Marcus Corp (MCS) 2005 Q1 法說會逐字稿

Good day, everyone, and welcome to the Marcus Corp. first quarter fiscal 2005 earnings conference call. This call is being recorded. With us today we have Chairman and Chief Executive Officer Mr. Stephen Marcus and Chief Financial Officer Mr. Douglas Neis. At this time, I will turn the call over to Mr. Neis for opening remarks. Please go ahead, Sir.

Thank you very much and welcome everybody to our fiscal 2005 first quarter conference call. As usual, I need to begin by stating that we plan on making a number of forward-looking statements on our call today. Our forward-looking statements could include but not be limited to statements about our use of the proceeds from our recently completed sale of the limited service lodging division; our future revenue and earnings expectations; our future RevPAR occupancy rates and room rate expectations for our hotels in regards division; our expectations about the quality, quality, and audience appeal of film products expected to be made available to us in the future; expectations about the future trends in the business group and leisure travel industry and in our markets; expectations and plans regarding growth in the number and type of our properties and facilities; and our expectations regarding future capital expenditures.

Of course, our actual results could differ materially from those projected or suggested by our forward-looking statements. Factors, risks, and uncertainties which could impact our ability to achieve our expectations are included in the risk factor section of our Form S3 shelf registration statement dated August 15, 2001 and 10-K and 10-Q filings which can be obtained from the SEC or the Company. We will also post all Regulation G disclosures when applicable on our Web site at www.Marcus.com.

With that behind us let's talk about another improved quarter for the Marcus Corp. Before discussing each division's revenues and operating income, I do want to touch on just a couple of global issues that impacted our first quarter comparisons to last year. The first and, obviously, the most obvious is that our presentation of our earnings statement balance sheet and segment data now treats our limited service lodging division as a discontinued operation. And prior year results have been restated to reflect the current year presentation. And while our focus on this conference call will be on our continuing operations I will make a few brief comments on the first quarter results for that division.

Before I get into our results from each division, let's first briefly -- let me comment on a couple of below the line items and their variations this quarter versus last year.

First one of note is that of interest expense which was down almost $600,000 for the quarter, continuing a trend we saw throughout last year. Again due primarily to reduced overall debt on our balance sheet. The summer is, historically, as you know a very strong cash flow period for us so you might expect we have paid down all of our short-term borrowings that were in place at the end of the fiscal year. In fact our overall debt to capitalization ratio at the end of the quarter was approximately 34 percent, down from 38 percent the end of May.

You'll also note that this year's first quarter results were favorably impacted by an increase in capital gains during the quarter compared to last year during the same period. The gains this quarter were primarily the result of the sale of a four screen theater in Beaver Dam, WI, and the sale of a former restaurant's parcel of land. As you've heard me state many times with a large amount of real estate in this Company it's not unusual for us to sell assets and most often for a net gain.

The timing of these periodic sales, however, can vary from quarter to quarter often resulting in noticeable swings in this line item on our earnings statement. We had the exact same kind of quarterly swings in this line item last year yet ended the year with approximately the same amount of capital gains in total during last year and the year before.

Although I can't say with certainty the same thing will happen this year, we do have additional access real estate that we may sell during fiscal 2005 and it's likely we will probably have a quarter this year where we will have -- where we will not have capital gains to the same extent that we did in the prior year.

Our total capital expenditures during the first quarter of fiscal 2005 totaled approximately $9 million which was really the same as last year at this same time. Nearly $5 million of the total came from our limited service lodging division and represented carryover renovation projects that we had previously committed to, plus continued construction of our downtown Chicago location, which was not included in the sale. The remaining $4 million incurred in this quarter was fairly evenly split between our theater and hotel divisions.

Please keep in mind that both of these divisions generally refrain from spending large portions of the capital budget during the summer so as not to disrupt our guests during this busy time period. As previously disclosed and noted again in our press release we have multiple theater expansion projects now underway, so we will certainly see the theater expenditures increase as we continue during the year.

Before I turn the call over to Steve, let me provide a few additional financial comments on each division, starting with the theater division. As you can see box office revenues were up 7.2 percent, concession revenues were up 8.1 percent for the quarter, driven by a particularly strong film performance right out of the gate with the Memorial Day weekend and carrying on through the middle of July.

Late July and August were not particular strong as film companies generally frontloaded their schedules this summer and at least in part in order to stay away from the competition of the television coverage of the Olympics. Total attendance increased 4.4 percent for the first quarter and our average admission price was up 2.6 percent for the quarter. Our average concession revenues per person were up 3.3 percent compared to last year during the first quarter.

