Omnicom Group Inc.
Q1 2007 Earnings Call Transcript

Published: 24 Apr 2007

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Omnicom first quarter 2007 earnings release conference call. (Operator Instructions) At this time, I would like to introduce to you to today’s conference call host, Executive Vice President and Chief Financial Officer of Omnicom Group, Mr. Randall Weisenburger. Please go ahead, sir.

[Randall J. Weisenburger:]

Thank you, and thank you all for taking the time to listen to our first quarter 2007 earnings call. We hope everyone has had a chance to review our earnings release. We have also posted to our website the press release and a presentation covering the information that we will present this morning. This call is also being simulcast and will be archived on our website. I have been asked to also remind everyone to read the forward-looking statements and other information that is included on page one of our investor presentation, and to point out that certain of the statements discussed today may constitute forward-looking statements and that these statements are present expectation and actual events or results may differ materially. We will begin the call with some brief remarks from John Wren. Following John’s remarks, we will review the financial performance for the quarter in more detail and then both John and I will be happy to take questions.

[John D. Wren:]

Good morning, and I thank all of you for joining our call this morning. We are very pleased with the company’s performance for the quarter. Revenue, operating profit, net income and EPS all reflect a really good start to 2007. Revenue growth for the quarter was very strong in all of our markets, except for Japan, which has been difficult for us since the middle of last year but it is tied to a specific client issue. Despite this one market, revenue growth everywhere else in the world was strong; in the United States across all of our services. Europe, especially strong in all the traditional markets and the non-Euro markets. In Asia, we continue to make real progress in China and other markets have performed very well. I think it was a second quarter event but we were able to win, one of our subsidiaries won the Singapore Airlines business, which is in and of itself very prestigious. South America, the Middle East and Africa all exceeded their planned growth rates. From a portfolio perspective, we continue to make investments in new areas which we believe reflect the shifts in client spending, and our traditional agencies by all measures are clearly the best in the industry. With that brief commentary, I will turn this over to Randy who will take you through our results and then, as he suggested, we will be open for questions.

[Randall J. Weisenburger:]

As John noted, we are very pleased with the performance of our agencies and overall, Q1 was an excellent start to the year. Revenue in the first quarter increased $277.7 million to $2.8 billion. That was an increase of 10.8%. Operating income for the quarter increased 10.9% to $315.5 million, with an operating margin of about 11.1%, which was the same as reported in Q1 of last year. However, last year in the first quarter there was a one-time pretax benefit of $3.6 million due to the adoption of FASB-123R. On a like-for-like basis, operating margins therefore increased about 15 basis points. Net interest expense for the quarter was $18.3 million. That was an increase of $3.2 million versus Q1 of last year and a decrease of about $5.8 million from the Q4 of last year. The increase from Q1 of last year is due primarily to our issuance of $1 billion of 10-year fixed rate notes at the end of Q1 in ’06. The interest rate on those bonds is about 6.1%, or about $15 million a quarter. This increase in interest was offset by reduction in other short-term debt, not needing to pay a supplemental interest payment on our 2031 bonds in February of this year, and further improvements in our working capital management. Given the current interest rate environment and our current debt levels, we would expect net interest expense in Q2 to be between $23 million and $25 million. On the tax front, our reported tax rate was 33.8% for the quarter. It was basically in line with last year. Net income for the quarter increased 10.4% to $183 million and fully diluted earnings per share for the quarter increased 17.2% to $1.09 per share. Analyzing our revenue performance, FX in the quarter was positive, adding 3.4% or $87.3 million to our revenue. Looking ahead to Q2, if rates stay where they are, FX should be positive between 2.5% and 3% for the quarter. Growth from acquisitions net of divestitures was marginally positive in the quarter, increasing revenue by $2.1 million, or about one-tenth of 1%. We completed four small acquisitions in Q1 and the potential acquisition pipeline continues to be fairly strong. While Q1 acquisition revenue was positive, this increase was still being muted by the divestiture of the healthcare business that occurred in the third quarter of 2006. Based on activity to date, we expect that net acquisition revenue will again be only marginally positive in Q2 before cycling out the impact of last year’s divestiture in Q3. Organic growth continues to be very strong, coming in at 7.3% for the quarter, adding $188.3 million to our revenue. As for our mix of business, traditional media advertising accounted for 43.1% of our revenue and marketing services, 56.9%. As for their respective growth rates, advertising grew 10.6% and marketing services, which was driven by the continuing strong performance of our CRM business, was up 11%. Breaking down the marketing services revenue for the quarter, CRM was approximately 35.8% of our revenue; PR, 10.4%; and specialty communications, 10.7%. As for their respective growth rates, CRM accelerated to 14.2% in the quarter, public relations remained very strong at 13.6%, and specialty communications, which was impacted by the disposition of the healthcare business in Q3 of ’06, decreased eight-tenths of 1%. Adjusting for that disposition, specialty communications grew about 5.7%. Our geographic mix of business in the quarter was 54.3% U.S. and 45.7% international. In the U.S., total revenue growth for the quarter was $110.9 million, or 7.7%. That consisted of acquisition growth of $400,000 and organic growth, which remained very strong at about 7.7%, added $110.5 million. International revenue increased $166.8 million, or 14.8%. There, acquisitions added $1.7 million. FX had a positive impact of $87.3 million and organic growth was 6.9%, adding $77.8 million. Our international organic growth was driven largely by strong performance in the U.K., Germany, Canada, the Netherlands, Spain, Italy, Russia, China, Singapore, and Australia -- basically fairly broad-based strong organic performance. Cash flow in the quarter was quite strong and consistent with our historical trends. Our cash management programs have continued to perform very well, as indicated by our quarter-to-quarter improvement in net interest expense. As we believe everyone already knows, our primary source of cash flow is net income, adjusted for basic non-cash charges, which for us are primarily stock-based compensation charges and their related tax benefits, and then depreciation and amortization. Our primary uses of cash

