ManpowerGroup Inc. (MAN) Q4 2012 Earnings Report, Transcript and Summary

Welcome and thank you for standing by. At this time, all participants are in a listen-only mode until the question-and-answer session. (Operator Instructions) Now, I will turn the call over to your host Mr. Jeff Joerres. Mr. Joerres, you may begin?

Good morning and welcome to the fourth quarter 2012 conference call, as well as the full year. With me is our Chief Financial Officer, Mike Van Handel. I’ll go through the high level results for the quarter and the full year. Mike will then spend time going through the detail of the segments, as well as the forward-looking items for the first quarter, and any implications at all to the balance sheet and cash flow as well as the reorganization that we did in the fourth quarter, and more that we will be doing in the first quarter and possibly beyond. Before moving into the call, I’d like to have Mike read the Safe Harbor language.

Good morning, everyone and welcome to today’s call. This conference call includes forward-looking statements, which are subject to known and unknown risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements can be found in the Company's Annual Report on Form 10-K and in the other Securities and Exchange Commission filings of the company, which information is incorporated herein by reference. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliation of those measures where appropriate GAAP on the investor relation section of our website at manpowergroup.com.

Thanks Mike. Despite the difficult headwinds, the fourth quarter was a relatively strong quarter for us. We continued to drive forward with our cost initiatives, resetting our cost basis, as well as bringing on the appropriate revenue, in other words, profitable revenue. We continue to be more selective regarding the type of client and pricing, particularly in the U.S. and Europe. We were able to significantly exceed our expectations of profitability, primarily because of the slightly better revenue performance and lower expenses than we had anticipated. In U.S. dollar, we came in at $5.2 billion for the quarter and $20.7 billion for the full year. On a quarterly basis, our revenue decline was 5.1% in dollars and a minus 3.5% in constant currency. For the year, we came in at 6% decline in U.S. dollar and 1.4% decline in constant currency. We were able to somewhat stabilize our gross profit margin and came in at the high end of the expected range of 16.9%. We’ve experienced stabilization in the staffing side, particularly in the U.S. and France. While we have seen declines in some of the Northern European countries that have most recently been hit by more fledgling economies. Our operating earnings at $105 million, was down 17% in constant currency or 11% before the reorganization charges. Earnings per share was $0.68 in the quarter or $0.91 excluding reorganization costs, a 7% decline in constant currency. For the full year, we came in at $412 million, down 17% or 9% down before reorganization charges. We executed well in the fourth quarter, however we have set the bar high for ourselves to continue to maintain the profitable revenue growth, as well as drive down our cost base. Now for additional information regarding the segments, I’d like to turn it over to Mike.

Thanks Jeff. As Jeff mentioned, our earnings per share in the quarter came in significantly stronger than expected at $0.91 per share before reorganization costs, compared to our guidance midpoint of $0.76 per share. Of this $0.15 outperformance, $0.13 came from the operations, $0.01 came from other expense and $0.01 came from lower weighted average shares due to share repurchases in the quarter. Our income tax rate came in at 31% before French business tax just as expected and currency was a negative one penny impact as expected. From an operational stand point, revenues were down 3.5% in constant currency, slightly better than expected. Our gross profit margin came in at the set of our range at 16.9%. SG&A expenses were tightly controlled and we are starting to realize the benefits of the second quarter restructuring, resulting in a year-on-year SG&A decline of 3.7% in constant currency. The combination of better gross profit margin and lower SG&A resulted in operating profit margin of 2.5% before restructuring which exceeded the top-end of our guidance. Our reorganization costs in the quarter were $26.6 million or $18.3 million after tax. This brings our total reorganization cost for the year to $45.4 million or $32.1 million after tax, earnings per share impact of $0.40. This combined with the legal provision in the second quarter of $0.08 per share brings our total nonrecurring items for the year to $0.48. Reorganization charges this quarter related to the simplification plan, we discussed on last quarter’s conference call. We’ll be executing this plan throughout 2013 and therefore I expect further charges in subsequent quarters. We’re estimating at this stage that these restructuring actions will result in a reduction in our SG&A run rate in excess of $125 million by the time we exit the fourth quarter of this…

