Interface, Inc. Q4 2008 Earnings Call Transcript

|
 |  About: Interface Inc. (TILE)
by: SA Transcripts

Interface, Inc. (IFSIA) Q4 2008 Earnings Call February 25, 2009 6:00 PM ET

Executives

Jessica Greenberger – Financial Dynamics

Daniel T. Hendrix - President, Chief Executive Officer & Director

Patrick C. Lynch - Chief Financial Officer & Senior Vice President

Analysts

Keith Hughes – SunTrust

John Baugh – Stifel Nicolaus

Matthew McCall – BB&T Capital Markets

Sam Darkatsch – Raymond James

Lee Brading - Wachovia

Garland M. Buchanan – Babson Capital

Chris Arndt – Select Equity Group

Operator

Welcome to the fourth quarter 2008 Interface earnings conference call. My name is Shameka and I will be your coordinator for today. At this time all participants are in listen only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call Miss Jessica Greenberger of FD.

Jessica Greenberger

Welcome to Interface’s conference call regarding fourth quarter and full year 2008 results. Joining us from the company are Dan Hendrix, President and Chief Executive Officer and Patrick Lynch, Senior Vice President and Chief Financial Officer. Dan will review highlights from the quarter as well as Interface’s business outlook. Patrick will then review the company’s key performance metrics and financial results.

We’ll then have time for Q&A. If you have not yet received a copy of the result release which was issued today after the close of the market please call Financial Dynamics at 212-850-5600 or you can get a copy off the Investor Relations section of Interface’s website. An archived version of this conference call will also be available through that website.

Before we begin the formal remarks please note that during today's conference call management’s comments regarding Interface's business which are not historical information are forward-looking statements.

Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from any such statements including risks and certainties associated with the economic conditions in the commercial interiors industry as well as risks and uncertainties discussed in the heading Risk Factors in Item 1-A of the company's quarterly report on Form 10-Q for the quarter ended December 28th, 2008 and annual report on Form 10-K for the fiscal year ended December 30th, 2007 each of which are filed with the Securities & Exchange Commission.

We direct all listeners to that document. Any such forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. The company assumes no responsibility to update or revise forward-looking statements made during this call and cautions listeners not to place undue reliance on any such forward-looking statements.

Management’s remarks during this call refer to certain non-GAAP measures. A reconciliation of these non-GAAP measures to the most comparable GAAP measures are contained in the company’s results release and Form 8-K filed with the SEC today each of which can be found on the Investor Relations portion of the company’s website, www.InterfaceGlobal.com.

Lastly please note that this call is being recorded and broadcasted for Interface. It contains copyrighted material. It may not be re-recorded or rebroadcast without Interface's express permission. Your participation on this call confirms your consent to the company's taping and broadcasting of it.

With these formalities out of the way I'd like to turn the call over to Dan Hendrix.

Daniel T. Hendrix

Before we get into specifics about our quarterly results I’d like to begin by talking about the challenges of the current operating environment and some of the opportunities we are seeing today. The fourth quarter was somewhat of a perfect storm for us. As you know most of our business is made to order which is a competitive advantage for us in normalized market conditions.

Under this business model we ordinarily carry a relatively lower level of fixed costs and a higher level of variable manufacturing costs compared with most companies. Although our business was hanging tough in October we saw a decline in sales and order activity in November and December.

We reacted promptly to implement restructuring initiatives in the form of employee reductions and the shutdown of our manufacturing operation in Canada but our margins still suffered and they were further impacted by currency changes. Based on our current level of business we adopted the further restructuring activities that we announced this afternoon.

Combined with our restructuring we announced in December these actions are expected to yield annualized savings of about $47 million. We will begin realizing most of those savings in the second quarter. In addition we’re seeing the costs of raw materials come down as well. There are some bright spots. The secular shift toward [Carbital] is continuing driven now by refurbishment more than new construction.

There is growing demand among customers for sustainable flooring solutions and our leadership position gives us a competitive advantage and the ability to capitalize on this trend. Flor, our residential carpet business in the US continues to grow even in the current market conditions further evidencing the trend of carpet tile taking share in the overall carpet market. We expect Flor to be profitable in 2009.

