Playboy Enterprises, Inc. Q2 2008 Earnings Call Transcript

Playboy Enterprises, Inc. (PLA)

Q2 2008 Earnings Call

August 6, 2008 11:00 am ET

Executives

Christie Hefner - Chairman of the Board, Chief Executive Officer

Linda G. Havard - Chief Financial Officer, Executive Vice President - Finance and Operations

Alex L. Vaickus - Executive Vice President and President - Global Licensing

Robert Meyers - Executive Vice President and President - Media

Martha O. Lindeman - Senior Vice President - Corporate Communications and Investor Relations

Analysts

David Miller - Caris & Company

David Bank - RBC Capital Markets

Presentation

Operator

Welcome to today’s teleconference. (Operator Instructions) I’ll now turn the program over to Martha Lindeman.

Martha O. Lindeman

Good morning everyone and welcome to the second quarter 2008 conference call. If you need a copy of our press release and earnings supplement, you can look on our website at www.peiinvestor.com or you can call Arisa at 312-373-2432. During the call today we will be making forward-looking statements pursuant to the Safe Harbor provisions of the Securities Litigation Reform Act. These statements reflect our current beliefs and plans. They are not guaranteed and involve risks and uncertainties that could cause our actual results to differ materially from those discussed today. We are under no obligation to update these statements. I refer you to the Safe Harbor language in today’s release which describes some of the factors that could cause our results to differ materially from today’s discussion.

With me today are our Chairman and Chief Executive Officer Christie Hefner, Bob Meyers our President of Media, Alex Vaickus who is President of Licensing, and Linda Havard our Chief Financial Officer. And we will start with Christie.

Christie Hefner

While the second quarter was difficult and disappointing, we believe we are pursuing the opportunities and making the decisions to return the company to sustainable profitability. The problems of increased competition for consumer attention and dollars, the migration of advertisers to other platforms, uncontrollable cost increases, and the search for new business models are being felt throughout the media industry. Add to this the weak economy and the resulting pinch on consumer and advertiser spending, and we like many media companies find ourselves facing unprecedented challenges.

There are of course bright spots. The Playboy brand is stronger than it ever has been and our licensing business, despite the retail economy, continues to show solid year-over-year growth on both the top and bottom lines normalizing for art sales. Alex will describe the licensing business in more detail and the opportunities we see to continue delivering strong growth in that business.

Today I’m going to focus on our strategies and the steps we are taking to return the company to consistent profitability. These include both revenue growth and cost-cutting initiatives.

Let me turn to the media growth opportunities first. We remain convinced that our future lies in the ability to provide consumers with seamless access to our content on any platform at any time. This integration is made easier by the fact that we primarily operate under one brand. Our content assets - photos, text, cartoons and video - work on multiple platforms in various formats. Our media audience, be it print or electronic, domestic or international, is primarily male and this target audience of young men was the first to embrace online and migrated to digital media even faster than other audiences.

Over the past year we have invested in a major redesign of www.playboy.com. We have two primary goals. First, to increase our audience both in terms of unique visitors and the amount of time spent on the site. Second, to increase our share of advertising online by providing an environment that is attractive to a range of advertisers and by creating more opportunities for targeting audiences. We’ll accomplish these goals by creating a site that is technologically flexible and easy for consumers to navigate and by providing the range and style of content of interest to our audience.

Just yesterday we announced the hiring of Jimmy Gelineck the former www.heavy.com executive and editor-in-chief of Maxim who will oversee content creation for our online and mobile digital businesses around the world. His mission is to leverage the brand and the new site to foster a more integrated media experience and better utilize our assets across the new digital platforms. Our content libraries include images, art, text and video and we’ve created these over nearly 55 years. The ability to share this content across platforms is actually a relatively new phenomenon, and as a result each business has over the years developed unique content format and storage systems creating a challenge to search, track and share our assets.

So as part of our focus on media integration, we have been working on a new digital asset management system and process changes for rights clearance, which include creating a centralized bank of rich media assets that can be easily accessed and cost-effectively repurposed.

