CEC Entertainment Q1 2008 Earnings Call Transcript

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CEC Entertainment, Inc. (CEC) Q1 2008 Earnings Call April 23, 2008 4:30 PM ET


Michael H. Magusiak - President and Director

Christopher D. Morris - Chief Financial Officer, Executive Vice President

Richard M. Frank - Chairman of the Board, Chief Executive Officer


Robert Derrington - Morgan, Keegan & Company, Inc.

Michael Gallo - C.L. King & Associates, Inc.

Barry Stouffer - BB&T Capital Markets

Greg Ruedy - Stephens Inc.


Ladies and gentlemen, thank you for standing by and welcome to the CEC Entertainment teleconference. (Operator Instructions) At this time, I would like to turn the conference over to our host, President of CEC Entertainment, Mr. Mike Magusiak. Please go ahead.

Michael H. Magusiak

Welcome to our conference call. I am Mike Magusiak and I am joined by Dick Frank, our Chairman and CEO, and Chris Morris, our Executive Vice President and CFO. Before we begin today’s discussion, I would like to make you aware that some of the information presented today may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those implied in the forward-looking statements.

Information on the company’s risk factors was included in our press release and is also included in the company’s filings with the SEC. Additionally, in today’s discussion we may refer to adjusted EBITDA, adjusted EBITDA margins, and free cash flow figures, all of which are non-GAAP financial measures. For a reconciliation of our reported results to such non-GAAP measures, please see the earnings release filed earlier today or the investor information section of the company’s website.

The primary objectives for today’s call are first to discuss our financial performance during the first quarter of 2008; second, to summarize the three broad components of our strategic plan to maximize long-term shareholder value, including increased comparable store sales, grow our concept with new units, and return capital to shareholders with a share repurchase plan. Next, Chris will discuss our outlook for the business and finally, Dick will provide concluding remarks and then open the lines for a question-and-answer session.

Christopher D. Morris

Thank you, Mike. Good afternoon, everyone. Total revenues grew 5.3% to $245.2 million due to an increase of approximately six stores in our weighted average store count and a 3.6% increase in comparable store sales. Comparable store sales growth by period was 1.8% in period one, 4% in period two, and 4.9% in period three. As expected, the timing of Easter and school spring breaks benefited period three and has negatively affected period four, as more spring breaks were scheduled to fall in the month of March this year as compared to April in the prior year.

Comparable store sales for the first three weeks of period four have been up 2.8% in week one, down 11% in week two, due to the timing of spring breaks occurring the week following Easter in the prior year, and up 4.2% in week three. While the second week in period four was down, the first three weeks of April have performed better than expected, given the previously mentioned calendar mismatch. Therefore, because of this calendar shift, we believe the best indicator of our current sales trend is comparable store sales on a year-to-date basis through the first three weeks of period four, which are up 2.6%.

Cost of sale as a percent of company store sales increased 10 basis points from 15.5% to 15.6%. This increase is primarily due to higher cheese prices during the quarter. The average price paid per pound of cheese increased approximately $0.50 from the prior year. This increase was partially offset by a 1.1% increase in menu prices and a reduction in cheese usage associated with the implementation of a reformulated and enhanced cheese product.

Labor expenses as a percent of company store sales increased 30 basis points from 25.2% to 25.5%, primarily due to a 5.1% increase in average wage rates for hourly employees.

Depreciation and amortization expenses increased from $16.9 million to $18.5 million, representing a 30 basis point increase as a percent of company store sales.

Rent expense increased from $15.9 million to $16.5 million, representing a 10 basis point improvement as a percent of company store sales.

Other company store operating expenses as a percent of company store sales improved 30 basis points from 12.8% to 12.5%, primarily due to a 30 basis point decrease in insurance expense as the company continues benefiting from favorable trends in workers’ compensation and general liability claims.

As expected, advertising expenses as a percent of total revenues increased 50 basis points from 3.6% to 4.1%, related to our enhanced marketing plan, which we discussed in our last conference call. General and administrative expenses as a percent of revenue decreased 30 basis points, from 5.7% to 5.4%, primarily due to leverage from a higher revenue base.

Interest expense increased from $2.8 million to $3.8 million, representing a 40 basis point increase as a percent of total revenues. This increase is related to an increase in outstanding borrowings from the prior year, partially offset by lower interest rates.

