EX-99.1 2 y78671exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
FOR IMMEDIATE RELEASE
     
COMPANY CONTACT:
  PRESS CONTACT:
Kristina McMenamin
  Guy Lawrence
W. P. Carey & Co. LLC
  Ross & Lawrence
212-492-8995
  212-308-3333
kmcmenamin@wpcarey.com
  gblawrence@rosslawpr.com
W. P. Carey Announces Second Quarter Financial Results
New York, NY — August 6, 2009 — Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today reported financial results for the second quarter ended June 30, 2009.
QUARTERLY AND SIX-MONTH RESULTS
•   Total revenues net of reimbursed expenses for the second quarter of 2009 were $44.3 million, compared to $47.3 million for the second quarter of 2008. Total revenues net of reimbursed expenses for the six months ended June 30, 2009 were $96.5 million, compared to $94.2 million for the comparable period in 2008. Reimbursed expenses are excluded from total revenues because they have no impact on net income.
 
•   Net income for the second quarter of 2009 was $15.0 million, compared to $19.8 million for the same period in 2008. For the six months ended June 30, 2009, net income was $32.7 million, compared to $36.9 million for the comparable period in 2008.
 
•   Cash flows from operating activities for six months ended June 30, 2009 increased to $34.7 million from $27.2 million for the prior year period.
 
•   Adjusted cash flow from operating activities for the six months ended June 30, 2009 was $50.0 million, compared to $53.8 million for the comparable period in 2008.
 
•   Funds from operations (FFO) for the second quarter of 2009 were $30.1 million or $0.75 per diluted share, compared to $35.6 million or $0.88 per diluted share for the comparable period in 2008. FFO for the six months ended June 30, 2009 was $59.0 million or $1.48 per diluted share, compared to $57.1 million or $1.42 per diluted share for the comparable period in 2008.
 
•   For the six months ended June 30, 2009, we incurred impairment charges of $2.3 million and our CPA® REITs incurred impairment charges aggregating approximately $54.6 million, which reduced the amount of income we recognize from these equity investments by approximately $2.8 million. We received approximately $6.8 million in cash distributions from our equity ownership in the CPA® REITs for the same period.
 
•   Further information concerning FFO and adjusted cash flow from operating activities, non-GAAP supplemental performance metrics, is presented in the accompanying tables.
INVESTMENT, FUNDRAISING AND FINANCING ACTIVITY
•   Investment volume, for our own portfolio and on behalf of the CPA® REITS, for the six months ended June 30, 2009 was $273.8 million, an increase over the prior year as a result of two significant transactions—The New York Times Company and Kronos Foods—closing in the first quarter.
 
•   In July, on behalf of our CPA® REITs, we structured a $93.6 million sale-leaseback and our first Hungarian transaction with UK retailer, Tesco plc.
 
•   We continue to raise investor capital through our latest non-traded REIT offering, CPA®:17 — Global, so that we may take advantage of attractive investment opportunities that we believe are afforded by the current market environment. Through July 31, 2009, CPA®:17 — Global has raised more than $550 million of its up-to $2 billion offering. For the second quarter of 2009, we raised $100.3 million, compared to $71.5 million in the first quarter of this year.
 
•   Since the beginning of the credit crunch in September 2008, W. P. Carey and our CPA® REITs have completed refinancings of maturing debt totaling more than $120 million secured by seven properties, of which $44.2 million closed in the first half of 2009.

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ASSETS UNDER MANAGEMENT
•   W. P. Carey is the advisor to the CPA® REITs, which had real estate assets of $7.9 billion and total assets of $8.2 billion as of June 30, 2009.
 
•   As of June 30, 2009, the occupancy rate of our 17 million square foot owned portfolio was approximately 94%. In addition, for the 92 million square feet owned by the CPA® REITs, the occupancy rate was approximately 98%.
DISTRIBUTIONS
•   The Board of Directors raised the quarterly cash distribution to $0.498 per share for the second quarter of 2009. The distribution was paid on July 15, 2009 to shareholders of record as of June 30, 2009. This was our 33rd consecutive quarterly dividend increase.
 