[Operator:]

(Operator Instructions) Our first question is from the line of Steven Barlow with Prudential Equity. Please go ahead, sir.

[Steven Barlow:]

Thank you. Very, very strong organic revenue growth on a tough comp. What is your outlook for the rest of the year on organic revenue growth?

[John D. Wren:]

Steve, we do not provide that guidance.

[Steven Barlow:]

I guess pockets of strength that you think will continue. I mean, you mentioned a dozen countries that are doing well. Any reason to think those won’t do well going forward?

[John D. Wren:]

At this point, no. Our natural bias always is to be conservative about what we see, while striving for what our objectives are, which is at least double-digit revenue growth for the year, reported revenue growth. But that is a combination of organic growth, FX, and potential acquisitions that we do. I am encouraged by the new business wins we have been able to get in the beginning of the second quarter, which have been very strong. It is a good start to the quarter. Following just traditional patterns, they won’t start to impact our revenue until the third quarter of this year but all the fundamentals of the company are strong and we do not see any real pockets of weakness.

[Steven Barlow:]

Okay, and then for Randy, share count remaining the same in the second quarter -- any particular reason why you would pull back a little bit from what you just did in the first and trying to get to potentially about $1 billion or so that you have traditionally dedicated about $1.3 billion in buy-backs in ’06, partly because of the bond issue, but any thoughts on that?

[Randall J. Weisenburger:]

Two things; when you look at year-over-year change in share count, you only have to look at the last 12 months, so the Q1 share count reduction from Q1 of last year was in part because of large purchase activity last year. This year in Q1, we bought in net about $400 million. I would think for the year, maybe we are looking at $600 million or $700 million, but again we are not -- we will see how the year plays out. The average share count in Q2 also gets impacted. Generally, we issue our restricted stock some time in the beginning of Q2, so that also has to be offset. That is why I am saying I’m thinking flat share count, maybe a slight reduction in share count for Q2 is a fair estimate at this point.

[John D. Wren:]

Also know, Steve, we are constantly looking at acquisitions. We are very disciplined as to what we pay when we buy things but if we found acquisitions -- if we were able to reach agreement on some of the acquisitions we are potentially in conversation with, we would use cash for those, which is just part of our theme.

[Randall J. Weisenburger:]

Obviously we would prefer to be doing acquisitions on the basis that we do them than using our cash to buy stock.

[Steven Barlow:]

Great. Thanks, gentlemen.

[Operator:]

We will go next to Craig Huber with Lehman Brothers.

[Craig Huber:]

Good morning. A very impressive quarter. The acquisitions, historically you guys have clearly done a series of small acquisitions over the years. I assume that won’t change going forward in terms of anything medium size or larger. Second question, could you just break down, if you would, the salary and service cost percent change in the quarter versus your office and general costs, just to give investors an idea of what those 2% changes were in the quarter? Thanks.

