富蘭克林資源 (BEN) 2009 Q4 法說會逐字稿

Good afternoon.

My name is Michael and I will be your conference operator today.

Welcome to Franklin Resources earnings conference call for the quarter ending September 30, 2009.

Please note that the financial results to be discussed in this conference call are preliminary.

Statements made in this conference call regarding Franklin Resources, Incorporated, which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements.

These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the Securities and Exchange Commission including in the risk factors and MD&A sections of Franklin's most recent Form 10-K and 10-Q filings.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer session.

(Operator Instructions) Mr.

Greg Johnson, CEO, you may begin.

Thank you.

Good afternoon, everyone, and thanks for joining us for this Q&A session.

I'm Greg Johnson the CEO, along with Ken Lewis our CFO.

Hopefully, the commentary we made available this morning answered most of your questions on the results we reported today.

But just to quickly recap the highlights, we ended our fiscal year on a high note with strong relative investment performance, one of the best quarters ever for net new flows, and continued improvement in our operating results.

I'd now like to open it up for your questions.

(Operator Instructions) Your first question comes from the line of William Katz with Buckingham Research.

Okay, thank you and good afternoon.

I just had a couple questions around maybe the margin outlook.

And the first one is I guess you are accelerating some advertising on the back of very strong performance and what appears to be a re-engaging investor globally.

I'm just sort of curious how we should think about, A, if markets were to potentially pull back here, how you think about that strategically; and then secondly, could you give me a sense of what products you are most focused on?

And I do have a follow-up.

Okay.

Thanks, Bill.

First, I'd remind everyone that there's other things other than advertising in that line.

And so, there is promotional expenses and distribution expenses that go up with both sales and with average assets under management.

So those will tend to elevate when the assets come up and sales come up.

In terms of the specific advertising, we have been -- and I would say promotional, too, expenses.

On the product side, one of the recent campaigns that we have launched is an equity campaign so you will see that, some expenses related to promotional activities related to the equity campaign.

And then just the general advertising I think you have seen on TV that we are being pretty opportunistic.

Not only is there a good message but there has been some good spots to buy at reasonable prices and get some good coverage.

Okay, I guess the bigger picture question is, if I calculated right -- and maybe I haven't -- but it looks like you have about almost a 49% manufacturing margin if you net out the impact of distribution from the expenses.

From the revenues, excuse me.

So, as you think about just strategically where the company is right now, is there a little bit of pulling the margin -- incremental margin down here a little bit to reinvest the business?

Or can you deliver both margin improvement and incremental growth at the same time?

Well, it is quite the balancing act to do that.

So there's two things there.

One is revenue is unpredictable.

So you don't know how quick or slow revenue will increase or decrease; and that obviously has a big impact on margin.

But in general in terms of spending, I think the message is that we are committed to invest in the business, not only on advertising but on all the expense categories.

But, we are going to be very cautious in doing that, or thoughtful in doing that.

The message we put in the prepared remarks is we are going to be as thoughtful in increasing the expense base as we are decreasing it.

But certainly, we will be investing in the business; it is just a matter of us feeling comfortable that the market improvement is sustainable.

And then we will look at each opportunity to invest on its own merits and decide at that point.

Okay.

Thank you.

Your next question comes from Robert Lee with KBW.

Thanks, good afternoon.

A couple of quick questions, can you maybe give us an idea of as you look around the world, you did talk a little bit about on your prerecorded call your non-US flows and certainly there are some institutional flows there.

But maybe talk a little bit about how in different markets the retail investors -- are you seeing more risk-taking in a lot of those markets or people starting to come awake?

And then I have a couple other questions.

I think just in general terms, looking at the flows -- and last quarter we talked about how in Asia and certainly outside of the US that they are a little more conditioned to the up and down; so we expected to see a bit more of a rebound there.

And that has been the case.

Where they got hit harder on a net flow basis versus the US, the turnaround has been a little bit quicker there with respect to equity flows.

You really have not seen the US investor really moving back into equities in any meaningful way.

You have seen redemption stabilize in a lot of cases, but actually even have increased in some cases in the industry over the last quarter.

But if you look at some of our best selling funds, the Asia Growth Fund, which is sold off shore, the BRIC Fund, have all snapped back very quickly from having net outflows to very strong inflows.

