ALLETE Inc (ALE) 2002 Q3 法說會逐字稿

))Operator: Good day everybody and welcome to the a heat 3rd Quarter Allete 2002 conference wall. Today's call is being recorded. The line will be muted for the presentation, then we will follow by a Q and A session. At that time you can press the star or # key followed by the digit one to single you have a question. This conference may contain forward looking statements within the meaning of federal security laws, including statements concerning business strategies and their intended results as well as anticipated events and expectations that are not historical facts.

These statements are made pursuant to Safe Harbor to Private Securities Litigation Reform Act of 1995. The forward looking statements in the earnings release distributed this morning reflect management's best judgement at this time. All such statement it is are subject to numerous risks and uncertainties which could cause actual results to differ materiallyfrom those expressed in or implied by the statement they're in.Additional information concerning potential factors that could affect future financial results is included in the company's annual report and with the company's filings with S E C. Iwould like to introduce the Chairman, President and Chief Executive Officer, Mr. David G. Gartzke please go ahead sir.

))David Gartzke: Thank you good more than everyone with me again is Jim Vizanko. This morning we reported 3rd quarter earnings per share of 55 cents compared to 47 cents last year. Our year to date earnings, exluding exit charges are $1.51 compared to $1.50 for the first mine months of 2001. The press release covered details of financial results, So I'm not going to spend time rehashing or going over them now. However, I would like to make some comments related to the automotive services side of our business before we open to your questions because I'm sure you're interested in that. That at automotive services, our quarterly income was up 3.5 million over last year for the quarter. The number of cars sold was slightly up over last year, but it was below our expectations due to the program of rental cars that we talked about before and also due to the zero percent financing on the 2002 new cars. This isn't new news.

Our conversion rate of 53 percent for the quarter which was about the same as last year but again, it of lower than our expectation for the year. Turning to the 4th quarter, we did not expect to see the auto manufactures continuing or extending this zero percent financing on to their 2003 vehicles. This extension of incentives depressed the price of used cars even more than the 2002 insensitive and has impacted our conversion percentages since the sellers don't immediately accept these lower wholesale prizes. We call it no sale minicars which is simply moving them through the lanes and not accepting the lower price and we incure the cost. Conversion percentages at the U.S. auctions for the 1st 3weeks of October have fallen to about 50 percent, which is the lowest the industry has experience in recent years except for the few weeks following 911 last year.

In our percent, decreases in prices like this generally have a short term negative impact on conversion percentages and usually sellers accept the whole sale price adjustment and begin selling once again. Once this occurs volumes increase and pent up inventory is sold I need to mention this pent up inventory does exist. Our lots at our auctions are full. This is what happened last year. As a result of lower volumes sold at actions in the past three weeks, we now expect automotive earnings growth for 2002 over 2001 will be less than the 30 percent that we mentioned at beginning of the year. This will result in our earnings per share guidance that we mentioned last month probability being at the lower end of the estimated range of the $1.80 to $1.90. However if sellers sect of price adjustment or if manufactures remove the zero percent financing on these 2003 vehicles, our earnings would improve. That concludes my comments. Jim and I will take your questions.

))Operator: Thank you today's Q and A session will be conducted electronically. you may ask a question by pressing the star key followed by one on your touch town phone. Once again star one to ask a question. We'll go now to Walter Kirchberger with UBS Warburg. ))Walter Kirchberger : Good more than everybody.

))David Gartzke: Good morning.

))Walter Kirchberger : I really have a couple of questions. First you addressed conversion ratio issue. I looked quickly through the last 3 or 4 quarters Overall, despite ups and downs and concerns that were relatively short lived, your year over year comps in most quarters have been pretty comparable. So I'm wondering if that's -- everybody is being a little alarmist over the clearly disappointing first few weeks of October and perhaps you might address the significant impact of zero percent financing on the rental fleets that are trying to sell current model cars. The other part of my question relates to the whole water sale issue. There has been a lot of stuff in the press, particularly in Florida, questions about the nature of competence, ability, financial strength of the buyers if you being address all that for us.

))David Gartzke: Are you finshed?

))Walter Kirchberger : I'm finished.

