Syniverse Holdings Inc. Q3 2009 Earnings Call Transcript

Syniverse Holdings Inc. (SVR)

Q3 2009 Earnings Call Transcript

November 2, 2009 4:30 pm ET

Executives

Jim Huseby – VP, IR

Tony Holcombe – President & CEO

David Hitchcock – EVP & CFO

Analysts

John Bright – Avondale Partners

Amir Rozwadowski – Barclays Capital

Will Power – Robert Baird

Sterling Auty – JP Morgan

Daniel Meron – RBC Capital

Suhail Chandy – Wedbush Securities

Shaul Eyal – Oppenheimer

Ric Prentiss – Raymond James

Rich Todaro – Kennedy Capital Management

Presentation

Operator

Welcome to the Syniverse third quarter 2009 earnings conference call. Please be aware that this call is being recorded. At this time, I'll turn the call over to Jim Huseby, Vice President of Investor Relations. Please go ahead, Mr. Huseby.

Jim Huseby

Thank you, operator, and good afternoon everyone. On behalf of Syniverse, I want to thank you for joining us today. On the call with us today are Syniverse's President and Chief Executive Officer, Tony Holcombe and Chief Financial Officer, David Hitchcock.

During the call today, Tony will provide an overview of the quarter, discuss some of the events that will impact our fourth quarter, give you more information about our recently completed acquisition. Dave will then provide additional detail on the company's financial performance during the third quarter, including a regional review and provide an analysis of some relevant trends in our business. After discussing guidance numbers, we'll then turn the call back to Tony for some concluding remarks before we open it up to your questions.

We issued a press release after the market closed and prepared some slides that David will be speaking to on this call. Both of these items are available in the Investor Relations section of our Web site at www.syniverse.com. We encourage you to download the slides for use on this call if you haven't already done so. Today's call is also being webcast over the Internet. It too is available on our Web site and will be archived and available for replay shortly after we conclude.

In our press release and our today's call we have included a discussion of certain non-GAAP measures including adjusted EBITDA, adjusted net income, cash net income, and operating free cash flow. You will find a reconciliation of each of these items as well as other information about or use of these measures in our earnings press release and on the Web site.

Before I turn things over to Tony, I would like to caution all participants that today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including statements about business outlook, strategy, net revenue, adjusted EBITDA, net income, cash net income and operating free cash flow outlooks for 2009; expected synergies related to BSG Wireless; statements about how the slowing global economy affects our business; the impact of our recent messaging acquisition and statements about historical results in the wireless communications industry that may suggest trends for our business.

These trends are based on assumptions, estimates, and other inherently subjective information available to us at the time of this presentation and are not guarantees of future performance.

Actual results could materially differ from our current expectations as a result of many factors, including unpredictable quarterly fluctuations in our business, changes in economic conditions, the effects of competition on our customers' use of our services, changes in our customers' network configurations, any adverse changes in our agreements with our vendors or partners, the impact of international expansion efforts on our business, our ability to integrate the operations of BSG Wireless, and our recently acquired messaging business and changes in our tax status.

These and other risks and uncertainties associated with our business are described in our filings with the Securities and Exchange Commission. We assume no obligation to update any forward-looking information.

With that said, I'll turn the call over to our President and CEO, Tony Holcombe.

Tony Holcombe

Thank you, Jim. And welcome everyone who has joined today. We have a lot to cover this afternoon, including some exciting news about the acquisition we completed just about a week ago. First, I want to give you an overview of third quarter results.

We finished the quarter a bit soft on the top line with $115.1 million in revenue, but delivered a solid bottom-line. The proactive cost controls we put in place earlier this year enabled us to achieve expected earnings for the quarter with $56.1 million in adjusted EBITDA and $28.2 million in cash net income.

The Q3 revenue softness can be attributed primarily to two factors; roaming trends that continue to be weaker than expected and lower revenues for ITHL technology products business in Asia-Pacific. I'd like to take a few minutes to discuss each one of these.

First, the global economic downturn continues to impact roaming in all parts of the world and its effect on our business has been greater than we had originally anticipated. The seasonality bump we normally experienced in third quarter was lighter than expected as fewer travelers took to the roads and sky. Although we saw a pickup in July, roaming volumes for August and September were weaker than expected.

On the positive side, European Union regulations that went into full effect helped offset some of the weaker volumes we experienced as the July 1^st tariff reduction on data roaming had a positive impact on our clearinghouse SMS volumes.

David will speak to roaming trends in more detail in a few minutes.

The second factor is related to ongoing underperformance of the ITHL technology product portfolio in our Asia-Pacific region. The economy has hit this part of our business, especially hard as operators in the Asia-Pacific region continue to be reluctant to commit to most one-off projects that require capital expenditures.

In addition, for projects that have moved forward, there is more intense competition. The major equipment manufacturers such as Ericsson, Alcatel-Lucent, Nokia, Siemens and ZTE have become more aggressive in this region. There also is more activity from local system integrators as well.

You can say that we are seeing more active and intense competition upstream via major equipment manufacturers and downstream via local systems integrations, all of which leads to pricing pressures in a sector already constrained due to tight CapEx and OpEx budgets.

Despite roaming softness and ITHL difficulties, as stated previously, we delivered this quarter when it came to meeting our bottom-line. The proactive cost controls we have implemented throughout the company made up for the revenue shortfall.

Looking at the current fourth quarter, we expect to see roaming in ITHL products continue to be weak. Although the economy appears to be stabilizing, roaming volumes remain uneven. We also don't expect much improvement in the quarter of either win or implementation rates for ITHL products.

Moreover, the delay in the implementation of mobile number portability in India, a project we won earlier this year, will now impact Asia-Pacific's fourth quarter revenue more than we initially expected. You will recall that the original date set by the Indian regulatory authorities would have had the implementation getting underway during third quarter.

However, since our last earnings call, timeline has been officially pushed out by the Indian regulatory authority to December 31. And although nothing has been announced, we suspect this date will move again into next year. A consequence of this delay is that we will not see revenue this year from individual operator side mobile number portability solutions, the ITHL products that operators need to connect to the number portability database.

Indian operators have been slow to implement their solutions due to the overall delay. So closing deals for these solutions has become more difficult than expected and realizing revenues and then before the end of the year is unlikely.

David will go in a more detail about the fourth quarter and annual guidance in a few minutes.

