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Omnicom Group, Inc. (OMC)

Q2 2007 Earnings Call

July 24, 2007 8:30 am ET

Executives

Randall Weisenburger - EVP & CFO

John Wren - President & CEO

Analysts

Karl Choi - Merrill Lynch

Troy Mastin - William Blair & Company

Alexia Quadrani - Bear Stearns

Matt Galati - Lehman Brothers

Jason Helfstein - CIBC World Markets

Paul Ginocchio - Deutsche Bank

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to the Omnicom second quarter 2007 earnings release conference call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time (Operator Instructions). As a reminder, this conference call is being recorded.

At this time, then, I'd like to introduce today's conference call host, Executive Vice President and Chief Financial Officer of Omnicom Group, Mr. Randall Weisenburger. Please go ahead.

Randall Weisenburger

Good morning. Thank you for taking the time to listen to our second quarter 2007 earnings call. We hope everyone has had a chance to review our earnings release. We've also posted to our website both the press release and a presentation covering the information that we'll present this morning. This call is being simulcast and will be archived on our website.

I've also been asked to remind everyone to read the forward-looking statements and other information that is included on page one of our investor presentation. And to point out that certain of the statements discussed today may constitute forward-looking statements and that these statements are our present expectations and actual events or results may differ materially.

We're going to begin the call with some brief remarks from John Wren. Following John's remarks, we will review the financial performance for the quarter in more detail. And then both John and I will be happy to answer any questions at the end.

John Wren

Good morning. And thanks for joining our second quarter earnings call. Our second quarter's performance and for the first six months of this year was excellent. All of our agencies and marketing services companies continue to grow in each one of our disciplines throughout the world.

As Randy will cover in a lot more detail, our net new business for the quarter and the first six months of this year reflects our continued ability to extend our services to the finest clients -- companies in the world. Our continued investment in the development of our people, I believe we believe, is the cornerstone for our consistent performance.

At this point, I will turn this back over to Randy. And then he and I, as he's just suggested, will answer any questions you might have. Thank you.

Randall Weisenburger

As John noted, the second quarter was an excellent quarter from both a financial and a market perspective, with our agencies continuing to distinguish themselves in the marketplace. Before I get into the results, I've been asked to remind everyone as a result of our recent two-for-one stock split, all current and prior period share and weighted average share amounts have been adjusted in accordance with SFAS 128.

Now, for the results. Revenue growth in the quarter increased $302.7 million to $3.1 billion. That was an increase of 10.7%. As a result, revenue for the six months increased 10.8% to $5.97 billion.

Operating income for the quarter increased 10.6% to $461.6 million. That's an operating margin of about 14.8%, which was about the same as second quarter last year. For the six months, operating income increased 10.7% to $777.1 million. And the operating margin was 13%, again, flat with last year.

Over the first half of the year, we've continued to increase our investment in our people, in training, in technology, and in numerous new business development initiatives, which together have resulted in our strong year-over-year growth. And we believe have positioned the Company well, going forward.

While internally, we see and feel the effect of these investments every day, externally they become more apparent in our agencies' consistent dominance of the creative award shows like Cannes and our new business performance, which this quarter totaled $1.7 billion and year-to-date has been about $3 billion and in our consistent industry-leading revenue growth performance.

Net interest expense for the quarter was $22.2 million, which was down about $3.3 million from last year. The year-over-year improvement is primarily the result of not needing to pay a supplemental interest payment on our 2031 bonds this past February, offset by higher overall interest rates on our short-term borrowings and marginally increased borrowings resulting from our share repurchase activity.

On the tax front, our reported tax rate was 33.9% for the quarter. That was up a bit from last year. And year-to-date, our tax rate was 33.8%, up from about 33.7% last year.

Net income for the quarter increased 13.4% to $276.7 million, bringing the year-to-date total up to $459.7 million. That was an increase of 12.2%. EPS, again, on a post-split basis. Fully diluted EPS, again reflecting our performance in the quarter as well as the impact of our share repurchase activity, increased 18.3% to $0.84 a share, bringing the year-to-date diluted number to $1.38, up 17.9%.

Analyzing our revenue performance. FX in the quarter was positive 3.1% or $88.7 million. For the six months, FX had a positive impact of $176 million or about 3.3%. Looking ahead to Q3, if rates stay where they are, FX should continue to be positive and at similar levels to the second quarter.

