Matthews International Corp (MATW) 2004 Q3 法說會逐字稿

Welcome to the third-quarter financial results conference call. (OPERATOR INSTRUCTIONS). As a reminder, this call is being recorded today, Wednesday July 21st, 2004. I would now like to turn the conference over to our host, Mr. Steve Nicola. Please go ahead.

Good morning. I'm Steve Nicola and on the call with me today is Dave Kelly, Chairman of the Board, President and Chief Executive Officer of Matthews.

Today's conference call is set up with the phone company for one hour; this call will be available for replay at approximately 1;30 PM today. To access the replay, dial 1-320-365-3844 and enter the access code 737764. The replay will be available until 11;59 PM August 4th, 2004. If you access our website at matw.com and click on the Investor Information icon, you will have access to the third-quarter earnings release and financial information we will discuss this morning. It will be under our Quarterly Report tab, and this data is available now. For those of you who will be asking questions, we request that you limit your questions to one question and a follow-up question until all of those who have questions have had an opportunity to participate in the question-and-answer session.

We're conducting the call to comply with the Securities and Exchange Commission Regulation FD. At the advice of our legal counsel, I've been advised to read the following disclaimer as it pertains to forward-looking statements. Any forward-looking statements in connection with this discussion are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to be materially different from management expectations. Although the Company believes expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ from those discussed today are set forth in the Company's quarterly reports on Form 10-Q, annual report on Form 10-K and other periodic filings with the SEC. I might also add that the balance sheet and income statement data we provide today are preliminary data since our 10-Q for the current quarter will not be filed with the SEC until around August 13th.

To begin the conference, I will review the financial results for the period ended June 30th; Dave Kelly will then provide general comments on our operations. Following that, we will open the discussion for questions. For the quarter ended June 30th, 2004, the Company reported earnings per share of 44 cents compared to 38 cents for the same quarter a year ago, representing an increase of 15.8 percent. For the first nine months of fiscal 2004, earnings per share were $1.21 compared to $1.03 for the same period last year, representing an increase of 17.5 percent. The increase in earnings for both the quarter and year-to-date periods reflected higher sales, an increase in the value of foreign currencies against the U.S. dollar, an acquisition in our European graphics business and operating improvements in several of our segments. Consolidated sales for the quarter increased 3.9 percent or $4.5 million. Year-to-date consolidated sales increased $21.7 million or 6.4 percent. Graphics Imaging segment sales were up $2.8 million or 11.2 percent for the quarter and were up $10.7 million or 14.9 percent for the first nine months of the fiscal year. The higher level of sales resulted primarily from an increase in the value of the Euro and the acquisition of Reproservice Munich. Reproservice Munich is a German graphics business which was acquired by Matthews in August 2003. Graphics Imaging sales for the quarter and year-to-date periods were also favorably impacted by sales growth in its other European operations.

Bronze segment sales increased $1.7 million or 3.4 percent over the prior quarter and increase $6.6 million or 4.8 percent year-to-date. Higher sales for the Bronze segment reflected the favorable impact of the change in the value of the Euro on its Italian operation and the temporary price surcharge implemented beginning April 2004.

Sales for the Marking Products segment increased approximately $900,000 or 10.5 percent for the third quarter and $4.2 million or 17.7 percent for the first nine months of fiscal 2004. The segment's sales growth resulted from higher volume reflecting higher demand with the improvement in the domestic economy.

York Casket sales declined for the third quarter and nine-month periods. However, prior year-to-date amounts included sales from a small Canadian manufacturing operation and several distribution operations which were divested by the Company during fiscal 2003. Excluding sales from these operations, York Casket sales were relatively consistent with last year on a year-to-date basis.

Year-to-date sales for the Cremation segment increased approximately $800,000 or 18 percent over the same quarter a year ago and $1.5 million or 10 percent year-to-date. Sales of both cremation equipment and cremation caskets were higher than a year ago.

As noted earlier, consolidated sales increased $4.5 million or 3.9 percent for the quarter and $21.7 million or 6.4 percent year-to-date. We estimate that the favorable impact of changes in foreign currency exchange rates contributed approximately $2 million to the increase in sales for the quarter and approximately $11 million to the increase year-to-date.

