MasTec Inc (MTZ) 2004 Q4 法說會逐字稿

Good day and welcome to MasTec's 2005 4th quarter earnings conference call.

Let me remind participants that today's call is being recorded. The following statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. In these communications we may make certain statements that are forward-looking such as statements regarding MasTec's future results and plans and anticipated trends in the industries and economies in which MasTec operates. These forward-looking statements are the Company's expectations on the day of the initial broadcast of this conference call and the Company will make no effort to update these expectations based on subsequent events or knowledge.

These forward-looking statements are based on MasTec's current expectations and are subject to a number of risks, uncertainties and assumptions including that our revenue may differ from that projected, that we may be further impacted by slowdowns, postponements or cancellations in our clients' businesses or deterioration in our clients' financial condition, that our targeted service markets may not expand as we anticipate, that our reserves and allowances may be inadequate or the carrying values of our assets may be impaired, that the outcome of pending litigation may be adverse to us, and that we may experience increased costs associated with realigning our business or may be unsuccessful in those efforts. Should 1 or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from results expressed or implied in any forward-looking statement made by the Company in these communications. These and other risks, uncertainties and assumptions are detailed in documents filed by the Company with the Securities and Exchange Commission. MasTec does not undertake any obligation to revise these forward-looking statements to reflect future events or circumstances. AT this time I'd like to turn the call over to Marc Lewis, MasTec's Vice President of Investor Relations. Marc?

Good morning. Welcome to MasTec's earnings conference call in which we will discuss our results for the fourth quarter and year ended December 31, 2004. With us today we have, Austin Shanfelter, MasTec's President and Chief Executive Officer, and Bob Campbell, Executive Vice President and Chief Financial Officer.

The format of the call today will be opening remarks by Austin, followed by a few comments from Bob. Financial discussions will be limited to GAAP-based financial items and their derivatives. These discussions will be followed by a Q and A period. We expect the call to last for approximately 1 hour. Austin?

Thank you, Marc, and good morning. Welcome to our call. Today we have a number of items to report. I want to start by highlighting the accomplishments of 2004, then Bob and I will talk about some items in detail.

The first point is about people. In all the issues that we have successfully worked through in 2004, most of them were about people. In some cases we did not have the right people, in other cases we did not have enough people. Largely through recruiting efforts of our new CFO and our Controller, we have made significant and positive changes to our financial and operational accounting personnel. We've also been able to upgrade our field operations staff and management to support our customers. The process that we've been through in the last 12 months has been extremely expensive and time-consuming. And without a doubt it's put on a drain on our bottom line performance. Our management team will focus on strong financial reporting, improving the business.

The first quarter ended yesterday. We are back on a timely filing basis and it is back to managing our business for profit. We will still have some cleanup work, but the vast majority of the 1-time cost items are now behind us. Once again, the management focus is now on managing the business. We continue to closely evaluate every division, office, contract, and manager to ensure the Company's policies and procedures and financial expectations are met. We are very focused on DSOs, which are already showing improvement.

MasTec continues to develop opportunities related to fiber upgrades for both Verizon and our RUS customers such as DacTel (ph), Alden(ph), and Golden West. We are currently working in Florida, Texas, California, Pennsylvania, Delaware, North and South Dakota, and Michigan, and will begin work in Virginia in June. Additionally, we are seeing expansion in capital expenditures in our existing MSA contracts, and some of that work includes some of the first stages of fiber deployment.

As we have discussed in prior calls, our installation to the home services for video delivery to our - - to our customers continues to grow. We expect continued growth and expansion of the work allocated to MasTec. The Company currently does this work in 14 states for both satellite and cable customers. Even though we are entering into a time of the year when we ramp up activities and use working capital to begin building receivables, our liquidity remains adequate. As of March 29th, we had liquidity of $33 million. We believe that our access to financial markets is very favorable, and will fully support our growth opportunities.

