Bloom Energy Corporation
Q3 2007 Earnings Call Transcript

Published: 3 Dec 2007

[Operator:]

Good morning. My name is Amy and I will be your conferenceoperator today. At this time, I would like to welcome everyone to theBearingPoint third quarter conference call. (Operator Instructions) I would nowlike to turn the call over to Ms. Connie Weaver. You may begin your conference.

[Connie Weaver:]

Thank you, Operator and good morning, everyone. I am ConnieWeaver, BearingPoint's Chief Marketing Officer and head of investor relationsand we’re pleased to have you join us this morning. With me on our call is RodMcGeary, our Chairman; Ed Harbach, our newly appointed President and ChiefExecutive Officer; and Judy Ethell, our Chief Financial Officer. We hope by now you’ve had a chance to review our pressrelease and had an opportunity to obtain our third quarter Form 10-Q filingthat we made earlier this morning. Before I get started, I would like to quicklyoutline the agenda for this morning’s call. Rod McGeary will start by makingsome opening remarks, followed by Ed Harbach, who will provide us with hispriorities and review, along with Judy, our financials for third quarter of2007 and highlight our 10-Q filing. Ed will come back and close our call andafter that, we’ll open the line up to take your questions. At that time, we’llgo through the instructions for questions but I would like to remind you thatwe will be limiting questions to two per person so we can accommodate as manyof you as possible. Now for safe harbor; this information covered on today’scall, which is not historical in nature, consists of forward-looking statementswithin the meaning of the federal securities laws. Words such as may, will,could, would, should, anticipate, continue to expect, intends, plans, believes,in the company’s views, or similar expressions and are used to identify theseforward-looking statements. These statements are only predictions and as such,are not a guarantee of future performance and involve risks, uncertainties, andassumptions that are difficult to predict and which could materially adverselyaffect the company’s financial conditions and results of operations. Forward-looking statements are based upon assumptions as tothe future events that may not prove to be accurate. Actual outcomes andresults may differ materially from what is expressed or forecast inforward-looking statements. As a result, these statements speak only to thedate they were made. The company undertakes no obligation publicly to update orrevise any forward-looking statements, whether as a result of new information,future events, or otherwise. Please refer to item 1-A, Risk Factors, contained in thecompany’s annual report on Form 10-K for the year ending December 31, 2006 andthe company’s quarterly report on Form 10-Q and subsequent filings with the SECfor additional information regarding risk factors. Now with that, let me turn things over to our Chairman, Rod McGeary.Rod.

[Roderick C. McGeary:]

Thank you, Connie and good morning, everyone. I am sureeveryone has already had a chance to see today’s announcement. I am veryexcited to announce that Ed Harbach has been named President and ChiefExecutive Officer and has been elected to our Board of Directors. Please joinme in congratulating Ed on his new role. Ed succeeds Harry You, whose accomplishments includedhelping us get current with our financial reporting, strengthening our balancesheet and resolving a significant number of financial, compliance and otherissues which existed when he arrived. With these important achievements inplace and as we enter the next phase of our turnaround, we believe that this isthe right time for change in our leadership. On behalf of the board, themanagement team, and the entire global employee base of BearingPoint, we wishHarry well in his future endeavors. We are thrilled that Ed will lead BearingPoint into its nextcritical phase of achieving strategic and operational excellence. As you know,Ed has been President and Chief Operating Officer of the company since Januaryof this year and has already made tremendously positive impact on ourorganization as the leader of our day-to-day operations. With his proven abilityto enhance operations, drive business results and increase client satisfaction,Ed will be instrumental in helping us make the final push on our businessturnaround and execute our strategy for long-term profitable growth. Ed meets all the criteria we defined for the Chief Executiverole as we move forward. He is an industry veteran, having spent almost threedecades at Accenture, where he served as managing partner and a member of theleadership team. In addition to leading global client relationships with manyFortune 100 companies, Ed served as Chief Information Officer and managingpartner client satisfaction and quality. And also served as turnaround leaderon a number of critical client and organizational assignments in multiplegeographic regions. Importantly, Ed already has a deep understanding andknowledge of the BearingPoint organization. He is very well-respected acrossour global employee base and with many clients he has already interacted. Ed’sappointment reflects a determination by the board that moving forward the bestway to create value for our shareholders, clients and employees is byintensifying our focus on operations and leveraging the full scale and scope ofour global business. Ed will pursue this strategy with a focus and disciplinedapproach to driving profitable growth, building the company’s cash flow andstrengthening the balance sheet. With today’s third quarter filing, we are current in our SECreporting requirements, putting us in very good position to continue to strengthenthe organization, improve our performance, and create value for ourshareholders. With that, I would like to turn the call over to Ed.

