Sinclair Inc (SBGI) 2008 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Third Quarter 2008 Fisher Communications Conference Call. My name is Chanel and I'll be your coordinator for today. At this time all participants are in listen only mode. We will be facilitating a question and answer session towards the end of this conference. (Operator Instructions).

As a reminder, this conference is being recorded for replay purposes. I would now like to turn our presentation over to your host for today's call, Mr. Joe Lovejoy, Senior Vice President and Chief Financial Officer. Please proceed.

Thank you. Good afternoon, everyone, and thank you for joining us. Before we get started, let me remind you that this call contains forward-looking statements relating to the development of the Company's operations, products and services and anticipated future operating results. These statements are based on information available at the time they are made but are necessarily subject to a number of risks and uncertainties and actual results may differ materially from expectations.

Factors that could cause actual results to differ materially from those expectations are described in our annual report on Form 10-K and quarterly reports on Form 10-Q as filed periodically with the Securities and Exchange Commission. The Company undertakes no obligation to update publicly any forward-looking statements due to new information, events or circumstances after the date of this conference call or to reflect the occurrence of unanticipated events.

A webcast of this call is available in the investor relations portion of our website and will be archived in audio form on the website for a limited period. With that, I'll turn the call over to Colleen Brown, our President and Chief Executive Officer.

Thanks, Joe. Good afternoon and thank you for joining us. As you may have seen from the press release, our third quarter financial performance was impacted by the economic slowdown and the sharp decline in advertising during the period. This is unquestionably a tough time for our economy and for advertising in general.

Despite improving competitive performance for our stations and strong Internet growth, the combination of the credit crisis, weakening consumer confidence and very soft economic conditions have caused many advertisers to curtail their spending. So in what would typically have been a growth year, we have been challenged to drive revenue creatively and rapidly and to appropriately address every cost component and spending decision in order to offset lower than expected revenues.

We had no Olympic programming on our stations; and although we benefited from strong political spending, our markets did not see any Presidential candidate advertising in the quarter. The political revenue we did receive was not enough to offset the general reduction in advertising, particularly from auto and retail.

Given the momentous events in the financial markets that have transpired since our last call, we thought it would be appropriate for us to spend a few moments today talking about how those issues are affecting our performance and the steps we are taking to manage the business in this environment. As always, we will take your questions following our prepared remarks.

Despite the progress we have made in restructuring the Company, Fisher is obviously not immune to the challenges that are impacting every single company in the industry. Although 2008 has been unprecedented political advertising year in some markets, total US ad spending is now expected to decline in 2008. Just this past week experts have begun to revise forecasts downward estimating a slight decline year over year in total advertising for 2008.

Across the industry automotive advertising has declined significantly. At Fisher we experienced a 41% decline in automotive ad revenues from the same period last year. In fact, the declines in automotive were so precipitous in the quarter that for the first time in recent memory, automotive was not our number one advertising category.

Outside of political, professional services, which consists primarily of medical spending, became the number one category. The reduction in advertising spending was not limited to automotive. We, like most of our competitors, also experienced declines in just about every category including retail, financial, restaurant and packaged goods. We did see increases in entertainment and pharmaceutical.

At Fisher we are highly cognizant of the environment in which we are trying to grow margins, cash flow and earnings and are clearly not pleased with the quarter's results. But we also recognize that most of the factors that have impacted our short-term performance result from macroeconomic factors.

I am encouraged by the progress that our stations continue to make in this environment. We want to ensure that when the economic tide turns, Fisher emerges as a stronger, well-positioned competitor. Since we cannot anticipate the duration of the downturn, we are intensely committed to reducing overhead costs, making operational improvements, and improving key financial metrics.

Our consistent operating strategy has helped us grow revenue, increase market share, diversify revenue streams and improve returns over the last few years. For example, we have achieved an increase in our share of market revenue in the majority of our markets this year including significant share gains for our Bakersfield duopoly as well as our Seattle radio cluster. These gains are direct result of stronger ratings. Our station scored some key victories in the July ratings period.