Operating profit for the quarter was $25.2 million, representing an increase of $3.6 million or 16.9 percent over the same quarter last year. For the nine months ended June 30th, 2004, operating profit was $69.2 million, representing an increase of $10.3 million or 17.6 percent from a year ago. These increases were mainly due to the increase in consolidated sales, the favorable impact of foreign currency exchange rates, an acquisition in our European graphics business and operational improvements in several of our business segments. We estimate that the impact of foreign currency exchange rate changes contributed approximately $500,000 to the increase in operating profits for the quarter and approximately $2.5 million to the increase year-to-date.

The Graphics Imaging segment reported increases of $1.8 million and $5.1 million in operating profit for the quarter and year-to-date, respectively, over the same periods last year. The improvements resulted from the higher value of the Euro, the acquisition of Reproservice Munich and sales growth in the segment's other European operations. In addition, our domestic graphics operations reported higher operating profit as a result of various fiscal 2003 cost structure initiatives.

Operating profit for the Marking Products segment increased approximately $600,000 or 55 percent for the quarter and $2 million or 67 percent year-to-date, mainly due to higher sales and improved operating margins. In addition, this segment's operating results also benefited from a higher value of the Swedish krone compared to the U.S. dollar.

Operating profit for the York Casket segment increased approximately $900,000 or 31 percent for the quarter and $3.4 million or 34 percent year-to-date, reflecting continued improvements in manufacturing efficiency and the absence of lower margin sales from the divested operations. The segment's operating margin was 14.7 percent for the nine months ended June 30th, 2004 compared to 10.8 percent for the same period last year. Since the acquisition in December 2001, operating profit as a percent of sales for the casket business has steadily improved, primarily as a result of our productivity initiatives. However, we continue to face several challenges, including low market growth, domestic competition, the threat of overseas competition and the recent increases in metal prices. During the current year, significant increases in steel costs have impacted the margins of the casket business. We expect these increases to have a more significant impact on the segment's margins in the fourth quarter of the fiscal year.

The Cremation segment reported a slight operating loss for the quarter and an operating profit of approximately $800,000 or 5 percent of sales year-to-date. Increases in cost of metals used in the manufacture of cremation equipment and changes in certain employee benefit costs adversely affected the segment's earnings.

Operating profit for the Bronze segment increased approximately $700,000 or 5 percent for the third quarter compared to the same quarter a year ago. On a year-to-date basis, the segment's operating profit was slightly below last year. Several factors have contributed to these fluctuations. Material costs for the segment in the current year are being adversely impacted by a significant increase in bronzinged (ph) costs. Bronzinged costs have increased around 60 percent from the same time last year. Due to the significance of these cost increases, the Company implemented several operating initiatives in an attempt to mitigate some of their impact. In March 2004, the segment implemented a personnel reduction program that resulted in a onetime charge for severance costs in the second quarter, which favorably affected the segment's costs in the third quarter. In April 2004, the segment implemented a temporary surcharge on selling prices. In addition, operating results for the prior year nine-month period reflected the favorable impact of a onetime adjustment in the segment's finishing cost liability.

Third quarter and year-to-date sales and operating income by segment are posted on the website. Year-to-date operating margins are as follows -- Bronze, 24.5 percent of sales; Marking Products, 17.9 percent of sales; Graphics Imaging, 17.8 percent of sales; York Casket, 14.7 percent of sales; and Cremation, 5 percent of sales. Our third-quarter consolidated operating margin for fiscal 2004 was 20.9 percent of sales compared to 18.6 percent in the third quarter last year. Our year-to-date consolidated operating margin for fiscal 2004 was 19.1 percent of sales compared to 17.3 percent last year.

Earnings per share for the quarter was 44 cents versus 38 cents a year ago, an increase of 15.8 percent. Earnings per share for the nine months ended June 30th, 2004 was $1.21 compared to $1.03 a year ago, an increase of 17.5 percent. The largest contributor to the earnings per share increase was the increase in our operating income. This increase was partially offset by an increase in minority deduction expense as a result of increased profitability at our foreign graphics locations. In addition, we estimate that favorable changes in currency exchange rates contributed 1 cent to earnings per share for the third quarter and 3 cents year-to-date.

Gross margin for the quarter was 40.2 percent of sales versus 38.3 percent a year ago. Gross margin for the nine months ended June 30th, 2004 was 38.3 percent of sales compared to 37 percent a year ago. The increases primarily reflected improved margins in the Marking Products, Graphics Imaging and York Casket segments. Gross profit dollars were up $4 million for the quarter, an increase of 9 percent and $12.7 million or 10 percent year-to-date.

