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Nexstar Broadcasting Group (NASDAQ:NXST)

Q4 2011 Earnings Call

March 08, 2012 10:00 am ET

Executives

Perry A. Sook - Founder, Executive Chairman, Chief Executive Officer, President, Chief Executive Officer of Nexstar Broadcasting Inc, President of Nexstar Broadcasting Inc and Director of Nexstar Broadcasting Inc

Thomas E. Carter - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

John Kornreich

Edward J. Atorino - The Benchmark Company, LLC, Research Division

Harry DeMott

Barry L. Lucas - Gabelli & Company, Inc.

Unknown Analyst

Operator

Good day, and welcome to the Nexstar Broadcasting Group's 2011 Fourth Quarter Conference Call. Today's call is being recorded. All statements and comments made by management during this conference and other statements of historical fact may be deemed forward-looking statements within the meaning of Section 21 of the Securities Act of 1933 and Section 21A of the Securities and Exchange Act of 1934. The company's future financial conditions and results of operation, as well as forward-looking statements, are subject to change. The forward-looking statements and comments made during the conference call are made only as of the date of today's conference call. Management will also be discussing non-GAAP information during this call. In compliance with Regulation G, reconciliations of this non-GAAP statement and GAAP measurements are included in today's news announcement. The company does not undertake any obligation to update forward-looking statements reflective of changes and circumstances. In addition, given Nexstar's announcement of July 21, 2011, that the company's Board of Directors decided to explore and evaluate strategic alternatives intended to maximize shareholder value, including a possible sale of the company, Nexstar does not intend to disclose developments with respect to the strategic review process until such time as the Board of Directors has approved a transaction or otherwise deems disclosure appropriate. As such, management will not be making comments on this topic today.

At this time, I'd like to turn the conference over to your host, Nexstar President and CEO, Perry Sook. Please go ahead, sir.

Perry A. Sook

Thank you, and good morning, everyone. I'd like to thank you all for joining us to review our 2011 fourth quarter and our full-year 2011 operating results. Tom Carter, our Chief Financial Officer, is here with me this morning as well as Tim Busch and Brian Jones, our Co-Chief Operating Officers.

I'm very proud to report today that Nexstar generated record odd-year fourth quarter financial results, including an 8.4% increase in 2011 fourth quarter total revenue, excluding total [ph] spending. We ended what was a strong 2011 for Nexstar with the fourth quarter core revenue growth of 6.4%. That marked the highest rate of quarterly core revenue growth during the year and our ninth consecutive quarter of year-over-year core television advertising revenue growth. Solely reflecting the impact of $20.6 million in year-over-year declines in political revenue, our Q4 '11 net revenue came in at $86.2 million, which was 11.2% behind last year's final.

Nexstar's continued leadership in new business development resulted in a 4.6% increase in fourth-quarter local spot revenue and an 11.6% rise in national spot revenue. Our year-over-year core revenue growth marks a quarterly sequential improvement over the 5.3% growth in Q3 of '11, the 4.3% increase in Q2 and the 3.3% rise posted in Q1 of '11. And it is more than double the 2.9% core local and national television ad revenue growth recorded in last year's fourth quarter.

In addition, the strength in core advertising activity, Nexstar's record odd-year fourth quarter revenue, EBITDA and free cash flow highlight the continued growth in every one of our non-television advertising revenue sources, with each reaching record annual levels of contribution. Our Q4 core TV ad revenue growth was complemented by a 34.9% rise in retransmission fee revenue, an 8.1% increase in e-Media revenue and a 9% improvement in our management agreement revenue.

To illustrate how effective our revenue distribution and diversification plans have been for Nexstar, our total net revenue for the fourth quarter of 2011 is 16.5% ahead of the $74 million reported in the fourth quarter of '09 and 20.4% ahead of the $71.6 million reported in the fourth quarter of '07. Furthermore, our 2011 fourth quarter revenue from non-television advertising revenue sources grew by approximately 79% from the 2009 levels and 172% from the comparable 2007 levels.

Nexstar's full-year 2011 core local and national revenue rose 4.8%, while annual net revenue declined just 2.2% for the year despite the cyclical impact of approximately $33 million variance in political advertising in 2011. This offset was largely backfilled by the increases in core, as well as the excellent growth I described from our non-traditional revenue sources.

We generated record odd-year fourth quarter broadcast cash flow of $34.9 million and adjusted EBITDA of $29.6 million and free cash flow of $15.3 million. For the full year, we generated record odd-year free cash flow of $34.2 million.

