Pam Testani - Investor Relations Craig Farr - Chief Executive Officer Mike McFerran - Chief Operating Officer and CFO

John Hecht - Stephens Daniel Furtado - Jefferies Joel Houck - Wells Fargo Scott Valentin - FBR Capital Markets Lee Cooperman - Omega Advisors

Thank you, Harry. Welcome to our third quarter 2013 earnings call.

I’m joined by Craig Farr, CEO; and Mike McFerran, our COO and CFO. As a reminder, we’ll be discussing forward-looking statements on today’s call, which are based on management’s belief.

These don’t guarantee future events or performance and are subject to substantial risks that are described in greater detail both in our SEC filings and in the supplemental information presentation posted to our website. Actual results may vary materially from today’s statements.

We’ll also refer to non-GAAP measures, which are reconciled to GAAP figures in the supplement. I’ll start with some third quarter highlights and then I’ll turn it to Mike and Craig.

With Craig taking over a CEO of KFN last quarter, we have undertaken a review of the business. Craig and Mike will give you a fresh assessment of where we are today and where we’d like to go from here to drive value for our shareholders.

This afternoon we reported third quarter net income available to common shareholders of $33 million or $0.16 per diluted common share. This compares to $79 million or $0.39 per diluted common share for the second quarter.

The largest driven of this decline were lower level of investment gains than in Q2, as well as the fact that we took an incremental provision for loan losses. At the end of Q3, our book value was $10.42 per common share, up from $10.41 at June 30th.

We had a very good quarter for capital deployment across our strategies, leaving us with $222 million of cash at September 30th, down from $508 million at the end of Q2. Our Board of Directors has declared the cash distribution of $0.22 per common share for the third quarter, which is up from $0.21 in each of the last five quarters.

The distribution is payable on November 20th to common shareholders of record as of November 6th. And finally for those who haven’t seen, we’ve begin posting trustee reports for all of our CLOs to our website.

Many of you have asked for more details on the CLOs and how they amortize, they having monthly data on their performance should be helpful. And I’ll now pass it to Mike.

Thanks, Pam, and thanks everyone for joining our call today. I’m going to cover a few topics, first, this quarter’s results and our earnings trajectory, second, where our portfolio is today, third, our capital deployment and liquidity position, and finally, I’ll spend a moment on our distribution and taxation.

Starting with the results, our third quarter net income available to common shareholders was $33 million or $0.16 per diluted common share versus $79 million last quarter or $0.39. It’s easier to understand this decline, if you think about things in terms of run rate and then gain-related earnings.

Our run rate earnings this quarter [surpassing] everything gains and incentive fees, $0.13 a share or $0.18 if you add back the impact of the loan loss provision we talk. Decline from $0.23 from the second quarter to an adjusted $0.18 this quarter is largely attributable to fewer prepayments in the third consistent with the broader market.

We had a $666 million of prepayments on the par base of $6.7 billion in the second quarter versus only $122 million on the base of $6.5 billion to the third quarter. That was $11 million of the $12 million decline in our interest income from the second quarter.

On the gain-related side, we had $0.03 per share of other income for the third quarter versus about $0.18 for the second quarter. These earnings had come from two places.

First, gains embedded in our bank loan high yield bond portfolio, which have largely resided in our quite KKR Holdings and second, mark-to-market or exits on our total return-oriented strategies, as well as hedges and foreign currency. We have been exiting our quite [KKR] positions.

Many of which we held far below par and that was around par, which has driven material gains in the last few years. But the portfolio has turned -- has turned over now and only minimal embedded gains that portfolio today.

So that source of gain-related earnings has run scores. Future gains will come primarily from our special situations, real estate and private equity strategies, which only makeup about $350 million of our $2.1 billion net equity base today.

So while we do expect gains to be a regular part of our earnings in the future, there will probably be a lesser degree that we have seen in recent quarters. And as I mentioned, we did record a provision for loan loss in this quarter, raising our allowance by $9 million to $213 million.

Our held for investment loan portfolio grew from $5.6 billion to $5.9 billion during the quarter, largely through our ramp-up of CLO 2013-1. So this provision keeps our allowance in-line with June 30 at 3.6%.

We have had one default in the last call, Longview Power, which we hold by $50 million cost in our CLO. We have previously impaired this position in an anticipation of the default and hope to now get a reserve against it based on its current market value.

We ended the quarter with book value per common share of $10.42, a slight increase from June 30th. This reflects a 6% total return on equity for the third quarter.

