Curtiss-Wright Corp (CW) 2005 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Curtiss-Wright Corporation Third Quarter 2005 Earnings Conference Call. My name is Dana (ph), and I will be your coordinator for today.

[OPERATOR INSTRUCTIONS.]

As a reminder, this conference is being recorded for replay purposes.

Now, I would like to turn the presentation over to your host for today's call, Marty Benante, the Chairman and CEO. Please proceed, sir.

Thank you Dana, and good morning, everyone. We apologize if you had any technical difficulties trying to dial into our conference today. Welcome to our 2005 third quarter earnings conference call. Joining me on the call today is Mr. Glenn E. Tynan, our CFO, who will begin our forum today.

Glenn?

Thank you, Marty.

If you do not have a copy of the earnings release which was issued yesterday, please call Miss Deborah Torrey at 973-597-4712, and she will be happy to e-mail or fax a copy to you, and add you to the Curtiss-Wright distribution list for all future press releases.

Before we begin, we will make certain forward-looking statements on today's call, such as statements about the company's confidence and strategies or expectations about the results of operations, future contracts, or market opportunities. While we believe that our operating plans are based on reasonable assumptions, we cannot guarantee that we will meet any expectations that might arise from these forward-looking statements or their underlying assumptions. Such forward-looking statements are made pursuant to the Safe Harbor provisions of the Security Reform Act of 1995, and involve risks and uncertainties that may produce results or achievements that are materially different from those expressed or implied during this discussion. Such risks and uncertainties include those factors that generally affect the business of aerospace, defense, electronics, marine, and industrial companies. Such factors, as well as further information relating to our business, are detailed in the company's Annual Report on form 10-K for the fiscal year ended December 31, 2004, and subsequent reports filed with the Securities & Exchange Commission.

For our agenda today, Marty will open our discussion with an overview of Curtiss-Wright's third quarter 2005 operating performance, and I will review our segment performance and financial position. And finally, Marty will conclude our discussion with an update on our 2005 guidance. After that, we will open the call for your questions. Marty?

Thank you, Glenn.

I am pleased to report that this year's third quarter sales increased 15% over the prior year to 271 million, including 8% organic sales growth from our base businesses. Our strong sales growth was driven by continued strength in the defense markets and solid growth in our commercial markets, and particularly aerospace and oil and gas. Our operating income for the third quarter 2005 increased 27% over the prior year to 32.4 million, including 28% organic growth from our base business.

In our metal treatment segment, we continue to benefit from growth in the commercial aerospace market and new programs in the automotive market. In flow control, we generated solid growth in valves and electronics for the U.S. Navy, as well as commercial oil and gas processing. In motion control, we had higher sales on key defense platforms, such as the F-22, F-16 helicopters, and we had a strong demand for commercial products, specifically the Boeing 737.

Our results of our strong operating performance, consolidated net earnings increased 19% to 17.5 million, or $0.80 per diluted share from 14.7 million, or $0.68 per diluted share in the third quarter 2004. Finally, new orders received in the third quarter were 277 million, up 16% compared to third quarter of 2004. For the first nine months of 2005, our new orders are up 30% over last year, and our backlog increased 20% to a new record high of 752 million, which provides solid momentum for the rest of the year and 2006.

I will now turn the call over to Glenn to discuss our segment performance and our current financial position.

In our flow control segment, sales for the third quarter 2005 of 112 million were up 19% over the prior year due to strong organic growth of 10% and contributions from the 2004 acquisition. The organic sales growth was primarily in the oil and gas market, led by continued high demand for our revolutionary Coker valve. Operating income for flow control increased 40% compared to the prior year due to increased volume, margin improvement, cost containment and contributions from our 2004 acquisition. Organic operating income growth was 33% in the third quarter compared to the prior year.

In our motion control segment, sales of 110 million in the third quarter 2005 increased 13% over last year due to organic growth of 4% and contributions from our 2004 and 2005 acquisitions. The organic growth resulted primarily from the commercial aerospace market, both OEM and repair and overhaul services, and in the defense aerospace with higher sales of F-22 production and F-16 spares. The organic sales growth was achieved despite adjustments to estimates at completion on certain long-term contracts that resulted in a reduction in sales in the third quarter.

