愛迪生國際 (EIX) 2008 Q1 法說會逐字稿

Welcome to the Edison International conference call. This call will be available for replay at the following numbers, domestic, 877-693-4277; International, 402-220-0042. You will need to use the pin code 11600 to access today's call. For your information, this call is being recorded. Also, we want to advise you that Edison International is holding a simultaneous webcast of this conference call. This will be on the company's website in a listen-only mode for interested parties. When the conference begins, will you be on listen-only, and there will be a chance for questions and answers at the end. (OPERATOR INSTRUCTIONS) At this time I would like to introduce your host, Scott Cunningham, Vice President of Investor Relations with Edison International. Thank you and have a good conference. Go ahead, Mr. Cunningham.

Thanks very much, and good morning, everyone. This morning our principal speakers will be John Bryson, Chairman and CEO, and Tom McDaniel, Executive Vice President and Chief Financial Officer. The presentation that accompanies Tom's financial review together with the earnings press release and the first quarter 10-Q filings are available on our website at www.edisoninvestor.com. During this call we will make forward-looking statements about 2008 and longer term financial outlook, both for Edison International and certain subsidiaries, and about other future events. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our 2007 Form 10-K and other SEC filings, which we encourage you to read carefully. The presentation also includes additional information including certain guidance assumptions, as well as reconciliation of non-GAAP measures to the nearest GAAP measure. With that, I will turn the call over to John Bryson.

Thank you, Scott, and good morning to all of you on the phone. By now you will have seen, most of you, the release and disclosures we put out earlier today. We're off to a good start in 2008. Solid first quarter performance, and with an earnings outlook now for the year that has moved to the upper end of our previous guidance range. Tom McDaniel will provide further detail on that. I will comment in these opening remarks on a few key developments during the first quarter. First, at Southern California Edison, in the aggregate we continue to see the 12% plus compound growth and earnings assets that we've identified in the past. We see that for now the next five years, 2008 through 2012. We've talked with you in the past about the importance of the Southern California Edison general rate case. That is the single largest element, and could it well be required to authorize the single largest element in our forward five-year investment plan at Southern California Edison. Hearings begin at the end of this month. The case remains on track now for preliminary decision in November and final decision in December of this year. The rate case filing is fully consistent with California public policy. It's fully consistent with California Public Utilities Commission precedent. Any of these cases for southern California Edison, for example, and most importantly it is consistent with the 2003 and the 2006 test year decisions of that commission. It is also consistent with our customer's need for reliable power, and we continue to expect positive outcome.

Turning then to another important regulatory issue, and I know at least a number of you are aware of this, last week, California- commissioned Administrative Law Judge issued a preliminary decision in the new multi-year cost of capital proceeding. This proposed decision, not yet filed this is an administrative law-level, judge-level decision, that proposed decision provides for a three-year forward return on equity that could be adjusted over the three-year period, higher or lower if there are significant movements in benchmark utility interest rates each year. Those adjustments, if any are triggered, would be from the baseline of the most recently approved return on equity at Southern California Edison, and you know that is 11.5%. In the absence of hitting any of the trigger marks under the proposed formula, the Edison return on equity would remain at the allowed ROE of 11.5% through 2010. And as you can see, if finally approved by the PUC, the proposed decision will provide longer-term predictability for Southern California Edison both on ROE and on the capital structure. The final decision on that could be issued by later this month.

And then let me turn to a major initiative, the Southern California Edison $875 million rooftop solar program, that's a five-year program. We announced it in late March, and the governor joined us, chairman of the commission, Mike Peavy joined us on this initiative. It is a meaningful breakthrough in cost and scale, and the initiative will bring on-line over the next five years 250 megawatts of solar generation. This is photovoltaic generation. It will be done by installing solar cells on large warehouse risk distribution rooftops, so huge facility rooftops in the inland sunny areas east of Los Angeles County. 250 megawatts just to provide all of you some sense of scale, is more than ten times larger, the largest solar cell project operating in the world today. And at this scale and for other reasons, we anticipate significant cost reduction relative to the cost of photovoltaics under the current California Solar Photovoltaic Initiative, that we see about having the cost of what's been done to date in California with this program. You may recall that the California commission has for some time urged California Utilities to undertake this sort of initiative, and has offered to provide 100 basis point higher returns on initiatives like this than are offered generally for the utility.