Part of this lower return on equity which is down from 15% last quarter is that our gains are normalizing. But this quarter’s results are actually below our ongoing expectations because of the provision we took and the fact a lot of our real asset holdings have ran to their full income generating level yet.

Let me go through our current portfolio to understand how we view the outlook for each of our strategies. At a high level, everything is tracking well, except the portion of natural resources portfolio.

Even there we think downsize of cost recovery are little better. Our CLOs are performing quite well.

Collectively, they’re still generating a 15% annualized cash yield for the third quarter, while these structures do most of our CLOs are winding down. About $1.2 billion of the $1.5 billion, we have deployed the CLOs are in pre-priced deals, all of which will be amortizing by May of next year.

We are focused on capital, migrating capital to new CLOs to offset the one-off of the legacy warrants. We’ve done two new deals the last year and upsized another one, deploying about $160 million and we hope to pick up our issuance pace from here.

Our mezzanine and special situations assets have also done extremely well. These opportunistic credit holdings are less cash flow heavy than the CLOs however.

So, while we expect the low to mid teens returns on this capital on the aggregate, there is definitely a gain components with these assets. Our private equity assets are on track, but they are smaller part of our book will be very launch on holdings.

Until we see exists, they’ll contribute mark-to-market gains and losses from quarter-to-quarter but no recurring income. In natural recourses, the picture is quite bifurcated.

Exploitation, which involves proved assets producing multi-natural gas and natural gas liquids is underperforming our expectations. Our other two streams have performed according to plan.

These are Development, where we fund the drilling of oil heavy properties and Royalties where we have the rights on revenue share in certain acreage if the gas produced. In Exploitation, we haven’t been able to go much out of our assets as we’ve underwritten in large parts lower natural gas and liquids prices.

Result of that excluding the unrealized mark-to-market impact of our hedges earnings have been flat for the last few quarters. On the cash basis which would add back non-cash depreciation expenses, we are seeing some income $4 million to $5 million in each of the second and third quarters of this year.

While this is what we hope for we think that downsize is reasonable that we get our money back with low single-digit returns plus embedded auction on natural gas prices. In the meantime, we’ll try to maximize the value of what we have by reducing expenses.

Development and Royalties are contributing positive GAAP and cash income at this point. Royalties will probably slowdown mid next year.

While Development is continued to grow, oil prices remain strong. Next our real estate strategy which as of quarter end we are deploying approximately $147 million to nine investments.

We’d expect to see some recurring revenue and cash flow from this portfolio starting in 2014 really ramping up in 2015. Because of the nature of these assets though, a good portion of our expected mid-teen return is likely to come through mark-to-market gains and exist the positions.

So that’s our current portfolio. Moving on to capital deployment on liquidity, we ended the quarter $222 million cash versus $508 million at June 30th.

Needless to say, it’s been the strong quarter for deployment. I went through few of the key transactions and also our current commitments, which we believe are likely to account for the rest of our cash on hand.

We upsized CLO 2011-1 by $300 million, this has given an additional $75 million from KFN and a $225 million increase in the loan facility provided by the third-party. This upsize enables us to pull on the life of a highly attractive and opportunistic structure that’s generated approximately $0.15 annualized cash returns since its inception.

Next, we have committed $150 million to a new company called Maritime Finance. We’ve backed an experienced team to run to new Maritime assets.

The idea is to make distributions to equity investors like KFN from the asset yield, many management fees the team earns from investing third party’s money and these assets. We funded $84 million so far and expect to remain to be funded over the next 12 months.

You will see this sharpen our private equity strategy for the time being, even though it was in the long sight of KKR PE fund since it is an unconsolidated equity stake. In real estate, we deployed $44 million in the third quarter, $34 million of which from the three new investments.

This included a $19 million investments in the shopping center portfolio in the U.K. and another $9 million investments in office building repairs.

We expect to fund another $45 million to $50 million to existing assets over the next three, six months. Through our natural resources strategy, we deployed $57 million, $33 million of this was through new drilling partnership with EXCO Resources, an exploration and production company to acquire and develop acreage in the Eagle Ford Shale.

In special situations in mezzanine, we deployed about $70 million to new opportunities, net of proceeds for sales during the quarter. We’ve also identified specific opportunities in these strategies, which we think will require up to an additional $100 million of capital deployment before year end, though these opportunities haven’t climbed up yet.

In addition, we have capital till March to fund between $200 million and $240 million to existing natural resource commitment. This includes about $135 million to existing drilling transactions and $50 million for our royalties’ joint venture, which we expect to play over the next few years.

