Moog Inc (MOG.B) 2009 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Moog third quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, with instructions to be given at that time. (Operator Instructions). And also as a reminder, today's teleconference is being recorded.

And at this time, we will turn the conference call over to your host, Ms. Ann Luhr, of Moog Inc. Please go ahead.

Good morning. Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties, and other factors that could cause actual performance to differ materially from such statements.

A description of these risk and uncertainties and other factors is contained in our news release of July 24, 2009, our most recent Form 8-K, filed on July 24, 2009, and in certain of our other public filings with the SEC.

We've provided some financial schedules to help our listeners better follow along with the prepared comments. For those of you who do not already have the documents, a copy of today's financial presentation is available on our Investor Relation homepage and webcast pages at www.moog.com. Bob?

Thanks, Ann. Good morning. Thank you all for joining us. This morning, we'll review the results of our third quarter; we'll update our guidance for the balance of '09; and we'll provide our official outlook for 2010.

The good news in this call is that '09 is getting better, not worse. More importantly, 2010 promises to be a year of recovery for our company, and our recovery he does not depend on an improvement in the industrial economy. More about 2010 in a few minutes.

Sales in the third quarter of '09 were $445 million; net earnings, $15.9 million; earnings per share, $0.37. We normally make the comparison to the third quarter of last year. That compares and simply underscores the fact that at this time last year, the recession had not yet found our company; we were still on a projectory of growth in sales and earnings.

The world is different this year, and in this year's third quarter, sales were down 10% from last year; net earnings and earnings per share were about half of what they were in last year. On the other hand, if we compare to our most recent guidance, we're actually doing better.

In April, when we reported our second quarter, we had year-to-date earnings-per-share of $1.25; we were projecting $1.95 after restructuring for the total of '09, so we would have expected to average $0.35 a share over the next two quarters. This quarter, we came in at $0.37. In addition, we made the $0.37 a share in spite of heavy restructuring expense. We had projected $15 million of restructuring in the last half of '09, and into the third quarter, we expensed almost $10 million of that total.

So, looked at from an overall earnings and earnings per share viewpoint, we're on track for a better result in '09. We're now projecting earnings per share of $2.02 after the $0.25 per share restructuring charge.

Results for the quarter were achieved in an unexpected fashion -- Aircraft, Space and Defense, and the Components segments all came in about where we expected. Our Industrial Systems segment was a little bit light on sales but strong in earnings.

The Medical Devices segment had a terrible quarter, much worse than we anticipated, and then a miracle occurred in our tax rate. Because of strong earnings and low tax jurisdictions, our tax rate for the year is going to be much lower than we'd anticipated. As we made that adjustment in the third quarter, our tax rate for the quarter came in at 3%.

If we look at the P&L, sales compared to the third quarter of '08, as I mentioned, were down 10%; cost of sales up as a percentage on lower sales; R&D expense was down by almost $8 million, in part because of reduced expenditures on the 787; SG&A was down in the quarter in absolute dollars but up as a percentage. We incurred a restructuring expense of $9.9 million in the quarter; interest about the same as last year. We have $3.4 million of other income, mostly the equity earnings on our investment in LTi REEnergy.

All that gets us to just over $16 million pretax, and with a tax rate of 3% for the quarter, we achieved net earnings of just under $16 million. Now let me go to the segments.

Aircraft Q3 '09 -- total aircraft sales, $162 million, down 8% from a year ago. Military aircraft sales down 3% to $103 million. The reduction has all to do with reduced activity on the F-35 development program. F-18 sales at $8.7 million were actually up 11%.

Most of the rest of our production programs came in about the same level as last year area. We did have a big increase in sales on the Indian light combat aircraft, which offset reduced revenue on the Japanese F-2 fighter. Military aftermarket, $32.4 million, is actually up 3% or about $1 million.

F-35 development programs, though, are winding down. We have revenue this quarter in total of just under $24 million; last year, the total was $30 million. Of the $24 million, almost $15 million was work done in our company compared to over $20 million a year ago.

The program is going very well for us. The hardware we've designed is performing very well. As the flight test program continues, it demonstrates our company's capability to do flight control actuation systems that involve high-power electronics and complex software. And this is a major step forward for our company.

Sales in commercial aircraft down 29% to $48 million. Every category in the commercial side is down. OEM revenues in the Boeing 7 series aircraft, $7.4 million. We're a little more than half of what we delivered last year.

We booked sales of $3.4 million of the 787, down 21% from a year ago. Sales to Airbus were $5.6 million, about even with last year, but our business jet sales, $6.5 million, were down 60%. Sales are down with every Bus. jet customer -- Hawker Beechcraft on the Horizon and the Premier; Bombardier on the Challenger 300; Gulfstream on the G-4 and the new G-250; and Cessna on the Citation 10.

If there's good news on the commercial side, it's that the commercial aftermarket revenues are no worse than we expected. Sales in the quarter of $20 million in the aftermarket, down 13% from a year ago, slightly better than what we anticipated.

I mentioned that our R&D on the 787 was down. We spent $4.2 million on that program in this quarter, less than half of what we spent a year ago. On the other hand, we are ramping up on the A350. We're now expecting our R&D spending for the year will total $21 million on the [87] and close to $23 million on the A350. We expect aircraft R&D in total to be just over $60 million for the year.

Last quarter, we described a new revenue category in our aircraft business -- Navigational Aids. This product group is the combination of the TACAN business we acquired from Raytheon in '98, and our recent acquisition of Fernau Avionics.

Sales in this product line were $10.9 million in the quarter. We've had some significant new wins, including a system in India and a shipboard TACAN system in Korea. We've increased our forecast for the year from $28 million to $32 million, and we think the Fernau acquisition is proceeding very nicely.

Aircraft -- of the balance of '09, we're anticipating a $6 million increase in our forecast for the year, to a total of $652 million. The change is the net of small increases in sales in the F-35, the Indian LCA, and the military aftermarket, and the navigational aids, offset by further reductions in sales to Boeing Commercial and to business jet customers.

Aircraft margins. Margins in the quarter before restructuring, 9.4%, were up substantially from the 6.9% of a year ago. Last year's results were heavily influenced by a high level of R&D and the charges that we took on the A400M.

In this quarter, we're taking a charge to reflect an increased estimate at completion on our work on the Gulfstream G-250. We've encountered some unanticipated FAA requirements. They require us to hire outside contractors to perform the DER function; we'd expected to perform that internally.

