Workstream F2Q08 (Qtr End 11/30/07) Earnings Call Transcript

| About: Workstream Inc. (WSTMF)

Workstream Inc. (OTCPK:WSTM) F2Q08 Earnings Call January 9, 2008 5:00 PM ET

Executives

Karen Haus - Investor Relations

Deepak Gupta - Chief Executive Officer

Philip Oreste - Chief Financial Officer

Michael Mullarkey - Chairman

Analysts

George Sutton -Craig-Hallum Capital

Nick Pajwani - RothCapital Partners LLC

Nate Swanson -Thinkequity Partners

Operator

Good day and welcometo the Workstream Incorporated second quarterfiscal 2008 financial results conference call. Today’s conference is being recorded.

With us today isChief Executive Officer Deepak Gupta and Chief Financial Officer PhilOreste. Atthis time, I would like to turn theconference over to our host, Ms. Karen Haus, Investor Relations for WorkstreamIncorporated. Please go ahead, ma’am.

Karen Haus

Thanks, Kimberly. Good afternoon, everyone and thank you for joining us today forWorkstream’s second quarter 2008 conference call. My name is Karen Haus, Investor Relations forWorkstream and with metoday are DeepakGupta, President and Chief Executive Officer; and Phil Oreste, Chief FinancialOfficer. Also joining us today on thecall is Michael Mullarkey, our Chairman.

Theagenda for today’s call is as follows: Phil will provide anoverview of the keyfinancial results for thequarter; Deepak will then provide asummary of the mostsignificant quarter’s activities, followed by adiscussion of our current operations and strategies. Michael will then provide us with anupdate on theunsolicited offer we recently announced. We will then open up thecall for your questions.

Before we begin, I’d like to remind everyone that ourremarks today contain forward-looking statements subject to theSafe Harborprovisions of thePrivate Securities Litigation Reform Act. Those statements include, but arenot limited to, future financial performance, new product development, marketgrowth, demand for Workstream’s solutions, and general businessconditions. Various known and unknownrisks and uncertainties may cause theactual results and events of Workstream to differ materially from thoseforward-looking statements.

We encourage you to review our security filings for amore complete description of therisk factors associated with thecompany. Our filings may befound at www.SEC.gov.

With that, it’s my pleasure to turn thecall over to Phil.

Philip Oreste

Good afternoon and thanks for joining us for today’s secondquarter 2008 earnings call. Please referto the press releaseissued today for further details regarding our financial performance for thesecond quarter of fiscal 2008. Let’s godirectly into thenumbers.

Total revenue for thesecond quarter was $7.1 million compared to $7.4 million inthe prior quarter and$8.0 million in thesame quarter last year. Thesequential and year-over-year decline inrevenues were primarily due to adecline in oursoftware revenues. Q2 revenues came inslightly lower than we expected due to thepush out of one perpetual license transaction and to alesser extent, some modest weakness inour rewards business.

Gross margin for thesecond quarter was 73%, which was slightly down from thegross margin in theprior quarter due to lower than expected revenues and to alesser extent, theproduct revenue mix.

Turning to operating expenses, sales and marketing expenseswere $3.0 million, up from $2.6 million inthe prior quarter,which reflects theinvestments we have made inour direct sales efforts, primarily increases inquota-carrying head count. Additionally,we incurred elevated marketing expenses related to thelatest release of Talent Center 7.0 inthe quarter.

General and administrative expenses were $4.3 million inthe quarter, down from$5.1 million in theprior quarter. Note that last quarter’sG&A expenses were higher than normal, as thecosts associated with our recent capital raise areincluded in thosenumbers.

Research and development expenses for thequarter were $1.4 million, down slightly from $1.5 million inthe priorquarter. Theprimary reason for thedecline was the latestrelease of Talent Centerduring thequarter. Going forward, we expect ourlevel of spending on development to decrease slightly.

EBITDA loss for thequarter was $3.2 million or $0.06 pershare. During Q2, we recorded a$5.4 million net benefit from interest income related to theaccounting treatment of financing costs related to thewarrants issued in Q1 inconnection with our financing. Thisbenefit allowed us to post net income of approximately $780,000 or $0.02 pershare on a GAAP basisfor the quarter.

We saw avery healthy level of sales activity during thequarter and as noted inour earnings release, we increased thenumber of transaction closed by 100% compared to theprior quarter.