Finally, our Board acquired a $0.22 per share on cash distribution to common shareholders for the third quarter, which is a $0.01 increase from the past five quarters of $0.21. I do want to spend a moment on our distribution in relation to taxes and our corporate structure.

The increase for distribution this quarter is clearly a positive. But even more positive is how the distribution looks relative to tax flow income.

We think this measure is important, more important than the absolute number since taxable income, not distribution is what our shareholders pay tax on. Year-to-date, our total taxable income is running lower than last year.

Our per share taxable income is further reduced because it’s spread across 15% more common shares than last year since we used common shares to retire our 7.5% convertible notes during the first quarter. Despite this, our years-to-date per share distributions has increased.

So all else being equal, long-term shareholders should be on track this year to keep more of their distributions than the tax they will pay when they receive our K-1s. In terms of our corporate structure, as you know we are a PTP or publicly traded partnership.

This provides the benefit of a single layer of taxation similar to what according to REITs and BDCs but without compromising our flexibility, the way those structures would by restricting our holdings, leverage and capital retention. The trade-off is that our shareholders do get K-1s.

We know this adds complexity to people’s personal taxes compared to 1099. However, we do want to maintain a single layer of taxation and our business model flexibility in a structure without K-1s.

However, there is no readily available alternative that accomplishes first. So given our strategy today, which pave the way out, we do still think this is the best structure for us.

And with that, I’m going to hand it to Craig.

Thanks, Mike. I talked about the quarter of the way we perceive to be keeping strengths, as I took over to CEO soon.

And to begin with, we have extremely long live liabilities and no mark-to-market value including our revolver, so we have an enviable capital structure as starting point. We also have a stellar portfolio of assets as you heard from Mike.

Having spent some time in the business, I feel comfortable with the diversification in the risk profile of the assets at the funding structure. My job from here is to see here, how we deliver upside in the phase of the amortizing CLO you see in some of our results and the overall yield compression we see across all asset classes today.

We spent a lot of time thinking about that and it’s a very dynamic environment. In the process, we have spoken too many of you about a few key things.

First, we clearly need to be growing our cash earnings not just overall but per share, that seems to be challenging in the interest rate environment and legacy CLOs amortizing is how meaningful they are to our earnings and cash flow. Second, I hear from a lot of your stories, starting too complicated to be diversified.

But if that’s just a network, we would like to see a narrow set of core asset strategies in order to having a easier time involving earnings part of business. And finally, as Mike alluded to their complexities surrounding corporate structure, for example K-1s.

It’s clear to me that to get value in the market for KFN and KKR’s key strength, we need to address these points. For using the feedback to adjust accordingly, we are going to increase our capital deployments to more cash building strategies in order to deliver on this growing cash EPS.

We are going to narrow our new capital commitments to three main strategies instead of six, which should simplify the story over time and hope to get more recognitions in the market. And we really do our best to evolve the business to minimize additional complexities from a corporate structure and tax status.

We’ll clearly continue to refine our strategy in these coming quarters, but at this point the three areas we are focused on for new capital commitments are CLO equity, opportunistic credits and then a new, a related area, specialty financed lending. We feel confident we can find attractive return on equity opportunities in these areas because they are and we think they will be less successful by others.

We’ll start to see our reporting perform to these strategies in the coming quarters. CLO, as you know have historically been KFN’s bread and butter.

They generate cash starting very soon after issuance and they are easier to model and understand. These are assets that held up very well even during financial crisis.

And when I sit back and we are looking at the business and we look at the risk adjusted returns on CLO equity versus other areas today and it’s a still a very attractive asset class, with low to mid-teen returns to the equity for KFN shareholders. And the term non-recourse funding is also very appealing in this market.

So we are committing to be more active as a participant in the CLO market, both in U.S. and in Europe where KKR just acquired additional CLO management capabilities by agreeing to purchase Avoca Capital last week.

We think global risk retention growth that gives us a chance to more share in the space, a smaller participants from the new regulations to capital incentives. The second area, opportunistic credit will include our current mezzanine and special situation strategies, as we’ve talked about this is one place where we may have to avoid to agree a yield compression you see in liquid market.

It’s also a strategy that works well given KKR’s strong direct sourcing capabilities, bringing and filling a premium by participating in the [unique] liquid long duration opportunity. And finally, specialty lending.