Beyond this major digital initiative the international markets remain an opportunity for all of our media businesses. In addition to the Philippines edition of Playboy magazine that we launched in the first half, we expect to add at least one more licensed international edition this year. On the international TV side, while growth in Europe is slowing as that market matures, we believe that longer term the fast developing brick markets offer significant potential and we are actively pursuing deals in these regions. Mobile already generates a majority of its revenues from outside the US and we believe that the increase in video content for our redesigned website will only create additional crossovers to the mobile platform, especially for overseas audiences.

While there are clear opportunities for profit improvement through top line growth in licensing, digital and international it is equally evidence that current industry dynamics also necessitate continuing changes in the way we are doing business. And that means reducing expenses. Our focus is centered particularly on our mature media businesses as well as on corporate overhead. I’d like to give you an overview and also have Bob lay out for you some more of the specifics.

We have spent the past month examining every aspect of our operations using both internal resources and external consultants to benchmark all of our functions. In publishing the focus has ranged from content creation to production, from marketing to distribution. Despite the fact that we have taken nearly $12 million in costs out of the publishing business between 2005 and 2007, we were able to take out another approximately $5 million more in the first half of this year. This critical work is continuing.

Separately we have identified approximately $10 million in annualized cost reductions, half from TV and publishing and half related to corporate and other overhead. These savings are related to a range of operating support and service functions as well as the reduction of T&E and other discretionary spending. We will be implementing these cuts over the next several months. While there will be a near-term cost to some of these initiatives, these changes will obviously put us on a better financial footing entering 2009. And we are not finished.

In addition to these efforts we are also focusing our attention on businesses that are either marginally profitable or not consistent with our core competencies. Examples of the work we’ve already completed in this area include the sale of the Andrita assets and the outsourcing of our e-commerce business. Although these two deals resulted in a revenue reduction of nearly $4 million in the 2008 second quarter compared to last year, they contributed to increased profitability. We are looking at similar opportunities in other areas.

And now let me turn you over to Bob who will give you more color on our plans.

Robert Meyers

As Christie indicated the publishing group has been and will continue to be very aggressive in its approach to expense reduction despite the fact that any easy cuts were made several years ago. Our publishing cost structure is benefiting this year from past reductions, specifically in lower editorial costs and from reduced headcount. On the production side we are looking at more efficient manufacturing processes as well as identifying ways to reduce paper and postage costs through changes to basis weight and trim size.

At the same time we remain committed to our heritage of creating a premier mass market men’s entertainment product. In our first half 2008 Publisher’s Statement of Circulation recently filed with the Audit Bureau of Circulation we reported to the ABC total average monthly circulation of more than 2.7 million copies or a bonus above the 2.6 copy rate base. We remain the largest monthly men’s magazine in the world and our 55^th Anniversary Issue which we’ll publish in December will celebrate that heritage.

In domestic TV we are dealing with the fallout from changes in distribution to VOD platforms and the resulting declines in pay-per-view revenues across all of our linear networks. Although revenues are down compared to last year, the networks remain both profitable and major cash generators for us. On a consecutive quarter’s apples-to-apples basis domestic TV revenues were basically flat excluding injury to revenues from this year’s first quarter. The bright spot in the overall TV picture is Playboy TV monthly where we expect to continue to benefit from new distribution, improved marketing and self provisioning. Obviously programming is also a key element and we will be rolling out on Playboy TV a number of new programs including a dating show called “The Gadget or the Girl” and an English version of the Latin American hit “School of Sex.” We also recently ordered a semi-scripted series from the creator of the hit show Gene Simmons’ Family Jewels.

On the expense side in domestic TV we have identified more than $4 million in annualized savings excluding the injury to studio outsourcing. In response to the changing pay-per-view environment we will also be consolidating networks fees and have reduced on-air overhead and programming expense.

Christie mentioned the online redesign initiative and I want to give you a little more detail on that. The first step in our redesign process was to develop a better understanding of the customer base both in terms of expectations and our marketing outreach. With that research in hand we have developed a content strategy that will provide customers with a unique consistent experience that embraces improvements in technology with more multimedia, community and interactive components. You will also see greater integration with the magazine and already we have begun bringing some of the iconic elements of Playboy magazine to our digital customers. You will begin to see elements of the new site in the fourth quarter.

