CMS能源 (CMS) 2003 Q3 法說會逐字稿

Good morning, everyone.

And welcome to the CMS Energy third quarter earnings call.

This call is being recorded.

Just a reminder, there will be a rebroadcast of the conference call today beginning at 12:00 p.m.

Eastern Time running through November 18.

This presentation is also being webcast.

An audio replay will be available approximately two hours after the webcast and will be archived for a period of 30 days on CMS Energy's website in the investment and CMS section.

At this time, I would like to turn the call over to Laura Mountcastle, Vice President Investor Relations and Treasurer.

Please go ahead.

Thank you.

Good morning and thank you for joining us.

With me today are Ken Whipple, Chairman and Chief Executive Officer, Dave Joos, President and Chief Operating Officer and Tom Webb, Executive Vice President and Chief Financial Officer.

First, I'll make the usual disclosure statement.

This presentation contains forward-looking statements within the meaning of the Safe Harbor provisions of the federal securities laws.

Our actual results may differ materially from those anticipated in such statements as a result of various factors discussed in our SEC filings.

The presentation also includes non-GAAP measures when describing CMS Energy's results of operations and financial performance.

We have prepared a reconciliation of each of these measures to the most directly comparable GAAP measure in our earnings release, which is posted on our web site at cmsenergy.com/invest.

I will now turn the call over to Ken.

Thanks, Laura and good morning, ladies and gentlemen, and welcome.

Welcome to our third quarter earnings call.

I'm going to kick off today's agenda and Tom will follow with his financial update.

Dave will follow that with his operations report, which will include an update on our important regulatory agenda.

As some of you know, Dave, Tom and Laura attended the EEI meeting in Orlando last month.

They spoke with many analysts and investors and there was a remarkable consistency in the questions and issues raised by you and your counterparts.

So I thought we'd start today by listing those top issues on the next slide, all of which will be covered in more detail in today's presentation.

They are earnings, liquidity, debt reduction and regulatory issues.

On earnings, we didn't exactly have a barn burner of a quarter, as Tom will cover in a minute.

We lost 51 cents a share on a reported basis and we made a whole penny on an ongoing basis.

Despite that, we are once again reaffirming our prior guidance of 80 to 90 cents, although we're guiding you to the lower end of that range.

Several of you have asked us about earnings for next year.

At the moment, we're working our way through the budget process and the most likely timing to discuss 2004 guidance with you is early in the new year.

On liquidity, we have pretty much achieved the period of liquidity piece that we have discussed with you in prior reports.

We're now moving into a next phase, where because of our progress, we are able to lower our on hand cash reserves and accelerate some debt maturities, good news, we think.

On debt reduction, Tom's presentation will highlight this year's total company reduction from $7.3 billion to $6.2 billion as well as a reduction of about 50% in parent and Enterprises debt over the next few years.

As you know, we have a big regulatory agenda, including the gas rate case, securitization and stranded cost recovery and frankly it's not moving ahead quite as briskly as we would like.

Dave will fill you in on that in a minute.

Now I'd like to turn it over to Tom to cover the third quarter results in more detail.

Tom?

Thanks, Ken and my welcome to everybody that's on the call today.

For the third quarter, our reported loss was 51 cents a share.

Excluding discontinued operations and restructuring costs, ongoing earnings were about break-even at a profit of 1 cent a share.

Discontinued operations include a reduction in the fair value of our Venezuelan and electric distribution company, called Seneca.

In September, only a portion of overdue rate relief was granted.

With this clarification, a new lower fare value for this discontinued operation was established.

Our plan is to sell this business in 2004.

Restructuring includes fees related to the reset put securities settled in July.

On an ongoing basis our earning are down from 46 cents a year ago and let's take a look at this together on the next slide.

With the exception of cooler than normal weather this summer and slower than anticipated economic recovery in Michigan, results are in line with our full year plan.

Cost savings in favorable currency exchange rates helped do that.

With this waterfall chart, we've highlighted earnings per share changes from a year ago.

Our Enterprises projects turned in better results, boosted by a stronger Argentine peso.

The earnings impact of lower sales was 16 cents, offset in part by higher gas utility rates worth 2 cents.

Lower sales related differences include three things.

First, electric utility sales that were off 6.4%, reflecting a summer that was much cooler than last year.

Second, a weaker economy in Michigan.

And third, a higher level of customers taking power from alternative suppliers.

Our retail open access load at the end of the quarter was about 600 megawatts.

The next bar reflects profits related to businesses sold since last year.

