威達信集團 (MMC) 2011 Q1 法說會逐字稿

Good day, everyone, and welcome to the Marsh & McLennan Companies conference call.

Today's call is being recorded.

First-quarter 2011 financial results and supplemental information were issued earlier this morning.

They are available on Marsh & McLennan Companies website at www.mmmc.com.

Before we begin I would like to remind you that remarks made today may include statements relating to future events or results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are subject to inherent risks and uncertainties.

In particular, references during this conference call to anticipated or expected results of operations for 2011 or subsequent periods are forward-looking statements and Marsh & McLennan Companies actual results may be affected by a variety of factors.

Please refer to Marsh & McLennan Companies' most recent SEC filings, as well as the Company's earnings release, which are available on the Marsh & McLennan Companies website, for additional information on factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

I would now like to turn the conference over to Mr.

Brian Duperreault, President and CEO of Marsh & McLennan Companies.

Please go ahead, sir.

Thank you.

Good morning.

Good morning and thank you for joining us to discuss our first-quarter results as reported earlier today.

I am Brian Duperreault, President and CEO of Marsh & McLennan Companies.

Joining me in presenting on the call today is Vanessa Wittman, our CFO.

Also, I would like to welcome Dan Glaser, Group President and Chief Operating Officer of Marsh & McLennan Companies, as well as our operating company CEOs, Peter Zaffino of Marsh, Alex Moczarski of Guy Carpenter, Michele Burns of Mercer, and John Drzik of Oliver Wyman.

Also with us is Mike Bischoff.

Our first-quarter results show that we are off to a very good start this year.

We reported a strong increase in revenue with growth of 9%.

In fact, this is the third consecutive putter that each of our operating companies produced revenue growth on both a reported and an underlying basis.

And importantly, we continue to achieve revenue growth while maintaining effective control over operating expenses.

As a result, we have produced 10% growth in adjusted EPS for the quarter, a solid start to the year.

The positive momentum at Marsh continued with good underlying revenue growth fueled by new business development and high client revenue retention rates.

Guy Carpenter also produced excellent quarterly underlying revenue growth, as it has for more than two years now, led by its international operations.

Mercer generated underlying revenue growth of mid-single digits for the third consecutive quarter, and Oliver Wyman's underlying revenue growth was its strongest since 2007.

So we are very pleased with our operating performance in the first quarter.

I would now like to expand on some recent management changes at the Company.

The four pillars I discussed at investor day last September are the foundation for Marsh McLennan Companies to produce outstanding performance on a long-term basis, reestablishing us as a global growth company.

Our strategy focuses on the characteristics that create exceptional value and superior returns for investors -- long-term growth, low capital requirements, high cash generation with disciplined capital management and low-risk profile.

Based on our strong performance last year and our excellent start this year, I am confident that the turnaround we began three years ago is complete.

Now that we have managed effectively through the Great Recession and each of our businesses is on an upward trajectory, I thought it was an opportune time to make changes to our leadership structure.

These changes further enhance our strong management team by providing expanded responsibilities and broadened scope for certain key executives.

This will allow them to utilize their unique perspectives to further refine our operating model, while at the same time maintaining the continuity and strong cohesive working relationship among the senior management team.

So as we announced last month, Dan Glaser is named Group President, Chief Operating Officer of Marsh & McLennan Companies.

We believe his appointment will accelerate our progress towards growth in revenue and profitability across all our operating companies and sharpen our focus as an organization.

As you know, Dan is a seasoned executive with 30 years experience in the insurance business, including senior management positions both as a broker and as an underwriter.

In this newly-created role Dan will have operational and strategic oversight of our four operating companies as well as certain functional areas.

Under Dan's leadership Marsh dramatically improved profitability and performance, and we have every confidence that he brings the same leadership qualities, strategic thinking, and operational excellence to his new role.

Peter Zaffino was named CEO at Marsh.

One of the best decisions I made when I joined Marsh McLennan was to name Peter as CEO of Guy Carpenter in early 2008.

During his tenure Peter built and led a team that significantly improved performance, solidified Guy Carpenter's standing as one of the world's leading reinsurance intermediaries, and positioned the Company as a broad-based risk advisor for the insurance industry.

Building on the strong foundation Dan created at Marsh, Peter will draw on his 20 years of experience in the insurance and reinsurance industry to bring the same vision, insight, and drive to his new role.

