New York Times Co (NYT) 2012 Q2 法說會逐字稿

Good day, everyone, and welcome to the New York Times Company's second-quarter earnings 2012 conference call.

As a note, today's conference is being recorded.

And now, at this time, it is my pleasure to turn the conference over to your host, Ms. Paula Schwartz.

Ma'am, you may begin.

Thank you, and good morning, everyone.

Welcome to our second-quarter 2012 earnings conference call.

We have several members of our senior management team here to discuss our results with you, including Arthur Sulzberger, Jr., Chairman and Chief Executive Officer; Jim Follo, Senior Vice President and Chief Financial Officer; Denise Warren, Senior Vice President and Chief Advertising Officer of The New York Times Media Group, and General Manager, NYTimes.com; and Roland Caputo, Senior Vice President and Chief Financial Officer, the New York Times Media Group.

All of the comparisons on this conference call will be for the second quarter of 2012 to the second quarter of 2011, unless otherwise stated.

Our discussion will include forward-looking statements, and our actual results may differ from those predicted.

Some of the factors that may cause them to differ are included in our 2011 10-K.

Our presentation will also include non-GAAP financial measures, and we have provided reconciliation to the most comparable GAAP measures in our earnings press release, which is available on our corporate website at www.nytco.com.

Now I will turn the call over to Arthur Sulzberger.

Thank you, Paula, and good morning, everyone.

Our second-quarter results reflect the ongoing progress we have made in repositioning The Times Company for the future, led by another quarter of solid circulation revenue growth, driven by digital subscriptions.

And while total advertising revenues declined, due in part to macroeconomic headwinds, we did see sequential improvement in digital ad trends in the quarter, particularly at the About Group.

At this time last year, we provided you the first full-quarter results for paid digital subs to The Times, which then totaled approximately 281,000.

Since then, paid digital subscription for The Times Media Group have almost doubled, and are now over 0.5 million as of the end of the 2012 second quarter.

We were very pleased with the initial numbers, and are even more pleased to see that growth continue beyond the first anniversary of our launch.

With the launch of BostonGlobe.com, and of digital packages at the International Herald Tribune; as well as a long list of products, technology, and marketing initiatives across all of our properties, we have made significant progress over the past year in growing our new consumer revenue stream and positioning our Company for an increasingly multiplatform future.

A great deal of exciting work continues, as we remain focused on diversifying our revenue streams, strengthening our digital businesses, and pursuing new ways to extend our brands.

We believe there is more opportunity for further growth in this revenue stream and our subscriber count.

Last month, The Times launched a Chinese language website, which can be found at the URL CN.

NYTimes.com.

The site is designed to bring Times journalism to an audience that is educated, affluent, and increasingly connected to the rest of the world.

We have seen strong interest from advertisers and launched with several luxury brands, including Cartier, Prada, Bloomingdale's, and Louis Vuitton.

This is the first step in our new international strategy, which, in conjunction with the International Herald Tribune, will extend the global reach of The Times and expand our international audience.

Even as we make these investments, disciplined cost control, as Jim will explain in more detail, remains a critical part of managing our business, as we continue to focus on our high-quality journalism while further reshaping our Company.

Our expense management efforts are focused on the careful balancing of investments to support our digital and journalistic initiatives, including significant coverage of the Olympics and the presidential election, while also finding additional cost efficiencies across the organization, primarily on the legacy side of our business.

Our strong liquidity position enables us to continue our transformation.

And our pursuit of a strategy that focuses on the development and the diversification of our digital products and capabilities to meet changing audience and changing advertiser demand.

At the end of the second quarter, we named two new directors to our Board -- Joi Ito and Brian McAndrews, who each bring significant digital expertise to the table; and in particular, offer extensive insight on the intersection of technology and content.

Joi and Brian's strengths will further enhance our existing slate of accomplished Board members.

Our Board has also made meaningful progress in the search for a new CEO.

And we expect to have more to share with you before the end of this quarter.

We are being very thorough and thoughtful, and have met with many qualified candidates.

Our new CEO must have strong business and digital management skills; must understand the power of brands; and must be able to successfully lead the launch of products that are critical to our future.

And now, I'd like to turn the call over to Jim Follo.

Thank you, Arthur, and good morning, everyone.

Our second-quarter results highlight the significant contributions our digital circulation revenue stream is making to our business, early in just the second year of our new subscription model.

In the midst of a challenging advertising market, the digital packages drove another quarter of strong revenue growth at the New York Times, offsetting the advertising decline and leading to overall revenue growth for the Company.