Thanks Mike. The fourth quarter was a good quarter for us. We achieved a bit better revenue than we had anticipated and good expense management, which gave us a significantly better operating profit than we had anticipated. We clearly had some economic wins in our phase. However despite that we were able to achieve revenue of $20.7 billion for the year, down 1% in constant currency, and as Mike talked about, our Expense Management contributed nicely to our fourth quarter results. Additionally, we took action in the fourth quarter, which resulted in a reorganization charge. The charge will allow us to go into 2013 with some of our work in the cost area completed. We have much more work to do and we will continue to take swift action to reset our cost bases throughout the world. During the fourth quarter, there were some real success stories; Canada, UK, particularly Brook Street, Norway, China, India, all had very strong top line growth and solid profitability. Australia, which is in a very difficult marketplace, was actually able to achieve very strong bottom line. And Right Management did quite well producing top line growth of 6.5% in constant currency and an operating unit profit of 9.7%, much more inline with where we are taking the business and we are confident as we move forward that we will be able to maintain that level, even in a slower career management or outplacement environment. Clearly, we are in a challenging environment, but we however at this time do not see it worsening. We’ve been able to stabilize gross profit with the U.S. and France core staffing business. As Mike mentioned, we have a lot of work to do in this area, but the stabilization of those two markets at least at this time gives…

(Operator Instructions) The first question comes from Mr. Kevin Mcveigh. Sir, your line is now open. Kevin D. Mcveigh – Macquarie Research Equities : Great, thanks. Jeff, Mike, really nice job in obviously a tough environment. Wanted to just get a sense of – you’re really doing a great job in France kind of holding a lot of margin. How much of that is kind of price discipline versus cost management, as we think about the business in Q4 and then into Q1 as well.

Thanks Kevin. A large part of it is the price discipline and some of the things that we are doing on the accounts that we don’t want to take. Additionally I would say, what I’ve been most pleased is that as we’re able to on the margin, if you will do a little bit better on the revenue line, we’re not doing it through taking on bad business, which is still out there. At the same time, there is that balance meaning that while we’re talking on good business and we’re making sure that we are getting what we can out of the contracts, we’re also reducing expense. Now, our current plan is to not go through a social plan within France, but continue to work through attrition and making sure that we have all the right performers in the right spot. So as a result you might see a few things going through the P&L instead of through restructuring, but we actually think that that’s much better for what we are plans out in that market. So we’re going to be very disciplined on expenses, disciplined on pricing and then also a few of our acquisitions, those small have added incrementally a positive on the margin side, very small, I mean, really is the other two actions that were prime drivers behind it. But it’s kind of a lot of little things in a market like that make a big difference, because of its size. Kevin D. Mcveigh – Macquarie Research Equities: Understood. And then, hi, Mike not to get too deep into 2013, but SG&A on a total level for 2013, how should we think about that relative to 2012 given the cost actions? I mean it sounds like we’re going to take about $125 million annualized by Q4, but what does that mean for kind of full year if we were to think about just SG&A progression?

Yeah. So as I said the restructuring we’ve done already so far, which we’ve have taken a charge of $26 million in the first quarter, that will give us about $52 million out of SG&A for the full year in 2013 and that really starts up in the first quarter. So, about a fourth of that $52 million, $13 million will come in the first quarter. So then, as you look out – so that’s $52 million if you will, the $125 million that we expect to get by the time we exit the year. So there is another $70 million that we will be working on through the course of the year and certainly that obviously that’s not going to come all Q1, it will come through the course of the year. So you will see that phased in, the remaining $70 million phased in. So that’s how I think about how that restructuring is going to work through the balance of the year and no doubt, we’re going to continue to be managing cost tightly, and we will see where the revenue line goes, if there is some revenue opportunities that we need to invest in. We of course will invest in those markets and those specific areas, but it will be with precision as we need to support the business. On the other hand, if we find the top line weakening further, you can expect that. We will more aggressively go after expense as well. But the whole simplification plan really is about – we’ve invested in our brands last year, we have invested in our solutions, in Experis in the professional side. Really now its about executing and really driving the overall business and driving performance and giving out of our way a little bit some of the other overheads and really just pushing things forward. Kevin D. Mcveigh – Macquarie Research Equities: Understood, thanks.