[F. Edwin Harbach:]

Thank you for joining us this morning. I am veryenthusiastic about our future and confident that our company can createlong-term value for our shareholders, clients, and employees. I would like to take a few minutes about the opportunitiesahead and then review some operational and financial highlights. As Rodmentioned, I’ve worked in the consulting industry for almost three decades.Based on this experience and my time at BearingPoint, I know that we arewell-positioned to improve our operations and grow both our top and bottom linein the long-term. BearingPoint has talented, committed employees, blue chipclients, and a truly global footprint that can be leveraged in manyvalue-enhancing ways. The strategic question we face is how best to leveragethese assets for the benefit of all constituencies. The best way to generatevalue is through an aggressive, strategic and disciplined approach to manageour business fundamentals and delivering consistent, sustainable solutions toour clients worldwide. That means operating on a fully consolidated globalbusiness. To that end, we intend to focus on the following strategicpriorities as we move forward

[Judy A. Ethell:]

Thank you, Ed. Now turning to our cash flow and balance sheethighlights, operating cash flow for the three months ended September 30, 2007increased $76.5 million from a negative $161.6 million in the second quarter of2007 and a positive $27.8 million in the same period of 2006. By the sametoken, free cash flow for the third quarter improved to $67.2 million from anegative $171.9 million in the second quarter of 2007 and positive $19.8million in 2006. This improvement was driven by strong collections and anincrease in our accounts payable, which drove both our operating and free cashflow up significantly in the third quarter on a sequential and year-over-yearbasis. In fact, our DSO decreased from 95 days at the end of Juneto 90 days at the end of the third quarter, resulting in an increase ofapproximately $44 million in cash. So in line with our previous disclosures,our cash balance at the end of the quarter of 2007 was $431 million, asignificant sequential and year-over-year increase. We continue to expect the business to be a source of cash inthe fourth quarter and expect our cash balances to be approximately $450million by year-end. Where we land cash will be dependent on our ability tocollect cash on a better rate in the fourth quarter of 2007 when compared tothe fourth quarter of 2006. In order to achieve these objectives, we have tied thepayment of bonuses to DSO targets, just as we did at the end of 2006 and tooverall business performance. We believe that this incentive will continue todrive the results we are targeting. In terms of our SEC filings, with our Q3 filing we havedelivered on our commitment to be a current filer before year-end and we arenow well on track to timely file our 2007 10-K in February of 2008. After oursecond quarter filing, we issued approximately 5.6 million shares under anemployee stock purchase plan. Of those delivered, only 15% have been sold inthe market as of November 30, 2007. Because we are once again a current filer, we will continueto provide our people with the opportunity to acquire shares under our variousemployee share plans. We will now be settling RSUs that have vested since 2005but still expect the number of shares to be put up for sale by employees to bejust over our average daily trading volume. Our employees will be selling their shares in an off-markettransaction, which we hope will limit any affects on our share price whileproviding our employees with enough flexibility to sell shares to cover theirwithholding tax liabilities and provide some liquidity. Once this overhang is behindus, we expect to return to ordinary settlement and trading practices under ouremployee share plans. Let me turn it back to Ed.

[F. Edwin Harbach:]

So with just a few weeks left to our calendar year-end, wehave good visibility into our business performance for this fiscal year. Wehave already provided metrics for the third quarter of 2007 on our lastconference call but I will say the monthly utilization employee retentionmetrics for October continue to be encouraging. We are more conservative, however,relative to bookings, given our recent negative news in the market and what istypically a seasonally softer bookings quarter given the holiday season. As you have seen in our results for the first nine months ofthe year, 2007 has not been without its challenges. Our performance largelyreflects the operational hurdle we face this year, including significantheadwind related to not having current financials, challenges in our FS and CSbusiness units, and higher compensation costs, which have reduced ourunderlying profitability. And these hurdles will continue to impact our resultsin the fourth quarter. We are not satisfied with these results and understandthat 2008 will be a critical year for BearingPoint as we stand at thecrossroads of becoming a timely filer and pivoting to a new phase of ourtransformation. Understanding the work that lies ahead, I am committed toimproving the underlying performances in our business and continue to achieveimproved profitability and free cash flow. What you can expect from me is aclear strategy with decisive actions that are realistic in the context ofexpected economic environment in the next 12 to 18 months. You will hear moreon this in the weeks and months ahead. We intend to hold an investor day early in the new year toshare with you much greater detail about our strategic plans and to provide aprogress report on steps taken between now and then, and to update you on ouroperational financial performance. The investor relations team and I intend tomaintain a proactive and clearer communication with you and we look forward tointeracting with you in the coming weeks and months. In conclusion, while I remain realistic about the evolvingeconomy, I am optimistic about the potential for this business and our abilityto grow value for our employees, our clients and our shareholders. Now I’d like to turn the call back over to Connie.

