You know, the one of the one of the other things is that we had quite a few companies over
the last three or four years that have not provided the kind of quality service and results on an
outsourcing basis that companies need. And much like you saw in the 80s with the direct marketing
industry, it only really takes one or two guys to tarnish a trend one or two companies that
perform poorly to tarnish a trend in the business. And I think we experienced some of that in this
arena where weve had some shakeout, weve had a number of companies that have gone away. And I
think youre seeing an emergence of some high-quality providers in the business right now,
ourselves being one, and the reputation of the capability of us as a full-service outsource
provider is growing. And I think that that will ultimately fuel trends as well.
JACK ANDREWS: OK. And then could you talk a little bit more about the financial impact of some of
these contracts in the pipeline. I think previously youve talked about pursuing larger deals
which, you know, may potentially mean lower gross margin profile. I was wondering if you could
just, you know, expand on the you know, the if there is a potential difference in the mix of
MARK LAYTON: The larger deals are typically at lower gross margin percentage. You know, its
obviously higher gross margin dollars, but lower percentage. And, you know, we what we have
found, as I mentioned in my prepared comments, is that there are more attractive financial
characteristics of the larger deals for us than there are for some of the smaller ones. Much like
an acquisition, its almost as hard to do a little one as it is a big one.
JACK ANDREWS: Sure.
MARK LAYTON: And so these integration efforts that we end up doing with some of the smaller
contracts, you know, theres an opportunity cost in terms of the deployment of the people and
resources that we put them. And then, you know, the actual dollar rewards are not all that great
when youre said and done with them. So thats the reason we want to continue to focus on larger
contracts. And they probably are going to be in the 20 to 30-percent gross margin range as opposed
to where we were at a few years ago focusing on 30 to 40-percent gross margin. So thats the trend
in our service fee gross margin area.
JACK ANDREWS: OK. And then just one last question on that point. Would the lead time to implement
these deals, is that similar to your historical, you know, kind of nine-month-or-so time to get
these contracts fully ramped?
MARK LAYTON: Yes.
JACK ANDREWS: OK. And then just on the $4 to $7 million of cap ex for 2006. Does that include the
potential investments related to eCOST that youre currently working on?
THOMAS MADDEN: Yes, it does. Those investments are not expected to be significant, though. Its
not its not a big component of that number.