希悅爾 (SEE) 2003 Q3 法說會逐字稿

Welcome to this JohnsonDiversey 2003 third quarter earnings results conference call. Today's conference is being recorded. At this time for opening remarks and introductions, I would like to turn call over to Chief Executive Officer, Greg Lawton.

Good morning. This is Greg Lawton, President and Chief Executive Officer of JohnsonDiversey. I would like to thank everyone for joining our investor conference call. Today we will discuss our results for the quarter and nine months ended October 3, 2003. I'm joined on this call by Mike Bailey, CFO; John Matthews, Vice President Corporate Communications; Clive Newman, Corporate Controller; and Francisco Sanchez, Corporate Treasurer.

On this call we will provide an update on the general status of the business and the financial results for the third quarter and first nine months of 2003; next, an overview of the balance sheet at October 3, 2003; and finally, updates on the progress of integration and synergy realization. We also will have a question-and-answer session at the end of our presentation.

Some of the statements that will be made in this presentation are not historical facts and are forward-looking. These forward-looking statements are subject to risks and uncertainties, some of which are beyond our control. Please refer to the risk factors and cautionary statement concerning forward-looking statements section in our registration statement on form S4, which was declared effective by the SEC on November 27, 2002, for certain risks and uncertainties we face, including risks related to the integration of the DiverseyLever business and synergy realization.

The discussion today includes references to EBITDA for various periods. EBITDA is a non GAAP measure within the meaning of the SEC's Regulation G. In accordance with Regulation G, a reconciliation of EBITDA for the periods discussed today to net income -- which we believe is the GAAP measure most directly comparable to EBITDA -- was included in our form 10-Q for the quarter ended October 3, 2003, filed with the Securities and Exchange Commission on November 12, 2003. Our third quarter 10-Q is posted on our website at JohnsonDiversey.com, and can be accessed by clicking on the investor relations link.

The business update we are providing reflects comments on the JohnsonDiversey business on a consolidated basis for the quarter and nine months ended October 3, 2003. For the first time since closing the acquisition of DiverseyLever in May 2002, we will be able to provide more meaningful year-over-year comparisons of the post-merger business for the third quarter of 2003. There remain issues, however, with comparing the year-to-date results for 2003 with the year earlier. Since the DiverseyLever business was operated as a division of Unilever, not as a stand-alone independent entity, and as we did not acquire the Unilever business of selling consumer branded products into the institutional and industrial markets, for which we now act as a sales agent, reliable comparative information for the DiverseyLever business that we have purchased is not available for the first four months of 2002; and therefore, the financial information for the nine months ended October 3, 2003 will not be comparable to the same periods in 2002. We will provide estimates of how we believe the regional sales figures for the nine months of 2003 compare with the comparable period of 2002 had the business been combined, but these are only estimates; we have to wait until 2004 to have reliable comparative data against the prior annual period.

Let me turn to our global business trends. The third quarter marked a return to year-over-year growth after a flat second quarter. On a constant currency basis, sales grew by 2.4 percent for the third quarter of 2003 versus the third quarter of 2002, primarily due to growth in Europe, Japan and the Asia-Pacific regions. The quarter also saw significant progress in debt reduction as a result of the successful implementation of our action plans to better manage working capital and accelerate debt repayments.

Let me give you some color on how our businesses has been performing on a regional basis. Please note that estimated year over year sales comparisons are made on a constant currency basis. Let me comment first on the professional segment of our business.

Sales in our European region grew 3.9 percent in the third quarter of 2003 versus the third quarter of 2002. This continues the trend of strong growth in the region, where we estimate that sales have increased by 4.3 percent in the first 9 months of 2003 versus the same period year ago. These increases resulted from continued outstanding performances in Central Eastern Europe and Africa Middle East, with continued sales momentum building in several key Western European countries, including Germany and Italy. In Latin America, growth from significant customer wins in Mexico and cross selling success in our distribution channels in many countries, have compensated for the soft economy in Brazil, our largest market in the region. On a comparable basis, sales in the region were flat during the third quarter of 2003 versus the third quarter of 2002. We estimate that on a comparable basis, sales in the first nine months of 2003 grew by 4.7 percent versus the same period in 2002.

