<A Mark C. Layton>: Hey, Alex.
<A Michael Willoughby>: Hey, Alex.
<Q Alex Silverman>: Lots of my questions have been answered. I have a few technicals. For
2011, what do you project your CapEx needs are?
<A Thomas J. Madden>: We do expect our capital expenditure needs to be higher than where
they have been over the last couple of years. Weve generally been operating at about a $4 million
level in the last, I think, both 2009 and 2010. We expect that number to go up this year to
probably between $7 million to $9 million. Some of that is expected to be financed with leases and
that type of stuff. So, our cash CapEx number in total was expected to be probably closer to the $4
million to $5 million that weve had previously.
<Q Alex Silverman>: And is that equipment or is that bricks and mortar or a combination?
<A Thomas J. Madden>: Its a combination as well as some of that relates to start-up
activity for the new client implementations.
<Q Alex Silverman>: Okay, how much in leases and unused properties left from eCOST? I
mean, I understand that youre going to be moving Philippine operations over to the core business
and such. But do you have property in California that was old eCOST property that is no longer
<A Mark C. Layton>: Well, weve got a small 5,000 square foot office facility out there
that were in the process of considering refocusing for a call center there. Im trying to get this
Dallas area one sorted out first. So, we do need to try to make some additions to our redundancy
capabilities. The weather patterns this year kind of made us understand there is probably some
improvements we can make in that a little bit. So we may use that office for those purposes, which
is the reason they didnt go into discontinued operations. So, we havent made a final decision
about that. Thats really the only physical plant thats left from that piece.
<Q Alex Silverman>: Okay. So, there is nothing that needs to be subleased out?
<A Thomas J. Madden>: No. The other space that eCOST was using in Memphis, it was a
relatively small footprint and that will be reallocated to other new clients. And then in
Philippines, we talked about earlier while there was an allocation in the past of that total
facility both between PFS and eCOST that full facility that will be allocated to PFS, utilized by
PFS for some of its new activity.
<A Mark C. Layton>: Yeah. Unrelated over the last year, weve really transformed that
middle operation. It was primarily eCOST 18 months ago. It became primarily PFS by, I dont know,
the third quarter or so last year as we ramped up our technology development there.
<Q Alex Silverman>: Okay. On a continuing operations basis, can you give us a sense for
2011, what do you expect depreciation, amortization and stock comp to be?
<A Thomas J. Madden>: Yep. Give me one second here. So, our D&A estimate will be somewhere
in line with this years number. Ive got may be a little bit of an increase somewhere between $6.5
million to $7 million. Our stock comp expense is also expected to increase somewhat. It was about
$800,000 in 2010. Expect it to increase to about a $1.2 million or so in 2011.
<Q Alex Silverman>: Okay. Looking at your pipeline, how much of your pipeline are folks
that have something up and running with one of your competitors are looking to move over to you,
and how much of it is sort of greenfield?