宏盟集團 (OMC) 2001 Q1 法說會逐字稿

OMNICOM GROUP CONFERENCE CALL

Good morning, my name is Michael and I will be the conference facilitator today. At this time I would like to welcome everyone to the Omnicom Group conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer period. If you would like to ask a question during that time simply press the number 1 on your telephone keypad and questions will be taken in the order that they are received. If you would like to withdraw your question press the # key. I would now like to turn the call over to Randall J. Weisenburger, Executive Vice-President and Chief Financial Officer and John Wren, President and Chief Executive Officer. Thank-you, you may begin your conference.

Good morning. Thank you all for taking the time to listen to our first quarter earnings call for 2001. I would also like to apologize for that technical difficult here on the start, but we will make up the time. We are going to begin the call with some brief remarks from John Wren, the President and CEO of Omnicom regarding the performance for the quarter and the state of the industry in general. Following John's remarks I will review the financial performance for the quarter in more detail and then we will both be happy to take questions at the end. We know everyone is busy, so we will also make sure to end the call before the market opens.

Good morning. Thank-you for joining us this morning. We are very pleased with the first quarter. Hopefully you have all seen the results at this point. The business environment in the first quarter was challenging, as it was I guess for many of our clients and others, but we feel that all of our business units actually performed very well in the environment. It is customary to the balance I think that we built in the company that we have the right services in the right environments and we are able to adjust our businesses to face the current environment that we are in, as Randy will cover with you in a great deal more detail, is that the currencies were difficult for us this year, and the business environment was affected by a slowdown compared to last year of the number of accounts that are put into review. Our net new business for the quarter was very strong and coming into the second quarter we will continue to win business, but there appears to be fewer and fewer accounts at the moment that are in review. This is not the first time in history this has happened. It will change, the environment will in fact open up again, and we are quiet confident that we will do better than our share as that change actually occurs, but it has been challenging. With that I will leave it to Randy and then we will answer any questions that you might have.

