ESCO Technologies Inc (ESE) 2003 Q4 法說會逐字稿

Good day, and welcome to the ESCO fourth-quarter year-end conference call. Today's call is being recorded. With us today are Vic Richey, Chairman and CEO; Chuck Kretschmer, President and COO; and Gary Muenster, Vice President and CFO. And now, to present the forward-looking statement and for introductions, I would like to turn the call over to Ms. Pat Moore, Director, Investor Relations. Please go ahead, ma'am.

Good morning, everyone. Before reading this statement, I'd like to remind you if you do not have a copy of the release, please access our web site at ESCOTechnologies.com, or call 314-213-7216.

Statements made during this conference call regarding future fiscal 2004 revenues, gains, charges and earnings; the company's ability to meet longer-term objectives; the level of co-op and IOU activity; momentum in the RF shielding test market; the results of planned divestitures, closures, consolidations, relocations, and associated savings to be achieved and real estate sales; and other statements which are not strictly historical are forward-looking statements within the meaning of the Safe Harbor provision of the federal securities laws. Investors are cautioned that such statements are only predictions and speak only as of the date of this call. The company's actual results in the future may differ materially from those projected in the forward-looking statements, due to risks and uncertainties that exist in the company's operations and business environment including, but not limited to the risk factors referenced in the press release as an exhibit to the company's Form 8-K, both filed today. The company disclaims any intent or obligation to update these forward-looking statements.

In addition, during the call this morning, the company may discuss some non-GAAP financial measures in describing the company's operating results. A reconciliation of these measures to their most comparable GAAP measures can be found in the company's Form 8-K and the accompanying press release on the company's website, ESCOTechnologies.com, under the links Investor Relations, Financial Reports and SEC Filings.

I will now turn the call over to Vic.

Good morning, and welcome to ESCO's year-end conference call. I assume everybody has had an opportunity to review the press release that was issued this morning. I appreciate the fact that there was a tremendous amount of information to review, but we feel it's important to communicate in sufficient detail to ensure that there's a clear understanding of the details behind our overall results. I will summarize the key issues and then answer any questions you have.

First, as it relates to our fourth-quarter results, we did achieve results in a range which we communicated as we entered the quarter. This was a product of solid results across all segments of the company. In addition to the solid earnings we experienced, I'm encouraged by the order input across the company as well as the strong cash flow.

Looking at full year results, our GAAP-reported results were significantly negative as a result of the actions we undertook to reposition the business. However, I remain confident that these actions were in the best long-term interest of our shareholders. The underlying strength of our core business should now be clear, given the disc ops (ph) reporting.

As you can see, our results from operations are $2.51 versus the $1.83 in fiscal year '02. Again, it's important to note the strong full year results in orders and cash flow, as both are key to a solid '04 and the funding of our future growth initiatives.

As we mentioned in the press release, we're making good progress on two major repositioning activities. The divestiture process of our MicroSep operation is well underway. I have been encouraged by the quantity and the quality of interested parties. Given the level of interest, we still expect to conclude this process by the end of our second quarter. The shutdown and move of our Puerto Rico facility is also on schedule, and should be completed in the same time frame.

Moving now to our '04 projection, as was outlined in the press release, our current perspective is for full-year EPS results in the same range as our fiscal year '03. The dynamics behind our performance are fairly simple. As we previously disclosed, the PTL project is scheduled to be completed in the third quarter of '04, with (technical difficulty)

'04 sales of approximately $20 million versus $60 million or $64 million in '03. While the strength of our co-op business and other customers have made up for a significant portion of this downturn, the communications sales level will be down year over year. We are encouraged by the activity level in the IOU market at this time. But still, it is not prudent to include sales from a new IOU in our FY '04 forecast. We anticipate modest growth in our filtration segment and more significant growth in test of approximately 15 to 20 percent.

'04 is not projected to be a year of significant growth. We feel confident that we will deliver solid results. Our forecast for the second half is stronger than the first, due to the fact that the repositioning activity and the associated inefficiencies will be behind us. The second half of the year should be more representative of our ongoing run rate. As we're completing this repositioning, we are concurrently working on our growth initiatives, both internal and external. We're well-positioned from both a market and a financial standpoint to build off of our second-half outlook.

I'd now like to turn it over to our CFO, Gary Muenster, for his comments.

