Natuzzi SpA (NTZ) 2007 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Natuzzi SpA fourth quarter and full year 2007 consolidated financial results and conference call. (OPERATOR INSTRUCTIONS) As a reminder, today's conference call is being recorded.

I would now like to turn the conference over to your host, Nicola Dell'Edera. Please go ahead.

Okay, thank you, Anne. Thanks, everybody, for joining us in this conference call. Today we will review Natuzzi's fourth quarter and full year 2007 consolidated financial results, and, as usual, soon after we will open the call to your questions. You should have a copy of our press release. If not, please, go on our website at Natuzzi.com, or call our investor relations department at 039-08-0882-0812.

Before proceeding, let me remind that our discussion today could contain certain statements that constitute forward-looking statements under the United States securities laws. Obviously, actual results might differ materially from those in the forward-looking statements because of risks and uncertainties that can affect our results of operations and financial condition.

We have discussed such risks and uncertainties, which have in the past affected and may continue to affect our results of operations and the financial condition in our annual report on Form 20-F for the fiscal year ended December 31, 2006. These reports are readily available on our website, natuzzi.com, or from us upon request.

You can have a copy also of the 20-F from the United States Securities and Exchange Commission. While the 20-F for 2007 will be filed with the Securities and Exchange Commission by the end of June 2008. As usual, we begin this call giving a look at the exchange rate that represents a very important factor in relation to our performance and I'm talking about euro-U.S. dollar exchange rate.

In the fourth quarter 2007, the average of the euro-U.S. dollar exchange rate was 1.4480, versus an average of [1.2894] in the prior year fourth quarter. This means that the euro trended by 11% against the U.S. dollar on a quarterly basis. In the 12 period, there was a change of 8.3% of the euro against the U.S. dollar. It means that the euro's strengthened against the U.S. dollar by 8.3%.

Let's now turn to the Natuzzi 2007 consolidated financial results of last year and look at the most important numbers and factors that have [considered] our financials in 2007. During the [period] the Natuzzi group reported a decrease of 13.7% and 14.1% on a yearly basis in terms of net sales and the units sold, respectively.

Such a decrease was quite widespread between the geographic markets and regarded both Italsofa and Natuzzi brands, mainly due to the following reasons. Generalized consumer spending crisis, which was particularly evident in the U.S. market and still today it's a relevant factor affecting the performance of furniture companies in the U.S. The strengthening of the euro versus the U.S. dollar. In particular, that strongly penalized our turnover conversion of the U.S. sales in euro sales for our financials.

We reported also a good performance of our retail network, as well, which for sure represents an area on which we have to focus our efforts in order to improve their performance. And, lastly, let me say that we were penalized at the end of the year in December by a couple of factors which were extraordinarily bad weather conditions in southern Italy, in particular where we have our manufacturing and logistics operations. And there was also a five days' important nationwide strike amongst transportation workers that literally penalized the movement of goods in Italy. So we lost more than a week of production and turnover for these reasons in 2007.

It's worth being highlighted that the fourth quarter increase of 10.8% in terms of units sold of our promotional line, whereas the high-end Natuzzi-branded products continued to suffer. In the first quarter 2008, mainly thanks to the orders backlog deriving from 2007, the Company had the opportunity to ship more than 10% on the same period of 2007. As of today, the order flow is slightly lower compared year over year, but we have good expectations on incoming High Point and Milan International fairs, which represent two of the most important events in the furniture industry.

During 2007, operations generated a negative result of EUR49.1 million, versus a positive operating result of EUR16.5 million reported in 2006. Let's try to recap what are the most important factors that have determined such wide difference between the performance at the operating level between the two years. The EUR65.5 million worsening in operations so was mainly explained by EUR29.4 million attributable to lower volumes sold, so [mix in] margins deriving from lower sales, EUR19.3 million deriving from an unfavorable exchange rate, conversion of sales in the currency of [consolidation]. Let me remind always this is always the same story about the U.S. dollar weakening against the euro. And we had EUR10 million due to higher raw material prices reported in 2007 and EUR3.4 million because of fixed costs not properly absorbed.

