iMedia Brands, Inc.
Q3 2007 Earnings Call Transcript

Published: 20 Nov 2007

[Operator:]

Good morning, and welcome to the ValueVision Media's ThirdQuarter Earnings Release Teleconference. Following today's presentation, therewill be a formal question-and-answer session. At that time, instructions willbe given. Until that time all lines will remain in a listen-only mode. At therequest of ValueVision Media, today's call will be recorded for instant replay.If anyone has any objections, you may disconnect at this time. I would now liketo turn the call over to Ms. Amy Kahlow, Director of Communications. You maybegin.

[Amy Kahlow:]

Good morning. Today's conference call may contain certainforward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995. Listeners are cautioned that suchforward-looking statements may involve risks and uncertainties that couldsignificantly affect actual results from those expressed in any suchforward-looking statements. More detailed information about these risks anduncertainties is contained in ValueVision Media's filings with the SEC. I would now like to turn the call over to Mr. John Buck,Interim CEO.

[John Buck:]

Thank you, Amy. Good morning, and thank you for joining meon this call. A lot has happened since our last call, and I apologize for notbeing able to talk with you before today. I assumed the role of Interim CEO onOctober 25, and I felt that I needed to spend time getting to know ouremployees, vendors and our operations. I also felt that it was important to have our third quarternumbers to share with you. My prepared remarks are focused in the followingareas

[Frank Elsenbast:]

Thanks, John. For the third quarter, sales were $185million, which is even with the third quarter last year. Sales in severalcategories showed considerable growth versus the last year. These categoriesinclude gemstones, watches, apparel, and notebook computers. These gains were offset by a reduction in our LCD TVbusiness, which peaked in the third quarter of last year and has seenconsiderable margin erosion this year. In response, we have shifted hours toother categories that maximize our margin dollars per hour. Our internetbusiness grew 18% over prior year and is now 28% of our merchandise sales. Our gross margin for the third quarter was 35.2%, anincrease of 80 basis points versus last year. The increase was driven primarilyby the shift in our merchandise mix, away from lower margin electronics. Operating expenses for the third quarter grew 1% versusprior year. This modest increase reflects the impact of our cost reductionplan, implemented in May, and that continues to be rolled out. This increasedoes not include the one-time CEO separation costs and certain severance andrestructuring costs. These costs amounted to $3.2 million in the quarter. Selling and distribution expenses were up 7% versus prioryear, driven by a 5% increase in our (inaudible) and continued growth in ourinternet marketing programs. G&A expenses were down $2 million versus prioryear due to lower salaries and related costs. It is important to note that bothof these are down sequentially versus our second quarter of this year. EBITDA for the quarter was 800,000 down 600,000 versus lastyear. While these results are below our expectations, we’re pleased that we canreport positive EBITDA even when our sales growth is below expectations. Let me handle the quick update on our balance sheet. Weended the quarter with a cash balance of $103 million, an increase of $1million versus the prior quarter. The primary drivers include a change inworking capital that generated $12 million. Our stock buyback program used $9million during the quarter. Capital spending was $4 million, driven primarilyby spending in non-IT projects and our warehouse consolidation project. EBITDA and the interest income contributed $2.5 million.John will now give you an update on the outlook for the remainder of 2007.

[John Buck:]

Thanks, Frank, and as he said I want to discuss plans forthe fourth quarter, and I will also comment on our annual financial guidance.For the fourth quarter, we’ve five key events

[Operator:]

Thank you. (Operator Instructions). Barton Crockett, you mayask your question, and please state your company name.

[Barton Crockett:]

Okay. Great. Barton Crockett from JP Morgan, and thank youfor taking the question. First, I think the question that's really foremost ineveryone's minds, that I didn't see your answer in the script, and that is ifyou can talk about why basically the board asked Will Lansing to leave, andwhat do you believe was the reason for that? And what do you believe hissuccessor could do better than Will was doing in that position?

