Crown Media Holdings Inc. Q4 2008 Earnings Call Transcript

| About: Crown Media (CRWN)

Crown Media Holdings Inc. (NASDAQ:CRWN)

Q4 2008 Earnings Call

March 5, 2009; 11:00 am ET


Henry Schleiff - President & Chief Executive Officer

Brian Stewart - Executive Vice President & Chief Financial Officer

Mindy Tucker - Investor Relations


Salvatore Muoio - SM Investors


Good day, ladies and gentlemen and welcome to the Crown Media fourth quarter earnings conference call. (Operator Instructions)

I would just like to take a moment to remind everyone that statements on this conference call may be forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management’s current expectations, estimates, and projections. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied in the forward-looking statements.

Such risks and uncertainties are detailed in the company’s filings with the Securities and Exchange Commission, including the risk factors included in the company’s 10-Q report, for the three months ended September 30, 2008 and the company’s 10-K report for the year ended December 31, 2008.

Any forward-looking statements are made only as of the date of this conference call based on information known today to the company’s management. The company has not undertaken any obligation to update any forward-looking statements.

I would now like to turn the call over to, Mindy Tucker. Go ahead, Mindy.

Mindy Tucker

Thank you. Good morning everyone and welcome to Crown Media’s fourth quarter conference call. With me today are Henry Schleiff, Crown Media’s President and Chief Executive Officer; and Brian Stewart, Executive Vice President and Chief Financial Officer. Henry and Brian will make some comments about the operating results and financial performance for the quarter and for the year and then we will open up the call for questions.

I would like to remind everyone that our press release, which contains information on non-GAAP measures, was distributed yesterday afternoon, available through the Investor Relations section on our website at In addition, our 10-K will be filed later today.

Now, I would like to turn the call over to Henry Schleiff. Go ahead, Henry.

Henry Schleiff

Mindy thank you. Good morning everyone and thank you all for joining us today. 2008 was, like the very best of our original movies, filled with their twists and turns, but always happy endings. I’m very pleased to report that Crown Media delivered extraordinarily positive results for the past year including continued expansion of Hallmark Channel.

Favorable distribution agreement renewals, which have significantly contributed to our bottom line; an ambitious lineup of original programming, which has delivered strong ratings, as well as increased delivery of our key demographic groups; the launch of Hallmark Movie Channel, which is experiencing exponential subscriber growth and growth in advertising revenues despite an extremely challenging environment.

The good news is that Crown Media’s crown jewels Hallmark Channel and our newly launched Hallmark Movie Channel have never been more successful. The bad news of course, is that we have never faced a more challenging economy, in which to increase our EBITDA and related cash flow.

Despite these challenges, Crown Media increased its revenues by an industry leading 20% in 2008, as compared to 2007, much of this fueled by our more favorable licensing terms with our distributors. We were also successful in increasing our advertising revenues to $223 million, an 8% increase over the previous full year, falling short of the tremendous growth we have had in the past, but certainly outpacing our competitors in a very difficult environment.

Finally, our bottom line EBITDA for the year was an impressive $66 million, well ahead of our own previous guidance to you throughout 2008 as to where we thought we would end the year and indeed well ahead of our results for 2007.

Our ratings for 2008 continued to set new records with Hallmark Channel once again delivering its highest month, quarter and year in the history of the network among households, key women and total viewers in prime time. Our efforts to increase our delivery among key women groups most important to our advertisers also paid off in total day, as we marked our highest month, quarter and year ever in the delivery of women 18 to 49 and 25 to 54.

Hallmark Channel successfully maintained its position in 2008, as a top 10 cable channel, finishing eighth in prime time out of all Nielsen rated, ad-supported cable networks and finishing 11 in total of day, household rating just outside the top 10. I should also note that we had more original movie premiers than any other cable network, which enabled us to increase our ratings and the delivery of key demos with this distinctive, brand defining, quality programming.

The year ended on a high note with the strength of our holiday originals, which is always a highlight in our year long lineup and a critical component of our overall programming strategy as we reach out to an often new audience, which may not have previously sampled our distinctive family friendly programming.

During this holiday season, we premiered six new holiday original movies on consecutive Saturday nights, our most ever in and more than any of our competitors. The strong performances for these programs made Hallmark Channel, the number one destination for holiday weekend Prime Time with an average 2.2 household rating. In fact, we were very successful in building our audience throughout the holiday period, finishing the year with an extremely strong rating in December, ranking fifth in Prime Time and 10 in Total Day.

