Pinnacle West Capital Corp (PNW) 2004 Q4 法說會逐字稿

Good morning. My name is Tamera and I will be your conference facilitator. At this time, I would like to welcome everyone to the Pinnacle West 2004 year end earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press "star" then the number "one" on your telephone keypad. If you would like to withdraw your question, press "star" then the number "two" on you telephone keypad. Thank you, Ms. Hickman you may begin your conference.

Thank you Tamera. I would like to thank everyone for participating in this conference call to review our earnings for 2004 and recent developments. Today I have with me Bill Post our Chairman and CEO, Jack Davis the President and Chief Operating Officer and also President and CEO of Arizona Public Service and Donald Brandt our CFO.

Before I turn over the call over to our speakers, I need to cover a few details with you. First the quarterly statistics section of our website contains extensive supplemental information on our earnings variances and quarterly operating statistics.

Second, please note that all of our references today to per share amounts will be after income taxes and based on diluted shares outstanding. It is also my responsibility to advise you that this call will contain forward-looking statements based on current expectations and the company assumes no obligation to update these statements. Because actual results may differ materially from expectation, we caution you not to place undue reliance on these statements.

Please refer to the MD&A in our September, 2004 10-Q, which identifies some important risk factors that could cause actual results to differ materially from those contained in our forward-looking statements. A replay of this call will be available on our website, www.pinnaclewest.com, for the next 30 days. It will also be available telephone through February 4.

Finally, this call and webcast are the property of Pinnacle West Capital Corporation and any copying, transcription, redistribution, retransmission or rebroadcast of this call in whole or in part without Pinnacle West's written consent is prohibited. At this point, I will turn the call over to Bill.

Good morning everyone and I would also like to thank you for taking your time to be with us here this morning. Our operational performance was strong in 2004. Like any other year was marked by a number of accomplishments and challenges and I would like to take a few minutes and highlight some of those for you.

Goals in our service territory remains remarkable. Our customer growth averaged 3.7% in 2004 continuing at a pace three times the national average. The peak loads set a know load of 6,402 megawatts in spite of the summer of 2003 being the hottest on record. In 2004 we also set company records for the number of new customers and the number of new meters set. JD Power and Associates ranked APS in the top 10% in customer satisfaction among investor owned electric utilities in the United States.

We negotiated a retail rate settlement that is pending consideration before the Arizona Corporation Commission. Through this agreement we would be able to unite the generation assets built to serve our retail customers under APS and resolve many of the issues created by the reversal of electric industry restructuring in Arizona. Palo Verde was recognized by that industry for 10 years of operational excellence and our coal plants operated a capacity factor that's set an all time record.

SunCor successfully completed the second year of its 3 year accelerated sales program with earnings of almost $45million. We placed the Silverhawk plant in southern Nevada in service in May, thus completing our generation construction program that began in 1999.

We also faced challenges. Sparks spreads continue to be compressed in the western wholesale markets. We face substation fires, transmission constraints and unplanned power plant outages. We sold two non-utility investments, the Phoenix Suns and NAC International, thus streamlining our strategic focus. And finally we increased our dividend for the 11 consecutive year, demonstrating our commitment to total return for our shareholder.

Don will give you the pertinent details on our financial results and then Jack is going to update you on pending regulatory issues and details on our operations. Don.

Thank you, Bill. I plan to spend most of my time talking about the year as a whole. However, I will give you a quick recap of our fourth quarter results as well. In my comments whenever I refer to earnings related amounts in millions of dollars, I will be referring to amounts after income taxes unless I say otherwise.

Reported earnings for the fourth quarter were down $15 million or $0.17 per share primarily due to milder weather, higher cost for new power plants, increased O&M cost and the absence of favorable income tax credits recorded in the fourth quarter of 2003. These factors were partially offset by the absence of regulatory asset amortization. Let me turn to the major factors affecting our consolidated results for 2004.

We have reported net income of $243 million, $2.66 per share for the year. An increase of $3 million or $0.03 per share compared with 2003. The year-over-year comparison was affected by a few unusual items including a $0.23 per share gain on the sale of the Phoenix Suns in 2004, tax credits related to prior years recorded in 2003 of $0.19 per share, and income from NAC discontinued operations of $0.04 this year and $0.05 last year. Ongoing earnings exclude the unusual items and were essentially flat at $2.39 per share. Now I will review the details of the major variances in ongoing earnings for the year 2004.