These profits, of course, are not in this quarter's results.

Next, net interest expense is higher reflecting higher debt at the utility, costs associated with a $925 million bridge loan that we've been able to pay off early and early retirement of other high cost debt.

The last bar, labeled cost and other, includes planned higher depreciation and property taxes at the utility and the expensing of stock options.

Our guidance for 2003 remains unchanged at 80 to 90 cents a share.

For the utility, we continue to expect earnings at $1.55 to $1.65 a share.

Compared to our guidance provided in August, costs are lower, but sales are softer.

Enterprises should be better and financing costs will be a bit higher, reflecting asset sales a little later than planned.

Dave will talk more about this in just a moment but for this year, we are not counting on the final sale of our electric distribution business in Brazil or our pipelines in Australia.

On balance, however, I'd expect earnings to be at the lower end of the range.

Our full year guidance includes fourth quarter earnings of 25 cents or better.

With this next slide, we will provide insight to some of the business drivers compared with 2002.

Now, last year in the fourth quarter, we lost 9 cents a share.

Excluding a reduction in tax credits recorded last year, results would have been 27 cents.

With normal weather this year and more shares outstanding, results would be lower as indicated by the arrows on the chart.

Planned cost reductions and Enterprise project results, however, should provide upsides.

Let's shift over to reported results.

As you may remember from our call in August, the timing of asset sales can influence substantially the outcome of our reported earnings.

Previously we were expecting to sell Loy Yang this year.

It appears that sale may be later.

This would improve reported results by about 50 cents as shown in the slide.

When the sale occurs, we'll recognize foreign currency transaction account losses in income.

Consistent with the plan to sell our electric distribution company in Venezuela, we've taken a charge to reflect our best judgment of the fair value of this business.

Also, we've included in this forecast a noncash pension charge of $40 million after taxes, should a greater than expected number of retiring employees take lump sum payments instead of annuities.

This may or may not be required.

We still anticipate our 2003 reported earnings per share to be a loss of about $1.

Now, please turn with me to the next slide and we will review liquidity.

The parents shown on the left and our Consumers utility on the right.

At the parent, we now plan our liquidity to include $845 million of asset sales, $55 million less than the prior estimate.

As mentioned earlier, the closing on the sale of CPEE and the Australian pipelines will occur early next year instead of this year.

The dividends in tax sharing for Consumers are lower at about $200 million.

Other cash improvements of $37 million are the result of lower capital spending and the sale of southern union stock.

Cash at year-end is projected at $346 million as you can see at the bottom of the slide.

Remaining 2004 debt maturities are down to $215 million since we called the balance of our January '04 senior notes as well as about $15 million of general term notes.

On the Consumer side, we retired $150 million more debt than previously planned and reduced capital expenditures by $20 million.

Cash on hand for the year-end is now planned at $50 million.

That's down 150 as we accelerate debt retirements.

We don't believe it's necessary to carry a large cash balance at the utility since we now have a $400 million bank facility and we've retired all the 2004 maturities.

As shown on the next slide, we're not where we want to be on capital structure but we are close to meeting our commitments.

As shown on the right side of the slide, consolidated debt will be reduced from $7.3 billion last year to $6.2 billion or a bit lower at the end of this year.

This puts us on a plan to reduce our debt to capital to 75% or about 74% net of cash.

As you may know, the FASB has delayed application of standard 150, which requires treating certain hybrid equity as debt.

If standard 150 applies at some point in the future, our debt to capital ratio would be over 80%.

This accounting change is not likely to impact the way rating agencies look at us or compliance with our indenture covenance.

It's not clear when this may apply.

As Ken mentioned, we're frequently asked about how we'll continue to reduce debt at the parent.

With this slide, I will highlight tools that will allow us to cut our debt about in half over the next five years.

Over that time period, interest as well as preferred and common dividends shown in red are covered by dividends from Consumers and Enterprise subsidiaries, and these are shown in the cross hatched portion of the green bar.

Several other tools provide cash to reduce debt.

Incremental asset sales and insurance settlements could generate between 2 and $300 million.

Project financing can provide further cash.

We only have about $100 million in our plan, but work is under way to accomplish a bit more.

Tax sharing between Consumers and the parent can provide substantial cash to reduce debt.

As Consumers generates earnings, CMS can offset its interest expense and other losses against these taxable earnings.

Finally, the use of existing cash balances can also reduce debt.

Now, not shown on this chart is equity.

