Peabody Energy Corp (BTU) 2003 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Peabody Energy Corp earnings teleconference. At this time, all participants are in a listen-only mode. Later we will be having a question and answer session and I’ll give you instructions at that time. Should you require assistance while you’re on this call, simply press 0 then star, and an operator will come to your line to assist you.

As a reminder, this conference is being recorded for a digitized replay. You may stay on the line at the conclusion of the call for the replay. [music]

I’m sorry for that interruption. I am now going to turn the conference over to the host, Vic Svec.

Well, good morning. We appreciate the musical interlude and thanks for taking part in the first quarter conference call for BTU.

This morning, our Executive VO and CFO, Rick Navarre, will review our first quarter performance. And Chairman and CEO, Irl Engelhardt, will discuss the markets, our Black Beauty transaction, and our outlook.

We will be making some forward-looking statements today and they’re consistent with our press release. We would encourage you to consider these along with the risk factors that we note at the end of our earnings release, as well as those documents that we file with the SEC. And replays of our call are available through a toll-free number and by Webcast at PeabodyEnergy.com. Rick.

Good morning. Thank you for your interest in BTU.

We had a very active first quarter that provided better than expected results. We were very pleased with the outcome of our recent refinancing that should save us $15 million annually. We made an [indiscernible] acquisition of remaining interest in Black Beauty Coal Company during the quarter and the coal markets are improving, which should help us post strong second half results this year.

I’ll begin by reviewing the income statement on page five. Peabody’s revenues at $681 million rose slightly for the quarter as higher pricing allowed us to overcome a 2 million ton reduction in sales volume. The lower production levels were due to the continued soft economy and outages at several major customer plants. However, heavy snowstorms during February and March in both Appalachia and the Powder River Basin took us all by surprise. Our operations were able to quickly get back on track, but more than one million tons of shipments have been deferred until later this year.

Our operating profit of $45 million was affected by the lower production levels. We also incurred $11 million in higher, mainly non-cash, operating expenses that we covered last quarter. These relate to health care and pension expense and the adoption of a new accounting standard for post-mining reclamation costs.

Partially offsetting the lower production levels were solid performances from our recently acquired Australian mine in our resource management group. Combined, they increased operating profit by $5 million for the quarter.

New this quarter on the income statement is a separate line item which includes $21 million related to the Irly extinguishment charges from our successful Irly refinancing in late March.

You’ll see that we are also incurring higher letter of credit and surety bonding costs. You’ll note we had a $12 million income tax benefit for the quarter, and we expect a tax benefit of $30 to $40 million for the year as a whole.

Finally, we had a $10 million charge related to the [indiscernible] tax cumulative effect of accounting changes that we previously communicated.

If you’ll focus on the summary on the bottom of page five, our EBITDA for the quarter was $97 million versus a target of $80 to $90 million. Income before accounting changes and debt repayment totaled $20 million in the first quarter versus $22 million last year. In earnings per share, excluding these special items, was 39 cents for the quarter compared with 42 cents in the prior year.

Turning to our supplemental data on page six, the decline in production volume for mining operations was offset by improved trading and brokerage revenues. Our revenues per ton rose in both the East and the West. You will remember that we locked in 200 million tons during the favorable market conditions of 2001, and we refrained from making major commitments during the soft markets of 2002. We also reopened the Big Mountain Mine in mid-February in response to improving market opportunities. As you will recall, we suspended this operation in 2002 and our ability to respond to this opportunity was due to our re-engineering of the Big Mountain cost structure.

Moving to operating costs, we experienced a 2.9 percent increase largely due to 3.3 million tons of lower U.S. production. Most of this increase from running at lower capacity due to the temporary customer outages and the blizzard conditions experienced at several mines late in the quarter.

Fuel costs added $2.5 million to our cost structure. The impact of higher priced fuel would have been more significant, but was minimized by a combination of our hedging program and pass-through provisions in many of our contracts.

Temporary geological problems at one Appalachian operation added about 70 cents per ton to our Eastern costs. In the West, higher revenue-based production taxes and royalties increased costs 12 cents per ton.

We’re pleased that our gross margin per ton improved to $2.62 in the West. Our margin in the East declined to just under $5. However, we expect higher volumes and lower costs to expand margins in the second half in both the East and the West.

During the first quarter, we had $59 million in capital spending primarily to complete several new mining complexes. The Highland number 9 mine, Willow Lake and Federal Eastside. Our expected capital target remains $175 to $200 million for calendar year 2003.

