Quad/Graphics Inc (QUAD) 2009 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Worldcolor conference call. During today's call, all parties will be in a listen-only mode. Following the presentation, the conference call will be opened for questions. (Operator Instructions).

At this time, I would like to turn the call over to your host, Tony Ross, Vice President of Communications of Worldcolor, to begin. Please go ahead, sir.

Thank you, Eric, and good morning, everyone. With me today are Mark Angelson, Worldcolor's Chairman and Chief Executive Officer; Andy Hines, Worldcolor's Chief Financial Officer; Joel Quadracci, Quad/Graphics Chairman, President, and Chief Executive Officer; and John Fowler, Senior Vice President and Chief Financial Officer of Quad/Graphics.

Mark and Andy will provide us with an overview of Worldcolor's fourth quarter and full year results. As you know, Quad/Graphics recently filed a Form S4 with the SEC to register its Class A common stock that it will issue to holders of common shares of Worldcolor Press in the arrangement agreement. Upon completion of Mark and Andy's comments on Worldcolor's results, we will open the call to your questions on the results and afterwards on the Form S4.

Before I turn the call over to Mark, I would like to remind you that this call is being webcast and forward-looking statements are subject to Safe Harbor provisions.

I will now turn the call over to Mark.

Thank you, Tony, and thank you, everyone, for joining us today. I extend a hearty welcome to Joel Quadracci and John Fowler, Chairman, CEO and President, and CFO respectively of Quad/Graphics.

Before we begin, I am pleased to acknowledge the contribution of two people who also are here with us today, Tony Ross and Andy Hines, and their teams in Montreal. Unsung heroes all of the past 5 1/2 months without whom, among many others, we would not have succeeded. And now, onto our results.

In the fourth quarter, Worldcolor had consolidated operating revenues of $848 million compared to $1 billion in the fourth quarter of 2008. For the full year 2009, consolidated revenues were $3.1 billion, compared to $4 billion in 2008. This dramatic decrease was due mainly to lower volumes from existing customers on account of the challenging North American economy, reduced advertising spending, and to a lesser extent lower pricing.

Despite this lower revenue in the fourth quarter and for the second consecutive quarter, we were able to increase adjusted EBITDA and EBITDAR margins. In the fourth quarter, adjusted EBITDA increased to $132 million, compared to $118 million in the fourth quarter last year. For the full year, adjusted EBITDA was $329 million as compared with the $277 million the previous management forecast in their exit plan in July.

EBITDA margin in the fourth quarter increased to 15.6% compared to 11.4% in the same period last year, not as high as we would like but a clear move in the right direction. The quarterly year-over-year increase in adjusted EBITDA and margin mainly our attributable to our continuing relentless and constant focus on cost containment and cost reduction.

During the fourth quarter and throughout the year, we worked aggressively across the platform to implement measures to ensure that our cost structure is in line with current market conditions. In the fourth quarter, we reduced our cost of sales by 23% compared to a decrease in revenue of 18%. This follows a similar trend that we announced in our third-quarter results.

We have done this through plant closures and other workforce reductions regrettably, in our manufacturing and other facilities, in our administrative functions, and in our corporate office. In the fourth quarter, we merged our publishing, marketing solutions, and Canada groups, eliminating redundant management layers and further streamlining our North American sales and manufacturing structure. This enabled us to break down silos as promised and to be more responsive to our customers. We coupled this with a focus on improving our processes and systems to become more efficient across the entire platform.

Free cash flow, our most important metric, in the fourth quarter improved to $79 million compared to negative $39 million in the same quarter last year. For the full year, Worldcolor generated free cash flow of $124 million compared to $50 million in 2008.

These results were made possible by the commitment of our employees and their willingness to as we say, walk through walls to perform above and beyond the call of duty in extremely challenging times. I am honored and humbled to lead them still, and I thank them for their hard work.

Our results, however, are based on more than cost reductions and operational improvements. Our sales force had important successes, renewing relationships with existing customers and attracting new ones, boding cautiously well for the future.

The list of wins is long and impressive. It includes such important publishers and retailers as ABA Publishing, Boardroom, CVS Caremark, Forbes Magazines, Macmillan, Newsweek Budget Travel, Pace Communications, Rodale, Schofield Media Group, and USA Weekend.

Our sales and customer service professionals are among our most important strategic planners because they observe and listen to our customers' changing needs and allow us to be responsive to them. This is true across our platform in all of our segments. A hearty thank you to all of our sales and customer service people and of course to all our customers.

