Viad Corp (VVI) 2004 Q4 法說會逐字稿

Good day, everyone.

And welcome to the Viad fourth quarter and year end earnings release.

Today's conference is being recorded.

At this time, I would like to turn the call over to Ms.Carrie Long, Director of Investor Relations.

Please go ahead, ma'am.

Good morning.

And thank you for attending our conference call.

I'd like to remind everyone that certain statements made during the call which are not historical facts may constitute forward-looking statements.

Actual results may differ materially from those projected in the forward-looking statements.

And additional information concerning business and other risk factors that could cause actual results to materially differ from forward-looking statements can be found in our annual and quarterly reports filed with the Securities and Exchange Commission.

This conference call may not be recorded or reproduced in transcript without the explicit written permission of Viad.

And during today's call, we'll refer to tables 1 and 2 in the press release.

Our press release is available on our website at www.viad.com.

And now, I'd like to introduce Bob Bohannon, the CEO of Viad Corp.

Thanks, Carrie.

Good morning, everyone.

We're very happy that you're with us today.

We have Paul Dykstra, President of GES with us, Kim Fracalossi, President of Exhibitgroup Giltspur, and Ellen Ingersoll, our Chief Financial Officer; and of course, you just heard from Carrie.

As we discuss our fourth quarter and full year results, you may want to refer to tables 1 and 2 in the earnings press release.

The fourth quarter loss from continuing operations before non-cash impairment losses was 6 million or $0.27 per diluted share, in line with our prior guidance.

The loss reflects a seasonably slow fourth quarter pattern of GES and the Travel and Recreation services segment, as well as continued weakness in the Exhibitgroup segment.

For the full year, income from continuing operations before impairment losses was 23.3 million or $1.07 per diluted share, an increase of over 10% compared to 2003.

After non-cash good will and intangible asset impairment losses, our loss from continuing operations was 6.8 million or $0.31 per share in the fourth quarter, and 58.3 or 2.68 per share for the full year.

As we discussed during our last earnings call, the impairment charges we recorded relate to good will and an intangible asset of Exhibitgroup.

And if you'll recall in the third quarter, we had mentioned that in that quarter the amount of the impairment recorded was 80.8 after tax or 3.71 per share, and that included a -- an estimate of the intangible asset impairment.

We completed our evaluation of the intangible asset during the fourth quarter and recorded an additional impairment charge of 776,000 after tax, or $0.04 cents per share.

For the fourth quarter, revenue was 152 million, up 5.6 percent from the 2003 fourth quarter.

This increase is due to strong growth at GES, particularly from the Products and Services division.

And the growth at GES was partially offset by lower revenue at Exhibitgroup.

Segment operating loss was 4.8 million, down from income of 198,000 in the 2003 fourth quarter, and the decline from 2003 was mainly due to Exhibitgroup.

For the year, revenue was 785.5, up 2 percent from 2003.

We had strong year-over-year growth at GES and then Travel and Recreation segment; but again, that was largely offset by lower revenues at Exhibitgroup. 2004 segment operating income was 53.8 million, up 5.1 percent from 2003; and the segment operating margins increased 30 basis points to 6.9, up from 6.6 in '03.

This improvement reflects the strong rebound and the high margin in the Travel and Recreation Services segment and modest growth at GES, which was largely offset by lower results at Exhibitgroup Giltspur.

Now for the individual operating results -- and again, you may want to refer to table 1 of the press release -- I'll turn this over to Paul Dykstra to talk about GES.

Paul?

Thanks, Bob.

Good morning, everybody.

Our fourth quarter operating loss was 3 million on revenue of 98.4 million.

The fourth quarter is a seasonally slow quarter for trade shows, and our results reflect this.

We actually came in a bit better than we expected, with revenue growth of nearly 13 percent over the 2003 fourth quarter.

This was driven primarily by continued strong growth in our Products and Services group.

Show rotation really didn't have an impact in the quarter.

