H.B. Fuller Company (FUL) 2002 Q1 法說會逐字稿

Good morning and welcome to the first quarter 2002 earnings release conference call. All participants will be able to listen only until the question-and-answer session of the call. This conference is being recorded at the request of H.B. Fuller. If anyone has any objections you may disconnect at this time.

I'd like to introduce your conference hosts for today's call, Mr. Al Stroucken, Chairman of the Board, President and CEO; Mr. Ray Tucker Senior Vice President and CFO; and Mr. Scott Dvorak. Mr. Dvorak, you may begin.

Thank you. Good morning everyone.

This morning's conference call is being recorded and will be available for replay an hour after we are finished with questions. As mentioned, present for this conference call are Al Stroucken, Chairman, President and Chief Executive Officer; Ray Tucker Chief Financial Officer; and other key H.B. Fuller management personnel.

Before beginning, I would like to remind all listeners that certain matters discussed during this call will include forward-looking statements as that term is defined under the Private Securities Litigation Act of 1995. Since such statements reflect our current expectations, actual results may differ. Please refer to our press release for full discussion of factors, which could cause such differences. Now Ray Tucker

Thank you Scott.

Good morning everyone and thank you for joining our first quarter conference call 2002. The quarter's results reflect the expectations we communicated at the beginning of the year. The industry and H.B. Fuller as well continue to be plagued by lower demand and to a lesser extent weak foreign currencies. Before I begin with the financial results, I want to acknowledge the change in reporting segments that you may have noted in the news release.

We are adjusting our external reporting to the same format used by management. To assist any of you in the development of your models or to analyze trends, we will be providing a work sheet on our Web site under Investor Relations with a restatement of the previous year's results in the new segment reporting structure. In addition, I want to remind everyone that current year results discussed will be prior to any special chart incurred due to the restructuring initiatives for 2002 and the accounting change for 2001.

Net earnings were flat with last year at $5.6 million. Earnings per share were also the same as last year at 20 cents. A crisis in Argentina and the devaluation of the peso accounted for a decrease of approximately two cents per share in the quarterly results. This is better than the three to four cents we estimated in our recently filed 10-K report.

As we have discussed during the previous conference call, we incurred a net earnings reduction of approximately five cents per share as compared to the previous year due to reduced income recognition from our pension plan offset partially by the elimination of goodwill amortization. Reported sales for the quarter were $293.2 million, a 4.5-percent decrease from 2001 sales of $306.9 million. Looking at the components of the sales change for the quarter, we see the following.

Pricing was down .4 percent. Volume accounted for a 2.7-percent decrease. Negative currency effects primarily due to the Australian dollar and euro accounted for a 1.4-percent decrease. Gross margins of 27.8 percent was 90 basis points higher than last year. Operating expenses were $67.4 million or $900,000 lower than last year.

As a percentage of sales, operating expenses were 23 percent compared to 22.2 percent a year ago. The dollar reduction in operating expenses is more significant if you eliminate the effect of the higher pension and other post retirement benefit expenses in 2002 as compared to last year. By excluding this effect, we see that operating expenses on a comparable basis for the quarter decreased by an estimated $3 million. Interest expense of $4.7 million was $900,000 or more than 16 percent below the first quarter of 2001.

Other income and expense, with a charge of $600,000 compared to a charge of $500,000 last year. The comparable expenses are a result of the increased expense this year in currency effects for our -- for our operations in Latin America offset by the elimination of goodwill amortization. Pretax earnings of $8.7 million were seven percent better than the previous year's first quarter of $8.1 million. The effective tax rate for the quarter was 35 percent compared to 37 percent in the first quarter of last year.

Moving on to the balance sheet, the company's capitalization ratio was 34.7 percent compared to 41.9 percent in the first quarter of 2001 and 35 percent at the end of the previous year. Total debt decreased 23.7 percent from the first quarter of 2001 to $226 million. Capital spending for the quarter totaled $4.2 million compared to last year's first quarter spending of $8 million. Depreciation and amortization were $14 million for the quarter compared to $13 million for last year.

Operating working capital amounted to $216 million compared to $249 million last year, a decrease of $33 million. As a percentage of sales, operating working capital was 18.4 percent versus 20.3 percent last year. Before I turn it over to Al Stroucken, let me give you an update on the restructuring initiative announced in January.