Let me turn briefly then to the Edison Mission Group. We continue there to benefit from our existing strong merchant positions in Illinois and Pennsylvania. We're also moving forward our renewable energy initiatives. Let me start there with when, and principally comment on when in the renewable area the program moves forward. The same time when we discussed this in our last call, we are working with Suzlon on root cause analysis of the turbine blade initiative that has arisen with regard to the Suzlon machines. In this quarter, most significantly two projects totaling nearly 110 megawatts have begun commercial operation. That brings the total for our wind projects actually now in operation to 675 megawatts. We have another (inaudible) for the megawatts in construction. And then taking things just a little further again, our development team announced last week with the governor of Nebraska the construction of an 80 megawatt wind project known as the Elkhorn Ridge Project, for which we have been awarded a 20-year PPA with the Nebraska Public Power District.

And one other matter, in March, Edison Mission Energy was awarded as the successful bidder - - a successful bidder in southern California Edison's most recent RFP, a contract for a gas fired peaker. That is a 10-year 479-megawatt contract for a peaking facility to be constructed here in our utility service territory in the city of industry. We foresee construction costs in the range of $500 million to $600 million on that project. So I will stop there and simply summarize that we continue on a solid path to deliver projected 2008 results, and even more significantly, to meet the growth outlook projections that we've put out for the next five years. So with that I will turn the call over to Tom McDaniel.

Thank you, John, and good morning, everybody. Today I'm going to cover our first quarter earnings performance, and update you on Edison Mission Group hedging programs. I will also comment on the liquidity position of the EIX entities, and conclude with comments on 2008 guidance. Throughout my discussion I will refer to the teleconference presentation located on our website, and if you could all turn to page two, our first quarter earnings summary, I will begin my comments. Reported earnings were $0.91 per share for the first quarter 2008, compared to $1.01 per share for the same period last year. Now, the first quarter of 2007 had a favorable impact of $0.10 per share, related to a tax item associated with the treatment of environmental remediation costs at SCE, and $0.01 per share from discontinued operations at EMG. Excluding these items, core earnings were $0.92, up $0.02 per share over last year. Keep in mind that quarterly earnings reported during the year are generally more heavily weighted to the third quarter reflecting the impact of the summer months. For SCE, warmer summer weather combined with how the rates are designed, produces generally higher base rate revenue and operating margin during the third quarter of each year. Similarly, for EME, the summer generating season combined with it's open merchant position tend to make EME's third quarter the most significant of the year. A look back at the earnings contribution by quarter over the past few years gives a reasonable indication of the summer season impact, relative to the other quarters within the year.

Now let's look at the first quarter results on a company by company basis. Please turn to page three. First, beginning with SCE, total earnings were $0.46 per share, compared to $0.45 per share last year. Operating margin was essentially flat, with the increase mainly due to lower net interest expense. EMG's core earnings of $0.49 per share were also up a penny from the first quarter of last year. In going through the piece parts for EMG, both Midwest Generation and EMMT, contributed positively to earnings for the quarter. Midwest Generation was up $0.12 per share, mainly due to higher gross margin, of contributed $0.05. A gain on the buy-out of the Legacy Coal contract of $0.03, and lower interest expense of $0.04, resulting from our 2007 refinancing activity.

Let me pause for a moment because it's not intuitive that the buyout of the Legacy Coal contract given where coal prices are today is something that we should be doing. This is a contract that we inherited from ComEd. The quality of the coal and its specifications really did not work well within our units, and was not effective or efficient for us, and so we have been working for some time to relieve ourselves of that obligation, and in doing so, we did it at a more favorable cost than what we had reserved for. Turning back to Midwest Generation then, Midwest Generation's higher gross margin, that's the $0.05, includes lower unrealized losses in 2008 related to FAS 133, that's $0.03 per share, and higher realized energy prices of 0.02 per share. Midwest Generation's output was lower for the quarter, primarily related to the Powerton Station Unit Six outage, reported last quarter. That outage extended into the first quarter of this year. The unit went back into the operation in mid-February. In addition the delivery cost of coal was higher for the quarter primarily related to the roll-off of certain contracts.