Growth from acquisitions, net of divestitures, was again marginally positive, increasing revenue by $6.2 million, or about two-tenths of 1% in the quarter, and by $8.3 million or about one-tenth of 1% year-to-date. During the quarter, we closed two acquisitions and appear to be on track to close several more in Q3.

As most of you know, for the past four quarters, our acquisition revenue has been muted by the divestiture of a health care business in the third quarter of 2006. Next quarter, this impact will cycle out as we expect to see an increase in our acquisition revenue for the remainder of the year.

Organic growth continued to be very strong, increasing to 7.4% in the quarter and accounting for $207.8 million of our revenue growth. Year-to-date, organic growth added $396.1 million or about 7.4% to our revenue.

As for our mix of business, traditional media advertising accounted for 43.7% of our revenue, and marketing services, 56.3%. As for their respective growth rates, advertising grew 11.8% in the quarter and marketing services increased 9.9%. Breaking down our marketing services revenue for the quarter; CRM was approximately 35.9%, public relations, 10.3%, and specialty communications, 10.1%.

As for their respective total growth rates, CRM continued to be extremely strong, accelerating to 14.8% growth in the quarter. Public relations also had an excellent quarter, increasing 11.9%, and specialty communications, which was impacted again by the disposition of a health care business and the third quarter of 2006, decreased 5.9% for the quarter. Adjusting for that divestiture, specialty communications would have been about flat in the quarter and up about 2.3% year-to-date.

Our geographic mix of business in the quarter was 53.1% US and 46.9% international. In the United States, total revenue growth for the quarter was $124.3 million or 8.1%. Acquisitions, again, marginally positive at $2.6 million. Organic growth very strong, accelerating to 7.9%, adding about $121.7 million to our revenue.

International revenue increased $178.4 million or 13.9%. Acquisition growth was net-positive $3.6 million. FX again was very positive, increasing $88.7 million. And organic growth was very strong at 6.7%, adding $86.1 million to our revenue.

Our international organic growth was driven largely by strong performance across the board. But the countries of note are Canada, Germany, Netherlands, Belgium, Greece, Ireland, Italy, Spain, Russia, China, and Australia.

On the cash flow front for the second quarter, again, was very strong and consistent with our historical trends. Our cash management programs have continued to perform very well. As we believe everyone already knows, our primary source of cash flow is net income adjusted for basic non-cash charges, which for us are primarily stock-based compensation charges and the related tax benefits, then depreciation and amortization.

Our primary uses of cash are dividends, which as most of you know, was just increased by 20% to $0.15 per share, that's obviously split-adjusted. Our year-to-date dividends totaled $84.2 million. Capital expenditures totaled $101.2 million year-to-date. Acquisitions, net of dispositions and asset sales, including earn-out payments on prior acquisitions, have totaled approximately $144 million. And share repurchases year-to-date have totaled $756.8 million.

We should also note that we've received $66.3 million of proceeds from option exercises and stock sold under our employee stock purchase plan. That's resulted in net repurchases of about $690.5 million. As a result of that, our average diluted share count for the quarter was reduced to 330.8 million shares. And I believe our outstanding share count at the end of June was about 328 million shares.

And with that, now, I'll ask the operator to open up the phone lines for questions.

Question-and-Answer Session

Operator

Great. Thank you very much. (Operator Instructions) And our first question comes from the line of Karl Choi with Merrill Lynch. Please go ahead.

Karl Choi - Merrill Lynch

Hi, good morning. The net -- the organic revenue growth was certainly very strong in the quarter. Can you talk a little bit about the prospects in the second half, given the net new business trends that was good in the quarter? And sort of any sense that maybe you can even exceed last year's performance? Thanks.

John Wren

Our business continues to be strong. As you know, the fourth quarter -- the second half is a lot -- much -- it's a bigger half for us to work on. And we're affected by global trends and people's ability or willingness to spend money. We have never -- and we're certainly not prepared today to try to forecast that for you. Having said that, our net new business, which there is always a lag effect on, should start to contribute some additional revenues to the back half of the next quarter and then the fourth quarter itself.

Karl Choi - Merrill Lynch

And Randy, question. Any thoughts about share buyback -- the magnitude of share buyback in the second half?