First, though I want to turn to our acquisition of VeriSign's Mobile Messaging Division and how this will begin to transform Syniverse as we go into 2010.

We've taken important step to both leverage our core competencies and focus our resources to take advantage of new opportunities in the mobile messaging space. Our strategy to invest and grow this part of our business makes us poised to benefit from the explosive growth in messaging we're all seeing in all parts of the world.

Future trends are very strong. Worldwide SMS traffic, for example, is expected to more than double from 2.6 trillion in 2007 to 5.5 trillion during 2013. While global MMS traffic is expected to grow from 51.4 billion in 2007 to 171.7 billion during 2013, an increase of over 230%.

So this acquisition clearly is a significant strategic move for Syniverse as we pursue and invest in messaging interoperability in order to take advantage of these impressive growth trends.

Our $175 million investment in VeriSign's messaging business is not only immediately accretive to cash net income, but will also have tremendous payback and propel our business forward. Here's a reminder of what we have gained as a result of the deal.

North American Tier 1 operator access and scale that allows us to pursue messaging opportunities of all sizes and types in all parts of the world. Four new products, the combination of our existing Syniverse NEXT messaging portfolio with its newly acquired products for operators and enterprises gives us a formidable set of solutions to offer through Syniverse's global sales force.

Increased R&D capabilities to further grow our product portfolio and expanded global footprint. With the acquisition added to our organic growth in 2009, we now serve over 800 customers in more than 160 countries. A very talented team of mobile messaging experts, we have brought on approximately 300 new employees and contractors to our team worldwide.

And last but not least, a strong North American presence in the messaging space. We will look to offer existing Syniverse solutions to the new customers that have come to us as a result of the acquisition.

I would like to spend the next few minutes talking about the status of integration so far as well as next step. Because we remain competitive with VeriSign even just a week ago, our ability to begin planning was limited. However, since the close integration teams have been going full speed ahead. Here is what we already have in place

We've begun integrating new Syniverse employees and contractors and met with most of them last week via initial team meetings and all hands employee meetings. We have vertically integrated the VeriSign sales teams into our regions and we're reaching out to customers on both sides of the integration with new products and solutions.

We have established executive leadership for our newly formed messaging line of business. Charles Landry, who came to us with the acquisition, was Service Executive Vice President of Messaging and report to Jeff Gordon, our CTO. And we have retained a vast majority of the non-executive VeriSign mobile messaging division employees.

We are working at a swift pace and soon expect to identify cost synergies including an evaluation of duplicate positions that can be eliminated and fully integrate day-to-day operations. We also intend to beef up investment in R&D activities, especially those related to the acquisitions products.

Additionally, global sales and marketing plans will be finalized. Those will be kicked off at our Annual Global Sales Conference in January. We anticipate most plans will be in place within 90 days and we'll provide details when we talk to you in February.

Now, let's go to David, who will provide you with detailed financials for both the third quarter and the acquisition.

David Hitchcock

Thanks, Tony. As usual, I'll be speaking from the slides that are posted on our Web site and as Jim mentioned at the beginning of the call.

I'll start with slide #2. Syniverse recorded third quarter net revenues of $115.1 million, down 15.2% from last year's third quarter, due primarily to the customer-specific impacts we talked about previously and continued weakness in ITHL revenues.

Verizon's integration of Alltel continues and we estimate that the impact on Syniverse is roughly 90% complete at of the end of September, up from 80% as of the end of June. Therefore, Q3 revenues will reflect roughly 85% or almost the full impact of the Verizon/Alltel transaction.

For the third consecutive quarter, ITHL revenues were under 5 million, down 28% year-over-year, and for the nine months ITHL revenue was down over 5 million. As Tony indicated in his remarks, we attribute the ITHL technology product revenue shortfall to the impact of the economy on our mobile operator customers and increased competition.

We again manage cost very aggressively, posting a strong gross margin 65.4% for the quarter, while SG&A as a percent of revenues were lower sequentially as you would expect in our strongest seasonal quarter, but we're also down year-over-year, consistent with our focused cost management across the organization.

Depreciation and amortization increased by a little over 5% versus the prior year quarter, reflecting the heavy capital investment in the first half of 2009, while interest costs due to the continued favorable rate environment in income taxes at 39.2% effective rate were both lower year-on-year. The higher effective tax rate versus the prior year quarter is driven by shift in earnings towards the U.S. On a year-to-date basis, our effective tax rate is 35.6%. Diluted GAAP EPS was $0.26 per share for the quarter.

Slide #3 reconciles our non-GAAP measures. Strong cost controls and lower variable compensation accruals helped to offset the lower year-over-year revenues and drove adjusted EBITDA to $56.1 million at a seasonally peak margin of 48.7%.

I won't spend much more time on this slide but want to note two line items. First non-stock compensation expense was $1 million higher than the prior year quarter due to the implementation of the new long-term incentive plan approved by shareholders earlier this year.

Secondly, nothing [ph] was included in new line item for the messaging acquisition related expenses. These expenses mainly legal and financial advisor expenses are directly related to the acquisition of the VeriSign messaging business. Cash net income was a solid $0.41 for the quarter.

Slide #4 breaks down our revenues by service line and by region. Technology interoperability was $66.8 million in the quarter, down 24.5% from last year. I think it is a business in two distinct pieces, the core transaction-based business and ITHL in Asia. The core transaction-based business remains solid. Results were lower year-over-year, but that's not surprising given the customer-specific impacts in the tough economy. And beginning in the fourth quarter we will begin to see those customer-specific headwinds recede with the anniversary of the Verizon contract renewal on October 1^st.

Looking ahead to the anniversaries of other customer-specific impacts, the Sprint-Alltel mobile data roaming insourcing annualizes in early Q1 2010 and as discussed earlier, the majority of the Verizon/Alltel transition impact will lap at the beginning of Q3 2010.

In the third quarter, we also saw the macroeconomic conditions temper our typical seasonal trend, although the impact was different in different parts of the world. Overall however, we saw flattish July and August trend rather than our typical August peak.

Our combined CDMA and GSM clearinghouse revenues again declined year-over-year, primarily due to the three customer-specific headwinds combined with slower volume growth. Over the past four quarters, year-over-year growth in clearinghouse volumes has been lower than last year's double-digit rate, even after normalizing for the insourcing and the Verizon/Alltel integration. Moreover, growth trends continue to be uneven within the quarter.

