Toro Co (TTC) 2002 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Toro Company fourth quarter year-end conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the one, followed by the four on your telephone.

As a reminder, this conference is being recorded Wednesday, December 11th, 2002.

I would now like to turn the conference over to Ken Melrose, Chairman and CEO of the Toro Company. Please go ahead, sir.

Thank you, Carrie (ph). Good morning, ladies and gentlemen, and greeting from our Minneapolis headquarters, where we're still lighting candles for snow, but those of you in the East are much more blessed than we have been so far this snowy season.

We thank you for calling this morning, and appreciate your sitting in today. I have with me, as usual, Steve Wolfe, our Chief Financial Officer, and Steve Keating (ph), our Director of Investor Relations, and they will assist me in answering questions that you may have after my remarks.

As usual, I would just ask you to keep in mind that, during the call, we'll make certain predictive statements. They're to assist you in understanding our results. You're all aware, I know, of the difficulties in making predictive statements in a highly seasonal and cyclical business such as ours. Our company's 10-K details some of the important risk factors that may cause actual results to differ from those in our predictions.

Let me review the highlights for the quarter and the year. The press release copy goes through into detail the various changes that have occurred to date. I'd like to also cover it again, though, since there are many numbers to look at, and all the new accounting rules add complexity to corporate reporting. So I'm going to talk through the table in the press release that hopefully you're looking at and you can follow along with me.

Starting with the fourth quarter, you'll see the first line shows the diluted earning per share that we reported in '02, 39 cents against '01's number of 17 cents. So it looks like it's a big difference, when in actuality it's much less.

First of all, we had to adjust the 39 cents because it included a positive credit that we are now booking in the fourth quarter from the decision to stay in our Riverside office facilities opposed to moving when we decided to close the plant and move production to Juarez, Mexico. We also put a reserve in for moving out of the whole office complex; we've now decided to stay. So we now have to reverse that, and that is part of the 39 cents.

Also, we, as you know, announced the closing of our Madera, California plant, where we make micro-irrigation for agriculture. And that was a restructuring charge, but on balance, that was 8 cents when you put the two -- the positive and negative together. And so we need to take that out of the 39 cents.

Also, looking at 2001, as we did the whole year, we included the goodwill expense in the '01 numbers and not in the '02 numbers, so we have to adjust one or the other. And so we put back in the 12 cents of goodwill expense in the fourth quarter of '01. So you have to add that to 17 cents, and then that nets out 31 cents in '02 versus 29 cents in '01. And that's the way -- one way for you to look at our business flow or ongoing earnings in comparison with the previous year. Similarly, we've done the same for the year, as we have in the last several analyst calls and releases.

Our reported diluted earning per share, which, again in '02 includes the goodwill adjustment, was $2.73 against $3.86 reported in '01 for that fiscal year. You recall in the first quarter we took a large impairment charge relating to our drip-in agricultural irrigation business. That cumulative effect was $1.90. That is a reduction in earnings for the year. So we would add that back to the $2.73, as we also would the restructuring expenses due to the announced plant closings, which -- most of which have been affected, and now Riverside irrigation plant, the Evansville, Indiana plant, where by and large we made commercial equipment for golf courses, and then the aforementioned Madera plant for irrigation.

And again -- so that's 44 cents that we add back in. That also includes Riverside office accrual that we reversed.

On the 2001 ledger is a credit that we received or we booked because we had too much of an accrual for the plant closing that we made earlier in the 2000 in Sardis (ph), Mississippi. Then, of course, we need to adjust 2001 for goodwill amortization, and that was 61 cents to add back to the previous shares ledger. And then lastly, due to buildup of foreign sales company credits, we are adjusted back 14 cents of a tax refund due to overexpensing taxes on our (inaudible) corporation. That all nets out to an apples to apples comparison of $4.93 in '02 versus $4.44 in '01, which is an 11% increase in, again, as I would say, ongoing earning, giving you a better measure of how we performed against the previous year. So hopefully that is clear. I know it's hard to explain on the telephone.

