Levi Strauss & Co (LEVI) 2012 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Levi Strauss & Co. Fourth Quarter 2012 Earnings Conference Call. All parties will be in a listen-only mode until the question-and-answer session, at which time instructions will follow. This conference is being recorded and may not be reproduced in whole or in part without written permission from the Company. A telephone replay will be available through February 14, 2013 by calling 800-585-8367. Please enter the ID code of 90792730, followed by the pound key.

This conference call also is being broadcast over the Internet and a replay of the webcast will be accessible for one month on the Company's website, levistrauss.com.

I would now like to turn the call over to Chris Ogle, Senior Director of Finance, SEC Reporting and Investor Relations at Levi Strauss & Co.

Good afternoon, everyone, and welcome to our conference call. Just quickly I want to apologize for the short delay we had. He we're having some technical difficulties with the streaming portion of our presentation.

But I am pleased today to introduce members of our Levi Strauss & Co. management team. With us are Chip Bergh, our President and CEO and Harmit Singh, Executive Vice President and Chief Financial Officer.

Before we begin, let me briefly remind you of a few items. Our discussion today may include forward-looking statements that are based on our current assumptions, expectations and projections about future events. Although these statements reflect the best judgment of our senior management, they involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the statements, as more fully described in our Annual Report on Form 10-K, our registration statements and our other filings with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on our future results, performance or achievements. We provide information on our website about how we compile various measures used to describe our business performance.

Finally, today we filed our Annual Financial Report on Form 10-K with the SEC. You can link to our SEC filings from our website.

Now I'd like to turn the call over to Chip Bergh.

Thank you, Chris, and good afternoon, everyone. Thank you for joining us today. Before we get started, I'd like to introduce our new Chief Financial Officer, Harmit Singh. He joined the Company three weeks ago in January and is participating on today's call. Harmit has spent about 30 years working at companies with consumer-facing brands and he has extensive global retail operations experience. Most recently, he served as the CFO of Hyatt Hotels Corporation where he successfully led the global financial and technology functions. Prior to Hyatt, Harmit held various management positions at Yum! Brands, including CFO of Pizza Hut. This combination of financial and operational expertise, global experience and deep understanding of Asia, make him a strong addition to our leadership team.

With that I'd like to turn it over to Harmit who will discuss the fourth quarter and fiscal year 2012 performance. Harmit, welcome.

Thank you, Chip, and a warm welcome to everybody on the call. I'm excited to be a part of a Company with such a rich and established heritage. I'm looking forward to getting to know all of you better.

Today my comments will focus on fourth quarter 2012 and I will reference comparisons on a year-over-year basis, unless otherwise indicated.

Total consolidated net revenues for the fourth quarter of 2012 were $1.3 billion, down 2% on a constant currency basis. Revenue declines in Asia outpaced growth in Europe and the Americas. Revenue from our retail stores grew, both from improved performance and expansion. But this improvement was outpaced by the impact of challenging market conditions in Asia and Southern Europe, as well as a loss of wholesale revenues from the conversion of the Levi's Boys business to a licensed model in the United States. Additionally, we moved less product to the discount channel in 2012, reflecting the tighter inventory position we maintained throughout the year.

Fourth quarter consolidated gross profit was $649 million, up $25 million from prior year, despite lower net revenues and unfavorable currency effects. This was driven by an improvement in gross margin, which rose to 50% as compared to 46% last year, reflecting our higher retail revenues, lower sales to discount channels and the declining cost of goods.

Fourth quarter SG&A expense rose 5% from prior year to $558 million, primarily reflecting increase in P-spend for activities, which we re-time to the fourth quarter, as well as increased cost related to our retail investments. As discussed on our last call with you, the fourth quarter is where we generally have a higher concentration of A&P spend.

Operating income for the quarter was down less than 1% to $91 million and our fourth quarter operating margin of 7% was a slight improvement compared to last year. We reinvested the benefits of a gross margin improvement into SG&A, primarily A&P and retail expansion.

Fourth quarter net income improved 20% to $53 million, primarily reflecting an income tax benefit we recorded, due to reaching an agreement with the State of California on refund claims for the past tax years. We have been in discussions with the state for some time on this matter and we are pleased to have this resolved. In accordance with the agreement, we received a $29 million cash tax refund subsequent to year-end.

