Teledyne Technologies Inc (TDY) 2009 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Teledyne Technologies Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. If you should require assistance during the call, please press star and then zero. As a reminder, today's call is being recorded. I would now like to turn the conference over to Mr. Jason VanWees. Please go ahead.

Good morning, everyone. This is Jason VanWees, Vice President, Corporate Development and Investor Relations at Teledyne Technologies. I'd like to welcome everyone to Teledyne's Second Quarter 2009 Earnings Release Conference Call. We released our earnings earlier this morning before the market opened.

Joining me this morning are Teledyne Technologies' Chairman, President, and CEO, Robert Mehrabian; Senior Vice President and CFO, Dale Schnittjer; and Executive 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 you that all forward-looking statements made this morning are subject to various assumptions, risks and caveats as noted in the earnings release and our periodic SEC filings, and, of course, actual results may differ materially. In addition, 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. Before commenting on the specific results for the quarter, I have some general observations about our markets, our performance, and cost reduction efforts.

A number of our commercial businesses continue to be impacted by the global recession. As a result, total sales for the quarter decreased 7.9% compared to last year. Specifically, the approximate 30% of our total portfolio that is related to commercial aviation, global infrastructure, and oil exploration, collectively declined about 25% year-over-year. While revenues in the balance of the Company were for the most part flat.

Earnings per share declined 22.5% year-over-year; however, second quarter 2009 earnings exceeded first quarter 2009 earnings per share by 21% because of our aggressive cost-reduction efforts to appropriately size our businesses given the current market realities.

For example, since late 2008, we have decreased our total workforce by 549, or approximately 6.2%. We eliminated our annual grant of the employee stock options at the beginning of the year, and we decided not to give annual salary increases in September of 2009.

Finally, we closed five operating sites, while a number of other manufacturing facilities have been subject to temporary plant shutdowns or reduced work weeks, as necessary.

These actions have already resulted in significant changes to our cost structures and our financial performance. While total sales increased only modestly in the second quarter compared to the first quarter of 2009, operating profit increased in every segment.

Corporate expense declined by almost $1 million, quarterly earnings per share increased $0.12 sequentially, and second quarter operating margin was 9.9% compared to 8% in the first quarter of 2009.

And, finally, second quarter 2009 free cash flow was $31.4 million equal to 125% of net income.

Despite our improved performance relative to the first quarter, and even though second quarter 2009 orders exceeded sales by 7.6%, we continue to expect 2009 to be a challenging year. However, the mix of our businesses including stability in our defense and government operations, coupled with our aggressive cost controls, should allow Teledyne to outperform in such an environment.

Turning to our segments, second quarter sales in our Electronics and Communications segment decreased 3.5% compared to last year from $316.3 million to $305.1 million with a negative organic growth of 8.3%. Segment operating profit decreased 15.1% as segment operating margin decreased by 178 basis points. It should be noted that 60% of the difference in operating margin is due to higher net pension expense in the second quarter of '09 and a $2 million gain from a legal settlement in the second quarter of '08.

In this segment our businesses lie within three separate market categories. First, Defense Electronics, which now represents approximately 45% of the segment; secondly, Electronic Instrumentation, which represents another 45% of the segment; and, finally, Avionics and other commercial electronics, which now represent only 10% of the segment.

In the second quarter of '09, sales of Defense Electronics increased 4.6% from $125.8 million to $131.6 million compared to second quarter of last year. Defense Electronics sales growth primarily resulted from the acquisition of Teltronic PLC's UK-based defense electronics business in the third quarter of '08. Organic sales growth was approximately 1% due to increased sales of Defense Electronic manufacturing services.

Turning to our Electronic Instrumentation businesses, year-over-year sales declined 5.3% from $144 million to $136.3 million. Instrumentation revenue decreased as a result of flat sales of our marine instrumentation and a 17% contraction in sales of environmental monitoring devices and 6% decline in sales of industrial instrumentation.

The declining global infrastructure market continued to impact the demand for our environmental and industrial instruments. We are hopeful that these businesses may achieve some benefit late in 2009 from the American Reinvestment and Recovery Act, since our products are used in emission monitoring analyzing carbon content in ambient air and wastewater sampling and analysis.