In 2009, we maintained our commitment to quality. This is evidenced by our winning many important industry awards for quality including in manufacturing. Worldcolor won 34 prestigious Gold Ink awards in 2009. In addition, Worldcolor received the Exceptional Customer Service Supplier of the Year award from Wal-Mart. And in Canada, the Vendor of the Year award from Toys "R" Us.

The Company continues to make impressive strides in its safety program. 2009 was our safest year ever. I take great pride in reporting that, and continues the string of year-over-year improvement in each year of this decade. We reduced our recordable accidents by 22%, our lost time accidents by 27%, and a remarkable 52% in terms of the number of actual lost time days. We will continue to be relentless in our goal that 100% of our employees will be 100% safe at work 100% of the time.

During the year, we continued to look forward to the future by placing an emphasis on helping our customers increase the impact of their messaging by supplementing their printed product with access to online and digital media. Our integrated multichannel solutions team is a critical component to this strategy and continues to introduce our customers to new products and services.

For example, we provided services to catalogers that enabled them to utilize variable data print, email, and micro sites to strengthen their catalog programs. This is in addition to our in-line co-mail solutions that allow catalogers to personalize the printed product to their customers and to reduce postal costs.

In the next two weeks, Worldcolor will launch a new print to Web digital edition solution. The V2 Virtual Version is designed seamlessly to integrate print with online advertising, email, social and mobile marketing promotions. V2 is an enhanced version of the digital edition technology that the Company has successfully applied to more than 400 magazine and newsletter titles. The new V2 will offer enhanced features to those publishing applications plus new digital applications for catalogs, retail inserts, and directories.

This is but one of the reasons why I believe that Worldcolor and its employees would be such a good fit with Quad/Graphics. We share many of the same approaches to growing our business and our customers' businesses in the future. But I'm getting ahead of myself.

First, let me turn the call over to our CFO, Andy Hines, for a more detailed review of our financial results. Afterwards Andy and I will answer your questions about the quarter. It's important, please, questions about the quarter first. Joel, John, and I will answer to the extent we are permitted to do so your questions about the S4. Andy?

Thank you, Mark, good morning, everyone. Thank you very much for your interest in our Company. I would like to start by highlighting again our free cash flow. For the year, Worldcolor generated $124 million of free cash flow, $79 million in the fourth quarter alone. This was accomplished through great working capital management, focused capital spending, and a reduction in organization items, mainly professional fees after we emerged from bankruptcy.

As a result of this achievement, I am pleased to report that there was nothing drawn on our revolving credit facility at the end of the year after having started with a draw amount of $89 million which we first obtained exit financing in July. In addition, the Company is fully compliant with all of its covenants and has significant cushion.

Worldcolor's free cash flow generation occurred despite a reduction in full-year adjusted EBITDA at $329 million compared with $379 million in 2008. As previously noted by Mark, the Company and the entire industry continued to face difficult marketing conditions resulting in significant decreases in volumes in most of our markets.

Our year-over-year revenue decreased by $945 million or 24% in the previous year; however, our adjusted EBITDA declined by only 13%. The Company was able to offset volume and price declines through procurement initiatives, revenue enhancements and cost containments. All initiatives, which included wage and benefit reductions, were rigorously monitored to assure their realization.

This was especially true in the last five months of the year when Worldcolor earned almost 60% of its adjusted EBITDA.

To better understand our financial results, I would like to take a moment to discuss Worldcolor's adoption of fresh start accounting, which required the Company to perform a comprehensive revaluation of its assets and liabilities based on an estimated enterprise value of $1.5 billion established in the plan of reorganization. As a result, Worldcolor became a new entity for financial reporting purposes.

While adjusted EBITDA of the new Company is on a comparable basis with that of its predecessor, many of the other consolidated financial statement elements are not on a comparable basis. Let me discuss some of the major items.

Total depreciation and amortization expense included in cost of sales, selling, and general administrative expenses for 2009 was $192 million compared with $240 million in 2008. Most of this drop occurred in the last five months of the year. The decrease reflects the reduction in the value of property, plant and equipment due to an asset impairment charge of $161 million taken in the fourth quarter of 2008 and a reduction of assets that took place -- and the revaluation of assets that took place on adoption of fresh start accounting.