For example, in 6 of our 7 markets our stations ranked either number one or number two in early evening news in the coveted adult 25-54 demographic. In addition, our 2 stations at Bakersfield became the top 2 stations in the late news within the marketplace. Our strategy to expand Fisher's demographic reach and develop new revenue continues to deliver positive results as our Spanish-language television stations generated strong revenue growth at 22% and broadcast cash flow at these stations increased at an even more impressive 30% in the quarter as we continue to fully develop these stations.

Similarly, our online business experienced substantial revenue growth of approximately 22% during the quarter. Average monthly unique visitors grew 30% from third quarter of 2007. In January, we began to take action for what we anticipated would be a difficult year. While Fisher wasn't experiencing the same slowdown as some of our peers at that time, our concern was the slowdown would eventually impact us.

This concern began to play out in second quarter and was deeply felt in third quarter and we anticipate a very challenging 12 months ahead. During the quarter we continued to aggressively control our costs. So far this year we have identified programming changes and other efficiencies that will result in annualized savings of approximately $3 million.

Regarding the Plaza, we are pleased with the level of interest, but clearly the current credit market environment has impacted our review of options. For now we've decided to suspend specific direct marketing efforts for the Fisher Plaza. We are pleased with the improving financial performance of this asset and remain committed to maximizing its value until such time we may decide to reconsider our options.

Although we face many challenges, our employees understand these issues and are committed to the success of Fisher. We have gained competitive strength and momentum in our marketplaces and through continued focus on our goals, we will be well positioned when better economic times return. And with that, I'll turn the call back over to Joe.

Thank you, Colleen. We issued our quarterly release of financial results this morning and we plan to file our Form 10-Q on Monday the 10th. Those documents include an in- depth information regarding our financial results so please refer to those sources for additional information.

Consistent with our improved transparency initiative, we will be discussing certain non-GAAP financial measures such as broadcast cash flow and EBITDA. Definitions and reconciliations of both terms can be found in our press release.

Consolidated revenue for the third quarter of 2008 grew 2.8% to $41.9 million from $40.8 million in the third quarter of 2007. Loss from operations was $1 million for the third quarter compared with income from operations of $1.7 million during the same period in 2007. We reported net income of $29.8 million or $3.41 a share for the third quarter, compared to a net loss of $533,000 or $0.06 per share in the third quarter of 2007.

Excluding the after tax effects of the gain from the sale of Safeco stock of $31.8 million, we would have recorded a net loss of $2.1 million in the third quarter of 2008 or $0.24 per share. Consolidated EBITDA totaled $3.1 million for the third quarter of 2008, a decrease of $2.7 million from the third quarter of 2007. The decrease was largely attributable to weakness in key advertising categories in our television segment, as Colleen alluded to earlier, as well as lower revenue from the broadcast of the Mariners in our radio segment.

Within the TV segment, increased Internet expenses also attributed to the decline in EBITDA. The decline was also attributable to the approximately $300,000 in severance expenses recorded in the quarter. We have made certain programming and operational decisions that will result in an 8% reduction in FTEs by the end of the year. We expect going forward annualized net pre-tax savings of approximately $3 million from those decisions as Colleen mentioned.

Our trailing fourth quarter operating cash flow as defined by our debt agreements was $27.7 million excluding the effect of our discontinued operations. The details of this calculation can be found on our website.

We ended the quarter with current assets of $120 million including cash of $19.2 million and short-term investments of $59.2 million. As of the end of third quarter 2008, we had our entire $20 million credit facility available to us. And next I'll review our third quarter performance by operating segment.

Our television segment reported revenues of $27.4 million in the third quarter, an increase of 7.3% over the $25.5 million generated in the third quarter of 2007. TV BCF was $5.6 million compared with $6.2 million in the same period of 2007, a decrease of 9.7%. The Company reported a TV BCF margin of 21.1% in the third quarter of '08, a decrease from 24.7% in the third quarter of 2007.

