德維特 (DVA) 2003 Q2 法說會逐字稿

Good afternoon, my name is Keri (ph) and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita Quarter 2 2003 earnings call. All lines have been placed on mute the to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star then the No. 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Mr. Whitney, you may begin your conference.

Thank you, Keri, and welcome, everyone, to our conference call. We appreciate your continued interest in our company. I have with me today Kent Thiry our Chairman and CEO and LeAnne Zumwalt, our Vice President of Investor Relations.

I would like to start with our forward-looking disclosure statements.

Certain statements included in today's presentation as well as in our press release and related supplemental information dated August 1st, 2003, are forward-looking statements. These statements relate to legislative and regulatory changes and the company's operations, economic performance, financial conditions, revenues, volumes, growth, DSO, bad debt expense, expense growth, planned capital expenditures, and earnings and cash-flow guidance.

They reflect management's current expectations and can be affected by numerous factors including the risk factors discussed in our press release and in our 10-K and 10-Q filings. These forward looking statements are based upon information available to us at this time and we do not have any current intentions to update the forward-looking statements, forecasts, or guidance whether as the results of changes, underlying factors, new information, future events or otherwise.

Additionally, our press release and related disclosures include certain non GAAP financial measures which we believe provide useful information to investors. These measure should be considered an addition to the results prepared in accordance with GAAP and should not be considered as a substitute or superior to GAAP results. Also included in the press release is a reconciliation of these non GAAP measures and the most comparable GAAP financial measures.

I will now turn the call over to Kent Thiry, our CEO.

Thank you, Rich. First we will try to cover some of your primary questions. I will handle 6.

No. 1, how are we performing clinically? No. 2, how are we going to use our cash balance and recurring cash-flow? No. 3, why did we purchase the Lifeline and RMS (indiscernible) from Baxter? No. 4, are we planning to participate in the ESRD (indiscernible)? No. 5, what's going on in Washington D.C.? and No. 6, what about 2004 operating income guidance?

With respect to question No. 1 -- clinical results (indiscernible) the same two stories (ph) we have provided in the past. First, adequacy, which is intentionally is how well the cleaning the toxins, removing the toxins from people's blood, 93 percent of our patients had (indiscernible) of 1.2 in the second quarter which is up from 92 percent in the prior quarter. The second measure, anemia management, a percentage of our patients with (indiscernible) greater than or equal to 33 was 84 percent consistent with a performance in the earlier quarter. Although it's difficult to ensure that these numbers are apples to apples with other numbers you see on the data we have since that they compare very favorable to the entire industry.

Question No. 2, what about our cash balance and the use of our current (ph) cash flow? $200 million is earmarked for the personal redemption of our 7 percent note. (indiscernible) 125 million was anticipated to be used to redeem our 5 5/8 notes. However as you already know, they ended up converted.

As for the balance of our cash, our view remains exactly the same that we expressed in the past. We will first pursue available growth opportunities within our business mainly acquisitions (indiscernible) for the most part. Cash in excess of attractive investment opportunities will either be used to a., pay down debt, b., return capital to shareholders in the form of dividends or share repurchases or c., held to allow strategic flexibility and (indiscernible) to compare all of the above.

Question No. 3 why did we buy Lifeline and the disease management business from Baxter?

Strategically we're committed to maximizing the value that we create clinically for our patients and economically for the payers. These two acquisitions will help position us over time with greater capabilities to enhance value we deliver the patients and payers in particular by offering services that can reduce the total cost of ESRD care.

Right now, however, the businesses are not profitable and it will take some time for them to achieve break even.

No. 4. Are we planning to participate in the CMS ESRD demonstration project? The answer is no. It is highly unlikely. The demonstration proposals, we believe, are dangerous from a policy and data point of view. Participants will end up carefully selected from a particular geographic area (indiscernible) right pathologists, the right surgeons, the right hospital relationships, the right patient mix, the right market share, etc etc etc.

All of that to maximize the probability that the demo works economically. So it will be a cherry picked situation.

In addition these demos then will receive inordinate amounts of attention -- management attention from other parts of the sponsoring organization, IT etc. etc. yet none of those costs will be captured by CMS in the actual tracking so what you would end up with is a dramatically non representative situation which, unfortunately, will be extrapolated from broadly in terms of public policy.

