CommScope Holding Company Inc (COMM) 2006 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the CommScope second quarter 2006 earnings conference call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. [OPERATOR INSTRUCTIONS] As a reminder, this conference is being recorded Wednesday, July 26, 2006.

I now like to turn the conference over to Mr. Phil Armstrong, Vice President of Investor Relations, CommScope. Please go ahead, sir.

Thank you. Good afternoon and thank you for joining us on this call. Frank Drendel, CommScope's Chairman and Chief Executive Officer, Brian Garret, Commscope's President and Chief Operating Officer and Jearld Leonhardt, CommScope's Chief Financial Officer are joining me on the call.

Please note that during this, this conference call we may make forward-looking statements regarding our financing position, plans, and outlook that are based on information currently available to management, management's beliefs, and a number of the functions concerning a future events. Forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause the actual results to differ materially from those currently expected. For more detailed description of factors that could cause such difference, please see the press release we issued today and Company filings with the Securities and Exchange Commission. In providing forward-looking statements, the Company does not intend, is not undertaking any duty or obligation to update these statements as a result of new information, future events, or otherwise.

Also note please, that all the dollar figures and percentages are approximations. After we review the second quarter results and Frank makes some closing comments, we will open the lines for questions. Jearld?

Thank you, Phil. Today CommScope announced second quarter results for the period ended June 23rd, 2006. The Company reported second quarter sales were $412 million and net income of 47 million or $0.65 per diluted share. Reported net income included an after-tax gain of $19 million, related to the recovery on a note from OFS BrightWave and after-tax charges of $3 million related to restructuring costs. Excluding these special items, adjusted earnings were $31 million or $0.43 per diluted share.

Sales for the second quarter of 2006 increased by 22% year-over-year, primarily driven by increased customer demand and price increases in response to higher raw material costs. Enterprise segments sales rose 18% year-over-year to $205 million, primarily due to higher sales prices for most cable products and higher sales volume and North America and Asia. Information technology investments, new bandwidth intensive applications, and data center consolidations are among the ongoing drivers of the enterprise business. We believe that our ability to offer a full portfolio of both fiber-optic and twisted pair solutions globally gives us a competitive advantage. As Chief Information Officers and network administrators look back on how their bandwidth needs have grown and changed over time, we believe that we will continue to see how high-performance solutions can cut operational maintenance and downtime costs associated with their networks.

Broadband segment sales rose to $137 million, up 24% year-over-year as a result of both higher prices for coaxial cable products and increased global sales volume. Broadband sales continue to be positive least affected by competition between cable cable television operators and telephone companies as they work to provide video, voice, and data services to customers.

Carrier segment sales rose 32% year-over-year to $71 million, primarily due to increased demand for Integrated Cabinet Solutions, or ICS products. ICS sales increased significantly as domestic telephone companies continued investing in their infrastructure to support video and high-speed data services.

Our wireless sales increased significantly. Sequentially, sales rose modestly over the year as North American market demand remained solid.

During the quarter, CommScope announced a number of new products, including the wireless industry's first full line of 50 ohm ExtremeFlex aluminum transmission cables. Carriers have experienced excellent results from our smaller diameter ExtremeFlex aluminum cables that have been installed in thousands of sales sites across North America during the past 3 years. Customers can now take advantage of a broader portfolio of aluminum cables that feed the electrical, mechanical, and environmental specifications of traditional copper cables.

International sales rose 17% year-over-year to $132 million or approximately 32% of total company sales. Overall [INAUDIBLE] in the second quarter of 2006 were $501 million, up 45% from the year-ago quarter. Book to Bill ratios were positive in all segments with particular strength continuing in the enterprise segment. While we believe that the distributor inventories remain manageable, we think that strong and user demand, [INAUDIBLE] in production lead times of rising prices may have caused distributors to accelerate orders.

The gross margins for the second quarter rose to 26%, up more than 200 basis points sequentially. Gross margin improved sequentially, primarily due to higher sales volumes and also benefited our ongoing cost management program.

Sales, general, and administrative expense for the second quarter 2006 was $58 million or 14% of sales, compared to 54 million or 16% of sales in the year-ago quarter. SG&A declined as a percentage of sales primarily due to higher sales level and ongoing cost management. Also note that the second quarter of 2006 results included pretax charges of $1 million for equity based compensation expense in accordance with FAS 123R, which was recorded primarily in SG&A cost.