So, I think that in terms of just generalizing overall trends, it has been the case where the Asian investor has come back a bit faster than what we're seeing in the US.

Maybe a follow up on the institutional side.

Again, on your pre-recorded call, you talked about outside the US missing or maybe in general seeing pretty good demand for some of up your global fixed income and other strategies.

In a way it almost seems a little counter to what some of your competitors have talked about with institutional decision-making getting kind of elongated, for a lack of better way of putting it.

Are you seeing that as much?

Or are you seeing that, yes, you've got some good flows but really compared to the RFP activity out there, there is a lot behind it that's not -- where people aren't pulling the trigger.

I think that is still true.

It does seem to be kind of a mix, when we talk to our sales people out there.

The good news is that if there is any searches, we are in the right place with the product mix and global bonds and global equities.

But really overall searches are still slow.

But we feel like in looking at the pipeline and looking at the wins, there has been a lot of good wins on the institutional side.

Nothing really big except the one account that we talked about, the Sovereign Wealth Fund that had $900 million go back in, and then another China fund that funded during the quarter.

So I still think things are it a little bit tentative on that side, but the searches that we're seeing are in our space and we continue to see good RFP activity there.

Great.

I just have two quick modeling questions actually for Ken.

The tax rate, the 30% for the full year should we be thinking of that kind of a reasonable run rate heading into the next fiscal year?

And then I am just curious what's the size of the deferred, the B share assets that you took on balance sheet in the quarter, that bumped up the deferred sales commission amortization.

All right.

Thanks, Rob.

The tax rate of 30% at this point where it stands now, that is probably as good a number as any to look at going forward.

It obviously bounced up pretty high in the beginning part of the year and all of that was due to earnings mix.

And so now, with pullbacks in the markets and the current asset mix, that is kind of our best guess for a reasonable tax rate.

The amortization of deferred sales commissions, there was a onetime charge in there that I tried to point out.

Having said that, we did have increased sales, we have had increased C-share sales.

So that will have the effect of elevating the deferred commission amortization in future periods, which I think is a trend.

But also this transaction, while overall it will not affect profitability, it will have the effect of inflating that deferred commission asset line in the first couple of quarters and then deflating it, if you will, in the second couple of quarters in 2010.

So overall, it is kind of a nothing but you will see probably some noise in that line in the short-term.

Okay, great.

Thank you.

.

Your next question comes from Jeff Hopson from Stifel Nicolaus.

Okay, thanks.

Greg, you mentioned the rebound in the equity sales offshore, but we're still, I guess -- well we are in positive territory, but not meaningfully so.

Any thoughts on -- I guess October trends have seemed a little bit more positive, but any thoughts on that trend moving in a more positive fashion?

And then I think you have talked in the past about using technology to offset maybe hiring people, using internal wholesalers, et cetera.

So give me some thoughts, please, in terms of how much you can offset on the technology side versus ramping up headcount?

Okay.

I think the equity question is really do the markets hold in here, do we have a setback?

I think if the markets hold in, it just takes time to get the retail numbers back, so I think that trend is definitely -- it continues to move in a positive direction.

I think part of it is -- I was thinking about and it reminds me of certain markets like Japan that had such a difficult period.

Every time the market snapped back or was strong, equities actually picked up in redemptions.

And that may be a bit of a psychological effect of the investor, that when they're getting x% back redeeming, and maybe that accounts for some of the activity of increased redemptions in some of the US equity funds over the last quarter.

But I think the trend is still the right way, it just takes a little bit of time; we knew it would take some time.

And I would think the net flows would continue to improve as long as the market and obviously the one-year numbers are getting a lot better than they were.

So every month helps that.

The technology side, we talked about our focus and it's really just a numbers for us and coverage.

We have 130,000 active advisers out there and we can't -- the traditional model, we're not going to be able to meet with that number of opportunities out there.

So we've expanded, along with our website, the use of internals and more of an outbound capability and that has been very effective.

We have been testing it and we're going to continue to expand it.

I don't think it is going to necessarily mean we are going to reduce or cut any costs.

I think it is fairly incremental, and hopefully it more than pays for itself with more penetration and more sales.

But that really has been a major initiative for the company in the last year; and I think to date we would call it a pretty successful initiative and one that we're going to continue to expand.