Therefore, we feel that organizations that do participate and stirring the industry up (indiscernible) terrible outcome in terms of the CMS (ph) generalizing however sincerely from a totally misleading dataset to make broader policy.

And we are really one of the few health-care segments in America that can point to unambiguous improvements in the quality of care over a decade and one of the few groups that care for the chronically ill that can point to reductions in annual per patient total cost despite its older and sicker population. We are perhaps the most efficient user of tax payer dollars in American health-care. Simply there is no point in turning the applecart upside down, working on these different demos.

Question No. 5. What are the latest developments in Washington, D.C.? With respect to rate increases, what is the probability that we will get a rate increase or rate increases? I would say 50-50.

Number 2, with respect to AWP protection which is to say if AWP rates are reduced in health-care, what are the odds that dialysis will be carved out and are affected? And I think this point is probably 60/40 against us because while we've achieved protection in both the House Bill and the Senate Bill, CMS has asserted their own right to reduce AWP reimbursement if Congress does not and so if our provisions survive and Medicare legislation is passed, we will be fine.

If they do not pass legislation CMS may very well take action that we would not be carved out from. So, all in all, the Washington D.C. picture is right in that 50-50 realm as to whether or not it will be positive or negative.

Question No. 6. What about 2004 operating income expectations? Our expectation is that operating income will be relatively flat in 2004 vs. 2003. This reflects an assumption of modest EBITDA growth which is then offset by several factors. First, an increase in depreciation of about $10 million. Depreciation will grow as a percentage of our revenue in 2004 because of all of our recent incurrent investments and information technology and the good news of our accelerated investments in new centers, new (indiscernible) centers.

Other factors -- which will offset the incremental process growth which would come from the volume increases -- are Medicaid cuts, the Pharma economic changes and private pricing. Hence, the expectation of relatively flat operating income, despite modest EBITDA growth. Thank you.

Thanks, Kent. This is Rich again. And I will go through the quarter financially. We had a good quarter financially. Operating income was 83 million pretty much on track with our guidance and was up 5.1 percent from the prior year quarter.

For the six-month operating income, or OI, was 162 million up 4.2 percent over the prior year. Consistent with our previous statements that we expected some pressure on operating margins, underlying margins for the quarter was 16.9 percent, down 40 basis points from the first quarter and down 80 basis points from the last year's quarter.

Year-over-year net earnings in EPS performance was as follows: these numbers exclude the refinancing charges in 2002.

First net earnings for the quarter were 38.5 million, up about 2 percent and diluted EPS was 55 cents up about 28 percent. Net earnings for the six-months were 74.9 million, up 1.7 percent and diluted EPS was $1.07, up about 29 percent.

Cash flow continued to be strong -- a rolling (ph) twelve-month operating cash flow with 324 million and (indiscernible) 12 months free cash flow was 277 million. Both of those numbers exclude cash from one-time lab recoveries.

Operating cash flow for the quarter was 79 million, maintenance CapEx was 10 million, resulting in free cash flow for the quarter of 69 million. In the six-months, operating cash flow was 159 million and free cash flow was 139 million.

Here's some other highlights for the quarter. And please note that all the year-over-year comparisons are confidential results only. And this is the last quarter which we will have to make that distinction as we completed the final (indiscernible) (technical difficulty) last year.

Our non-acquired treatment growth rate was 3.4 percent, up slightly from the last few quarters. We are continuing to get some traction in the area of new centers of the center, opening 8 de novos this quarter for a total of 15 so far this year.

Dialysis revenue was up 10 percent versus the prior year quarter with 6 six percent of that being driven by volume and the balance by about a 4 percent increase in the revenue per treatment. Revenue per treatment growth was driven by a couple of things. Improved pricing and contracting on the private side, (indiscernible) (indiscernible) mix, Pharma intensities and billing and collection improvements.

Generally the private pricing environment has remained solid. But it is our continued expectation that pricing is likely to be much tougher in the next few years that has been in the last few.

As far as operating expenses they were up 6.1 percent or about $12 per treatment versus the prior year quarter. A few details on operating expenses. First labor. Q2 year-over-year labor rate per hour was up 3.9 percent. A small improvement over last quarter's increase of 4.3 percent. Pharma expense was up a little more than 5 percent per treatment, primarily related to the increased intensities and (indiscernible) pricing.