EMMT experienced a good first quarter in 2008, with pretax trading margin of $41 million compared to $26 million during the same period last year, an increase of $0.03 per share. Several EMG items reduced quarter-over-quarter earnings comparisons. First, Homer City earnings were down $0.02 ,mainly due to lower realized energy prices and lower generation. Edison Capitol was down $0.03 per share, due to lower gains from its global infrastructure fund investments. Project income was down $0.03 per share, largely due to lower earnings from the Sycamore and Watson projects, two of our big four, which have been operating under new market-based contracts since the beginning of the year, and this is something that we did highlight with regard to our guidance. Finally, corporate interest and G&A expense were up collectively $0.06 per share, primarily due to higher interest expense at the EME-level debt that's associated with a re-financing last year, and a step-up in our growth initiatives at EMG.

Next I will be discussing the operational metrics for Midwest Generation, so if could you turn to page four. Generation was down 2.9% at Midwest Gen for the first quarter of 2008. This is largely due to the forced outage at Unit Six at the Powerton Station that I mentioned previously, and this outage shows up in the lower availability for the fleet, for the quarter, and the higher forced outage rates as compared to the first quarter 2007. Turning to the right side of that page, on-average realized prices increased 7% for the first quarter, compared to last year due to higher real-time prices.

Turning to page five for Homer City, total generation was lower by 3.1% compared to the first quarter of last year, mainly due to a higher forced outage rate and lower off-peak dispatch. On the right side of the chart all in average realized prices decreased 2% for the first quarter of - - relative to last year primarily due to the roll-off of higher priced power hedges. Turning to page six, this page summarizes our regular hedge positions for both power and coal at Midwest Generation and Homer City. There were no changes to these positions since we reported in fourth quarter. As will you note, or can note, for Midwest Generation we are in, essentially, a hedge neutral or 50% hedge position, the balance of 2008 and to slightly lesser hedge position in 2009 and '10. We are substantially hedged for fuel costs, including both coal and rail at Midwest Generation through 2009. In Homer City we are also at about this hedge neutral position for the balance of 2008 and to a lesser hedge position in 2009 and '10. Our coal requirements are largely hedged for Homer City through 2009, and this positions us well, as John said, to capture the higher market prices that we're currently seeing if they prevail through the balance of the year.

On page seven, you'll see our liquidity base position remains strong, and backed by a well diversified banking group for EIX as a whole. We ended the first quarter with overall committed credit facilities of 5.1 billion, which extend through 2013 through EIX and SCE, and through 2012 for EMG. These were negotiated last year and expanded at favorable pricing at terms, and we're very pleased that we did that, relative to what we might experience today. Total liquidity including cash and short-term investments is 5.9 billion.

Turning to page eight, as we said in our press release this morning, we are reaffirming our 2008 core guidance range. We established a fairly broad range at the beginning of the year, because the volatility in power prices and the commensurate impact on revenue and margin associated with the unhedged component of EME's merchant generation. Power prices have been trending upward, and based upon current favorable forward market prices, we expect EMG's earnings to be around the high end of the range, and consequently EIX's core earnings to be around the high end of the $3.61 to the $4.01 per share guidance range. Our core guidance is based on the key assumptions and factors we reviewed on our February call, and are shown on the slide.

Now, one last item I want to update you on our -- the tax matters related to our Edison Capital leveraged lease portfolio. We have updated our 10-Q disclosure that was released this morning, so let me run through what we have included since we have had a number of questions on this area during the week. The 10-Q provides an update to our 2007 10-K, regarding the status of several cases involving other taxpayers, to reflect two legal developments involving commercial banks that occurred in April. These are the only current court decision points involving these types of transactions. And as required by GAAP accounting, each quarter we review significant events to determine whether our accounting or disclosures should be revised. We have done so, and we continue to believe that we have properly recorded these transactions based on applicable statutes, regulations, and case law. As a result we've recorded deferred taxes associated with these leases of about $1.6 billion, as reflected in the 10-Q.

The 1.6 billion cumulative tax deferrals is updated annually, based on the filing of our tax returns, and last year, it increased by $54 million. We do not expect this deferred tax amount to grow materially in coming years, given the age of our lease portfolio. The after-tax accrued interest is updated quarterly, and that was $557 million at the end of the first quarter, compared to $525 million at the end last year. Finally, we are engaged in settlement discussions on a number of issues with the administrative appeals branch of the IRS for certain open tax years, which include these lease issues. As a result of these discussions we are limited in commenting about future outcomes beyond the disclosure we have in our 10-Q. And with that, we'll move to the formal Q and A part of the call.