))David Gartzke: Okay to address your first question, if I can remember what it was. Explaining the math, I think we have to go back to the beginning of the year when we gave guidance for the year and we expected the rental or the program cares to recover faster than they have and they haven't so we've experienced flat volumes but we were hitting expectations, the conversions were strong, the captive finance, the fleet lease returns and dealer consignment volumes wereall up, so we were getting off set necessary terms of bottom line performance. We're really pleased with performance of efficiency. They've all done well,being able to stay on bottom line growth target in spite the program card. But looking at the simple math, When you have conversions that fall to 56 to 50, or a three week period at this stage of the year, six percent or say two sales or 56 sights is a lot of income that probably will turn around once the cars are released, but again, we're very close to the end of the year so that may occur as 2003 and not 2002. You may say it's conservative but we want to be sure just like last year that the market has access to the same information that we do. To the second question with respect to the ability of the modest sales, Jim would you take that question.

))Jim Vizanko: There has certainly been a lot in the press, the counties are certainly not pleased with losing their transaction and having us sell to another party. To date, they have not been any lawsuits filed against us. Obviously we're reading what's in the press, but we expect our transaction to close for targets a December 15 closing of the bonds and receipt of our first payment.

))David Gartzke: So there may be a lot of noise in the press, but we feel confident that we're on track and this is certainly something that's in the best interests of the public, the customers and the shareholders and we expect to get it done this year.

))Walter Kirchberger : Okay. Well, let me go back to the auto thing for a minute. I certainly am confused by it and I spend a lot of time on it. In the 2001 4th quarter, which was clearly significantly impacted at least at the beginning of the quarter to the e cents of 9/11, you ended up the quarter with 54.5 percent conversion rate which was better than the prior year. I'm not trying to put word necessary your mouth or increase your internal estimate but I wonder how significant a few weeks results are. You indicated your lots are full and it's expensive for the owners of those vehiclees to hold them. Realistically, can they hold those vehicles without sis cant cost pent in o flee. Apart from everything else, snai depreciate every day and dollar's an interest expense, another holding costs of keeping them.

))David Gartzke: Your correct Walt. We looked at that and relative to last year, at least from the information that we have access to, because of interest rates, perhaps that holding cost isn't as high as last year but you're right. Essentially, we would expect them to release those cars. The question is when.

))Jim Vizanko: One thing that was different last year than this year is last year there was a defleeting (ph) of the rental cars that the timing this year is uncertain. What happened last year is we got a lot of influx of rental cars.

))David Gartzke: That is the point we were making with respect to the program cars for the year.

))Walter Kirchberger :I'll get off and let someone ask a question.

))David Gartzke: Thank you Walt.

))Operator: Next question from Mark Linnenburg (ph) from Town Capital (ph).

))Mark Linnenburg (ph): I'm here.

))David Gartzke: Good morning..

))Mark Linnenburg (ph): Hey, just wanted to ask you, I know the conversion rate is down, how about the actual units running through the lane?

))David Gartzke: The cars consigned (ph) are very close to what we expect for our -- the amount of cars sold that are due to the conversion rate, not due to less cars consigned.

))Mark Linnenburg (ph): Can you give us an idea on samestore basis or relative to last year how many cars are going through the lanes.

))David Gartzke: Compared to last year, the cars consigned (ph) are down. But compared to our expectations -- last year we had more cars coming through than what we were expecting this year.

))David Gartzke: On a year to date baize that of my first comment and we have been talking about there through the year, that the volume of cars that are consigned and sold from dealers is up. The number of vehicles from your fleet lease accounts is also up. The captive finance G M A C and Ford motor credit is up. The programs Jim is referring to are off significantly for the entire year. We're expecting them to refleet (ph) and begin their normal turnovers.I think that is going to only happen about the economy refers and the demand for rental cars are back to track.

))Mark Linnenburg (ph): Thank you.

))Operator: Reminder to ask a question, star 1. We'll go next to David Parker with Robert W. Baird

.

))David Parker: Back to the water sale operation could you give us a milestones as we prove towards closing this transaction, particularly with the buyer that we can watch for to get a sense of this progression. I don't know if there's something noteworthy that can go along with approval of them being able to get the bonding. I think also there is a lot of question about the condemnation threat, is that real or is that strong talk from papers type of [inaudible]

))David Gartzke: All we can say at that point David is there are a lot of threats and very little action being taken. Certainly the party that we were negotiating with is not pleased with this transaction and is threating to do a lot of things. With respect to the progress internally on bonding et cetera we are not at liberty to disclose those detailes ass you might imagine. As we can say is we still expect to close on target, which Jim mentioned was the 15th. We're on track to the best of our knowledge. If we weren't we'd say so. I don't think we -- certainly we expect to be sued. They have been threatenning to do so. We have been anticipating that, but we have been told by counsel that everything is legal this. It's the best interest of the people. Given that, I think we're are on track for the transaction to be closed.

