Question-and-Answer Session
Randy Harp
Now I want to respond to email questions that we have received that Steve hasn’t previously addressed this morning or that have been addressed in our public filings. Again, I will read the questions and Steve and I will do our best to answer those.
Reading these in the order they were received, the first one is ?very few shares bought back for the second quarter in a row. It certainly appears to be a policy change or something else. Please explain. The explanation at the end of the second quarter just does not seem logical, two quarters in a row after the last 10 years of activity.?
Steve Williamson
I think I answered it last time. There is a lot of factors that we consider when we decide whether or not we are going to buy back shares. I think I highlighted some of those in previous quarters. Those include just our own business metrics, the level of cancellations, the level of production, are we growing or not, as well as some big picture things like the economy. Of course the price of the shares. In explaining the reason we kind of backed off, if you will, in some of the results for the second quarter and third quarter which had 13.3 and 15.7 thousand shares purchased respectively, we saw a pretty quick increase in the price once we announced the first quarter earnings. We decided to kind of back off when it started running.
The other reason is, if you look at the cancellation trends we have had, we did have like a lot of other folks when the world seemed to be afraid everything was coming to an end, higher cancellation rates. Certainly in the first quarter and the second quarter. I am glad to report that the results that we saw in the third quarter were very good. We came in a little bit less than 136,000 cancellations. So that certainly is one factor that has helped a lot. We have got more production. We grew the membership base by almost 40,000 memberships during the third quarter. So I just have to say there is a lot of things different this quarter that puts us in a position where we feel much better about getting out in the market place and that is we are going to do.
Randy Harp
Suffice it to say we think every purchase we have ever made has been accretive for shareholders but more clearly accretive when the stock is in the mid 30’s as it was in the first quarter versus the higher average V we have seen in the second and third quarters.
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