Offsetting this drop was $17 million of amortization of new intangibles, customer relationships and contracts which were set up on fresh start. Worldcolor recorded impairment of assets, restructuring, and other costs or IAROC of $61 million in 2009 largely related to the closure of four plants and the realignment of our workforce consistent with the current market conditions. This followed the closure of three plants in 2008 and a significant downsizing of another.

As part of its continued focus on cost containment, the Company approved the closure of an additional four plants in early 2010. IAROC was $242 million in 2008 and included asset impairment charges of $183 million for that year.

I will now move to financial expenses. For the first seven months of 2009, financial expenses were $74 million. That included $125 million of interest on prepetition debt, which was extinguished as part of the plan of reorganization, partially offset by $4.74 million of foreign exchange gains. These gains resulted primarily from the favorable movement of the Canadian dollar and its impact on the translation of foreign currency debt.

The Company changed its functional currency on adoption of fresh start to the US dollar and is no longer exposed to foreign currency risk on its long-term debt.

In addition as required for companies while under bankruptcy protection, we separately reported a reorganization expense of $67 million, mainly professional fees for the first seven months of 2009 compared to $106 million for the entire year 2008.

For the last five months of the year despite ongoing volume challenges, Worldcolor, the new Company, had operating income of $78 million and substantially lower financial expenses of $30 million. Its effective tax rate of 47% was unfavorably impacted by a non-deductibility of dividends on preferred shares which are classified as a liability under Canadian GAAP in addition to a separate tax thereon.

And finally, net income for the new Company was $21 million or $0.29 per share. We consider the financial results of the last five months of 2009 to be a solid performance and reflect new positive momentum. The Company has taken many of the necessary steps to continue to produce exceptional results.

So I'm going to turn it back to you.

Thanks, Andy. So now we'll take questions on the fourth-quarter results. Eric, can you please repeat the directions for people to be able to answer -- ask questions?

(Operator Instructions) Scott Cuthbertson, TD Newcrest.

Thanks very much and good morning. First of all, I just want to say great job on the results. Just a tremendous performance. Well done in a difficult situation. And just looking at the nature of the cost saves, it seems to indicate to me that they should be sustainable given that there is some of your reductions in overhead and that should allow you to continue to outperform relative to the original projections that you made almost a year ago. At least I would think in the first half of this year.

I just wondered if you could comment on that as an assumption and on the pacing you are seeing so far this year?

We are feeling fine about what we are seeing so far this year. I would caution you that one can't cut one's way to glory forever, which is one of the reasons that we concluded that a combination transaction was in order here.

Okay, but is it --? I guess the results would be more pronounced probably in the first half of this year than in the second half of this year when you were going to lap more difficult comps, correct?

No, what I would say is we put our projections in the S4 and you should take a look at them. There's nothing new.

Okay. I was just remarking on the remarkable outperformance versus those projections. Giving me more optimism that you could do better than those.

I thank you for your optimism.

Okay, thanks. I'll get back in the queue for the S4 questions.

[George MacArnold], RBC.

Thanks very much. It's a Drew McReynolds. Again, just echoing Scott's words on the performance, great job. Just a couple of minor ones. Obviously big picture environment you've spoken to. Are you just prepared to give a little bit more granularity on individual segments, specifically kind of book directories, different geographic regions? Can you get into that type of granularity?

You know, we are still getting our arms around this. We've been in place since September 8. We are -- we have had some pleasant surprises. We've had some unpleasant surprises. Ask us again in 90 days, please.

On -- just going back to what was projected on restructuring coming out of bankruptcy back in the summer, you just alluded to some additional plant closures in early 2010. Is it safe to say that your scheduled restructuring program coming out of that process is certainly changing in response to market conditions, or is the bulk of what was originally projected still expected to transpire?

Actually, you know you raise a very good question and you raise it in a way that allows me to be more responsive to your colleague from TD Newcrest than I was a second ago. The 277 was not our number. We inherited the 277 number -- we inherited lots of things, but the two principal things that you should be aware of for this call that we inherited were that 277 number, which is not a number that we would have used. That is to say, the surprise of 329 as compared with 277 is not as dramatic as we would have had it be if we were putting out a number at the beginning, and I think that's really important.

I think it's also important in response to the TD Newcrest question that was asked earlier. The second thing that we inherited and I'll get into this more when we talk about the S4, is we inherited a capital structure that is draconian with respect to barrier one warrants and barrier to warrants, also not of our creation. But which impelled us to clean up that capital structure as quickly as possible, another reason for the combination with Quad/Graphics.