Alex Moczarski will now lead Guy Carpenter.

Alex had been CEO of the International Division of Marsh and was instrumental in building its substantial presence in markets throughout the world.

Under his leadership Marsh's international operations have been a strong contributor to Marsh's performance over the past three years.

Alex has worked tirelessly to build a cohesive international team spanning several continents, and he has a passion for the business that always takes into account what is in the best interest of Marsh & McLennan Companies.

With more than 30 years in the insurance industry, 18 years at Marsh and before that with AIG, is an internationalist.

He has spent time in Latin America and Europe, as well as the United States, gaining invaluable experience and perspective needed to lead Guy Carpenter as it focuses on the enormous potential of international growth.

I want to emphasize that our strong management team includes our colleagues within Mercer and Oliver Wyman led by Michele and John.

The entire senior management team will continue working together with a long-term focus driving performance.

And before anyone asks, I couldn't be more engaged and energized about the Company's prospects than I am today.

With that let me turn it over to Vanessa to review our first-quarter results in more detail.

Thank you, Brian, and good morning, everyone.

I am delighted to report that the financial performance of Marsh & McLennan Companies in the first quarter was strong.

We achieved solid revenue growth and increased operating income in each of our operating companies.

On a GAAP basis earnings per share in the first quarter was $0.58, including $0.56 from continuing operations.

Discontinued operations of $0.02 related largely to Putnam, and it's important to note that our adjusted EPS equaled GAAP EPS from continuing operations.

On an adjusted basis, first quarter EPS increased 10% to $0.56.

First, let's go into a little more detail on our consolidated results.

Unless specifically indicated, my references will be to underlying revenue, underlying expenses, and adjusted operating income.

Investment income rose to $19 million from $8 million last year.

In the second quarter we anticipate a slight loss due to mark-to-market declines in our private equity portfolio, which are recorded on a one-quarter lag.

In the first quarter interest income rose to $7 million due to higher cash balances compared with last year and slightly higher interest rates.

Interest expense decreased to $51 million in the first quarter from $60 million a year ago, due to the payment of a $550 million senior note last September.

Our next debt maturity is a $250 million note due in March of next year.

Let's turn to the results of our operations.

In Risk and Insurance Services both Marsh and Guy Carpenter contributed to strong revenue growth in the first quarter.

Operating income increased 7% to $383 million.

This growth in profitability was achieved despite higher pension costs and the negative impact of foreign currency translation.

The euro and the British pound were weak relative to the US dollar in January, which is a major renewal period for Guy Carpenter and the largest period of profitability for Marsh's European operations.

Had it not been for the effects of foreign exchange Risk and Insurance Services would have achieved slight margin improvement instead of the slight decline.

Even taking this into account, Marsh had another solid quarter.

Revenue rose 4% in the first quarter to $1.3 billion, marking the fourth consecutive quarter of growth.

Every one of Marsh's major geographic operations experienced revenue growth in the quarter with particularly strong growth in Asia Pacific and Latin America.

Additionally, US/Canada generated revenue growth of 3% for the third consecutive quarter, a real achievement considering the market conditions.

Turning to reinsurance broking, Guy Carpenter continued to build on its very strong performance in 2010.

Revenue was $340 million, reflecting strong growth of 7% led by its international operations and global specialties.

This quarter marked Carpenter's ninth consecutive quarter of revenue growth, reflecting continuing strong new business and high client retentions.

Our consulting segment continued to generate strong revenue growth.

In the first quarter revenue rose 6% to $1.3 billion.

Growth in operating expenses was 5%, including the impact of higher pension expense.

Operating income rose 13%.

Mercer's revenue increased 5% in the first quarter to $922 million, continuing its strong performance from the second half of last year.

Within retirement, revenue growth in EMEA, Asia Pacific, and Latin America was offset by declines in North America.

Health & Benefits continued its outstanding performance, matching its 8% growth in the third and fourth quarters of 2010.

All global regions showed strength, particularly the US, Latin America, and Asia Pacific.

Rewards, Talent & Communications produced double-digit revenue growth for the third consecutive quarter.

This was due to continuing demand for Mercer's compensation surveys as well as higher demand for consulting services in all major geographies.

In the quarter, Outsourcing revenue was negatively impacted by the loss of two clients due to M&A.