Now, let's get into the business. We were very pleased with our double-digit earnings growth for the year, particularly under the adverse conditions that we experienced, but economically and weather-wise. Our revenues fell short, however, of our original expectations, but as we stated throughout the year, our continued emphasis on asset management allowed us to respond quickly as the market conditions changed or were revealed, so that we could keep our field inventories in check. This asset focus has also helped us improve our receivables and drive them to lower levels.

Moreover as we stated in the press release, we have significantly reconfigured our manufacturing footprint to improve the capacity alignment and reduce costs, and talked about this now already somewhat. We did close our Riverside facility earlier in the year and moved that production to our existing plants, primarily in Juarez, but also to some extent in El Paso, Texas, right across the border from our Juarez plant.

We also closed our Evansville facility, moving that production to current plants in Nebraska and Windham (ph), Minnesota. In addition, we transferred the majority of our Power More (ph) production from the Windham plant, historically our homeowner/lawnmower facility, to a second plant in Juarez. And as a result, this has enhanced our ability to meet our customer needs and significantly reduced costs. Moreover, in the fourth quarter, as I said at the beginning, we made the decision to close our Madera plant in California and transfer its production to our other irrigation manufacturing sites down near El Paso -- or excuse me, down near San Diego, California.

At the same time, we've decided to keep our sales offices at the existing site in Riverside. It just didn't make economic sense to move to a new office. And that allowed us to reverse some accruals on our previous closings. The combinations of these one-time charges resulted in a before-tax restructuring and other income of $1.5 million in the fourth quarter, and that is 8 cents, as I mentioned, (inaudible) the table, 8 cents a share.

We have begun to see these facility decisions already paying off. You note the higher gross margins we obtained in the fourth quarter versus last year, and this is the big reason for that. And because of this, we certainly expect to see strong improvement in gross margin percentages in fiscal '03. So we'll get really good benefit from these changes in manufacturing for the whole of fiscal '03.

Our revenue growth this year was only 3.4%, due to a combination of managing our inventory in the field better, weak economies worldwide, and also unseasonal weather patterns. So, by adjusting our production schedule from lowering our sales, we were able to meet these challenges without building excess inventories, either internally or in the field. And we actually, on balance, have driven our inventories down in virtually all our businesses, expect our Power More business, and that was because of the dramatic increase in sales through the Home Depot.

These production cutbacks caused some pressure on our margins, and as our plants were not totally utilized during the year, but we felt these were prudent moves to make under the circumstances, and certainly puts us in excellent shape as we head into fiscal '03.

The -- looking at the segments, the residential division provided the revenue growth this year, with a 9.8% increase. This was driven by the introduction of our new line of walk (ph) power mowers, which we sold through Home Depot as well as our independent dealers. And moreover, the acceptance of this product exceeded both ours and our retail customers' original plans. The transfer of our production to the new facility in Juarez should allow us to be more flexible now in meeting future customer demand and also to improve our gross margins.

In addition, our home solutions product line, which is trimmers and blowers and the electrical appliances for outdoor use, they did very well, led by our new cordless trimmer, and our retail irrigation products, which fall into this category. New products and greater product placement were keys to this growth. Our rider market, on the other hand, continues to be soft, as customers appear to be moving somewhat away from the traditional lawn and garden tractors.

However, our TimeCutter product line, which is a zero turning radius riding product, should allow us to regain market share in that business. Snow Toro (ph) sales were down significantly from the previous year, although we had planned for this accordingly by managing shipments to keep field inventories low. So this puts us in a good position should we get good snowfall this winter. We saw good evidence of this, as Snow Toros were retailed pretty robustly out East, and dealers and distributors are inclined to scale (ph) back their pipeline from shipments out of our facilities here.

Our professional division is up slightly, even with the reduced shipments of landscape equipment products to correct our field inventories. Landscaping market continues to grow at a double-digit rate. The retail sales levels for both Lexmark (ph) and Toro were strong, and we did - we do believe we maintained our market shares in that category.

Our golf business improved somewhat, but that market is still depressed. New products and a continued focus on the customer have allowed us to grow our already strong position, both domestically and internationally in the golf area.