[Randall J. Weisenburger:]

I am going to pull up some numbers. I will let John --

[John D. Wren:]

We have traditionally done small acquisitions which have been either an extension of one of our business platforms from a geographic point of view, or the addition of a product or areas where we have determined it is cheaper to buy than to build, and I do not see that philosophy changing very much in the predictable future. We are very comfortable with our business platforms. They are very robust. We are very engaged in where we think we can make improvements and acquisitions play a role for simply that. We are not, as an organization, we are very good when we make those kinds of purchases to integrate them as opposed to doing large deals which others have done, which in my opinion take a long time to get incremental value from, so we are steady as you go in terms of what that is. We also I would guess over the last several years have probably made an increasing amount of investments in talent, which runs through our payroll line, where we have decided to build certain services out is in the long-term interest of the company as opposed to making purchases. Randy is dutifully looking at that variance. I don’t know if you’ve --

[Randall J. Weisenburger:]

I think salary and service costs will be around 72.2% and office in general will be about 16.7% for the quarter.

[John D. Wren:]

But again know that when we decide to start something in India or start something in China or start something or enhance our client service coverage by bringing senior people in, that is payroll that actually runs through these lines. We value them and evaluate them against how would we accomplish the same thing if we went out and made acquisitions, which would be treated as a capital item. So it is a steady combination of a lot of little decisions that you get made but for the purpose of sustaining our growth and our consistency.

[Randall J. Weisenburger:]

To maybe add a touch to what John just said, and I pointed out in many of these meetings with investors, any investment we make for the future, and keep in mind our focus is on creating consistent, high-end organic growth on a long-term basis, any of those investments run through basically the salary and service cost line on a current basis. There is no CapEx to go out and build a plant. It is all a current expense. For us, balancing those long-term investments to achieve the consistent long-term organic growth is I will say the challenge.

[Craig Huber:]

My other follow-up, if I could, in the past, Randy, you have mentioned in the first and third quarter your company was benefiting from many of your clients were switching more to a monthly retainer fee arrangement, so a sort of smoothing the revenues over the course of the four quarters I think helping your first and third quarter by roughly 1%, 1.5% in terms of organic revenue growth. Did that happen again here in the first quarter? Also, what is your outlook on that basis for the rest of the year? Thank you.

[Randall J. Weisenburger:]

I don’t know if it happened again or not. It is a trend that we have seen for the last several years that we have had greater organic growth in the first and third quarters than in the second and fourth quarters. At some point that trend is bound to slow down. Obviously we have 10s if not hundreds of thousands of individual client engagements. Those fee agreements are all structured somewhat differently. It is not possible to go through it and say “Well, that contract changed, therefore X changed”, but we definitely have been seeing a smoothing over the past couple of years in organic growth. I would suspect that we will see greater organic growth in Q1 and Q3 this year, whether or not it is one percentage point or one-and-a-half percentage points, or half a percentage point, I don’t really know.

[John D. Wren:]

Also understand that from the dawn of time, the cycle in the industry and certainly we are a reflection of this, is the fourth quarter is always the largest, second quarter is the next largest, then the first and the third. So there is a base there that you are operating off of and that base has been built over 20 years.

[Craig Huber:]

Thank you.

[Operator:]

Your next question is from Alexia Quadrani with Bear Stearns. Please go ahead, sir.

[Alexia Quadrani:]

Thank you. A couple of questions; first, do you have a number for net new business in the first quarter? Also, I know we only see a sliver of your new business activity here in the U.S. in the trades, but would you agree however that the second quarter started off very strong? And then I have a follow-up.

[Randall J. Weisenburger:]

The net new business in Q1 was right around $1.3 billion, and yes, you are right -- the trades tend to only pick up -- it is kind of U.S.-centric, advertising-centric wins. Given our mix of business that obviously what gets picked up in the trade is not terribly reflective of our total. I think John pointed out new business wins in the first quarter certainly started off very strong.

[Alexia Quadrani:]

Historically, your business has not seen that much impact from the presidential elections or the Olympics. Is there any reason that 2008 should be any different?

[John D. Wren:]

Well, the Olympics impacts the business a little bit. The elections affects media. What happens is all these politicians go out and buy space, but we are not engaged in that business domestically in the United States so we are not the beneficiary of it but we have to deal with it because our clients, if they want to be on air in places that the candidates are, the networks and the stations, generally their pricing increases during that period of time, so it does have an impact on our clients’ business. It is a slight impact but not measurable for us in terms of what the political cycle does.