Turning to page seven, you will see how our changing debt structure affects the March balance sheet. In late March, we seized on opportunities in the capital markets with our Irly refinancing. It lowers our interest rates by over 200 basis points, it gives us expanded flexibility, offers pre-payable debt, extends our debt maturities, and really simplifies our capital structure.

We now have a $450 million pre-payable term loan and a $600 million revolver that is undrawn except for letters of credit. We also secured $650 million in tenure notes at a 6 and 7/8 percent coupon, which compares very favorably with our previous average coupon on our bonds of 9.3 percent. We expect interest savings of more than $15 million per year from the new structure.

As you can see, at March 31, we had a large restricted cash position of $510 million to redeem the remaining high interest rate bonds. Also, receivables increased as we reduced our securitization program to efficiently use excess cash pending the May bond reduction.

In summary, our EBITDA of $97 million and earnings per share of 39 cents outpaced our previous targets and our 2003 outlook is strengthened by the benefits of our refinancing.

In closing, I’d like to thank all of you who participated and invested in our refinancing, for your support and continued confidence in Peabody.

At this point, I’d now like to turn it over to Irl Engelhardt, our Chairman and Chief Executive Office.

Good morning, everyone. Before I take your -- before Rick and I take your questions, I plan to cover Black Beauty, the coal markets, and our outlook.

The purchase of the final stake in Black Beauty is an example of Peabody’s business development, strategy and action. We’re frequently asked what we’re going to do with the excess cash that Peabody generates. While our strategy is to create numerous investment opportunities which have varying levels of risk. And then we look at those various opportunities as we deploy our capital.

We’ve worked with the Black Beauty management since 1994 and we know them well. We’ve watched Black Beauty’s customer base and its production base grow dramatically. As we had the opportunity, we’ve increased our stake in a very successful company that we know well.

The final purchase allows us to own a business, which is growing at a rate of 15 percent while we retain our strong relationship with Black Beauty’s founders and its senior managers. We plan to continue Black Beauty’s growth record, and we expect the acquisition to be slightly accreted in the first 12 months.

Turning to the market condition, I’m happy to report that most market indicators continue to improve. The normal winter weather helps stimulate a 4 to 5 percent increase in U.S. electricity generation over the first quarter of 2002. We believe that generation from coal increased 3 to 4 percent year-over-year despite a number of customer outages for repairs and equipment upgrades.

We estimate that the U.S. coal shipments lagged the first quarter of last year by somewhere in the range of 8 to 9 percent. Shipments were affected by ongoing stockpile reductions by the customers, heavy snowfalls in Wyoming and Appalachia and difficulties at a number of producers in the East.

We believe coal stockpiles, which were in a building mode a year ago, were drawn down by 5 to 10 million tons in the first quarter. They now stand below the levels of three of the past four years, and we estimate them to be at a level of 125 million tons at the end of March.

During the first quarter, we priced 4 million tons of 2003 production at improved prices. We are essentially sold out for most of 2003 at current production rates. 20 million tons for delivery in 2004 and beyond were also sold at some very favorable prices and our unpriced position for 2004 is approximately 60 million tons, and we’re quite comfortable with our book of business.

Although market activity is lively, and we expect Peabody to perform very well, we are continuing to take a conservative view. Major issues such as the more and the weak industrial activity cloud the view of the future. We are targeting second quarter EBITDA in the range of $80 to $90 million reflecting our reduced production due to customer repairs.

Full year EBITDA targets are up to $405 to $415 million. Absent the debt repayment charges and the effects of new accounting rules that Rick discussed, our earnings are targeted at 15 to 30 cents per share for the second quarter and $1.40 to $1.55 per share for the full year.

We appreciate your continued support, and at this time, Rick and I will be happy to take your questions.

Ladies and gentlemen, if you wish to ask a question, please press 1 on your touchtone phone. You’ll hear a tone then indicating you’ve been placed in the queue. You can remove yourself from queue at any time by depressing the pound key. If you’re using a speaker phone, please do pick up your handset before you ask your question. And we do also request that you try to limit yourself to one question and one follow-up.

Our first question comes from the line of David Snow at Energy Equities. Please go ahead.

Yes, sir. Could you give us some feel as to what spot prices are looking like versus their historical.