With the new IFRS, one I’m very exciting about, as we’ve discussed there has been a pullback among traditional lenders against the long duration high residual value assets since the crisis, especially European banks. We think that presents a real opportunity for KFN.

In KKR’s network, we can find experienced teams in areas of high bearing entries and we can partner with them to lend against physical assets that generate the cash yields and give down debt protections. We’ve already seen several of these situations and executed in one of them, the Maritime Finance transactions Mike described.

Outside of these areas, we don’t expect to commit incremental capital to other strategies beyond some of our existing commitments to natural resources and real estate unless we see in a specially differentiated situation. That’s should leave us with more cohesive and narrow business model, more natural comp sets than the market analyze over time.

Finally, we encouraged your views in our partnerships structure related in K-1 and tax treatments. We’ll continue to look for good ways to address those issues, so we can do it in a way that complements our strategy and a net return for all the issues is positive.

Hopefully, this gives you a better sense of how we see the business today. While, our third quarter results are clearly disappointing and below our expected run rate earnings, we feel confident we can position KFN for recording growth in the upcoming years and I’m pleased our Board has supported that view by raising our distribution this quarter.

Thanks for joining us this evening. We are happy to take any questions you have.

Afternoon. Thanks for taking my question.

Just a couple kind of household kind of questions for the model. First is, do you guys have the -- either the sure value or economic book value versus the recently reported GAAP book value?

We -- not handy, John.

Okay.

But we can just close that.

Okay. Next, so I guess -- when I’ll call you on matters you get better in the next few moments you can provide us, it’s not that important.

And the second question you have it is, what was the discount accretion in the quarter? Do you have that handy?

Discount accretion from prepayments was pretty anemic at about a $1 million.

Okay.

That compares to $12 million from last quarter.

Yeah. Okay.

Moving on to more kind of strategic questions. You guys had a lot of deployment in the quarter, sorry?

I’m going to interrupt you. Assume you’ve -- fair value over corporate GAAP holdings, adjusted book value would be $10.70 per share.

Okay. Great.

Thanks for that. Okay.

In terms of the deployment in the quarter, you mentioned your asset by asset but can you discuss the timing was just kind of balanced throughout the quarter? Was it late in the quarter?

I’m trying to just assess for what run rate earnings might be including the full quarter of performance of the new deployment.

Sure. The $75 million, we contributed to CLO 2011-1, which we up sided by $300 million.

That was done in the last day of the quarter. So there’s no impact on the quarter, just last quarter from that when you see it going forward as we ramped.

The Maritime deal, which we funded at $84 million of our $115 million commitments to, we talked about, that’s going to ramp up over the next year. And once that portfolio kind of hits this run rate, we would expect later ‘14 or early’15, it will start to begin generating or returning dividends to us, which we hope is not mid-teens range.

On the natural resources and commercial real estate front, those were done -- in fact throughout the quarter. But as you know, John, those have little bit mortgage acre for fast run and delay when we start receiving the benefit of income and cash flows.

And then, you guys -- it sounds like you are going to deemphasize other your remaining commitments, deemphasize natural resources. You are considering the commitments and the cash flows and I guess in-ground resources and so forth.

When would we see the peak cash flows and when would those start to kind of tail off or amortize, just with the right type of data we should be thinking about?

So on the natural resources, John, you will probably see that mid next year. On the commercial real estate side, as we mentioned in our remarks that we expect to see that where we kind of starting and had more of a recurring basis in early ‘15 with the pickup the second half of ’14.

Okay. And to be clear, you would expect that the peak of the natural resources portfolio middle of the next year then that would start to decrease over time.

Overtime. Correct.

Okay. Appreciate that.

Very much. Thanks guys.

Thanks John.

Good afternoon. Thank you for the opportunity.

I just had a couple of questions trying to figure out this bank loan and high-yield strategy. The performance quarter-over-quarter, excluding other income, it looks like revenue or income is down about $17 million.

I’m just trying to get a handle on, is the $11 million you were talking about in the prepay income that didn’t come true this quarter part of that $17 million and the accretion to delta or how should I think about that $17 million decline considering that the portfolio balance is up quarter-over-quarter?

Daniel, $11 million is part of that. So that’s the key component, which is, one, you have seen the portfolio turnover over time.

And the actual portfolio spreads is tightened but what’s most noteworthy is we saw $666 million of prepayments in the second quarter and a little over $100 million this quarter. So that’s 80% drop.

So this is the lowest level we’ve seen in quite some time as a result of that level of prepayment is pretty anemic on $1 million. So that would be the driver of that decline we’re referring to.