During the quarter, aircraft took a charge of $2.1 million for restructuring. This all has to do with the changed situation at Boeing. As you may know, much of the OEM equipment we build for Boeing Commercial is produced in our factory in the Philippines, and we had staffed up that factory to meet the original [8/7] production schedule.

You all know that schedule has changed dramatically. For a while, we had that additional staff employed, building inventory reserves at our other Boeing production aircraft. However, the rates on some of those programs are also reducing.

The result is that our manpower forecasts for that factory would not support the staff that we'd already acquired; so in this quarter, we reduced the size of our Philippine manufacturing operations. The net margin in aircraft, then, after restructuring, turns out to be 8% for the quarter, including the restructuring impact we're now forecasting aircraft margins for the year will come in at 8.6%.

Aircraft 2010. Fiscal 2010, we're forecasting aircraft sales of 653, just slightly higher than '09. This is a remarkable result in light of the fact that revenue on the F-35 development program will decline by almost $48 million. F-35 sales will go from just under $103 million in '09 to $55 million in 2010, reflecting the completion of many aspects of the development program, offset by $20 million in revenue on low rate initial production.

Many other military aircraft programs will experience increased sales, including B-22, F-15, the Indian LCA, the Japanese F-2, and the Black Hawk. In addition, we're forecasting a $9 million increase in the military aftermarket -- will go to $137 million. So, in total, we're projecting military aircraft sales of 385 -- that will be down $26 million from '09 -- but then we're projecting a $9 million increase in commercial aircraft sales and an $18 million increase in Nav Aids.

In commercial aircraft, we're anticipating a resumption of normal deliveries for the Boeing 7-series production aircraft; should take revenues back up to $45 million. At the moment, we're forecasting $16 million in sales on the [87], up from $12 million in '09.

Now in light of the evolving 787 story, it's possible that our 2010 revenues could be lower on the 787 than this forecast. However, we're currently booking these sales at a breakeven margin, so any schedule slide won't have a noticeable impact on operating profit.

Airbus sales, 2010, at $22 million will be about the same as '09. Business jet deliveries at $33 million will be down $9 million. We're projecting a continuation of aftermarket revenues at just under $80 million, so that gets us to a total of 218 for commercial aircraft.

As I mentioned a minute ago, we're anticipating a substantial increase in Nav Aids revenue to a total of $50 million. In '09, we had only seven months of the Fernau's acquisition sales. The growth is also fueled by the recent wins in OEM systems for military customers.

2010, we're projecting margins of 9% for the aircraft business, a modest increase over the 8.6% we're currently forecasting for '09. We'll be helped in that improvement by slightly reduced levels of R&D in the aircraft business. So, that's aircraft.

Space and Defense Q3 '09 -- a very solid quarter. Sales, $65 million. They were up only 2% from a year ago, but the quarter-to-quarter comparison is very much influenced by the Driver Vision Enhancer program at QuickSet. You will remember that toward the end of '07, we got a very large order for DVE systems that were going on the MRAP vehicles. That order was delivered through the last three quarters of '08, and in the third quarter, the subject of current comparison sales on that program were $4.6 million. In this quarter, they were less than $100,000.

So setting that one program aside, sales in the quarter of $65 million were up 10%. Of that increase, $1.3 million was generated by CSA Engineering; the acquisition we completed in the third quarter of '08; in addition, there was continued strength in controls for satellites, particularly commercial.

Sales of thrust vector controls for launch vehicles were up. There was increased activity on Delta 4 and the Taurus II at Orbital. Tactical missile business was up $1.3 million, reflecting work on the TOW missile, the new Joint Air-to-Ground Missile, or JAGM, and a program called MALD -- that stands for Multiple Air Launch Decoy system.

In total, what I've taken to referring to as our legacy controls product line, which includes satellite controls, launch vehicles, strategic and tactical missiles, and missile defense -- sales for that collection in the quarter of $29.8 million were up $3.6 million.

In our defense controls product line, sales other than the Driver Vision Enhancer were up over $1 million to $14 million. Increases were on programs called FLW 100 and 200. These are gun stabilization programs in Europe. They work on the turret for the Mark 46 gun system on the LPD-17. We have controls on a program called Gator, which is a ground-based mobile radar. And all those increases offset lower deliveries on the CV9035 in Europe.

I mentioned that during the quarter, there was very little activity in the Driver Vision Enhancer. Many of you have been following the Family of Systems award to BANDRS. There's the potential that that program represents demand for literally thousands of pan and tilt mechanisms.

At present, we've been awarded contracts by both DRS and BAE, for small numbers of [qual] units. We are expecting low rate initial production contracts will be awarded later this quarter. That will result in sales next year of $3 million and we expect another $7 million in follow-on production.

The Constellation program. Sales in the quarter, $4.6 million, down from $7.2 million a year ago. This reflects the completion of some of our work on the Ares I vehicle, and a relatively slow start on the Orion Crew Exploration Vehicle. NASA has been moving slowly on commitments for the Orion. We think they were waiting for the confirmation of a new administrator. We're hoping the award of contracts will be begin in earnest in the fourth quarter and in the early part of 2010.

Homeland security product line, up nicely in the quarter to $8.2 million, all having to do with the acquisition of Videoalarm, a company that makes enclosures for surveillance systems.

Lastly, sales of Naval applications, up in the quarter to $2.7 million, reflecting increased activity on Virginia class submarines.

For the rest of '09, we're projecting sales in the fourth quarter of just over $66 million, up slightly from the third quarter. The increase will show up primarily in Homeland Security and in vibration controls. Sales for the year [were] $271 million, just about what we forecasted 90 days ago.

Space Defense margins in the quarter were 11%, slightly down from the comparable quarter last year. The margin result is achieved in spite of a different product mix. Last year's third quarter had a stronger component of mature strategic missile programs, and it had $4.6 million of DVE sales. We're forecasting margins of 11.3% in the fourth quarter. It will bring the year to 14%.

Space And Defense 2010. We should experience strong growth. We're projecting an increase of $46 million or 17% to a total of 317. A $10 million increase in launch vehicle sales, based on work on the Taurus II and the CASTER launch vehicles. [Belfire] revenues will double to $19 million. We'll see increased sales in missile defense.

The Constellation program should double to over $34 million. The Homeland Security product line will be up $12 million, we think. Naval systems and vibration controls will both be up.

