S1 Corporation (SONE)

Q3, 2008 Earnings Conference Call

November 6, 2008 5:00 pm ET

Executives

Johann Dreyer - President, Chief Executive Officer

Jan Kruger - President - Global Enterprise Business

Steve Dexter - Principal Accounting Officer

Analyst

George Sutton - Craig-Hallum Capital

John Kraft - D.A. Davidson & Co.

Tyler Boone - Stephens Inc.

Presentation

Operator

Welcome to the S1 third quarter 2008 earnings conference call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given to you at that time. (Operator Instructions)

I would now like to turn the conference over to your host, Mr. Johann Dreyer; please go ahead.

Johann Dreyer

That you, everyone for joining us today; I’m here with Jan Kruger, the President of our S1 Enterprise division and Steve Dexter, our Principal Accounting Officer. Before I hand over to Steve to review our financial results, I would like to remind you that we will be making forward-looking statements on today’s call.

These forward-looking statements are based on our current expectations and are subject to a number of uncertainties and risks. Our actual results may differ materially. Please refer to the risk factors identified in our Form 10-K for the period ended December 31, 2007, and subsequent filings with the Securities and Exchange Commission.

I will now hand the call over to Steve to review our financial results. Steve.

Steve Dexter

Thank you, Johann. First, I would like to focus on the operating results. Starting with the quarter comparisons to prior year and as the press release indicates, our total revenue increased 14% to $58.6 million, during the 2008 third quarter compared to the 2007 third quarter, representing an 18% increase in the Enterprise segment and a 10% increase in the Postilion segment.

2008 third quarter operating income was $7.2 million, a $2.8 million improvement compared with the same period in 2007. For the first nine months of 2008, compared to the same period in 2007, our total revenue increased 12%, representing a 14% increase in the Enterprise segment and a 9% increase in the Postilion segment. Operating income was $19.1 million, a $7.2 million improvement compared with the same period in 2007.

There are three things I would like to point out regarding our revenue growth. First, I would like to emphasize that the revenue growth we are achieving is organic

Second, total revenue from international operations increased 34% and 36%, for the quarter and year-to-date comparisons. Both segments contributed to this increase.

Third, excluding the State Farm relationship, revenue from all other customers increased 16%, for both the third quarter and for the first nine months of 2008, compared to the same periods in 2007.

We anticipate State Farm revenue will be approximately $42 million in 2008. As we indicated last quarter, excluding State Farm, you can deduce that we continue to expect double-digit revenue growth for the remainder of 2008. In addition to the revenue growth, total gross profit margins improved one percentage point to 54% for the quarter and year-to-date comparisons.

Turning now to total expenses and adjusted EBITDA. Direct costs associated with Professional Services, support and maintenance increased $2.4 million in the 2008 third quarter compared to the prior year quarter. For the first nine months of 2008 direct costs associated with Professional Services, support and maintenance increased $5.2 million, compared to the same period in 2007. The increases were in line with growth in revenue from Professional Services projects and customer support.

I would like to point out that the 2007 third quarter includes the reversal of a $1.3 million contract loss reserve which reduced this expense line in 2007. Sales and marketing costs increased as both segments increased sales staff and marketing activities to support growth. However, these cost increases were partially offset by lower stock-based compensation expense.

Product development expenses increased in the quarter and year-to-date comparisons, as the Enterprise group continues to build out product functionality across all channels, for both domestic and international customers. Additionally, the Postilion segment continues to enhance our payments, sales service banking and full service banking solutions.

General and administrative expenses decreased in the quarter comparisons, due to lower stock-based compensation expense and decrease in the year-to-date comparisons, as we have less professional consulting fees, renegotiated the terms of the repayment obligation relating to an international development grant and lower stock-based compensation expense.

Depreciation has increased slightly for the quarter and year-to-date comparisons, as our capital expenditures increased since late 2007, due to capital improvements for our Norcross headquarters and upgrades to our data center.

Adjusted EBITDA increased to $10.5 million in the 2008 third quarter, a $700,000 improvement from the 2007 third quarter. For the first nine months of 2008, adjusted EBITDA was $32.5 million compared to $28 million for the same period in 2007.

The increases in adjusted EBITDA reflect the growth in our revenue tempered by our continued investment in customer satisfaction, as we have highlighted throughout the year. Those figures exclude stock-based compensation expense of $400,000 in the 2008 third quarter and $2.9 million in the 2007 third quarter.

