Matthews International Corp (MATW) 2009 Q1 法說會逐字稿

Welcome to the first quarter financial results conference call.

At this time, all participants are in a listen-only mode.

Later we will conduct a question and answer session, with instructions to be given at that time.

(Operator Instructions).

As a reminder, this teleconference is being recorded.

At this time, I would like to turn the call over to your host, Chief Financial Officer, Mr.

Steve Nicola.

Good morning.

I am Steve Nicola, on the call with me today is Joe Bartolacci, President and CEO of Matthews.

Today's conference call has been set up for one hour, and we are conducting the call to comply with the Securities and Exchange Commission Regulation FD.

This call will be available for replay at approximately 1:30 today.

To access the replay, dial 1-320-365-3844, and enter the access code 980511.

The replay will be available until 11:59 PM, February 6th, 2009.

We have posted on our website, which is www.matw.com, the first quarter earnings release and financial information we will discuss this morning.

In the left column of our home page under Investor Relations, you can click on Investor News to access the earnings release, or click on Reports to access the quarterly financial data.

The financial data is presented under the heading Preliminary Quarterly Reports, in a PDF file format.

Before beginning the discussion at the advice of our legal counsel, I have been advised to read the following disclaimer as it pertains to forward-looking statements.

Any forward-looking statements in connection with this discussion are being made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements involve unknown risks and uncertainties, that may cause the Company's actual results in future periods to be materially different from management's expectations.

Although the Company believes the expectations in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove incorrect.

Factors that could cause the Company's results to differ from those discussed today are set forth in the Company's Annual Report on Form 10-K, and other periodic filings with the SEC.

In addition, please note that the balance sheet and income statement information provided today are preliminary data, since our quarterly report on Form 10-Q for the period ending December 31, 2008 , will not be filed with the SEC until around February 4, 2009.

To begin the conference, I will review the financial results for the quarter.

Joe will then provide general comments on our operations.

Following that, we will open the discussion for questions.

For the quarter ended December 31, 2008 the Company reported earnings of $0.37 per share.

Earnings for the current quarter included unusual charges of $0.14 per share, which primarily consisted of severance and other costs, related to the consolidation of certain memorial production operations within the Company's Bronze segment, severance costs in connection with cost structure initiatives in other segments, and asset adjustments resulting from current market conditions.

In addition, earnings for this quarter included a one time benefit of $0.03 per share, related to a favorable adjustment in income tax expense.

This adjustment relates to the Company's ability to utilize a European tax loss carryover, which was generated in prior years.

Earnings per share for the first quarter last year were $0.56 per share, and included a one-time tax benefit of $0.06 per share, related to a favorable adjustment in income tax expense.

As a result of tax rate changes in Europe, an adjustment to the corresponding deferred income taxes was required under US accounting rules.

Consolidated sales for the first quarter of fiscal 2009 were $191 million, compared to $182 million for the same quarter a year ago, which represented an increase of approximately 5%.

The growth in consolidated sales reflected the acquisition in the Company's Graphics Imaging segment of Saueressig GmbH & Co.

KG in May 2008.

Excluding the impact of this acquisition sales were lower than a year ago, reflecting the recent downturn of the economy.

In the fiscal 2009 first quarter Saueressig reported sales of $25 million.

Additionally changes in the values of foreign currencies against the US dollar, had an estimated unfavorable impact of approximately $5 million, compared to the first quarter a year ago.

In our Memorialization businesses, sales for the bronze segment were approximately $50 million for the first quarter, compared to $54 million last year.

Currency rate changes had an unfavorable impact of approximately $2 million on bronze segment sales compared to a year ago.

Sales for our Casket segment were approximately $53 million for the current quarter, compared to $56 million a year ago.

Sales in both of these segments reflected lower volume.

In addition, our overall product mix was lower within the Casket segment.

Sales for the Cremation segment in the fiscal 2009 first quarter were slightly lower than last year, total $6.3 million for the current quarter, compared to $6.4 million for the same period last year.

In our Brand Solutions group first quarter sales for the Graphics Imaging segment were $57 million, compared to $35 million a year ago.

The increase resulted from the acquisition of Saueressig, which reported sales of $25 million for the current quarter.

Excluding this acquisition, sales declined from a year ago, primarily reflecting the unfavorable impact of changes in foreign currency values against the US dollar, and weakness in the US markets as a result of the economic downturn.