In reviewing our balance sheet and cash flow statements, one can clearly see the emphasis we put on asset management for the company. While we've reduced our inventories and receivables, we were, at the same time, able to pay down substantially all of our short-term debt. We were able to repurchase stock and make significant capital investments for the future. So we obtained a significantly higher operating cash position, which should put us in excellent financial position for 2003.

We're poised to take advantage of strong positions in our growing business in the most cost effective manner. However, as you all know, these continue - there continues to be uncertainties in the political and economic arenas worldwide, even if weather prospects are better than last year.

So that leads us, based on our conservative nature, to initially expect revenues for '03 to grow in the 5%-7% range. But even with this uncertainty, we're confident that we can obtain at least an earnings per share level in the $5.45 to $5.55 range, which is approximately 10%-13% increase over fiscal '02 numbers before all the charges and tax credits are effected.

At the same time, because we still wait indications of the snow through our markets, particularly in the Midwest, we're estimating our first quarter, which is our smallest in terms of revenues and earnings, to have fallen an EPS range of 10 cents to 15 cents per diluted share.

So, I appreciate your attention as we go through all these numbers. Let me stop and turn it over to Carrie to field any questions that you may have.

Thank you. Ladies and gentlemen, if you would like to register a question, please press the one, followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one, followed by the three. If you're using the speakerphone, please lift your handset before entering your request.

One moment for the first question.

Our first question comes from the line of Aaron Ravencroft (ph) with Janney Montgomery Scott. Please go ahead.

Good morning, gentlemen, and congratulations on a great year.

If we could start just with looking at the revenue expectations for fiscal '03, could you provide a breakdown of that? Where will the greatest strengths be versus the weaknesses? And could you discuss the success of the midprice point product at Home Depot in '02 and expectations for '03?

Sure. Let me just start from the rear of your questions. We have pretty bullish expectations for '03 with the Home Depot lawnmower line. First of all, from an economic standpoint, it will - virtually all that product is being produced in Juarez, whereas this past year, it was in Minnesota. So our cost structure will improve somewhat.

And the year last year with both the dealers, and as I said, with Home Depot, was better than we had started thinking it was going to be. And the sell-through was very strong. So we start '03 with very little of that (ph) inventory in the Home Depot stores and in our dealers. So, typically, when you introduce a new product, you have a pipelining effect, which doesn't continue on. So sometimes the second year doesn't quite look as favorable to the first year. We don't think that's going to happen because of the inventories being so low, and we think, again, there's going to be increased demand as our retailers get even more behind that product. So, in short, we think that part of our residential business will be another good growth piece.

We're introducing a new line of ZTR mowers for the homeowner at much lower price points. Again, the Home Depot is going to carry that in some of their stores, but not all of them. But they -- it's a relatively new category, and I think the Home Depot is being cautious on that. But that -- I think that's going to be a good business, if we get some good snow. That's going to certainly be, for '03, a better snow-thrower season than we had last year. That's more of a testimony to last year probably than what may happen this year.

So the residential side, we think, is going to be very good, and then - and I can't quantify that in my head because I can't add all these qualitative points of view up. But if you turn to commercial, we had a disappointing year in the landscape contractor business, as I said before, even though the retail was strong.

We think the retail will continue to be a double-digit growth for the industry, and now that we are starting the year with a much better inventory position in the field, our retail and our shipments will be much more in align. So we expect it can get back on a double-digit growth track, as we have for the last several years in that part of the business.

The irrigation business, which has been going through a recovery the last year or so, I think is getting up a good head of steam. And we think that business will continue to be good for us, both for the Toro and the Iritrol (ph). And the golf business is -- I think that's bottomed out. It may not be a big growth piece this year, but we don't think it's going to continue going down. So I think we'll be able to hold our own and do well there too. So if you look at each of our businesses that way, I think the net of that is, most of our businesses will have some nice growth in them.

And if we just look at the mix of up products regarding margins. How will that fall out? Will the restructuring benefits be even greater than what we were expecting, but it's somewhat hidden because of the mix of high residential? Or could you just provide a little detail on that, or color on that?