•   Over the past 36 years, W. P. Carey and the CPA® programs have paid approximately $2.9 billion to investors over 800 cash distributions.
“While the second quarter was largely uneventful from a financial results standpoint, we believe we are very well poised to take advantage of opportunities in the sale-leaseback market,” said Gordon F. DuGan, President and Chief Executive Officer. “Specifically, we have been quite pleased at the access to capital that we have in terms of increased equity fundraising and our continued access to mortgage financing. Our existing funds continue to perform as expected, although we will remain cautious about corporate defaults until we see a meaningful economic recovery. Lastly, having access to capital and significantly fewer legacy challenges is allowing us to play offense in the sale-leaseback market at a time when others have to take a more defensive posture.”
CONFERENCE CALL & WEBCAST
Please call at least 10 minutes prior to call to register
Time: Thursday, August 6, 2009 at 11:00 AM (ET)
Call-in Number: 877-591-4953
(International) +1-719-325-4898
Passcode: 3545166
Webcast: www.wpcarey.com/earnings
Podcast: www.wpcarey.com/podcast
Available after 2:00 PM (ET)
Replay Number: 888-203-1112
(International) +1-719-457-0820
Replay Passcode: 3545166
Replay Available until August 20, 2009 at midnight ET.
W. P. Carey & Co. LLC
W. P. Carey & Co. LLC is an investment firm that provides long-term sale-leaseback and build-to-suit financing for companies worldwide and manages a global investment portfolio approaching $10 billion. Publicly traded on the New York Stock Exchange (WPC), W. P. Carey and its CPA® series of income-generating, non-traded REITs help companies and private equity firms release capital tied up in real estate assets. The W. P. Carey Group’s investments are highly diversified, comprising contractual agreements with approximately 300 long-term corporate obligors spanning 28 industries and 15 countries. http://www.wpcarey.com

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Individuals interested in receiving future updates on W. P. Carey via e-mail can register at www.wpcarey.com/alerts.
This press release contains forward-looking statements within the meaning of the Federal securities laws. A number of factors could cause the Company’s actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office and industrial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact the Company, reference is made to the Company’s filings with the Securities and Exchange Commission.

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W. P. CAREY & CO. LLC
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)
                                 
    Three months ended June 30,     Six months ended June 30,  
    2009     2008     2009     2008  
Revenues
                                
Asset management revenue
   $ 19,227     $ 20,039     $ 38,335     $ 40,165  
Structuring revenue
     365       3,169       10,774       6,585  
Wholesaling revenue
     1,597       1,488       2,690       2,628  
Reimbursed costs from affiliates
     11,115       11,080       20,111       21,446  
Lease revenues
     18,473       19,296       36,828       38,371  
Other real estate income
     4,649       3,305       7,904       6,427  
 
                        
 
     55,426       58,377       116,642       115,622  
 
                        
Operating Expenses
                                
General and administrative
     (14,310 )     (15,816 )     (33,409 )     (31,229 )
Reimbursable costs
     (11,115 )     (11,080 )     (20,111 )     (21,446 )
Depreciation and amortization
     (7,120 )     (6,178 )     (12,749 )     (12,167 )
Property expenses
     (2,180 )     (1,245 )     (4,026 )     (3,532 )
Impairment charges
     (1,700 )     —       (1,700 )     —  
Other real estate expenses
     (1,707 )     (2,146 )     (3,838 )     (4,215 )
 
                        
 
     (38,132 )     (36,465 )     (75,833 )     (72,589 )
 
                        
Other Income and Expenses
                                
Other interest income
     401       679       808       1,440  
Income from equity investments in real estate and CPA® REITs
     4,875       3,934       6,262       8,645  
Other income and expenses
     127       1,848       3,281       4,659  
Interest expense
     (3,923 )     (4,532 )     (8,252 )     (9,575 )
 
                        
 
     1,480       1,929       2,099       5,169  
 
                        
Income from continuing operations before income taxes
     18,774       23,841       42,908       48,202  
Provision for income taxes
     (3,720 )     (7,422 )     (9,920 )     (14,566 )
 
                        
Income from continuing operations
     15,054       16,419       32,988       33,636  
 