Now, I'll share more detail on the fourth quarter revenue results for the regions.

For the Americas region, fourth quarter net revenues were up 1%. Growth in our Levis retail stores was offset by declines at wholesale, primarily reflecting lower sales to discount channels and the licensing of the Levi's Boys business to a third-party. As a reminder, we know recognize a royalty rate on the licensee sales of these products in lieu of recognizing the full wholesale revenue and related costs.

In Europe, net revenues were up 2% on a constant currency basis. Net revenues in our own stores grew again, but sales to franchisees and traditional wholesale customers continued to decline, reflecting the ongoing difficult economic situation in Europe, where Northern markets continued to outperform the Southern markets.

In Asia-Pacific, net revenues were down 18% on a constant currency basis, with India accounting for the majority of the revenue decline. Lower sales in the region reflected high channel inventories and a challenging market environment. Our decision to phase out the dENiZEN brand in the region also significantly contributed to lower revenues.

Now turning to cash flows and the progress we made on building a stronger balance sheet. Operating cash flow for full year 2012 was $531 million, as compared to $2million in 2011. The significant increase in cash flows primarily reflected a decline in inventory units. As you know, we manage inventory units down to levels more appropriate for our business. Additionally, the cost of cotton in our products declined during the second half of the year. Improved cash flow also reflects the timing of accounts receivable collections and our lower operating expenses.

Capital expenditures for 2012 were $84 million, down from the $131 million we spent in 2011, which included the SAP deployment in Europe. Our investment in expansion of our Company-operated retail network continues, but we are being cautious with opportunities for capital spending.

Improved cash flows enabled us to repay more than $200 million of debt, including the borrowings under our credit facility that were outstanding at the end of 2011. We were also successful in completing the refinancing of the 2016 bonds during the year, which enhanced our capital structure by extending the maturity and improving the interest rate on a significant portion of our debt.

We paid a $20 million dividend during the second fiscal quarter of 2012. Subsequent to the 2012 fiscal year end, we also paid a dividend of $25 million in advance of anticipated tax changes going into effect. We do not plan to pay any further dividend in fiscal 2013.

At the end of 2012, our cash balance was $406 million and we had $534 million available under our credit facility. Net debt was $1.3 billion.

With that I'd like to hand it back over to Chip, who will discuss our strategies.

Thanks, Harmit. Over the past year, we began to transform our Company with the goal of driving sustainable, profitable growth and generating shareholder value. 2012 was a year of significant change, making some tough choices in the short-term to benefit the business long-term.

We've assembled an almost entirely new leadership team and we've refined our strategies. And we've started executing against these strategies as we roll into fiscal year 2013 with a new organization structure and operating model and a much sharper focus against the things that matter the most.

With that I'd like to walk you through the areas of strategic focus. Driving our profitable core businesses and core brands, expanding beyond the core to create a more balanced portfolio, becoming a best-in-class retailer and making our cost structure more competitive. Let me pick them off one-by-one.

Let's start with driving our profitable core businesses. We're concentrating on the biggest and most profitable businesses. This includes men's bottoms for both the Levi's brand globally and for the Dockers brand in the United States, as well as key wholesale accounts in the United States and Europe. Collectively, these make up the majority of our revenues and profits. This choice to focus on our profitable core was a key factor in our decision to exit the dENiZEN brand from Asia, which we announced in the third quarter of 2012. This non-core business was not delivering a sufficient return and was a distraction from the core business. We'll now put our energy and efforts and resources behind growing the Levi's brand and Dockers brand in the region.

In 2013, we'll leverage our timeless iconic items to grow the business. For example, we've updated the Levi's 501 jean and we're now offering it, for the first time ever, in colored non-denim fabrics for the first time ever. The Dockers brand will build on the success of Alpha Khakis camel pant, offer new colors and patterns this spring, as well as offering refined interpretations of other iconic Khakis to reach both the traditional and modern consumer.

As I said, we also include our big wholesale customers as part of the core profitable business. In 2012, we worked on enhancing our relationships with key customers and expanded and improved the on-floor presence to drive a more consistent brand experience. At J. C. Penney, consumers responded well to the denim bars and we continue to be pleased with the results. What J. C. Penney and our denim bars clearly demonstrate is if we elevate the brand experience at wholesale, we can sell more product more profitably. In 2013, we'll continue to work with key wholesale customers on fits, filters and on-floor displays. Most recently, we upgraded our in-store execution at Kohl's.