Again, it's hard to quantify the pieces. We'll obviously get a strong improvement in margin in irrigation, because that's where the major cost changes are occurring. We'll get, as I said before, some cost improvement from the lawnmower production change to Mexico. Our 5 by 5 initiatives, which started around the cost of sales and asset management areas, will continue to deliver some improvement, and that will be across the board because that's been a corporate initiative that is showing up not only in the manufacturing processes, but also sourcing materials and product design.

So, again, you're getting some contribution of margin improvement from a lot of areas, and I think -- as I said, we'll see for '03 good growth, but leverage that growth with good margin improvement in our manufacturing of products.

Okay. And just a little housekeeping. What are your expectations for cap ex and D&A for fiscal 03?

I think Steve has those figures. Wait a minute here.

Hi, Aaron -- Steve Wolfe. (inaudible) in the 50 range, 52, I think, to be specific. And depreciation and amortization is in the 35 range.

So there will be an increase in cap ex next year?

We're still finishing up some of the moves and the things that we're doing in Mexico, and with our El Paso facility, plus we have our normal cap ex that we would have with our ongoing business. So that's where our plan is. Whether we spend all that or not, we'll see how the year rolls out. But it's another fairly healthy investment year, and we're fortunate we've been able to do that because of our results in '02, and our cash flow has been strong, so we're going to reinvest a good number of those dollars.

OK. And just touching on that for a second. What other usages of cash do we expect? It seems like you will be throwing off some good cash next year.

What are the uses of cap ex ...

Will you be paying down debt further, or repurchasing stock? What's the plan for your free cash flow?

We'll be doing that. Certainly we want to -- our first thing is we pay down our short-term debt. And we were able to get down to literally no short-term debt at the end of the year. I think we had a little over a million bucks on the balance sheet. But that would be our first goal. We would buy back shares as we have, as we feel it's the right thing to do value-wise, and to fund our benefit plans. And then we're also still - have our eye out for the right acquisition. So, multiple uses of the cash.

How has the acquisition pipeline been?

How has the acquisition which been going?

The pipeline for acquisitions. Is it robust, or is it still weak?

No, it's not robust because our industry is -- well, it's not a terribly acquisition-oriented industry. There are niche players that we think are attractive. We have, over the years, talked to a lot of them -- companies like X-Mark (ph) or Goosen that we've acquired recently. There are some others that we think would be of interest to us. Snapper just got bought by Simplicity. So there are some opportunities to bring in another brand or another product segment to fill a gap or a bolt-on kind of acquisition.

And we're certainly interested in doing that and have, as we've been saying for the last two years, been in just a friendly dialog with several companies. But most of them are privately held, and there's not much of an appetite for the seller to make a deal.

The big -- there are not many companies that are large that (inaudible) an opportunity for us, and so you do see some concentration going on that consolidates into the larger companies. But it's not a robust activity for not only Toro, but for our industry.

And the economy, I'm assuming, hasn't created any opportunities. I guess that was my main interest, to see if - you know, it's been a tough market out there for most companies. That hasn't created any more willingness by some sellers?

Other than Snapper, which has been a company that has been speculatively talked about for long before the current economic period, other than them, there hasn't been -- nobody has all of a sudden, because of economic woes, come up on their radar screen. And our bent has really been not so much, here's an opportunity because of a depressed price as opposed to, here's a company that makes good strategic sense for us, regardless of whether it's a healthy environment or a depressed environment.

So we haven't really changed our efforts or views about this whole area. We continue to think -- like I said, there's some companies that would be good fits, and we could make one plus one equal three if we could convince them to emerge with us at an appropriate price.

And lastly, what's the competitive status of MTD these days?

The competitor status of MTD? Well, they're competitive. They're an aggressive -- a very strong company. I think they're doing some very good things with Lowe's with their brands. They have similar strategy as we do, taking more than one brand to segment the distribution channel -- as we tried to do with Lawnboy and Iritrol and X-Mark, they have many more brands than we, so they have more ability to do that - (inaudible) and Cub Cadets and Bowens (ph) and - as well as their own MTD brands.

