Harte Hanks, Inc. (HHS) Q1 2009 Earnings Report, Transcript and Summary

Welcome and thank you for joining the First Quarter 2009 Earnings call. At this time, all participants are in a listen-only-mode. (Operator Instructions). Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I'll turn the meeting over to Mr. Larry Franklin, President and Chief Executive Officer of Harte-Hanks. Sir, you may begin.

Thank you. Good morning. On the call with me today is Doug Shepard, our EVP and Chief Financial Officer, Jessica Huff, Vice President of Finance Controller, Brian Pechersky, Senior Vice President and General Counsel and before I begin my remarks, I would ask Bryan to say a few things.

Thanks, Larry. Our call may include forward-looking statements. Examples may include statements about our strategies, initiatives and business plans, adjustments to our cost structure, financial outlook and capital resources, competitive factors, business and industry expectations, the economic downturn in the U.S. and other economies and other statements that are historical facts. Actual results may differ materially from those projected or implied in these statements because of various risks and uncertainties including those described in our most recent Form 10-K and other documents filed with the Securities and Exchange Commission and then in cautionary statement in today's earnings release. Our call may also include non-GAAP financial measures. Please refer to today's earnings release for the required reconciliations and other related disclosures. Our earnings release is available on the Investor Relations section of our website at www.harte-hanks.com. I'll now turn the call back over to Larry.

Thanks Bryan. As we mentioned in the press release, the first quarter as we expected was difficult. The economic uncertainty continues to make it difficult if not impossible to predict when the conditions will improve. And although our clients in direct marketing and shoppers are very different, they are both feeling the effects of the recession and they're carefully controlling their marketing spending as evidenced by our revenue decline. In direct marketing, we believe our data driven marketing solutions are even more necessary and effective in this environment. But the facts are that our clients have less money to spend and that leads to reduced activity, delayed programs and some instances, these programs being eliminated. And while there are differences in spending in the various verticals that Doug will cover, the common theme is our customers need us to help them generate revenue now at a better value. We're not pleased with 18% revenue decline in direct marketing; it's obviously a difficult revenue environment. But there are also some good things happening, and with our existing clients and also with some new clients. While I have said this to this group before, we have a traffic client list and in the first quarter, we expanded our relationships with several clients, building on our ability to deliver multi-channel solution. There are two good examples of this in the highlights section of the press release. One of those is the global electronics company and the other global healthcare company and programs that we've provided for them. In the new client category, a major retailer that we've won this quarter will be accountable for delivering fully integrated data driven solutions across multiple communications channel. We'll be providing a marketing database and data management insight and analytics, services from our direct agencies, digital marketing and direct mail. The use of this win (ph) was the fact that we could bundle all those solutions and be responsible for their CRM story. Additionally, our people aggressively executed against to reduce our cost initiatives that we discussed in the last quarter and the results are obvious in this quarter. To only have a 10% reduction in operating income with 18% revenues reduction I believe is terrific. We will have to do more because we are committed to being able to deliver more value to our clients at less cost. And I really believe that the big pay off from all of this will come when this recession is over, because I'm confident that we will be stronger and more efficient company with terrific growth opportunities. Turning to Shoppers, California and Florida remain very difficult markets, although the 16% or 16.3% same circulation decline was no worse than previous quarters, we see no signs that there will be any improvement in the near term. Again, I could not be more proud of the leadership of our people and what they've shown in this ongoing realignment of the cost structure. The aggressive cost reductions have started in the fourth quarter last year and actually have been going on throughout last year, were also continued into the second quarter of this year. The encouraging thing to me about our Shoppers is that we get confirmation every week that this product works for our client and that encouragement comes in the form of testimonials and also the fact that we have 14,000 plus customers that use our product each week. And in any given week, we will distribute over 19 million inserts that we delivered to the homes in California and South Florida. We have intense focus on increasing the customer count since we know that most of our customers have less money to spend. We are also getting confirmations that our web product especially the Power Sites to add tremendous value to the fresh product. And while the numbers are still small, our growth is exciting and more importantly our territory sales force are embracing the web strategy. I am fully convinced that we will emerge from this recession and I do believe that California and Florida will again be good places to do business. We will emerge a more efficient and competitive business with tremendous long-term opportunities. Cash and other key focused area and results again are very good. Doug will provide you more detail, but it is important to note that our focus on accounts receivable and collection is paying dividends, our focus on limiting capital expenditures to those that are necessary to deliver our services more efficiently, are to generate and keep revenue that's working, that allows us to add... or allowed us to add $19 million of the cash balance during the quarter and reduced outstanding debt by $7 million. While we don't underestimate the challenges that we face and the difficulty of the environment, I could not be more pleased with the way our people are making the hard decisions. Because we also know that they are more ahead of us and they are hard and difficult decisions. Doug?