Teledyne marine instrumentation businesses currently represent about $350 million, or roughly 19% of the Company's total sales.

Oil and gas exploration represents the smallest piece at roughly 4% of the total sales, and oil production represents approximately 6% of the total sales.

The balance and the largest portion of our marine sales are derived from oceanographic research, military hydrographic survey, and other industrial markets. In the second quarter of '09, marine instrumentation sales were flat as a 30% decline in sales of sensor systems for offshore seismic exploration was offset by increased sales of unique connectors used in subsea oil production systems as well as acquisitions made in 2008.

Finally, I will discuss our Avionics and other commercial electronics businesses. In the second quarter of '09, sales from these businesses collectively decreased almost 20% compared to second quarter of '08 primarily due to declining sales of Avionics and other commercial and electronic components such as relays for test equipment.

Turning to our Engineered Systems segment, in the second quarter '09, revenues decreased 6.3% compared to last year. The decline in sales primarily resulted from (inaudible) sales in certain NASA programs. Segment operating profit declined 7.4%, and margin decreased 12 basis points solely as a result of the 96 basis points of headwind in net pension expense.

I will now discuss our Aerospace Engines and Component segment, which represent Teledyne Continental Motors, our aircraft piston engine business. Sales in this segment decreased 38% in the second quarter compared to last year. Year-over-year sales of OEM engines declined approximately 70% while after-market parts and services declined approximately 20%.

At the moment, we do not expect a significant increase in sales of OEM engines throughout 2009. On the other hand, while the after-market was weak in the second quarter -- it was down approximately 20% compared to last year -- we have been taking aggressive steps to capture market share, and after-market sales increased approximately 22% sequentially compared to the first quarter of 2009.

During the second quarter, we reported a profit of $0.7 million compared with $5 million in profit in the second quarter of last year. But we did reverse the $4.3 million operating loss seen in the first quarter of 2009.

Finally, in our Energy and Power Systems segment, sales in the second quarter of 2009 decreased by about 12% compared to last year as a result of lower sales of commercial hydrogen generators and aviation batteries plant partially offset by higher sales of military turbine engines.

Second quarter operating profit was essentially breakeven due to our $1.2 million product replacement charge in the quarter. The profit comparison to last year was also difficult as second quarter 2008 included a gain of $1.3 million from environmental research no longer needed to acquiring a settlement.

In conclusion, 2009 will continue to be a challenging year for a portion of our commercial end markets. Nevertheless, I believe our operations have stabilized and are healthy with the significantly reduced cost structures. Orders have been in line with sales. Book-to-bill for the second quarter was 1.08, and, overall, in the first six months, book-to-bill was 1.

Operating margin in the quarter was 9.9%, only slightly lower than full-year 2008, and we generated over $31 million of free cash flow in the quarter. Furthermore, we believe risks to Teledyne are somewhat mitigated by a number of factors including our balanced mix of government and commercial businesses that produce highly engineered products, which are not easily commoditized. We have good visibility and a healthy backlog in many of our government businesses and, finally, we have ample liquidity and a proven track record of continuously improving our operations and successfully integrating acquisitions.

I will now turn the call over to Dale Schnittjer.

Thank you, Robert, and good morning. I will first discuss some additional financials for the quarter not covered by Robert. Then I will discuss our 2009 outlook.

In the second quarter, cash provided from operating activities was $35.8 million compared with cash provided from operating activities of $38.5 million for the same period of 2008. The lower operating cash flow in 2009 was primarily due to lower net income partially offset by lower pension contributions. No pension contributions were made in the second quarter of 2009 compared with $2.5 million of pension contributions in the second quarter of 2008.

Free cash flow for the second quarter was $31.4 million compared to $28.7 million for the same period of 2008.

Capital expenditures were $4.4 million in the second quarter compared with $9.8 million for the same period of 2008. Depreciation and amortization expense was $11.3 million compared with $13.1 million last year. For the full year of 2009, we expect capital expenditures of approximately $35 million to $40 million, and depreciation and amortization expense of approximately $47 million.

We ended the quarter with $310.9 million of net debt. Our balance sheet remains strong with net debt-to-cap ratio of 35.6%. Our credit facility has $590 million of bank commitments and does not expire until July 2011.