Yes, David, for those that have followed us on the road show involving the recent bond offerings, you saw -- you have seen a slide that showed for the over-the-countering markets for Appalachian steam coals and for Powder River Basin coals that the markets were up for both products versus approximately five to six months ago. They are much more in the East than they are in the West. However, that could be expected if you saw the situation that occurred in the year 2000 and 2001 when the prices moved in the East Irlier than the West.

In the East, those market indicators would show that they’re up somewhere in the range of $4 to $5 a ton. And in the West, it would show a much lower number, but of course, the price is much lower, somewhere in the range of 25 to 50 cents.

Would that put it up in the $30 range?

For Appalachian steam coals, some of the prices are above $30. But, I have to say that I’m not allowed to discuss much about pricing on a -- in a forum like this for obvious reasons.

Okay. Thank you.

Thank you. Next question.

Our next question comes from the line of Andy Pettyjohn from Goldman Sachs. Please go ahead.

Good morning. I was wondering if you could give us a little more detail on your balance sheet. For example, what did you have outstanding for letters of credit and what was outstanding on your AR securitization program?

Sure. With respect to the letters of credit, it really didn’t involve the balance sheet, of course. But, we had about $230 million of letters of credit that were used against the capacity on a $600 million revolver.

As it relates to the outstanding securitization program, we were at about $140 million in total before this quarter, and we paid it down to about $52 million. So we’ve taken advantage of the fact that we had the excess cash and used that to take advantage of the interest rates. And we’ll bring that back up to 140 after we pay down the bonds on May 15.

Great. Thanks. Do you mind just telling us what was outstanding on your old bond issues that you’re going to call in May at the end of the quarter?

It was about $703 million in total. We picked up some of those in the tender offer that we had -- the Irly tender offer. And we now have about -- with face value -- about $465 to $466 million of bonds remaining to be redeemed.

Great. Thank you very much.

Our next question comes from the line of Dave [ph] from Credit Suisse First Boston. Please go ahead.

Great. Thanks. Just a couple of quick questions. First of all, on the -- just on the trading business, I was wondering if you could give us a little more color on -- seemed to be quite an active quarter and I’m just curious what happened in this quarter and what we should look for moving forward. That’s the first question.

Sure, Dave. As it relates to trading, as you know, we’ve been turning in improved results really every quarter for the last two or three years. We continue to put more emphasis on that piece of business. But, we turned in a solid quarter. We had a number of structured transactions that closed in this quarter. From a looking forward, I would expect a number somewhere in the $10 to $15 range each quarter of earnings in that business.

Okay. Great. And then --

A little bit spotty, but it could be higher in certain quarters based on what we closed during that period.

Okay. And then just on the operating cost side, it looks to me like first quarter operating costs sequentially were down fairly substantially, particularly in the East. Now, I realize there was some one off items in the fourth of ’02, but I’m curious what you’re expectations in the East and the West are, if you can give us some guidance for unit costs for Q2 through Q4 and for the full year, if possible.

Well, let me cover it from a macro level. First of all, our operations are running well. We had one mining operation in Appalachia that had a long wall issue for two months of the first quarter. But, it worked its way out of it in the month of March and ran well.

Our biggest concern on the macro level from an operating standpoint is that we had three mines that were ramping up their new mines. Two were already in production. We’re simply bringing them up to full capacity, and that is always a difficult thing to predict.

And then we have a third mine that we will move a long wall to a new area that has not been mined previously. We think it will all go well and we’re on track, but there’s a little bit of risk associated with that. But, overall, the operations are running well.

Yeah, and you’re right. In the fourth quarter to the first quarter, we improved our cost structure some $1.44 over the fourth quarter of last year. And that’s in part because some of the issues we had in the fourth quarter and our efforts to rectify those issues and re-engineer the cost structure at Big Mountain and other operations. So we have basic improvement.

As we go forward for the second half of 2003, what we directionally I think we should be looking for is lower costs than what you’re seeing in the first quarter as we get our capacity and volume up to the right levels.

Okay. Great. Thanks.

Our next question comes from the line of Andrew O’Connell -- O’Connor, excuse me, from Strong Capital. Please go ahead.

Andrew O’Connor: Good morning, Rick, Irl, and Vic. I wanted to know perhaps, Rick, what gross operating margin per ton would be commensurate with your second quarter earnings guidance of 15 to 30 cents a share and your EBITDA guidance of $80 to $90 million. Thanks.