(OPERATOR INSTRUCTIONS) Our first question comes from the line of Paul Fremont with Jefferies, please proceed.

Thank you very much. In looking at the power price improvement, particularly in the Midwest Gen fleet for the quarter, aside from higher natural gas prices, it looks as if you're basically getting market heat rate expansion, which I would guess is coming from higher coal costs in the off-peak hours, so I guess my question is can you discuss where the pricing improvement is coming from in the quarter?

Well, I think the easiest way to really capture that for us in our load factor, and as you can see the on the chart on page four that load factor has improved from around 81% in the first quarter of 2007 to 85% this year, and most of that would be coming in the off-peak hours.

And is that - - should we look at that as the major driver of your confidence in the higher end of your guidance range?

Well, two things. Obviously the higher forward prices, and that's really the predominant thing, and then the higher utilization of the Midwest Gen fleet. The higher prices are the big driver. Next question.

Thanks.

Thank you. Our next question comes from the line of Hugh Wynne with Sanford Bernstein, please proceed.

I also wanted to ask about Edison Mission. I'm concerned about the extent of the outages. You had forced outage rates of 11.8% at Midwest Generation, 9.5% at Homer City, and of course, that diminished your ability to capitalize on this favorable pricing environment. Are there issues arising with the fleet that are reflected in these outage rates, or is this simply just a coincidence that you happened to have two major outages at the two ends of the fleet during the quarter?

I'd like to have Ron Litzinger, the new CEO of Edison Mission Energy, comment on that.

Yes, if you look at our historic outage rates they are sort of in the range --- typical historical range for what I would call recurring types of outage causes. We have had some one-off events, which are part of the business. The Powerton outage with the duct failure, and we'll just continue to monitor our forced outage rates and plan our maintenance capital accordingly.

So you don't view these outages as extraordinary, but still within the range of a normal rate of occurrence?

Yes.

Okay. A second quick question if I could, the realized prices at both ends of the fleet, Illinois and Pennsylvania, were significantly below the average prices prevailing at nearby hubs, and I imagine that that's going to allow to you increase realized prices over time as a result of the roll-off of hedges. On the other hand you have got a coal contract, apparently of some four million tons that appears to fall away in 2010 at Homer City, and that presumably would have to be renewed at much higher prices. I was wondering, in light of those two big trends, if you could just give us a comment on the longer-term outlook, say over the next two or three years for generation gross margin across the fleet.

Well, let me have Jim Scilacci comment on that. The foundation, we have looked to make sure that we're matched up on both the fuel and the power side, so that we aren't exposed unduly to a margin capture that we think we might have. And so as you take a look at the hedge position for 2009 and '10, you can see that we are kind of balanced on the right side. So the legacy coal contracts that we have we think are - - position us well, and then we will look to market conditions to fill out the hedge book as we see most appropriate, with the important thing is that we'd want to make sure that we don't get out of balance and get our power hedges in front of our coal hedges.

Excuse me does, that mean that you foresee rising or declining margins?

Well, it's really going to be a function of where prices move, but obviously what we would look to do to lock in the margins at the most favorable point that we think we can.

Alright. Thanks.

Thank you. Our next question comes from the line of Michael Lapides with Goldman Sachs, please proceed.

Hey, guys, with rail, can you talk about how much of the rail contract at Midwest Gen rolls off between '09 and '10, and then in '10 and '11, and then just kind of what you're seeing is macro-level in terms of pricing lately from the PRB into the Midwest?

None of it rolls off in '10-'11. It's after '11 that that contract expires. I don't know that we can comment at all about what we're seeing in terms of rail pricing. We're really taking into consideration what we see as the long term, but most importantly focusing on what our hedge position is as I said earlier, in making sure that we are matched up, should we decide to extend our hedges out beyond the 2011 time frame.

Got it. Thank you.

Thank you. Our next question comes from the line of Dan Eggers with Credit Suisse. Please proceed.

Hey, good morning. First question for you, I guess just on the leverage lease situation, is there no obligation for you guys to go into a litigation situation as Peg talked about on their earnings call, and any kind of views when you'll have final resolution on this?

