BlackRock Capital Investment Corporation
Q4 2014 Earnings Call Transcript

Published: 6 Mar 2015

[Operator:]

Good afternoon. My name is Stringer, and I will be your conference facilitator today. At this time I would like to welcome everyone to the BlackRock Kelso Capital Corporation Investor Teleconference. Our hosts for today’s call will be Chairman and Chief Executive Officer, James R. Maher; Chief Operating Officer, Michael B. Lazar; Chief Financial Officer, Corinne Pankovcin; and Secretary of the Company and General Counsel of the Advisor, Laurence D. Paredes and Steve Sterling of BlackRock. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions]. Thank you. Mr. Maher, you may now begin the conference.

[James Maher:]

Welcome to our fourth quarter conference call. Before we begin Larry will review our general conference call information.

[Laurence Paredes:]

Thank you, Jim. Before we begin our remarks today I would like to point out that certain comments made during the course of this conference call and within corresponding documents contain forward-looking statements subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may and similar expressions. We call to your attention the fact that BlackRock Kelso Capital Corporation’s actual results may differ from these statements. As you know BlackRock Kelso Capital Corporation has filed with the SEC reports which list some of the factors which may cause BlackRock Kelso Capital Corporation’s results to differ materially from these statements. BlackRock Kelso Capital Corporation assumes no duty to and does not undertake to update any forward-looking statements. Additionally, certain information discussed and presented may have been derived from third-party sources and has not been independently verified. Accordingly, BlackRock Kelso Capital Corporation makes no representation or warranty with respect to such information. Please note that we have posted to our website an investor presentation that complements this call. Shortly, Jim and Mike will highlight some of the information contained in the presentation. At this time, we would like to invite participants to access the presentation by going to our website at www.blackrockkelso.com and clicking the November 2015 Investor Presentation link in the Presentations section of the Investor Relations page. With that I would like to turn the call back over to Jim.

[James Maher:]

Thank you, Larry. Good afternoon and thank you for joining our call today. We had a very good fourth quarter and an excellent year. We harvested several of our equity positions and have generated investment income that exceeded our current dividend level, both for the quarter and the year. Highlights include new investments of more than $235 million, relative to exits of $84 million. This amount includes the investment we made in Gordon Brothers finance company, our largest single investment since inception. That brings our total new investments to more than $530 million for the full year. Adjusted net investment income equaled $0.26 per share, exceeding our $0.21 dividend. For the full year 2014, our net investment income as adjusted was $0.91 per share, relative to distributions declared of $0.89 per share. Realized gains during the year provided another $1.30 per share of earnings with no accompanying distribution requirement. This resulted in $2.21 per share of combined net investment income and realized gains. We've had increases in the valuations of many of our remaining equity positions. The net realized and unrealized gains on our portfolio contributed to an increase of our NAV of $0.52 for the quarter to $10.49. This represents an increase of nearly $1 per share over the last 12 months. We believe that setting the dividend at a level that is largely covered by interest and dividend income rather than capital appreciation, realized gains and fee income has allowed us to grow net asset value. Thanks to the redeployment of proceeds from equity sales into income producing assets, our run rate net investment income, pre-incentive fee was $0.22 per share on a pro-forma basis at year end. This run rate does not consider the impact of fee income, which would of course result in even higher pre-incentive fee NII. As we outlined in our last several conference calls, an important part of our portfolio strategy has been focused on harvesting some of our investments in equity securities. Overall in 2014, the sales of our equity interest in Arclin, ECI and Advanstar produced net realized gains of $99.2 million and generated $153.2 of proceeds available to redeploy into income producing assets. The companies in which we have remaining equity investments such as USI, Penton, Progreso, and others generally continue to perform well. It remains our goal to affect further reductions in our equity portfolio over the next year. The rate of return on these investments continue to be accretive to our overall returns. Notwithstanding exiting a net $100 million of equity investments during the year, the equity exposure on our portfolio increased to 21% from 18% at the end of the third quarter, due to the continued appreciation on our existing investments. The current equity balance in the portfolio is down slightly from 22% at yearend 2013. The first quarter 2015 has been somewhat slower than normal with respect to volume of new transactions. Market conditions remain frothy as an abundance of capital continues to seek investments in the leverage finance space as fewer new middle market M&A transactions limit the supply of investment opportunities. I would like to now turn the call over to Mike.