The company's fundamental growth remains strong and is the foundation of our long-term performance. Retail sales growth contributed $0.28 per share. The rate of growth has continued to accelerate with the overall improvement in the Arizona economy and is expected to continue into 2005. Customer growth was 3.7% in 2004, our highest level of growth since 2001. We added a record 35,000 customers in the past year. On a weather normalized basis retail sales grew 5.2%, residential sales increased 6.9% and business sales increased 3.9%.

As we mentioned in last year's -- last quarter's call the sales growth was particularly noteworthy in light of our customers' successful conservation efforts this past summer. Consistent with the 1999 regulatory settlement agreement, we concluded the amortization of substantially all of APS's regulatory assets at the end of the second quarter of 2004. The decrease in this amortization improved our earnings $0.45 per share compared with 2003.

Wholesale marketing and trading gross margin increased earnings $0.36 per share. The change was comprised of higher mark to market gains due to higher forward prices of $0.18 per share, increased realized margins primarily due to higher wholesale electricity prices of $0.11 share and modest improvement in excess generation sales of $0.07 per share. These positive factors were substantially offset by several items.

The net negative earnings impact of new power plants in service was $0.28 per share. The higher cost primarily include interest expense, depreciation and OEM. These costs were slightly offset by modest gross margin contributions from the plants. As a reminder, our west Phoenix five and Silverhawk units were placed in service in late July 2003, in mid may 2004 respectively.

Higher O&M cost excluding those related to new plants decreased earnings $0.26 per share due to increased cost per customer service programs primarily related to customer growth, Bark Beetle remediation cost and wage and other employee related cost.

Higher depreciation expense related to delivery and other assets decreased earnings $0.13 per share. Weather continued to be a significant swing factor in 2004.While 2003 was the second hottest year on record, milder weather in 2004 decreased earnings by $0.11 per share.

To add some perspective, actual cooling degree days were 3.6% above normal in 2004 compared with 8.1% higher than normal in 2003. In addition, cooling degree days for the fourth quarter of this year were 16% below normal and 38% below the same period last year.

The last retail price reduction under the 1999 settlement was effective July 1, 2003, and decreased 2004 earnings by $0.09 per share. Results for non-utility operations were lower as we had previously forecast. SunCor's earnings were down $11 million or $0.12 per share for the year. Margins related to APS Energy Services California retail sales were down $0.14 per share.

Now I will provide perspective on the marketing and trading activities in the western power markets. Our wholesale marketing and trading activities continued to focus principally on risk management. At the end of 2004 we had hedged approximately 75% of our exposure to purchase power and natural gas commodity risk for 2005 native load requirements. The hedged positions are at prices meaningfully below current forward prices for 2005.

Despite improvements to marketing and trading gross margins in the annual comparison, spark spreads in both the spot and forward markets remain low and continue to reflect difficult market conditions in the west for our off system generation sales.

As shown in the quarterly statistics on our website, spot prices at Palo Verde in the fourth quarter compared with a year ago are up about 20% for on peak power and up approximately 25% for off peak. For the same period natural gas prices increased about 20% and on peek spark spreads have remained about the same. Spark spreads for delivery in 2005 appear consistent with '04 realized levels. In general, we expect market opportunities to continue to be challenging for our marketing and trading activities through 2005. Now I'll return briefly to our financing activity and liquidity situation.

Both the parent and APS have significant liquidity in the form of invested cash, commercial paper capacity and SEC shelf capacity. The parent company ended the year with approximately $100 million invested primarily due to an $85 million cash distribution from SunCor in December 2004. The parent will meet its $165 million floating rate note maturity in November 2005 with invested cash and commercial paper capacity.

In addition, the parent has $300 million of 6.4% senior notes maturing in early 2006. In December 2004 we filed a universal shelf and currently have $500 million of shelf capacity to meet parent level maturities and provide additional financial flexibility. APS ended the year with approximately $250 million invested, primarily due to our issuance of $300 million of notes in June, 2004 to pre-finance upcoming debt maturities in 2005. APS's other significant capital requirement in 2005 will be the purchase of the Sundance Plant for approximately $190 million. I will now turn the call over to Jack.

Thank you, Don and good morning everyone. Today I'm going to give you a brief update on regulatory developments and a summary of recent operations.