These solid circulation results, combined with continued attention to cost management, led to our operating profit -- before depreciation, amortization, severance and special items -- to increase 7% for the quarter.

Our success in creating a robust revenue stream, based on charging for digital access to our award-winning content, is evident in the growth in both digital circulation volume and circulation revenue were recorded in the second revenue.

Total circulation revenues were up 8% for the Company and 11% for The Times Media Group, driving the fifth straight quarter of total revenue growth at The Times Media Group.

The Times also continues to benefit from improved retention rates for home delivery circulation following the launch of digital subscriptions, despite the price increases implemented at the beginning of the year.

To update our digital subscription volume numbers, at the end of the quarter, The Times Media Group had 509,000 paid digital subscribers, up 12% from the March anniversary number, continuing solid growth even into The Times' second year with a digital subscription strategy.

This number includes subscribers to The Times and the International Herald Tribune digital packages.

Separately, the Boston Globe had about 23,000 paid digital subscribers as of the end of the quarter.

The advertising environment remained difficult in the second quarter, although the overall digital advertising trend improved sequentially from the first quarter, as revenue trends at the About Group showed marked improvement from recent quarters, and finished down 9% from the second quarter last year.

Digital advertising was down 4% for the Company and 2% for the News Media Group.

Print advertising finished down 8%, while overall advertising was down 7%.

Total revenues for the Company were up 1%, which includes a 9% increase in other revenues, due to growth in commercial printing activities at the New England Media Group.

Cost management remained in sharp focus in the quarter.

The Company's operating expenses before depreciation, amortization, and severance were flat, despite the increases in certain costs we highlighted in recent quarters, such as sales and marketing efforts at About; commercial printing efforts at the New England Media Group; and digital subscription acquisition and related expenses.

On a GAAP basis, costs were down 1%, and we reported an operating loss of $144 million in the second quarter, compared to an operating profit of $31 million in the same period in 2011.

The loss this quarter stems from a $195 million goodwill impairment charge at the About Group, which I will explain more later in my comments.

Diluted earnings per share from continuing operations, excluding severance and special items, or $0.14 in the second quarter, compared with $0.11 in the same period of 2011.

On a GAAP basis, we reported a diluted loss of $0.57 in the quarter, compared to earnings per share of $0.05 in the second quarter of 2011.

In the second quarter, we also sold our remaining 210 units in Fenway Sports Group, closing out our original position of 750 units over the course of two years.

The stake was sold for the same price per unit as previous transactions, or three times our original investment, resulting in proceeds of $63 million and a pre-tax gain of $38 million.

Now let me provide more depth on our second-quarter revenues.

At the News Media Group, digital advertising again faced challenges in the quarter, and ended down 2%, while print advertising decreased 8%.

The Group's total advertising, which declined 7% year-over-year, saw their best month of the quarter in May, but then declined in June.

Overall, advertising was down 6% in April; 1% in May; and 13% in June.

Digital advertising results trended lower in the quarter as a result of both difficult comparisons, in part due to the technology category at The Times and market factors, including the weak economic climate, and an increasingly competitive landscape.

The Group's weakness in digital advertising was led by declines in national display and real estate classified.

In the second quarter, we saw digital gains in retail display, as well as the automotive classified category.

Within the News Media Group at The Times Media Group, our overall revenues were up 2% in the quarter; advertising revenues are down 7%; as growth in retail, print, and digital advertising was more than offset by national and classified print declines.

Aggregate national advertising declined, and aggregate advertising was also lower.

The Times' digital strategy remains centered on continuing to grow its subscriber base and extend its brand.

In the second quarter, the growth in paid digital subscriptions benefited from the adjustment in the free model -- in the free monthly article count, to 10 from 20, that we made in conjunction with the model's one-year anniversary in March; as well as from a variety of new product and marketing initiatives, such as the anniversary gift subscription program, a Memorial Day sales event, and the sales of group account for corporate and education subscribers.

We remain committed to building our offerings in the areas of mobile, social media, and video.

In the second quarter, we added to the products currently available to digital subscribers with the announcement of our inclusion in the Flipboard app, through which subscribers get full access to The Times' content via a third-party app for the first time.

Subscribers can now view articles, videos, slideshows, and blog posts inside Flipboard with the level of access aligning with the subscribers' digital package.

Top news articles remain free within Flipboard for non-subscribers.

