Teledyne Technologies Inc (TDY) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Just a reminder this conference is being recorded. I would now like to turn the call over to Jason VanWees. Please go ahead.

Good morning everyone. This is Jason VanWees, Vice President Corporate Development and Investor Relations at Teledyne. I would like to welcome everyone to Teledyne Technologies fourth quarter and full year 2011 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining us today 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 answer 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 order to avoid potential selective disclosures, this call is also simultaneously being webcast and replayed both via dial-in and webcast will be available for approximately one month. Here is Robert.

Thank you, Jason. And good morning everyone. Fourth quarter sales of $474.5 million increased 12.6%. Earnings per share from continuing operations was $0.99 compared to $1.00 last year. Note however, that the fourth quarter 2010 included $0.24 of tax credit, partially offset by $0.08 of acquisition and disposition expenses.

Before I discuss our individual business segments, I have some general comments. 2011 was a decisive year in the history of Teledyne, both financially and strategically. Full year sales of $1.94 billion increased 18.1%. Earnings per share from continuing operations are $3.81, increased 17.2%. GAAP operating margin was 11.7%, an increase of 84 basis points. And free cash flow excluding voluntary pension contributions was $221.8 million, an increase of 79% from 2010. All of these metrics were at record levels. Beyond the financial performance, the divestiture of our aircraft piston engine business in April of 2011, along with its liabilities significantly reduced Teledyne's risk profile, while the acquisition of DALSA was a major commitment to digital imaging. Teledyne is a different company today.

Following a decade of progressive change through acquisitions and divestitures and continuous improvements in operations we enter 2012 as a Company that serves primarily industrial growth markets. We now possess high technology businesses, a greater Research & Development capability, and a portfolio of proprietary highly engineered products, serving markets such as offshore energy, global infrastructure, factory automation, transportation and communication.

US government sales now account for 35% of total revenues, down from 47% just two years ago. And the profile of our government business has also changed with an increase in proprietary products over engineering services. Finally, given the greater profitability of our commercial businesses, the US government today accounts for less than 25% of our income. We have also been growing our sales internationally, and in the fourth quarter this increased to 34% of our total sales.

I will now comment on our business segments after which Dale Schnittjer will review some of the financials in more detail and provide and earnings outlook for the first quarter and the full year. Turning to our Instrumentation segment, as a reminder this segment, which comprises our highest margin group of businesses, provides advanced electronic instrumentations, including trace chemical analyzers, underwater vehicles, acoustic sensing and imaging systems, and specialty subsea interconnects.

This segment primarily serves offshore energy, including deepwater exploration and production, and global infrastructure market. In addition to today's high price of oil, other macro economic drivers for this segment, include population growth and industrialization in the developing world. Industrial sales international sales represent more than 50% of the revenue in this segment. Fourth quarter sales in this segment increased slightly to $148.9 million. Sales of environmental instruments grew almost 4%, while sales of marine instrumentation contracted slightly. While the marine instruments declined slightly in the quarter, this was largely timing related. We currently expect good sequential growth in the first quarter of 2012 as book to bill in this segment in the fourth quarter are was 1.2 X.

Turning to the digital imaging segment. Before mentioning the results, I wanted to offer some historical perspective and comment on our strategy in digital imaging. Teledyne entered the digital imaging market with the acquisition of Rockwell Scientific and Imaging in 2006. We were then and still remain the leader in very high performance sensors for land and space-based infrared astronomy. Today both our technical depth and the breadth of our product line have increased dramatically. We now offer a suite of sensors, cameras and software spanning the electromagnetic spectrum from X-ray through infrared.

Beyond our historical space of astronomy sensors that look out and capture infrared protons from the origin of the universe, we have begun making inroads into classified programs where we did not previously participate. With the acquisition of DALSA, we are now the leading provider of commercial ultrahigh resolution visible light sensors used for space and aerial photogrammetry, that is the devices that capture the images available to you on Google Earth and Bing.

Our sensors and cameras are also used for tactical applications such as hyperspectral sensors that is used on the Predator UAV, and a cool infrared camera that is used on the ScanEagle UAV. In the commercial domain, Teledyne DALSA is a leader in high performance visible and ultraviolet cameras for factory automation, and is an emerging supplier of smart cameras for automated quality control in industrial processes. Finally, medical and dental X-ray machines is one of the highest priorities in our digital imaging segment. Order intake for new X-ray high resolution low dose panels have been excellent from both our medical and dental customers.