Bottom line, we reported net income for the quarter of $32.9 million. Diluted earnings per share grew 33% from $0.95 in Q1 of ’07 to $1.26 in Q1 of ’08.

During the quarter, the business generated $81.5 million in operating cash flow. We invested $18.1 million in new and existing stores and used $58.6 million to repurchase 10.1 million shares of company stock, representing approximately 8% of weighted average diluted shares outstanding at the end of the quarter.

We ended the quarter with a balance of $310.4 million on the company’s $550 million revolving credit facility, and a balance of $173.6 million on the share repurchase authorization. The company remains committed to completing the share repurchase authorization and achieving its targeted debt-to-EBITDA ratio of 2-to-1 in a timely manner subject to market conditions.

Mike will now update you on strategies to drive shareholder value.

Michael H. Magusiak

Thanks, Chris. First on the balance sheet, Chris stated that we repurchased 8% of our diluted shares outstanding. That is correct and we repurchased a total of 2.1 million shares outstanding. Thank you. So the 8% is correct.

The three broad components of our strategic plan to maximize long-term shareholder value are summarized as follows: first, to increase comparable store sales; second, to grow our concept with new company and franchise stores; and third, to return capital to shareholders with a share repurchase plan.

The first component of our strategic plan of maximizing long-term shareholder value is increasing comparable store sales. Despite a difficult economic market, we had relatively strong comparable store sales momentum in the first quarter and early stages of the second quarter, considering spring breaks.

Our sales momentum is widespread with each of our five regions producing positive comparable store sales year-to-date through week 16. We believe that this sales momentum is attributable to the quality execution of our previously communicated sales strategies, coupled with several new initiatives implemented during the first quarter of 2008. These sales strategies include the continued execution of a strong capital plan, a refocused strategy of increasing birthday sales, the execution of a comprehensive strategy to increase fundraising sales, the implementation of a suggestive sales program, and finally an enhancement of a marketing campaign including moms targeted television advertising and online media.

The first initiative to increase comparable store sales is the continued execution of our capital plan. We continue to believe that our physical assets, including entertainment attractions, are in the best condition in the history of our company and our capital plan will ensure that we offer our guests the best entertainment in the marketplace.

Last year, we impacted 163 existing stores with capital expenditures totaling approximately $68 million. This year we intend to spend approximately $54 million on existing store capital expenditures that will impact approximately 167 stores, or 37% of our comparable store sales base. The detailed breakdown of our capital plan includes 18 to 22 expansions, 20 to 24 major remodels, and 120 to 130 game enhancements.

We continue to believe that our capital expenditure plan not only protects our company’s strong cash flow but it will also be instrumental in increasing it over the long-term.

Our next business strategy focused our efforts on increasing birthday sales. Given that we have historically viewed this are as the strength of our business, we have taken aggressive steps to capitalize on this opportunity. Our results have been dramatic with first quarter comparable birthday sales increasing 4.3%. We believe that this recent positive birthday sales trend is attributable to our operators aggressively booking birthday reservations, executing our wait system, and our concentrated efforts to confirm birthday party reservations, which results in fewer no-shows.

In addition, we are e-mailing birthday invitations with incentives to approximately 2 million kids’ parents in our database four weeks prior to their birthday. We intend to build on this birthday sales momentum with our next phase of increasing birthday sales being the system wide rollout of a significantly improved birthday package in the second quarter of this year. We have extensively tested this improved package and will promote our new birthday party with a national television campaign.

Our next sales initiative is to increase weekday school fundraising sales. Last year our fundraising sales totaled approximately $5.6 million, representing 0.7% of total sales. We established a goal of increasing this revenue source by at least 10% in 2008.

During the first quarter, our core stores fundraising sales increased approximately 17%. We believe this increase is attributable to the following: first, our ongoing advertising of school fundraisers, which continues to build guest awareness; second, the utilization of dedicated call center staff members to promote fundraisers; third, contacting each fundraiser group within one week after an event to rebook; and finally, providing support materials and training to our operators to book fundraising sales.

We are very proud that our donations to schools since 2004 now exceed $2 million.

Our fourth existing store sales initiative is to develop a suggestive sales culture in our restaurants, focusing on cashiers and birthday hostesses. We implemented a nationwide suggestive sales campaign for six weeks during the first quarter. Our objective was to increase sales of value meals and token value deals, which represents a great value to our guests but also results in a higher guest check.