If I could follow up on fixed income, how much of the global would you say is local market, local product versus this global bond franchise that you've built?

It is primarily the global bond franchise.

India has some local market there; but outside of that it is really the global bond that is the lion's share of that category.

Okay, great.

Thanks.

Your next question comes from the line of Mike Carrier, Deutsche Bank.

Thanks guys.

Just a quick question on the cash.

Cash investments continued to build; you guys continue to do the buybacks, in line with last quarter.

I guess from an industry standpoint and when you look at your options, sitting in cash is not that great just given where yields are.

But there is still a lot of activity going around in the industry on the M&A front.

So some of the big properties have been taken, good or bad.

But when you guys kind of view the landscape and what you are looking for, and then your other options in terms of buy-backs or special dividends, just an update on there as the cash continues to build.

This is Ken.

I will take the first crack at the cash question from the perspective of buy-backs.

Certainly, we have been active in the share repurchase throughout the whole year, which I do think sets us apart from some of our competition.

While it is true that the payout ratio is probably below our long-term average for the year, I think part of that or a large part of that is due to the fact that earnings kind of re-accelerated more quickly than we did on our sharing purchase.

But in terms of dollars, of course, that increased as well.

So we're still committed, there's pretty much no change in our philosophy going forward as we have done in the past on that side.

And then I guess on the M&A front maybe Greg might want to add a few words there.

Yes, I think we have seen some large deals over the last year, and I don't feel that the opportunity is any less.

Or you could maybe argue that the opportunity for a large deal is probably less than it has been.

But I think the opportunity to do other deals, especially just in our industry -- no matter what the environment, there is going to be deals done for generational transfer and we're still very active.

And we've always said that scale is not really the goal here, and we have scale and we are in just about every channel.

So we don't think an acquisition provides us a whole lot of new opportunities for distribution.

So we are very careful and we will continue to be careful.

And as far as what that means, we are going to be opportunistic and be careful about what we acquire.

But I think the fact that just the nature of our business, there is always going to be opportunities to use that balance sheet.

Okay and then just one quick number follow-up.

In the investment management line, was there any significant performance fees this quarter?

No, not really.

Maybe somewhere in the neighborhood of 2 to $5 million, maybe.

Okay.

Thanks a lot.

Your next question comes from the line of Roger Freeman with Barclays Capital.

Good evening.

I guess the first is on the expense front again.

How much of the increase across let's say the non-comp items, excluding underwriting and distribution, was really bringing back spending initiatives or plans that were cut earlier in the year?

I'm stuck how to answer the term how many.

But I'll just generally tell you some trends.

Just dollar wise.

Part of it is -- we talked about spending and advertising and promotion and we talked about investing in documents systems.

There is a little bit of a feeling that it is time to do that sort of spend.

But then also part of it is seasonal.

It is hard to give you a percentage of how much is seasonal versus reinvesting.

But I will make the general comment, and it is the same as it was last quarter.

There are certainly discussions around the spending initiatives that we are having at the senior management level.

The emphasis there is which initiatives have the biggest bang for the buck?

So we are going through that analysis.

At this point, we really haven't made any commitment to increase spending in any significant level.

No real commitments to increase headcount.

So that is where we are now.

We're waiting to see, as Greg mentioned earlier, how sustainable will the markets hold and how sustainable this increase in the market is.

Right, okay, and is maybe a way to think about it all, and I'm sure it's not how you exactly budget for this -- but you did increase, despite the increase in spending, the margin did increase sequentially this quarter.

And, you were at the prior peak 30%, call it 33% to 35% operating margin.

So do you think about that as a bounding guideline, in terms as revenues rise what you have to work with, in terms of funding new initiatives?

I do not know that -- we have talked about this in the past, I don't know that that is a bounding guide for us.

Just as, on the low side, it's not something -- the operating margin is not something that we focus on, on the short term.

Obviously we are cognizant of it, obviously, if you look back in our history, there is a band that we stay within.

So it is just one of -- it's just another metric, an important metric but just another metric that we use as inputs when we are making decisions to spend.

Okay, great.

Then on the flow side, looking at the Global Bond complex, global international taxable fixed income.

You said that, I think in the prepared remarks, right, that $1.2 billion of inflows there was Sovereign Wealth, is that right?