Reduced film expense along with the continued strong emphasis on cost control enabled the Division to again increase operating margin this quarter by over a full percentage point compared to the first quarter of last year.

In our hotel and resort division, our overall hotel revenues were up 4.4 percent during the quarter, consistent with our reported RevPAR increase of 4.3 percent noted in the release. And while we don't disclose individual hotel performance for competitive reasons I will say that our hotels that count the individual business traveler as a primary customer accounted for the largest revenue increases this quarter, along with a nice improvement in revenues at our Miramonte resort due to their recent opening of our new spa.

Turning our attention to operating income, as you can see in the release we reported a record result and improved overall operating margin this quarter despite another $200,000 of startup costs and losses from our share of the Las Vegas venture, as that project's still getting ready to get started, and reduced margins from our time-share operation.

And, finally, as you look at our limited service lodging segments as noted in the segment data that we released, you can see that we had a very nice improvement in our operating results from our limited service lodging division as well. Now as we note, a good portion of the increased operating income arose through the requirement that we see depreciating these assets upon signing our agreements to sell La Quinta -- sell to La Quinta. Administrative costs for this division also were down significantly as well as we prepare for the potential closing of the sale. Having said that it still was a very good quarter for (indiscernible) suites compared to what was a rather disappointing summer last year as evidenced by our very healthy increase in RevPAR noted in the release.

As has been in the case in recent quarters, the increase in RevPAR this quarter was the result almost exclusively of increased occupancy as our average rates did not change materially from the prior year's first quarter.

Woodfield Suites also had a much improved quarter with RevPAR up 10.8 percent. As noted in the release we are currently estimating that we will report an after-tax gain on sale of this division for book purposes of approximately $75 million during our fiscal 2005 second quarter, subject to any final post closing adjustments and the determination of our final transaction costs.

A portion of the sales proceeds remain in escrow pending completion of certain customary transfer requirements. In our 8-K filings that we filed in conjunction with the sale, we have estimated that final net proceeds after-tax to be nearly $320 million pending the outcome of potential income tax deferrals that may be available to the Company at a later date.

With that, I will now turn the call over to Steve Marcus.

Thanks very much, Doug. I'll start my comments where Doug left off with our now sold limited service lodging division. When we got together in July, I indicated that our focus in the near-term would be threefold. First of all, successfully completing the transaction; secondly, meeting the needs of our many associates during this significant transaction for them; and third still running a business during the busiest travel season in the year.

As you know by now, we successfully closed the sale of substantially all of the assets of this division to La Quinta Corporation on Sept. 3rd, seven weeks after we signed and announced the deal. It took a great deal of time and effort on the part of many people in both organizations in order to make this happen. And we were very pleased with the professionalism of the La Quinta organization. And we're confident that our Royal Guest associates and franchisees of Baymont Inns & Suites Suites and Woodfield Suites are indeed in very good hands with La Quinta.

The transition for our associates has gone as well as anyone could have expected. For the majority, vast majority of our 2400 plus associates. The transition was relatively seamless. For our outstanding headquarters staff, however, our work continues. Some of our associates have been absorbed by our other businesses. Others have joined La Quinta at least on a temporary basis and we continue to work to find opportunities for everybody that was impacted by the sale.

And as you have seen in our improved first quarter results, we have kept our commitment to operating the division with the same focus on the guests that we have always applied in all our businesses.

With that, let's move onto our continuing businesses, starting with hotels and resorts division. We are pleased to report record operating income in this division despite a couple of items that Doug went over with you. We continue to see signs of business travel is indeed rebounding. Our overall occupancy at our hotels and resorts was up nearly 4 percentage points with our overall average rate decreasing just slightly. In keeping with past patterns for the industry as it recovers from a downturn increased occupancy typically comes first and then followed by increased average rate as demand continues to increase and put pressure on occupancies upward.

As we noted in our release, one of the most encouraging items we experienced during the quarter was the increases we experienced at our hotels that focus on the individual business traveler, particularly at the Pfister and the Hotel Phillips. The individual business traveler is the segment of our customer base that has been lagging in the market as you heard us say before so we are pleased to continue to see the steady progress being made at these particular hotels.