Again, hopefully everyone has had a chance to review the earnings release this morning, but in any event, I guess I will have to start out with a couple of footnotes, which I apologize for. Most of you remember that in the first quarter of last year we sold approximately 25% of our investment in Razorfish. That sale resulted in a $110 million pretax gain and a $63.8 million after tax gain. To make the analysis of our core business more clear, last year we isolated the impact of that gain each quarter last year and we will continue to do so this year when we present year over year results. For this call to save having to do both the with and without year comparisons, we will just do the without. This is for comparison purposes, that is for the comparison purposes for 2000, we will exclude the gain. To begin, revenue for the quarter increased $222 million to $1.601 billion, that was an increase of 16% over the last year and net income increased 20% to $95.3 million making this quarter Omnicom's 39th consecutive quarter of year over year growth in both revenue and earnings. Earnings per share data for the quarter increased 16% to 52 cents per share, up from 45 cents per share last year. Also that impacted the earnings per share in the quarter was an accounting change. With effect from January 1, 2001, we adopted SFAS 133, which is the accounting statement that deals with accounting for derivatives and hedging activities. We don't do a lot of that, and as a result of that change in the first quarter, we recorded the cumulative affect of this accounting change, which resulted in a $2.9 million reduction in net income and reduced earnings per share of about 2 cents. Moving on, organic growth for the quarter was driven largely by last year's strong net new business wins, they came in at 13.8%, that compares to 14.8% for the first quarter of 2000. Foreign exchange in the quarter continued to be quiet the headwind, reducing revenues by $59.2 million or about 4.3%. On a constant currency basis revenue for the quarter was up approximately 28.4%. On a net income basis, foreign exchange cost shareholders approximately 1 cent per share. The most significant foreign exchange impact, as most people would recognize, came from the year over year weakening of the Euro and the British pound. But frankly going through the list this year, I think all but two countries that we do business in their currencies were down versus the dollar. Going forward, if currencies remain stable at the current levels, we expect to see similar FX results in the second quarter and then should get some relief starting in the second half. If we remember the Euro and the Pound took a pretty significant dive early in the third quarter and late in the second quarter last year. From a revenue mix standpoint for the quarter marketing services accounted for approximately 56% of our revenue and traditional media advertising accounted for about 44%. Marketing services had a total growth of 18.5% for the quarter and traditional media advertising grew 13.2%. Breaking down Marketing Services for the quarter, revenue in public relations was approximately 15.7%, 11.3% came from specialty communications, and 28.5% was from the new category we are describing as CRM. If you remember in the last quarter we announced that we are going to be combining our promotional marketing and our direct marketing into one category. As the line delineating between these two categories become somewhat blurred rather than forcing businesses in the [_______________] categories we elected to combine the two of them. As for the respective growth rates, public relations was up approximately 14.2%, CRM was up 19.9%, and specialty communications which reflects the strong performance of our healthcare brands increased 21.4%. Geographically, 56% or approximately $897 million of our revenue was generated in the United States and 44% or $704 million was generated internationally. The UK and the Europe markets combined for approximately 32% of our total revenue. In the United States, total revenue growth was 25%, of which organic growth again driven by strong new business wins was 14.8% and 10.2% was a result of acquisitions. Overseas organic growth was also very strong coming in at 12.6%. Acquisitions added an additional 2.8% and as I mentioned FX was quiet a problem at a negative 9%, bringing down reported international growth to 6.5%. Geographic breakdown consistent with prior quarters for the international markets, we are going to provide information individually for the major countries and in group the smaller countries by region. As I go through this list, I will name each country or region and then give the total growth rates for the quarter rounded to the nearest 5%. To start with the US, as I mentioned was up 25%, the balance of North America was flat, the UK was up 5%, Germany up 10%, France up 10%, Netherlands up 15%, the balance of Europe was up 10%, and then moving to Australia and Asia was up 10%, and Latin America was up 15%. For a rough guidance Australia and Asia accounted for a little bit less than 5% of our total revenue and Latin America accounted for less than 2% of our total revenues. As John mentioned net new business wins in the quarter remained strong across our agency brands resulting in net wins of $1.34 billion, which was an increase of 3% over an exceptionally strong first quarter last year. We are also pleased to report that this was our fifth consecutive quarter with net wins greater than a billion dollar. Some of the significant wins in the quarter, again most people probably already have these picked up, Kentucky Fried Chicken, Royal Philips, Kohler, and the Pfizer Lipitor brand. A couple of losses in the quarter were Vodafone, Circuit City, and Burger King at one of our marketing services operation. During the quarter much of the dollar volume of the wins came early in the quarter and there appeared to be a slow down in the pace of new business almost across the industry later in the quarter. However, so far in the second quarter, or it is certainly too early to tell, it appears new business activity is beginning to pick up again. So far in the second quarter significant wins have included both Dell and the Goodyear accounts. Moving down the income statement a little bit for the quarter, operating margins were 11.9%, which is consistent and/or inline with the first quarter of 2000. As we previously stated, our objective has been to optimize our operating margins, that is, to get as high operating margins as possible without negatively impacting the quality of our services or ability to achieve double-digit growth on a long-term basis. Net interest expense for the quarter was approximately $20.3 million and up from a $11.3 million for the first quarter of last year, and down from $25.6 million in the fourth quarter of last year. The year-over-year increase reflects, increased debt levels used primarily to fund acquisitions and share repurchases offset by reductions in interest expense that resulted from the conversion of the 4.25% convertible bond issue which occurred at the end of last year, and lower overall interest rates. Our tax rate for the quarter was 39.6%, which is about 120 basis improvement over last year. As we mentioned before, this is a current area of significant focus for us and today we've made some pretty good progress as these results show. However, we believe we should be able to continue to improve over the next several years. To compare our tax rates to some of our competitors, there is quite a gap as to with some of our international competitors. Finally, on the EPS front and as I previously mentioned, diluted earnings for the quarter was 52 cents per share, that was an increase of 16% from the 45 cents posted last year. Looking at the EPS calculation for the quarter weighted average number of shares outstanding for the basic calculation was approximately $181.8 million, that reflects the conversion of the 4.25 convert at the end of last year, after the diluting calculation it was about a 188.4 million shares. In the diluting calculation in addition to outstanding options and restricted stock, a 2.25% convertible debt issue was dilutive for the quarter and should be for the balance of the year. The associated after tax addback for the quarter was $2.1 million, this is down from $4.4 million from last year again reflecting the redemption of the 4.25% convertible bond issue. And with that I will have the operator to open the call for questions.