Despite a significant increase in coupon redemptions during the first quarter, our sales trend for value meals and token deals improved. We plan on implementing another nationwide suggestive sales campaign in June of this year and more importantly, we are focused on training our cashiers and birthday hostesses to suggestively sell targeted menu items that are an excellent value to our guests and that we believe will increase our average ticket.

Food platters, including buffalo wings, sandwiches, vegetables, mozzarella sticks, will be rolled out to all company locations in May of this year and are one of our targeted items as birthday parties that we intend to suggestively sell.

And finally, our last sales initiative that is very important and we believe positively impacted first quarter comparable store sales is our enhanced marketing plan. Our marketing plan in 2008 is projected to cost approximately $34 million compared to $31 million in 2007. This plan incorporates and for the first time in the company’s history includes an online component as part of a multimedia approach communicating to moms.

The multimedia effort includes television and online media targeted at moms and is further supported by our traditional freestanding insert program. Our overall television media plan combining both our kids and moms buy is projected to deliver in the first quarter an increase of approximately 10% more impressions than a year ago.

Total advertising expenditures in the first quarter of this year increased to $10.1 million compared to $18.4 million in the first quarter of last year. We continue to believe that targeting both kids and moms with national television advertising supported with online advertising targeting moms, along with a strong couponing program will build long-term sales.

The second broad component of our strategic plan is to grow our concept with company and franchise stores. During the next five years from 2008 to 2012, we project the opening of 30 to 40 company stores and 20 to 30 franchise stores.

First on the company side, we opened 10 new stores last year including three relocated stores. We also acquired one franchise store. This year we currently anticipate opening five to six new company stores.

Our controlled growth plan enables us to focus on high quality real estate sites in primarily dense demographic areas, resulting in a high return on investment. The 10 stores that we opened last year are projected to generate average sales volume in excess of $2 million compared to company average annual sales volume of approximately $1.6 million.

In 2007, we offered the rights to develop approximately 40 domestic franchise locations in current franchise markets and in smaller markets that the company was not planning on developing within the next few years. Since this offering, we have already sold and collected development fees for an additional 13 domestic franchise locations.

At the end of the first quarter, franchisees own the rights to develop a total of 20 stores domestically and internationally. We are on track to achieve our goal of opening 20 to 30 new franchise locations within the next five years. We anticipate that franchisees will open five to six stores this year, including one in Dubai in the United Arab Emirates. This franchisee has an existing store in Jeddah, Saudi Arabia, the highest sales volume store in our system.

The final component of our plan to maximize shareholder value is to execute our share repurchase plan. We have aggressively repurchased our shares during 2007 and the first quarter of this year and plan to continue with our repurchase plan because of two primary factors.

First, we believe that our strategic plan will increase long-term comparable store sales while growing our concept with high sales and return on investment at new stores. We believe the combination of positive comparable store sales and quality new store development will result in increased cash flow and earnings per share.

The second reason that we intend to continue with our share repurchase plan is because it is highly accretive to earnings per share as demonstrated in the first quarter of this year. Last year we repurchased 7,887,337 shares, which represented approximately 25% of weighted average diluted shares outstanding at year-end 2007.

During the first quarter of this year, we repurchased 2,127,137 shares, which represented approximately 8% of weighted average diluted shares outstanding at the end of the first quarter. We have $173.6 million remaining on previously authorized share repurchases approved by our board of directors and have significant flexibility on our $550 million line of credit with borrowings totaling $315 million at the close of business yesterday.

Chris will now review with you our current outlook on our business.

Christopher D. Morris

Thank you, Mike. Based on everything discussed today, our estimate for 2008 diluted EPS is a range of $2.33 to $2.40, reflecting a 19% to 23% growth rate from the prior year, after excluding asset impairment charges from the 2007 fiscal year.

In addition, our estimate for Q2 2008 diluted EPS is a range of $0.29 to $0.33. Incorporated into this guidance are the following items: a comparable store sales growth assumption of 1% to 2% for fiscal year 2008. As stated earlier, year-to-date through the first three weeks of period four, comparable store sales are up 2.6%.

We believe this strong sales performance during the early part of the year provides evidence that our strategies are working. As a result of this performance and our confidence in our strategies and our brand, over the long run we remain optimistic about comparable store sales growth. However, we also recognize the challenges present in today’s consumer environment.

