Teledyne Technologies Inc (TDY) 2004 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Teledyne fourth-quarter earnings conference call. (OPERATOR INSTRUCTIONS). I would now like to turn the conference over to our host, Jason VanWees. Please go ahead.

Good morning. This is Jason VanWees, Director of Corporate Development and Investor Relations at Teledyne. I'd like to welcome everyone to Teledyne Technologies' fourth-quarter earnings release conference call. We released our earnings earlier this morning before the market opened.

Joining me today are Teledyne's Chairman, President and CEO, Robert Mehrabian, and Vice President and CFO Dale Schnittjer, and Senior Vice President, General counsel and Secretary, John Kuelbs. After remarks by Robert and Dale, we will ask for your questions.

However, before we get started, our attorneys have reminded me to tell everyone that all forward-looking statements made this morning are subject to various assumptions, risks and caveats as noted in this earnings release and our periodic SEC filings and of course, actual results may differ materially. Also, in order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay both via webcast and dial-in will be available for about one month.

Here is Robert.

Thank you, Jason, and good morning, everyone.

Since our fourth-quarter earnings release was issued earlier this morning, I won't go through all the details but I would like to make some introductory comments about the quarter and the year, followed by observations on the performance of the various segments. We will begin.

This was another outstanding quarter for Teledyne. Earnings per share increased year-over-year for the twelfth consecutive quarter. We are again part of the performance throughout the Company.

Overall sales during the quarter increased 29.5 percent with organic growth of 12 percent. We continued to grow our Electronics and Communication segment through acquisitions. On October 22, we closed our fifth acquisition of the year for this segment; that was Celeritek's defense business, which designs and manufactures RFM microwave components and subassemblies for electronic warfare, radar and other military applications. These products utilized design and manufacturing technologies similar to our existing microwave businesses in Mountain View, California. Celeritek's defense business is being relocated to our facility, as was another acquisition, the Filtronic solid-state defense microwave operation earlier in 2004. This type of facility consolidation and integration provides the best synergistic opportunities. (indiscernible) in our systems engineering segment grew 23.9 percent. In our Aerospace Engines segment, sales grew by 13.4 percent while in the Energy Systems segment sales increased by almost 58 percent.

In the fourth quarter, earnings per share increased by 62.5 percent, compared to 2003, from 24 cents per share to 39 cents per share.

Turning to the whole year, 2004 was a transformational year for Teledyne, one in which we made exceptional progress towards our goal of high-quality revenue and earnings growth. We closed 5 acquisitions, 3 in defense electronics and 2 in electronic instruments. Revenues increased 21 percent to just over $1 billion compared to 841 million in 2003. Earnings per share increased over 36 percent to $1.24, compared to 91 cents in 2003. Total operating margin improved by 124 basis points. Finally, cash from operations was a record 84.9 million and our balance sheet remains strong, which provides flexibility for future investments for organic growth and acquisitions in our strategic businesses.

In the remainder of my comments, I will elaborate on the operating performance of our business segments. Dale Schnittjer will then discuss in more detail our financial performance and comment on our outlook for 2005.

Turning to our business segments, fourth-quarter sales in our Electronics and Communication segment increased 37 percent, (indiscernible) 17.9 to 161.8 million. Operating profit increased 99 percent, 8.4 to 16.7 million compared to last year with operating margin up 320 basis points compared to 2003, 7.1 percent to 10.3 percent.

As I further discuss our Electronics and Communication businesses, which going forward will have total annual revenue of over $625 million, I'll break up my comments into 3 separate categories -- first defense electronics; second, electronic instruments; and third, avionics and other commercial electronics. Each of these groupings currently contribute approximately one-third of our Electronics and Communication segment sales.

In the fourth quarter of 2004, sales of defense electronics increased approximately 35 percent compared to the fourth quarter of 2003. However, excluding the acquisitions of Filtronic solid-state business, Reynolds Industries and Celeritek's defense assets, sales in the fourth quarter decreased slightly primarily due to lower sales of contract manufacturing services to defense customers. However, orders for these services have been strong and we expect improved revenues in the future.

Turning to our instrumentation businesses, Teledyne has been involved with gas flow and gas analysis since the 1960s. After our spin-off, we began to focus on the environmental market, which requires similar sensor technologies and which is regulated by the EPA. Our initial acquisitions were for online air quality monitoring and more recent ones, Tekmar in 2003 and Leeman Labs and Isco in 2004 have added laboratory instruments and water quality. Also through the acquisition of Isco, we have added attractive products of lab instruments used for purification of biological samples for the pharmaceutical industry.