I would like to remind everyone in order to ask a question please press the number one on your telephone keypad. The first question comes from Lauren Fine.

Thank you, just a couple of questions for you. The organic growth in the quarter was obviously very good relative to the business environment, but I am wondering what your confidence is as you approach the rest of the year with the rate of new business slowing and the business environment looking pretty bleak that you can come in each quarter within your 12 to 14% goal of organic growth and then I have a couple of quick follow on questions.

It's an interesting business environment that we are very confident to stay at our guidance and continue to do that based upon the visibility that we have in our businesses and the conversations we are having with the clients and with everyone else. It is certainly not simple but the base business continues to be strong. I think there is enough mix and diversity in the clients in the industries that we service to maintain that level of growth and it's the focus of a pretty experienced management team not only at Omnicom but at all the operating companies and there is constant dialogue review about us. Net new business in our industry as you know, is something that the clients have to initiate, and we suspect that the environment that exists today is one where all companies have challenged or have been challenged in the fourth quarter and first quarter of this year. One's that are considering changes have not moved forward on it because they are probably addressing themselves to other more pressing issues in their business. Before we expect if history is any indication of what we can expect, and it should be, that at some point during the year, that will change and accounts will be put into review, business will move, and we will have opportunities to win more than our fair share. The other aspect of this is that, a significant part of our business is outside of the country and Europe has not slowed down, activity still continues there, and we are hurt a little bit by the currency situation but as Randy pointed out, the comparison even though for the second quarter that's going to remain tough for us, is that there is not any relative movement with currencies and they stay more or less around where they are, we should get some relief from the second half. So, we are confident, we've been doing this a long time, and we are going to continue to perform.

All right. Great, as a follow on, I am wondering when you provide the break down of how your businesses have done you do it on a reported basis, can you give us a sense on the marketing services businesses, whether those businesses are performing better on a real basis than your advertising businesses, or how much of that is being driven by new business versus existing client growth?

First of all we don't break the numbers down anymore. As far as organic growth coming from either new business wins or existing clients, that's not something that we even really track, it is fairly difficult to track it. Keep it in mind, that new business wins if we are winning a new program from an existing client, it is still described as a new business win. So, for example, if we picked up another product from Mars, Mars is a client, that would still be considered as a new business win. Growth on existing products would not show up as a new business win category, but both would be organic growth.

Well, maybe I could ask it a different way, which is, are you getting a stand from the marketing services side that clients are holding back, they are spending there as well for the same reasons they might be on the advertising side, or because of in the case of many of those businesses there is an easier to measure return on investment they are more willing to spend there?

It is not that discernible Lauren, what you have is, industries are doing different things. You take a look at the whole technology sector, which was a significant investor spender in public relations in the past, that's it, the technology sector has slowed down quite a bit in terms of what it is spending and what it is saying out publicly, largely because they do not have a lot of great things to say at the moment. That will change. That will come back. It has to. CRM is still very strong, our numbers indicate that. You talked about the healthcare environment, that's very, very strong. Our food clients are very strong. Our car companies are showing some signs of strength. So we don't break it down, when we look at it in detail, the way that you are asking me the question, we look at individual business units, we also look at the industries those people are serving, we look at the underlying reasons why their business is growing or why their business is slowing and we take the appropriate action as we need to as a result.

