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Executives

Richard B. Handler - Executive Chairman, Chief Executive Officer, President and Director of Jefferies

Peregrine C. de M. Broadbent - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Brian Paul Friedman - Director, Chairman of Executive Committee and President of Jefferies Capital Partners

Analysts

Douglas Sipkin - Susquehanna Financial Group, LLLP, Research Division

Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

Jefferies Group (JEF) Q4 2012 Earnings Call December 18, 2012 9:00 AM ET

Operator

Welcome to the Jefferies 2012 Fiscal Fourth Quarter and Year-end Financial Results Conference Call. A question-and-answer period will follow management's prepared remarks. [Operator Instructions] As a reminder, this conference call is being recorded. A press release containing Jefferies' 2012 fiscal fourth quarter and year-end financial results was distributed via Business Wire earlier this morning and can be accessed at jefferies.com.

Some of the comments made in this conference call may include forward-looking statements. These forward-looking statements may contain statements about management's current assumptions, expectations, strategic objectives, growth opportunities, business and prospects. These forward-looking statements are not statements of historical fact and represent only Jefferies' belief as to future performance. They usually include the words continue, will, believe, should, estimate or other similar expressions. Actual results could differ materially from those projected in these forward-looking statements.

Please refer to Jefferies' annual report on Form 10-K filed with the Securities and Exchange Commission on January 27, 2012, and Jefferies' Form 8-K for discussions of important factors that could cause actual results to differ materially from those projected in these forward-looking statements.

I would now like to introduce your host for today's conference, Mr. Richard Handler, Chairman and CEO of Jefferies. Mr. Handler, you may begin your conference.

Richard B. Handler

Good morning, and thank you for joining our discussion of Jefferies' fourth quarter and full year 2012 results. I am Rich Handler, CEO of Jefferies, and with me on the call today are Brian Friedman, Chairman of our Executive Committee; and Peg Broadbent, our Chief Financial Officer.

For the fourth quarter ended November 30, 2012, we posted net revenues of $769 million, net income to common shareholders of $72 million and earnings per share of $0.31. Net income would have been $81 million and EPS would have been $0.35 on a non-GAAP basis without the negative impact in the current quarter of fees and expenses attributable to our proposed merger of Leucadia of $4.2 million, our $4.1 million contribution to the Hurricane Sandy recovery effort and certain items arising from the historical acquisitions and debt extinguishment accounting gains recognized in prior quarters.

Our results for the quarter were solid considering the mixed environment that persisted throughout the period. Trading markets and volumes were reasonably robust during September and most of October, but slowed after the U.S. election for the remainder of our fiscal year. Activity and volumes have been solid for the first few weeks of December. Though our fiscal year ended November 30, 2012, we achieved record fiscal year revenues of nearly $3 billion, net income to common shareholders of $282 million and earnings per share of $1.22. Annual net income would have been $302 million and EPS would have been $1.31 without the items I mentioned before.

Our record annual net revenues reflect our increased market share and our significantly enhanced global position and brand during a year in which the environment was often challenging and volatile. Short periods of relative calmness in the financial markets were interrupted by slowdowns in both trading volumes and investment banking activity, stemming from uncertainty about the EU and inconsistent momentum in the U.S. economy.

Consistent with recent periods, and as Peg will describe in more detail, at November 30, our balance sheet was about $36 billion or 9.6x equity. Our liquidity buffer again exceeds $4 billion, and our Level 3 assets continue to represent about 3% of our trading inventory. The combination of our well-capitalized and highly liquid balance sheet, along with our record net annual revenues, underscores the position of strength with which we enter our proposed merger with Leucadia, which we announced on November 12.

We do not intend to change Jefferies' business model or strategy. Going forward, we will continue our 50-year focus on clients first. We will continue to strive for market share gains from our full service global platform and our much enhanced competitive position. That said, our top priority for 2013 will be to improve operating leverage and drive margin improvement with the goal of delivering a solid return on equity for our shareholders.

As announced on November 12, we donated $4.6 million to over 20 Hurricane Sandy relief charities. $500,000 of this donation was contributed by our employees from their salaries. Our other expense category includes the remaining $4.1 million of this contribution. $3.1 million was generated by client commissions and $1 million was a direct contribution by Jefferies. We thank our clients and employees and shareholders who collectively leveraged the Jefferies platform to once again help those in need.