I should also point out that this is our third straight year. The number one cable channel for holiday movies, despite increasing efforts to develop this genre by our more deep pocketed competitors including Lifetime and ABC Family, who have recognized the value and unique appeal of the well produced TV movie.

Indeed, at a time when viewers across our nation from New York to L.A. and especially in the Heartland, are looking for positive and uplifting endings. Hallmark Channel has once again succeeded in delivering stories that Americans seek to watch in the comfort of their homes surrounded by their family.

In that regard, this past year our holiday originals reached over 22 million additional viewers in December, many of whom have stayed with us into 2009. Our results for January and February of this year reflect this. As Hallmark Channel ranked seventh in prime time for the quarter to-date among all ad-supported cable networks with an especially strong showing from our original movies.

For the year-to-date in 2009, our original movies have averaged a 2.7 household rating with significant increases in our adult and women 25 to 54 demos. Key groups that we have been targeting with storylines that appeal to younger audiences and of course to our advertisers.

As we look ahead into 2009, we will continue to introduce new and entertaining programming in all areas. Our original premier movies will serve as the highlights of our schedule with wholesome and positive stories, with widely appealing talent including Cicely Tyson, Treat Williams, Cybil Shepherd, Eriq La Salle, Angie Dickinson, Lesley Ann Warren, Patrick Duffy, and many others.

The addition of 80 family friendly movies from 20 Television including a host of academy award winning films with timeless appeal across all generations will help our ratings and broaden our audience. This includes such popular films as Big, Cocoon, Home Alone, Mrs. Doubtfire, My Cousin Vinny, Cheaper By The Dozen, Dr. Doolittle and Working Girl.

We have also recently announced the addition to our western and mystery lineups with the acquisition of the Comanche Moon miniseries in collection of Stone Cold Mystery movies starring perennial favorite Tom Selleck and in addition to all of these original and feature films, we are adding to our collection of broadcast networks most popular classic series with such baby boomer favorites as Golden Girls, Cheers, and I Love Lucy.

We are also thrilled to announce that we have acquired 18 of the very best theatrical, family-friendly musicals of all time to be featured on Hallmark Movie Channel including Bye Bye Birdie, Funny Girl, Oliver, and Pal Joey. We also continue to expand our offerings on our website, which is an important element of our strategy to attract a younger component of our key demographics.

Throughout 2008, we increased traffic to our website with the introduction of original streaming programming with our behind-the-scenes and Adoption series. In January, we announced the addition of more entertainment with over 1,000 online and downloadable games through our partnerships with Big Fish Games and VideoJax.

We’ll be featuring select genres of games throughout the year to support featured programming on the network, including mystery and western games to coincide with our on-air promotions. We’ll also be working with our partners to customize games to fit the themes and plots of our upcoming original movies.

As we consider the prospects for our business, it’s important to reflect upon the impact of the economic issues that we are all facing. Our programming has been particularly successful in this tough economic environment because it really shouts our brand. While our brand is all about, what you would expect from Hallmark Channel heart, hearth, home. I think in this environment it is particularly about offering predictability in an unpredictable world.

After a long day not at work, but at looking for work people are truly looking for predictability in their lives. One day you have a job, the next day your job is gone. One day you have some money, the next day your money is gone. In this environment the ability to provide viewers with programming which is uplifting, filled with hope and the predictability that the good guy wins, will be particularly successful.

Viewers know that they can come to us for original films perfect for this escape, as well as the many family-friendly theatrical films, classic series and Hallmark Hall of Fame programming that we have to offer on our Hallmark Channel new addition, Hallmark movie channel.

Briefly about distribution, at the end of 2008 Hallmark Channel had 85.5 million subscribers, representing an increase of 1.7 million homes over, where we were at the beginning of the year. Our attention over the past year and a half has properly been focused on the renewal of our distribution agreements and with that now achieved we can expect our growth to be gradual, as we are now a fully distributed network.

We continue to expand Hallmark Channel subscribers on all three platforms cable, satellite, and telephone distributors and currently stand at 86 million subscribers. Our expansion comes through organic growth, as well as the launches on new systems, our distribution team is continually pushing and accordingly, we expect to end this year, 2009, with over 88 million subscribers.