Research and development was down slightly year-over-year to $8 million for the quarter. CommScope's second quarter '06 results reflect pretax restructuring charges of $4 million, 3 million after tax, primarily for employee related and corporate relocation costs associated with the Company's global manufacturing initiatives, which were announced in September 2005, continued to progress on schedule. The Company has achieved a number of notable accomplishments since the implementation of these initiatives, including improved factory efficiency, lower overhead, and enhanced customer service. As previously announced, CommScope anticipates total annualized pretax savings of $35 million to $40 million from the initiatives, which are expected to be completely implemented by early 2007. The Company expects to realize about half these annualized pre-tax savings through 2006.

We're also in the process of selling excess real estate at the Omaha facility and have all major parcels under contract. We expect to receive 25 to $30 million from the sale of this real estate. Closing on the various parcels is expected over the next 3 to 9 months, and is subject to normal closing conditions and appropriate subdivision approvals by local government officials.

Operating income for the second quarter of 2006 rose 55% to $38 million or 9.2% of sales. Excluding restructuring costs, our operating income would have been $42 million, or 10.2% of sales. While we were pleased with our overall performance, our broadband operating margin was lower than expected at 3% for the quarter.

Broadband operating margin was negatively affected by our Brazilian operations, where continuing slow Brazilian in country sales force us to record income reserves against the recovery of the Brazilian value-added tax assets. Sales from our Brazilian facility largely exported to markets outside of the Brazil. We believe that the broadband price increases that were recently introduced and the ongoing operational focus will help improve margins in broadband segments.

We achieved double-digit operating margin in both the enterprise and carrier segments. Excluding special items, enterprise operating margin rose to 13% due primarily due to increased sales of higher performance, higher margin products.

We're particularly pleased with our carrier segment operating point. Our carrier group posted a record operating margin of 14% for the quarter, excluding special items. Which was a substantial improvement from previous quarters. Our sales of ICS products, and ongoing cost management were the primary drivers for margin improvement in the quarter.

Commscope also recorded a special gain during the quarter of 2006. The Company received a cash payment of $30 million, plus accrued interest, from OFS Brightwave. This payment satisfied and canceled the $30 million outstanding note issued under a revolving credit facility between CommScope and OFS Brightwave, a venture that was formed in 2001 by CommScope and the [INAUDIBLE] Electric Company of Japan. The Company has also agreed to terminate the recalling credit facility, which was created in 2001, and which was scheduled to mature in November 2006. The $30 million long-term investment has been considered fully impaired by CommScope since the Company exited the venture in June 2004. CommScope recorded a gain of $30 million or $19 after tax during the second quarter 2006.

Now I'll turn to cash flow and balance sheet items. Net cash provided by operating activities in the second quarter was $15 million. Total depreciation and amortization expense was $14 million and included 4 million of intangibles and amortization. Capital spending in the quarter was $8 million. CommScope received proceeds from the exercise of stock options of $14 million during the quarter. At June 30, 2006, long-term debt including current maturities declined to $291 million and was 31% of [book] capital structure. CommScope ended the quarter with 296 million in cash, cash equivalents, and short-term investments.

We delivered strong financial results in the second quarter and we are raising our sales and operating guidance for calendar earlier 2006 to reflect the expectation of improving enterprise sales volume, higher sales prices, and ongoing cost management. For the third quarter 2006 we expect revenue to be in the range of $420 to $435 million and operating margin to be in the 10.5% to 11.5% range, excluding special items. For calendar year 2006, we expected revenue in the range of $1.56 billion to $1.59 billion, and operating margin to be in the range of 9.0% to 9.5%, excluding special items. We also expect higher effective tax rates up 30 to 34% in the second half of the year, primarily due to changes in the mix of international and domestic income. Overall it was an excellent quarter and we are bullish about our long-term prospects as a global leader in cable and connectivity solutions.

Now we would be glad to answer your questions after Frank has a few comments.

Thank you, Jearld, and thank you for all of you for joining us on the call this afternoon. I would like to personally thank the entire transitional team. Brian's put a great team of people together to bring these companies this type of profit leadership. Special note to Randy Crenshaw, and the outstanding operational results and enterprise and especially to Ted Halley, who turned in the highest operating margins in the carrier group which was a tremendous turnaround from past history. We look forward to continuing our position in this [INAUDIBLE] connectivity and working with all due to bring forward some excellent results. And with that, we'll open it up. Tina, are you there?