First-quarter sales in the Marking Products segment declined $3 million, or 21% from the first quarter a year ago.

Of the Company's businesses this segment has been the most economically sensitive, as industrial capital spending has declined, and the sales of consumables have been unfavorably impacted by lower consumer spending.

Sales for our Merchandising solutions business were approximately $14 million for the fiscal 2009 first quarter, compared to $16 million a year ago.

Unit volumes declined in this segment, as projects have been delayed, or in some cases such as Christmas related projects, cancelled due to the economic environment.

Consolidated operating profit for the quarter ended December 31, 2008 was $20.1 million, compared to $26.8 million for the same quarter a year ago.

Operating profit for the fiscal 2009 first quarter included approximately $5.8 million of the unusual charges I described earlier.

In addition, changes in foreign currency values against the US dollar, had an unfavorable impact of $600,000 on operating profit, compared to the first quarter a year ago.

As I noted the unusual charges primarily related to severance and other costs, related to the consolidation of certain memorial production operations within the Company's Bronze segment, severance costs in connection with cost structure initiatives in other segments, and asset adjustments resulting from current market conditions.

The asset adjustments affecting operating profit, primarily included charges to bad debt expense, which were required under the Company's accounting policies, due to additional aging within Accounts Receivable.

While the additional aging is a reflection of the current market environment, the Company has not yet seen a corresponding increase to any significant degree in actual uncollectible accounts.

In addition, unusual charges also included one-time costs related to the integration of the Saueressig acquisition.

In our Memorialization businesses the Bronze segment reported operating profit of $9.3 million for the fiscal 2009 first quarter, compared to $13 million a year ago.

Unusual charges of $3.1 million were recorded in the current quarter, representing severance costs and asset impairment charges in connection with the consolidation of certain memorial production operations.

Operating profit for the Casket segment was $6.4 million for the fiscal 2009 first quarter, compared to $7 million a year ago.

Lower sales and an increase in the Company's [fitness] segment's bad debt reserve, contributed to the decline in operating profit from the first quarter last year.

Operating profit for the Cremation segment was $813,000 in the current period, compared to $1 million a year ago.

Slightly lower sales and higher material costs were the principal factors impacting operating costs in the current quarter.

In the Brand Solutions group, the Graphics Imaging segment reported operating profit of $2.6 million for the quarter ended December 31, 2008, compared to $2.7 million a year ago.

The decline in operating profit reflected lower sales primarily in North America, and unusual charges in connection with severance costs and integration of Saueressig.

These declines were partially offset by a slight operating profit generated by Saueressig for the current quarter.

Operating profit for Saueressig is projected to continue to grow in the fiscal year.

The Merchandising Solutions segment reported operating profit of $299,000 for the fiscal 2009 first quarter, compared to $1.6 million in the first quarter last year.

The decline in sales and severance costs in connection with cost structure initiatives, were the main factors in the reduction in operating profit from a year ago.

Operating profit for the Marking Products segment was $671,000 for the quarter ended December 31, 2008, compared to $1.4 million a year ago.

The decline in operating profits from last year resulted principally from lower sales and severance costs, incurred as a part of the segment's recent cost structure initiatives.

First quarter sales in operating income by segment are posted on our website.

Our first quarter consolidated operating margin for fiscal 2009 was 10.5% of sales.

Unusual charges for the quarter were approximately $5.8 million, or 3% of sales.

Our consolidated operating margin was 14.7% in the first quarter last year.

Gross margin for the quarter ended December 31, 2008 was 35.5% of sales, versus 39.5% for the same period a year ago.

The decline resulted from lower sales excluding the Saueressig acquisition and unusual charges.

In addition, the gross margin percentage for Saueressig is lower than the average for the Company.

SG&A expense for the current quarter was 25% of sales, compared to 24.8% of sales in the same quarter last year.

Lower sales adversely impacted the SG&A percentage relative to sales in several of the Company's segment.

For the fiscal 2009 first quarter, investments generated a net loss of $388,000, compared to income of $512,000 for the same period a year ago.

Unusual charges for the current quarter included a mark to market asset adjustment of approximately $800,000, representing unrealized losses in the value of investments held in long-term trusts for certain employee benefits plans.

Under the Company's accounting policies unrealized gains and losses on these investments are recorded through the income statement.

Interest expense for the current quarter was $3.3 million, compared to $2.1 million for the same period a year ago.

The increase in interest costs principally resulted from a higher average level of debt, as a result of the recent acquisition of Saueressig.

