Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from David Yuschak - SMH Capital.
David Yuschak - SMH Capital
Let’s look on drill bound for this year, as you have mentioned about the ability to produce internal cash. Could you give us maybe the devil in the details here of how you expect that operating cash to play out between the various components between inventories, receivables, CapEx spending and the rest. Think about just what kind of actual cash you can produce and when and how that may layer in on a quarterly basis, because I would think some of that would have to be kind of maybe back end loaded somewhat in your expectations.
Mark Johnson
In reality it is not back end loaded because the seasonal shift that occurred in 2008 caused the fourth quarter to be less volume than the third quarter which is very unusual. So our typical pattern would be that the back end of our year is where the working capital tends to free up and we would invest in the first half of the year. But that won’t be the case in 2009, because we are coming off of a softer quarter and therefore we are not rolling a bunch of payables into the first quarter that need to be paid.
So we would see the cash flow relatively evenly distributed throughout the quarters in 2009 and only slightly leveraged towards the back end.
David Yuschak - SMH Capital
So would your assumption be that to get a recovery in say late third quarter into the fourth quarter you may end up still, because the traditional season ways still free up cash then as well?
Mark Johnson
Correct. Then we have this $90 million that we invested, that has started to roll out already.
David Yuschak - SMH Capital
And a lot of that will come out of your inventory reduction more than, you know in a softer time you are certainly going to get some receivable release, but is a lot of it too going to come from inventories?
Mark Johnson
A large part of it will come from inventories, but the other hidden piece to all this is the accounts payable. If the normal seasonal pattern returns next year, the fourth quarter of next year will be stronger and therefore the payables will actually increase year-over-year.
David Yuschak - SMH Capital
Right, I wanted to get some kind of sense as to how the different components you expect will play out to get you what you need as far as – so a this point in time you are thinking you can produce enough cash. It is possible to get to maybe $200 million in cash by the end of the year?
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