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Boston Beer Co. Inc. (NYSE:SAM)

Q4 2007 Earnings Call

March 11, 2008 4:00 pm ET

Executives

Jim Koch - Founder and Chairman

Martin Roper - CEO

Bill Urich - CFO

Analysts

Andrew Kieley - Deutsche Bank

James Watson - HSBC

Andrew Sawyer - Goldman Sachs

Philip Keanes - Tritan Investment

Lauren Bintowin - Suncrest Capital

Operator

Good day ladies and gentlemen and welcome to the fourth quarter 2007 Boston Beer Company earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Jim Koch, Founder and Chairman; please proceed.

James Koch

Thank you. Good afternoon and welcome everyone. This is Jim Koch, Founder and Chairman and I'm pleased to be here to kick off the 2007 fourth quarter earnings call for the Boston Beer Company.

Joining the call from Boston Beer would be Martin Roper, our CEO and Bill Urich, our CFO. I will begin my remarks this afternoon with a few comments on where we stand competitively and then pass the microphone on to Martin who will provide an overview of our business. Martin will then turn the call over to Bill who will provide financial details for the quarter as well as our outlook for 2008. Immediately following those comments, we will open the line for questions.

We feel very positive about our fourth quarter depletions growth of 19% which contributed to 17% growth for the full year 2007. We believe that we gained share in both the Better Beer and Craft Beer categories during 2007. This was our eighth consecutive quarter of double-digit depletion increases. We believe these results are driven by drinkers trading up to our full flavored Craft beers and the strength of the Samuel Adams brand and brand support and the increasing retailer and wholesaler support for the Craft category as well as for Samuel Adams.

While the Craft category continues to get more competitive, I believe that the quality and variety of distinct beers with Samuel Adams brews positions us well to compete in this challenging market and the addition of the Pennsylvania Brewery will provide us with the capacity and capabilities to meet this demand.

As previously reported, we entered into a contract of sale for the brewery in Lehigh Valley, Pennsylvania which is just north of Philadelphia and we completed our due diligence process. We intend to proceed with the purchase of this historic and award-winning brewery where we brewed some of our beers from 1994 to 2001. We have already started making the necessary improvements to upgrade the brewery and hope to being brewing and bottling our brands during the summer of 2008. I will now pass the call over to Martin for a more detailed overview of our results.

Martin Roper

Thank you, Jim. Good afternoon everyone. As Jim noted we are encouraged by the depletions growth achieved in the fourth quarter. Our fourth quarter depletions growth reflected double digit growth in the Samuel Adams brand family and the Twisted Tea brand family. Our Samuel Adams brand continued to benefit from increased drinker interest, increased retailer support and the hard work of our wholesalers supporting our retail initiatives. We believe that our Samuel Adams brand health is being helped by our significant investment in media, sales force, point to sales materials and promotions. We intend to increase this investment level in order to maintain our leading position. As noted the Twisted Tea brand family achieved double digit growth in the quarter. We expect the alcoholic tea category to remain very competitive, but we are encouraged by Twisted Tea’s growth and we plan to continue to invest in the Twisted Tea brand to improve our position.

The Samuel Adams depletions growth achieved in the fourth quarter of 2007 reflected growth of all of our major beer styles. We believe that our brand health has been positively impacted by the strength of the Craft category which continues to experience growth from increased drinker interest in better beers, more flavorful beers and in variety.

The strengths of the Samuel Adams brand family trends during the quarter suggest that Samuel Adams continue to maintain strong brand equity with drinkers. We believe that maintaining strong brand equity in the Samuel Adams brand is vital to the continued health of our business and we remain committed to investing behind it as the number one priority to ensure long term success. We continue to test and evaluate our initiatives to determine their effectiveness and to identify the optimum investment required to generate sustainable volume growth.

As Jim mentioned earlier, the Company entered into a contracted sale to purchase from Diageo North America, a brewery located in Lehigh Valley, Pennsylvania for $55 million. In the fourth quarter of 2007, we completed our detail in this process on this brewery and has now paid in to escrow the $10 million deposit called for by the contract. We expect close on the purchase of this brewery as scheduled in June 2008 borrowing any unforeseen circumstances. We have begun making certain capital improvements necessary to restart the brew house and to upgrade other portions of the brewery. We hope to have the brewery partially operational for our brands during this summer.