Taking a minute now to look at the 2-year cycle run rate, Nexstar generated a total of $94.3 million of free cash flow in 2011 and '10 or an average of $47.2 million per year. This would equate to over $1.50 per share of free cash flow and I'll discuss later how our expected growth, including the timing of our recently completed retransmission agreements, will lead to free cash flow growth increasing based on the 2011, 2012 cycle.

In addition to Nexstar's continued revenue momentum, we continue to selectively expand our station portfolio. In early December, we completed the accretive acquisition of WEHT, the ABC affiliate serving the Evansville, Indiana market. And Evansville now represents the company's 20th duopoly market out of the 32 markets in which we serve and increases our ABC affiliate count to 11 stations.

Under Nexstar's ownership, the station is already generating higher retransmission revenue, as well as synergistic operating improvements in conjunction with our second station there. This deal follows our accretive and deleveraging purchase of 2 CBS stations in Wisconsin and Michigan that we completed in mid-2011. We look forward to strong contributions from all but 3 of these stations in this year 2012.

Let me quickly review our quarterly and recent highlights and then I'll turn the call to Tom to take you through additional financial detail.

Our fourth quarter retransmission consent fee revenue reached a quarterly record of $10.3 million, that represents a year-over-year increase of 34.9% as we benefited from our newest contracts rolling into the mix including 2 agreements in the second half of the year with 2 of our top 5 distribution partners. By way of comparison, Q1, Q2 and Q3 of 2011, our quarterly retrans revenue growth sequentially was 15.6%, 18.4% and 30.5%, respectively.

For the 2011 full year, retrans revenue grew 25% to $34.7 million. And with the renewal of more than 130 retransmission consent agreements by the end of 2011, 2012 will see another period of record revenue from this source. In fact, if you annualized our December 2011 retrans revenue run rate and take into consideration the completed renewals of the other agreements and escalators in existing agreements, our 2012 retrans revenue will not only be a record but it will grow at a percentage rate approximating twice that of our growth in 2011.

e-Media revenue growth also remains robust as we further expand our base of revenue applications to achieve further penetration and monetization of our mobile marketing and video initiatives. Q4 e-Media revenue came in at $4.3 million, surpassing last year's fourth quarter by 8.1% and it marks the 20th consecutive quarter of growth for Nexstar and the highest ever level of revenue within a quarter.

For the full year, e-Media revenue grew 17.4% to $16.2 million and we anticipate this trend continuing throughout 2012 with another year of mid-teens revenue growth. 2012 will benefit from a full year's integration of our Internet technology provider, GoLocal.biz, which was acquired in an accretive transaction in the middle of 2011, as well as our expanded mobile offerings that bring our local advertisers more innovative solutions that yield very high interactivity and return on investment.

In the fourth quarter, we recorded $4.2 million of fee revenue from our management services agreement with Four Points Media Group, that represented the $500,000 quarterly base management fee and incentive compensation based on exceeding the broadcast cash flow threshold in our management agreement.

For 2011, the total management fee revenue reached $6.2 million, 9% ahead of 2010. With the completed sale earlier this year of the Four Points stations to Sinclair Broadcast Group, we will record an approximate $2 million termination payment in the first quarter of 2012. The sale of Four Points was the culmination of our efforts on behalf of servers [ph] to improve the market position and operating efficiencies of those stations and create value for the group. And we believe the positive outcome from this transaction for servers [ph], Four Points and Sinclair, position us well for future management services agreements.

Nexstar generated $4.5 million in new local direct advertising in Q4, that represented 9.2% of our total local billing. And for the full year, new local direct advertising grew about 10% to $17.8 million.

Looking now at category data for Q4, Nexstar was up in 4 of our top 5 advertising categories for the quarter. In total, our automotive category grew 10% over the prior year, led again by the strength of our local dealer advertising, which continues to outpace the total category growth. Of note, auto spending on a dollar basis rose by 17.3% over Q3 levels and Q4 auto represented 21.1% of our television ad revenue, up from the trough of 15.4% in the second quarter of '09 but still headroom to get back to the 25% contribution ratio from this category that we've seen prior to 2008. Of our top 5 categories, which account for roughly 45% of our Q4 core revenue, we also saw increases in department and retail stores, furniture and paid programming. The fast food category was the only category in the top 5 for us that was down. Overall, the top 5 categories were up about 3.5% over the prior year.