We are anticipating that satellite revenues will actually be down $8 million, to about $53 million, because some of our major customers will be rebalancing their inventory. And we're forecasting $10 million in revenue on Driver Vision Enhancers in 2010, compared to the $16 million we expect to experience in '09.

All in all, we're looking for a strong sales year in Space and Defense. We're anticipating some moderation in margins, reflecting the increased component of cost plus sales on the Constellation program. We're looking for margins for the year of 11.3%.

Industrial -- Q3 '09. Sales in the quarter, $102 million, down 28% from a year ago. However, the $102 million includes almost $19 million in sales from the LTi and Insensys Ltd. Wind Energy acquisitions. You remember that in June of '08, we bought 40% of LTi. We completed the acquisition in June of this year. Over that 12-month period, we've been using equity accounting, not recording LTi revenue.

We acquired the remaining 60% in June of this year, so we're now recording revenue; and in one month, LTi generated $17 million in sales. In addition, Insensys, our other wind energy acquisition, generated sales of $1.8 million.

Without the revenue of those two companies' sales, our legacy industrial product line would have been at $84 million in the quarter, down 41% from a year ago. A part of that reduction is foreign exchange, but even on a constant currency basis, the actual decline in the quarter was still 37%.

Excluding the effect of the new acquisitions, sales were down in every major product line. Historically, controls for plastics-making machinery has been our largest industrial product line. Sales in the quarter of $7.9 million were down 64%. Sales were down all over the world, but in this product line, our major concentration is at Europe. Sales in Europe in the quarter were $4.9 million, down from 14 a year ago.

The good news is that incoming orders in total for this product line were actually up from last quarter, and close to our shipment level. It seems that our major customers have at least burned off their inventory.

Our best-performing product line in the quarter was power generation, because sales at $13.1 million were down only 5%. Sales of controls for power gen equipment were actually up in the US a few hundred thousand dollars, about even in the Pacific and down in Europe.

The next largest product line, motion bases for simulators, sales in the quarter -- $11.5 million, down 46% from a very high level a year ago. Last year, you may remember, was a year of remarkable growth in this product line. Sales in '08 were up 56%. We're now forecasting simulator sales for this year of just under $60 million, which will be down from last year but up 24% from the year before.

In recent years, we've enjoyed robust sales of gauge controls for steel mills, primarily in China. That activity has slowed some. Sales, $8.4 million in the quarter, down 23% from a year ago, and we're expecting a further reduction in the fourth quarter.

The situation in metal-forming equipment is similar to plastics. Sales in the quarter, $5.2 million, down 62% from a year ago. But our incoming orders for this equipment are still lower than our shipments. We expect that many of our major customers will take some or all of the summer off in an effort to reduce their capacity.

There is one other product line, which is actually doing better than most, and that's specialized test equipment for aero and auto industries. Sales in the quarter, $7.6 million, down only 11%. And we have a backlog which will support slightly increased sales for the fourth quarter.

Industrial -- for the balance of '09, in the fourth quarter, we should see a revenues from LTi and Insensys, the new wind energy acquisitions, totaling $48 million for the quarter; a $29 million increase over what we'd booked in quarter three. This is, of course, because we completed the acquisition of LTi in June, booked revenues in the third quarter for only one month; in the fourth quarter, we get three months.

Other than that, we're anticipating a sales quarter very much like quarter three. Total, $133 million will take us to 450 for the year. This forecast is down $20 million from what we were projecting only 90 days ago.

Margins. Industrial produced operating profit in the quarter of $8.5 million before a restructuring charge of $7.7 million. So the operating profit net of restructuring was less than 1%. Operating profit percentage before restructuring was considerably better than we anticipated, but we did take this heavy restructuring charge in the quarter.

We've been projecting that industrial would finish the year with margins of 7.1% before restructuring, making $33.5 million in operating profit. We're now convinced that industrial will finish the year with margins before restructuring of 9%, not 7.1%, and they'll generate $41 million in operating profit. But after restructuring, the operating margins will be 6.3%.

Industrial 2010. In fiscal 2010, we are forecasting revenues in all of our major product lines that are a continuation, simply a continuation of the level we're achieving in the last half of '09. Setting aside for the moment the revenues from our new wind energy acquisition, this sales level would be 337 on an annual basis, down from 382 in '09 and 532 in '08.

However, our wind energy acquisitions will provide $235 million in revenue in 2010, up from $68 million in '09. So this will bring our 2010 industrial total to 573, a 27% increase over '09. Our wind energy acquisitions are still carrying heavy purchase accounting expenses, so we're projecting margins of 8.2% before restructuring. We expect that some of our restructuring will slip into 2010 and that will bring margins down to 7.8% for the year.

Components group. Quarter three '09, sales $90.4 million; actually up 4%. Some of the Components group sales are in sterling and Canadian dollars; compared to last year, the strengthening dollar actually reduced their sales by $3.1 million.

Sales increased by military aircraft business and defense controls -- military vehicles, that is. Military aircraft sales increased $7 million, but almost half of that was the Northrop Grumman Guardian program. We've talked about Guardian in the past. This is the system that protects aircraft from shoulder-fired missiles. Sales on that program are currently over $6 million a quarter.

The other important aircraft programs are Raytheon's multi-spectral targeting system; Lockheed's Arrowhead and Sniper programs; and we're also experiencing continued activity on de-icing systems for the Blackhawk and the V-22.

Commercial aircraft component sales down in the quarter; reduced deliveries of avionic components to Rockwell Collins and Honeywell.

The Space and Defense part of the Components group business -- revenues are strong in military vehicles. Major programs with Raytheon and the Commander's Commander's Independent Viewer for the Bradley and the Abrams. We also supply slip rings for the turrets in those vehicles. We've just begun shipments on the CROWS Remote Weapon System program for [Cummingsburg]. Missile business is also pretty consistent.

Sales on marine products of 12.2 in the quarter, were about the same as a year ago. However, this quarter, we had the benefit of major sales, slip ring for FPSOs. These are large slip rings used on floating, production, storage, and off-loading vessels that are in turn used in offshore oil exploration and production. Moderation in the price of oil -- as a result of that, we're now experiencing reduced order input and we're anticipating lower sales in marine products as the year goes on.