So is the rest of that a pretty broad based distribution of flows?

It is.

3.7 in the United States and I think somewhere around, just under 2 or actually 1.6 into the SICAV Global Bond Fund net.

And those two are sold obviously a very diversified base for retail advisers.

Okay.

And then, looking again at flows sort of internationally, how impactful -- how much do you think has dollar weakness really been factoring into investors' decisions to direct capital into international investments?

It certainly has helped.

Obviously, that has improved the relative performance on the Templeton Funds along with obviously the stock-picking.

And the same with Global Bonds.

I think you do have a lot of people here in the US that do not have a lot of confidence in the dollar and maybe want to get some exposure into an asset class that is not correlated with the overall market.

And I think that asset class having had a total return in our Global Bond Fund of somewhere around 10% a year for the last decade has shown that it has performed very well, in a very difficult market.

So, I think it is somewhat of a new market in many ways that has not existed so it is a new asset class for a lot of retail investors; and that's the same even for institutional.

I still think it is going to continue to grow.

Okay.

I was just looking at your Muni flows -- those continue to tick up sequentially, now three quarters in a row in positive territory.

Do you see that as a recipient of the flight from money-market funds looking for yield?

That is exactly right.

I think the rush to money funds where the world was ending and now people feel a little bit more comfortable around systemic risk -- and with the yields at 1% and under in a lot of the money funds, it is the natural first step.

And that is probably why you're not seeing a big move in the equity markets' confidence to go into short duration bonds.

Our US government fund continues to do very well in this kind of environment.

It is all short duration taxable.

And then tax-frees, with some of the problems in that marketplace earlier, had very attractive relative yields and still very attractive relative yields.

So I think that trend should continue.

Okay, great Thanks.

Your next question comes from the line of Cynthia Mayer with Bank of America.

Hi, thanks.

I'm wondering if you could give a little color on your thinking behind not granting merit raises to manager level and above, and also get a sense of what impact that has.

How many folks is that, how many dollars that does that free up?

And do you feel like that would make you vulnerable at all to poaching?

Or alternatively, if markets improve a lot from here would you somehow reinstate those next year?

All right Cynthia, this is Ken.

I will take that one.

So obviously a lot of difficult decisions are made when you're trying to manage your expense basis in a market that we had and certainly that was one of them.

And in the debate, all the points you brought up were considered and are definitely valid.

I think that decision was made today; as with all the spending if the market's recovery is sustainable we'll obviously revisit that.

It does not even have to wait 'til next year, we could revisit it any time.

But I guess looking back on the bigger picture of compensation, certainly compensation will increase or decrease with the profit of the company.

And I think in our prepared remarks, I said, if the markets are flat, what I mean by flat is average assets under management which drives revenue.

So if you look at average assets under management, in this quarter it's $488 billion, we are already starting at $523 billion for next year.

So just based on that, you expect the variable component of compensation to increase.

And I think as people obviously are this business and the key focus of this organization, we are going to focus on restating compensation levels and making sure they are competitive going forward.

I would just add that we take a hard look at all aspects of compensation whether it is bonus performance, share grants, salary.

And I think part of that decision around manager and above is that looking at benchmarking our salaries, some of them were relatively high in the organization; and a lot of that is due to having people that have been with the firm a long time and have had merit increases every year.

Just again, in general terms, we did not feel like there was a lot of pressure on salaries.

There's pressure on bonus levels and that is something that we have been very focused on here with the rebound in the market.

And I think that is where we are more concerned right now, on getting that right in this environment when things have come back fairly quickly.

That is why you saw some movement in the comp line for the quarter, to enhance the pool a little bit.

But I think that is more important than what we do around the salaries for managers and above.

Great.

If I could just follow up, how many people were you talking about, managers and above?

I'm sorry, Cynthia.

I do not have that number at hand.

Okay.

All right.

Thanks a lot.

The next question comes from the line of Craig Siegenthaler with Credit Suisse.

It looks like most of my questions were already asked.

Except -- I just had a follow-up on institutional fixed income flows.

I am wondering if there is a difference between you and some of your competitors in that your incremental buyer of credit assets really outside the US is from the emerging-market side, mainly India; and a lot of your competitors are distributing fixed income assets to Western Europe.