All of our instruments are electronic products and as such, have significant commonality with other product lines in our Electronics and Communication segment. In the fourth quarter of 2004, year-over-year total sales of electronic instruments increased approximately 86 percent compared to last year, from 27.4 to $51 million, primarily due to sales growth through acquisitions. Organic sales growth was modestly higher by approximately 3 percent in the fourth quarter.

Finally, I will discuss our avionics and other commercial electronic businesses. In the fourth quarter of 2004, sales from these businesses collectively increased approximately 13 percent from the fourth quarter of 2003. This organic growth resulted from increased sales in several product lines, most notably by strong sales of broadband wireless assemblies, or (ph) cellular backhaul applications, relays used in wireless infrastructure in our networking equipment, and sales of medical contract manufacturing services.

Turning to our Government Systems Engineering segment, in the fourth quarter of 2004, revenues in this segment increased almost 24 percent compared to last year's and operating profit increased by 82 percent. In the fourth quarter, sales were especially strong in our traditional core defense and newer environmental programs. We continue to see demand for our environmental services and expect this to be an important growth area for our Systems Engineering segment.

As a reminder, in August of this year, we were our awarded an engineering services contract from the U.S. Army Edgewood Chemical Biological Center. This multiple-year IDIQ (ph) contract was for a 5-year term at the $100 million ceiling. The profitability this quarter in Systems Engineering segment was again outstanding due in part to increased sales and award fees on the ground-based midcourse missile defense program. Nevertheless, operating profit income and segment operating margin declined from the third quarter of this year.

In a new biggest target area for this segment, in the fourth quarter, we signed an alliance with Rheinmetall Defence Electronics of Germany to market and manufacture adaptation of their 2 proven UAV (ph) system in our facilities in Huntsville, Alabama. You may recall that our predecessor, Teledyne Incorporated, had a strong presence in the UAV business until the sale of Ryan Aeronautical to Northrop Grumman just prior to our spin-off.

Turning to our Aerospace Engines and Components segment, sales during the quarter of 2004 for our (indiscernible) piston engine business increased approximately 15 percent, relative to the fourth quarter of last year, and the results were from increased sales to the OEMs. In the turbine engine business, sales increased approximately 9 percent in the fourth quarter compared to last year, primarily due to increased revenues from turbine engines' spare parts. Operating profit in the segment decreased from 5.2 million in the fourth quarter of 2003 to 4.8 in 2004, primarily due to a 1 million charge for environmental matters partially offset by some gains related to recovery of previously legal expenses.

Finally, in our Energy Systems segment, revenue in the fourth quarter of 2004 increased by 58 percent compared to the fourth quarter of last year and operating profit was $700,000 compared to breakeven quarter last year. Given the substantial multi-year government programs we have won in this segment, we continue to expect to remain profitable despite R&D investments in hydrogen generation and fuel cell technologies.

To conclude, I would like to note that our fourth-quarter 2004 net income was the highest level since our spin-off in the fourth quarter of 1999. Going forward, we intend to build on this momentum of high-quality revenue and EPS growth by first continuing our focus on operational excellence and margin expansion programs and second, to invest in organic growth initiatives and find and successfully integrate acquisitions in defense and regulated commercial markets.

I will now turn the call over to Dale Schnittjer. Dale?

Thank you, Robert, and good morning.

I will first discuss some additional financials for the quarter not covered by Robert (indiscernible) some full-year highlights when warranted. Then I will give an update on pension costs and discuss our 2005 outlook.

In the fourth quarter, cash provided from operating activities totaled $28 million, compared with cash provided from operating activities of $18.2 million for the same period of 2003. The primary difference was due to improved net income and operating cash flow from new acquisitions.

During the fourth quarter of 2004, we generated strong cash flow, cash from operations less capital expenditures, of $19.2 million, compared with free cash flow of $10.7 million for the same period of 2003.

Near the beginning of the fourth quarter, we completed the acquisition of Celeritek's defense assets for $32.7 million, including a small purchase price adjustment. Given our strong free cash flow, we ended 2004 with only 66.2 million of net debt, which is $77.6 million of debt and capital lease less cash on hand of $11.4 million. This is despite spending approximately 177 million for acquisitions.