Higher insurance cost and de novo center openings also contributed to the expense growth. General and administrative expenses were up about $2.50 per treatment sequentially, reflecting the timing of certain expenses and were down slightly versus the prior year quarter on a per treatment basis.

Depreciation and amortization increased by 8 percent per treatment versus the prior year quarter, selecting our investments in new centers and IT infrastructure spending can create (indiscernible).

DSO was 66 days for the quarter down three days sequentially driven in part by strong collections in June. Given this and the fact that we are still in the midst of our billing system implementation we do expect that it will go up as the year progresses. As of July 31st we converted approximately 200 facilities onto the new (indiscernible) system and while generally going as planned we are experiencing all of the normal headaches and are still nervous about the potential for some profit leakage, as we continue to roll out.

Regarding capital structure. During the quarter we called (indiscernible) notes which converted into 4.9 million shares of common stock on July 15. Also on July 15 we refinanced our senior credit facilities, resulting in lower interest rates and an increase in borrowings at $200 million. The new rates are LIBOR plus 2.5 percent, a 50 basis points improvement for a little more than one billion up our 1.18 billion outstanding under the senior credit facilities.

Also weighted average maturities for the senior credit facilities were extended from 4.4 years to 4.9 years. The additional borrowing of 200 million will be used to redeem a portion of our outstanding 7 percent notes.

Net debt at the end of the quarter was approximately 1.15 billion after the conversion of our 5 5/8% percent notes on July 15, net debt will be closer to 1 billion. Quarter end leverage ratio was about 2.8 times. Pro forma leverage after the conversion of the notes is approximately 2.5 times. Pro forma debt for total enterprise value is approximately 40 percent and we would like to reiterate our long-term leverage ratio target is 3 to 3.5 times although as we always say we may be above or below this range for extended periods of time.

As for fixed versus floating interest rates. Our percentage of fixed-rate debt has historically been in the 40 to 60 percent range, reflecting a neutral stance on rates. Pro forma for the transactions our fixed percentage will be about 10 percent. As a result it is likely that we will now choose the fixed-rates for a portion of our credit facilities to move us back to a more rate-neutral position. These (indiscernible) transactions should we pursue them will cause an increase in run rate interest expense of plus or minus $2 million per quarter.

Turning to growth this quarter we acquired 11 centers with a total census of approximately 1,000 patients. We continue to target treatment growth from acquisitions of 2 to 4 percent per year on average during the 2003 2005 period. As I mentioned previously we opened eight new centers in Q2, 15 year-to-date. For comparative purposes last year we opened 19 centers and this year we plan to open between 20 and 25 centers.

As far as the financial outlook our updated 2003 operating income guidance is 315 to 330 million. Operating cash flow guidance is 230 to 260 million and free cash flow guidance is 170 to 200 million. Free cash flow just to remind you is before acquisition and development spending.

Our capital spending guidance for 2003 remains 60 million for maintenance capital spending with an additional 40 to 50 million of development spending with no (indiscernible) expansion projects. 2004 as Kent mentioned our expectation (indiscernible) relatively flat versus 2003.

And, finally, what could drive us out of our ranges? Six key (indiscernible) factors 2003 and beyond. Number 1, private pay reimbursement environment, number 2, Pharma economics, number 3, Medicaid cuts, 4, medical director retention, 5, (indiscernible) 6, the availability of attractive acquisitions.

So. In summary, a good quarter in many respects and -- going forward -- our long-term outlook remains consistent. With same strong free cash flow and modest growth with a number of swing factors that on a margin could push profit growth a little higher or a little lower.

I would now like to turn it back to the operator for moderation of the Q&A.

(CALLER INSTRUCTIONS) Your first question comes from Dax Solaces.

Two questions. First question relates to the cash on the balance sheet. I was wondering what sort of cash balance do you need to maintain just to run the business? And how much of your cash balance is accessed so you can use for developments for share purchases, etc.

Just to run the basic day-to-day operations of the business, about 30 or 40 million.

And has the company or the Board of Directors reviewed your dividend versus share repurchases equations since the change in the tax rate?

We are looking at it and continue to look at it.

Your next question comes from Chuck Ross (ph).

Can you talk in a little more detail really what you expect on private pay side and on the Medicaid side? You mentioned those as impacts in '04?