Regarding the net foreign loss of EUR2.3 million, it's comparable to a EUR2.8 million reported in the previous year's comparable period as income. The ForEx loss can be broken into the following -- we had EUR300,000 more or less of losses on forward contracts, a loss of EUR0.8 million, which is the difference between invoice exchange rate and exchange rate on the date of collection payment, an unrealized loss of EUR2.5 million related to the mark to market of receivables and payables and an unrealized gain of EUR1.3 million related to the mark to market of our derivative contracts, of our forward contracts that the Company puts in place to cover its sales in foreign currencies year over year.

As far as the 2007 bottom line is concerned, the yearly overall result was burdened also by about EUR8.4 million of the writeoff of deferred tax assets on the [holding] Natuzzi S.p.A. Operations during 2007, especially because of the loss, used EUR15.1 million of cash flow. We reported also an increase in inventories, but it was due only to the fact that at the end of the year, as I said before, there was a transportation strike that blocked deliveries and so we had to pile up finished goods in our warehouses.

And in the year we had also EUR26.2 million of investments, which were related, mainly addressed to recover efficiency in the manufacturing plants, open other new Natuzzi stores and galleries worldwide and install the new ERP system. By the way, good news, are that in this situation which is complicated, but we are ready to discuss with you soon after this introduction is that the Company still has a sound net financial position that as of December 31, 2007, was about EUR80 million, but as of today it's about EUR70 million. So still solid, and so the Company can afford this kind of turnaround and trying to turn up, basing on a sound financial position that really helps in implementing the strategies for recovering growth and recovering profitability.

I have finished, and now myself, Mr. Natuzzi and Mr. Gaipa will be very pleased to be answer any of your questions.

Anne, back to you.

(OPERATOR INSTRUCTIONS)

Our first question comes from Seth Hamot from RRH. Please go ahead.

Howdy. A couple of questions, CapEx for 2008, any forecasts on what you're hoping to spend?

I'm sorry. I didn't get your first name, please.

Seth Hamot, H-A-M-O-T.

Seth. Okay, nice to talk to you. Seth, we are working, as we said in the press release, on the business plan. We are trying to build the business plan for 2008 and 2010. Guidelines are almost set up and together with top management, we are working on the operational details of this business plan that really will represent our next, mid and long-term future for the Company, for the group overall.

In this business plan are included also the CapEx, the capital expenditures regarding the typical areas in which we make investments, so plants, machinery, opening of new stores and new ERP systems. At the moment, I cannot anticipate any CapEx number for 2008, because it's part of the business plan. But let's say that typically the Company has to invest about EUR15 million, EUR20 million as maintenance CapEx for the rule manufacturing operations. So for the moment we should stay between 15 and 20 for 2008.

Super. We spent about EUR150 million in CapEx over the past five years or so, EUR150 million. Is that an accurate statement?

Yes. If you are talking about the last five years, I can tell you that your numbers are quite close to the number we have spent. And the reasons -- if your question is why you have spent those monies, is that it, or just the confirmation?

No, the confirmation. So I guess -- you've confirmed it, so to move on, let's talk a little theoretically here, okay? We've put a lot of CapEx in over the past five years, about EUR150 million, and we now face at least the valuation of that has been reduced substantially, right? We're not getting any credit for it. How, and I don't need to know the exact numbers going forward, how would you change your capital expenditure program going forward from what you did in the past?

Consider that the CapEx performance -- so let's talk about the quality and the type of CapEx investments we have made in the past. As I said, typically, we invest, starting from 2001, in new manufacturing capacity and this was in particular for our foreign operations, talking about two plants in China, two plants in Brazil, one plant in Romania, which feed the Italsofa production and that was -- sorry?

Yes, I understand.

So that was a huge investment. I would say we have invested about EUR100 million in all these operations, but that was quite a good investment because they are feeding Italsofa, which is the product that over the past few years, the five years we have been talking about, has been the one that has produced for the Company the higher return on capital invested and has grown very fast over the past few years.

Other monies have been spent in some maintenance in Italy, and, as I said, that represents overall about EUR15 million, EUR20 million by year. And, other than that, we have spent money in opening stores and opening galleries. So what we spend in those cases, regarding the stores that we own, of course we have to build up the stores, so we spend in display systems and so on and [looking at] this, the same we spend on display systems and other [totems] and other fixtures needed to put the product onto the floor and to sell, but they do not represent a large part of the CapEx.