Now I'll turn it over to Peg to discuss our result and financial position in more detail.

Peregrine C. de M. Broadbent

Thank you, Rich. As Rich said, our net revenues for the fourth fiscal quarter were $769 million. Our net income to common shareholders was $72 million and earnings per share of $0.31. Also as Rich mentioned, net income would have been $81 million and EPS would have been $0.35 on a non-GAAP basis without the impact of the costs attributable to our proposed merger with Leucadia and our contribution to the Hurricane Sandy effort, as well as the impact of amortizing certain items arising from previously mentioned acquisitions and debt extinguishment accounting over the last year. This compares to $0.17 or $39 million for the fourth quarter of 2011 on a comparable non-GAAP basis.

Our fourth quarter Investment Banking revenues were $283 million, up from the $261 million reported in the fourth quarter of 2011. Of the $283 million, capital markets revenues were $199 million, and M&A and advisory revenues were $84 million. Fixed Income revenues were $293 million for the fourth quarter, up significantly from last year's fourth quarter of $141 million, which was clearly as a result of the extremely challenging Fixed Income environment that persisted in the second half of last year.

Equities net revenues for our fourth quarter were $177 million, which includes the impact of our holdings in Knight Capital. Equities revenues without the Knight markup were slightly higher at $124 million reported in the comparable quarter last year. Asset management revenues for the quarter were $16 million. About $9.7 million of fee income this quarter was supplemented by $6.6 million of recognized gains on our investments in unconsolidated private equity funds.

Non-compensation expenses were $186 million for the quarter. Without the $4.1 million donated for Hurricane Sandy relief and about $4.2 million of Leucadia merger costs, non-compensation costs would have been $178 million, the same amount as the non-compensation expenses of $178 million reported in last year's fourth quarter.

Our compensation expense ratio was 59.9% of net revenues for the fourth quarter and 59.1% for the full fiscal year. As we have discussed over the last few years, our investment to build our firm has been borne substantially as compensation expense. Upfront and early year commitments are amortized generally over 2 to 4 years. We must also absorb the compensation costs of new business initiatives that can take some time to deliver on their potential.

Similar to others, our Equities and Investment Banking businesses in Europe have been challenged by the markets over these past 18 months, and our business in Asia is in the early stages of delivering results. Similarly, we made additional investments in 2012 in our Jefferies Bache Futures, Commodities and Foreign Exchange businesses and expect to begin to see the benefits of our commitment in 2013.

We began 2012 with 3,898 employees and ended the year 2.4% lower at 3,804 employees. Despite significant hiring to enhance and strengthen our platform, our severance costs for 2012 were double the average over last 3 years and were approximately 1% of net revenues. We are committed to driving productivity and return on equity and expect to make progress on these fronts in 2013 and 2014, as the cost of our historic growth investment subsides and results advance.

During the quarter, we acquired 603,000 Jefferies shares at an average price of $15.53 per share, all of which related to employee tax withholdings. There were no open market purchases -- repurchases during the quarter, as we were restricted from such purchases for most of the period. There are still about 11.5 million shares authorized for future repurchases.

Book value per share was $16.90 at quarter-end based on 203 million shares outstanding. Our adjusted book value per common share was $16.01, based on 215 million shares outstanding, including vested restricted stock units but excluding unvested restricted stock. We have enhanced the method used to compute adjusted book value per share and have set out the revised method on Page 6 of our press release.

As Rich mentioned, we estimate total assets at November 30 were about $36.3 billion, or 9.6x our estimated shareholders equity. We estimate our total quarter-end Level 3 trading inventory, after accounting for noneconomic interests, was approximately $450 million. Virtually all of our trading inventory continues to be highly liquid, with about 97% of our trading inventory continuing to be classified as either Level 1 or Level 2, which is consistent with levels of previous quarters.

We estimate that our quarter-end liquidity buffer was about $4.4 billion. Of the $4.4 billion, we estimate $2.7 billion was cash and $1.7 billion was unencumbered liquid securities. We estimate our average VaR for the quarter was approximately $13.4 million. Without the Knight position, VaR would have been about $8 million compared to last quarter's $8.4 million, also without Knight.