Yes, I am. [OPERATOR INSTRUCTIONS] Our first question comes from the line of Celeste Laurenzano, Merrill Lynch. Please go ahead.

Good afternoon.

Good afternoon, Celeste.

Could you just talk a little bit about the price increases you mentioned on the Broadband products, just timing and magnitude around those?

Well, to start with Celeste, they were the last effective price increases to be working their way through. So they're still in the process of making the complete transition in those -- both domestically and internationally. And size wise, they vary somewhere between 8.5% and 9.5%. In fact, the majority of the impact, Celeste, we should have seen probably by mid June, so minimal impact in the second quarter should be favorable, certainly, to the third quarter.

Okay, great. And looking at operating margins in the carrier segment, I don't know if you can expand on that a little bit more and going forward, how would you look at, you know, kind of how would you target may be sustainable levels?

Well we just for the last 2 years now we have worked very very hard particularly in the integrated enclosure business, to reduce cost and looking at what we're seeing, in this quarter, it's really the culmination of that work. And so we, on a year-over-year basis we have seen extraordinary improvement in both businesses, both our enclosure business and our wireless cable business.

Looking forward, I would say we're very happy with where we are. Expectations to improved from where we are, I'd say, is probably minimal. It's been that great.

Thank you.

Celeste, by the way, thank you for your recommendation.

Thanks, guys.

Our next question comes from the line of Daryl Armstrong, CitiGroup. Please go ahead.

Hi, this is Luke Li on behalf of Daryl. Our question is also related to the pricing. In the event of copper prices going down, how that would affect your sales and what is your mechanism to protect that from happening?

Let me clarify. You're asking in the event that copper pricing --

Yes.

Which they have not.

Right.

The big variable for us as always, and what is the rate of that decline? Obviously, if it fell off a cliff, it would require probably a pretty precipitous response on our part. If it slows it down or declined over an extended period of time, a couple of quarters, I think there would be little need to reduce pricing. Particularly in the enterprise space which is so copper denominated, in all, we have a large backlog at the moment and so there would be -- there would be limited market pressures to reduce pricing, at least over the next, you know, 4 to 5 months, certainly.

I think it's important that the listeners understand at best, absolutely at best, we have not got any cost improvement, I mean price improvement over cost. All the margin improvements coming out of that activity and operational excellence, that's with breaking even on the copper price.

Okay. Thank you.

Our next question comes from the line of Ken Muth, Robert Baird. Please go ahead.

Hi, guys. In the way of the guidance, if you picked the midpoint for the Q3 results and apply that to get your Q4, that comes out to about $376 million number. Which would show a 12% drop off sequentially. Is there anything more to read into there besides you guys being just more conservative going into it, because it is little bit further away? Is there any other market dynamics you see coming?

In regard to the guidance, I think what we've seen, we had a very strong order quarter and second quarter and I think as we related here, we don't believe those order rates would continue into the second half of the year that there were some acceleration of that, for the reasons we mentioned. And I think so we expected to see a seasonal trend as we approach these fourth quarter from the third quarter. And so we would see some downturn seasonally as we go from there as well. Could there be some price erosion? That is a possibility. It depends on raw material and those issues.

On that front, how many price increases have you done year to date and what portion of your growth do you think was related to the price increases?

I think it's going to vary by segment, in -- the number is large. In know, we've talked about it again in the past, in the enterprise space there is not price increases at any one time for all products. So, you know, in any given month, there might be a price increase, depending upon what the product is. So there has been quite a few of the course of the last 6 months, over quite a few price increases.

Okay and do you have a rest rough estimate of what the price --

The impact is? In the enterprise they space, particularly the largest price increases have been in copper cabling and I would say the vast majority of our growth has been pricing. In the cable television space and the digital broadband segment, it's a good mix of both volume and -

It's about half of what the sales increase shows. And carrier, interesting enough, a lot more price and volume and dealers cost. It's volume. So carrier is performing so well generally 80% of that is at least in price and volume.

And that big increase you guys had in the carrier division of 30% sequentially, is a big chunk of that driven by Project Lightspeed?