And certainly this is also very client specific as to what they are doing. When [_______________] launches a new product, it has got an irrespective of what's going on in the industry reasoning behind it. It's just the nature of marketing. Some of the broadbased generalities are difficult to know the answer.

Great. Thank you.

The next question comes from [_______________].

Good morning guys. I guess my question was a little bit of, I was actually going to ask the question that Lauren asked, but as a followup in terms of looking forward, you talked about some of the clients kind of delaying when they are going to move or shift accounts, do you have any sense as to when that actual change may take place, are we talking 3 months, 6 months, 9 months, or is that completely a function of the business environment as a whole.

It is impossible to predict. It is never historically down a year. Last year was a fabulous year. This first quarter we were a bit up even in a difficult environment. We have entered the second quarter pretty strong and we are just in the beginning of it. We are working on a number of things to try to win additional new business on a daily basis, even though, it is not following a normal pattern where a client announces a review, short list a few agencies, and then makes decisions. We are very actively engaged in keeping that pace in trying to win new business and I think what we are saying, it's not as easy as it was last year.

Okay

But it is still very much there. There is still a lot of activity and it will continue. We are not concerned in the aggregate about our ability to continue to stay within the guidance that we have set even in this difficult environment.

We did point it out on prior calls that, first four new business to be awarded, especially the larger accounts that sort of make the [_______________] and people take notice to, the client has to put it out for review. Generally what triggers those reviews are some change in the business. Sometimes it is the change of CEO, sometimes it is mergers and acquisitions, sometimes it is a drive for more efficiency, reducing the number of vendors they have, sometimes it is new product launches. When you go to that list of catalysts for change, some of those are certainly occurring in the market place today, and at the same time may be going through the trauma of changing your marketing or advertising partner is not the first priority in this kind of an environment, it is probably maybe second priority.

Sure.

For some firms obviously it is going to be first priority. Our objective is to make sure that we win more than our fair share of business when it does get pulled up for review and then, we are in a position to have at least one agency involved in as many client reviews as possible. We have done a pretty good job of the business that has been awarded that could be awarded in the first quarter. Obviously, we are up 3% over the last year's billing of over a $1.3 billion and in the second quarter is also a pretty good start.

If you kind of characterize this as the pie growing across the board, for everyone knows the pie is kind of staying the same and you are getting a bigger slice, how would you kind of classify it with the comments which you have just kind of made?

I think [_______________].

I think the pie will grow a little slower this year than it has in the past couple, but it is going to grow in real terms, otherwise we couldn't put in the results that we have even for the first quarter, and we wouldn't have the courage to tell you that we are staying within our guidance which we are, and we also have differentiated ourselves I think in the services and the type of companies that we have within Omnicom and what their own reputations are, and that is not something we have created for this environment, that is something that has been created over a very long period of time and very deliberately, and as a result, we have consistently and historically won more than our fair share of whatever has come up for review, and we have every reason to believe that because of the quality of our operating units we will shine even a little brighter in an environment like this, that is a little bit more challenging for everybody because of the balance, because of everything that is going on and we are also blessed because the structure that we put in to place as compared to our competitors is kind of unique. We've had 3 networks and we have done acquisitions and absorbed companies on a very rational basis over a very long period of time. We haven't done huge deals, which is distracting to anybody here at Omnicom or anybody within our operating units. So, our people are focused on those business issues that they should be, which is how to grow their business, and how to run their business. They are not focused on how they are going to interface with their new cousin who just showed up and who is going to have a job and who hasn't. We don't have those distractions because we haven't participated in the same way our competitors have. I think that is an underlying blessing, especially in an environment like this because our people are focused.

