Thryv Holdings, Inc. (THRY) Q2 2010 Earnings Report, Transcript and Summary

Scott W. Klein - Chief Executive Officer, Director Samuel D. Jones - Chief Financial Officer, Executive Vice President, Treasurer

Ian Zaffino - Oppenheimer & Co. Joe Staff - SIG Jonathan Levine - Jefferies & Co. Aaron Weitman - Appaloosa Management Richard Jones - Goldman Sachs Zachary Altschuler - Davidson and Kempner Todd Morgan - Oppenheimer Adam Spielman - PPM America Simon Whittington - UBS Andrew Finkelstein - Barclay’s Capital Jake Newman - CreditSights

Good morning and welcome to SuperMedia’s second quarter 2010 earnings conference call. With me today are Scott Klein, Chief Executive Officer, and D. Jones, Chief Financial Officer. Some statements made by the company today during this call are forward-looking statements. These statements include the company’s beliefs and expectations as to the future events and trends affecting the company’s business and are subject to risks and uncertainties. The company advises you not to place undue reliance on these forward-looking statements and to consider them in-light of the risk factors set forth in the report filed by SuperMedia with the Securities and Exchange Commission. The company has no obligation to update any forward-looking statements. The replay of the teleconference, we’ll be available at 800-642-1687. International callers can access the replay by calling 706-645-9291. The replay pass-code is 82225485. The replay will be available through August 10, 2010. In addition, a live webcast will be available on SuperMedia’s website in the Investor Relations section at www.supermedia.com. At the end of the company’s prepared remarks, there will be a question-and-answer session. Now I’d like to turn the call over to Scott Klein, SuperMedia’s CEO. Scott.

Thank you, Melissa. Good morning everyone and thank you for joining us. As Melissa mentioned, I’ll provide an overview of where we are to date, then D will follow with a more detailed financial review. When D. is done, I’ll have a few additional comments before we will take your questions. Today, we are almost a full seven months removed from exiting Chapter 11 and emerging as SuperMedia. Since, fresh start accounting is confusing to many, I want to make two points clear so there is no doubt as to what we want to convey to you today. Viewed in the context of the overall uncertain economic climate, we continue to be encouraged by what we are seeing in the business as reflected in second quarter results. This view is based on key indicators we are seeing resulting from the plans we have already implemented, which I will detail further on in this call that are designed to drive revenue, reduce expenses, improve margins and continue to foster a high-performance culture. The second point is that despite what some may say we are convinced that the fundamentals of our business model remain sound. Small to medium sized businesses need advertising agency like services delivered via the internet, direct mail and of course, the print yellow pages to help them get consumers to click on their websites, make their phones ring and to get them to knock on their doors. We remain committed to improving our ability to deliver on our click-ring-knock promise to our clients. We continue to be both laser focused on introducing new revenue generating opportunities and on meaningful expense reduction. That said because of the nature and timing of our sales cycle, in other words the way we sell, publish and amortize revenue, there is a lag…

Thank you, Scott, and good morning everyone. I want to start off by mentioning that our reported numbers our provided in GAAP format and non-GAAP which is referred to as adjusted pro forma. Please be aware, the GAAP results include fresh-start accounting implemented in our 2010 reported results which does not provide comparability to prior periods. I want to encourage you to review the footnotes included in our 10-K and 10-Q as well as the GAAP reconciliation schedules attached to our earnings release to get a better understanding of fresh-start accounting. Fresh-start accounting can make it difficult to understand our results and I encourage you to get in touch with our Investor Relations team if you have additional questions. As always, I will focus on our adjusted pro forma numbers for this call. There is a reconciliation of the GAAP and adjusted pro forma results in the appendix of this presentation. Turning to our results, year-to-date revenues were $1.045 billion, a decline of 21.1% compared to year-to-date 2009. Second quarter revenues were $512 million, a decline of 21.4% compared to the same period last year. Year-to-date EBITDA margins were 31.4%, compared to 34.1% year-to-date in 2009. We continued to drive cost down with process improvements and synergies across the business to partially mitigate the revenue decline. As Scott mentioned, we made our sweep payment ahead of schedule. A free cash flow for the second quarter was $184 million and $265 million year-to-date. Our cash flow was particularly strong in this quarter and I’ll provide a little more detail in a few minutes. As mentioned on previous earnings calls, there is a timing lag in the conversion of advertising sales results into our reported revenues. The reported revenues result from amortizing sales over the life of the directories, which were primarily…