In this year's third quarter volume growth slowed to 1% overall, however, after normalizing for the insourcing and the Verizon/Alltel integration, volume growth was 5%, down from 6% and 7% normalized growth rates in the first and second quarters respectively. The slow growth rates clearly reflect the effects of the slower global economic conditions.

Roaming volumes have been uneven throughout this year, making forecasts more challenging than usual and will likely remain so until travel trends stabilize. Several airlines, hotels and other travel groups have recently commented that their businesses seem to have stabilized, but they remain uncertain about near-term trends.

As I've done in each of the last couple quarters, I'd like to provide some volume analysis by type and geography. As I just indicated, total clearinghouse volumes adjusted for the Sprint/Alltel insourcing and the Verizon/Alltel integration, were up 5% versus last year's third quarter. Volume growth continues to be driven by messaging and mobile data sessions, both of which posted double-digit increases.

Looking at regional volumes, once again, volume growth was strongest in North America, despite tempered seasonality. Normalizing for the insourcing and integration, volumes increased 6%, voice transactions were down, but messaging and mobile data growth remained healthy. Volumes were also higher in EMEA by 5%, but North America voice was down, but lower roaming rate appeared to have had a positive impact on SMS volumes.

After three consecutive quarters with year-over-year declines, SMS volumes were up 10% versus last year's quarter. CALA was nearly flat, down less than a percent, same trends voice down, data sessions and SMS transactions up.

Asia-Pacific was the weakest region. Overall, volumes were down 6% year-over-year, led by significant decline in voice volumes, while data and SMS were both higher though not as much as the other regions.

Volumes during the quarter continue to be affected by macro factors. This is seen in both the year-over-year comparisons and the month-to-month inter-quarter volumes. While the macro conditions have impacted our results this year, we remain confident that growth in roaming volumes will strengthen as the economy improves.

ITHL continued to underperform our expectations at $4.5 million in the third quarter, due to an accelerated slowdown in the rate of new wins.

Given the impact of the economy on customer CapEx spend, new project wins on a monthly basis in the second half of 2009 were down about 70% from the already depressed first half run rate. ITHL revenues are down over 25% on a year-to-date basis while we had been expecting some modest growth.

Based on this new information, we have significantly reduced our forecast for ITHL for the remainder of the year and this reduction combined with the delayed launch in India is the primary driver of our reduced outlook for 2009.

While ITHL's results are down significantly from last year, it is important to put ITHL's contribution in perspective, especially given the recent closing of the messaging acquisition.

On a pro forma basis, ITHL will be 3% to 4% of total revenues, with a roughly 20% EBITDA margin structure and a relatively high variable cost base, especially when compared to our transaction-based business. We will size ITHL fixed cost base appropriately with our ongoing revenue stream.

Continuing with the rest of the business, network services was nearly 3% higher versus the prior year quarter, due largely to strengthen our traditional SS7 transport and our visibility product.

Number portability was again higher this quarter, up over 5% due to an increased in porting volumes in the U.S. And finally, call processing was little changed down slightly over a percent.

An analysis of the geographic breakout at the bottom of the page is relatively straightforward. North America remains our largest region, contributing 71% of the quarter's revenue. Year-over-year comparisons are driven mostly by the three customer-specific headwinds and the slow economy providing some additional pressure.

CALA contributed 10% of revenues and was up 3.6% with organic growth in network services and SMS traffic offsetting the weak clearing. EMEA was 14% of revenues and was down roughly 17% from the prior year quarter, driven by the stronger dollar this year combined with the impact of lower roaming tariffs on our financial clearinghouse revenues, Asia's remaining 8% of the business in the quarter. Our core transaction-based business underperformed as volumes in the quarter were weaker than expected and ITHL revenues also were weaker as I previously discussed.

Let's move onto slide #5 and talk about cash flow. During the third quarter, Syniverse generated $26.7 million of free cash flow, bringing our year-to-date total to $56 million as we head into our seasonally strongest cash flow generating quarter. As expected, capital expenditures slowed to $6.1 million from last year's heavy spend, bringing our total nine month capital spend to $27 million.

Capital spend in the quarter was focused on investments in network capacity and our new IPX infrastructure, upgrading our business continuity disaster recovery platforms and investments in future products and services such as our NEXT advanced messaging hub.

Cash interest and taxes are detailed towards the bottom of the page. Cash interest was almost 6 million below the prior quarter level, driven by the timing of LIBOR tranche maturities.

Key balance sheet items are summarized on slide #6. Our cash balance at September 30^th was $216.2 million, but we utilized $175 million of that on October 23^rd when we closed our acquisition. Thus our pro forma cash balance at September 30^th was $41.2 million.

Our debt balances are little changed aside from the effects of declining dollar on euro denominated debt and normal amortization. Our leverage ratio at September 30 was 2.5 or 1.6 net of our cash balance. Pro forma for the recently completed acquisition, our leverage ratio is a modest 2.1 times and 1.9 times including the 41 million pro forma cash balance.

As I've done each quarter since we made the BSG acquisition, I will briefly discuss the breakdown of our transition expenses on slide #7. Transition expenses are starting to wind down and we are realizing the synergies that we had expected. We've completed over 50 upgrades through September 30^th and combined with our activity in October, we now have over 90% of our GSM clearing volumes on the new, more efficient platform.

The upgrade project has been extensive and at times challenging, but it's also been very successful and has generated the return we expected. Through September 30^th we had achieved $11 million of annualized cost savings, and our efforts in the fourth quarter will have us roughly at the $12 million cumulative total we expect. Q4 will be our final quarter of reporting on this project.

During the quarter, we reported $1.5 million of transition expenses, including $700,000 of integration-specific expenses. As we realize our debt of processing platform labor synergies, the duplicative cost trend downward. In the third quarter, these costs accounted for the remaining $800,000 of the total.

Let's move onto slide #8 and talk about our expectations for the fourth quarter and the full year. Over the past 30 minutes, Tony and I have covered the key drivers of our third quarter revenue shortfalls, softer than expected ITHL revenues and tempered roaming volumes through our seasonally strongest quarter.

We expect both of these trends to continue into the fourth quarter with the largest impact driving our much weaker ITHL sales and the push out of the operator side MNP opportunities in India that we had expected to positively contribute in the fourth quarter.