[John Buck:]

Barton, thank you for the question. I think some of you knowthat I have talked to -- Will is a very close personal friend. A businesscolleague for many years, and so I am sure you can appreciate just howdifficult this was for everyone involved. This was a decision that was done ina very careful, thoughtful way. And I think rather than getting into boarddiscussion and discussion with Will, I think it's just suffice to say that wewere not pleased with the overall performance of the Company, and we just feltnow was the best time to make a change. And again, Barton, I can appreciate theinterest, but I just don't think it really helps to go back in time. I amreally focused on today and going forward. In terms of the new CEO, we are obviously looking forsomebody that's got a proven track record, somebody that has that experience inthe retail business direct-to-consumer, someone that's got Internet retailing,home shopping, and I have to tell you based on my conversations with SpencerStuart on a weekly basis, I am pretty excited about at least initial work thatthey have done, and I am excited about our future prospects.

[Barton Crockett:]

Okay, great. If I can follow-up, the second part of myquestion was really what could someone else do better in terms of improvements,and can you elaborate a bit, I mean, where is ValueVision executing at asub-par level, and what could someone else do? What are the opportunities forimprovement?

[John Buck:]

Yeah, thank you again. Well our mind is, we have got an $800million business here that's not delivered $1 of net income. We have had somefairly nice growth, maybe even significant growth over the last three, fouryears. But there has to be a balance between that growth and also beingprofitable. I think what we are looking for going forward is a CEO that hasthat balanced view, if you will, continuing the growth path that we have beenon, and I think we've got such wonderful platforms that I referenced earlier.But at the same time, being sensitive to the cost structure of the business.And so I think finding more of that balance, if you will.

[Barton Crockett:]

Okay. Alright. And then if I could switch gears here alittle bit, your commentary that the fourth quarter has started off so strong,obviously very interesting. And I was wondering if you could elaborate a littlebit more on what's changed, because the third quarter churn was flatyear-to-year, in the fourth quarter you say you are starting off, I think thenumber was 8% up on [ouster] of that. Was it mainly an issue of comps, in otherwords, LCD maybe, that comp has eased as you kind of enter the fourth quarter,or was it just momentum on some of the new initiatives, or was it just despiteof that retail environment for some reason you guys just had to (inaudible) there?

[John Buck:]

Well I think, I wish I knew that question and knew theanswer to that. I'll give you a few thoughts, and then I'll let Frank chime in. We did have just an outstanding All Star Event, and a lot ofit has to go to the credit of the organization, it's planning, it'spreparation. I mean, we had this thing really down pat. I will also tell you wehad a very-very enthused energetic evening with our top vendors, where wereally laid up a challenge to them. There was a lot of energy and people leftexcited, and we really talked about the All Star event not only being a fiveday event, but really that's what we need to do in the fourth quarter. So Ithink it's just maybe a combination of a whole bunch of things, certainly theplanning, preparation from everybody in the organization, all of our employees.I think our vendors and our guest vendors were really-really excited. They wantto make sure we are successful. We obviously have the right products and thevalue that customers were looking for. So we just hit it on all cylinders. Iwould also tell you that that has continued. As I mentioned, we are at doubledigit growth. It is what it is today, and I am excited to share that withyou, and we'll just see if we can keep that going through the fourth quarter.We've got some very exciting events coming up, five more events. We've got thatbig clearance sale in January, but I would also tell you, the organization hasreally got, the plans are very detailed, and it's a matter of us executing andhoping that customer continues to buy.

[Barton Crockett:]

Okay. And then one final question, and then I would like toget out of the line, let others ask questions. There has been a few analysesthat I've looked at. What would ValueVision be worth if the company were in aliquidation scenario, which I know is not what you put on the table out here,but I wanted to ask the question. Given that arguably and some type of winddown of liquidation scenario, you could extract value that is near or abovewhere the stock is currently trading. Why not look at that right now and whatwould have to happen to get you to consider that type of scenario?

[John Buck:]

Barton, again thank you, and first off, I want to givecredit to [Sound Port], I am sure that's who you arereferencing, Sound Port Partners.

[Barton Crockett:]

Right.

[John Buck:]

We credit them for their homework and putting together avery detailed letter. I would say their position is very, very clear. I do, andthe board and I, everybody agrees that this company has some wonderful andvaluable assets. But I would just say at this time, we don't agree that that'sthe way to realize shareholder value. We think there is more value here throughunlocking the profitability to this company, and quite frankly my focus rightnow is, as interim here, is I am working with this officer team, working withAlvarez. As I mentioned, I am pretty excited about having Alvarez and Marsal inhere. They have come in with a fresh pair of eyes. They are looking at it andthe officer team, probably equally important, may be more importantly hasreally embraced this. And we are really thinking outside of the box, and Ireally, I think the focus on that, the focus on executing the fourth quarter,putting the plan together for '08 and recruiting the CEO is really thedirection that board that we've all agreed to. That's the best path forincreasing shareholder value.