We exited Q2 with $7.9 million of cash and cashequivalents. We used $1.3 million incash flow fromoperations and invested approximately $200,000 incapital expenditures. We ended thequarter with 211 employees, including 17 direct sales reps, up from 15 atthe end of theprior quarter.

With that, I’d like to turn thecall over to Deepak.

Deepak Gupta

Thanks, Phil and good afternoon, everyone and thank you forjoining us for our fiscal year 2008 second quarter earnings call. First of all, I amvery pleased with theprogress that we have made during thequarter in building asolid foundation which will help us escalate our revenue and bookings.

We have continued to work towards our goals for revenue andbookings volume and velocity. Our sales team is inexecution mode and we already areand should continue to seethe benefits of theirexcellence as they diligently work through thepipeline. Typically, as I’ve saidearlier, the salescycle is around three to sixmonths for mid market deals and sixto nine months for theenterprise deal. We also continue to focus our efforts to control costs withoutnegatively impacting sales momentum.

I believe there arethree reasons why Workstream is ina better positiontoday. Number one is market trends,number two products, number three execution. Let’s talk about themarket trends that we areseeing today. We believe that themarket for talent management solutions may not beadversely impacted as much as themarket for ERP or CRMas the economy slowsdown. This is because employeeproductivity, talent retention, and alignment of profit goals become even moreof a mandate underchallenging economic conditions. Let meprovide some more color on this belief.

Number one, SAPadoption remains very high and especially during difficult economic times, SAPbecomes a very, veryhandy tool for avariety of reasons. Number one, itcan offset most of its CapEx and during difficult economic situations, OpEx ispreferable over CapEx.

Deployment times and accelerated time to [inaudible] is thekey. Itdoes not require a lotof investment and time from internal ITand allows us to plug into and leverage existing ERP and CRMsolutions.

Number two, demographics around talent management remain positivewith increasing trends to systematically address lowunemployment and aging workforce, alignment of employees and contract objectives,increasing challenges of retaining thebest talent, and turning talent management data into actionable information.

Itis still aunderpenetrated market as pera recent survey doneby [Modern Infusion], 52% of thecompanies said they don’t even have aclearly outlined talent management strategy. That tells you it’s ahuge market and we’ve just begun.

With aneconomic slow down, there’s ashift in spending andas you all know, as theeconomy begins to slow down, thebuying patterns will rapidly shift from tactical recruiting products becausecompanies don’t need to hire too many more people, to more strategic productslike performance, succession, compensation, knowledge management.

We have anintegrated suite of products to address allthese major spending categories and we believe this will help us differentiateourselves from the foreignsolution providers and help accelerate our bookings growth.

Let’s turn to our products. We continue to innovate by investing inour award-winning product set. Talent Center 7.0 was unveiled inSeptember. Its highly intuitive user interface, great functionality, [inaudible]functionality, and soon and so forth. Nobody else inthe industry hasthe breadth and thedepth of functionality coupled with superb user experience.

We integrate allthe softwareWorkstream hasacquired into one comprehensive suite. Whatdifferentiates us from our competition is our focus on integrated processeslike pay for performance,built in metrics, and businessintelligence capabilities.

Feedback on version 7 hasbeen extremely positive. Infact, over a dozenindustry analysts have commented very positively on our launch of Talent Center7.0. But we allrealize having one of thebest products doesn’t matter if you can’t monetize it, soI would like to share with you theimpact of our sales efforts as well as theimpact version 7 hashad on our pipeline development.

Let mejust share data from one of our keymarketing initiatives. Three months agowe launched an[inaudible] activity to over 2,000 customers and through that activity inthe last three monthswe have had 146 meetings. Out of 146 meetings, 42 have entered thepipeline of sales opportunities. Webelieve this is atestament to the valueof version 7 to themarketplace.

As I mentioned earlier, execution is extremely important andsomething that we arelaser focused on. InQ2 we continued to solidify thefoundation for our future growth. Let meshare with you some leading indicators that I believe demonstrate thatWorkstream is successfully executing on aninitiative I started ayear ago. I amsure you can appreciate that these changesdo not happenovernight, but I amvery pleased with what we have accomplished inthe past few quarters.

