? And perhaps what are your thoughts about paying down some of the expensive debt that you are carrying on your books? And then I have a follow-up.

So obviously I will let Becky comment as well. But as we said, we are pretty confident about our ability in the next year to manage the transition where we will end up with making a series of important investments and still end up with roughly the same cash as we started the year with. And that includes paying down the amortization and the interest expense, etc.

It is relatively expensive debt. And there are some protections on that debt that limit us, some no call provisions and so forth, particularly on the first lien. And so -- the second lien, excuse me. And so we will be opportunistic. We do realize it is a [frosty] market out there for debt in companies like Kodak with our profile. And when the time comes if we can address this we will.

Sure. And my follow-up question is regarding your intellectual property portfolio. Can you just talk about -- I know you -- Kodak [sold] a lot of its digital IP during bankruptcy. What is left over? Is there ability to monetize that in the near term? Could you just comment on that?

So there has been enormous monetization in the past when you look at all the deals. I am optimistic as you see how we have structured our strategic technology businesses, you see we included intellectual property and brand licensing and graphics in that.

We remain -- we continue to have some of the richest patents, 10,000 patents where -- we had 10,000 patents in place at one point, there is a little bit fewer than that now. But they are still very rich patents that are very effective.

We are always in dialogue with many companies around the licensing and frankly many companies can't go into certain markets without -- which would be natural adjacencies for them without coming through Kodak for this.

So we have some intellectual property licensing and in the current projections, but we believe this will continue to be an opportunity that we will focus on. It is a rich set of patents and it is quite exciting to spend time in the lab -- I spent a couple of days in the labs here in my first six days. And we've got people who are producing 20 patents, 40 patents, there are two people in the Company who have produced over 100 patents.

And the rigor by which Kodak goes through it is an intellectual property classification is world-class. And so, we view this as not only supporting our products going forward, protecting us on a defensive basis but it is also it could be a real money maker as it has in the past. And on day six this is a great opportunity I hope to know a lot more about it and we will currently push for more going forward.

Yes, thank you. I appreciate the answer.

Okay, I think that is the end of our question-and-answer period. I will turn it back over to Jeff for some closing remarks.

Well, first off thank you all for joining us on the call today. I know it has been a long time since you have had one of these forms with Kodak. I am excited to be leading the Company going forward, it is quite a privilege. I am excited that we are moving forward with some momentum, $375 million year-over-year improvement in operational EBITDA. We will grow our sales in the strategic technology businesses and we will have dramatic improvements in EBITDA on these strategic businesses.

We do realize film is a very mature business as cost based on strategic decisions at our consumer inkjet inkjet. And as a result we will manage those businesses for EBITDA contribution as they decline. And we will continue to invest in new technology areas for growth.

So thank you for joining the call. I look forward to meeting many of you in the investor program as we go forward. I urge you, if you have any questions, feel free to contact David Bullwinkle who has been on the call here, his number is on the press release. If you have any further questions. Have a good evening.

Ladies and gentlemen, that does conclude our conference call for today. We thank you for your participation and for using the AT&T executive teleconferencing services. You may now disconnect.