Thanks, D. Before we get to your questions, I want to introduce something I am very excited about and iterate something D has said previously. I am pleased to announce that we will be integrating quick response or QR Code technology to our SuperYellowPages and Superpages direct mail product. Consumers will have direct access to download our free Superpages Mobile app, registered for our SuperGuarantee program and view online local coupon. According to BIA/Kelsey, the leading provider of strategic research and analysis, data and competitive matrix on yellow pages, electronic directories and local media, SuperMedia is the first United States’ company to utilize QR codes nationally on the covers of its yellow pages. For those who may not know what QR codes are, these are the two dimensional barcode that are scanned using a Smartphone code reader, store information that can be made available on consumer mobile device. Our QR codes will be located on the cover and on our own ad in our SuperYellowPages. You can actually scan the codes in the presentation that you are looking at right now. When the QR code is scanned from the front cover, it will send the user who is at local Superpages.com homepage homepage to their book, and prompt the user to download our Superpages Mobile app. On our own ads, with QR codes, the user will be prompted to register for our award-winning SuperGuarantee program. Consumer scanning the QR code on the back of the SuperPages Direct card pack will be taken to local online coupons on Superpages.com. Now before we take your questions, let me assure you, we will absolutely attempt to answer any question you may ask to the best of our ability. However, as you are all aware, our policy has been and remains that we will be providing guidance. As a result, we cannot address questions in that area. Melissa, can you please read the Q-&-A directions.

Thank you. (Operator Instructions) Your first question comes from Ian Zaffino of Oppenheimer. Ian Zaffino – Oppenheimer & Co.: Great, thank you very much. Scott, you sounded very enthusiastic and excited. I think it’s a good thing. Can you give us an idea of what’s really driving that excitement; is it more of the initiatives you have in plan or actual results you’re seeing out there in the market place right now? And if I could drill down a little bit further, I know a lot of other industries give what they call pacings. Can you give us an idea of maybe what your business is pacing at right now as far as what your ad sales are doing from kind of the boots on the streets right now? Thanks.

Ian, let me try to answer what I can of what you just said. First of all, my enthusiasm is really based on both points that you made. We have some really exciting programs out there in the marketplace today. The excitement in the market place is about the innovation we’ve brought to the print yellow pages, the excitement of what we are doing with our direct mail programs and the innovations that we’ve added through our locally focused Superpages.com program including our SuperMatch program, EeveryCarListed.com and other initiatives that we’ve got in place, early good reason for me to be excited. As we alluded too in the prepared comments, we have a view as to what’s going on in the market place today and as I said, with what we see, we continue to be encouraged. As far as pacings go, that would clearly fall into the category of guidance and we’re very committed to not providing any, but I really do appreciate your question and the comment. Ian Zaffino – Oppenheimer & Co.: Okay. Then the other question would be is on the G&A, if you make adjustments for bad debt, and make adjustments for this one-time benefit, G&A should be coming down, I imagine with revenues declining. Is there something going on there? Are you seeing something in the business that’s causing you to kind of hold back on cutting that cost or is something else going on there?

Ian, I think you’re probably referring to the sequential quarter review because on both period-over-period basis and on the year-to-date basis over the last year, we did see improvement in G&A expense, both relative to bad debt improvement as well as on headcount reductions and other initiatives. On a sequential quarter basis because a lot of the initiatives we put in place on starting on January 1, with respect to G&A, you wouldn’t see as much of an improvement in G&A net of the one-time items. In addition, there were a couple of small one-time benefit items in the second quarter of last year. So, you see the offsetting effects, but G&A clearly as far as rightsizing that part of the business is absolutely a priority for us and one of the reasons we’ve got to have it earlier rather than later and so you’re seeing the year-over-year and period-over-period improvements as opposed to so much of a sequential quarter improvement. Ian Zaffino – Oppenheimer & Co.: So, as you look at the SG&A investment and what was D, talking sequentially. Can we look for that to trend down or is this an ongoing expenditure level? Please give us some essence. Thanks.