There arethree key leadingsales indicators that I keep aclose tab on. Number one is pipeline,number two is bookings, and number three is number of transactions. We allknow that the leadingcompanies are able to crosssell more to leverage their most valuable assets; that is their customers. Now I’m very happy to announce that allof these three -- bookings, pipeline, and number of transactions -- arepointing in theright direction.

Let metalk about bookings. From thefirst of June to the 30thof November, year over year we have grown our bookings up by 55%. That is inline with my earlier goal of growing faster than themarket rate of 20% to25%.

Pipeline. Our totalpipeline has grownover 282% from the yearago pipeline, soas you can see, our marketing efforts areyielding results. We saw 100% sequential increase inthe number oftransactions we closed this quarter compared to theprior quarter. Again, atestament that we’re able to go out and sell to our existing and newcustomers. We believe these metricsindicate that our sales organization is beginning to hit its stride.

Inaddition, we saw strong contribution from our install base. Some of thecompanies that we transacted with inthe last quarter wereEDS, a large cablecompany, a globalfinancial services company, and amajor pharmaceutical company. We believethat this trend of leveraging install base will continue inour favor and provide cushion against competitive and economic factors.

Sowhy were the Q2revenues light? As Phil said, and Ishared earlier, we typically don’t dotoo many perpetual deals, but sometimes it’s arequirement, especially ina governmentvertical. Aperpetual deal in Q2split had a modest, anegative impact on therevenue but it is ontrack in this quarterand we hope to close inQ3. We also saw some weakness inthe rewards program.

While Q2 revenues were light, we remain confident inour outlook. As I discussed with you last quarter, I believe themost important metric for investors to use to measure our progress isbookings. Revenue currently is not agood barometer due to thelag between bookings and revenue.

There is one more data point I’d like to share withyou. During thesame quarter last year, bookings were split 30% into recurring revenue and 70%on PS and last quarter our bookings were 70% of therecurring revenue and 30% on theprofessional services side, sothe trend is clearly inthe direction we want itto be and we arefocused on the recurringrevenue.

Over time, this trend will help eliminate therevenue fluctuations inherent inhigher PS-driven sales model. We believethat our booking momentum sets thestage for us to build asteady stream of increasing revenues, but we recognize that it’s not just aboutrevenues; profits matter too.

We believe that our major investment inR&D and building our sales organization arebehind us. That does not mean that we will not invest if necessary inthese areas, but we should expect to begin to seesome leverage in theseexpense categories in thenot-too-distant future. We will belaser focused on reducing expenses and we look atevery possible way to accelerate our path to profitability, including increasedleverage on offshore employees.

I have been very busy over thepast year building asolid foundation for Workstream’s growth. I am pleased toreport that we now have allthe major pieces inplace and we are solidlyfocused on execution as we head into calendar year ’08 and beyond.

We have avision, and the visionis to be one of thetop three players in thetalent management industry. To share that vision and also to talk about themerger offer we received, I would like to turn thecall over to our Chairman,Michael Mullarkey.

Michael Mullarkey

Thank you, Deepak. Good afternoon, everyone. As manyof you know, on December 31st of 2007, Workstream announced that itreceived anunsolicited offer for aletter of intent to merge with anHR payrollcompany. I will discuss this ina moment, but firstsome background.

Over thelast several years, Workstream hasbuilt a great companywith many great assets and recently inour HR tech show inOctober we were held as game-changingby some of our industry analysts that looked atour new Workstream 7.0 product that Deepak and theteam have brought to market. Our management team is relatively new, but they arelaser focused and they have just begun to hit their stride which hasresulted in thesolid momentum and building inthe marketplace thatwe’re seeing today.

Workstream is very well positioned to capitalize on theinvestments that it hasmade over the last 12months in building outits sales force, expanding its management team, investing inmarketing, and bringing world-class products to themarketplace. As such, agreat software company we are, we were attractive to other people.

As Deepak mentioned, our vision is to become one of thetop three players in thetalent management industry. We alsobelieve that we have avery unique offering of our products. Many of our competitors aretrying to catch up to theuniqueness of our depth and breadth of our product offering. Thelead that we currently have we aregoing to continue to invest inand initiate a game-changingposition for Workstream.

Therefore, we decided to accomplish this vision, we neededto have two keyobjectives. Number one is to become profitable quicker than we had initiallyprovided in our July2007 plan. First we realized thatbecoming profitable is anextremely important objective, and we areworking very diligently to getthere as quickly as possible. Webelieve, however, we need to also recognize thebalance between profitability and not taking unnatural actions that would stuntour growth. We aretaking a hard look atevery dollar that’s spent, every dollar that’s been invested, and making surethat they pay off.

