Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Paul Patterson – Glenrock Associates
Paul Patterson – Glenrock Associates
I wanted to touch base with you on the dividend reduction and exactly what has changed since November, because it seems to me that if the financial markets were anything in worse shape then, it looks as though you've reduced CapEx and it is just the earnings outlook deteriorated? Could you just give us a little bit more flavor on what really changed this very strong commitment it seemed to the dividend at the time to the reversal that we've had in the last few days.
Michael Chesser
From my perspective Paul, there's three things. The first is that we have received updated forecasts, economic forecasts that we've cranked through our forecast models and as Terry mentioned, that drove our projected sales growth from a positive .5% to a negative .7%. That may not seem line a lot but it really does have a significant impact on the bottom line and that's of course a big part of why we reduced our earnings guidance.
Secondly, the cost of the capital markets continued to grow and we have a considerable amount of money that we have to raise in those markets. So those are the two main drivers. The third thing for me is how long this economic downturn may last. As you hear the speculation today, early on we were saying well we might be pulling out the end of second half of this year.
Now, there's no sign of that. There's no optimism so this could be one year or a couple of years. So there are three things I think are significantly different today than they were back in November.
Terry Bassham
The one thing I would add to your point I think is, yes markets have opened a little bit. Certainly the volatility around those markets is what caused this pause in the fall and so as we've discussed, we had expected to lean on our short term debt balances. Now that we believe we've got the ability to go to the market and as Mike said, do some longer term debt to provide some financial flexibility, that's going to cause an increase in costs, no doubt.
So it's not just the changes we've seen which I think Mike covered very well, but it's also a little more clarity around the volatility in those markets that caused us to make some more definitive financing plans that over the short run will be more expensive than we expected, causing the guidance in large part to be adjusted for '09.
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