In addition to the purchase price of $55 million we expect to have spend between $45 million and $55 million in due diligence and capital improvements by the end of 2008. With a further $10 million to $15 million in capital projects anticipated in 2009 to achieve our $1.4 million barrel capacity goal. We have identified additional potential projects that could improve the breweries efficiencies and capabilities that maybe completed over the next few years depending on our final assessment of return on investment and need which are currently estimated to total between $25 million and $35 million.

Our focus is on transferring ownership and starting up the brewery at the $1.4 barrels per annum capacity level and therefore the exact timing of any capital beyond 2008 is still being evaluated and may change. As previously reported we had previously being contemplating the construction of a brewery in Freetown, Massachusetts but the probability of proceeding on this side is decreased due to entering into the contracts to purchase the Pennsylvania brewery. As a result in the second quarter of 2007, we determined that it was appropriate to write off $3.4 million, the amount that had been capitalized through June 30, 2007 on the Massachusetts Brewery Project.

In August 2007 we purchased the land in Freetown, Massachusetts for $6 million as protection against possibility that the results of the due diligence on the Pennsylvania Brewery might prove unsatisfactory. As we have now concluded we will proceed with the Pennsylvania Brewery purchase. In February 2008 we place the land in Freetown, Massachusetts on the market.

As previously reported, during the third quarter the TTB performed a routine audit of our Cincinnati brewery and other breweries where some of our products are produced. In February 2008, the TTB formally disputed our regulatory and tax treatment for certain of our 2006 and 2007 Twisted Tea shipments and we have received a notice of demand for additional excise taxes plus interest and penalties of approximately $8.5 million.

The TTB has asserted that these shipments were not classified consistent with TTB regulations that took effect January 1, 2006. Based on our analysis to date, we believe that most of our Twisted Tea shipments were in compliance with applicable regulations. We are in discussions with the TTB regarding the differences and the methodologies used to ascertain regulatory compliance and expect these discussions to eventually include potential settlement terms.

While we believe settlement should be possible, we also believe that we have litigation options available to us to dispute the TTB’s position. It is not possible to determine the ultimate outcome of these discussions or any future litigation, but based on information available on December 29, 2007, we concluded that the range of possible outcomes was between $3.9 million and $9.3 million.

In the first quarter of 2008, we have continued to gather additional information and refine our analysis and now believe that if we do not pursue litigation, the potential expense could be as low as $1.8 million and would not be expected to materially exceed the $8.5 million to which the TTB has assessed, after considering amounts we have previously paid.

The ultimate outcome of this matter could materially differ from our estimates. Based on the information previously collected and our earlier assessment of likely outcomes, we recorded a provision of $3.9 million in the third quarter. We continue to maintain this provision in our December 29, 2007 financial statements related to this contingency. Twisted Tea shipments were only minimally interrupted due to this matter during the year.

Net revenue per barrel for core products for the quarter increased by 5.2% primarily due to price increases and a decrease in discounts. During the fourth quarter of 2007 we saw a continuation of significant cost pressures particularly unfavorable ingredients impacting material costs as well as unfavorable freight costs. Despite these cost pressures we were able to increase our investment in advertising, selling and promotional support behind the brand and continue to invest in our organizational infrastructure.

During the quarter we continued to maintain a strong balance sheet with adequate cash positions to support our business strategy. Our shipments and orders in hand suggest that core shipments for the quarter ending March 29, 2008 appear to be up approximately 10% as compared to the same period in 2007. Actual shipments may differ however and no inferences should be drawn with respect to shipments in future periods. February year-to-date depletions are estimated to be up approximately 14% over 2007.

Now Bill will provide the financial details.

William Urich

Thank you, Jim and Martin. Good afternoon everyone. The Boston Beer Company realized earnings of $0.46 per fully diluted share in the fourth quarter of 2007, an increase of $0.29 per fully diluted share over the fourth quarter of 2006 after taking into account a $2.2 million or $0.15 per diluted share provision for income taxes related to an income tax audit. This increase in earnings is primarily the result increases in net revenue and a decrease in general and administrative expenses only partially offset by increases in cost of goods sold, selling and administration expenses and income taxes.

For the fourth quarter of 2007 Boston beer recorded net revenue of $92.2 million, a 25.7% increase over the same period in 2006. This increase is primarily a result of the19.5% increase in core brand shipment volume and the increase in net revenue per barrel of 5.2%. The increase in shipment volume can be attributed primarily to increases in Samuel Adams Boston Lager, Samuel Adams Seasonals, Samuel Adams Brew Masters Collection and Sam Adams Light. We believe that the wholesaler inventory levels at December 29, 2007 were at appropriate levels.