Thanks, Vic. Good morning. As Vic mentioned, we have a somewhat complex earnings statement for the fourth-quarter and fiscal year. Consistent with the detail presented in our third quarter release, it remains our intent to continue to fully describe the various reporting events that have occurred and to provide more financial clarity as to what the ongoing operations were in the periods presented. Our underlying goal was to describe in detail the various items that are impacting our GAAP-reported earnings. The magnitude of the detail is necessary to fully understand the core operating results and is driven by the complexity of the situation. Rather than recap the press release financials, we can address in the Q&A portion of this call -- I will provide a brief overview of the definitions used to described the operating results.

GAAP, obviously, is the required financial presentation and includes all of the reporting events described in this narrative. The GAAP results present the MicroSep businesses as discontinued operations. Operational reflects the financial results from continuing operations, excluding the MicroSep businesses and excluding the adjustments described in detail within the release.

This presentation is intended to provide insight into the company's core operations on an ongoing basis. The exhibits and related footnotes were intended to provide a concise reconciliation of the GAAP to operational results for fiscal '03.

With regards to the guidance provided for fiscal '04, I would like to emphasize the point that we will no longer be allocating the corporate office management fee to the operating units. Historically, this allocation amounted to 2.5 percent of the individual segments' net sales. Obviously, we'll present all comparable periods on this method as well. We feel this change will further enhance clarity and provide additional insight into the operational segments' EBIT performance.

And finally, on the governance front, we have been working diligently on the implementation of the Sarbanes-Oxley 404 certification requirements, and we feel that we are in excellent shape to be in full compliance well before the required deadline.

I will be happy to address any financial questions during the Q&A. And now I'll turn it back over to Vic.

Okay. With that, we would be glad to take any questions that you have.

(OPERATOR INSTRUCTIONS) Steve Sanders, Stephens Inc.

A couple of questions on the communications side -- in the co-op business, it sounds like things are going really well there. I just wanted see if you could provide some more insight on whether you're seeing acceleration in the market, market-share gains, a combination of both --?

Yes, I would say a bit of both. We've entered about $70 million -- over $70 million the last two years. And that -- much higher level than what we had experienced in prior years. We see a couple of reasons for that. First of all, I think the overall market -- the acceptance of AMR, if not the requirement for AMR within the co-ops is a much higher level that it has been the past. And then the second thing is that we've changed our approach in taking the product to market, and that we've been selling more through reps and distributors to better access that market -- to get more feet on the street, if you will. So we have seen an underlying increase in the business itself. And I think we're doing a better job of accessing the market as well.

Okay. And I know it's still uncertain in terms of timing, but the energy bill has some provisions that would provide for accelerated depreciation of smart metering devices and also some requirements from utilities for time of use based rate structures. I just wanted to get your comments at this point on whether those would be meaningful positives or sort of modest positives for you.

I think in the early phases, it would probably be more modest. Certainly, we see longer-term the (technical difficulty) requirement for that type of granularity, if you will, increasing. And so we think that longer-term, the requirements the government will put on the utilities will increase our ability to access some of the larger utilities. I think near-term, it probably won't have a tremendous impact, even with the depreciation piece of that path (ph) --

Okay. Gary, just stripping out MicroSep, cap-ex, operating expenses for '03 -- can you just give some sort of directional guidance on what we should expect in '04?

Yes. In '04, we should see an increase year over year. Primarily, we're going to continue to invest in advanced automation within the filtration group -- primarily at Filtertek. And also, we're going to continue our investments at DCSI in some advanced technologies. So I would say somewhere in the neighborhood of 10 to 15 percent increase in cap-ex.

And then there was a -- on the operational breakdown on the P&L, there were other expenses of 1.7 million. Can you just provide some more detail on what's in there?

Yes. Primarily, that relates to patent amortization -- obviously, related to the AMR technology, as well as the patent portfolio that we possess in the filtration group. And there was a one-time charge in there, a nominal amount relative to some past liabilities related to a divested entity.

James Gentile, Sidoti.

I was wondering if you could give us some insight into the acquisition strategy for communications -- how that's going along?

Sure, we're in the, I'd say, fairly early stages of understanding exactly what we want to do there. This is a significant move for us. As we've talked about a number of times, we want to have more direct access to the gas and water markets. And what format that takes has yet to be determined, whether we have a close, exclusive relationship with another company or whether we make an acquisition there is yet to be determined. And we are going to go -- we're going to take our time to completely understand the best approach for us. But that's something we're working diligently toward.