Political revenue of $2 million in Q4 primarily reflects activity across 5 of our states, with gubernatorial elections in West Virginia, Kentucky and Louisiana and the recall race in Wisconsin. With a great deal of local races occurring across all of our markets, the candidacy spending provided the majority of our total political billing that we saw less-than-expected spending in the Louisiana gubernatorial race as the incumbent ran without significant opposition there. However, 2012 will prove to be a record political billing here for Nexstar. A majority of the spending will relate to the presidential elections and like other years, the battleground states in our portfolio are projected to be very, very active. Pennsylvania and Wisconsin, where we have 7 stations in total, have risen in level of priority with open seats, the recall election in Wisconsin still to come. Due to the battleground states status, many of our markets will experience, in addition, significant pack and super pack spending in 2012. Indications also suggest that 3 open seats and 13 total races, there will be a large amount of spending across our senatorial elections in our markets, very similar to what we saw in 2008. Congressional spending will be active in about 2 dozen races across a total of 61 congressional seats in our portfolio. There are also 4 races and a mix of open or toss-up [ph] gubernatorial seats in our markets for the 2012 election cycle.

Tom will now provide further detail on our financials. And then I'll come back to close the call, after which, we'll open it up for your questions. Tom?

Thomas E. Carter

Thanks, Perry, and good morning, everybody.

I'll start with the review of Nexstar's Q4 income statement and balance sheet data, after which, I'll provide an update on our capital structure.

As Perry mentioned, net revenues were down 11.2% to $86.2 million, largely reflecting the $20 million decrease in political spending from Q4 2010 to Q4 2011. Core revenue was up 6.4% to $67.3 million, with local revenue up 4.6% and national revenue up 11.6%. Retrans fees were up 34.9% to $10.3 million, reflecting the impact of some of our new contracts during the fourth quarter. e-Media revenues continue their growth trajectory at up 8.1% to $4.3 million. Broadcast cash flow was $34.9 million. Adjusted EBITDA was $29.6 million and free cash flow was $15.3 million.

Nexstar's fourth quarter corporate expenses were $5.3 million or 9.3% ahead of the year ago. Of the additional $454,000 of cash corporate expenses, a large percentage was associated with our acquisition activity and the ongoing strategic review process which was announced in July.

In Q4, we incurred $299,000 of non-cash option expense compared to $332,000 in the same quarter in the prior year. Station direct operating expenses, consisting primarily of news, engineering and programming, and selling and general administrative expenses net of trade expense, were $43.1 million for the 3 months ending 12/31/11 compared to $42 million in the year-ago quarter or a 2.6% increase. The increase largely reflects a full quarter of expenses for the new stations in Michigan and Wisconsin and a month of expenses in Evansville, Indiana, which increased our overall expenses, combined with expanded local news initiatives in our markets, increased variable expenses associated with our JOAs in Peoria and Rochester and e-Media-related expenses.

Net of the acquisitions on the same station basis, our operating expenses were actually down 3.4%. The net effect of our debt reduction program has been to reduce our weighted average cost of borrowing to approximately 7.5% as of year end. Following a significant reduction in total debt in 2010, Nexstar repaid approximately $44 million of debt in 2011 and that was offset by a borrowings of $20 million against the credit facilities in July for the accretive acquisitions in Wisconsin and Michigan and the GoLocal.biz acquisition, as well as approximately $21 million under the combined Nexstar and Mission credit facilities to finance the purchase of WEHT, the ABC affiliate in Indiana at the 1st of December.

At the time of the Indiana station acquisition in December, we divested the FCC license-related assets of WTVW in the market to Mission Broadcasting for $6.7 million and entered into a local services agreement with Mission to provide sales and other services to WTVW.

With the capital structure rightsizing we've done over the last 2 years, I'll review key balance sheet items as of 12/31/11. Total leverage at that date was 6.19 versus the total permitted leverage covenant in our credit agreement of 7.5, and first lean leverage at 12/31/11 was 1.67, well within the 2.5x leverage covenant in the credit agreement. Reflecting repurchases, redemptions and elimination of almost all of the expenses pieces of our capital structure, Nexstar's outstanding debt as of 12/31/11 consisted of $24.3 million out on the combined credit facilities under the revolver and $148.1 million on the combined term loans between Mission and Nexstar.