Finally, we have strong credit -worthy customer base which we have a longstanding relationship with. We have fully returned to our base of highly qualified customers with end users. Revenues have grown compared to 2003, despite the wind down of cable upgrades and the elimination of our Brazilian and Network Service operations.

I'd now like to turn the call over to Bob so he can discuss the initial observations, along with some of the financial details of the quarter. Bob.

Thank you, Austin. Today I will cover our full year 2004 results and fourth quarter results, plus I have a few comments about financial reporting, financial controls, and our new and improved financial management team.

First, the numbers. For the full year of 2004, MasTec revenue was 914 million, up 10% over the 828 million we had last year. We had a net loss of 49 million, or $1.02 loss per share for the full year of 2004. This was slightly better than the 52 million net loss, or $1.09 per share in 2003. For 2004, the net loss from continuing operations was 26 million, or $0.54 per share loss compared to a loss from continuing operations in 2003 of 24 million, or $0.51 per share. I will cover some full-year 2004 details in a moment.

For the fourth quarter, revenue was up 5% from the prior year. The fourth quarter net loss was 6.9 million, compared to 55 million in the fourth quarter a year ago. The loss from continuing operations was 5.8 million, compared to a loss of 31million in the same quarter last year. The loss from discontinued operations for the fourth quarter of '04 was 1.1 million compared to a $24 million loss in the same quarter in 2003.

Now I'm going to switch back to the full year 2004 P&L with a few comments. As I mentioned, full year revenue was up 10%, or up $86 million. The increase in revenue was due to growth with DirecTV and with Verizon, or primarily with those 2. Our cost of revenue as a percent of revenue for 2004 was 90.7%, compared to 90% for 2003. This reflects consistency between the periods. This is, of course, our most significant area of opportunity.

SG&A expenses in dollars increased in 2004 compared to 2003. Professional fees increased in 2004 by $4.5 million, mainly due to increased audit fees, Sarbanes-Oxley audit and consulting fees, along with increased legal fees. However, as a percent of revenue, SG&A dropped from 8.5% a year ago down to 8.2% for 2004. The $26 million net loss from continuing operations was hurt by low gross margins, a $13 million increase in insurance costs, mostly in Q1, and the $4.5 million increase in professional fees that I mentioned. Needless to say management is working hard to improve all of these areas.

For the fourth quarter our 10 largest customers were DirecTV, 26%, Verizon, 11%. And if you remember the third quarter call, prior to the third quarter, Verizon was not even in our top 10. BellSouth was 7%, Sprint 6 %, Comcast 5 %, Progress Industry - - Energy 3%, and then Florida Power and Light, Encore TXU, Qwest, US West and Florida DOT were all at 2% of revenue.

Regarding liquidity and banking, please note the following: As the Company ramps up operations for the year MasTec has adequate liquidity and at March 29th, we had approximately $39 million of liquidity. The Company defines liquidity as bank cash on hand, plus availability on our revolving credit agreements. The Company's senior credit facility was amended on March 17th with some minor availability enhancements and revised financial covenants. MasTec is in compliance with all of its financial covenants.

At the end of the year, North American accounts receivable DSO, or days sales outstanding, was 79 days. That compares to 83 days at the end of the third quarter and 89 days at the - - at year end 2003. Our DSO calculation includes contractual retainage and is calculated based upon 90-day revenue trends. As a point of information, our - - our - - our 2005 target or goal is 70-day DSO, and our stretch goal is to get DSOs into the 60s. I expect to see a further DSO improvement as a result of changes in customer mix and from additional focus on our collections.

Now I would like to address briefly financial reporting, financial controls, and our financial management team. In 2004, the Company was focused on getting current on all of its SEC filing requirements and on complying with new Sarbanes-Oxley requirements. We accomplished both of these tasks as a result of yesterday's 10-K filing. In our 2004 10-K, we identified only 1 material weakness which relates to inventory pricing management at our ITS, or government business. We have already addressed this material weakness by implementing an Oracle inventory control system and with other controls. It should be noted that we have improved significantly from our 2003 internal control assessment in which we reported 5 material weaknesses.

