Ambac Financial Group Inc (AMBC) 2004 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Ambac Financial Group Incorporated first quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Thomas Gandolfo, Chief Financial Officer of Ambac Financial Group Incorporated. Thank you sir, you may begin.

Thanks, Shamara. Welcome to Ambac's first quarter conference call. My name is Tom Gandolfo, and with me today is Rob Eisman, our Controller, and Pete Poillon, Head of Investor Relations. Our earnings press release and quarterly supplement are on our website, and will be mailed to those who've requested it. The call is also being broadcast on the web, and can be accessed through June 30.

Second quarter 2004 earnings will be released on July 21, 2004 at 8 a.m., with a conference call at 11 a.m..

During this conference, we may make statements that would be regarded as forward-looking statements. These statements are based on management's current expectations. I refer you to our press release for factors that could change from actual results.

Let me jump in with some highlights for the quarter. Net income was $171.6m, or $1.55 per diluted share. That's up 22% on a per diluted share basis from the first quarter of 2003.

While Ambac reports net income in accordance with generally accepted accounting principles, the research analysts have not adjusted the reported estimates. Therefore, we continue to provide information on the items that analysts adjust out of GAAP net income to arrive at their current estimates, to eliminate any confusion.

Those items are - first, net after-tax gains and losses from sales of investment securities, and mark-to-market gains and losses on credit derivative contracts and derivative hedged contracts, which in the first quarter of 2004 were net gains of $6.3m, or $0.05 per diluted share. This compares to a net gain of $1.8m, or $0.02 per diluted share, in the first quarter of 2003.

Some analysts also back out the after-tax accelerated premiums earned on obligations that have been refunded. This amounted to $8.7m, or $0.08 per diluted share, in the first quarter of 2004, compared to $6.9m, or $0.06, in the prior year, up 33%.

Cash flow from operations amounted to $219m in the first quarter, illustrating our continued ability to generate significant liquidity.

Moving on to adjusted gross premiums written, or AGP. AGP came in at $258.8m. That was down 20% from the $322.4m in the first quarter of 2003. AGP this quarter was 1.6 times the rate of our normal premiums earned, and other credit enhancement fees. Let me take you through some of the detail there.

First up, public finance. Gross public finance AGP came in at $96.9m. That's up 24% from the first quarter of 2003.

While muni issuance was moderate during January and February, March issuance was very strong, and municipal issuance for the quarter was virtually flat through the first quarter of 2003, coming in at total market volume of $84.8b for the quarter. Insured penetration was approximately 47%. That compares to 53% and 40% in the first and fourth quarters of 2003 respectively. Ambac's market share, in the low 20s, remained steady in this segment.

Moving on to structured finance. Structured finance AGP written was $77.2m, that's down 34% from the $117.7m in the first quarter of 2003. The primary factors contributing to the decrease were less activity in the CDO market, where spreads are extremely tight, and lower mortgage-backed securities writings.

While spreads remain tight in CDOs, we recently noted some turnaround in the insured mortgage-backed sector, where the senior sub-market has been tough competition. We closed some mortgage-backed securities transactions at acceptable returns late in the quarter.

Looking forward for the MBS sector, volume is expected to remain healthy for the near term, as many analysts have revised their annual issuance projections upwards. However, a notable increase in interest rates could cause projections to be revised downward later in the year.

We're pleased with the opportunities we've been seeing in the commercial asset-backed securities portion of this business. However, that's an area that will be somewhat lumpy.

Moving on to international finance, International AGP in the first quarter came in at $84.7m. That's down 33% from a very strong first quarter of 2003. The quarter's results were acceptable, given the diverse nature and geography of the deals closed, but paled in comparison to the comparable prior quarter, which included three large transportation transactions, including one very large deal at the Rome airport.

The international markets in general remain quite robust, providing ample opportunities with attractive returns. However, as we've repeatedly stated, quarter-on-quarter volume in the international market will be lumpy.

Moving on to net premiums earned. Net premiums earned and other credit enhancement fees earned, excluding refundings, increased to $161.7m. That's up 22% from the first quarter of 2003.

Public finance, our most mature product, continues to display strong growth, coming in at the growth rate of 19%. Structured finance and international both grew at 23%. The growth trend in both segments - structured and international - has moderated compared to the past several quarters, as the respective books have grown significantly, and the comparisons become more difficult.