Our balance sheet remains strong with a net debt to capital ratio of 20.2 percent. This provides flexibility for future acquisitions in our strategic businesses. Capital Expenditures for the fourth quarter of 2004 were $8.8 million compared to $7.5 million for the same period of 2003. For 2004, depreciation and amortization expense was $24.8 million compared to capital expenditures of $18.7 million.

Moving to pension, as we have stated before, the clients in the capital markets in prior years and adjustments in pension assumptions have resulted in an increase in pension expense and the requirement to make pension contributions. In the fourth quarter of 2004, pension expense was $2.1 million or a negative earnings per share impact of 4 cents, or $1.6 million or 3 cents per share after recovery of allowable pension costs from certain government contracts. This compares to pension expense of $1.7 million or a negative earnings per share impact of 3 cents in the same period of 2003. Pension expense for 2004 was $8.7 million or a negative earnings per share impact of approximately 16 cents. This is $8.2 million or 15 cents per share in net pension expense after recovery of allowable pension costs from certain government contracts. Pension expense in 2004 reflects the 50 basis point reduction in discount rate from 7 percent to 6.5 percent when compared to 2003.

As of January 1, 2004, new hires are being added to an enhanced defined contribution plan as opposed to the Company's existing defined benefit plan. Furthermore, employees from each of the acquisitions this year will participate only in our defined contribution plan. Additionally, we made an after-tax pension cash contribution of approximately $2 million in 2004. Subsequent to November 29, 2004, the Company was able to begin recovering certain pension costs from the U.S. government under various government contracts.

Now, let me turn to our 2005 outlook. Management currently believes that GAAP earnings per share in the first quarter of 2005 will be in the range of 30 to 33 cents. The full-year 2005 earnings per share are expected to be in the range of approximately $1.30 to $1.40. We expect that earnings per share in 2005, excluding net pension expense of approximately 11 cents, will be in the range of $1.41 to $1.51 per share, as shown in the release. We currently anticipate $6 million or 11 cents per share in net pension expense in 2005 after recovery of allowable pension costs from certain government contracts. This compares to a net pension expense of $8.2 million in 2004 or 15 cents per share.

The assumed FAS 87 discount rate is 6.25 percent in 2005 compared to 6.5 percent in 2004. Beginning with the third quarter of 2005, the Company plans to record expense for stock options in accordance with Financial Accounting Standards Board's statement 123, which cover share-based payments. Expensing of stock options is expected to reduce earnings per share by 5 cents in the second half of 2005.

I will now pass the call back to Robert.

Thank you.

We would like to now take your questions. Cynthia, if you're ready to proceed with questions and answers, please go ahead.

(OPERATOR INSTRUCTIONS). Mark Jordan with A.G. Edwards.

Good morning, gentlemen. Can we talk a little bit about the Aerospace group? Clearly, you have had dramatically stronger results in the second half of '04 versus the first half. Could you talk about what contributions Honda may have had to the fourth quarter or impact on the fourth quarter? Looking out into '05 with that segment, could you comment on what type of margin profile, given the fact that at least this year you had losses in the first half and some fairly attractive profitability in the second, what kind of range of profitability or variance of profitability might be expected in that group as the year evolves?

Good morning, Mark. First, let me just go through the first part of the question, which is Honda contribution. There was no Honda contribution to the fourth quarter. The fourth quarter of this year was similar to the fourth quarter of last year. The big contributor to the quarter is our turbine engine business, which generally ships a significant number of engines in the second half of the year.

Going forward, Mark, it is again difficult for us to estimate what the 2005 will be. We think it will be flat with respect to 2004, except we probably, as you know, we expect to have $2.5 million more in Honda contributions than we did in 2004; that being Q1 and Q3 most probably.

Okay. In theory, that higher contribution, would there be any potential offsetting expenses relative to that higher contribution?

I don't know at this time. I cannot answer that. I don't have any visibility to something offsetting that at this time. As you know, the only issue that is coming up is we have our piston engine insurance renewal coming up this May for June 3 (ph), and we don't know how that is going to play. We think it is going to be relatively flat with last year.