[Barton Crockett:]

Okay, great. Thanks a lot.

[John Buck:]

You are welcome.

[Operator:]

Bob Evans. You may ask your question and please state yourcompany name.

[Bob Evans:]

Craig-Hallum Capital. Good morning, everyone.

[John Buck:]

Good morning, Bob.

[Bob Evans:]

Can you comment a little bit more on the Alvarez-Marsalprocess in terms of the -- maybe prioritize the potential biggest areas ofsavings or efficiencies. And then maybe elaborate, I mean, I know you can'tgive a number necessarily at this point. But are we talking about meaning --from what you are seeing thus far, are we talking meaningful dollars, not acouple of million, but are we talking double digit type of millionopportunities over aggregate opportunities?

[John Buck:]

Yeah, thank you, Bob. We are not going through all this workfor a single digit improvement. And based on what I am seeing and by the way Iam participating in a lot of these reviews, I just spent yesterday all daygoing through our whole merchandising organization and our planning andprogramming, promotional organization. I just think there is a lot ofopportunity. So there is a lot of hard work being done by the organization atlarge, and again we are not going to put this kind of effort into this for asingle digit improvement. The process, it's really a nice process in that this is thetime of the year we normally go through our budgeting process for '08, and sowe've integrated Alvarez and Marsal into that process working with all of ourbudget owners, looking at their specific budgets. Questioning, why did we do itthis way; why did we do it that way? And at the same time we are also looking at some of thesebig ideas I referenced, and I just assume not going to that at this quarter. Ithink it's just too early, and quite frankly all of us need more time, morework. But we are on a fast track. Alvarez, this is a 60 day assignment in andout. And that we are going to reporting to the board in the December timeframe,the buckets we are really looking at are growing our revenue, and there is topline opportunity for us here. Obviously, a 35% gross margin is unacceptable. And we thinkthere is some real opportunity in that area, and certainly in the merchandisearea, working with our vendors, we think we have got some real opportunitythere. We just can't be sitting at, and you guys know this as well, where ourcompetition is, where our competitors are, and we are sitting at the 35% grossmargin. And then, we are continuing to really look at our operatingexpenses, and I think there is again some more room in that area. So, to sum itall up, we are in the middle of this, it's very detailed. These are long-longdays. But I got to tell you; I leave like yesterday. I got out here last night,and I was full of enthusiasm because of the opportunity we see. And we are notdoing it for single digit improvement.

[Bob Evans:]

Do you believe you can do some other things you want to dothat are meaningful but not towards the top line, and I think that’s some ofthe fear that was maybe first recognized when they saw that Alvarez is goingthrough a cost cutting initiative.

[John Buck:]

Absolutely, and if I didn’t, that was one of the themes Iwanted to convey in my opening remarks, is that with our assets, we think wehave got some incredibly valuable growth opportunity. So, that’s a rule that wehave amongst ourselves and with Alvarez and Marsal is we don’t want to doanything that impacts the revenue side of this business, impacts our customers,impacts our ability to continue to grow the business.

[Bob Evans:]

Okay. Thank you. And then a question for Frank on theG&A and D&A that were both down sequentially year-over-year; is thiskind of the right baseline to think about I guess for both items going forward,or how should we think bout it?

[Frank Elsenbast:]

Bob, I think on the G&A line, the third quarter may be alittle bit of a low watermark, just because this is the quarter that we didreverse some of the bonus accruals that we had on a year-to-date basis, butit's not going to go up significantly. It should still be in the between 5.5and 6 on a go forward basis.

[Bob Evans:]

Okay. And how about depreciation; I know that that numberhas been coming down. Is there something that happened a while ago that’sruling off?

[Frank Elsenbast:]

Right, the decrease that you have seen in the D&A lineis driven by some significant IT projects that were initiated 5 years ago, ourOracle launch. A lot of those investments are starting to be fully depreciated,and you’ll continue to see that line come down and probably be closer to $4million as we go into ’08, $4 million per quarter, between $4 million and 4.5million.

[Bob Evans:]

Okay. Alright. Thank you.

[Frank Elsenbast:]

Alright.