Operating income for the motion control segment increased 8% in third quarter over the comparable prior year period. Organic operating income growth in the third quarter was 17%. The increase is due the combination of higher sales volume, acquisitions, and the realization of previously implemented integration cost savings. This organic growth was achieved despite a cost overrun on a fixed-price development contract for the 767 tanker program, and higher rework costs relative to the startup of the APR 39 radar warning system program. We believe that both of these situations are now resolved.

In our metal treatment statement, sales for the third quarter of 2005 of 49 million increased 10% over 2004. The improvement, all of which was organic, was driven by higher global shop peening revenues primarily from the aerospace market. Operating income increased 27% from the prior year, all of which was organic, primarily as a result of the higher sales and lower medical costs.

Now I will review our liquidity and financial position. Our free cash flow, defined as cash flow from operations less capital expenditures, was slightly negative in the third quarter of 2005. We experienced several issues that negatively impacted our free cash flow for 2005. The first issue pertains to a new production program for the APR 39 radar warning system, which began in late 2004. Technical issues in the startup phase resulted in delayed shipments and the resultant cash flow. These issues have been resolved, and shipments resumed in late August.

In addition, we also encountered technical issues with the new development program for the 767 tanker program, which led to delayed milestone billings and the related cash receipts. The technical issues have been resolved, revised milestone dates have been negotiated, and shipments had restarted on this program.

In addition, and to a lesser extent, we have built up some inventory levels in support of new programs that will be utilized in 2006. As a result, we are lowering our free cash flow guidance for 2005 to a range of 40 to 50 million. Our balance sheet remains strong, with working capital of approximately 290 million and total debt outstanding of 410 million as of September 30, 2005, for a total debt to book capitalization of 40%.

I will now turn the call back over to Marty. Marty?

Thank you, Glenn.

Although we have seen a lot of speculation in the news over the future defense spending, we are confident that our position on a variety of high-performance platforms will continue to be a source of growth for Curtiss-Wright in the future. Between the legacy programs we are currently on and the new programs we continue to win content on, we see our defense business growing well into the future.

In addition, we are seeing increased activity in the commercial aerospace market that should continue over the next few years, and our remaining commercial markets, primarily oil and gas and power generation, are growing, and we expect them to continue to grow well into the future. As a result of our diversification, we have achieved superior returns again in the third quarter, including growing our operating profits faster than our sales, which we have achieved over the past several years. We believe that our performance continues to demonstrate our commitment and focus on creating value for our shareholders.

Now, I'd like to address our 2005 full year guidance. In order to reflect current market conditions, we are tightening our 2005 full year revenue guidance of 1.1 billion to 1.125 billion, operating income to range from 135 million to 140 million, and earnings per share in the range of $3.30 to $3.45 per share.

The decrease in our operating income is due to a couple of events that occurred in the third quarter. First, I believe everybody’s familiar with the Boeing strike and resolution. While we’re still working through the issues with our customer, we estimate that this situation will shift as much as $1 million of operating income out of 2005.

Second, we’ve had a shift in a major defense contract from our helicopter RAST system for the US Navy. These systems are currently used on all DDG ships, and will be used on the DDX platform in the future. The Navy had a requirement. It was funded for three such systems in 2005, even though the Navy had two systems in inventory that would require refurbishment prior to deployment. Our forecast assumed the purchase of three new systems in 2005. In August, the Navy decided to purchase one system and refurbish two systems of inventory rather than purchase the three new systems in 2005 as they had previously indicated and was funded for. While this negatively impacts our forecast for 2005, it does not mean that any new ships in the future will require the purchase of these new systems, as there are no such other (ph) spares left in the Navy inventory.

These events, which will impact our motion control segment, result in operating margins in this segment at around 11% for end of the year. Without the impacts of these events, the operating margin for this segment would have been, as previously indicated in our guidance in a range of 11.5 to 12% for the year. Overall, our guidance reflects our expectation of 15 to 20% growth in revenue, 20 to 25% growth in operating income, and 10 to 15% growth in earnings per share. Earnings per share is based on estimated fully diluted shares outstanding of 22 million shares for the full year 2005.

In 2005, we have grown our operating profit at a pace greater than our sales, and we look forward to continuing to generate solid profitable growth, and to provide our investors with superior returns in the future.

At this time, I’d like to open up the conference for questions.

[OPERATOR INSTRUCTIONS.]

Myles Walton of CIBC World Markets.

You’ve trimmed back the guidance on the top end, but it’s still a pretty wide range going into 4Q. Can you just give us a couple of the swing factors that move you from one end to the other, and kind of where now you’re feeling most comfortable?

