PNM Resources Inc (PNM) 2003 Q4 法說會逐字稿

Good morning and welcome, ladies and gentlemen, to the PNM Resources 2003 fourth-quarter and year end earnings release. At this time I would like to inform you that this conference is being recorded and that our participants are in a listen only mode. At the request of the company we will open the conference up for questions and answers after the presentation. I will now turn the conference over to Barbara Barsky, VP Investor Services. Please go ahead ma'am.

Thank you all for joining us this morning. These note that the presentation accompanying this conference call, together with supporting documents relating to 2003 earnings performance, is available on the PNM website at PNM.com. With me today are PNM Chairman, President and CEO Jeff Sterba, Chief Financial Officer John Loyack and other members of the PNM management team.

Before I turn the call over to Mr. Sterba, I need to remind you that some of the information we will be providing this morning should be considered to be forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all forward-looking statements are based upon current expectations and estimates and PNM Resources assumes no obligation to update this information.

For a detailed discussion of the factors affecting PNM results, please see our current and future annual reports on Form 10-K and quarterly reports on Form 10-Q, and our current and future reports on Form 8-K filed with the SEC. Thanks, now I'd like to introduce Jeff Sterba.

Good morning and thanks for joining us today. I assume each of you have had an opportunity to read the press release issued yesterday on earnings and also have the presentation up that's on our website, as Barbara mentioned. I'll use that in the presentation. And I'm going to spend a few minutes just hitting a couple of highlights about performance for 2003 and items that drove it and how they will also move forward and affect us in the coming year. And I'll turn it over to John at that point to go over in more detail the financial performance and a comparison between '03 and how we look for '04.

In summary, we had a very good year. I'm pleased with the progress we've made, not just financially but also in terms of our core operations, our initiatives and process, quality and also in providing value to our customers. If you look at page 3 of the presentation labeled PNM Resources 2003 earnings, for our ongoing earnings we announced $1.95 per share performance for 2003 compared to $1.81 earned in '02. That’s a 7.7 percent increase which, given the many things that occurred during the course of year, we're pretty pleased about.

I would remind you that we implemented a $20 million rate reduction in late September which was worth about -- cost us about 13 cents a share. We also did not obtain any gas relief during the course of the year as we had hoped for, but we do have that for 2004 and John will talk more about that. So the $1.95 was in the upper end of the range of guidance that we had provided you for 2003, and again, I'm pleased with the results of our overall operation.

Let me hit on a couple of high points that will affect -- affected '03 and also will affect '04. First the gas rate increase. We -- as you all know, we ran into a situation in which high natural gas prices, which are a pass-through to our customers, created an environment of concern on the part of the regulatory body of having those higher gas prices at the same time that we would be implementing a rate increase in the winter.

And I would tell you that I'm proud of the way our folks worked with the regulators and the interveners, that it didn't get us what we thought we'd agreed to in the stipulated agreement, but it put in place a $22 million rate increase. For our industrial and commercial customers it implemented in the middle of January, for our residential customers it will implement it at the 1st of April. We obtained that on a 5-0 vote out of the commission. So I think the strength of that vote also says something about our regulatory climate.

On an annualized basis that will add about 33 cents a share, but for '04, since it only goes into effect, for our residential customers at least, after the winter season, it's probably worth only about two-thirds of that amount. I think in the press release you would have noticed that our gas business, both because of the need for rate relief and a warm summer -- I'm sorry, a warm winter, caused the gas company to effectively earn no money in 2003.

A second item which was significant for us last year and will continue to be important to us as we move forward has to do with our commitment into the renewables marketplace. As you know, we brought into service the third-largest windfarm in the world, a 200 megawatt facility with FP&L. I would comment FP&L as a group that we certainly enjoyed working with. And that plant has performed very well in its short-life to date, it's at or above its targets in terms of production and we're learning how to operate with that kind of a wind resource on our system.

The reaction by our retail customers has exceeded our expectations. We're about two times the number of residential customers that have signed up for our Sky Blue program in which they pay $1.80 per hundred kWh hours extra to purchase wind energy, and our commercial and industrial customer sign-up is about four times the rate that we had projected. At the same time, that entire retail piece, all of those customers that have signed up account for only about 1.5 percent so far of the output of that facility. So our pursuit of wholesale market opportunities which we have put forward, for example, the transaction with Salt River project, have also been very effective where we're selling the renewable energy credits in the wholesale market.