The growth was also slightly impacted by lower writings in CDO and MBS segments, as I've previously stated.

Deferred earnings, representing future earnings that are in hand or contractually due us, grew to $4.6b. These deferred earnings will be recognized as earned premium in the future, over the life of the related exposures.

Let me move on to losses and loss adjustment expense. Losses and LAE increased to $17.5m. That's up $7.7m from the first quarter of 2003, and up $700,000 from the fourth quarter of 2004. Based on current projections, we expect the loss provision growth to mitigate, as provisioning should remain in that $17m-$19m range per quarter for the rest of the year. Of course, these estimates will change if unforeseen events - either positive or negative - arise during the remainder of the year.

Net insurance loss reserves at March 31, 2004 were $227.7m. That's a $40.9m increase from December 31. To further break down reserves, our ACR increased $5.6m to $137.8m, and our case reserve increased $35.3m to $90m.

The change in case reserves was large this quarter and included some positive news. Approximately two-thirds of the increase in case reserves was due to net cash recoveries on previously paid losses. Cash recoveries from previously paid claims relate to various deals in our domestic structured and public finance segments.

It should be noted that these recoveries were expected, and consistent with the estimates we used when establishing case reserves in prior periods. As previously stated, negotiations regarding recoveries are sensitive, generally take a long time to settle, and are often subject to confidentiality agreements. These recoveries are no exception.

The remaining increase in case was due to a transfer from ACR. The increase was partially offset by net claims payments during the quarter of $9.6m. The largest component of the transfer from ACR relates to a healthcare credit, that we paid a claim on during the quarter. This credit is from the old Connie Lee book, and it's the same stressed healthcare credit that I've reported to you for several quarters now.

In addition to the insurance reserves, we have $24.4m of reserves that we established through mark-to-market accounting on our credit derivatives book.

If you look on our income statement, you'll notice in the other losses line item, you'll note that we have a net loss included this quarter. That item relates to our funding conduit, and although the accounting is technically correct, it represents a bit of form over substance.

On a limited basis, Ambac provides clients the ability to fund through its medium-term note conduit vehicle. This conduit issues medium-term notes and purchases client-issued fixed income assets with the proceeds. We reported a $15m loss during this quarter related to a mark-to-market on certain derivative contracts used to hedge interest rate risk associated with the underlying investments.

The derivatives, or the interest rate swaps, serve as highly effective economic hedges. However, they don't meet the requirements of effective accounting hedges as defined by the accounting rules of FAS 133. Therefore, the change in the market value of the derivatives was recorded through earnings without taking the offsetting gain on the hedged item. Economically we have an equal and offsetting gain, we just weren't allowed to recognize it in the financials.

During the first quarter of 2004, the derivative instruments were re-designated, and now meet the requirements of FAS 133 for an accounting hedge, as well as an economic hedge. This allows for us, on a prospective basis, to record the offsetting gains and losses on the hedged items. So you should have some, we will have equal and offsetting gains and losses, and that will eliminate the volatility there.

The loss that we recorded during the quarter will reverse as a credit to income over the remaining term of the contracts, which is about eight years. So we've taken in about $1.6m-$2m a year reversal of that $15m over the next eight years.

Moving on to financial services, financial services net revenues excluding realized gains and losses, were $17.1m. That's a 54% improvement from the $11.1m in the first quarter of the prior year.

Derivative product revenues were up 34% from the first quarter of 2003, due primarily to a couple of profitable transactions during the period.

Investment agreement net revenue increased 73%, primarily due to improved interest rate spreads caused by the run-off of older, less profitable deals being replaced with current higher return transactions.

Just a word on that book. In the old days, we did do flexible draw-off transactions. We no longer do those. We haven't done them in a couple of years. So the new business that we're putting into that book, the higher return business, is fixed draw. Takes the variability out of that business. So we think we've turned the corner there and we'll see some fairly consistent results going forward.

Moving on to return on equity. Return on equity, excluding net investment gains and unrealized gains on the investment portfolio, came in at 15.7% for the quarter.

So overall, a solid quarter, having met or exceeded our long-term earnings growth and return on equity targets.

And with that, Shamara, I'd like to open it up to questions.

[Operator Instructions] Our first question comes from Mr. Geoffrey Dunn with KBW. Sir, please state your question.