As we stated in our disclosure, that really we will make a determination on litigation based on how we perceive the outcome of our settlement discussions, and that's really the driving factor. And there's really no time frame that has been established around when we might come to the finish line in terms of those discussions.

Okay. On the wind business, view on when you are going to have the Suzlon blade issue resolved, and are you running the Suzlon turbines right now?

Let me have Ron Litzinger comment.

Yes, we do have version 2 of the Suzlon blades, the ones that are having the cracking, in operation at our operating facilities. The individual turbines that have cracks are taken out of service, but with an inspection program we continue to run the turbines that are not currently cracked. We are working with Suzlon on both the technical front the determine the root cause analysis, and on commercial discussions, and those are progressing satisfactory at this time.

I guess last question is from the hedging strategy perspective, without adding any hedges in the quarter, kind of thought process behind that strategy given the move in commodity prices, and kind of how we should think about layering in hedges for 2009 as we progress through the rest of this year.

Yes, let me let Jim Scilacci cover that.

Clearly what we'd like to do is roll forward our hedges at appropriate times. We like to match up the forward sale of power and make sure we've got the coal, the coal transportation emissions, synced up at the same time. We don't typically do it simultaneously, but we try to broadly get it within the same time period so you have clean and clear hedges. And we'll just roll forward as we see market opportunities present themselves, and clearly the prices have been up, and we are looking at the market constantly trying to evaluate when the best time to jump in would be.

Dan, we, traditionally, don't really provide an outlook on our hedging activity, that's really proprietary. But we do report on what we have done at the end of the quarter.

Just from a - - given a move in power prices and a move in coal prices, is it the fact that coal prices have maybe left you guys on the sidelines or is it just some common - -

Okay this is Jim Scilacci. Clearly we've been watching the elements here, and the rapid rise in coal prices is a factor we have been considering, but there are other factors, too. We are in pretty good shape from our perspective for Midwest Gen for '08 and '09. There's a factor that gets into your - - in terms of liquidity, and you want to make sure that you roll forward carefully. We typically go out a couple years. That provides, in stress cases, sufficient liquidity if things go up unexpectedly that you the cash to cover the margin calls when they occur.

As you'll recall we have been talking about the last couple of quarters. We have worked hard at Midwest Gen to put a facility in place that, going forward, when we hedge that we don't need to provide actual cash or letters of credit, that we can offer a lien on Midwest Gen, so that reduces our liquidity, so again that provides additional flexibility that, in theory, we can go roll forward in a longer period of time, if the market opportunities present themselves.

I think the important point here is that we've done a lot of work to position ourselves to capture higher market prices, and we're pleased with what we see in the market today.

okay. Thank you.

Thank you. Our next question comes from the line of Mark Siegel with Canaccord Adams, please proceed.

Hi, good morning. With respect to your AMI program at SCE, assuming a final rate case decision in the December time frame, do you guys feel comfortable with your previously disclosed deployment schedule for about 1.4 million meters in '09?

Yeah, this is - - Al Fohrer will take that.

Yes, yes, we do.

Okay. Thanks. That's all for me.

Thank you. Our next question comes from the line of Hugh Wynne with Sanford Bernstein.

I was wondering if you might comment on what contingency plans you have in place, in the event the IRS were to prevail on the litigation on the leases to make those tax payments which you had previously deferred, as well as any interest and penalties. I understand the amount could be something like 2.4 billion at a maximum, and I was wondering how you would draw down your lines and deploy your cash to meet the claim began to approach that scale.

We feel that, in the event that we would to have raise the capital that we have sufficient liquidity to be able to support that. Of course, that's sometime down the road. And certainly we could look at that cash flows within the leases also to be a source of funding.

Thanks.

Thank you. Our next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed.

Hi. Can you hear me?

Yes.

Hi. The Beaver Valley 2 lease that you guys are doing the buyout on, is that 20 million after tax that we're seeing, and is in that the second quarter?

That's 20 million after tax, and of course that's just an estimate. We're in discussions right now with them as to what the appropriate value would be, associated with their buyout option.

Okay. But that is what - - that's - - in guidance, that's roughly the number that is in guidance, I guess?

Well, that wouldn't be in guidance, because it's an uncertain result right now. We've identified it, because we're in discussions with them, but it has not been concluded.

Okay, so that would be up side to guidance.