From a regulatory front APS retail rate case is far the most prominent activity. As most of you know we reach a comprehensive settlement agreement with 22 of the 30 parties in the case this last summer. The parties to the settlement include ACC staff and residential utility consumer service office, which is our state consumer advocate as well as a number of consumer groups and mercant generators. Hearing on December lasted a total of 8 days and there were no adverse public comments about the settlement during the hearing.

Pre-hearing briefs were filed on January 14. These briefs summarized positions of the parties in the docket for the administrative law judge. There's not a prescribed schedule for the ALJ to issue a recommendation on the settlement or the commissioners to make a final decision. That being said, the ACC has recently gotten several large issues off their plate. Two of the issues being the proposed purchase of Uni service and our request related to the Sundance purchase. We anticipate that the commissioners will consider the recommended order and comments from others a few weeks after the ALJ recommendation is issued. The bottom line as I stated in our last call is that we estimate the commissioners will vote on the settlement some time this quarter, most likely in March.

Assuming the ACC approves the settlement and terms of settlement agreement would go into effect shortly after the approval. Also following ACC approval we will seek whatever FERC approvals are appropriate for the Pinnacle West Energy Arizona assets to Arizona Public Service. We estimate that the process for full consideration and approval would take three to six months. Meanwhile, APS and Pinnacle West Energy would enter into a bridge agreement that would mirror the economics of APS ownership of the assets.

Long-term resource acquisition is also a major activity for our company in light of our remarkable customer growth that Bill mentioned earlier. The rest of this decade we need to continue to adding peaking capacity. By 2007, we will be some 1200 megawatts short on peak even after the Sundance power plant acquisition and transfer of the Pinnacle West Energy generation to EPS.

Our proposed purchase of 450 megawatt Sundance power plant, southeast of Phoenix is pending approval by FERC. Assuming FERC approval is granted in the next few months we anticipate closing of the purchase of plant PPL this spring. Earlier this month the ACC issued an order related to our plant acquisition of Sundance. Among other things, they confirmed APS's authority to self-build or by generation assets for native load. Additionally APS had asked the ACC to allow the company to defer certain operating and capital costs until rate treatment for Sundance could be considered in APS's next rate case. We estimated the pretax deferrals would be $10 to $5 million on an annualized basis.

The ACC order would allow APS to record the deferrals up to 36 months subject to a number of conditions. However, if APS has a general rate case pending at the end of 36 months the deferral period could extend until the rate case has been decided. I would like to note though that it appears to us the conditions imposed by the ACC order could substantially limit the amount of deferrals that APS could be able to record.

We plan to issue 2 requests for proposals later this year. These are RFPs would be issued in accordance with the terms of the rate settlement agreement and our contingent on the ACC approval of settlement. The first RFP would be for at least 1,000 megawatts of capacity with the delivery beginning in 2007. The second RFP for 100 megawatts of renewable resources with proposed delivery date of 2006.

Now I will turn briefly to some of our operating activities. I will focus most of these comments on our fourth quarter operation. As Bill said growth in our retail service territory continues to be inviable but challenging. Our customer growth continues to be about three times the national average. In the fourth quarter, our customer base grew 3.9% compared with last year's fourth quarter.

Looking at our power plant performance, the capacity factor of our nuclear plants was 74% during the fourth quarter and 84% for the year as a whole. The major factor that affected the newer operations in the quarter was the planned extend refueling outages of power radiant number 3 in the fall, during which we replaced a pressurizer feeder nozzles. For the year the plant experienced a few unplanned outages primarily due to transmission related issues.

Our coal plants operated at an average capacity factor of 88% during the fourth quarter. For the year as whole our coal fired fleet set an all-time record with average capacity factor of 84%. The Silverhawk plant, which was placed in service in May operated at 45% capacity factor for the fourth quarter and 49% capacity factor with more than 90% available for the year overall. Excellent results for a new combined cycle plant.

During our conference call last quarter I briefly discussed 2 substation fires that occurred last summer, one of which "The West Wing" fire significantly reduced our transmission import capability. I shared that we hired 2 independent consult to help us determine the cause of the fires and to review our maintenance practices.

We have received the consultants' reports. He found that our maintenance practices didn't contribute to either of this summer's fires and that our are maintenance practices and performance compared favorably with industry peers. They concluded that the substation fires were independent events and resulted from an unusual combination of contributing factors. The assessments also provide some recommendations for operational improvements. We agreed with the overall findings and conclusions and we are in the process of implementing the recommendations.