Thank you, Larry and good morning. Here is the companywide overview of our first quarter. Revenue decreased 18.9% for the quarter. Direct Marketing revenue decreased 18% for the quarter. Shoppers revenue decreased 20.7% for the quarter and 16.3% for circulation during the same period for the first quarter in 2009 and 2008. Operating income decreased 46.7% for the quarter. For the quarter, Direct Marketing declined 9.5%, while Shoppers declined $10.2 million including 3.5 million of charges during the quarter. Our free cash flow was 14 million versus 16.7 million in 2008. Our net debt, total debt less cash declined $26.7 million during the quarter. We reduced our capital expenditures in the quarter 2.2 million compared to 6.7 million in the 2008 first quarter. Turning to our businesses, in the quarter, Direct Marketing revenue decreased 18% and operating income decreased 9.5%. Operating income margins increased to 13.1% compared to 11.9% in the first quarter of 2008. The charge of 1.9 million was incurred in the first quarter related to head count reductions as a result of adjusting expenses to our revenue decline. We're removing this charge, which has resulted in operating income margins of 14.4% for the quarter. The improvement in operating margins is due to our across the board expense reduction initiatives. In the quarter, our high-tech/telecom vertical represented 30% of Direct Marketing revenue, retail was 23%, product markets were 20, financial was 14 and healthcare pharma was 13. All vertical markets experienced revenue declines in the first quarter compared to the first quarter of 2008. Our pharma/healthcare experienced a revenue decline in the high single-digits while our retail and select markets both had decreases in the low teens. The high-tech/telecom vertical revenues decreased in the high teens while financial service revenues declined 35% for the quarter. Our top 25 Direct Marketing customers represented 41% of Direct Marketing revenue for the quarter. Our largest customer in the quarter represented approximately 7% of our total Direct Marketing revenue. Turning to Shoppers, our performance for the quarter was disappointing. Shoppers first quarter revenue decreased to 20.7% based on circulation distributed for the same time period in the first quarter of 2009 and 2008; Shoppers revenue for that circulation declined 16.3% in the first quarter. Shoppers operating income margin for the quarter declined $10.2 million including 3.5 million of charges compared to the prior year quarter. Removing the charges would have resulted an operating income of $1 million. In February 2009, approximately 650,000 circulations closed in Southern California. At the end of the first quarter of 2009, we consolidated two Florida production facilities into one. We expected 2009 savings from this consolidation will be offset by the 2009 first quarter charges. During the fourth quarter earnings call, we gave guidance to expect 2.25 million of charges evolved primarily related to our Florida production facility consolidation during the first quarter. We actually incurred about 3.5 million charges. This increase is due to additional headcount reduction in the lease reserve for a facility we are no longer using. We estimate the first quarter charges outlined in our press release negatively impacted first quarter earnings by approximately $5.04 per share. On the balance sheet of March 31st, we are showing a net debt balance of 213.8 million versus 240.5 million December 31st, a reduction of 26.7 million. Net accounts receivable were 144 million versus 169.4 million year end. Days sales outstanding at the end of March was 61 days, a slight increase compared to the 59 days outstanding at March 2008. We ended the quarter with the leverage ratio of 1.8 times versus a covenant of three times and an interest coverage ratio of 11.3 times versus the covenant of 2.75. We currently have all 125 million available under our revolver in addition to c cash balance of 49.7 million at the end of the quarter. We believe our conservatively leverage balance sheet and free cash flow provide us a good operational flexibility. With that operator, we'll turn the call over for questions.

Thank you. (Operator Instructions). Your first question comes from Alexia Quadrani with JPMorgan.

Hi. Thank you. A couple of questions. First in the direct marketing business, you guys did a very impressive job in the margin side despite the revenue fall off. And I'm just trying to get a better sense of how sustainable do you think that is. The cost cutting efforts that you've done, will they carry through the year or is just depends on the revenue by any mean (ph)? You can maybe talk about it a little bit.