Hi, good morning, Tom.

Hey, Geoff.

I had two detailed questions and two big picture questions. Can you give a little bit more color on -- there was a lot of movement in your below investment grade portfolio this quarter. I think there was about a $30m addition on the GO side, reduction on healthcare, just a little bit on the CDOs. Add a little color there, what was developing, and then speak a little bit to the structured market. Spreads are very tight; it does sound like MBS is coming back a little bit but what are other areas you can put your capital towards within the structured market, that you think might be able to offset some of that weakness? Or should we be expecting pressure on those results for the remainder of the period, until spreads start gapping back out?

And then just a last thing, if you'll just comment on the tax rate, and if there's any movement in your investment portfolio this quarter.

Okay. Sure. Let me start with below investment grade. What we do, Geoff, we generally -- these are our ratings, so we try not to get too specific. We may actually downgrade a credit before the rating agencies downgrade them, and that's with the exception of consumer asset-backed where we put it on our website. When we downgrade a municipality it obviously would not be good for us to give you the name, because they, like I said, might not have been downgraded by the rating agencies, and they would be pretty upset with us for doing that. But I can tell you we did downgrade one municipality during the quarter, which is what you saw in public finance.

It's about relatively small exposure, but one that we thought warranted special monitoring. What we do by putting it on that category is it gets moved up a notch in our surveillance and remediation process, and it's really to get folks' attention here as well.

In the remaining portion of the below investment grade, you can really see on our website the majority of that has to do with public consumer asset-backed transactions, particularly in the mortgage area. So you can take a look at that right on our website if you want to see the names.

Structured finance. Just let me give you a bit of an overview, in terms of prospects there and pricing, I think was your question.

MBS issuance overall was strong, as obviously interest rates have remained very low. I think I mentioned in the fourth quarter we are seeing competition, particularly in the mortgage-backed sector, from the senior sub-market. And what's happened there is simply, you've got investors out there that are flushed with liquidity, and they're chasing yield, and they're willing to take the risk of buying these senior tranches uninsured.

Some positive news in March, and so far in April, is we are seeing some spreads widening a bit in the MBS sector, and we've been seeing some good opportunities for insured transactions, whereas in January, February we weren't seeing that quite as strong. It's too early to say, Geoff, whether that's going to continue. We're going to have to ride this out a little bit.

In the CDO area spreads remain really tight. We're not doing a whole lot there. So that is impacting us a bit. But fortunately, because we're so diverse, we have so many opportunities to put our capital to use, a tightening in one particular or two particular segments isn't going to hurt us dramatically. We've built a model here that compensates for that. And you're going to see it; we've seen it all the time. You've seen it in IOUs. You see spread tightening, then you see an event happen, and then all of a sudden spreads blow out and everybody wants insurance again. It's just part of the normal cycle here.

So we're going to have to -- on domestic structure, we are seeing opportunities in auto. In fact we did two attractive auto deals this quarter. We've seen activity in credit cards. We've seen opportunities to bid on credit cards. We didn't close any this quarter, but we are looking at some. Spreads have tightened there too as investors, same thing as the senior sub-market, it's interesting there as well. What's been really interesting in that sector is commercial asset-backed loan securitizations, franchise loan securitizations for very well known names. So that's been opening up some opportunities for us.

So we're going to have to wait and see on structured finance. Hopefully the recent trends continue. We will keep you informed about that.

On our tax rate, I assume you're talking about our overall corporate tax rate, that's edged up a little bit?

Yes. Just on an operating tax rate basis. It looks like it was up a little bit.

Yes. What's happening there is we have about 70%, generally 70-75% of our investment portfolio invested in municipal bonds, about a third of our income. But what's happening is our growth in our earned premium, which is taxed at 35%, versus our tax-free income on the investment portfolio, has grown faster and continues to grow faster than our tax-exempt income. So as a result of that, you see the tax rate edge up a little bit there.

Okay. Thanks Tom.

Thanks Geoff.

Our next question comes from Robert Hottensen, with Goldman Sachs. Please state your question.

Yes. Tom, maybe you could just clarify one technical point. You said that of the $35m in case reserves - the change - two-thirds of that comes from cash recoveries on previously reserved issues. Why does the case reserve increase when you get cash? Why wouldn't that be allocated to the general reserve?