For the full year 2004, our revenue was -- increased 8.3 percent or $41.4 million, to 540.1 million, and operating income increased 7.7 percent to 43.3 million.

Operating margins were 8.8 percent as compared to 8.1 percent in 2003.

The key driver of our year-over-year revenue growth was the Products and Services group.

Products and Services revenue increased nearly 15 percent from 2003, and provided about one-third of GES's total 2004 revenue.

We also benefited from positive show rotation of roughly 10 million.

And although we saw modest same-show growth in 2004, our material handling revenue remained soft as exhibitors brought lighter weight exhibits and products onto the trade show floor.

As a reminder, the key goal of the Products and Services group is to offset slower growth of exclusive services and products by capturing a greater share of exhibitor spending on discretionary services.

These would be nonexclusive trade show services that exhibitors can purchase from any vendor, like [INAUDIBLE], exhibitory, installation and dismantled labor, and transportation.

Our success in this division comes from providing high-quality, value-added services with a superior value proposition relative to other vendors.

Unlike any other vendor, GES can provide and coordinate all exclusive and discretionary services on GES shows.

And because of this value proposition and our relatively low penetration in some key product categories, we believe that we can sustain a strong growth rate for the foreseeable future.

For 2005, we're targeting low double digit to low teens growth in product and services revenue.

Relative to the 41.4 million increase in 2004 revenue, our operating income improvement of 3.1 million was modest.

This was due in part to the soft material handling revenue, and also to various margin pressures that I discussed during the third quarter earnings call, including the work stoppage that we experienced in Las Vegas, hurricanes in the southeast, and increased fuel and labor costs that were not fully reflected in our prices.

With respect to our outlook, 2005 will be a negative rotation year.

Our full year net rotation is expected to negatively impact revenue by approximately 14 million.

Despite this, we do expect -- driven primarily by -- we do expect comparable to slightly improved revenue, driven primarily by continued strong growth in Products and Services.

Our outlook for industry growth is moderate, and we expect that exhibitors will continue to be very focused on costs, making price increases difficult to realize and putting pressure on material handling revenue.

In order to maintain our operating margins, we will aggressively pursue productivity improvements.

In addition, we will pass on price increases to cover the increased costs of labor and petroleum.

As for the quarterly impact of show rotation, we're expecting about 17 million positive rotation in the first quarter, relatively flat rotation in the second and fourth quarters, and negative show rotation of about 34 million in the third quarter as IMTS, MINExpo, International Woodworking, International Baking and the Democratic National Convention do not occur in 2005.

I've said many times that we typically enter each year with more than 60 percent of that year's revenue under contract, and 2005 is no exception.

Our total future bookings stand at 900 million, with the longest contract running through 2010.

And as we announced in early January, we successfully re-signed the Consumer Electronics Show, or CES, through 2009.

GES has been the general services contractor for CES for more than 25 years, and we are very excited to extend our relationship.

So far, we're seeing good strength from several of our early 2005 shows, and as I've said many, many times before, shows tend to go as their industries go that those shows serve, and certainly one month doesn't make a year, but January seems to have been a good month for all of the trade show stake holders, from exhibitors and attendees to show organizers and general service contractors, as well as the labor organizations.

I have belter confidence in the trade show industry now than I did at this time -- the same time last year -- and regardless of the challenges we expect to face in the upcoming year, I've got a terrific management team and terrific employees who are committed to winning for our clients, shareholders and employees.

With that, I'll pass it back to you, Bob.

Okay, thanks, Pau.

I'll ask Kim now to talk about Exhibitgroup Giltspur.

Kim?

Thanks, Bob.

Our revenue for the fourth quarter was 47.1 million, down 9.1 percent or 4.7 million from the 2003 fourth quarter.

Our operating income loss was 1.3 million compared to income of 4.4 million in 2003.

This performance is clearly disappointing.

Most of the decline from the prior year was due to lower and new construction revenue from our TL Horton kiosk business.