This offering is the first in our new New York Times Everywhere distribution strategy, which will enable us to further extend The Times' reach to third-party platforms, helping us to retain subscribers, generate new subscribers, and maximize advertising opportunities.

We are also building on our success in the second year of our paid digital subscriptions through the continuous rollout of new features, content, and functionality for our products, such as the recent improvements to the search capability on NYTimes.com that now provides more relevant results, auto suggestions, and dynamic navigation.

This enhancement will improve our users' ability to discover and consume more content, ultimately increasing engagement.

Our print platform has continued its positive effects from our digital strategy as well.

The New York Times again posted solid circulation results in March ABC reporting period, including another six months of positive growth in Sunday home-delivery print volume, which was up nearly 2% year-over-year.

The weekday print home delivery subscription decline also moderated.

Digital volume was factored in for the first time in the ABC period, providing a boost to total average circulation for both daily and Sunday.

These gains reinforced the popularity of The Times' digital packages and the renewed appeal they have created for the print product as well.

At the New England Media Group, advertising revenues declined 5% in the quarter, due to weakness in print advertising.

Overall, national ad revenue increased.

Digital retail and classified ad revenue showed growth, reflecting increases in automotive and recruitment, but the combined retail and classified categories were both down, resulting from continued print weakness.

On the circulation front, in April, The Globe instituted a price increase of $0.25 per copy for weekday single-copy editions in the Boston metro area, and $0.50 outside that area.

For seven-day home delivery customers, the price increase was about 6%.

The Sunday-only rates remained unchanged.

This was The Globe's first circulation price increase since 2009.

Moving on to the About Group -- total revenues in decreased 9% to $25 million in the second quarter, with decreases in display and cost-per-click advertising both contributing to the decline.

In the quarter, we recorded an impairment charge of approximately $195 million to reduce goodwill of the About Group.

While About is gaining momentum in its turnaround efforts, and we expect to build on that progress in the second half of the year, we have reduced our long-term display growth and profitability assumptions for the Group which led to the impairment charge in the quarter.

This non-cash charge will not affect About's ongoing dismissed or financial performance.

Furthermore, the application of generally accepted accounting principles with respect to goodwill impairments does not necessarily result in a carrying value that is indicative of fair value, and we believe this to be the case in this circumstance with the About Group.

Getting into more detail on the quarterly performance for About, revenue trends have seen significant improvements from recent results, as the site continues to aggressively respond to increased competition in both display and search advertising markets.

Display was down 14% in the quarter, while CPC declined only 5%.

CPC advertising saw single-digit declines during each of the months in the quarter, its best performance in nearly 2 years, with CPC declining between 2% and 3% in both May and June.

These declines resulted from lower, yet sequentially improved, click-through rates compared with the first quarter, although advertising rates for CPC rates returned to modest growth.

We expect that CPC advertising will see the benefit in the third quarter of cycling a Google algorithm change that had a significant negative effect on consumer search traffic beginning in July of last year.

About continued seeing improving traffic trends in the second quarter, with page views up 1% year-over-year.

While display advertising trends improved from the first quarter levels, display revenues were still lower in the quarter, as the competitive landscape and uneven economic environment offset progress and rebuilding About's sales team.

About has made strides in its sales plan to better leverage the site's strong reach, averaging 85 million monthly unique visitors worldwide in the second quarter; and also launched a new trade marketing campaign in June.

The About Group's operating costs were up 7% in the second quarter.

And operating costs, excluding depreciation, amortization and severance, increased 15% to $15 million, due to increased compensation and content costs, as well as higher marketing expenses resulting from the launch of the new ad campaign.

The Group saw an operating loss of $187 million in the quarter as result of the impairment charge.

Our outlook for the second half of the year, with respect to About, remains unchanged from previous comments, as we expect both display and CPC advertising revenue return to positive growth.

On a Company-wide basis, our commitment to controlling expenses led to operating costs -- excluding depreciation, amortization and severance -- to remain flat in the quarter as a result of lower professional fees and distribution costs, offset by higher compensation for various other costs.

With [newsprint] prices generally flat for the past two years, newsprint expense declined 3% in the quarter, mainly due to lower consumption.

While our capital expenditures have only totaled $17 million for the first two quarters of the year, we expect to ramp up that spending in the back half of the year as we continue to invest in our digital pay initiatives and the About Group relocates to new office space.

We now expect capital expenditures of approximately $50 million for the year.

We still do expect costs to increase modestly in the third quarter.

We will continue to invest in our digital capabilities and subscription acquisition efforts and About sales and marketing initiatives, as well as see higher production costs for the new commercial printing activity in New England.