Turning to the results, fourth quarter sales increased 187% compared to last year. While the bulk of the revenue was due to the acquisition of DALSA in February of 2011, underlying organic growth was over 10%. Segment operating margin increased, but remained relatively low on a GAAP basis largely as a result of, one, increased R&D spending. Two, approximately 290 basis points of acquisition related intangible asset amortization. And three, and just as importantly, the reclassification of Canadian R&D tax credits from above the line in segment income to below the line provision in US GAAP for taxes.

Turning to the aerospace and defense electronic segment fourth quarter sales increased 2.6% due to higher sales of microwave devices, interconnect, and air traffic information management systems. Segment operating profits increased 23% and segment operating margin increased 233 basis points. Margins in this segment continue to grow nicely over last year as a result of, one, sustained operational excellence effort. Two, a mix shift towards higher margin commercial product and proprietary defense electronics, versus lower margin manufacturing government manufacturing services.

Turning to the engineering systems segment. As in our aerospace and defense electronics segment, there has been a progressive and international intentional mix shift in this segment. In this case the shift is toward proprietary technology and manufactured product, away from historically less differentiated government systems engineering and technical assistance programs. Fourth quarter revenue and margin declined, as we have continued to absorb significant government funding reductions in certain missile defense engineering programs, and a pressured NASA budget. However, growth in manned and unmanned underwater systems, an area in which Teledyne has become a leader was able to partially offset the decline.

While our Instrumentation segment provides electronics subsystems, as well as complete autonomous underwater systems for ocean science, oil and gas, and commercial hydrographic survey markets. Our engineered system segments provides unmanned autonomous gliding vehicles to the US Navy, and more recently was selected to develop and produce a next generation of Navy Seals delivery vehicles. In conclusion, after a decade of acquisitions and divestitures, we now have a mix of high technology industrial businesses that are growing in international markets. We also have a much lower risk profile, a strong balance sheet, and hands-on management with a proven track record of 10 consecutive years of earnings improvement.

Finally, the defense market now represent less than 25% of our earnings. Furthermore, we do expect some stability in earnings in this market, as we have continued to position these businesses to be more aligned with surveillance markets, unmanned systems and certain Navy programs, which we expect to remain at relative priorities in the defense budget. 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, and then I will discuss our 2012 outlook. On cash flow in the fourth quarter cash provided from operating activities from continuing operations was strong at $79.8 million, compared with $60.2 million for the same period of 2010. Free cash flow was $65.7 million in the fourth quarter of 2011. For the full year 2011 free cash flow was $177.8 million. Adjusting for the pension contribution net of taxes free cash flow was $221.8 million.

Capital expenditures were $14.1 million in the fourth quarter, compared with $15.4 million for the same period of 2010. Depreciation and amortization expense was $16.8 million in the quarter compared with $12 million last year. For the full year 2011 capital expenditures were $41.7 million, and depreciation and amortization expense was $64.2 million. Of the $64.2 million, approximately $24 million was intangible asset amortization expense. To put that in perspective that is approximately $0.41 per share in amortization expense for 2011.

We expect to invest approximately $60 million in capital expenditures in 2012. Also, for the full year of 2012 we expect depreciation and amortization expense to be approximately $70 million with amortization expense at approximately $24 million. We ended the quarter with $263.4 million of net debt. That is $312.8 million of debt and capital leases, less cash of $49.4 million for a net debt to cap ratio of 21.2%. Currently we have approximately $500 million available under our credit facility. The margin of borrowing costs on the facility is LIBOR plus 125 to 250 basis points, depending upon the leverage ratio.

While cash flow from continuing operations remains strong we paid $46.9 million of income taxes in the fourth quarter, related to the gain on the sale on the discontinued piston engine business. Next on pension. Net pension income after recovery of allowable costs pursuant to government accounting standards was $2.2 million in the fourth quarter of 2011, compared to $1.2 million of net pension income in the fourth quarter of 2010.