The second lien notes 8.875% [ph] secured bonds totaled $318.4 million and the combined 7% sub notes were broken down at $37.5 million for the historical PIK notes and $112.1 million -- I'm sorry, the $37.4 million was the historical cash pay and the $112.1 million was the historical PIK notes. Total debt as of year end was $640.4 million and there were $7.5 million of cash available at year end.

Total interest expense in the fourth quarter of 2011 was $12.9 million compared to $14.1 million in the same period of '12, that's a reflection of the reduction in our high-priced debt that we did during the year. Cash interest expense for the quarter was $12.1 million compared to $10.9 million for the same period in '10.

Nexstar's Q4 CapEx of $2.5 million compares to $1.9 million in the fourth quarter of last year. And total CapEx for 2011 came in at approximately $13.2 million.

For 2012, we are budgeting full-year CapEx of approximately $17 million, as we accelerate local HD origination capital deployment based on our expected growth in EBITDA during the year.

Overall, we are successfully managing the top line, our fixed and variable costs and the balance sheet for cash, and remain focused on further actions that can enhance value and we can expect to continue deploy free cash flow to debt reduction in the coming year.

That concludes the financial review for the call. I'll now turn it back over to Perry for some closing remarks before Q&A.

Perry A. Sook

Great. Thanks, Tom.

Nexstar's positive core television advertising trends are continuing in the first quarter and we expect positive year-over-year core revenue comparisons throughout 2012. The expected core revenue growth will be driven by strength in key categories, such as auto, and our commitment to producing and broadcasting high-quality local programming in our markets while airing high-profile events like the Super Bowl and the Grammys, both of which recently garnered record ratings, and we will also have the Summer Olympics on our NBC affiliates later this year.

Nexstar is on track to deliver record 2012 financial results, which will benefit from the growth and overall advertiser spending, significant political revenue and increasing growth from revenue in our newest retransmission agreements, as well as further immediate contributions.

Beyond the revenue and the operating momentum, our recent acquisition and programming activity has strategically strengthened our platform through the accretive de-leveraging transactions we talked about earlier, and our expanding scale is also reflected in our upbeat 2012 outlook.

As we mentioned earlier, due to the volume of renewed retrans contracts and the high number of subscribers they represent, we believe that our percentage growth in retransmission revenue will be approximately double in 2012, the growth rate of 2011. This growth trajectory has been confirmed in retrans results that we have booked thus far in 2012. Additionally, our acquisitions which closed in the second half of 2012 are expected to add an incremental $20 million in revenue and approximately $10 million in EBITDA for the full year of 2012. With the anticipated significant net revenue growth throughout the year, margins should easily surpass the levels we achieved in 2010.

In addition, Tom and the finance team have done a superb job of improving our capital structure, which we plan to address further in 2012, based on our expected record levels of free cash flow. We believe that we're firmly on plan to generating 9-figure level of free cash flow for the 2011, 2012 cycle.

Since our IPO in 2003, Nexstar has posted an impressive 37% CAGR of free cash flow for the 2-year cycle starting with 2003, 2004 through the 2-year cycle that included 2009, 2010. And in that 2-year cycle, we generated total of $79.6 million in free cash flow.

If we maintain our 37% CAGR growth rate for the 2-year cycles, we would then generate in excess of $109 million for the '11, '12 cycle, which would mean that based on our results that are in the books for 2011, that 2012 free cash flow would have to come in somewhere around $75 million. From my vantage point, I will be highly disappointed if we don't exceed those levels.

So with that, let's open the phone for your Q&A and address your specific areas of interest. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] We'll take our first question from Bishop Cheen with Wells Fargo.

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

So just a couple of quick questions, one to kind of the tenor and tone of ad revenue. It feels like auto is driving a whole lot of January and February and whatever -- I know you're not giving specific guidance or I didn't hear that, but whatever you're seeing or feeling out there, how much of it is auto and how much of it is kind of a more diversified strength in the ad environment?

Perry A. Sook

Well, I would say, generally, what we see in first quarter results with 2 months in the books at this point, Bishop, is kind of a continuation of what we saw throughout 2011 and particularly in the fourth quarter. Auto is our largest category. It is still up and continues to grow. We're not back to where we were at 25% of revenue. But we're north of 21% of our revenue now. So if your largest category, that's 20%, is up 10%, that's 2 points of growth. And we're reporting, for the quarter, something on the order of 6.4% of core ad revenue. So it is a driver but I would tell you that when we look at our top 5 categories, our top 10 categories, dramatically, again, it's 4 out of 5 or 7 out of 10 that are showing growth and continuing to grow. So I would say, thematically, first quarter looks and feels a lot like fourth quarter in terms of core ad spend.