Finally, I'd like to share with you that we have been very busy and have had real success in strengthening our financial management team, both at corporate and throughout all the divisions in the Company. Of the top 10 financial management positions at MasTec, we have - - we have - - as of last week we have filled all 10 positions. That may not sound like much, but some of these positions were either open during parts of 2004 or they are newly created to improve our financial management capability. Of the top 10 financial management positions at MasTec, 8 of the individuals have joined the Company since June of 2004. What I'm incredibly excited about is the experience levels and the backgrounds of the individuals we've been able to attract. From day 1 I've gotten just great Board and CEO support for building a quality financial management team and on an accelerated basis.

At this point I'd like to turn the call back to Austin.

Thanks, Bob. And here are a few key points that I want to leave you with prior to the question-and-answer session. No question, 2004 was a difficult year for us, as we began rebuilding our financial reporting capabilities and increasing our financial staff. Many have worked tireless hours to get this financial reporting issue behind us. Fiber to the premise is real. It's being deployed across the country, and we are participating. While we cannot talk much publicly about our customers' deployment, schedules, and plans we are currently working on contracts in 8 states. Our install to the home model has continued to grow and we expect additional growth through market share gains and potential changes in customer deployment plans that will favor MasTec.

Finally, we want to thank our team members, our customers, and our financial partners for their continued support and hard work and we appreciate our investors for their continued confidence in MasTec. In order to assure that we have enough time for the question-and-answer session I will now turn the call back to the conference operator so we can devote the remaining time to our listeners' questions.

Thank you. The question-and-answer session will be conducted electronically. If you would like to ask a question please do so by pressing the star or asterisk key followed by the digit 1. If you are using a speaker phone please be sure that your mute function is turned off to allow your signal to reach our equipment. We'll proceed in the order that you signal and we'll take as many questions as time permits. Once again, please signal by pressing star 1.

We'll take our first question from Romeo Reyes of Jeffries & Company.

Good morning, gentlemen. I just wanted to ask you a little bit about the liquidity that you talked about. I heard 2 numbers. I heard 33 million from Austin. I heard 39 million from Bob. Can you clarify whether it's 33 or 39?

It's 33, Romeo.

Okay. So it's $33 million. And can you further break that out between what's cash on hand, unrestricted, and also the availability on the credit facility?

I believe the numbers are around $20 million, $24 million of cash, and the rest is the - - is what's remaining on the credit facility.

Okay. Now, Austin, the credit facility as of December, I guess, December 31st of '04, you had 25.5 million available. So does that imply that, I guess based on the March amendment, that your liquidity from the credit facility has been reduced?

I think what you should imply from it, Romeo, is the fact that we are in a ramp-up period of time to support some growth in the business, as you can see through our revenues. And that we are definitely rolling out new work forces, so we are using some of the capital to do that, and as days sales outstanding reduce I think you'll see our cash and liquidity improve as we go forward.

Okay. That's fair. In terms of the - - you know, to get a clean number for 2004, should we just look at backing out the professional fees and the increase in insurance expense, or do you? - - I mean, because we're trying to figure out what sort of the base should be for '04 and as we look into '05. Should we net out $17 million - $17.5 million for 2004, Bob, so we have normalized, you know, recurring number?

Romeo, I think that's reasonable. First, on professional fees, I think we set a world's record last year for audit and Sarbanes and to some degree legal fees. And while they will continue, I think in all cases they'll continue at a much lower rate for 2005.

The 13 million of insurance increase, is that - - that's nonrecurring as well as a 1-time expense?

Yeah, most of that was in the first quarter, and it was a result of an actuarial adjustment looking at trends and adverse development. But in reality most of that related -- almost all of that related to some very old Workers' Comp accident years.

Okay. And now, with respect to either - - both the cost of goods sold and the SG&A, are there any other 1-time noncash, you know, items in there that we should be backing out?