We faced a very difficult competitive environment that resulted in reduced new kiosk construction, as well as lower margins on our kiosk sales.

For the full year, revenue was 177.8 million, down 18.6 percent or 40.6 million from 2003's revenue of 218.6 million.

Our full-year operating loss was 9.2 million as compared to income of 1.1 million in 2003.

Overall weak demand and irrational pricing by the competition resulted in the year-over-year declines in revenue and operating income.

Aside from the kiosk business, the irrational pricing in the exhibit market that we saw earlier in 2004 appears to have abated somewhat, and we actually saw our exhibit construction revenue stabilize a bit in the fourth quarter.

While exhibit construction was still down from the 2003 fourth quarter, the decline was not as pronounced as it was in the third quarter.

We had several sizable new builds for the January '05 Consumer Electronics Show, the largest of which was LG Electronics.

It spanned over 18,000 square feet and was two stories high.

LG was a huge win for us, and it would not have been possible without all of the work that we've done to reposition our company.

Our discernible differences came into play in almost every aspect of this job.

Like most of our construction jobs in today's market, we had very little lead time for this build.

And getting a job of this size and complexity done successfully in such a short time period required resources from across our entire network.

All of our manufacturing facilities participated in the build.

And this would not have been possible if we had not standardized our processes.

And our investments in industry-leading technology made communicating with the client throughout the design and construction process easy.

With e-conference, our client was able to view our design concept and collaborate with our designers online.

EG ExhibitCam allowed them to view the construction process as it was happening, so they could see how their exhibit was coming together.

We even called upon our sister company, GES, to assist with some last-minute changes to the graphics on the show floor.

All in all, this was a great success for us and for the customer.

The exhibit attracted a lot of attention on the show floor, both from potential buyers as well as from other exhibitors.

We're hoping that this will encourage other companies to build new for the next show; and most importantly, to choose EG for their next build.

The number of new builds that we have for CES is certainly encouraging; however, CES itself is a very strong show.

We don't expect to see this many new builds at all of our 2005 shows.

As I said before, our customers set their marketing budgets in the third and fourth quarters.

And based on the feedback that we've received, we aren't anticipating much of a rebound in spending in 2005.

We do continue to see good RFP activity, and our win ratio remains strong.

Now, please keep in mind winning and RFP doesn't necessarily mean that we'll see immediate spending on new exhibits.

The bulk of new business that we're winning is mainly show services at this time.

But we have a lot of big names on our client list, and we expect them to increase their spending on new exhibits at some point in the future.

I've been talking about the difficulties in our market for quite some time.

And as many of you know, we have been through four awful years, with a huge overall market decline, client companies pulling back on marketing spending, significant pressure on pricing and irrational competitive behavior.

And while the environment is still very challenging, we are hopeful as we enter 2005.

We see good economic growth, we see good corporate earnings, and we see an increase in show attendance.

All are good signs for us.

We don't -- what we don't know is whether or not these good signs will actually translate into more construction dollars for us in 2005.

We're also starting to receive feedback from our clients that in general, they plan to exhibit at more trade shows in 2005.

If this comes to fruition, it should mean more show services work for us, at the very least.

But as you know, we will benefit the most from an increase in new exhibit construction.

In combination with the difficult environment over the past four years, we have had to make some very tough and disruptive changes to our business to make it better, such as restructuring from 16 to 5 domestic manufacturing locations, undertaking a major process reinvention to improve productivity and customer service, cutting costs by roughly $40 million and restructuring our sales force to focus on new business development while simultaneously improving customer satisfaction levels for existing clients with our dedicated team.

Proudly, I would like to say we have executed extremely well through one of the most difficulty operating environments imaginable.

We have excelled at cost cutting, productivity and quality improvement; and today, our company is poised to take advantage of any rebound.

And if the market does not turn around, we have the capability and wherewithal to get even more productive.