On stock options. Stock option compensation expense was $1.5 million in the fourth quarter of 2011, compared with $1.1 million in the fourth quarter of 2010. Moving to our 2012 outlook. Management currently believes that GAAP earnings per share from continuing operations in the first quarter of 2012 will be in the range of $0.88 to $0.91. We expect full year 2012 earnings per share from continuing operations of approximately $3.90 to $3.96. As noted in the earnings release the discount rate for our domestic pension plan will decrease to 5.5% in 2012 from 6.15% in 2011. And expected rate of return for 2012 will remain at 8.25%.

Finally, the 2012 full year effective tax rate is expected to be 32.5%, compared with 32.9% in 2011. I will now pass the call back to Robert.

Thank you, Dale. We would now like to take your questions. Stacy, if you are ready to proceed with the questions and answers, please go ahead.

(Operator Instructions). Howard Rubel, Jefferies & Co.

Thank you very much. Good morning Robert, how are you?Could you just talk a little bit more about some of the risks to your forecast, and where on one hand there are some challenges, and on the other hand maybe where you see some opportunities?

Good morning Howard. The primary risk and it is a small one, is in our government businesses still. We potentially could take another 5% of revenue out of that, but as I indicated the profitability of our government businesses now comprise less than 25% of our earnings. On the upside, because of our exposure to oil and gas and international markets, I think we are going to do pretty well there. And finally, with at least the announcement that we heard today with increased emphasis on special operation forces and their products that they use, we are favorably inclined in that direction first with our data link systems to UAVs. Second, with our new surveillance cameras both for the Predator, as well as the ScanEagle, as well as some of the submergible manned vehicles that we are developing for the Navy Seals. So when you put all of those together, I think defense budget changes are going to be actually favorable to Teledyne.

I was actually thinking a little bit more in some of the instrumentation markets or in digital imaging, in terms of either risks or challenges?

In the instrumentation domain, as you know, we are primarily environmental and marine. I don't see much risk in our marine. We may have a little bit of a headwind in our oil exploration, but we are shipping there from streamers that are drawn behind boats to reservoir monitoring, and our new products that are coming out this quarter and next will be a buffer for that. In the environmental instrumentation, obviously the problem is spending by municipalities and the government, but even there we have done alright. We have gotten some major awards for water quality monitoring in two large municipalities, and of course, overseas we are getting, we are selling a lot of our environmental products. And then we are, of course, playing the food and beverage NA separation, which is important in China and water quality, Middle East, et cetera. I think overall I don't see a lot of negative in our instrumentation.

In digital imaging, on the other hand, the one area that we have to be careful about is the semiconductor capital equipment industry, to which especially we sell our standard products. The book to bill has declined from 0.98 in last May, to 0.83 this November. It stabilized, and we think in the second half of 2012 that market will pick up again as it has in its historical cyclicality. We do have a little headwind there. But again on digital imaging on the really positive side is that we have made significant inroads in the medical X-ray, both for medical and dental X-ray market, we have introduced new CMOS, large panel X-ray sensors, which have much better resolution at significantly lower doses than what exists out there today, and we have a lot of orders in that area and those are increasing, so we are bullish on that part of imaging. I hope that answers it better, Howard.

That was very helpful. And then I just have one last question for Dale. To go back to the pension plan. What percentage are you funded today both for risk and for financial purposes?

The funding is at 91% to date.

So there is no required contributions for the foreseeable future?

That is right. There are not. Our policy has been to contribute to the pension trust an amount that is equal to what we pay out to retirees each year, but there is no requirement for payments.

I think the other side of that, Howard, is that as you remember January 2000 and forward, we stopped all new entrants in our defined pension plan, and today only 27% of our active employees participate in that plan.

Thank you gentlemen, for your help.

Thank you.

The next question from Jeremy Devaney with BB&T Capital Markets. Please go ahead.

Good morning, Robert. Thanks for taking the call. I wanted to start off taking a look at funded backlog. What was the total funded backlog at the end of the quarter, and how did you see the pace of orders through the quarter for both your government customers, and then separately more for your other end market customers if you could comment specifically?