On the online advertising side revenue again increased year-over-year marking the eighth consecutive quarter of double-digit ad revenue gains. We already receive more requests for ad proposals than we do for print, and along with industry trends we believe that dynamic will continue.

And now let me turn you over to Alex.

Alex L. Vaickus

The strategic focus of the licensing group remains much the same as we’ve discussed in the past. That is, building out our core consumer products business in terms of both categories and geography, adding more channels of distribution, and increasing our entertainment venue business.

Turning to the first initiative, we are very excited to be partnering with Cody the world’s largest fragrance company on the introduction of a line of Playboy men’s fragrances. We expect to begin rollout of four different Playboy-themed fragrances in the US, Canada and a handful of European countries in late September and early October of this year with launches continuing through the next two years across Europe, Latin America and Asia. Cody is a strong partner in terms of product development, packaging and marketing support and we’re very pleased with the product and the potential of this deal. Beyond grooming we expect to rollout our energy drinks and lingerie products in new markets throughout the remainder of this year as well as to continue developing new product categories.

In terms of distribution we’re on track to open two new Playboy retail boutiques in the second half of the year, both of which are expected to be in Asia.

Looking ahead we remain optimistic that we can deliver improved licensing profits in 2008 compared to last year excluding art sales even with the weak economic conditions. Fortunately, the global nature of our business provides some cushion from economic slowdowns in one market as second quarter results indicated.

Turning to the entertainment venue or LBE business, the Palms venues remain strong in spite of the well publicized weakening of the general Las Vegas economy. We are also on target in terms of the progress in Macao and we remain confident that we will sign and announce another entertainment venue deal this year.

And now Linda will describe the quarter in more detail.

Linda G. Havard

Let me start with the entertainment group which reported segment income of $5 million that was lower than last year on a $10 million decline in second quarter revenues. It’s important to note that last year’s second quarter was aberrational as a comparison to this year’s second quarter for a number of reasons. First, approximately $4 million of the revenue decline reflected the sale of the Andrita assets and the outsourcing of our e-commerce business which had a net positive effect on margins as planned and as we described earlier.

In addition we had virtually no cash adjustments to domestic TV in this year’s second quarter versus nearly $2 million in positive cash adjustments in the 2007 second quarter. And finally, the second quarter last year in domestic TV represented a seven-figure overstatement of domestic TV revenue that was over-reported to us by a major cable partner as a result of their incorrectly allocating TV buys between Playboy TV and the movie networks. We discussed this in last year’s third quarter conference call. The remaining $4 million entertainment group revenue shortfall was due primarily to domestic TV and online performance. In domestic TV as noted in the release we were adversely affected by retail price increases initiated by some of our distribution partners. While several of the systems have started rolling back prices, others are still evaluating their pricing policy.

Revenues in the quarter also were affected by the continued migration of TV households away from pay-per-view services where we’ve enjoyed a majority of the shelf space over the years to a much more competitive VOD platform. The VOD trend has accelerated as cable operators have begun actively pushing consumers away from pay-per-view and towards VOD. We’re also seeing VOD begin to completely replace linear networks in such large markets as Portland and Phoenix and we expect to see that trend continue in other markets as well.

International TV revenues were essentially flat as lower revenues from the UK networks and foreign exchange losses were mostly offset by increased licensing revenues from Playboy TV in northern Europe and from the company’s Pan-European channel.

Although online advertising revenues increased in the quarter, pay site revenues declined slightly and are not expected to increase until after the new site is launched. As expected and as we discussed, e-commerce revenues were down significantly due to the outsourcing of this business to EFS.

Entertainment group operating results for the quarter reflected a number of items including the reversed leverage created by lower TV revenues on a relatively large fixed cost base plus costs we incurred in successfully defending a legal claim as well as reduced online profitability associated with the www.playboy.com website relaunch. The group’s content expense was in line with our projections and essentially flat compared to last year as lower TV programming amortization was offset by an increase in online content spend.

In publishing the decline in Playboy magazine circulation and advertising revenue was in part due to our decision to reduce the rate base effective with the January 2008 issue. The group’s second quarter 2008 operating results were better than last year as the revenue decline was more than offset by lower manufacturing costs resulting both from the rate base reduction and combined with other cost control efforts.