Moving to pension, in the second quarter of 2009, gross pension expense was $5.6 million compared with gross pension expense of $2.5 million in the same period of 2008. Net pension expense after recovery of allowable costs pursuant to government Cost Accounting Standards, or CAS, was $2.5 million in the second quarter of 2009 compared with $0.1 million of net pension expense in the second quarter of 2008.

For the full year of 2009, net pension expense is expected to be $10.1 million compared to $200,000 of net pension income in 2008. The increase in pension expense is largely due to the amortization of market losses experienced in 2008.

In the second quarter of 2009, stock option compensation expense was $1.2 million compared with $1.8 million in the second quarter of 2008. The lower 2009 amount reflects the decision to eliminate the annual grant of employee stock option in 2009.

Now let me turn to our 2009 outlook. Management currently believes that GAAP earnings per share in the third quarter of 2009 will be in the range of $0.70 to $0.75. Consistent with our January and April of 2009 outlooks, we expect full-year 2009 earnings per share of approximately $2.70 to $2.80.

The outlook for the third quarter and full-year 2009 compared with the same periods of 2008 reflects a reduction in sales for the Company's Aerospace Engines and Components segment as well as lower sales in environmental instruments for air and water monitoring and other commercial electronics.

In addition, the full-year outlook reflects a contraction in sales and marine instruments, which serve the offshore exploration market, especially in the second half of 2009.

The impact of weakness in these selected markets, however, has been mitigated by the cross-reduction efforts Robert mentioned earlier.

I will now pass the call back to Robert.

Thank you, Dale. Paul, we would now like to take questions. If you are ready to proceed with the questions and answers, please go ahead.

(Operator Instructions) Mark Jordan, Noble Financial.

Good morning, everyone. A couple of questions related to the engineering systems group. Number one, could you tell us what you feel might be the impact of USEC's current financial problems if, in fact, they don't get timely loan guarantees? Could you see a hiatus in work being done there? And if there was one, what would be the cost to the Company?

Thanks, Mark, and good morning. Our expectation, as is USEC's expectation, is that they are going to expect to hear about the loan in early August, in the next few weeks, and they seem to be relatively positive about it. So I'm not sure how that will affect us.

As of right now, we have reduced our -- we've reduced our production to ostensibly one unit a week, where we have a capacity for using more of the units a week than that. On the other hand, I must say, we also do have some other products that we would be bidding on with them in addition to what we are making.

So -- I can't tell you what the effect would be, but I don't think it's going to get much worse than it is now. But there is some upside if they do get the loan guaranty.

Okay, so we should watch for the loan guaranty on that. Secondly, relative to the missile defense work, you've had some comments in the past of your clients that you'd be working with had some OCI issues. Also, some of those contracts were maturing with getting more clarity of the Obama administration's strategy for missile defense. How do you see your activities in that area evolving over the next six months?

Over the next six months, Mark, because the administration has cut ground-based missile defense for 2010 from $2.1 billion to just less than $1 billion, we expect that that will affect us in the remainder of the year by about $10 million in our direct GMD program.

On our system engineering and technical assistance program, we also expect some reduction. It would be in the range of $3 million, maybe a little more. So, collectively, I would say $13 million, $14 million, $15 million in the remainder of the year.

Fortunately, we do have some mitigating businesses that -- especially in integrated testing -- that we expect to improve as the time goes on. The big effect on ground-based missile defense, assuming that Congress stays with the president's budget proposal, is going to be next year. Next year we might have between ground-based missile defense and CETA, we may have a decline of about $30 million. We are going to try and make that up through various new programs that we hope will be more successful, especially in single simulation framework, which is hardware and software tests that are used in real-time missile defense hardware-in-the-loop testing.

So -- we do have some upsides in other programs but, overall, the ground-based missile defense budget proposals are negative for us.

Okay. A final question, if I may -- on Lockheed's call yesterday or the day before, they mentioned that there have been delays in, I guess, finalization of the [JAZN] program as they were having difficulties getting -- or meeting -- the tests that were required. Do you have a sense as to when that program will be in a fully accepted mode, and once it reaches that status, what's the impact on you?