))Jim Vizanko: I think as far as file stones obviously we have an aggreement with the buyers so that's all completed. It's a matter of completing the bond work, completing the indenture and details of the bond work and then essentially sell the bonds.

))David Parker: Will we know prior to the closing the sale that the bonding and being able to get that accomplished will be done or is that going to be a simultaneous news event.

))David Gartzke: I think we will expect December 15th and we'd announce bonding and our receipt of the cash.

))David Gartzke: Sounds simultaneous.

))David Parker: Yeah. Let me see, back to -- the autoauction business. Two weeks being week, I assume you would be as aggressive letting us know things have slow immediate October but we see a turn around as we saw last year as aggressive at getting information as well.

))David Gartzke: Absolutely.

))Mark Linnenburg (ph): Thank you.

))Operator: Next request is George Rufus (ph) with Angela Cordin and Company..

))George Rufus (ph): Good morning could you give us an idea of what time of assumptions that you guys are making for the automotive business give this morning's earnings guidance?

))Jim Vizanko: Assumptions what level of detail are you looking for.

))George Rufus (ph): Are you assuming that the conversion rates stay at these levels or are you still assuming a higher number? What is the dollar 80 which is basically the lower end of the guidance assume.

))Jim Vizanko: Well, all we can say is that the normal conversion ralles that we're experience inside the past have relative to the 3 weeks that we just experienced kind of fallen off the table from 56 to 50. To the extend they can recover to 53, 54 for the quarter, then we would expect some uptake. Obviously if it continues, as it is right now to the end of the year, I think that's the point of our notice that we would see at the low end of the range for the company. We are uncertain and as to what the conversions are going to be as it extensions into the month November and we have the holidays necessary front of us. Last year, we were in the same situation they released the cars at the of the year and we ended up at 54 percent. But we're not in a position to tell you what our assumptions are, thattie exactly to an earnings number. We're giving a pretty tight range for your expectations and I think we prefer to leave it at that.

))George Rufus (ph): Internally are you able to figure that out for yourself as far as can you put that assumption into a model.

))Jim Vizanko: Absolutely. It's not did difficult to calcluate ifthe conversions increased by one percentage point, but again we don't disclose that and we don't give you an picture number that relates to a specific conversion percentage.

))George Rufus (ph): Could you also talk about the utility business and how that went this quarter.

))Jim Vizanko: The utility business, I think we gave some adjustments a month ago relative to expectations are were for the utility business for the months of July and August. Unfortunately we get our expectations and that was the reason for revised guidance. It came in relatively close to last year but keep in mind we added the coal facility of ALTV (ph) and (inaudible) to our portfolio so our expectations were certainly higher than our performance was period of time for the quarter. I might expand on that by simply stating that we have to keep in mind that the value of these assetes that we acquired is still what we expected it to be. They're very low cost with respect to their dispatching cost. The market was extremely low, which had a significant impact on us. But it met the same performance that we had last year and it certainly met the expectations that we had after our revised guidance much, but going forward, we're confident that they'll be able to fit hit our expectations and guidance we're giving you.

))George Rufus (ph): So the trading operation and the -- I guess nonutility, so to speak, assets did not lose money this quarter.

))Jim Vizanko: No, no we did not.

))George Rufus (ph): And as far as the assumption for next year, what are you assuming for utility, those assets.

))Jim Vizanko: We're not in a position to provide guidance for next year. We're in the planning process as you might imagine and it's a pretty rigorous process between now and the end of the year and we have ourstrategic discussion for the board and we set direction following the January board meeting, but we're not in position to begin giving guidance for next year.

))George Rufus (ph): Just 1 more question, given where the stock price is, are you considering share repurchases.

))Jim Vizanko: No we are not.

))Operator: Anything further.

))George Rufus (ph): No thank you.

))Operator: Next to Allen Nickles (ph) with Kur Marbock (ph) and Company.

)) Allen Nickles (ph): You mentioned in the firstst three quarters that the financingshad been help being off set the lower cars. How is that half gone in the first three weeks of October. Also with the cash that you'll be receiving from the water, are you nearing any additional salvage purchase.

))Jim Vizanko: The results from AFC are exceeding our expectation and helping us like in the past and continues to do so today. We continue to explore salvage opportunities that's not changed. And with respect to the contributions of Salvage (ph), the contribution to salvage in Canada continue to out perform our expectations the Salvage (ph) contributions from salvage (ph) in the U.S. has been hampered by weather. It impacted our competitor so the contribution for the year from salvages (ph) isn't as high as we expect it to be. If that answers your question.