A lot of it is driven by all of the infrastructure built in telecommunications. In both those cabinets, both DSl and Lightspeed. We don't know exactly where it ends up in the field, but they are growth driven by broadband acceleration. Which is fair, it's either DSL or Lightspeed --

We had some sequential increase in our wireless as well.

That you very much.

Our next question comes from the line of Jeff Beach, Stifel Nicolaus. Please go ahead sir.

Good afternoon and nice quarter.

Thank you, Jeff.

Frank, this is the second quarter in a row the incoming orders have been incredible. Can you give us roughly the book-to-bill by segment or at least rank the book to bills as to the incoming orders?

Well, we don't break normally it out quite that clear, but it was increasing across all the segments. We can give it to you all bit more granularity.

Jeff, both broadband and wireless were in the 1.1 roughly range and enterprise was very strong arm around 1.4, something like that.

Okay. And carrier?

Just over 1, by 1.1 times.

All right, thanks. And on this 4 million, or maybe that's too high, the restructuring charge that you just incurred, did that fall through all the segments and into the operating results?

There were -- some in all segments, but most heavily in the enterprise segments, about three-quarters of it there. And the other piece split between the other 2 segments. So about 3 million in the Enterprise segment.

And lastly, the 35 to 40 million-dollar cost reductions, you have realized to the first half of this year very little of that, right?

That was the expectation and that's accurate.

In terms of the scope of the whole program, and where we expected to get to, Jeff, we were seeing good [INAUDIBLE] in the second quarter from those programs. And, you know, we expect those benefit to continue to increase into the third quarter, certainly.

Can you give a rough breakdown as to how those cost benefits cost, reductions fall between the segments? Just roughly?

Between the segments or where we are you today?

In the 3 segments.

Okay. Let me say in the second quarter they were in near equal. Between enterprise and broadband. And with both projects, you know where or at full run rate, when both projects are mature, it weighs a little more heavily towards -- towards the enterprise side.

All right, thanks a lot, and again, great quarter.

Thanks, Jeff.

Our next question comes from the line of Marcus Kupferschmidt, Lehman Brothers. Please go ahead, sir.

Good afternoon, guys.

Hi, Marcus.

A couple of questions I want to talk about. I guess, first, just to clarify, the increased guidance for the year, is that still assuming a minimal increase in the fibers to the node cabinet sales for the business?

In the second half there will be improvement over the second quarter levels. And I think the expectations are for the third and the fourth quarter to be relatively level in terms of numbers of units.

Talking about for the total? Talking about specifically fiber to the nodes, which is one -- or is that what you're saying for the total revenue -- are you saying revenues are flat for, you know, the overall cabinet business in Q3 and Q4?

Yes. I think there will be -- and they'll be close.

Are you concerned about some of the announcement of the carriers have made out slowdowns our inventory in channel and stuff?

Yes, there's some of that. I just want to understand what you're baking in, basically.

We would say the third quarter level is a little bit ahead of the fourth quarter, coming off a little bit for seasonality and the normal construction things that happen outside plan. But we aren't seeing any indication that there is an overall slowdown in the theory fiber to the curb, even if one of them is going through -- The whole carrier segment out there is still continuing to add broadband. The issue apparently as far as this thing fits both the DSL model and a Broadband Lightspeed model. Also given the net increase the [LECs] are having in DSL connect, you're having some lift exposure here, and then they can go back and revisit that facilitation for Lightspeed.

Okay. So if you could increase in the sales guide, at now is taking some improvement in cabinets, is that kind of officially in there?

That's fair.

Okay. And then in terms of the enterprise market, you know, we had increase here, we're talking a part of an acceleration of orders right now. But it sounds like what you're saying is that the market itself for enterprise connectivity is better than what you thought or are you saying you're taking a share?

Well, you know, we're very happy with the market right now. And if you look at our book to bill, for really first and second quarter, it's been extraordinary. And part of the large book to bill, of course, is a result of our capacities, as we've been relocating the facilities our capacities have been constrained and fully utilized, and we built a backlog. Expectations are the second half will consume much of that backlog as our capacities expand. The other part of our business that impacts enterprise is our fiber business. And our growth on a year-over-year basis in fiber in terms of sales is even exceeding what we have been doing on the copper side. So it's a very, very robust market for us.