As we've talked about frequently over the past many months, CMS likely will issue stock in the future.

This can be used to further reduce debt or to grow the back-to-basics business and on that note, I'd like to hand the call over to Dave to provide an update on our operations.

Thank you, Tom.

Let me just summarize operations in total by saying that they continue to be strong.

I will highlight just a few items.

First, I'm proud that our gas utility has recently been named the JD Power and Associates award winner for highest customer satisfaction among midwest gas utilities.

You may recall that we won this award last year, as well, though we did share it last year with another utility.

Our employees take great pride in the job they do serving our customers and this recognition is well-deserved.

Secondly, our generating fleet continues to perform well, both at the utility and CMS Generation, our independent power company.

Particularly notable is the continuing strong performance of our Palisades nuclear plant, which is currently in its fourth all time longest continuous run.

Finally I would mention that the Michigan Public Service Commission last week issued its report regarding the August blackout.

The report focused on the actions of Michigan utilities to manage the event and restore customer service promptly.

In a nutshell, the commission gave Consumers a clean bill of health with regard to its response.

Now a brief update on asset sales.

If you listened in on our last quarterly conference call, you will recognize that the only change in this slide is that we now have signed a sale agreement for our interest in our Marysville processing and storage facility.

We expect to close on that sale along with the Arcadia land sale in the fourth quarter.

The auction processes for the gold fields in Parmelia, pipelines in Australia and our CPEE electric distribution properties in Brazil are well under way.

However, we are now forecasting that those sales will close in the first quarter of 2004.

As for the sale of Loy Yang, the GEAC consortium, led by Australian Gas and Light, is challenging in court the Australian competition commission, which has blocked that sale.

We can't predict the outcome of that proceeding or any related appeals or settlements.

We have been successful, along with our partners, in reaching agreement with the bank group to extend the pending debt payment until February 12 of next year to allow this process to run its course.

Also, it's been widely reported that others have expressed interest in the assets.

While I am pleased with the level of interest, we do have an exclusivity agreement with GEAC through mid-December, so I won't comment any further on those reports.

Ken mentioned earlier we're a bit frustrated that progress has been slow with respect to key issues before the Public Service Commission.

Though we recognize that the appointment of a new Chairman and the distraction associated with the August blackout in the northeast have had an impact on this agenda.

The gas rate proceeding continues to run its course.

Testimony and cross examination are now complete and we're in the briefing stage.

The staff recommendation for final relief is the same as they made for interim relief, just over $80 million.

You will recall that the major difference between our request and the staff's recommendation is that the staff did not support our proposal for the use of a target equity structure or for an increase in the rate of return on equity from 11.4% to 13.5%.

As a reminder, any action on the interim relief is now in the hands of the commission.

Again, we can't predict whether or not they will grant the interim relief or wait until the full proceeding is complete early next year.

I would not expect the final order in this case until very late in the first or early in the second quarter of 2004.

Nothing has really changed with respect to the securitization case.

You will recall that we filed for rehearing this summer of certain problems with the order that precluded issuance of the bonds.

The commission has not yet acted on that rehearing request.

At this point I think it's safe to say that even assuming a favorable response, the securitization bonds would not be sold until next year.

There is also been no real progress on the stranded cost issue, however, there is growing recognition by the Michigan legislature and the administration that failure to address this issue would impact the financial health of the state's utilities and also result in excessive rate increases for residential customers.

I do expect that the Michigan Public Service Commission will respond to these growing concerns and establish meaningful stranded cost charges, though it's too early to say when and how much.

By the way, Consumers has lost just over 600 megawatts of peak load to alternative suppliers to date, or about 2,000 gigawatt hours this year, which is actually somewhat lower than our original forecast assumptions.

Finally, a new item on the list is the power supply cost recovery plan.

For the first time since 1997, Consumers will adjust the PSCR factor an be subject to the reconciliation process in 2004.

The re-establishment of this process actually is beneficial because it reduces the company's risk of costs associated with an extended outage at a power plant or a spike in fuel or purchase power costs.

Now let me turn it back over to Ken for some summary remarks before we take questions.

Thanks, Dave.

And here's the report card that we've been showing you for the last few quarters.

Since the last time, I've changed the asset sales check mark from green to yellow because as you saw in Tom's cash flow slide, we may not close more than $850 million or so this calendar year with a balance to follow early in 2004.

Also, I've shown the debt to capital as yellow.

It's just too close to call whether we'll end up literally at less than 75%, so I've added a note of caution there.