                        
Discontinued Operations
                                
(Loss) income from operations of discontinued properties
     (75 )     3,733       (100 )     3,706  
Gain on sale of real estate
     478       —       343       —  
Impairment charge
     (580 )     —       (580 )     —  
 
                        
(Loss) income from discontinued operations
     (177 )     3,733       (337 )     3,706  
 
                        
Net Income
     14,877       20,152       32,651       37,342  
Add: Net loss attributable to noncontrolling interests
     203       168       373       340  
Less: Net income attributable to redeemable noncontrolling interests
     (103 )     (472 )     (338 )     (733 )
 
                        
Net Income Attributable to W. P. Carey Members
   $ 14,977     $ 19,848     $ 32,686     $ 36,949  
 
                        
Basic Earnings Per Share
                                
Income from continuing operations attributable to W. P. Carey members
   $ 0.37     $ 0.41     $ 0.83     $ 0.85  
(Loss) income from discontinued operations attributable to W. P. Carey members
     —       0.10       (0.01 )     0.09  
 
                        
Net income attributable to W. P. Carey members
   $ 0.37     $ 0.51     $ 0.82     $ 0.94  
 
                        
Diluted Earnings Per Share
                                
Income from continuing operations attributable to W. P. Carey members
   $ 0.37     $ 0.41     $ 0.82     $ 0.83  
(Loss) income from discontinued operations attributable to W. P. Carey members
     —       0.09       (0.01 )     0.09  
 
                        
Net income attributable to W. P. Carey members
   $ 0.37     $ 0.50     $ 0.81     $ 0.92  
 
                        
 
                                
Weighted Average Shares Outstanding
                                
Basic
     39,350,684       39,204,221       39,067,391       39,039,617  
 
                        
Diluted
     40,065,495       40,256,658       39,780,708       40,271,185  
 
                        
 
                                
Amounts Attributable to W. P. Carey Members
                                
Income from continuing operations, net of tax
   $ 15,154     $ 16,115     $ 33,023     $ 33,243  
(Loss) income from discontinued operations, net of tax
     (177 )     3,733       (337 )     3,706  
 
                        
Net income
   $ 14,977     $ 19,848     $ 32,686     $ 36,949  
 
                        
 
                                
Distributions Declared Per Share
   $ 0.498     $ 0.487     $ 0.994     $ 0.969  
 
                        

 

 

W. P. CAREY & CO. LLC
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
                 
    Six months ended June 30,  
    2009     2008  
Cash Flows — Operating Activities
                
Net income
   $ 32,651     $ 37,342  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization including intangible assets and deferred financing costs
     12,757       13,506  
Income from equity investments in real estate and CPA® REITs in excess of distributions received
     (3,157 )     (1,924 )
Straight-line rent adjustments
     967       1,252  
Management income received in shares of affiliates
     (15,414 )     (20,053 )
Gain on sale of real estate
     (343 )     —  
Gain on extinguishment of debt
     (6,991 )     —  
Allocation of income to profit sharing interest
     3,875       —  
Impairment charges
     2,280       —  
Unrealized gain on foreign currency transactions, warrants and securities
     (39 )     (1,203 )
Realized gain on foreign currency transactions and other
     (126 )     (1,565 )
Stock-based compensation expense
     5,260       3,922  
Decrease in deferred acquisition revenue received
     22,877       46,695  
Increase in structuring revenue receivable
     (5,416 )     (3,538 )
Decrease in income taxes, net
     (8,454 )     (3,963 )
Decrease in settlement provision
     —       (29,979 )
Net changes in other operating assets and liabilities
     (6,044 )     (13,273 )
 
            
Net cash provided by operating activities
     34,683       27,219  
 
            
 
                
Cash Flows — Investing Activities
                
Distributions received from equity investments in real estate and CPA® REITs in excess of equity income
     7,606       3,425  
Capital contributions to equity investments
     —       (837 )
Purchases of real estate and equity investments in real estate
     (39,677 )     (184 )
Capital expenditures
     (6,929 )     (6,455 )
VAT refunded on purchase of real estate
     —       3,189  
Proceeds from sale of real estate
     3,835       —  
Proceeds from transfer of profit sharing interest
     21,928       —  
Funds released from escrow in connection with the sale of property
     —       636  
Payment of deferred acquisition revenue to affiliate
     —       (120 )
 