And I think we're extremely pleased, even though it doesn't represent a great deal of our sales yet, the market acceptance and the front, and the exposure that we're receiving on the entire Fiber 10G combination enterprise offering is getting us a lot of leads into the marketplace.

Okay.

It's being reflected in the business model.

Okay, so, enterprise, I guess we said before is roughly about a 5% of market growth?

It can't be well measured by our sales because we've been capacity limited. I think the number is going to be much, much larger than that. The and UTP, if you look at our POS markets, sales out of distribution, the number is going to be north of 20% year to date.

Marcus, for the first time in a long, long time, since at least '99, 2000, that there is a large amount of floor space under construction in the enterprise type of environment, in office building, office space. Much more than we've seen in the past 2 or 3 years. So the leading indicator at least is pretty concrete.

Sure. And I wanted to clarify, in terms of the margin guidance, you know, expenses, looks like, on a pro forma basis, excluding the charges, were about $66 million for the quarter. So we think that's kind of, it's flat or out from here going forward or does it come down?

I would think that spending is going to be a little higher in the second half. No, not significant ramps, but it does tend to get higher in the second half of the year from the first and so I'd model it that way.

Implying gross margins then kind of down a little bit this year to make those operating margin targets?

There is improvement in the gross margin ratio, yes .

I guess we have said in the third quarter sort of gross margin. We didn't address gross margins. Our operating margin was -- For the second quarter -- and we're saying period spending is increasing, so that implies to me that gross margin is improving.

Okay, thanks for the clarification. It was very helpful.

Yes sir.

Our next question comes from the line of Brian Coyne, Friedman Billings. Please go ahead, sir.

Hi, guys. Congrats again on a good quarter and good outlook. Just a few questions. I was wondering if we could spend half a second on Jearld's comment earlier, going back to an earlier question about enterprise and inventories. I think, Jearld, that you had mentioned that the price potentially could see a little bit of price erosion or something like that. I guess on the flip side, if prices do end up coming in just a little bit, do you think you guys could see enterprise volumes, at least remain strong in the second half of the year and maybe kind of -- just kind of taking on the flip side of what could happen to the enterprise to support fourth quarter. And second just drawing on that, you have any update on the progress or trends that you're seeing with the Gigaspeed 10G product?

Yeah, a number of points, there, hope I catch them all. As it relates to volumes, clearly we would expect volumes in the second half to be up at enterprise. Because capacities are expanding, Brian.

And, you know, as it relates to the 10G space, we remain very happy with what's going on. We're seeing much more than just data center activity. We're sitting increased adoption by universities in particular, one I could think in particular, is a medical application where there is a lot of imaging. There's 10G being adopted those the verticals. I mentioned a very, very strong fiber which will influence the second half of the year and moving forward.

Then just largely, the entire transition by the market and I certainly -- in our space is a transition away from day more generic category, 5E spaces into Cat 6. Today, if I looked at the second quarter, nearly 70% of our sales would be in the Cat 6 space or above. And it's a rather substantial shift from the same time last year.

Do you have any updates on, I guess in the past you sort of given a dollar number of kind of what that product represented in terms of your top line. Or alternatively, I guess, sort of relative to the targeting, I guess you have about a hundred projects that were at least in the works are underway?

Yes. I don't think we're going to continue to update that level of detail. I think it was important to us and the first and second quarter of last year as we were launching this new product and just to give everyone a sense of the opportunity. I will say that we're very happy with where we are, new projects for the first half of the year, defined projects are north of what we did in the first year. The number of projects that we have in the pipeline looked very encouraging for us.

I had to ask. Okay, last one. Are you guys seeing an increase in order activity from either Comcast for Time Warner following the Adelphia deal resolution?

We've begun to see some improvement from the Adelphia resolution, finally, it's still very early in the process as they review it. But there's clearly an increase in input from that segment.

Do you think it just increases the velocity orders because again you're getting some CapEx, I think opening up at least the purse strings as things have gone through for Adelphi as well as the other markets that -- where spending math and held back a low bed?

I think will be much clearer on that by this time next quarter. We'll be able to give you kind of what they're looking and their timing on it. But it's obvious the deal is finally, finally is being resolved.

Okay, that's all I had. Thank you, guys.

