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I would now like to turn the conference call over to the Chief Financial Officer of BBSI, Mr. Jim Miller. Please go ahead, sir.James D . Miller Thank you, Erin, and good morning, everyone. As you saw this morning we issued a press release announcing our agreement to repurchase approximately 3 million common share or roughly 30% of our outstanding common shares for $59.7 million. As a result of this transaction, we will acquire approximately 2.5 million shares from the Estate of William W. Sherertz, which represents all of the shares held by the Estate, and 500,000 shares from Nancy Sherertz. We intend to purchase these shares due to a combination of $24.9 million of cash and the remainder in nonconvertible, non-voting, redeemable preferred stock for an aggregate purchase price of approximately $59.7 million or $20 per share. Following the completion of the transactions, we expect to have approximately 7 million common shares outstanding, $56.9 million in cash and investments and 34,800 shares of nonconvertible, non-voting, redeemable preferred stock outstanding with a liquidation value of $34.8 million. The nonconvertible, non-voting, redeemable preferred stock will not have a trading market. The initial preferred dividend rate of 5% per year and is payable at the company’s option in cash or additional preferred shares. The dividend rate has an escalation cost or by the rate increases by 2% each given in April 1, 2013. So for example in the first year, the dividend is 5%, which escalates to 7% in the second year and 9% in the third year and so forth, and solely preferred stock is redeemed by the company. During the year one, the dividend equates to approximately 1.7 million annually or 435,000 per quarter through March of 2013. The preferred stock dividend will have similar characteristics of non-tax deductible interest expense. The escalation in the dividend rate encouraged the company to explore other potential sources of financing, which we intend to pursue.
Following the transaction, our total debt-to-EBITDA using a normalized 2011 EBITDA will equate to a ratio of approximately 2.3. Our current ratio is approximately 1.3x and our debt-to-equity ratio is approximately 0.8x.Now, I would like to turn the call over to the CEO of BBSI, Mike Elich, who will comment further on the share repurchase transaction and I believe that we’re well positioned to drive shareholder value throughout 2012 and beyond. Mike? Michael L . Elich Good morning and thank you, Jim. I wanted to thank all of you for getting on the call this morning. I know it’s a quick turn. I wanted to take time this morning to just expand a little bit on the detailed comments that Jim made by asking a couple of questions that I’ve had to answer for myself over the last few weeks or months. One of them would be why do we do the purchase? When we look at the current market valuation, the available strategic options for the company, and the level of capital and existing cash flow and we believe that this purchase of shares the majority of which have been basically out of the public float was an attractive investment for all shareholders. Now, the second question for me was why did you pay a premium? This was not a transaction that could be accomplished empowered or for a company of our size and daily volume. Based upon our internal operating plan, extreme analysis that we did, projected cash flows at a cash balance, the board and management believe the $20 is a good price and transaction will be accretive to all shareholders. The third was, how does the proxy fight play into this decision. And I’d like to say that the proxy fight itself did not quite drive our decision to repurchase the shares. If anything, it was a mirror catalyst to bring all parties together to reach a mutually agreed upon outcome, which I think is best for all shareholders. Read the rest of this transcript for free on seekingalpha.com