On Medicaid, it is pretty (indiscernible) ambiguous there's going to be cuts -- there's already a few states that have passed them some of them take effect (indiscernible) take effect Jan. 1 and some other states are still (indiscernible ) whether they are going to cutting back on expenses because of the deficits that most states are facing. So the only business question left is how big are they? And right now looks like we're already locked and loaded for about $5 million worth of Medicaid (indiscernible) and the question is how much higher could it go and when is that likely to happen. Admittedly, we are trying to fight the good fight in a number of the states, in order to make sure that patients still have access to dialysis but that's kind of a ballpark starting point for Medicaid.

On a private side, its always a devil to forecast because it's lots of discrete individual battles. In some years we win more than we lost and sometimes we lose more than we win and some of them are bigger than others and some are smaller than others but it is, again, clear on a net basis that 2004 is going to be tougher than 2003 because of just what's going on in the bear market itself.

Do you expect private pay as a group to have higher rates just in a slower rate increase than previously?

I think our fundamental view over the next several years hasn't changed since our three-year guidance was given last fall and that is on average over that period we anticipate (indiscernible) contribute (indiscernible) 1 to 3 percent and we've been doing somewhat better than that, historically, but we can't mention (indiscernible) that it'll be tougher in the coming years.

I think in the first quarter conference call you said you didn't make any share repurchases because you were in the midst of evaluating and bidding on a large acquisition. Why no share repurchases in the second quarter?

I guess, first, is that we tend to look at these decisions regarding allocation of our cash flow among acquisition, (indiscernible) centers and share repurchase and pay down, holding cash etc. We tend to look at that over a much longer period than a quarter or two. That would be the first statement and, secondly, during the quarter we did initiate a number of transactions (indiscernible) try to use our cash balances (indiscernible) 5 5/8% notes partial (indiscernible) (inaudible) I'm not sure that is a satisfactory answer but we tend to valuate our alternatives -- pay down debt, holding cash acquisitions and returning capital to shareholders.

Clearly you -- well let me back up. When you mentioned the cash balance, I think Kent said 125 or 200 of it was earmarked for the 7, then when you mentioned the new credit agreement you talked about that 200 million for the 7 -- so I am a little confused on that.

(indiscernible) about 500 million of cash 200 million is earmarked for the 7. The balance we haven't made decisions as we sit here right now as to what the mix will be among paying down debt, funding acquisitions and other growth, returning capital to shareholders or holding on to cash for the strategic flexibility that offers.

Why did you you not call all of the 7?

The timing of the partial call of the 7's is tied to the refinancing which was significantly oversubscribed and created the opportunity to take an additional 200 million in addition to lowering the rate and the best use of that incremental 200 million in our (indiscernible) call for the 7. We may or may not call the rest (indiscernible) (inaudible)

I guess in my mind you looked at the 7s and looked at the advantages of calling and it obviously makes a heck of a lot of sense. You clearly could have called the entire thing especially after the 5 5/8 were converted. So I was wondering why when you made that decision, you decided to do part instead of all?

Yes and then we will have to (indiscernible) give others a chance to ask the questions. The timing of that decision was tied to that financing so that's why it may look a little odd but that's the answer.

I'll let someone else have a chance.

Andrew May.

First you had a competitor who had sequential decline in revenue for treatment as a result of some details in the change -- in the way certain Vitamin D supplements get reimbursed. Was wondering if that was something that was an issue for you in the quarter? Second, you have a couple of significant payer contracts that I believe expire at the end of the year where there were some opportunity either to improve pricing or lose patients or a little bit of both and was wondering if you could update us on those significant contracts? And, finally, you talked about medical director retention as something that could drive you outside of your articulated ranges for cash flow? Wonder if you could describe your level of exposure on any medical director departures over the course of the next 18 months and what you think the outcome's going to be?

Okay, Andy, I will take at least number one and number 2 here. But the first one relates to the impacting of (indiscernible) Pharma change basically a vial size change. That began impacting us at the beginning of this year. And that was something that we had talked to you all about in the latter half of last year as being an issue going forward in terms of revenue. So it was not impact -- incremental impact in the second quarter if that makes sense.

Second question was the status of the large pear (ph) contract that renewed -- that was expiring at the end of this year and the news this quarter is, we have completed the negotiation of that contract and extended it and got a positive rate increase. However the key question really remains is, what will happen with the volume and so this renegotiation could be neutral or positive for economics depending upon what happens (indiscernible) just won't know that until 2004 begins going forward.