We also need to update fourth quarter expectations for the impact of the messaging acquisition that we were able to close on October 23. We expect to see a solid contribution from the acquired business in Q4 on both the top-line with roughly two months of revenues that include strong seasonal impacts from Halloween and the year-end holidays. And the bottom-line with immediate accretion to cash net income consistent with our expectations when we announced the deal in August.

We expect the newly acquired business to generate $26 million to $27 million of revenue for Syniverse in the quarter. This incremental revenue should generate approximately $6 million of adjusted EBITDA, which excludes the $2.8 million in transaction and integration expenses associated with the deal such as legal and advisory fees and cash net income of $2.5 million to $3 million or roughly $0.04 per share.

In total, inclusive of the messaging acquisition, we now expect 2009 net revenues to be between $466 million and $472 million. We will continue to proactively manage our cost base with adjusted cost for the full year roughly 10% below 2008 levels. This lower cost base has enabled us to maintain strong adjusted EBITDA margins in the mid-40s and cash net income for the base business at/or just below our guidance levels from early February in the face of significantly lower revenues.

We expect adjusted EBITDA to be between $202 million and $209 million for the year. GAAP net income to be between $59.5 million and $64 million, while cash net income is expected to be $98.5 million and be between $98.5 million and $103 million for the year.

The business also continues to generate strong free cash flows. Including the messaging acquisition, free cash flow is expected to be between $80 million and $85 million for the year. Consistent with our last call, we expect the base business to generate roughly $90 million of free cash flow.

We'll have some incremental CapEx costs of $3 million to $4 million related to the acquired business, which together with the timing of certain cash inflows, subject to the terms of our transaction services agreements should reduce full-year free cash flow by $7 million to $9 million, to the point we receive much of December's cash collections for the acquired business normally positive cash flow in December and early January.

Let's move to slide #9 and summarize our key takeaways for the quarter. First, Syniverse continued to deliver strong earnings despite a challenging quarter. Our cost containment efforts helped offset some of the softness on the top-line and the customer-specific impacts will start to recede at the beginning of the fourth quarter.

Second, our transaction-based business continues to perform well. We saw less seasonality this third quarter than we usually do, but we believe this is mostly indicative of the slower macroeconomic environment. Our volumes continue to grow with messaging and mobile data volumes continuing their secular trends.

Despite strength elsewhere, however, our Asian business was our weakest region, compounded by disappointing results from ITHL. BSG continues to realize synergies and the two-year project is now nearly complete. We have achieved $11 million of run rate cost synergies through September 30^th and our integration process continues.

Fifth and finally, we completed the messaging acquisition on October 23rd. Earlier than we had expected, which gives us roughly two months of contribution in the fourth quarter with an immediate contribution of an incremental $0.04 of cash net income in the quarter.

With that I'd like to turn the call back over to Tony for some additional remarks.

Tony Holcombe

Thank you, David. Before we go to questions, I want to sum up with one more observation. This acquisition signals a fundamental change for the Syniverse business going forward, as messaging now will account for about one-third of our company's revenues.

Today, we operate three primary lines of business. The roaming part of that business accounts for about half of our revenues. Network services, which includes our SS7 and mobile number portability businesses account for about 20% of our revenues and the newly expanding messaging business is about 30% of our revenues.

We are evolving a company to serve the mobile community, operators, MSOs, enterprises, over the top players and new entrance, and subscribers, a new ways with new products all over the globe. I think this is great news for our customers, employees and shareholders.

And at this time, we'll take the questions.

Question-and-Answer Session

Operator

(Operator instructions) Your first question comes from the line of Mr. John Bright of Avondale Partners. Please proceed.

John Bright – Avondale Partners

Thank you. David, it looks like there's three events taking place that are changing your guidance, the roaming trends, ITHL as well as India. Can you tell me what the order of magnitude of that is relative to your 460 guidance previously and then if you wouldn't mind ranking those within that? That's question one.

David Hitchcock

Sure, John. If I look at the impact from India, that would be roughly $7 million to $8 million. If I look at the impact of what I'll call the core ITHL business across the Asia region, it would be $4 million to $5 million, and then the base business due to the tempered seasonality we saw in the third quarter and expect to continue into the fourth quarter roughly $4 million to $5 million as well.

John Bright – Avondale Partners

Okay. Then my second question goes around the assumptions for your guidance in the fourth quarter. Did I hear you correctly of saying that overall unit growth in Q1 was 6%, Q2 was 7% and then Q3 was 5%? Is that accurate?

David Hitchcock

That's correct for combined CDMA and GSM clearinghouse volumes and remember John that those are normalized for the impact of the Sprint/Alltel and our insourcing in the Verizon acquisition of Alltel, so we could get a clean picture year-over-year.

John Bright – Avondale Partners

Okay, so are those good unit numbers to think about in a normalized total basis?

David Hitchcock

Yes. Given the current macroeconomic environment, absolutely.

John Bright – Avondale Partners

Okay. It looks like that we've seen a slowdown in Q3 and that's reflected in your guidance. What are you assuming then for Q4 would be my follow-up question?

David Hitchcock

For Q4, we would be in roughly that same range. We have not included an impact in the fourth quarter. We have not assumed that we're going to see a pickup in the fourth quarter, John.

John Bright – Avondale Partners

Okay. Thank you.

Operator

Your next question comes from Amir Rozwadowski of Barclays Capital. Please proceed.

Amir Rozwadowski – Barclays Capital

Thank you very much. David, it seems though over the course of this year you've done a fairly strong job in terms of reducing your overall cost versus the initial plan that you had set out. If we think about sort of the rollover into the next fiscal year, how should we think about sort of your spending priorities? Is there a sense that OpEx at these levels is sustainable or should we think about a pickup in OpEx next year?

David Hitchcock

So, good question. I think the way that I would think about is if you look at what I said during my prepared remarks, we would expect our costs to be down versus the prior year versus 2008 on a full-year basis of roughly 10%. And we had talked about it at the beginning of this year that we're going to take our cost down 4% to 6% versus the prior year, so a little stronger performance. Delivering on what we said we were going to do, plus as you would also expect, we've got lower variable compensation expenses included in 2009 spend as well.

That being said, as we look forward to 2010, we believe that the reductions that we implemented during 2009 on the base business are sustainable reductions. So we would expect to keep those solid as we move into 2010. We obviously have to impact 2010 for whatever we decide to do with variable compensation, but that will be in the mix as we decide to, especially as we look at Tony talked about the investments that we also need to look at with the new acquisition as we balance those out going forward, but we feel very good about the sustainability of the reductions we've put in place during 2009.