Okay. In government services area, again you continue to have favorable responses with awards fees inflating returns a little bit here. Does it continue to be your belief that, as we move into '05, that we should really just assume a more normalized operating margin and a governmental systems engineering group and that that should be in the 8 to 9 percent type of operating profit range versus obviously the higher one that you have had in '04?

Yes I think, Mark, that is correct. As you have noted, our margins decreased from Q3 to Q4 in 2004. The segment operating margin went down from 11.8 to 9.6. The segment operating income also went down from 7.7 to 6.2 million. So 8 to 9 is a good range, as you said, maybe with an upside to 10 based on whether we receive award fees or not.

Okay. You had a little bit of strength on the revenue line in the last half of the year, again in the Systems Engineering side. I would assume that is related to some of the environmental -- incremental environmental awards. Would it be fair to assume at least sort of the average run-rate of the second half of the year, you know, would be a minimum expectation for that group as a run-rate for all of '05 (sic)?

I don't know. Right now, we do have some challenges for '05, we have some programs that we have got to go get yet, so it is a little early and a little cautious on that score. I think, year-over-year, I cannot date, especially with what is going on with the defense budget.

Okay. Final question -- you mentioned -- you know, you have obviously been very aggressive on the acquisition front in the instruments arena. What opportunity or is there opportunity to drive some meaningful cost efficiencies by really starting to consolidate activities in that group, or do you see them remaining pretty much as stand-alone operations?

They are -- by and large, the instrument business (indiscernible) we have not done a lot of factory consolidation but we have done some consolidation from the administrative perspective and sales and service perspective, because you know, those instruments have tremendous costs associated with them in terms of being able to service them wherever our customers are. We have combined some of those functions. Finally, we have derived some benefits by introducing our operational excellence program in reducing scrap, rework and warranty cost across those businesses, which had made them much more efficient than they were prior to our buying these businesses from other entities.

Lastly, (indiscernible) on development and production of different products across the business lines that we are now able to buy from each other, flow controllers, meters, various kind of instruments, that give us other types of efficiencies.

Okay. A final question -- when you talk about your capital structure, you know, obviously with the number of acquisitions you executed this year, you went into the banks a little bit. Could you talk about what your desires are, from a capital structure standpoint, in terms of carrying debt?

Secondly, what roles or in what situations might you look to the capital markets, both either debt or equity?

Mark, as Dale mentioned, right now, our job -- net debt, debt minus cash on hand, is about $62 million. We have a revolver with our banks that goes up to $280 million with an additional accordion of 100 million on top of that. At this time, with what we have in front of us, I really don't have a target for the capital structure. We certainly don't see, at this time ,going to the equity market, but as acquisitions develop, if we do dip into our revolver significantly, then we will have to revisit this issue.

Chris Quilty, Raymond James & Associates.

Congratulations on another nice quarter. I just wanted to clarify from Dale the '05 guidance that you put in here presumably includes the 5 cent of option expense.

Yes it does.

And the Q3-Q4 impact?

Yes, that's true. It begins in the second half of the year, ending in the third quarter.

Did you give any sort of guidance on what your Sarbanes-Oxley impact was here in the fourth quarter? And should you get a little bit of decrease or benefit going into '05?

Certainly we had a fair amount of expense; some of that internal and external. We did not give any guidance. We would think that there would be some lower costs in the year of 2005, but we also weren't sure that the expenses were going to be that high in 2004. So that is sort of an open issue at this point.

Just to add, some of our acquisitions, this year's acquisitions, we still have to work on Sarbanes-Oxley work in those acquisitions next year. It has been an expensive undertaking, not just in dollars, but in the time that our people have put in it. It's been a significant undertaking for a company our size.

Okay. Speaking of acquisitions, in two different areas -- on the defense side, I know you were going to consolidate a lot of those operations into Mountain View where you had a lot of extra capacity. Could you give us an update on where you stand there? And flipping over to the instrument business, where you mentioned in your prepared statements there's a lot of electronic content that you manufacture at the component level that could eventually be integrated into these devices, it seems from your statement that you really have just dealt with the administrative and sales aspect. How long does it take to work on the operational side? When do we start to see the benefits? And what might it do just in general terms for the gross margins of the product as you do that?

Let me address the defense one first. I think you know we are consolidating in Mountain View, and that's working really well for us.