The double-digit growth in Investment Consulting & Management continued a trend that has now extended for more than a year.

Oliver Wyman's 9% growth rate in the first quarter was its highest since 2007.

This impressive growth was led by a number of industry sectors that achieved double-digit increases including healthcare, transportation, and retail.

Oliver Wyman's close management of operating expenses also contributed to excellent growth in operating income.

Debt at the end of the first quarter was $3 billion, unchanged from year-end.

Average diluted shares rose due to three factors -

1) acquisitions;

2) an increase in common share equivalents due to a higher share price; and

3) the normal vesting of equity awards.

The increase was partially offset by share repurchases.

Quarter end cash was $1.3 billion compared with $1.1 billion a year ago.

Our cash utilization is typically greatest in the first quarter, primarily due to the payment of incentive compensation awards.

Other major uses of cash in the first quarter included $120 million for acquisitions and dividend payments of $117 million.

We delayed repurchasing shares due to our normal heavy cash uses in the first quarter, but now in the second quarter, with bonus payments behind us and the anticipation of a tax refund in June related to the Kroll disposition, we plan to resume repurchasing our shares.

With that let me turn it back to Brian.

Thanks, Vanessa.

We should begin our Q&A session.

Just as a reminder, our operating companies' CEOs are here to answer your questions.

And for the first-quarter's results at Marsh it's more appropriate, I think, that Dan answers and the same for Guy Carpenter.

I think it's more appropriate that Peter answers.

And with that let's take your questions.

(Operator Instructions) Keith Walsh, Citi.

Good morning, everybody.

First question for Dan and then I have got one for Peter.

Dan, just thinking about enhanced commissions, how should we be thinking about that year-over-year?

Do you have more paying customers and more revenues this year than you did last, if you could directionally give us some color there?

Sure.

In general, I would look broadly on our strategy of increasing carrier revenue streams.

Enhanced commission is part of that strategy, but also fee-for-service agreements with carriers is also part of that strategy.

If I look at the quarter specifically, we made progress last year and we are making progress this year.

If I look at the quarter on a global basis, about a quarter of our growth were related to yield initiatives, fee-for-services, and enhanced commissions.

Okay, great.

And then for Peter.

It's nine consecutive quarters of growth and coincidently I guess Aon Benfield was done nine quarters ago, so maybe if you could just give us an idea of what percent of that growth is really coming from fallout from a merger that size.

And then if you could have any commentary on RMS 11.

Thanks.

Again, our success over many quarters has been focusing on driving value to clients and this quarter is no exception.

We had our strongest quarter of new business ever and it was up 20% year-over-year when you look at the first quarter of 2010 to 2011.

So again it's very strong and it's coming from everywhere - our competitors; we have driven significant value to clients; have created new reinsurance opportunities; so there is no one specific trend.

I just think we have been executing very well on new business.

In terms of RMS, it's not quite clear and certain how that is going to impact reinsurance purchasing or the industry as of yet.

But we have been working very closely with all of our clients, running a series of RMS and other vendor models to understand the changes and how they impact our clients and what specific trends there are.

We are starting to see a lot of the inland exposures being driven up in some of the peak zones 15%-plus, and so as renewals come up we will certainly react to that.

Florida is a big one on June 1 and then we will have others on 7/1.

So I think that is going to be a gradual impact as we look into the year.

Okay, thanks a lot.

Brian Meredith, UBS.

Good morning, everybody.

Couple questions here for you.

I guess the first one, can you talk a little bit about exposure growth and what are you seeing from the economy?

Are we seeing exposure growth now, is that part of the revenue growth we are seeing here?

Dan?

Sure.

We are seeing very slight improvement in exposure units, both in terms of payrolls, business interruption values, and asset values.

But very low single digits, as an example, in the United States and in the UK.

So while it's a very slight tailwind, I wouldn't put exposure growth as being the basis for our growth.

Our growth is largely driven by high client retention and new business.

Great.

Then, Vanessa, I wonder if you have got what the FX adjusted growth in operating expenses was at Risk and Insurance Services.

So, Keith, we don't break it out, but I think the best way to think about it is that over the course of the year it's going to have a de minimus impact.

It was a slight drag on the margins, as I pointed out, during that quarter.

Okay.

So therefore, so margins were up year-over-year, right, ex Risk and Insurance Services?

Yes, excluding --

I mean ex FX.