Of course the office market is not promising in the near term but after years of opening up penetrating non-office segments we now have a more balanced market approach. The non-office segment represents 40% of our sales company wide with the office market representing 60%. We are optimistic about the prospects in the non-office segment such as government, education and healthcare.

With the economic stimulus package in the US and other countries should drive additional sales particularly as we move into the second half of this year. In fact we’re beginning to see some of these projects coming through in very select areas. The timing of the stimulus funds for education projects may be just right as the second and third quarters are historical buying season in that segment.

Bentley Prince Street is perhaps our toughest business to manage in this environment because of the tie in designer oriented products which are typically the first to be cut by customers. In response we’ve introduced lower cost products to appeal to a broader price spectrum. In addition we’ve taken a lot of cost cuts out of the business. We’ve reduced employment by 30% over the last two quarters.

While we have yet to fully realize the impact of these actions we continue to see good demand for Bentley Prince Street modular products and we’re still working hard to further align this operation and cost structure with the current demands.

We’re intent on making sure that we’re in financial position to not only weather the current environment but to be able to take advantage of the opportunities in the marketplace that I’ve described to take market share and emerge as even a stronger competitor.

To conserve cash as we announced in our press release we decided to reduce our quarterly dividend to $0.0025 which should save us about $7 million in cash in 2009 while still maintaining our status as a dividend paying company. This decision is part of our ongoing initiative to proactively manage our liquidity to prepare for the maturity of our senior notes in 2010.

Now I’ll turn the call over to Patrick for him to give you some details about the quarter.

Patrick C. Lynch

I’ll now take a few minutes to outline the financial highlights from the quarter. Sales in the fourth quarter of 2008 were $247.2 million compared with sales of $293.3 million in the year ago period. The decrease in sales during the fourth quarter was due in part to a negative impact of currency of $27 million as over 50% of our business came from abroad and 39% of our orders for the quarter were denominated in euros, pound sterling and the Australian dollar.

Weakness in the corporate office segment globally and the deterioration in the emerging markets also contributed to the year-over-year sales declines. Gross profit margin in the fourth quarter of 2008 was 31.4% compared with 35.5% in the fourth quarter of last year. As Dan mentioned earlier our margins were affected by the inefficiencies that resulted from the downturns as well as currency impacts.

SG&A in the fourth quarter was $59.2 million or 23.9% of sales compared with $64.7 million or 22.1% of sales a year ago. Excluding unusual items which were detailed in our press release and I’ll discuss them again in a moment operating income in the fourth quarter of 2008 was $21.2 million compared with operating income of $39.4 million in the fourth quarter of 2007.

Including those items the operating loss for the fourth quarter of 2008 was $53.8 million. As a percentage of sales operating income excluding the unusual items decreased to 8.6% from an operating margin of 13.4% in the fourth quarter of 2007. Interest expense in the fourth quarter of 2008 was $7.4 million versus $7.2 million in the fourth quarter of 2007.

Net income for the 2008 fourth quarter excluding the unusual items was $6 million or $0.10 per diluted share compared with net income of $20.3 million or $0.33 per diluted share in the year ago period. Including the unusual items the net loss for the fourth quarter was $79.3 million or $1.29 per share.

The company’s fourth quarter results included the impact of the following items, $61.2 million or $0.99 per share in non-cash charges resulting from the impairment of goodwill related to the Bentley Prince Street business; $11 million or $0.13 per share in the previously announced restructuring charges; $13.3 million or $0.22 per share in tax charges resulting from the anticipated repatriation in 2009 of approximately $37 million in earnings from our European and Canadian subsidiaries; $2.8 million or $0.05 per share in the non-cash charge charges related to the decline and cash surrender value of our company owned life insurance; depreciation and amortization was $6 million in the fourth quarter of 2008 compared with $5.4 million a year ago; capital expenditures in the fourth quarter were $8.5 million compared with $13 million in the fourth quarter of 2007.

For the full year 2009 we expect capital expenditures to be in the $10 million to $15 million range. Now I’ll take a few minutes to review some of the details of our individual business segments. In the fourth quarter of 2008 sales in our modular carpet segment were $218.5 million compared with $257 million in the fourth quarter of 2007. Exclusive of the restructuring charges operating income for the modular segment decreased to $23.5 million or 10.8% of sales.