The program is progressing according to plan. In the first quarter we incurred pretax charges of $7.7 million. This amount includes $4.6 million for severance, $1.6 million of accelerated depreciation, and $1.2 million of contracts and lease cancellations. We still expect the total charges related to the plan to be in the range of 30 to $35 million. The remaining charges are expected to be incurred in 2002. Now here is Al Stroucken to provide some additional comments.

Thank you Ray and good morning to all of you.

As you have just heard, the first quarter results were aligned with the expectations we had earlier in the year and continued to be influenced by the two negative factors that we faced throughout 2001 -- demand and foreign currencies. With regard to demand, the quarter started out with an abysmal December, especially the second half of the month when the drop off in orders was particularly worrisome.

December's shortfall to the previous year accounted for over 60 percent of the total quarter's difference. January and February showed some strengthening, but still our sales of the same month of the previous year. It is, therefore, with understandable caution that I read the reports of the improving economic climate. Expectations that any economic turnaround is going to manifest itself akin to toggling a light switch on and off are in my view misplaced.

Logic would dictate that an improvement is likely to occur some time this year, but I believe that a dimmer switch effect would be a more appropriate analogy. The United States and Asia-Pacific show the best starting position for some improvement over the course of the year. In the Asia-Pacific region, China continues to expect a general seven-percent growth rate this year and Australia and New Zealand have shown some good economic activity in the first quarter.

Whereas Japan's economy remains in the doldrums, we see some good pickup of our own business in the country. Currency effects of the region mask the volume growth we have seen in the last three months.

In the United States, we hope that the inventory reductions have come to an end, especially in the durable good sector where we still see the most significant decline in demand. In our automotive business where we are a first tier supplier, we have seen some of that improvement in uptake already.

Other sectors like the furniture industry or small appliances and converting remain anemic at best. Europe remains an enigma. Every thing I read and hear in and about Europe blames the present economic downturn on the conditions here in the United States, that Europe did not have any market or economic power of its own. If the growth and demands Europe is hoping for is to come exclusively from its exports, it will be safe to assume that Europe will indeed follow the development in the U.S. with about a six-month delay.

In my book, that does not predict any growth scenario at all for this region in the current year. Latin America is suffering from the Argentinean situation, along with its strong dependence of Central American countries on the U.S. economy will probably not see any significant improvement until the end of the year at best. The currency effect we faced in the first quarter was similar to that of the last several reporting periods.

In the Asia-Pacific region, the effect of the yen and the Australian dollar accounted for nearly a six and a half-percent decline. Europe experienced over a four-percent drop mainly driven by the weakened euro. These regions combined to account for virtually our entire currency related shortfall of over $4 million on the top line. Our adhesive prices continued to show a positive year-over-year comparison, whereas for the total company, our pricing deteriorated slightly in comparison to the same quarter last year mainly due to competitive pressures in our paint business in Central America.

As a result, our full value specialty division reported a two-percent price decrease. As I just mentioned, the adhesive business has maintained the pricing initiatives that we implemented over the last several quarters. The modest increase we posted included the offsetting effects of the radical devaluation of the Argentine peso. Here we were unable to raise our peso denominated sales prices at the same pace at which the currency devalued during the reporting period.

At the beginning of this year, we anticipated the peso being pegged at a 1.4-ratio to the U.S. dollar settling in on the open market around a two to one. As you all know, the peso continued to slide well past this point reaching four pesos to the U.S. dollar earlier this week.

Earlier the Argentinean government's restrictions on free transfers of foreign currency created a situation in which we were unable to pay liabilities denominated in U.S. dollars, eventually eroding our protection on our balance sheet. This resulted in an expense of two cents per share this quarter. We are diligently working on reversing the impact we experienced on our balance sheet and hope that we can avoid similar effects in the future.

The raw material development for the quarter continued in our favor, mainly in North America. Reduced costs, which we began to realize in the previous quarter continued to work themselves through our costing system. Yet we are still not at the same level we saw in '99 before the . In other areas of the world, raw material costs have not softened at the same pace as in North America.

Looking forward on the development of raw materials, it would appear that we are approaching the bottom of the trough as several of our basic raw material suppliers have indicated and need to raise prices in light of the latest increasing costs of natural gas and crude oil. Other strength plays out in the market with supply and demand considerably out of balance is uncertain at this point.

Given this framework of economic uncertainty, it's only logical that we have been putting a lot of emphasis on our continual efforts to become more effective and efficient as a company. Initially this effort concentrated heavily on removing the obvious cost structures that were no longer supported by the market conditions under which we operated. In a second phase, we have been making changes in our internal processes and structures that allowed us to address inefficiencies that are more engrained and difficult to remove.