We plan to take on an additional 5 million in fixed and semi-variable costs in 2005, which we should be able to do without trimming capacity.

We're targeting a break-even in the range of 180 million or so in revenue.

In order to hit this, we not only need to realize that 5 million in cost takeouts, but we also need improved throughput in our lower margin show services offering.

We feel pretty comfortable about achieving the cost take up; however, increasing throughput on show services will depend in large part on the resilience of our client's budgets.

In addition, we recognize that the competitive environment in our kiosk market has resulted in price erosion within the kiosk industry, which unfortunately cannot quickly be recovered.

The entire Exhibitgroup Giltspur team has been working very hard the past few years to drive efficiency, to improve client satisfaction and win good, profitable business.

We clearly have a lot more work to do, but our resolve is as strong as it's ever been.

And I want to assure you that we're doing everything we can to grow our revenue and improve our performance.

The bottom line is that we expect 2005 to be a much better year for Exhibitgroup Giltspur, even if the overall market doesn't improve.

Bob, back to you.

Okay.

Thanks, Kim.

Let me now cover some highlights for the Travel and Recreation segment, please.

The fourth quarter is seasonally very slow for Travel and Rec -- it generates less than 10 percent of the segment's full-year revenue.

For the quarter, revenue was 6.5 million and segment operating loss was about 500,000.

Both revenue and operating income compared favorably to 2003.

For the full year, revenue was 67.5 million, up 26.8 percent or 14.3 million; and operating income was 19.8 million, almost double 2003 operating income of 10 million.

Operating margins were at 29.3 percent in 2004 versus 18.7 percent in 2003.

And these are the strongest operating margins we've had in this segment in over five years.

Passenger volumes at Brewster's too -- high throughput attractions were up considerably over 2003 -- the Columbia Icefield snocoach passengers increased to 32.4 percent to 481,000 and Banff Gondola passengers increased 14 percent to 472,000.

These two attractions provided more than 50 percent of the Travel and Recreation Services segment 2004 operating income.

Brewster's other lines of business also showed nice -- nice growth over 2003.

Our Glacier Park operation, which provided roughly 20 percent of the segment's operating income, had a 17 percent increase in the number of room nights sold in 2004 over '03.

Now, these substantial improvements over '03 for the Travel and Rec segment was due largely to a rebound in visitation to Canada in Glacier Park.

That was in the absence of SARS and virus bars, which negatively impacted the 2003 results.

I'm very, very happy with this segment.

Certainly the margins -- and Dave Morrison of Brewster, Joe Vasler [PHONETIC], Cindy at Glacier, have just done a terrific job with those companies.

And in 2005, we expect the Travel and Recreation Services segment to resume growth.

And we also expect it to continue to produce just outstanding, strong operating margins and cash flow, as they have done.

So with that on the segments, I'll now ask Ellen to discuss some financial highlights with you.

Thank you, Bob.

As shown in table 2 to the earnings release, adjusted EBITDA was negative 3.6 million during the fourth quarter versus 6.1 million in the fourth quarter of 2003.

Also shown in table 2, precash flow -- defined as cash flow from operations less capital expenditures and dividends -- was negative 3.1 million for the quarter versus negative 20.4 million last year.

Directionally for 2005, precash flow should approximate net income plus depreciation and amortization, minus restructuring payments, Cap Ex and dividends.

In 2005, our working capital is expected to have a slightly negative impact on cash flow.

At December 31, 2004, Viad had total cash and cash equivalents of 115.1 million.

Viad's total debt at the end of the quarter was 21.1 million, with a debt to capital ratio of 5.7 percent.

Net interest expense for the quarter was $42,000.

This compares to net interest income of $4.2 million in the fourth quarter 2003, which included a $4.6 million reversal of accrued interest on state taxes.

Depreciation and amortization for the quarter was 5.6 million compared with last year's fourth quarter of 4.9 million.

The full year 2005 forecast for depreciation amortization is approximately 22 million.