SG&A expense for the quarter was 19.3 percent of sales compared to 19.7 percent for the third quarter last year. Year-to-date, SG&A expense was 19.2 percent of sales compared to 19.7 percent year ago. Cost structure improvements in the York Casket and Graphics Imaging segments contributed to this reduction.

For the current quarter investment income was $435,000 compared to $354,000 for the same period a year ago. The increase reflected higher levels of invested cash during the period. Year-to-date, investment income was $1.1 million compared to $985,000 last year. Interest expense for the current quarter was $613,000 compared to $578,000 for the same period a year ago. For the nine months ended June 30th, 2004, interest expense was $1.5 million compared to $2.3 million last year. This decline reflected a lower average level of debt during the period and lower interest rates. Minority interest deduction was $1.4 million for the quarter compared to $1.2 million for the prior period. For the nine-month period ended June 30th, 2004, minority interest deduction was $4 million compared to $3.3 million for the same period last year. The higher level of minority deduction reflected an increase in the value of the Euro and higher profits from our less than wholly-owned European graphics businesses. Our third-quarter and year-to-date tax rate was 38.8 percent of pre-tax income, which is unchanged from last year.

We closed out the June quarter with a cash and investment balance of approximately $132 million. At June 30th, 2004, our current ratio was 2.22 to 1, which is the same as September 30th, 2003. Our outstanding accounts receivable balance at June 30th, 2004 was approximately $66 million, which represented 49 days sales outstanding compared to 48 days sales outstanding at September 30th, 2003. As of June 30th, 2004, shares outstanding totaled 32,239,413. We have purchased approximately 428,000 shares of our stock in the open market since September 30th, 2003. At June 30th, 2004, approximately 2,240,000 shares remain to be purchased under the current repurchase authorization, which reflects the latest increase approved by the Board in April 2004. Our long-term debt balance at June 30th, 2004, both current and long-term portions, was $70 million. 50 million of this balance represents borrowings under our domestic revolving credit facility. The maturity of this facility was recently extended to April 2009. The balance is debt on the books of our Italian subsidiary, which was primarily used to finance the purchase of that company.

Depreciation and amortization expense for the quarter and nine months ended June 30th, 2004 were $3.6 million and $11.1 million, respectively. Capital expenditures for the quarter and nine months ended June 30th, 2004 were $3.6 million and $6.8 million, respectively.

Finally, our earnings per share for the quarter of 44 cents was ahead of our revised internal expectations. However, due to the significant increases in bronze and steel costs, the Company remains concerned with its ability to achieve our original budgeted earnings objectives for the fourth quarter. Based on the level of our year-to-date earnings and with the acquisition of Cloverleaf Group, the Company expects to achieve its initial earnings target for the year of $1.58 per share. This concludes the financial review and Dave Kelly will now comment on our operations.

Thank you, Steve. I'd like to direct my comments this morning to three areas -- first, some (indiscernible) about the results year-to-date and I'd like to talk a little bit about our recent acquisition and then perhaps a few comments about the full year. To start off with, I have got to compliment, once again, our operating management for a wonderful job. You will perhaps recall, those of you who participated in the second quarter conference call that we faced some pretty substantial issues, which Steve has discussed during his comments, particularly, increases in metal prices. Operating management was challenged at the end of the second quarter to try and offset those and they have done really a fabulous job. Bronze held the line on profitability through the productivity improvements and the price increase that Steve mentioned. Graphics and Marking Products had significant sales increases, well above the level of increase of business in general in the marketplace. And York did a very fine job in a very competitive market environment. They continue to focus on better quality, timely delivery and productivity improvements, all of which are helping our business. And the Cremation group has had continued improvement in their operation. So we are very proud of what has been accomplished year-to-date on the part of operating management.