Well, that concludes our formal presentation, ladies and gentlemen, and now I'd like to move to your questions, please.

Thank you very much, Mr. Whipple.

The question and answer session will be conducted electronically.

If you would like to ask a question, please do so by pressing the star key followed by the 1 digit on your touchtone telephone.

If you're using a speaker function, please make sure your mute signal is turned off.

We will proceed in the order you signal us and we'll take as many questions as time permits.

Please press star 1 on your touchtone telephone to ask a question.

If you do find that your question has been answered or you want to remove yourself by pressing the star 2 key.

We will pause for just a second.

Just one moment while our questions are collected.

Your first question comes from Craig Gilbert of Banc of America Securities.

Please proceed.

Hi, Craig.

Good morning, gentlemen.

Just a couple of quick questions here.

For the asset sales that are planned in 2004, can you just provide us with a breakdown of the asset sales and the total book value?

Let me just start by, this is Dave Joos, let me just start by sort of reviewing those asset sales.

Again, as we talked about in our presentation, we are in the asset sale process right now, in the bidding process for our distribution utility in Brazil and also for our gold fields and Parmelia pipelines in Australia and we do expect now that that process will cause those to close in the first quarter.

Secondly, we have our Loy Yang pipeline and while it is theoretically possible that that could close this year, it's certainly not likely and that's a very fluid situation, we are anticipating that that would likely close some time next year.

In addition to that, we have a couple of power plants still in India that are on our sale list for next year as well as power plants and gas pipeline assets in Argentina on our sale list for next year.

I don't know that we have broken out any assumptions with regard to the specifics of those and I prefer not to at this point.

Let me just say that we don't have a very large asset sale program assumed in our cash flow for next year, other than the carry over of the CPEE in Australian pipelines from this year.

And it a bit difficult to predict what actually might happen given the economic situation and the political situation in both Argentina and India.

They're not critical to our program but they are what we'll be attempting to sell during the calendar year.

Okay.

Of the 2 to $300 million, how much would you say is from these insurance proceeds?

From the insurance proceeds, keep in mind that this is over a period of years, because you're referring, I think, to the debt reduction slide that we just covered, and that's a little over $100 million on the insurance side and we've been pretty conservative on planning that out further in time.

Okay.

How much -- do you have an estimate of how much would be in '04?

For insurance settlement?

Yes.

On that particular issue, none.

Okay.

And lastly, can you just give me the outstanding balances on your 7.625 senior notes and the 7% due '05?

How much is just still outstanding?

If you're referring to the notes from November 15 of '04 for CMS --

Yes.

Is $175 million, or about $176 million outstanding.

What was your second one?

The 7% extendable tender rate adjusted securities.

And this would be the January '05 notes at $180 million, they would all be outstanding.

okay.

Thank you very much.

You're welcome.

Okay.

Your next question comes from Jeff Gilderhoffer of Sigma Partners.

Please proceed.

Hi, Jack.

Mr Gilderhoffer, you are in the question queue, sir.

Okay.

Can we go to the next question, Operator?

Thank you, sir.

The next question comes from Jay Hatfield of Zimmer Lucas.

Please proceed.

Good morning.

Good morning.

I just wanted to get a little bit more detail, if you have it available, with regard to the lost margin on the electric utility.

In your release you said that it was $25 million, is it possible to give a sense for how that breaks out between the shopping versus lower than year-over-year declines in industrial sales?

I'm not sure I can answer your question exactly as asked, but let me just talk about the ROA or retail open access portion of that.

We've seen through the first three quarters lost margin of somewhere in the range of about a little less than $20 million on the open access and that's net of our sales associated with the excess wholesale capacity that results from open access.

That's a little less than what we had built into our original forecast and on track with about the same as we ended up with last year.

You may recall that our stranded cost filing last year at a low end number in the range of $35 million.

So, we're not seeing anything unexpected, let me say it that way are regard to retail open access.

With regard to the electric utility for the third quarter, we saw, as Tom mentioned, a significant reduction in sales over last year, about 2.5%.

And that really, because we had a very strong summer in 2002 and very cool summer here in 2003.

And so then is it safe to assume, in your release you have a loss margin of negative $25 million, that most of that is due to lower industrial sales?

I don't think that's fair to say.

I think probably somewhere on the order of half is related to weather and the other half related to other factors, including this softer economy.

That's great.

Thank you.

Thank you.

And your next question comes from Richard Hayden of Omega Advisors.

Please proceed.

Good morning.