I mean we are going to continue to drive cost efficiencies in all aspects of the business. I would say that G&A being a smaller portion of our cost base, I mean we won’t see the dollar amounts, but you would continue to expect to see continued improvement as we look forward. Ian Zaffino – Oppenheimer & Co.: Okay. Thank you.

Thanks Ian.

Your next question comes from [Joe Staff of SIG].

What was the advertising expense in that quarter? Did you dial it down -- obviously, in the first quarter, the advertising expense was relatively moderate. So, I wanted to just compare to contrast.

Yes, we did see a little bit of favorability from a timing perspective, and that goes in the mid teams of favorability because of the timing in the first quarter, period over period, some of that did come back in the second quarter, I’d say probably about half of it came back in the second quarter relative to last year’s second quarter period. So, you probably saw $6million to $8 million bump up quarter-over-quarter in the second quarter. On the year-to-date basis, we still continue to see some favorability, but as we said before, we expect to be on an annual basis consistent with last year’s advertising expense loans.

And when would you expect that to occur?

That will come back through the remaining couple of quarters of the year.

Okay. And so can you give me the actual number in terms of the advertising expense that you had in the second quarter?

We don’t disclose that level of detail there. There’ll be some more conversation or discussion in the queue, but we don’t disclose the explicit number.

Okay, fair enough. But what you’re saying is incrementally over the first quarter, about $6millin to $8 million, did I hear that right?

No, from a period-over-period variance perspective, we had about $16 million favorability in the first quarter; we had about $8 million of un-favorability because of the reversal of that timing difference in the second quarter.

Okay. Thank you. Now, are you guys giving any segment information with respect to percentage of revenue and EBITDA from your internet base product versus your publishing base product, is there any -- are you separating out of there?

No. I mean our product in our business is about providing advertising solutions, we do provide them across multiple platforms, but we don’t view those as being distinct products. Our product is the provision of advertising and we simply deliver it across various platforms. So, for that reason, we don’t view those as distinct segments.

I hear you. At least, I tempted. I guess another way to possibly ask it is, of your clients, what percent of those I guess buying the publishing based product is also purchasing the internet based products?

Again, we don’t distinguish those two pieces.

Okay. Final question …

The percentage of clients buying the internet product as well as the print product is increasing.

Okay. Do you think it’s increasing and I understand how you want to keep this somewhat opaque, but does the inflection point was about 50/50? Is there any quantitative number you can share with us to give us a sense of how many of your existing sort of core legacy customers again buying the publishing product are also now incrementally buying the internet based product, that’s basically what I’m trying to understand.

Now, we don’t provide any specifically on that topic other than just tell you that the number, the penetration of internet products being sold to existing print clients is continuing to improve.

Okay. Thanks very much.

Your next question comes from Jonathan Levine of Jefferies. Jonathan Levine – Jefferies & Co.: Couple of questions, first, I guess we are not going to do any kind of where July ad sales are, but can you talk a little bit in terms of the monthly trends during the second quarter?

Yes, Jonathan, as far as the quarter went, we did see improvement throughout the quarter. As we stated earlier, we’d continue to be encouraged by what we are seeing in the sales activity in the market place today, similar to what we stated on the first quarter. As far as seeing it being encouraged by what we are seeing in the market place at the time of our first quarter call, we continue to be encouraged at this point by what we are seeing in the market place with respect to current sales activity. The movement across the quarter while we don’t break out monthly, we saw contribution from each of the months and the activity in the sales and publications across each of those months in the period. Jonathan Levine – Jefferies & Company: Okay. So I guess so you are saying you’re still on improvement, right on the month over month basis?

We saw contribution from a period-over-period, of course, that’s influenced by what publications and what markets contributed or were published in the individual months. So you can’t really compare individual months to months in that regard because you’re dealing with different publications in different markets. Jonathan Levine – Jefferies & Co.: And are you seeing any difference in regards to certain markets that are performing significantly better versus others?

Because of the geographic diversity of our business, of course is going to be differences in what we see and there are certain markets that seem to be coming back much more rapidly than others. The trend kind of started in the west coast and is moving through the mid-west towards the east, but there some hot spots of success right now but there is those some that are still challenging. Jonathan Levine – Jefferies & Co.: Okay. Turning to the warranty expense, can you talk a little bit in terms of the number of customers that are signing upward and what you’re experience has been in terms of people taking advantage of the SuperGuarantee?