Capital expenditures for the quarter were 6.1 million compared to 5.5 million in the prior year's fourth quarter.

Full year 2005 forecast is approximately 22 million to 26 million.

Payments on Viad's restructuring reserves were 1.3 million during the quarter versus 2.3 million in the fourth quarter of 2003.

We expect to make restructuring payments of approximately $4 million in 2005.

The 2004 income tax rate year-to-date, excluding good will and intangible asset impairment losses, for the year was 34.8 percent versus 50.3 percent year-to-date in 2003.

Implicit in our 2005 guidance is a 40 percent tax rate.

And back to you, Bob.

Okay, thanks, Ellen.

Before we wrap up the comments and open the call to questions, let me give some guidance for 2005.

Keep in mind this guidance is subject to change and does not include any impact from the adoption of Financial Accounting Standard Number 123-R, which is effective to us at the beginning of the 2005 third quarter.

This standard requires that all share-based compensation awards be measured at fair value at the date of the grant and expensed over their vesting of service periods.

The extensive on adoption, which has not yet been determined, will be affected primarily by Viad's historical and new option grants, forfeitures, and valuation methodology.

And also mention that again visibility of Exhibitgroup continues to be -- to be poor; and finally, please keep in mind that $0.01 per share is the equivalent of approximately 220,000 after-tax dollars.

For the full -- for the 2005 full-year income per diluted share, it's expected to be in the range of $1.23 to $1.36, which would be a 15 percent increase on the low end and 27 percent on the high end.

And this is unchanged from the guidance provided at our December analyst meeting.

Revenue is expected to increase at a low single digit rate from the 2004 amount of 785.5; and while this growth may seem modest, keep in mind that it reflects negative show rotation of about 14 million at GES.

We also expect modest revenue growth at Exhibitgroup and the Travel and Recreation Services segment.

Segment operating income is expected to increase by mid-single digit to mid teens rate from the 2004 amount of 53.8, driven mainly by cost reductions and improved margins at Exhibitgroup.

We expect that Exhibitgroup will at least cut its 2004 loss in half, and at GES and in Travel and Recreation Services segment, we expect low single digit operating income growth.

For the first quarter '05, income per diluted shares is expected to be in the range of $0.50 to $0.58, also unchanged from our prior guidance.

This compares favorably to income of $0.35 per share in the 2003 -- 2004 first quarter .

Revenue is expected to increase at a half single digit to low double digit rate from the 2004 amount of 207.6, and segment operating income is expected to the increase by 5 to 8 million from the 16.2 million in 2004.

And the improvement here is expected to be driven mainly by positive show rotation of 17 million at GES, as well as an improvement at Exhibitgroup.

First quarter guidance for each of our operating segments can be found in the earnings press release.

Our press release also includes, however, guidance for the second, third and fourth quarters to help you better understand the impact of show rotation of 2005.

Now, heading into 2005, we're not expecting at this point any significant improvement in the trade show industry.

We are, however, optimistic that the growth in trade shows we saw in '04 will continue in '05.

On the exhibitor side, we expect exhibiting companies will remain focused on ways to reduce the trade show costs, including using lighter weight exhibits and refurbishing existing exhibits rather than building new.

And in this environment, much of our expected year-over-year improvement is dependent upon excellent cost control and capitalizing on new business opportunities at both GES and Exhibitgroup.

Our Travel and Recreation Services segment is back on track following a substantial rebound in '04, and we expect modest growth to resume in 2005.

And at the corporate level, we expect to reduce expenses by about 2 to 2.5 million from the 2004 amount.

We are entering 2005 with a very strong balance sheet, and we continue to evaluate strategic acquisition opportunities.

We know that 2005 will not be without its challenges.

With that being said, we are more optimistic about the industries -- industries we serve going into '05 than we were going into '04.

We have a well-tested, first-class team, and we are confident in our ability that we can drive this earnings growth that we've targeted for 2005.