One of the other items that I wanted to touch on which really goes to legislation; you may recall that our commission developed a renewable portfolio standard. And while we don't believe that mandates in this arena are the appropriate way to go, we did feel that if we're going to have them let's get them codified into legislation. And I'm real pleased with the work that our folks did with a number of environmental groups and other constituencies, including the commission, to develop a piece of legislation that I think will help provide stability for that commitment as well as helping ensure cost recovery of costs that may be associated with that commitment.

That legislation will cause us to have a 5 percent portfolio standard in '06 growing to 10 percent by 2011. We're effectively -- can already be there with the investment we've made, but we are continuing to pursue looking at other renewable options because we think that the diversity of that portfolio is an appropriate thing to do. The legislation has moved through the Senate, it's now at the House, I think it has one committee referral, and I think prospects look very good that it will pass and will be signed.

The third item to let me touch on is something that obviously drives our performance -- any year, and it certainly was a strong performing element in 2003 and I think will be in 2004 also, that's relative to our wholesale market. You'll recall that in 2002 we added about 200 megawatts of gas generation to our resource portfolio and then in 2003 we added the wind project, another 200 megawatts. But our customer acquisition strategies have really come to fore and we add about 330 megawatts of mid term contracts during the course of last year. And these are contracts that are from four to seven years, I think the average duration is about six to six and a half.

And so we're very pleased with that, particularly not just the number of contracts we added and the megawatts associated with them, but that a number of them were referral contracts. So customers that we currently have being pleased with our performance and referring us to other customers. Since these are more relationship based contracts for somebody wanting more than the commodity, that's a very important aspect.

We saw what I would call an improved market, I would still not call it a robust market, but we saw market prices, at least for our transactions, move up into the $42 range on average for 2003. And we saw velocity add about almost two times which I think was also a good sign for us at least within the marketplace.

The next thing let me just touch on briefly is our power plants which obviously are a very important piece for us because we operate under fixed-price retail agreements and our wholesale contracts are largely fixed-priced, we do have a few elements where there's gas price risk that a customer takes on. But we were affected in the course of 2003 by an extended outage at Palo Verde as it came back from its steam generator replacement, and we did experience higher than we would like to see forced outages at San Juan.

We have to remember San Juan is now average 30 years of age, and we're having to do a fair amount of boiler work. We've got the last major piece of boiler upgrading will occur this spring and so I do believe we'll see improved performance out of our coal units. But we also saw the cost of our generation, our O&M costs down about $7 million last year which, given the amount of outage work that we had, I think was a good performance.

And as we have talked about I think every time we visited, we continue to evaluate marketing opportunities to acquire new generation. We've come to the conclusion that we're not going to see the flood gates open. This is going to be more of a scattered marketplace where individual projects will need to restructure as opposed to the whole market opening up and a whole bunch of resources coming on the market. So it again fits within our targeting strategy. We still see bid-asked spreads a little wider than I think they need to be in order to make the transactions happen.

The last thing I'd like to touch on before turning it over to John is just an update on our legislative session. Recall that in New Mexico on odd number years we have a 60 day session, on even numbered years we have a 30 day session. In the 30 day session the session is restricted to items of budget for the state and those things that the governor chooses to bring forward to the Legislature. So it's a fairly constrained period of time.

We have a couple of items of interest, the first one I've already talked about, our renewable energy portfolio standard legislation which it seems to be moving along very well. We also have a proposal on a tax credit for produced water which would effectually enable us to develop an alternative source of water for our generation facilities through the use of water that's associated with coalbed methane gas. So I think that we're having a reasonable session from our perspective, although of course you never know until it's over.

The last thing I'd touch on is our commission, and we have two of our commissioners -- remember, we have a 5 person elected (ph) commission -- we have two commissioners that their seats will be up for election in November. The incumbents are not running so in one way or another we will have new commissioners. This embraces our Albuquerque region. And then the Santa Fe North Central part of New Mexico, those two districted seats will be up for election. We're getting some good interest by candidates, so obviously we'll have to see what happens as we move through November.

There is also a piece of legislation that I believe is still alive in the Legislature that would move the commission back to an appointed commission as opposed to an elected commission. Even if that legislation passes, it's a constitutional amendment and so it would have to go to the voters in November. We're agnostic in terms of which is better.

