希悅爾 (SEE) 2006 Q2 法說會逐字稿

Good day everyone. Welcome to this JohnsonDiversey 2006 second quarter earnings results conference call. Today's call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the conference over to Ms. Lori Marin. Please go ahead ma'am.

Good morning. This is Lori Marin, Vice President and Corporate Treasurer of JohnsonDiversey. I would like to thank everyone for joining our investor call this morning. Today, we will [conduct] our results for the quarter and six months ended June 30, 2006. I'm joined on this call by Ed Lonergan, our President and Chief Executive Officer, Joe Smorada, our Executive Vice President and Chief Financial Officer, and Clive Newman, our Vice President and Corporate Controller.

On this call, we intend to provide an update on the general status of the business and the financial results for the quarter and six months ended June 30th, 2006, an overview of the balance sheet at June 30th, 2006, an update on our restructuring program and an update on the results for JohnsonDiversey Holdings.

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 statements concerning forward-looking statements in the JohnsonDiversey registration statement on Form S4 that was declared effective by the SEC on November 27, 2002, in the JohnsonDiversey Holdings registration statement on Form S4 that was declared effective by the SEC on January 8, 2004 and in our Form 10-Q and Form 10-K report in for certain risks and uncertainties we face.

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, our Form 10-Q report includes a reconciliation of EBITDA for the quarter and six months ended June 30th, 2006 to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to EBITDA. Except for comments regarding EBITDA, net income and cash flow, or where specifically indicated, today's discussion reflects the results of continuing operations excluding the divestiture of the Polymer business.

Our Form 10-Q reports for JohnsonDiversey and JohnsonDiversey Holdings were filed with the Securities and Exchange Commission on August 10, 2006. They're also posted on our website at JohnsonDiversey.com and can be found by clicking on the investor relations link and selecting the relevant company.

JohnsonDiversey Holdings is a holding company whose sole asset is its shares of JohnsonDiversey. Other than differences in net income due to interest expense for the JohnsonDiversey Holdings senior discount notes, provision for income taxes, and dividends received, the consolidated financial results of the two companies are the same. Accordingly, we will address the results of both companies in on this call.

I would now like to turn the call over to Ed Lonergan, our President and Chief Executive Officer, for our general business update.

Thanks Lori and thank you all for joining us today. I'm pleased to report we continue to make progress in our plan to refocus on our core business and to build the financial flexibility we need for long-term growth. We continue to deliver sales growth in our core businesses while making planned progress against our restructuring program. In addition, we're preparing the launch of critical cleaning and sanitation innovations that we expect to generate substantial new penetration in the key segments of our markets.

Our sales continue to show growth, primarily from new pricing. On a year-to-date basis, our net sales increased by 2.8% when adjusted for onetime effects. These onetime effects include the impact of acquisitions and divestitures, currency, our decision to withdraw from the majority of the U.S. service-oriented warewashing business, and partial termination fees in related to our master sales agency agreement with Unilever.

On this same basis, net sales during the second quarter increased by 2.4%. This growth was driven by the continued strong performance our core business in North America, growth in developing markets, and steady growth in most of Western Europe. In North America, we define our core business as our building care and food sanitation applications and the retail contract cleaning, education, government, food and beverage and health-care sectors. This business has generated high single digit growth year-to-date reflecting solid gains from pricing, customer acquisition, and product innovation.

We continue to see strong customer response to our best in class building care portfolio and we're benefiting from our unique distributor relationship management models. I'm emphasizing the strength of this business because it reaffirms our essential choice to refocus on our core in the United States.

Our overall net sales in North America decreased by 3.4% in the quarter, reflecting the impact of our decision to exit the majority of the service-oriented warewashing business in the U.S. We expected this result when we made the decision to pursue a new model for serving our North American warewashing customers. While we have exited a majority of our service-oriented business and sold our laundry business, we have, in fact, remained in this business where it makes sense to us in our customers and especially were U.S. presence supports global relationships with our international food and lodging partners.

Simply put, we have a significant set of customers in major geographies that wanted us to remain in this business and [we've] worked with us to build a profitable model to meet their needs. In some cases, this means our employees are providing the service. In many cases we have third parties who are providing the service. But we have not walked away from this market and don't intend to. Warewashing chemicals and service is a critical part of our business everywhere in the world; in fact, our primary business in many geographies and our innovation stream is clear evidence of our commitment to this business.