Second, inexploring strategic options for thecompany, as we continue to growand focus on profitability to help us achieve our goal of being one of thetop three companies inthe talent managementindustry. When you bring out greatproducts and you have agreat management team, you begin to stir thepot. Opportunities will come our wayfrom very unexpected places and as many of you know, we received anoffer. I want to beclear that today we arenot in aposition to disclose many of thedetails such as price, terms, and conditions, but as such, I want to make surethat everybody understands that theBoard takes its responsibility very serious. In receiving theoffer over the time ofthe holiday, myselfand several members went and metwith the targetedcompany. We spent thelast seven days working with thetargeted company. We invited them to ourBoard meeting in Californiaon Sunday and Monday. We shared ourvision for each other of thefuture, how thecompanies combined would work together, including tactical plans forintegration, customers, management, product synergies, and such.

At theend of the day, weboth liked what we had heard and we felt that there was enough overlap invision and synergies that yesterday we signed anon-binding letter of intent that we will moveforward on. Theexpiration of this letter of intent is avery short time frame, January 25th of 2008, to keep both partiesvery focused on one thing: to find outif the two companies,what they’ve initially determined and their initial impressions were correctand to further expand into amutually shared vision and strategy, and then second, is by December 25thto get to apoint where we can hammer out adefinitive purchase agreement where we can merge thecompanies that would benefit allshareholders over the longterm.

Our view is that if adeal cannot be donequickly than it’s proably not worth doing. If a deal is tobe consummated,there’s three things that we’d like to focus on: acollective company that is larger, profitable with abreadth of products that stands above everything else inthe industry and makesus one of the threeleaders in thetalent management market. There aremany moving parts to this plan. Theletter of intent, its terms and conditions, we areworking through currently.

I know they’ll bemany questions about this as we go through thecall, but I ask that you beconsiderate and just focus your questions on our product strategy. As we moveforward, many offers will come. Thekey is to keep thecompany, themanagement team focused on delivering great service and products to ourcustomers. TheBoard is in constantcommunication inmoving this process forward. We’re insupport of atransaction with thetargeted company. We want to make surethat the economicbenefits arebeneficial for allshareholders. We want to make sure thatwe can leverage thebalance sheet and net operating losses ina transaction.

Soas we move forward, Iwant everybody to know that we aregoing to work hard on this letter of intent. We will know ina very short period oftime where we’re going to beand we will report back to theshareholders after January 25th inan updated conferencecall.

As such atthis point, thanks, Deepak, and I’ll turn itback over to you.

Deepak Gupta

Thanks, Michael and just to reiterate what Michael said, ourgoal is to be one of thetop three talent management companies and there aretwo objectives we have inplace. Number one, to accelerateprofitability and number two, to explore options where itis a win-win forshareholders, it is awin-win for customers, itis a win-win foremployees, and it is awin-win for thepartners. Solike Michael and theboard, we are fullycommitted to exploring these options as well.

With that, Operator, we will open for Q&A please.

Question-and-AnswerSession

Operator

Thank you, sir. The question and answer session will be conducted electronically. (Operator Instructions) Our first questioncomes from George Sutton at Craig Hallum.

George Sutton - Craig-Hallum Capital

Good evening,everyone. Deepak, could we walk through the meaning if you will longer term of the pipeline being up 280%, the bookings being up 55%? Obviously bookings are a nearer term indicator of activity. It takes a while for the new product obviously to go through dealscycles. Does that suggest that we shouldcontinue to see accelerations in the percentage growth in bookings or are we just working off of small numbers tobegin with?

Deepak Gupta

You know, numbers arenot small and they aregetting bigger every day due to our various marketing initiatives we areputting in place. SoI’m very pleased with thepipeline going up over 250%, very pleased with thebooking going up 55%, and we think this trend can continue. Not atthose levels, not at300% forever, but we think that booking acceleration can continue and we canbuild on this booking growth.

Thekey is, how doyou know that thebookings are yielding theresults you expect as ananalyst? There are twoplaces you want to seethe benefits ofbookings. One place is revenue and we allknow there’s a lagbetween bookings and revenue and bookings, once you book adeal, it could beover three to five years; sorevenue to berecognized over over three to five years as well sothe impact on revenueof closing bookings ina respective quarteris very minimal, if any, inthat quarter except atPS revenue.