Our second strategy is to expand beyond the core. We're looking at where we may selectively leverage our two strongest brands through either new or existing product categories, consumer segments or geographic markets. We'll build on the strong brand equity, innovative design and marketing expertise to extend the brands' appeal globally. For example, we believe there are significant opportunities in the women's business and we have a tremendous asset in the Levi's Curve ID collection. We also see opportunities in tops and outerwear for both the Levi's and Dockers brands.

Expanding internationally, we'll continue to concentrate on key emerging markets. Last year, for example, we added several Levi stores in key cities in Russia and our Russia business has had double-digit growth. We're focused on getting the business back on track in India and China by optimizing the retail network and cleaning up inventories.

Our third strategy is to become a world-class retailer. This implies more than just opening stores and running a retail network. It will impact everything we do, from supply chain to information technology. Today's consumer is a global consumer, shopping across a variety of channels, both online and in-store and that's why we're concentrating on delivering a globally consistent brand experience across all formats. In 2012, we elevated the service in our stores, training denim experts to assist consumers.

We saw continued growth in North America and Europe and even though some of this falls outside our fiscal fourth quarter, we finished the holiday season strong, outperforming the industry. In 2012 and 2013, we've been investing in our e-commerce platform to better showcase the brands and drive sales performance.

Our e-commerce business is underdeveloped versus most of our competitors and therefore represents short and long-term upsides. The new Levi's and Dockers sites are going live in Europe this spring and we have plans to expand that globally over the next one to two years.

Fourth, we're very focused on getting our cost competitive. We continue to emphasize productivity, managing controllable costs and driving efficiencies through our global infrastructure and supply chain. Our new leadership team is now mostly in place to move these strategies forward. In 2012, we reorganized the Company into global operating model that better aligns our business processes with these strategies. Harmit will now share the financial implications of our objectives.

Thanks, Chip. I will now discuss how the strategies we are implementing will impact our future results. While we continue to seek opportunities for revenue growth, we will place an increased emphasis on taking the steps necessary to move the Company towards improved profitability, building a stronger balance sheet and creating higher value for our stakeholders. To accomplish this we will strive to continue to manage our inventory to appropriate levels and to identify opportunities where we can better leverage and reduce our SG&A costs.

Through 2013, we anticipate that a higher retail sales and the declining cost of cotton in our products will continue to drive margin improvement. We expect gross margin for full year 2013 to move closer to 50%. While we expect gross margin to improve, it won't entirely drop to the bottom line. Ongoing expansion of our retail presence around the world will continue to drive higher selling expenses and we are planning our A&P investment to move back to the range you saw prior to 2012, as we concentrate on executing our longer-term brand strategies.

Our capital expenditure in 2013 will be in the range of $100 million to $120 million, comprised of the buildout of our retail network and investment in core infrastructure, such as our distribution and IT facilities. We also estimate pension contributions of $33million during 2013.

In the first half of the year, we intend to refinance our 2014 term loan through a combination of deploying cash and access to the credit markets and will make progress on our long-term objective to pay down debt over time.

To summarize, while we are pleased with our ability in 2012 to mitigate revenue declines and hold operating income to prior levels by controlling our expenses, we recognize that the economic environment in certain markets around the globe will continue to be challenging for some time. This underscores the importance of discipline in executing our strategies behind sustainable value creation initiatives over the long term.

Now we'll take your questions.

Thank you. The floor is now open for questions. (Operator Instructions). William Reuter, Bank of America.

In terms of the SG&A cuts or opportunity there, is there any way you can help us understand the magnitude of how you're thinking about that opportunity or any kind of boundaries to put around it?

SG&A has been our focus in the Company over the last couple of years and especially this year. As we're thinking about SG&A -- Chip talked to you about the new operating model that the Company is focused on executing against. So as we're thinking about SG&A, we're thinking about re-aligning or reorganizing the organization to support the operating model, which will support the growth and the turnaround over time. So that's one.