We've had good appointed commissioners and bad appointed commissions, we've had good elected commissions and we've certainly seen not so good elected commissions in various states. So as in anything, it comes down to the people that count. I think we're working fairly well with our state regulator and we're certainly committed to doing that regardless of what structure we may have to work with.

With that, let me turn it over to John to go into 2003 and '04 in more detail.

Thanks, Jeff, and good morning. I'll start on slide 9 with the fourth quarter and full year EPS comparison. On a GAAP basis for the quarter earnings were 32 cents, up 23 percent. And for the full year on a GAAP basis earnings were $2.37, up 76 cents from a year ago. On an ongoing basis earnings for the quarter were 34 cents, up 6.3 percent, on a full year ongoing basis earnings were $1.95, up 7.7 percent from $1.81 a year ago. We did have one new one time item in the quarter related to the cumulative effect of an accounting change where we changed the measurement date on our pension plan year end to 12/31 from 9/30. The impact was about 2 cents.

On slide 10, let me walk you through the key factors that determine where we wound up in our earnings range for 2003. If you recall, our earnings range for '03 was $1.80 to $2.05, we wound up at about $1.95. The impacts that drove us from $1.80 to $1.95 was solid long-term contract growth and recovering wholesale markets. We also saw retail growth at the high end of our assumption as electric growth was 3 percent and gas customer growth was 2 percent. As Jeff mentioned, we also made progress on cost control throughout the year.

The things that sort of held us back from $2.05 end of the range was we did have an unusually long outage schedule in 2003. In the first quarter at San Juan we replaced a turbine and we rewound it, at Palo Verde we replaced the steam generator in the fourth quarter. Both of those doubled the normal outage schedule and both of those projects, due to the highly complicated nature of the project, ran longer than our schedule. On the gas side of the business, the gas rate case delay cost us about 7 cents and weather cost us about 5 cents in the gas business.

On slide 11, let's look at some of the key factors affecting the fourth quarter of 2003. We saw very strong growth in our wholesale business that added 13 cents and that was all from long-term contracts. We avoided 6 cents of start-up costs. If you remember, a year ago at this time our new gas fired plants in Southern New Mexico were just starting up, those costs did not reoccur this year. Retail growth for the quarter was very strong. We saw electric growth at 3.7 percent and gas customer growth at 2 percent, that added 5 cents in growth to our business.

Interest costs were lower 4 cents because of the refinancing activities we went through in 2003. And cost control added 5 cents and that was everything from our quality initiatives to better bad debt experience to lower property taxes and the refinancing of our EIP lease that we did earlier in the year. Offsetting those improvements was higher depreciation because of our new gas plants and our capital spend in 2003. As we mentioned, weather hurt the gas business about 5 cents.

As we've been talking throughout the year, pension and benefit expenses have been higher, it's about 5 cents for the quarter, as our asset returns in 2002 were low and discount rates were also lower. Plant availability and replacement power cost us about 7 cents due to the Palo Verde outage and a full quarter of the electric rate reduction lowered earnings about 10 cents.

On slide 12, let's look at the EPS by segment. Utility was down about 12 cents, again reflecting replacement power needed for outages; gas utility was down about 4 cents due to weather; transmission was down a penny due to lower third party sales. Our wholesale business improved 16 cents, again because of long-term contracts, and corporate was also positive as a result of the refinancing activities we did throughout the year.

On slide 13, if we look at margin by platform for the quarter, the utility margin was down about 11 million; again replacement power was the key driver. Gas utility margin was down 3 million because of weather, and transmission down 2 million because of lower third party sales. Our wholesale business long-term margin was up about 9 million or 90 percent reflecting the roll-on of the 330 megawatts of new contracts that we've added throughout the year.

Short-term sales were down a little as sales volumes were down because of the extended plant outage schedule as well as our focus on long-term sales, but that was largely offset by price improvement as we recognized $39 around the clock for the quarter versus $31 a year ago. And as Jeff mentioned, our velocity improved, as a result we saw better results from our forward sales improving 3 million as velocity was over 2 for the quarter versus 1.7 a year ago.

Now let's switch to the full year where we look at the key factors that affected full year results on slide 14. Again, the wholesale business was the key driver adding 57 cents a share, as we saw new long-term contracts come on throughout the year and more stable conditions in the wholesale market in general. Retail growth added 17 cents, again 3 percent growth in the electric business for the year and 2 percent for gas and cost control added 10 cents.