Well, Miles, we have about $40 million, or a little bit more, increase in sales from the third to the fourth quarter. Most of it, as I indicated in the first quarter, is coming out of our embedded computing systems. Also, we have Global Hawks and our DDG RAST system that normally would be shipped out in the fourth quarter.

On our flow control, we’ll also have a pickup in the submarine and aircraft orders, also improvement in gas and oil shipments.

Myles, also if you take a look at where we were last year for third quarter going into the fourth quarter compared to this year, they’re relatively the same percentage increases in both sales and profitability.

Okay. But, within the range, there’s no particular single items that are going to move you within that $0.15?

No.

Okay. All right, that’s fine. And in terms of your expected growth in the core markets, which you usually give us updates on, could you just run through those for us again for 2005, if any of them have shifted?

We’re really basically in the same area. One of the areas that we’re down on is in the defense because we had a shift in our RAST system coming out of 2005.

Okay, good. And then, in terms of the debt and the variable rate that’s currently on it, your thoughts on moving that to fixed or converts, could you just share with us kind of your outlook there?

Yes, Myles. As it turns out, as we’re looking forward, it looks like we still have about two-thirds of our debt is variable versus one-third fixed. We see that’s probably going to change dramatically next year. We think our two-- we now have swaps on our currently existing notes, and I think they will both expire in 2006, and we’ll convert the fixed. That’s our current thinking for next year. So, we’ll shift from more fixed next year.

Okay, great. And then the last one, kind of looking through the press release, you talk about progressing through some development programs to give you some improved profitability. Can you just touch on, in particular, the programs that you’re looking at in particular for ’06 that could be drivers to improve profitability there?

He says Q4 programs.

I think, Myles, what we’re talking about is that some of the development programs that caused a little bit of a hiccup in third quarter will have resolved itself, and we’ll also be looking for improved profitability as these programs progress into 2006.

Okay. So, mostly the APR 39 we’re talking about, then?

Yes, correct.

Okay, very good. And I think I’ll leave it there, and I’ll get back in the queue, let someone else answer (ph).

And Myles? So, I just want to add one thing to your first question. When you think about our range versus everybody (ph), I just want to remind that a $0.15 range for us is only $5 million in operating profit, based on our number of shares. So, I just want-- it may seem like a wide range from an EPS standpoint but, from a profitability standpoint, it’s really relatively narrow based on our number of outstanding shares. And I know everybody thinks EPS but, when you think of our structure, you’ve got to keep that in mind.

Chris Donaghey of SunTrust Robinson Humphrey.

Glenn, first of all, can you provide us with the organic growth numbers on just a one-year basis?

It’s about 8%.

Okay. I thought that-- did you change the way you report organic growth, then, from the two-year model to the one-year model?

No.

No.

No?

Last quarter-- I was giving a comparison of what it would have been had we done it another way, but we stick to our way of reporting.

Okay, so you’re not going to provide the other way anymore?

No. I mean, I have it. It hasn’t really changed much, but I have it if people want to know what it is. But, we still report under the two-year model as we discuss in our 10-Qs and 10-Ks and things.

Right. So, can you give us the one-year model numbers, what those would be, or do you know?

Sure, I can. For 2005, as Marty indicated, the organic growth is looking to be about 8%. Under the other method, it would be 21%. The organic growth in OI at 16% would be 30% under the other method.

Okay, that’s great. Also, on the EACs, can you talk about the specific impact from a dollar perspective and where they’re concentrated in? I couldn’t tell if it was one or two programs or more.

It was two programs, Chris. It was the 767 tanker program and the APR 39. It was about a 7/10 decrease. So, obviously when we gave guidance last time where we said that we would be slightly below the $0.82, or slightly below the $0.82 and we got (ph) $0.80, there’s obviously some positive things that also took place during the quarter that offset one another. The reason why we highlighted it was, when you take a look at the operating margin for motion control where these two programs are, you’ll notice that the operating margin went from 10.7 down to 10.2. If you had excluded these two programs, you would have been up to around 11.6 or 11.5, 11.6, somewhere in that area.

Jay Khetani from SG Cowan & Company.

Let’s see. The issue with the RAST system pulling out of inventory and refurbing versus buying new, I mean, should we be thinking that this is linked generally to what we’re seeing more broadly, which is just some spending restraints, effort to save money wherever possible at DoD, and whether that is something that you’re seeing impact any of your other product areas?