And also comment, Brian, the other thing that's going on in that space, apart from Adelphia, is we are beginning to benefit from our acquisition of the MC squared product line from Trilogy. On the topline, for a variety of reasons it's not supporting the bottom line right now, but that will transition over the course of the second half. We we finalize the move of the facilities to our facilities we'll begin to see the real market impact, which will be positive.

Okay. Just thought of one last one I might as well throw in while I have the chance. Obviously going on, a lot of MNA speculation activity going on with Phelps-Dodge and [INAUDIBLE] anything like that. Did that impact your business at all in terms of you're dealing with copper suppliers?

No, I think our position is so far downstream from that that just as long as there's copper available will be able to get it somewhere.

Okay, sounds good. Thanks again.

We have a follow-up question from the line of Ken Muth, Robert Baird. Please go ahead, sir.

Hi, guys. On the wireless cable side of the world, there is quite a bit of turmoil going on in that segment. Have you guys seen any disruption or favorable terms on your products there was some of the North American carriers?

Well, there's a number of things, positive and negative that are going on. Obviously, the consolidation that's going on, particularly as a reflects -- impacts Sprint and Nextel, I think is slowing down our demand as well as everyone else in North America. We did have sequential growth in the 50 ohm space in the second quarter. But I think we clearly could have that better had it not been for a slow response by Nextel. The other thing that's going on and that is very positive is the adoption of aluminum. And, you know, we -- gosh, goes back over 2 years ago, we launched the aluminum products to that segment for a variety of reasons. One, recognizing the time that it would take for industry adoption. With copper pricing where it is, you know, obviously the subject becomes much more -- much more urgent to all the cable operators. So we are getting strong interest in the full line of aluminum products that we announced over the course of the second quarter and have expectations for good growth in that segment in the second half.

Okay, thank you.

[OPERATOR INSTRUCTIONS] The next question comes from the line of Marcus Kupferschmidt, Lehman brothers. Please go ahead, sir.

You touched on this in the last question. My connection broke up. Do you guys have a sense, you talked about the wireless demand softening a little bit here in Q2. Is that kind of a temporary thing or do you think in the second half and into '07, the demand, the market outlook for all wireless may be minimal growth for a while?

That's a -- our guidance for our assumption for the rest of the year are relatively flat with the second quarter. I think the industry of North America, at least for the customer set that we have, Marcus, is going to remain pretty much where it has over the course of the second quarter. And the big variable there has been Sprint Nextel. Marcus, I think the other issue that's going on in the wireless market is, there's a lot of discussion on what the next generation moves should be made. I mean, for a long time a lot of people thought we would have to go through two transitions. There is some that believe we could skip one and go to a newer generation. So there's a lot of thought going on all those forward-looking from the cellular carriers.

Thank you.

Tina, we'll take one more question.

Our last question comes from the line of Allen Mitrani, Sylvan Lake Asset Management. Please go ahead, sir.

Hi, thank you. Can you talk a little bit about your capital structure, what you're looking at to do the next year plus, now you have gotten your different divisions in place and your cost-cutting benefits, plus the money back from [INAUDIBLE]. Maybe you could just talk about expansion given that your stock is back to a multi-year high.

Thanks, good question, Alan. Yes, we are very pleased that our financial position continues to improve and increase cash and positive operating cash flow in the second quarter. So the position has improved. I think we said earlier that we are probably looking at some increased capital spending, particularly in the second half of the year from the first. Probably will be between $35 million and $40 million, that sort of number, for full-year capital spending. So that's certainly one need that we have. And then generally we are maintaining our financial flexibility for strategic reasons, and that's no change in that thinking at this point.

Are you fighting a lot more deals coming to the table now that some of the carriers are more consolidated? Are you seeing a lot of bankers bringing companies to the table, or are there more companies that you talks with outside of investment bankers that you think would make sense to acquire now versus a year ago or 2 years ago?

Obviously, we can't discuss those types of issues, but we clearly continue to manage our balance sheet both internally and externally, and that's what we continue to look at.

Thanks, guys. A good quarter.

Thank you.

Thank you, operator, and we want to thank all of you for joining us. It was obviously an excellent quarter. Could be done without our 4000 + employees, and we thank all of them too. So have a good evening.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your pick dissipation and please at ask the you disconnect all lines.