So - and they're just a very robust player. So we have a lot of regard for them, both in the large, big-box retail, as well as in the dealer channel.

Okay. Thank you very much.

Our next question comes from the line of David Russo (ph) of Salomon Smith Barney.

Hi, good morning. You mentioned something interesting about rolling out a ZTR for the consumer. We've been seeing a trend where the consumer has gone up and went into the commercial ZTR trading up, cannibalizing some of the high-end riding mowers.

Yes.

This ZTR that's going to be rolled out of Home Depot, what's the timing on that rollout and how pervasive is it? And the price point on it, relative to, like, Deere's new X series, obviously the high-end riding mower. What's it going to be priced at?

We'll roll that out in the first year to, I'm going to say, roughly 10% of their stores, and I think it's two markets. I'm not even sure which of the two markets, but the -- then they're still talking about that. But the price points - we'll have three models that will range from a little more than $2,500 or maybe $2,700 to $4,000, or $3,500. So you'll have three models that will step from $2,700 to close to $4,000, whereas this past year our consumer Zs were 4,000-5,000, and when you got up to $5,000 you were close to a commercial grade product price.

So what we have done and the reason why homeowners are buying some commercial products is because, up until recently, there just hasn't been a product line in a reasonable price range available. And now what you're seeing with Toro, and you'll see this with some other competitors as well, is products that didn't start from the commercial platform in (inaudible). You're seeing platforms that are wholly created for the homeowner market. And don't have maybe the infrastructure cost that a commercial unit has.

So now you're seeing much better pricing for our Zs and some other brands. And they will compete pretty nicely with the John Deere - well, the John Deere lawn tractor, I think, is a $2,000 or $3,000. I'm not sure quite ...

There is actually even a higher end. This is interesting. It's a very much consumer-oriented product to be at this price range you're talking about of 2,500 to 4,000. But it is clearly a direct competitor now versus the higher end riding mower.

Second, the consolidation we've seen in the last couple of years with X-Mark and Arris (ph), and now Snapper and Great Dane (ph) and so fourth, we've had pretty good underlying retail demand. You mentioned the idea of share gain next year. What are you seeing competitively now that - especially that Deere's pretty much integrated Great Dane. I think everybody's got their partner now. The competitive landscape of the next year, people trying to move forward and get some share.

What are you seeing on pricing? Who in particular seems to be really trying to make a push now that the chips have been laid down, everybody's ready to move forward on a consolidated basis?

Well, there are some -- I think it will be a more competitive environment because, like you say, people are out looking for how to build up their landscape business with acquiring a smaller player. A Skaggs (ph) will continue to, I think, be a strong player. They just have a very strong position in the market.

You know John Deere's got to start coming up strongly with not only their Great Dane purchase but just their whole engineering of new products to fill gaps. And they will be -- they're more going to be John Deere products than Great Dane products. And they're not as -- they're just going to be a bigger factor.

I'm not sure they'll do that by price, but by just doing what they do so well -- good marketing and distribution and service and having very good products. So they're going to be a growing factor in the marketplace. Aaronson (ph), Simplicity, the (inaudible) are going to continue to expand their line. People are getting into the standup Z mowers that you ride on a platform behind the mower. More and more companies will be doing that. It's kind of a new concept of zero turning mowing.

Have you not seen -- maybe the prices aren't really out there yet for the spring selling season, but have you seen increased programs out there, given you have a player like - with deep pockets like Deere pushing in, and as I said earlier, about people starting to digest their acquisition. Have you (inaudible) seen more aggressive programs for the spring?

There's more aggressive financing programs. More people are doing that, perhaps taking John Deere's lead because they're probably the strongest player in that aspect of the programs. We haven't seen material price reductions, and then maybe one of the reasons for that is because the steel tariffs created such an increase in the price of steel for all the domestic manufactures. Everyone's kind of struggling to eat those increased costs. On balance, you're seeing some price stabilization or maybe even a little higher prices, but you're not seeing significant price reductions -- at least we don't see that.

I appreciate it. Thank you very much.