As it relates to Edison capital.

Okay. And the company as a whole, I guess, as well, right?

I guess so.

Okay. And then with Homer City, what was the reason for the demand decreasing, off-peak?

It was probably a function of coal prices. They are more influential in the off-peak hours than gas prices, so the market had to adjust to those.

Okay, so coal prices being higher decreased demand for power, off-peak, is that what you're saying?

I think the demand is the same, and it's probably in just the way units are dispatched, and the way they fit in the with moving coal prices.

Okay, so the generation from Homer City was less valuable because of the higher coal prices. Yeah. And therefore, okay, I gotcha, it's more of a dispatch issue. Finally, on the total liability of 1.6 billion in the leveraged leases, outside of the actual liability it sounds like you're not really booking much in the way of any tax benefits going forward, so am I right to assume that if - - aside from the cash costs of any issue associated with any potential liability in that area, going forward, if this program were to end or what have you, it wouldn't have any ongoing earnings impact outside of that, is that right?

Let me address that in two ways. Yes, as I mentioned, in terms of the increase in deferred taxes that we would book because of the composite nature of the lease portfolio, we wouldn't look to see that grow. What would grow would be the interest associated with that deferred tax balance going forward. We are experiencing some incremental income from one of the leases that we have, which is the Swisscom lease, that drops down over time.

And how much would that be, just roughly speaking, the income impact associated with that going forward?

It's really immaterial. It's not a significant number.

Okay, great. Thanks a lot guys.

Thank you. Our next question comes from the line of Andrew Levi, with Brencourt, please proceed.

Hi guys. Not to beat a dead horse, but just one more question on the leases. If settlement --You haven't taken a reserve yet, right?

We have no reserves.

Right. So if settlement talks aren't successful, are your accountants going to make you take a reserve?

Well, if the settlement talks are not successful, we would have to make a determination at that time as to the nature of the settlement.

But wouldn't your accountants make the determination for you? It's not your decision, right, it's really your accountant's, right, or am I incorrect on that?

Based on the technical merits associated with what the elements of the settlement were, that would dictate whether or not we had to take a write-off or reserve.

Thank you.

Thank you. Our next question is a follow-up question from the line of Paul Fremont with Jefferies. Please proceed.

I guess there was a more recent decision in California to require cooling towers as best technology available for discharge. With respect to San Onofre, I guess you would have all the way until 2021 to install cooling towers. Can you give us a sense of timing there?

Paul this is Al Fohrer. That whole area of (inaudible) cooling is still under discussion in terms of what it means, what the impacts are, and there are no final decisions at this point.

Also is there a cost estimate as to what it would cost to build a cooling tower there?

No. It's premature to speculate on what they're going to require at what plants, and how they view the whole thing. This is just a very fluid discussion right now among all the parties at this state.

Thank you.

Thank you. Our next question comes from the line of John Sohan with Citigroup, please proceed.

Actually, it's Greg Gordon. How are you doing?

Hi, Greg.

You made a comment earlier, as you were being bombarded with questions on the leases, that one of the scenarios, should you be put in a position where you have to pay the IRS, would be to use the cash flows coming off the leases. Can you give us a little bit more of an explanation of how the leases might be able to - - the value of the leases or the future cash flow off the leases might be able to potentially fund some sort of payment?

Yeah, you know, the leases, I mean, the decision surrounding this would accelerate payment. That would - - tax payments that would be taken into consideration, or are taken into consideration through the lease structure. In other words, the leases are totally self-contained, so the cash flow that would remain under the leases could be used to secure funding to help us meet some of that obligation.

And so, basically what would happen is the earnings contribution from the leases would dissipate, as you - - financing out against the value of the leases, is that the right way to think about it, or is that incorrect?

Well, I mean, the earnings structure under the leases would be predominantly back-end loaded. Obviously we would experience a drag associated with the financing in the earlier years.

Okay. Thank you.

Thank you. There are currently no additional questions waiting from the phone lines.

All right. This is Scott Cunningham. We want to thank you very much for participating in the call today -

Scott, I'd like to -- Before we close on the call, I do want to re-emphasize that in our judgment, in our legal positions that support our leases and the issues that we are contesting with the IRS are strong, and we remain behind that position.

Thanks very much. Please don't hesitate to call if you have any follow-up questions. Have a good day.