))Allen Nickles (ph): Thank you.

))Jim Vizanko: Of what the question on water.

))Allen Nickles (ph): With the water, the proceeds from the water, would you be looking at making more salvage (ph) acquistions with that.

))Jim Vizanko: Certainly that plus funding other initiatives for all of our businesses.

))Allen Nickles (ph): Thank you.

))Operator: Next to Gary Steiner (ph) with Awad F Etmanagement (ph).

))Gary Steiner (ph): Good morning. I have a couple of questions. Just a follow up on one of the questions that was just asked relative to the salvage business. You've not slowed the pace there because the water sale has been delayed over the court of the year have you.

))Jim Vizanko: No we have not. Keep in mind that the growth in the role up in the whole car actions that we have completed took 5 or 6 years. It's a patient process and the water proceeds are effecting the role up.

))Gary Steiner (ph): Is it not.

))Jim Vizanko: So don't read between the lines I guess is the short answer.

))Gary Steiner (ph): I guess I was just trying to maybe get some more clarity in terms of -- you guys have been talking about salvage for a while and the opportunities there.

))Jim Vizanko: And the majority of our acquistions are maybe 50 50 have been stock acquistions as well and we'll made them.

))Gary Steiner (ph): But you have been pretty quiet this year, sort of where are you in the process. Are you identifying candidate it is now? Is it a pricing issue where prices may not be as attractive as they were 12 months ago. Can you give some clarity there?

))Jim Vizanko: Well, we're continuing to explore a number of acquistion candidates. I don't want think there's been and change in that. Sometimes the negotiation process takes more than a week or two but nothing's changed.

))Gary Steiner (ph): Okay go back to the auto. I think I understand why your reducing guidance for the fourth quarter there given what you're seen so far. I'm not as clear on the shortfall in the third quarter. I had been assuming that auto will make $34 million more than it did. Are you saying that even though conversion rates were pretty flat year over year that you just expected them to be a lot higher.

))Jim Vizanko: Well we-

))David Gartzke: The conversion rates for the quarter and year to date were pretty much on to last year's numbers but our expectations were for higher conversion rates for the quarter and for the year.

))Gary Steiner (ph): When did the -- I had thought that conversion rates were running reasonably well for most of the quarter. Did you see a fall off in September? Is that where the impact was or talk about the trending conversion ratings the corner was just fine. It's the experience that we're seeing in October that we're reacting to. But the quarter for the third quarter was meeting our expectations.

))Gary Steiner (ph): Okay why did you in the quarter you.

))Jim Vizanko: It was hitting our expectation revised by the experience that we're had for the first half of the year.

))Gary Steiner (ph): Okay. Let me try this 1 different way. In the quarter you earned in autobusiness about 24 million versus 20.5 or so last year. So the rate of earnings growth quarter over quarter of significantly less in the first half of the year and I'm trying to get a sense of why that is given your full year guidance you know 20 per growth in auto without the change in accounting and 30 percent including the change in accounting.

))David Gartzke: I think we're still -- if you look to the year to date, our net income growth compared to last year was 33 percent and our original target was 30 percent. So we were -- you know we're within -- certainly exceed that 30 percent. Our expectations may have been more than the 33 percent, but we're still within our original guidance through year to date of the 3rd quarter at 33 percent net income.

))Gary Steiner (ph): Okay.

))Jim Vizanko: And there will be situations where quarter to quarter we may not get these annual expectations. I think that's normal for this industry. We try to look at the full year when we set these guidance i guidance targets and that what's were attempting to do with what we are experiencing in Octoer.

))Gary Steiner (ph): Okay. Can you make comment -- I know you just opened a pretty large auction in san fan, can you maybe San Francisco. Can you tell us how that's gone and what kind of investment you made and what kind of return you expect and so forth.

))David Gartzke: The store opened and I was out there with the grand openings -- with dealers in the lane that were significantly greater than we had in the other facility and that certainly is what our hope was. This facility is significantly larger. Significantly larger than the other facility. The other facility of selling for the past five or six years as many cars as it could possibly handle. It was turning business away. So, we by expanding our facility to accommodate two plus times the volume that we have in the other facility is what our expectations are.