Our Europe, Middle East, Africa business grew net sales by 2.2% in the quarter. Most countries in Western Europe showed ongoing strength, but a few large countries continue to struggle structural changes to our industry, customer consolidation, and weak economic conditions. Our Eastern Europe, Middle East and Africa business are generally -- generating near double-digit growth and we're investing for long-term vitality and profit generation.

In addition to solid performance in North America and Europe, we're experiencing strong upper single digit growth in Latin America and Asia-Pacific. This reflects innovation-driven share of wallet gains with current customers as well as business gains from new customer acquisition.

Japan remains a challenging market with net sales declining in the quarter by 3.3%. This decline is largely attributable to three actions designed to improve the financial performance of our Japanese business. First, the restructuring of a low profit service relationship at a large retail customer. Second, the withdrawal from low margin filter sales in our food and beverage business, and finally, the move from direct sales to a more efficient joint venture for sales and distribution to small customers in the Tokyo market.

Pricing activity was a prime driver of the net sales growth across the Company in the second quarter. This pricing was one factor that helped improve our gross margin by 200 basis points from the first quarter, but we have not yet fully recovered the effects of raw material and transportation cost increases which remain at historic highs. As a result, our gross margin decline versus the prior year by 60 basis points.

While we make progress on the pricing front, it's clear our internal cost control program is beginning to deliver the desired efficiencies in operations. SG&A expense, adjusted for currency and cost associated with the restructuring program, declined year-on-year by about $10 million in the quarter. Our restructuring program continues to progress as planned.

As you know, we completed the sale of the non-core Polymer business to BASF on June 30th. The vast majority of the net proceeds of this $470 million sale were used to repay debt and create more financial flexibility for our Company. In addition to the Polymer sale, we recently announced our decision to contract for most of our transactional information technology services. This project is proceeding per plan and promises to deliver significant near and long-term cost savings.

As we discussed, our restructuring plan comprises numerous projects including divestitures, SKU reduction, increased plan utilization, and organizational redesign. I'm pleased with the scope, the planning, and the project management of this restructuring and I expect it to deliver on the results envisioned when it was announced. Joe and Clive will discuss this in greater detail in a few minutes.

Overall, I am encouraged by our progress and by our top and bottom line performance in the first six months, particularly in light of our large restructuring project and with the challenging economies of Western Europe. And while we aspire to a faster growth rate with greater profits, we remain on course with our key initiatives and we're focused on delivering for our customers. We continue to enjoy strong customer relationships with some impressive new customer wins and few customer losses outside businesses where we've chosen not to compete.

Our innovation pipeline is particularly strong, promising greater opportunities for business generation in the near future. Our team is energized by the traction we are seeing across the business and by the delivery of promises in each of the first two quarters of the year. I'll look forward to building on the solid foundation as we progressed through the year.

Now I would like to turn it over to Joe Smorada for more detailed comments on our financial results.

Thank you, Ed. I would like to remind you that a reconciliation and EBITDA to net cash provided by operating activities can be found in our 10-Q reports for the quarter and six months ended June 30 which can be accessed on our website.

On an as reported basis, net sales in the second quarter of 2006 were $763 million as compared to $782 million in the same period last year. Excluding the impact of foreign currency exchange rates and acquisitions and divestitures, our net sales were flat compared to the second quarter of 2005. Our net sales were impacted by partial termination fees related to our Master sales agency agreement with Unilever which increased sales in the second quarter of '05 by $6.6 million, but, and more significantly, by our decision to exhibit majority of the service-oriented laundry and warewashing business in the United States.

After adjusting for the termination fees and excluding the laundry and warewashing business and United States, net sales for the second quarter of 2006 increased 2.4% compared to the second quarter of 2005.

In the first six months of 2006, net sales were $1.46 billion as compared to $1.5 billion in the first six months of 2005. This increase is due to the same factors I mentioned for the second quarter, along with a $15.3 million impact of a lease accounting adjustment which increased net sales in the first quarter of 2005. On a constant currency basis and after adjusting for these onetime impacts, net sales increased by 3.9% on a year-over-year basis.

In our professional segment, sales in North America decreased by 3.4% in the second quarter versus the same period a year ago. In the first six months of 2006, net sales in North America increased 1.9% as compared to the same period in the prior year. This reflects the announcement on March 7, 2006 of our intent to withdraw from the majority of the underperforming service-oriented laundry and warewashing business in the U.S., partially offset by the impact price increases in 2005 and strong growth in all core business units.