Jonathan, we don’t disclose the numbers of people registered, but what I can tell you is that the number of consumers that have registered with the SuperGuarantee has exceeded any of our original expectations. We’re very, very excited and it is accelerating at this point as far as registrations are going as this thing becomes more and more viral we get some real nice daily boosts and what’s going on in the SuperGuarantee. As far as clients, we have clients on a daily basis that are in touch with us, looking for help to make it right. The good news is that our advertisers more often than not are very anxious to help make it right and the entire expense of the program is covered in our existing marketing budget. We don’t see any risks being created for us at this point with the SuperGuarantee. Jonathan Levine – Jefferies & Co.: Okay. So effectively I guess the claim is right that you guys were anticipating even with kind of the greater number of clients signing up. It seems to still be within kind of your marketing expense, is that correct?

That’s correct. Jonathan Levine – Jefferies & Co.: Okay. Thank you.

Your next question comes from Aaron Weitman of Appaloosa Management. Aaron Weitman – Appaloosa Management: Hi guys, as you guys are building up cash on your balance sheet now, what’s your current view to doing I guess a tender for some of your debt out of this account? I think you had a limitation that would maybe restrict that for another 11 months, but it would seem that most people would be in favor of that right now or what’s your view in terms of doing a stock buy back at these levels?

With respect to capital allocation, obviously, with $300 million on the balance sheet at this point, we’re considering all alternatives relative to capital allocation including from a de-leveraging perspective evaluating opportunity to do that to the open market within the confines of the credit agreement. You’re right, there is a time limitation that we have to wait through before that becomes a real option and there are other limitations around that. And certainly one of the considerations that we look at, and the economics of that are dependent upon what happens in the market place with respect to that and the other considerations of the timing of the de-leveraging at par versus waiting and going through the timeframes with regard of that. We have been as we’ve mentioned on the call, paying down our debt with regard to the cash sweep required level 45 days earlier, give or take 45 days earlier which is allowed under the credit agreement to get out of more efficient level of debt sooner. We did that both with respect to the first quarter and the second quarter cash sweep requirement. As we look forward, we do that limitation within the credit agreement on both, what we can do on the equity front, from a capital allocation perspective as well as what we can do below par on the debt front, but all of those are on the table as we evaluate those and we’ll have to continue to assess the economics in regard to how we’re going to allocate the capital. Aaron Weitman – Appaloosa Management: I would think many lenders would be favorable to an amendment to allow you to do that sooner, so as to save interest cost, but thank you.

Thank you.

Your next question comes from Richard Jones of Goldman Sachs. Richard Jones – Goldman Sachs: Good morning. A quick question. I am not an expert yet on this fresh-started accounting, but the adjustment from $247 million adding $265 million to get the 512 in the quarter. Can you just walk us through how you make that adjustment? And is that real cash that’s come in or is that accounting entries that in the end wash out?

Yea Richard, I appreciate the question. In our business because of the amortized method of accounting revenue, fresh-start accounting has a significant implication when you start from day 1. It will take a full year before our revenue stream builds back on an amortized basis to a true annual level, that is consistent with the billings and the cash flow that actually flow through. So, when you look at that revenue that’s brought in to adjust to the pro forma level from the fresh-start accounting level, think of that as being the billings from publications that occurred in 2009. Those billings will continue throughout 2010 and until those publications are replaced with a new 2010 publication. Because fresh-start accounting start to on day 1, as far as what flows through the income statement, all activity related to 2009 publications that would a normal course flow through the revenue stream are left aside and do not hit the income statement. So you will see the fresh start accounting adjustment each quarters, we move towards at the end of the year, get smaller and smaller, but the base GAAP revenue level will be higher as you move through sequential quarters as we build up 2010 publications that have replaced the 2009. It’s a tough explanation to make in a two-minute conversation. Richard Jones – Goldman Sachs: But is there any cash associated with those numbers?

The cash flow comes through in normal course as we build over the 12-month cycle. So for example, we have a November 2009 publication, the majority, the revenues from that November 2009 publication amortize and until the end of October of 2010 and those billings and the cash flow associated with those billings will flow through in 2010. Doesn’t hit the income statement on a GAAP basis because of the fresh-start accounting, but it is absolutely influencing our billings on our cash flow. Richard Jones – Goldman Sachs: An unrelated question, I know there has been stuff about certain communities likely your people having an option of together not get the white pages, is the white pages publishing strictly a cost for you and what’s sort of the future of the white pages?