Well, there's 1 thing that we have disclosed for 2004. There's almost $8 million of accruals for losses on contracts in that cost of sales, or cost of revenue number. You know, the prior number - - the number in '03 was like 28 million, and we don't forecast that, but, of course, it's management's goal for that to be zero.

Okay. That's fine. And just another quick question here.

What sort of gross margins do you think you can achieve in '05? What sort of - - when you look at SG&A what sort of percentage of revenue do you think is a reasonable target for SG&A?

We're not providing that kind of specific guidance. I mean, it would be fair to say, especially relative to gross margin that a 10% gross margin is certainly not the Company's goal.Nor - - nor as - - if you go back and look at our history, you know, you'll find that we enjoyed dramatically better gross margins than that. That's the big - - you know, now that we have had our filings done and gotten some other issues behind us, the biggest focus in MasTec is on margin improvement.

How quickly --. go ahead. Sorry.

Having said that we're not going to provide a specific goal or target or guidance at this point on margins.

How quickly can you get back to your historical margins?

What you're asking, the same question. I think that MasTec will continue to work down the path of getting off of having to repair some of the things we had to do and having some of the other expenses, Romeo, and we will work really diligently to not only improve our margins, to get back to historical margins. But also, that's going to be our key focus for every day in and day out of our activities. But also we will be reducing some other overhead costs that will allow us to get back to those historic margins. The time frame of that we're just not talking about at this time.

Alright. CapEx, what do you expect? Do you expect similar numbers to last year?

In our 10-K we reported CapEx to be expected around $10 to 15 million. We have, number 1, the availability of doing leasing rather than CapEx, is one of the opportunities we have. And also, as the businesses do ramp up in some of the sectors that we have in our new customer mix we will evaluate that as we go forward with opportunities presenting themselves.

Yeah. 1 last question, I promise here. If you look at 2004 you guys were pretty much free cash flow break even, cash flow from operations, less CapEx was pretty much a nil, so you didn't burn any cash despite the fact that you had all these professional fees and the insurance expenses. Is it reasonable to expect that, you know, that 17 - - that you could do at least $17.5 million of free cash flow in '05?

Romeo, of course, we don't guide to cash flow, number 1. But number 2, it's reasonable to believe that as MasTec pays attention to its DSOs, pays attention to its margins in its businesses that items such as those will definitely be improving.

Okay, great. Thank you.

Thank you. Once again if you would like to ask a question please do so by pressing the star key followed by the digit 1. As a reminder, if you're using a speaker phone please make sure your mute button is turned off so that your signal may reach our equipment. Again, that's star 1 for questions.

We'll go next to Alan Metroni with Copper Beach Capital.

Hi. Thank you. Just a couple of quick questions.

You say in your forecast for '05 you're expecting, I guess, up revenues and profitability. Can you maybe give us a framework of what kind of - - where the revenue growth should come from, which segments, and maybe a framework of what kind of revenue growth you're targeting?

I think, Alan. This is Austin. I think that what you're going to see is consistent revenue growth in the mixes that we've had growth in both in the third quarter and this quarter. I think you'll continue to see it in the telecommunications space and in the satellite cable provider install to the home space. I think that the energy markets are definitely on an uptick up, but broadband is a rebuild, an upgrade is definitely trending downwards, and government work itself, we're just not taking on new areas of growth at this time. So, you know, you'll definitely see it in the areas that have been affecting the Company in the last 2 quarters.

Also, it was difficult to get to some of the numbers I guess, because in the fourth quarter it looks like you put Network Services in discontinued ops and restated in essence the first few quarters' revenue and earnings. Is there a way, maybe, you can file as an 8-K the first 4 quarter - - you know, maybe the full year quarterly P&L's that have the restated numbers in them so we can get - - as well as end market segment breakdown so we can get to the right numbers or just so we can have a baseline to work with?

Well, you know, 1 really important point of clarification, Alan, is we reclassified into discontinued operations Brazil and Network Services. We did not restate.