Consider also that, together with this investment, that typically we capitalize and amortize in five years, we have also investments in marketing. What is considered -- what we consider for marketing investment, I'm talking about investments in advertising for pushing up the revenue of Natuzzi. Strategically speaking, Natuzzi in 2000, 2001, launched the two brands way, one, Natuzzi going up in the medium, high-end of the market, and the other one, Italsofa, playing in the promotional line.

In order to position up the Natuzzi brand, of course we had to spend some monies, some important money, that on average has been EUR30 million over the past years and this year has been confirmed at EUR35 million, because, imagine, positioning a brand at the medium high end, like Natuzzi that before was a very well-established manufacturing brand and in the last three, four years we have been trying to transform that manufacturing brand in consumer brand, has required a huge investment.

But these investments are not in the 150 you said, because they are expensed year by year in the income statement.

Okay, so that still brings me to the question, what will -- I don't need to know numbers, but I'm just trying to understand what you think, as a manager, should change going forward in terms of capital expenditures.

I believe -- of course, again, we go back to the business plan and, again, I cannot anticipate for technical reasons the numbers because it's a matter of discussion management and the consultants, our consultants, [Bain]. And we -- I cannot anticipate that number because it depends, of course, by the number of growth that we are planning to have. So I'm sorry I can anticipate only the EUR15 million, EUR20 million of maintenance for the manufacturing plants in 2008.

I completely understand that you can't give me a number. I'm just looking for a managerial observation as to the changes in their type, not what the amounts are different, but if going forward you expect to spend more on retail stores, maybe, or less on manufacturing, more on brand management. Whatever you want to say is fine.

I just want to understand not the amount but the type of spending and how it might change this year versus last year.

Okay.

Okay, hello. This is Pasquale Natuzzi. Good morning.

Good morning.

As for the strategy that the Company is applying for the current year is to invest in marketing and communication only for generating strong profit and sales, obviously. So the goal that we are looking for is to reduce expense for the coming year and increase sales by focusing on advertising for store traffic.

Super, that's fantastic. Thank you. My only follow-up question is on -- in the first quarter of the year, we've gone through another EUR10 million or so in cash. We've reduced cash by about EUR10 million?

Yes, approximately. Because January 1st was 80, I believe. You (inaudiblehave said

No, but, again, the number I gave you was about EUR70 million. Consider that it's as of today number, which represents the moment in which the Company makes payments and so on. So I believe that on average in the first quarter we should be around EUR75 million, so not very distant, far from the EUR78 million we had at the end of the year 2007. So I don't see a big difference in figures for the net financial position.

Okay, and that brings me to the inventories, which should be lower now, right, because of the strike being over?

That should be. That should be, because we have pushed in the first quarter to produce and deliver to our customers, and so we shouldn't have any particular situation of inventory that we don't know, but we shouldn't have to use that.

So that would indicate that the accounts receivable should be higher.

Yes.

Because that's the only way we get to a point where cash is declining.

I'm sorry, higher, when you say higher, are you talking about compared to the end of year 2007?

Yes. I guess there's other parts of working capital that can move, but given where you've kind of described the business, it seems to me accounts receivable must be pretty high at the end of the quarter.

Yes, consider this, just to help you, if I can say this --

Sure.

-- in making your calculation, that on average our working capital requirements are about 20% on sales. 2007 was 21.4%, but we were close to the average of the Company. So if you are planning to have in the first quarter an about 10% of increase in our sales, just making this calculation and making the difference compared to the end of 2007 probably could help your calculation.

Super. Thank you very much. I appreciate the chance to ask questions.

You are quite welcome.

Your next question comes from [Bart Kuhl] for IMC. Please go ahead.

Hi. Good afternoon. This is Bart.

Good afternoon.

Hi. Looking back one year, you basically stated after the conference call, after the Q4 numbers '06, your outlook for 2007, which was actually, and I'm quoting, besides the Company should invest almost EUR20 million in capital expenditure for the full year 2007. We expect in 2007 to report approximately same revenues year over year and almost breakeven at net results levels.

Of course, we all know that now things worked out a little bit different, but what is actually your statement today is basically you're reviewing your business plan, but at the same time you're making a statement that you're also breakeven at operational level in 2008. I'm wondering what leads you to that last statement.

I'm sorry, the last part of your words?

Basically, I'm wondering what kind of combination you have right now considering your business plan. Because, on the one hand, you're saying you're reviewing your business plan. On the other hand, you're giving me an outlook of breakeven at the operational level.