For end our funded backlog, Jeremy, was $950 million but of course, that does not include our longer term awards, such as the submergible vehicles for the Seal delivery, or our OSF longer term contracts, so those are things that materialize in the next 12 months. Furthermore in Instruments, our book to bill is 1.2. In digital imaging it is likely below 1. And in general the only area that we are a little concerned about again is our engineering services, engineered services area, which segment, which the backlog, at least a 12 month backlog is about 0.8.

That is very helpful. If we look out into next year, I know how everybody is talking with you a little bit about some unforeseen risks. How would you say you are thinking about the defense budget as it relates to your specific businesses, I know the special opportunities community is looking strong for you, do you think you fully baked in sequestration and impacts to the full extent, or sort of just baking in the cuts that the OMB pass back to DOD right now?

I think overall we might have to take maybe a 5% cut if they keep doing what they are doing in 2012 in the government budget. I can't tell you about the out years. In 2013 I don't think sequestration is going to have an effect on us. The reduction in spending in Afghanistan and Iraq will have little or no impact on Teledyne. Any increases in UAV and battlefield satellite communications which are high priority, would be very positive for us. And really we are not going to build new platforms. We are simply going to maintain our older legacy platforms, and that is really in some ways very good for us because we have a lot of products that are going in those platforms. So overall, and finally, we do have one program that is coming which is a counter, complete integrated counter ID system that we are developing for a European customer, which could have a very positive effect on our defense program.

Would that be through the engineered systems segment?

No, most probably that would be through our electronics, defense electronics group and will probably be one of our European acquired companies.

Excellent. Thanks for the detail. I will hop back in queue.

Thank you.

We will go to Mark Jordan with Noble Financial. Please go ahead.

Good morning, gentlemen. First question relative to the tax rate. Significant decline projected for next year at 32.5%. Is that tied to Canadian tax benefits from DALSA?

Primarily. That and some European, and the fact that we have much more international sales.

Okay. Second question relative to pensions again. As you said you have been making contributions roughly equal to the funds withdrawn. Your $44 million this year up from $28.1 million. When given the demographics of your retiree pool, when do you see that contribution peaking?

There would be a number of years from now, Mark. On the positive side, we are doing two things this year which would have a positive effect on our pension. First, about 27% of the people that are in the pension program who are vested have left Teledyne, and what we are going to do this year, we are going to make an offer to buy them out, and that will take a significant liability off our pension. Second, we made a modification to our pension plan now which changes some of the calculations in terms of averaging every year's pension income versus the final five year average, which will have another positive, potentially reducing our liabilities by 10%. So when we do both of those, I think we have stabilized the pension for the future. But I think we will continue putting in somewhere around $40 million to $42 million a year, because we expect that to be the amount that will be paid out to our retirees.

Okay. Final question, if I may. Looking at the aerospace margins at 14%, do you see that as sort of an area where that segment will stabilize, or how do you see that segment oh he veer the next year or two, from an operating margin and profit margin standpoint?

I think that 14% is a good number. We might even go up a little bit. We are bullish on that segment, at least the part that serves the aerospace market. We have very strong positions in data acquisition and wireless transmission of data in both Boeing and Airbus, and as you know, their businesses have significantly improved, and their backlogs are at historical levels. Actually, they are beginning to pull in some products from Q2 and Q3 into Q1. So I think because of a mix of our products that we have shifted both there and in defense, I think our margins are going to remain in that range or even slightly above.

Thank you very much.

Thank you, Mark.

We will go to Chris Quilty with Raymond James. Please go ahead.

Thank you. Speaking of margins Robert, can you give us perhaps your general forecast for the growth rates in the margin performance by segment?

I will try. I just talked about the aerospace defense. I think in the commercial domain our margins should keep improving as it has in the past. Maybe 100 basis points over time, maybe a little more. In digital imaging, we are constrained a little bit from two perspectives. First, as I mentioned, in DALSA when they were an independent Canadian public company, their margins were healthier because they took the R&D tax credit above the line. Now we are taking it below the line, as Dale mentioned our taxes was actually taxed, our tax rates have gone down because of that. So we are not getting as much credit. The other part of imaging which is our scientific R&D centers we actually don't take profit there, we intentionally reinvest the profits there in our R&D, and that of course, making the product better products for the rest of our segments. All-in-all I would say that if you look at our 11.7 GAAP margin this year, we should be able to increase that maybe 40 to 50 basis points next year.