It's in a great location, it's nothing to a freeway system that should provide very good transportation for the dealers. So our expectations are to have volumes that are 2 times 86,000 cars that we were selling at the other facility and the rate of return expectations on the incremental investment moving from one to another facility is [inaudible] company once the volumes and the dealers is where it starts and the supply side of the equation makes their adjustments to begin to relocate their business to the store. It doesn't happen over night. We expect that but this say major market as is Atlanta, New Jersey, Montreal, Boston, so we don't expect the volume increase to take more than a couple of years. We looked at this as a tremendous opportunity for us to expand in that major market. California is a huge market and that's where we need to have larger facilities. Los Angeles is another one. We see increase in volume in that market. We had capacity that was four times greater than utilization when we opened that and it's doing extremely well.

))Gary Steiner (ph): Okay just one last question, is the investment portfolio fully liquidated

))David Gartzke: Yes it is.

))Gary Steiner (ph): What was ranch from the portfolio control on the quarter.

))Jim Vizanko: $4 million.

))David Gartzke: That was a return loss.

))Gary Steiner (ph): Thanks a lot.

))Operator: Next to Jeff Joinoff with Han Capital.

))John Goldburg (ph): High it's John Goldburg (ph) for Jeff. You said earlier going back to the water assets that the transaction was in the public's best interest. I know that's a key determinite here. Can you tell us what -- how that is defined and why you're confident that that is the case. Then a second question. I know the buyers are doing a study right now as to the shape of the assets, what would kind of condition there in and capitol extension necessary the future. Do you have and how the update is going.

))David Gartzke: The buyer is going through the normal diligents that anybody would go through to lake sure the position the assets are what we represent them to be and that are in concerns. Fortunately we had gone through the providing of a lot of data for the last 13 applicant months soit's readily available.

As far as the best interest of the customers, we state today before and I'll state it again, that this transactions will provide for stable rates except for cost of living adjustments and so on for at least 3 years. In does have the low cost financing as did the other other transactions as well but it will have the scale of the operations, keeping all these systems together. That's important. Also compare to the other transaction, we're retaining all the employees. I think management and employees and people to the field is extremely important with respect to suffer to the customers. So we believe that based on input from customers and what we believe is significant variables of factors for customer serve that this transaction certainly is the best interest of 240,000 customers are going to be effected by this -- the best interest of the employs and in my business, the best interest of our share holders. ))John Goldburg (ph): Okay thank you.

))Operator: Follow up question from Dave Parker with Robert W. Baird.

))David Parker: My question was asked and answered.

))Operator: Another follow up and Gorge Rufus.

))George Rufus (ph): Could you guys give us indication as to the amount you are getting from the costs in operating efficiencies out of the acquired auto businesses and the impact from the lower conversion rate?

))David Gartzke: From acquired auction businesses, if you're looking to acquisition of the ADT auctions,, those continue to increase on ebidal (ph) basis. We see constant improvement in that more forward our other actions. We saw that during the quarter and we're seeing the year to date.

))George Rufus (ph): So if you look at margin from (inaudible). Is that as much the impact of the conversion rate or is that just a slow down in the efficencies.

))David Gartzke: It's impacted certainly by conversion rates. Impacted by mix of cars impacted by many factors. I think if we talk about quarter to quarter -- it's eye more difficult (inaudible). If you look at year to date, we're on percent over on margin than we were in 2001 and the large piece of that is coming from our newer auction.

)): George Rufus (ph): Just the AFC business, it seems like exceeds budgets and forecasts every quarter. Doesn't that sort of benefit from the automotive business. How come that is not seeing the slow down or at least the tech call that the automotive business gets. Are you taking market share there or something?

))Jim Vizanko: AFC is by far the largest dealer floor planning company in the United States. It's a focus business as is the others. It also does finances dealers that are outside of the family. I think the percentages are approximately 70 percent.70 percent (inaudible) and 30 percent is with cars sold through the (inaudible) auctions. That doesn't insulate it from the market in general, but that's just a point ever fact. To go to the math again, if these branches, which I believe are close to 85 or 87 or so, in general are able to finance one or two vehicles more each month or every months of the year over the year before, we see or it translates into the growth that you've seen. So they're very well disciplined and they don't attempt to over extend themselvess and finance significantly more vehicles than the year before. It's very slow, very disciplined as it has to be to manage the risk side of the business. That's what our experience, that's what I've seen that focus to result in over the last five years. It's a complement to them even in difficult times to sustain that growth. I would agree with you, you'd think if there's a slow down in cars going through auction, there would be a slow down in their performance but we have not seen that.

))George Rufus (ph): Okay when are you expected to give 03' guidance.

))Jim Vizanko: In January following our board meeting.