Rick Eastman, Robert W. Baird.

Yes, just a couple of things. I thought Gary's comments was a classic about the press release being "somewhat complex."

Thanks, Rick.

(multiple speakers) I'm glad it's only somewhat complex. Let me ask you a couple of things. First of all, the tax rate -- why does that go up and stay up? Is that due to Puerto Rico?

Yes, it is a couple of factors, Rick. One is obviously, as we move out of Puerto Rico, Puerto Rico is a lower-tax entity. And as we move that business from Puerto Rico to Mexico, the Mexican tax rate basically rides on the back of the US domestic rate. And so the differential there obviously works against us. But it's more than offset, obviously, in the pretax side. But as a percentage event, it's really the structure going from about a 10 percent rate in Puerto Rico to a 35 percent plus -- the Mexican value added. That's one factor.

And the second really relates to the mix. In fiscal '03, we had a reasonably high contribution from our foreign entities, primarily at Filtertek in Europe. And the mix is shifting a little bit, where the domestic business at Filtertek -- the outlook in '04 is significantly stronger. And obviously the tax rate differential in a country like Ireland versus the United States is going to change the mix on that as well.

So that tax rate shift is really primarily because of the filter business -- or entirely?

I wouldn't say entirely, but it's substantially related to it. Greater than 80 percent.

I've got one more piece of math for you. I think -- or just suggest this and make sure I'm on track here. We were at 270. I think the Street was around 270 in pro forma earnings. The tax rate is about 12 cent difference. And then it sounds like Puerto Rico and the UK test facility are going to account for about 7 cents, which you'll run through the P&L in the first half?

Correct.

So basically, we're working our way down here to about -- or work our way back up, I guess, to the 270 number from the midpoint of your guidance. Is that about --

That is an accurate representation. Also one other thing just to add -- obviously, when you look at the incremental shares that, obviously, the share differential changes year to year, the denominator is slightly higher, as well. And that obviously -- I think a lot of people that have modeled this thing out held the shares outstanding on a diluted basis flat in '03 to '04. And it's a couple of hundred thousand shares higher, obviously, as that evolves. And so when you look at the share differential as well, that's worth a few pennies, as well.

Okay. And just to look at the first half or second half guidance. I'm a little bit surprised that -- with the first half guidance, you obviously are looking for -- whether it's seasonal or back-end loaded year. But is there anything in the first half -- I mean, we had the PP&L issue last year, the pull-forward. But I'm a little surprised that the first half with the bookings and the backlog is perhaps not a little bit greater.

I would say two things, Rick. First of all, we did have a very, very strong first half last year, particularly first quarter, because of the pull-forward, the PPL. And that's certainly not there to be had this year.

The second thing is we do have some inefficiencies associated with having two facilities in the first half of the year with Puerto Rico and with Juarez, as well. So I think that is hurrying things a bit.

And then the third thing is -- as we get into the second half of the year with the communications product, we're looking at a different sales mix. And I think the margins will be higher as well.

Okay. And then just two more things; sorry. The cash position came down sequentially. Is that a synthetic lease issue? Did you buy those buildings, or --?

Yes, we cashed out the synthetic lease or refinanced it, whatever term you'd like to use. And that was to the tune of around $31 million. And we also -- there was that interest rate swap associated with that that was in the neighborhood of 3, 2.5. And so the sum of those two is about $34 million. And then obviously, we had strong free cash flow. That's why you didn't see the cash drop by the $34 million. So that is the biggest change in the cash balance, Rick.

Okay, understood. And then just lastly, I will get out of the way here. Vic, when you look at the communication business and you look at the marketplace for the large IOUs, could you -- I mean, what percentage out of 100 would you put on your ability to secure a sizable IOU sometime in fiscal '04? I'm just trying to get at the tone here. Better than 50 percent?

That is so hard to answer. And I'm not trying to be evasive, as you know -- as you know me. But the reality is the cycle on the things are so long and so unpredictable, what I've continued to say is there -- the real key is to have a number of these things in play. Because there are going to be a different -- cycles within their acquisition cycle, if you will. And I feel good about the number, the quantity, and the quality of the things we have, that we are pursuing at this time. As I mentioned in the press release, that has even picked up a bit in the last couple of months. So I feel good about the activity. I'm not a betting guy, so I would hesitate to put a percentage of -- potential percentage on that for the year.