[Operator:]

Jamie Zimmerman you may ask your question, and please stateyour company name.

[Jamie Zimmerman -Litespeed Partners:]

Jamie Zimmerman, Litespeed Partners, how are you? With 70%of the carriage turning over in '08 and NBC controlling that process and NBC’scontract having to be renegotiated in 2011, are they helping you or hurting?And how do you work with that interaction?

[John Buck:]

Thank you for that question. And as I noted in my comments,you are exactly right; our carriages are coming due in '08. We do look at thatas an opportunity for us. In terms of the GE/NBC, I would say they have beenreally, really good partners in helping us plan a go-forward negotiatingstrategy. But remember, or keep in mind that we will be negotiating contractsthat are in the best interest of ValueVision. And to be honest, most of these contracts are due to end of'08 so we're really just now getting started. It's early in the process. And infact, our priority right now is really developing a go-forward negotiatingstrategy. But we will be focused on doing what’s right for ValueVision. And again, I think GE/NBC have been wonderful partners inthese discussions currently, and in fact, there is a meeting scheduled nextweek in New Yorkto further these discussions. So, I see it as a positive.

[Jamie Zimmerman -Litespeed Partners:]

On what basis, I mean what have they been able to do thatyou couldn’t do otherwise, and what position does it put you in it that theyhave to get renegotiate in 2011?

[John Buck:]

Well, they obviously have a lot of experience in this area.They are large shareholders of this company. We have our own internalresources, and this is something that we've also developed a set of skills andexperiences. So, I am very confident in our management, in our partnering, thatwe'll able to negotiate these contracts that will be favorable for ValueVision.

[Jamie Zimmerman -Litespeed Partners:]

Are there any contracts that are particularly unfavorablenow?

[John Buck:]

Yeah, I don’t know if I can name the contracts, but we dohave some contracts that I would say too are unfavorable, that we're going towant to renegotiate the opportunities, some of these come up in '08. A lot ofthem come up in '08, but we have a feeling that they are up further, but I'djust assume not get into that level of detail, if you will, over the phonehere.

[Jamie Zimmerman -Litespeed Partners:]

Yeah, no problem. But you are talking about gross margin.When you look at your competitors QVC and HSN, they are paying for carriageabout 5% to 8% of revenue, and you guys are paying around 18%? Obviously, youknow that, because it's a set dollar amount versus a percentage. Is there anyway on a smaller revenue base that you think that we will able to negotiatesomething that's more contingent?

[John Buck:]

The answer is, everything is open for discussion, and weneed to negotiate contracts that are favorable to ValueVision that meet ourneeds. And quite frankly I don't want to be going forward with that kind ofanchor around me. I mean, we need to find win-win. And again I appreciate thequestion. You are right on the money. This is an area of opportunity. But Idon't want to go further into negotiating or outlining our approach to this atthis point.

[Jamie Zimmerman -Litespeed Partners:]

Thank you.

[Operator:]

Randy Heck, you may ask your question, and please state yourcompany name.

[Randy Heck:]

It's Goodnow Investment Group. My questions are basicallythe same thing, and that is the opportunity in front of you with thedistribution cost. I assume you are going to try to go and tie to a 100%revenue share rather than you pay $2 of sub today. So, for example, if you cancut it in half, obviously you are making more than a $1 a share after tax. Withthe development of the ShopNBC.TV website, could that come into play innegotiating with the MSO's, meaning you get distribution for free rather thanpaying $2 a sub?

[John Buck:]

Very, very, very good. It's a very astute comment. Theanswer is, we have a lot to offer. To your question and the previous question,you've really focused on an area that we really believe we have someopportunity going forward, and we are going to do what's right for ValueVision,and position us for the future. The good news is a lot of these contracts are up in the endof '08, I would also say to you I am very, very confident that we are going tobe able to negotiate contracts that are win-win for both sides. And yourparticular comment around the .TV, there is an opportunity there. So, again Ithink the message here is we are all in agreement about the opportunity. Itreally now to gets back to our own ability to execute. We are starting early and developing our own go forwardnegotiation strategies. We are pulling in the experts if you will. We are goingto reach out to people that have expertise in this area, along with our ownpeople. And I think we'll be at the end of the day pleased with the results.But I would also tell this is all of a bit, when I say they are up for renewallot of must be end of '08. So, we'll beusing '08 as the negotiating time period.