During the third quarter, we recorded $5.4 million of political revenue compared to $1.2 million during the same period last year. Fisher also earned $750,000 in retransmission consent revenue in the third quarter, which represented an 11.3% increase over the third quarter of 2007. As discussed on prior calls, our current retransmission revenues primarily attributable to our satellite retransmission agreement, several of our major cable retransmission agreements expire at the end of the year, and as we renegotiate those contracts, we expect that this source of revenue will be come more significant in future years.

On a same-station television basis, Fisher's 2008 third quarter revenue was $25.3 million compared with $25.5 million in the third quarter of 2007, a decrease of 0.9%. Same-station TV BCF was $5.3 million compared with $6.2 million in the same period of 2007 or a decrease of 14%. Expenses at our English-language stations were virtually flat on a same-station basis from the third quarter of 2007.

Turning to radio, in our radio segment revenue decreased 9.9% from the third quarter of 2007. For the third quarter of 2008 our radio segment reported revenues of $11.3 million. Broadcast cash flow was negative $275,000 compared with a positive BCF of $1.2 million in the same period of 2007. The decrease was largely attributable to a 21% decline in Mariners related revenue in the third quarter of 2008, our final quarter of broadcasting Mariners baseball games.

Despite an 8% decline in the overall Seattle radio market in the third quarter, our radio stations increased market share in the quarter and have done so now for 5 quarters in a row. Without the impact of the Mariners contract, we generated a radio BCF margin of 31.9% in the third quarter of 2008 compared to 34.8% in the third quarter of 2007.

For Plaza, for the third quarter of 2008, our Plaza segment reported revenues of $3.3 million, a 17% increase over the $2.8 million generated in the third quarter of 2007. EBITDA was $2.2 million in the third quarter of 2008, an increase from the $2 million reported in the third quarter of 2007. Occupancy was 97% at the end of the third quarter, no change from the end of the second quarter. And now I'll turn the call back to Colleen.

Thanks, Joe. As I shared with you last quarter, we are committed to improving our level of transparency and have increased the amount and the relevancy of the information we're providing our investors. That commitment will be there not only in good quarters but in challenging quarters as well.

In summary, while our third quarter results were impacted by the difficult economic environment, the Company continues to make progress toward improving our competitive position, growing market share, growing our key audiences, reducing costs and diversifying sources of revenue.

We believe these efforts will not only help us offset some of the near term challenges posed by the short term declines in ad spending, but more importantly these initiatives will make us a stronger -- stronger positioning Fisher to emerge from the down cycle as a leaner, more competitive company.

With that, we'll open the call up for your questions. Operator?

(Operator Instructions). The first question comes from the line of Bishop Cheen of Wachovia.

Hi, everyone. How are you?

Hi, Bishop.

Thanks for taking the question. Okay. So let me go right to the balance sheet here. Joe, you threw out so many numbers my head is spinning and I'm sure I'm going to be able to get my head around it. But didn't I see like a huge chunk of cash still on here at this point? No, that was assets. Tell me how much cash do you have at this point?

$19 million and $59 million in short term investments, commercial paper.

Okay. And $59 million even in commercial paper? We've done the dividend and its $19.0 million in cash?

$19.2 million rounded.

Okay.

And 59.2 in the short-term investments.

Okay. We've taken care of the dividend; we've sold all our Safeco shares. You've taken Plaza off the block because of who can blame you, the conditions for brick and mortar and every other kind of asset right now. And you've got plenty of cash to work your way through this dislocation, you're going to cut costs; but as we go out 10 months, the next capital event that is scheduled and I'm not going into whatever your dissident shareholders might be demanding, the next capital event that's scheduled is the call of your bonds which is totally at your option. Can you just give me some color and what your thinking is because I know you would love to have more flexibility in your balance sheet than bonds allow in terms of flexibility. So whatever you can tell us I think would be helpful.

