Brandon Dobell (William Blair): With the tax rate bouncing around and gets strong cash flow, how do we think about cash taxes going forward compared to the provision on the income statement, just trying to get a better feel for a kind of true free cash flow conversion on a sustainable basis?
Mike Beach: We’ll provide much more detailed information on our Q4 call related to that when we finalize the budget, finalize the year and know where our NOLs end up. I think the best way to think about it right now is that we’re going to pay $4 million to $5 million in cash taxes this year. Next year that would probably double. We still will have some level of benefit from the NOLs. And on our next call, we’ll give you more of effective cash tax rate that we’re using to model the cash flow number for ‘09.
Kirk Materne (Bank of America): When you started to see some slowdown, you all maybe in the cell phone industry have one of the better opportunities in terms of Greenfield, new sales in terms of you’re not really restricted by having a saturated customer base. You have a lot accounts you haven’t talked to before in both Higher Ed and K-12. Have you talked to your sales heads about trying to build out a broader pipeline knowing that the conversion rates are obviously going to be lower? Have you started down that path as you head into 2009 and how long does it take to sort of start building up some more qualified leads to maybe either substitute in for ones that are getting either downsized or getting cut out altogether?
Michael Chason: I want to be careful here because actually we’re not seeing that. Our existing clients are less likely to expand their relationships versus bringing new clients on board, because the clients that are currently our technology realize the benefit and know that if they were to expand their relationship with Blackboard, that would actually give them additional cost savings at the school through implementation and through again being able to get more students in the existing classes, have more distance learning courses online, have their teachers to be effective. So, because they already have that experience with some of our software, in some ways, they’re actually better positioned to know that if there are going to be budget constraints in the future, technology is a way to address those budget constraints.
Now, at the same time, we want to make sure that we’re taking advantage of the Greenfield opportunity in front of us and our sales people are really focusing on both, but I wouldn''t say that they’re focusing on the Greenfield opportunity over the other opportunity. They’re continuing to focus on both of those going-forward.
Kirk Materne (Bank of America): In terms of every salesperson’s going to have some sort of net new customer metric they have to hit, have you been specific with your sales organization in terms of broadening, testing a wider net given the macro economy right now and how long does it take to have that start to have some impact in terms of your pipeline as you head into 2009?
Michael Chason: We’ve had a little bit better visibility into this coming so we certainly have been working closely with our sales force both to better refine the messaging and in general, but primarily because of a longer sale cycle, to make sure that we’re casting a wider net both across new opportunities as well as expanding existing clients. And we’re starting to see that reflected in our pipeline and the work our sales team is already doing it.
Bennett Notman (Davenport): It sounds like most of the caution you’ve seen so far has been domestically, can you talk about whether that’s beginning to spread internationally and then what impact, if any, the stronger dollar is having on you there?
Michael Chason: The big area of impact for us has been in K-12 and primarily our K-12 marketed in and based out of the United States. So internationally, we’re in the higher education market which while we certainly as we mentioned has seen a little bit of a slowdown in the sales cycle hasn’t had the same type of budget impact. So internationally we remain cautiously optimistic about the higher ed business globally.
Mike Beach: We sell predominantly in US dollar. I haven''t seen a push back related to that. Obviously, customers have benefited from that over the last several years and we think the pricing of our product even with the change in the dollar is appropriate to the markets that we serve.
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