Excluding FX, up slightly.

Excluding FX, that is right, Keith.

Sorry, Brian.

That is okay.

All right, thanks.

Cliff Gallant, Keefe Bruyette & Woods.

Good morning.

Could you talk a little bit about just the M&A strategy and the deals you did over the past year?

How are they coming along, are you meeting targets, and what is the outlook?

I guess I will take that.

Well, I think so far so good with the ones we have done over the last year.

We have been concentrating more on the Marsh & McLennan Agency, and those things are relative -- as you know, relatively new.

The strategy itself is a long-term strategy so it's going to take awhile for the total effect of that network to come together.

But in terms of hitting our milestones, I think we are on target and we are going to continue to do that.

We have been looking across all the operating companies for acquisitions that enhance capabilities.

We just finished one at Mercer, Hammond, that does a lot for the investment side.

On Guy Carpenter's side we did a couple over the last year or so, Rattner Mackenzie and Collins, which increased our capabilities in very specific areas.

HSBC was done to enhance Marsh's international capabilities and so.

Of course, I have left Oliver Wyman out, but they continue to look and as we find opportunities we will seize upon them.

So it's very targeted and specific and, of course, it has to meet all those standards we laid out for you at investor day.

Thank you.

You are welcome.

Meyer Shields, Stifel Nicolaus.

Good morning, everyone.

Vanessa commented that retirement was weak in North America and I was wondering if you could get a little more detail on that from Michele.

Sure.

As I indicated to you in the last quarterly call, retirement, as a business, will continue to face some headwind and struggle as the DB landscape changes.

This quarter the US struggled a bit more than the rest of the theaters; however, I think that is episodic.

If anything, there is a good marker in the fact that EMEA did stabilize and begin to come back.

That said, I think the thing to remember about the business of retirement is that we are working hard to do two things -- to change and realign our operating model to reflect the new realities, as well as building and continuing to extend into capabilities that actually work in consort with that retirement client to solve the needs that the retirement client has.

So the combination of our retirement business with the strength of its client base, the strength of the loyalties therein, combined with our investment capabilities makes that a winning hand over the long run.

Thanks and if I could turn to Dan really quickly.

There has been some chatter recently, whether it's the Japanese earthquake or other factors, about rates at least stabilizing.

Does that hinder the opportunity to do M&A in the short term because brokers are thinking things are getting better?

No, I don't think so.

I think in general we all know that we are in a cyclical business.

If you put yourself in the mind of a seller, they wouldn't sell based upon whether rates in the macro P&C environment were going up or down, because it's so temporary in one way or the other.

I think there is a lot of other factors that drive that usually has to do with how they believe they can grow their businesses on a going forward basis, what global capabilities because many upper middle market accounts now have some global exposures.

So which company can help them on a global platform basis, which company can drive product to them which they could sell on to their customer base?

So I think there is a lot of other factors beyond P&C.

So we are not seeing any impact on our pipeline based upon an anticipated flattening market.

Okay, thank you very much.

Yaron Kinar, Deutsche Bank.

Morning.

I wanted to ask a question about the Risk & Insurance Services margins, maybe to follow-up a little bit on Brian's question.

So even if I adjusted for the foreign exchange effects, it would appear that with comp and benefit ratio being down there is still something else there that is driving margins lower a little bit.

Could you maybe expand on that a little bit?

Guess that is Dan.

Or you want to do it Vanessa?

Let me start because we do have the pension drag as well.

So we were trying to quantify for you that the FX drag would have flipped it from a slight decline in the margin you see for the segment to a slight improvement.

But also remember that on top of the FX drag, which was really the anomaly because of the January rate inflection, exchange rate inflections, you also have that pension drag.

We gave some guidance in the fourth quarter that that would be about $45 million over the course of the year or call it roughly $12 million a quarter.

And that is about $7 million for RIS and $5 million for Consulting.

So if you add that to the -- to your pension -- I am sorry, to your FX drag, you would have seen positive margins.

Got it.

Then could I maybe ask one other question about the Consulting business where clearly there have been two major acquisitions in that space over the last couple of years?

Have you seen any greater flow of resumes or talent looking for opportunities after those acquisitions?

Absolutely.

The market for talent currently is quite high.

There is a lot of movement between firms and a lot of activity in the market.

Obviously, we are in a unique position because we have a stable base to take advantage of that as appropriate, and to continue to build our business and our capabilities through this time.