Offsets to that were gas margin because of weather, 5 cents. We didn't have capitalized interest of 9 cents that we had a year ago due to the construction of our new gas plants. Plant availability and replacement power cost us 10 cents; the electric rate reduction was 13 cents; pension and benefits, as we mentioned, for the full year at 14 cents; and then depreciation at 19 cents from the new gas plants and 2003 capital spend.

On slide 15 if we look at EPS performance by segment, utility EPS, electric utility EPS was at $1.49, up about 2 percent, and there we saw higher margins for the year as well as good cost control. As Jeff mentioned earlier, our gas business broke even for the year which was a 15 cent decline. That was weather; we also had the full collection of a take-or-pay contract at the end of last year, so those revenues didn't reoccur. Higher benefit costs and higher depreciation costs drove the 15 cent change.

Transmission was down 5 cents due to lower third party sales. For our wholesale business we saw a 35 cent improvement in EPS, again long-term contract initiation as well as more stable markets. And corporate was down slightly as we had less capitalized interest and that was offset by the refinancing activities that we did throughout the year.

On slide 16 if we look at margin performance, margin was up 34 million for the year or 5.5 percent. Electric utility margin was up 1 percent to 385 million as we saw a 3 percent load growth, lower generation costs, which were more than enough to offset the plant outage schedule as well as the electric rate reduction. On the gas utility side we see margin down 3 million, weather cost us about 3 million, the roll-off of the contract another 3 and that was offset by higher off-system sales of 1 million and growth of 2 million. Transmission was also down about 3 million, again lower third party sales.

On the wholesale side of our business, long-term contracts improved 24 million to 68 million, that was a 55 percent improvement. In the short-term side of our business we were about breakeven, again volumes were down but prices helped offset that as we realized $42 around the clock versus $29 a year ago. And liquidity returning to the market helped drive improvement of forward sales as we had velocity of about 2 versus 1.6 a year ago.

On slide 17 let me spend a minute on liquidity and cash flow. In November we renewed our revolver, extending it from one to three years, and improving our capacity from 195 million to 300 million. Earlier in the year we also added a $90 million accounts receivable securitization. This should give us plenty of capacity and liquidity as our business grows.

We also did about $500 million of refinancing throughout the year that on an annualized basis should save us about $12 million. On the cash flow side we saw cash from operations at over $230 million, more than double a year ago. And on a free cash flow basis we generated $90 million versus using 137 million of cash a year ago.

Now slide 18, let's switch to 2004 with our capital expenditure outlook for the next five years. A year ago we predicted capital for the five-year period of about 708 million, that's down 56 million in our most recent forecast to 624 million. There generation is a key component because of the extended outage schedule we had this year, getting that behind us will lower generation capital going forward about $56 million a year. We also see some improvements on both our gas and electric distribution business from a capital spend perspective.

On slide 19, let's focus on our 2004 earnings range. Let me reaffirm our earnings guidance for '04 at $1.90 to $2.15. Throughout the year we'll be talking to you about some critical factors that will determine where we wind up in the range. Plant availability, weather, wholesale growth, short-term electric prices and cost control will all be critical factors in where we wind up in the range in 2004.

On slide 20 and 21, I'll walk you through some of the assumptions embedded in the earnings range. At the low-end of our earnings range we're assuming a $37 market price for short-term sales. If I look at forwards at the moment they're about $40; we achieved about $42 a year ago. And a $1.00 change in price adds about 2 cents to our bottom line. If we look at velocity at the low-end it was 1.7, as we mentioned earlier; we were about 2 for the year. Every tenth of an improvement adds about a half a cent to the bottom line.

On retail electric load growth at the bottom end of our range we're at 1 percent, last year we achieved 3, and every 1 percent improvement adds 3 cents to the bottom line. And then finally, gas at 1.8 at the low end we achieved 2 this year and every 1 percent change adds about 2 cents. So with that I will hand it back over to Jeff for a rap up.

Thanks, John. I really don't have anything else to add. I think, as I said at the beginning, that we had a strong year, I'm pleased with our performance. We didn't really share with you some of the things that have happened on our process quality and customer side, but frankly those are the things that drive our long-term positioning and they've moved on, of course, very well. So with that I will turn it back to the moderator for -- and we'll take any questions that you may have.

(OPERATOR INSTRUCTIONS) Mike Werner with Kennedy Capital.