Do you think a driver could be your heavier emerging market focus?

I think that could be, and I think that is probably correct around that we have not had a big presence in Europe with fixed income and have had a stronger presence with a lot of the Sovereign Wealth and as well as relationships we have in Asia.

So maybe those two are two separate markets in really what's happened the last quarter.

So, I think that's a fair comment.

Actually if I can just ask one follow up on expenses.

We saw a pick up in the number of non-comp items, especially like tech, advertising, other.

Was there anything lumpy or unusual in those three lines?

Or is the new run rate going forward, and should we expect even like a modest growth rate on these items as revenue increases with AUM?

As revenue increases with AUM it would be fair to assume this is a reasonable run rate and probably I agree there could be a modest uptick in some of the lines.

All right.

Great.

Thanks for taking my questions.

Your next question comes from Michael Sarcone with Sandler O'Neill.

I am calling on behalf of Michael Kim.

I just had one question.

At some point, you'd think that at least some of the money that has gone into bond funds will find its way back into equities, and you have obviously done a very good job capturing share on the fixed income side.

But how confident are you that you can retain these assets once investors start reallocating in favor of equity funds?

I think that is a concern and one that -- right now in the United States, we have an equity campaign where we are going out to the very strong relationships we have that are more fixed income oriented and really trying to cross sell our equity funds.

And we do have a very strong performance in many of our growth funds today, and it is really a question of getting the message out.

So I think we recognize that the market has been somewhat perfect for us over the last quarter as far as the asset classes and the flows; and we want to make sure that we are doing everything we can to capture when things move back into equities.

But we do feel like we've got the funds, we've got the records and it is just a question of getting -- making sure that we get that heard and visible to the advisors.

All right.

Thank you.

Your next question comes from the line of Marc Irizarry with Goldman Sachs.

Great, thanks.

Greg, just in terms of capturing the move back to equities on the retail side, it sounds like you are ready to prime the pump a little bit and maybe get gross sales going by advertising a little more than you have perhaps.

Is there something that you're seeing in the environment?

Or are you just making the connection here between what is going on with your funds and your performance and your strategies, that this is the right time?

And then I have a follow-up in the institutional side of that as well.

Well, I think that it is hard to know exactly when things will turn around.

But I mean, you have had big move in the markets, performance numbers are better and I think fear is a little bit less every day as far as the retail investors' appetite.

So we are not going to stop telling our story around Munis and Global Bonds and the other areas, but we do want to make sure that that is not the only story we're telling right now.

And so we are -- it's very much built into our sales process right now to get the message around equities out there.

And it is not -- remember, the flows are still fairly strong; it's just the redemptions I think are still higher than we like to see.

So, the awareness is out there, these are not small funds, they are big funds and they do have long-term records.

So that is important as well for us.

But I just think that every day the market hangs in, we are closer and closer to seeing more normalized flows and asset allocation in our business.

Okay.

Then just on the institutional side, can you comment a little bit on the move towards passive and maybe how International versus US only strategies would maybe fare in the move towards passive, if you are even detecting one?

I think the move towards passive, it is obvious.

I mean it is significant especially in categories like large cap growth in the US, and you are seeing a lot more activity there.

For us, again, having the larger asset classes in areas that really don't lend themselves to a passive competitor, I think somewhat shields us from that trend.

And global equities, emerging markets all fit that bill -- municipals, where we don't today see the cannibalization of passive investing.

And it also I think affects how you look at the universe and the world from an M&A standpoint and have to be careful about the traditional -- if an active manager's in a traditional space today, is that going to be a growth space versus passive?

And that is something that again we are very careful about.

Okay.

Great.

Then just in your fixed-income taxable, flow trends, if you look at the redemption rates, it looks like they slowed somewhat.

Which would -- I infer from that the stickiness of the assets there is improving at least slightly.

Do you think that is something that is characteristic of the larger institutional mix there, or are we reading into a little too much?

No, I think that is probably true; but you are right.

If you have a big institutional account go in, that will somewhat skew the numbers.

But overall, there is still a big appetite for fixed income; and I think that unless rates spike up a bit, redemption should stay down.

But I think flows will also continue to accelerate.

There is a lot of money still sitting on the sidelines that is moving into the markets every day there.

Okay.

Great, thanks.