We feel very advantaged in the fact that we have not had the requirement or the need to do a large acquisition.

Instead, we have been able to deploy our capital to do tuck-in acquisitions that actually extend capabilities and allow us to have freedom of movement across the rest of the portfolio to continue to build.

Great, thank you very much.

Matthew Heimermann, JPMorgan.

Hi, good morning.

Question for Dan just on growth in the Marsh segment.

You mentioned about a quarter of that was commission enhancement.

Based on your response to Brian's question, it sounds like there was some positive impact from the economy, so I guess what I would be curious about is are you still seeing growth, because retention isn't increasing year-on-year?

That is something that you had talked about in the past but I am just curious if that is continuing.

Yes, our -- we look at it in two ways, account retention and revenue retention.

Our account retention levels are stable at a high level and actually, depending on segment and geography, are between 90% and 94%.

Those are levels that Marsh hadn't seen until the period of like 2000 and 2001.

So our account retention level is very strong.

Our revenue retention level, which really is the revenue we get on accounts on sort of a same-store basis, has been increasing as well.

That is where you could see some mild stabilization of rates, some mild increases in exposure units, and expanded new sales to existing customers.

So if you look at our growth in the quarter it was very broadly distributed.

We had 32 countries that grew organically 5% or more, and we had very strong new business, both internationally and in the US Canada.

Our new business for the quarter was about $240 million.

Okay, that is helpful.

So just to summarize, and I realize these are my numbers, but if growth was 4% you get about 1% from the commission enhancement, maybe 1% from some of the economic things you talked about and then probably about 2% from the new business growth?

Well, you are far more technical than us.

We go out there and we try to find a new customer.

So I would just leave it at that.

Matthew, it looks like those are your numbers and we will leave it at that, okay?

All right, no, that is fair.

That doesn't sound too far off though, does it?

Fair enough.

(multiple speakers)

That's okay.

The other question I had for John, and I guess Michele could opine on this as well, is just I think previously -- the pipeline for the specialty consulting business has been quite full.

I guess I would just be curious about whether or not the pipeline is starting to clear at kind of a pace consistent with past recoveries, or whether or not that pipeline is still maybe fuller than it should be because things still aren't moving -- even though the growth is picking up, aren't moving as fast as you normally would expect.

Well, I think, Matthew, if you look at the last five quarters, we have had revenue growth between 6% and 9% in each of the last five quarters.

And I think that trajectory is broadly reflective of relatively weak recovery but still growing business confidence over the last five quarters relative to, say, 2008 and 2009.

Now looking forward I think we are seeing a continuation of that same environment broadly.

That is, we are still not seeing a spike in recovery, but we would expect the pipeline to clear at a pace similar to what we have seen over the last five quarters.

So I think our outlook is for more of the same rather than a spike up or down.

Okay.

That is helpful thanks.

With Mercer in our specialty businesses we actually lagged behind a bit for a couple of quarters and we did not see the turn until the third quarter of last year.

Since that time it has been consistent and strong and we have a strong pipeline into the immediate and midterm.

All right.

Thanks for that.

And then could I sneak one numbers question just on depreciation and amortization?

I would just be curious if you could give us a sense of what is happening with intangible amortization relative to just depreciation.

Intangibles are going to go up because of our acquisitions, so it would be a higher percentage.

And you should expect that to stay in line with our M&A activity going forward.

Okay, that is fair.

But no other -- there is no underlying change to the depreciation number?

No.

Okay, perfect.

Thanks.

Larry Greenberg, Langen McAlenney.

Good morning.

For modeling purposes, when we think about buybacks going forward should we assume, all other things equal, it will be greater in the latter half of the year when you tend to generate more cash?

Well, I guess certainly if you take the quarter out, the first quarter out, and then the next nine months, I would say certainly.

Whether it's latter half of the year I think it all depends on a lot of market conditions, etc., but the first quarter is the anomaly.

Okay, fair enough.

Then clearly the sense from the underwriting community has been that the tone of the marketplace has changed for commercial lines, and I am wondering if you could just give us your thoughts on that.

Dan?

Sure.

I just got back from RIMS last night and it was a very active RIMS -- lots of clients, lots of underwriter discussions.

And I think you are right that the tone in the discussions is a bit different.