For the nine months, adjusted EBITDA excludes stock-based compensation expense of $4.6 million for 2008 and $7.9 million for the same period in 2007. I would also like to point out that compared to the last quarter we have added $1 million of expense from our annual merit increases that was effective July 1.

Moving on to the segment results; focusing first on Enterprise on table five. The Enterprise segment’s total revenue increased 18% to $32.9 million for the 2008 third quarter, as compared with the 2007 third quarter. Software license revenue for the 2008 and 2007 third quarter reflect a consistent demand for our Enterprise solutions and fluctuate based on product mix.

Support and maintenance revenue increased $200,000 due to increased licensing activity for our Treasury solutions during 2007.

Professional Services revenue increased by $4 million, reflecting an increased number of customer projects, an increase in revenue from our largest customer and work related to a multi channel implementation for a large international bank.

We have previously commented on the Professional Services work we have been doing for this international customer and are pleased to announce that this customer signed a license and services agreement for our Enterprise teller, sales and service and call center solutions in the third quarter.

Data center revenue increased $800,000 which included the addition of several new hosted customers and an increase in transaction volumes for our existing customers. I would like to point out that there will be no revenue recorded in the licensed line from the large international agreement that we entered into in the third quarter.

While the agreement is a profitable relationship for S1, the services required by this customer will represent an investment in the development of functional enhancements, which we plan to leverage in the region. This investment resulted in discount Professional Services, which GAAP requires us to allocate from the license amount to the Professional Services revenue.

For the first nine months of 2008, Enterprise segment’s total revenue increased 14%, as compared with the same period in 2007. Software license revenue increased $1.3 million, which includes a $600,000 settlement in 2008 with an international customer of amount previously reserved for in 2007.

Support and maintenance revenue increased to $1 million, due primarily to an increase in licensing for our Treasury solutions and international business in 2007. Professional Services revenue increased $6.6 million, reflecting an increased number of customer projects and work related to a multi channel implementation for a large international bank.

Data center revenue increased $3 million, due primarily to the migration of a Postilion self-service banking customer to Enterprise in 2007, new hosted customers and an increase in transaction volumes for our existing Enterprise customers.

For the quarter and first nine months comparisons, excluding State Farm revenue, revenue from all other Enterprise customers increased 23% and 24% respectively. The Enterprise segment improved gross profit margins one percentage point to 51% in the quarter comparisons and two percentage points, to 51% for the first nine months comparisons.

Enterprise generated $4.4 million in operating income in 2008 third quarter, a $1.3 million increase from the same period in 2007, due primarily to lower stock-based compensation expense. Enterprise adjusted EBITDA was relatively unchanged at $5.8 million in the 2008 and 2007 third quarter.

For the first nine months of 2008, Enterprise generated $10.1 million in operating income, as compared to $6.5 million in the same period in 2007 due to higher revenues and gross margin improvements. Enterprise adjusted EBITDA increased $1.9 million to $16.7 million for the first nine months of 2008, as compared to the same period in 2007.

Continuing now to the Postilion segment as presented on table six, total revenue increased 10% to $25.7 million in the third quarter of 2008. This included a 15% increase in license revenue when compared with the 2007 third quarter, primarily due to increased licensing activity for our payment solutions, partially offset by the high volume of additional seat licenses, sold by our FSB business in the 2007 third quarter.

Postilion’s segment software license revenue includes subscription revenue of $2.4 million in the 2008 third quarter, by comparison to $1.6 million in the third quarter of 2007. As we have previously highlighted, this is long term, recurring revenue being generated by the subscription model, even though it is appearing in the software license revenue line.

Support and maintenance revenue increased 5% and Professional Services revenue increased 39%, reflecting Postilion’s continued strong licensing activity in the payment solutions business.

Postilion data center revenue is down 7% in the 2008 third quarter, as compared with the prior year quarter partly due to the conversion of customers to long-term subscription contracts and customer attrition in our self-service banking business.

For the first nine months of 2008, the Postilion segment’s total revenue increased 9%. This includes a 19% increase in license revenue, when compared with the same periods in 2007, primarily due to increased licensing of our Postilion payment solutions.

The Postilion segment software license revenue includes subscription revenue of $6.6 million for the first nine months of 2008, by comparison to $4.5 million for the same period in 2007. Support and maintenance revenue increased 10% and Professional Services revenue increased 22%, reflecting Postilion’s continued strong licensing activity in the payment space.