Yes, this is Gaipa speaking. Good morning, everybody. I would like to answer this question. The proposal is to increase the sales as much as possible to the region of around 10%, but to cut costs in a more than proportional way in order to reach the breakeven target within this year. This is our ambition.

No, I understand if you keep your costs the way it is and you're increasing your sales that you probably are going back to an operational level of zero. On the other hand, if I look to the last year, basically the only outlook you gave was in the beginning of the year and the rest of the year, Q1, Q2, Q3, you didn't give any outlook, and especially in a difficult market it seems to be a prudent way to go forward.

So, then again, what is actually anticipated to bring your sales higher?

It's anticipating this -- we started this year with quite a significant backlog, which was the result of 2007 not manufacturing products because of the reasons I said. At the end of December, strike, bad weather, so we accumulated quite a backlog that we have been using in the first 12 weeks of 2008. And there is still a buffer that we should use in the next few weeks. This, together with the order flow, gives us the possibility to think that based on these first considerations and considering the first signal we are getting from the products that we are going to place at the next two most important furniture fairs in High Point and Milan, we should be able to achieve an increase in sales.

So the message is, sales will increase. We give this quite for granted because of the dynamics we are getting in these first weeks of the year, in these first months of the year. That would be 10%, 8%, 5%. It's something that we will give you more in detail in the business plan. We wanted to anticipate this region of 10%. It could be 7% to 10%, based on the consideration we have today.

But, again, in the next weeks, when we will announce the business plan, we will give you more detail about what could be the increase in 2008 and if we were effectively able to achieve the operating profits. We are working on assumptions as of today, good assumptions, but, again, assumptions.

Okay, that's perfect. And if I look to the outlook of you're trying to reach an increase in unit sales of 10% and basically that is coupled to the breakeven on the operational level, what kind of margin of error is in there? You're talking about is it 10%, 8%, 5%. I'm wondering, let's say it's not 10% but 5%. How far out of reach is then the operational breakeven level?

The operating level based on the forecast we tried to make so far was at 10%. If we go down 10%, it will be difficult to be in operating breakeven, and the operating breakeven is also subordinated to the actions we are going to make, we are making, after the beginning of the year in trying to cut costs and cut investments that are not strictly required to produce a good return on capital invested, as Mr. Natuzzi said before.

Yes, but I'm not sure if I quite understand you, because basically you're saying if we're down 10%, then of course operational breakeven level becomes out of sight, but within up 10% and down 10%, there's a 20% margin, to put it that way. So my basically question is if it's not 10% but 8% or 5%, what is the level you're basically getting difficulties with breakeven at an operational level?

Can I say something? Okay, at beginning of the year, we increased the Natuzzi Made in Italy product by 10%. That price increase has been accepted from 99.9% of our customers around the world. By the way, no, the price increase was related on U.S. prices. U.S. prices are not only United States, but even other markets, like China, we still sell in China in U.S. dollars, in Korea, in Mexico, in South America. We are going to change now those prices by U.S. with the euro, but to do takes time.

But, anyway, 10% on (inaudible - background noise) prices for the U.S. currency price list has been increased in January. And then the 3% on Italsofa. That price increase has been accepted. All the new products that we are going to show next week in High Point in North Carolina and in Milano, the following week, and then we have a retailer congree here in Santeramo, in our headquarters, all the new product that we are going to show will be calculated on today's raw material cost, on today's exchange rate situation. And because we believe that the product has been so innovative, because we have -- I mean, we have product know-how, we have 50 years' experience, so I personally as a management believe that the new products that we developed for the spring and summer collection will meet the consumer and retailer expectations.

And, because of that, we are calculating all at new price and cost while on the old price list, especially in the United States, it's impossible, even if we are losing money. But it's impossible to raise the price more than the [10%] we did in January because of the crisis. Retailers are dying. Consumers, they don't get in the stores. The situation, it's a little bit unbelievable, no question about it. But we are a typical [control] of the tight situation.

Okay, Mr. Natuzzi, that's of course perfect to hear. So I'm very glad --

(inaudible) But trust me, there is a lot of energy here and determination. I mean, these companies are so important for management and for the shareholder that we are doing the impossible. But, I mean, the business climate, everybody knows. Everybody knows, especially in the furniture industry.