Amir Rozwadowski – Barclays Capital

Great. Thank you. And then Tony, in thinking about the acquisition, certainly it seems though integration is proceeding on process, but perhaps you could give us a little bit more color in terms of some of the top-line synergies that you had alluded to previously? Have you begun initial discussions with some of the international opportunities for the VeriSign Messaging business or how should we think about that playing out?

David Hitchcock

That's a good question, Amir. I think a couple of things are going on. I mentioned in the prepared remarks that we have put the sales teams together and let me explain what that means for those of you who may not be as familiar with our operating structure. We have four regional executives that we divided the world up in the four quadrants and each of those executives owns the customer relationship in that region, which includes sales, new sales, renewals and new customers.

So, what we've done is, we've taken the VeriSign sales teams and integrated them underneath that management. And that over the last week, they've been in a fairly intense set of meetings, talking about what opportunities we have in those regions and what opportunities they had. As competitors, we clearly could not share that information. We were clearly both competing on some of the same business and we had to keep a very firm wall between that until we received our DOJ approval and closed the transaction.

And now that we've done that, those teams are looking at where those opportunities are and sharing information relative to the services that we have, like our Syniverse-NEXT and where that can kind of help, make the difference in our sale, and where they have some example, mobile enterprise solution capabilities or other product capabilities where they had the advantage. So, we're scrubbing that pretty hard right now.

Our goal would be between now and the end of the year that we clearly have identified all those opportunities, and focused on how we want to proceed with that going forward into 2010. Certainly, when it's available at the end of '09, we are going to make sure we capture. But in 2010, it's also referenced in our prepared remarks. We'll have our combined sales team here in Tampa for our global sales kickoff.

And at that point, we will be laying out all the opportunities, our project managers in our line of business management will identify all of the things we want to chase. And we'll have a pretty good feel about where the opportunities are and what the revenue uplift from the synergies are going to be. So, I am pretty pleased really where we're after a couple of weeks candidly and I think everybody understands the urgency to move very quickly in this particular area.

Amir Rozwadowski – Barclays Capital

Great. Thanks a lot.

Operator

Your next question comes from the line of Will Power of Robert Baird. Please proceed.

Will Power – Robert Baird

Great, thanks. Just a couple of questions. First, just on if I look at Q3 tech interoperability business, I guess fairly flat sequentially what normally would be a seasonally stronger quarter. I know you addressed a lot of the factors there, but could you give us a little more granularity on what the ITHL numbers were sequentially and it sounds like the clearing volumes were up a bit sequentially, but trying to understand if there was any increased price pressure, etc., I guess just any further granularity on the seasonal impacts relative to Q2 would be helpful?

David Hitchcock

Sure, give me one minute, Will. I don't have the Q2 number off the top of my head. The ITHL business in Q2 '09 was roughly $4.8 million. It was down to roughly $4.5 million in the third quarter.

Will Power – Robert Baird

Okay. And then…

David Hitchcock

If you look at it on a year-to-date basis, Will, through three quarters of last year, it was just over $19 million and through three quarters of this year, it's just over $14 million.

Will Power – Robert Baird

Okay. And then just on the clearing volume piece, I guess ITHL is down a little bit, does that imply, I guess effectively the clearing volumes were pretty flattish than sequentially to get to a flat overall number?

David Hitchcock

Yes, the clearing volumes if we're focused on volumes not dollars, the clearing volumes in total were up roughly 1% versus the prior year and again we normalize that up 5% normalized for the two key items.

Will Power – Robert Baird

Okay. So I guess what I'm just trying to make sure, I'm clear on it because it sounded like the July trends had improved off of May and June and so did August and September actually decline off of July?

Tony Holcombe

Yes, based on our expectations, Will, the August and September numbers were lower than we would have expected given what we saw in the July trend line. So at a macro level we would have expected to seen a higher seasonality bump associated with those two months within the quarter.

Will Power – Robert Baird

Okay. And then my second question, it's just a follow-up or clarification. I think one of the first questions, did I hear you right when you said you were previously expecting India to contribute $7 million to $8 million of number portability revenue this year?

David Hitchcock

Yes, and that's made up of two pieces. If you remember last time on the call we talked about, we didn't think the delay at that point in time would significantly impact us for the year, because the porting piece of the revenue we expected to push out. We did not expect to have the operator side solutions at the ITHL business deliver a push out, but we're seeing that push out. So the porting volume is a relatively small piece of that compared to the operator side, which is a new information since the last time we talked.

Tony Holcombe

And, Will, just to kind of elaborate a little bit. If you remember when we brought Singapore up a couple of years ago, we also achieved the one-time upgrade necessary for the operators to connect to the mobile network portability database. And as a scale of reference those kind of one-time upgrades can be anywhere from $0.5 million to north of $1.5 million to $2 million. So, given the number of operators and where we thought we were going to be, and the operators are going to be, if you put that alongside the $1 to $2 million of the portability revenue we didn't get in Q4, that's how you come back to that $7 or $8 million.

I think at the end of Q2 although we knew the number portability piece was likely going to fall off to $1 million to $2 million, clearly, we expected the operators to move forward when they upgrade their systems and they generally have not done that at this point. Virtually across the board I think all of them anticipating a further delay into the first quarter 2010 and then that was something that we did not anticipate on the last quarter call.

Will Power – Robert Baird

Okay. That's helpful. Thanks.

Operator

Your next question comes from the line of Sterling Auty of JP Morgan. Please proceed.

Sterling Auty – JP Morgan

Yes, thanks. Hi, guys. In terms of ITHL looking to the fourth quarter, I wasn't quite clear in terms of what you're actually including in the new guidance, the $466 million to $472 million, are you including virtually nothing?

David Hitchcock

We were including roughly flat performance with the rest of the year.

Sterling Auty – JP Morgan

Okay. And then to get a gauge of I think we're going to look at Syniverse and the new adjustments are based on where you are and then trying to add in the VeriSign piece, you mentioned some rightsizing. How should we think about, if you look at the total expenses for Syniverse in the September quarter, how should we think about that expense base in the fourth quarter, up, down or flat?

David Hitchcock

From a total cost perspective, if we look at the line items on the income statement, SG&A and G&A will probably increase a little bit dollar-wise quarter-over-quarter because of the one-time expenses associated with the integration, and also the fact that we did have some impact from a true-up of a variable compensation in the third quarter. So, you'll see higher dollars, slightly higher dollars in the fourth quarter than you did in the third quarter.