Right. What I'm wondering, is if I take the 4 quarter revenues that you reported they don't add up to 913, and I'm trying to get back - - I know - - and I can't get the cost of sales and the SG&A quarterly, all of them, I guess Network Services, is now out of the numbers. If it's possible, maybe later in the day or some time next week you could file as an 8-K, or just talk off-line to get the data so we can get really quarterly '04's on an apples to apples basis so that when we start reporting '05 we see the numbers ex-Network Services and Brazil, which they're going to be, as well as '04.

First of all, Alan, we wouldn't be able to talk about this off-line, but secondly, we will review this issue and if it deems a 8-K response we'll definitely look at that.

I appreciate that.

Also, in this "K", you talk about, I guess, the deferred tax asset. You speak about that you're looking to sell a division involving the sale of 1 of the divisions on page 35 of the 10-K, that in essence you kept the deferred tax asset to a high level, seeing that it looks like you're going to be able to generate some money involving the sale of 1 of your divisions is 1 of your divisions up for sale or classified as deemed for sale in discontinued ops?

The answer is no. No to anything being for sale.

Which division does this refer to, then?

I'm not going to comment on that. But let me just talk a little bit about the deferred tax asset of 53 point something million.

While we're not adding to that deferred tax asset, because of our additional losses, and as a point of information, we have 18 years to use our $160 million tax loss carry forward. Okay? So obviously we believe it's a valid and valuable asset. And proper accounting, GAAP accounting, requires that - - any company to have reasonable assurance. They have a tax strategy to make sure that NOL can be utilized. We have, again, as I've mentioned, we have 18 years to use it, and we do have some tax strategies that we are not required to execute that could fully protect the NOL and that deferred tax asset. But GAAP accounting does not require us to execute the strategy, you know, and we don't need to deal with -- but we basically have 18 years to use it, and 1 of 2 things will happen. We'll either use the NOL - - the 18 years of good earnings, or we'll adopt or execute 1 or more of our tax strategies to use it.

Okay. Also, your --.

Did that answer the question?

Yeah, I think it's fine. Thank you. I appreciate that. Your backlog was 940 million. What was it last quarter ex -Network Services?

We didn't do it quarterly. We talked about it in general. From the year end last year it was about $1.2 billion.

Okay.

And the change is basically from change in customer mix. We're going from a long-term project type of work that we had with Comcast and the rebuilds to more of an overall MSA model throughout the firm, and so we've just been incredibly conservative in our approach to backlog and flat-lining it at this point.

How much of the Comcast work -- you did about 112, 113 million plus at Comcast in '04, as a good customer. How much of that work do you think is recurring into '05? I know Viacom has spoke about seeing a big drop-off, you know, calendar year over calender year from Viacom where (inaudible) from Comcast work as they finish their upgrade work. Can you give us a sence of how much of that 113 - - ?

Well I think you've seen that drop-off from MasTec even into, you know, third quarter of last year and definitely see a continued drop-off in the fourth quarter. Comcast has moved to a level of about 5% at this particular point. I expect it to decline down to probably a 2 to 3% level going forward in the next quarters to come.

Okay. That's fair. That's helpful. Thank you.

And then lastly, if I can, someone asked the question earlier, I think Romeo, regarding gross margins. I guess it's harder to do that now, versus the past to look apples to apples, given the deprec - - you're moving the expense cost up into cost of revenue from D&A. Your depreciation used to be 50 million, 100 million, whatever it was, going back several years, now it's down to almost 12 million a year and it sounds like in the "K" it's going to get lower, on a run rate basis. And I assume the leasing costs then are put in cost of revenue as they move up the income statement as you pay for leasing. So it's hard to get an apples to apples gross margin given that you're leasing so much equipment now versus purchasing. Can you give us a sense of how much that impacts historical versus gross - - potential gross margins versus historical gross margins? Maybe it's better to look at operating margins now given that you're moving the D&A cost up there. You know what I'm saying?