[Michael Lazar:]

Thank you, Jim. In advance to this conference call, we posted our quarterly investor presentation to our website and an overview of our fourth quarter results starts on Page 2. We're pleased with the continued solid performance of our investment portfolio. Net assets increased to $782 million and net asset value per share increased to $10.49 per share from $9.54 per share at the beginning of the year. Total investments stood at $1.26 billion at yearend. With respect to earnings, our portfolio generated investment income of $37.9 million for the fourth quarter, which was a significant increase relative to the $33.2 million earned in the prior quarter. While interest income was relatively flat for the prior two quarters, fee income was $4.6 million higher. Fees obviously remain an important part of our direct investing business. Income derived from fees tends to be consistent over the long run, but can be volatile in any particular quarter. For the fourth quarter, fee income totaled $9.5 million, which is above our longer term average. We believe that our adjusted net investment income, which removes hypothetical gains fees and adds an adjustment to account for incentive fees earned on income is the better indication of our quarterly performance. Reconciliation of these GAAP and non-GAAP measurements appears on Page 11 of our Investor Presentation. Adjusted net investment income of $19.5 million in the quarter compares with $17.3 million in the third quarter and equated to $0.26 per share compared with $0.23 per share in the prior quarter. Our net investment income as adjusted of $0.26 per share relative to distributions declared of $0.21 per share, results in net investment income dividend coverage of 125%. In the fourth quarter, we continue to focus on opportunities in the secured and senior debt -- in secured and senior debt investments and negotiated transactions where appropriate structures could be put in place. Given the current high leverage levels in the market, we're still focused on investments with a reasonable level of tangible asset coverage. Since yearend 2013, we have increased our percentage of first lien loans from 13% of the portfolio to 26.9% of the investment portfolio today. The fourth quarter was very productive for our new investment activity. During the quarter, we invested in the following portfolio companies either in first-lien, secured lien -- first-lien secured loans, second lien loans or in one case, a series of securities issued by a company whose entire business is focused on asset based lending. We hope to structure a first lien unit tranche term loan to Vertellus Specialties provided $55 million of the $455 million loan earning a 3.5% capital structuring fee of $1.9 million. Vertellus is a specialty chemicals business operating in two major segments, agriculture and nutrition and specialty and materials. Completed a transaction with Gordon Brothers Group, whereby we launched Gordon Brothers Finance Company, a majority owned portfolio company. We invested just under $95 million consisting of $71 million of newly issued LIBOR plus 11 senior notes with a 1% floor, $13 million of newly issued 13.5% coupon preferred stock and we paid $10.6 million for 80% common equity ownership of the company. We also earned a $3 million capital structuring fee in conjunction with this transaction. This company is focused on asset-based secured senior lending. We invested just under $15 million in the first lien term loan of Oxford Resources, a producer of thermal coal that's used primarily by regional electric utilities and is sold under long-term contracts. The loan has a floating rate coupon of LIBOR plus 11.5 and a 75 basis point floor. Lastly, we invested in a directly sourced and negotiated second lien loan for a new private equity sponsored transaction. Our loan to Pioneer Sand Company supports a JLL buyout of the business from the current family owners. Our $20 million loan has a coupon of LIBOR plus 850 with a LIBOR floor of 1%. In terms of exits during the fourth quarter, Advanstar Communications was acquired by UBM Plc, a U.K. based media company. Total proceeds of $26.2 million on our combined preferred and LLC interests resulted in realized gains of $14.1 million. As of last quarter end, our combined investments in Advanstar accounted for over 13% of our total equity investment sector value. Significant exit transactions in the quarter also included the previously disclosed realization of our investment in AmQuip Crane Rental from which we received proceeds of $41 million and a prepayment penalty of $1.6 million. Our realized IRR was more than 15%. We also exited our small opportunistic purchase of Expert Global with an IRR of 13.7%. After quarter end, M&M Tradition Holdings was sold through a subsidiary of Berkshire Hathaway, MiTek Holdings. Our 11.5% common equity ownership generated net proceeds of approximately $14.3 million and this resulted in a $9.3 million realized gain and represented a further increase of $2.5 million above our mark for this investment at last quarter end. Inclusive of escrow proceeds, our IRR on this investment is over 18%. Our borrowing cost fell to a rate of 5.2% for the fourth quarter as a result of an increase of leverage to 5.6 to 0.56 times from 0.43 times net of cash at the end of the third quarter. This is a result of our incremental borrowings being drawn under our revolving credit facility, which is our lowest cost of capital as well as the effect of our credit facility pricing reduction completed earlier this year. Jim and I are extremely proud to be leaving the company in excellent position perhaps the best position it has been in during its history. At $1.26 billion, the portfolio has the benefits of scale and diversification and has continued upside in many of its equity positions. Our debt portfolio has been carefully constructed based on fundamental credit underwriting and is comprised of a diverse pool of well structured junior and senior debt investments with low internal correlation and substantial excess return relative to risk. We’ve achieved double-digit IRR on the $3.7 billion of total investments we’ve made since inception nearly 10 years ago. This is all the result of lots of blocking and tackling by a terrific investment team, while I would like to commend and thank for their hard work and their dedication. With that, I would now like to turn the call over to Corinne to review some additional financial information for the quarter.