Okay. Good question, Alexia. The cost cutting that we... well, as I said started and I guess toward mid last year and then accelerated, we got the benefit of that in the first quarter and add to the cost that Doug referred to that actually are the one time charges that we won't have next quarter. But those savings, they will play out over the remainder of the year. Now, what we know is that we've got to keep intently focused on our revenue streams and where those are going. And we feel reasonably good about the ability to continue to right size if you will our operations at the revenue picture changes. We are literally looking at every system that we have everything that we do, every way we deliver our services and the fact that we know we need to deliver our services at better value to our customers and we think there're ways to continue to improve that. We are taking those actions as we speak, and we'll continue to monitor them very carefully.

And then if you look at the revenue declines in the drug business, is there a sense you can about how much of that is to pull back of spending on the different verticals that you highlighted or how much that maybe putting some pressure on your fees or what they pay you given the overall environment as what you can you qualify that a little bit?

Yeah, the financial performance which was, Don, how much?

35.

35% that is and... it's now, I think the 14% of our revenue. Those pullbacks were credit card diversified finance, insurance, community funds and those were all customer mailings et cetera. So that is pullback in volumes. And in some cases just eliminating some programs. And the other verticals, it's a mix volume reduction. And it's a mix of some delays and the retail verticals were... what were we down in retail? Mid teens. We had some good growth with some customers and then the ones that, where we had the deductions that lead to the 14%. Those were primarily volumes in delays and some of some programs. The high tech/telecom, the results there really high tech had a fairly good quarter. Telecom, we had a large program that we were running for our company that ended in the first quarter last year. So that was a reduction in this programs. And then the last part of your question, we are seeing price compression and we are responding.

And then just lastly jumping to the Shopper business, so if I understand it correctly, you maybe approaching a bottom, but there's no sign of a recovery anytime soon. I guess that if that is the case, if you sort of stay at a bottom here and you'll no longer see further deterioration, will it be easier to sort of manage the extent little bit more managed the margin going forward? And then secondly so on Shoppers, when we see an eventual recovery, do you have any sense in sort of what sort of shape that will take? I mean have some of the clients can really disappear from... gone out of business and therefore be a very modest recovery? Any color you can give me on that would be great.

Okay. Can I add another couple of comments about the marketing quality (ph) there?

Okay.

Because we in the quarter, and I was talking about... it's kind of hard to say that everything is not bad when you got 18% reduction, but everything is really not bad. We had some really good wins and they were throughout our service line offering. So, they were... and several of those particularly where we're selling additional services to our existing clients that are the more traditional clients, where we are doing personalized direct mail, targeted mail, and some of those sorts of services, where we're adding the higher value, but lower revenue based programs. It makes that revenue we think a lot more sticky and it adds a lot more value. So, there is some good things. It's just... when you've got that kind of revenue, it's hard to it's very difficult to make that up. On the Shoppers side of the business, when I mentioned that we have 14,000 plus customers, I can tell you that that customer account is down 10 plus percent, though there has been a lot of these small to medium size businesses that have gone out of business. And then we also because our revenue is down more than that, the ones that we have and are keeping, they are spending less. But again, the anecdotal testimonials of why those people continue to advertising and advertise with us, is to me encouraging as to what's going to happen when we do see some upswing here. Our -- what we call national accounts or really regional accounts, some of the larger ones, they're actually performing better than our local people. And it just says that the local people are having to watch every single nickel they spend. As to what this... it is true what you said that it may not go down further or much further, we don't see any catalyst at the moment that's going to make it moving back up. We can all talk about some house sales, housing sales, one may be up a little bit, but they are 30% less priced. And then you got to ask how quickly that person bought that home, now start painting and putting the drive way etcetera when unemployment rates continue to increase in those two states. But what we know is and having gone through other recessions, nothing like this, but other recession. When it does come back, these people will start spending money and with the combination of what we're doing with the print product and also the web, I'm convinced that we're going to have a strong franchise. We still have 400 plus sales people in California and South Florida, those people know those markets, they know the customers, they're with the customers and the product works. So I feel -- I don't know how long we're going to be in this, the position that we are in. But I can tell you that our people that are running our shop there. They are really good at not just controlling costs and cutting costs, because when you're in an environment like this where we're combining production facilities, we're combining operations, you make two or three passes through those. As you take the actions, you get the price reductions, then you go back and see where is the efficiency et cetera. So there are all kinds of opportunity to continue to right size, but I can also tell you these are difficult decisions being made.