Richard, now recognize that there are both the residential white pages and the business white pages. What you are reading about in the press is our request of the Public Utilities Commission to stop printing the consumer white pages because our data shows that only about one in nine households today actually uses the consumer white pages. The business white pages are still quite heavily used and quite important for our business and as we showed in the earlier presentation, we sell advertising in the business white pages, but the consumer residential listings are nothing but a pure cost. Richard Jones – Goldman Sachs: I know you don’t break those costs out, but how close do you think you are to being able to eliminate those significantly over the next couple of years?

Well, we have to go after those one-by-one, state-by-state and we are encouraged by what we are seeing with what other publishers have begun to get accomplished in some of these states, so that I think that over the next year or so, we will make great progress in eliminating this cost and also the impact that putting those residential white pages has on the environment. Richard Jones – Goldman Sachs: Okay, thank you.

Your next question comes from Zachary Altschuler of Davidson and Kempner.

I just have a quick question. I know you provide the income statement on that pro forma adjusted basis, but I am trying to understand what’s going on with working capital along the same lines. It seems like if you back out some of the cash side and as you get to working capital advance, like source of cash in the quarter when historically it like Q2 was a use of cash. I wonder if you could comment on that. What you expect to see if the working capital gone forward?

You are right; there is some timing elements working through, working capital as we look at our inventory affects from the deferred cost that we put on the balance sheet. On a 12 year basis, we’ve normally seen cash requirement from working capital, the collections experience that we are seeing, improvement in day sales outstanding and some of those activity, it is helping that as we are seeing improvement and day sale is outstanding and contributes to the cash and helps offset that normal use of cash. So, there are some timing elements within that. I would say that as we look forward working capital will continue to be a slight use of cash.

And just one more question. You were commenting on the client decline slowing to 50%. I was wondering if you can add more color which clients you are sort of seeing slowing or whether it’s your larger clients, smaller clients, maybe some more color on what the client rate actually is.

Zach, thanks for asking that question. The vast majority of that decline is coming from our smallest clients, clients that really don’t spend enough to get a benefit or value from their advertising investments. Other than that, we won’t provide specific data until the end of the year.

Okay, that’s helpful. I’d just like to reiterate the view I shared earlier that the company should probably try and assess what they can do even if they don’t mean getting any amendment to step by and get back on a discount?

Alright, thanks for your help.

Alright, take care.

(Operator Instructions) Your next question comes from Todd Morgan of Oppenheimer. Todd Morgan – Oppenheimer: Thank you. I have three cash flow related questions. I guess the first one, the interest payment for the interest accrued in the second quarter, I mean some of that was paid in the second quarter and not after the quarter on the LIBOR contract before the quarter was over. Is that correct?

Yes, that’s correct. Todd Morgan – Oppenheimer: Okay and secondly, can you comment about any debt payments that you made subsequent to quarter end? You talked earlier about making those cash flow sweep payments earlier than sometimes required.

Yes, the 122 was a very close approximation of what the actual cash sweep requirement turned out be for the period. We get out a slight couple of million dollar residual payment that was made early in the month. Todd Morgan – Oppenheimer: Okay, I mean lastly, if I take the operating cash flow from our cash flow statement and then I am trying to adjust that to exclude I guess the bankruptcy items and we talk about $35 million in payments here to date and also the tax refunds that you talked about $97 million. Are there other items that would be kind of not related directly to the operations we should look at for that period?

I mean with the $16 million that we reference with respect to state tax clients, now that’s on non-cash elements or there was non-cash associated with that. What that is a void and some potential future cash outlay; but that $16 million would influence the statements. So as you look at your individual line items you see that $16 million element. Other than that, I wouldn’t say there is any abnormal activity in the quarter with respect to cash, other than the OCF refund that we also mention. Todd Morgan – Oppenheimer: Okay, so if I make those, for example, those two adjustments, then I can compare that to I think six months, that the 2009 is the first half or second half sort of OCF levels and get some indication of how the business is trending?

From a forecast perspective, I wouldn’t say on a year-to-date basis, there was huge significant one-time items that we have already mentioned. Todd Morgan – Oppenheimer: Okay, thanks.