I totally agree, Mr. Natuzzi, and of course, as a shareholder, we all like your efforts to turn around the business and we like that you have this long history of industry experience and we all recognize it's a very difficult business environment.

Hello?

Hello.

I'm sorry.

Can you hear me?

Hello, I'm sorry, we had a technical problem. I couldn't hear you. I was saying hello. I'm sorry, go ahead.

No, no, I like the way Mr. Natuzzi approaches the business and we all know he has a long-term experience and we like that. On the other hand, we have --

I have also long-term planning. This Company has been in business for the last 50 years and we'll be in business for the next 500 years.

I'm not --

That's certainly determination, not only personal determination, but even the management one. The business climate, I faced many different climates in my 50 years in business in [Italy], but, Jesus, never so many things all together, I mean, China competition, U.S. recession, exchange rates. I mean, revolution, it's a [total] evolution. But, again, we work for you guys. I mean, we work for you guys, for the shareholders.

I totally agree on that, Mr. Natuzzi. Maybe a last question, because I didn't --

Any question you like. It's just passion. I talk for passion.

I would like probably to answer it to you. Let's say that if we consider a 5% [grouped] over total revenues and if we consider a 30% gross margin as an acceptable gross margin for 2008 and keeping selling expenses at 25% as the level we had in 2006 and taking out about EUR10 million of G&A from 2007 G&A total expenses, we are close to breakeven and probably we will lose some million euros, but we should be EUR5 million, more or less, based on my calculation, but we should be close to breakeven. That's why from 5% to 10%, there is a range of EUR10 million, EUR15 million of improvements that we want to achieve.

I don't know if that answers for you. Do you want me to repeat the figures?

Okay, that's perfect. Maybe one last question concerning your maintenance CapEx, because I didn't understand that quite well. What was the figure you mentioned?

15, between 15 and 20.

Between EUR15 million and EUR20 million?

EUR20 million over all the year. These maintenance are based of course on the total investments we have today.

Okay, perfect. May I wish you a very prosperous future in 2008 and will probably talk to you again in -- well, actually, maybe one last question. Will there be a conference call after the new business plan comes out?

Probably, probably, probably.

Yes, of course, we will be very glad to share with our shareholders guidelines and to tell us about the business plan.

Because I would appreciate it very much.

Okay, thank you.

Thank you so much. Thanks, sir.

Our next question comes from Budd Bugatch with Raymond James. Please go ahead.

Good morning, Nicola.

Good morning, Budd. How are you?

I'm fine, thank you.

How's it going in Richmond?

No, I'm in St. Petersburg, Florida.

Oh, St. Petersburg, so I think much better, at least from --

It's okay. And that was my first question, and the connection at least here has not been very good. You've been coming in and out and sounding like a lot of echo. So I hope maybe we get a better connection, if the operator has anything to do with it. The first question is what are you planning to do when you get the business plan ready to be disclosed publicly, and do you have a date on that? The next few weeks is a long time. Do you have a specific date in mind?

Not a specific date, because when you start working on business plans, which is something we have begun working since the beginning of February, it's quite a challenging and complex activity, which involves management, consultants and I would say Mr. Natuzzi is very, very involved in this project, [exuding] all his experience and knowledge in the development of the business plan. It takes time and we don't have a scheduled date because we want to do things very, very seriously and with the proper details, because on this plan we will play our game in the future, the game which is the game of Natuzzi and our shareholders.

Let's say we expect to close it (inaudible) within the next four to six weeks, we should announce the business plan.

And if -- you have moved into the retail community pretty aggressively, at least in Europe, mostly. Can we get a feel of how the business has done -- I didn't see it in the numbers -- between the manufacturing, or the wholesale side, and the retail segments or subsegments?

Business in Europe is really tough, we must say. It's really tough. Spain is softening very, very much --

Is it tough, Pasquale, at the wholesale side or at the retail side? Is the retail division losing a lot of money?

It's retail has suffered and we suffer. Because we are in the manufacturing side and the retail side. When the consumers, they don't get at the end of the month, because in Europe the salaries are too low. I mean, any newspaper, we read every day here in Italy and every television channel, we look for news, all kinds of news says that people and their salaries, they don't get at the end of the months.

I am sorry, but you're coming in and out on kind of an echo and I'm not sure I got all of that.