Sterling Auty – JP Morgan

But that integration expense is associated with the VeriSign business, correct?

David Hitchcock

That's correct.

Sterling Auty – JP Morgan

Okay. So if you were to take the VeriSign acquisition impact out of the way for a second – I'm not even looking for an exact dollar amount, but just in thinking about it would the rest of the Syniverse expenses as you look to the fourth quarter be up, down or flat?

David Hitchcock

Just give me one second, Sterling.

Sterling Auty – JP Morgan

Yes, no problem.

David Hitchcock

In total, the cost will be roughly flat, Sterling. If I look at it on an adjusted basis, taking out the impact of the one-time cost that we just talked about, they will be slightly up, but roughly flat in the flattish range.

Sterling Auty – JP Morgan

Okay. And last question would be on the VeriSign acquisition, you gave us what it is, I think you mentioned you're really only getting two months worth of inclusion. Can you give us a sense as to either the profitability or the revenue run rate if you had it for the full quarter?

David Hitchcock

No, not really for the full quarter, but I would say, Sterling, based on what we've told you previously, it would still be the same information that we talked about, if you look at their $140 million LTM run rate and we talked about this business approximately should grow around at 10% level and we talked about the margins being in the low 20% and a blended to our mid-40s putting us into a low 40% range. There's really no change in any of that data. It's pretty much on line with what we expected to get.

Sterling Auty – JP Morgan

Okay. All right, thank you.

Operator

Next question comes from the line of Daniel Meron of RBC Capital. Please proceed.

Daniel Meron – RBC Capital

Hi, Tony, and David and Jim. So, I want to get a little bit better clear beat on what you're seeing in last couple of months, and then what kind of growth are you seeing in the volumes, or what should we expect on an organic level into 2010 and pricing pressure you're seeing to offset that? Thank you.

Tony

Yes, I think organically right now it’s little early for us to talk about 2010. We're certainly tempering based on what we've seen in quarter one, two and three now relative to the organic growth, and as David pointed out, those numbers have been bouncing around in a 5% to 7% range on the clearinghouse volume business at this point. So I think it's too early for us to talk about expectations into 2010 at this point, Daniel.

Daniel Meron – RBC Capital

Okay. That's fair, Tony. And then on, as we look into the competition, you talked a little about that earlier. To what extent you think you can reverse that, and what will it take to get ITHL back on track following the pressure you've seen so far in the year?

Tony Holcombe

Yeah, let's talk a little bit about that. I think as we've obviously tried to get our hands around what is going on with ITHL and talked about that, we've taken several actions at this point. One of those is to really try to understand the competitive environment a little more. And let's just backed up and let’s talk a little bit historically about ITHL for a minute. It's been a very consistent performer for us since we purchased the company in the middle of 2006. So it met our expectations in '06, met our expectations in '07 and met our expectations in '08.

Starting '09, we certainly had this very unique economic downturn that we’ve all struggled through this year and clearly we saw some impact on that. As the deals have not come through under the flow that we would like to see, as David pointed out, in his prepared comments, we clearly have looked at that and because of the economic conditions in Asia, we've seen some large scale players that normally didn't play in the space that we were at start to move down market and we've certainly seen some of the smaller players have been squeezed really or fight very hard for business. So that's a pretty intense competitive environment that we're going to have to step back and think abut how we do a better job of dealing with that.

Unrelated to this particular issue we had already decided to beef up our management team in Asia, and we've added a couple of senior executives primarily to focus on the tremendous opportunities we see over the long-term in India and China. But clearly due to this issue now, we now have a couple of additional senior executives in the region. They are working with the existing management to take a very hard look at this and make a determination of what we can do. So, we're working the sell side of the equation very hard. We got additional resources in region to do that. At the same time as David referenced again in his remarks we're going to take a hard look at expenses that we have in that region and bring those down as necessary.

Clearly, we had expenses late into the region anticipating some of this MNP business to come on line in Q2, Q3 and Q4 and that has not happened. So we are going to make and take a look at that in Q4 and see what we can do to get that more in line. So, there is not a lack of activity on management to deal with it. Number of portability delays in India is truly outside of our control. Some of it is increased competition and we had to do a better job responding to it and some of it is just -- we just need to get the cost basis in line.

But, let me close by saying remember, again, in our combined business going forward, we are talking about a business that's roughly less than 4% of our total revenues and probably some of the lowest EBITDA margins we have in the business today. So we do want to kind of put it in perspective. It certainly has impacted us on a top line basis, but we've worked hard to make sure we managed the cost to get to the adjusted EBITDA and the cash net income targets that we've set at the beginning of this year.

Daniel Meron – RBC Capital

Okay. Sounds good. So, it sounds like it's going to take a couple more quarters until things there will be sorted out, either from the revenue side or from the cost side, right?

Tony Holcombe

Well, I think the cost side we're going to move fairly quickly on that, so we're working hard on that. On the revenue side, yes, I wouldn't say a couple of quarters, but I clearly say, we're going to have to step back and think about what that revenue profile for that business looks like as we go into 2010. Again tempering timing and investment where we had tremendous opportunity with a new messaging business, some of the opportunities we see there and hopefully return to more normal macroeconomic conditions around the roaming line of business as we get into 2010.

Daniel Meron – RBC Capital

Okay, very good. Thank you.

Operator

Your next question comes from the line of Scott Sutherland of Wedbush Securities. Please proceed.

Suhail Chandy – Wedbush Securities

Hi, thank you. This is Suhail sitting in for Scott. Two questions really and I'll be really quick. On the messaging business, you alluded to the 10% growth. Kind of looking at some of the proxies out there, Sybase, I think it was 18% growth, 23% local currency. Is there some amount of conservatism in this guidance and would it be fair to see an optimistic scenario, would be an upside scenario would be probably mid-teens?

Tony Holcombe

Well, I think as we talked about in earlier calls and let's talk about this for a moment. There is a mix of businesses that we purchased in the messaging line of business and some of those are more mature business lines, they don't grow as fast as the baseline messaging. So I think as we look at that going forward and also point out, as we said earlier, the VeriSign messaging assets were heavily concentrated into very large tier-one carriers in North America with a very different price profile than you might see on a more global basis.