We probably aren't going to tell you how to analyze it, but it's probably reasonable to combine the 2 and then you'll be picking up, you know, whatever shift there is from owned assets to leased assets. But if you look at the -- but there's been a considerable push over the last year or 2 to fully utilize the fleet and the equipment and we have sold off a tremendous amount of equipment. But I think you're right, if you combine the 2, you'll probably get something that's analytically better.

But I think 1 of the advantages to go to the leased equipment now compared to what it's ever been in the industry we had is that now we can tie in maintenance costs and other costs of running the vehicle and operating the vehicle on a regular basis, regular services, into the lease, and have a very streamlined and consistent predictable cost for managing our fleet.

Got it. Okay. Thank you.

Thank you, Alan.

Thank you. We'll take our next question from Jon Rogers of D.A. Davidson.

Good morning. I was wondering, you gave us the revenue numbers by customer for the quarter. Do you have those for the full year?

Yes, we do.

Can you share them with us?

I'm getting a piece of paper. I apologize.

That's all right.

Okay. On a full-year basis, the top ten customers are DirecTV, 21 %. Comcast, 12. BellSouth, 6. Sprint, 6. Verizon, 5. Progress Energy, 3. Encore TXU, 3. Florida Power and Light, 3. And then the last 2 are at 2 %, Qwest, U.S. West, and Florida D.O.T.

Okay. Great. And then I guess, Austin, just in terms of the fiber to the home project coming out into '05. I know you can't talk too much about specific customer relationships, but are there significant capital programs that may be initiated this year, and can you give us a sense of timing on when we may see announcements on any of that? I presume that you're submitting proposals now.

Well, I think that the public information that's out there has been pretty consistent. That the 1 customer -- the one RBOC that's doing the project is very consistent on what they're doing and how they're coming at it. The 2 major other ones, BellSouth and SBC, they have announced pretty fully what their plans are and I do think it's the second half to fourth quarter event moving into '06.

Okay. So possibly announcements then. Okay. Great. Thank you.

Thank you.

We'll take our next question from David Lieberman with South Point Capital.

Hey, good morning. I was just wondering if you can just tell us sequentially why the gross profit margin - - what was the, you know, do - - on a percent basis, the change there?

A year ago it was 10% gross margin, 90% cost of revenue, and it was 90 .7% cost of revenue this year. Therefore, a gross margin of 9.3%.

Okay. I was more looking for, let's say, from the September quarter to the December quarter. Where the gross margin came down a little bit, what was the driver of that? Percent-wise.

And I believe the gross profit was, what, 10.2 %, I believe, for the fourth quarter.

Right.

There were some loss accruals in the fourth quarter that would have contributed to that. Beyond that I'm not sure I can analyze it down to that last few, you know, parts of a - - of 1%

Okay, and then sequentially in the SG&A, what's the difference there? It seems about $3 million in growth.

That would absolutely go to professional fees and some of the extra costs we had involved with getting everything current and, of course, the S-Ox issue and those type of issues.

So those - - it sounded like you were saying before those should materially decrease next year.

The bottom line is is that all your, you know, for us it's been an 18-month process to be- - to get the S-Ox implemented, and the enormous amount of costs that came at the end of the process was quite a bit. And -- but next year we just -- we're maintaining the existing systems, not building it, and therefore the costs should be reduced substantially in future years.

Okay. It seems like you had some really solid growth from Verizon in Q4. Do you see the quarterly revenue from Verizon continuing to grow?

I think our trend is what it's been over the last really 3 quarters, and I believe that as seasonality starts affecting us throughout the year, you know, historically second and third quarters are our best quarters, and productivity levels are higher, just because of weather issues. And the fact that, you know, we are ramping up in some more states as the year progresses, which we discussed in this call, that I think that would be a likely scenario.

Okay. And last question, it looks like, although the backlog, you know, has come down, you seem to be saying don't read too much into that decline because it's just getting revenue from a different type of contract.