Given these challenges, we remain cautious in our near-term outlook for sales growth. We hope our assumptions prove conservative, given the strong financial results to date.

We are assuming cheese prices continue to trade at levels higher than the prior year. Based on our review of estimates from a number of different sources, we are currently assuming the block price for cheese will average $1.85 per pound in 2008, compared to an average of $1.75 in 2007.

Currently they USDA is forecasting the average price per pound of cheese to be $1.75 in 2008. Our estimate is a dime higher than this forecast as current prices are at historical highs.

Labor expenses are expected to continue adding pressure to store level margins, driven primarily by minimum wage increases. We are currently estimating labor as a percent of sales to increase 70 to 90 basis points in ’08 compared to ’07.

We are targeting five to six new company units and five to six new franchise stores in 2008.

We are currently estimating total capital expenditures to be in the range of $80 million to $85 million.

We are assuming free cash flow will be used for share repurchases throughout the fiscal year and we are assuming an effective tax rate of 38% for the remainder of this year.

With that, I will now turn the call over to Dick for his concluding comments.

Richard M. Frank

Thanks, Chris. We are pleased with the results of the first quarter, particularly in light of the current difficult economic environment. Our comparable store sales for the first quarter of 3.6%, in year-to-date through the first 16 weeks of 2.6%, were achieved with each of our five regions posting positive same-store sales. We believe this solid sales performance is evidence of the strength of our brand and the quality execution of our sales strategies

As Mike shared with you, these sales strategies include a capital plan impacting approximately 167 core locations in 2008, an aggressive approach to birthday parties, an enhanced focus on school fundraising and suggestive sales programs at the location level, all reinforced by a solid marketing plan that incorporates a strong, multimedia effort targeted at moms.

Diluted earnings per share for the quarter increased 33% to $1.26 per share over the same period in 2007. Despite the fact that the first quarter is historically our best quarter, we believe the financial strength of the company is evident as we were able to fund $18 million of capital expenditures, utilize $59 million to repurchase 2.1 million shares of company stock, and still reduce our line of credit by $6.4 million.

During the quarter, we were pleased to announce the addition of retired four star general Tommy Franks to our board of directors. We believe General Franks’ experience of managing operations and developing strategy will be invaluable to our board and company.

As we continue to enhance the Chuck E. Cheese brand, both domestically and around the globe, General Franks’ international background and relationships will complement our efforts to grow our business and increase shareholder value.

As we look to the balance of 2008, we are excited about our sales momentum yet are also somewhat cautious, given the economic environment. Management remains committed to implementing and executing our strategies in a quality and timely manner and we look forward to updating you on our progress.

At this time, Mike, Chris, and I will be glad to answer any questions you may have.

Question-and-Answer Session


(Operator Instructions) We’ll begin today’s question with a question from Robert Derrington representing Morgan, Keegan.

Robert Derrington - Morgan, Keegan & Company, Inc.

Thank you. Eye-popping numbers -- congrats, guys. I’ve got to ask the question and I guess I’ll direct it to you, Mike, if you could help us; you know, obviously this -- you know, the weather thing, we are constantly asked how much of the business is affected by that. But you’ve got so many positive things going at the restaurant level, is there any way to separate out the impact of the business between all those things?

Michael H. Magusiak

It’s very hard, Bob. You know, if we go back to our last conference call, we thought that weather may have somewhat favorably impacted comparable store sales. After that earnings release, there was a few weekends that we believed that it probably hurt some of our sales.

With that being said, net net it may have helped the first quarter but as we look back on the year now through 16 weeks, we really believe that the execution of our strategies and the new sales strategies that we’ve shared with you both last conference call and this conference call is what is really driving comparable stores sales.

Robert Derrington - Morgan, Keegan & Company, Inc.

Sure. Mike, as you look forward, do we essentially have all of the calendar mismatch with Easter and spring breaks, are those essentially behind us after these first three weeks?

Michael H. Magusiak

Yes, we believe that they are, Bob.

Robert Derrington - Morgan, Keegan & Company, Inc.

Okay, and then Chris, there are a couple of statistics that were mentioned that may have gotten wrong and one of those was talking about the advertising spend year over year. And Mike, you may have mentioned it. I think you mentioned 10% more impressions in the first quarter versus last year, but I got the dollar amount incorrect. I think you mentioned the company spent $10.1 million on advertising this year and what was it last year?