Our comment regarding the group business segment, which is the lifeblood of several of our other hotels -- most notably Grand Geneva and the Milwaukee Hilton -- is identical to what I told you in July. It continues to be improved but it's still somewhat sporadic. The corporate spending, certainly, is not back to pre-9/11 levels but is improving. The Chicago market is recovering slower than many other areas of the country and that's had some impact on Grand Geneva. But the advance bookings pace at all of our hotels is good so we should have a pretty good fall.

From a growth perspective, we continue to work on quite a few projects right now. We hope that several of them will come to fruition in the near future. The vast majority of the projects we're currently working on involve either management only or management plus some equity investment. I think this is a very exciting time in this industry and we're committed to growing the segment of our business.

Moving onto our largest division, what is now our largest division Marcus Theatres, we are pleased to be reporting another record quarter of operating results. As Doug indicated, we've continued to be very successful at converting a strong slate of movies into an even stronger bottom line performance. I am particularly pleased to highlight Doug's comment that film costs were down this quarter. As the industry adapts to the new paradigm of blockbuster pictures opening with huge box offices but then not running as long as films used to we put a great deal of emphasis on reducing what has been a rising cost of film rental.

We continued to make some headway this quarter and we will continue to work to control what is easily our single biggest expense in this business.

Of course, strong operating results still rely first and foremost on a strong slate of movies. In that respect Hollywood has generally been holding up their end of the bargain and while we would have liked to have seen a better flow of quality movies in the last weeks of the summer we can't complain about what was released during the first two months of our quarter.

September is shaping up to be like most Septembers, slowest month of the year in the movie business. As the kids get settled back in school, though, the pictures do start to get a little bit better. We think the upcoming fall movies look very good, starting with Shark Tale on October 1, and moving on from there to some of the other pictures that we noted in our release.

Every one of the pictures noted in the release looks like it might have a strong family and teen appeal which as an aside generally bodes well for our concession business.

As we head into the traditionally strong holiday season at the end of our second quarter and early in the third quarter time will really tell whether this year's lineup of movies will be able to keep up with last year's record performance. We think we could have a difficult time matching the results of the final installment of The Lord of The Rings that came out in December last year. So making the record start to this year is that much more important.

In the end we continue to take a long-term approach to this business knowing that movies will change from week to week and quarter to quarter. Bottom line is that we obviously continue to feel very good about our ability to leverage good film product and significant profits for the Company in the months and years ahead.

As I noted in our previous calls after 2 years of very little growth capital spent in this division, we're now once again focusing on opportunities to further strengthen our already strong market position. In addition to the projects noted in our release, we continue to review additional opportunities to develop new locations in and around our existing markets and to further strengthened our existing asset base. As always the actual timing of these plans can and will change as we proceed through the development process but like our hotels division we are committed to growing this business in the future.

As a cautionary note, with the business being strong, our competitors are also considering their expansion plans. And we as an industry and as a Company need to be careful to avoid overbuilding markets by putting theaters too close together.

With that I guess before I open it up for questions I would certainly be remiss if I didn't once again address the subject of what we're going to do with the significant proceeds from the Baymont sale. First of all there's still loose ends that have to be wrapped up before we can do anything. A relatively small portion of the funds are in escrow pending completion of certain transfer requirements. As Doug noted our final net proceeds are yet to be determined pending resolution of certain tax referrals that may be available to the Company. At the same time that steps are being taken to address these issues our board bored and management team are carefully reviewing the opportunities and the uses of the proceeds that may be available to us.

We will be patient and thorough in our review as we keep our focus on producing long-term and sustainable growth in shareholder value for the Marcus Corporation.

With that, at this time Doug and I would be happy to entertain any questions you may have.

(OPERATOR INSTRUCTIONS)

David Tarantino with Robert W. Baird.

Congratulations on a good quarter. Have a follow-up question on the use of proceeds, the release mentioned that you are considering some other opportunities in addition to using the proceeds to invest in hotels and theaters. I was wondering if you could give us some color on what that means?

Not really because all that means is what it really means is that we are not restricting what we're thinking about to only just the divisions we're in, that we may be looking at the possibility of putting a third light on the Company.

That's fair.

But it doesn't -- we have nothing specific in mind in that respect. I want to be clear about that.

Okay, great. Thank you. Could you provide an update on some of the hotel initiatives including the Las Vegas project and the downtown property in Chicago?

Sure. The Las Vegas project we're currently working with the architects and the contractor to get a final set of plans that meets the cost requirements of the project and we expect that by the end of the year we will be in the ground there. And open it at about 15 months after that.