Sales in medical equipment in the Components group, $11.7 million, down 20% from a year ago. We've experienced reduced sales to Respironics, reflecting not only lower unit price, but also an effort on the part of Respironics -- which is now owned by Philips -- to accomplish a dramatic reduction in their inventory.

Slip rings used on CAT scan machines, other major medical product line -- in this area, we seem to experience on a -- be experiencing on a secondhand basis the same reduced demand that I'll be talking about in a minute, in our medical devices business.

Lastly, sales of components used in general industrial equipment, also down about 30% to $10.8 million. The good news here, if there is any, is that our industrial sales appear to have leveled out. They're actually up slightly in the quarter from the quarter before. And our bookings for the quarter were also up a bit.

Closed-circuit TV application, the most dramatic decline compared to last year, down 55%. But we're also experiencing a 30% reduction in other products sold in industrial automation.

The one bright spot in the industrial part of the Components business is wind energy, again, where we sold almost $1 million worth of slip rings. That's the market that continues to grow. And recently, we won a major order for slip rings with Sinovel, the largest wind turbine manufacturer in China.

The Components group '09. The last quarter, we had reduced the Components group forecast for the year down to 330. Recent strength in the aircraft business and in defense controls persuade us to revisit that forecast. We're now back up to 342. We're expecting military aircraft sales of $107 million, up from our recent forecast of $96 million.

In defense controls, we're forecasting 64, up from 57, 90 days ago. We're making one downward adjustment in marine products, reducing the forecast from 43 to 40 -- all based on incoming order activity, which does seem to reflect a moderation in the price of oil.

Components group margins in the quarter, 16.2%, down from 17.4% last year. Change -- simply the result of a changed product mix. The shift away from industrial and standard marine products in favor of heavy shipments of FPSOs slip rings, results in a slight moderation in margins. If we have another quarter in this range, we'll wind up at 17.3% for the year, just slightly below what we projected last quarter; but on the other hand, margins achieved on slightly higher sales should produce operating profit that meets our target.

Components group 2010 -- we're projecting a modest 7% increase to a total of 365. We expect military aircraft sales will be up from 107 to 121, primarily based on the Guardian program and full array production.

Space and Defense should be up slightly. We're anticipating increases in medical, industrial, and wind energy product lines, offset by an $11 million reduction in sales of marine products.

Every year we project margins for the Components group on a conservative basis. Based on the product mix we're currently forecasting for 2010, we're projecting margins of 15.4%, down from 17.3% that we'll average this year. And we hope that once again this turns out to be a conservative forecast.

Medical Devices, Q3. The medical devices business has turned out to be a real roller coaster ride. This year began with first quarter sales that were very low and a loss of the operating profit line. Second quarter sales of pumps and admin sets recovered, but earnings were negated by the expense of a recall effort in enterel pumps, and increased costs for purchased components.

We left the second quarter modestly optimistic about our prospects for the balance of the year; but in the third quarter, the Medical Devices segment seemed to suffer something like the perfect storm. I apologize for the overused cliche, but it seems appropriate for the results in this segment.

Sales of $26 million included $7.5 million from recent acquisitions, Ethox and Aitecs. If we make a comparison just on the basis of the businesses we owned last year, sales were down by one-third. That's a level even lower than the first quarter of this year, and at that time, we thought that quarter was an aberration.

In addition to the low sales, the product mix was stronger on enterel pumps and sets, which are not the high margin parts of our product line. As a result, operating profit was a big negative, and I'll talk more about that in a minute.

In reviewing the sales results for the quarter and for the year-to-date, I think we can describe some lessons that we've learned about this business. First, it's not recession-proof. Hospitals are worried about shrinking endowments and lower admissions. Admissions are down by 30%. In many instances, we're told that hospitals have established a hold on all capital expenditures for all of this year.

We might think that outpatient clinics would be less affected. Their businesses are supposed to be more stable, but once again, we're told that companies that own these clinics are watching cash flow and deferring purchases.

Secondly, we've learned there's quite a bit of quarter-to-quarter volatility in the sales of these products. Some of that may have to do with inventory management in the hospitals and the clinics, and some of it was the buying patterns of distributors and reps.

Thirdly, we've learned that any suggestion of a reliability problem with your product in the field can develop into a rumor that lingers in the market much longer than you'd expect, and much longer than it should. In the early part of this year, there was an allegation that our intravenous pump, when dropped from six feet, might require recalibration.

We made a product improvement to protect the pump from such an event. That product improvement should be described as a field correction; but confusion about that change seems to have caused a delay in the commitment of some major purchasers.

Similarly, you'll remember that in the first quarter, we encountered a very subtle software problem in enterel pumps. That problem triggered a field retrofit. The fix is in, the software update is complete, but there still is some apparent hesitation in the market.

Lastly, we've discovered that this type of product is not recession-proof in Europe either. Although the healthcare systems there are quite different, buying decisions are made in different places, it seems that in the midst of an economic slowdown, healthcare professionals buy less equipment there just like they do here.

So, that's the situation we find ourselves in. Let me go back to the quarter results. I'll start with the parts that were not so bad.

The recent acquisitions, Ethox and Aitecs, generated sales of $7.5 million, which was about 13% below our most recent forecast. In Ethox, the shortfall was in contract manufacturing. From a strategic point of view, that's not the business we're most interested in.

Aitecs is the syringe pump company in Lithuania. And the difficulty there seems to be that many of their customers are in countries that were formerly part of the USSR. Most of the medical facilities are government-funded, and in many of these, the governments have cut back on funding for everything, including equipment.

Now we would have been slightly happier with better results from both of these acquisitions in the quarter, but they're not our real problem. Our problem is in the sales of infusion pumps, both IV and enteral, and in the sales of admin sets. Pump sales in the quarter [at] $5 million were down 42% from a year ago. They were less than half the sales of the most recent quarter; hence my comment about volatility.

Sales of admin sets at $8.7 million, down only 5% from a year ago. Because of the volatility of admin sales, we're not sure whether this is a trend or not. If we look at our sales over the last four quarters, they're actually up a few percentage points from the proceeding four quarters; so maybe there's a long-term trend upward. In this particular quarter, the bulk of the sales were in admin sets that are of the less-profitable variety.

Sales of sensors and hand pieces, $3 million, also about half the level from a year ago. We sell sensors to other infusion pump manufacturers, so our sales would suggest that their pump sales are down about the same percentage as ours. All in all, a pretty grim picture for sales in the quarter.