Your next question comes from the line of Douglas Sipkin with Pali.

Thank you.

Good afternoon.

A couple of questions and I apologize if this was said already.

I think I might have gotten cut off for a second.

But I am surprised to see the headcount drop a little bit again.

Can you provide a little bit of color what that is going to look like going forward especially considering obviously the move up in the earnings in the AUM?

Sure.

This is Ken.

We did talk a little bit -- not specifically about headcount, but we talked about our expense outlook and at this point, we really don't have plans to add to headcount significantly.

The job this quarter was normal business, there was nothing in this quarter unusual.

There may have been some residuals from the staff reductions we had before.

In other words, things that took longer to reduce staff by might have come through this quarter.

But nothing really significant that would be any sort of a trend; and then looking forward, like I said, we have no plans to significantly add to headcount.

Were there any lagging severance expenses in the quarter or that ended last quarter?

I think there were some, but not significant.

Okay.

And then just following up on the marketing expense, first point, I guess is, or first question I should say is, how much of this is like near-term discretionary?

Meaning let's just say -- hopefully not -- but let's just say the markets reverse pretty sharply and people get scared again, how quickly can you turn off the marketing spending if you had to?

No, I think when it comes to things like where we are opportunistic like TV ads and some of the big-ticket items, we can shut that off pretty quickly.

And then the other component of it, which is a driver, is that if the market comes back in and we see reduced asset levels and reduced sales levels, a lot of the promotional expenses, the marketing support payments will drop as well.

And those are in that line as well.

It is interesting though -- I saw that you guys ramped because one of your competitor's marketing was much lower.

You mentioned there are some good spots.

Was it that you guys saw competition easing in certain places and you jumped on it?

Or it's just something unique to Franklin's franchise that you were able to take advantage of?

I think we felt with the performance trends, we felt like we had a good story to tell.

That's been a theme for probably the last three quarters.

Then the other part was as you described, there was probably some good spots as competitors pulled back that we were able to take advantage of.

Okay, great.

And then just final -- I know it has been hit on a little bit about the fixed-income.

I guess if I'm reading correctly, I guess, should I be thinking this way?

If the markets continue to strengthen on the equity side, do you guys envision maybe the pace of fixed income slowing down?

Obviously no one expects it to maintain this pace, but is that part of the reason why you guys are getting out there and marketing now more so than you have been?

Or do you feel like fixed income can continue to roll on the positive side even if the equity markets remain fairly healthy?

I think the bigger question is -- and we all know what we know today is going to be different than what we know in three to six months around what rates are doing and inflation and the dollar and all those factors that are really going to affect what's fixed income.

If the markets are quiet and we don't really have an inflation scare, then I think you will see very strong fixed income flows.

As I said before, equities will come back at some point and if the markets hold in here, I think we're getting near that stage where we should start to see the retail investor moving back.

So the answer is we think for what we know today, we are going to see more of the same right now.

That is fixed income, global bonds and shorter duration taxable kind of flows.

I think that is consistent with the mindset of the retail investor, but every day they get a little bit closer to more equities.

Great, thank you.

Your final question comes from the line of Ken Worthington with JPMorgan.

Hi, good afternoon.

First in terms of operating margins, can you help us size the operating margins in your US businesses versus your businesses overseas?

How do the two compare?

Well, it is a little bit problematic because I would not say that we run our profitability models by geography.

It is more of a distribution line, where you have your all-in costs.

In general, you might tend to have a little bit less profitable margin in the US, but not by much when you allocate all the support functions to the international offices.

Okay.

So higher overseas, but not that much higher?

Okay.

Then on investment income, just to get it -- I would love to just size the base rate of investment income you'd expect to generate over the next year.

If the equity markets are flat and the rate environment is flat, just given that size of trading assets and available for sale, how much income should that really kick off each year?

If you are just talking about cash earnings, as you know, yields are at historic lows, so that has come down since last year.

Of the total -- this quarter, the total other income was about $87 million.

Maybe 20% of that is cash earnings.

Okay, great.

Thank you very much.

At this time, I would like to turn the call over back to management for closing remarks.

I just want to thank everyone again for participating on our call and we look forward to speaking next quarter.

Thank you.

Ladies and gentlemen, this will conclude today's conference call.

You may now disconnect.