Downtown Chicago construction is moving along. And the slight glitch if you want to call it that is that it would be my transaction; we now have the opportunity to review the branding of that property and that is what's currently -- what's going on currently. And whether there would have to be some changes done mainly would be in terms of level of furnishings that kind of thing will be dependent on where we finally lined up with the brand decisions.

Is there any update to the small market theater concept? Has that been something you can share some metrics on at this point or is there some thoughts on how you might grow that concept further?

We've got the first one really under construction right now. So I think we're going to have to wait to see when we get it -- trying to get it opened and see how it's working and then we will know all those metrics a little bit better.

Great. Thank you. Final question for Doug, what tax rates should we assume for continuing operations going forward?

Well the 39 1/2 percent rate that's inherent in here is a pretty good rate. We ended up last year at 39.2 and my expectation is that a good conservative safe rate is in that 39 1/2 range.

Greg Macosco (ph) with Lord Abbott.

Very nice quarter. Could you talk just a little bit about your expectations with regard to the theater area looking forward in terms of the -- just give us some color on the current and the holiday season. Given the level of films, kind of is -- are you expecting to see volume growth, based on that?

Well I guess I'll start and certainly from the fall we rattled off I think about four pictures in the release. All of them are animated or some version like that and it's really interesting. And those I think there's a Pixar picture in there. And there's pictures that have some pretty good buzz about them. So our guys are feeling pretty good about all four of those pictures that were in the release. And those are all October November pictures, Greg. Now there are certainly some live action pictures as well coming out and there's Taxi and Ladder 49 and it goes on and on. But certainly the ones that we identified were the ones that at least the initial buzz is it could be the top ones for this time period.

Now the holiday season's kind of has been moved up just like the summer to me the Christmas season, Thanksgiving seasons have been moved up into almost early November so some of these pictures are being released like The Incredibles in -- and another picture that we mentioned, Polar Express, which is really kind of a Christmas picture is being released on Nov. 10. So kind of interesting how Hollywood is doing that.

Now as you look beyond that, look into heading into Thanksgiving and the third quarter itself? Hard to tell. There are some -- I can rattle off some pictures for you such as there's the sequel to the -- I think Meet The Parents called Meet The Fockers that has some decent -- certainly a great lineup of stars. There is a sequel to Ocean's 11, Ocean's 12. And there's another picture called -- that could be a sleeper called Lemony Snicket, A Series of Unfortunate Events. And so there's plenty of pictures. It's that there's no -- I think we're going to have it's my understanding we're going to have an equal number of pictures being released -- that we can see. We don't see a Lord of The Rings, obviously.

There aren't many of those that come along very often so that's our concern is that this may not be able to (technical difficulty) quantity we don't know if we have that one star potential to pull a picture or not.

Thank you. With regard to the sale, I assume that 415 includes the Woodfield and those additional operations that you mentioned in the subsequent release. Is that correct?

That's correct. There were several joint pictures that were added to the deal subsequent that's correct.

(MULTIPLE SPEAKERS)

With Bill that was always part of the deal but several joint ventures were added.

And so the only thing left then is Chicago. Is that correct?

No there's still I believe four joint ventures. The (indiscernible) suites joint ventures that remain. They are being operated by a small team of folks kind of through our hotel and resort division. And we're going to take those one at a time and take a look at them to determine what the proper future steps are for each of those.

Nice results and thanks.

(OPERATOR INSTRUCTIONS) Todd Sutek (ph) with Toscata Capital.

Just wanted to come back to the first question or might have been one of the first questions where it talks about you guys are committed to opportunities out there and the board and management has looked at some opportunities. Without specifically identifying one particular opportunity that you might use as cash forward can you possibly paint a broader picture maybe three different things that you are looking at? Or is that possible at all?

I don't think we said that we were looking at anything specifically.

Well you say you are considering other opportunities. I mean, it's in the press release that you're considering. What I'm trying to find is instead of just one specific opportunity, can you paint a picture of opportunities that look attractive to you without identifying just one maybe two or three different opportunities out there?

I'll go first, Todd, in the case of first of all we're looking very carefully at both of our existing businesses. And so that, we are committed to both of those businesses. We want to grow both of those businesses. There are ways to grow both those businesses that require capital and some don't require as much capital when you start talking about management contracts and things along those lines. So, certainly, we're looking very closely at our capital needs in those two businesses.