The average VaR for the fourth quarter of 2011 was $9.4 million. Our average VaR for 2012 was $8.8 million, excluding the Knight position, which was acquired in the middle of the year. Our estimated effective tax rate for the quarter was 30% versus our full year rate of 34.3%. The lower rate for the quarter is mostly attributable to the utilization of previously unused tax losses that originally arose from some small asset management funds we closed about 5 years ago. Brian will now address in more detail our Investment Banking results.

Brian Paul Friedman

Thanks, Peg. As Peg indicated, Investment Banking revenues were $283 million for the fourth quarter, an increase of 8.3% from the $261 million generated in the same period last year. Our capital markets revenues were $199 million, with debt capital markets generating $146 million and equity capital markets, $53 million. During the quarter, we completed 145 capital markets transactions.

In debt capital markets, we acted as joint lead arranger on several large credit facilities, including the $2 billion credit facility for Chesapeake Energy; the $1.625 billion credit facility for BJ's Wholesale Club; the $1.535 billion credit facility to finance Advent International's acquisition of AOT Bedding; and the $1.37 billion credit facility for PQ Corporation, together with our acting as joint book runner on PQ Corp's concurrent $600 million senior notes offering.

We also completed several book run high-yield offerings, including acting as joint book runner on Vantage Drilling Company's $1.15 billion senior notes offering; Ryerson's $900 million senior notes offering; Edgen Murray Corp's $540 million senior secured notes offering; Alere Inc's. $450 million senior notes offering; First Quantum Minerals' $350 million senior notes offering; and acting as sole book runner on Shelf Drilling International's $475 million senior secured notes offering. In the CLO area, Jefferies raised $810 million for 2 CLOs, Shackleton I and II, in which Jefferies acted as lead left arranger and sole arranger, respectively.

In the investment grade area, we acted as joint book runner for United Continental Holdings on its $844 million offering of enhanced equipment trust certificates and as joint book runner for BB&T's $500 million senior notes offering. We also acted as senior book running manager for the Massachusetts School Building Authority on its $916 million refunding bond offering.

In equity capital markets, we acted as joint book runner on the $330 million IPO of Sherborne Investors, the largest IPO in London during our fiscal year, as well as serving as joint book runner on several follow-on offerings, including the $253 million follow-on offering for Thermon Group Holdings; the $306 million follow-on offering for Western Asset Management Capital Corporation; the $163 million follow-on offering for Lexington Realty; and the $130 million follow-on for Regal Pharmaceuticals.

We also completed several convertible bond offerings during the quarter, including acting as sole book runner on the $230 million convertible bond offering for Vector Group Limited; joint book runner on the $130 million convertible bond offering for Sequenom, Inc.; and joint book runner on the $125 million convertible bond offering for XPO Logistics.

Our M&A and advisory revenues were $84 million in the fourth quarter. And during the quarter, we closed 33 transactions. Notable advisory deals included our acting as lead financial advisor to Thoma Bravo on its $1.1 billion acquisition of Deltek, Inc., and sole advisor to Pfizer Inc. on its $700 million acquisition of NextWave Pharmaceuticals.

In addition, we jointly advised Chesapeake Energy on its $3.3 billion sale of Permian Basin assets to Chevron, Royal Dutch Shell plc and EnerVest. We also acted as sole advisor to Cinven Limited on its $590 million acquisition of Amdipharm Group and to Heckmann Corporation on its $531 million merger with Power Fuels. Finally, we acted as joint advisor to GCA Services Group on its sale to Blackstone and as joint lead arranger of the $540 million credit facility that financed this deal.

Our backlog in investment banking, while always subject to market conditions, is robust against -- across products and sectors. This list of transactions for the fourth quarter includes a strong year for Jefferies Investment Banking, and we are carrying a lot of positive momentum into 2013. Total investment banking revenues for fiscal 2012 were $1.13 billion, the total number of deals completed was 714 and the total transactional value of those deals was $302 billion.