Yes, flexibility's a good thing but as you know the coupon rate right now is pretty darn attractive in today's market. Who knows what 10 months from now will bring but no decision has been made at this point in terms of what we'll do in terms of the first call date. But right now we feel pretty good despite some of the limitations that the indenture has in it. We're pretty comfortable having that piece of capital in our structure.

Okay. Yes, I mean, makes sense to me when you see what's going on. And then your take on how deeply banged up the commercial real estate market is. That's quite an attractive building you have and a great location and normally we would never be having this discussion, but clearly you're not going to sell it into an extremely low bid market or a no bid market. What's your sense out there on how tough it is for commercial real estate?

I think it's tough for anybody that's trying to raise capital to acquire any asset these days. And that's kind of why, like you mentioned, I mean this is not the best environment to be selling any asset that requires, and even if a buyer doesn't require financing, the marketplace is such that most buyers require financing and the pricings based on that, most of the buyers. So it is an attractive asset. We have some opportunities to maximize value further and we'll reconsider when markets improve.

Okay. And then to the operating side, can you give me a sense, two questions -- (a), you've identified $3 million of annualized operating cuts. How much of that is head count, how much of that is other kinds of expenses; and (b) can you give us a sense on where you are in the development of your retransmission revenue segment which is very high margin and your new media and it's not retrans or Internet or call it what you want, whatever euphemism you guys call the kind of, not the traditional revenue streams?

Sure, Bishop. First of all, on the $3 million of annualized, it's no surprise that the broadcast industry is about 70% personnel costs so the majority of that is personnel driven and head reduction driven. Obviously going forward, we'll realize the full benefit of that since most of it came in the back half of the year as well as offset by severance costs.

I do feel that we were able to keep severance costs to a minimum by working our way through the process rather than in an abrupt decision. On the retrans itself, we are in negotiations. I don't think it's appropriate to vet those negotiations in the press or even on a conference call but we are actively in negotiations and so far they are going well, but that does not mean necessarily we will get everything that we're asking for.

We have asked for cash and it's a great deal of money for the Company if we are successful so we will continue to be very, very bullish on pursuing this. As far as new media goes, our costs ramped up because our sales are ramping up and we've seen great growth in Internet revenue, even despite the softness in advertising in general. However, again, with this kind of effort, it's pretty much based on employees and salaries and is highly variable expense against revenue.

So I feel very confident that as revenue grows we can add, appropriately, AEs or sales folks or we can reduce sales folks as the revenue constricts itself if it follows the same way that we've seen advertising in the television or radio sector go. So I'm very, very encouraged with our new media sector. We have grown tremendously and I anticipate that to continue. We especially saw the benefit during the elections of what a robust website can provide, and I think that that is absolutely one of the new revenue streams that is going to be critical for the future of this Company particularly.

From a cash flow contributing viewpoint, how many years or how long do you think before your new media segment will be positive cash flow?

We've been running pretty close to break even although obviously with the softness in general advertising, we don't anticipate that to continue. We're very aware of not overspending in the investment. So we are extremely conscious of cutting our costs as much as we can, where we can, without hurting the momentum that we've gained. We have long said that we would be profitable next year. I would like it to be sooner but I think that is realistic. We're working toward that end but, of course, with the softness in the advertising, we're reassessing right now.

Okay. And last question I promise to shut up and go. Give us a sense if you could if you have this handy your duplicated and unduplicated TV homes in your footprint that would clearly be on the table in any negotiation on retrans.

Are you talking about duplicating between satellite and cable?

Yes or in your duopoly. In other words, if one of your markets has 500,000 homes but you have 2 facilities in there, that's a million homes.

Correct.

Yes, so I'm just kind of looking for a -- how many homes you reach, actual homes, not FCC attribution, and then how many duplicated homes.

Yes, that's a little bit different question than I took it be. Joe has that answer.

Yes, I don't have a specific answer but looking at it a different way, this might get you the same information for you. Our largest MSO is Comcast which is in primarily 3 of our markets, Seattle, Portland and Eugene, and there are close to 3.4 million subs.