Beyond that, we are not attempting to try to send any sort of message other than just to say that look we are going to be smart about this, we are going to be thorough about this. We will look at our existing businesses, we will discuss in terms, we will discuss what our other opportunities are. Steve mentioned that certainly in our history, we had other legs of the business and other legs on the stool and so we will certainly take a look at what opportunities could be presented to us. But beyond that, there's really not at this stage of the game yet, Todd, it's still a little early to really paint much more of a picture than that.

Okay. Then, let's talk about the specific businesses that you have right now. Looking out a year, two years from now and we can go in both those, do you see any material difference between the percentage of EBITDA or revenues between the two as a percentagewise a year from now and then two years from now? As a mix of business?

I would have to think that the hotel business EBITDA would be -- would probably grow in relation to the theater. And because it's been mainly because it's been very depressed for the last couple of years and so we see that coming back and with theaters having a more normal growth pattern. Now beyond that it will depend on decisions we make with respect to the deployment of capital.

And as regard to that, I agree wholeheartedly with what Steve said, in terms of just all things being equal, I think that the near-term upside in hotels just in terms of existing asset base is certainly probably could drive that dynamic. From a growth perspective the wild-card there will be how we would grow, because, for example, the theater business is predominantly driven by owned assets and which would typically have potentially larger EBITDA dollars. In pure dollars. But requires investments vs. the hotel division at least a lot of the growth opportunities we are pursuing right now may not require significant individual capital of any one project. And yet and so the dollars that -- and we will get a fee from that, we will get a management fee and maybe some equity earnings. So the raw dollars on any of those growth projects may not necessarily be so much that I would tip the balance. However the return on those types of investments is that, we would expect to return from that division in turn would improve as a result of that kind of change in the investment pattern a little bit.

So you'd get a higher return on your capital? Obviously, by doing that. One other question if I may and that just regards some of the acquisition activity in the movie theater business. And Doug, you and I might have talked about this at one time. What is your general feeling on why the private equity firms are taking over again the -- some of these cinema players instead of cinemas buying other cinemas? Any further thoughts on that it all? Why is this dynamic happening right now and not cinemas buying other cinemas?

That's a good question.

I hope it is.

The interesting thing is it's very pricey today. Multiples are very strong.

Acquisition multiples are strong?

Yes.

So I guess that means that the deeper pockets the better off the acquisition candidates are? The deeper the pockets of the acquirers is what I'm saying.

I am not sure I understand the question.

Well what I'm trying to drive at is it seems like to me that theaters should be acquiring theaters instead of just rolling these up again like they did several years ago and that seems to be what's happening again. That these private equity shops are taking the private again. I am wondering what the dynamics are behind that and what your thoughts are, but maybe that's not a question that we can talk about here.

Too much cheap money. I don't know.

Okay. All right, good, thanks guys. Keep up the nice work.

(OPERATOR INSTRUCTIONS)

Greg Macosco, Lord Abbott.

Just one question I forgot. Within the possibility of investment is it possible that you could take a larger equity position within existing relationships during (indiscernible). Is that on the table?

It really is not. You mean the deals that we're currently pursuing? Is that what your saying?

Both I mean existing deals that you -- existing relationships that you've already sort of developed. Would you perhaps take more equity if there was a partner within that group that might be interested in selling and if I look at the deal that you are looking at going forward, are those equity positions in general about the same more less than what you've done in the deals in the past?

Well I guess first of all, Greg, I would say that this model as it is is a relatively new one for us in the hotel and resort division. We've done in the Baymont Inns division, we have done a series of primarily 50-50 joint ventures. In general, going forward in the hotel resort division, the projects that we are looking at have less than 50 percent interest. And in some cases 10 percent smaller in that neck of the woods.

It's referred to as sliver equity.

So in general I don't see that necessarily changing. We certainly have the capability in certain projects. We -- in Vegas as an example we agreed and chose to go ahead with a 50 percent interest in that project. Of course, that's a unique project because of the nature of the pre selling efforts, the actual equity required was relatively small. So -- but generally speaking I don't know that just the fact that we have the cash will necessarily change our position in terms of where we see the best model going forward on some of these projects.

I think one of the -- just one observation. I mean the one thing we -- I think we know how to do well is small units replicated. As well as maintain that that's a strength of ours and somewhat real estate based. We're not a manufacturing company, we're not a banking company. And I wouldn't expect that we are going to go wandering off far afield on something that we don't know anything about.