I think we've been very - - the facts are, our revenue base has been growing even though we've discontinued the Brazilian operation, Network Services, and broadband has been reduced as far as it has, so the facts are that the revenue has grown.

Secondly, you know, I think our trends in the 2 larger business opportunities that we have, fiber to the home and install to the home, are definitely showing growth quarter over quarter and will continue to do so.

Okay, great. Thank you.

Once again, that's star 1 if you'd like to ask a question. Star 1. We'll take our next question from Oa Ahmad.

Good morning, gentlemen. You guys have done pretty good jobs since - - since (inaudible) this Company. Just - - my question relates back to the professional fees. Just, kind of, could you break it down by quarter what it was for S-Ox and Sarbanes-Oxley and compliance and everything?

No, we don't have the numbers that way. You know I think that what you - - the larger expenditure was in the second half compared to the first 18 months. I think you provide it 9 to 9, and I think if you take two-thirds of the cost and put it in the second part, but that's a guesstimate. But we don't have it broken down quarter after quarter.

Okay. And now just going back to margin issue. I mean you guys say you don't exactly provide guidance going forward but can you at least talk about how your contracts you're winning now, how you're bidding for them, how those are panning out in terms of margins?

Well, a lot of the things that are going on right now is not really an active bidding process. Many of the things we're dealing with at this particular point, the opportunities where we have growth are negotiated or just expansions on existing contracts that we've already had in place. So there's - - the bottom line is that we feel that we have good and adequate pricing, you know, our job is for us here is to pull down the overhead costs and do some more consolidation in back offices. Number 1, to have a more streamlined financial process, but number 2, then to cut some costs out of the daily operations.

But for us right now, as we grow with the DirecTV client, the numbers are established, have been established, and as we grow with the RBOC customers those numbers are established and have been established.

Okay. And just, you know, I think someone earlier asked the question if you could file an 8-K or something breaking out the fourth quarter numbers. I would like to add, I would like to see that, too if that is possible.

Here again, we will not commit to filing the 8-K or not to file an 8-K. We will review the item very closely, and we will make the appropriate decision.

All right. Thank you.

Thank you. Once again, that's star 1 if you would like to ask a question. Now we'll take a follow-up from Alan Metroni of Copper Beach Capital.

Hi. Thank you. How much cash did you take in from the settlement of the Sierra Touch America, and when did that hit the P&L?

I don't believe, Alan, that's been disclosed, and the timing of that issue has been over a couple of different quarters, because of different -- just because of the legal process of it.

Viacom said it was --.

it was in 2004.

I'm sorry?

The whole amount was in 2004, and I believe it was in the third and fourth quarters, but I don't have the breakdown.

Okay. Also, given that the first quarter is now done, finished yesterday, I guess, or are you guys actually - - you finish the end of the week or you finish yesterday?

We finished yesterday.

Can you give us a sense of how the first quarter came out in revenues or anything given that it's over?

Alan, I think that, the reality, as you can well imagine, some of the announcements yesterday with some 400 companies not being able to file because of the S-Ox process and the audits, we've been truly concentrating on locking down this process and not fine-tuning the numbers from the first quarter. We don't have our final numbers in from the field for the last month of the quarter, so I'm reluctant to speak about the first quarter right at this point. The minute that we have data points that are very -- that are very factual, we will get them out to the markets immediately.

Excellent. Also, you guys, because of the late "K" filing last year, I guess you weren't qualified in a number of states for government work. Now that you're filed on time, when can you requalify, or are you looking to requalify or is that -- can you just give us a sense of what's going on?

We will move very quickly to recall requalify, in the states that we want to continue relationships with on the ITS and DOT work in the year to come. That should take us about 30 days.

Thank you.

Thank you. It appears there are no further questions at this time. I'd like to turn the conference back over to you, Mr. Shanfelter, for any additional or closing remarks.

We thank everyone for joining the call today, and we look forward to working with you with a very successful upcoming year. Thank you very much.

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