[Connie Weaver:]

Thank you, Ed. And now I’d like to open our lines up to takeyour Q&A. As I mentioned earlier on the call, we would like to ask you tokeep your questions to two per person so we can accommodate as many of you aspossible. And now I’ll turn it back over to Amy our operator to one more timereview the Q&A procedures. Amy.

[Operator:]

(Operator Instructions) Your first question comes from theline of Rod Bourgeois from Bernstein.

[Rod Bourgeois -Sanford C. Bernstein:]

Let me start the question with this; in reading the pressrelease, it sounds like a very bullish press release. You’re citing experiencein turning company’s around and making operational improvements and pride ingetting financials current and so on and so on. I do see a big disconnect inthe way investors look at this story, though. I mean, the stock is literallycut in half since 2005 and so I’m seeing a disconnect between the bullishnessof the press release and what shareholders have been going through here. I guess the question I want to ask in that context is in thelast three years relative to the turnaround, particularly during the periodthat Ed has been on board, have you guys missed anything from a turnaroundperspective that you could have done a better job of addressing and based onthe lessons learned in that experience, what do you see doing different thanthe turnaround that we’ve heard about for the last three years? If you can citeanything that you’ve missed and anything you plan to do going forward that’sdifferent than what you’ve done in the past, I think that would be very helpfulfor the shareholders that have been through a lot of pain here in the lastthree years.

[F. Edwin Harbach:]

Good morning, Rod. I apologize for my cold. If you guys hearmy voice a little bit this morning, I’ve got a cold but hopefully it will beclear for you. The pain I understand and hopefully we won’t create quite somuch pain going forward but I think we have accomplished some things. Duringthe at least 10 or 11 months I’ve been here, we’ve gotten current. We are cashflow positive as we described before. The factory supply/demand is in balance.We talked about that in utilization. We’re cutting SG&A with more to come.Attrition is down, basically. DSO is down, so we’ve accomplished a lot and Ithink the key for us is focus and execution. I think what you have to hold us accountable for is if wefocus and we get this thing right and we execute, we’re going to create valuefor you, that’s going to follow, right? If we don’t then obviously it won’t butI think we will.

[Rod Bourgeois -Sanford C. Bernstein:]

Let me ask you specifically on EMEA. There’s a big change inmessage on EMEA and I’m not sure I heard in the prepared commentary why thechange of heart on divesting that unit and keeping it under the BearingPointumbrella.

[F. Edwin Harbach:]

I’ll give you a couple of perspectives on that. I’ve spent alot of time talking to our clients and talking to our people and obviously I’vebeen in the industry a long time. Our clients want a global firm. Not on everyproject, not on every engagement, but they expect us to serve them globally andI believe we can do that best without a transaction. Our people want to be partof a global firm. I talked to the Japanese staff, for example. They’re proud ofbeing part of a global BearingPoint and they view it that way and frankly, whenyou guys do -- when I do the calculations, I think we can return more value toour shareholders being part of a global firm and we can do it that way and sothat’s my recommendation. That’s the direction we’re heading.

[Rod Bourgeois -Sanford C. Bernstein:]

And just a clarification there; I guess what I’m asking isdid you have a difference of opinion versus Harry on that topic? Because at theanalyst day earlier this year, we heard multiple arguments from Harry thatbeing a global firm wasn’t important and therefore EMEA needed to be divested.And I’m wondering why the change in that view. Do you disagrees with the priorregime’s point of view on that topic?

[F. Edwin Harbach:]

Rod, it’s an excellent question. I’m not going to lookbackward. I know you want me to but I’m going to look forward and I believeit’s all about execution. I’ve got a track record in terms of doing that. Istrongly believe we’re better off having a global firm with EMEA as part of ourglobal firm and that’s my recommendation going forward and that’s obviously adirection we’re heading.