In our Europe, Middle East and Africa region, net sales in the second quarter grew by 2.2% as compared to the second quarter 2005. For the first six months of 2006, sales in this region increased by 1.4% as compared to the same period a year ago. Excluding the impact of the 2005 lease accounting adjustment, net sales grew by 3.6%. This growth was primarily due to increased sales in developing countries in Central and Eastern Europe, Africa, and the Middle East and the effects of price increases in Western Europe.

Both the Pacific and Latin America regions showed solid sales growth in the second quarter. Asia-Pacific posted sales growth of 7.6% in the quarter and by 7.3% on a year-to-date basis, led by growth in the food and beverage business and the lodging, retail, and quick service restaurant sectors as well. Latin America grew by 8% in the quarter and by 7.9% on year-to-date basis, as favorable economic conditions contributed to growth in the food and beverage business, the retail sector and distribution. This offset lower health and hospitality sales in Mexico where tourism is still adversely affected by hurricane damage.

In Japan, net sales decreased by 3.3% in the second quarter and by 5.1% on a year-to-date basis, primarily due to the restructuring of the service relationship at a core Japanese retail customer, the discontinuance of low margin filter sales in the food and beverage business, and a change from direct selling to a joint venture initiative for sales and distribution of select food service customers in the Tokyo Metropolitan area.

Our gross margins in the second quarter declined as compared to the same period a year ago. On a consolidated basis, our second quarter 2006 gross margin was 43.1% as compared to a gross margin of 43.7% in the second quarter of 2005. For the first six months of 2006, gross margin was 42.2% as compared to 43.1% for the first six months of 2005.

As we have been discussing in considerable detail for the past year, this was a result of raw material and transportation cost increases that were not fully offset by price increases taken either '05 or in the first six months of 2006. However, gross margin in the second quarter was 200 basis points higher than the first quarter of 2006 and 230 basis points higher than the fourth quarter of 2005. This improvement reflects the higher impact of pricing activity that Ed mentioned earlier, early benefits of our restructuring program and seasonality, which led to favorable recoveries in our plants.

After adjusting for period costs attendant to our restructuring program, SG&A expenses were 34.6% of net sales in the second quarter. Excluding the impact of foreign currency and period costs, SG&A expense was $9.7 million below prior year levels. As reported, SG&A expense as a percentage of net sales was 37.2% in the second quarter of 2006 as compared to 36% in the same period a year ago.

Year-to-date and on as reported basis, SG&A expense as a percent of sales was 40.8% as compared to 37.1% in the same period a year ago. These increases were primarily due to the inclusion of period costs associated with our restructuring program of $19.5 million in the second quarter and $77.1 million in the first six months of 2006. This is as compared to $6.2 million in the second quarter of 2005 and $13 million in the first six months of this year.

Of the $77.1 million of period costs, $46.5 million related to tangible and intangible asset impairment. The remainder primarily relate to IT project costs, consulting and professional services. Restructuring expenses in the second quarter of 2006 were $35 million compared to $4.7 million in the same period last year. For the first six months of 2006, restructuring expenses were $77.7 million as compared to $8.1 million in the same period a year ago. These costs consisted of severance related and other costs related to our restructuring program.

EBITDA reported in the second quarter of 2006 was $395 million as compared to $99.2 million in the second quarter of 2005. Generally, of course, this increase was due to the $348 million pre-tax gain recorded on the divestiture of our Polymer business partially offset by a $43 million increase in restructuring expense and period costs recorded [as] SG&A related to the restructuring program.

For the first six months of 2006, EBITDA was $403 million as compared to $171 million in the same period in the prior year. This change is largely explained by the gain on the Polymer sale, offset by a $92 million increase in restructuring expense and period costs.

The Company reported net income of $230.7 million in the second quarter of 2006 compared to a net income of $5.1 million in the second quarter of 2005. This difference was primarily due to the $225 million net gain on the sale of the Polymer business. In addition, a $43.6 million increase in restructuring related expense was offset by a decrease in income tax expense related to the Company claiming a tax benefit for a portion of the year-to-date pre-tax losses to offset the gain on the sale of the Polymer business and a decrease in interest expense.