Perhaps many of you are aware of the fact we announced this week the acquisition of the Cloverleaf Group. This is a very, very important step for Matthews. We intend over time to evolve our businesses into basically 2 segments. The first segment is memorialization, which would include our Bronze business, our York Casket business and our Cremation business. And the second is merchandising solutions, which would include our Marking Products group, our Graphics group and our Cloverleaf group. With respect merchandising solutions, you can look at business as providing its customer a wide variety of services, which can range from commodity all the way to solving problems. And obviously, as you move in the direction of solving problems, you are adding more value and when you are adding more value, the potential returns are greater. That's the direction that we would like to move in. We would like the ability to solve problems for customers, merchandising problems -- put them in a position where they can increase their sales -- and we can do that by providing better graphics, by providing better marking solutions or by solving other retail-related problems. So we are very excited about Cloverleaf. We think they have skills which are going to gain us access to customer organizations at very high levels, something that we have wanted to do for some period of time. Really outstanding group of people in the 2 component companies of Cloverleaf, the Big Red Rooster and iDL, which is headquartered here in Pittsburgh. And we have great expectations for those businesses over time.

Thirdly, with respect to the full year, I want to second what Steve said, at the end of the second quarter, I was somewhat cautious saying that I expect our earnings to be in the range of $1.55 to $1.58, and now it would appear to us, based upon the excellent results of the third quarter, that we should be at the top end of that range, as Steve indicated. So that is very much a good result from our perspective and we're quite pleased with it. With those comments, I'd like to turn the meeting over to questions.

(OPERATOR INSTRUCTIONS). Bill Burns, Johnson Rice.

Dave, could you go into a little more on the acquisition about, maybe give us some idea about margins or enterprise value to EBITDA? And then maybe also, I know in the past you have been very upfront about acquisitions you have made that were successful and acquisitions you have made that were not quite so successful, and what characteristics this company has that you think it will be successful?

Just a couple of comments. First of all, generally speaking, our acquisition criteria, we always look for acquisitions which are accretive to earnings from day one. And we don't consider that to be a very stringent hurdle because we have relatively low borrowing costs. But then secondly, we look for acquisitions, which over a reasonable period of time, will return an investment of 20 percent, and give us a return on our investment of 20 percent. That is the number we use for our cost of capital; that's a pretax number. So we certainly expect that this business will meet those criteria. Now, the business though is much more important to us than that, it's not an additional business. It's a way of moving our total Company in the direction of merchandising solutions. And it is very critical and I guess seminal acquisition from that viewpoint. It's going to create other opportunities for us over time and it's going to be part of a much broader strategic thrust along the lines I mentioned a few minutes ago.

I will get back into queue to ask a different question. Thanks, Dave.

James Clement, Sidoti.

David or Steve, obviously I saw the Cloverleaf press release. Could you give us just more of a sense, like as if you were explaining it to a third-grader exactly what they produce?

Cloverleaf, okay. Yes, Cloverleaf consists of 2 companies. One is called the Big Red Rooster and the other is called iDL. The Big Red Rooster can be best described as a marketing consultancy company; they are located in Columbus, Ohio. They have a group of extremely, and with emphasis on extremely, talented people who are experts in all phases of merchandising. This could include things like consumer research, brand identity work, product development, retail store design. They have recognized leaders in all of these fields and they have a blue-chip client list, which includes companies like Nike and Microsoft and Nokia, etc., etc. iDL is a Pittsburgh-based company, a very successful company that does various types of fixturing and screen printing work. They would, for example, create signage for a petroleum company that could be used in their gasoline stations or their convenience store, would be one example. So I hope that helps to give you an idea of what they do.

That does and if I may ask just one follow-up question, I believe I saw in the 8-K, I think it alluded to a purchase price, initial purchase price of somewhere in the $30 million range, and then subject to some, depending on how the company has performed, there might be an additional consideration over time. Is that right?

Yes, that's right. I think the price is --

Approximately $34 million, Jamie.

Okay. And if I could also just ask, with the cash and investment position that you guys have, just sort of, how should we think about the balance sheet? Is this a number that just comes immediately out of that or are you going to be taking on some debt here?

No, this came out of cash.

Gary McCann (ph), McCann & Co.

If you're moving your total company in the direction of merchandising solutions, comment please on what that says about what's been your base business for 100 years? Is this an admission that bronze prices are going to remain so high or you don't think the margins will be there going forward? If you're changing the total company, this is something I would like you to comment on a little further, please.

Let me clarify my comments a little bit. First of all, I want to make it clear that we have 2 major business segments that we are evolving into -- one is memorialization. Memorialization would include Bronze, York Casket and our Cremation business. And of course they have been bedrocks of Matthews and will continue to be for a long, long time into the future. They are very important and key businesses for us. What is new, if you will, is the merchandising solutions leg of our business, which would include Marking Products, Graphics and the Cloverleaf companies, which I just discussed. That really is not new in the sense that we have not been in these things. In effect, Marking Products was our very first business that we started in 1850. And back in 1850, we solved customers' problems that time but they were very simple problems, like using a branding iron to put a mark on the side of a wooden crate. But today's merchandising problems are much more complicated. We live in a much more sophisticated environment and we are trying to react to that by pulling our existing businesses together into a whole which can do a better job of solving present day problems for our customers.