Capital markets revenue for the year were $650 million, with debt capital markets generating $456 million and equity capital markets, $194 million. During the year, we completed a total of 593 capital markets transactions, of which 482 were debt and 111 were equity. The total transaction value of all capital markets deals completed throughout the year was $198 billion, of which $175 billion were debt and $23 billion were equity.

Our M&A and advisory revenues were $476 million for the year. And during 2012, we closed 121 transactions, with total transactional value of $104 billion. Now Rich will comment on our trading results before we take questions.

Richard B. Handler

Thanks, Brian. Our Fixed Income revenues were $293 million for the quarter, up significantly from last year's fourth quarter of $141 million. The Fed's ongoing commitment to the QE program translated into reasonably robust trading volumes for much of the quarter, which in turn resulted in solid revenues for our mortgage, international, domestic credit and rates businesses.

Our emerging markets business also performed well during this period. Our record fixed income revenues for 2012 of nearly $1.2 billion, up 66% from last year's $715 million, reflects the depth and breadth of our global fixed income, customer-focused sales and trading businesses. Excluding Knight, equity revenues were $128 million for the quarter, slightly up from the $124 million of 2011. While the equity industry continues to experience low volumes, we believe we are well-positioned for when volumes return.

As we end 2012, a new era is on the horizon for Jefferies. We believe our imminent merger with Leucadia will result in an even stronger Jefferies, as well as making us more distinguished from our bank holding company competitors. We also believe we have put ourselves in the best position possible to focus on our clients, add value and play aggressive offense, while continuing to protect our balance sheet and platform. The traditional entrepreneurial Wall Street model has served us well. Combining our firm with an extremely well-capitalized and diversified pairing will help create the foundation for us to build Jefferies and add value for our clients and Leucadia shareholders into the far foreseeable future.

Our 3,804 employee-partners are energized by our collective opportunity to continue to build Jefferies from a position of strength. Our brand, balance sheet, business model, competitive position and culture have never been stronger. We are extremely proud of the way our entire team began and finished 2012, as we believe it was a year that truly distinguished our firm. We're now available for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Douglas Sipkin with Susquehanna.

Douglas Sipkin - Susquehanna Financial Group, LLLP, Research Division

Just had a couple of questions. First, drilling down into the Fixed Income trading, obviously, it's been very impressive for you guys. I mean, how much of this is QE3 and activity versus -- I mean, I guess are you guys feeling the competitive dynamic getting a little bit easier with some of the larger firms, particularly abroad, announcing significant reductions in staff? Or is it still predominantly driven by just sort of the favorable tailwind of QE3?

Richard B. Handler

I think we're gaining real market share from a competitive position, that's probably the biggest driver. If you talk to our clients, as we do when we go around, we are being very proactive in terms of using our relationships to provide liquidity for them. Our capital provides liquidity for our primary relationships, and those relationships are growing, and our competitive position is very strong. So across the products within Fixed Income, I think we're getting market share. The fact that the Fed is cooperating is added gravy. But I think that's the priority.

Douglas Sipkin - Susquehanna Financial Group, LLLP, Research Division

Okay, great, that's helpful. Second question, I'm just -- for some of us that have covered you guys for a while, and I'm just trying to gauge, are you guys going to provide sort of any more, sort of I guess, functionality and clarity around Leucadia and some of their legacy businesses to sort of help us understand the consolidated entity moving forward? Obviously, Jefferies is going to be a big piece of Leucadia. And I'm just curious is there – are we sort of – just sort of winging it from here now trying to figure out some of the other businesses that are going to be part of the consolidated company once the transaction closes?

Richard B. Handler

I mean, as you can imagine, we haven't really had a whole lot of time to breathe here between our year-end, the merger and all that we have going on. I think as we get closer to the merger, we'll communicate what our plan will be going forward. I think you know that we are generally transparent in how we operate, but we have to come up with a plan in terms of how we deal with it going forward.

Douglas Sipkin - Susquehanna Financial Group, LLLP, Research Division

Okay, great. And then last question, maybe a little bit just item-wise. I mean did, I guess, the charitable contribution show up in comp?

Peregrine C. de M. Broadbent

The charitable contribution showed up in our non-compensation expenses in the other expense line.