And John if I may ask one last question. In terms of your growth expectations, I guess if I am looking at it from the perspective of the US being the largest and perhaps the most important market, it sounds to me as if you are expecting a larger portion of your new growth to come from the international side of the business. Is that correct?

I think it is going to stay pretty balanced.

Yeah, I think it is going to stay pretty balanced too. There is huge opportunity both domestically and internationally. It is pretty balanced I would have to say.

There are two combinations of growth, one is new business and new service offerings and the second is overall market growth. Obviously, the broad based market is growing quite a bit slower than it grew last year, our new business activity, it should allow us to stay, I don't think easily, but with a lot of hard work and focus, stay within the guidance that we have given people. We will not expect to exceed the guidance that happened last year.

Right, okay, thank-you.

Thank you.

The next question comes from Vivian Kuan.

Hi, I was hoping to get some more color on Europe. You are saying that you are still seeing [_______________] but we have been hearing about some weakening. You should comment on, is there strength across the board, in both traditional and nontraditional and then I will have one more question after that.

Europe continues to be very strong, at least the major countries in Europe. Again, I think you have to understand that we have a leadership position in most of the larger European markets, I mean, we are number one in England, we are number one in France, we are number one in Netherlands, we are number one in Germany, probably number two in Spain. So, Europe is not unaware of the slowdown in United States and you see it in conversations [_______________] but we haven't seen any cut back in spending by any of our European based clients. There is also in the environment, classically there is a flight to the largest or strongest player when there is any kind of uncertainty. So, our businesses continue to be very strong. Europe is fine.

Okay do you notice any particular better strength on the marketing service side versus traditional or they are pretty balanced?

I think it is probably pretty consistent with what we experienced here, marketing services is in a different stage of its overall lifecycle, people are developing new marketing services and trying them all the time. So you are going to get a little bit more growth there just by those trends then you should in traditional advertising.

Thanks a lot.

The next question comes from Alexia Quadrani.

Good morning, just a followup question on the new business that you have already won. Are you seeing a sort of an increased lag in the time it takes from when you have been actually awarded the business to when the [_______________].

I missed that I am sorry. Could you repeat it?

On the new business that you have already won, are you seeing an increased lag in between the time it takes when you have been awarded the business and when the customers gives you the go ahead and that's something we are hearing about in the industry is that new businesses are bit, I mean, customers are a bit slow as to give the go ahead for their spending.

It is industry driven more than, overall, I mean, Goodyear as you can see, they are doing a lot of advertising. Dell has to stay in the market in order to be competitive. So, things like that are not being delayed. You get into a couple of marketing services areas, there have been some, a little bit of, slow to get started type of activity, but I have to characterize this more as challenging rather than threatening or any overall trend that you will be able to put your finger on. I think, what happens is, people in the business tend to use that as an excuse or rationalization for covering up other problems that they have in their business, so they don't have growth, and so that is kind of an overall generalization which you can blame things on clients selling cars, clients selling soda, or clients selling hamburgers, clients selling pharmaceuticals, have to be out there marketing their products and doing it consistently. And so, there is spending, it is not as easy as it was, but the spending is still there.

Any change in maybe your client sentiment about the outlook or the advertising environment, maybe, since the last conference call you held, and any preliminary thoughts about 2002, or is it too early?

The advertising environment continues in the United States to be challenging. But again, as we see it, our ability to grow in tandem within the guidance that we've set. So I don't have any great generalizations which would lead you to, I don't feel confident enough to make suggestions about what happens outside or what's going to happen to Omnicom. It is probably the nicest way I can think about it.

There is probably, there are lots of conversation and information in the market place with respect to advertising as it relates to media companies, which has a combination of, pricing and the focus of people spending impacting as well as their overall spending patterns. The companies are not walking away from marketing. They're not walking away from their need for growth. They are going to probably take advantage, or every advantage possible to get efficiencies and economies and pricing, as media companies.