Michael H. Magusiak

You know, I misspoke, Bob. We need to work on our presentation skills. We’ve been working more on sales. But the correct dollars -- Chris, do you have it there? Yeah, this year we spent $10.1 million compared to 8.4. I misspoke on last year’s.

Robert Derrington - Morgan, Keegan & Company, Inc.

I thought there may have been an extra digit in there. Okay.

Michael H. Magusiak

That’s exactly right.

Robert Derrington - Morgan, Keegan & Company, Inc.

And Chris, you mentioned you were -- when you were talking about cost of sales, the fact that cheese was up as much as it was yet cost of sales looked relatively flat year over year, Chris, you mentioned there were a couple of factors that came into play there. Could you repeat those? I didn’t get all those.

Christopher D. Morris

No problem, Bob. The two factors, first and foremost the weighted average menu price increase in the first quarter was 1.1%. The second item was a result of a company initiative where essentially it’s a reformulated and enhanced cheese product. Mike, do you want to elaborate on that?

Robert Derrington - Morgan, Keegan & Company, Inc.

Yeah, what does that mean?

Michael H. Magusiak

I sure will, Chris. Joe Elliott, our Vice President of Research and Development, has worked with our cheese supplier, Leprino, for about a year now and we extensively tested a high moisture mozzarella cheese. We did this in several markets across the United States and we believe that this cheese provides our guests with a cheesier taste. This Mozzarella product spreads better than our previous cheese and has enabled us to modify the cheese portion on certain of our topped pizzas.

We are very proud of our cheese product. Joe has maintained the highest quality, integrity, and we feel great about our pizza product. We compare it to our competitors from both a quality and a portion size, and so that modification too what we believe is a better cheese product has helped from a cost standpoint.

Robert Derrington - Morgan, Keegan & Company, Inc.

Okay, all right. And then one last thing, if I may, on the promotion -- I guess I should say the suggestive selling program in the June period. I think you talked about supporting platters. How is it -- is it essentially when a customer wants to book a birthday, it will also be suggested to them that they buy a platter or -- and what do those retail at?

Michael H. Magusiak

A couple of things there, Bob, is platters are going to be part of it but we are also suggestive selling some other high value, high ticket items at both the counter and the birthday parties.

As far as the platters are concerned, what we are doing is for every birthday party, the parents sometimes have a difficult time ordering for other parents and other guests and so forth, and so we still offer pizza as a food for the birthday party guests but the platters are really a very good food product that enables a birthday mom or birthday dad to offer other guests a variety of food. So the primary sales is at the birthday party and what we’ve experienced really on a broad scale basis that those platters are being well-received with our birthday parties.

But that’s not going to be the only item that we are going to suggestively sell at our June suggestive sales contest and we are not going to get into all of the details on that, Bob, just for competitive purposes. But I think the overall emphasis is we believe we have a significant opportunity to suggestive sell in our stores.

Robert Derrington - Morgan, Keegan & Company, Inc.

Well, the troops certainly seem fired up. Great job, guys. Thank you.


Next we will go to the line of Michael Gallo with C.L. King.

Michael Gallo - C.L. King & Associates, Inc.

Good afternoon and congratulations on a very nice quarter. Two questions; first question for Chris, I was wondering with LIBOR rates where they’ve come down to, whether you’ve made any progress towards looking to fix the rate on the credit facility. And then I have one other follow-up.

Christopher D. Morris

At this point in time, we have not executed an interest rate swap but it is still something that we intend to do this year. I do believe it will be a priority for us in the second quarter, so at this point in time we believe three months from now that we will have a certain percentage of our debt fixed.

Michael Gallo - C.L. King & Associates, Inc.

Okay, perfect. And then just second question, sort of a follow-up, I guess, on some of the questions around the birthday initiatives. I was wondering what you are seeing in the trends. I know you had been focused on reducing no shows and cancellations and things like that. Have you been able to really move the needle significantly on that through some of the e-mail confirmations? And if so, are you able to quantify what kind of increased birthday business you are seeing?