Mike Braig, AG Edwards.

Vic, if I could just follow that up a little bit. Does the fact that you are not including any potential IOU work -- additional IOU work in the '04 outlook have anything to do with your confidence in progress working towards a favorable conclusion? Is there any change in your level of confidence on that work?

No, that has nothing to do with it. I just think as we sit here today -- I don't think it's a prudent thing for us to do. And that's one project which got out in the public. But that's one of a number of IOUs that we're talking with at any given time. And so there's nothing that has changed in that project or any other project that has resulted in that. I just don't think that, given where we are today, that the appropriate thing to do is to put a lot of sales for investor-owned utility that we today aren't confident we're going to be able to win this year. So --

So you are emphasizing your normal agnostic nature when it comes to that kind of work? We like it, we think we're going to get it, but were not going to put it into the model.

That's correct.

And then, from an entirely different perspective -- any consideration to paying a dividend?

That's something we continue to look at. We have been very -- we've done a good job at generating cash over the past year, and that continues in the future. We are looking at a variety of ways to redeploy the cash. And it's pretty obvious we can do that. We can continue to pursue acquisitions. And we'll continue to look at all of those. But we have not as yet made a decision on that.

Steve McNeil, State Street Research.

I would like to echo Mr. Eastman's comment related to the complexity of the news release. But anyway, I wanted to walk through a couple of questions. The first is on the co-op order activity. It looks for the quarter that it was $29.3 million. And I'm just wondering -- earlier in the year, we sat down and talked with the DCSI folks. And I know there was some dialogue related to attacking the municipal business as a new market. I'm just wondering if this entered ordered -- the order figure reflects any traction with municipals, or if it is all co-ops?

We actually did enter a couple of municipals in the fourth quarter. I mean, that was not a huge driver to what we achieved. But we have made some inroads there, and would anticipate to continue that in the future.

Okay. And just to review that, the margin on the municipal business more closely resembles the margin in the co-op business versus the margin at an IOU.

That would be correct.

Okay, great. And then I also just wanted to talk -- in the press release, you had alluded to investments -- increased investments in the communication business. And we're just trying to get a sense for how much that impacted the margins in the quarter. I mean, they were down pretty dramatically year over year, from 22 to 19 percent. I'm just trying to get a sense for how the sales mix played out vis-a-vis the margins, and then versus any incremental investment you guys have made to grow the business?

Okay, I will address that with you Steve. Part of the -- are you looking at the fourth quarter or for the year for the margins?

I'm just looking at the quarter.

Okay, when you see the drop-off there -- obviously, when you look at the sales mix changes there, we had a couple of things happen in the fourth quarter with -- relative to software and things like that, which obviously have a higher margin. That impacts it partially. But really the driver there comes off of the investments we're making in engineering, and that's -- and sales and marketing efforts, obviously, as we are pursuing, as Vic alluded to, as the activity increases in the IOU market, the opportunities that we have to pursue these we obviously need bodies on the street at each of these utilities. And so we are making investments in sales and marketing. And then, obviously, on the engineering side, as we expand our product offering and continue to expand that product offering, the advanced engineering content obviously needs people as well.

Yes, I mean although, as Mike mentioned earlier, maybe I'm agnostic, if that's the proper term on including something from an investor-owned utility basis in our base forecast. I mean factually, we're confident that that's a good market for us long-term. And we feel it's necessary to make the investments now to be able to capitalize on that. As you get a new investor-owned utility, you want to have a well-trained team ready to hit the ground running as you achieve that investor-owned utility sale.

And can you give us a flavor for the -- I mean, can you quantify the incremental investment you have made? Is it -- are we talking a couple of million bucks here?

Not in the quarter, obviously. But over the course of the year, the answer is yes.

So, I mean -- could we call it 2 million, possibly? Or -- I don't know if you guys are --

I think you're generally accurate -- give or take a half million.

Okay, and then I wanted to talk a little bit about your margin assumptions for next year. I realize -- to just understand, the reported margins this year reflect a 2.5 percent management fee allocation. Correct?

Yes.

And then the margin assumptions you laid out for '04 exclude that.

Correct.