Douglas Sipkin - Susquehanna Financial Group, LLLP, Research Division

Got you. So then I guess my -- I'm just trying to gauge I mean, obviously, a great bounce back year for revenues, very solid fourth quarter, you guys have sort of benefited from smart investment in Knight Capital. I'm just trying to gauge what sort of revenue level can we expect, maybe where we can actually start to see a little bit more operating leverage, because clearly you guys have tremendous revenue momentum, I think the next step is sort of showing a little bit more margin leverage. And can we define that by a revenue level or is that sort of something that just has to happen over time?

Brian Paul Friedman

I think the answer is it has to happen. If you listen to a couple of the different things that we noted, I won't say that there were onetime things in our comp expense. But it was a year where a combination of initiatives from the past several years were still being invested in. Secondly, there are businesses that cyclically or otherwise didn't perform necessarily up to snuff, so there's a little bit of netting cost to that. We noted the fact that in strengthening our platform, there was above trend severance in 2012. I think when we look out to 2013 and beyond, we see both the potential for continued growth on the revenue side and we see some subsiding of some of the investment cost and some of the onetime items. So naturally, the compensation can begin to come down. So we think it'll be virtuous on both sides. Obviously, markets have to cooperate, the environment has to be right. But we see it as now a trend in our favor. And market pressures frankly help us.

Operator

Your next question comes from the line of Chris Kotowski with Oppenheimer.

Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division

I was wondering in looking at Dealogic M&A data, we saw -- industry-wide, you see a pickup in announced transaction volume in the fourth quarter, not so much in closed yet. But is it your judgment, I guess, Brian, in particular, do you think that, that is relating to transactions trying to get in, in front of year end or do we really see a turn in activity?

Brian Paul Friedman

I think there is a turn. I would probably flip it on its head and say that, in the second half of 2012, the -- it's always difficult to say what the forces are. But I think that the weight of the U.S. election and the U.S. fiscal cliff and all the macros in the U.S., coupled with EU uncertainty and coupled with maybe some growth uncertainty coming out of Asia, just caused people to pause, slow down a little bit. We saw the strategic dialogue pick up over the last few months. December is stronger than the last couple of months, partly, I think, it's -- I'm not sure it's taxes as much as the fact that just a lot of deals happen in December, more than typically happen in October and November. But looking into next year, the first quarter looks better than the fourth quarter. And just my personal gut says that the second quarter could already be a very strong M&A period. It does just feel like it's picking up. And if we get some good resolution on the U.S. deficit issue, we probably see a very solid 2013 M&A. Again, you're just getting a personal feeling, although it's informed a little bit by the dialogue and the flow that we see.

Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division

Okay. And I mean, just looking forward, the current quarter, $84 million in the revenues was actually your lowest since early 2010.

Brian Paul Friedman

Absolutely.

Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division

No read through on that, or is that the pause that you were talking about earlier in the year?

Brian Paul Friedman

I think that's just the pause. I mean, if you go back to, the first quarter of 2009 was as dead as I've ever seen, going back to, like, 1980, '81, when interest rates went to 25%. I think our M&A revenue in the first quarter of '09 was like $30 million. And so this is, in my view, just a cyclical slowdown, but cyclical in a very short sense, meaning it's second half petered out and you saw that in the fourth quarter revenue number. I frankly can't get it precise in my mind in terms of how the first quarter is shaping up relative to that. But when I look out particularly to the second quarter, I can feel the momentum in the flow. And those are the deals that will be announced this week, next month, and they'll close. It's kind of like our deal announced on November 12 is going to close somewhere between February and March. So you're starting to see the announcements, and I think you're going to see those closings. Again, our being a February quarter rather than a March quarter, I'm going to hedge a little on our first quarter. But I think as you get into the calendar first quarter, you get into March, April, May, you're going to start to see a stronger flow of closings.

Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division

Okay. And then I guess just a follow-up on Doug's comments. Since Jefferies shareholders are soon going to be Leucadia shareholders, it would be great to get an articulation of the strategy. I mean, are you going -- are you -- is Leucadia going to be a merchant bank or is it a conglomerate? And curious if you're planning on holding conference calls to discuss the whole of Leucadia results, or are we just going to be looking just at Jefferies?