Congratulations on a great year. I just have one question for you. Does your -- you may have mentioned this -- does your guidance include the rate case -- the two-thirds of the 33 cent annual per share increase in your gas rates?

Yes, Mike, it does, that's why we held off on giving guidance until we knew the outcome of the gas rate case because it just had such a big impact for us this year. And it also obviously takes into account a full year of the electric rate reduction which is -- how many cents per share --?

It was 13, wasn't it?

Well, that was 13 for last year and that was only for the period from September. So I think it's about 25 cents when we put in an annualized basis for '04.

I see. Okay. But for 2005 you would expect, all things being equal, the offset to be positive? This year's going to be a bit negative because of the electrics?

Yes.

Great. Thank you.

David Grumhaus with Copia Capital.

Good morning and congrats on a nice year. Can I just clarify -- so you're saying there's an additional 12 cent hit this year from the electric rate case?

Well, compared to last year, yes, because the electric reduction only want into affect in September. So this year it will be in place for a full year.

What was the overall weather impact last year?

On a dollar basis, John, I'm not sure I have that --.

In the gas business it cost us about 3 million in margin and then in the electric business it about balanced out for the year.

So it was basically a breakeven then?

Right, on the electric side. The gas cost us 3 million.

So the electric was 0 and the gas was a negative 3?

That's right.

I'm sorry; I thought you were saying the electric was positive 3. Given the amount of long-term contracts you all have put in place last year, does that leave you fairly well hedged going forward? How do we think about sort of short-term power to sell?

We're fairly well hedged out, certainly over the next year. In fact, a fair number of the sales -- the longer-term sales that we've made are above and beyond what our resources can provide, and so they're covered -- they're either covered up by purchases that have already been made and locked in margins, or to the extent that they're not they would be hedged off on gas so that we've protected ourselves from the market place on longer-term sales through gas hedges.

So most of that is pretty well locked in, that's just kind of our conservative strategy. We don't make forward sales without having either the purchases behind it, resources behind it or a gas hedge behind it.

Do you get step-ups in those long-term contracts, or do they tend to be pretty much flat rate contracts.

They vary. There's a couple that do have slight changes in prices, but fundamentally they're pretty flat priced contracts. Now we always have pieces of energy that are available, so a lot of this depends on how well the units perform in which we obviously play in the short-term marketplace and in the forward marketplace through the course of the year. So that's still a fairly robust business for us. But on our longer-term contracts we don't put ourselves in a position of being at risk on what future market prices would be when we have to buy power to cover them.

Last question. Can you just talk a little bit about the wholesale markets and what you're seeing out there? Obviously it was a pretty good year for you. Some of your more gas centric peers out there struggled more with it. Just what's the environment currently?

I think what you're seeing is in the West which is the market we operate in. This year looks like we're going to have a heavier hydro situation than we've had over the last couple of years. The snowpack, in fact, it's messed up my fishing trip in June on the Green River -- which doesn't make me happy. But I think we're going to have a little higher hydro flow and I think the market has started to pick that up and that's why you're seeing prices down a little bit.

The marketplace is gas driven but not one for one, and it's because there's still a lot of other energy available and some of this gas -- gas generation that's come on, the market just can't absorb it so people have to discount from there in order to be able to keep their units running. So, we still don't consider this what I would call a good, robust marketplace.

Frankly, it's a little better than we expected if we go back to what we thought it would be two years ago, but it's still, I'd say, got a ways to go to work out of the surplus of gas to gas trying to compete against each other or beat each other up. I'm just very happy that we've got our coal and nuclear and, frankly, now our wind resource. I think each one of those resources (technical difficulty) market.

Great. Thanks for the time.

(OPERATOR INSTRUCTIONS) Brooke Glenn with Jefferies & Co.

Good morning. I assume that even with your gas rate increase you'll be earning sub par or low returns on that business. Can you give us an update on your longer-term plans?

Yes, Brooke. It will be earnings sub par. It's not at the earnings level. I think one of the things we realized is we're not going to bring this piece of the business back to full health in one step. And so we're continuing to focus both on ways in which we can manage the overall cost of the business -- but that's a bit difficult because of the Pipeline Safety Act, some commitments that we've made within the state on replacement of (indiscernible) mains. So we're continuing to have to invest a fair amount of capital in that business.

And so certainly, and we've been open about this, that this is not a once every 10 year rate case. We're going to have to take another step and we have not made any commitments in terms of when that step will be, but the commission and the interveners know that they'll see another rate case in the future.