Postilion data center revenue is down 11% for the first nine months of 2008, as compared with the same period in the prior yea, partly due to the conversion of customers to long-term subscription contracts, the migration of a Postilion self service banking customer Enterprise and customer attrition in the self service banking business.

Postilion data center revenue for 2008 also includes a hosted payments customer that went live in late 2007. We have described the Postilion subscription revenue in previous calls, as including the right to use the software and the right to receive maintenance support and enhancements, and in some cases these subscriptions include data center services.

The continued growth in subscription revenue reflects the broader acceptance of the Postilion self-service banking product and the subscription model in the community and regional space.

Over time, we anticipate that growth in a subscription model will have a negative impact on support and maintenance revenue and data center revenue, while a positive impact on the software license revenue.

The Postilion segment improved gross profit margins one percentage point to 57% in the 2008 third quarter, as compared with the prior year quarter. Postilion operating income increased $1.4 million in the 2008 third quarter, compared to the third quarter of 2007, reflecting revenue growth and lower stock-based compensation expense.

Postilion’s adjusted EBITDA increased $700,000 in the 2008 third quarter, as compared to the same period in 2007. Gross profit margins were unchanged at 58% for the first nine months of 2008 and 2007.

For the first nine months of 2008 Postilion operating income increased $3.6 million compared to the same period in 2007, reflecting growth in revenue while holding margins flat and lower stock-based compensation expense. Postilion’s adjusted EBITDA increased $2.6 million in 2008 as compared to the same period in 2007.

Turning now to the balance sheet on table two, cash and short-term investments were up $1.1 million since the end of the second quarter, to $81.8 million due to cash from operations of $9.5 million, partially offset by capital expenditures and cash used to fund our share repurchase program. We estimate we will continue to generate positive cash flows from operations during the remainder of the year.

Accounts receivable decreased $5.1 million, primarily as a result of strong collection efforts. Deferred revenues decreased $2.5 million from the prior quarter, due primarily to timing of maintenance billings, but increased from the prior year quarter due to the sequential quarter revenue growth.

As previously announced in September 2008, our Board authorized the repurchase of up to 4 million shares of our common stock. During the third quarter, we repurchased 1.3 million shares for approximately $8.4 million. In October, we repurchased an additional 2.2 million shares for $11.6 million.

Cumulatively, during our various stock repurchase activities since the fourth quarter of 2006, we have repurchased close to 21 million shares of our common stock. As you may have seen in our press release, we increased our stock repurchase authorization by another $10 million.

We have about $6.3 million of restructuring charges remaining to be paid, after paying approximately $700,000 in the 2008 third quarter. We expect to pay $2.1 million over the next 12 months and then approximately $2 million a year through the end of 2011.

Turning to income taxes; income tax expense relates to state income taxes, alternative minimum tax in the U.S. and taxes in international jurisdictions where we do not have NOL’s. This provision is primarily cash taxes and represents an effective tax rate of 17% for the quarter and year-to-date, which is an increase over the prior year.

We anticipate our cash taxes will remain in this range on a percentage basis throughout 2008. However, we anticipate that as our international operations continue to grow, our cash taxes will increase as we do not have NOL’s in most international jurisdictions.

As of September 30, 2008, S1 has approximately $217 million of domestic NOL’s, which are fully reserved. Of this amount $200 million relates to stock option expense, the benefit of which would go directly to stockholders equity if ever used.

So with about $17 million of domestic non-option related NOL’s remaining, it is possible that we may begin recording a tax provision with an effective rate of perhaps 20% to 25% for GAAP purposes for 2009 and 37% or more after 2009 even though a significant portion of this GAAP tax provision would be non-cash through the utilization of these option related NOL’s.

That concludes my discussion on the 2008 third quarter financial results. Thank you for joining us today. I will now turn the call back to Johann. Johann.

Johann Dreyer

Thank you, Steve. Well, I would like to start off by saying that we are very pleased with the results of this quarter. It was one of the best quarters ever in the history of S1. We have added a number of very large net new customers and signed new business in all the different business units of our company.

What I would like to do at a high level today is to touch on the following topics. I would like to talk about the impact of the economy, because I do get a lot of questions about that from analysts and investors, and people in general and I would like to talk about the general state of our business, both the Enterprise and Postilion segments. I would like to touch on our State Farm relationship and then provide a quick update on our CFO search.