The second is the question of our advertising spend. In quarter four you saw the advertising spend tick back and we ended the year, I think, close to 5.6%. Coming into the quarter, this quarter four, we were tracking at about 4.4%. Our thinking is, as we think about 2013 and beyond that the advertising spend increases slightly, still remaining below historic levels. We've, over the years, spend over 6%, but again, as we refine the brand strategies and with the intent of concentrating and growing revenue, we think it's important to spend than the brand.

So let me take another run at this too, Bill, just maybe clarify a little bit more. It's a big bucket of spending for us between A&P and all the organization and distribution components. And we've got puts and takes in there this year. I guess, I wouldn't expect a huge swing in the overall. What you're going to see is a shift in the internal. So we do expect to reinvest back in our brands, we cut pretty deep last year to manage the declining revenues. So we do anticipate our A&P spending returning back closer to the historical levels. That'll be funded somewhat through cuts elsewhere. The other dynamic that we've got going on is, we will continue to build out retail stores, and every retail store you add, you're adding headcount. So we will continue to make those kind of investments. So I wouldn't expect a huge swing in the absolute as a percent of sales, but there will be changes in the insides of it, if that makes sense.

That's actually very helpful. And then, last call you had mentioned your plan, holding price despite declining cotton prices. Is that still the plan for 2013?

That is basically the plan, yes. And so far it looks like we're able to do that, particularly in the mid and upper parts of our business, but we know we've got to be priced competitively in the marketplace and as things change we're going to need to be responsive to the competitive environment. But our plan going into the year is still hold pricing.

Okay. And then my last question, I don't know if you would like to comment, but you talked about one of the drivers being strong sales in Company-operated stores. I didn't hear any mention of a same-store sales number. Did you provide anything like that or is there anything you could help us with that there?

Well, we don't make comp store -- we don't comment on comp store sales, but our performance was ahead of expectations and actually we outperformed our competitors, particularly here in United States in our owned and operated stores.

Okay. That's all from me. Thank you.

I guess, the net is, we're pleased with the performance of our retail business.

Understood. Thank you.

Carla Casella, JPMorgan.

Hi.

Hi, Carla.

Hi, how are you?

Hi, Carla. Good.

I'm wondering, if anything, your margin improvement is due to the denim bars at J.C. Penney. It sounds like that business is more profitable. You mentioned that you could sell more product profitably and I'm assuming it's price and clearance in the J.C. Penney business last year. Is that part of the driver?

No, in the grand scheme of total global business it would probably be a rounding art, to be honest with you. But we're pleased with the performance of the denim bars. We are selling more product, our business is up in the stores where they have the denim bars. So we're happy with it and its profitable.

And, Carla, just to give a little bit more color on the margin improvement, you saw a 400 basis point improvement. We're consciously focusing on margin improvements as we think about the business going forward. Basically, I'd say three factors; reduction in cotton, the fact that retail was a bigger piece of the mix relative to a year-ago and the fact that our sales to the discount channels we consciously reduced that. So the fact is that kind of contributed margin growth in the quarter. And as we think about -- sorry, just to add, as we think about 2013, we are thinking about ending, in terms of margin performance for the year, we've indicated a number closer to 50% on a full-year basis.

Okay. That's great. Just one more question on the Penney business. The company started discounting some products in the store. When they do that did that change the relationship with you? Are they coming back to you for markdown money or is it still a one-priced sale as originally was contemplated, I guess, when Ron Johnson came in?

They're executing the program as you see it in their stores. To my knowledge, they did not come back to us for discount money, and as I said, we're very, very happy with the performance of the denim bars.

Okay, that's great.

They are --

Go ahead. Sorry.

I was going to say they are using the [sale words], they are bringing back sales, but our business continues on the model that we've got in the store.

Okay, that's great. And then on the consumer, have you seen any change in buying patterns with the payroll tax?

It's still really, really early days and it's obviously falls outside of the fourth quarter, but I would say, in general, here in the United States, January has been really, really choppy. Whether that's because of the payroll tax or whether that's because of the price of gasoline going up, I don't know, I can't really comment on that, but we're definitely seeing a more choppy traffic pattern over the month of January.

Okay. And then I think I may have missed it, did you comment on Dockers in the quarter? Was Dockers was up in the quarter and what's the timing of your rollout for the shops on Dockers?