Okay, maybe just a final question here and it's probably one for Andy. A lot of moving parts to Worldcolor's tax status as a stand-alone entity. I am just wondering what -- if you can shed some light on what that would be in 2010 again as a stand-alone entity.

Well, it's going to be -- to begin with, it's a very complicated technical tax status. What happens as you emerge from bankruptcy and you don't pay any taxes on the forgiveness of debt, it has the impact of reducing what we call tax attributes which are primarily eliminating the loss carry forwards that the Company would have had in eliminating its basis, it's tax basis, or reducing its tax basis and then ultimately doing some other things that are very technical with respect to the asset carrying values of its subsidiaries.

Having said all of that, if Worldcolor continued as it is right now as a separate entity, nasty things would have continued. We would have not gotten the tax shield that we had previously. We would continue to pay dividend taxes, heavy taxes on the dividends of the preferred stocks, which under Canadian tax and accounting are considered to be liabilities, debt liabilities. And you pay on tax on that. So that without the further restructuring, Worldcolor would have continued to have a very high effective tax rate and a very high cash tax rate. That's the best I can do with that.

That is helpful, Andy. Thanks very much.

I think we are going to move on to questions on the S4, if we may. So, Erick if you would tee those up for us, that would be great.

(Operator Instructions) Scott Cuthbertson.

Scott, apologies. I didn't quite understand what you were asking the first time around and when I heard from RBC I did. So I didn't mean to be elusive in any way. If there's anything further you want to ask before you get into the S4, batter up.

No, that's fine. Thanks very much, Mark. Between the two of us I think we got the answer. That's great.

Just a couple questions on the S4, I just wondered if you could describe the regulatory review process and the timeline in a bit more detail. In particular when you are going to file the HSR and when the review period expires and maybe just some color on the investment Canada process from your perspective.

Sure, I'm delighted to report that we have made good progress on all of the material filings that we needed to make, not just the two that you mentioned. And that the applications that need to be filed are filed and we are in the waiting period.

Any idea when the review period will be over?

We will announce as we learn of them, all expirations of review periods and all approvals that are forthcoming.

Okay. My second question just deals a little bit with something I've been getting a lot from shareholders. One of the reasons cited for the Board deciding to recommend the arrangement was advice from Worldcolor management as to other possible strategic transactions and the likelihood they could get done, economics, benefit that they would realize to Worldcolor shareholders.

I just wondered if you could elaborate on this a little bit and the reason for the decision to pursue an exclusive negotiation [Quad] rather than a different process.

Understood. You are asking me why we didn't conduct a formal auction and the answer is very simple. In August of last year, I went to lunch at a restaurant on the West side of Manhattan with Joel Quadracci in what I would have described as throwing a very, very long ball to a receiver that I wasn't even sure I could see.

We have as a result of Joel's thoughtful expression of interest soon after that lunch been able to announce a combination agreement with the leading company in the industry, with the most forward-looking company in the industry, with the company with the finest technology in the industry, with the company with the finest management team, in particularly leadership in the industry, best automation in the industry. This is a chance for us to leap frog by years the opportunity that was before us -- and I use the word opportunity carefully -- to slug our way through this on a stand-alone basis.

So the first part of response to your question is that this as compared to going it alone was very, very far from a close call. Second, in terms of other opportunities, there have been some expressions of interest very close in advance of my first meeting with Joel, sufficiently close so that we knew what the bid was. And as we got into further explorations with Quad/Graphics, it became clear that the value on offer for our shareholders here was meaningfully higher.

Also remember it takes a willing buyer and a willing seller to do anything other than a hostile transaction. We've never been involved in a hostile transaction and don't intend at any point to be involved in a hostile transaction.

We -- Joel wanted exclusivity as a quid pro quo for devoting what we knew would be months and months and months of management time on both sides getting this done, and that was the price that we paid for getting this done.

There is no question in my mind that we have the very best merger partner here and that we have created the greatest value for our shareholders that was available. Absolutely none.

The question you didn't ask me but which somebody else will if you don't so I will anticipate it is, well gee, why did you take 40%? It looks like your numbers were pretty good here. Well, the answer to that one is he started offering us 30% and I can say -- I've been to this film a few times before, like 60, and we are delighted with a 60/40 split.