Thank you. The next question comes from Ms. Kelly Flynn. Ma’am, your line is now open. Kelly A. Flynn – Credit Suisse Securities: Thanks. You got me this time Mike. Thank you. I had a couple of questions; one about France. So first of all, you obviously spoke many times to stabilization, but the results themselves really didn’t show stabilization and I am wondering if you could just kind of explain why you’re saying its stable and then what constant currency and same day growth is implied in the Q1 guidance? Thanks, just for France.

Sure. Yeah, I think when we look at France overall, France is one of the – from the revenue perspective, France is one of the markets in the fourth quarter that did get a little bit weaker on a year-on-year basis compared to where it was in the third quarter. So overall average daily revenue in France was down about 10% in the fourth quarter, was down about 5% or so in the third quarter. So we did see that market get little bit weaker as we got through the quarter. As we start out the first quarter, it seems to be trending about where it was in the fourth quarter. So in terms of our first quarter guidance at this point, we’re not expecting it to get dramatically weaker, at least that’s not what’s assumed in the guidance. We’ll se where things actually go in the market, but at this point we’re not anticipating it to get dramatically worse. As opposed to some of the other markets across Northern Europe, there actually fourth quarter looked a lot like the third quarter, when you actually put it on an average daily sales basis. So France is one of the few markets that actually in Europe looked a little bit worse and so that’s why overall, I would still say things are stabilizing. When you look at our first quarter guidance overall, on a year-on-year basis the decline is on an average daily sales basis, the decline in the first quarter guidance is similar to the decline that we’ve seen in the fourth quarter. That’s the first time that you would have seen our guidance not get incrementally worse on a year-on-year basis, when we go from one quarter to the next quarter, you have to go back to – somewhere…

Yeah, that’s fair for Italy too. Yeah, if you take Italy on an average daily basis, both Q3 and Q4 was down about 11% in constant currency terms, average daily. So it’s about the same and as we look to Q1, I am assuming we’re going to continue to run at that same year-on-year decline. Kelly A. Flynn – Credit Suisse Securities: Okay, perfect. Thank you very much.

Thank you. The next question comes from Ms. Sara Gubins and your line is now open. Sara Gubins – Bank of America/Merrill Lynch: Hi, thank you. Could you talk about how you are thinking about gross margins for the year? It’s nice to see that you’re expecting the potential for some improvement in the first quarter and I am wondering if you think will see that continue throughout the rest of the year?

Sure. And I think it’s – obviously when you look at our gross margins, there are a number of factors that are playing in and I think there is some opportunity for some improvement, but at this stage, I am thinking that when you break the pieces apart, you look at perm recruitment right now. It’s running little bit behind prior year, about 7% in the fourth quarter. If we start to see some pickup in the economy, I would expect that to turn and therefore perm may not way on the overall gross margin as it has been in the last few quarters and perhaps could add little bit incrementally. I think when you get to the overall staffing gross margin itself, you got a couple of elements that are playing in there, that are not really pricing, but when you look at for instance the German Collective Labor Agreements. As we pass those incremental wage costs on effectively, we keep the same dollar gross margin if you will, but our margin percentage goes down and so there is some factors like that that will play in little bit negatively. So, I think from an overall, just the staffing gross margin, I would be thinking about flattish, it might be slightly up, it might be slightly down, but I don’t see a dramatic move. Then you’ve got perm playing in there and you’ve got the right outplacement business depending upon where the economies are. So assuming the economies don’t get much worse, it might start to turn a little bit here, that’s how we look at the picture and if we get – things get a lot better or get incrementally worse, I think there clearly is impact on the gross margin as a result. Sara Gubins – Bank of America/Merrill Lynch: Okay, thank you. So there are lot of moving parts in the potential French legislative changes, can you give us an update on where we stand on these and when you are expecting to get some more definite news on what changes we might see this year? Thank you.