I mean, what, these things stop, start and stutter, I mean, the upfront markets and media is going to be challenging, between now and the 4th of July, largely because, there are a number of clients who feel that they don't have to make commitments. On the other hand, this is not one of our clients, if we go in to the market place to talk to the media today, Coke is in the [_______________] market buying everything they possibly can. And if big companies who have to be in the media, if somebody breaks out of the crowd and starts changing the fundamentals, the others would not sit on the sidelines for very long. So, it's a very fluid environment. People have to continue to do this. They are just not making it easy on the media, because, quite frankly, media didn't make it too easy on them over the past 18 months, and so it's a little bit of an adjustment period. But the spending will be there, it is just, for them it wouldn't be as predictable.

Again that largely impacts the media companies [_______________].

For Omnicom 2002, right now you said, we would just sort of stay within your traditional guidance, even though it is early.

Oh, yeah, its early. Yes, absolutely.

Okay. Thank-you.

The next question comes from David McMurry.

Hi. Thanks. David McMurry from First Boston. Just two quick questions going back to when you were talking about the new business environment, you said perhaps throwing your account into review isn't the first or necessarily the second priority if your own business is having problems. I think one of the first priorities would be going out and trying to get some concessions from your suppliers, since I'm wondering if you're seeing any increased pricing pressure from some of your big clients as they are going through tough times.

No, I think, they are probably, the big spending is more on media, that would be, on our services. There hasn't been that much pressure.

Okay. And a second question, just a quick one. The tax rate for this quarter was a bit lower than we had forecast for the full year. What are you now projecting?

I'm not really projecting. I think we should be under 40% for the year that's the guidance that we've given all along. I think it should probably be, in line with where we are at. We've made some pretty good progress, we've sort of internally I describe it as picking up the food that has been on the ground. So we still have some ways to go once and then we get it. To take another step, is a little bit harder, it takes a little bit longer than the steps that we've taken so far, if required.

Sure. This is not my area, but its Randy's, if we take a look at one of our competitors. They'll have a rate of 30%; we'll never get to that. We've done studies internally and looked at the other Fortune 250 companies that do have our global profile, looked at what their tax rates are, and we still have a fair amount of work to do. Just to get within the norm of that set of companies and Randy has pointed out that we started out with this last year as a focus. We started taking a multi year view of it because it requires reorganization and some other things which have to be done in a fashion that don't disturb our businesses, but we are making progress and we'll continue to make progress just to get to a level that makes us look like everybody else who has a footprint like ours, even if they are in a somewhat different business.

Right. Thanks very much.

The next question comes from Bill Bird.

Thanks a lot. Just two questions, first, are you comfortable with the second quarter consensus estimate of 81 cents, and the full year of $2.79. And second, have you seen much of a divergence in announced new business spending plans and actual spending? Thanks.

We are comfortable with the consensus estimates that you just said. As far as the second one goes, it is probably difficult to really answer, when you do business, generally it takes, 4-6 months to get sort of fully up to speed of the running rate of what the accounts are targeting. So it is [_______________] to say that was [_______________].

But please understand that, when we are talking of business, we don't report what the media reports it to be. We are reporting after we know what the contract is going to be and what the spending is going to be. That's what you're getting when we give you a net new business number. So our number, it isn't just picking up the highest that you read in the trade press and spewing it back to you, it is really based upon a followup conversation with clients to what their spending is going to be. Probably there are occasional disappointments to that? Yes, sure. But there are as many upsides or downsides, so our numbers are pretty accurate and reflective of what you can expect.

Thanks. And just a followup on the SFAS 133 charge in the quarter. Was it somewhat large because you reported the cumulative effect going forward, should it be less, are you going to continue to treat it as an operating item, where most companies treat it as non-operating. Thanks.

We have got a separate line item on the queue. This was a one-time item. And while it was, I guess large for us because it stands up on a line item, frankly, we don't do very much hedging activity. This was related to a debt we put place to acquire some of our Japanese assets. There wouldn't be any increase to this line item, going forward. I think that answers your question but to make sure it is clear, this is a one-time number, it will show up throughout the year on the separate line item and in reality it is really not very big, [_______________] too much of it.