And we also reset our variable compensation targets earlier this year.

Partially offsetting this will be expense savings in our production and distribution operations, reduced support function costs, and further leveraging our centralized processes and resources.

In the second quarter, our liquidity position has improved further, as we recognized the cash proceeds from May's sale of our last remaining units of the Fenway Sports Group, and through cash flows from operations, bringing our cash position to $570 million and our net debt down to $206 million.

Two priorities for this cash remain managing the underfunded levels of our pension plans and paying off our $75 million 4.61% notes that mature at the beginning of the fourth quarter.

Turning to our outlook -- in the third quarter, overall advertising trends are expected to improve from second-quarter levels, due to better digital advertising performance across the Company.

Although at the beginning of the second quarter, we cycled the first full year of digital pay packages at The Times, we expect to see continued benefit from these initiatives as well as from the price increases.

And total circulation revenues are projected to increase in the mid- to high-single-digits in the third quarter.

And operating expenses are expected to increase in the low- to single-digits in the third quarter.

And with that, we'd be happy to take your questions.

(Operator Instructions).

Alexia Quadrani, JP Morgan.

Thank you.

Just a couple of questions.

The first one, could you give us a little bit of detail on what you saw monthly, in terms of newspaper advertising trends?

I heard there's been a lot of volatility.

I'm curious how the quarter ended for you.

Alexia, just to recap, I touched a little bit on this.

It was an extremely volatile quarter, with total advertising in April declining about 6%.

May was down about 2%, and June was down about 12%.

So we continue to see significant volatility.

We are, however, not seeing -- we're seeing better performance, as we get into the early part of the third quarter relative to June.

But, as we said, we're expecting to see total advertising better in the third quarter.

But we expect most of that to be driven by better digital performance.

Volatility month-to-month continues unabated, and I think we expect to see that going forward.

And when you say better digital performance, is that largely from About?

Or also better digital performance at your News Media Group?

No, we expect it on the News Media Group as well.

The first half of the year -- if you looked at last year, the first half of the year in the News Media Group, for example, we were up 15% in both the first and second quarter, and the growth moderated significantly in the back half of the year.

We grew somewhere in the 4% to 5% range.

So we'll get the benefit of some better comps.

We'll see -- News Media Group, we expect to see better digital; and, as we said, About, we expect second-half meaningful improvements on revenue trends as well.

And then if you could just -- I know you commented a bit about use of cash in your outlook there; and the notes you are going to pay back in the fourth quarter, I believe.

But I guess with the positive announcement of the highway bill, in terms of how you that impacts you and your potential pension contributions, I guess any update on any thinking about a dividend or giving cash back to shareholders.

Well, I would say on the highway bill, while it did give relief and gives more time to get fully funded, we have been pretty aggressively ahead of the required contributions.

So we actually don't see the highway bill meaningfully impacting our strategy to get ahead of that, because we do have a desire to get that fully funded as quickly as we can, within limits.

We do wait and hope and expect for a better interest rate environment which has been fleeting, for sure, and doesn't appear to be much of a help in the near-term, at least.

Look, we'll continue to evaluate use of cash; as we get stronger, that issue becomes more prominent, we understand.

We speak about it at our Board meetings and finance committee meetings every quarter.

I Have nothing new to report now, but everything is on the table.

And we feel good about the progress we made on the balance sheet.

And we will continue to evaluate opportunities there.

Okay, thank you very much.

John Janedis, UBS.

Hi, thanks.

Jim, in the past, I think you've said you're expecting OpEx for the full year to increase modestly.

I'm wondering if that's still the case?

And then moving to the advertising side, is it your sense that the underlying demand for print advertising is improving?

And is there any kind of impact from the Olympics?

On the OpEx side, I think the OpEx performance -- I think it's likely to be under more pressure in the second half than the first half.

And I think that will come from a couple different areas.

We will be spending money on Olympic and election coverage; that will clearly drive costs in the second half beyond what we saw in the first half.

I would say our spending in the digital arena will continue to increase, as we continue to explore new ways to monetize our content, whether it be video and other areas.

So I think that will bring some pressure.

I think the About cost structure -- I think we'll see a little bit of growth.

In part, we'll have some one-time double rent in the second half of the year for About as they move to new locations.

We've got to go rent on both locations.

There's a bunch of smaller stuff that adds up, and so my guidance this morning reflects that.

And that's our best look at what we think the back half of the year is likely to look like.