Well, you are right. There are a lot of moving parts in there and when you get down to it and we’re really looking at the end of the first quarter, where we might be able to get some better sense of what’s really in and what’s really out. Right now there is some great benefits to employees, really more transportability from one position to another. There is the ability for companies to negotiate some working time and wages. And then there is the taxation that is put on what would be called short-term CDI contracts less than three months, not to be confused with temporary contracts. So we see that as a positive. We have a lot of training dollars, protection dollars, holiday pay already in our contract, so I think this is a way to try to get more security into the workers hands that have less kind of short-term contracts, without that and possibly some more temporary ones. And there is some taxation things that, what level of eligible wages will be used, how much, when will it be paid back, how will it be paid, how does this work with the bench model, those things right now are all kind of in pencil as opposed to pen and we should be able to get at this a much better understanding by the beginning of the second quarter, hopefully by the end of the first quarter. Sara Gubins – Bank of America/Merrill Lynch: Okay, thank you.

Yeah.

Thank you. The next question comes from Mr. Paul Ginocchio. Sir your line is now open. Paul Ginocchio – Deutsche Bank Securities: Thank you, just for clarification; can you just give me what the midpoint of your guidance is on a same day organic or a same day constant currency basis for the first quarter and how that compares to the fourth and what that fourth quarter number was? Thanks. And then second on the tax rate, what do you have, just maybe some more clarity on the first quarter, is there any benefit from the changes in the bench labor market in that tax rate and how do we think about the difference between the reported tax rate and the underlying tax rate beyond the first quarter? Thanks.

Okay. Paul, you’ve got a lot in there. So average daily sales, midpoint of guidance in constant currency would be about 4.5% down in the first quarter, which if you did the same math for the fourth quarter, we would see something similar. So as I said, we’re expecting about the same type of revenue decline going from Q4 to Q1, which is as I said earlier, first time we didn’t see it incrementally worse going from one quarter to second quarter and we’ll see how that plays out obviously right now, so it’s just a forecast, we’ll all see how that plays out overall. Now when you look at our tax rate overall, our underlying rate of 36% as I said in my prepared remarks excludes the French business tax and then the U.S. workers opportunity, tax credit related to 2012. So, effectively our all in tax rate, we are estimating at 41% in the first quarter. So without that, U.S. worker opportunity tax credit would probably be in the low 50s would be typical in the first quarter and that’s what I would expect. And I think as you look at a full year tax rate, again you get to the some underlying tax rate of without the French business tax, I think that’s going to be somewhere in that 36% range for this year, and then you have the French business tax on top of that. And I pull a French business tax out separately because that number does not move with pre-tax. So as pre-tax either goes up or goes down, it impacts the effective rate, so I think its better to pull it out and think about it separately. So that’s the way I would think about it. The business tax, of course runs about…

Thank you. The next question comes from Mr. Gary Bisbee. Sir, your line is now open. Gary E. Bisbee – Barclays Capital, Inc.: Hi guys, good morning. Hey Jeff, you’ve talked the last couple of quarters about thinking about a slower long-term growth rate or at least next few years growth rate in Europe and ways that drive profitability despite that and I think that’s really all these efficiency efforts you talked, but can you give us maybe a couple of tangible examples of the types of things you’re thinking about and where you are in the process of implementing these changes to allow that?