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

Okay, that is helpful. And Tom, this is also just kind of a general big picture. Nexstar, historically, has a nice high data of leverage in and out of the -- that political cycle and you tend to always use it to take down debt and come back with stronger, better improved leverage every 2 years. So as you enter this political and strong growth cycle for all your non-traditional revenue and the $75 million, hopefully, plus of free cash flow applied to debt reduction, where do you think you can take your leverage target down to at the end of this year?

Thomas E. Carter

Somewhere 4 or south.

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

4 times or south, which gives you a lot of cushion heading into 2013. And then the last part to the grand inquisition, at what point do you start thinking about perhaps returning value to shareholders via buybacks or dividends?

Thomas E. Carter

Well, Bishop, that's kind of above my pay grade, what the board wants to do. But I will say, clearly, my job is to give the company as much financial flexibility as possible. We are going to have a substantial amount of free cash flow this year. We do have some bonds that mature in early 2014 that are on our radar screen. But with the strong free cash flow, I think it gives us a number of opportunities as it relates to that. And then strategically, what the company does is just part of our -- and the board's, quite honestly, overall strategic review that is ongoing.

Operator

We'll take our next question from John Kornreich with JK Media.

John Kornreich

Just one quickie -- a couple of quickies. What was the local growth -- the local and international core revenue growth in the fourth quarter excluding acquisitions, apples to apples?

Thomas E. Carter

Well, John, the information that we have given is excluding acquisitions and the 3 affiliation switches. So kind of a steady-state, apples-to-apples and core growth in the fourth quarter on, we call it the unaffected stations, was up 3.4%. So I think, if someone asks me, what -- how does the market look? That's kind of an apples to apples.

John Kornreich

Okay. More importantly, I think you mentioned in the press release that this huge jump in retrans is largely due to 2 very big ones that were signed in the second half of 2011. When do the other 3 of the top 5 get renewed?

Perry A. Sook

Those are basically 2013 events. One of them is 2014 but that will be the next big jump. I mean, obviously, with 130-plus agreements renewed and escalators and all of the other ones, that's accumulative effect. But again, 2 of the top 5 are driving a lot of that top line growth.

John Kornreich

When you say 2013 is the next round of renewals, that would show up in 2014 or actually show up in -- or somewhat show up in part of 2013? And is it a December 2013 or is it during the year?

Perry A. Sook

It is primarily a year-end event. But if you're talking about the other 3 of the top 5, the vast majority of that impact would be felt in 2014.

John Kornreich

Okay. So I blanched when you first said that the growth rate for retrans will be double the 25%. I thought I heard it wrong and then you said it again. So I'll ask you to say it one last time, you're talking about mid-50s retrans.

Perry A. Sook

We're talking about a number that is 50% growth, yes.

Operator

We'll take our next question from Edward Atorino with Benchmark.

Edward J. Atorino - The Benchmark Company, LLC, Research Division

Well, I had a question on the categories, too, which you sort of answered. How did you do in the primaries? Were anything of noteworthy committed primaries in your markets in terms of ad dollars?

Perry A. Sook

Not specifically. And it's because, Ed, the Texas primary that [indiscernible] coming in the first quarter came, it's now a late May event. So that spending will all be in the second quarter at this point. We got money on the books yesterday for the Illinois primary, which comes up a couple of weeks down the road. The spending in Wisconsin for everything that's going on there continues to surpass our expectations. So pretty much as advertised, with the exception of money we had internally projected for Texas is now moving from first quarter to second quarter.

Edward J. Atorino - The Benchmark Company, LLC, Research Division

Out of these 7 categories that are up beside auto, what would be the next 2 biggest growth carriers?

Perry A. Sook

You're talking about top 10 product categories?

Harry DeMott

Yes, what you mentioned. You mentioned food, was it? And...

Perry A. Sook

Well, fast food was down and that was due to the -- just the volatility of the money kind of moving between network and spot and scatter. And that always happens in fast food. But in terms of percentage growers for the year, department and retail stores was up a mid-teens amount for us for the full year. That's just outside of the top 5. We saw growth in medical and healthcare. And the service area is the only other category that, out of the top 10 categories, that is down significantly was telecom and that was driven primarily by the mergers or lack thereof in that category.