Okay. And so I guess, looking forward, I mean, the tenure come in this quarter so arguably there is more prepayment activity but in a rising rate are consistently moving higher environment.

I mean, is the right way to approach this to back out $11 million or there whatever the ratio happens to be between assets in that prepayment income on a go-forward basis if investors are assuming rates are going up or -- how do you I think about that. I mean, was this $11 million or thereabout pretty consistent in the past and at a rising rate environment, does that come out moving forward?

It’s a great question. Over the last couple of years, that number is varied anywhere, let’s say, $5 million to $12 million on average.

So I would definitely not ignore it. If I look at the recent portfolio today, you’ve got $100 million difference between par and cost basis of the assets that needs to be accreted in on a portfolio where leverage loan, you’d assume the average life for them is four years.

So if I do that math, obviously straight line, that’s going to be $25 million a year or about $6 million a quarter which would not be too different that kind of a historical norm for us, really independent rates because the fact that loans usually aren’t accompanied by a prepayment penalty, they still get paid off.

Okay. I got you.

Thank you for that. I appreciate it.

And then I think -- another question, when you think about the CLO de-leveraging, if you look that there is a chart you put in here, the figure, Page 13 where you kind of show the current quarter cash receipts, the interest receipts is like a 3-ish million dollar change there. Is that the way -- is that the best way to kind of track from a higher level of the de-leveraging effect that’s going on in the vintage -- in the CLO book?

Yes. I mean, that -- the cash is obviously driven by two things.

But the CLOs are amortizing. Clearly, the biggest volume is going to be amortization and for the other deals that are in reinvestment especially whether they are reinvesting into a wider or tightening spread in items of another variable.

But when I look at 2005, 2006 deals and 2007, 2008 which are all amortizing that’s the best indication of seeing that drop-off.

Okay. Thank you.

And then finally, one other higher level question. So if we assume rates are moving higher, prepays are slow and so on one hand, you are not going to be getting that prepay income on the revenue side but on the other, couldn’t you argue that the CLOs were de-levered more slowly because the principal payments would be coming in more slowly because of higher rates.

Great observation. Completely agree that -- if I had to pick which one we prefer, we’ll take the slower prepayments and extending the life to our legacy deals.

Understood. Thank you for the responses.

Absolutely.

Thanks, and good afternoon. One of you guys could maybe talk about the -- perhaps the inflection point is in interest income, I mean, you guys deployed capital this quarter, corporate loans went up about 9% but interest income went down, I guess, largely due to amortization.

Can you talk about how we should think about the inflection point in terms of the capital being deployed in the future versus kind of slowdown in prepayments?

I think you hit it on. There is going to be a balance of us putting capital to ramping up, the new capital we’ve contributed to CLOs like level 1, ramping up future CLOs which as Craig mentioned is a key focus for us and the pace of amortization with your deal.

I like to think we’re currently around that inflection point today. However, the target is to time that perfectly.

If I were to look ahead, I would expect run rate on that portfolio to start increase over time.

Okay. This certainly should be favorable metric in 2014.

Is that fair?

That considerably be our objective.

Okay. And then I guess, the second question is maybe talk about the types of returns you are expecting in the maritime finance strategy?

Yes. Joel, I can talk.

This is Craig. I think the -- what we’re seeing there is the management team is able to put out loans at -- on LTV basis, about 65% loan-to-value and cash yield anywhere from 10% to 12% on an un-levered basis.

And then we do believe as we accumulate that portfolio, we’re going to attract portfolio-based leverage against the advancing company and it could generate returns on a levered basis from the high teens.

Okay. Great.

Thanks guys.

Thank you.

Good afternoon, and thanks for taking my question. Just kind of high level question in terms of returns, as you move from kind of a long tail, maybe more residual type of investments particularly of a high return to more current cash type of investments.

Did your -- you're seeing return bogeys, I think 10-year charge close to 1000 basis cost. Did that change at all with the new kind of investment mix?

I think it’s a great question. I think it’s -- I think the (inaudible) we’re going to balance those two things that we are shifting today and may have been a little more aggressive on CLO activity and try to get that cash yield up in the near term.

That’s still very attractive return, still place some of that on a more detailed opportunities like, especially finance side. But yes I do think maybe you come down a little bit onto your point on that overall expectation and a 2.5% rate environment given the yield compression keep us at 1000, that’s probably a big expectation in cash yield in this environment.