Inclusive of these charges operating income for the modular segment decreased to $12.8 million or 5.9% of sales from $40.1 million or 15.6% of sales in the 2007 fourth quarter. Bentley Prince Street sales were $28.7 million in the fourth quarter of 2008 compared with $36.3 million in the fourth quarter of 2007. After the goodwill impairment charges Bentley Prince Street recorded an operating loss of $63.9 million.

As Dan mentioned we’re working hard to right size Bentley Prince Street and hope to see a stabilization of results in the first half of 2009. As an update on the restructuring the Canadian shutdown and the employee reductions that we announced in December are nearly complete and we should be finished with all of our restructuring activities including those announced today by the end of the first quarter.

Turning to the balance sheet at year end 2008 we had $71.8 million in cash; inventories were $128.9 million up slightly from the $125.8 million at year end 2007; average DSOs during the fourth quarter of 2008 were 48.2 days compared with 54.3 in the fourth quarter of 2007; and inventory turns were 5.5 times compared with 5.9 times in the year ago period.

We entered this difficult environment in strong financial position. We have every intention of managing the business to maintain our financial strength. Going forward we are very focused on continuing to generate strong cash flow, preserving our margins and maintaining the necessary financial strength and liquidity to navigate these times. With that we’ll now open the call up for questions.

Question-And-Answer Session

Operator

(Operator Instructions) You have a question from Keith Hughes – SunTrust.

Keith Hughes – SunTrust

A couple questions, first on the bond issue that’s due in about a year, what is the current amount outstanding on that, Patrick?

Patrick C. Lynch

$152.8 million.

Keith Hughes – SunTrust

You had bought some bonds back in the past, is that correct?

Patrick C. Lynch

Yes, we did in the fourth quarter in October. We bought about $22 million back in.

Keith Hughes – SunTrust

The cash went down a little bit from the third quarter to $70ish million. Usually I would expect you to get some money out of working capital in the fourth quarter. What’s the status there?

Patrick C. Lynch

We actually bought $22 million in bonds in the fourth quarter, Keith.

Keith Hughes – SunTrust

Okay, so that’s what’s brining the cash down.

Keith Hughes – SunTrust

As you look towards this maturity, is the goal to get cash up and just pay these bonds off or would your preference be to just try to roll them over? What’s your feeling on that?

Daniel T. Hendrix

We going to run the business for cash. We’re cutting cap ex. It’ll be $15 million to $10 million [inaudible] is $24 million. I think we’re going to get some out of working capital as obviously this current environment in sales decline and we’re going to look at all the options out there to refinance some of those bonds but we’re going to run it as if we can’t do that right now in this environment and we’re going to run it for cash.

Keith Hughes – SunTrust

If you weren’t able to roll it over easily, would you just use the cash and then borrowings off the revolver, Patrick, to bring these things in?

Patrick C. Lynch

That’s right.

Keith Hughes – SunTrust

Final question, you talked about raw materials in your prepared statements, can you give us some sort of indication how much raw materials are down given current prices from the peak?

Daniel T. Hendrix

We’ve got a calculated number from the fourth quarter to right now, if you look at the raw material spend it’s about $25 million down.

Keith Hughes – SunTrust

On a percentage basis, how much would that be?

Daniel T. Hendrix

About 9%.

Keith Hughes – SunTrust

Is that primarily nylon that’s come down?

Daniel T. Hendrix

It’s also backing as well.

Keith Hughes – SunTrust

Do you think those prices are going to continue to decline short term?

Daniel T. Hendrix

I do.

Operator

Your next question comes from John Baugh – Stifel Nicolaus.

John Baugh – Stifel Nicolaus

The fourth quarter if my math is right you did about $10 million in free cash flow, is that correct?

Patrick C. Lynch

It’s about right.

John Baugh – Stifel Nicolaus

If we got a spread of $10 million to $15 million between D&A and cap ex, let’s just assume we don’t have any net income for the moment, leave that out, but if we’re looking at a 15% to 20% revenue decline in '09 versus '08 what would the free cash flow number be for '09 if that scenario developed with the zero net income number?

Patrick C. Lynch

I haven’t done it under that scenario but probably in the $30 million range.