Okay. So if I on an apples-to-apples basis exclude the management fee for this year, it looks like you're expecting margins to soften a little bit in filtration. Can you address that?

And then it looks like they're expected to increase in testing -- can you address that? I mean, I understand communication, just the mix shift there. But can you address the margins assumptions? It looks like in '03 on apples-to-apples basis they were 13 percent. But you're expecting 11 to 13 next year and test this year 8.7 going to 9 to 11?

Yes, I'll let address the filtration one and I'll turn it over to Vic on the other one, Steve. On the filtration side, the margin is going to be slightly down. I think it will be constant. What we have there is relative to our defense aerospace product line, we want a significant program in fiscal '03 that's going to deliver approximately $7 to $10 million of a product next year. And it's at a little bit of a lower margin than the normal run rate. And again, this is a long-term contract opportunity that has significant growth potential to us over time. And so obviously, in the first year of a program like that, the margin tends to be a little bit lower.

And so if you take a 10 million -- $7 to $10 million revenue profile on that product alone, at a margin that's 10 to 12 percent lower than the run rate, that's really what's influencing that. There's no aberration in there. And we look -- certainly, we didn't buy into this program with the opportunity that that's going to be the ongoing run rate. I think as we look at the two- to five-year profile on that specific program, the growth potential and the margin expansion certainly is there.

And what program is that?

It's a deicer valve that we make for the Black Hawk helicopter. We made it in the past. And that's obviously heated back up for obvious reasons recently. And so we won a nice contract on that this year.

Okay. And then can we talk about the --

Sure. And on the test side, it's a couple of things. Number one, as you saw, we've got some pretty significant increases year over year on the sales side within the test business. That market has turned certainly from two years ago and even from this past year. We have won a number of projects, both domestically and internationally. You know, we -- as I've talked about in the past, we've established a presence in Asia, both in China and Japan, and those are starting to produce. And so that has allowed us to increase our margins on a go-forward basis.

So that business has, I would say, turned the corner -- both on the test and measurement side, the medical shielding has continued to remain strong, and then some of the things we're doing for the industrial and government shielding have really increased over the past year.

Okay, great. And then lastly, just wanted to explore the concept -- or idea, potentially, of a stock split -- if you guys have thought about that, of if that's on the table with the Board?

Well, I think that goes into the same thing as we've talked about dividend earlier. There's a number of things like that that we are continuing to evaluate. I would say that today, our real focus -- we've got a couple of focuses -- number one, the reposition activities that we have underway. We have to make sure that they are completed on time and within budget -- that is our number one focus. Number two is making sure that the major programs that we have underway are completed appropriately -- I'm just talking about the ongoing programs.

And then number three, we need to expand our business. Having a flat year-to-year EPS is not the way we plan to run the business longer-term. And so we need to now shift a good deal of our focus to growth. And so those are the three major things that we're thinking about. And some of the other issues such as the split or a dividend -- those are things that we're looking, at will continue to look at over time.

(OPERATOR INSTRUCTIONS) Terry Lally (ph), Kramer Rosenthal (ph).

If you could comment a little bit more on the pipeline -- you talked about the strong activity you have been seeing. Could you give us a little bit more color whether that's early-stage, customers are in the initial due diligence on the technology and return on investment? Or is it later stage, where they have evaluated that and they're just more waiting for the budgetary constraints to be lifted?

Yes, well, again, I would say there is a mix. There is always this continuum of people starting to evaluate the technology,, starting to understand if they have a business case, and people that are actually going out for bids.

And so that -- we have potentials in all of those ranges, if you will. And I think that's been consistent within the path (ph). And my comments as far as the activity picking up -- it just seems that there has been more contact in the past 60 days or so related to those. But we have people in a variety of points within the decision process.

Any push back or any tone from customers on the budgetary side? Is that the reason for the delay? Are they at the final stage, but are not going ahead because of budgetary issues?

I don't know that there's any specifics like that. I mean, that's always a concern, but you know, there's not been anybody that's come forward and said, boy, we'd really like to do this, but we just don't have all the money pulled together today. That's something that they really have to be able to justify the business case. And if the business case justifies itself, then they usually move forward.

Can you expand on the comments about the water and gas market, the investments that you are making -- are you able to take your current technology and adapt it? Or would you need to acquire to enter those markets?