Thank you very much.

Yeah.

Thank you. Our next question comes from Dan Leben with Robert W. Baird.

Great, you guys headed towards this. But could you talk a little bit more about the products performance within Direct Marketing in terms of the just kind of what the magnitude of the declines are, kind on the more of the traditional business versus some of the more data intensive type businesses?

Dan, just because of the magnitude of revenue, the more traditional businesses where we had more of the decline and that's what was driving the downward pressure and a lot of it just -- a lot of the decline was in lower volumes. Where we saw some upside and where we had gains and we had some good gains with some clients, those were pretty broad spread among the Lead Gen, database, the programs that we added to existing clients, the more contact center work those -- it was fairly well spread. On the new business that we got that we'll be on boarding over the next few quarters and again keeping in mind that it takes time to get these on and you're losing the larger volume account. So these are not extremely large revenue streams over any short-term period but those are... and they're across the... cost base on tech support database, sales lead management, several agency and digital additions to existing clients. So that part was pretty broad spread. The volume related transactional businesses are down.

So is it safe to assume that on the actual... some of the data sides and some of the things you're mentioning that if you just look at those pieces, you are actually modestly positive or it's just not down there nearly as significantly?

Not down nearly as significant.

Okay, fair enough. And then just on the Shoppers business, obviously some customers going away and volumes are down. Have you made any changes to the pricing on the products?

I can safely say we have not increased prices.

What about the other way?

We compete aggressively.

Okay. Fair enough. And then can you just talk a little bit about DSO trends particularly within the Shoppers business, up a little bit negligibly, but just want to get a sense of how that kind of broke down between the two businesses?

Yeah, the Direct Marketing was slightly down and Shoppers was slightly up. It's not anything unexpected. And as we said in our previous call, we've got steps in there to monitor it tightly and to stay on top of it, even the slight -- it's just a slight increase in Shoppers. There's nothing material or alarming magnitude.

Okay. And then you mentioned some program delays within the retail vertical, how many of those were kind of delays where people were pulling back spending versus kind of customer bankruptcies or on the verge of bankruptcy and just absolutely had to halt spending?

No, it was the more the former. They just reduced volumes and they're waiting and change their plans, but not -- I don't know if any of them--

But there were other no large new bankruptcies in the first quarter that impacted us to have the carry over of what happened in the third and fourth quarter, but--

Which would have affected the comparisons, but those were the ones that everybody already knew about and we've taken all of it. There is no new list that I'm aware of --

Okay.

You obviously got to look at it all the time but --

Yeah, fair enough. Now on the circulation declines, you guys feel pretty good about where you are at today and kind of feel like this the stable level that you could maintain even as trends remain weak, that kind of looking forward this is the base you want to grow off of when things do improve in those markets?

It's something that we look at frequently, but we have no... at this moment plans for further circulation reduction.

Great. Thanks guys.

Our next question comes from Mike Kupinski with Noble Financial.

Thanks for taking my question. Larry, I was wondering can you give me what the sequential month-to-month declines were in Direct Marketing? I mean, it got up slow in January, kind of little better in March or is it just pretty consistent throughout the quarter?

Mike, it's really, really interesting when you track it and you think there's got to be some pattern to it. Actually, January was a little bit better. We're talking (ph) lot of the ups and downs from last year. So I can look at what happened in January last year. There's little bit better in January, down a little more and February and March is about the same. So, if we look back and looked over several months and there are those... it's just not evenly distributed, either up or down. And that's the same thing within Shoppers as well.

Okay. And then in terms of... it sounds like you have a significant win with one retailer. I thought Larry that you had all the retailers, so for that, but usually you have to ramp up expenses to support business development. Will that be significant in the coming quarters like in the second and third quarter particularly?

No.

Would we start to see? When would we see that and would it be in payroll for instance?

No, I am not talking about any.

No, nothing there. Okay. And in terms of the Shoppers, what would be the key component that you would look for to kind of when you think that we're out of the woods and maybe start to see some improvement. Will it be the real estate market, because on being here in Florida now and talking to real estate agency here, they're telling me that the prices aren't going down anymore. And that the homes are actually starting to move, and which I would have thought might show some signs that the Shoppers business might to start to see some improvement. What do you think would be the key category to get the Shoppers business, kind of moving in the right direction again?