[Randy Heck:]

Right, just as a follow on, what is your estimation of whatQVC and Home Shopping pay as a percentage of there sales per FTE, or yes as apercentage of their sales per FTE?

[John Buck:]

I am going to actually pass on this one, and my only thoughthere is we've got to be very careful and for me in particular recognize, Ibecame Interim CEO October 25, so I think this would be one I am going to justpass over to Frank.

[Randy Heck:]

Okay. Alright, thank you, good luck.

[John Buck:]

Thanks.

[Operator:]

(inaudible) you may ask your question and please state yourcompany

[Unidentified Analyst:]

Hi, guys (inaudible). Yeah, I hope I didn’t imply by theletter in the filing that's how you guys should be looking at the company.That’s certainly not what I think should be done to realize the value here. ButI guess just one quick comment. I think you guys have been great. First of allthe quarter was great, and second of all you guys have been very responsiveand, I think, really taking your fiduciary responsibilities seriously. And I guess the question along those lines would be, givenwhere the stock is if you agree with the analysis that it's trading below itsnon core assets. And you agree that the stock is cheap, at what point does itbecome almost not in your fiduciary duty to do an aggressive stock buyback. It's seem like the only thing, the only possible action thatyou could take would be an aggressive share buyback as long share stayed atthis level, and the capital for that could come for any of the -- whether it isnot suggested or another way, but I guess I can't conceive of a situation wherethat wouldn’t be the right thing to do to for shareholders?

[John Buck:]

Jamie, thank you for the nice comments in your introductionthere. Well, as I indicated, as soon as we get out of this blackout period, wewill be back in the market. I also indicated that the stock is at a significantdiscount. We are going to be back in the market, we are going to be back in avery discipline manner. I don’t want to really disclose the methodology, how we aregoing to be buying and when we will be buying, but we will be back. And as Isaid it is at the significant discount. Once we have gone through theauthorization. Are nearing spending to the authorization, we will have ourBoard reconvened the bond, we will talk about our next step. The balancing actthat we have here is clearly this significant discount of stock price and atthe same time we have these wonderful assets, we have a nice balance sheet andwe are focused on the fourth quarter executing this plan. We're focused on getting in getting the input from A&Mand we are focused on a new CEO. I think we have got just a lot of good stuffgoing on here and we would also like to be able to give our CEO a company thatcan achieve sustained earning power going forward and a nice balance sheet. So,that's kind of a balance that we're talking through currently.

[Unidentified Analyst:]

I understand that, but I think given $103 million of cashand additional what I would estimate $100 million to $150 million of non-coreassets. I guess I don't understand why those things can't be done in tandem?Why you are not going to look back at this point with the stock at 5.50 a shareand say that was really dumb of us, we should have bought back a lot more ofstock than we did, when we had the opportunity. So I guess what is actually sodifficult about being the more aggressive [preferreds] of your stock. Giventhat even if you took the cash balance down to $10 million or $20 million, thenew CEO could easily monetize any of those assets and bring it back up over100, if your CEO saw that?

[John Buck:]

Yeah, I don't know if we are necessarily in a disagreementor debate here. I am just simply saying our stock is at a significant discount,one. Two, we will be back in the market. We have 14 point some millionremaining in that authorization, and we will then reconvene on our next steps.And I am going to --

[Unidentified Analyst:]

Have you considered an accelerated stock repurchase program?

[John Buck:]

Pardon?

[Unidentified Analyst:]

Would you consider an accelerated share repurchase program?

[John Buck:]

You know what I think; everything is on the table, Jamie. Imean, we are looking at as I said, we've got a lot of things right now withexecuting this fourth quarter, A&M and a CEO search and a wonderful set ofassets in the balance sheet. And we will be looking at all of our options andwhat we think we'll deliver significant shareholder value

[Unidentified Analyst:]

Okay. Great, and just to confirm, even though this isn'tyour focus, and certainly you did a lot on your play, if you were approachedwith an offer, you would consider that seriously, and is there any level atwhich an offer would have to be above in order to meet that threshold to be aninteresting or legitimate offer in your opinion?

[John Buck:]

Jamie, I think I can't go there with that question. But I'lljust say to you, as I said in my comments, we're not interested in selling thecompany at this price. We've got a lot of actions in place which I've discussedwith you and the others, and we'll just wait and see. I really can't commentfurther on that.