            
Net cash used in investing activities
     (13,237 )     (346 )
 
            
 
                
Cash Flows — Financing Activities
                
Distributions paid
     (39,060 )     (48,668 )
Contributions from noncontrolling interests
     1,583       1,320  
Distributions to noncontrolling interests
     (3,474 )     (1,329 )
Distributions to profit sharing interest
     (3,434 )     —  
Scheduled payments of mortgage principal
     (5,241 )     (4,698 )
Proceeds from mortgages and credit facilities
     127,500       101,937  
Prepayments of mortgage principal and credit facilities
     (83,936 )     (73,729 )
Proceeds from loan from affiliates
     1,624       —  
Repayment of loan from affiliates
     —       (7,569 )
Payment of financing costs, net of deposits refunded
     (806 )     (370 )
Proceeds from issuance of shares
     874       12,743  
Windfall tax benefits associated with stock-based compensation awards
     242       608  
Repurchase and retirement of shares
     (10,686 )     (5,134 )
 
            
Net cash used in financing activities
     (14,814 )     (24,889 )
 
            
 
Change in Cash and Cash Equivalents During the Period
                
Effect of exchange rate changes on cash
     38       298  
 
            
Net increase in cash and cash equivalents
     6,670       2,282  
Cash and cash equivalents, beginning of period
     16,799       12,137  
 
            
Cash and cash equivalents, end of period
   $ 23,469     $ 14,419  
 
            

 

 

W. P. CAREY & CO. LLC
Financial Highlights (Unaudited)
(in thousands, except share and per share amounts)
These financial highlights include non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), funds from operations (“FFO”) and adjusted cash flow from operating activities. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures is provided on the following pages.
                                 
    Three months ended June 30,   Six months ended June 30,
    2009   2008   2009   2008
EBITDA
                                
Investment management
  $ 10,430     $ 15,774     $ 23,498     $ 30,519  
Real estate ownership
    19,365       22,307       40,257       42,941  
 
                       
Total
  $ 29,795     $ 38,081     $ 63,755     $ 73,460  
 
                       
 
                                
FFO
                                
Investment management
  $ 11,627     $ 14,664     $ 25,960     $ 20,125  
Real estate ownership
    18,486       20,887       33,010       36,956  
 
                       
Total
  $ 30,113     $ 35,551     $ 58,970     $ 57,081  
 
                       
 
                                
EBITDA Per Share (Diluted)
                                
Investment management
  $ 0.26     $ 0.39     $ 0.59     $ 0.76  
Real estate ownership
    0.48       0.56       1.01       1.06  
 
                       
Total
  $ 0.74     $ 0.95     $ 1.60     $ 1.82  
 
                       
 
                                
FFO Per Share (Diluted)
                                
Investment management
  $ 0.29     $ 0.36     $ 0.65     $ 0.50  
Real estate ownership
    0.46       0.52       0.83       0.92  
 
                       
Total
  $ 0.75     $ 0.88     $ 1.48     $ 1.42  
 
                       
 
                                
Adjusted Cash Flow From Operating Activities
                                
Adjusted cash flow
                  $ 50,019     $ 53,789  
 
                           
Adjusted cash flow per share (diluted)
                  $ 1.26     $ 1.34  
 
                           
 
Distributions declared per share
                  $ 0.994     $ 0.969  
 
                           
Payout ratio (distributions per share/adjusted cash flow per share)
            79 %     72 %
 
                           

 

 

W. P. CAREY & CO. LLC
Reconciliation of Net Income to EBITDA (Unaudited)
(in thousands, except share and per share amounts)
                                 
    Three months ended June 30,     Six months ended June 30,  
    2009     2008     2009     2008  
Investment Management
                                
Net income from investment management attributable to W. P. Carey members
   $ 5,954     $ 7,123     $ 12,659     $ 14,054  
Adjustments:
                                
Provision for income taxes
     3,440       7,556       9,205       14,340  
Depreciation and amortization
     1,036       1,095       1,634       2,125  
 
                        
EBITDA — investment management
   $ 10,430     $ 15,774     $ 23,498     $ 30,519  
 