On the instrument side, we're doing more than the administrative side. We are selling products across our product line. To give you an example, when we bought Monitor Laboratories, they use instruments for essentially looking at ambient air quality. But they do it -- their job is to do continuous monitoring. Earlier we bought Advanced Pollution Instrumentation. Monitor was using other instruments than the ones Advanced Pollution does. Now Advanced Pollution instruments are being adapted at Monitor Laboratories, and they're using them. The same cross-sales are going between Hastings or Mass Flow Controller and Meters, and the Tecmar (ph) acquisition, the (indiscernible). What this does is not only do we make the instruments in one plant for another plant, but we also help them with the electronics and the incorporation of the instruments into their systems.

Having said that, we do have manufacturing capabilities in Mexico. And we have shifted some of our instrument manufacturing to our Tijuana plant, and we've been doing that all along even before the acquisition.

So finally, I'll just repeat what I said before. What is common also in our electronic factories and instrument factories is that we are doing benchmarking from factory to factory on reducing our scrap, rework and warranty costs. And we're taking those down 20 percent a year from prior year. And we think these all have worked very well for us.

In terms of the gross margins, to finish the question, to answer, the gross margins at our instrument businesses are pretty good. They are pretty high. And they are higher than our other businesses in electronics. And really, our aim is to work on improving the sales and lowering our G&A costs as much as possible.

Okay, but if you're doing a lot of inter-company sales, obviously the reported growth of all these companies will be -- in terms of absolute topline growth would be less because you're getting the inter-company sales, but we should see a corresponding positive impact in terms of profitability.

Yes. But you know -- this is true, but when we (indiscernible) and we report our revenues, we're eliminate the inter-company sales from that (multiple speakers)

So I guess the point is if we see a slower growth in these businesses we shouldn't be concerned, or as concerned, because they are being hidden through inter-company sales.

Yes, that's a good point. I agree with that. I'm just a little cautious on the margin side, Chris, because we expect to improve margins, obviously. But it's tough to predict because these instruments are becoming so price-sensitive. The competition in these kinds of instruments is huge in terms of what people are willing to sell the instruments in terms of below their recorded prices. Sometimes people give discounts of 35 to 40 percent on some instruments, especially if they're trying to capture market share. So that's why I'm cautious.

Also, it seems from the press release you have another strong quarter in the geophysical sensors. If I remember correctly, you were expecting that to fall off. So is there a bit of a positive impact relative to expectations? And how does the outlook appear going into 2005?

Yes, it was strong, Chris, but it was lower than Q2 and Q3 in terms of both dollars and profitability. And going in 2005, at the present time our visibility is kind of closer to what we were in 2004 first quarter rather than the whole year.

Okay. And one final question. In the avionics area you typically give us some sort of an update on the data capture business, your gains on the Airbus platforms, and also the fact that you've picked up some military customers. Any updates there or any change from the last time we spoke?

Nothing really that stands out. Both Airbus and Boeing are expecting a 10 percent uptick on their deliveries next year. In terms of commercial airlines in the United States, you know the difficulty that they are in currently, and we don't expect much gain there. But, in Europeans and Asia-Pacific Rim, we're doing better. Our Airbus, as you know, content has increased to over 50 percent now. I don't know how much more that can grow.

The only new thing we have with Airbus that's significant is the electronic flight back system that we are a sole source for it. And we think that's going to be going forward -- if we're successful in implementing this, it's going to be important because more airlines are going to turn towards a paperless (ph) cockpit solution to get more operational efficiencies. So there is a good future for us there.

Very good. Thank you gentlemen.

Robert Stallard, Banc of America.

Just a couple of quick questions for you. First of all, Robert, you mentioned about there is still acquisition opportunities out there. I was wondering if you could comment on the pipeline that you have or what sort of companies you're looking and what sort of prices are being asked.

Robert, we always have a pipeline, but a very disciplined approach from a valuation quality of what we're going fit to our lines, etc., and ability to integrate. I will make one comment that I'm sure your cognizant of.

In the defense component and subsystems domain things have become pricey, especially at our level. And as you know, part of the reason for that is that Europeans have entered our secondary and tertiary supplier markets in the defense industry, and with the dollar being weak they can afford to pay higher prices. And they're driving those prices up, perhaps a little beyond what our appetite is at this time.

On the instrument side, though, we are looking at environmental and other regulated markets, especially in air and water. And there are not too many large assets, but there are a lot of small ones. And we have to be selective. We do have a pipeline, but I can't really comment on it much more than that.