As you come to know more about Quad/Graphics, which people will as they study the S4 and more particularly as they study the revised S4 because as you know the one that's been filed is just a first draft, as you come to appreciate, as I have and as other members of our management team and our advisors and our Board have, just what a spaceship it is we are associating ourselves with in terms of taking a ride into the future. The 40% was when you look at their margins, when you look at how I believe they are going to trade based on their historical performance as compared with everyone else in the printing industry, the 60/40 split I found to be remarkably fair.

Now I wasn't born yesterday. I tried to get 40.1. I tried to get more than that, as a matter of fact. This was the best price on offer and we are pleased with it.

Thanks very much, Mark. That is very helpful. Just one small thought, if I may, and this pertains to my earlier questions just on the remarkable performance you guys have achieved during your time at the rings.

You know, the valuation work done by Morgan Stanley was based on those projections that you inherited. And obviously you have done a lot better. Do you anticipate any process by which that valuation will be updated to reflect more recent performance?

This valuation was based on 2010. It was not based on 2009 and our view of 2010 has not changed and interestingly enough if you look at our 2010 as compared with the exit number from bankruptcy on July 21 for 2010, the numbers are right on top of one another. And as long as we thought they got the 277, we actually think they got 2010 right.

So you stand by the -- you are still going with the 2010

Absolutely yes. That's our number.

Okay, thanks very much.

George MacArnold, RBC.

It's Drew McReynolds again. Just a couple of follow-ups here. Will Quad/Graphics report a Q1 quarter, assuming the transaction doesn't close before then?

John, I would pick kick this over to you. I don't --

How we report the Q1 is really going to depend on where we are in the registration process and the comments back and forth. Depending on how many comments we get and how many rounds of comments, will determine whether we are effective prior to May 15. And if we are not effective by May 15, then the first quarter will be reflected in another revision of the S4 before it goes effective.

Okay, thank you for that. Maybe just getting back to Mark, I guess the big question I get from a number of folks is just trying to put the magnitude of the synergies into a context. And I am not as well-versed in the industry as you are and there definitely is some good detail in the S4. But if I go back to kind of the Worldcolor, Quebecor World merger with similar revenues, they expected $75 million in synergies and we are obviously 10 years later dealing with a bigger number.

So my question without getting too specific is has there been fundamental changes that would allow you within the industry to realize more synergies and/or is there something very unique about this particular combination?

I don't think that the Quebecor printing acquisition of the old Worldcolor press is necessarily the right sort of example to be looking at here. I think if you look at some of the other large combinations in the industry, all of which I have been associated with, you will find that those are more indicative of what's going on here. And you will also realize that I have tried never to be in the business of over promising and under delivering. So I'm feeling pretty good about the synergy opportunities that I see in front of us.

One of the reasons I'm feeling good about it is I've come to know the Worldcolor managers very well. I've come to see the Worldcolor managers' ability to take costs out as necessary. I have also had the privilege of coming to know Quad/Graphics management both at the very top and down a bit into the organization and I shudder to think assuming that the laser beam is properly in focus on any given day, just how well these guys are going to do it getting the synergies they say they're going to get. They are really, really good at this, the best I've ever seen.

Okay, my final question for now will be -- and again, I hate to do this to either John or Andy. It is just on a combined basis what the tax status of the combined entity would be assuming closing of the transaction, in layman's terms if --

Are you asking what the pro forma tax rate is for the combined company?

That would do, absolutely.

I don't think we have it.

This is John Fowler. We don't have it yet. As Andy indicated, they have a very complicated situation. There's a lot of moving parts and putting us all together and coming out with guidance regarding future tax rates would be something that will follow significantly down the road.

I would add to that, look, transparency, we have been at this for a long time. Transparency is really important to us, so -- and credibility with you is really important to us. So look, you know we are in the process or we will be in the process over coming weeks of preparing a revised S4. We are also going to once the S4 is finished with its SEC process and before the closing, we are going to do another call like this. We are going to do a road show.

And so there's going to be an opportunity for all investors to know everything that we can possibly tell them at the time. So I would urge any of you who are listening and others if there's something that you would like to see in the next round of the S4, by all means communicate it to us. The names of the people are on the S4. They are in our recent press release, etc., -- is communicate what you would like to see in the S4. We can't promise we're going to be able to be responsive to every single request that you make, but the more we know about what you want, the better job we will be able to do of the most fulsome disclosure.