Yes. Good question Bob. What we did, the recoveries we received, when we build up our case reserves and we build up our ACRs - depending on which credit is in there, but let's talk about case - we, in determining the amount of case reserves we put up, we evaluate what our probable recoveries are going to be. Probable meaning we have a high chance of achieving a certain level. So when we're building that case reserve, we factor that into the calculation. So we assume we're going to pay X on a claim over the life of the claim, and we assume we're going to get X in recoveries. So when you actually receive that recovery, generally accepted accounting principles requires you to put that amount into the reserve, because you expect to pay that out over time. So in other words, it was a factor in building up the reserve initially, and as a result, when it comes in you it into the reserve.

Does the fact that that now number is higher and in fact you've remediated credits that were previously reserved for, does that give you more flexibility in the income statement line item that's associated with credit reserving, or do you feel that just gives you a higher perception of earnings quality as you go forward?

Well, I think what it does is it - because we expected the recoveries - it gives us a great deal of comfort in our methodology and our process, in determining the recoveries. I think it shows that we're pretty accurate in our estimates of reserves, because I can tell you what we received, and this isn't just this quarter. Consistently over the last several years, what we've received in recoveries has been very consistent with what we estimated. So we're pretty prudent in our estimation process. We don't try to kid ourselves there.

And were these in the transactions that, where there were some dispute as to underlying origination quality with respect to [product]?

No. These recoveries were actually related to a number of transactions. There weren't any particular transactions that consumed 100% of them. It just happened to be a quarter where we had a cross-section of consumer asset-backed, some international - on international, (indiscernible) getting paid much there - and also on our public finance. We got a recovery on healthcare credit, for example. So it was really a cross-section, Bob. It just happened to come together for us in this quarter.

And the final question is, that as the improvement in credit quality that we've seen at, for instance MGIC, or some of the sub-prime companies, with what they're reporting, does that in any way diminish the potential for losses that you've had in a couple of transactions in the sub-prime market that have exceeded the subordination level?

You know, it really does-- I'll give you two answers to that, yes, in some portions of our book where we think the cycle is beginning to turn, the credit cycle, and that's going to help us in particular, in certain stressed segments where we think we're going to end up a little better than maybe if you asked me that same question six months ago. However, I don't want to mislead you. We do have, as I've said in the last several quarters, we have a handful of credits, stressed credits, where we're not out of the woods yet, and I think the $90m that we have set up in case reserves more than likely will be spent over the many, many years, paying claims on those.

So I think the particularly stressed credits we're going to pay the claims on. I think where we'll be helped is credits that were more on the brink or borderline industry segments. We'll see an improvement there, and I think the general market cycle will help us in that regard.

Are there any new credits this quarter that entered a claims paying status, or are you just dealing with the same credits that you've been dealing with for a while?

It's pretty much the same credits. The only thing I will say - we did transfer, if you go back a year now I've been talking about a healthcare credit that we thought we were going to pay claims on for about a year now. We finally paid a claim on it. As a result of that, we moved that reserve, that we've had allocated in ACR, we moved it officially to case reserve this quarter. But no new names, no new issues. It's really still the handful of stressed credits that we've been working for some time now.

Okay, thanks.

Thanks Bob.

Our next question comes from Rob Ryan with Merrill Lynch. Please state your question.

Good morning.

Hi Rob.

I know this isn't a biggest issue for your company, but it is something that potentially could be changing. Could you describe your reinsurance strategy of currently and looking forward, what you might do differently?

Sure. I guess as we've said, some of the reinsurers backed away from the business - Axa and Ram Reins being two. What we've done, it doesn't impact us as great as others, because we're not huge users of reinsurance, although this quarter we were up higher than we normally are. We were, I think, in the 15% range. Generally we hover in that 10-12%, 10-14% range.

What we do, we're using traditional sources of reinsurance, those of remaining players that are still out there, the [Radiants], the Ram Reins. We have a reinsurance relationship with Soppo in Japan. We have reinsurance relationships with the other primaries.

So we don't feel the pressure from a capacity point of view, but having said that, we're not going to sit on our laurels either. We are constantly looking for innovative ways to shape the book and risk transfer and get capital released. We look at capital market opportunities. We look at things like what MBA did, in the captive market. It hasn't been compelling to us yet, but that doesn't mean we won't continue to look at it, and if things change there's unfortunately plenty of capital out there that wants to get into, that's willing to go to work in the reinsurance market right now. So I'm not concerned over lack of capital, but it just hasn't been compelling from an economic point of view for us to do anything drastic other than the traditional means of reinsurance.