The steps that we are taking this year to remove 20 percent of our installed capacity are the result of that effort. As those two cost reduction oriented endeavors were going on, we concurrently have been driving our organization to operate at a higher level of performance in many different areas. Dimension of the model would certainly go beyond the framework of this conference call. Let me therefore concentrate on a few that I believe tie logically together and form the basis for our future focus.

The aggressive reduction of products in our adhesives business from over 6,100 to a year-end target of less than 2,700 while still introducing new technologies and products to our customers has been extremely important in enabling the company to significantly reduce the number of production sites around the world. Besides from that obvious and very visible effect, it will give us the added benefit of a considerable reduction in changeovers in our production scheduling and drive our inventory and rework to new lows.

Consolidation of our supplier base and interchangeability of raw materials in our formulas has given us a more solid footing in our negotiations with our suppliers. The standardization of our supply chain processes and quarterly comparison of key manufacturing, quality, safety, on-time delivery and other data of our facilities around the world allows us to transfer ideas and efficiencies from those facilities with the highest performance levels to the other facilities throughout the company.

To give you an example, for our North American adhesives, on our on-time delivery over three years ago was at a dismal 72-percent. Today that number is over 97 percent. And in the past three years, our inventory levels were reduced by nearly 12 percent while at the same time our safety performance as measured by the number of incidents per 100 employees improved by over percent.

By creating standard processes in our supply chain, we were able to benefit from our ERP systems when we started to enable the company -- to the company. This process is still ongoing, but we're making great progress in the transactional area where we are presently running at a rate of 70 percent of all purchases conducted electronically and 25 percent of our sales are handled through e-commerce. These numbers are for the U.S. only.

But more importantly, we've believe that we can use e-business very effectively to become a more valuable supplier to the industries we serve by using its capabilities to transfer knowledge, support and provide solutions to our customers, as well as within our own company. This digitization process creates an environment for us where we can be certain that our customers will receive when they select us as a supplier.

Once this process is completed, we no longer need our sales people to use so much of their valuable time to act as transactional facilitators. They should, instead, be able to concentrate their time on gaining new customers for our company.

We are, at this time, evaluating the capabilities of our sales force to make that transition and where necessary we will provide the needed support or make the required changes to achieve an organization that is growth-oriented and driven by a winning culture.

As you can see, all these steps are inter related and has to be in place to be able to deliver on a strategic direction to grow above the general growth rate in the industry. There's plenty of business out there in the market that we don't have yet. We have the infrastructure in place. We have the market coverage. We have the expertise, and we have the capability to accommodate significantly more volume without having to add costs.

The most profitable growth that we can generate is organic growth, and not all growth is determined by pricing either. It is determined by the cost of ownership and the value the customer gets out of it. In addition, new products and technologies continue to be an important part of our future growth. Yes, of course, our business is subject to economic conditions, but that does not mean that we have to be bob like a cork on the waves of the ocean.

As I tell my sales people, what does it matter that the economy does not grow or even contracts by two percent, if you only have five or 10 percent of the total business that's available and that's out there. This capability building that I described earlier is occurring in many other areas of our company. We are not yet the company we want to be, but we are on our way. And I'm sure you have some questions and will therefore conclude my comments at this time.

Thank you. At this time we are ready to being the formal question-and-answer session. If you would like to ask a question, you may press star, one. You will be announced prior to asking your question. To withdraw your question, you may press star, two. Once again to ask a question, you may press star, one. One moment please.

Our first question comes from Rosemarie Morbelli with Ingalls & Snyder. You may ask your question.

Good morning all and congratulations on a quiet good quarter, given the economy out there.

Thank you.

And following up on that, could you talk about the gross margin level, which is higher than I anticipated? Was there anything specific and with the trend in raw materials, that you mentioned, if it's the high level for the year or do you think you can keep improving?

Rosemarie, typically our first quarter is not the best quarter as far as our gross margins are concerned, as to -- if you look back at that last year we started out, I think, below 27 percent, and then we ended the year at close to 29 percent. Now there was some effect, of course, last year of the raw material price decreases that perhaps to that same level we will not see this year. But just if you look at manufacturing overhead and labor costs and the volume relationship in the first quarter versus the stronger second, third and fourth quarters, I would expect that this is not yet the high point of the year.

Even with raw material trending up, as you just mentioned?