The majority of our efforts in distribution are now focused on the expansion of Hallmark Movie Channel as a new and exciting emerging network, in strong demand by both viewers and distributors like.

Indeed, Hallmark Movie Channel scores high marks with distributors expressing interest in carrying new networks as well as with adults who rank it number one as the emerging network they would like to see.

According to an MRI survey of the American consumer, Hallmark Movie Channel delivers young, affluent audiences, who are technology oriented, extremely interested in the cable triple play and of interest to local advertisers. Needless to say, this is exactly the kind of data we can successfully use with local cable distributors.

In each of our distribution agreement renewals, we position Hallmark Movie Channel as an attractive addition to the channel lineup and our efforts are paying off. Despite the tremendous competition in the marketplace from emerging channels as well as established networks to occupy limited bandwidth, Hallmark Movie Channel has had significant launches on Comcast, Time Warner, Cox, Charter, Cablevision and Verizon systems with the additional benefit from organic growth on existing systems.

We started 2008 with less than 4 million subs on Hallmark Movie Channel and ended the year with 14.5 million subs. We currently have 15 million subscribers and expect to be in over 25 million homes by the end of 2009. Our launches in new markets cover cities throughout the country, especially impressive penetration in New York and Chicago. This is explosive growth for a nascent network, achievable only with the premier brand of Hallmark and a programming lineup that has properly positioned it to provide the greatest family movies of all time, every day, every night, 24/7, throughout the year.

Advertising sales, it is precisely our brand name combined with our success in programming and distribution that supports our advertising revenues. Although the fourth quarter was a disappointment for us with ad revenue down 4%, compared to the exponential growth, we enjoyed in that quarter in 2007. We still certainly outpaced the industry in an extremely difficult environment and increased our advertising revenues by 8% for the year.

For the fourth quarter, we were successful in maintaining our CPM pricing, which was up 79% over our upfront pricing. We experienced a decrease in volume, but felt it was important not to discount our pricing for the quarter for the sake of our volume. Indeed, we were able to report growth in two particular areas for Hallmark Channel.

Our advertising clients in the entertainment industry sector nearly doubled their business for the quarter as compared to last year, reflecting the industry’s recognition of the value of our family audience, as well as our success in attracting a younger audience with our new original programming and we also doubled our business in the travel area sector with advertisers reaching out to our baby boomer audience with their well documented disposable income.

Hallmark movie channel also contributed to our revenues as we were successful in attracting 13 new clients during the fourth quarter alone, including Fortune 500 companies such as Allstate, Bristol-Myers, Hershey, and Schering-Plough. Although, I’m reluctant to make any predictions about the advertising business for 2009, I can say that I’m relatively pleased with our preliminary results for the first quarter. Our pricing for the scatter market is holding and we are pacing flat with the volume of the first quarter of last year, where we reported significant gains.

We are now just beginning our meetings for the upfront season. We’ve had a great reception so far and while it’s still very early in the process to express any expectations, our clients are reasonably responding to our messaging and to the growing audience we reliably and consistently deliver.

One accomplishment that has been a significant factor in the strength of our advertising appeal is the consistency of our ranking. Now, for the eight straight year, as being a network among the top three broadcast and cable entertainment networks in ad effectiveness.

In addition, Hallmark Channel again ranked number one out of all networks, both broadcast and cable, in length of tune; clearly at a time when advertisers are carefully assessing the return on their investment. Hallmark Channel represents a particularly attractive and effective environment and that is why our clients are quite favorable in both absolute terms and relative to our competitors.

Now, I would like to turn things over to our CFO, Brian Stewart.

Brian Stewart

Thank you, Henry. As Henry indicated, in the fourth quarter of 2008 our channels experienced strong ratings, distribution, revenue, and operating income growth. In a very challenging economic environment, Crown Media delivered strong 2008 financial results highlighted by continued significant growth in our operating income and EBITDA and cash flow in excess of our full year targets.

Since you all have the detailed financials that are included in the press release, I’ll review some of the operating and financial highlights for the quarter. From a revenue standpoint, despite the significant economic downturn in 2008, total Crown Media revenue grew 20% over 2007 to $281.8 million. Full year 2008 revenue grew 8%, advertising revenue grew 8% to $223.4 million, while subscription revenue grew 106% to $57.2 million resulting from rate and distribution increases from our renewed affiliation agreements.