There was relatively no minority interest deduction for the current quarter, compared to a deduction of $552,000 a year ago.

At September 30, 2008 the Company purchased the remaining interest in one of it's German companies, which was the primary reason for the decline in deduction from a year ago.

The remaining subsidiaries with minority interest were generally breakeven in total for the current period.

The fiscal 2009 first quarter effective income tax rate was 30.9% of pretax income.

Excluding the favorable impact of the one-time adjustment I mentioned earlier, our fiscal 2009 first quarter tax rate was 36.6%, excluding the one-time favorable adjustment from income tax expense a year ago, the effective tax rate for the fiscal year ended September 30, 2008 was 36.2%.

At December 31, 2008 the consolidated cash and investment balance was approximately $65 million, compared to $60 million at September 30, 2008.

Our current ratio was 2.2 at December 31, 2008, and 1.9 at September 30, 2008.

Our outstanding Accounts Receivable balance at December 31, 2008 was approximately $122 million, which represented 58 Days Sales Outstanding.

Outstanding Accounts Receivable at September 30, 2008 approximated $145 million, which represented 60 Days Sales Outstanding.

At December 31, 2008, consolidated inventories totaled $103 million, compared to $96 million at September 30th, 2008.

At December 31, 2008, the Company had approximately 30,646,000 shares outstanding.

During the fiscal 2008 first quarter, the Company purchased 380,000 shares under it's share repurchase program, at a repurchase cost of approximately $19 million.

At December 31, 2008, approximately 637,000 shares remained under the current share repurchase authorization.

Our long-term debt balance at December 31, 2008, both current and long-term portions approximated $272 million, $197 million of this balance represented borrowings under our domestic revolving credit facility.

The remainder is primarily debt on the books of our Italian and German subsidiaries.

The majority of the domestic revolving credit facility is September 2012.

Depreciation and amortization expense for the quarter ending December 31, 2008 was approximately $7 million.

Capital expenditures for the same period were $3.1 million.

In summary, excluding the impact of unusual items and the one-time favorable income tax adjustment, our reported earnings for the fiscal 2009 first quarter were a little better than our internal expectations.

As we discussed in our November conference call, we expected a challenging quarter with the severity of the current economic downturn, affecting both our Memorialization and Brand Solutions businesses.

We expect these challenging conditions to continue into the next quarter.

In December our Memorialization businesses saw trends in sales closer to normal for this time of year.

While encouraging we still remain cautious in the near term.

We should also start to see the benefit of lower commodity costs towards the end of the second quarter, and into the second half of the fiscal year.

Additionally we expect Saueressig profitability to continue to improve as the year progresses.

Finally, each of our businesses are continuing their efforts to adjust their cost structures, to better align with the current revenue run rates, to mitigate some of the economy's impact.

For this reason, and as the Bronze production consolidation continues, we expect further unusual charges in the coming quarters.

In November we provided guidance that our fiscal 2009 earnings per share would increase in the range of 5 to 10% over fiscal 2008, excluding unusual items from both periods, which represents at least $2.62 per share.

Based on our current projections and the factors I just mentioned we are maintaining our fiscal 2009 earnings guidance at this time, excluding unusual items.

This concludes the financial review, and Joe will now comment on our

Thank you, Steve.

Good morning.

I will be brief.

Our quarter ended much as we had expected, each of our businesses struggled on the top line for sales.

But each of those businesses took difficult steps to reduce operating expenses and deliver our current results.

In fact, on an apples-to-apples basis, consolidated operating profit was about 3% lower than the same period last year, when you exclude the unusual charges.

This is exceptional performance in a challenging economic environment.

Looking forward we expect to be continue to be challenged by the economy.

This is particularly true in our Brands Solutions segment, where tightening marketing budgets slowed new product launches, and an unwillingness on the part of industry to spend on capital goods, like those manufactured by our Marking Products division, will continue to challenge our revenue line.

Similarly uncertainty in the currency markets makes predicting exchange rates difficult.

However, declining raw material costs relative stability in our Memorialization businesses, and our continued efforts to control our costs, allow us to maintain our guidance for the balance of 2009.

I must caution you, however, as we have stated in the past, we are not immune to the economies in which we operate.

The guidance we confirm today is only as good as the information currently available.

We will monitor that information and regularly adjust accordingly.

I would like now to open it to questions.

For those of you who would be asking questions, we request that you limit them to one question and a follow-up question, until all of those who wish to participate in the Q&A session have had an opportunity to do so.