In summary we work tenaciously to maintain our strong reliability and exceptional customer service in to (indiscernible) and address regulatory issues at the state and federal levels. This concludes my prepares remarks. I will turn it back to Bill.

Looking forward at our financial outlook we currently estimate that our 2005 earnings will be within a reasonable range around $3 per share before the regulatory disallowance proposed in APS's retail rate settlement that is pending before the ACC. This estimate assumes the ACC will approve the settlement agreement as proposed and the provisions of the settlement will become effective on March 31, 2005. However, we are not able to predict whether the ACC will approve the settlement as proposed or the exact timing when the commissioners will consider the proposed settlement. Additionally, this estimate assumes that SunCor will report 2005 net income of approximately $50 million or $0.55 per share.

In October we increased our dividend for the 11th consecutive year. We planned to continue emphasizing our dividend. Future dividend levels and growth will be based on a number of factors including pay out ratio trends, cash flow and financial market conditions.

In summary I would like to emphasize a few points. The rate case outcome is clearly the most significant single factor affecting our outlook. We have a solid track record of working with our regulators toward constructive regulatory outcomes. This process has taken longer than we would like.

However, we are working intently to achieve an outcome that had cover the cost of providing reliable service for our growing customer base and provide a fair return to our shareholders. Going forward the Sundance acquisition will help us meet our future needs in an efficient price. The fuel adjustment mechanism in our settlement is critical. It will ameliorate the regulatory lag inherent in recovering fuel cost and it is something we have not had since 1989.

Additional capital for new capacity beyond the Sundance plant will be dependent on the outcome of our bidding process as outlined in the settlement agreement and that Jack discussed with you since it will establish the proportion of purchase power contracts versus plant acquisition.

However, given the PPL decision we do expect to file for full recovery of the Sundance deferrals both financially and regulatory along with our estimate of other rate base and cost increases for generation, environmental transmission and distribution before the end of this year. At this point we obviously can't predict the components of that filing due to its interdependency on the outcome of the current case.

Besides the rate case there are many facets of our business on which our employees focus each day providing top tier customer service, maintaining and improving operational reliability, managing the risks of our business, controlling costs and the list goes on. I believe our tremendous customer growth and the related potential for earnings and dividend growth are distinguishing characteristics of our company. We will continue to capitalize on them. That concludes our prepared remarks. We would be happy to answer your questions now.

[Operator Instructions].

Your first question comes from Ashar Khan with FAC Capital.

Good morning. I guess from your time perspective. Don, could you break for us the 2005 forecast of $3? I know you provided SunCor for us, but can you give us what the regulated electricity and market end trading is anticipated in that forecast?

The marketing and trading is -- I will refer back to the guidance we had in October of 2003 where we talked about the new deals in marketing and trading I believe it was about $0.10 a share. That is probably all that's in there above just a base level of operations.

And how do you define base level, can I ask you?

That's defined in 2004. Basically it new deals that have been originated in the current year.

So, what you are saying is we should expect $0.10 higher --

No, it goes back to '03 it was zero. Going forward, about $0.10. And there was about $0.10 in 2004 and we don't expect much more than that certainly not in '05.

And for -- have you -- can we assume that you have assumed that the rate case goes into effect the 1st of April? Is that the assumption over here?

Yes.

Okay. Now, one thing which you provided us a year back when you gave us the '04 guidance was that you expected SunCor and APS energy services to be $0.33 in '05 and dropped to $0.11 per share after 2005. I guess they are coming in stronger. Can you tell - can you update that number, what you would expect the drop off to be after 2005?

No, we are not doing that today, Ashar.

Okay. But directionally I'm assuming it is less of a drop off. Is that fair to assume?

No, I don't think so. I think from a directional standpoint it is comparable. The $0.50 we've got in for SunCor results in 2005 reflects again the last of 3 years of the accelerated asset sales program at SunCor.

Okay. So, Don, when should we expect you -- at the end of the remarks you said you are going to be filing for this rate case. When should we expect it? Last quarter?

Well, what we said is that we expect to do that before the end of the year.

Okay, but when could be timing, because we are trying to see when would you expect -- I know it is hard in judging from the time frame of the last rate case, but as we must look in the impact of the high revenue increases how should we model it in? Should we say the effective date in the west case should be '07, is that how should we should look at it or -- for our planning purposes?