Excluding the sale of art from last year’s second quarter, licensing revenues improved 8% while segment income improved 19%. Although royalties from Western Europe declined due to weak consumer spending, we recorded higher revenues from Southeast Asia, US and Latin America. In addition the quarter’s results included the reversal of a total of $1.1 million related to variable compensation expense which we had previously accrued in each of the segments. Cash and cash equivalents at June 30 were approximately $26 million up from March 31 primarily due to proceeds that we received from the Andrita sale. Our balance sheet remains solid and we’re able to continue funding the investments that we believe are essential to returning this company to profitability.

And now let me turn you back to Christie.

Christie Hefner

Before opening up the call for questions, I want to briefly summarize what you hard today. We do not believe that the dynamics underlying changes in the mature media industry are cyclical in nature, and as a result we are focusing on ways to both adapt and get in front of this changing landscape through cost-cutting initiatives on the one hand and focus on the opportunities for top line growth in digital on the other. While Playboy magazine’s relevance and value to the brand make it a key part of our future success, we can and will look for ways to offset the revenue declines that are endemic across the publishing industry.

This means that one of our primary ongoing initiatives in the near term must be on reducing expenses even further than the millions we’ve already taken out and further than the additional savings we’ve identified. We believe in the importance and value of our multimedia content and delivery business model. Through better integration of our assets, our brand and content will remain an important voice for our target audience. As we have already seen the changing media business model has only increased our opportunity on a global basis to attract an international audience and we continue to look for ways to capitalize on both the technology and globalization changes.

The online relaunch is a key initiative. Elements of the new website will be evident in the next few months and we are excited about the opportunity that we are creating. In the short term as we expected, pay site revenues have flattened or even declined as our focus in resources have shifted to the redesign project. This will continue to negatively affect online results through the remainder of this year.

In the TV business we are pleased with the continued gains in Playboy TV monthly subscriptions and continue to focus on how to best program and market the network as an SBOD service. In two weeks Sony will begin the worldwide release of a major film called House Bunny, a movie that features Hef, the Playboy Mansion, and the Girls Next Door. This film is another demonstration of the power of the Playboy brand and its ability to resonate with large audiences globally. It is this power that continues to be so ably capitalized on by our own licensing group.

Looking ahead, we remain confident that we will both sign a new LBE deal this year and deliver on our earlier projection of high single-digit revenue and profit growth for licensing in 2008 normalizing for art sales and despite the weak economy. This is a difficult time for all media companies and those of us involved in a print business in particular. But our proven ability to build profitable new media businesses and our commitment to making the cuts and changes to right-size the company along with the power of the Playboy brand, we believe will pay off in increased shareholder value and the creation of sustainable profits.

And now let’s open up the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from David Miller - Caris & Company.

David Miller - Caris & Company

On the $10 million in annualized cost savings, it looks like half in domestic TV and half in publishing and the remainder in corporate and other overhead. Correct me if I’m wrong Christie or Linda but you guys took similar charges here last year at this time and I believe two years ago at this time and I’m wondering what happened over the quarter or maybe over the last six months that allowed you to identify these new cost initiatives and why weren’t they identified a year ago or two years ago?

Christie Hefner

First of all, let me just clarify. The division of the $10 million is roughly half in support service, primarily corporate overhead, and the other half is in a combination of publishing and TV. And that’s looking ahead. It’s a little confusing because there’s then another $5 million number that we referenced which were cost savings achieved in publishing in the first half that offset the $5 million revenue decline in publishing in the first half.

In answer to your question, maybe Linda you just want to speak about the two years ago and then I’ll add to that.

Linda G. Havard

In last year’s second quarter we had very little restructuring but we have had restructuring expenses over the years. Part of that was due to sales of businesses, other was due to the recognition back then that the business models were changing particularly for our publishing business. And as Christie mentioned in her discussion, we’ve taken $12 million out of that business over the last couple of years and that did include taking people out which resulted in restructuring charges.