(Operator Instructions).

First question will come from the line of Bob Labick with CJS Securities.

Good morning.

This is actually Torin Eastburn filling in for Bob.

Good morning.

I was hoping to focus on commodities for a second.

Could you rank where bronze, steel and fuel fit within the percentage of your total costs, and then talk about the timing of any benefits you will start to see as the costs come down?

We can rank them in terms of importance, steel obviously is probably the largest of the commodities which we purchase, bronze being the second, and fuel being the third, of all of our divisions.

As they relate to the percentage of sales we don't give that information out at this time.

Okay.

In terms of any timing of benefits you will see from those costs coming down, you mentioned in the release that in this !

the client costs hurt you, what do you expect to see

Well, let's talk about steel for a second.

As a practical matter, we are working through on the steel side three different sets of inventories, the inventories we have committed to purchase, inventories we have in the form of raw material, and inventories we have finished goods.

We don't expect to see significant impact from the downtick in the raw material price for steel, until about the beginning of our third quarter, end of the second.

Thank you.

The next question in queue that will come from the line of Jamie Clement with Sidoti & Company, please go ahead.

Good morning.

Steve and Joe, you guys historically have made acquisitions on a fairly regular basis, and obviously the economy is tough, and you guys are working on all of your divisions on the cost side.

At the same time you do have a flexible balance sheet, and you are comfortably free cash flow positive.

Can you talk about your willingness to put money to work, in terms of outside investments or acquisitions in this kind of marketplace?

Sure.

We are cautious with our cash at this point in time.

We have not been overly active with regard to any of our utilization of cash.

But as we have been in the past we will be opportunistic for the right acquisition at the right time.

We are willing but we will use that as an opportunity, these economic environments to capitalize on well priced acquisitions, and not necessarily trigger anything that is overpriced.

Lastly, a follow-up question to that, Joe, historically it always sounded like you would have favored death care opportunities.

Does the economy, do you see potentially seller valuation expectations coming down significantly on the Brand Solutions side, where looking out over the next year or two, you might see some attractive opportunities on that side?

Sure, we have seen it on both sides of the table, with regard to seller expectations.

However, the same economics we feel, which is that the Brands Solutions side of the business is far more sensitive to the economy.

That will probably give relative valuations lower on the Brands Solutions side, than we would find on the Memorialization side.

Fair enough.

Thank you very much for your time.

Thank you.

Our next question in queue will come from the line of Dax Vlassis with Gates Capital Management.

Your line is open.

Yes, you said something regarding additional charges.

I guess, 6 million in charges roughly this so far, and you expect to take some more.

Can you give us some sort of magnitude as to the additional charges you expect to take?

Are all the benefits of those charges baked into you maintaining your guidance for this year?

I will answer that this way, right now I cannot give you a number on what we expect the unusual charges going forward to be.

Right now our business leaders are, we are in the mist of this economic environment, and they are evaluating their businesses and their revenue run rates now.

So I can't tell you to the degree of magnitude what those could be.

But the projections that our managers provide to us, which is the basis for our guidance, contemplates that they will manage the cost side of the equation as necessary, to help meet the guidance that they have provided us.

But the charges you have taken so far, what sort of expectations for benefits this year are baked into your guidance?

You are excluding the charges but you are getting benefits as well, correct?

The benefits of those charges would be in our guidance for the latter half of the year, to the extent they will benefit this fiscal year.

Okay.

And then similarly on the inventory side, are any of those charges related to inventory?

Because your inventory days look like they are up a little bit year-over-year?

No, no charges related to that.

Okay.

Our next question in queue will come from the line of Clint Fendley with Davenport, your line is open.

Good morning Joe and Steve.

I wondered if you guys have any idea what the pro forma margins would have been from Bronze for the quarter if we excluded the charges?

The charges in the third quarter for Bronze was 3.1 million.

If we add those back relative to sales, I apologize I don't have my calculator in front of me.

That is okay, we can do the math.

If my memory serves me correctly, you guys may have recently instituted some price changes for this segment.

Any early read on the receptivity there?

That is an interesting question Clint.

We basically took some staggered pricing, we have reduced some pricing on our higher end goods, maintained some pricing on some mid-level product.

It was favorably received, although the environment is a little more competitive.

We do have some smaller players out there that may not be as willing to be as consistent with our pricing.

So we may have to respond going forward.

