Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from the line of Mike Cox with Piper Jaffray. Please proceed.
Mike Cox – Piper Jaffray
Hi, good morning gentleman, and nice job weathering through a tough economic backdrop.
Brian Lipke
Thanks Mike.
Mike Cox – Piper Jaffray
My first question is on the debt level, and I know you touched on this in the prepared remarks, but as you sort of stress test the ?09 outlook where do you kind of see some of these leverage ratios may be peaking out, and do you see the potential risk of bumping up against the debt covenants?
Kenneth Smith
Well, one of the big variables in answering that question specifically is demand levels. As we all know, as we look across the headlines and most industries including manufacturers the demand outlook is not very certain very far into the future, and so that kind of being my opening answer to the question, (inaudible) and we do expect some gradual improvement in demand and as we flexed our expected financial performance, we would have less cushion as we approach most notably September, maybe the tightest but there is a lot of runway between now and then and many of the actions that Brian and Henning described we are acting on, and have acted on to help us ensure passage and to stay compliant.
Brian Lipke
To give – to answer to your question I think more directly, we have stress tested with volume decreases as much as 30% and we still comply with the covenants that we have. So that should give you some confidence that even with significant decreases in volume, we are still running the company within the covenant compliances that we do have.
Mike Cox – Piper Jaffray
Okay, that's great and that is down 30% for the full year.
Brian Lipke
Yes.
Mike Cox – Piper Jaffray
Okay, that's great. And working capital in 2009, it sounds like you are doing a lot to take more out. Is that correct and do we see that as a source of cash in 2009, and maybe directionally cash flow from operations in ?09 compared to ?08.
Brian Lipke
Looking at working capital decreasing, I think we have a realistic target of 70 days that Ken talked on, and we had 77 days, which is down from 98 days the previous year. We think the 70 days is realistic, we just have internal targets even more aggressive than that. I think we would all comfortably say that we will hit those targets.
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