[Corinne Pankovcin:]

Thanks Mike and hello everyone. I will take a few moments to review some of the other details of our 2014 fourth quarter financial information. For the three months ended December 31, 2014, our earnings were $0.73 per share and our GAAP net investment income was $0.05 per share as compared to $0.26 per share on an adjusted basis. The adjusted net investment income increased over the prior quarter due to higher fee income in the fourth quarter offset by increases in base management fees and incentive fees. The composition of our portfolio remained fairly stable in the fourth quarter. Senior secured loans comprised 52% of the portfolio representing a two percentage point decrease from the prior quarter. Unsecured and subordinated debt securities increased by three percentage points to 18% of the portfolio while the composition of our portfolio invested in senior secured notes decreased one percentage point to 8%. The weighted average yield of the debt and income producing equity securities in our portfolio at their current cost basis decreased slightly to 11.6% at December 31 as compared to the prior quarter. The weighted average yields on our senior secured loans and other debt securities at their current cost basis also decreased slightly at 11.2% and 12.5% compared to prior quarter respectively. At December 31, we had approximately $448 million in debt outstanding, $10 million in cash and cash equivalents and $271 million net cash and availability under our revolving credit facility. Subject to leverage and borrowing base restrictions at December 31, our asset coverage ratio was 271%. Compared to last year, our weighted average cost of debt decreased 28 basis points to approximately 5.2%. This was due to our securing more favorable pricing of our credit facility earlier this year. With that, I would like to turn the call back to Jim.

[James Maher:]

Thank you, Corinne. As I’m sure you're all aware, BlackRock Kelso Capital Advisors entered into an agreement last autumn with BlackRock Advisors LLC through which BlackRock will acquire certain assets of the company’s investment advisor. The shareholder vote on February 18 approved the transaction and the appointment of BlackRock as the company’s new investment advisor at the close of the transaction. The closing of this transaction is expected to happen in the very near future. At closing, Mike and I will be stepping down from our roles with the company. I am confident of speaking for Mike when I say we are both very proud of the company and its many accomplishments and are honored to have built and led it. Going forward, I expect to remain on the Board of Directors and will become a senior advisor to BlackRock to assist in the transition of the business. Mike has also agreed to serve as an advisor to BlackRock in transitioning the business including portfolio responsibility and business operations. Steve Sterling, a Managing Director at BlackRock and their head of Global Capital Markets is with us today. Steve has joined us today and while he does not have any prepared remarks, he is here to address any questions you may have about BlackRock and the rational for this transaction as well as his strategy going forward. Mike and I, along with Larry and Corinne have been assisting Steve and the BlackRock team. After the transaction closes, Steve will assume the CEO role of the Company. We pass the Management of the company to BlackRock at the time that we believe BKCC is in its strongest ever position. The dividend is covered by interest income, that is in excess of $120 million of unrealized depreciation in the company’s assets and the performance of both its debt and equity positions continue to be strong. We've invested more than $3.7 billion over nearly 10 years and 168 portfolio companies in the middle market. It has taken a lot of hard work from a lot of individuals successfully acting as one team dedicated to our business. On behalf of Mike, Corinne, Larry and myself I’d like to take this final opportunity to extend my thanks and appreciation to each of the members of our investment team for all their efforts in 2014. They've each individually done a tremendous job in contributing to our success and their teamwork has driven our business to new heights. As a significant shareholder, I’d like to read reiterate my vote of confidence in our team and in BlackRock going forward. With that, I’d like to thank you for joining our call today. Operator, would you now please open the call for questions?