So let me start off with the impact of the economy. Right now, we see great strength in both our Postilion payments business and our international business. We have not seen any effect of the economic slowdown worldwide, in either the international business that we’re signing on both the Enterprise or the Postilion sides of the business and in the payments business worldwide.

Amongst community and regional financial institutions in the U.S., we actually have seen an up-tick in those organizations where the banks feel that the stress of the larger banks is driving customers towards the community banks.

There seems to be the impression under community and regional banks, that the general man in the street might have lost some trust in the larger financial institutions and that they may be a little bit too faceless and therefore the community and regional bank sees an opportunity in attracting some of the customers that previously banked at larger banks.

So we haven’t seen an impact and also this part of our customer base have been less exposed to the sub-prime crisis than the larger banks. Amongst U.S. larger banks, we are seeing that they are a little bit more deliberate in the decision making process, that the sales cycles are slightly slower; however, we don’t see less opportunities.

I believe our software is required by these banks, in many cases drives down the cost of these banks and it is actually necessary in these times. Though this may be a little bit more scrutiny on the deals, we do not see the number of deals going down.

Obviously, there are acquisitions taking place currently in this space. In some cases, some of our customers are acquired by other customers and sometimes we are on the acquiring side. So I believe over the long term that will be somewhat of a wash.

Further implication of the current economic circumstances is the huge currency fluctuations that we have seen over the last quarter. Now, although this will negatively impact our revenues, since a good percentage of our revenue is outside of the U.S., we will not see that impact on the profitability line, since we have large offshore development centers, as well as good delivery teams offshore.

That acts as a natural hedge, in that our costs will go down as well. So even though there might be a slight influence of our international revenues that will be neutralized by the decrease in our costs as well.

Going forward to the general state of the business, obviously as I said before this is one of the best quarters we’ve ever had and I would like to talk about that a little bit. I would like to start off on the Enterprise side. First, we signed one of the largest Enterprise banking deals ever in Asia-Pac a great new customer for us, licensing multiple channels, as Steve mentioned in his comments and this is a multi year deal going forward.

We also signed a top U.S. bank for personal banking and our business banking solutions over the Internet. We have had some good cross sell opportunities, good cross sell deals closing in the quarter. We see definitely a higher rate of success in cross selling into our existing customer base.

I believe this is a direct result from our customer satisfaction initiatives and I would like to remind everyone on this call that as I stated in the first call of this year, any increased revenue this year we’re going to reinvest in customer satisfaction and we believe we are seeing the payoff of that.

I am also particularly pleased about the fact that we released our newest generation of Treasury online product on the Enterprise side in the last quarter.

Going on to the Postilion payment side of our business, a great quarter for that part of the business as well. We signed another top 10 retailer in the UK and we now have four of the top 10 retailers in the UK. As you might recall at the beginning of this year we had two of the top 10 retailers in the UK. We have now added during the course of this year another two and are currently have four of the top 10 in the UK.

We also signed an ATM driving, as well as a merchant acquiring solution to a process owned by the largest bank in Poland. We signed two significant deals, one in India and one in Indonesia for transaction processors.

We added two more banks in Venezuela and we now have 11 customers in Venezuela. We signed a deal with the largest ATM network in Columbia and we signed a significant deal with a bank in Western Africa in Ghana, and we’ve also seen significant card usage growth in Africa, so we benefit from that up-tick through the fact that we license our software per volume.

On the Postilion community and the regional financial side, we’ve added three new internet-banking customers. We’ve added three new voice-banking customers and we currently have in excess of 20 customers live on the new Postilion banking platform for community financial institutions and we have in excess of 20 active projects to convert our customers from our legacy products onto this platform.

Moving onto our State Farm relationship, as we mentioned in our press release earlier today, we reached agreement that State Farm will spend $80 million with us over the next three years. That obviously gives us great visibility into the next three years and we anticipate that next year’s spend will be between $35 million and $37 million. We are particularly pleased that we now have the visibility to work through the relationship as we exit it three years from now.

In terms of the CFO search, we are currently talking to a number of very strong candidates. We are really focused at finding the right person versus just filling a title. In the meantime, we have a very strong general management team in place, that all have a strong financial background. So we are taking our time to find the right person, but there are definitely a number of very strong candidates that we are considering and already have concluded our second round interviews with.