During 2003, our business in Japan continued to outperform the deflationary local economy, as we continue to grow market share with innovative new business models. The business grew by approximately three percent during the third quarter of 2003 versus the third quarter of 2002. This growth resulted from strong sales in the retail sector, particularly related to our total solutions relationship with Lawson, the second-largest convenience store chain in the country. We estimate that sales in Japan for the first nine months of 2003 were up 2 percent over the same period year ago. The rest of the Asia-Pacific region, excluding Japan, posted sales growth of 3.1 percent in the third quarter of 2003 versus the third quarter of 2002, led by sales growth in China. This also is a return to growth after a flat second quarter, reflecting the return of business travel and tourism as the region recovers from the impact of the SARS virus. We estimate that sales in the region have increased 3 percent in the first nine months of 2003 versus the same period year ago.

On a comparable basis, North American sales in the professional business were essentially flat for the first nine months of 2003 versus the same period a year ago, due primarily to a softening in our lodging and foodservice businesses, but reflecting continued strength in our sales to building service contractors and to retail end-users. Third quarter sales were down 1 percent versus the third quarter of 2002. Performance in 2003 reflects continued isolated restructuring challenges, coupled with lower consumption of products by existing foodservice and food and beverage customers. The third quarter results reflect an improvement over second quarter, and we expect that actions we are taking will result in continued improvements.

Polymer sales, including intercompany sales to the professional segment, grew by 4 percent in the third quarter of 2003 compared to the third quarter of 2002. Sales in the first nine months of 2003 grew by 9 percent versus the same period a year ago. These increases were due primarily to new business in the printing and packaging and global coatings markets. Higher unit sales volumes were partially offset by a decline in average selling prices. The business experienced reduced demand for higher priced specialty polymers, and experienced a faster growth in the Asia-Pacific region, where average selling prices are lower than in other markets, both negatively impacting average selling prices.

Building on the innovations we discussed in the second quarter, I would like to give you an update on some developments that are exciting our sales teams and the industry. As we have indicated in the prior briefing, we believe our success in providing industry-leading innovations that meet specific customer needs will be an important driver of our near and longer-term financial performance. At the annual International Sanitary and Supply Association trade show in Chicago last month, we rolled out our new RTD platform. RTD, which stands for ready to dispense, is a new dispensing and dilution control system that saves customers money while enhancing worker safety and reducing the impact to the environment. Prior to RTD, systems that regulated the dilution and dispensing of concentrated chemicals were typically used only in larger, higher volume customers, because of the requirements for significant upfront investment in sophisticated dilution control equipment.

The RTD system brings dilution control to the entire marketplace without the need for upfront investment. We believe this brings an important change to the industry, offering customers an alternative to upfront investment in dispensing equipment and opening up the benefits of secured dispensing and dilution control to a wider market. The system can accommodate most types of chemicals, from general planners to sanitizers and disinfectants. The response among customers already exposed to this product in the janitorial business in North America has been very encouraging. We are now preparing to sell RTD into additional sectors, and in 2004 it will be made available in regions around the world. Following in the footsteps of other new products launched in 2003, RTD is the strongest evidence yet that JohnsonDiversey's commitment to innovations targeted to our customers needs is really paying off.

Now I would like to have Mike Bailey, our CFO, take you through the financial results for JohnsonDiversey.

Thanks Greg. Again, I would like to remind you that any comparisons of the results for JohnsonDiversey for the nine months ended October 3, 2003 against the same period in 2002 include the DiverseyLever results for only five of the nine months in 2002, making historical comparisons of limited relevance. Comparisons for the third quarter of 2003 versus the third quarter of 2002 are more relevant as the results include the post-merger business for both periods. Also, a reconciliation of EBITDA to net income can be found in our third quarter 10-Q, which can be accessed from our website.

On an as reported basis, net sales for the third quarter of 2003 increased by $57 million, or 8.5 percent, to 730 million, compared to net sales of $674 million for the third quarter of 2002. Net sales for the first nine months of 2003 increased by 683 million, or 45.3 percent, to $2.2 billion, compared to net sales of 1.5 billion for the first nine months of 2002. The increase in sales for the nine-month period was primarily due to the acquisition of DiverseyLever on May 3, 2002. Now on a constant currency basis, as Greg previously mentioned, net sales for the third quarter of 2003 were up 2.4 percent compared to the third quarter of 2002. We estimate that on a comparable constant currency basis, net sales for the first nine months of 2003 were also up 2.4 percent compared to the first nine months of 2002. The revenue growth in 2003 was primarily driven by growth in Europe, Japan and the Asia-Pacific regions.