Well, there're probably a number of things, but as long as unemployment is there and rising, people are nervous. And I think, those home sales are in the -- there're still a lot of homes on the market that have got to be absorbed. And I'm talking anyway of our California people and looking at home sales statistics and that's a data point. Our question is, when you buy the house, how long are they going to pay before you're paying it, get approval, buying the furniture, drive your car and those people spending money is going to tell us that. And we sure see a lot cautious people in California and Florida.

Right.

And people are just... they are just not spending money.

Right.

And so, and as I said with our sales force, we are in that market every single day of the week. And well, you know there is... I know it's very safe to say that there's less doom and gloom than there was. But it's not directionally positive where we see it.

And in terms of just going back to the Direct Marking, as you go into the second quarter we've already kind of started into the quarter. Do you have any insights on how the quarter let's say on... just like look at the last month, how that paced relative to the first quarter? Is that about the same or have you seen some stabilization, have you started to see some improvement, because on -- in the past cycles it seems like Direct Marketing did have a couple of quarters where you had some significant double-digit decline in the last cycle. But then we started see some bounce back pretty nicely, just in the matter of three to four quarters. What are your thoughts about that business, in particularly what you saw in the last month and how it might look? Is it similar to last cycle do you think?

This might sound really strange, but we obviously anxiously await our financials every month. But we are not getting excited or especially depressed on one month activity, because we are in a long-term game that is very short-term focused here. And so, we are constantly looking at what products and services we are selling our clients, and how do we be more effective through them. And that keeps us focused on structure. It keeps us focused on cost, it keeps us focused on our clients' costs, and it keep us trying to add more value to each of these customers. But it's amazing when we go back month-by-month and look at the fluctuations in what's happening in revenue stream. I can tell you that in the first quarter of this year, we were really, really close to our Shopper revenue plan. The 18% in direct marketing, slightly more than we would have thought. But then we go back and look and say, there is no big surprise given some of these... where some of the fluctuations came from. So, I know that doesn't help you at all, but my trends are just... now as we look back four months and you kind of normalize some of those, maybe there's nothing there. But we don't see it based on what the last three months or four months. As I said in remarks, we don't see the... this is the statement now for the total business, not individual clients or individual vertical. But we don't see any directional change at this point.

And the business that you want from your retailer, well, what was... how did you win that? Hopefully, it was... I would imagine, it was based on price. But I would like to have your thoughts on what allowed you to win that business.

Well, we won... I mean, the important thing and the reason that it is backed out there is because it is a bundle solution, totally all the services that we provide from the traditional to the digital. I mean it is a total solution. And so, that was done through a long process of RFPs and presentations, and so the significance again is the fact that it's the bundle solution.

Okay, all right. Thanks Larry, I appreciate that.

You bet.

Thank you. Our next question comes from Ed Atorino with Benchmark.

Hi Larry, how are you doing?

Good, how are you?

Okay. My readings correctly, do you think the 70 million range for Shopper's is sort of a temporary bottom here or bottom? And secondly, if you looked at the cost structure, your two biggest costs of what mail and distribution or mail and people?

Right.

And are at a cost base that's going to stay at this level borrowing the change in the top line?

Okay. The 70 million is in the bottom, I don't know that, but again as I've said, I don't give. The 70 million other than just a fact that there is slight variations throughout the year. But again, we don't see that leaving. We don't see any indications to say that's moving up. On the cost side, the postage goes up when? May?

May.

May, 1.4%, so at today's sharp (ph) postage increases on just a base postage will go up 1.4%. And the people costs, we continue as we indicated in the press release. There were some further reductions in the first quarter that we've talked, some of them we talked about in the fourth quarter, but there is some additional reductions. So they're based on further reduced expense there. And then we are literally as we speak, we're consistently looking at how we're doing. If you look at what happened in Florida where we combined those facilities, we've gotten that done.

Yeah.

But we are not as efficient yet, because it just was completed in...

Got you.

...I think in March. So we're still working on the productivity issues, we are working in the structure and staffing of that structure. So there's still opportunities to impact the cost structure, but obviously less than there were.

And what's mail at the percent of total cost, a third?

Yes. Yes, it is.

On the direct marketing, as I think some of the... like we talked about this before. I think some of the problems have to do with the credit crunch and people were afraid to spend money. Are you sensing that, A, assuming, I'm right? B, are you sensing people not new, or at least think about spending money again, sort of taking the checkbook out of the drawer sort to speak with the markets up. The governments drawn a trillion dollars at the world and spring is here and all that stuff. You get my point?