In closing; we are very pleased with the quarter; we have a very strong balance sheet; good cash flows from the operations; a strong recurring revenue stream; we have very good visibility on the State Farm relationship; our headcounts are now at the right levels going forward; and our pipelines are looking healthy with good visibility.

I believe we are very, very well positioned in the marketplace with a modern product set across all our business units, whether that’s Enterprise or Postilion a very modern product set, good geographical diversification, good industry diversification. We substantially increased our customer satisfaction and I’m looking forward to the remainder of 2008 and 2009.

I will now hand it back to the operator. Thank you everyone.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from George Sutton - Craig-Hallum Capital.

George Sutton - Craig-Hallum Capital

What’s financial meltdown? It doesn’t even appear that it impacts you at all.

Johann Dreyer

It is one of those things. The pipelines are good, we are posting good results, but I wish there wasn’t a TV channel or a newspaper to read.

George Sutton - Craig-Hallum Capital

From a sales coverage perspective, you mentioned you are making some increased investments in sales coverage. Can you give us a better sense of how you are expanding the sales channels?

Johann Dreyer

Our sales channels, we are really expanding across all our product lines. The biggest expansion right now is on our Postilion payment side, where we are expanding our sales capacity, both in the U.S. and internationally.

George Sutton - Craig-Hallum Capital

Can you give a sense of numbers?

Johann Dreyer

George, I cannot comment on that right here. I don’t have those numbers in front of me.

George Sutton - Craig-Hallum Capital

Now you also mentioned that any dollars that you have in excess in the quarter, you throw back into customer satisfaction. I’m just curious how that works functionally as you are going through the quarter --?

Johann Dreyer

Here is basically how it works. Specifically on the Enterprise side, it is not a secret that we had some customer satisfaction issues a few years ago and at the beginning of the year I said that 2007 was the year of fixing the company from a financial perspective and 2008 is fixing the company from a customer satisfaction perspective, predominantly on the Enterprise side of the house. We’ve always had very good customer satisfaction specifically on the Postilion payment side of the house.

In terms of Enterprise customer satisfaction, here are some of the things that we have done. We’ve put in a dedicated team in place to effectively not only cover, severity one and two issues with customers coming in, but just to work on a backlog of severity three and four issues in the product. A specialized team that brings it right down and we got it to the point where we can turn around any new incidents coming in from customers in a very, very short period of time.

For a period of time, you’ve to put a dedicated team on that just doing that and we went outside and in some cases used contractors for that as well. So that’s an indication for where you take money and instead of having a team of say, four people, you have a team of eight people, that can just reduce that backlog in a shorter period of time. That’s one example.

Other examples would be where you take a customer live through a conversion process, is to spend more time with them than you normally would and in some cases that might not be billable. So there are a variety of ways in which you can use money to increase your customer satisfaction and fix some issues that you had in the past and get past that negative view that some customers had about S1 a few years ago.

George Sutton - Craig-Hallum Capital

And then finally with respect to the consolidation we’ve seen in the bank market, have you been impacted positively or negatively by the recent trends?

Johann Dreyer

We have been impacted by one of our customers being bought by another bank; just a small part of our revenue. Even though it is a large bank, it is a small part of our revenue and we won’t see that revenue going away in the short term. Obviously as this bank migrates off their systems onto the acquired systems, that revenue will go away for us, but it’s so small that it will be made up by just normal sales activity that we have outside of that.

It’s obviously something that we are aware of, but no big impact. Obviously it’s never nice losing a customer. Subsequent sales to that customer might be more difficult, but from a big customer, big revenue stream going away, no, we haven’t been impacted.

Operator

Your next question comes from John Kraft - D.A. Davidson.

John Kraft - D.A. Davidson & Co.

I guess I’m particularly intrigued with the enterprise deals that include multiple applications. I know that’s the beauty of your software and the reason you built it the way you did, but that hasn’t always been the way that it has been purchased. Is there something different in the way that you guys are selling it? Is it just something in the way that the siloed structures of the banks are changing finally or what’s happening there to get you there?

Johann Dreyer

I think I can address that in two ways. Let’s just first take the deal that we signed in Asia-Pac. That was a financial institution that is going through a total technology refresh of their entire bank. So things like that don’t come about every day. It’s very seldom that a bank decides to change out their back end as well as all their front-end channels.

Obviously in a case like that, our product makes a lot of sense, because it is the only integrated front channel solution out in the marketplace today. If we look at some of the other deals that we did in the US, I think a big portion of that John is we’ve improved our reputation in the marketplace, we’ve improved our reputation with our existing customer base, and that means that when a new channel comes up for bid, we are competitive and I don’t believe we were always competitive.