                        
EBITDA per share (diluted)
   $ 0.26     $ 0.39     $ 0.59     $ 0.76  
 
                        
 
                                
Real Estate Ownership
                                
Net income from real estate ownership attributable to W. P. Carey members
   $ 9,023     $ 12,725     $ 20,027     $ 22,895  
Adjustments:
                                
Interest expense
     3,923       4,532       8,252       9,575  
Provision for income taxes
     280       (134 )     715       226  
Depreciation and amortization
     6,084       5,083       11,115       10,042  
Reconciling items attributable to discontinued operations
     55       101       148       203  
 
                        
EBITDA — real estate ownership
   $ 19,365     $ 22,307     $ 40,257     $ 42,941  
 
                        
EBITDA per share (diluted)
   $ 0.48     $ 0.56     $ 1.01     $ 1.06  
 
                        
 
                                
Total Company
                                
EBITDA
   $ 29,795     $ 38,081     $ 63,755     $ 73,460  
 
                        
EBITDA per share (diluted)
   $ 0.74     $ 0.95     $ 1.60     $ 1.82  
 
                        
Diluted weighted average shares outstanding
     40,065,495       40,256,658       39,780,708       40,271,185  
 
                        
Non-GAAP Financial Disclosure
EBITDA as disclosed represents earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is a useful supplemental measure for assessing the performance of our business segments, although it does not represent net income that is computed in accordance with GAAP. Accordingly, EBITDA should not be considered an alternative for net income as an indicator of our financial performance. EBITDA may not be comparable to similarly titled measures of other companies.

 

 

W. P. CAREY & CO. LLC
Reconciliation of Net Income to Funds From Operations (FFO) (Unaudited)
(in thousands, except share and per share amounts)
                                 
    Three months ended June 30,     Six months ended June 30,  
    2009     2008     2009     2008  
Investment Management
                                
Net income from investment management attributable to W. P. Carey members
   $ 5,954     $ 7,123     $ 12,659     $ 14,054  
Amortization, deferred taxes and other non-cash charges
     2,607       4,041       3,919       1,487  
FFO from equity investments
     3,066       3,500       9,382       4,584  
 
                        
FFO — investment management
   $ 11,627     $ 14,664     $ 25,960     $ 20,125  
 
                        
FFO per share (diluted)
   $ 0.29     $ 0.36     $ 0.65     $ 0.50  
 
                        
 
                                
Real Estate Ownership
                                
Net income from real estate ownership attributable to W. P. Carey members
   $ 9,023     $ 12,725     $ 20,027     $ 22,895  
Loss on sale of real estate, net
     (478 )     —       (343 )     —  
Gain on extinguishment of debt, net (a)
     —       —       (2,796 )     —  
Depreciation, amortization and other non-cash charges
     5,174       5,389       10,348       8,950  
Straight-line and other rent adjustments
     232       659       412       1,328  
Impairment charges
     2,280       —       2,280       —  
FFO from equity investments
     2,411       2,287       3,413       4,128  
Noncontrolling interests’ share of FFO
     (156 )     (173 )     (331 )     (345 )
 
                        
FFO — real estate ownership
   $ 18,486     $ 20,887     $ 33,010     $ 36,956  
 
                        
FFO per share (diluted)
   $ 0.46     $ 0.52     $ 0.83     $ 0.92  
 
                        
 
                                
Total Company
                                
FFO
   $ 30,113     $ 35,551     $ 58,970     $ 57,081  
 
                        
FFO per share (diluted)
   $ 0.75     $ 0.88     $ 1.48     $ 1.42  
 
                        
Diluted weighted average shares outstanding
     40,065,495       40,256,658       39,780,708       40,271,185  
 