[Alexia Quadrani:]

But the Olympics being in China, any reason that -- should that be maybe a bit -- when we are looking at the ’08 numbers and what your clients are thinking about in terms of spending around the Olympics in ’08, any reason that should have a material impact here to your outlook for 2008, or is that --

[John D. Wren:]

A material impact? Absolutely not. Omnicom is a very, very large company. We passed Publicis’ revenue for the year somewhere around February 15th, and you report on them in the same fashion that you report on us. So you have a large number, so does it have a -- it has a positive impact but what that is, given the size of the company and the continued growth of the --

[Alexia Quadrani:]

Just a last question, any consideration of possibly splitting the stock?

[John D. Wren:]

That is a Board decision, which the Board takes those things up periodically. I cannot pre-empt my Board in conversation about that.

[Alexia Quadrani:]

Thank you.

[Operator:]

Our next question is from Karl Choi with Merrill Lynch. Please go ahead.

[Karl Choi:]

Good morning, a couple of questions here. First one is one of your competitors has suggested there has been a slow down, a general slow-down in the U.S. in the first quarter, which you clearly did not see. I just wonder what you think is the market share situation or more client-specific spending, and I have a follow-up.

[Randall J. Weisenburger:]

It is difficult sometimes with organic growth to compare one company versus the other. Certainly something that impacts all of us is the economy. Secondly, when you are looking at us versus our competitors, we have a bit of a different mix of business. We are much larger in the marketing services area relative to any of our leading competitors. I definitely think that has been a significant advantage for Omnicom over probably forever but definitely for the last five or six years, and maybe even accelerating over the past couple of years. You see it more in the organic growth area I think than anywhere else. I think this quarter, WPP, I think they just put out their numbers. They were at about 4.3% organic growth -- definitely very good numbers. Our number was about 70% higher than that.

[Karl Choi:]

I noticed that the advertising revenue on a reported basis, at least the growth accelerated in this quarter. Anything in particular that drove that? I don’t know if the trend also put an acceleration on an underlying basis.

[Randall J. Weisenburger:]

I don’t have anything specific to it. It is hard to distinguish between execution, meaning strong new business activity and performance of our agencies versus an economic expansion. We also have, the way we collect our numbers, a lot of the digital work that we do is now getting captured in our traditional agencies because we do not separate those out. If an agency like a Goodby, Silverstein is a good example, as they build their digital capabilities and digital services, that is still coming through as traditional media advertising, so I think the numbers are not 100% pure.

[John D. Wren:]

Well, the numbers are pure; the nomenclature of how we traditionally describe things probably has not caught up to some of the language used by other people in the way that they distinguish stuff. We have always believed that there will be a large convergence of the methodologies that an agency and/or a CRM company and/or whomever ultimately use to reach the consumer base that they are targeting.

[Karl Choi:]

Last question, as you look at acquisitions, just finally what your thoughts are about acquiring technology as clients are increasingly migrating online?

[John D. Wren:]

We have a tremendous base in that and oft times, depending on what it is we are trying to accomplish, it is more sensible and this is probably the trend over the last two years on our part to acquire the talent and to build those capabilities rather than go out and try to purchase them.

[Randall J. Weisenburger:]

But we --

[John D. Wren:]

We are still open and we look at everything --

[Randall J. Weisenburger:]

We have a pretty robust acquisition -- I’ll say target list or discussion list, and with each one we go through the criteria. It is kind of a buy or build sort of scenario. If we can acquire it at lower risk and cheaper price than we can build it for, we certainly prefer to acquire it.

[John D. Wren:]

This is not something new to us. I have been engaged or studying or evaluating this for at least the last 11 years since we made our first investments in the space, so we know exactly, or at least we believe we know, where all the real talent is and we go out and acquire them -- the individuals as well as the companies.

[Karl Choi:]

Thank you.

[Operator:]

We will move now to William Bird with Citigroup. Please go ahead.

[William Bird:]

I was just wondering if there was much reinvestment in the quarter that may have limited margin expansion. Also, was there anything in particular that drove the more negative swing in working capital? Thank you.