Operator

[Operator Instructions] We'll take our next question from Barry Lucas with Gabelli & Company.

Barry L. Lucas - Gabelli & Company, Inc.

A couple of items, you touched on revenue growth and the good job you did in expenses on the core basis in '11. Tom, where you think expense growth is going to be in '12?

Thomas E. Carter

Barry, obviously, you've got the variable component will be up not insignificantly because revenues will be up both on e-Media as well as the core business and political. So you've got the sales expenses associated with that. Then you got fixed expenses will be up a low single-digit percentage largely due to general cost containment and the fact that I think we've got those well under control. So on a blended basis, I would imagine it would be up mid-single digits.

Barry L. Lucas - Gabelli & Company, Inc.

Okay, helpful. The next area and just really for Perry, with auto tracking back to its historic levels in terms of percentage of the total revenue pie, and you've done a good job diversifying a way. But we saw what happened the last time when auto cratered in '09. So what other efforts do you have on the way that can reduce your reliance on auto?

Perry A. Sook

Well, I think that from our perspective, I look at the whole company and better than 40% of our EBITDA comes from non-television ad spend. So we're 60% EBITDA driven by television ad spend. Automotive, if it's 20% or 25%, so that means you're 12 to 14 points or so of total ad spend that comes from the automotive category. We have lessened our reliance but we continue to focus on new business development and e-Media growth. I think I mentioned on our previous call that we also, part of our acquisition strategy for acquiring GoLocal.biz was to potentially try and syndicate that product to markets that we are not in or do not serve. So we're continuing to try and take our platform and derive as many ancillary revenue sources, in addition to our continuing new business development efforts at the grassroots level to just bring new advertisers into the medium and continue to keep those availabilities filled with new advertisers. So it's kind of part of a global discipline of diversification and revenue growth and not become reliant on any one category as we had in the past.

Barry L. Lucas - Gabelli & Company, Inc.

Great. Two more quickies, if I may, Perry. And first one, net debt was up sequentially from September 30 to 12/31 by about $18 million or the cost of the station at Evansville. But you also generated $15 million of free cash in the quarter. So where was the delta? What am I missing in the debt balance that drove that number up a bit?

Perry A. Sook

Well, it all really has to do with the timing of some of the actual receipt of those payments. For example, the Four Points incentive fee in the fourth quarter was paid when the deal closed on January 3. So I mean, it really is just more of a timing. I will tell you our revolver balance today is substantially below the $24.3 million level. So when you collect those funds, that obviously affects the balance sheet.

Barry L. Lucas - Gabelli & Company, Inc.

Sure, that's very helpful. Tom, I appreciate that. And I'm going to toss this one out there despite the early announcement by the moderator. We're now 8 months, 7 months into this strategic review process. Maybe you could just -- without commenting on what's going on -- it feels open ended, Perry. And so when might we expect some closure?

Perry A. Sook

I appreciate that. I got burned on some timetable projections that I made in conferences last year so I don't want to do that. But I will tell you that the board is, of which I'm a member, is determined that when the process concludes, we will make an announcement that the process has concluded either by making an announcement of activity or no activity. So please, just infer from that, that discussions are still on going on various array of fronts and things move slower than we would all like potentially but pencils are not down on this, there are still discussions of various alternatives and continuing to weigh what is in the long-term best interest of shareholders. So the board is being very deliberate about this. There is no sense of urgency per se but there is a sense that this can't go on. And I will be highly doubtful that we will pass the anniversary date of the announcement, that we are in this process without an announcement about this process.

Operator

[Operator Instructions] And we'll take our next question from Alex Sharnelli [ph] with SM Investors.

Unknown Analyst

I was looking at the cash interest expenses that are provided for the year 2010, that are provided in the press release, just think at around $41.3 million. And then when I look at the 10-K, so for 2010 at the cash flow statement and I go down to the supplemental information, the interest paid number there is $46.9 million. May I ask you what is the difference between those 2 numbers?

Thomas E. Carter

I would have to get back to you. I don't know right off the top of my hand what the difference between the press release and the K is. It could be a number of things including amortization, et cetera. I'll have to check.

Operator

And we have no further questions in the queue at this time. I'd like to turn the call back over to our speakers for any closing remarks.

Perry A. Sook

All right. Well, thank you very much. I hope you all found this morning's call informative and helpful. And I'd, again, like to thank you all for joining us.

Operator

That concludes today's conference. Thank you for your participation.

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