                        
Non-GAAP Financial Disclosure
Funds from operations (FFO) is a non-GAAP financial measure that is commonly used in evaluating real estate companies. Although the National Association of Real Estate Investment Trusts (NAREIT) has published a definition of FFO, real estate companies often modify this definition as they seek to provide financial measures that meaningfully reflect their operations. FFO should not be considered as an alternative to net income as an indication of a company’s operating performance or to cash flow from operating activities as a measure of its liquidity. It should be used in conjunction with GAAP net income. FFO disclosed by other REITs may not be comparable to our FFO calculation.
NAREIT’s definition of FFO adjusts GAAP net income to exclude depreciation and gains/losses from the sales of properties and adjusts for FFO applicable to unconsolidated partnerships and joint ventures. We calculate FFO in accordance with this definition and then include other adjustments to GAAP net income to adjust for certain non-cash charges such as amortization of intangibles, deferred income tax benefits and expenses, straight-line rents, stock compensation, impairment charges on real estate and unrealized foreign currency exchange gains and losses. We exclude these items from GAAP net income as they are not the primary drivers in our decision making process. Our assessment of our operations is focused on long term sustainability and not on such non-cash items which may cause short-term fluctuations in net income but that have no impact on cash flows.
 
(a)   In January 2009, Carey Storage repaid, in full, the $35 million outstanding balance on its secured credit facility for $28 million and recognized a gain of $7 million on the repayment of this debt at a discount, inclusive of profit sharing interest of $4.2 million.

 

 

W. P. CAREY & CO. LLC
Adjusted Cash Flow From Operating Activities (Unaudited)
(in thousands, except share and per share amounts)
                 
    Six months ended June 30,  
    2009     2008  
Cash flow from operating activities — as reported
   $ 34,683     $ 27,219  
Adjustments:
                
Distributions received from equity investments in real estate in excess of equity income (a)
     9,040       3,223  
Contributions received from noncontrolling interests, net (b)
     252       —  
Changes in working capital (c)
     6,044       14,626  
CPA®:16 — Global performance adjustment, net (d)
     —       (12,291 )
Settlement payment (e)
     —       21,012  
 
            
Adjusted cash flow from operating activities
   $ 50,019     $ 53,789  
 
            
Adjusted cash flow per share (diluted)
   $ 1.26     $ 1.34  
 
            
 
                
Distributions declared per share
   $ 0.994     $ 0.969  
 
            
Payout ratio (distributions per share/adjusted cash flow per share)
     79 %     72 %
 
            
 
                
Diluted weighted average shares outstanding
     39,780,708       40,271,185  
 
            
Non-GAAP Financial Disclosure
Adjusted cash flow from operating activities is a non-GAAP financial measure that represents cash flow from operating activities on a GAAP basis adjusted for certain timing differences and deferrals as described below. We believe that adjusted cash flow from operating activities is a useful supplemental measure for assessing the cash flow generated from our core operations and is used in evaluating distributions to shareholders. Adjusted cash flow from operating activities should not be considered as an alternative for cash flow from operating activities computed on a GAAP basis as a measure of our liquidity. Adjusted cash flow from operating activities may not be comparable to similarly titled measures of other companies.
 
(a)   We take a substantial portion of our asset management revenue in shares of the CPA® REIT funds. To the extent we receive distributions in excess of the equity income that we recognize, we include such amounts in our evaluation of cash flow from core operations.
 
(b)   Represents noncontrolling interests’ share of contributions/distributions made by ventures that we consolidate in our financial statements. This adjustment in the calculation of adjusted cash flow from operating activities was introduced during the fourth quarter of 2008 because we believe that it results in a more accurate presentation of this supplemental measure.
 
(c)   Timing differences arising from the payment of certain liabilities in a period other than that in which the expense is recognized in determining net income may distort the actual cash flow that our core operations generate. We adjust our GAAP cash flow from operating activities to record such amounts in the period in which the liability was actually incurred. We believe this is a fairer measure of determining our cash flow from core operations.
 
(d)   Amounts deferred in lieu of CPA®:16 — Global achieving its performance criterion, net of a 45% tax provision. In determining cash flow generated from our core operations, we believe it is more appropriate to normalize cash flow for the impact of CPA®:16 — Global achieving its performance criterion, rather than recognizing the entire deferred amount in the quarter in which the performance criterion was met (second quarter of 2007), as this revenue was actually earned over a three year period.
 
(e)   In March 2008, we entered into a settlement with the SEC with respect to all matters relating to their investigation. As a result, we paid $30 million in the first quarter of 2008 and recognized an offsetting $9 million tax benefit in the same period.