))George Rufus (ph): Thank you.

))Operator: Follow up with Walter.

))Walter Kirchberger: Yeah, I'm got another point here. Could you give us more color on the large increase and income from discontinued operations. I understand the water business is part of that but you assumed the water business was in for both years.

))David Gartzke: It's depreciation of our water businesses.

))Jim Vizanko: We discontinued the depreciation of water assets to the 40 quarter last year.

))Walter Kirchberger: So you really accounting for water a little differently this year.

))David Gartzke: Yes.

))Walter Kirchberger: So there's no DNA in the water side of it so the net income is increased by that amount.

))David Gartzke: Yes.

))Walter Kirchberger: Thanks.

))Operator: Furtherfollow up, Jeff.

))John Goldburg: Do you have a prelem (ph) cash from operation and Capex (ph) for the quarter and review balance sheet items where your total cash is, including vest investment portfolio and what you'd been doing on the debt (ph) side either commercial or longterm..

))David Gartzke: To take the last question first. On the portfolio, it's been liquidated as of the end of September. That's why if you look at December 01' vs. September 30, that't why current assets and liabilities. Essentially, the portfolio is been reduced and we've used that to pay off comicial paper with current liability.

))John Goldburg (ph): Okay and then what about the cash on the balance sheet?

))Jim Vizanko: Remaining cash on the balance sheet with the portfolio gone is basically a minimal amount and other than one addessa (ph), it does have cash on the balance sheet that ties basically from operation. But it's not cash that we have access to reduce commercial pain liability. Basically what we have is available cash which is basically a minimal amount. With the portfolio gone.

))John Goldburg (ph): How about cash flow from operations and capex (ph) the quarter.

))Jim Vizanko: I guess it's coming in all we can say is it's coming in as budgeted. I don't know if we ever released our capital budget on a quarterly basis. All we can say is the spending has been on budget and on target. You will see it in the Q, I guess.

))John Goldburg (ph): Okay thanks.

))Operator: At this time there are no further questions I would like to turn the concern balk to Mr. Gartzke for closing marks.

))David Gartzke: Well thanks again for joining us this moring. I would like to close with some obvious comments and thoughts they have approximate I'm sure they will be obvious to you too. But I think they're worth stating.

These conference calls are very important for all of us and they do focus on operating results of the company and I would say they should focus on the operating results of the company. We revised our guidance for earnings for the beginning of the year down ward approximately 10 to 15 percent due to the close of the portfolio as you know and for the depressed auto prices that are significant low below that that we have seen for a number of years. But, the value of the company, as I see it and I'm sure you do too, is based on the value of the future performance, which certainly is a function of our current performance. I will admit that, but at the same time, the value of this company as it relates to furniture performance is very important and I believe that the work extremely well positioned for the future based on the assets that we have and the businesses that we're in. I'm saying business again and you heard me say it before that our generates assets on the par side of ours business are low cost. They are the low cost generating assets are extremely low cost. There the lowest costs generating assests in the map region in the markets that we serve. I believe we're the second or third lowest cost electric utility in the United States and the merchant facilities that we acquired fall into that same category so we're extremely well positioned when the car market recover and the incrementalimpact when they do, will be significant to this company.

On the auction side or the automotive side of the company, we're invested a lot in new capacity and major markets. When we made these major acquistions a year and-a-half ago and now request the expansion of the San Franciso facility and the Los Angeles facility and Atlantic facility, Long Island, Jacksonville, et cetera, we're well positioned in these major markets with good assets and good management. To digress for a second there a difficult market, our actions are performing extremely well. Ear over year growth has been very good as they continue to focus on efficiency and volume and car mixes. In difficult times, I'm proud of way our August es have performed. As we talked about the call, AFC continues to provide growth each in difficult times.

Last and certainly very important to this company is the selling and existing of the water business and the realization of the total cash consideration of 260 million dollars for Florida properties and I think we have to add in our mind the (inaudible) heater facilities too, which is going to position this company extremely well with respect to balance sheet strength liquidity to fund acquiston to balance to being a strong company going forward. So again, I just want people to keep in the back of their mind that there say tremendous amount of value in this company. Our operating performance relative to the guidance at the beginning of the year is off 10 to 15 percent perhaps, but we continue to remain very confident that we're going to have a company at the end of the day and these two businesses that give you and us the value that we expect to have longer term. Thanks again for business on the call and we hope to see all you folks relatively soon.

))Operator: That conclude says the concern call you may disconnect at that time. END