John Baugh – Stifel Nicolaus

I believe you mentioned that by the end of Q1 all these restructuring activities including the one you just announced today would be implemented or complete, is that right and as we think about it, so this $47 million annual run rate in savings really begins April 1?

Daniel T. Hendrix

Yes.

John Baugh – Stifel Nicolaus

The Bentley just continues to be an issue and it sounds like tile is doing well, I assume broadloom continues to bleed. What are both the near term financial options or levers and then maybe coming in a longer term strategic options or levers that relate to that business?

Daniel T. Hendrix

We’re turning every knob we can to reduce the costs down in that business. We’re trying to gear it to break even somewhere around $100 million in revenues. The strategic standpoint and I think you’ve got to get through the storm before you try and think about strategic options for that.

John Baugh – Stifel Nicolaus

Could you comment on, I think you said international was 50% of the mix for the quarter. Did I hear you right on that? Then comment on Asia, Europe, US and maybe some color particularly in Europe as to some of your key markets there and I assume the outlook is pretty bleak but any color.

Daniel T. Hendrix

It’s been 50% US and 50% outside the US. That mix has been there most of the year starting in 2008. If you go to the European market France actually looks okay. The UK is one that is getting hit but it’s not getting hit as bad as you think except the fact that the currency has been impacted so much when you translate it.

On a pound sterling basis our UK business was somewhat flat actually which is pretty amazing in itself. You’ve got a lot of competitors that compete from the continent into the UK and they’ve seen their euro sales decline by over a third. From a competitive standpoint I think the UK is great but I think the UK is going to be one of our toughest markets.

We’re seeing London really be impacted but outside of London we’re actually seeing some pretty good activity. But I anticipate the UK to be the toughest market in 2009. Germany was actually up double digits for us and France showed some strength in the fourth quarter but for the year France was down double digits as well. Eastern Europe really had a liquidity crisis in the quarter and a lot of the construction work just stopped because of funding issues.

Eastern Europe really hasn’t started up yet. If you go to Asia the Australian market besides the fact that currency is down 35% continues to be a good market for us, even going into 2009 it appears to be a good market. China was up 22% for the year but I anticipate in China that we are going to see some short term issues around China as well. The pipeline in China looks pretty good going into the second quarter, it’s been soft in the first quarter.

Asia I think is hopefully going to be okay. We’ll see, it’s started out but it was okay in the fourth quarter. In the US we were up in the US for the year. If you look at the commercial market I think it was down, if you look at it from an industry standpoint, double digit. We got impacted in November and December in the US with the office market really showing some weakness but the other segments are holding their own.

John Baugh – Stifel Nicolaus

Lastly, in your mix your office is your highest margin, if I have that wrong correct me, I’d assume there’s some pressure on margins going forward with the mix. Could you comment on that and your average selling price and whether pricing is an issue and volume is weak and raw materials coming off?

Daniel T. Hendrix

So far the pricing is flat for us in the US, that’s the market you’re probably talking about the most. We typically don’t lower prices and I don’t really see us doing that but our price is holding in there. The issue we have is we were geared up for a lot more business within the plants in general and we had to reduce a lot of overhead costs and that’s what the restructuring charge was all about, was reducing the variable manufacturing and the variable overhead to meet demand.

From a standard variable margin standpoint, I think we’re going to hold our own there. The education market, the K-12 is typically a little bit lower margin job but we actually also sell a product that’s engineered to meet that marketplace. The higher ed is typically very close to the corporate margins as well.

Operator

Your next question comes from Matthew McCall – BB&T Capital Markets.

Matthew McCall – BB&T Capital Markets

Dan, you just mentioned that you’re addressing your variable overhead, your variable manufacturing costs in some of the restructuring. Your sales are down about 16%, SG&A only down about 9% year-over-year and the quarter, what’s the expectation of that going forward? I see the work you’re going to do on the cap ex line. How should we look at SG&A spend in '09?

Daniel T. Hendrix

We’re going to take SG&A down further, part of the restructuring was not just the manufacturing it was also the SG&A side. We ended up at $57 million? What was our SG&A in the fourth quarter? $59 million? I’m trying to get the SG&A to around $52 million, $53 million, Matt. That’s my goal in absolute terms and then adjust it from there if the market continues to deteriorate.

Matthew McCall – BB&T Capital Markets

That’s also assuming an April start for that [inaudible]?