Your next question comes from Adam Spielman of PPM America.

Thank you. D, if you could mention from trends on actual number of advertisers. In an historical period, can you just quantify at all even the percentage terms I think you said the declines were improved over prior quarters?

What we have mentioned in our prepared remarks was that we’d seen the rate of decline diminish by over 50% and our net customer count changes. That’s first half 2010 versus second half of 2009, as you know back half of 2009 was a very difficult period for us from a small to medium business perspective. We’ve seen that mitigate a little bit as we work through the first half of 2010. I could say the rate of decline; I believe it was still declining as far as client counts are concerned in absolute numbers. The rate of decline is diminished somewhat relative to the back half of 2009. We don’t disclose explicit client counts to accept on a year end basis, which we can support for the business after you’ve worked through all the publication cycle. So, I am not going to get into specific numbers, but we are seeing mitigation in the marketplace.

When we look at this down 17% at sales number, could you give us any sense of how that breaks down between numbers of clients versus rate, kind of a price volume?

Well, like I said, we don’t break down or break out our number of clients in that regard. The total revenue decline and the improvement in the revenue decline was both influenced by spend as well as net client counts, the 370 basis points did. We saw influence of that a more improvement and basically, all elements of the business. The new accounts that we have been able to sale, the level of cancel, the level of decrease, and the level of increase have actually all contributed to that 370 basis point improvement first quarter to second quarter.

Ok thank you.

Your next question comes from Simon Whittington of UBS.

Thanks very much for taking my call. Just a question, if I may, on the underlying cost base. I am just wondering what we can be thinking of incomes as the underlying cost inflation there. Are you seeing now salary in commission cost to increase, outside of the additional efficiency savings thing and how should we be thinking about by going into 2011 as well.

Are you referring to selling expense or ..

Yes, including the sales expense and sales commission specifically and underlying staff inflation cost.

Well, we have seen contribution to the sale expense efficiency both in the commissions that would pay as you would expect with lowering headcount, would pay out less commissions in totality, and less total count through the sales force and getting out the revenue streams we’re after and covering the marketplace. We have seen normal course increases in relative cost of labor and that sort of stuff. I wouldn’t say that that those terribly significant as we look through the period, but we have mitigated those with efficiencies across the sales force.

Okay, thanks a lot.

Your next question comes from Andrew Finkelstein of Barclay’s Capital. Andrew Finkelstein - Barclay’s Capital: Hey guys, a couple of questions. First of all, I was wondering, Scott, maybe if you could talk about what you guys are seeing from a competitive perspective out there and particularly maybe with some of the online products that there is any change in the market?

I think we are seeing a higher level of co-opetition right now. We see some of those traditional competitors reaching out to us and that’s reaching out to them looking for ways that we can complement each other’s services, offerings, geographic coverage areas, and I think that’s a trend we see as very healthy and are doing everything that we like to make sure we can to encourage doing more of that. And that’s really across both traditional and digital folks as well. Andrew Finkelstein - Barclay’s Capital: Okay, and then in terms of the campaign with what you are saying, is there any different in the largest metro books versus maybe some of the smaller or the regionalized scoping of the smaller books that you have done.

Andrew, I wish I could tell you the answer, that one is very straightforward. We really see a mixed bag of everything. I mean some of our large markets are doing quite well, while some of other large markets certainly have some challenges. Small markets on balance are probably doing better overall in a more consistent fashion, but some of those are in areas that still have challenges as well. Andrew Finkelstein - Barclay’s Capital: And just looking at the bad debt, I was just wondering the timing and we are lapping some pretty tough results from last year, I would think the sort of credit policies would have tightened. I am just wondering how long you think it’s going to take to get the bad debt down to sort of pre-recession levels, and where we headed from here.

I think when we went into 2006-2007 tough time frames; we were probably in the 4% to 5% range with respect to bad debt. We absolutely look to drive bad debt in normal course times to that level that type of view of what normal course bad debt should be in this business. But it’s difficult to predict when the economic circumstance and the effects of what we are doing from a credit perspective as well as a collections perspective we’re going to drive those results all the way back to those levels. With the uncertainty in the economics and the uncertainty in the market place I really can’t predict that. We are encouraged by the trend line that we’re seeing with it as we move through the first half of this year. But I can tell you we’re not happy at the 7.5% year-to-date level of bad debt. And we’ve got to continue to try to drive an improvement there while also balancing opportunity to capture revenues in the market place, but unfortunately, Andrew, I just can’t predict when that’s going to move to a normal course level. Andrew Finkelstein - Barclay’s Capital: And more of it coming out of the books that were closed, let’s say 9-12 months ago versus the more recent?