Thank you.

John Hanson with Imperium.

Good morning. Coming back to the wholesale power market, the wholesale business you guys have got, you've done a great job on that here in 2003 in building that. As I look forward to 2004, do you have the ability to sign more contracts in that area?

Sure we do. And we're continuing to pursue customers all the time. Our strategy -- and let me go back over it -- our strategy is that we don't go naked on the short side. But that doesn't mean we only employ our own resources. What we've become fairly affective at is cobbling together resources that help meet -- when we think of our entire system, expand the capability of the system from a load serving basis. So we are still a purchaser of power as prices move down, we will always try to turn and lock in.

Think of it this way, in a simplistic way we will make a sale and lock in resources that serve the sale. If we find opportunities to then lock in a better margin by purchasing additional resources we'll do that if we can then turnaround and use the freed up resources to make an additional margin. So we're always back in the market and we are certainly pursuing additional long-term sales.

We're getting to a point where our resource acquisition needs to move along with a -- if we can find the right resource, we would be interested in purchasing some additional resources. But yet the price so far has not gotten to a point where we're willing to step into some of the resources that are on the market.

Your '04 plan, does it include the same level of marketing or wholesale market sales or is it going to include an increase?

Well, it obviously includes the performance under all of the existing contracts and there are additional sales we believe we will make in the course of the year.

Good.

We're not going to stay static, but we're not going to do anything where we go naked either.

Do you have any big contracts rolling off this year at all or not?

No, we don't have any -- Eddie? I can't think of any? We don't have any contracts -- significant contracts rolling off.

Great. One other area is -- you haven't talked much about the view on your policy on dividend of late. Could you comment on that at all?

Yes. Last year we increased the dividend 4.5 percent, we did that in February. That's our typical time in which the board undertakes a review of dividend policy. So we'll be doing that at our February meeting this year. We've stated what their policy is before, we target to pay out 50 to 60 percent of our regulated earnings, and at this point I don't see a change in that policy. So we'll be applying that to our performance and making a decision in February.

Just one last item. There's a labor action in a coal mine, does that affect you guys at all there in New Mexico?

It is the coal mine that serves us, but -- at San Juan we have moved primarily from an aboveground operation to an underground operation. The underground miners are not involved in the strike; it's only the aboveground miners. So it has a potential impact on us because there is still some aboveground coal coming, but it's fundamentally on reclamation.

At Four Corners where we are a participant, that coal is all aboveground strip -- well, it's not aboveground -- strip operation, it's not in the air. Depending on the length of the strike, can it have an impact? Yes, but frankly there's enough of a coal pile, storage pile that we feel pretty comfortable. I think BHP is continuing to operate the mines in an effective way with their managerial force. And so we really haven't seen a significant diminution in production for either San Juan or Four Corners. So I feel pretty comfortable that this can be weathered.

Great, thanks very much.

Rick Shobin with Duquesne Capital Management.

Good morning, everybody. I just had a really quick question about the coal mine as well or just the coal savings in general. Can you give us an idea of what the coal savings for '04 over '03 embedded in the guidance are?

I'm not sure I can -- I've got a number on that, Rick. I'm looking at John to see if the does.

(inaudible) off the top of my head either.

But do you anticipate that there will be some -- in the guidance do you anticipate that there will be some savings?

Well, I'd say at the low end of the range there probably isn't any savings -- year-over-year savings. Because we've really moved fairly heavily into the -- where almost all the coal in '03 really was coming from the underground mine. And there are challenges that that mine is facing in terms of H2S gas and some fracturing in the roof wall, but that just kind of goes along with the territory. I think they reached the upper end of the guidance -- certainly we would look for additional coal savings to help us get to the upper end. It depends on the point within the guidance, but the low end would reflect no savings.

Thank you.

Michael Lapides with Hibernia South Coast.

Thanks, my question has been answered.

(OPERATOR INSTRUCTIONS)

And Michael, while she may have called you Lapidus, we know it's Lapides.

Gentlemen, at this time there are no further questions.

Thank you very much. We're available for any further calls if anyone needs additional information. Thanks for joining us for the 2003 earnings call.

Ladies and gentlemen, if you wish to access the repay for this call you may do so by dialing 1-800-428-6051 or 973-709-2089 with an ID number of 331-494. This concludes our conference for today. Thank you for all for participating and have a nice day. All parties may now disconnect.