Daniel T. Hendrix

That’s with everything we’ve got in play.

Matthew McCall – BB&T Capital Markets

In the release you referenced significant profitability in '09. I know you’re talking about $47 million in cost savings, what volume levels do you assume there? Do you assume current levels hold, the Q1 run rates hold? How should we look at your expectations and what’s baked in, what your cost savings should bake in from a profitability standpoint?

Daniel T. Hendrix

What we’re trying to do is manage it to a certain level of sales and obviously you need to do that work and make sure that our modular businesses are over 10% operating income. That’s how we’re looking at it and we’re adjusting to it based on quarter to quarter business activity.

Operator

Your next question comes from Sam Darkatsch – Raymond James.

Sam Darkatsch – Raymond James

My first question would be on pricing. Are you seeing any competitive pressure there, still having success price increases?

Daniel T. Hendrix

Yes, we’re holding our own on price. Actually we’re holding our own on price really around the world. Pricing right now is not a margin issue for us today.

Sam Darkatsch – Raymond James

So no increase in promotional activity or no material increase?

Daniel T. Hendrix

No, we don’t throw promotions out there except in our Flor business which is a very small business. That’s our residential business, Flor.

Sam Darkatsch – Raymond James

The restructuring that you just announced, can you walk us through which geographies that’s going to take place in?

Daniel T. Hendrix

A lot of it is in the US related to trying to get the production down because we were geared up for a lot higher production and in Europe. A lot of the European is around the SG&A line as well. We did it around the world, Asia as well. It’s pretty much based on the size of the business, it’s pretty much in all areas we’ve taken costs out.

Sam Darkatsch – Raymond James

The Q1 restructuring, is that all in the modular segment also?

Daniel T. Hendrix

No, some of it was actually in the Bentley Prince Street as well.

Sam Darkatsch – Raymond James

Do you have that breakout for us?

Daniel T. Hendrix

We don’t give that out, I’m sorry.

Operator

Your next question comes from Lee Brading – Wachovia.

Lee Brading – Wachovia

On the cost savings, you mentioned that your goal is to hit a $52 million, $53 million run rate in SG&A. At the $47 million cost savings how much of that is running through SG&A?

Patrick C. Lynch

If you looked at the cost savings that we have in play today we’re somewhere between $54 million and $53 million with everything we’ve done so far a quarter.

Lee Brading – Wachovia

So that doesn’t include the $47 million yet?

Patrick C. Lynch

It does. We’re at $59 million, we’ve taken it down to something that’s under $55 million.

Lee Brading – Wachovia

To make sure I’m just understanding the repatriation and the cash flow, how that works, the $37 million that you’re bringing back I guess that’s if you looked on your cash balance is that $37 million in your cash balance now, the reported number?

Patrick C. Lynch

Yes, everything with the exception of a portion in Europe which is availability under one of their credit facilities which is about 10 million euros. With the exception of that it’s all in cash.

Lee Brading – Wachovia

You’ll fund that up over in Europe and then bring it over?

Patrick C. Lynch

Correct.

Lee Brading – Wachovia

When’s the timing of that expected to happen?

Patrick C. Lynch

We could do it anytime. We’ll just continue to monitor the cash balance and do it anytime, probably the first half of '09.

Lee Brading – Wachovia

I don’t know if I heard it, what is the revolver availability at the end of Q4?

Patrick C. Lynch

About $57 million.

Lee Brading – Wachovia

Is that all on the US side?

Patrick C. Lynch

Just on the US facility, that’s right and there’s $12 million in Europe.

Lee Brading – Wachovia

On the working capital going forward, obviously we’re assuming sales decline, you get a working capital benefit. I apologize if you already said this, but is there areas of improvement that you see that you can eke out more just from the normal decline in sales and working capital decline? Is there particular areas that you’re focused on?

Patrick C. Lynch

Obviously we’re focused on inventories.

Lee Brading – Wachovia

Are there opportunities there though? Are there multiple opportunities?

Daniel T. Hendrix

Yes, there is some opportunities within our Asian business. We have a lot of high inventories around the yarn, raw material inputs and we’re trying to get consignment put in those areas to help with that. Then you’ve got increased turns. You keep working at it. There’s going to be a natural decline of working capital just due to the level of business.