[Operator:]

[Operator Instructions]

[James Maher:]

Well, if there are no questions I’d like to thank all of you for attending this conference call and if you have any further questions feel free to give us a call at your earliest convenience. Thank you.

[Operator:]

I’m sorry we did just have couple come in queue.

[James Maher:]

Okay.

[Operator:]

So the first question is from [Indiscernible] from Wells Fargo Securities.

[Unidentified Analyst:]

Hi, thank you. First a basic question, we saw some pretty good markups on some of the equity holdings in the portfolio, can you give us an update us to whether there were material operating improvements or are these kind of sponsor bid driven? And second on top of that, would this accelerate your appetite to monetize these and deploy given that’s a strategy. Thank you.

[Michael Lazar:]

Sure, it’s Mike. There is -- the contribution in terms of the total increase is spread across a couple of different portfolio and some of which we mentioned in prepared remarks. I think there is a combination of improving financial condition of some of these companies combined with higher market multiples evident in today’s leverage buyout marketplace and in particular one of the assets has been marked up pretty significantly in the quarter because our third-party that does the valuations had an observable event happen to the most comparable company in the industry at a higher multiple, while that business's EBITDA continues to improve quarter-over-quarter. In terms of liquidating these investments, as you know looking at the business over a long period of time takes a while to exit our equity investments. We’ve mentioned for a while now that this is an active part of our business strategy. We've been doing it over time with some of our other investments. Some continue to appreciate and all of them are always up for high consideration in terms of trying to exit and trying to turn those appreciated assets into cash for redeployment into interest bearing securities. So we’re always trying to sell everything. We want to make sure that we're good fiduciaries is in that regard and that we're able to capture as much appreciation as is reasonably possible over the near term and we continue to examine each business, business by business as conditions change and evolve in the marketplace.

[James Maher:]

Yeah, I would -- the only thing I would add to that is I think we're more enthusiastic today about selling these positions because they -- they have run their course in terms of to some extent of what the appreciation that we expect to the garner. As we said before, we said in the past that we intended on hang on to these positions until we were able to realize fully what we expected. I think we are by definition a lot closer to that point in time.

[Unidentified Analyst:]

Okay, great thank you. And just another one on Gordon Brothers to help understand their if you can give us kind of some color on what yields these guys deploy at and then if I am right, it's a $269 million portfolio your total contribution is $94 million and then $10.6 million of that which is the majority of the equity is there leverage on top of this?

[Corinne Pankovcin:]

So senior to our investment in the company its various levels, there is asset based financing against this portfolio of assets as you would expect in any type of finance company. You can sort of deduce the map using round number, using the round numbers that you just used in your question to figure out that. The amount of leverage above us or that is senior to us in this transaction that is secured is a pretty reasonable amount with good pricing. Therefore it's just the opportunity to make good returns in a type of leverage environment that's not dissimilar to those in BDC.

[Unidentified Analyst:]

Okay, great. Thank you.

[Corinne Pankovcin:]

In terms of their underlying returns there is a quite a variety from transaction to transaction and these tend to be smaller companies and again their focus on what they do is much more specifically tide to the valuation of the assets that are securing the loans. Assets that in many cases are available for liquidation should the loans not continue to perform. These are different types of companies then you would see as a typical company investment in the BDC.

[Unidentified Analyst:]

Okay, thank you.

[Operator:]

Your next question is from Aaron Siganevich from Evercore ISI.

[Aaron Siganevich:]

Hi thanks, I was wondering if you could talk a little bit, I don’t know if Steve is available to talk about their philosophy, once you have a change in the advisor and what type of investment opportunities are you looking to target under the new management team?

[Steve Sterling:]

Great, first I apologize my voice is little bit poor. I've been since by the Flu. I’d also like to just maybe take a moment and congratulate Jim and Mike and the investment team at BlackRock Kelso for a fabulous 2014 and certainly a solid ending in the fourth quarter and a nice business that has been built with a lot of hard work and equity and through some tough times at the marketplace. And so for that congratulations to you all for the good work that you've done. We’re very excited about assuming responsibility for management contract of BDC. We think that the current course relative to portfolio construction and portfolio management is reasonably aligned with what we would otherwise do at the state, which is to say that the course of monetization of the equities is a critical consideration. Jim just highlighted that a few moments ago. We will certainly be very focused on that. We think that’s in a roll to ultimately redeploying the proceeds that are currently locked up. They've been pretty meaningful sums in equities into productive assets. They’re earn current income and enhance the ROE of the business. So our focus will definitely be on NII growth about ensuring quality coverage of our dividend and about continuing to raise the ROE of the business. From a portfolio construction point of view, we would continue at this moment where we are in the credit cycle to buy a secured risk certainly to more asset intensive businesses plus volatile business less paid overall. So I don’t think that one should expect a material change in approach as to the previous management team in terms of where our focus will be in the near term on a go-forward basis.

