Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Tim Willi – Avondale Partners.
Tim Willi – Avondale Partners
First, around e-discovery, Chris or Tom could you talk about the margin structure in Q4? I think it is probably lower than we would have expected. Is there any way to delineate the margins in Q4 between the soft revenue, pricing and then discretionary investment just so we can think about how that margin will look as we move through 2009 and hopefully revenue growth begins to pick back up?
Betsy Braham
Relative to our e-discovery margins the cost structure for that business is fairly fixed. So when we saw a deferral of revenues from the fourth quarter to the first quarter it naturally lowered the margin for that particular quarter. We would expect as we go into the first quarter of 2009 to see that margin level go back up to be more consistent with where we were in the second and third quarter.
Tim Willi – Avondale Partners
So it was purely just a function of the revenue growth rate? No discretionary expenses or anything like that which took it down temporarily?
Betsy Braham
That’s correct.
Tim Willi – Avondale Partners
I apologize if I missed some of the opening comments where you may have talked about this, but could you just talk a little bit about the success you are seeing as you have tried to brand EPIQ as one brand and cross-sell amongst the various disciplines between e-discovery, bankruptcy, and class action? Just any stories or pieces of evidence it is working and that you are seeing it resonate with customers?
Chris Olofson
Yes there are a variety of matters that we have been engaged where we are working both in an e-discovery capacity and a bankruptcy capacity or an e-discovery capacity and a settlement administration capacity. We believe that by offering clients that complete spectrum of services under a single relationship we can establish a competitive differentiation and offer a better value than can individual category competitors whose solutions would be more narrowly defined.
We have always believed, and I think this is the case, that is going to be a slow and steady building of that cross-selling opportunity. It is not something we are seeing any other competitor do so it is a novel concept in front of different types of customers but it is achieving traction and we are enjoying the benefits of being able to displace a competitor with a broader solution set.
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