No. We’re not seeing it across the board. This is an isolated instance. And unfortunately, you would size your businesses based on the volume that you expect, and we were working with the Navy. We work very closely with them, and we were-- and they were very confident that they were going to receive the funding for the three full systems, which they did. And then, it changed. So, it knocked a pretty good amount of sales and profit out of the year.

Okay. And are you seeing any impact to demand for products going into DDG and LPD, anything that would be in the Gulf yards where you could have some temporal push-out due to the hurricanes?

No, no, not at all. In fact, we’ve seen a good demand. We have increased backlog on all of our defense programs. So, we haven’t seen it. This thing with the DDG, which caught us flat-footed, just happened in August and just happened to go that way.

Okay. So, the trend (ph) guidance in motion for margin for the full year, you’re now saying 11%, still would seem to imply a fairly sizable snap in the fourth quarter. Is this something that would be primarily related to the F-16, or is there something else? I mean, it’s that combined with you’re talking about the rapid step-up in embedded in Q4?

Well, the thing is is that just anywhere we looked at-- and I’m going to go a little bit around your question, Jay-- just anywhere we see motion control ending up at 11, we see flow control lining up much closer to 12, okay, so there’s the good and the bad there. No, the increase in the sales for the fourth quarter are mostly all defense-related. It’s on Bradley, it’s on Navy sales, it’s along a lot of programs that we have supplied before. So, to us, the fourth quarter, again the same thing that I mentioned to people last year is a matter of execution. We’re waiting for some orders still in the fourth quarter, which you’ll always do, and we have most of it is in backlog. So now, it’s a matter of execution, Jay.

Okay. And you had also talked in the prior conference call about a Q4 ramp in MIC. Where does that stand today? Should we still think about a sizable step-up in sales sequentially into the fourth quarter and, presumably also then, a decent margin rate there? You’re still at the 17 to 18 range on MIC for the full year? Are you near that at all?

We’re a little bit-- we’re still at a 17 and 18, not to the upper end there. Obviously, some of the things that have taken place in the aerospace with the cutback for the last two months going to only one month worth of shipments is also going to impact their sales and profitability.

Okay. And last question, just if you could give us some commentary on what you’re seeing with regards to acquisitions in terms of the number of opportunities, it would seem that pricing has been creeping up, and any areas that are more in focus versus others, or any that have fallen out of focus?

The prices of acquisitions have been going up. We have a couple that we’re interested in. I think that the price range is good of what we’re looking at. A lot of where we’re looking at and see some opportunities is gas and oil, and also in the plating area, more commercial.

Okay. But, with regards to embedded, do you feel like you’ve got the portfolio that can carry you forward?

We feel we have a portfolio to carry us forward. We did indicate that we’d like to get involved in the medical-- more in the medical side and commercial side, so that would be something that we’d be interested in. But, right now for where we are in the positions that we’re into, I feel very comfortable.

Eric Hugel of Stephens. Please proceed.

Can you just update us on the top line? Should we just assume that all of-- in terms of the segments, the guidance that you had given previously, that all of what you talked about coming down on (ph) the top line is coming out of motion?

That’s correct.

And there shouldn’t really assume anything incremental to flow or metal?

No.

Okay. I guess my second--.

--Most of it is the DDG, quite frankly.

Okay. My second question is can you sort of maybe give us an update? I’m assuming that things aren’t finalized, but maybe some indication looking forward to what you guys are looking to as-- from your (ph) impact of pension or sort of directionally in pension, where you’re going for next year, and in terms of what we should expect for FAS123(R)?

Yes, Eric. On pensions, we would expect to see-- you’re right, we don’t have the numbers yet. We would expect to see an increase in 2006 for two reasons. It’s probably the last year of the rollout of the dismal activity from 2001, as well as the discount rates are going to fall. We haven’t set our final assumptions for this year but, once it’s pretty clear that the discounts rates will fall, so the pension expense will go up next year. And hopefully, that should be one of the last years that-- we should be going the other way after that. But, that’s what we’re expecting in pension.

From a FAS123 standpoint, right now our estimate is between about 4.5 to 5 million pre-tax right now for 2006, although we haven’t finalized that either. But, that’s our preliminary thought on that.

Okay. Can you give us an update on what’s going on with your laser peening business?