Obviously we should expect some benefit from the commodities during the current quarter.

Could you help us out maybe how we might think about the inventory and any lag from that?

Will that delay the favorable trends that we might have on the commodities?

Our standard purchasing commitments take us out a number of months within each segment, and then we do have some inventories that we have to run through.

That is why we think we should start to see the benefits towards the end of fiscal 2009, second quarter, the end of this fiscal quarter, and then into the second half of the year.

Thank you.

(Operator Instructions).

Next in queue is Greg Halter with Great Lakes Review, please go ahead.

Thank you.

If you could comment on how much of your business you feel is discretionary in Memorialization, if there is a trade down factor that you have seen so far?

Probably can't comment as to how much of it, but we can talk about the product lines themselves.

There are clearly multiple products within our Casket product line, ranging from a 20 gauge casket, to a mahogany wood casket, where the price points can be from $500 to $3,000.

It is fairly significant in the range.

On the Bronze side it is a question also of whether or not, there are various factors.

We have size, the number of features that are associated with it, complexity of the product.

Those ranges could be from 400 to $500 for a plaque, to $1,500 for a plaque.

Lastly, we have some deferral options we have on the Bronze side, that we don't have on the Casket side.

You need a casket when you pass away.

You don't necessarily need a marker right away.

We can't quantify how much of that is being deferred.

There might be some of that out there today.

That is very helpful.

Relative to your pension plan given the decline in the markets, any kind of substantive changes you are looking at there, in terms of increased costs?

Our pension year end is July 31st.

So the way the accounting rules work with respect to that, is that you do your evaluations one time per year and that sets the expense for the year, and that was done as of the end July 2008, and I guess under the new accounting rules FAS-158, re-set it at September 30th.

That is a long way of saying, Greg, that our pension expenses are set for this current fiscal year already.

Anything that has happened in the market that still exists as of the end of this fiscal year will impact next year's expense.

All right.

One other quick one, can you breakdown the charges versus what was in the Cost Of Goods Sold and what is in SG&A?

Greg, I don't have that data with me, no.

I apologize.

On the segment side, you did mention that the Bronze was 3.1 million, are there any other components in the other five divisions that you could break out?

There are other components but they are much smaller, and no, we have not broken those out.

I should mention one other number.

I believe in my commentary I stated that our repurchased share cost was about $19 million.

I believe that is actually closer to $16 million.

I think I misstated that number for anyone that took notes.

Thank you.

Our next question in queue will come from the line of Mike DeBernardis with Lazard Asset Management, please go ahead.

Going back to the charges, I think you said that 3.1 of the 5.8 was in Bronze.

What other segments had restructuring charges?

The other segments that had restructuring charges, well we don't term them restructuring, because some of them are unusual, such as the bad debt reserve we talked about.

Casket had some.

Our Graphics Imaging group had some, our Marking Products division had some, Merchandising Solutions had some.

Those are the ones, I think all but Cremation were touched by the unusual charges.

Pretty broad based.

We do have a follow-up question in queue from the line of Bob Labick, CJS Securities.

Just one more, in Graphics Imaging the markets have been volatile, with currency and the slow down overseas.

Can you give us help with how to think about margins in that segment going forward?

It is difficult.

That is probably one we don't have as great a visibility as we would like to have.

Because to date our European operations other than Saueressig, have performed pretty well.

Those businesses are pretty concentrated in Germany at this point, or at least the German speaking part of Europe, and that economy is having it's own issues.

So it may be a little delayed.

We think that the margins over time will continue to improve.

Short-term it is difficult for us to get our arms around.

Thank you.

We also have a follow-up question from Dax with Gates Capital Management, your line is open.

Yes, on the Memorial side of the business, you talked about some stabilization in January, can you expand on that?

What are you seeing in just a little bit more detail, and what segment it is in?

Stabilization, we saw it was in December.

When we had our conference call in November, we said there were strange things going on in the marketplace as to volume.

We got back to more normal rates both in our Bronze and Casket business, albeit slightly below what we think is normal, but more reliable than what we were seeing earlier in the quarter.

It is too early for us to tell what it is looking like this quarter.

That is why we are a little cautious out there, having seen an early start that was difficult.

Our Cremation business was a relatively fairly stable business on the Memorialization side, fairly good backlog and equipment.

What happened to the cash in the quarter?

Your cash flow from ops number minus CapEx was like $17 million, and then you have $2 million in dividends, and then you are saying it is 16 million.