Our gross margin for the fourth quarter of 2007 increased to 57.7% from 56% in the fourth quarter last year due primarily -- due to a settlement with package materials player over a 2007 pricing dispute which had been provided during the year. Excluding the impact of the, this settlement gross margin would have declined to 55.2%. This decline was due to increases in package material, ingredient cost and increased depreciation cost which were partially offset by price increases.

Advertising, promotion and selling expenses increased by $3.4 million during the quarter as compared to the prior year, primarily due to increases in advertising and promotional cost and freight expenses to wholesalers. General and administrative costs decreased by 400,000 during the quarter as compared to the prior year driven by a $900,000 reimbursement of prior period legal cost due to a settlement reached in the fourth quarter with insurers partially offset by an increase in salary and benefit cost.

In responding to an income tax audit we reviewed our judgments certain income tax deductions and increased our tax provision by $2.2 million. This resulted in an effective income tax rate of 46% for the year. We estimate that our tax rate for 2008 will be approximately 42%. Core shipment volume for the fiscal year ended December 29, 2007 was 1.8 million barrels, a 16.9% increase from 2006 fiscal year.

Depletions increased by approximately 17.3% during the 2007 fiscal year compared to the 2006 fiscal year primarily attributable to increases throughout the Samuel Adams brand family. We are pleased with our growth and depletion that has been accompanied by price increases of approximately 3% in 2007. We increased our advertising and selling investment behind our brands by over 8% and we achieved a 20% increase in earnings per share while dealing with significant pressures on our supply chain costs which reduced our gross margin by 2.2 points.

Net income of $22.5 million or a $1.53 per diluted share for the fiscal year ended December 29, 2007 increased from $18.2 million and $1.27 per diluted share for the fiscal year 2006 primarily as a result of an increase in net revenue offset by increases in cost of goods, selling and advertising expenses, general and administrative expenses, the write off of brewery cost and income taxes. Excluding the impact of the write off of $3.4 million or $0.13 per diluted share in capitalized cost related to the Massachusetts brewery project in the second quarter and the provision for excise taxes of $3.9 million or $0.14 per diluted share in the third quarter related to the TTB audit, the Company realized earnings of $1.80 per diluted share for the full year 2007, a 42% increase over 2006.

Net revenue increased by $56.2 million or 19.7% as compared to 2006 fiscal year due to the increase in core shipment volumes and a 2.5% increase in net revenue per barrel for core products. The increase in net revenue per barrel for core products is due to price increases offset by the provision for excise taxes of $3.5 million recorded in the third quarter related to a TTB audit and a shift in package mix from cases to kegs.

Cost of goods sold increased by $31.1 million due primarily to volume increases, higher packs material cost and ingredient cost and the increase in other processing cost at our Cincinnati brewery.

Advertising, promotional and selling expenses increased by $10.8 million during 2007 fiscal year as compared to the prior year primarily due to increases in advertising and promotional costs, freight expenses to wholesaler, and salary and benefit cost. General and administrative costs increased by $1.9 million during 2007 fiscal year as compared to the prior year, driven by salary, benefit and stock compensation cost offset partially by the $900,000 million reimbursement of prior period legal costs pursuant to the settlement with insurers reached in the fourth quarter.

The $3.4 million write-off of capitalized cost in the second quarter relates to the Freetown, Massachusetts brewery project as entering into a contract in sale with Diageo North America for the Pennsylvania Brewery significantly reduced the likelihood of proceeding with the construction of the new brewery in Freetown.

The reported effective income tax rate for 2007 fiscal year increased to 46% from the 2006 rate of 42.7% due to an increase in provision for taxes related to an income tax audit.

We also continued to generate positive cash flow. For the full year 2007, our operating cash flow was $53.8 million. After taking into account capital expenditures of $37.1 million and our repurchase of stock during the year of $6.1 million, our cash and short-term investments as of the end of the year totaled $95.5 million.

During the year ended December 29, 2007, the Company repurchased 182,500 shares of its Class A common stock for a total cost of $6.1 million. From December 30, 2007 to March 7, 2008 the Company repurchased an additional 428,779 shares of its Class A common stock for a total cost of $15.3 million. Through March 7, 2008, the Company has repurchased a cumulative total of approximately $8.5 million shares of its class-A common stock for an aggregate purchase price of $114 million and had $6 million remaining on the $120 million share buyback expenditure limit set by the board of directors. As of March 7, 2008 the Company has 9.7 million shares of Class A common stock and 4.1 million shares of Class B common stock outstanding.