Margins. The recent acquisitions of Ethox and Aitecs, although running its sales volumes below our plan, they just about broke even on an operating basis. The purchase accounting expenses drive them negative by nearly $1 million. The very low sales volume for the rest of the business, $9 million down from last year, resulted in an operating loss, which brought the total for the quarter to $4.4 million negative.

The rest of the year. For the fourth quarter, we're forecasting a modest recovery and sales of both pumps and sets. Pump sales at $7 million, up from $5 million this quarter. Our field sales force has provided the detailed forecast, which does suggest that this result is really possible.

In admin sets, we're forecasting sales of $9.2 million, which is about what we average for the first three quarters. Sensors and handpieces at $3.4 million, up 10% from the average of the first three quarters, and we're simply expecting a continuation in the current level at Ethox and Aitecs.

The total for the quarter would then be $30 million. We're projecting that with the modest sales increase in the fourth quarter, taken together with some of our cost-reduction efforts, will cut in half the loss we just experienced. We expect the operating profit will be a negative $1.5 million. This will result in a total for the year of $110 million on sales, and an operating loss of $8.1 million or 7.4% of sales.

This is certainly not the result we anticipated when we got into the business. On the other hand, our plan for success in medical devices was not anticipating the backdrop of a global recession.

We are expecting that 2010 will be different. As in our other businesses, we're not promising our improvement on a major economic turnaround, but we've made a number of changes that will impact our business.

First of all, we go into 2010 with a broader product line. We will be introducing our own large volume infusion pump, and we'll be introducing the Aitecs syringe pump into the US market.

Secondly, we will have considerably strengthened our sales and distribution organization. We now have available the Aitecs distribution network in Eastern Europe; we can use that for infusion and enteral pumps. In addition to that network, we've added 10 other international distributors for a total of 14, in a broad range of countries, including Canada, Australia, and the Mid East.

Perhaps more importantly, we've doubled the size of our domestic sales force to work with our domestic distributors in support of their efforts. We, of course, believe that we'll be out from under the cloud of IV pump malfunctions and enterel software problems.

On the cost side, we expect to achieve economies by improving the supply chain that supports all of our recent acquisitions. We're in the process of streamlining our organization in terms of indirect expense, and we have the major initiative underway to develop our own facility in Costa Rica, to provide disposables. We expect the major impact of that move will occur in the second half of 2010.

With those plans in mind, we're forecasting pump sales in 2010 of $36.4 million, up 29%. Anticipating growth in admin sets to $42.4 million, an increase of 16%. We're projecting a recovery in sensors and handpieces to $16 million. We'll have a full 12 months of Ethox and Aitecs for a total of $29 million. And together with sales of other accessory equipment, we're forecasting a total of $129 million; operating profit of 4.7% or a positive $6 million.

Of the $14 million change in operating profit from '09 to 2010, about two-thirds depends on increased sales, and the balance will be the result of cost reduction efforts, and a more profitable and favorable product mix.

We're occasionally asked about the Medical Devices business, but if we knew then what we know now, would we still have taken this initiative and gotten into this business? Our response is this -- I believe that over the next few years, the talented group that we've assembled in this segment will continue to elaborate what is already an excellent product portfolio; we'll be able to avoid the product problems that we've recently experienced in the field; we'll get our costs under control; and most importantly, we'll learn effective distribution of this type of product.

So I still believe that in the long-term, this segment will be a major contributor to the growth and profitability of our company.

Looking back, one can second-guess our timing, particularly if we'd had the clairvoyance to know that '09 was going to be a year of recession. But I believe the real mistake we made was in projecting that we would enter this market and immediately enjoy very high operating profits. In retrospect, we should have anticipated that in entering this market, like every other market we've entered in our history, operating profits in the early days would likely be modest, and may actually require some investment.

Our company has learned new markets before, and in the end, they've been worth the initial investment. I think we, and you, should give this initiative more time in a somewhat better economy, before we make a judgment as to whether it will achieve our long-term objectives.

In summary -- the summary of the guidance for '09 and 2010.

Let me now try to put the whole picture together. Total sales for '09 now forecast at $1.825 billion; operating profit of $188 million before restructuring; $173 million after. That will turn out to be 9.5% of sales. Taken together with the rest of our cost structure and our new low tax rate, these operating profits should generate net earnings of $86.8 million or $2.02 a share, up from the 195 we were talking about 90 days ago.

90 days ago, we also talked about a range of uncertainty plus or minus $0.20 a share. We now think that range has narrowed substantially. We'd recommend that you think about $2.02 a share plus or minus maybe $0.05.

For 2010, we're now projecting sales of $2.037 billion; operating profit of just under $202 million; 9.9% of sales. With a more normal tax rate of 27.7%, we're projecting net earnings of $101.4 million, $2.36 a share. You should probably bracket that forecast by at least $0.10 a share. We expect the first quarter will be about $0.50 and the following quarters will probably grow at about 10% a quarter.

If we make the $2.36, that will be a 17% increase over what we now expect for '09, and our company will have resumed our trajectory of annual increases in sales, earnings, and earnings per share.

I apologize for the blizzard of numbers. With that, I'll turn you over to John, who will talk about cash flow, taxes and credit. Here's John.

Thanks, Bob. Good morning. The headlines this quarter includes strong cash flow; [at] very low tax rates, and a favorable amendments to our revolving credit facility. Let me start with our cash flow.

Free cash flow this quarter was positive $15 million. The operational focus on improving our cash performance is starting to bear fruit, as our changes in inventories, receivables, and payables contributed a net $13 million in cash. Year-to-date, free cash flow is positive $20 million.

Our net debt increased by $23 million in the quarter, as we completed the acquisition of LTi. Capital expenditures were $21 million, while depreciation and amortization was $20 million. Our interest payments totaled $10 million and cash tax payments were $9 million.

Now let me go to taxes. As Bob mentioned, our effective tax rate in the quarter was a very low 3%. There are two factors driving this abnormally low rate. The first is some special benefits which we enjoyed this quarter. And the second is a result of a re-estimate of our average rate for the total fiscal year.

On the special fronts, we had the reversal of FIN 48 accruals from fiscal '05, a favorable final US tax audit for fiscal '07, higher R&D tax credits as a result of completed audit work for fiscal '08, and finally, the effect of LTi equity earnings in this quarter.