Okay. And I mean you have had good improvement in the aerodefense segment margin-wise, are the current margin levels sustainable?

We believe so.

Okay.

And you have never seen me be so bullish about anything but I am.

That is good. Another question just regarding DALSA. Did you give the organic growth rate? I may have missed that.

It is about 10%.

Okay. And regarding the buyback plan?

Yes.

I guess you had mentioned that was sort of a tradeoff between the M&A opportunities and obviously the stock price. Have you seen any improvement in the pricing or valuations in M&A, or would you be more inclined towards repurchase as a way to deploy the cash?

Both. We will buy back stock as opportunity comes our way, as we have announced we are out to buy 1.5 million shares. We have only bought about 650 million. On the other hand, we are seeing some opportunities in M&A right now. Interestingly enough, we like our properties that we see especially in Canada like where we got DALSA, and so we expect to be active there, too. As Dale mentioned, we do have about $500 million that we have access to, and we are generating really healthy cash as you know that we generated over $220 million this year.

Final question regarding energy. I know most of your activities are focused on the offshore, so I guess a two-part question here. Do you have opportunities in the fracing market which seems to be one of the faster growing areas, and alternatively the growth of that type of energy extraction take away from the growth in the offshore?

I don't think it will take away from the offshore at all. We do participate a little bit in the fracing. You will see us increase our participation there, both from our capability to offer products on the top side, as well as use some of our environmental instruments which of course, as you know are in need there. So we see that being very positive for us. And as you know, that primarily at least gas or very heavy oil in this country, in deepwater energy production we don't see any slacking of that. Actually, the most recent data that I have looked at shows that the Christmas trees, which are the structures that sit at the ocean bottom, the number of them from 2011 to 2012 should go somewhere from 350 to about 600. And that is very positive, and a lot of that is deepwater which is where we excel, and we have a whole bunch of new products, including high power pit throughs that can carry 6,000 volts and over 200 amps. So we are very bullish about that area.

Great. Thank you for the comments.

Thank you.

And we will go to Robert Kirkpatrick with Cardinal Capital. Please go ahead.

Good morning.

Good morning.

Could you explain to us why CapEx is going to be going from kind of the $40 million to $60 million number? Are there certain opportunities you are trying to take advantage, or are you just more bullish on the American economy, the world economy? Help us understand that a little better, please.

There are two primary reasons. One, as we have indicated before, we are developing a large capabilities in our DALSA semiconductor facility, and our Vermont facility, to begin production of uncooled long wavelength infrared products. And those would be VOX space. And we are making commitment to capital there. The second is that historically because of all the acquisitions that we made and all of the various businesses that we have, we have put together a series of ERP systems that are not the most efficient for a company that has now evolved to where we are, so we are going to probably invest some where about $10 million or so next year in upgrading our ERP system across the Company. And that kind of investment will continue over a number of years.

And would there be operating expenses associated with that as well that are substantial, the latter one, the ERP upgrade?

No, I don't believe so. There are some expenses, those would be offset by savings as we go forward. Net/net over time I think that will pay for itself because as you improve your ERP systems, you reduce the number of things that you have to do to get the financials up.

Okay. And then maybe a question for Dale specifically. Your pension expense this year, and your projection for it next year as it runs through the income statement?

Well, as we pointed out in our Q for 2010, the pension expense associated with the 25 basis point change, and the discount rate goes up by $2.2 million, so you can calculate what the difference would be in expense associated with the discount rate change.

Super. Thank you so much.

We go to Kevin Ciabattoni with KeyBanc Capital. Please go ahead.

Good morning, guys.

Good morning.

Just looking first at specifically the OSF and Seal delivery vehicle. You mentioned I think last quarter you saw the OSF at kind of $30 million to $40 million for next year running about $8-plus million a quarter. Is that still the case?

Yes, I would say about $8 million a quarter. Could be a little more. And SWCS, which is the delivery vehicle next year it is going to probably be, since it has been in a development phase, about $12 million to $15 million.

Okay. That is helpful. And then looking at the DALSA business at their kind of more commercial industrial end markets, what do you see there in the quarter, and what are you looking at for 2012, in terms of I guess kind of directionally?