Well I have not seen the trending up yet, but I believe there is at this point and time a reasonable assumption that we're approaching the trough and that perhaps in the third and the fourth quarter of this year we may some -- see some upward movement of the prices, but it's too early at this point and time to really numerically be able to predict that.

Do you have a feel as to whether you will be able to pass through those raw material cost increases if they come through? I am assuming that if your suppliers are telling you that they are thinking of raising prices, you must be turning around and telling your customers the same thing.

Yes we are and of course, they're all applauding us as we're doing that. It is, as always, a very difficult part of our business trying to raise prices because it's not always just our cost structure that's determined and that there are many other factors like what are the strategic objectives of many of our competitors. But certainly our intent is as we see raw material prices rising to get price increases in the marketplace, and I hope that our experience over the last two years is going to give us a more solid footing and a more positive initial result than we had two and a half years ago when we started it.

Could you give us a feel for the areas you are working with in -- and tell us which ones or which market is operating best and which one is worse. Where do you see the most progress and where do you see continuing erosion?

Well I see a continuing weakness in assembly applications, which tend to go into the durable goods sector. Converting is also still somewhat weak, whereas our packaging area, our non-woven area is -- and automotive, as I said, is showing stability, as well as in some cases some improvement.

Thank you.

You're welcome.

Our next question comes from Allen Cohen with First Analysis. You may ask your question.

Al, you've got the company materially strengthened. You've got internal communications and process streamlined, improvements. Your opportunity clearly is higher sales and higher margin sales. Could you maybe take us through what you're currently doing and envisioning in the growth areas of be it new technology, new product, new marketing thrust, perhaps, to leverage your global strength better and whatever else you might be doing.

All right, I think a significant portion of our success is going to be dependent on our focus. And focus areas that we're looking at is, as I may have said in earlier announcement as far as new product development is concerned and creating products that have a much more robust profile and that can be used not only across geographical boundaries, but also across application boundaries and I believe that our product line as well as some others that we have been introducing over the last 12 to 24 months are really moving in that direction.

With regards to a geographical reach, we believe that a concentration of our efforts on those markets where we have the greatest opportunity is going to be of the essence. Therefore when we look at Asia-Pacific, we are predominantly looking at China as a key driver of our future growth, and that's where we're spending a lot of effort and time. In Latin America, that would be the America region of Brazil, Argentina, and Chile, even though Argentina, of course, at this time poses problems, but isn't that always the case. Where you have the greatest , you sometimes have the greatest opportunities.

As far as the global aspect is concerned, by combining our activities in the middle of last year into strategic management teams that run the business from a global perspective, we have, I believe, set up a structure that is very appropriate for this business environment we already see and we are going to continue to see in the future. And also, perhaps, as a last point that I think is important to bring up is what I alluded to in my comments is our e-commerce initiative. Because I believe and I've been saying that for years, even before I came to H.B. Fuller, I believe that the use of information technology is going to be the next competitive advantage that we can create for ourselves as companies.

That's pretty exciting. Thank you very much.

OK, thank you.

Our next question comes from Karen Gilsenan with Merrill Lynch. You may ask your question. One moment.

Hello.

Yes, Karen.

tucker Hi Karen.

Can you hear me now?

Yes I can hear you.

Terrific. Congratulations on a good quarter.

Thank you.

I guess -- some questions about your new segments. In your press release you mentioned that operating income improved for global -- your global adhesives group and fell for the specialty -- the specialty group. Could you kind of give us the top maybe two or three reasons why one group -- why one group did well and why the other group did not do as well. In other words, was it cost cutting? Was it this competitive pricing in Latin America, et cetera, et cetera?

Well I think, first of all, demand in our adhesive area stabilized somewhat in comparison to the previous year. Whereas, in the full value specialty area where a significant portion of the business still goes into the durable goods sector. We had still some shortfalls against last year in sales. On top of that, you know that we've been driving over the last couple of years for our adhesive business more operating from a commodity type model, which really has put a lot of emphasis of taking cost out.

We have separated the full value specialty business on purpose because that requires a different operating model. That business has for many years, I would say, oh way up until '99 and 2000 been providing us with seven or eight percent growth per year. The margins tend to be higher than in our adhesive business and so, we have been feeding that business. We have been putting structures in place that allow us to continue to participate in that demand. And so, that area is not as reactive and shouldn't be as reactive to cost cutting measures because ultimately then we would lose our footing and would lose the opportunity to start growing again when the market turns around. And that really has been the main driver and the differential development.