First, let me start by saying that whatever the results have been in the tests have not been because of the engines that we make. Let me take that one off the table. There are some tests that are scheduled for the next few months. We anticipate that the results of those tests would be available subsequent to that in the next following four to five months.

Right now we think, based on the budgets that are out there, we think that there may be a 12-month hiatus in the production, or a stoppage in the production of the missiles next year. What that does to us is it reduces the revenue in our turbine engine business by about $13 million to $14 million. Again, we are working very hard to substitute other programs, especially increasing R&D programs because of our ability to fill, probably, the most extensive number of small engines for the military.

We are trying to mitigate that loss if it were to happen as I have outlined it. There is a chance that there might be some production at the end of 2010. But, overall, that also is not very good news for us, but we're hopeful that that system will work.

I must conclude by saying that Teledyne's turbine engine business is one of the only two national resources available in small turbines for those kinds of missiles. Thanks, Mark.

Steve Levenson with Stifel.

I know you've had some tough choices to make in the last several months. In relation to the plant shutdowns and the reduced work hours, do you think you'll be able to re-hire or retain the skilled employees on the assumption that things will turn at some point?

Yes. I think on the plant shutdowns, usually what we do is we shut them down sometimes for a week. It depends on the business, of course. Usually, we might go to a four-day work week.

The reason we are doing that, Steve, is exactly what you said -- we want to keep as much of our workforce -- not just our skilled workforce but all of our workforce, which are highly skilled -- we want to keep as many of them working as we can in these economic circumstances and not have layoffs. Layoffs are bad for Teledyne, they are bad for the country, and anything we can do by sacrificing some work week, some salary increases, stock options, whatever -- we are doing to maintain our workforce. We feel comfortable that we are not losing any of our skills.

Great, thank you. And on the plants that you actually -- the facilities that you've shut, are you planning an asset sale or are you going to carry those assets for some period of time?

No, basically, what we have done, Steve, these were leased facilities. What we did is we consolidated them with other facilities that we have and moved our operations to those facilities. As an example, in San Diego, we had two different facilities making connectors. We just combined them into a new facility -- the same thing in Northern California where two multiple facilities in the microwave business and amplifiers, and we combined them, and so on and so forth.

So -- the plant shutdowns are not staying on our books. They are just -- whatever we had to write down, and I think, collectively, that cost us maybe $1 million, $2 million, $3 million in terms of leases and et cetera. But I think we are okay.

So earnings would have been higher by even a couple of pennies, ex those leased (inaudible)?

Yes, yes, and we've -- over the last six months, we have also had to absorb about, I would say, $4 million-plus of severance expenses because of the workforce reductions. And we haven't -- as you know, we don't take -- if we can, we don't take one-time charges and make adjusted earnings types of statements.

Okay, thanks. With your focus on cash flow and the really good result there, do you think you're going to be back in the acquisition market or still paying down debt?

We are always in the acquisition market. It's just that the guys we are trying to acquire, the realities of the marketplace have not sunk in yet. They still think it's last year.

Okay, last item -- on pension expense, looking forward into 2010 based on whatever the performance is in your pension plan assets through this year, do you think it will be lower next year?

Let me pass that to Dale, please.

Okay, thank you very much.

Yes, we do believe that the expense in 2010 will be lower than 2009. There are a lot of unknowns yet because we don't know what the market is going to do. Our assumed discount rate is 6.25, our assumed rate of return is 8.25, and 2010 expense is going to depend heavily upon the rates of return that we do, in fact, enjoy from the pension trust. So -- we do expect it to be lower, but we don't know the amount yet.

Chris Quilty, Raymond James Associates.

Thanks, gentlemen. Focusing on the aerospace engines business, if I remember correct, May is usually your re-negotiation date for the catastrophic insurance. How did that go this year?

It went pretty well. We always are cautioned by our brokers that the market is very soft, and we are not going to get enough coverage. But because of the extensive efforts that our legal team and our businesses have put together in accident investigation and litigation, we had a successful negotiation, and we did get good coverage.

Good -- so a little bit of cost savings there that should help?

Just a little.

Okay. And you've talked about cost reductions in other areas, but I assume you've also done some layoffs, furloughs, in the aerospace engines business?