[Unidentified Analyst:]

Okay. Alright. Well, great job guys, and thanks for thecall.

[John Buck:]

Thank you.

[Unidentified Analyst:]

And good luck.

[John Buck:]

Thanks.

[Operator:]

Bob Evans you may ask your question. Please state yourcompany name.

[Bob Evans -Craig-Hallum Capital:]

Craig-Hallum Capital. Well, it's a tough one to follow-up,on the previous caller. But one clarification is on the -- just back to thedistribution side of things. Can you elaborate a little as to why you think thedifferent cable owners [size] and those that you are going to be renegotiatingwith? Why ShopNBC is something they want to have on because I think some mayhave fear, that this could create an issue for the company in terms of thedistribution being renegotiated versus and opportunity.

[John Buck:]

Okay, Bob. Thank you. In terms of risk to the carriage, Imean our priority is to successfully renegotiate with our distributionpartners, first point. Second point, we are a different company today, and wenegotiated those contracts several, several years ago. I mean today we have$800 million in revenue. We have got lot of wonderful assets with our .com andour .tv and you can imagine some of that cross-over there. We are a revenuebase for these companies. I really am pretty optimistic that we can find thatwin-win formula that meets their needs and meets our needs and I am certainlynot interested in losing the carriage, if you will, that's the risk I wouldlike to somehow eliminate that as being the risk. That's not our go-forwardstrategy. Our go-forward strategy is to successfully negotiate. And I do thinkwe have a lot of weapons. Again I don't want to get into that into ournegotiating strategy in this phone call.

[Bob Evans:]

That's fine. And my understanding is that the digital cablehomes are significantly at a much different pricing, discounted pricing thansay the analogue homes and that should have some benefits to you as it relatesto decreased distribution costs going forward. Is that correct?

[Frank Elsenbast:]

Bob this is Frank. And yes the digital cable rates tend tobe at least 50% less than what we pay for analog and we don't see 50% reductionin the productivity. So, digital cable for us works very well and as it becomesmore highly penetrated. That becomes a better and better option for us as we gointo the renegotiation.

[Bob Evans:]

Okay. Alright. Thank you.

[Operator:]

Jamie Zimmerman you may ask your question and please stateyour company name.

[Jamie Zimmerman -Litespeed Partners:]

Litespeed, and again it's a second question like Bob's. Wehave experienced NBC negotiating for non economic priorities, and I asked thisquestion, but I would like to ask it one more time. What makes you sure thatNBC is negotiating for the benefit of ValueVision and not for the benefit ofthemselves, for their other interest aside from their stock ownership in thiscompany?

[John Buck:]

I can only again thank you for the question. I can only tellyou the people that I know, the people that I work with, Members of our Boardour fiduciary responsibilities are to our shareholders, to the share holders ofValueVision, and that is the priority of our Board. And I am very, veryconfident that we are all in line with that objective. So, quite frankly, I would say this to you, they've actuallyreached out as well to us in wanting to help us find ways to go forward innegotiating these contracts. So, again today is a different day compared towhen these contracts were negotiated some several years ago. The company isdifferent today. We are a significantly larger business today. Back in the days when lots of those contracts were negotiated,as you know we were a much different looking company. So, in my being overlyoptimistic, I am trying to be just very objective, and say this is a bucket, anarea of opportunity for us. It's got our focus. I can tell you that it's gotour focus. It's on our radar. We've got people that are working on this. We will be in New York again next week and these transacts don’t comeup till the end of '08. That are not going to be easy by the way, these aren'tgoing to be easy negotiations. But I think we have a lot to offer. We are notgo into this being shy at all. We are not go into this not being proud of whatwe have. And I am confident we'll negotiate good contracts for both parties.

[Jamie Zimmerman -Litespeed Partners:]

Thanks.

[John Buck:]

I can't say anything more.

[Operator:]

And at this time I show no further questions.

[John Buck:]

Okay. Thank you everybody, and let me just take thisopportunity to wish and your family the very, very happy Thanksgiving. I hopeyou get an opportunity to spend time with your love ones, and enjoy theholiday, and think about us, and think about us executing those big five eventsand the clearance in January. And we look forward to talking to you early partof the year.

[Frank Elsenbast:]

Thanks.

[Operator:]

Thank you. This does conclude today's conference. You maydisconnect at this time. Thank you.