Sure. The first changes we took were in headquarters and will be in the regional locations where we really had many programs that have great value to the company and great returns to the share holders, but what we were doing was probably keeping that support system across the Board and placed too long and not driving in into what we internally call run mode in the company. So the way I’ve kind of described it in the company is, we had a lot of support systems in here and what we need now to do is, we’ve been doing this long enough, so lets take those out, put them into the field and turn it more into revenue giving as opposed to support. So that affected a fair amount of the programs that we are trying to simplify, because now we’re looking at the programs and saying, okay, what do we really need, how do we do that, and how we make them simpler. In addition to that, we had a fair amount of Rogue IT systems, which sometimes works really well, we’re trying to and have put up a lot of governance on that, so we’re going to be able to reduce the cost in there. So when you look at that simplification in the four areas of organization programs delivery at IT, we’re going through systematically all of those and really looking at how we can make this a much faster agile, so you can move up an move down, I mean it’s what we’re telling our clients and what we need to do is to make sure that given this potentially longer or prolonged slow growth as opposed to re-bounding up catapulting growth, we’ve got to be set forth. So when Mike talks about the $125 million that we’re really kind of taking out, almost all of that fits into those four programs. Gary E. Bisbee – Barclays Capital, Inc. : Okay, thanks. And then the follow-up, what’s causing the U.S. Experis business to continue to lag the way it is and I guess I’m referring specifically to the key accounts. Is part of that the fiscal cliff and now does it mean – is it the ongoing uncertainties or deficit reduction. Is that having an impact on your customers, because there is so many positive things we hear about, different trends and technology. The thing sort of add that it would just be bunch of projects and so now we got to keep going until we lap that and that’s going to be a drag. How big an impact is this?

Well, there is some hesitation out there. So it’s not as robust as what we would see as it was last year. And last year, we did pick some accounts out, some accounts just wound down that were major – lots of contractors out on assignment in the finance industry, some in the pharmaceutical industry. We are starting to pull those back. So you are going to see us get back that, not only as we anniversary it. I would say that it’s probably not as positive as it was out there last year, but still there is a lot of opportunity and we’re bit behind in where we want to be. Confidence in the team, how they are driving it, the actions we have put in place. So it’s going to take us a little time to claw some of those back, but our backlog looks good and our pipeline is solid. So we are optimistic to get that back.

Hey, Gary, your point is right. I mean it really is more on the key accounts that SMB side, and Experis on the IT and the U.S. was up 7% year-on-year. So that’s running pretty well, but we do have these clients that have wound down and it is specific to our client mix, but yeah we can’t use that as an excuse. We got to get out there, we got to chase it and find new business to fill that up and that’s what the team is trying to do. Gary E. Bisbee – Barclays Capital, Inc.: Great. And then just one last quick one, I saw you release the other day of contract in Norway that was healthcare, I think it was nurses or doctors, is that a new area of focus or is that just a pretty small thing that’s specific to that or a couple of other markets?

We do have healthcare as one of the verticals within Experis, but we do it in a very limited way and most of it is outside the U.S. So the healthcare that we have, whether it’d be nurses, higher end physician assistants, are all outside the U.S. and we’re more comfortable in that, because of the way the liabilities and laws work. So we do have that, we have it in probably in eight to 10 countries between Europe and Asia; we’re looking closely at it. We’ve got some work in the U.S., but it’s such a small amount, it’s not worth mentioning, but it’s on our radar screen to see when we want to get into that and at what levels we want to get into it. Gary E. Bisbee – Barclays Capital, Inc.: Great, thank you.

Thank you. The next question comes from Mr. James Samford. Sir, your line is now open. James Samford – Citigroup: Great, thank you. Just a couple of questions on domestic policy and then particularly focusing on the Affordable Care Act and want to talk about the secular trend towards more terms as clients look at that transitioning some of that permanent side few times or just focusing on recruiting temp, instead of perm, how are you thinking about that and the implications of your business? Then second question would be on just sort of general manufacturing Renaissance trends, is that really a zero sum game if U.S. really to starts to pull from the other regions and that’s how you would participate in that? Thanks.