If we could visually see it, our controller is sitting here, [_______________] he is asking the question, that we are done with it.

Great. Thanks a lot guys.

The next question comes from [_______________].

Hi, good morning. I had a question concerning, I guess, the current economic environment and the rounds of layoffs that many of the holding companies have already gone through. I am wondering in light of this more difficult environment, if you are looking at any of the business units differently that may be or not carrying their weight right now for the long haul and particularly since the client priorities seems to have changed a little bit as well.

I would like to refer to what we have done as firing as opposed to layoffs. We have taken people out of the organization starting since last November, and I think what we have done is we have encouraged people to look at those individuals in their organization who aren't really AA players and to let those people go, and also to look at the market place and to add the staff where there are real quality players because of the economic environment and because of some of the challenges our competitors are facing we are able to pickup now. So yeah we have pared down our business. We will continue to do it, but we have not done to the point where I would characterize layoffs and my feeling about that is layoffs kind of result when good people are kind of put out faster and we haven't gotten to that yet.

And obviously the aggregate of business has grown on a year over year basis on sequential quarter basis, etc. There is a little bit may be a change in mindset, last year companies targeted that they wanted people available that if new business showed up they could execute on it, immediately because it was difficult to find people in the market place. The environment today is easier to recruit people when new business is there. We want to make sure we suggest to our companies that they hire the people following the revenues in the door as opposed to in anticipation of revenues coming in, that is just running the operations in a little bit tighter sort of conditions in the market.

What about specifically business units, for example things that are probably less appealing for clients right now in light of a tougher economic environment of web enablement, online promotions things that may be they had used in the past when there is some excess funds but now maybe a little bit less [opt] to do that.

You know we have invested in some of those companies and some of them public and they have done all sorts of things to their businesses, which as an investor we are just impacted by those decisions, we don't help to make those decisions. We have had some small changes but nothing dramatic, if you take something like [_______________], it was in the Times three days ago saying it laid of 8% of its staff, which was something like 14 people. So there is trimming, every business unit looks at its complement of people, it makes the decision as to who stays and who goes in order to achieve their objectives. But there is no overall flush or purge or layoff or any of that going on.

Okay thank you and Randy a question specifically to you, I will just check my math here, excluding currency and the one-time effect on the adoption of 133 the number would have been 55 cents, is that accurate versus the 52 cents that you reported?

Yeah.

Okay thank you.

Your next question comes Kevin Sullivan.

Hi thanks. Could you guys just talk about the acquisition environment and whether or not you see any changes in regard to pricing or whether small companies are willing to come to the table in light of the slow environment.

We have a good pipeline in acquisitions. We are being pretty careful in this environment. Obviously, the business environment has changed fairly rapidly and we want to make sure that our due diligence and analysis is extremely tight in this kind of environment, you could in theory think of companies that did quite well last year during the very robust environment, and if their business wasn't extremely solid it could change significantly in this kind of environment, [_______________] slowing down the profit down as such, but as far as availability of businesses we still have a pretty strong pipeline of companies that we are looking out or working with.

Great, thank-you.

We are pretty close to the market opening, so if there are no other questions we will say goodbye here, if there is another question already queued up we will take one last question.

You do have one final question from Lauren Fine.

Hi. It's a very quick one, could you answer very quickly about your debt outstanding and cash outstanding at the end of the quarter, or if there was any share repurchase activity and what the total cash cost of acquisitions was in the quarter?

I don't have the numbers in front of me Lauren. There was some share repurchase activity in the quarter. It was not very high. The other two numbers I just don't have that just out of my head, I am sorry.

Can we followup with you?

Sure.

Great, thanks.

Thank you everyone for taking the time to listen to our call.

Thank-you for participating in today's conference, you may now disconnect.