Gross profit for the quarter ended October 3, 2003 was 46.6 percent versus 47 percent for the comparable period in 2002. The slight decline in gross profit margin in the third quarter was primarily due to accounting adjustments of a nonrecurring nature of approximately $2 million, or 30 basis points, and declines in average selling prices in our polymer business of about $3 million, or 40 basis points. In addition, the professional business has also experienced adverse impacts on margins from a series of issues, including -- the inability to fully recover cost inflation and pricing; devaluation in key Latin American geographies; reduced average selling prices due to the deflationary environment in Japan; price discounts in the rest of Asia-Pacific in the interface of the SARS crisis, which have carried over into the third quarter; and adverse product mix in Europe. Now, strong synergy performance, as Clive Newman will discuss shortly, has more than offset these negative impacts in our professional business.

Gross profit margin for the nine months ended October 3, 2003, at 46.7 percent, was slightly higher than the 46.5 percent margin for the comparable period of 2002. As in the three-month analysis, our synergy program has acted not only to offset the decline in average selling prices in our polymer business, which again, accounts for about 40 basis points deterioration in gross margins, but also has more than offset the adverse influences on gross margin I just discussed, related to the margin performance in the recent quarter.

Marketing, administrative and general selling expenses for the third quarter of 2003 increased by $19 million, or 8 percent, to 264 million, compared to similar costs of $245 million for the third quarter of 2002. Expressed as a percent of net sales, marketing, administrative and general expenses for the quarter ended October 3, 2003 were 36.1 percent versus the 36.3 percent for the comparable period in 2002 -- a 20 business basis point reduction. The third quarter of 2003 includes incremental pension and public reporting compliant costs representing approximately 40 basis points. In addition, as with the industry at-large, we've incurred higher employee health care and insurance cost increases. All of these higher costs have been more than offset by benefits from our synergy program. Marketing, administrative and general expenses for the first nine months of 2003 increased by $270 million, or 51 percent, to $799 million, compared to similar costs of $529 million for the first nine months of 2002. This increase was primarily due to the acquisition of the DiverseyLever business.

EBITDA -- defined as net income before minority interest plus net interest expense, the provision for income taxes, depreciation and amortization expense -- increased $14 million, or 18 percent, to $88 million for the quarter ended October 3, 2003, from $74 million for the same period in 2002. The increase in EBITDA was primarily due to an increase in gross profit, driven by net sales growth, and a decrease in restructuring expense -- partially offset by the slight decline in gross profit margin, as described earlier -- and an increase in marketing, general administrative expenses.

EBITDA increased by $59 million to $248 million for the first nine months of 2003, from $189 million for the first nine months of 2002. The increase in EBITDA primarily -- resulted primarily from the acquisition of the DiverseyLever business, partially offset by restructuring and integration expenses and a reduction in other income, as compared to the previous year. Net income increased by 4.7 million, or 82 percent, to 10.4 million for the third quarter of 2003, from net income of $5.7 million for the comparable period in 2002. The quarter-over-quarter increase in net income was driven by higher gross profits and lower restructuring expenses, partially offset by the slight decline in gross profit margin and higher marketing, administrative and general expenses, as described earlier, and a higher tax provision. The higher tax provision was due to a combination of the higher pre-tax income and year-over-year adjustments to the effective tax rate.

Net income declined by $21 million, or 49 percent, to $22 million for the first nine months of 2003, from $43 million for the first nine months of 2002. The decrease in net income from for the first nine months of 2003 was largely driven by the increase in gross profit resulting from sales growth, the acquisition of the DiverseyLever business, and synergy benefits -- offset by higher marketing, administrative and general expenses -- higher research and development expenses and restructuring expenses, and lower other income. The nine months ended September 27, 2002 included a $16 million gain on an acquisition related forward contract and a $10 million gain on the sale of a product line in Japan. Excluding these other income impacts, net income this year increased by $5 million. For the quarter ending October 3 2003, we had capital expenditures of $36 million, compared to capital expenditures of $24 million for the comparable period a year ago. Of the 36 million of capital expenditures during the quarter, we estimate that 11 million were related to integration activities. Of the remainder, approximately 50 percent is attributable to investment in dispensing equipment. Total capital expenditures for the nine months ended October 3, 2003 were $98 million. This spending is in line with our revised expectations to reduce capital spending by 10 to $20 million versus the original $150 million target for 2003.