Secondly, looking at defense, what is your view on the outlook for defense, given recent comments on the outlook for the US defense budget? And how might that impact you?

I can give a short or a long answer. The short answer is, we don't know what will happen with the budget. But if you want an answer, I will give you my best guess.

The budget a political process. It appears that the most significant near-term impact is going to be to future Navy ships, which we have little exposure to that.

There are two other impact, two programs that have relevance to us. One is the F-22 and the other is the National Missile Defense.

In the F-22, from what we understand, the negative impact in terms of production would not happen until government's FY 2009. But if they're not going to reduce the number of planes they make every year and fresh the program up, because that increases the cost of the program, they will front-load program, at least the plannings and then discontinue it, assuming they work through the political process successfully. If that were to happen, we don't see an impact on us several years out.

The flipside is that when and if this were to happen, DoD is going to continue to support tactical operations with its existing aircraft, which is the F-15. And electronic upgrades are going to continue to those systems. And those are beneficial to us, because we have a lot of communication, technology and different parts that go in all of those upgrades. So we think that will be okay for us.

National Missile Defense, the second part, is a little more difficult in that they're talking about cuts there. But again, it is not clear whether the cuts will affect deployment or just overall program across the board. As you know, there was a recent test failure. But from what I understand, the interceptor was salvaged and will be retested sometime in February. Even though people talk very negatively about the National Defense System -- some people, I should say -- five of the seven tests have been successful. So if they go back to doing more work on development, that would benefit us because most of our work is simulations, testing and development. If they stay with the deployment, then we should stay relatively flat. It's possible we will have some exposure on the downside in that domain, more than the F-22.

Just a couple of quick ones for Dale. I was wondering if you could tell us what you're expecting for your tax rate in 2005, and also what you're annualized interest charge might be?

We assume that the interest charge might be between 4 and 5 percent. And we're assuming that tax rate will be 39.6 percent.

Thank you very much.

(OPERATOR INSTRUCTIONS) Howard Rubel, Jefferies & Co.

It's Gary Liebowitz for Howard. Just following up on the missile defense question we just heard, how much of your work today is on not GMD, but on things like airborne laser or kinetic energy interceptor?

None -- pardon me, any. Half of our work related to missile defense is with the prime contractors. And the other half of our work is really work that we do for the Space and Missile Defense Command, and work that's for system engineering and tactical assistance, especially helping the government in evaluating their programs and running them, some of them for small businesses, more efficiently. And that we don't think is going to be affected much by going forward. But in regards to the question you asked, there is very little or hardly anything that we're doing in those domains.

Thank you. That helps. Another thing, Robert, you mentioned during your prepared comments some opportunities that you're targeting for 2005. Can you add a little color maybe where they are, and if they on the defense side; if you're recompeting programs that you're incumbent or anything like that? Or just any opportunities of size that we should watch for this year?

Really, there are no major programs that we've been competing on because of our large program wins in the last two, three years. So I don't see anything major that is coming up in our existing programs. Let me start there.

I think in the defense microwave domain, where we've made several acquisitions, we could improve by building more integrated microwave devices. We also enjoy some common customers in this area, which helps the businesses that we acquired, because we have a better presence in the deep pools (ph) etc.

There is one thing in terms of programs that I mentioned that may be useful to reiterate, and that is in the UAV area. We anticipate to go forward with the alliance that we formed between our systems engineering businesses and Rheinmetall. And we will be competing in terms of program competition. We expect to compete in some new UAV programs that have been announced. So in terms of new competition, that would be an area that would be potentially attractive to us.

Thank you very much.

You we have no other questions from the phone lines. Please continue.

Thank you. I will now ask Jason to conclude our conference call.

Again, everyone, thank you for joining us this morning. If you have any follow-up questions, please feel free to call me at the number on the release. Cynthia, if you could just please conclude today's call? Thank you.

Ladies and gentlemen, this conference will be made available for replay after 11.30 AM Pacific time today, running through Sunday, February 27, 2005 at midnight. You may access the AT&T executive playback service at any time by dialing 1-800-475-6701, international participants 320-365-3844 using the access code 766266. Those numbers again are 1-800-475-6701, international participants 320-365-3844, using the access code 766266. That does conclude our conference for today. Thank you for your participation and for using AT&T's executive teleconferences services. You may now disconnect.