Well, I think that what we are talking about here is making the filing for the case. We haven't given you prediction of when they would have a decision on that case. And, depending upon how the commission deals with this issue would also have a factor on when we make the filing. But I think as we sit here today what I can tell you is that we expect to make a filing before the end of the year.

Okay. Well, the issue is -- the earlier the filing you make, the earlier you get a decision. So I'm just trying to understand when we can start the clock from there.

Believe me, we understand that.

So I'm understanding -- I'm trying to understand why the filing has to wait. I can understand the plant gets approved by the FERC. So once the plant is approved and sale is approved what will stop you from not making a filing immediately after that?

Well, there's nothing to stop us from making a filing at any time. But what I've outlined for you really is as we look at the assumptions that we have given you in terms of the approval of the settlement and the issues associated with FERC and the various other things that we have talked to you about, as we see it we would be making a filing before the end of the year.

Okay. And just to, you had mentioned that you believe that what the commission order will not allow to you defer the $10 to $15 million that you were asking for under the conditions. That was an analyzed number. Is that correct?

Well, yes, that was a number that we analyzed. We do not know for sure based on the language in the order how much effect the language has on that 10 to 15 million. But as I said in my prepared comments we believe by looking at the words it basically would not allow to us defer the majority of those dollars.

It would not allow us to financially record that deferral.

Right.

But it would be our plan to file for full deferral, whether that has been financially recorded or it's a regulatory deferral, in the upcoming filing.

I understand. And previously you given us a little bit more data on the hedging beyond the next year. I know you guys mentioned your hedge 75% for this year. Can you help us, what is it for beyond 2006?

2006 and 2007, 2006 is slightly above 30% hedged and 2007 is about 20% hedged.

Can I ask you, you mentioned that you wanted to be targeted 50% usually at this time, why the hedges are below 50% I guess?

No, I don't -- I think you misunderstood us. The program is before we go into a year we are at least 70% hedged. And we are at 75%. And the next year is-- we allow our folks on the trading floor a fair amount of discretion.

Okay. I appreciate it. Thank you very much, sir.

Thank you.

Your next question comes from Tom O'Neill with Lehman Brothers.

Good morning. Couple of quick questions. Listening to the Sundance approval it seems like there's a fair amount of consternation about the fuel cost. Curious on your thoughts that there is any that fuel cost would go away I mean the process of final approval or is it far too critical in your mind that it could ever go away?

Tom, this is jack. Just to answer that, I can't comment one way or the other since we have not even seen the ALJ's recommended order but honestly the power supply gesture within the settlements is always is an important piece of the settlement.

Tom, obviously in terms of predicting where the commissioner will go that is really up to them. But I can tell you this, in terms of the settlement it is absolutely critical in terms of or positions for the settlement.

Okay. That's -- to clarify the parent debt long term amount, we should think that you are going to carry -- is that still about 300 million?

Yes, Tom.

Thank you.

The next question comes from John Hansen with Imperium.

Good morning. I would like to talk a little bit about the outlook for the merchant power plant business. You mentioned, Don, about the margins and spark spreads. What does that look like going forward now, for improvement to the forward curve - I mean in terms of that?

For at least through 2005 I don't expect much improvement. And I wouldn't expect a quantum leap going into 2006 either.

Hydro, your view on Hydro for the year? It looks like may be there's a bit more water out west.

Yes, there is.

Does that give you some opportunity to buy power cheaper or does that flow through the merchant business in the other direction?

Probably more so the other direction. A good hydro year will, all else be equal, tend to depress pricing and spark spreads.

On the rate settlement, the timing of that, is that -- it seems to have taken a little bit longer. Now we are pretty certain on the path on that in terms of timing?

As I mentioned in my comments, we would agree it has taken longer than we would like. But there's no schedule that is laid out how the ALJ will actually give a recommend order or when the commissioners will rule on it. As I said in my comments, we would hope we would get a decision from the commissioners in March but there's no schedule that would mandate that.

Thank you.

[Operator Instructions].

Your next question comes from Michael Goldenberg (ph) with Alumnus (ph) Management.

Good morning, guys. Just wanted to break 2005 and 2006 and whatever I can beyond in terms of earnings. So 2005 is $3 of which SunCor is $0.55. And trading --

$0.50, Michael.