Yeah; and swine flu is waning, right?

Hopefully.

I think there's... we're seeing a few programs adding back, but what we don't know is what is taking place.

Yeah.

The customers that we are not seeing movement one way or the other. Because not only did we have to... we have to watch the performance of our clients. And how well they're doing, and we're fortunate again, and I can not overemphasize this enough. Our client list is terrific.

Yeah? It's always been.

So we think that's a plus, but it's not any kind of given the things about to turnaround.

You're sitting on a ton of cash and you've got some debt, are you inclined to do pay down debt in the short run or take a look at stock again, can you answer that or?

Yeah, no, there is no change in that; we thought we would accumulate cash and we plan on to continue accumulating cash.

Okay, thank you.

(Operator Instructions). Our next question does come from the Dan Salmon with BMO Capital Markets.

Good morning guys, and thanks for taking my question. I'd dance a little bit more around this cost question and see if you have a broken down like this, a breakdown just straight up between fixed costs and variable costs. We've heard some of a little bits and pieces within that. But I am wondering if that type of breakdown you have available?

Are you talking about direct marketing?

Well, I guess if you could break it down between two, that will be great, but as well for the company as a whole.

Coming at the direct marketing part of it, obviously the headcount reductions are significant. And we think those are somewhere between 35 and 40% of the savings. And then if you look at production and distribution, which is the cost of everything that we do with the product, it's probably in the 35, 40 and then it's G&A. Now within those brackets, there is just a multitude. The expense line items that are down without very many of them being up. And the Shopper side of the business, it's probably not much different from that as far as percentages go. There's more within the payroll with all the changes that have taken place in the consolidations of production facilities in the way we manage the production process, there's a fair number of people involved in that, particular function. There is some leases associated with the property that we've... I won't say changes that we made in Shoppers. I don't have it on the tip of my tongue is fixed or not, but I would assume that probably in Shoppers there's more of fixed part of it would be reduced. And then when we've reduced circulation about a million in the last year, 1.2 million something like that, then the base postage against that is out which is in the production and distribution. Paper cost same thing. So I think probably the 40-40-20 somewhere like that would be fair assessment of both of them.

Okay. That detail helped. Thanks very much.

Thank you. Our next question comes from Danny Amok (ph) with BlackRock.

Hey Larry, great job. I was actually wondering why you guys are holding and elevated cash position and why you wouldn't pay down some more debt?

Well, first of all our term facility, there is no... it's a permanent pay down. So that's one discouraging fact for if there is a point. And then the second, which we just consistent with what we've said over the last couple of quarters, is to have flexibility build that cash up and be able to address any issues that arise.

And what gives us a lot of encouragement is the fact that in this environment, we have the flexibility to respond to circumstances that we don't now see. Whether there are opportunities on the CapEx side to do something to do some revenue. I mean we are focusing on both keeping our cash as Doug has said. And then that permanent pay down like the... makes it not terribly attractive at this time.

Okay, thanks.

Thank you. Our next question comes from Andrew Cash with Point Clear Value Management.

Hi, good morning. I was just wondering within your financial vertical and direct marketing, I assume that some of your customers have TARP money?

Yes, that would be... yes.

Okay. Well, I was just kind of curious, have you noticed any difference in behavior between the TARP related customers or thinking about advertising and how the non-TARP customers are thinking about it?

We really haven't, because the vertical... our financial vertical is 14% of our total revenue and then that's spread among five different categories within financing. So, we haven't seen any at all now. I don't know that we would given the magnitude of our business with them, but we've... I've heard nothing from our financial sales force, but would indicate that that's the case.

Okay, really appreciate then. Thanks for doing a great job.

Thank you.

Thank you. Our next question comes from Edward Atorino with Benchmark Company.

I got my answer. You said that the charges of $0.05, total charges?

Yeah.

Yes.

Okay. I just figured it out myself. Thanks a lot.

Thank you. Now, I would like to turn the meeting back over to Larry Franklin for closing comments.

Okay. I just want to again emphasize on how significant I feel that our performance is as it relates to our people's initiative, the effort and their commitment to company for the benefit of our customers and to assure that us we will emerge from this recession even stronger and with terrific growth opportunities; and it's just a really good group of folks. So to them, thank you, and thank you for your interest in our company.

This concludes today's conference. You may disconnect at this time. Thank you.