JohnsonDiversey Holdings reported net income of $240 million in the second quarter of 2006 as compared to a net loss of $1 million in the second quarter 2005. As previously mentioned, the main differences between the results of JohnsonDiversey Holdings and JohnsonDiversey are interest expense and related taxes on senior discount notes, as well as dividend income. Capital expenditures in the first six months of 2006 were $40 million compared to a $41.7 million in the same period last year.

I would now like to ask Clive Newman, our Vice President and Corporate Controller, to provide you with an update on the status of our restructuring plan.

Thank you, Joe. As we have discussed, we have seen positive momentum in our restructuring program. Incremental cost savings to date are estimated about $20 million, which are on plan in this stage. We continue to expect annual savings of approximately $150 to $175 million by the end of fiscal year 2008. As Ed has already mentioned, on June 30, 2006 we completed the sale of Johnson Polymer to BASF, completing a major component of the restructuring program.

In terms of organizational redesign, we are in the advanced stages of reorganizing our European region around four geographic areas and it simplifying spans of control and increasing focus on sales and marketing. We also substantially finalized the realignment of our central and regional marketing organization during the quarter.

A number of key elements of the operational restructuring of our Company commenced in the quarter, including structuring in many of our European operations behind organizational alignment discussed. Supply chain optimization projects, preparations for outsourcing of most of our IT support work, and feasibility studies related to financial services outsourcing in Western Europe. We also launched a global strategic sourcing initiative to complement our restructuring program.

Headcount reductions to date under the restructuring program are about 740, of which about 360 our related to cost reduction initiatives and organizational redesign, and the remainder related to the aforementioned exit of the service-oriented laundry and warewash business in the United States and divestiture activity. These reductions are slightly ahead of our expectations.

Second quarter costs associated with the restructuring program includes $35 million of restructuring expenses. These costs were primarily related to involuntary terminations associated with the withdrawal from the majority of the service-oriented warewash business in United States, severance accruals related to the decision to outsource most of our IT support operations, and severance accruals related to the aforementioned restructuring of our European operations.

In addition, and in the second quarter, we recorded $19.5 million of period costs in selling, general, and administrative expenses related to these restructuring actions. On a year-to-date basis, the Company reported $77.7 million in restructuring expenses and a further $77.1 million of period costs in selling, general, and administrative expenses related to the restructuring actions.

Of the amount recorded as period costs, 25.9 million related to tangible asset impairment and 20.6 million related to intangible asset impairment, primarily related to the withdrawal from the majority of the service-oriented warewash business in United States. Of the total asset impairments, $41.7 million were recorded as adjustments to depreciation and amortization and are therefore not included in EBITDA.

Cash (indiscernible) for restructuring related activities totaled $29.8 million during the second quarter of 2006 and $49.5 million during the first six months. Restructuring reserves at the end of the quarter were at $61.2 million. I will now turn the call back over to Lori Marin, who will discuss the Company's cash and debt position.

Thank you, Clive. The second quarter of 2006, we repaid $420 million of our term B loan with a portion of the proceeds from the divestiture of the Polymer business. This, along with a $3.9 million amortization payment, has reduced the balance of our term B loan to $351 million. At June 30th, 2006, our total debt balance was $1 billion, reflecting these payments and an unfavorable foreign currency impact of $14 million.

We held cash and cash equivalents of $135 million as compared to $158 million at December 30th, 2005. Usage under our accounts receivable securitization program was $112 million. JohnsonDiversey Holdings' consolidated debt balance at the end of the first quarter of 2006 was $1.36 billion, which includes $339 million of senior discount notes.

As of June 30th, 2006, the Company had total credit availability of $167 million under our revolving credit facility and also had the ability to draw under our $100 million delayed draw term loan. Of the total credit available at the end of the quarter, we could borrow this full amount and still be in compliance with our financial covenants. On July 14th, 2006, the Company fully drew down our $100 million delayed draw term loan. Of this amount, $42 million was used to repurchase the Italian receivables under our accounts receivables securitization program. The program size was reduced from $150 million to $75 million.

This concludes our presentation. I would like to remind you that our investor relations website can be found at JohnsonDiversey.com. We consider this website to be a key communication tool with the investment community and we encourage you to periodically access the site. Documents related to the JohnsonDiversey senior subordinated notes and the JohnsonDiversey Holdings senior discount notes, as well as both Companies' financial results, can be found on the investor relations site.