[Arren Cyganovich:]

Great. Thanks, that's helpful and then in terms of the types of investments that you would be seeking, is it still along the lines of a directly originated, well underwritten private focus or would you also include some opportunistic secondary market purchases as well?

[Corinne Pankovcin:]

Yes, that's a great question. Look we're a direct investment business. We're not a secondary markets business. We will focus our efforts on creating value through direct relationships with the various sourcing channels that I think are available that includes directly with companies as well as their sponsors and other forms of intermediaries, but we certainly want to be in a position that we can in fact affect the quality of the underwrite the structure. At the end of the day, what's most important to us is preserving capital, protecting our client's capital. So owning depend relative to that origination exercises is certainly an important conservation for us.

[Arren Cyganovich:]

It's good to hear and then in terms of the change in the new fee structure, what was the thought process to be putting a two year transition period for that, why not just do it immediately upon closing transaction?

[Laurence Paredes:]

Well, that was -- this is Larry speaking, that was part of the negotiated transaction and at the time BlackRock felt that from a legal and regulatory perspective, delaying the rollout of the amendments for a two year period would be in the best interest of the stockholders.

[Arren Cyganovich:]

Okay, that's fair. And then in terms of the current investment pace, did you provide any update in terms of quarter to date activity, in terms of new investments and exits from the portfolio? And then I guess secondly Jim had mentioned that the environment still seems somewhat frothy, which is going against somewhat from what we're hearing from other management teams as being a much better investing environment over the past several months versus the past several quarters?

[James Maher:]

Let me address the second point first. I think you're right. Things are better, but I would be -- well certainly in my mind far from being anything other than frothy at this point in time. In terms of investments or exits this quarter, the only one that we've talked about is the M&M sale. I would expect at this point in time, we have several opportunities on our plate for acquisitions and we also have at least one possible exit that could happen. I would expect depending on what happens with those particular transactions that we would end the quarter somewhere around where we're today in terms of total net assets.

[Michael Lazar:]

Hey Arren, it's Mike. I would just add that we've seen over a long period of time that the first quarter tends to be seasonally slow in our business. People do like to close new leverage buyout private equity transactions. There is sort of a rush to yearend. I think that was very much true in 2014 as well. We don't view it as unusual to get a slow start in this sort of January, February timeframe of any new year and we're in fact now starting to see things pick up quite a bit in terms of activity level. To comment on Jim's comment on the frothiness, yes, there has been slight easing in liquid credit markets and the last month or two versus the run up to year end. Think there are a lot of structural reasons that the run-up to year end happened and a lot of people wanted to print CLOs in 2014 and that had an effect on the marketplace in which we exist also. But when you look at the statistics, the sort of the year ended on a very, very high note in term of high leverage, lower covenant levels, less protection in yields and while there may be some slight easing off of that, easing off of a pretty high level. So we still want to be pretty cautious and I am sure that going forward, BlackRock will want to engage in that same kind of cautious and thoughtful behavior in terms of portfolio construction.

[Arren Cyganovich:]

Okay thanks. And then just a thank you to Michael and Jim for your help over the past few years.

[James Maher:]

Our pleasure.

[Operator:]

Your next question is from Troy Ward from KBW.

[Troy Ward:]

Great. Thank you. And I would like to sort of offer Jim and Mike, just want to say congratulations and thanks to both of your first. It's been a pleasure to get to know working with you on BKCC over the past seven years and our team here definitely wishes you the best in your new role and all your future endeavors.

[Michael Lazar:]

Thank you.

[Troy Ward:]

Michael real quick, Michael just couple of quick housekeeping questions, in the fourth quarter as we look at kind of the yield on the assets. Can you tell us was it weighted more as the originations in the quarter? Was there any significant waiting either to the front or the back of the quarter that could help us with the yield on the portfolio in the coming quarters?