Unduplicated.

Unduplicated. That's their subscribers.

Right. And so just trying to get a feel for--

Bishop, if you're trying to estimate revenue?

Yes.

Yes. What we have said in the past is if you use the modeling of approximately just, for example, a $0.10 per sub of what our potential is, it's in the $5 million range.

Okay. That's very helpful. Thank you.

You're welcome.

Your next question comes from the line of Barry Lucas of Gabelli & Company.

Good afternoon, Colleen, Joe. A quick math question if you don't mind. If I pull out political and we don't have that on a same-station basis but it looks like the core business was down 20% in the quarter. Is that what I'm really getting?

I've got that right here. Hang on; we've got that. I'm trying to find it here. Here it is, yes. 6.5% in local and core business national is 20% down.

Okay. And what are you seeing in terms of variance through October into November in the fourth quarter?

Yes, Barry, we don't give forward guidance; but I can tell you that since the political is now clearly behind us, that we did see late breaking political sort of started late in third quarter so and it hit really hard and we saw that continue through fourth quarter so we have over-achieved our expectations for political.

And as far as the rest of the 2 months I think it's a little bit early but we have seen bookings pick up and we are encouraged by that. I do see a stronger number of cancellations. I think it kind of falls into 2 camps. One camp is they book early wanting to reserve their space and they're optimistic, and then they have to cancel, and then we see those folks holding back and placing later as we have a combination of things going on for fourth quarter. I still think it's going to be a rough fourth quarter.

Right. Okay, thanks very much.

You're welcome, Barry.

Your next question comes from the line of Tom Kerr of Reed, Conner.

Hi there.

Hi, Tom.

Two questions -- one on the decline in the auto business, can you differentiate between dealers and manufacturers, which one's the big issue; and number two, on the Plaza can you tell us if you received any bids or if it was a situation where you received bids and didn't like the price you were getting?

No, we had a very robust process. A lot of activity and a lot of interest and many, what I call very good bids. But in the third round--second round or third round?

Second.

Second round when asked to verify financing, all of them started slow walking the financing. So it became evident to us that it was going to have to be a discount if there's even going to be the ability to do anything, and ultimately our Board decided that this is not the environment to pursue this.

Okay. And then on the auto business?

Yes, I can speak from that. The dealer business has been better than the manufacturing business. To give you a little context, in first quarter for Fisher we were the opposite of the market. In general, the industry numbers were down 5 and in general we were up 5. In second quarter we were about even with the market and in third quarter I'm anticipating, I don't think I'm going to be wrong, but I'm anticipating we're a little worse than the market and I think it just caught up to the northwest a little bit later than the rest of the country. But the dealer market has been hit but not hit as hard as the manufacturing market.

Okay. Is that pretty much across all your regions?

Yes, pretty solidly. California has been worse all around.

Great. Okay, that's it.

Thank you.

Your next question comes from the line of Robert Berzins, of Post Advisory.

Good afternoon. As an investor, if I was looking at this Company a year ago, I would have thought of it as being the holder of basically 3 asset groups, Fisher Plaza, Safeco stock, as well as the broadcasting business. Now in part because of your voluntary sales of Safeco and the ultimate sale of Safeco Company, you're down to two businesses, Fisher Plaza and broadcasting. You've been more diversified than most people have been in the broadcasting space.

Now admittedly your Fisher Plaza sale is on hold for the time being but at some point in time I'm sure you'll sell it. Then you'll be looking pretty much like a broadcasting pure play. Where will you be? Are you thinking about possibly eliminating some secular risk by trying to establish a portfolio of assets that, again, provides diversity over two or three areas, or should we expect you to become more of a concentrated broadcasting play? In part I'm asking what your thoughts are with respect to the use of the almost $80 million in cash. (multiple speakers).

Just to provide you a little context, the Safeco really was not a voluntary.

Well, you sold shares in advance of that announcement though.