Randall Weisenburger

No, our share repurchase activity is really kind of the net of our cash flow after CapEx, acquisitions and dividends. I suspect that our share repurchase activity will probably continue a little bit slower-paced than the first half. But obviously, without being able to predict acquisition spending, it's harder to dial it in much more than that.

Karl Choi - Merrill Lynch

It sounds like from your comment that acquisition activity may pick up a little bit in the third quarter. If you could just elaborate a little bit on it, that would be great. Thanks.

Randall Weisenburger

Yes, we have a very active acquisition pipeline. We closed two acquisitions in the second quarter. It looks like we're on track for certainly three or four acquisitions in the third quarter. We've -- we continue to be interested in acquisitions that fit our long-term strategy and are priced appropriately for our shareholders. That hasn't changed.

Karl Choi - Merrill Lynch

Great. Thank you.

Randall Weisenburger

Thank you.

Operator

Thanks, and our next question comes from the line of Troy Mastin with William Blair & Company. Please go ahead.

Troy Mastin - William Blair & Company

Good morning, thank you very much. First question relates to new business wins, really strong in the quarter. I'm curious if the nature was any different than typical, I guess, between existing clients, new clients, geography, discipline. And the average has been about $1.2 billion over the last two or three years. I'm curious if you feel confident that the internal changes that you've made recently should result in maybe a higher run rate, as has been the case in the last two quarters?

John Wren

I'm not aware, Troy, of any seismic changes in what we've been doing. New business, as everyone should know, it is not -- that is not something we can drive. That's the result of us being invited into opportunities where clients or potential clients want to make a change.

Having said that, a lot of organic growth is driven by the underlying growth of our existing client base. We don't see any real change in the pace of clients reviewing their accounts. And our strategy is to bat very well when we're able to get up to the plate. So we're not in a position to predict that. And so, therefore, I can't really respond to your question the way you've asked it.

Randall Weisenburger

Breaking the net new business up into sort of two groups; there's a large -- a very large number of, I'll say, relatively small wins that happen around the world because we have so many agencies. The consistency of that group of wins continues to be very high, and over the last few quarters has probably even stepped up a little bit higher than normal.

The larger wins and losses, those obviously happen, there's less of them and they're much harder to predict from one quarter to another, which bounces -- can bounce the number around a bit. This quarter being $1.7 billion, first quarter being $1.3 billion -- that change is something that's very difficult to forecast one way or the other.

Troy Mastin - William Blair & Company

Okay. And then also, I saw CapEx was up a fair amount verses last year. I wondered if you could get some details on why. And should we expect this to be a more permanent situation, with higher CapEx?

Randall Weisenburger

Well, it's probably a couple things going on in CapEx. One, I've said it a few times, we've historically done a lot of our, I'll say, technology requirements, PCs, servers, et cetera, through leasing programs -- through operating leasing programs. We will probably shift some of that spending towards CapEx. That doesn't really change the economics of those equipment purchases.

They change a little bit -- effectively the way we're -- I'll say -- financing them. That might have a $20 million to $30 million per year change in our CapEx numbers. Over time, we'll probably look at shifting some of our other purchasing programs from operating leases to potentially capital leases or CapEx.

Troy Mastin - William Blair & Company

Okay. Great. And then finally, you add -- just formed OMG Digital. I wonder what you are willing to share with us regarding how you feel this is really going to differentiate you in the marketplace?

John Wren

One of the observations that we had in creating this was to actually benefit from the significant amount of spending that we do online, and that's growing faster and faster every day. I think we had estimated, although it's probably hard to actually get an exact number, that our collective billing when you go across our spend -- when you go across the agencies today is at about $2 billion.

We think that we can do a better job for our clients if we approach purchasing of digital -- specifically digital buying in a manner similar to what we've done for the last decade, from a traditional point of view.

It also allows us to look at the business, look at the systems that we need to track the effectiveness that spending, and I think attracts people who are merging with new technologies and new capabilities, when they see the level of spending that is actually done through our companies. So it is an important step, which establishes a basis for us to grow even faster in this area by becoming more efficient.

Troy Mastin - William Blair & Company

Thank you.

John Wren

Thank you.

Operator

Thanks, and we have a question now from the line of Alexia Quadrani with Bear Stearns. Please go ahead.