Certain things we aremoving ahead is as we start to bill our customers for yearly bookings,traditionally we have billed our customers monthly or quarterly; sowhen you bill acustomer monthly and quarterly, you don’t seea significant increasein deferred revenue.But moving ahead, all thedeals we are workingon this quarter and ahead areyearly bookings so youwould start to see atrend of increased deferred revenue as we book more business.

George Sutton - Craig-Hallum Capital

Now and that is helpful because that had been aquestion. Now with respect to thepipeline, obviously you have JoeI assume really working through thepipeline pretty significantly. Obviously he’s new relative to who was doing thepipeline before. Arethe definitions ofpipeline much different or is this just pure acceleration inthe interest levelyou’re seeing?

Deepak Gupta

No, thedefinition has not changed. Thenumber I gave you was total pipeline and thedefinition has not changed,it is pureacceleration and due to our marketing and sales force out there knocking on thedoors.

George Sutton - Craig-Hallum Capital

Now if I can justask Mike, you signed a non-binding LOI. That I assumedoes not preclude another bidder from coming to the party if one does show up, is that correct?

Michael Mullarkey

We signed a non-binding LOI that would allow the two companies to agree upon terms that Ican’t discuss at this point. One of the binding parts of the agreement though is confidentiality and alsoexclusivity for a period until January 25th.

George Sutton - Craig-Hallum Capital

Okay, I understand.

Michael Mullarkey

Thesecond part of themodel is we also have received anoffer for our career networks business inthe middle of this ofcourse and the Boardis also looking atthat opportunity as well sothere is a reason westructured it theway we did and again we’ll beable to report back on that right after January 25th.

George Sutton - Craig-Hallum Capital

I know I will be asked this question so I will ask you this question, one of the statements you made was this will benefit all shareholders over the long term. What does that necessarily mean for the short term or is that not an important consideration?

Michael Mullarkey

Not at all George. I guess when we are looking at an offer, we’re not looking at a point in time at the end of December and tax loss selling seasonand though the stock may go up and down we have to look at the intrinsic value of the business before we spend a significant amount of time over two dayslooking at the value of the assets inside the company and its achievements against its goal, the investments that we’ve made, including moneythat’s been put into the company in the last several years. As such, wewant to make sure all those shareholders who put money in at those levels are treated fairly but we also know that we’vemade a tremendous investment over the last 12 months and those things are starting to pay off, so we’re taking a long term view, we’re not just saying, “The stockprice is at $0.80 or $1.10” or what have you. We’re going to make sure that we can benefit together if we do a combination.

The second thing when I say long term is if you look at a very profitable company and if you look at the NOLs that are on our balance sheet as we go through a transaction and the complications around the use of the NOLs, we’re bringing in outside third party independent advisors toadvise on the value of those NOLs and that’s what some of the things that are taking time in the transaction.

George Sutton - Craig-Hallum Capital

Perfect. Okay, thank you. Good luck.

Operator

Thank you. Moving on, we’ll take our next question fromNick Pajwani with Roth Capital Partners.

Nick Pajwani - Roth Capital Partners LLC

Hi, thank you. Deepak, if you will help meunderstand, how was therevenue mix across thedifferent line items for your corebusiness?

Philip Oreste

Hi Nick, this is Phil. The enterprisework force services business had about $4.7 million, just under $4.7 million inrevenue and the careernetworks portion of thebusiness did just under $2.4 million.

Nick Pajwani - Roth Capital Partners LLC

I was trying to ask what was thebreakdown across thedifferent revenue line items like software, professional services, and rewards?

Philip Oreste

For thesoftware component, we had $2.2 million for thequarter. Professional services was about$850,000. Therewards business was $1.6 million and as I mentioned, career networks is $2.4million.

Nick Pajwani - Roth Capital Partners LLC

Also, was one of thethings you mentioned inyour comments was theprofessional services, one of thedeals slipped in theprofessional services side. What was themagnitude of that deal?

Deepak Gupta

We didn’t sayprofessional services, we said perpetual license.

Nick Pajwani - Roth Capital Partners LLC

Can you share with us themagnitude of the deal?

Deepak Gupta

No, we’re still working through that. I would rather not talk about that.