[Michael Lazar:]

Sure that’s a good question. I think our single largest investment in the quarter and of all time is the aggregate investment in Gordon Brothers and that’s just a relatively high coupon payroll securities and the two interest bearing securities and again you’ll see that that transaction didn’t close until right around just about a minute or two before the middle of the quarter. So that single timing would have a pretty big effect. Oxford is smaller investment, but again first lien loan good coupon that closed right at the end of December.

[Troy Ward:]

Okay. So you got about exactly half of the income that Gordon Brothers would have in the full quarter?

[Michael Lazar:]

Just slightly more than half.

[Troy Ward:]

Okay great. And as we look at the remaining equity gains in the portfolio, what is your ability to affect the sale and actually maybe continue to move out of some of those. What is your ability to do that from a control perspective?

[Michael Lazar:]

Well, we don’t control any of the big positions that we’re in. But we have relationships with all of the investors in those transactions and we’ve made it quite clear that it’s our desire to move on in each of those cases. We have as you could well imagine, in some cases we have more influence than in others, but I think our interest in part just because of the passage of time and the maturity of these investments is clearly aligned with the other investors in these transactions. So as I said earlier, we're certainly closer to the end than we were a year ago just largely because of the maturity of these transactions. They have been held by their investors for quite some time and I think they may have a little bit different timing than our immediate desire might be, but it certainly I don’t see any long term holes here.

[Troy Ward:]

Great and then just switching gears a little bit to Steve, can you just talk a little bit about the future, first of all in one of your comments earlier you talked about you just mentioned credit cycle, where do you think we are in the current credit cycle and what are some of the key factors you look for as you look at the overall middle market?

[Steve Sterling:]

One can never know for sure where you are in the cycle, its best guess. Certainly it feels like we’re very well into the game using the baseball analogy. I think though I am pretty bullish on the U.S. economy certainly in 2015 feel good about where we are there, certainly from a metrics point of view looking at things like employment, capacity utilization are certainly macro indicators that will give you some sense of where potentially we are in a cycle. But as we think about the investment horizon over the next 12 to 18 months, it feels to me like we are in a pretty good position of the marketplace, but we’re dealing with assets that are pretty sticky and certainly in higher risk part at the market be in the middle market. We think we can mitigate that risk through good underwriting decisions, good structuring decisions and we think there is good opportunity to extract value but we want to be very prudent in terms of our portfolio construction and the situations that we play. Not only dissimilar I think that what the team has done heretofore will continue to be I think fairly vigilant around that selection process.

[Troy Ward:]

Okay, great and then one final one Steve, is just a good question about capital allocation, given where the shares are trading now assuming kind of stay in that range you've had a nice lift off of very depressed price, but up to around 90% of book value even under with the nice move in book value. How do you feel about using capital for share buybacks in the current environment?

[Steve Sterling:]

Good question. We'll evaluate all aspects of value creation for the shareholders and stock buybacks are certainly one aspect of that, but there are lot of things to consider in that decision of buyback versus investment analysis including, but not limited to certainly the friction cost associated with that as well as the opportunity cost. Portfolio risk and capital markets considerations, which we float. So we want to take a pretty holistic view and determine what we think is in the best interest of the shareholders over the longer term, which is really sort of BlackRock's view around managing client capital. So again I think everything is under consideration, but I think we need to take qualitative as well as quantitative factors into account as we make those decisions.

[James Maher:]

We reinstituted our share purchase program at our most recent Board Meeting after having put it on hold during the pendency of this transaction.

[Troy Ward:]

Apologize I was on mute, can you guys still hear me?

[James Maher:]

Yes, hearing now.

[Troy Ward:]

I’m sorry, I just follow-up and just I assumed that the window was closed, so now that you’ve reinstated, have there been any shares purchased and is the window currently open following the filing of the 10-K here.

[James Maher:]

Larry.

[Laurence Paredes:]

The window hasn’t opened, but at this time we can’t comment on purchases.

[James Maher:]

Other than comment.

[Troy Ward:]

Okay, thanks for your guys comment and Steve thanks and look forward working with you in the future.

[Steve Sterling:]

Look forward to working with you as well.

[Operator:]

Our next question is from Doug Harter from Credit Suisse.

[Doug Harter:]

Thanks. My questions have been asked and answered.

[Operator:]

There are no further questions at this time.

[James Maher:]

Well, once again thank you all for attending this conference call and we stand ready, willing and able to answer any questions you have that come to mind after the end of the call. Thank you.

[Operator:]

Ladies and gentlemen, this does conclude today’s conference call. Thank you for participating. At this time you may now disconnect.