On the advertising question, John, we absolutely have packages out, and sponsorship opportunities.

And we're taking advantage of that, but I don't expect that it will have a meaningful impact on our overall performance in the quarter.

Okay.

And maybe somewhat related, or maybe tangentially, can you help us dig in a bit more on the digital subscriptions?

How immediate was the increase from the gate that you saw?

And has the mix of digital subs changed over the past couple of quarters?

So, as we said in the past, we typically get the growth from a range of product and marketing initiatives and our growing expertise in the digital subscriptions marketing arena.

And as we could say, this quarter's growth did come from a few key areas, the first of which is absolutely the gateway.

But the core business remains very, very healthy; and retention also remains very high.

In addition, we have several marketing initiatives this past quarter, including the anniversary promotion and the flash sales that drove the subscriptions.

And finally, we did launch new capabilities in the corporate and education marketplaces.

Just looking ahead, we really see nothing but opportunity for this business, as we have a large pool of both domestic and international prospects currently not subscribing, and a range of product and marketing initiatives yet to be launched.

In addition to the ones I just mentioned, we can look forward to growth coming from reducing friction in the building process; our propensity modeling capabilities; growth from offers made from daily deal sites; and an expanded digital distribution through our NYT Everywhere strategy.

We also believe that there is an opportunity to build a portfolio of niche paid products in several content areas, given the passion that our readers have shown for certain content.

So as far as we're concerned, and as we've said in the past, we're in the very early innings of this plan, and we see nothing but opportunity ahead.

Thanks very much, Denise.

Craig Huber, Huber Research Partners.

Yes, good morning.

First a broad question -- at year end, or last year, you obviously announced the sale of your regional papers, as we've talked about.

Your online strategy at your flagship paper clearly has been working quite nicely.

But one of the big reasons I recall from our conversations is that one of the reasons that you sold the regionals is you did not think a paywall model would work at your smaller papers.

Can you explain for the benefit of all why that is, please?

I'm sorry.

I'm not sure I totally follow the question.

Sorry.

At your regional papers, I believe one of the reasons you sold your small market papers is because you did not think a digital paywall strategy would work in your small markets.

Yes.

Just for the benefit of all, why do you feel that way?

It's just different content.

The New York Times is just a unique position.

Yes.

This is Arthur.

I think the challenges that regional newspapers face and that metro dailies face -- like The Boston Globe and the national spots, international newspapers like the New York Times face, are different.

We face different challenges and different opportunities, which doesn't mean that any one strategy will succeed or fail.

They have to be adaptive.

But we do believe that, over time, what you're going to see is more and more newspapers moving to a pay system of some sort for their digital journalism.

And you are actually seeing that taking place.

So it's going to take time.

But I think it's going to expand to newspapers -- to the smaller newspapers.

But, look, I do think just -- The New York Times, we do view in the scale of everything.

We've always viewed it as probably the best position at where we find ourselves, and we feel good about that.

And I think that's because people really value the New York Times content.

It's content you just can't get anywhere else.

It's unique content, and people want to pay for it.

And you didn't think that would be the case in your small-market regional papers?

Is that what you're saying?

On that yes.

Just, yes.

And then also, housekeeping question -- maybe I missed this, but your daily and Sunday circulation volume percent changes, year over year, at your two main papers.

What was it, please?

At The New York Times for Q2, the trend was similar, slightly worsening versus Q1.

The daily was down about 6%; Sunday down less than 2%.

The Sunday home-delivery portion was actually up about 0.5%.

And just a reminder, this was all in an environment where we raised home delivery prices between 3% and 4% in the beginning of the year, depending on geography.

And we raised the single-copy price by 25%.

And, on The Globe, remember that we put these price increases in place early part of the quarter, so these numbers are a little bit distorted on a year-over-year basis.

But the daily number was a negative 9%; Sunday, negative 6%.

I think if you went back to the first quarter -- which I think is more indicative, and was more consistent with the trend we're seeing -- we saw a daily trend of negative 7% and negative 4% on Sunday.

Those are the numbers I have.

And then lastly, your comments on July newspaper ad revenue -- June was down 12%; you said, I think, the whole quarter was down 6.5%.

Are you saying July is tracking down similar to June?

Or close to (multiple speakers)

No.

I think I said, specifically, it wasn't.

I think June appears to be an aberration.

And what we're suggesting by our overall guidance for the quarter is -- the print market on balance appears comparable to what we saw on balance in the entire second quarter, so we don't see a repeat of June going into July.