In the fourth quarter of 2008, when the general weakness in the economy was the most prevalent, Crown Media revenue grew 8% over 2007 to $75.2 million. Total advertising revenue in the fourth quarter was $60.4 million, a decrease of 4% from $63 million in the fourth quarter of 2007.

As Henry mentioned, our fourth quarter advertising revenue was impacted by the recent economic slowdown. In addition to lower CPMs for our general rate inventory, the market weakness resulted in an increase in the amount of inventory that we allocated to lower rate, direct response advertising.

Total fourth quarter subscriber revenue of $14.5 million, was up 126% from $6.4 million in the fourth quarter of 2007, again reflecting increases in our paid subscribers and rate increases within our distribution agreements.

Total 2008 cost of services decreased to $153.8 million from $202.5 million in 2007. The reduction in overall cost relates primarily to lower programming costs, which decreased 14% in 2008 versus 2007. Our lower programming costs resulted from the expiration of our programming agreement with the NICC and the renegotiation of a number of our significant third party programming agreements, whereby we reduced our programming costs for assets that we were not fully utilizing.

Fourth quarter costs of services decreased 29%, again primarily related to a reduction in programming expenses. SG&A expenses decreased 24% in 2008 versus 2007, resulting primarily from lower expenses related to our share-based compensation and a decrease in settlement expenses compared to 2007, when we had $8.2 million in costs related to a contractual settlement with the NICC.

Fourth quarter of 2008, SG&A expenses were 60% lower than the fourth quarter of 2007 and included lower stock-based compensation and bonus expenses than the prior year. Full year 2008 adjusted EBITDA totaled $66.2 million, compared to an adjusted EBITDA loss of $11.3 million in 2007. Again, this significant increase in our bottom line operating performance reflects the benefits of our renewed distribution agreements and cost management measures put in place as early as the second quarter of 2008.

Our continued growth in advertising revenues also contributed to our EBITDA growth, although not to the extent that we had projected at the beginning of the year. Fourth quarter 2008 EBITDA totaled $23.3 million, compared to an EBITDA loss of $774,000 in the fourth quarter of 2007. Cash provided by operating activities for 2008 totaled $48.1 million, compared to $14.6 million in 2007. Again, this increase resulted from strong revenue growth and our continued ability to manage growth in our operating expenses.

From a liquidity standpoint, our credit facility had a capacity of $50 million at 12/31/08, and our total drawn balance on the facility at year end was $28.6 million. We have extended the term of the credit facility through March of 2010 and we will continue to reduce the outstanding balance on the credit facility throughout 2009 from excess cash from operations.

We’ve also extended the waivers under our Hallmark Cards notes through March of 2010 and as a result of those extensions, interest on the majority of our Hallmark debt, will continue to be deferred until March of 2010. Cash interest due to Hallmark under the notes in 2009 will total approximately $20 million to $23 million.

So, as we look forward from a guidance standpoint, although we expect the current economic conditions to negatively impact the advertising industry throughout 2009, we expect our advertising revenue to outpace industry growth rates throughout the year. We expect significant revenue increases from the Hallmark Movie Channel, as the universe to that platform continues to grow rapidly throughout 2009. In this challenging economic environment, we continue to focus on cost controls and efficiencies and expect nominal expense growth in 2009.

Although we are largely a fixed cost business, we are focused on opportunities to manage and reduce costs in the event that the economic downturn is more severe and longer lasting than expected. Through this revenue growth and a focus on cost management efforts, we expect to continue to grow EBITDA in 2009.

So in conclusion, in one of the most challenging economic environments in recent history, Crown Media exceeded its EBITDA and cash flow targets for 2008. Through continued growth of the Hallmark Channel ratings and advertising rates, growth of the Hallmark Movie Channel platform and continued focus on efficiencies and cost management, we are confident in our ability to continue to grow Crown Media’s bottom line performance.

With that, I’ll turn it back to you Henry.

Henry Schleiff

Thank you, Brian. In summary, let’s summarize what I consider to be the three areas of our business: programming, distribution and advertising. Clearly, our programming is the key to the appeal of our channel. We continue to expand our offerings through new production and acquisitions, keeping our schedule fresh and attractive for our audience.