Alexia Quadrani - Bear Stearns

Thank you, a couple of questions. First, could you give us a little bit more color on the growth in your larger markets in Europe, specifically Germany and France?

And then secondly, the weakness in specialty -- I think you said it was flat, organically. Is there anything else weighing down in that business? And what sort of -- should the normalized growth in that area be?

Randall Weisenburger

I'll answer that one. This quarter, two areas -- that whole category is made up basically of two things -- or three things that dominate it; healthcare is the largest, second is our recruitment advertising sector. We obviously have -- the divestiture in healthcare was fairly substantial.

A couple of our other healthcare practices were not showing the double-digit growth that, I'll say, has been more consistent in the past. And recruitment advertising was down a little bit in the quarter -- that's probably more economic or marketplace driven and possibly, a little bit of second quarter driven.

As far as international growth, this quarter, Germany was quite strong. France was not as strong. Obviously, when you're looking at growth rates on a quarterly basis, especially when you get down by country, you can certainly -- a new business win or loss or a shifting of an account or the timing of spend and account from one quarter to another can move these percentages a bit.

These are a percentage -- 1% growth in a country like Germany, which is obviously a substantial country, is only a couple million dollars in a quarter. So these percentages can bounce around a bit.

Alexia Quadrani - Bear Stearns

Just back on specialty for a minute, could you give us the sense of -- is healthcare really the larger part of it? I just want to get a sense of what, going forward, may remain weak because of the economy verses what may bounce back?

John Wren

Alexia -- specialty in the aggregate is 10% of our revenue -- so just keeping it in perspective. The impact that we had in the recruitment advertising side, it's fully been anticipated by us through the year and as we continue to grow our companies. Healthcare, I don't know the exact number, maybe Randy does.

Randall Weisenburger

Probably about 8.5% of that 10%.

John Wren

Right. If you take 10% of $3 billion, you're already at $300 million. You shifted a slight amount of revenue. In the context of this conversation, it seems like a big number, but it's not.

Alexia Quadrani - Bear Stearns

Okay. And just one last question then. It seems like on most your geographies, you really seem to be operating on all cylinders, growth seems to be really strong. Is there anything -- I know you're not an economist, but is there anything you're seeing now that's particularly worrisome? Do you suspect the good growth to continue in the back half of the year, in terms of -- in the geographic regions?

John Wren

We're certainly not the economists. Our net new business activity has been strong, so execution is obviously very important. I think it's been widely talked about with the US elections coming. That certainly creates a -- probably an economic environment or at least incentives for the economic environment to stay fairly robust.

We've got the Olympics coming up next year. There's a number of things that would probably -- generally say that the economic environment and our operating environment should remain strong for the next 18 months. That, combined with continued strong operating performance of our agencies, we're reasonably optimistic.

Alexia Quadrani - Bear Stearns

Thank you very much.

Operator

Thanks. And we have a question now from the line of Craig Huber with Lehman Brothers. Please go ahead.

Matt Galati - Lehman Brothers

Yes, good morning, this is Matt Galati on behalf of Craig Huber. I just had two questions, actually. Given the strength in organic revenue, do you any opportunity in terms of increasing margins? Or are you somewhat satisfied with where they are?

My second question is; by vertical, is there any strength or weakness that you're aware of? Thank you.

Randall Weisenburger

John may answer too -- I'm very satisfied with the 18.3% EPS growth. We've said it numerous times. We're focused on EPS growth, we're focused on operating efficiencies at our agencies' level that allow us to continue to make increasing investments across the board, in our people, technology, marketing initiatives, development initiatives, et cetera.

Those are the things that drive the consistent long-term performance of the Company, which I tried to point out in my comments earlier, we think we're well-positioned going forward, we think those investments are certainly paying off. We see them and feel them internally all the time.

Externally, it's probably a little bit harder to see, at least directly. But you see it indirectly through the consistent executional performance of our agencies in things like the award shows, the placement that they get -- the below the line agencies, in their awards. That's certainly a testament to the quality of the people that we have.

Low turnover, the high net new business wins, that's a result of, again, investing in our people, training programs, et cetera. So we're pretty comfortable with the way the business is going right now.

John Wren

On the margin question, that really -- if you look at the last several years, we've done more in terms of internal growth, than we have in terms of -- way more than we have in terms of acquisitions. Since growth for us is the investments in people, the investments in our technology, the investments in the way that we develop our people, we're not purchasing revenue, we're actually making those investments.