I wrote down your exact words a moment ago and I will give you a chance to say them again. You did say moving our total company in the direction of merchandising solutions. Do you want to restate that? Or does it --?

No, no, no. If I said that --

I don't mean to pick but those were your exact words, I wrote them down.

I misspoke. As I said originally, we're moving our company in the direction of 2 major business segments. One is our memorialization business and the other is merchandising solutions. Thank you for raising that point. I hope that clarifies it.

It certainly changes the comment, that's for sure. Thank you.

Greg Halter, LJR Great Lakes Review.

On this Cloverleaf, can you give some comment on their sales growth history, what your expectations are there for capital spending needs, if any; if management will stay; and where the Cloverleaf will be broken out on the income statement or will it be a separate line item?

Those are all good questions, Greg. In terms of their sales, they are about 60 million today, and they have grown over a period of years, although, the iDL leg has been in business since 1940's, 1950's, I believe. With respect to their capital spending, I'd say if you look at our average capital spending for the Company and they are not, at least initially, we are not anticipating that they are going to be spending to any significant degree any differently than any of our existing segments; although it is a little difficult at this point to be able to comment on those numbers. So those are about the best answers I can give you at this point, Greg. We are still kind of working through how we are going to present this financial information in our financial reports.

For right now, the best guess for us at least in our models, to put it in the Graphics Imaging?

I would think, Greg, that, as I said that we would like to move in the direction of having Graphics Imaging, Marking Products and Cloverleaf thought of as a single business. Now actually how we are going to get from here to there is something that Steve just said a minute ago we are working on.

Okay. And I believe Elliott has a question for you as well.

First of all, congratulations on the terrific quarter. I must say though you have thrown us a curve ball on this most recent acquisition. I would appreciate it if you would take a minute and just elaborate a little on what your future strategy will be on acquisitions, moving from a manufacturing-oriented company to basically a service business, what does that do to your future acquisitions? What should we expect you to acquire next? What are your criteria for those acquisitions?

Okay. Maybe I can expand on that a little bit, Elliott. First, I don't want to leave the misimpression that we are going to become a service company. We are still going to be a manufacturing company even within the merchandising solutions part of our business. The bulk of that is going to be manufacturing; we are going to be manufacturing printing plates; we are going to be forming graphics hardware for our customers; we are going to be doing point-of-purchase displays, fixturing, etc. We are going to be making and selling things. But there is going to be a glue that holds all of this together, which is the ability to go in at high levels of customer organizations and consult with them on marketing problems and then as a result of that consultancy, suggest to them solutions which might involve a certain graphic image, a certain brand identity or a certain merchandising solution. Continue to think of us as a manufacturing company.

And any particular sectors in manufacturing above and beyond what you are already in that you are looking for? And any comments on -- I think I know the answer -- but on dilutive acquisitions versus additive ones or size?

Well, we think that obviously when you start to get into the whole area of merchandising solutions, there are just huge opportunities almost everyplace you turn. But we are going to once again be kind of conservative in our approach and we are going to digest what we have and we are going to evolve our strategy over time and adding things which we feel will help us with our customers from the viewpoint of being able to solve their problems.

Any comment on size of acquisition that might be of interest to you in the future and would you consider a dilutive one?

No, we do not at this point in time see any need or any desire to consider dilutive transactions. I would expect the size question, we generally I think have had better luck with larger acquisitions. I think our preference at this point in time is $25 million and up; you know, in the 50 to $100 million range is probably ideal for us. But once again, size is not the determining factor to us. It's the return on investment (technical difficulty) -- (multiple speakers) --

Thank you.

Justin Thomas, Acorn Capital.

You guys had mentioned in the York segment that you're seeing some competition there. Do you feel like you've maintained or gained or lost your share during the quarter in that segment?

The casket industry from a total perspective is relatively flat. We don't think there's much of a growth in casket volume in the industry as a whole at all because what (indiscernible) growth in the death rate there is is generally eaten up by improvements in the cremation business or increases in the cremation business. We think our share of market has remained approximately the same. We don't think there has been any significant shift either up or down.