I think it’s fairly comparable to what you’re seeing right now at some 75 to 80 cents of operating profit per ton.

And that’s because we’re running at reduced levels of capacity primarily.

We think our production for the second half will be somewhere in that same range, and so we’ll probably be like from an operating profit per ton for the operating side and excluding some of the other lines of business, it will be about 75 cents.

Andrew O’Connor: So 75 cents a ton in the second quarter even though earnings will be quite a bit less relative to the first quarter?

Yes.

Andrew O’Connor: Okay. Thanks, guys.

Our next question comes from the line of David Cameron at Stifle Nicolaus & Company. Please go ahead.

Good morning. It’s David Cameron with Stifle. A couple quick questions for you. Actually, just one macro question. What are you guys hearing as far as utilities? You said stockpiles, I think, were 125 million in press release. Can you give us a little more color on what you’re hearing?

What we’re seeing – all of our analytical work shows that the stockpiles are very low compared to prior years. They’re lower than three of the past four years overall. There are some regions of the country that are very low. And especially in the Eastern half of the United States, and the farther east you go, the lower they seem to get. Those are areas where the customers will have to increase their orders in the second half if they’re going to utilize those coal plants at high capacity levels.

Okay, and any – where are you at in the West? Are the inventories – I know they’re not quite as low as the East, but what –

As you know, the industrial activity of the country is focused in certain regions and certainly the eastern United States has had the biggest decline in industrial activity. So, the customers are feeling it the most. In the West, the stockpiles are generally in good shape. They’re slightly higher than the East. When I say good shape, I’m talking about it from my perspective, that they are relatively low, but they are slightly higher than in the East. And they are also closer to the coalfields, which is an interesting situation, too, in terms of days of delivery.

Okay and any update on the legislative front?

A number of things are happening on the legislative front. The Energy Bill is certainly being heard right now and the debate is going on about it. It will generally be good for coal from the standpoint that our clean coal technology component of it seems to be in both the House and the Senate version. And there’s also good language in the Bill related to the use and upgrade of electric transmission lines to allow the coal plants to run at even higher levels. So that’s good.

The Clear Skies initiative is one that is trying to get traction. It will be debated and is being debated in the Senate. We hope the House will move it along. I think it is an initiative that will be good for coal for the long term because it clIrly establishes the regulations that allow the investment in coal plants for the long term.

The other thing it does, is it makes it clear that we can continue to make emissions improvements without the need for the New Source review regulations that were [promulgated] by the last administration. And that caused some of our utilities to have uncertainty as they made repairs and investments in the plants. So, generally, it’s moving at a good pace.

Okay, thanks very much.

Our next question comes from the line of Michael Dudas from Bear Stearns. Please go ahead.

Good morning. When you talk about you set up 21 million tons of contracts for 2004 and further, what are some of the tenor – what are the utilities asking from these contracts? Are they longer term in nature, [mid-nak] provisions and is that a number that you thought you’d be booking now? Is it a little bit more, a little bit less?

It’s roughly on line with where we expected to be at this time. I would call your attention to Page 6 and to the Revenue Per Ton section of our release and you will see that we continue the overall increase in pricing for both the East and the West and that includes a solid base of long-term contracts, as well as the affects of the stock market. So pricing continued in this quarter to increase and they increased, I believe, year-on-year from last year. So we’re continuing that trend.

As far as the terms, they differ by customer, but, generally, two to four year contracts are readily available out there. Almost all of the major customers are in the market or had been in the market and it’s quite a lively market right now.

And Irl to follow up on that from the – or maybe Rick, a break-down of the exposed towns for 2004 relative to your Eastern and Western operations?

In 2004 we had about 60 plus million tons to sell Mike, and about 35 million of that would be in the [caribou] basin, and the rest would be broken down between the East and the Midwest and very little in the Southwest.

One final thought. Irl, we’ve seen tremendous – and even in your company, down 13% in shipments out of the East, and every week another bankruptcy comes on to the forefront. How serious do you think are the capital restriction issues and all the other very high varies in entry and varies in exit in the East and could that cause some more, maybe, utilities to get a lot more anxious as they watch inventories come down at these rates?

I won’t comment about whether the utilities will get anxious or not, but I will say that our country is in a very bad position regarding energy supplies – high oil prices, high natural gas prices, yet low stocks of oil, low stocks of coal, low stocks of natural gas, and if we were to have a resurgence in the economy coupled with normal weather, we could have some major supply disruptions for electricity in this country or the fuel that is used could be extremely expensive, which has a dampening effect on the economy.