Customers like to buy more products from vendors that they are satisfied with and so that was one of the main reasons why we just did everything in our power this year to improve customers and we’ll continue with that.

John Kraft - D.A. Davidson & Co.

And then Steve, just to make sure I heard correctly, the merit increase, that actually started in July, at the beginning of the quarter?

Steve Dexter

That’s correct.

Johann Dreyer

Just to put color around that, globally we do our merit increases mid-year every year. So in terms of any model, any future model, that’s the time that we actually do our salary increases.

John Kraft - D.A. Davidson & Co.

Okay and then moving on to the Postilion segments, you did mention attrition still. Is that just legacy attrition from deals that had been planning to migrate or are you still seeing some new attrition and I guess what is the customer count there?

Johann Dreyer

We anticipate that from a revenue perspective, we will be pretty much bottoming out in 2009. On the one hand you have a new product and we will release our business banking solution on Postilion still this quarter and that will be the final channel as far as that product is concerned, but basically we had some legacy attrition and it obviously takes some time for that revenue to work itself through the revenue recognition process. So that revenue goes away. If somebody cancels, the revenue doesn’t go away immediately.

Secondly, obviously it takes time to convert. We have in excess of 1,000 customers in that business and it takes time to convert all of those customers and in that process, you might lose some customers. So we are internally planning to hit the bottom end of that part of the business in 2009. I think we’re pretty close, but 2009 to me would be the bottom end and then from then onwards I think we’ll be on a pretty healthy growth trajectory.

John Kraft - D.A. Davidson & Co.

Now you’re talking about the migration, you’re talking about the continuation of what you say now you’ve got 20 customers live on?

Johann Dreyer

Exactly.

John Kraft - D.A. Davidson & Co.

I mean, I guess I appreciate the approach of trying to be realistic about customers leaving during any sort of conversion, but is it involving any sort of incremental revenue or cost to them, that would cause them to leave, or why would they want to leave?

Johann Dreyer

No, it’s really time that would take to convert the whole base and that would just be a risk period for us. Now there’s no cost or any other reason why they should leave. It’s just a period that you know as well as I do, any conversion is a period of risk and so we are very focused on doing a number of conversions next year and that’s why I believe next year is sort of the bottom year, as far as that part of the business is concerned. Bear in mind that is not the total Postilion business; that is purely the community financial side, the old IBS and Regency part of the business.

John Kraft - D.A. Davidson & Co.

But presumably, this product, its really leaps and bounds above kind of what they are on right now. So once they convert they are going to be pretty well hooked?

Johann Dreyer

We have seen very, very good customer feedback wherever we presented the new product. It is in my opinion light years ahead of anything else in the industry, but the reality is we still have to move all of those customers onto the product.

Operator

(Operator Instructions) Your final question comes from Brett Huff - Stephens Inc.

Tyler Boone - Stephens Inc.

This is actually Tyler sitting in for Brett. I was wondering if you could comment on kind of how the sales pipeline compares to last quarter.

Johann Dreyer

We don’t disclose that information, but as I said before, I think it was my comment to George earlier, if we didn’t read the news or watch the television, our sales pipeline is strong.

Tyler Boone - Stephens Inc.

Okay and I don’t know if you can comment, but have you noticed any change in sales activity in October versus September?

Johann Dreyer

Our deal cycle, our sales cycle is much longer than that. Every sales cycle can be, at the shortest from say three months in the community and regional space to up to two years in some of the larger payment or enterprise deals. So you won’t notice a difference month to month really.

Operator

As there are no further questions in queue; please continue.

Johann Dreyer

So in closing, again thank you very much for joining the call. A very good quarter; we are positive about the remainder of the year; 2009 is shaping up nicely, so we are excited about the future of the company. Thank you everyone for joining us today.

Operator

Thank you, ladies and gentlemen. This conference will be available for replay starting today at 7:00 pm and will run until November 27 at midnight. You may access the replay service by dialing 1800 475 6701 and entering the access code of 965760. You may also dial internationally 320 365 3844 and also entering the access code of 965760. Those numbers again are 1800 475 6701 and 320 365 3844 and entering the access code of 965760.

That does conclude your conference for today. Thank you very much for your participation and for using the AT&T executive teleconference. You may now disconnect.

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