Could you give us some idea of how much you think interest expense that you will run through the P&L will decline in '04?

And second, the rollout of the dividend and how you see that evolving?

Well, first, this is Tom Webb here, let me just address the interest expense side.

We haven't given any guidance yet for 2004 and as Ken mentioned that will be something that will come early in the year.

But you can get a little instruction by looking at slide 9, which talked about the interest and preferred dividends in '03 at about $280 million and then some redemption costs and issue costs of about 70.

I would just give you this general guidance, as we wouldn't expect to see much in the way of the issue and redemption cost, at least not what our plans would have and you'd certainly see the interest expense and preferred dividend come down, but I'm going to take pause not to share guidance on that yet except to say that it will certainly be lower than the $280 million number we've shown to you for '03.

But it could be significant?

I would say that it could be significant.

Yes.

I just want to stay away, at this juncture, from actually giving the guidance on that, if we could.

Okay.

And this is Ken, let me follow up and talk about the dividend.

Really we're in the same situation that we've discussed a couple of times.

This is the kind of company that has to pay a dividend in the long run.

The board has said that they plan to resume the dividend as soon as it's prudent to do so.

Prudent means as soon as we can do it on a sustainable basis, I would expect the board to entertain that.

That's as much as, really, as we can say on that.

Thank you.

Okay.

Thank you.

Your next question comes from Ben Sung of Loomis Management.

Please proceed.

Hi, I was wondering if you could give us a little bit more detail on the comparison that you made from '02 fourth quarter and '03 fourth quarter, that slide where sort of walk through that?

Well, at this stage, we're not adding a lot more detail, but let me just repeat a little bit on where we were.

We did have a loss last year in the fourth quarter and a big piece of that was the tax adjustment on our international earnings.

That's 38 cents.

So, we start from a comparative base more like 27 cents.

We do expect the share dilution could be a penny or two and that's something that would be pretty easy to figure out and if you went to normal weather, you might see 3 or 4 cents in that arena compared to the cool fourth quarter that we had last year.

Then we've got some internal plans around cost reductions and some project results that are coming in and as those stay on course, we're fairly confident that we should be able to be at that low end of the guidance, if not a little bit better.

Okay.

Thank you.

Thank you.

And your next question comes from Ali Agha of Burnham Securities.

Please proceed.

Thank you.

A couple of quick questions.

First off, could you tell us through the first nine months of the year, how much cash has been dividend from Consumers and Enterprises to the parent?

Hang on just one minute.

Happy to give you that.

You have another question while we just look that up for you?

Sure.

Separate question, I think you mentioned in the remarks on the deleveraging that equity issuance is somewhere in the mix and I was just wondering if you could elaborate how critical would that be to that deleveraging slide you showed us and what kind of parameters would you be looking at so that equity insurance becomes part of that mix?

Let me offer a little thought on that debt reduction slide.

You will notice that we didn't show equity on there at all because we're trying to build our plans around real, tangible things that we can do to cut that debt down and we believe, as we've indicated, that we can cut it in half over the next five years and we can do that without equity.

That leaves us a nice option to be able to look for possibilities on issuing equity in the future, which would either give us more opportunity to reduce debt or to invest back in our businesses because as you know, we invested in our utility at Consumers, we can get a very good return from that business.

So, that can be a very important and helpful piece to improving our capital structure and growing our business.

But for the purposes here we try not to lay out anything specific on equity at this stage of the game.

In term of your first question, the dividends up from Consumers for the first nine months have been $162 million out of that dividend and tax sharing of 200 we showed on our slide.

And Enterprise?

And the Enterprise piece is being looked up at the moment.

And while you're looking that up, one final question related to that.

Is there anything inherent in the business, either at Consumers or Enterprise, that could cause the dividends to the parent to be significantly higher than where they've been running at on an annual basis?

Well I think, if I can just start on that one, the one piece of guidance that we have given to people as we look to the future is that in very broad numbers you can expect to see a balance of about something in the ballpark of say $200 million of dividends from Consumers and something in the ballpark of $100 million coming out of the Enterprise operations.

That just gives you a general feel of the mix and what to expect and obviously that will change each year as we go through time in terms of the size of the dividends from each one of the operating activities.

But it's a pretty good rule of thumb, I think, that you can work with.

Okay.

And I'm just wondering if you have that number handy?

Yes, absolutely.

That year to date number out of the Enterprises affiliates is $60 million.

That's 6-0.

Great.

Thanks so much.

You're welcome.