[Rod Bourgeois -Sanford C. Bernstein:]

All right, Ed. Thanks very much.

[Connie Weaver:]

Thanks a lot. Next question, please.

[Operator:]

Your next question comes from the line of Tien-tsin Huang ofJ.P. Morgan.

[Tien-tsin Huang -J.P. Morgan:]

Thanks for taking my question. I guess I’ll ask about thefinancial services sector. Can you just give us a little bit more detail onwhat’s taking place there? What are you expecting in ’08, given the commentaryabout some of the challenges you are seeing now? And I think it would behelpful if you could give us a little bit more detail on your exposure, I guessby type -- exposure to banks, capital markets, mortgage, et cetera. Thanks.

[F. Edwin Harbach:]

Thanks for your question. Financial services is probably oneof the more kind of up and down segments we have. It’s about 8% of ourbusiness. If you look back about two years ago, it was the star. We have aranking system we do internally for our business units. It was number one byfar. Right now, obviously they are in a down cycle. What we do with those guys is stabilize them and get themfocused on the right clients and we end up picking which segments we’re goingto operate in so we can be profitable going up and going down, so you’llprobably see some volatility in them in terms of revenue but hopefully therewon’t be volatility in terms of profit. As far as next year, we’re going to have an analyst day andwe’re talking about ’08 plans. I’m not really prepared today to talk about thefinancial services or any other segment for ’08.

[Connie Weaver:]

Thanks very much. Next question, please.

[Operator:]

Your next question comes from the line of Adam Frisch ofUBS.

[Adam Frisch:]

Ed, congratulations on your new role. I have two questionsfor you. You have the unfortunate timing, I guess, of coming in when mostbelieve some of your end markets are going to get weaker in the next 12 months,making your personal operating experience even more important in ’08. So myquick question to you is first on the operations, what kind of results shouldwe be expecting in terms of growth margins or cash balances in the next 12months? I think that’s important to know or at least get on this call before gettingoff given where the stock is.

[F. Edwin Harbach:]

First of all, thank you for the congratulations. I hope youare congratulating me a year from now but the results for the next 12 months --I figure my honeymoon is probably over today but the results for the next 12months, if you let me wait until we had the analyst day at the beginning of theyear to address ’08, I’d really like to do that. I don’t really want to talkabout ’08 today. I will talk about --

[Adam Frisch:]

Okay, the analyst day will be when?

[F. Edwin Harbach:]

Okay, go ahead.

[Adam Frisch:]

The analyst day will --

[Connie Weaver:]

I will certainly get back to you guys as soon as possiblewith dates but it will be early in the new year.

[Adam Frisch:]

Okay, but maybe a different way to address that, at $3.60 orwhatever the stock happens to fall out in the near term, should we be concernedor are you concerned Ed at all about a liquidity crisis or anything like thaton the balance sheet?

[F. Edwin Harbach:]

In terms of the balance sheet, obviously the balance sheetis what the balance sheet is, right? You guys could read that. From a cashstandpoint, it was one of the concerns when I arrived but we had $350 millionof cash at the end of Q2. Judy mentioned we’re at $430 million or so at the endof Q3. I don’t to go out -- I told you I’m not going to go out too far in thefuture but we are going to be cash flow positive for Q4 also somewhere aroundthe 450 range in terms of doing that. I told you I wasn’t going to speak to you about ’08 but Iwill violate that a little bit. We’re walking through our various scenarios andplans for ’08 now. They are not finalized. In every one of those scenarios, weplan to be cash flow positive next year and I don’t expect to have any need foradditional financing over the next 12 months.

[Adam Frisch:]

Okay, great. And then one last thing -- obviously one of themajor attributes of some investors’ investment [pieces] was the potential for astrategic initiatives and M&A. Harry’s background was banking andoperations. You are obviously a more seasoned operator with your 30 years ofexperience in the industry and so forth. So can you talk about some color onwhat you are thinking about for M&A and strategic initiatives at this point?And should we still expect those kinds of things or are you just coming in andsaying look, I’m going to run this company better and more profitably withbetter cash?

[F. Edwin Harbach:]

I guess the best thing I can tell you is I’m going to createvalue for the company in terms of running the company. We are obviously apublic company and we’re for sale every day in the marketplace but my goal isto run the company and deliver value through improving the performance ofBearingPoint.

[Adam Frisch:]

Okay, thanks.

[Connie Weaver:]

Thanks a lot. Next question, please.