Christie Hefner

One of the things David that I would say perhaps is responsive to what you’re trying to get a sense of in terms of the what’s new now is that there are now available as a result of technology opportunities to do things more efficiently that have not been available in the past. So for example, the ability to eliminate feeds is entirely a function of the shift away from the linear pay-per-view to VOD and the shift with the now ubiquitous delivery in digital that no longer requires different edit standards in different regional markets. In a similar vein there are now opportunities that relate to how certainly at least from our vantage point a high-quality monthly magazine is manufactured that allow us to in some cases outsource processes and in other cases take in-house processes that have been developed recently frankly as a result of everybody grappling with trying to find new ways to do the business. So what I would say is what I have said kind of consistently and that is that I think for all companies in all businesses it is an ongoing effort to find ways to do business more efficiently. You never stop doing that. What we have been able to benefit from is opportunities mostly driven by technology that might not have been in existence two years ago.

David Miller - Caris & Company

Just to follow up, the cost cuts on the publishing side. Would you guys say that this is sort of maybe the start of a massive outsourcing operation in publishing whereby the future business model here is that you don’t really own any publishing assets, you just own the brand and you can outsource that to a third party who could maybe do it a little more efficiently and then publishing just gets kind of folded into licensing, which you have to admit on a defacto basis that’s essentially have internationally? Do you see that happening domestically?

Christie Hefner

Let me start with what is near term our focus and that is back to the market dynamics. Again, because we are hardly alone in facing challenges to print we can capitalize on the fact that what the market comps are has shifted. So that allows us to do things in terms of changing trim size and number of editorial pages that had we done three years ago would have actually signaled to the market that the magazine was no longer competitive with other high-quality magazines. So we’re taking advantage of the ability to comp against a changing market. So that’s part of what we’re doing now.

Another part of it is as I alluded to definitely looking at what processes we think we should do versus what processes we think others can do. And that is both on a disaggregated basis, specific assets of the creation and distribution of the magazine, and broader opportunities. So all I can really say at this point is that everything is on the table and we are taking a hard look, going to school on what we’ve learned from our international publishing partners as well as a knowledge that we can glean from what other publishers are trying.

Operator

Our next question comes from David Bank - RBC Capital Markets.

David Bank - RBC Capital Markets

First I want to clarify something I think in Bob’s remarks. I thought I heard the number $4 million of savings being identified on the TV side and I just wanted to first of all make sure I heard it right and second, would that imply that of the $10 million of annualized run rate expenses if half of them are in publishing and entertainment, that would imply that $4 million of the $5 million would be in entertainment and only $1 million would be in publishing. Did I hear that right, Bob?

Robert Meyers

You heard the $4 million right. In terms of the rest of the math I’d have to defer to Linda.

David Bank - RBC Capital Markets

So if you’ve identified $10 million and half of them are corporate and half of them are publishing and entertainment, that would be $5 in publishing and entertainment so it sounds like $1 million in publishing and $4 million in entertainment?

Linda G. Havard

Yes, that’s correct David.

David Bank - RBC Capital Markets

So that would lead to a follow up on $1 million in publishing seems - I guess you’ve taken a lot of costs out?

Linda G. Havard

Yes, we mentioned that we had taken $5 million out of the first half and that’s already been done. The $1 million’s been identified and we’re definitely not stopping there as Christie also said. We’re continuing to look for more and $1 million is not the number we’re going to end up at.

Christie Hefner

I appreciate that there are a lot of numbers floating around here and candidly we had a lot of internal discussions about how to be helpful, but one of the decisions that we made that would be helpful for you all to understand is that we determined that we would only give you numbers today that were based on decisions made, specific actions that have been or are going to be taken in the next several months, and not put a stake in the ground estimating what are the potential additional savings that are being looked at in all three buckets, i.e. domestic TV, domestic publishing and corporate. I just wanted to stand on very solid ground in terms of the numbers and that hopefully the magnitude of the numbers described to date will give you a sense of confidence in the seriousness with which we are taking the cost right-sizing part of our obligation that goes hand-in-hand with the revenue growth part of our obligation. And over the next several months we will update you with the additional quantification of what further savings we’ve identified and are implementing.