So please don't be shy about that. And again, you will have between now and closing an opportunity to talk to this group again on the telephone and we would intend also to do a road show closer to the closing.

Thank you.

David Dean, Cormark.

Good morning. Thanks for taking the questions. I am hoping you can go through the mechanics of how the effective price will be determined as they relate to the barrier warrants.

Boy, I was hoping you wouldn't ask that question. That is akin to asking -- and I'm going to try to do this without exaggerating at all -- how it is exactly that one would disassemble a 747 and reassemble it in midair. The calculation -- and again, I talked about the importance of getting rid of the Worldcolor capital structure that we inherited from the creditors and their advisers who put this together. It is -- I would urge you to read the warrant indenture as closely as you can. I would urge you to ask specific questions after reading the warrant indenture, and we will do our best to get them into a better description in the next round of the S4.

But at the moment, we don't have anything more for you than is in the S4. I can tell you that I believe it is unlikely -- I'm speaking for myself only here -- I believe that it is unlikely that we will end up receiving from Quad/Graphics more than the $93.333333 million in cash and that the $135 million number that is in the S4 and in the agreement is one that is unlikely in the extreme to occur.

And I can tell you that I believe it is likely that some of that $93.333 million will be used after satisfying obligations in respect of warrants and RSUs and DSUs and things like that, there will be part of the consideration, the 40% consideration paid to Worldcolor shareholders in cash. How much I can't predict because it's all about the highest 30 consecutive days of trading between now and the closing date.

Okay, so if that's the case then that would suggest then that some of the warrants probably the $13 warrants might be exercised. Is that what you mean by that?

I would say the answer to might be exercised is yes.

Now though given that under a change of control provision I believe the Board is the determining factor as to what the effective price is and when I look at it, you can look at the share price at the time of close or you can come out with a different number. So is it then -- are you confirming that the Board then can come out with possibly a number that is higher than what the share price is?

I believe that there is some limitation on that in the arrangement agreement. If there's not, I am misremembering and I would refer you to the arrangement agreement for that. But the fact of the matter is you are asking and I am endeavoring not to be in the slightest bit elusive to your questions here, you are asking questions that some of the greatest minds available are coping with as we speak.

Again, please feel free to ask again specific questions after you've reviewed the warrant indenture and so forth so we can try to make the disclosure better in the next round of the S4. But we are dealing with warrant related documents that are complex, draconian, and that's just as much as I can say right now.

Okay, thanks for asking -- answering the tough question the best you can. Just one more. Are you anticipating a second request from HSR?

I am the eternal optimist. I believe that the antitrust regulators are very knowledgeable about our industry. I have been associated with them in the past. I know there will be -- they will be thorough. I am hopeful that we will not have a second request. But we have had second requests in previous transactions that we've been associated with.

Hope is not a strategy. We will see. I know they will do their job and we will cooperate with them fully.

Thank you very much.

That was our last question. I will now turn the call back to Mark Angelson for closing remarks. Go ahead, please.

Thank you very much. We are going to get back to work. We are grateful to all of you for the time that you spent with us this morning. I am particularly thankful to the questioners who participated in this morning's call. It gave us a chance to get the message out.

I would leave you with a few parting messages. Quad/Graphics is the printing company of the future. It is, in my opinion, the best home for the greatest number of Worldcolor employees, and I am delighted on account of all of our constituents with the arrangement that we have made.

I would remind you of my remark in our last conference call that there are three parties to this transaction and we need all three of them. Without all three of them, there wouldn't be a deal. One is Quad/Graphics. The second is Worldcolor and the third is those beautiful synergies, and we are just as pleased as we can be about that.

It's also important that you should focus on the fact that we have an impossible capital structure. As you will have read in the history of the arrangement in the S4, we were looking very carefully at refinancing if we were going to go on a stand-alone basis for a while. We put that on hold for the purpose of conducting our negotiations with Quad/Graphics, which ended up being successful. But the capital structure in this Company is a real issue for us. It doesn't give us a lot of room to maneuver.

I am delighted to say that with respect to covenants and so forth, we've got lots of room on all fronts, but getting rid of those barrier warrants is something that is going to be in the best long-term interest of all of the shareholders of this Company, and that's an important reason why we did this.

I thank you all. I wish you well. We will talk to you in 90 days if not sooner. God bless.

Thank you, ladies and gentlemen. This conference is concluded.