On the average rate front, we have refined our forecast to reflect higher earnings in lower tax jurisdictions, particularly China, and lower earnings in the US. The net result has been that we have reduced our calculated rate for the year, and have taken the year-to-date adjustment in Q3.

When you combine these tax specials with the low level of pretax earnings in the quarter, the effect is a significant reduction in the effective rate for the quarter. This will not repeat in Q4.

A couple of other items. Our equity-based compensation expense in the quarter was $1 million, [but] contract loss reserves dropped by $1 million in the quarter. We contributed $8 million to our US pension funds. At the end of June, our net debt to total capitalization stood at 42%, the same as last quarter.

Now let me mention a few words about our credit situation.

As we mentioned last quarter, our most important covenant at present is the maximum leverage ratio under our senior revolving credit facility. This covenant limits our net debt over an adjusted EBITDA. The adjusted EBITDA allows us to add back non-cash expenses, and also includes the 12-month trailing pro forma EBITDA from acquisitions.

Last quarter, we reported that our projected leverage ratio would peak at about 3.1 times towards the end of calendar '09. Given the heightened interest in credit availability in the markets, the general economic uncertainty, and the desire to continue to take advantage of growth opportunities, we felt it would be prudent to negotiate a modification to our agreement with our bank group.

In June, we revised our agreement to increase the maximum leverage to four times, and included an add-back for restructuring charges through the end of calendar '09. As a result, the interest rate on our senior facility increased by 50 basis points. Over the course of a full year, this will add about $2 million of interest expense at our current debt levels.

You'll recall that our senior credit facility does not mature until 2013. With the revised covenants, our credit situation at the end of June included over $330 million of available bank credit, and $77 million in cash on-hand. At the end of June, our leverage ratio was just under 2.8 times.

Now let me look at the forecast for '09. Last quarter, we projected breakeven cash flow for the remainder of fiscal '09. This quarter turned out much better than anticipated, but I'm reluctant to call one quarter a trend, so I'm sticking with the breakeven quarter for Q4 to give us a positive $20 million for the fiscal year. Perhaps we will do better.

Capital expenditures for the year should come in around $90 million, while depreciation and amortization will be $77 million. Interest expense of $38 million will be very slightly higher than our last forecast, due to our revolver modification. We're moderating our forecasted tax rate to 23.9%, driven by higher forecasted earnings in our foreign subsidiaries.

For fiscal '10, we're projecting an improvement in free cash flow to $60 million, a 60% conversion ratio. Capital expenditures will moderate from the fiscal '09 level to about $75 million; depreciation and amortization will be up to $86 million. We're anticipating an increase in our average tax rate to 27.7%. This year, we had several one-time benefits, which will not repeat next year.

Finally, interest expense next year will be $41 million. It will be up from this year, due to the increased costs associated with our recent revolver modification and higher average debt levels.

Now let me pass you back to Bob to lead the Q&A.

Tony? Can we go to questions, please?

Certainly. (Operator Instructions). Cai Von Rumohr, Cowen.

Thank you for all that data; very helpful. Could you give us a little more? The restructuring is going to be $15 million for the year. You did [$9 million], I guess in that quarter. $2.1 million was in aircraft. Was the rest -- what, $7 million, $8 million in industrial? And how does that split in the fourth quarter between the businesses? And how much, you know, do we have of restructuring still to go in 2010?

We're anticipating that the rest of the $15 million in '09 will be primarily industrial. And at the moment, we're projecting, in industrial, an additional $2.3 million in 2010. But I would say that that number could grow a little bit. It all depends on -- there's still decisions to be made about certain facilities. And it may be that we'll incur a small amount of additional expense; but we think it will be pretty close to that.

Were there any restructuring initiatives outside of aircraft and industrial, other than very minor things?

What's occurred has all been in aircraft and industrial.

Okay. You walked through a lot of numbers, but maybe give us some color, your cyclical industrial markets. Like, what are you seeing in wind energy? What are you seeing in the key markets? And what's the level of backlog that you have in the wind energy sector?

The wind energy business seems to be going gangbusters. The major acquisition was this product line that we bought from LTi REEnergy. And that business is very strong, has the backlog to support a forecast of well over $200 million in 2010.

About half of the backlog relates to projects in China that are sponsored by governments and funded by governments. And therefore, not likely to run into financing difficulties. So that business seems to be just motoring along just fine.

Our legacy power generating business seems to be doing better than most others. As I mentioned in my prepared remarks, business was actually up some in the US in this quarter. Pacific seems to be holding okay. So, I guess I would say power generating, think controls that meter natural gas into power generating turbines don't seem to be as affected by the recession as everything else.

Then we could go to the motion simulator business, which is -- I tried to describe, down substantially from last year; but last year, this business was up 56%. And this is mostly a matter that our major customers, FlightSafety and CAE, last year, particularly CAE, seemed to be buying equipment for use in their own training facilities in addition to the equipment that they were buying for customers.

This year, they don't seem to be continuing to facilitize their own installations. And so sales are down this year compared to last, but it's still a pretty handsome level.

On the other hand, if you look at the controls that we supply for major equipment manufacturers -- injection molding, blow molding, metal-forming -- those equipment manufacturers, those businesses are at parade rest. I mean, our sales, as I mentioned, are one-third of what they were a year ago. And for the most part, that's spares, repairs, and overhauls.

I mean, there are many companies that are simply not building equipment because nobody is buying that kind of capital equipment these days. And I'm talking about businesses that are primarily -- the manufacturers are primarily in Europe and Asia, but their customers are all over the world. And this is where the recession has hit. And the impact on us really began in the second quarter of our fiscal year. We really felt the effect in this quarter.

Our first quarter was actually not that bad. So we expect that the quarter we're now in, the fourth quarter, will be about the same as the third. And as I've tried to make clear, our forecast for next year in these product lines does not presume an improvement.

Now, I can say that our folks in the field report that things aren't getting worse. And we are, these days, continuing to book orders in those product lines that are about the equivalent of what we're shipping. As I occasionally say, when talking to those people, the absolute best news is, it ain't getting worse. And that's what we're hearing at the moment.

Going forward, the big improvement in our industrial business in 2010 all has to do with the fact that we now own 100% of the LTi wind energy product line. We also have this other Insensys product line -- makes sensors that measure the health of turbine blades and wind turbines. And the combination of these two businesses, we're forecasting sales of $235 million in 2010. And we have the backlog to support it. And that will take our industrial business back onto a growth curve. So that (multiple speakers) --

Last one, Bob -- what is the level? If you say you have the backlog, what is the numerical backlog for the wind energy sector now? And has it gone up or has it gone down on an apples-to-apples basis in the last three months?