I will now turn the call over to Francisco Sanchez, our Corporate Treasurer, who will discuss the Company's cash and debt position, and the very favorable performance we saw in the third quarter.

Thanks Mike. As of October 3, 2003, cash and cash equivalents were 24 million, compared to cash balances of 59 million as of January 3, 2003. In terms of outstanding debt, our debt balances fell by 107 million during the quarter, to 1.428 billion as of October 3, 2003, versus debt balances of 1.535 billion on July 4, 2003, excluding capital lease obligations of 15 million in each of the periods. This reduction in debt is a direct result of the positive reaction of the Company to the action plan I mentioned last quarter. We have made significant progress in reducing working capital and cash balances, limiting capital spending and controlling overhead costs. We are very pleased with the results of our actions during the quarter, demonstrating our continued commitment to repay debt as quickly as possible.

One of the key components of this plan was to expand our accounts receivable securitization program to include the domestic receivables of the former DiverseyLever business and our Butcher's subsidiary. We used 25 million raised from the securitization program to repay term debt in the quarter. Also during the quarter, during the third quarter, we completed an amendment to our senior secured credit agreement, which has been furnished to the SEC on form 8-K and is available on our website. The amendment reduced our borrowing cost on certain tranches of our senior secured trade facility which we estimate will reduce our annual interest cost by approximately 4.3 million.

On September 11, 2003, Unilever sold the senior discount notes issued by JohnsonDiversey Holdings Inc., the holding company that owns JohnsonDiversey Inc. This placement was completed successfully (indiscernible) oversubscribed by about 1.5 times. We are in the process of registering this debt offering with the SEC. As of October 3 2003, we were in compliance with our financial covenants under the senior secured credit agreement. In terms of liquidity, as of October 3, 2003, the Company had 305 million available under a senior secured credit facility and could borrow up to an additional 176 million, while still being in compliance with our financial covenants. This debt capacity, coupled with cash holdings of 24 million, results in a total of 200 million in available liquidity as of the end of the third quarter.

I would like to turn the call over to Clive Newman, Corporate Controller, for an update on the integration and synergies.

Thank you Francisco. Our integration strategy continues to track ahead of expectations. Cost savings resulting from synergies during the quarter are estimated at $25 million, which is 19 percent ahead of our plan. For the nine months ended October 3, 2003, we estimate these plans have generated cost savings of $78 million, 18 percent ahead of plan, with all regions contributing positively to this over-delivery.

The increased savings are primarily driven by above-plan supply chains improvements in all regions, particularly in Europe, North America and Asia-Pacific. We are delighted with the success of our overall supply chain program, which has clearly been a key factor in protecting our gross margin, in a year characterized by the many external challenges pressuring margins in all regions that Mike has already discussed.

Another important driver of the over-delivery is our Japanese business, where we successfully accelerated implementation of a back office consolidation, and executed an early retirement program that has delivered headcount reductions and related cost savings ahead of expectations. During the quarter, we recorded (indiscernible) million dollars of restructuring expense in the income statement in accordance with GAAP. We also recorded a further $5 million of integration related costs that do not meet the GAAP definition of restructuring expenses. Integration related capital spending during the quarter was $11 million. On October 3, 2003, we had restructuring reserve balances of $57 million, $48 million of which were recorded as purchase accounting adjustments -- referred to as exit plans in our financial statement footnotes -- with the balance of 9 million, the result of restructuring charges taken through the income statement, referred to as restructuring plans in our financial statement footnotes. We expect to substantially utilize the $48 million exit plan reserves by the end of the second quarter of 2004.

Total cash spending for integration related activities during the quarter totaled $29 million. This includes cash spending against restructuring reserves, integration related spending recorded as period costs in the income statement, and capital expenditures. Year-to-date cash spending for integration related activities on a similar basis totaled $101 million. From an IT systems standpoint, we are continuing to roll out J.D. Edwards in Latin America, with launches anticipated in Venezuela and Colombia in the fourth quarter. Systems integration in North America and the consolidation of operations in Japan, both to J.D. Edwards' platforms, have continued during the quarter. In Europe, our implementation of SAP in Italy, the UK and Switzerland is well underway, with completion anticipated in 2004.

Our work to complete our separate separation from both Unilever and SE Johnson & Sons is nearing completion, with significant work now underway in North America and the corporate center, to fully integrate payroll and benefits administration into JohnsonDiversey. Similar projects are in process in four other countries, primarily dependent on Unilever and/or SE Johnson and son for payroll and benefits administration.