Moving on to our outlook for 2008; we are facing overall production cost increases in 2008 currently estimated to be between 12% and 16% over the full year 2007. Approximately 7% of these estimated increases are expected to driven by malt and hops cost increases approximately 1% by packaged material cost increases and approximately 3% from the cost of starting up the Pennsylvania brewery. In addition potential incremental cost associated with contract brewers account for 2% of the estimated increase.

Increased depreciation cost due to significant Keg purchases to support our on premise growth could contribute another 2%. These cost increases might be somewhat offset by price increases of 5% that we plan to implement, but we anticipate that 2008 gross margin could still be down three points below full year 2007.

Based on these assumptions 2008 earnings per share are expected to be between $1.70 to $2 absent any significant changes in current plan levels for brand support or any unexpected cost related to the Pennsylvania brewery acquisition and start up. Current plans for 2008 are to increase brand support by $10 to $13 million include freight expense to wholesalers. We continue to pursue cost saving initiatives and pricing opportunities and hope to preserve our economics to allow for continued support of our brands with appropriate investment in order to grow volume in earnings.

We currently estimate total capital expenditures in 2008 to be between a $110 and a $125 million of which $45 million is the balance of the Pennsylvania brewery purchase and $45 million to $55 million relates to capital expenditures necessary to restart and upgrade the Pennsylvania brewery. In addition approximately $15 million will be utilized to purchase Keg’s to support continuing growth. $3 to $5 million may be used to upgrade the brewery in Cincinnati, Ohio and $2 to $3 million for investments and technology and other miscellaneous capital investments.

These amounts are current estimates based on the current plans and information. As of March 10, 2008 we have increased our existing line of credit from $20 million to $50 million and had no borrowings outstanding. We expect that our cash and investment balances as of December 29, 2007 of $95.5 million along with the future operating cash flow and the line of credit will be sufficient to fund future cash requirements.

We will now open up the call for questions.

Question-and-Answer Session

Operator

Your first question comes from the line of Andrew Kieley from Deutsche Bank. Please proceed.

Andrew Kieley - Deutsche Bank

Hi good afternoon everyone.

Bill Urich

Hi Andrew.

Martin Roper

Hi Andrew

Andrew Kieley - Deutsche Bank

Hi, a couple of questions. First I wanted to ask you about on trade trends. Obviously given the numbers that you reported today looks pretty strong, but are you seeing any tail offs in those channels because we are seeing so many of the restaurant companies talking about their accounts getting hit there.

Bill Urich

Let me take that. I think we have seen a little bit but it’s mixed in with a bunch of other trends going on. One is at the consumer level there continues to be a strong trading up trend across a lot of food and beverage, but Samuel Adams is certainly included in that and the second is increasing retailer support. The operators want to encourage their trade up and they also want to encourage the beverage alcohol business because it’s just more profitable for them. So at this point it’s hard to tease out each of those three positive things from the overall softness especially in casual dining where we sell a lot of beers, so our trends remain reasonably good, but I think we are sort of holding our breadth to see what happens to the economy in the next three months.

Andrew Kieley - Deutsche Bank

And could you remind us what, maybe percent of volumes goes through the on-trade against the “at home consumptions”?

Bill Urich

For us it’s -- we can’t get an exact hand along it because we sell to distributors who then sell to on and off premise customers. Roughly on the order and order of magnitude it’s roughly 30 some percent, maybe in the high 30’s right now. It’s been probably, I don’t know as high as 40 I think, but if I had to guess and I am just guessing because I don’t have the exact numbers I’d say it’s in the high 30’s.

Andrew Kieley - Deutsche Bank

Okay thanks. And secondly I had asked before, I wondered if you could give us any sense of how much distribution runs through miller and course houses and if you see that as a risk as we get later into 2008 as those companies potentially consolidate.

Bill Urich

It’s a big piece of our volume. I don’t think we’ve added it all up, but I’d just be guessing, it’s well over half anyway and well over that number and where again it hasn’t happened -- I think there is going to be some time that is just going to be transitioned and from our point of view it’s pretty murky at this point. We certainly have a lot of miller course houses now and they perform at least as well as the end consolidated houses.

Andrew Kieley - Deutsche Bank

Okay and finally I just wanted to ask. As far as the 2008 outlook or the guidance goes, are you building in any cost benefit there from the new brewery? I know you are trying to get up a good part of the capacity up by the end of the year but I wasn’t sure if you were building in any actual production cost savings by the end of ’08.