Are you expecting large commutations from some of the downgraded reinsurers, that you would take back a proportion of the book of business? And would you, in turn, find new homes for those exposures, or might you keep a substantial portion of it?

That's what we're struggling with right now. We have the two books, we have the Axa and the Ram Reins book, that there's great interest in out there, from reinsurers, to take. So we have the option of taking them back, and we will most likely cede a sizeable chunk of that out to existing reinsurers, and we may keep some of it. It's a quality book in both. Both the Axa and Ram Reins are pretty high quality books, so we're studying that now. We have the option to do either.

So in a quarter when a large transaction like that would occur, basically if you did cede it back out, we would expect a large amount of gross writings and then a large amount of sessions for a normal amount of net writings? Is that what we should--

No. You would see it -- if we did it in the same quarter, you'd see it net to zero, because we would take in, we'd get the UPR back from the reinsurer we're taking the book back from, and we'd give up some of the UPR to whoever we give it to. Now if we were to retain it, you'd see the UPR being retained with us, but if we take it in and put it out it should net pretty close to zero.

Okay. I was talking about the writing side, just because the cash flow is--

No. We would not recognize that as premiums written. You would recognize the recovery of UPR, but we shouldn't show that as new production.

So, potential source of -- a real comparison that isn't going to be there?

No. You wouldn't see that.

Okay. Thank you.

Okay.

Our next question comes from Mr. Mark Lane with William Blair and Company. Sir, please state your question.

Good morning.

Hi Mark.

On the public finance side. Can you just describe -- insured penetration was down and the level of insured bonds were down, but your premiums were up and your market share was up. Can you just describe, is that a fact? And maybe business mix changes or whatever the reason was for the actual increase in AGP?

Sure. Actually, the insured volume for the quarter in muni was actually not down. It was actually flat to the first quarter of '03. It was actually a pretty strong quarter. It was looking weak in January and February, and then March had a large month in terms of volume, and that really got us flat [indiscernible] bond committee [indiscernible] billion.

But the insured market was down on an absolute basis, year-over-year, first quarter to first quarter.

Yes. Insured came in at about $40b versus about $45b.

Right. That's what I'm referring to.

Yes. And a lot of that is the mix. If you look at the fourth quarter, insured was up $2b. So we're not talking huge swings here. We did a fair amount of attractive business, and that was the one sector that was a real bright spot, we think, this quarter. One of the things just in that, just to comment on public finance.

We think demand for financial guarantee in the public finance sector is going to continue to be strong, even though you're starting to see some improvement in states and municipalities. S&P actually just issued a report a week or two ago, you should take a look that, and they come out and they talk about municipal budgets remaining quite strained, and they say that while revenues are gradually improving the budgets are going to remain tight in fiscal '05. We're seeing that in the spread market. We're seeing spreads come in a tiny bit. We have seen spreads come in, but our relative basis extremely wide still in that sector. So that's not a factor that we're concerned about at all right now.

So from a segment standpoint, what areas did you write business in that would have drove your market share up year-over-year, or what allowed you to grow AGP when the total insured market was down?

Probably what drove the market share was we did do a large California GO. About $222m of park, gross park. That was one of the large transactions in the quarter. We did it actually before March, before they announced their economic recovery bonds planned issuance, which was a good thing, because spreads were still quite wide. And spreads actually came in after that issuance, but that was probably one of the major drivers.

I'll give you some of the mix. I'm looking at some of the big deals (indiscernible). GO was probably the largest component. Hospital, healthcare, lease-backed, a couple of universities, some tax-backed, a couple of utilities, public utilities, but I think GO, healthcare and lease were the top three.

Okay. That's helpful. And on the international side, just to help us understand the "lumpiness" of the business. I know Colchester was a long-dated transaction, but just roughly how much of AGP did that account for in the first quarter? Just that one transaction.

I can't give it Mark. What I don't want to do is start giving that information out, because then our competitors know exactly what we won that deal for, and I just don't want to tilt our cards in terms of pricing. I can tell you it was a large transaction. We had two large transactions this quarter. By large I mean AGP in excess of $10m. So I guess I will tell you that much.