The cornerstone of our holiday strategy culminates in the fourth quarter, where once again we earned the distinction as the number one holiday destination on weekends among cable networks for viewers, indeed for the third year in a row. Our results in 2008 extended our position as a top 10 cable network in prime time, now for nearly three full years.

The growth Hallmark Channel has experienced in terms of ratings demonstrates that viewers recognize that Hallmark Channel is one of the very few destinations, where they are guaranteed a predictable, family-friendly viewing experience and as I mentioned earlier, it is this predictability, I believe that makes Hallmark Channel even more attractive in these unpredictable times.

Moreover, we have successfully renewed all of our major distribution agreements for Hallmark Channel, providing us with a stable and attractive stream of increased subscriber fee revenue, most of which is dropping to the bottom line. With the successful renewals of these agreements behind us, we can now focus on the growth of Hallmark Movie Channel, as well as the continued expansion of Hallmark Channel.

We have already experienced tremendous progress in this area with launches of Hallmark Movie Channel standard def and high definition, nearly tripling our subscriber base in 2008. We have developed strong momentum as an emerging cable network with significant interest in our channel from both distributors and viewers.

In this challenging economic environment, Hallmark Movie Channel is an ideal and extremely cost effective addition to any network lineup offering family-friendly programming at a time when this is exactly, what Americans are demanding. This is the right channel at the right time and we are successfully selling this concept to distributors, as can be seen by the fact that we are on target to nearly double our subscribers in 2009 to over 25 million subscribers.

Finally, while our advertising revenues have been the part of the business that has been the most affected by the pressures of this economic downturn, we were still successful in increasing our revenues for the year and compared favorably to our competitors. In these difficult times, our extremely positive brand image combined with our distinct ability to attract a baby boomer generation audience with its enormous purchasing power and continued growth, adds up to a unique appeal for advertisers.

Our emphasis on industry sectors such as entertainment and consumer products, which consumers appear willing to support and our lack of vulnerability to industries such as financial and automotive, which appear to be the most negatively impacted, will contribute to our resiliency in this economic downturn. Combined this with the appeal of our programming in the current environment and I believe that we have the right stuff to withstand and even maintain our profitability in the face of a down economy.

Needless to say, I’m extremely proud of our accomplishments in 2008 across all areas of our business and which added up to a significant growth in both revenues and EBITDA. Indeed, we have built a strong and viable organization, which I’m confident, will successfully navigate the difficult and uncertain road ahead.

At this point, I’ll turn the proceedings over to the operator, to assist us for the question-and-answer part of the call.

Question-and-Answer Session


(Operator Instructions) Your first question comes from Salvatore Muoio - SM Investors.

Salvatore Muoio - SM Investors

I thought, I would just ask or start by asking about the movie channel. Some specific questions, how do you expect, I guest progression of sub ads to go this year? I know you’re looking for perhaps a DirecTV or change in the EchoStar distribution. What are the issues around that?

Secondly, do you feel you need to have incremental programming I guess purchased? You mentioned a few movies that you added this year. I guess are those specifically for the movie channel? Are they for both channels and how much incremental expense would you have added just for the movie channel programming? Are you budgeting anything for sort of launch support in terms of any of the deals you’re looking to do this year?

Henry Schleiff

Let me just try to take some of those questions in the order you’re talking about. I think in terms of distribution, as I say we’re still looking at very materially significant growth this year in Hallmark Movie Channel to about 25 million subs. I think if you compare similar networks, Lifetime Movie Networks successful growth pattern over the last couple of years. We’re actually pacing I think equal or slightly ahead of that.

With respect to the specifics of DirecTV and EchoStar, as you know we’re already on EchoStar, we’re trying to get into a more popular and heavily penetrated tier. We are in, what can I say discussions, negotiations with them. I’d say the issue there, as this the issue with DirecTV, which we are also in discussion with. It’s really not whether it’s a great idea or a bad idea or dollars or whatever it’s about limited bandwidth.

In the case of DirecTV, on the current satellite they have up there, they are really down to very, very few remaining slots, some of which, as I understand it, they’re using for revenue purposes through pay-per-view and the like. I’m very, very optimistic about either getting on DirecTV sometime this year on the current Bird and/or getting on the Bird that they’ve announced that they will be launching.

Originally, it was going to be the fourth quarter of this year. It was then moved to the first quarter next year. I understand there’s some talk about it moving back again to where it originally was, which would eliminate as I understand it the fundamental issue of capacity or bandwidth. So I’m optimistic about both of those being resolved in a way that will have greater presence, if you will of Hallmark Movie Channel on them.