Nick Pajwani - Roth Capital Partners LLC

Also on thebookings side, 55% looks like ahealthy growth number. Could you help usbetter understand on what was theincrease purely for fiscal Q2 ’08 or year on year increase there?

Deepak Gupta

I would behappy to do that. As I said last time, Nick, we arelearning to -- the wayI define that is we arelearning to walk before we run and I’m not ata stage where I wantto start running and I will start giving quarterly numbers from this quarter, butI wanted to make sure you guys have thevisibility that themomentum is continuing. We’re not slowing down themomentum. Thebookings are growingfaster than the marketrate and from thisquarter onward, once my sales team hasbeen around for six tonine months I will bein aposition to start sharing those numbers.

Nick Pajwani - Roth Capital Partners LLC

Could you share with us only thegrowth number if not thedollar value?

Deepak Gupta

I don’t have thenumber handy. When you and I talk I cangive it to you.

Nick Pajwani - Roth Capital Partners LLC

Okay, thanks. Also,if you could help me. Itseems like you still have $1 million of debt on your balance sheet, bothcurrent and longterm. Is that interest bearing or isthat non-interest bearing debt?

Philip Oreste

If you’re talking about thecapital, we have capital leases for various equipment and hardware. They areinterest bearing but they’re for operating leases for capital equipment.

Nick Pajwani - Roth Capital Partners LLC

Soon the sales upside,can you update us on whether thetwo reps that you hired, was that on theenterprise side or themidmarket side?

Philip Oreste

Both of those represents were hired on theenterprise side.

Nick Pajwani - Roth Capital Partners LLC

Okay. Lastly, forMichael, regards themerger offer here, is themerger offer from thepayroll company for theentire business or is that only for thecore business and notfor the career sourcesbusiness? Thank you.

Michael Mullarkey

Thanks, Nick. It’s currentlycontemplated that itwould be for thewhole business.

Nick Pajwani - Roth Capital Partners LLC

Okay. Thank you.

Operator

Our next questionwill come from Nate Swanson with Thinkequity.

Nate Swanson - Thinkequity

Hi guys. Question on the proposed transaction. It’s sort of a non-traditional merger. Essentially you’re combining tactical payrollwith more strategic human capital management. I’m just wondering how you think that’ll change your competitive positioning and maybe whatfactors you’re looking at in terms of weighing the risk/reward and execution once the transaction would be completed?

Michael Mullarkey

I think we’ve seentwo things going on right now. Numberone is, as many people know, companies in the payroll space such as ADP and others have acquired talent managementcompanies over the last 12 months at a more aggressive pace than they have in the prior several years. The number one reason is because payroll ofcourse as we head into a difficult time, unemployment went from 4.7%to 5% last Friday as reported, and we see that trend continuing. We see the recruiting companies more specifically, asyou have probably noticed, declining dramatically in both value and where they’re going.

As it relates to payroll, it’s always been a very consistent business. What’s strategic about it, different thantaxable perhaps the way you see it, is that it’s a system of records, which is in many cases the holy grail, but it doesn’t grow as quickly. Number two is that our products are really built for the midmarket and really large enterprisecustomers who can benefit from talent management, so they’re looking for a growth engine and if you go across some ofyour spreadsheets and other analysts compare to some of the people in the marketplace, we’re relatively inexpensive ona market cap basis compared to some of ourcompetitors, whether it’s success factors in [Toleo] and [Conexxa] and such so they’re looking for a growth engine from extreme.

Number two is webelieve that the strategy is that we can benefit from their distribution of their salesforce along with the benefit of a profitable company as we’re able to open up the doors and meet with more customers and have the financial viability behind us and a balance sheet moving forward so we can execute.

Nate Swanson -Thinkequity

Okay. Do you have any partnerships currently withpeople in the payroll space? I guess I’m notfamiliar enough with your business.

No, we do not.

Nate Swanson -Thinkequity

You don’t. Okay. That’s all I have. Thank you.

Operator

It appears we have no further questions at this time. At this time I would like to turn the call back over to you for any furthercomments or closing remarks.

Karen Haus

Thanks,operator. I just want to thank everyonefor joining us today and we look forward to speaking with you soon.

Operator

Thank you. Ladies and gentlemen, this does concludetoday’s teleconference. We would like tothank everyone for their participation in today’s call. Have a great rest of your day.

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