It's about $25 million -- what? (multiple speakers) Excuse me, $85 million. And I think it's been fairly stable over the last three months.

Okay, thank you very much.

Thank you. Our next question in queue (multiple speakers) --

I think -- Tony, let me go just (multiple speakers) -- I think, as you know, Cai, I pay less attention to backlog extrapolation than the forecast coming out of the people, provided by the people who are doing the business. Go ahead, Tony.

Thank you, sir. Eric Hugel, Stephens.

Can you talk about what your lead times are typically for, I guess, large commercial equipment, like go into Boeing and Airbus? In case there is a rate cut, sort of give us an idea of sort of what kind of leadtimes you would need to have.

Our leadtimes for commercial aircraft products range from six months to, I would say, 12 to 15 months, depending on what you're talking about. And we have to develop manufacturing plans well in advance of the advice we get from Boeing -- or Airbus, for that matter.

So strangely enough, our commercial transport customers are relying on our ability to forecast their production rates, so that when they finally get around to ordering, we have already pre-ordered material so that we'll be able to support them. Why they want to operate in that fashion is a mystery to me, but that's what they want to do.

So in other words, you're telling us if Boeing or Airbus cut production rates, you guys are going to get stuck holding excess inventory, right?

What I'm telling you is that we've made our own plan for what we think they're going to do and we hope that they're right. To the extent that we're wrong, on the one hand, we may have some excess inventory; on the other hand, we may have some expediting to do.

Right. No, understood there.

You may remember some years ago when the Boeing production rate was doubling and they finally ran into a jam where their suppliers couldn't support them. And during that period, every time we met with them, as the rate was doubling, they told us the current rate is the peak and it's going to go down in the future.

And what actually happened is the rate continued to increase. Fortunately, in that circumstance, we were paying more attention to forecasts coming out of your community then we were to them, and we were able to support them through the whole thing.

But Eric, can I just clarify -- you said excess inventory, which might suggest that [some of it'd] be a write-down in some way. I mean, all that would happen is that we would have more inventory than we might need short-term, so there would be a cash implication; but the inventory is good and it would just flow through. We'd slow down the incoming orders on our side and it would flow out perhaps a bit later, so.

You know, I was thinking more in the mindset of sort of like a de-stocking type of impact, where you guys would actually have to go down to a lower rate for period of time than they were actually forecasting -- to burn off your inventory.

Yes. That can happen.

Yes, I mean, I think if you look at our sales even this year, they're significantly lower than last year. And that doesn't -- our rate doesn't typically reflect exactly Boeing's production rate anyway, because of the way the supply chain breathes, so.

Okay. No, fair enough there. Is there any way in terms of -- you had multiple things going through on the tax rate. Is there anyway that you could sort of break out what the, I guess, the total benefit was? And of that, break out sort of what was retroactive catch-up versus what sort of just earnings from lower tax rate jurisdictions?

I would say two-thirds of the effect is one-offs and perhaps slightly less than one-third of it is due to a correction in the tax rate for the year. This time -- 90 days ago, we were anticipating higher earnings in the states and lower foreign earnings.

And what happened in the quarter and what we're projecting for the next quarter is that, particularly, with the LTi acquisition, we'll have strong earnings in China and in Europe, so they're lower tax jurisdictions. And with the downturn in the medical business, we'll have lower earnings in the US.

So that adjustment is about one-third of the impact. You can take it that we would have an average rate for the year in the kind of the very low 30s. And then bringing us way down, you've got the specials, which I mentioned -- there were four of them, and this adjustment.

Keep in mind we had very low earnings this quarter -- $16 million. So the specials on an absolute number were not that big. But when you take them off of $15 million, $16 million of pretax earnings, it has a dramatic impact on the tax rates.

Great. So ex all of this stuff, you would have had a tax rate of around 30%? Or in the high 20s, I mean?

Yes. Yes, I mean, we're projecting now 23.9% for the year, but kind of low 30s, very low 30s is what -- if you took all of the specials away, is what the year might have been.

Okay. And finally, Bob, when you're talking about the medical business and you're talking about describing the effects of the hospitals not ordering, you refer to it as we're told things are happening. Is this information that you're getting from guys like B. Braun and things like that?

Because I'm kind of interested in -- I mean, from the standpoint -- I look at a guy like a Baxter, who, I guess, they reported the other week. And they're infusion system sales were down 10% year-over-year, 3% on a constant currency. And your numbers are just down dramatically worse. I'm not sure it's an apples-to-apples thing, but I guess my concern is that really what you're seeing here is more of you guys are losing marketshare to a guy like a Baxter.

How do you get comfortable there in terms of what's really going on in the market? Are you directly talking to the end customers? Or are you relying on a middleman here?

A little of both. I would say that to a large extent, at least at the moment, particularly with respect to the IV business in the US, we're relying on the distributors that we use. We do have a field sales force, as I mentioned, and we're increasing the size of that field sales force.

But what I described is -- these are reports we're getting from the field, both from our own people, and from our distributors and reps. And the information all seems to be pretty consistent. I mean, we're not getting a much different story from our own people than we're getting from the distributors.

Incidentally, it won't be Baxter that's picking up marketshare, because they don't have a -- Baxter was the company a couple [of] three years ago that had the recall, that provided the great opportunity for us.

We don't think that we're losing marketshare. We do think that there have been some major orders that were deferred. And in some cases, because of this phenomenon that I described -- to me, it sounds -- seems like a rumor mill, where there gets to be this question in the field as to, what went on?

The first problem I described turns out that -- take one of our infusion pumps. If you drop it from six or eight feet, bang it hard enough, there was the possibility that you could bend the platen and wind up with the result that the pump would over-infuse.

What you had to do was get it calibrated after you dropped it. But first, whoever dropped it, had to be willing to admit that they dropped it.

We learned about this, made a product improvement, and sent out a notice to everybody that has the product, that says, incidentally, if you take to throwing our product around, you need to get it recalibrated. And that gets confused as maybe a so-called Class II recall. And then there gets to be some confusion in the market as to, is the product in question? And it's taken longer, it seems, to clear up some of those perceptions than one might think.