On top of that, the negative effect that you saw two years ago, when raw materials were increasing extremely rapidly, that was predominantly in the adhesive industry. So the drop that we're seeing there is also coming predominantly in adhesive whereas our raw material situation and specialty and full value was more balanced throughout the period.

OK and then, the Central American competitive pricing in your paint business ...

Yes.

Was that a big negative in terms of profitability year-over-year, Al?

Yes I think it -- that really was where we saw also the more significant price drop and as a result also the most significant drop in contribution. The situation there is driven by two factors. Number one, because of the general economic conditions, the customers in their purchases of paint are selecting our lower cost brand, our more economy type brand instead of the higher price protective brand. And also the competitors in the marketplace are vying for a position because it puts an overall damper on the total volume. So there were two factors -- one is lower price range of products that was being purchased and a general pressure on price levels of the higher brand of products.

That's great, and then my last question is just on the -- on the gross margin improvement year-over-year. If you could just give us a sense of how much of that came from cost cutting as opposed to a more favorable raw material environment. I imagine those are the two biggest drivers of that gross margin improvement.

I would assume it's most normally in 80-20, 80 percent of that improvement may come from raw materials, 20 percent from manufacturing overhead and labor improvements.

Great, thank you very much.

OK.

Our next question comes from with . You may ask your question.

Sorry if I missed this already or if it's old news. I'm just wondering if you could update me on what the expected annualized savings are from the most recently announced restructuring, why we're cutting 20 percent or capacity.

We expect in the year 2003, which is the first full year a 10 to $12-million benefit.

And most of that will be -- is it -- what's the mix between cost of goods sold and SG&A from that?

The way this is going to develop, it's most of all you're going to count two-thirds out of manufacturing, labor and overhead and one-thirds out of operating expense.

Thank you very much.

Our next question comes from Rosemarie Morbelli with Ingalls & Snyder. You may ask your question.

You, if I remember properly, you set up a little company, which was selling the software you are using in-house and which seems to be helping you quite a bit on your e-commerce ventures. Are you successfully selling it out there? Is anything happening at that end?

Well I attended several meetings a couple of weeks ago with technology analysts that make recommendations to companies about what software to use and what companies to work with, and the model that we're presenting is very well received.

The real benefit, Rosemarie, seems to come from the fact that this system allows people to use already installed ERP systems and even if those are no longer finding support from their original software vendors to convert that ERP system to a fully e-commerce compatible system. And thereby extending the period of time when certainly more than 10 years, and as I have said in several conferences, no CEO should have to go to the implementation of two ERP systems in their lifetime and so there is a very strong interest at this point.

Now counter to that, we're finding that companies have, over the last year, become much more restrictive in their outside labor and into their outside contracting. So what we're seeing are shorter term contracts for 90 days for a couple of hundred thousand dollars here, couple of hundred thousand dollars there, but I believe we're at a -- at the beginning of a -- of a very good development and we have scheduled or budgeted for this year about $3 million of sales out of that operation. And I'm certain we will be able to reach that and possibly we're going to be pleasantly surprised, but it's too early to tell.

And could some of your competitors buy your -- buy this particular ...

Yes.

Software and therefore, you are helping them compete more efficiently against you?

Yes, they can and we make it freely available because, as in many cases, the system's really become more valuable and become more filled with many people are using them, and I think we have put no constraints or I don't think so. I know we have put no constraints on where they sell this product and if they sell it to my strongest competitor, I'm all for it because I think it creates a new standard in the marketplace and it will help all of us.

OK, and could you give us what cap ex you are expecting for this year?

With the additional expenditure that we had said -- mentioned in the first conference call of 10 to $12 million due to the restructuring, I would expect this year to be between 40 and $50 million.

And lastly, you gave us a percentage of sales of the revenues generated via e-commerce, could you give us a similar number for new products you have been developing for the last couple of years?

Well, we, of course, have gone to a different standard of determining what we consider to be new products, and as I indicated in my answer to Allen, we have been focusing more on broader products of broader applications and more robust uses.

But the numbers that I mentioned at the last conference call, if we use the same basic end, we're growing in the first quarter of this year 47 to 53 percent approximately in those new products over the same sales of the first quarter of 2001. So that growth rate is still continuing at a very good click and if the first quarter is an indicator for the year, I would expect us to be at around 70 to $80 million of that category in the course of this year.

Thank you and congratulations again.

Thank you.

Our next question comes from Jeff Zekauskas from J.P. Morgan. You may ask your question.