Okay so I mean that -- does that -- I know you were in the restaurant business in the past. Does that remain as a possibility on the table?

Only because it sort of fits description that I just gave you but other things as well.

Yes, it does.

Other things as well.

And I guess I'm going to reiterate what Steve said earlier, too, I want this conversation to -- I mean there's nothing specific that we are working on right now. (MULTIPLE SPEAKERS) want to be clear about that.

And you do have -- just so I remember right -- 50 percent of the Las Vegas venture?

That's correct.

Larry Source with Robert W. Baird.

Congratulations, again, Steve and Doug, on two counts. The quarter of course and the early closure. A question regarding theaters. As you become potentially a larger player potentially a larger player with usage of some of this capital on and let's call it a regional, super regional, or even a national basis. Is there any inherent leverage that exists that helps you with the production companies? So let's say you're hypothetically No. 18 in the business in terms of size and for reasons of excess capital going to that division you (indiscernible) 15. Does that give you some inherent advantage in terms of your cost structure as it relates to now increased guidance?

Well I would have to say that -- first of all we're No. 9 in size, I think. With all these consolidations we keep moving up on the list, without even expanding ourselves. But, historically, it didn't seem to make much of a difference. We seem to have about the same film cost structure as virtually everybody else. But recently, we've noticed -- we don't see a particular reason for that. Because in most of the markets today in the industry if you have a 16 or an 18 flex somewhere you basically control a small market as it relates to exhibition. And so, we can't understand why there would be that kind of a (indiscernible).

Herb Buckbinder with Wachovia Securities.

Quick question. Could you give us an idea what the investment in a number of these UltraScreens and looking at your existing market how many more UltraScreens you possibly could construct right out of your regular market to do some more?

Well I think it's difficult to assess it exactly as there's a slightly different take on this. It's more what the Ultrascreen does for the entire complex. So it's hard to pin it. It gives us a competitive edge that acts as a magnet to bring people to the theater. But, as to whether you would say well that particular screen based on its gross gives you a particular return on investment I am not sure that we ever calculated it quite that way.

Well what we do, Herb, is again to be specific. It's not that the picture that plays on the UltraScreen wouldn't have played at that theater so but the fact is that we have to kind of look at it as a complex in total. It's a significant investment, it's not something that we'd just willy nilly put it in multiple ones in given markets so we've been very selective about it. But, clearly, the fact that we -- and we just recently announced one up in Oakdale, Minnesota, we have been very satisfied and very happy with what it's done for complexes. And we think it's given a definite competitive advantage and so we have been certainly selective from that perspective as well. We see it as a key competitive advantage for us.

Obviously you can't put these in in the small towns and there's a limit to how many larger metropolitan areas you actually have theaters in. That's why I was asking if there is a reasonable limit as to how many of these you could put up, given your existing territory?

That's a fair statement, Herb, you're exactly right. There aren't, it's not an unlimited number by any means.

Do you think you can do 5 5 to 10 more of these, is that realistic? Or I mean -- does that sound reasonable or is that --?

I think 5 to 10 is in the ballpark.

But what is the actual investment to construct these today?

Probably on average, it's probably double, at least double the cost of an average screen which an average screen could cost -- depending on when you build it part of the whole complex an average screen could cost three-quarters of $1 million and it's double that or even a little bit more.

David Tarantino, Robert W. Baird.

Just a quick follow-up. How do you plan on accounting for the four remaining JVs that weren't included in the sale of LSL?

At this point in time we expect to continue to call those discontinued operations.

Bill Nascovits (ph) with Heartland Advisers.

Congratulations. One of the options of course is dividending part of this out to shareholders. Would you view that as a strong possibility?

I guess it could be. Sure. There will be a bunch of options at some point that management will bring forward as put on the table for the board to think about and I would guess the board will come back with perhaps some others. And then we will have a dialogue about it.

I think that at this stage of the game right now, Bill, am not sure you can put any one strong -- sure, you can say it's strong. But I would list a bunch of other things as strong as well so I'm not sure you can put it ahead of anything else at this stage of the game.

(technical difficulty) any additional closing comments.

Well thank you, everybody, once again, for joining us. We hope we may see some of you at our annual shareholders meeting at the Madison Hilton on Oct. 6, 10:00 and if not we will be back with you in December when we release our second quarter results. Thanks, again, for joining us today.

That does conclude today's conference. Thank you for your participation. You may disconnect at this time.