[John D. Wren:]

Let me just comment on one thing though; margins are the result of what we do, and we do not target margins because we think if we would, it would drive bad behavior and ultimately stint consistent growth over a long period of time. What we are focused on is revenue growth. We are focused on being able to service our clients to more and more areas. Then we are interested in operating profit, but we are more interested in net income and then EPS. We would not hesitate, nor do we hesitate, to make investments in people and/or start-up operations because it would be popular for us to, more popular for us to not spend that money and put up operating margin growth because we think that is a short-term strategy. We also continue to make incredible plans, taking Omnicom University this year to China and to other places, so we are always balancing how do we, what decisions do we make -- we do not get every one of them right -- in terms of investing in people and resources, which get reflected in our P&L as opposed to making acquisitions for those same type of activities.

[Randall J. Weisenburger:]

In this quarter as well, operating margins were actually up about 15 basis points. To be comparable, I think you need to take out the one-time benefit of adoption 123R last year, so frankly I think operating margins were very strong, especially given the investments that we have made in the business. As far as working capital goes, working capital actually did quite well in the quarter. Our working capital and cash management programs, we stepped them up a notch again starting about a year-and-a-half ago, which I think were already quite strong. If you are looking at the year-over-year differences, you really need to look at where the year ends started. Year-end ’05 I believe was a weekend, so you ended up having extremely strong first quarter performance last year, which was really kind of making up for the starting point from year-end ’05. This year in the first quarter we are coming off of a different starting point for year-end ’06, but still on an absolute basis or historical basis, Q1 working capital was quite strong.

[William Bird:]

Thank you.

[John D. Wren:]

I think the proof of that, Bill, is to always look at the interest expense, not to look necessarily at the balance sheet dates, because one should tie into the other. It is a reflection of what the real operations are like.

[Operator:]

We will go next to Jason Helfstein with CIBC World Markets. Please go ahead.

[Jason Helfstein:]

Two quick questions; first, so obviously net new business was slow in the quarter. I think the actual number is up 26% year over year, but that is not the best way to look at it but maybe if you can talk about, relative to last quarter, we talked about the gap or there was not the tail wind going into this year as there was last year from new business. How much of that gap have you closed and how do you feel about closing what is left in that gap? Secondly, John, can you talk about -- so far, I guess, of the SMP 500 companies that have reported so far this year, most companies tend to be beating earnings, so I have to believe that is good for their ad spending outlook. How would you compare your tone as far as this quarter, or the beginning of this year, relative to how you felt in years past? Thanks.

[Randall J. Weisenburger:]

The first question, the new business front, obviously new business, there is two pieces to it. I have said this to a number of people. There is kind of what I describe as the engine room, which is the tremendous number of smaller, sort of bread-and-butter wins and losses that happen every quarter. That section of our new business activity has been very strong for quite some time. Then on top of that, there tend to be a handful of larger wins and losses and they happen when they happen. It is not a consistent quarter-to-quarter kind of thing. Going into ’06, third quarter ’05 was extremely strong with the B-of-A and Lowe’s wins. Those were two very, very significant wins in that quarter, and again you can’t expect that quarter on quarter, or every quarter. Q1 of this year seems to be quite strong. Q2 is off to a very good start.

[John D. Wren:]

Just one comment on that, the key to it, and we never really focus on it in conversation, is it is net new business, so how do you win business when you are able to pitch for new accounts and are your current clients giving you product assignments, but also mitigating the amount of business which you lose is a very important factor in the long-term trend there. I think Omnicom probably does as good a job or better job than Donnie or anyone in mitigating losses through shifts in clients even within our own system. So it is a combination of a lot of factors and what goes into review is driven by clients, and then we are responding to it. It is not -- we cannot cause somebody to put their account in review, so we tend to be -- it is a reflection of what is going on in the marketplace at any given quarter. It is true that the fourth quarter of last year was slightly below what we would have liked but we seem to be on track. Again, the numbers are not material to our long-term growth as long as there is a direction. You have to look at the trends, not a specific quarter, to get a sense of what is going on, and we feel pretty good about it. Now, your second question, how did I feel last year, I don’t remember. I really don’t. Things are good. We tend to be very conservative in our outlook. There is a -- the constant conversation which goes on with clients is how to make marketing, advertising more measurable, and I think that is an underlying current which impacts almost all of the conversations that I have with our significant clients, and that is what we endeavor to do every day now, is to try to make whatever efforts we are providing on the part of clients more measurable. I think we have the asset base to accomplish that.

[Jason Helfstein:]

Thank you very much.

[Operator:]

Our next question is from Meggan Friedman with William Blair & Company. Please go ahead.