Yes. Laser peening is in the area that we indicated last time. We are expecting orders this year. One thing about what we talked about was the qualification has been taking longer, but the results that we have been supplying to our-- hopefully-- next customers are definitely there. So, to me, I think it’s just a matter of the qualifications getting resolved internally and through their customers in order to getting it on board and going.

But you haven’t seen any of that in the third quarter. That’s still a looking-forward event? You haven’t really seen any of those sort of qualifications come to fruition yet?

The only ones that we have have been in the current customer that we have. We still keep getting more business out of Rolls-Royce, and they’re looking at their new A-3-- the A-380 engines, which haven’t really gone that far into production. But, those will be coming also into production.

In terms of the Boeing strike, is that more of a Q4 event, or did you actually feel impact in Q3 also, and also with regards to I guess the RAST. Was that really--?

--No. On the RAST we had about $.5 million fall out of third quarter. Boeing, no. We received just recently a reduction in schedule for 2005 that took basically one full month’s worth of shipment out of the schedule. So, what we’re doing right now, Eric, is we’re trying to work with Boeing to try to push that out because, obviously, we have the manpower and facilities that were dedicated to produce it at full rate. And if we can smooth that, it helps our workload.

My final question is with regard to the free cash flow. It seems like the two I guess main reasons that you cited for the weak cash flow in the quarter seem to be resolved, and shipments starting up again. So, I would think that that, for the most part, should be somewhat of a wash into-- with ’04 as you start delivering stuff, and maybe some falls out. But, I mean, that’s a significant 10 to $15 million drop-off. I mean, can you sort of maybe be a little more detailed? Is it all just sort of-- has your ’06 outlook improved that significantly that your-- versus what you were looking at last quarter that you need to be stocking up that much more working capital to meet those demands?

Well, let me just clarify a couple things there. We said we resolved the issues in the third quarter. Shipments have begun, but it’s not like you take the whole program and ship it all at once. Shipments have commenced, so they will continue throughout the quarter. So, if the-- on these two programs, if they’re delayed-- let me give you an example. If we expect the shipments to go from March through August and now they’re going August through February, the shipments go out piecemeal, and then you have to do the billing and then you have to do the collections, so it’s more than just-- we resolved it at one point in time. We actually re-negotiated new schedules and new milestone payments on the one program, and are beginning to ship steadily on this next program. The problem is we lost several month’s worth in the delay, say well (ph), let’s push it out to the right. And we would expect to see some improvement in 2006 for sure, although we don’t have that finalized yet. But, it’s a time issue (ph) for us.

Can you maybe sort of quantify how much of the slippage in free cash flow is sort of due to these sort of timing issues on these two programs versus how ’06 may be looking a little better now and you need to stock up some more working capital to meet that demand?

Yes. I mean, we built a little bit of inventory but, as I said on the call, that’s to a lesser extent. The delay in cash flow on the two programs we mentioned are about 5 to 6 million each due to those-- approximately.

Which should be made up for next year?

It should lead to improvement in 2006, exactly.

Robert Stallard of Banc of America Securities.

Just quickly on the nuclear power side of things, you’ve not talked about that so far. How did that perform in the quarter, and how do you see that shaping up for this year and possibly next?

Well, the sales are going well there. Yesterday was an announcement by Duke Power that they were looking to purchase two reactors from Westinghouse, and we have been selected as the supplier of pumps on that particular reactor. They were talking about putting in for two reactors that they would put their credentials in for-- certifications in for in about two year and start construction about 2010. So, that would put us around the 2008 time frame.

Also, as I indicated last time, Rob, that the Chinese have now selected both Westinghouse and a French company to look at four reactors in China, and that selection should be made by the end of this year to the beginning of first quarter of next year. So, things are starting to heat up.

Okay. And I just wanted to check something on the organic front, looking at your operating income numbers. You said that the operating income was up 27%, but the organic number was 28%, so that basically implies that your acquisitions made a loss in the quarter. Is that correct?

Not sure, but I know, Rob, that that’s where some of our cost overruns are and some of the other issues we had in the third quarter. So, that could be. I don’t have it at my fingertips.

Well, yes, like the RAST system did come out of our new acquisition at Indal.

Oh, so you’re taking the radar warning charge in one of the acquisitions, then?

Yes.

Frederick Stahl (ph) of UBS.