That doesn’t mean again your five-year period is not reasonable. But I think -- I think in this environment what you’re hearing from us is we are going to focus on growing our cash distribution which may put a little pressure on that total return.

Okay. Thank you.

Let me first apologize. I have been in a meeting.

So I just walked out. I did not hear about 98% of your formal presentation.

So I apologize if anything is redundant. But just have a series of questions, if you back out the non-recurring earnings -- the non-recurring charges, what was the ex run rate of earnings in the quarter back at unusual items.

Again, I apologize you may have covered all this, but I have a series of questions that all are linked?

It was $0.18, Lee.

So the non-recurring was only $0.02 but you reported $0.16?

Yes.

Okay. So if I take $0.18, I multiply that by 4, you would have run rate of earnings of $0.72.

Based on net quarterly that’s correct. I think as Mike mentioned, we put in more capital pretty in the quarter that -- which should help grow that over the upcoming quarter that wouldn’t really inflate at this point.

And then we had the loan loss provision and some of the amortization discount that was unusually low this quarter.

Lee, to add on to Craig’s point. If you look at our cash on hand at quarter end, the amount of capital that’s kind of falling, we’ll call it a J-curve earnings effect being deployed.

We are not yet provided earnings contribution. Our total amount is about $600 million.

$600 million that was unemployed at the end of this quarter or the prior quarter?

$600 million of cash as well as capital that’s already been deployed but for which -- the time lag on the period will actually start earning income from it. So a good amount of our capital is actually not providing earnings contribution today, that’s $600 million.

Right. So if I put a 10% return on $600 million, would that be reasonable?

I think that would be reasonable.

You said $60 million and again I didn’t even read the release, what’s the share count now, 200 and something shares?

Yes. 204 million.

That would be called an extra $7.5 a quarter.

Okay. And so, okay, and then something I said, I think, to is contraindicated, you said that you wanted to grow the distribution which would put pressure on your spreads, why is that?

Yes. I think the question was when you think of total returns versus cash, I think -- what we are saying is with the CLO equity we -- and now we have deployed today natural resources in real estates, those maybe higher total return strategies but we are -- got to shift a little more into higher cash yielding strategy to ensure that we have the adequate cash flow for dividend growth.

I got it. So basically, if you put the $600 million to work, looking at year from now, assuming no other profits crop up, you are like dollar-to-dollar slide kind of earner which would basically be a 10% or little bit less on GAAP book value -- the 10% ROE business?

Is that fair?

Your math is very reasonable, Lee.

Okay. So I think this is a little bit less ambitious than we have been, so 10% ROE we generate earnings a little over dollar.

You bump the dividend to $0.88 rate. So you are only retaining a very modest amount.

Let’s say you are returning -- retain 20% of your earnings on a 10% ROE, so you could finance the growth rate a couple of percent?

While the other aspect, Lee, is there are a couple of things. One, our leverage is under 0.3 times.

So frankly with our credit ratings, the debt capital markets are still available to us. But if we rate -- our average borrowing rate today is a little over 7%.

So assuming we put a lot of more money, something above 7%, this could be accretive to both cash and income.

Yes. We certainly have the strategy -- capital on the ground with higher expectations obviously than a 10% return whether it’s some of the natural resources, some of the real estate cash or even some of your Maritime Finance that I just went through.

So I do think there is -- there is -- we see the growth profile as Mike mentioned some of that capital may take time to like into do that -- that return profile.

Okay. And I know that the Board probably were very low to be in a position to cut the dividend again.

We went through that period in ‘08, ‘09 et cetera. So I assume that the dividend of $0.88 you guys secured based upon the business outlook as you see it?

Lee, we want to speak for the board but they clearly made that statement and wouldn’t -- wouldn’t be raising the dividend, they didn’t have that deal of choice.

So just using round numbers, an $0.88 dividend and divide that by -- do that by 11, let’s say, just being optimist. That’s an 8% return and maybe you get 2% to 3% growth and so it’s 10% to 11% return vehicle in a world of zero sure rate and 2.5% 10-year government, something like that?

I think that’s certainly I look at it and I think to get your point. You have to look at the risk profile.

I think we are still very good about the downside protection in diversification and zero point when you look at relatively risk rewards, it makes down but it’s not a huge return, but I actually think in this environment it’s such a very reasonable expectation.

Okay. Very good.

Thank you very much. I think that’s all I had.

Okay. Thank you very much.

Again, I am sorry, I missed the call by. I will listen to the replay.

Thanks Lee.

Yes. Thanks Lee.

Thanks for coming.