A recording of this conference call will be available for replay for the next two weeks by dialing into the numbers listed on the press release announcing the call. Please direct questions related to our financial results to [Cathy Powers] or to me. [John Mathews] will continue to be to contact from non-financial matters. Our contact information can be found on our website. We will now move on to the question-and-answer session.

(OPERATOR INSTRUCTIONS). Richard Phelan, Credit Suisse.

A few questions if I might. One of your large competitors has recently stated that the exit from the laundry services business to the hospitality and health-care sector is resulting in their gains of roughly $150 million in revenues, specifically from JohnsonDiversey and possibly significantly more incremental sales directly to those customers associated with other services and products. I'm wondering if you can address that in relation to your guidance for revenues in North America and obviously in light of the same store or decline in revenues in that region in the quarter.

And secondly, with respect to the divestiture of the Polymer division, I think when you announced the restructuring program back in November, you mentioned that there would be an aggregate of above $500 million in revenues associated with businesses potentially planned for divestiture. The sale of Polymer itself is not significantly different from that, just shy of the 500 million figure.

Does this mean that the divestiture program is largely complete? I know that you signaled that there is still -- there are some actions planned. But at this stage, can we view these future divestitures as material to the group?

Richard, this is Ed Lonergan. Let me take your first question I'll ask Joe to handle the second one. I've seen the same claims by our large competitor. What we said at the time of our announcement on March 7 is that this would impact about 3% of the business of the Corporation, and we believe that is still at worst-case an accurate number. We actually at this point find that more customers have chosen to stay than our original plan.

So I can't comment on their claim of larger sales as a result of gaining that business. That's part of their 360 degree business program. But I can tell you that the numbers that we originally provided back in March are still accurate. Joe?

As you know, the Polymer transaction, as you indicated and as we all know, was closed and we're very pleased with that result. We are still very actively working on the divestiture of several other non-core, non-strategic businesses as we indicated back in the 10-K we would. These are, as I said, non-core and we are in active negotiations with three different parties. We have nothing -- we're not going to suggest in the immediate or imminent dates of closure except that we are considerably down the path, if you will, progressing on those quite well. And they do not amount to anything near the level of sales of Polymer. You are correct.

Great. Thank you.

[David Cole], [NFS Investment Management].

Thank you for the detail on the restructuring. That was helpful, by the way. So by my tally, you spent roughly $70 million since the November announcement. Is that right?

The November announcement?

Since the large restructuring, the $70 million of the cash expense.

Yes, that's correct.

Okay. And the guidance of $345 to $370 million of cash -- is that still a fair target?

Of the cost related to the program, David, yes. We would still standby that number, or that range, rather.

Okay. And the headcount -- did I get this number right? It was 740?

Yes.

In the original plan was 10% of --

I think we said at least 10%, David.

Okay. 10% is -- at year-end you had roughly 12,000. I am assuming that included some people from Polymer too. So I am just trying to figure out, are we more than halfway there or less than halfway there?

Closer to 13,000 was the total employee count at the end of the year. Be careful with the 740. The 740 includes about 340 associated with the exit from the warewashing business in United States, which wouldn't have been counted in the 10% number we quoted before.

Okay, so 10% -- okay. So there's certainly more to come there. And Clive, the 20 million that you said in terms of the benefits from the restructuring, was that in the quarter? Is that cumulative? Is that an annual run rate?

Cumulative program to date.

Okay. How much was in the second quarter?

About 13 million roughly.

Okay. And then, I am not sure who this is for, but for CapEx for the year, have you talked about how much you think you'll spend this year?

We have. And right now we're still expecting it to be in our traditional 125, 130 range.

Okay. And Joe, is that inclusive of the capital related to the restructuring? Is that incremental?

That's incremental.

Okay. And that was -- what was that, 50 to 65?

50 to 65, but we never really contemplated spending much of the restructuring capital this year.

Okay. That's more next year.

Yes, sir.

And the timing of the balance -- of the balance of the cash payments related to the restructuring, how much of that this year and next year? Is it pretty -- as you said, you're kind of getting into the heavy work right now. Is it pretty front end loaded for the next twelve months or something like that? Is that the right way to think about it?