Bill Urich

You know what, I’ll let Martin handle that.

Martin Roper

Thanks Jim. Hi, Andrew. I think one of the reasons for our range is that it’s a little unclear exactly how much production we will be able to produce in the Pennsylvania brewery this year. We have contractual commitments to Diageo to produce their needs for a period of time first and we certainly want to position ourselves to be able to put our beer into the brewery if Diageo should need not need the production that we have agreed to provide them and -- but depending on that mix -- it will depend exactly what we will see from the facility. So at this point in time, it’s difficult to plan and I would say we would probably not see benefit this year.

Andrew Kieley - Deutsche Bank

Okay, thank you.

Operator

Your next question comes from the line of James Watson with HSBC. Please proceed.

James Watson - HSBC

Good afternoon everyone.

Bill Urich

Good afternoon.

Martin Roper

Good afternoon.

James Watson - HSBC

I had a question about the pricing environment in ’08. You mentioned in your remarks that you were planning to take a 5% increase and I was wondering if that has been implemented so far.

James Koch

Yes, -- you go ahead.

Martin Roper

Yes, well, I think Jim just answered yes.

James Koch

Most, we haven’t implemented all of it but most of it has been implemented. So it’s been fairly recently. So I don’t think we have any clarity about its impact on our depletions and obviously doesn’t all get implemented at once but the majority of it has been implemented.

James Watson - HSBC

Okay, so it happened midway through the quarter, so perhaps for all of ’08 we are not looking at a full 5% increase once we’ve taken into account the early part of the quarter.

Martin Roper

James, I think what we said is we are intending to take or plan to take 5% during the quarter. I think if you look at last year you will see that we were successful in taking some pricing, so it’s not inconceivable but in total we may not get -- we may get 5% for the full year.

James Watson - HSBC

Okay. Yeah, so you had very good mix effect for the last -- for maybe the second half of 2007 because I think you took pricing at 3% but you’ve gotten 5% and I'm wondering what is really driving that mix effect? Is that a switch to on-premise and two, could we continue to see that into ’08?

Bill Urich

Jim it’s Bill. It’s primarily driven by the fact that we had significantly lower discounting in the fourth quarter of this year than I should say of last year.

James Watson - HSBC

Okay, and will we be able to see that lack of discounting going forward or is that something that’s just going to be in the fourth quarter of ’07?

Bill Urich

I can't predict that at this point in time.

Martin Roper

Let me add to that. I think when we say that we intend to execute price increases of 5% we look at that on a net basis and so it includes frontline price increases and discount increases or decreases. So you should be thinking when we say pricing that we are talking about net revenue per case equivalent.

James Watson - HSBC

Okay, great. And just one last question on the pricing is that what are you seeing in the market. We read that some of the competitors in the craft segment are taking up pricing maybe $1 per six packs, have you guys seen that in the marketplace and does that have any effect on your strategy?

Bill Urich

Well, we compete with lot of different people all the way from the large domestics to the imports through to craft and there certainly been a range of responses to these (inaudible) I think we have seen some of the smaller craft brewers having those kinds of increases and then on the other hand you have got big importers like Corunna and Heineken with much smaller increases. So it’s all a big mix and I don’t think that you could look at any individual slice of it. It’s sort of a mixture of a bunch of different competitors with a range of price increases.

James Watson - HSBC

Great, thank you very much guys.

Operator

And your next question comes from the line of Andrew Sawyer with Goldman Sachs. Please proceed.

Andrew Sawyer - Goldman Sachs

I got a follow-up question on the brewery investment. I guess I was just looking at, it looks like you Roth investment is going to be on the order of $120 million and I was wondering if you can kind of scope out for us how you think about getting returns on that investment and I guess if you think about this as a bogey, a 10% after-tax return you would require about $20 million of pretax cost savings. Is that the right way to think about it heading into ’09, if not, how should we be thinking about getting the returns on that investment?