[Operator:]

Your next question comes from the line of Moshe Katri fromCowen & Company.

[Moshe Katri:]

Thanks. Good morning. Looking at the quarterly results, haveyou experienced any project terminations or project deferrals? That’s numberone. And number two, your 10-Q is indicating that you are planning to move ortransition to a new financial system in North America some time in ’08. Can yougive us some more details on that and will that impact any progress in terms ofBearingPoint becoming current in their filings? Thanks.

[F. Edwin Harbach:]

A couple of responses to that; we have a broad portfolio ofthousands of projects. We get projects starting up. We have some terminationall the time. I think the gut of the question is unusual. I’ve not seenanything outside of financial services. There are a few clients in financialservices caught up in the mess you guys are well aware of that have gonethrough capital cuts and actually have terminated projects in the middle ofthose. But outside of financial services North America, I’ve not see that. You are right. We have a new financial system we areimplementing internally. We’re planning on doing that and converting our publicservices business sometime at the end of this year -- the end of, I’m sorry,2008 in terms of going forward and that will just improve our ability tocontinue to stay current.

[Moshe Katri:]

Thanks.

[Connie Weaver:]

Thanks. Next question, please.

[Operator:]

Your next question comes from the line of Ed Caso fromWachovia.

[Edward Caso -Wachovia:]

Two questions; the first is you talked about near-recordutilization and positive trends and I see turnover remains absolutely high andthe gross margin is only 15%, so if you could talk about what are you going todo to get the gross margin higher. And the other question is on can you updateus on the NOLs coming out of EMEA?

[F. Edwin Harbach:]

I’ll take the turnover and the gross margin, Judy can takethe NOLs. On turnover, it’s higher than we’d like but actually it’s trendingdown. We had 26% or so turnover last year. We’re year-to-date around 25% thisyear. October, which is really my most recent full month, we’re about 23.5% soattrition is trending down but it’s something we’re watching very carefully interms of doing that. In terms of the profitability, you’ll notice on the list ofaccomplishments I didn’t list improving profitability yet, so that’s the oneyou guys are going to have to hold me accountable for but there’s a lot ofleverage on that. And we have pricing to start off with and we need by focusingthe marketplace to create pricing power for us. We’re working on some reshapingof the pyramid. That’s consultant speak to talk about how many MDs we haveversus senior managers versus more junior staff, make sure we have that right.We’re working on our onshore/offshore mix. We think we have some room toincrease utilization further. We think we have some room to increase some focusin terms of what work we go after and what work we don’t. So obviously the trick for us next year is increase theprofitability and drive that and that’s what you guys have to hold usaccountable for.

[Connie Weaver:]

Judy.

[Judy A. Ethell:]

Good morning, Ed. For the NOLs, as you know we haveapproximately $700 million of NOLs at the end of 2006 and we are still focusedon unlocking that value for the organization so I think if you reflect on Ed’scomments about GAAP profitability in the future, a more efficient business,that really puts us in a good situation to start realizing the benefit of thoseNOLs and also, they’re available to us for some extended period of time due tothe law changes and so I think that places us in a nice position.

[Edward Caso:]

Thank you.

[Connie Weaver:]

Great, thanks. Next question, please.

[Operator:]

Your next question comes from the line of James Friedmanfrom SIG.

[James Friedman -Susquehanna Financial Group:]

Good morning and congratulations, Ed, on your new assignment.Not to beat a dead horse here, Ed, but does your vision anticipate any assetdispositions or acquisitions? I guess in particular in light of the fact thatyou perceive that the company has strength in a global footprint, do you feelthat you need a better global delivery in low-cost developing markets?

[F. Edwin Harbach:]

I guess I heard two parts to that and if I don’t get itright, probe again but I don’t believe we need a transaction to create value.Obviously I do believe we need to continue to strengthen and grow our globaldelivery centers to basically create value for our clients.

[James Friedman -Susquehanna Financial Group:]

Okay, and if I could follow-up with one additional question,maybe for Rod if he’s still on the line, Rod McGeary; being that thesedevelopments occurred so shortly subsequent to the shareholders meeting, couldyou maybe brief us as to what was discussed at the shareholders meeting andwhat you perceive as the emphasis of this management versus the priormanagement?

[Roderick C. McGeary:]

There was nothing unusual discussed at our shareholdersmeeting. The focus of this management is on execution. The only decision thatwas made at the recent board of directors meeting was to accept Harry You’sresignation and the board elected Ed to the board and to his current positionand adopted Ed’s plan, which is to focus on the global footprint and onexecution going forward.