Oh, yes; oh, yes. They probably took the brunt of the reductions early on. That one became obvious late in 2008. As you look at the year-over-year fourth quarter 2008, we saw some significant declines from 2007, and we'd already gone from $46 million in Q3 '08 to $30 million in Q4 '08. So we took cost reduction efforts there immediately last year.

Okay. And is it still your sense that credit market conditions are a big issue for the OEM side of the business?

I believe so. It's both that, Chris, and I think it's the discretionary spending. People are a lot more cautious; people are scared of the budget deficits that are looming out there; and they are just cautious with their money. But it's the same for the whole economy. You know, the economy -- two-thirds of the economy depends on consumer spending, and that's why it's in the tank because everybody is cautious.

Yes. Speaking of not being cautious, the economic stimulus package and the money that may be available there -- can you help us -- I haven't gone through the section of the bill that would apply to some of the funding you've talked about specifically for environmental test equipment and other activities. Can you give us a sense of where you think your best opportunities are of capturing some growth and what size growth potential might you see out of that spending?

Yes, there are two things that have happened there, Chris. If you look at some of our environmental -- and I'll just work with examples. If you look at our water and wastewater sampling, as an example -- a lot of our work is paid for by the states and municipalities, at least in the US. And both the states and especially municipalities have cut their spending in that area. We think, partly, of course, because they just don't have the tax revenue, but the second part is they are anticipating stimulus money coming in.

So we think that in the second half of the year, if the stimulus money does get to the states, there is going to be some significant amount of money. Now, some people are estimating there might be as much as $6 billion in wastewater projects. And we'll have to wait and see. But that's going to be positive for us, overall.

The only problem with the stimulus package, as you well know, is a lot of it is not even going to hit the economy in 2009. There are estimates that it may be as low as 15%. So -- we'll wait and see, but it's going to be positive for our environment of businesses.

Okay, and final question -- now that the deal is done, and they're going to shut down the F-22 line, I know the production is going through FY '12, but when is you, as a component supplier into that program, see your revenues ceasing, and you still of the mind that the rampup in F-35 production will basically offset any decline in F-22?

Yes, pretty much it's a wash. I think the 22 might cost us, I don't know, $3 million or $4 million, the reduction that just got through the Senate. But I think, overall, we picked that up -- both in that and also there are some increases in F-18, in our electronic warfare. So I think we are going to be -- in the overall, Chris, if you look at the defense electronics market, there is a lot of put and takes. I think we should be okay.

Michael Lewis, BB&T Capital Markets.

Good morning, gentlemen, this is Jeremy Devaney on for Michael Lewis. A couple of quick questions for you -- first off, looking at some of your electronic sensor businesses, as it relates to the ISR surge in Afghanistan, are you guys seeing any pickup in any of your sensor businesses?

Well, we do have a very healthy electronic manufacturing business that has had significant growth year-over-year, especially for producing product for the [primes] that are involved in Afghanistan and as well as the continuing in Iraq. There are some programs, both for microwave data links. For example, for the Predators, there are some development programs that we have for IR staring cameras and visible -- both in the IR and visible range.

So -- in the ISR domain, specifically, we do have a lot of development programs. So, overall, that's been -- that's helpful to us.

Excellent, thanks for that detail. Then, also, looking at some of these cost savings that you've gotten through cost rationalizations, facility rationalizations, layoffs, pension reductions -- how sticky do you think those cost reduction efforts will be? Moving forward, do you think you can hang onto a lot of this cost savings. If you could give us some color on that, it would be appreciated.

Well, first, let me give you an order of magnitude of the cost reduction. For a company our size, our cost reductions have been 2.5 times what normally we would do on any given year, and we think most of that will stick, especially when you have things like plant closures.

What may, obviously, not stick is that the -- if our businesses improve, we are going to bring our people back, and we are not going to shut our plant down. So some of that cost reduction that's associated with that will go away. But that would be a positive thing because our businesses, our revenues, we're being treating, and we have to meet revenue increase needs.

In terms of the pension itself, that's really not from a cost reduction. Pension expense this year is going to be $0.17 versus nothing last year. So if there isn't significant movement in the market, that expense is going to stay next year -- maybe increase our decrease, but that's negative for us.

But I think a lot of our costs -- salary increases, for example, once you do not give a salary increase for a year, that's a permanent cost reduction because that's a 3.5% that stays with you. So I hope that's a good answer to your question.