Right. But I guess the concern is as a result of that, if you are losing marketshare, because (multiple speakers) --

I guess I didn't make myself clear. At the moment, we think that purchases have been delayed, but not necessarily that they've gone to another company.

Okay, thanks, guys.

(Operator Instructions). Mike Ciarmoli, Boenning Inc.

Thanks for taking my call. Bob, just on the -- if you can talk a little bit about the Space and Defense business. It looks like you're projecting some nice growth for 2010, but the operating margins are going to come down. I know you mentioned some of the more mature programs may be slowing, but is there anything else that we should be thinking of, with those margins coming down?

I don't think so. The Space and Defense part of our business historically has not been the kind of business that generated 11% or 12% or 14% margins. I mean, that's really unusually high margin performance in this business.

It occurs when we have a product mix that's heavily weighted to either mature, long-term programs or we've -- in 2008, we had a wonderful experience because we got a huge order for Driver Vision Enhancers, and were able to produce and deliver at very high volume. And it turned out to be, in that business, a nicely profitable program.

But if you go to the cost-plus development programs -- and Constellation will be that -- I mean, those kinds of programs don't generate double-digit operating margins. I mean, there's -- the risk of overrun goes away, but you're not in the 10% or 11%.

Similarly, in some of the major programs' mechanisms on big satellite programs, a lot of design and development nonrecurring, very little production. And so, what's required is to be able to do a really good job of planning and estimating a large development task. And generally, those kinds of programs are not double-digit margin programs.

So over the long-term, we don't actually expect that our Space and Defense business will maintain the kind of margin performance that you may have gotten accustomed to. And we think that what we're projecting for next year for that business is quite respectable.

Okay. That's helpful. Just more on the Driver Vision Enhancer. The recent order was awarded to Oshkosh for those MRAP ATVs, and you mentioned BAE and DRS. Does your, I guess, potential order intake account for the ramp in production of those vehicles? Is there going to be a high attach rate of the Driver Vision on those MRAPs? Or is that something you don't have visibility into?

We don't have perfect visibility, but we think it will have an impact. And so we think that we will have a strong participation. I don't know if that's 60% or -- but we think most of the vehicles will take this kind of system and most of them will be ours.

Okay. And then just shifting gears a little bit to the Constellation, I guess, the Shuttle and Constellation-related revenues. Funding is obviously a concern. There's some talk out there of potentially scrapping Ares I, which might be a little radical, in favor of a shuttle-derived throwaway lifter. How would that impact your revenue outlook, your opportunities? Have you heard any grumblings about that?

Yes, indeed. Well, if -- I just described a projection for next year of about $34 million on the Constellation program. Much of that, however, is focused on the Orion Crew Exploration Vehicle. Much of our work on the Ares I is already done.

So -- but it still would have a substantial impact on us, because we wouldn't be delivering equipment for the Ares I. So, I guess to be clear, I could say -- if Ares I is canceled before the end of next year, it will have a noticeable impact on that $34 million revenue forecast. Maybe it'd be cut in half.

Okay.

On the other hand, let me opine on what's likely to happen. First of all, let me tell you, in the age where we're talking about $50 billion to bail out General Motors, I think it's fascinating that NASA has a $17 billion or $18 billion a year budget, and we can't afford to do what ought to be done because we've got to do something cheaper. So I think that's all a little silly.

Secondly, I think there's a reasonably good likelihood that the Augustine Commission, having looked through the alternatives, will decide that they aren't good ideas. The easiest one to discard, I think, is the -- let's use Delta or Atlas expendable launch vehicles and turn non-manned rated expendable launch vehicles in demand-rated systems. I don't think that's a practical thing to do.

The notion of using the boosters from the shuttle and somehow packaging the Orion in some kind of a vehicle that could be launched by that system, that may be a closer call. But I'll be quite surprised if the Augustine Commission gets around to embracing that concept.

It's not a new concept. This has been argued within NASA for years. This is a minority view, getting their hearing. And I think much of what's going on is, this is the Obama administration holding a -- having a set of Commissions so that when they decide what should be done, it will be the Obama plan, not the George W. Bush plan.

Got you.

The Obama administration sure as hell doesn't want to simply follow through on a plan developed by George Bush; they've got to have their own plan, so.

Got you. And then one more question and I'll get out of the way here. Just on the balance sheet, inventories look like they were up pretty significantly quarter-to-quarter. Anything to read into there? Or can you elaborate what's happening?

Yes. That's all acquired inventory from LTi.

Okay, perfect. Great. Thanks a lot, guys.

J.B. Groh, D.A. Davidson.

I think most of my questions have been answered, but I was curious how you're feeling about acquisition opportunities? Appetite there, multiples that you're seeing, that sort of thing.

Well, the frantic pace that we maintained December, January, and February, we're not continuing at that rate. Actually, there's been a kind of a slowdown, I guess I would say, in real likely opportunities.

J.B., you've heard us before say that the way we go about it from generally -- the acquisitions we make are companies that we've identified and approached directly, and sometimes it takes a couple of years to bring a bride to the altar. And so the actual closing of deals often is happenstance -- the timing, at least, is happenstance.

We have a number of opportunities that are being evaluated. I don't think there are many of them that are likely to close in the near future. So I think the pressure is off.

Multiples, I would say, are all over the wall -- all over the map. There are sellers that have not adjusted and still think that they ought to be thinking about 10 or 11 times EBITDA or maybe more. And there are examples you can point to -- I mean, what Woodward paid for hydraulics research and what Woodward paid for MPC is probably even (multiple speakers) --

But there are other sellers who, for one reason or another, actually want to get a deal done, and their notions are more realistic. It's kind of all over -- I can't say there's a consistent pattern.

So you say the pipeline is robust, and it is. But like you said, the closing of these is purely coincidental and sort of depends on when the bride says yes.

That's what I think.

Okay, thank you.

Thank you. At this time, there are no additional questions in queue. Please continue.

Well, thank you all very much for coming. I know we've -- it's taken a long time, but we appreciate your attention and we'll see you next time.

Thank you. And ladies and gentlemen, this conference will be available for replay after 12:00 p.m. Eastern time today through August 23, 2009 at midnight. You may access the AT&T conference replay system at any time by dialing 1-800-475-6701 and entering the access code of 107928. Again, that telephone number is 800-475-6701, using the access code of 107928. And also, this replay information will be available on the Company's website.

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