The short answer is both. We have an approach -- we have two approaches, actually, that allow us to access gas and water meters when there is an electric meter in the same area. So what we do is we either hardwire, or more recently (ph), we introduce the product. It allows us to use the RF technology to send the signal from the gas meter and the water meter to the electric meter. And then we use the power line to send the signal back to a central location. So we have that capability today.

The limitations of that are pretty obvious, though. If you don't have an electric meter there, then you're not able to service a gas and water customer. So the thing that we've been talking about more recently is our need to be able to do that, both to be able to access investor-owned utilities that have large bases of gas or water customers that don't have electric meters that are resident in the same area, and also to be able to access the gas and water utilities that don't have any overlap with electric utilities.

So for us to do that, it would require a new technology. And that's the reason we are evaluating what alternatives we have to either work closely with someone who has that alternate technology or to acquire that technology.

What timeframe would you be talking about if that was internally developed versus acquisition.

Well, that's something that -- well, as far as an internal development, I don't think that would be the right approach for us. I think that the technology that we have in-house is directed more toward the power line technology. So for us to try to develop a new technology out of whole cloth, if you will, is probably not the right approach. So I think we'll look outside, whether it be in a partnership arrangement or through an acquisition arrangement. But that is something that we are currently -- I mean, that's an active process that we're going through as far as evaluating our alternatives.

Okay. And who are the players that would have that technology currently?

Well, there are a number of people out there. Everybody from certainly our largest competitor, Itron, which uses primarily a drive-by approach. And there are other companies, smaller companies, if you will, anywhere from startup technology companies to $20 to $40 million companies that have RF technology, as well.

Okay. And then one last question, just on the balance sheet -- with the change in the accounting on the synthetic lease, is that actually on balance sheet now?

The assets are. We obviously, when we refinanced that, we used our cash to pay off the off-balance sheet debt. And we brought the three facilities onto the balance sheet in PP&E. And one of the facilities relates to the MicroSep business, so that is included on the balance sheet in the assets from discontinued operations. But the other to related to the test business and the aerospace business are included in the PP&E that you see. And that's primarily the largest part of the increase you see year over year in the PP&E. So there is no residual debt related to that.

Chris Hanrahan (ph), Signal Capital.

Most of my questions have been addressed. But I wanted to circle back to an item that was touched on earlier on the energy bill. Maybe if you could just kind of expand on some of the wording that's pretty specific in the energy bill as far as timing with regards to when utilities should offer a time-based rate schedule and then it goes through the various offerings. Maybe just touched on that and -- vis-a-vis your offerings and where you sit competitively?

Sorry, go ahead.

You can take that one.

Again I don't think that there's going to be a huge impact near-term on what we're able to -- on what we're going to achieve as a result of the bill. But as they work toward time-based rates, if you will, I think that is something that we do really have something to bring to the party as it develops further, because what we are able to do utilizing our technology is that we collect the data on a very frequent basis, in that we can collect the data on an hourly basis, and in some cases, even more frequently for a properly-equipped meter. So as people are driving toward this time-based rate, being able to do that versus collecting it on a monthly basis or a less frequent basis -- you know, that really puts us, I think, in a very strong position.

So our approach has always been and will continue to be, whether it's on electric or some of the other utilities, that we think a fixed network is the appropriate way to go, and that it's the way of the future for that very reason, because people do want to be able to do things like time-based billing and to do on-demand reads and to do remote turn-on and turn-off of meters. And you really need a fixed network to be able to effectively do that.

Okay, but as far as -- you said, not a huge near-term impact -- maybe drill down on that a little bit, just given that the timing that's cited in the bill is around 18 months. So, I don't -- trying to reconcile near-term -- (multiple speakers)

I guess near-term is a relative term, if you will. And I guess that it's probably a good point, given the end markets that we're talking about. And I think that's -- back to a point that I've made quite often, that the timeframe that penetrates on these larger investor-owned utilities is a longer-term process. And certainly, we're going to go out with the things that have been brought in this bill and try to capitalize on that. But it's not something -- I guess I'm thinking it's not something that's probably going to help us much from a sales perspective in' 04.

And we have no further questions at this time.

Okay, great. Well, I appreciate everybody's interest today. Again, I feel very good about the future of our business, not only in '04, but beyond. So thank you very much.

Thank you for today's teleconference. We thank you for your participation.