I'm sorry $0.50? And then trading is another $0.10?

Excuse me, I spoke wrong. It is $0.55.

Right, 55 and then trading is $0.10?

Yes.

And on the flip side, in that guidance you assume majority of the $10 to $15 million loss from Sundance will not be deferred?

Correct.

And you are also assuming Silverhawk loss of about what, about $0.08?

No. Silverhawk is a loss of in the range of $0.15 to $0.20.

$0.15 to $0.20 Silverhawk loss in 2005?

Correct.

So, if we are looking into 2006, the combined SunCor trading which is $0.55 and $0.10, the latest information will now only be $0.11, right?

That was the guidance we gave back in the fall of 2003.

Right. And the Sundance loss will be more or less the same and Silverhawk in theory can only get better?

Yes. There's substantially minister up side than there is down side.

My final question would be just on 2007. If you look at Sundance and you assume it gets rate base January 1, 2007, what is the overall swing from that $10 to $15 million loss into earnings from Sundance?

You broke up at the end. Could you repeat that question?

I assume sun tans gets rate based on January 1, 2007. Taking that rate base times on a percent of equity and ROE and getting bad debt and also taking into effect it is a $10 to $15 million loss, what is the swing of Sundance profitability from 2006 into 2007?

Okay, that $0.10 to $0.15 loss -- are you --

Assuming the deferral is not financially reflected on your income statement.

Okay.

So what is the approximate net income that Sundance or earnings per share that Sundance should bring in 2007 if I were to assume that it gets rate based in January 1?

Well, we are probably jumping way far ahead of where we are going to go today. But that $0.10 to $0.15 deferral would be equivalent to the carrying cost including a debt component of the total capital cost. So you may want to factor that up a little bit for the equity component. And I think that will get but to the number you are looking for.

The question is purely mathematical, you know. If we were to just hypothetically run through these numbers what would be the improvement?

Well, you can go through the algebra and, you know, take a look separately at that plant in 2007. You can certainly do that. But I would suggest to you that the changes that are occurring in other places and the impact of that plant coming in and the impact on the fuel cost, etc., that puts you in a situation where you will have to predict every single plant and what their effect is year over year. So I would caution you against just taking one plant like that and trying to calculate the effect on earnings.

Understood. Okay. Just final question, for 2006 over 2005, how much earnings is the utility losing from January through March in 2005 because the rate case is not effective.

Michael, this is Becky. Just a couple of things real quick. First just a correction. The Sundance deferrals are not $0.10 to $0.15. It $10 to $15 million pretax which is only about a $0.06 to $0.09 annualized number.

Okay.

And 2005 is a partial year, Okay?

Right.

So that is the answer on that one. With respect to the rate case delay, we haven't given the number. I can tell you that our full asking was $1.15 a share. We have told you that the rate case settlement is about $0.35 a share less. So, you have to figure out approximately how much you think that seasonalizes into, say, a quarterly delay.

Could you please elaborate on that? I'm not sure I understand necessarily the relationship between $15 and $35, I apologize?

Why don't you let me do it with you after the call.

Thank you very much.

Your next question comes from Richard Huffy (ph) with Simran Lucas Partners (ph).

Good morning. In your $3 guidance you mention disallowance. Does that mean that you are not including the $5 million lessening of depreciation expense as a result of that write off?

No, we are excluding the write off. It means excluding the write off, which would be about $86 million net of tax, or $0.94 a share.

And then along with that would come a $5 million decrease in depreciation. Is that $5 million, which I think would be like $0.03, is that in your earnings or once you include this disallowance here guidance theoretically would be $0.03 higher?

That -- the change is part of the difference between the ask for the rate case and the settlement. So, it already factored into the guidance.

It's already factored in. And I just wanted to clarify from the previous question, the Sundance for the $3 guidance you are not assuming any of the cost of Sundance will be deferred, correct?

That's correct.

Correct. Just another question with the trading, which you said would be about $0.10, is EITF factored into that or no?

No.

It's not factored in to that. So its $0.10 plus the EITF?

Right.

Thank you very much.

At this time there are no further questions. Miss Hickman, are there any closing remarks?

I would just say thanks to everybody. We really appreciate your time.

I would echo that. Thank you and if anybody have any questions, please call me or Lisa Melagon.

Thank you again.