On the healthcare, there are still some things to be worked out. What we have determined was that, as it sits right now and as we would implement it particularly with the 12-month look back, it will affect our temporary workforce, but not yet anyone near is dramatic as what it could have been with of course a three month look back, so we’re in pretty good shape on that. We are having a lot of conversations with clients about their work with what would be called contract work, short-term contract, supplemental work, internal work, those sorts of things and saying maybe we can recap that, maybe you can allow us to have a more flexible labor model where we have a fair amount of those workers particularly in transactions centers, call centers, that might be working 29 hours a week which would be under the 30 hour, that would kick-in some of the cost associated with those healthcare. So right now we are going through the analysis of that. I would say, if you just take the headlines of it, this is the opportunity for us, its opportunity for us in lot of their clients that we deal with that might have large staffs that are currently contracted after they no longer want to be trying to understand all of the intricacies of this and let us do that. As well as, the savings of now not having to recruit those people, manage those people all of that. So on net, I would say, we definitely look at it as positive. On the manufacturing Renaissance, we are participating in that and I don’t believe is, we’ve heard most of the clients talk that it is a zero sum game; what it is, what they have done in other parts…

Well, clearly it goes to one of our offerings with strategic workforce consulting. What you are really doing with this workforce? But the majority of the opportunity from a revenue perspective falls into manpower, where we have the ability to manage a 29 hour workforce, do flexible staffing, different kind of shifts environments, many shifts, crossover shifts. Things that can really maximize that labor market and the talents that’s in the labor market. So from a revenue perspective, it falls mostly on Manpower from a Manpower Group and how we can continue to assist our clients in figuring out this changing world of work, how did they win in that. That really falls into the Manpower Group Solutions, which is outcome based pricing, as well as our consulting offering to say how you really do this over the next three to five years. James Samford – Citigroup: Thank you.

All right.

Thank you. The next question comes from Mr. Andrew Steinerman. Sir, your line is now open. Andrew C. Steinerman – JPMorgan Securities LLC: Hi gents. Looking at my global flexible staffing model, it looks like Manpower in France is still gaining share relative to the market, but and by not as big of a gap as the prior three quarters and the fourth quarter being still a again, but less than first to third, can you think any of the office consolidation that you are doing in France is infringing on the prior market share gains and how do you think about Manpower France’s position relative to the market?

We really try to do a very robust, the deep analysis of consolidations and how much it affects revenue and return profitability. We don’t believe that much of that slowdown in market share gains would be coming from that. In many cases, we were consolidating in office that was maybe three, four blocks away and we still have the sales coverage which is what’s going to be generating the revenue. I would say what’s happening is, is that we just continue to make sure we’re selective on that, some of what was happening was as one of our competitors was combining brands and more companies they have to get rid of one of them and we ended up getting a lot of that business, but some of that consolidation is done, so now it’s a different kind of opportunity we have going forward. When we look at market share, we’re not focused on market share, we’re focused on sales activities, sales pipelines, sales leads. At the end of the quarter, however it comes out on market, it’s interesting, but we’re not, we have no market share conversations presence other than an analysis through our data people of what’s happening. We’re deriving it more by sales opportunities, pipelines, salesforce.com, where the industry is, how much onsite, all the things that really drive our profitability and then we’ll let the chips fall from there. Andrew C. Steinerman – JPMorgan Securities LLC: Perfect. Thanks very much.

All right, last question.

Thank you. The last question comes from Mr. John Healy. Sir, your line is now open. John Healy – Research Holdings, LLC: Thank you. Just a couple of housekeeping questions; Mike, when you look at the cost reduction efforts for this year, should we think that the geographies that you are going to be focusing all those efforts on, would it be similar to how you allocated the spend throughout the fourth quarter going into the first quarter and then also I didn’t maybe hear this, but did you mention what capital spending might be for this year?