Underwriters are not quite as aggressively pursuing new business and not quite as malleable with existing clients.

That is not to say that they are walking away from clients based upon prices.

And so I think we are in sort of a shoulder season; we are not quite soft, but we are certainly not hard.

So it feels like it's stabilizing.

I know from talking to our marketing hubs, placements are still getting done, oftentimes with reductions still, but the marketing of those placements is more difficult than it had been at this time last year.

And could Peter maybe comment on reinsurance?

Sure.

On the reinsurance, remember for our portfolio over 50% of our business incepts on January 1.

So as all these different catastrophes happened in the first quarter we are really looking forward as some of the major quarters that come up.

The true story won't be told till next year.

But similar to what Dan is saying, there are signs that rate reductions are starting to slow down.

We still saw that in the first quarter on property cat and there will be a confluence of events.

We have seen what happened in Japan, but as we see the earnings calls for reinsurers, many of them have increased their own estimates on what Japan means and what the expected loss is.

So we have that coupled with RMS, coupled with the largest quarter of catastrophes outside of the US in the history of reinsurance.

So all those confluence of events are going to have companies taking a hard look at how they are going to deploy their capital and how they are going to price the business going forward.

So it's a very similar theme.

Great, thank you.

Adam Klauber, William Blair.

Good morning.

A couple questions on Mercer.

Obviously, growth was pretty strong in Health and Benefits and Rewards and Talent.

Is that a function of pent-up demand from the recession or is that a function of new clients, or a combination?

That is, I would say, a combination of the two.

Let's start with Health and Benefits.

We are still not seeing growth in employment in the US at such rates as to impact that so you would have to attribute the growth in H&B, Health and Benefits, to be new business, new clients, expanded business for existing clients.

Some of that would have to do with healthcare reform and we expect that trend to continue.

We see that growth across the entire marketplace, whether it's in the top end of the market all the way to the small employer, where our D&A consultative approach to providing broking and consulting services in Health and Benefits is winning in marketplace.

With regard to Specialty Consulting, clearly there is a pent-up demand where people have taken an opportunity to step back in to their talent management space especially, both in the United States and around the world.

I just recently completed a trip that covered Mexico to Argentina and met with a number of the CEOs and CFOs and CHROs, Chief Human Resource Officers.

The consistent demand from them, bar none, was talent management, talent advice, advice around their workforce strategies.

And so, yes, they have taken their eye off of that for awhile as we all weather the Great Recession, but have moved back into that space.

Okay.

And one more follow-up on Mercer.

The expense line effectively moved up with the revenue line.

I think expense growth was roughly 9% for the quarter.

Should we expect that trend going forward that expenses should track revenue or should we get some margin expansion if revenue remains at a high level?

The segment expects margin expansion over the mid and longer term.

I think that we focus on profitability, and with revenue growth you do, in fact, need some degree of expense growth to fuel the people and the talent in the pipeline to do the work.

But that said, there were a couple of anomalies I won't even bother to call out in the first quarter.

As we move forward, you should expect margin expansion across the segment fairly consistently.

Great, thank you very much.

Excellent, good.

Any other questions?

Thomas Mitchell, Miller Tabak.

Just in a broad sense, looking back and not making adjustments for what you did own and don't own, of course the level of overall consulting side earnings was considerably higher, let's say, if we go back to the first quarter of 2007, 2008.

As we sort of model looking forward to the next couple of years, do you see the possibility that we can get back to similar levels of profitability or have we sort of adjusted to a lower level to start from and it will be a more modest growth?

How about if I answer that one?

Because I would say that when we look at the potential for consulting, those 2007 levels certainly they reflected an economy that was robust, no question about it.

But I would say that we have every belief that we can get back to those levels over time.

Okay, good.

Thank you.

Any time.

Let me take one more question.

Meyer Shields, Stifel Nicolaus.

Thanks.

Is the first-quarter corporate expense a good run rate for the year?

Vanessa?

We will have some movements as we figure out our new management structure.

So I think you can use it, but we may revise that guidance for you in the next quarter call.

Okay (inaudible).

Okay?

Let me just close and thank -- first of all, thank you for attending the call and thank my associates all around the world for getting us off to a very good start, and wish all these guys with new jobs luck in their new endeavors.

So good luck to you all and thanks again.

We will talk to you next quarter.

That does conclude today's conference.

Thank you all for your participation.