Martin Roper

Hi Andrew, it’s Martin. I think we tried to do in our communication is layout the many facts that go into the decision to buy or to build a brewery and certainly comparing the alternatives on the contract brewing front we have a declining availability of contract capacity. We have that capacity concentrating in fewer hands. We actually have our own growth causing problems in getting access to contract capacity because we are such a significant piece of it and then the prices that people are willing to provide contract capacity also increasing. So against that backdrop our decision to proceed with the purchase and operation of a brewery was based on our projections of all of those trends. So I think given that it is actually quite difficult for you to model and we are at this point unable and unwilling to provide some clarity as to what we think the cost of goods is going to be next year because frankly we haven’t brewed that yet and once we’ve brewed that and we have a good sense of yields and labor costs and efficiencies and other things, we will be in a much better position to do that and I think we will probably be there at sometime third quarter. So, at this point in time I am not sure I can directly answer your question other than to say that we compared to what we anticipated the alternatives to be and we decided it was a really good business decision.

Andrew Sawyer - Goldman Sachs

Alright, thank you very much for that, Martin.

Operator

Your next question comes from the line of [Philip Keanes with Tritan Investment]. Please proceed.

Philip Keanes - Tritan Investment

Yes, I was just wondering if you value your inventory on a LIFO basis, would that make a big difference in the profit figures, or you value on FIFO? And that might be…

Martin Roper

I don’t have that information in front of me. So, I just can’t comment.

Philip Keanes - Tritan Investment

Okay. And at the closing do you plan on drawing down your cash balances or using your line of credit to come up with that money?

Martin Roper

Could you expand on the question? I don’t think I fully understand.

Philip Keanes - Tritan Investment

Okay. I mean you have $50 million line of credit. You have close to $100 million in cash and equivalents. Are you going to draw down your cash balances at the closing or you are going to draw on your line of credit instead?

Martin Roper

I don’t think I can actually answer what are intended. I would just refer you to our historical practice which is to have the line of credit available, but I think historically, I’m trying to think whether we have ever actually drawn it down. Don’t think we have and I would just refer you to that history.

Philip Keanes - Tritan Investment

I see. And in terms of Diageo’s output from the Lehigh Valley plant. Do they plan on keeping the output at pretty much the same levels of the past couple of years? They make Smirnoff Ice there, right? Or -- and then tapered of or have they indicated a big decrease in their plans for the output there?

Martin Roper

I don’t think it will be appropriate for me to indicate one what products they produce there or indeed what their volume plans are. What I can indicate is that we have some contractual commitments that we are required to meet to produce their needs if they should request and as such it makes it very difficult for us to estimate the effect of the brewery on our operating cost this year and even in the first half of next year.

Philip Keanes - Tritan Investment

I see. Okay, thank you.

Operator

And your next question comes from the line of [Lauren Bintowin from Suncrest Capital]. Please proceed.

Lauren Bintowin - Suncrest Capital

Good afternoon guys. I was kind of -- I want to focus on the buyback. How much money have you guys used in the buyback over the last couple of years?

Bill Urich

I think we’ve disclosed that in our filings.

Lauren Bintowin - Suncrest Capital

Jim, you talked about it earlier a couple of minutes ago. What was the number you stated kind of since you started the buyback program or whatever?

Bill Urich

Is your question how much we repurchased of stocks since the beginning our start of the buyback program?

Lauren Bintowin - Suncrest Capital

In your initial kind of comment you had mentioned a number, it’s like a hundred and something million. I’m just trying to reconcile and just kind going to looking at it and trying to figure out kind of how many shares you bought, what average price and so forth.

Bill Urich

Yeah. We repurchased $114 million of stock. It’s right in the -- it’s in the release. So I'm sure you can do the math of -- and we have repurchased approximately 8.5 million shares.

Lauren Bintowin - Suncrest Capital

8.5 million shares? Since when?

Bill Urich

I believe it started either 2000 or late 90’s.

Bill Urich

Late 90’s

Bill Urich

Yeah, I wasn’t here then.

Bill Urich

That it was in the late 90’s.

Operator

Thank you ladies and gentlemen. There are no additional questions at this time I would like to now turn the call over to your host for today for closing remarks.

James Koch

Thank you very much. We look forward to --

Martin Roper

Jim if I could just add. I think in future our intention is to issue our release after the market close and we would then propose a 4:30 conference call so we would just -- for those of you who have been on our regular conference calls, we have always tried to do the release in the afternoon and then do a 4 o’clock call but given market conditions and some advice we’ve received we are going to move to releasing our announcements after the market closes and then having a call and meet up afterwards and hopefully that will still meet everyone’s schedules and work needs and I think that’s all we currently have to say.

James Koch

So, thank you.

Martin Roper

Yeah, thank you. We appreciate the participation and will see you next call. Thanks all.

Operator

Thank you for your participation in today’s conference, this concludes the presentation. You may now disconnect. Good day.

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