Yeah. In terms of savings and where they come from, we started at the headquarters, which is why you see the biggest piece of the $26 million, over $10 million of that coming on the corporate side, so that’s what you will see of that coming through the first quarter on corporate expense, you will see about $6 million or so coming through there. And then as we go through the year, it is going to be across geographies and I think you will see Europe overall, but Northern Europe in particular we’ll see maybe a little bit more than what we might see in the Americas and Asia-Pacific, Middle East, but really it is across all geographies. But the one comment Jeff made earlier in this specific case of France, yeah, we don’t anticipate a social plan at this point, so we may not see as much restructuring, but we will see some office optimization and managing cost down to attrition as well. So I think we are going to expect it to come across most of those geographies. And then in terms of CapEx for the year, I don’t envision any substantial change overall, but we came in this year at about $72 million overall. I think something in that $70 million-ish range I think is – now if you put a range of $65 million to $75 million around it, I think that will be a safe number for you for this year. John Healy – Research Holdings, LLC: Thank you, guys.

Thanks. That was a relatively short one. So if we have one more question that would work.

Okay. The next question comes from Mr. Mark Marcon. Sir, your line is now open. Mark S. Marcon – Robert W. Baird & Co.: Thanks for squeezing me in. Obviously there have been a lot of organizational changes including leadership changes. I was wondering if you could give us a preliminary reflection on how those are going through, what’s the energy level, engagement level within the organization, positives, negatives, anything that need to change?

That’s a good question and you and others on this call know that we have got a very engaged team from the top to the bottom, so anytime you make changes that some people are no maybe no longer participating in something that they believe to be, very important to how they live their lives and others, it becomes very difficult when you go through the discussion about what simplification means, where we need to take this, compress cycles, prolonged maybe more tepid growth and how we’ve laid it out from a communication side inside whether it would be my writings, some of the people reporting in the writings, videos that have gone out, face to face meetings. I would have to say that, well, people may not appreciate or may not like that they may not be able to participate in our future success, they understand it, they get it and they are huge supporters of us. When you then take it down toward really where all of the money is made in 27,000 people in the field, they are energized, but what they are saying is that’s great, lets simplify this, let’s focus on selling, can I take out this and a message I just wrote this morning that went out to everybody, said look, if you think that you are doing something that’s too complicated not adding values, speak up to your manager, we’ll get it fixed for you. So this is becoming energizing in the organization and at the same time, it has been difficulties for people that many of us have worked with for 20 years or more or 15 years, but it was done as you would imagine in a respectful way, the right way with good communication, so I would say difficult work through many of those difficulties and we’re on to it becoming energizing of us making real big strikes into the small incremental stuffs. Mark S. Marcon – Robert W. Baird & Co.: Great. And then can you talk a little bit about the reorganization in terms of the cost cutting, is there any revenue pull that you would say could be negatively impacted by those changes.

That’s a good question. So if you look at simplification, is what’ve talked about and you’ve heard that from the external market. Inside the organization, it’s two words not one. It’s not simplification, it’s simplification to sell. So what we were doing is looking at revenue producing jobs and actually putting more resources in there, trying to make sure the resources are given the kind of help that they need both in the field, in region as well as headquarter. So we did not do a let’s cut cost by 10%, we find that to be a completely useless exercise. The cost will find their way back in. We are going through and saying what do we want to keep, what do we want to make trade offs and how we make sure that sales engine gets the support, the energy and the focus. So even my time, when I looked at a pie-chart of the time, I wasn’t selling enough so I committed to the organization x number of sales calls every quarter. I am going to be reporting on it with sales chatter and I got to make my quota as well. So inside the organization the message is simplify to sell, outside the organization, it’s really about simplification in those four areas. Mark S. Marcon – Robert W. Baird & Co.: Great, I appreciate the color.

Okay, thank you all.

Thank you. That concludes today’s conference call. Thank you for participating. You may now disconnect.