I think in the first quarter we are looking at first and then maybe part of the second quarter, we are looking at reduced sales in our standard products, which are going to let's say flat panel display inspection. We think that will pick up later in the year. We think that in the special products that we develop for our customers, we have a whole suite of products that are specially developed for customers, where they pay for R&D, there we are going to do fine. We have a lot of projects underway. And as I indicated before, the X-ray area is going to be really our big growth area. We expect that area to substantially grow year-over-year. To summarize, short-term we think semiconductor is going to be, semiconductor inspection, flat panel, even though we do play in the tablet computers that is not sufficient to make up for the flat panel display, we are going to see a positive in Asia, in security, maybe slightly negative in Europe and semiconductors.

Okay. And that X-ray business you guys are funding, is any of that R&D customer funded there?

Oh, yes.

Okay.

Significantly.

Okay. And then lastly, you mentioned that you were seeing some improvement in the M&A kind of pipeline. Is it fair to say you guys would be looking at more commercially focused applications there, and continuing to shift away from the government defense business?

That is very fair.

That is all I had. Thanks.

Thank you.

We have a follow-up from Jeremy Devaney from BB&T Capital Markets. Please go ahead.

I just wanted to circle back. Earlier you said you were on a consolidated basis your are looking for 40 to 50 bips increase in EBIT margin. And you were also talking about the ERP system that you are going to begin putting into place. Are those two tied together? What are you seeing as the largest driver of that margin expansion really?

It is not the ERP system I can assure you of that. The ERP system will pay for itself hopefully if we do everything right. The margin improvement is primarily because of the shift in our product mix. First, shift in the commercial domain to higher margin businesses, instruments, oil and gas, international. Second, even in our defense businesses, we are moving more towards higher value-added products, the kinds of things that OSF and submergible vehicles for troops, gliders, and also for data link to UAVs. Battlefield communication. And finally, I think in the commercial aerospace, we are bullish on that area only because most of our products are communication devices, data acquisition, and wireless communication for commercial aircraft, and there we own significant chunks of the market in things like the 737, 777, and those are where we see our margin improvements coming.

That is fair. It continues to be very granular. Do you see the instrumentation business being able to go 20%-plus margin next quarter, and within the engineered systems business do you think that is going to be 9%-plus?

This year the instrumentation business was 19.9% to be exact. We think it will remain around there, 19.9% or 20% over the next year. Those are healthy margins because we are also investing in R&D there. On the engineered systems, we think that will probably go down somewhat. It is a little over 9%. It will probably go down to a little over 8%. And frankly the guidance that we have given up today, as you saw is as usual, it takes all of the risk into consideration, and we don't have for example any in our engineered system business, we don't have any revenue baked in for our USEC nuclear manufacturing that goes for that business in there. So those margins would be a little under pressure.

And actually you brought up one last good question. I don't want to hog all of the good questions here, but USEC. Where do we stand today? I know we have seen some press releases out of their entity, but it seems like it got pushed out of the budget for 2012. What are you seeing, Robert?

Well, they got a little funding relief. They got $44 million recently for some of the reserves that they had for the nuclear products. They may get some reprogrammed money for development, and I think they are positive about that. From our perspective the way we run this Company, as you know historically we don't count on things we don't know about, and so that is not in our budget right now.

That is $30 million to $40 million a year, if and when it comes through at full rate?

Yes, and it is not in our projections, with this administration you can't put things like that in the projections.

Excellent. Thanks for all of the detail.

Thank you.

At this time there are no questions in queue.

Thank you very much, Operator. I will now turn the call over to Jason to conclude it.

Thanks, Robert. And thanks everyone for joining us on the call this morning, and if you do have follow-up questions please feel free to contact me at the number on the earnings release. Operator, if you could just give the replay information and then conclude the call, we would appreciate it. Thanks again.

Sure will. Ladies and gentlemen, this conference will be available for replay after 12 PM today running through February 26th until Midnight. You may access the AT&T replay system at any time by dialing 1-800-475-6701, or 1-320-365-3844, and when prompted enter the access code of 222575. The numbers again 1-800-475-6701 or 1-320-365-3844, access code 222575. That does conclude the conference for today. Thank you for your participation, and for using AT&T Executive Teleconference. You may now disconnect.