Michael H. Magusiak

The best quantification is if you look at the first quarter, comparable birthday stores sales increased 4.3% and we think that that is a factor associated with us really reconfirming birthday parties, aggressively running waits on the weekends, and also opening up our parameters to book more birthday parties on the weekend. So it’s a function of all three of those initiatives, and then the best indication that the birthday sales are up over 4% on a comparable basis.

Michael Gallo - C.L. King & Associates, Inc.

Okay, that’s great. Thanks a lot.


We will go to Barry Stouffer’s line with BB&T Capital Markets.

Barry Stouffer - BB&T Capital Markets

Just two questions -- what is the current effective interest rate on your credit line?

Christopher D. Morris

Right now the outstanding LIBOR loans we have are at 3.8%, so we pay 100 basis points over LIBOR.

Barry Stouffer - BB&T Capital Markets

And that would have compared to what a year ago?

Christopher D. Morris

A year ago the weighted average interest rate in this quarter last year was just a little over 6%.

Barry Stouffer - BB&T Capital Markets

Okay, and you mentioned a menu price increase in the quarter of over 1%. Can you comment at all on what the change in average check was during the quarter?

Christopher D. Morris

We have not commented on that. Here’s what I can tell you is number one, it’s difficult of us to know with a high degree of precision exactly what our traffic trend is and what our average guest check is, and we do the best job that we can to estimate it. We look at a number of different sales trends.

The few things that we do know for sure is we know that our weighted average menu price increase during the quarter was up 1.1%. We know that. We also know that the company has continued to distribute coupons at a higher rate this year compared to the same period in the prior year and that’s just simply, just given the consumer environment, we think it’s important to promote the value of the Chuck E. Cheese experience.

When we look at sales dollars attributable to coupons, this year -- or Q1 of ’08 compared to Q1 of ’07, we’ve seen an increase in sales mix of around 5%, so there’s been a fairly significant increase in coupons. So we believe that our average guest check, while it benefited from the menu price increase, we believe that to a large degree, the increase in coupons have partially offset the increase in menu prices.

So we haven’t disclosed the actual average guest check and in terms of year-over-year change, our best guess when we consider all things, we think that the change in our average ticket year over year is somewhere between flat to slightly less than 1%.

Barry Stouffer - BB&T Capital Markets

Thank you.


(Operator Instructions) We will go to Greg Ruedy’s line with Stephens Inc.

Greg Ruedy - Stephens Inc.

Good afternoon. Mike, I think in the past you discussed the same-store sales lift you’d get in the first year from major remodels and expansions. Can you kind of go ahead and revisit that and tell us what you are seeing from some of the most recent capital investment?

Michael H. Magusiak

I’d be happy to comment on sales from stores impacted from capital. We have not released actual sales or remodels or game enhancements or expansions. They are included in our comparable store sales base.

What I would tell you, for every component of our capital plan, whether it be expansions, game enhancements, or major remodels, the sales lift that we are getting from the stores that we remodeled last year are significantly outpacing our comparable store sales. And we are not disclosing on an asset by asset basis from a standpoint that we are basically impacting about a third of the stores a year, and we think that the best guidance is really off of comparable store sales.

But what I would tell you is our capital initiatives we see as a major reason for our positive comparable store sales and when you have really what we believe is a superior product out in the marketplace, we think that our marketing expenditures actually work a lot more as we’ve got a great product in the marketplace.

Greg Ruedy - Stephens Inc.

Okay. Shifting to the advertising spend, 20% growth on an absolute basis -- what did you learn in the first quarter in terms of where you are getting the most bang for your buck from the impressions and how much leverage can you get on that marketing spend going forward this year? Thanks.

Michael H. Magusiak

It’s always difficult to segment the marketing, you know, whether it is targeted at kids or moms or online media. But we believe that the strategy that Dick Huston and his team have put together is really another one of the key factors that is driving sales. The kids love Chuck E. Cheese and we’ve got three strong messages that we are communicating with mom is a great reason for a mom to take their sons or daughters to Chuck E. Cheese.

So to separate that out and which is working better or not, that’s really impossible. But when we look at our comparable store sales in this environment, we believe that that marketing plan is really one of the key factors that is driving sales.

Greg Ruedy - Stephens Inc.

Great. Thank you.


Gentlemen, there are no other questions at this time.

Michael H. Magusiak

We appreciate your questions and if you have any additional questions, please feel free to call Dick, Chris, or myself. Thank you.


Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using the AT&T executive teleconference service. You may now disconnect.

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