[Meggan Friedman:]

I have two questions for you. First, with the newspaper companies reporting slowing growth online, just on a macro level, are you seeing any signs of a slow down in online growth? Second, if you could talk a little bit about your thoughts on Google DoubleClick. Do you see that impacting your agencies’ willingness to use their technology?

[Randall J. Weisenburger:]

No, we are not seeing any slow down in the push towards digital. Again, we look at -- we see digital in a much broader perspective than I will say just online advertising. We see it as online marketing and branding. It seems all of our agencies are doing more and more experimentation and development work with their clients digitally, or in the Internet. Digital is probably a broad word. So it is very strong and continues to grow.

[John D. Wren:]

On the whole Google DoubleClick thing, I have a few points, some of them may be off -- one is [Laird Helmut] is a very good friend of mine and I have to credit him and his ability to generate outstanding return for his own shareholders. That was my first point. The second point is I ultimately feel, although it will probably take a year, that that deal will be done. I think what it is going to raise, and this will be a very good conversation in the marketplace, are privacy concerns in terms of the technology that exists far exceeds I think the laws and the thinking of the people that are going to be impacted by it, so I think this will be a healthy debate as they go through and try to seek approval for this deal to find out where that comes out. It will be -- we are big client of Google’s already, so we have a relationship with Google. I think depending on how this deal gets approved or not, it will be very beneficial for a company like Omnicom. I have been studying for what Google and DoubleClick can do for the last 11 years. If there is clarity as to where the privacy lines are and where they are not, by the time this deal gets approved and then implemented, we will be well ahead of everybody else by acquiring the right talent and building out incremental needs that we will have to be a very important client to them and a very important asset to our clients once the lines of where privacy, what can be done and what can’t be done, are better defined. So I am encouraged by the deal because I am most encouraged by the discussion that the deal is going to cause the marketplace to have, and any definition will be positive for us because we in fact know how to respond to it.

[Randall J. Weisenburger:]

We are also a significant user of DoubleClick services as well.

[John D. Wren:]

Yes, so I think it is pretty cool.

[Meggan Friedman:]

Thank you.

[Operator:]

Next we have Joel [Arms] with Banc of America. Please go ahead.

[Joel Arms:]

Good morning. Your plans to add talent this year, do you expect the headcount to increase this year as much as it did in ’06? I think last year you had roughly 4,000 employees.

[Randall J. Weisenburger:]

I’m sorry, we didn’t quite -- if you could speak just a bit --

[Joel Arms:]

You talked about plans to add talent this year. The question is do you expect your headcount to increase this year as much as it did last year? I think last year you added more 4,000 employees versus ’05. I am just curious as to what the headcount increase might be in ’07.

[Randall J. Weisenburger:]

Our headcount tends to grow with revenue. The only minor modification that is the location of the revenue growth. Obviously you get a higher revenue per head say with growth in New York than you do in places like Asia. Also, you have differences in the type of businesses that you add. You can get a different revenue per headcount. I think our headcount has been pretty consistent with our revenue growth and we would forecast it probably the same way. It is not a metric that we spend a lot of time focusing on.

[Joel Arms:]

Thanks.

[Randall J. Weisenburger:]

I think we have time for one more question here.

[Operator:]

Thank you, then that will come from Paul Ginocchio with Deutsche Bank. Please go ahead.

[Paul Ginocchio:]

Thanks. I guess in the other region, growth was a little bit slower than the rest of the regions. Was there anything in particular there or is that just noise? Thanks.

[Randall J. Weisenburger:]

I’m sorry, I did not hear the beginning of your question.

[Paul Ginocchio:]

The other regions you have geographically, it seemed a little bit slower than the rest of the groups. Is that a specific country or is that just noise?

[John D. Wren:]

Are you talking about -- do you mean slower than the United States?

[Randall J. Weisenburger:]

That’s the way it is presented in here. As we said, the performance around the world was actually fairly consistent. It was much broader based than it has been in say the last two or three quarters. John mentioned Japan being weak. That was one client-specific event that occurred. I think it started about the middle of last year. For the most part, we had pretty strong growth globally. The other thing that is happening is these numbers that you are seeing on this page, these are total growth, so you have differences in FX impacts in some various markets as well.

[Paul Ginocchio:]

Okay, great. Thanks.

[Randall J. Weisenburger:]

Thank you, and thank you all for taking the time this morning to listen to our Q1 call.

[Operator:]

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