How many international deals did you write in the first quarter?

Let's see. I'm looking at eight deals that were over $1m, and then I'm looking at several deals, smaller deals, under $1m. It's about eight deals over $1m of AGP in the quarter. The problem with international this time, we had actually a pretty good quarter internationally. It's just that we were up against a mega quarter, first quarter '03. We closed three huge transactions in that quarter, and the Rome airport was a very large AGP deal, which was in the first quarter of the prior year.

Okay. And then the last question is on the excess capital front, presumably new business is slowing and the underlying credit quality of the book is getting better. When are you going to be in a position to make a decision to potentially more proactively manage capital, either by increasing the dividend in excess of underlying earnings growth, or maybe buying back some stock? Is it when the S&P margin of safety estimate comes out, or when the rating agencies do their '03 year-end reviews? When are you going to be in a position to have more clarity on that issue?

Well, what we do, we run the S&P model constantly here, and we try to run the Moody's. The Moody's model is a little bit more of a black box, but we take our best shot at that as well, and we run our own economic capital models. So we know our capital, we don't have to wait till the end of the year, when the S&P model margin of safety results are published. We know that constantly throughout the year, and I think all the major insurers are in an excess capital position. I don't think that's a secret. We don't publish that number, as a courtesy to S&P. S&P will give you the range when they issue their annual report. They'll give you the range of the margin of safety and you guys can pretty much figure out the range of excess capital.

What our philosophy has been there, is we've gone through an incredible two-year period here of growth and opportunities, and we're delivering 15-16% after-tax ROEs to our shareholder. And we think that's made everybody pretty happy, and we think that's the best use of the capital right now. We're still seeing good opportunities out there, and I guess - will the business slow? We don't know. We're not expecting it to slow maybe as much as others are. So we still think there's going to be good opportunities to put our capital to use.

All I can tell you is if that changes some day, we're going to of course-- If we don't see opportunities to get you guys 13%, 14%, 15%, 16% after-tax ROEs, then we have to re-evaluate. And you do that by increasing the dividend. You do that by buying back stock. We did buy back some stock this quarter. I think we bought back about $20m, $22m worth of stock this quarter, and we do that pretty much to keep pace with dilution from employee stock option plans, things like that. We haven't done it in a huge way, but we do it from time to time. If you look at history, we've increased our dividend about 10% a year every year. But we do give the capital back.

So just to finish up on that, the dialogue would have been very similar, maybe a year ago, and what has happened in the last year is new business has clearly slowed. The credit environment has clearly gotten better, but you're sending the same messages you did 12 months ago.

You know, when you say it's clearly slowed, one of the things we've tried to get folks to look at, I don't think you can look at AGP any longer on a quarterly basis in this industry for any of us. The deals and the mix of business has changed so dramatically. The slow business doesn't dominate AGP any more in this industry. Large deals and international transactions have a big impact on quarterly AGP. I think you've got to look at AGP over a six, nine-month period, not a three-month period.

So don't be so certain it's slowed that dramatically yet. Let's let this play out here. We're still seeing good opportunities out there.

Okay. Thanks Tom.

To put the capital to use.

Thanks.

[Operator Instructions] Gentlemen, we have a follow-up question from Mr. Dunn. Please state your question.

Tom, you've given expectations for the total muni issuance market, I think in the fourth quarter, where the rate that we'll be seeing with the stall that we saw in January, February issuance, and then the rebound in March. Has that expectation changed at all materially?

No. I think what we put out there, Geoff, was in the range of $275m-$300m, in that range. That's what we tend to use for our internal budget purposes, versus the $380m plus that came in for 2003 actual. We have not internally revised our expectations, although I will say the first quarter came in a little stronger than we thought. It's so hard to predict, with interest rates having an impact on the refunding component of that market. So we're going to stick to that $275m-$300m now. It'll be easier to give you - if we revise it it'll be when we have six months under our belt. It'll be a little easier to do.

Okay, thanks.

Thanks Geoff.

Gentlemen, there are no further questions at this time. Would you care to make any closing comments?

No. I just want to thank everybody for their participation, and Pete Poillon, Rob Eisman and myself are here all day. If you have any follow-up questions, don't hesitate to give any one of us a call. Thank you very much.