Oh, I'm sorry. I'm sorry.

Anne, is this a problem -- I'm talking to the operator. It's just a problem of Budd or it's a common problem?

It's a problem with your phone. I don't know if you have more than one speakerphone set up in the room.

No, we hear very, very well.

Okay, we will try to improve here. Okay, thank you.

Budd, do you hear me now?

Yes, sir, Mr. Natuzzi.

So we are, I mean when retailers suffer,, because the consumers they don't get in the store, they don't buy furniture because they cannot pay the mortgage. There is a real estate crisis in Spain, in Italy, obviously, in United States. I mean, it's a common situation, Europe and the United States.

But the major difference between Europe and the United States is you have more retail locations in Europe that you own.

We have more retail locations in Europe, that's true. But, again, we are suffering probably more -- in the United States, we are suffering because of the exchange rate and the retail prices. In Europe, we are suffering a little bit more because we have a retail operation, and I would remind you that we own 65 stores. And so we are losing money on the manufacturing side and even on the retail side.

And that's something that surprised me, when I look at the numbers, to see that the selling expenses are essentially flat in euro year over year and G&A actually went up year over year while revenues went down so markedly. It seems to me that there may have been a little bit of a loss of expense control at the Company, at least in the quarter, if I look at it.

Probably even a little bit of that, even a little bit of that, but the reality is that when you do less volume and you still invest in marketing in order to attract people into the stores, obviously then the operating costs became very high.

I see. And one thing that concerned me as I did my calculations --

But what I feel that I can tell, I mean, with a lot of confidence, that our business model works. We have wonderful stores, we have a wonderful product. I mean, consumers, they love to shop in Natuzzi stores, but unlikely there's a crisis. I mean, that's the reality.

Nicola, when I did my calculation on Italsofa in the quarter on a until basis, it looks like the unit pricing went down by about 9% per seat, from EUR171 per seat to about EUR155 or EUR155.6 per seat. Most of Italsofa is sold in the U.S., if I remember right.

Yes.

Is that real pricing degradation or is it because the Italsofa is priced in dollars and then when you translate it back into euros, with the exchange rate going up, that's what causes that.

Exactly, exactly, exactly, exactly. That's what happens.

That's what happens. I can tell you that when the euro is going the wrong way or going the right way for the Europeans, it's very unpleasant.

We are looking forward to that.

And my last question, if I can, is when I look at the idea going forward, in that business plan, are you going to then -- do we look for any manufacturing space to come out? What kind of capacity utilization are you at in the various factories?

Today we have still production capacity. Obviously, we have a lot of production capacity in Brazil, but unlikely there is no convenience to manufacture in Brazil today because the exchange rate between reals and U.S. dollars is worse than euro and U.S. dollars.

So we should think that Brazil may be slightly at risk here, then?

In Brazil, we are working now to organize the distribution. I have been personally there in November in Sao Paulo and other cities to analyze personally the opportunity. And I must say that I'm seeing a good opportunity for Natuzzi Group there because we know how to make product again. We are very strong with the product and I met some very important retailers. We already shipped to them some products ordered in the local currency with a full margin. They will invest and we are now getting organized to distribute the product locally, because we have made a huge investment there in Brazil and even if we are suffering, we are resisting, because we have made the investment.

And the investment is not only in the facility and with the machinery, but even in six years, in training people, we have state-of-the-art factories. We have two huge factories there, and there is a huge opportunity to sell the product locally, but it will take time, 12 months, 18 months, 24 months. I believe that we will continue to manufacture in Brazil and retail and sell in Brazil the product and make a profit. That is our wish and our hopes.

Nicola, if I heard you correctly, you said that the -- the press release says that so far this year sales are ahead, but then I heard, I thought I heard you say, and again, I apologize, because the connection is really pretty terrible, that the incoming order rate was not ahead. Is that correct?

Exactly, yes. The orders growth in the first 15 weeks has been slightly lower than the period of last year.

So then the increased sales have come from working off the backlog.

Exactly.

All right, thank you, sir. Really good luck. Maybe I will get to see you in high point.

Thank you very much.

Thank you very much, Bud.

Thanks.

(OPERATOR INSTRUCTIONS)

And there are no further questions in queue at this time.

Okay, thank you, Anne, and thank you everybody for participating to this conference call for myself and (inaudible).

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and you may now disconnect.