It's difficult to tell, David. There are a significant number of projects, many of which are material, the timing of which we don't have complete control over, I am sure as you can appreciate, of the timing when these cash payments move. But you can look at that range I gave you before as roughly being spread evenly over '06, '07, and '08. A little bit less in '08, but I wouldn't want to be --

Sure. Understand.

I won't be right.

Okay. Thank you very much.

[Bob Franklin], Prudential.

Sorry, just need to make sure I got some of the math right. Second quarter, you said there were 35 million that you expensed and then 19.5 million in period costs. Are those additive?

Yes.

Okay. So I can put those two together. And is that something I should look at as part of the 375 in the total restructuring costs?

It is. Yes.

Okay. Now, maybe my notes are wrong, but I thought in the last conference call you had talked about 120 million that had already been spent at some point.

We might have -- I think it's that your notes may be wrong. You need to be careful. We also -- we have charges to date, if you look at restructuring costs charged to date since we started the program of about 82 million and further period costs of about 93 million. That's not all manifested itself in cash yet though.

Okay. That could be where I am getting confused between the cash expenses. So you spent cash of 70 million of the 345 to 375 so far. Do you have the number that you expensed so far?

No, I think it's about 130.

It's about 175, of which about 155 expensed in this year.

Okay.

That 155 I should point out does include non-cash of about 46 million.

Okay. Terrific.

I appreciate that this is quite complex. We have been careful to make sure that both the restructuring footnote and the restructuring commentary and the MDNA you have all the pieces you need to piece this together.

Yes, I appreciate the efforts you are making, because in my case I need a little remedial help here.

No, it is complex. You are not the only one who struggles here, Bob.

Of that 170 Clive is talking about, I think you clarified, Clive, there's a significant amount of that having to do with non-cash impairments and a further significant to date non-cash outlay attendant to the accrual severance. So as you look at 170-ish for a program to date cost, you're looking at something not much north of or 100, if you will, that is cash.

Okay. Would you want to guide us to where you think your leverage caps out before you start to get the crossing point between the cash expenditures versus the cost savings?

Let me try to assimilate that question. Can you try it again, please? When we crossed --

In other words, your expenses are going to be front end loaded. Your savings are going to be back end loaded. So what we're all trying to do on this side of the telephone is figure out where your leverage is going to peak if everything goes according to plan.

As Clive said, when you're doing some of these major projects, works councils can cause decisions. There is other externalities that affect you. But as -- in general, we would probably be thinking that the latter part of '07 -- certainly where we're getting close to having really reached the apex of activities. But I don't think we can be anymore finite than that.

Okay. Thanks very much.

(OPERATOR INSTRUCTIONS). Richard Phelan, Credit Suisse.

Good morning. Following up with respect to the 19.5 of period costs in the quarter in SG&A, I guess you do provide a good breakdown of that, 13.9 of which is restructuring. So that is separate from, obviously, the 34.9 million restructuring costs in the quarter. Is there anymore detail that you can provide on what those are related to -- which could just help us be assured that they're more defensible in adding back to an EBITDA figure, because obviously they are excluded from the GAAP presentation of restructuring.

You're talk about the 19.5 in the second quarter, right?

Exactly. Yes.

Okay. Let me -- I will give you a high-level overview. There's about $10 million of consulting costs associated with the program in that second quarter. That -- I appreciate that might sound a bit high, but we just completed the planning phase of this project and are moving into execution, so a lot of the consulting costs we would expect to have been front loaded in any case. So there's about $10 million of consulting in there.

There's about $4 million associated with non-capitalizable IT project work, a significant portion of that again third party work related to IT projects behind some of the initiatives we have going in the program. And there's about 1.5 to 2 million of intangible asset impairment in the quarter, largely related to inventory and receivables associated with the exit of the warewashing business in the U.S.

There's a little bit of employee costs that don't meet the definition of restructuring. I'm talking there about some retention benefits and recruiting costs and relocation and so forth. I think that gets you to about 15 to 16 million and the balance is a whole host of other small stuff.

Okay great. That is very helpful.

I think your question is a good one and I think you can see from that it's pretty defensible.

Great.

Right. Thank you very much everyone for joining us today. On behalf of everyone at JohnsonDiversey and JohnsonDiversey Holdings, we would like to thank you for attending this conference call and for your continued support of our Company. I hope everyone has a terrific day and a great weekend.

Thank you. And this does conclude your conference call for today. We thank you very much for your participation and hope you have a terrific day.