So, Dockers, it's the same story we've been saying now for pretty much the last couple of quarters. Our core men's bottoms pants business here in the United States is up, that's offset by the strategic decisions that we made earlier in the year to license off other parts of the business, which drags the total results down. And then the other thing that impacts the total number is we had dramatically incented sales to discount channels on that brand as well this past year. So, total revenues were down for the year, but we've set the brand up for success longer term and we're happy with the progress that we're making on the core men's bottoms business.

Okay, great. Thank you.

You are welcome.

Karru Martinson, Deutsche Bank.

Looking at Asia, you guys talked about high channel inventories. Where did we end the quarter in that market?

So, I'm actually going to Asia tomorrow night. Our biggest issues are in India and in China. And China in the fourth quarter, we made the decision to mark down a significant amount of inventory to try to move into this year with the inventory in our shop-in-shops in our stores in China a little bit cleaner. So the expectation coming into the year, it's probably taking us a month or two to execute some of that cleanup. But the intent is to get fresh product on the floor in China this quarter, I guess, first quarter of 2013.

India is a bit more challenging, frankly. There are a couple of dynamics going on in India that you have to take into consideration, aside from the competitive environment, which is also definitely a factor. But remember, we shut down the dENiZEN brand, so we are flushing a lot of dENiZEN product in that market.

There's a lot discounted jeans on the market in India today. And our inventory, our channel -- our inventory of our product in our stores is also a little bit higher than we would like. So it is going to take us a while to work through India. We have some business model things that we need to clean up in India too. It's not going to turn superfast, but we're trying to lay it -- I guess, I'm patient on India. We're trying to get it right for the long-term and it's going to take us probably the better part of at least the first half of this year and maybe even a little bit longer than that to get those conditions right to set us up for success long-term.

Last thing, just switching gears a little bit, you guys had a successful launch with the Curve ID, but the women's business has been historically a challenge for the Company. When you look at it with a fresh set of eyes, what are you seeing there that gives you the opportunity to extend that brand globally into that category?

The Curve ID is really a story -- it's two different tales. Where there is a high service component, think of one of our stores, Curve ID is a very, very powerful proposition and I mean I've watched it work with my own eyes. I've sat in stores, watched women being fitted for Curve ID and having one of these Oh! My God experiences. It works. And when consumers by it they love it and they are very loyal to it and they come back.

In lower service environments, though, which is predominantly like the wholesale business, so think the big customers, Sears, J.C. Penney, Kohl's, it's a much more challenging proposition. It's a hard one to shop on your own. It's a complex proposition, it really needs that high touch and so it's had very mixed results in wholesale.

And so, as we move forward, the benefit of having the store network that we have is we've got an installed base where we can leverage that type of very proprietary, distinctive concept and we continue to be committed to it and focus on continuing to grow it.

You said it, our women's business is very underdeveloped relative to many of our competitors and it represents significant upside opportunity and we're focused on driving it.

Okay. And just to clarify in terms of housekeeping. If I was interpreting you correctly, we don't think we'll see more advertising spend here in 2013. But, overall SG&A dollars aren't going to be that for off from where historical levels are, because of the various puts and takes in that segment, correct?

Yeah, that's about right. And, I guess, the only thing I want to just make sure everybody is really clear on is, when we say A&P, don't just think television advertising, all right, it's more than just measured media. So it includes fixtures in stores, whether our stores or J.C. Penney or Macy's or Kohl's. So anything that is brand building and enhances the equity of the brand goes into that A&P bucket.

Thank you very guys. I appreciate it.

Got it.

Grant Jordan, Wells Fargo.

Good afternoon. How you're doing? Thanks for taking my questions. It looks like in the quarter your cash conversion was pretty good, driven by working capital, particularly on the accrued expenses side. Was there anything in terms of timing that drove that?

Yes, Grant, hi. This is Harmit. There was a bit of timing that drove it. The other thing is lower CapEx spending also kind of helped from a cash flow perspective. The one thing you should consider as you think of about cash flows in 2012 -- 2013, this year we did tighten down inventory and rationalized our inventory management down to tighter levels and adjusted that to what I call demand levels. That was more of a one-time impact. Reduced cotton also kind of helped.

So as you think about operating cash flows for 2013, just make sure that you incorporate the fact that 2012 had some one-time impacts to it.

It was mostly units, it's mainly units that drove it over the course of the year.

So thinking about 2013, you don't expect seeing the same kind of benefit from working capital, is what you're saying?