Brian Paul Friedman

All fair questions, Chris. I think our posture right now is that we filed a proxy statement about 10, 12, 14 days ago. We're in that process now. It's really not appropriate for us to comment further as the merger closes and after. All those are fair questions, which we will be answering and we're mindful of.

Operator

You're next question comes from the line of Joel Jeffrey with KBW.

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

Just thinking about -- I'm sorry to go back to some of the questions brought up. But I mean, thinking about the company after the merger, with your average assets kind of getting to that mid-40s range during the quarter end and that sort of pro forma, it looks like you guys with Leucadia would be slightly above the sort of $50 billion line. And I know that's a number you've tried to stay below on a period-end basis. But is that any kind of concern from a regulatory perspective going forward?

Peregrine C. de M. Broadbent

Joel, it's Peg. I'll first of all point out that we don't believe that the Leucadia assets would be taken into consideration because none of the Leucadia businesses are financial services business, so it wouldn't be taken into consideration in terms of any $50 billion limit. That's the first thing to say. So secondly, as you know, our average balance, period-end balance sheets have remained pretty static at the sort of low- to mid-40s and mid-30s, respectively, throughout this year, and we'd anticipate, environment changes aside, those levels being maintained throughout the foreseeable future.

Richard B. Handler

I would also add that while $50 billion is a threshold, there are a bunch of other tests that have to kick in, none of which really apply to us. So the regulators can do what the regulators want to do but we believe we'll be -- we'll have the flexibility to operate our company.

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, great. And then just thinking about sort of equities volumes overall. I mean they certainly industry-wide have been coming down and you guys showed a nice little pick up this quarter. But I mean, when we think about it going forward, is it the same sort of impact as what you were talking about in the M&A business? Are we sort of getting a little bit more certainty in the markets and you could certainly see things pick up next year?

Richard B. Handler

I think as you see some stability with the U.S. political and government situations, some stability in Europe, the systemic risk card off the table, you'll start to see eventually dollars flow into equity securities versus fixed income securities. And we've seen 4 years of everything going into fixed income. And there will be a natural transition. When it happens? No one knows. It's certainly feels closer today than it has in a while. But when that happens, you'll see people start to get rewarded for picking stocks again and willing to take risk and you'll see it flows into the equity market and volumes will come back.

Brian Paul Friedman

And it will compound with equity capital markets. So in a way, for us, it's an important opportunity. It's been a long time since it's really had a strong upward trend. But when it comes, we feel very leveraged to it.

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, great. And then just lastly, I think you'd mentioned that you're starting to see some positive results out of your Asian business, and there have been a few firms that have certainly backed out of Asia recently. Just wondering sort of what are you guys doing differently or why do you think the opportunities there might be different for you than for some other firms?

Brian Paul Friedman

Well, just to be clear, what Peg said is that we're starting to see early results. So I'm not sure it's as robust as what you might have said, just to be clear. But what I think we are doing in Asia, and I would speak to it in 2 levels, is number one, our presence in Asia is part of a global strategy. We want to be globally supportive of both our investor clients and our corporate and issuing clients. So in part, it connects to what we're doing in the U.S. and Europe, and we think there's an integrated value there. Secondly, our focus in Asia, I would say, you can look at it in 2 ways. The less distinct is that we are in the business of delivering U.S.-European global fixed income product to Asian clients. That's not a lot different than our sales offices around the world. The more directed effort is focused heavily on China and to some degree, on India in the Investment Banking and Equities business. And as you may have noted a few months ago, we announced a significant additional group of hiring, a senior team that came out of RBS. We now think we have a very strong team focused on China, both from Mainland and from Hong Kong. We have a very solid team in India. So it's really the combination of the investment banking, together with our research and our equities, is our strategy there. Markets have been tepid. We think we have a first line offering comparable to what we have in the rest of the world, and we're willing to be patient and see it play through.

Operator

That does conclude our question-and-answer session for today. I hand the floor back over to Mr. Handler for any further comments or closing remarks.

Richard B. Handler

Thank you, everybody. Happy holidays and a happy new year.

Operator

This does conclude today's conference call. You may now disconnect.

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