You mentioned laser peening earlier. Could you give some flavor on how the heat treatment market is in terms of pricing and the energy costs, and also with regards to the starting automakers you have there in the US?

Okay. As far as the heat-treating unit is concerned, we do try to pass those increase in energy charges over to our customers. And, in most instances, we are successful. So, heat-treating has been going well. Obviously, the buildup in commercial aerospace has helped fuel it. So, that’s the color as far as heat treat is concerned. Again, we pass most of our increased energy cost onto our customers.

As far as the US automakers are concerned, well, actually our content on cars are increasing. So, even though the sales of new cars are down, the amount of work we perform has actually increased.

[OPERATOR INSTRUCTIONS.]

Jim Foung of Gabelli & Company.

I guess on the Boeing strike, I’m just kind of trying to understand this. Why is that a fourth quarter hit instead of a third quarter hit, because the strike ended in mid-September.

Right, because we were just notified that they’re looking for a reduction in the 2005 shipments. So, we actually were told in October that they wanted November and December to be half-month shipments.

And these are actuators, yes?

Actuators, yes.

Okay. So, is that going to be recovered in 2006?

Right now, the Boeing schedule does not indicate that they’re going to be able to recover those airplanes.

Oh, okay. So--.

--They’re standing firm on their 2005 shipments.

Right. What they did in their call was they kept the 2006 deliveries unchanged despite the strike last month, or two months ago. But, it seems like they inferred that the 2007 deliveries will make up for the lost shipment this year.

Right. That’s one of the reasons why, Jim, we’re trying to extend the reduction in shipments out of 2005 and 2006. We just recently received it. We put it in our press release indicating that that occurrence did take place. But, I think that we’ll be able to work out some type of better balance of shipments with Boeing, at least we’re hoping for.

Yeah. Well, good luck on that, okay. And then, I have a second issue on this lower embedded computing sales. I’m just trying to get a better understanding of what happened there. Is that a timing issue and you pick up the sales in the fourth quarter?

Yeah. I think Jim, as Marty indicated, most of the big increase for us in the fourth quarter is in the embedded computer group on a variety of programs.

All right. So, what’s left in third quarter is actually going to get picked up in Q4 then, right? Okay. How much was that that kind of slipped out in Q3?

We didn’t indicate we slipped anything in the embedded computers.

Well, you said it was just lower sales of embedded computer products in motion control.

No. Well, the other thing we mentioned, Jimmy, is that they had some EAC adjustments that lowered the sales in the third quarter. That was real-- it’s adjustments on the contracts in the third quarter that resulted in lower revenue in embedded.

Okay, so there was just adjustment in the contract terms then I think, okay. So, you’re not going to recover that then in the fourth quarter, right?

Well, it’s a long-term-- it continues on the third quarter. They were reset in the third quarter, but we have other increases in embedded that are scheduled for the fourth quarter besides those contracts, or other contracts.

All right, okay. And then, just this one last issue is this medical insurance cost that was lowered in metal treatment. Could you kind of give us some qualification of the amount, and is that a permanent reduction in your medical cost that we can annualize?

It’s not a big material amount to Curtiss-Wright. It’s something that affected their particular operations, and they would-- actually running favorable. We’re self-insured, so it’s on an actual claim basis. And when we get the data, we try to estimate and so on and so forth, so it’s not a big number. It’s a big number. It affected metal treatment segment, but it’s not material to Curtiss-Wright overall. It was really adjustment to their run rate.

Eric Hugel of Stephens.

Two quick follow-ups. Glenn, you talked about 4 to 5 million of pension expense. Is that a combination of what you show on in the pension expense line and what you incur in the flow control business, or is that just what would be shown on the pension expense line?

Well, truthfully (ph), I didn’t give a pension number. The 4 to 5 million was the FAS123.

Oh, I’m sorry. Okay. Oh, I’m sorry. I got that confused.

Second, the EAC adjustment at motion that you talked about, can you quantify what the revenue impact was there? I know Marty said it was a [inaudible] EPS impact.

I think it’s somewhere-- I don’t have the exact number-- somewhere around 7 to 8 million in revenue.

Currently, you have no other questions, gentlemen.

If there aren’t any more questions, I’d like to thank everyone for joining us today, and we look forward to our fourth quarter and year-end conference call in February. Take care.

So long, everybody.

Ladies and gentlemen, this concludes your presentation. You may now disconnect. Good day.