Very good. Thanks for your help.

Steve Baumgarten, Parker/Hunter Inc.

There was a recent article regarding Chinese caskets being imported into the country and typically they are a lot cheaper than caskets made domestically. I was wondering if you felt that this was a threat to your casket operations?

This is an important issue to us. And we have had -- several of our key people have visited China to better understand the issue. And we think it is true that the labor rate in China is lower than the labor rate in other countries, including the United States. But there are other factors to be considered. There is a considerably higher transportation cost in delivering a casket, which remember is largely air, from China to the United States than we would have domestically. And there are time differences too. So we think the people who make comments about Chinese product being lower cost are perhaps referring just to the labor component and not necessarily taking into account these other factors. And when you add them all in, we don't think that Chinese product is as attractive as some people might lead you to believe. Our distributors have had some experience with Chinese caskets and have frankly not found huge market acceptance at this point in time. We are very much attuned to the issue. We recognize that our customers are very interested in lower prices, good quality product at lower prices. And so we are going to orient our efforts at trying to meet those customer demands and we will do whatever is required to stay competitive.

Great. Thank you, very much.

Greg Halter, LJR Great Lakes Review.

Steve, I was looking if you could provide some additional detail on the balance sheet, such as total assets, goodwill and other intangibles, payables, equity, as well as cash flow from operations in the quarter?

I can give you some round numbers, Greg. We have not nailed those down exactly yet. But we are now with the -- at June 30th, we are now at about $490 million in total assets. Goodwill and other intangible assets, about 170 million. And payables, about $17, $18 million. And then cash flow from operations year-to-date is around $65 million.

And equity for the quarter?

Equity as of the end of the quarter is about 290 million.

Okay. And your inventory balance is up about 4 million on a year-over-year basis, about a 17 percent increase. Anything of particular note there?

No, I would not say anything of particular note. I mean we have got some exchange rate that could be affecting some of that. We have got just probably some seasonal build in the Casket business, really nothing that sticks out, Greg.

Okay. And then the share repurchase, it looks like you bought back 197,000 shares in the quarter. At what either average share price or dollar amount did you spend on buying those shares?

Probably in and around the $30 range. I mean the price has not fluctuated much this past quarter.

And then Dave, back to your comment and I guess Steve as well on the earnings per share, that $1.58 would basically mean a flat fourth quarter, and traditionally your fourth quarter is the best operating margin-wise in bronze. I realize the raw material costs and so forth, but is that a realistic way to look at it at this point?

Yes, actually, Greg, I take exception to what you said about the best. The fourth quarter compared to the other quarters, really, seasonally, tends to be one of our lower in terms of operating profit because of a couple of factors -- one, it's the slower -- we start to get into the slower period for bronze. It's the slower period for casket sales. And given some of our strength in Europe in the Graphics Imaging segment, the summer months are high vacation months in Europe. So and then when you compound that with our increase in metal costs that we are facing and steel has actually gone up, we are expecting that it's going to be higher in the fourth quarter than any other quarter this year. We just can't project anything more than what we originally said for the year of $1.58.

Okay, that's fine. Again, I see the margins in bronze have been in the 30 or 30 percent or higher the last 2 quarters, in the fourth quarter, but obviously as you say on lower sales.

Yes, I would have to go back and check those numbers for you, Greg.

Gary McCann, McCann & Company.

Thank you. You said Big Red Rooster does brand identity work.

Yes.

Would they actually be working with you going forward to try and help not just the investment community but well I guess the investment community, yes, to explain your company going forward?

That's not a bad idea. We are blessed now with people who have a great deal of experience on exactly that issue. So we might very well get them involved in helping us do that, Gary.

Okay. Well if there is anything we might could see if they do get involved in that because I mean obviously there's some confusion on my part this morning and I am not the only one either. I would like a little more help from someone here in understanding you going forward.

We would be glad to try and help you out on that score. Maybe we can, off-line, we can have a further conversation.

I would like that if you don't mind, please.

Thank you. And ladies and gentlemen, there are no further questions at this time. Please continue with your presentation.

Steve.

Well thank you for the call this morning. That's it for us with respect to the third quarter and also the discussion on Cloverleaf. So we will be prepared in November with our fourth-quarter conference call and results. So thank you, again, for participating.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.