And then the third question was physician contracts and the -- I think your question was the risk going forward the next 18 months?

That is right.

That's a tough one. There are times in the past (indiscernible) disclosed the total exposure of contract business -- renewing and trying to find different categories based on exactly what kind of noncompetes existed if any. And then after a while we stopped doing that once we had demonstrated our track record of actually dealing with them and just began to report on the losses the number of times we did lose the relationship with a doctor that then had a negative impact on our center. So, again, in the beginning we gave people (indiscernible) two a sense of the exposure going forward. And then we switched to instead saying here's our track record and that's probably the best indicator for how we will do in the future care and that all amounted to was losing a few million bucks of profit a year in terms of lost relationships.

So if you look at the amount out there to be renewed or not, and then subtract from that the ones that will successfully renew on terms that we find agreeable, than I think the right expectation to have is that the amount remaining will be a few million dollars of profit a year that we lose. Is that responsive?

What's the -- give me a trailing number then, like in the last six months. Have you had any medical director losses that were consequential?

We do not in the last six months although the last six months were impacted by a couple that we lost about 12 months ago as a matter-of-fact.

Quickly -- what would be the (indiscernible) -- congratulations on getting the payer contracts renegotiated. Why would you think there was any particular reason why you would lose significant volume in that deal? Was it exclusive before and now it's non-exclusive or is there something else that would tend to drive patients away?

That was not entirely exclusive but semiexclusive before it had commitments on a volume and going forward it is no longer a semiexclusive contract. So that would be -- you're correct. That would be 1 reason why one might forecast volume decline.

Let me add on what are the comparative rates other people have and we have a population with a mortality of 18 percent a year. If there's a change in where new patients go, you can add significant changes in (indiscernible) independent of whether or not (indiscernible) actually proactively move some people and so we just don't know and won't know until we see whether or not any patients start to be moved to other centers or whether new patients are directed elsewhere.

Rob Chrisbon.

You talked about accelerating internal growth in the quarter. Is there anything that would make us think that that trend shouldn't continue throughout the remainder of this year and into next year? And I think that's it.

I think that we had a good first half when it comes to growth -- 15 centers, more than half of our target of 25 for the year. With acquisitions with a census of about 1,000 patients -- also more than half of even the high-end of our guidance as it relates to acquisition growth. So we had a good first half and we count on replicating it in the latter half (indiscernible). Does that answer your question?

I have a follow-up also. You mentioned things that would take you out of kind of your track of guidance that you gave and it seemed to me you emphasized the negative as opposed to what I would think would not be emphasizing some of the positives which would be, if you do get reimbursement from Washington, that would probably get you to go outside of your guidance, also, right?

Well it's a fair point. And many of the things that were listed could really cut against us either way when you talk about (indiscernible) reimbursement and talk about Pharma economics, Medicaid cuts, most certainly going to go against us. Availability of attractive acquisitions, so really meant to say these are swing factors that could go either way and drop a bit more profit growth there or a little less profit growth (indiscernible) without their guidance. That make sense?

It does -- it just seems like you didn't emphasize what would seem to me to be a clearly positive one and that was just surprising.

Medicare rate increase would be, if we get it, an unambiguous positive -- (indiscernible) in the portfolio there is more downside than upside but it is good that there is upside in there.

Thank you.

Scott Mark.

My question has been answered, thanks.

Bill Fanella.

Just a couple of follow-up questions -- one on a large contract you talked about. Did that change in pricing go into effect at the beginning of next year or is that already in effect?

It goes into effect Jan. 1 of next year, Bill.

Okay. And I know you're not going to tell us specifically what kind of increase you got but given that that was a contract for you where you hadn't had increases for quite some time, should we expect that it was probably a better increase than you typically get?

That would be a fair assumption and as you can appreciate, doesn't make sense for us to be more specific than that.

I am trying to understand if you have one fairly large contract where you had a pretty decent price increase and yet you expect your in aggregate your private pay pricing not to be your commercial pricing not increases not to be as good this year as next year. It would almost lead us to believe that there may be contracts where you're seeing downward pressure?