Right, mainly because we didn't want to play arbitrage and we saw the market softening and that worried us, not that we had any inside information that the deal wouldn't close but we didn't want to be left holding the bag if you will on a deal that had been broken. So we long ago said probably now 4 years ago, although I wasn't here then, that this Company wanted to emphasize and move toward a pure play and that is what we have been doing. The fact that Safeco sold was something that complimented our strategy.

As far as the Plaza goes, obviously it's the home to a big number of our assets and so whatever we do here has to make strategic sense as well as economic sense for the Company. Bottom line, in diversifying and your question about diversification, I think it makes sense for us to, if we're looking at increasing shareholder value over the long term, to look at those opportunities that build off of what we currently do.

If there is something that makes sense that can build shareholder value, we will consider it and obviously in a diversification sense, that is quite attractive. I do believe that you're seeing multi-platform media becoming very successful and finding ways to capitalize on that for our shareholders is very attractive. But we're not going to do it if it's not extremely attractive especially in this environment.

Okay. So the bottom line is you think of media as being your core business and you'll probably be expanding in and around the media industries rather than trying to achieve diversity outside of the media industry?

Yes, that is correct.

And you apparently feel comfortable with the secular risks, DVRs, Internet competition, you feel comfortable with that?

Yes, obviously we are in the media business and there's a great deal of research right now that we can dive down to discuss further and I'd be happy to discuss off line with you specifically but the various technology applications that are available don't always hurt and sometimes help what we are all about. So I do believe that how we expand has to be built off the core brands and the very strong brands that exist in our current markets. And that is our best opportunity to drive value to the shareholder.

Okay. Last question, and really this is a follow up, do you have any thoughts you can share with respect to the use of the $80 million?

Yes, I'm sorry you did ask that and I did not follow up. Joe, I don't know if you want to add on to what I'm going to say but obviously I feel very strongly about having a healthy balance sheet and we are going to be extremely thoughtful and strategic about how we use that. There are a number of ways that it can be used. We continue to evaluate that and it is in the regular course of Board discussion at each Board meeting and we continue to discuss it and we will discuss it in December.

Have you considered open market purchases of your bonds?

We have considered that and we continue to consider it. We have some restrictions in terms of our credit agreement; but as Colleen said, in this environment we really need to be cognizant of cash as king and have a strong balance sheet, maybe more so than in ordinary times. You also have to look at the rate of return. If you do the analysis based on the current pricing of the bonds, it is pretty attractive and you have to weigh that into the analysis but right now we're considering it. Let's put it that way, but we do have some constraints as it relates to our agreements.

Okay. Is it an absolute prohibition or is it subject to some kind of test? I just thought that by virtue of having sold off so much Safeco stock you'd have pretty open basket for redeploying that in other assets like bonds.

Not with the revolver, the credit agreement.

Okay. Thank you very much.

Thank you.

Your next question comes from the line of Kevin Seagraves of Fort Washington.

Hello. The CP investments that you guys have, do you guys have full access to that? You didn't end up in something that's lost liquidity by any chance?

Well, I think generally speaking most CP if not all CP lost liquidity. They're the highest rated A1P1 so we're very confident. We keep in touch with the bank on a continual basis and the market valuation is very close to the book value so we don't see any issues there.

Okay. And in terms of Fisher Plaza, when you look at that into 2009, not in terms of selling it but in terms of the business as it stands today in terms of the leasing and everything else that you have there, do you see anything on the horizon there in terms of either leases coming up or other revenue. I don't fully understand all the revenue sources there. It's just in the environment that we're in now, do you feel pretty comfortable with that business and the EBITDA that you generate from that?

We do. I mean, we do see some opportunity as leases roll over, as they always do, to renew at attractive rates. Remember this is not as a pretty unique property in terms of its technology and its type of tenancy mix, which is skewed to the data center type of environment. So it's not just, you can't just compare it to the office market so to speak, so there is some insulation there.

We do see -- on the expense side we see some opportunity to make more efficient the management of the property so we feel pretty comfortable that there are opportunities to improve EBITDA and the valuation.