David Bank - RBC Capital Markets

The next question would be on the margin side. It looks like if you look at some of the steps you took that you announced at the end of the first quarter, like Andrita and on the e-commerce side, we were expecting a bit of a revenue drop off but those were very low-margin contributing businesses. Sequentially though 1Q to 2Q, I guess maybe more of a Bob-focused question, the margin declined another 120 basis points into the 4.5% range. So I’m not quite sure why the margin, if you’re taking out the lower-margin revenue, declining and I know it’s really hard to get your arms around but (a) do you think the TV business is kind of stabilized? (I’m sure you get that question every day.) and (b) have the margins stabilized? Is it probably as simple as maybe laying on the costs and how do we think about margins that were 15% a year ago now kind of 4.5% and you’ve actually taken out a bunch of low-margin revenue?

And the last question is on the international side. It’s surprising that the business has kind of slowed there because I would think that would be not what I would call mature, so could you give a little bit more color in terms of what you’re seeing internationally? I know maybe some of the growth moves into the brick region, but what has matured on the international side?

Christie Hefner

Bob, let me help out here first and then by all means if there are other points that you think it’d be helpful to make, you go ahead and add. I would start David by saying that I think the most important thing from my perspective to bear in mind in terms of where we’re going to get margin growth, which I absolutely believe we will get, is that there are two drivers for that. One is our digital business, online and mobile, and one is our international business. And we’ve said that consistently. You’ve known for some time that not only are those our growth drivers in terms of the top line, but digital because of its ability to repurpose so much of the content that’s been created and expensed against domestic TV and the magazine as well as its multi revenue stream model; international because of its ability again to repurpose so much of the TV programming that’s been expensed already, are higher margin businesses. So bear in mind that when we’re in a year in which online is not going to show growth as we said at the beginning of the year, and indeed on a quarter-to-quarter basis online revenues not just on the e-commerce side which to your point was not the high margin part of the mix but on the pay site side which was the high margin part of the mix was down quarter-over-quarter. So you’ve got the opposite of growth from the businesses that will contribute, have contributed and will contribute to margin.

And on international consistently we have variations quarter-to-quarter of the revenues from international TV and never think that that business should be tracked consecutively and in fact historically the first quarter has generally been stronger because we’re sort of reporting the catch-up of the fourth quarter in the second quarter, so while those revenues were down which again would impact margins that’s not a trend, that’s just the nature of that business.

Now to the question that you asked about the maturing of it, what we wanted to signal and I’ll let Bob speak to this, is that the 15% to 20% kind of growth that we were experiencing as Europe was building out is probably not in the near term what we’re going to experience. But that doesn’t mean that we don’t think that there will be further growth in Europe particularly central and eastern Europe, and also as we mentioned and as you alluded to there are major territories like Russia and like India, like China, that are truly virgin territories for us that we’re very excited about. But the nature of building out in those markets as you all know from looking at any global media companies that are making investments in those markets is that the near-term business is relatively small but the potential is quite large. So we just wanted to acknowledge that kind of dynamic that is going on.

The last thing I would say and then I’ll throw it back to Bob if there’s anything he wants to add is that we definitely are focused on margin growth and we think that there are clearly three things that are going to drive it going forward. We’re going to get the benefit of the continued cost cutting that will help us on the domestic more mature business side; we definitely see the potential for continued growth in Playboy SBOD which will also help us on the margin; when we relaunch Playboy online which will be the end of this year we are looking for that to be a growth driver for us; and we still see growth opportunity for the businesses in international.

Bob I don’t know if there’s anything that you want to touch on.

Robert Meyers

Before I embellish what you said Christie, David is there anything specifically you’d like me to address?

David Bank - RBC Capital Markets

Yes, I guess specifically, what do you think your target margins are? It’s difficult to answer that question I know but can you give a ballpark sense of what you think your target margins are in the entertainment division?

Robert Meyers

I’m not going to go into that level of detail but I can -

Linda G. Havard

Yes, we’re not going to even allow Bob to answer that David. I think that question we can all debate depending on where the business models end up going, depending upon also what we decide to outsource. It isn’t core versus what we end up operating. Clearly our target’s higher than where it is today as Christie said. That’s about all I think we can say at this point.

Operator

I’m showing no further questions at this time. I’ll turn the conference back to our speakers.

Martha O. Lindeman

Thank you all for joining us. We look forward to talking to you in the future and telling you about our progress. Good morning and goodbye.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: [e-mail]. Thank you!

.