And lastly, I must tell you that on the execution side, I think that all of our companies -- Brewster, Glaser, GES and Exhibitgroup -- have just done an outstanding job on the productivity piece by driving out costs, and that's why we've been able to obtain some of the results that we've been able to obtain despite a lot of terrible external conditions.

So Kim, with that, I'll close and ask you to open the call for questions, please.

Thank you, sir.

The question and answer session will be conducted electronically.

If you'd like to ask a question, please do so by pressing the star key followed by the digit one on your touch-tone telephone.

If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment.

We'll proceed in the order you signal us and take as many questions as time permits.

Once again, that's star one to ask a question or make a comment.

And we'll pause for just a moment.

Our first question will come from Kartik Mehta with Midwest Research.

Good morning.

Good morning, Kartik.

Bob, I wanted to ask you a question as far as allocation of capital, I know you mentioned a little bit about acquisitions, but the balance sheet remains extremely strong.

You're generating significant free cash flow even in this environment.

So I want to get your -- maybe broad thoughts on how you will allocate the capital for this company?

Kartik, thank you.

As I mentioned, we are looking at some strategic acquisitions.

We -- and I've said, I believe on the last call, that there's some things that we like, if we can buy them at the right price, that we would be very happy to do.

Having said that, though, if those things aren't possible, clearly the second call on the available cash of capital that we have would be on share repurchase.

So we would like to, obviously, grow this company.

We think that we've got some good internal growth opportunities and organic growth opportunities.

You've heard about Paul on the new products and services -- and gosh, that started just a short 18 months, two years ago.

We put capital there.

We've got some other things on the drawing board that we're looking at.

But if not, then the second -- the second major call on that would be share repurchase.

And a question on Exhibitgroup, Bob, I think in your remarks you said that you saw pricing to abate a little bit -- at least pricing pressure -- to abate a little bit on the Exhibitgroup side.

And I was wondering, is that because your competition's balance sheets are getting weaker and it's tougher for them to be in business, or is it because the economy's improving and as a result you're seeing corporations wanting to spend more money?

You ask a great question.

And before I ask Kim to comment, let me just mention a couple of things.

I have just been shocked at this industry in general, because you've had about five or six of the top 15 or 20 over the last two years that have shut the doors or filed bankrupt.

And we all know that capital is not infinite if there's not an adequate return on it.

And I had thought some of this irrationality would end a long, long time ago.

And we haven't seen the end of it yet.

Again, I think as I've said and Kim said, we've seen it abate somewhat, but you just hope that -- again, capital is not infinite.

That's what we do believe, and I hope this positive trend that we've seen will -- will continue, because we happen to be public; but again, you can look at the bankruptcies and the shutting of the doors and look at the financial results and say the industry is sick.

And I just hope it continues to get better.

Kim, you want to comment further?

Yes.

I think it is twofold.

It's both competitors and a perspective from the customer side.

With respect to the competitors, I do think there is a little bit more rationality and understanding that they can't continue to give stuff away for free.

And from the customer standpoint, I think there is some realization that they don't get anything for free.

So it's not so much that their budgets are a lot more resilient, it's more a realization that even though somebody -- somebody may have bid a low ball bid and they moved the business over, they're recognizing that there are added costs that come in and there's some surprises.

Because we, in fact, have gotten some of our old customers calling us and saying, you know, it may -- it -- it -- you know, we want to come back and talk to you guys, because at least there were no surprises.

You guys laid everything out for us.

And what we're getting are hidden costs on the other side.

So I think it is twofold, not necessarily customer budgets increasing, but a little bit of rationality on the competitive side, and the customers understanding a little bit more through this environment when they went after cheap what that meant.

And just one last question on the GES side.

Paul, you indicated that you're starting to get some more traction on the value-add services that you're selling.

Is there any way you could -- is it -- is it possible to quantify maybe what the percentage of revenue that used to be value-added sales, and the percentage [INAUDIBLE] is, or any other way for you to quantify the success you are having in that business?