I just want to add onto that too. We have a great variety of tenants and I think that also insulates us from one giant tenant leaving because we don't have that kind of mix. We have a lot of medium to small sized tenants with solid leases. And we detract that by the way.

Okay. And then have you guys seen any change in bad debt, either there or in the broadcasting side of the business?

No, and I keep my -- obviously my finger on the pulse of that and with our collections department and in terms of DSO we haven't seen any measurable change in either direction, actually, compared to last year and history in general. So we haven't seen any meaningful change there.

Okay. And then with the increase in cost over last year just in total, make sure I had them all -- you talked about the internet spending, you talked about Spanish-speaking stations and I assume some of the acquisition was in there. Does that pretty much cover the bulk of the increases year over year and cash expenses, operating expenses?

Yes, there's some with the radio segment as well with increased Mariners in particular, with the contractual. Again, 2008 being the last year but there was a stepped increase each year of the contract. And then we talked about a little bit of severance too.

Okay. And then as we roll forward, obviously you've got the cost savings initiatives, you've got the Mariners change. Is there any other pieces that we should think about in terms of, because it looks like the last three quarters from a not an SG&A perspective but the other costs, they've been relatively stable, excess to cost savings, is there anything we should expect either up or down to move the needle there much?

I think you pretty much got it on the expense side; again, on the revenue side the retransmission opportunity is a big focus of ours right now.

Okay. And then what would have been the net outlay on the dividends? Was that like 30, 31? Was that the right number?

Yes, 31 rounded.

Okay. That's all I had. Thanks a lot.

Good enough.

Your next question comes from the line of Bishop Cheen of Wachovia.

Hi, I'm sorry for the follow up. Just three small questions -- one, I know you do have, I can't recite them, typical restrictions in your $20 million credit facility on restricted payments and what you can use to buy back on bonds. Does that also apply to stock?

I'll have to check on the credit agreement, Bishop.

Okay.

There are restricted payments with the indenture and as you know the dividend amount was pretty close to that limit, so that's kind of a governing agreement for our sakes and the credit agreement is much, as you know, more easy to amend than an indenture.

Yes, and that's why I was going to follow up with you because the dividends now kind of go away which is the biggest difference in the operating cash flow metric versus the EBITDA metric.

That's correct.

So going forward they're going to look almost identical.

Yes, that's true.

And I was just wondering if since the dividends go away, if there was any linkage in any other kind of restricted payment going away in terms of buying back the stock?

No.

Okay. Two, the long-term debt is 150 which is roughly the face of the bond. Is there total debt, do you have some drawn on your credit facility now? I think you said you have nothing drawn?

That's correct, nothing.

Okay. So your total debt is 150?

Correct.

Okay. And 3, is there any kind of, and forgive me if anyone asked this, on the commercial paper with what $59 million in there, is there any kind of restriction or lockup meaningful on that commercial paper?

We lockup, I don't think so.

You can't actually access that?

From an accounting perspective, we intend to hold these until maturity. They all mature between now and early April of '09.

Okay.

We kept that short term on purpose for flexibility.

It's [like] a short term CD you're not going to touch, that $59 million is not liquidity at your fingertips until after April?

Well, it depends on how you look at it. We don't intend and we don't plan on needing it until April or even after that for that matter. But if we needed it, then we could access it.

You could access it. Okay. Just not your plan --

It's not our plan at all.

To do so. Okay. So we should think about you as a company with 7, I think Bob said it, close to $80 million of cash in the kitty?

Correct.

Well, that's quite an uptown dilemma.

Gee, thanks Bishop.

Thank you.

Okay. Thank you.

That is it for the q-and-a session. I'd now like to turn the call back over to Ms. Colleen Brown.

Well, thank you, everybody. These are interesting times and we will continue to persevere and look for ways to improve the operations of the Company. We appreciate your time today.

Ladies and gentlemen, that concludes the presentation. Thank you for your participation. You may now disconnect. Have a great day.