I think net debt went up by $13 million year-over-year, was there an acquisition or something in the quarter?

We had CapEx of about $3.1 million during the quarter, and I think you have hit on the principal factors.

Our cash from ops is a little over 19 million.

Our cash used in investing activities was a little over 5 million, and the rest relates to Treasury stock purchases under our repurchase program.

Okay.

Thanks.

We also have a follow-up question in queue from the line of Greg with Great Lakes Review, please go ahead.

To touch on that question a little further, on the debt side, debt was up about $18 million sequentially.

Any comment for the reason for the increase?

I apologize, Greg.

Can you state your question again?

Sure.

Debt was up about $18 million sequentially.

Wondering if you could comment on the reason for the increase?

The reason for the increase was we had some, again, I would call it working capital requirements during the quarter, because we pay some year end bonuses, year end tax payments, we had a little bit of lengthening of receivables.

We saw opportunities in the price of the stock for repurchases.

As we saw opportunities with some of the lower prices of steel and bronze, albeit they have to work their way through the system now.

We were buying into some of our commodity based input costs.

That would probably explain the inventory is up to 103 million, about 12% increase year-over-year, doing some buying on the steel and bronze and whatever?

Absolutely, correct.

Your equity is down about $20 million again, primarily explained by the share repurchase.

Did the foreign currency have any impact there?

Yes, the foreign currency would have because the foreign currency rate we exchange our overseas balance sheets, was lower on December 31 than it was at September 30th for quite a few of our operations.

Can you comment on where your cash is by country, and what it is invested in?

The cash by country I would say a lot of it is overseas, and overseas and our ability to bring some of that back is influenced by obviously tax treaties, and taxes on dividends, and it is invested in just shorter term money market type funds, sweep accounts, and the like.

So no auction rates, or anything overseas?

No, no.

Can you comment on how the continued shift to direct distribution in Casket continues to progress here?

We are pretty well down the line on where we expect to be in the short run here.

We cover about 75% of our market right now with direct sales, and we are beginning the process of looking at our warehouses, and narrowing down both product lines, inventory, and perhaps locations.

That is a longer term strategy than short term.

You are not going to see impact within quarters, or too much within the fiscal year.

Your CapEx was 3.1 million in the quarter.

You had commented it might be 28 million for the year.

Any change to that forecast?

I think that the 28 million that we provided as our capital budget, I would tell you that right now we are expecting capital expenditures this fiscal year, at least right now we are projecting mid to high teens.

Okay.

One last one, on the Saueressig I know you made a comment that it actually had operating profit in the quarter, I presume the EBITDA was even better.

What have you done there to improve that position?

We have taken out a fair number of people frankly, both in Poland operations and German operations.

We don't see the benefit of that for several months here, because of the unions we operate with over there.

So there is a notice period.

It is a little longer than you would have in the US.

We expect to see that improve here towards the end of the second quarter.

Great.

Thank you.

Our next question will come from the line of James Lee with Potrero Capital, your line is open.

On the Casket business, could you talk about the competitive environments, specifically are you seeing more progressive pricing, and did you think you lost market share?

In terms of the Casket environment, it has become a more competitive environment pricing largely as it goes down right now.

We are seeing a trade down in our product mix.

We do think a lot of that, we have seen that for a while and we normally budget that in.

I think it is a little accelerated now.

I think that is economically driven.

Similarly I think we see some competition on the low end.

I don't think that it is much from our major competitors who are fairly, I would say price honest, but there are some small players in the marketplace, who are scavenging out, there was some lower end product, and causing us some problems.

Market share, when we talk about market share to your question, we have done a number of acquisitions over the last three years, to get to where we are today.

We will have some shake out in that, as we kind of decide to integrate product lines.

When we say market share, we probably lost market share to some extent, but not to competition as much as we may have lost it to our integration.

Thank you.

Thank you.

At this time, there are no additional questions in queue.

Please continue.

We would like to thank everyone for participating in our call, and we look forward to our results for the March quarter, and our conference call toward the end of April.

Thank you again and have a good morning.

Thank you.

Ladies and gentlemen, as a reminder this call will be available for replay after 12 PM Eastern Time today, through February 6, 2009 at 11:59 PM.

To access the AT&T Teleconference replay system at any time, dial 320-365-3844, using the access code of 980511.

Again that telephone number 320-365-3844, using access code 980511.

That does conclude our call for today.

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You may now disconnect.