And there's always a lag time between when you incur those costs, make those decisions, and when you start to see a result from it. I think the way we view it is we're always looking to optimize, not maximize the performance of the Company. And that has a long-term -- there's a long-term basis to those decisions.

So as we invest in people, as is appropriate, there's a cost to that. And that cost is reflected in margin performance. We have the ability, based upon the decisions we make, to impact that. And I think we've struck the correct balance over the past several years. And I don't see any significant change to that.

Randall Weisenburger

Your second question was regarding sectors. We do some analysis, at least at this point in the quarter, on our top 250 accounts -- try to break them up into sectors, obviously. Which client you put in which sector is depending upon definitions of sectors, I guess.

Our top 250 accounts through the first six months increased around 16%. That's total revenue, not organic. And pretty much across the sectors, look pretty consistent. Some of the larger sectors had, I'll say, high-single digit, low double-digit growth. Obviously, the bigger the sector, a little bit less volatility from a executional standpoint. But for the most part, everything was pretty consistent.

Matt Galati - Lehman Brothers

Great. Thank you.

Randall Weisenburger

Thank you.

Operator

Thanks. And we have a question now from the line of Jason Helfstein with CIBC World Markets.

Jason Helfstein - CIBC World Markets

Thanks. Based on data that we've got, if I add up kind of Agency.com, Organic, Tribal, DDB and Critical Mass, you probably have other online agencies that I don't know of; you're about 20% bigger than everybody else, if you aggregate up the numbers.

Can you just talk about -- we don't hear a lot from you guys relative to your competition about kind of what's going on in the online ad agency business and the progress. But is there any color you can give on that business and how you expect that to grow and how you expect that to impact your business overall going forward? Thanks.

John Wren

I'll try this and then Randy can -- is free to add to it. I think at a recent CBWA Worldwide Conference, somebody asked me the question about digital as a specialty or digital as -- in some way. Trying to answer it very positively but also pointing out reality to them, simply every aspect of our business has a significant -- and increasingly significant digital component to it. And we started making these investments in 1995, 1996.

But the specialty companies that you just enumerated, which are the easiest to make a distinction about -- but I'd have to say I'm not really aware of too many parts of our business or individual offices or country which haven't continued to shift to where digital is becoming an increasingly important venue for us to reach the consumers that we're looking to reach.

And I also think that when you look at the average age of our employees throughout the world, it's being driven by clients, but it's also being driven internally by the proportion of people who don't quite -- don't make the distinction any longer between what's interactive or what's digital and what's traditional.

And that's impacting our business, and I think as time passes, these distinctions will become less important because everything today and everything increasingly in the future is going to have a digital component to it. Randy?

Randall Weisenburger

I think that's exactly right. I use a couple examples because they are easy to talk about. Agencies like Goodby & Silverstein, your traditional -- your historically traditional agency, obviously a creative powerhouse and leader, they were Digital Agency of the Year.

We're seeing PR firms, Fleishman & Ketchum, very significant digital practices there and direct marketing firms, in (inaudible). International, obviously the conversation becomes very US-centric because of the brands that we talk about more frequently here. But all of our international operations have digital, either built in or stand-alone digital agencies in their groups, as well.

It's a very important medium. We don't believe it should stand out as a separate discipline. Although the skill sets today are being developed, they're being integrated at an ever-increasing rate.

Jason Helfstein - CIBC World Markets

So when you think about, historically, how your organic growth rate compared to, let's say, worldwide GDP growth or US GDP growth and then you kind of -- you have this digital component on top. It seems, because of the trends we're seeing, that for some period of time that would actually accelerate your growth relative to, let's say, GDP growth. Would you agree with that?

Randall Weisenburger

We've said for a while that we think given our size, et cetera, that we ought to be able to outpace GDP by 200 or 300 basis points per year -- or our organic growth outpace GDP by 200 to 300 basis points. We think we've achieved that.

We've also achieved pretty significant relative organic growth rates verses many of our competitors in the industry. We think that's obviously the execution of our agencies and our mix of business being somewhat different.

John Wren

There's a blending, though, that goes on. Evidence the growth, which is reported and kind of online and digital. The incremental growth, I guess, going into those areas -- some markets that faster paced than others. But then refer back to what the upfront just showed you, which was -- it was essentially in line with the past.