Excellent. And then lastly, looking at your oil end markets in marine exploration, what do you think the largest overhang is from an industry perspective in getting that market moving in the right directions again?

Well, oil prices have gone up almost 80% in the last five months, four or five months, it depends on where you count it. If you look at our marine instrumentation businesses, half and half -- 50% is in the oil exploration and production, and 50% is in surveys, research, and defense.

The 50% that's in the surveys, research, defense, is fairly flat. The part that's in the oil production and oil exploration has go two parts. The larger part of the two is oil production. That's been fairly stable, because those decisions for capital expenditures for oil production have been made years ago, and some of the -- even last quarter, there were some announcements from the big oil companies commitment to oil production. You take those from Exxon, Shell, BP, Chevron, Stafford, Hydro, Petrogas -- all of them have a large significant oil production contract.

So -- we feel okay about that. It's the other side of the equation, which is the oil exploration, which is a lot more sensitive. There is extra capacity in vessels for seismic exploration, and they are much more sensitive to oil prices. And that market, we think, is going to be down for us in the second half of the year especially. First quarter we did all right, we had some negative comps in the second quarter, and we think we are going to have some negative comps in the remainder of the year.

But, again, I'll caution by saying if you look at our overall portfolio, that's only 4% of our overall total portfolio of Teledyne.

Byron Callan, PW Partners.

Good morning, gentlemen. I just wanted to follow up on the comment on NASA -- a little bit more color on that on the year-over-year comparison in the quarter. And then just, more generically, how that business looks over the next two to three years, particularly in light of some of the comments that were made on the defense side of [brand]. There's a lot going on in the space program. I mean, is it fairly stable? Is there room for new opportunity as, maybe, the nation rethinks some of its space program. Go ahead.

Yes, Byron, first, if you look at, year-over-year, '08 to '09 -- 2008 to 2009, our -- what I'd call our "civil space" business, we have about -- we had about $105 million in revenue last year. We have about $100 million this year. So it's declined a little bit, maybe $5 million.

About half of that is tied to space exploration, and we have a concentration on Aries 1 launch vehicle development. As you know, there is a presidential commission with Norm Augustine reviewing NASA's human space flight program and providing recommendation. Those should occur sometime end of August. I think they will have an effect, obviously, for the space shuttle, space station, and exploration programs including Aries 1, Aries 5, Orion, et cetera.

I think our 2009 space business is fairly stable. If we look at the out years, if nothing bad happens in these recommendations, we are relatively positive about our programs as we go forward. And the new administration has planned some top-line growth for NASA. So we think, overall, it's okay. You are always wondering about because you don't know what these recommendations are going to be, but from where we sit right now, we think we are going to be okay.

(Operator Instructions) Michael Lewis, BB&T Capital Markets.

Hey, guys, it's Jeremy Devaney again. Just a quick follow-up -- earlier in the discussion we were talking about OCIs, and I was wondering if, Robert, you could give us your take on where the administration and the Defense Department is heading with this issue. Do you see anybody calling for a separation of businesses? I know it's become a more vocal issue of recent times and just really would like to hear your stand on it.

Well, I really don't have one because I don't know how the bill is going to work out. You know, it all has to do with how they implement the bill that's out there. I think, overall, what the government is trying to do is take jobs from the private sector in that specific area and move it to the federal government. So net-net, if you look at a given district there may not be a job loss, but there would be a job shift from the private to the government sectors, and you can be the judge of who is more efficient in fulfilling those assignments. But, having said that, I don't have any more insight than anybody else.

At this time, there are no further questions in queue.

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

Thanks, Robert and, again, everyone, thanks for joining us this morning. If you have any follow-up questions, my number is on the earnings release. Please feel free to call. And all our releases are available on our website as well. Operator, if you could end the call and give the replay information, we'd appreciate it. Goodbye, everyone.

Ladies and gentlemen, this conference will be available replay after 10 a.m. Eastern time -- Pacific time today through midnight Pacific time on August 23rd. You may access the AT&T Executive Replay Service at any time by dialing 1-800-475-6701, entering access code 997828. International participants dial 320-365-3844, access code 997828. That does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.