So I think from that standpoint, we're very comfortable with the approximate 10% growth opportunities for that business as we think about a long-term. Having said that though, we still believe there is upside for us relative to how do we up-sell the revenue side and the ability to be able to take those access points and be much more of a global competitor than we have been in the past.

Suhail Chandy – Wedbush Securities

Thanks. And second question really quick. India MNP realizing, on the bottom-line is probably not much of an impact, but trying to size the revenues here. So, the two pieces here the ITHL products needed for MNP on the operator side. So is it fair to say that's going to really happen in the first quarter of rollout and obviously there could be some timing delay there, but would that be just the first couple of quarters and then we see really more traction in terms of porting fees?

Tony Holcombe

Yes, I think rather we get into which quarter we're talking about, I think the point would be is as we see the regulators log down a date and have a commitment to that date, then I think it's easier for us to see when the number portability ITHL product revenues come online and certainly once porting goes into place we've a much better feel of the revenues.

And if you remember we talked previously about that, that from our perspective that half of the country we have somewhere in the $5 million to $10 million range, now that's going to depend on when it actually rolls out in 2010, because there's a slight stage rollout as we understand what the regulators want to do today. But your thought process is correct. The number portability ITHL revenues should come on line first and then the porting revenues should come on second. We need to see more clarity for the 2010 dates at this point. Clearly, we don't anticipate any of that happening in 2009 based on the guidance we've given you today.

Suhail Chandy – Wedbush Securities

Sure, thank you.

Operator

Your next question comes from the line of Shaul Eyal of Oppenheimer. Please proceed.

Shaul Eyal – Oppenheimer

Thank you. Hi, good afternoon, guys, couple of quick questions on my end. Tony, can you also talk to us about trends in Europe versus the United States and APAC? And may be the other question is, you just touched on a couple of the new names that you have seen with the hefty competition with ITHL, any other products, any other services that you are beginning to see some new competition rather than existing?

Tony Holcombe

Yes, let me answer the last question first and then I'll come back and talk about some of the regional trends. As we've always said in this marketplace it's a highly competitive market and we expect it to remain a highly competitive market. Clearly, on the messaging side we're going to be now competing head-on with Sybase, which has a clear dominant position in this marketplace on a global basis.

And on the other side relative to our normal roaming business, we clearly have the same group of competitors and obviously a new competitor with TNS picking up the VeriSign SS7 and roaming platforms on that site. But having said that, competition is intense this market, had always has been intense in this market and relative to those lines of business that would be more of the norm, the way to look at it. I think the ITHL is original highlighting and that is a new competitive dynamic that we have not seen in the marketplace before. So that's why we want to carefully articulate that.

Relative to your first question got around regional trends, and we talk about Europe primarily, clearly we're still seeing weakness in roaming like we're seeing in all markets around the world, I think the significant good new story to that is that we did see an increase in SMS clearing traffic relative to the tier up reductions mandated by the EU. So we could clearly see an impact of that, clearly, those price sensitivity there and we see people utilize that service more, but just not enough people traveling either on a personal level or a professional level to show the growth we would normally expect to see in that particular market.

Asia-Pacific is pretty much the same as we've seen globally. Traffic continues to remain down and depressed in the region and it's still growing organically as we've pointed out before, but we're not seeing the traditional growth rates that we would expect to see once the economy starts to get some legs underneath and it recovers on a go forward basis.

Shaul Eyal – Oppenheimer

Got it. May be just one more on specifically an ITHL, is the kind of the weakness that you're seeing from the competition is that pricing driven, is that product quality driven, or all of the above?

Tony Holcombe

Yes. I think we listed some of the names. If you think about some of these very large system integrators, I think they're coming down market because the market is difficult for everybody, so we're seeing them in the market because they're looking for business like everyone. And on the low end, the system integrators, we're certainly seeing them try to play pricing to get to the market.

So, the ITHL group is getting squeezed on both sides relative to that, but again, let me just kind of reemphasize, it is less than 4% of our combined revenues going forward and low margin. So it does have an outside of the impact as we talk about revenue on a go-forward basis, but probably not as much of an impact as what we're going to be able to do with the growth in the messaging business in 2010 and the roaming business getting back to more traditional lines as the economies around the world start to recover.

Shaul Eyal – Oppenheimer

Thank you for this color.

Operator

Your next question comes from the line of Ric Prentiss of Raymond James. Please proceed.

Ric Prentiss – Raymond James

Thanks. (inaudible) back on that last question. You mentioned earlier about how airlines and hotels are seeing kind of flattish demand and trying to look forward. As you look out there, have you done any correlations to say, is it airline traffic, Is it highway miles, is it hotel stays? What do you think should we look at as far as leading indicators for helping the roaming business kind of grow back as the economy grows back and just to kind of help us get a sense of when the growth materializes back on the volume side?

Tony Holcombe

Yes, Ric, that's a good question. I think one of the metrics we pay particular attention to is airline miles both in travel, particularly, on international because there's a pretty good indicator and I think most of those are still showing that traffic been down 20% kind of levels in some of the data that we look at. Although it's not declining any longer, it's kind of flat lined out. Clearly, those are depressed from 2009 versus 2008. That's a very clear quick metric you can take a look at. We do look at a variety of other metrics and as you can imagine it's a little bit difficult to make predictive characteristics from that.

The other thing that we look at primarily is that we spend a lot of time out in the market talking to operators about what trends they see in the marketplace. And again from an operator perspective, we're seeing pretty much the same kinds of comments and I think you've heard on many of the operators' earnings calls. They would reference this type of information also, but if you wanted one quick metric to look at, I would look at international air miles travel and take a peak at that and I think once we see start to see that start to recover, that's probably as good a leading indicator as anything.

Ric Prentiss – Raymond James

Okay. And then on the Alltel transaction, I think you said up to 80% now averaged out, probably 85%, in the quarter. Should we expect that getting all the way to the 100% kind of at the end of the year or early January given the timeframe, just trying to think when you lap that and when that could be completely behind you?

Tony

That's what our expectations are, Ric. We would expect to see the items to be executed in fourth quarter that will drive the rest of the impact for us, by the end of the year and we would expect that we're roughly 100% complete, as you said end of the year or early January.

Ric Prentiss – Raymond James

Great. Thanks.

Operator

Your next question comes from the line of Rich Todaro of Kennedy Capital Management. Please proceed.

Rich Todaro – Kennedy Capital Management

Hi, guys. Can you talk about currency in the quarter?