So there's incremental growth in marketing dollars, I think, going to specific areas. But there is very little erosion, except for in certain areas like newspapers, from what makes up a large part of our base.

Having said that, you look at cellular phone growth in the United States and then go to India. India brings on six million new customers a year -- I mean a month -- pardon me -- a year. The world, I don't think we can generalize -- we have to be rather specific in terms of the underlying growth of -- the pace of the underlying growth in various markets around the world.

Jason Helfstein - CIBC World Markets

And just one follow-up, specifically. So clearly, you would describe this quarter, the flat margins year-to-year was primarily all these investments in your business. Without giving us guidance, do you have the same level of planned investments in the back half or is it too early to say?

John Wren

First of all, 14.8% margin performance for a service company -- I'm pretty pleased with that.

Randall Weisenburger

Especially that combined with 7.3% organic growth, and the consistency of that organic growth. We've said it very consistently that we're focused on balancing margin improvement and the growth of our business. We're focused on delivering great earnings per share growth to shareholders. And that's a balance of those factors. We think right now it's dialed in at a pretty good level.

John Wren

And those decisions really get ranked and made based upon the individual plans for each one of our base companies -- or our disciplines, based upon what we see as need. And Randy and I, for instance, just got back from Omnicom University -- thank God we went at different times, because they can compare -- the students can compare both of our answers.

That's been a huge -- very important program that we've expanded. It's been in place here since 1995, and every year, we're so pleased with it that we continue to expand it. This year, it's gotten even more robust in, not only what we do here in the United States, but what we do in Europe. And I think come September, we're actually exporting this for the first time to China.

So we know that as we make investments in people, as we develop people, especially middle-level people and then expand the capabilities of our managers, that that reaps real benefits in many, many ways starting from retention to the way people view various disciplines, to their ability to adjust their business models as their clients need to adjust them.

And there's a balance that goes on and we're always weighing these decisions. As I said, if you're making an investment in people, if you're making investments in the development of technology -- we don't have R&D budgets. That gets reflected in our P&Ls.

Randall Weisenburger

And I've got -- I'll put in a sales pitch, as well. We just came back from our financial leadership conference, which is an initiative we started, I guess, three or four years ago. Our North American financial leadership conference -- we had over 400 of our North American financial staff attended for almost a week.

We hold that once a year in the US, twice a year in Europe and twice a year in Asia. Certainly, our financial operations help distinguish us from many of our competitors, as well. Those are investments in the long-term development of the Company that we think are the right things to do. And the results seem evident.

Jason Helfstein - CIBC World Markets

Thank you very much.

Randall Weisenburger

Thank you. I think we have time for one more question and then we'll let people finish up before the open of the market.

Operator

All right. Very good. And that question will come from the line of Paul Ginocchio with Deutsche Bank. Please go ahead.

Paul Ginocchio - Deutsche Bank

Thanks, just on -- the equity line had a pretty good growth year-on-year, could you comment on that? Was that recurring or is there something non-recurring in there? And second, are you seeing any Olympics spending build-up or is that still yet to come?

Randall Weisenburger

Equity -- you mean equity in affiliates?

Paul Ginocchio - Deutsche Bank

Yes.

Randall Weisenburger

Trying to think if there's any one-time things. I think there were a couple -- those obviously -- that line item is made up of a relatively large number of individual investments. I don't think there was anything that stood out too dramatically in this quarter.

Clemenger BBDO in Australia has been doing very well. That's a business that we own, I think about 46% or 47% of. It's the BBDO affiliate in Australia and New Zealand, it's a very substantial, extremely well-run company. I believe the leader in that part of the world. I think that was certainly up year-over-year.

John Wren

And your second question -- I'm sorry, what was it?

Randall Weisenburger

And the second question?

Paul Ginocchio - Deutsche Bank

Do you think there's still -- are you starting to see some specific spending around Olympic creative? Or is that still coming, you think?

John Wren

That won't occur in earnest until next year.

Paul Ginocchio - Deutsche Bank

Great, thank you.

Randall Weisenburger

Thank you all very much. And everyone have a great day.

Operator

Great. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thanks for your participation and for using AT&T's Executive Teleconference. You may now disconnect.

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