Well, from a write out perspective as you would expect the write off of an account is a lagging effect so more of it would be coming from the back half publications of 2009, but as you know with accounting from a provision rate perspective we’ve held it pretty much inline with our experience rate. But that’s just the function of the time; I can’t say that, that’s necessarily indicative of what’s going to happen with the current publications. Andrew Finkelstein - Barclay’s Capital: Okay. And then one other thing, in just the lack of guidance’s, just curious to be given, the transparency or the visibility of the yellow pages has been a strength for this, sort of from an investment perspective following this company given most campaigns have closed for the -- probably the September quarter. I don’t know if you guys can rethink that policy of telling us what you’re seeing, but it seems there wouldn’t be that much uncertainty particularly in that ad sales number. Thanks.

Appreciate your perspective in that regard.

Melissa, we’ve got time for just one more question before we wrap up.

Your final question comes from Jake Newman of CreditSights Jake Newman – CreditSights: I’d like to ask just two quick ones actually, one on the 370 basis improvement in ad sales, if we think about it being made up of involuntary cancellation, voluntary cancellation, increases by existing customers and addition of new customers. Would it be fair to say that most of that was coming from the -- most of the improvement decline and improvement in ad sales number was really related to improvement in involuntary cancellations? Is that fair?

I wouldn’t necessarily characterize it as most of other kind of from that, as I mentioned all aspects there are breakdown of revenue between new accounts, increased accounts, decreased accounts, and cancellations inclusive of credit cancels. We saw improvement in all of those relative to the trends. So the trend as improvement in the rate of credit cancel, we saw improvement there. The rate of new accounts we’ve been able to add, we’re seeing improvement there. It varies by market but I would say we saw contribution 200-370 basis point improvement across each of those elements. Jake Newman – CreditSights: And historically, you had a fixed fee business in the internet that was larger than the pay for performance, but this buckets of fixtures selling now, I would have to believe that maybe that’s disappearing. Can you tell us -- one point is I think the fix fee was two-thirds of the business. Can you tell us now where it is? Whether it’s less than 50% now on the fix fee side?

I think you’re referring to our identity bound those with the clicked packages that we sell. The way we sell that in the market place and the way we impress the client that is a subscription based product with a number of clicks that we guarantee or provide on that relative to that monthly rate. In large part that’s viewed by the client base and it’s viewed by us – in the process we take the selling as a fixed view product. That is our baseline product in the market place on the dot com side of the house. And it is – as we look forward we view it as being our core piece of the business. And that being a subscription based product, monthly based rates, we would view that more as a fixed view product as opposed to a performance based product, albeit it does have a performance element with the click packages that we’re selling. Jake Newman – CreditSights: How does that differ from the fixed rate product as formerly described or represented to customers?

Yes, with the former fixed rate product that was basically, you sold, reach or a placement with no guarantee or no reference as to how many hits or how many calls or how many clicks they were going to get. With this product we pace those accounts, we can move in and out as we need to across our network in order to provision the clicks we’ve guaranteed within their package.

Alright, Jake, thank you very much. And please, just stay with me another moment here with some closing thoughts. I appreciate all of you being with us. For those who know many well, you know I never think anything as fast enough and in spite the solid progress we’re making this certainly holds true for our transformation. That said, rest assured that we approach the business every single day with a sense of urgency, a biased action and a focus on excellence in everything we do. Our view of the business is for the long term and we will not make decisions only focused on short term results. We continue to be encouraged with what we’re seeing in the business and this is based on the key performance indicators we track daily. Our plans implemented are all designed to ultimately drive revenue, reduce expenses, improve margins and continue to foster a high-performance culture. Again, thank you for joining us and we look forward to reviewing our third quarter results with you in the fourth quarter. Operator.

Thank you. This concludes today’s teleconference. As a reminder, an archived version of this call will be available on the website at SuperMedia.com under the Investor Relations section. You may disconnect your lines at this time and have a great day.