In terms of synergy delivery, we continue to expect 2003 performance and the ultimate multiyear synergy savings to exceed original expectations. We are observing an emerging culture that continuously seeks out cost savings, especially in the supply chain. As result, we expect to identify potential cost reductions substantially in excess of our original projections. Of course, realization of these incremental savings opportunities will require incremental costs. These estimates are being refined over the next two months, as part of our 2004 budget process. And will be discussed further in our next call.

I now turn the call over to John Matthews for an investor relations update.

Thanks Clyde. Our Investor Relations website can be accessed at JohnsonDiversey.com. Documents related to the high yield notes and our financial results can be found on the Investor Relations portion of the site. In addition, documents filed with the SEC relating to the registration of JohnsonDiversey Holdings notes can be accessed from this site. We consider this website a key communication tool with the investment community, and we encourage you to periodically access the site. A recording of this conference call will be available for replay in the next two weeks by dialing into the numbers listed on the press release announcing this call. That press release is also on the website. Please continue to direct questions related to our financial results to Kathy Powers in our Treasury Group. I will continue to be the contact for all non-financial measures. Our contact information is also on the website. Our next conference call to discuss the results for our full year for 2003 will be scheduled in mid-March of 2004. We will continue to hold quarterly investor calls to discuss our results, and are planning an investor day conference here at our headquarters at the end of May 2004. We also plan on making presentations at one or more investor conferences in 2004. The details of these presentations will be released on our website well in advance of the these events. Greg?

Let's now move to the question and answer session.

Thank you. (OPERATOR INSTRUCTIONS). Karen Eldridge, Goldman Sachs.

Congratulations on your progress. A couple of things. Were there any significant customer wins or losses during the quarter?

Yes. We had a series of wins and losses that would be in keeping with the tradition of what we see in the marketplace. But nothing particularly material to the business during this time period.

Okay. And in terms of the SKU reduction, where is that on both sides of the business and how much more do you need to complete?

I think we are moving forward around the globe -- it's being done on a regional basis. We're moving into the second phase in Europe. North America is also moving forward with the program. Work is going on in Latin America, as well. The tail end will be Japan and Asia-Pacific. But, all moving forward and achieving benefits at this point.

And you, obviously, made some significant improvement in working capital in the quarter. How much more opportunity do you think is there?

Well, we continue to believe that there is some low hanging fruit that we will see this year, but beyond that, until we get the structural changes made to the business on the systems side and complete our global logistics footprint, there will be limited savings beyond that low hanging fruit. But clearly, in 2004, we are anticipating further reductions in the amount of working capital to support our business.

Final question. Can you give a little more clarification on the auditors note of internal controls? Obviously, you made progress. Could you kind of can say what was behind it and what you did to remedy it?

Yes. Let me try and answer that. There were three material weaknesses were identified in the 10-K. I think you will recall that. In terms of vendor invoice processing backlog in North America -- I want to reassure you that was already addressed -- by the end of the first quarter. In terms of bank reconciliations in North America, these have now been satisfactorily addressed.

To get there we put a Pacific Working Group focused on that, and there were weakly follow-up meetings with that team. That team has now been disbanded and we've invented the process into the normal working groups. We put in -- in terms -- the first is internal control (indiscernible) centered around inter-company balance reconciliation process. We put in place infrastructure, including policy procedures and reporting in the -- early in the second quarter deal that. We've been executing against that infrastructure progressively during the second and third quarter, where the enormous progress has been made. And again, I'm comfortable that with the progress we're making that we will have results (indiscernible) fully by the end of the year.

One final question. Even out of my own curiosity -- in the U.S., there has been a lot of restaurant outbreaks, from everything from Listeria to Hepatitis. Are you guys finding that there's increased interest in your products with these?

We are certainly in contact with customers that have interest in consulting services and linkages we have in the marketplace that would be helpful to them in these types of environments. But it has certainly heightened the importance of food safety and the programs that we provide in the market.

Janet Son (ph), Loomis Sales.

I just have a question on the numbers you've shown on your 10-Q regarding the reserve for restructuring. I was just wondering, in order to adjust the EBITDA to exclude these restructuring costs -- for example, for the nine months, what would be 21.7 million of exit costs -- is that taken off of your income statement or is that just adjusted from your reserves off the income statement?