That number seems to be, we believe, somewhat of an aberration and we would just look at the overall blended number in print for July.

But, as I said, we're looking to have much more favorable numbers in the early part of the quarter, for digital.

And digital, yes, is performing much better than it had been in the second quarter.

Great, thank you.

Doug Arthur, Evercore.

Yes, three questions -- Denise, can you just expand a little bit on how you expect to monetize content Everywhere, and how big could that become?

Second question, Jim, this is kind of a nitpick -- the other revenue category, New England, was up 28%.

Is that commercial printing?

And then the third question is, on the $250 million tied to the headquarter building, you have an option to, I guess, repurchase the floors.

If you look at this liability, is it actually really now and asset?

Thanks.

So, the NYT Everywhere strategy has three legs of monetization, if you will.

The first is, by giving subscribers access to this content wherever they would like it, we believe that we will add value to their subscription offering and retain them better.

So that's monetization lever number one.

Monetization lever number two is by offering the content in these distribution platforms, we expose ourselves to a new audience, so we hope to generate new subscribers from being in these distribution outlets.

And so that's lever number two.

And then, lever number three is our ability to sell advertising, cross-platform advertising programs, across the distribution partners.

I'm not going to comment on how big this is; this is early innings.

It's something that we're excited about and we do believe has some nice potential for us down the road.

You are right, Doug, the commercial printing was what drove the other revenues in New England.

And we've been talking about the costs associated with that as well.

So we have cost increases but we also have revenue increases and, obviously, a profit there.

On the building headquarters -- just to be clear -- we did a sale leaseback, and essentially what we did was -- for all intents and purposes, it was a financing transaction where we have a liability.

We also have the assets on the books.

The asset on the books far exceeds the liability.

And that's consistent with a financing transaction where the building essentially is collateral for the loan.

That is essentially a 10-year loan.

We have an option to repurchase.

That option has meaningful value to the Company, given the spread between fair value of the underlying asset in the loan.

We cannot move on that option before the 10 years, but there was almost no scenario where we wouldn't move on that.

Look, the building still has meaningful value.

And that value is attributed to us, and not to the party who is party to the sale leaseback.

Got it.

That's helpful, thanks.

Kannan Venkateshwar, Barclays.

Hi.

Just a couple of questions.

One is on the pension front -- just wanted to understand what the contribution expectation is for this year and next?

And, secondly, should we assume that the asset monetization process is over?

Or can we expect some more of that?

On the pension contribution front, the only requirement we have right now is about $47 million of required contributions.

That's largely required via a union contract.

As I had said in some earlier remarks, we are ahead of our required contribution to the main qualified plans.

We will continue to evaluate that.

And we've got plenty of cash to potentially put to work there.

So we'll continue to evaluate whether we want to get ahead of the required contributions.

But we have not made any commitment to do that at the end of this year.

But, again, the key is, we're not required to make it the end of this year; we would do it simply to get ahead of required.

But as you look out, as you get into 2013, they will become required, and they will become meaningful numbers.

We've got a -- going into the year, about a $500 million gap.

And, generally, you have seven years from when the gap arises.

So we're several years beyond one that gap arose, largely in 2009, given the low interest rate environment.

So we've got less than seven years to get that ready.

So you can imagine the size of the contributions that will be required to that thing fully funded.

Now, that being said, that assumes a, hopefully, level interest rate environment; and rates have not been stable.

We've actually had negative rate movement this year.

But we hope, over the remaining four years or so, we got to get fully funded on that.

Maybe we'll get some help on rates, but who knows?

Okay, and just to understand this a little bit more, I guess the $500 million spread over seven years, roughly about $70 million a year.

And if you are ahead of it, I guess it could be higher than that.

Is that a fair expectation?

Now, let me just clarify -- you have seven years from when it arises, but it arose in 2009, so we're at least two years beyond when it arose.

So we'd have less time than that.

So I would say you have more like 4 to 5 years to get fully funded.

Okay, okay.

I think you had asked another question.

Yes, on the asset monetization.

Is that process over?

Look, it's something we just, generally, don't publicly -- comment on publicly.

We evaluate all our properties on a regular basis.

And beyond that, there's not much more we can say.

Okay, thanks.

And it appears, at this time, we have no further questions in queue.

So I'll turn the conference back over to our speakers for any additional or closing remarks.

Thank you very much for joining us today.

And please give us a call if you have any additional questions.

Goodbye.

And once again, that does conclude today's conference call.

We'd like to thank you for your participation.