Question-and-Answer Session
Operator
Our first question comes from the line of Michael Pace – JP Morgan.
Michael Pace – JP Morgan
Thank you, couple of questions. The first is on CapEx; you did a good job laying out for us why CapEx will be higher, but as you look beyond 2008 some of your remarks were going all digital in some systems, beginning to push switched digital, simulcasting and upgrading. Why wouldn’t those continue beyond 2008?
Rocco Commisso
We said in our comments that we foresee 2008 as being our peak year and then with reduction, we’re going to have much less upgrades to be done. Whatever one-time investments we have to make in our network for our digital transition would have been done. And frankly, we see a reduction in the flip-top boxes going forward. Combination of those, plus an additional investment we might have to make, we frankly see a reduction in CapEx beyond 2008.
Michael Pace – JP Morgan
Then just any more color on how many systems, and I know for competitive reasons you don’t want to give which ones, but what percentage of your systems in ?08, you may consider going all digital or switched digital and just to give us a sense of what might be left, going forward?
John Pascarelli
I don’t want to confuse the point. We’re talking about some small systems that are not what we consider our One network, the main platform. So it’s not a significant portion, these systems actually have high digital penetration and we could expedite delivery of HD services as well as comply with this by converting it to digital, but it’s not a huge percentage of our customers.
Michael Pace – JP Morgan
Since you brought up liability management in your prepared remarks, I’ll ask a question on that one. You’ve always had a surplus of liquidity. Obviously, in markets like this, this is a wise decision. Now that the company is turning free cash flow positive, where would you take that liquidity in the context of your view of free cash flow over the next few years?
Obviously, bank amortization, but where do you feel comfortable bringing that liquidity down now that we’ve seen you turn the corner on free cash flow?
Rocco Commisso
As we stated in our remarks, Michael, again, we have almost no visibility as to when the refinancing windows will open up. So first, our highest priority is to conserve as much as possible whatever the liquidity we’ve been able to raise in the last five years.
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