Yes, good morning. This is sitting in for Jeff. I just have one quick question. How much of your restructuring charge this quarter was a cash charge?

It's around $200,000 was a cash charge at this point and time, because most of those were basically reserves that were put out for people that have been notified.

OK, great. Thank you very much.

.

Once again, if you'd like to ask a question, please press star, one. One moment.

At this time we -- I'm sorry, one moment. Karen Gilsenan, you may ask your question.

tucker Hi Karen.

Sorry, the Argentina currency.

I didn't hear your question.

I apologize. The Argentina currency, you took a rate down in this quarter, do you think there'll be anything in Q2?

That really depends on how it's going to play out and with the dramatic drop that we saw over the last weekend and then yesterday, we saw a on again, it's very difficult to predict that. But I -- if there is going to be an effect, I think it may be again in the same range that we had in the first quarter.

OK. And then can you talk at all briefly about sequentially within the quarter how your demand trends seem to be? In other words, not the quarter overall, but was February better than March? Well I guess we can kind of ignore December ...

Well as I already said, December accounted for 60 percent of the shortfall of the entire quarter. So, January and February did not show a strong trend. Between the two, they were about equal, but considerably better, of course, than January. I just looked this morning at our sales for March and I see a continuing trend. That's why I said in my comments I have to be very careful at this point and time because I don't see that turnaround yet. It continues to move along the same lines as we have seen in the same period last year.

Great, thanks.

Our next question comes from Rosemarie Morbelli with Ingalls & Snyder. You may ask your question.

OK, this will be the last one. Do you following up on Karen's question in your comments before, do you see the combination of all being positive in the second quarter versus last year, or is it too early?

I think it's too early at this point and time Rosemarie to make that prediction. If I recall correctly off the top of my head, last year's April was a weak -- was a weak month and so, well April is really going to be the tell tale this year, whether we are moving out of it or not.

And there is news out there that housing continues to be strong and that there's actually a shortage. Do you see -- have you anecdotally seen anything in terms of pickup for your businesses there, or will they never really down to speak of?

Well I think our tech business, which basically provides adhesive as well as grout for tiles is showing some good improvement this year. Some of that is due to the fact that we're doing some new things. We have some different programs in place, but I believe that housing has been continuing to be a good supportive base for those initiatives and for those activities that we have implemented.

I mentioned already earlier automotive is showing some good improvement over the last year. That's because automotive is no longer reducing their inventories as they were last year. It's not necessarily in the sales of automotives where that growth is coming from. And I hope that that is going to be also the cause for some of improvement in some of our other businesses that people are finally stopping to reduce their inventories and start to replenish their inventories.

Can you touch on the automotive market in Europe? We haven't talked about that.

Automotive in Europe is weakerthis year than last year because, again, I think we have some of this six-month delay effect that Europe always seems to be going through, and so I see some corrective inventory correction activities there that may have an impact and have an impact on the sales. I believe, though, that based on what I've been reading and especially came out with some very positive statements a couple of weeks ago, that they expect that in the second half of this year to improve again.

OK, thank you.

OK.

Our next question comes from with Standard & Poor. You may ask your question.

Good morning gentlemen.

Good morning.

Just two quick questions. One is from Ray's early comment, something about the pension. He said the pension income was down five cents -- I kind of missed what he actually said. This was your prepared comments.

tucker Yeah, during the conference call the fourth quarter, we announced that the income from the investments of the pension funds would be much lower this year ...

Correct.

Than last year, and the effect of that is about five cents a share for the ...

OK, fine, OK. So ...

I'm sorry -- I'm sorry, it's seven cents for the quarter, about 27 cents for the year.

Right.

Being -- the quarter is being offset by two cents favorable with the elimination of the goodwill amortization.

Oh, OK, fine.

That's where you -- fine, OK, fine. That makes sense to me. And maybe, if you can explain or describe the two new segments. Is it simply the old specialty group with a new name, or did you shift stuff from the old regions to that new full value?

Well we have shifted some businesses into that group, as well, that used to be in the regional makeup of the adhesive business, like for instance, our window business and our consumer business have been moved into that operation as well. And then last year we made the change of taking the full value business and adding it to our specialty business too. Those were the changes that we have made.

Oh, OK, fine. OK, good. Thank you then.

At this time, we show no further questions.

OK, so then we'd like to thank all those who took the time to listen and participate in today's conference call. And since there are no more questions, we will now conclude this conference call.