Lee Brading – Wachovia

Exactly, I wasn’t sure if there was anything much more outside of the natural decline.

Daniel T. Hendrix

Not much except we’re really going to push on the turns.

Lee Brading – Wachovia

You have out first six weeks, I believe went down 27%. Any breakdown international or by sector, any differentiation there?

Daniel T. Hendrix

I would say that the one that’s getting hit really the hardest would be the European business if you looked at it and then what I call the China business that I alluded to.

Lee Brading – Wachovia

How is the US side doing?

Daniel T. Hendrix

The US is holding its own.

Lee Brading – Wachovia

When you say holding it’s own, it’s maybe more down single digits as opposed?

Daniel T. Hendrix

Not single but it’s not down 27.

Operator

Your next question comes from Garland M. Buchanan – Babson Capital.

Garland M. Buchanan – Babson Capital

Have you guys done any bond buy backs?

Patrick C. Lynch

We have not, not since October. We did $23 million in October.

Garland M. Buchanan – Babson Capital

So nothing in the most recent quarter?

Patrick C. Lynch

Right.

Garland M. Buchanan – Babson Capital

Is your plan then to if you can buy bonds throughout the year or are you looking to settle at maturity?

Daniel T. Hendrix

We are being optimistic and keeping all our options open.

Garland M. Buchanan – Babson Capital

Any covenant issues of which we should be aware?

Patrick C. Lynch

None.

Garland M. Buchanan – Babson Capital

The $47 million in savings, is that something that’s just going to keep you at more normalized margins or are you looking to get some net benefit in cash from that?

Patrick C. Lynch

More normalized margins.

Operator

Your next question is a follow up from Keith Hughes – SunTrust.

Keith Hughes – SunTrust

Patrick, can you give us the, I don’t know if you already said this, the excluding charges operating profit for Bentley Prince Street and the same thing for corporate expenses?

Patrick C. Lynch

Corporate expenses was zero, it was break even and Bentley Prince Street was $2.6 million loss in the quarter.

Keith Hughes – SunTrust

Finally Dan you commented on raw materials earlier, is there going to be any benefit in the first quarter of raw materials or is that going to come later in the year?

Daniel T. Hendrix

There’ll be some.

Operator

Your next question is a follow up from John Baugh – Stifel Nicolaus.

John Baugh – Stifel Nicolaus

Patrick, on the repatriation, the $13.3 million, is that cash that goes out in the first quarter? How do we think about the cash state at the end of the year versus after repatriate?

Patrick C. Lynch

This would be cash that we would just bring back from our Canadian and European subsidiaries. There’s no cash going out. There is no cash taxes associated. There’s a small withholding cash tax that we will have to pay, somewhere in the $500,000 to $600,000 range but it is not a cash tax charge. It’s shielded by the NOL.

So we’ve just provided for it, it’s part of that earnings per share charge and then we’ll just inter-company transfer those cash balances from our Canadian subsidiaries and European subsidiaries to the US subsidiary.

Operator

You have a follow up from Matthew McCall – BB&T Capital Markets.

Matthew McCall – BB&T Capital Markets

Dan you talked about the Flor business being profitable in '09. What were the total losses in '08?

Daniel T. Hendrix

$3.5 million.

Matthew McCall – BB&T Capital Markets

That’s the total business or just US?

Daniel T. Hendrix

That was the US. European was another $5 million.

Matthew McCall – BB&T Capital Markets

Is it US and Europe profitable in '09?

Daniel T. Hendrix

I anticipate the US being profitable and I anticipate we’ll cut the European loss to $2.5 million.

Operator

Your next question comes from Chris Arndt – Select Equity Group.

Chris Arndt – Select Equity Group

Just a quick question on the US revolver and the European revolver, I just want to make sure I got this straight. There was $57 million available that you could draw upon in the US and $12 million in Europe? Is that right?

Patrick

That’s right.

Chris Arndt – Select Equity Group

How long does this revolver go out?

Patrick

The US is December of 2012 and the European facility expires at the end of '09.

Operator

There are no further questions in the queue at this time. I would like to turn the call back over to management for closing remarks.

Daniel T. Hendrix

Thank you and we’ll talk to you in the second quarter for the end of the first quarter.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!