Tony Holcombe

Sure, not a lot of currency impact in the quarter, although stronger lately both the euro and the pound were down against dollar versus the prior year quarter, the euro down 3% and the pound down roughly about 11%. This impacted our revenue in the quarter by just under $1 million or roughly 1% on a year-over-year basis.

Rich Todaro – Kennedy Capital Management

Okay. And not to beat a dead horse, but when you guys gave your guidance last quarter, you said you'd taken a lower level of revenues and then gave it some sequential bump that you would normally see. What sort of sequential increase would you normally see from Q2 to Q3 in the business?

Tony Holcombe

So, if we look at clearinghouse volumes, which is most indicative of that increase. If I look back at 2008 and look from Q2 to Q3, the roaming clearinghouse volumes increased 25% to 30% between Q2 and Q3. And if I look at them this year, we still saw a bump from Q2 to Q3, an increase Q2 to Q3, but it was tempered, so instead of 25% to 30% increase in volumes, we saw a 15% to 20% increase in volumes.

Rich Todaro – Kennedy Capital Management

Okay. And then, you may have covered this in all of the ITHL discussions, but in prior calls you've said, well, the pipeline is decent there, it's a matter of closing and there’s a lot of moving parts. Do you still feel the pipeline is okay there or are you starting to question the pipeline a little bit?

Tony Holcombe

Well, I think we have certainly referencing the fact that there is more competition in the pipeline. Again, let's talk about the pieces that we mentioned before. Number portability, including the ITHL core products is $7 million to $8 million number we're bringing down at this point. So, clearly we are pushing that off and that's a delayed aspect and we still feel good about our chances to win on the number portability side.

The core products as David referenced, we're bringing down $4 million to $5 million. Again those delays, we're also highlighting, there's more competition associated with that $4 million to $5 million. So, we are not putting any of those in the 2009 guidance at this point. So, clearly pipeline is reasonable at this point, but there is more competition, which we're highlighting, and clearly number portability. Those items have just been pushed off now due to the delays in the India side, which puts them in a 2010 timeframe rather than 2009 timeframe.

Rich Todaro – Kennedy Capital Management

Okay. And then you guys did a great job managing expenses this quarter, just wanted to pat you on back on that. The acquisition still sounds great, can you guys tell us as you've gotten further along is, has there been any red flags that concern you or any positive surprises thus far. I know it's early, but how do you guys feel about that?

Tony Holcombe

I think we feel very good. We've just completed a round of employee meetings. We've been out meeting with employees. We're going to be traveling around visiting all the employees we didn't cover in the first week. And I would say what we're very excited about is the very positive reaction from the former VeriSign employees, now Syniverse employees. They are very excited about the combination. They're excited about what we can do together. We're working that every single day right now. So I think no red flags, no surprises at this point. We're very upbeat and we're very pleased with the response of the former VeriSign messaging employees and how excited they are to be a part of our team. So we're very positive and bullish about it. I think it's going to mean great things for us in 2010.

Rich Todaro – Kennedy Capital Management

And I think you guys covered this, but just is there any contracts with VeriSign asset that could be up for renewal because of the acquisition or that are in the next six months that we, (inaudible) to worry about as we're integrating the acquisition?

Tony Holcombe

That's the simplest answer I'm going to give today. That's no.

Rich Todaro – Kennedy Capital Management

Okay. When would like one other bigger contracts, when do you have to deal with that?

Tony Holcombe

I don't think we're looking at anything until we get beyond the 2011 timeframe, but we'll give you more color on that as we get into the 2010 timeframe, but there's certainly nothing in 2010.

Rich Todaro – Kennedy Capital Management

Okay. Great, thanks, guys.

Tony Holcombe

Thank you.

Operator

Your next question comes from the line of John Bright of Avondale Partners. Please proceed.

John Bright – Avondale Partners

Thank you. Just a follow-up, David. I know you're not giving guidance for 2010, but I'm thinking in terms of growth in 2010 organically. Should we assume a 1:1 ratio where your businesses is transaction based for growth for 2010 or is there anything we need to normalize for?

David Hitchcock

I don't think on the base business, John, that you should think about it any differently than you have in the past for the base business given the different pieces.

John Bright – Avondale Partners

So have one month of Verizon/Alltel, but beyond that, I'm thinking out loud, there's no contracts that would need to be adjusted, something of that nature…?

David Hitchcock

That's correct, that's correct.

John Bright – Avondale Partners

…where actually you get the benefit from it? Okay. Actually one point too, simply the 25% EBITDA margins talked about in the VeriSign acquisition versus your typical historic margins of 45% EBITDA margins, what's the difference? Any more clarity on that thought?

David Hitchcock

Yes, it's a little early for us to get into all the granularity with that, John. We'll do that when we do the 2010 guidance. I mean there are some pieces that are relative to as I mentioned earlier. A lot of very large tier-one customers where have they just is pricing, so the price points are a little different, you might expect in our more globalized portfolio. We had to go through and look at whether there are some costs synergies that we've got to validate at this point and we're doing that in the next 60 days, 90 days. So, I'm comfortable when we get back together in February and talk about 2010 guidance, we can give you the color on that and let you know what to expect on the go-forward basis.

John Bright – Avondale Partners

Last question. Tony, any change in your thought for use of cash given this close of acquisition?

Tony Holcombe

No. I mean our position is always the same when it comes to cash is that I would traditionally say we'd be looking at M&A opportunities, but right now I'd say we're very primarily focused on getting messaging integrated and getting off to a very successful launch in 2010 taking advantage of now a business line that's roughly 30% of our revenues in a high growth market on a global basis. Cash after that, we'll look at usage for that, that make the most sense for us from a shareholder perspective and we can also give you an update on that as we get into 2010 guidance.

John Bright – Avondale Partners

Thank you.

Operator

At this time, there are no further questions in the queue and I would like to turn the call back over to management for closing.

Tony Holcombe

All right, thank you, operator. I do want to take a minute before we go to welcome to Syniverse all those who have joined us from VeriSign. And I also wanted to thank everyone from VeriSign and from my own team here in Syniverse who worked on the acquisition. I know there were many late nights and weekends that were dedicated to this project. And finally on behalf of everyone at our company, I'd like to extend a special welcome to new Syniverse customers and our deep appreciation to those who have been with us for a while and to all of you on the call. Thank you for joining us today.

Operator

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

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: [e-mail]. Thank you!