(multiple speakers)

I understand the restructuring cost charge to income would run through your income statement, as well as the period costs?

Yes. The exit plans were created -- the exit plans -- the reserves reported in footnote 11 related to exit plans were created against purchase accounting. So they were created against goodwill.

Okay. So that would not have run through your income statement, right?

No.

But the other amounts, the 13.8 million of restructuring costs, as well as the 30.6 million of period costs, would have been reduced from your EBITDA?

Correct.

And, obviously, the same for the quarter. Would you mind for the quarter -- give the comparable number for the year ago quarter? I know that this quarter is the first one that we can look at on an apples to apples basis, but I would like to know what the restructuring costs were for third quarter of '02, so we can make that adjustment.

Sure. If you look at third quarter '03 versus third quarter '02, and I combine both restructuring expense charged in the income statement that met the definition of U.S. GAAP -- (inaudible) for U.S. GAAP purposes, and those that did not. (indiscernible) we call the period costs. There was a net increase in the third quarter of '03 of $6 million.

Right. That's the .56 plus the 5.3? Is that right? That's for '03, right? For the third quarter of '03?

Yes. Let me clarify that. There was a decrease in restructuring expenses of $8 million and an increase of the period costs of about $2 million, so there was a net reduction in those costs in Q3 over Q3 of 2002 of $6 million. I think I said an increase before, I meant to say a reduction.

Okay. So you're seeing that the year ago quarter had $6 million more in restructuring?

Restructuring and period costs, yes.

So last year's would have been $6 million more than this quarter's?

Correct.

So that would imply last year's was around roughly 12 million of restructuring? Because I'm seeing around 6 million for this year.

That would be correct, yes.

Okay. The other thing is you mentioned that you have 305 million still available under your -- for borrowings under your senior facility -- (inaudible) facility?

Yes. That is correct. But, only (technical difficulty) be available without -- and still be in compliance with our covenants.

I understand that, but I thought your -- did I miss something? Maybe because you amended the bank lines. I thought that the entire revolver was only 300 million?

The entire revolver is 300 million, but it also has -- well, that revolving credit facility would include -- it includes the yen amount which is 90 million, and that 90 million is actually effectively about 95 now because of translation.

Oh, okay. So (indiscernible) the entire amount is available?

That is correct.

(OPERATOR INSTRUCTIONS). Greg Gore (ph), Pimco.

I have two questions. The first relates to a comment that was made during the presentation this morning, that incremental savings from restructuring our synergies requires incremental cost. Could you elaborate a little bit on that please?

Anytime we remove people from the organization or close down facilities there is a cost to accomplish that. So as we move forward and complete our 2004 budget, we are completing the process of identifying those very specific programs which we will be implementing next year, identifying the benefits but also identifying the cost required to enact each of those actions. And we are just not complete with the budgeting process, so we will be giving more information on that after that is completed in the next call.

And then the second question relates to the fourth quarter. What would be terrific is if you would provide guidance, and if that is not available, perhaps you could just give a sense of how things are shaping up thus far? Thanks a lot.

We don't give guidance on the future expectations for the EBITDA or the income to the business. What I can tell you is that our business is not significantly seasonal, that you would see a dramatic change in the average quarterly results of the business compared to the three quarters.

Jean Park, Goldman Sachs.

I was wondering if you could talk a little bit about the IT integration in North America, how that is going?

As we have indicated previously, we made a decision to delay moving forward with that until we stabilized the systems that were already being implemented early in the process. We have reinitiated the launch of J.D. Edwards across the entire business, including all of the DiverseyLever elements. It is underway as we speak. They are moving forward to implement that, and we expect that to be completed in 2004, and at this point, have not seen any problems with achieving that timeline.

(OPERATOR INSTRUCTIONS). Mr. Lawton, it appears there are no further questions. I will turn it back over to you.

This is actually Francisco Sanchez. I would like to clarify the answer to the previous question that was raised with regards to the availability under our revolving credit facility. That facility is actually now 313 million as a result of the strength of the yen, and outstandings under that facility are 8 million. So the availability is 305, but we can only borrow 176 to remain in compliance with our covenants. I hope that is clear.

Thanks Francisco. On behalf of everyone at JohnsonDiversey I would like to thank you for attending this conference call and for your continued support of our company, hoping you all have a very happy holiday season.

That does conclude today's conference. Again, thank you for your participation.