[Connie Weaver:]

Great. Thank you. Next question, please.

[Operator:]

Your next question comes from the line of George Price fromStifel Nicolaus.

[George Price:]

Thanks. Two questions; first, notwithstanding some of thecommentary around the bullishness of what’s being said, I guess I want to askfor a more specific answer around what is going to be different now? What isgoing to change? I mean, intensifying the focus on operations, establishing aculture of accountability, focus on profitability -- it sounds a lot like whatwe heard nearly three years ago. What specifically are you going to do differentthis time around? That’s my first question.

[F. Edwin Harbach:]

History is history and I told you guys I’m not going to goback there but I have a track record of doing that and I think we’re going toexecute, execute, and execute to drive that so I don’t think the story is goingto be much different than what you’ve heard before except that we are going tofocus on the business and we’re going to drive the improved profitability ofthe business and the value through that. I think what you have to hold me and the others accountablefor is do we execute to drive that?

[George Price:]

Fair enough. Second question is what are you going -- Imean, it sounds like your -- obviously the cash balance and the cash flow,we’re seeing some improvement, at least near-term. It doesn’t sound like you’reconcerned about liquidity at this point so what are you going to do with thecash? Assuming that you hit your fourth quarter numbers and you are cash flowpositive, confident of that next year, can you give us a little bit more aroundthat topic?

[F. Edwin Harbach:]

I think overall we just want to strengthen the balance sheetin terms of cash. I’m not planning on creating a long laundry list of things todo. I’d like to take the cash and strengthen the balance sheet. At some pointwe can do some refinancing if we get to that point but mainly it’s juststrength in the balance sheet.

[George Price:]

So when you say strength in the balance sheet, you mean cashis going to sit on the balance sheet?

[F. Edwin Harbach:]

For a point in time. We’re going to generate free cash flowand at some point we have to look at refinancing the facility we have today.

[George Price:]

Thank you.

[Connie Weaver:]

Operator, I think we have time for about two more questions,if we have them.

[Operator:]

Your next question comes from the line of Susan Chen ofMerrill Lynch.

[Susan Chen:]

Good morning. Ed, a question; can you comment on the growthprospect of your public sector, like federal versus local and state? Do you seeany budgetary issues given the state of the economy?

[F. Edwin Harbach:]

Susan, I’ll be glad to do that. Public sector is growingwell for us. Year-to-date this year, we’re up in the mid single digit percentand I’ve mentioned we’ve not finalized the plans for next year. The great thing-- and people worry about public sector but the great thing for us is it’s verydiversified. We have the federal government business. We have the civilianbusiness. We have emerging markets. We have healthcare. We have state and localgovernment and if you -- we’ll talk about it when we got to investor day. Thereare certainly different prospects in all five of those business segments butoverall we’re going to have solid growth this year. We’re going to have solidgrowth next year and it’s the crown jewel of our business.

[Connie Weaver:]

Thanks. Anymore questions, please, Operator?

[Operator:]

Yes, Madam. Your final question will come from the line ofPat Burton of Citigroup.

[Patrick Burton -Citigroup:]

Good morning. Congratulations, Ed. My question is just -- Iguess I’ll ask the last one about the RSU program. You mentioned off-markettransactions. How will the company fund that? Will you actually repurchasethose shares or will they be traded amongst employees given your balance sheet?Thanks.

[Judy A. Ethell:]

Pat, for purposes of our RSUs, as we mentioned, some ofthose will be available to our employees once we file this Q, obviously whichhappened today. And we expect for that trading to be less than one day’saverage of trading. So that will -- those will actually go into the market overa period of time and our employees will be able to sell those and have enoughliquidity to pay their taxes, so they will be traded in the market. The companywill actually not be buying those back.

[Patrick Burton -Citigroup:]

But it’s about one day average volume?

[Judy A. Ethell:]

Yes.

[Patrick Burton -Citigroup:]

Okay, thank you.

[Connie Weaver:]

Great. Well, with that, I would like to thank everyone forjoining us here this morning. As always, please feel free to contact myself orDenise Stone or Francesca Lucie. Our IR phone number is 908-607-2100 and we’lllook forward to taking your calls and talking with your further. Thank you andhave a great day.

[Operator:]

This concludes today’s BearingPoint third quarter conferencecall. You may now disconnect.