And your next question comes from Mr. Greg Embruce of Jefferies and Company.

Please proceed.

Yes, good morning.

Good morning.

What's the restricted cash on your balance sheet for?

Well, the restricted cash that we show is tied up with supporting cash for letters of credit and items like that at different operations where we have backed up our businesses with cash set aside.

It's a part of some agreements we've had.

As we satisfy some of those arrangements, we'll be able to free that up and use that in our own business.

Okay.

And then could you break out the other current assets as well, please?

And where would you be looking?

On your balance sheet in the press release?

We'll just look that up.

Sure.

While you're doing that, could you give us a breakout for CapEx third quarter, between Consumers and Enterprise's?

It's principally, I would say, all Consumers in the third quarter.

Okay.

And then on your pension payments, could you review those payments for '04?

What you expect there?

Well, again we haven't given specific guidance, but let me, if I may, just take you back in time.

This last August, we made a contribution to our pension plan, between Consumers and the CMS operations of $210 million.

As we go forward next year, we would have one more large payment to make and we have not actually provided that number yet.

Is it the same magnitude?

It's in that magnitude.

It will be a very large number we're looking at.

As we've said previously, it's an important contribution and one that we put in our plan and that we want to and intend to make.

It's the same approach we had for the 210 this year.

However, it is a discretionary decision, as we came to the time of the 210, we made sure that we were in a position to be able to make that and have strong liquidity and we were and so we did.

We will take the same kind of decision as we get closer to September of next year and determine whether or not we're still in a good enough position to make that contribution.

If we are, and we intend to be, we would plan to make it because that's good for the health of the pension fund and for all the participants in it and once we complete that payment, we should then be in a very good position with only small contributions required in the future.

Okay.

And just comparing your current presentation you made today with the Orlando presentation, you had on your asset sale, net proceeds to date, you had on the prior presentation $810 million, this presentation 815.

I know it's a small number, but what's the difference?

It is a small number and it's with regard to a sale that we had inadvertently omitted in our Orlando slide.

That has to do with the sale of our reactor vessel head we made out of the retired Midland plant.

Okay.

And do you have the breakout for the other current assets and then I'm done?

Yeah, I think the main items to pick out for you are going to be inventory and the largest piece of that will be gas underground.

That's about $815 million.

And then there's materials and supplies as well as some generating fuel stock and I will just round it to did $150 million.

And then receivables that we'd look at and I will just round that as well, and call that about 250.

Okay.

Thank you very much for your time.

You're welcome.

Again, ladies and gentlemen, star 1 if you'd like to ask a question.

And your next question comes from Monroe Helm.

The 50% reduction in the debt over the next five years, did you say awhile ago that that doesn't include any equity issuances or you just didn't quantify those?

Well, the debt reduction plan that we've shown to you excludes any equity issuance.

Now, in our actual plan we've said and continue to say that at some point we would certainly like to do that and it could come in many different forms.

It could come in the form over time of common, it could come in the form of a convertible or whatever, but for the purposes of what we've shown today, we wanted to exclude the equity so that you could see what our tools would be without it.

Okay.

Thank you.

Okay.

Thank you.

And your final question of the day comes from Warwick Busfield of Oppenheimer and Company.

Please proceed.

Morning.

Yes, good morning.

Are you currently in any discussions with other parties about being acquired?

And I am talking about the entire CMS Energy firm?

And if not, do you anticipate any discussions over the next six months?

I have to obviously start off with the standard rule that says we don't confirm or deny or talk about anything like that.

I get that question, Warwick, from employee groups a lot and what I say is that we don't run our business any different whether we were looking to be acquired or to run it as a company.

We're trying to make this company the best that we can and I think the things you heard from Dave Joos in terms of the operational excellence, that's not just fluff.

Those are the important things that we concentrate on whether we're talking with regulators who really like us to serve customers or investors, where that kind of thing is important.

But I obviously couldn't comment one way or another whether or if we would have such discussions.

All right.

Thank you.

Thank you.

All right, well, thank you, ladies and gentlemen for your always good questions.

As you can see, we have a busy couple of months ahead of us in closing out this year.

And while we're not very good at forecasting either the weather or the pace of the regulators, we are working hard on this stuff that we can control as part of our back-to-basics strategy.

We have shown pretty good progress as we've covered today in our liquidity program and in our operational excellence and we look forward to sharing with you further progress reports in future meetings.

Thank you very much and goodbye.

This concludes today's conference, we thank you, everyone, for your participation.

You may now disconnect.