I don’t know if the utilities will be anxious or not. I will say the country, as a whole, is in a precarious position.

Irl, thank you for your thoughts.

Our next question comes from the line of Paul Forward. Please go ahead.

Good morning. On the Black Beauty buy in, what’s the strategy in continuing to add to your position in the Illinois Basin, as opposed to going further into the PRB or going international where maybe you pay a higher price but you’re in a higher growth area? Are you looking for more long-term more [scrug] installations, more mine op generating opportunities in the Illinois Basin, or maybe taking advantage of more closures by competitors there that eventually support better coal pricing? Could you provide a little color on that?

Sure. Black Beauty has in access of 90% of its business locked up under long-term contract. We have a huge reserve position in the Midwest, somewhere in the range of three and half to four billion tons of coal reserves.

We have a relatively high market share of the business in the Midwest and we see it as a very good place to do business. But locking up our business under long-term contract, we can afford to build low cost mines that are located close to the customers and therefore eliminate a lot of transportation costs. And both the customer and we benefit from the pricing that they receive and the recurrence we receive on our investments. So it’s a good place to do business. Is it better than the Powder River Basin? Well, we can obtain similar returns to the Powder River Basin. Is it better than international? As you know, we’ve been international before and done quite well there. We’re back into Australia at this point. We simply look for good investment opportunities. We don’t fall in love with the assets. We’ll sell them if we can get it higher priced than we think they’re worth. And that’s how you make money for the long term. So, we believe Black Beauty is a good buy and is a great company and it will allow us to apply it and another companies that we own to our three and half to four billion-ton reserve base.

Okay, very good. And just one question on the year-end coal inventories coming out from the Department of Energy. They seem to come in pretty high at 143 million tons of total power generators coal stockpiles. That seemed to be higher than what most people were estimating it would be. Did your 125 million ton estimate for March take into account that higher number at the year-end?

Well, we think they are too high. Let’s say they were right and we subtract our 15 million tons of usage or draw-down during the period, then we would be somewhere in the range of 128 versus the 125 that we say is our number. It’s not a precise number, either on their part or ours or anybody else’s. But it’s indicative of continued drawdown that is going on.

Okay. Very good. Thank you.

Next we go to the line of John Bridges at J.P. Morgan. Go ahead sir.

Good morning everybody. Just looking at the prices on Bloomberg Central App coal and one of the services we take, your [trust] prices moved up mid-quarter and then came back a little, and I just wonder – you’re obviously the guys who know what prices are actually doing, but is that a fair representation of what’s been happening? And I wondered if you’d have some color as to what was driving that?

I think we always explain to parties that when we use OTC prices for purposes of explaining where the markets are, that they’re thinly traded and they’re indicative or longer term movements in price. They’re not precise. We are now in the shoulder months of the year and in thinly traded markets with customers with a lot of plants down for repair, you would logically expect the demand to be down slightly. We see markets remain quite strong at the current time, so we are not alarmed by any dip that might temporarily take place in that OTC market.

But those dips could generally be related to short-term deliveries in the next, you know, 30 days, versus the business that we’re booking that is forward-looking for 12 months or more, so we’re just looking forward on that. So the trend hasn’t dipped in that particular sector.

Re your comment on the particularly low levels of indentures in the East that you see, what sort of – when would we expect to see volumes picking up there if they were planning to build up for the summer? That, presumably, would have to start within the next few weeks.

That’s true. I mean if we are to run the coal fire generating plants at a high capacity factor and to be able to have adequate supplies through the summer period, if we have a normal summer, those shipments should have already begun, and they don’t seem to be, as of this moment, in some regions.

However, there is a lot of activity in the market right now and they could begin.

Okay, well, let’s keep our fingers crossed from the [indiscernible] this summer.

Let’s keep them crossed for the country as a whole because of the effect on the economy.

Okay, thanks Irl.

Our next question comes from the line of Bob Sullivan at UBS Warburg. Please go ahead.

Hi. I just wanted to follow up a little bit on the inventories and the EIA data just to make sure I’m using apples to apples here. If you bring down the 143 that they’ve estimated, it’s still hard to see where the stockpiles, from my perspective, are above historical levels at year-end – I mean below, it still seems like they’re at or above. Could you just sort of talk a little bit about what you see differently there?