Yes. I think that would be fair. We're always quarter-by-quarter -- we're always fighting battles and we're always facing downward rate pressure and tried to get (indiscernible) where we can (indiscernible) (inaudible)

Is that something you're contemplating or are we actually in a phase where you've seen rates go down on some contracts?

We -- I just reiterate what I said before is that we're doing a little better right now than what our three-year outlook had suggested. But we continue to believe that we're going to experience more pressure going forward than what it's been being in the last couple of years.

Bill, we have had the rates go down -- I can't comment on the last three months 4 months (indiscernible) quarter, necessarily, but last year we had some negotiations with (indiscernible) answer is yes. Absolutely yes. (MULTIPLE SPEAKERS)

Is that a change or is that the normal course in any given year?

Normal course.

The other question when you talked about the (indiscernible ) Medicare rate increase and you put it at 50-50 in your estimations, does that include the MSP extension or do you think we have better or worse odds of getting an MSP extension?

Bill, a fair question. I don't know how to (indiscernible) extension, just in the DC area this week and didn't end up discussing the other stuff a lot and that not at all. So the 50-50 calibration (indiscernible) respect to the other issues and MSP on three or four weeks out of date which means I know virtually nothing.

If I could ask one last question. Other revenue for treatment was down about a buck sequentially. Any particular reason there?

No, just normal back quarter fluctuation.

Andreas Dirnagl.

Couple of questions just on your guidance, Kent and Rich. Just for your 03 guidance now that we've moved to operating income from EBITDA you know some (indiscernible) consistencies assumptions on the DNA minority interest for the rest of 03. Is going from $300 to 320m operating income out up to $315 to 330m basically the equivalent of going from your previous $380 at 400m EBITDA guidance of up to about $395 to 410m?

I think that it is. But we're going to pull something in front of us to (indiscernible) mislead you on that.

And another question on the guidance specifically for the term relatively flat operating income from '04. I guess I heard Kent say there is going to be modest EBITDA increases which is offset partially or all of my increases in depreciation and amortization because cost of your de novos and acquisitions. So basically you're EBITDA guidance for going forward is really unchanged from your previous long-term guidance of around 3 to 8 percent?

Yes, that's correct. And thank you for bringing that up. There is no change except for the fact that we are changing the primary metric with which we are reporting in order to simplify our compliance with the new SEC regulations. Your understanding is correct.

One final question. On the contract, not to beat a dead horse and I understand the reasons for not wanting to give specifics on it, is there any way you can give us some sort of parameter in terms of the delta say in the EBITDA margin you saw was it 500 basis points? 1000 basis points? Significantly higher or lower than that on those 1200 patients?

Yes. I'm sorry Andreas, we're just -- we're not going to touch that.

Chuck Ross.

Can you talk -- just a quick accounting question. The 5 5/8 -- how is that interest expense treated? Is that interest expense in the second half here and then we see it get backed out or how -- what happens with that?

Well in the first half of the year while the 5 5/8% are outstanding they were counted in the diluted share count and, therefore, the interest expense from an accounting standpoint is backed out of the numerator (indiscernible) So the conversion -- glad you asked the question -- the conversion going forward is basically has no impact on diluted EPS. $70-80 million of cash interest.

Understood. I guess the question is, when I look at the income statement which of course is done on a primary basis, does that interest expense include the 5 5/8%?

On a (indiscernible) basis it does, on a diluted basis, it does not.

Then that gets backed out in the third quarter because, obviously, in the normal July payment you didn't have to make that big interest expense that, on the primary basis how do you treat that in the third quarter?

It gets reflected in the third quarter as opposed to the second quarter. Primary basis (indiscernible)

Fully diluted -- there is no impact okay, I got it, thanks.

And just because it happened after the quarter was over.

Dax Solaces

I was wondering on the senior credit facility you talked about modification of certain covenants. Did you modify the covenant to allow payment in your restricted payments basket, did you increase your availability to repurchase stock or pay a dividend?

We did on the first item we purchased back. We did not on the dividend side.

What is your availability to repurchase stock under the bank deal as it stands at the end of -- I guess -- after taking into account the transactions?

It -- as it stands today is 350 million.

At this time, there are no further questions. Mr. Whitney, are there any closing remarks?

No, other than I want to thank everybody for their continued interest. Talk to you next quarter.

This concludes today's conference. You may now disconnect.

(CONFERENCE CALL CONCLUDED)