Bob, you want me to take that?

Yes, go ahead, Paul.

Good morning, Kartik.

I think in the December 16th meeting, we showed a little bit of that, if I remember, Kartik and some of the shift that we've seen from exclusive based services like material handling, over to nonexclusive-based services, like we have in the Products and Services.

It's about a third of our total revenue now, and it is certainly growing at a faster rate than our exclusive services.

Great.

Thank you very much.

Thank you.

Your next question will come from Michael Peterson with [INAUDIBLE] Investment Management.

Hi, good morning.

Hi, Michael.

A couple of -- of somewhat housekeeping issues.

The guidance on corporate expense is a fairly significant reduction next year, but you went in the opposite direction this quarter.

So were there some true ups in the quarter or something of that nature?

That's my first question.

Yes, on the fourth quarter corporate expense -- and I should have talked about that upfront because it looks awful.

It's not quite as bad as it looks.

It existed of a number of things.

One was that we always have a true up on any type of incentive program.

Secondly, you're seeing a good chunk of that Sarbanes-Oxley 404, and also, we had higher minority interest in the quarter.

And I think those -- those things accounted for the bulk of it.

Ellen, you want to add anything?

No, I agree.

And I'd just add on a year-to-date basis, our 404 costs from outside auditors were about 1.1 million, so that is a big difference from '03.

Yes, that's just -- the 1.1 million, I should mention, is just the cost from the external auditors and it does not include a lot of other costs associated with that.

So we -- we hope that a good bit of the 404 is what you might call the one-time cost, and that certainly will hopefully moderate on a go-forward basis.

We believe that to be true.

Okay, and then just -- but --

So there was nothing there, Michael, that -- that's in the run rate of that type stuff that you need to be concerned about.

Right.

And then in thinking about the '05 reduction, apart from the Sarbanes-Oxley stuff, without going into huge detail, but can you give us an idea in terms of, are those -- is that a stretch to get that much out, or is that relatively easy and sort of a function of now being farther on and being a public company?

Well, the good thing that we have from a timing standpoint regarding the separation of MoneyGram, we had a good sense as to when it was going to happen.

You know, in the -- June of second quarter -- so we had a lot of time to go through and put a lot of thought behind what we could do and what we couldn't do in respect to corporate expense.

And as you might guess, some of that included personnel, some of that included facilities, where we've been able to, you know, decrease some of the facilities, and it was just across the board.

So the nice thing that we had, we had plenty of time to go through and think about.

So the '05 is real and it's doable.

Okay, and then my last question was just on the tax rate.

And I think I just missed something you said, which is that the 40 percent is what you're planning on, which is significantly up from this year, but I think that the -- this-year number, Ellen, that you reported had some one-time benefits.

Am I correct about that?

Correct.

In the third quarter, we had a $2.4 million tax settlement, so that lowered the rate.

So on a go-forward basis, without any settlements which may occur, we just based it on a normal year with a 40 percent tax rate.

Okay.

Thank you very much.

Thank you.

Moving next, Lee Sykes with [INAUDIBLE] Capital.

Actually, my questions have been answered.

Thank you.

Thank you.

Zach [INAUDIBLE] with Gates Capital Management is next in the queue.

My question's answered, too.

Thank you.

Thank you.

As a reminder, it is star one on your touch-tone telephone to ask a question or make a comment.

At this time, it appears there are no further questions.

Please go ahead.

Okay, Kim.

Thank you so much for helping us out today, and thank all of you for attending.

Again, we look forward to '05.

We're excited about it.

We're happy.

We think we finally are getting a few breaks.

These industries we serve, we're confident and respect our ability to execute on the productivity side through GES throughout Exhibitgroup, Brewster and Glacier, and we look forward to a real good '05.

Thank you very much.

Bye.

That concludes today's conference.

Thank you for joining us.