That's correct.

Okay, great. And then two other brief questions. On Dockers, what is the timing for the launch at J.C. Penney's?

Sometime this calendar year, 2013, in the second half.

Okay, second half. All right. And then, finally, did you give the CapEx number for 2013?

Yes, we did indicate. The range was $100 million to $120 million. It is a little higher than what we spent in 2012 and is largely driven by spending behind risk mitigation strategies around IT and distribution.

Okay. The risk mitigation, is that new systems or --?

Yeah, it's parallel systems, it's investment behind some new systems. We are thinking about -- Chip talked about our focus in e-commerce, so things like that.

Risk mitigation, it's a co-location facility, which most companies are doing. It's just to protect us.

Sure. Okay, thank you very much.

Welcome.

(Operator Instructions). [Kevin Gwayne], Goldman Sachs.

Good afternoon and thanks for taking the questions. Maybe I could start with Harmit. I also cover lodging, so I've worked with you on some of the Hyatt deals. But, congratulations on the new spot. I was just wondering what is really exciting you, being that you -- since you've arrived at the Company, in terms of what you've seen and what's really motivating you going forward?

Thanks, Kevin. Good to talk to you again. Hopefully we catch up over time. But it's a wonderful brand of brands. The leadership team that Chip has put together is an outstanding leadership team that I'm really encouraged will help turn around performance over time. I think as we think about the opportunity ahead of us and the things that got us here, I would list a major chunk into the controllable bucket, as against the controllable bucket and that really encourages me as I think about driving business performance longer-term for the brands. So excited to be here.

Great. Now, it's a great opportunity. We certainly, from a credit perspective, loved hearing the near-term target to de-lever with the refinancing of the credit facility. Do you have any thoughts on long-term leverage target?

It's early days, Kevin, but over time definitely we'll engage you as we structure our thinking. But one thing you should know. You referred to my experience with Hyatt. The thing you should know, creating and driving a stronger balance sheet and improving cash flows is uppermost on my mind.

I think it's also -- I think it's fair to say that the senior team and the Board of Directors is very focused on how we continue to make progress on paying down the debt. So, it is something that's in our sights and that is something that we will continue to march against over the next couple of years as we strengthen our cash position.

Great to hear. And then maybe I can just slip one final one in. Certainly as you think of expanding beyond the core, I know traditionally you've only developed things more or less internal, but would you ever consider looking at any M&A opportunities in the expansion plan?

I get asked this question a lot internally and I've got a pretty straightforward answer, which is -- the first simple answer is yes, but before we do that we've got to make sure that we're in a position where we're strong enough to be able to bring in an acquisition. I've done bunch of acquisitions in the past. I was the guy at Gillette after P&G acquired Gillette. It's hard and it doesn't matter if it's big or small, it's hard.

We've got a lot of work that -- and a lot of opportunity on our core business, in our core brands short term. I think we've got plenty to keep our plate full over the next one, two, maybe three years. But we know we're going to need to broaden the portfolio long-term. I don't think we'll be able to do it all internally and at some point in time, when the time is right, when we got the debt position right, et cetera, et cetera, et cetera, I think an acquisition would certainly makes sense, if the right one came along.

Okay, that's very helpful. Thank you.

Participant, Sterne Agee.

For your mid to upper end of your product range, what was the magnitude of the price increases that you took last year?

Last year, most of it was in the -- prior year we took one price increase, in general, last year. It'd probably be very low-single digits for the full year. Very low, like I'm talking probably 1% or 2% on the full year, I would imagine.

And with regards to J. C. Penney under the new denim bar format and also with your relationship with Kohl's, do you provide any level of margin guarantees and have you seen an increase in markdown dollars at Kohl's?

The latter question, no, and I believe the answer to the first question is no, we don't follow it.

Okay, thank you.

At this time, I'd like to turn the floor back over to the Company for any closing remarks.

All right, I guess, I will close and just thank you all for joining us today. I said it earlier. Our focus is on delivering sustainable profitable growth. I pretty much got the new executive team in place, we've got our new structure and operating model in place and we're beginning to execute against the strategies that will deliver that goal. And we will talk with you again in April to give you an update on our first quarter fiscal 2013. Thanks a lot for joining us today.

Thank you. This concludes today's conference call. Please disconnect your lines at this time.