Repeat your question please.

It just seems like the 143 figure that the EIA is reporting is significantly above the last three to four years, so I’m just trying to figure where those figures are different than the stockpile levels that you’re seeing and the levels that you’ve seen historically. Are we looking at the same?

Well, first, I hope you’re matching at the same point in each of the –

Right, end of December I’m looking at.

Okay, then, again, we believe the EIA data is high. How do you reconcile it to where we are? We’re at roughly in the range of 125. If you say there were 15 million tons of draw-down in the quarter, that 145 takes you to 140, which is within 3 million tons of where they are, so –

So, you were at about 135 then at the end of the year?

And if you look at the statistics that have come out since the end of the year, Bob, with respect to generation, is up some 7 to 8% and you’ve got coal stockpiles – I mean our coal production is down so that’s where we get our 15 million draw-down which gets us down to the 125 range.

Yes, I agree with you. I just was looking at the December points with that. On resource management, what would you expect for the contribution for – or sort of a run rate there?

Well it’s a lumpy kind of business. It’s doing deals and we described one of our strategies is to aggressively manage the big 300,000 acre surface position we have and the 9 billion tons of coal reserves. We, simply, buy or sell around that position. Rick, do you have any –

For the last two years we’ve churned in, Bob, $15 million in both ’02 and ’01, we had $15 million in contributions from that sector. So, you know, I would be comfortable saying we’re going to be in that same $15-20 million range and comfortably for ’03.

Okay, so that’s the range? This would have been guidance?

Right.

Okay, and have you seen anything in the market that would make you comfortable to start to look at pulling some of that production off – putting some of that production on line? I think you mentioned three million tons a quarter that you could bring on line?

We said we had, roughly, four to five. At this point we haven’t put any of it back into the market now, other than our reopening of the big mountain mines slightly Irly versus what we had expected. And that’s trivial in the grand scheme.

For competitive reasons, we can’t explain where our production level is going to be. We’re not allowed to.

Our next question comes from the line of Andrew O’Connor at Strong Capital. Please go ahead.

Andrew O’Connor: That’s for the follow on. Irl, perhaps you or Rick stated this Irlier, but your overall production for ’03, is it still estimated to be about 177 million tons?

It’s in that neighborhood. We’re in that 175, 177 right now projections. We were only slightly down because we’re behind a little bit in the first quarter, hoping to make that up and get this back up to the 177 by the end of the year.

Andrew O’Connor: Okay, and then again, I think I heard you just say, that what – you’ve got 15 to 20 million tons of additional annual capacity available? Is that right?

On an annual basis, right.

Our next question comes from the line of Dick Price at Wunderlich. Please go ahead.

Good morning. Just a follow-up on the Irlier discussions of your search for the President and Chief Operating Officer position?

Where are we, is that the question?

Yes.

We continue to look both within the company and outside the company. We have good candidates in both spots, so as we move along and reach a position that the Board is comfortable with; we’ll make the announcement to the street. But there’s no urgency on it. It’s one of those situations where you need to get the right person and for the rest of the world, they don’t need to hold their breath.

Okay, quick follow-up on your two long [wall] items of Irlier discussion points. The geological issues, would I be correct in assuming there were errors and the other is the federal move?

The geologic problems did occur at [harris]. They worked their way through an unexpected area and people did miraculous and very good work there achieving it. However, once they worked their way through it, their performance has been very good in the month of March and thus far in April. So we’re hopeful that that’s behind us and we’ll move on to very good performance. But we’re cautious because it has occurred in the past.

And you’re right that the other issue was some start-up issues with Federal.

At this time, there are no further questions. Please continue.

Okay, well once again, we want to thank everyone for you interest in Peabody and those that supported us in connection with the recent re-financing. Thank you very much. We will strive to meet of exceed the targets that we’ve provided you and do our very best. Thank you.

Ladies and gentlemen, this conference will be available for replay beginning at 1:30 p.m. Central Time today running through Midnight the evening of May 16, one month from today. You may access the AT&T Executive Playback Service by dialing one of the following two numbers; either 1-800-475-6701 or 320-365-3844. The access code for this call is 678009. Once again, those numbers; 1-800-475-6701 and 320-365-3844. The access code is 678009.

That does conclude our conference for today. Thank you for your privation and thank you for using AT&T Executive Teleconference. You may now disconnect.