In terms of costs or incremental programming, we’re not buying anything for alone or exclusively for Hallmark Movie Channel. Anything that we have bought is playable, as I say, on Hallmark Channel also. So there’s no additional expense and we’re not at all paying for launch support or anything like that.

Salvatore Muoio - SM Investors

So basically, the incremental revenue this year will be pretty much all incremental to the bottom line?

Henry Schleiff


Salvatore Muoio - SM Investors

If you’re looking at the numbers, are you really do you need DirecTV in the mix to get to 25 million subs this year?

Henry Schleiff

Yes. I think, depending upon whether we pickup substantial growth elsewhere EchoStar, what have you. I would certainly like the cushion, if you will of DirecTV being in there to plus 25.

Salvatore Muoio - SM Investors

Okay. It looks like just penciling out some numbers that you’ve got a pretty good shot at more than doubling your revenues this year from Movie Channel. Perhaps a long shot of even of being up more than that actually?

Henry Schleiff

Well, we don’t want to get into the guidance and projections, but I will say that we’re feeling very good about the progress of Hallmark Movie Channel. What luck is the residue of skill, I think we introduced it obviously not foreseeing this economy, but I think the combination quite frankly, Sal, of more people being home and looking for some form of cost effective entertainment and diversion.

Frankly, going the other way, not so anxious to run out and pay $10, $12 a movie ticket plus parking, plus concessions, plus food, the idea of being home and knowing that you’re going to get the kind of quality family movies that Hallmark Movie Channel presents. I think a very attractive proposition in this environment or any environment, but it seems to resonate now.

Those are arguments we’ve been making, I think when you actually see the demand in the marketplace. As I say, reflected in some of the third party independent surveys and research that the cable operator is pursuing. The issue, as you well know from most of these distributors, both satellite and cable, has been the loss of basic subs over the last year and I think we represent a very, very bonding if you will of value for that cable operator. I think it’s in their interest to have something like Hallmark Movie Channel in their lineup and I think it’s more important now than ever for them.

Salvatore Muoio - SM Investors

Revenue last year from the Movie Channel was around $8 million?

Henry Schleiff

For the Movie Channel, I think it was just over $7 million in 2008.

Salvatore Muoio - SM Investors

Just a little more detail on some of the changes to the Crown facilities and I thought that the J.P. Morgan Chase facility by the end of last year would have been somewhat reduced from the number you gave there and some of the detail and some of the specific HC Crown senior notes and promissory notes and etc., I guess the big piece. What used to be called the HC Crown ten in a quarter senior secured notes?

Brian Stewart

Yes. Just in summary around those notes, Sal and you will see this in the K that gets released later today. We’ve extended those notes, so the maturity is all the waiver and standby agreements around those facilities is extended to March of 2010. The interest on all of the notes, three smaller notes outside of the ten in a quarter notes, turned cash pay in November of 2008 and those notes will continue to be cash pay throughout 2009.

So as I mentioned, we will pay in the rough order of $21 million of cash interest on those notes in 2009. The rest of the interest on the large note, the $400 million ten in a quarter note is deferred and is payment in kind through March of 2010. So that’s the Hallmark Notes.

The J.P. Morgan facility has been extended. Remember, the capacity end of that facility gets reduced at the end of this month to $45 million and that facility will get extended also to March of 2010 and the effective rate on that to Crown is unchanged and we’ll continue to make payments on that facility.

The outstanding balance on that facility fluctuates obviously, that’s what we use as the working capital tool. So, depending on the timing of payments due around large programming agreements and obviously depending on the timing of cash receipts, the balance on that facility will fluctuate from period-to-period, but on balance, we will pay that down not fully, but we will continue to make payments on that. So, expect that balance to go down throughout the course of 2009.

Salvatore Muoio - SM Investors

What interest you’re paying on the three smaller notes? I guess last time I had noted this was LIBOR plus five.

Brian Stewart

Yes. It still is.

Salvatore Muoio - SM Investors

The big note is still ten in a quarter?

Brian Stewart



There are no further questions at this time.

Henry Schleiff

Great, thank you very much for your participation. We look forward to reporting back to you at the end of the first quarter and we’ll speak to you then. Thank you so much.


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

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