Ladies and gentlemen, if there are any other questions, please press the one, followed by the four at this time.

Dick Henderson (ph) with Pershing, please go ahead with your question.

Good morning. It was a terrific year.

Just to follow-up on the cost reduction and productivity improvements, you guys did a terrific job on the manufacturing front. Could you spend a couple minutes and talk about the direction and what you're doing in the - in improving the SG&A to sales ratio?

Sure. We have - this is kind of like most things -- when you start a corporate initiative, you look at the big areas first as you get more and more of the organization attuned to driving towards your goals. So asset management, cash flow, inventories, fixed assets like plant and equipment, as well as purchasing, those were the big items that 5 by 5 (ph) addressed aggressively beginning in '01, and then this past year. And you're seeing the benefit of that finally, and will even more so in '03.

The SG&A area is a lot more difficult to -- it's one thing to go to your plastic or steel suppliers and try to renegotiate prices, but to add 5,000 employees working on saving $100 or $1,000 or $10,000 by changing their process or doing something a little differently. You know, eventually that all adds up, but you spend a lot of time getting people to think differently about how they do business, and it takes a while to see much yield.

And that's what's happening here. We're finally starting to see some improvement in SG&A from 5 by 5. It wasn't the biggest deal of the day in the beginning, and that's not where we focused most of our effort. But little by little we're picking up some nice savings, whether it's standardization of parts, whether it's the engineering design process, or some of the just warranty administration warehousing things that -- all these things need addressing and focus, and we're doing that now and we're -- I think we have an organization today that's much more willing to look at change as a partner rather than an adversary, and once you change people's inclination to initiate change, then you've got a rolling snowball. And I don't know how big it will get, but it's happening here, and we're going to see benefits that will go on for some years.

Can you offset the increases in insurance, healthcare, and those sorts of -- so that you could show steady improvement in that ratio?

Yes, I think we can do that. And again, you've picked on some difficult areas where it's going the wrong way, and so that means that the gains we make get masked in the negative variances in some big cost areas. Legal litigation is another big eater of incremental savings. But on balance, we will slowly but surely drive our SG&A as a percent to sales down.

In terms of cash flow, you mentioned that your sales expectation was 5%-7% or so. What do you think is going to be the impact on your primary working capital units, accounts receivables, inventories, and payables?

In other words, on an incremental dollar of sales, what's the percentage that would be eaten up by those three components? And I guess on the other hand, your asset management programs are working to drive that ratio down. Could you just comment?

This is Steve Wolfe. I don't know that those ratios will change a lot from what you've seen. When we look at cash flow and we look at what we need the focus on, it's receivables and inventory are the two main components. We did a relatively good job in '02 doing that, as you've seen. We've had cash flow - cash provided almost doubled. And that was a result of the lower receivables and inventory numbers that we ended up at year-end. I would see that -- it won't be as dramatic next year because we've taken that big lump kind of out of the system. But there's still room for improvement there.

So you think you could show a positive number on those three components netted?

Yes, certainly.

Okay, very good. Last question -- on the projection on the first quarter, not trying to get too cute, but in that -- for that range, what were your sales expectations, rough, versus last year?

We're not ...

In that first quarter, because, you know, your gross margins should be up, and your interest expense is down, your share count is probably down, and you earned whatever it was, 12 cents. So ...

Well, the sales number is ...

As I say, I'm not trying to get too cute, but I -- just trying to get a sense because it is seasonally slow. It's kind of a more insignificant quarter. But I was just kind of curious.

We don't look too hard at whether it's 5% up or down. It's driven a lot by -- if we can get - ship all of our snow through our inventory in the first quarter, and that's fueled obviously by snow - snowfall. So, you know, it is a small number, and basically ...

It's anybody's guess.

The other businesses are somewhat dormant, and they're pretty much saying from year to year, you don't see any major swings like if you initiated the Home Depot kind of program, you don't really see much of that until January or February, maybe some in January, that affects the first quarter. But again, it's kind of business as usual, and then what are you going to do in snow throwers that might change the relatively of the first quarter versus the previous year?

Very good. Thank you.

Once again, ladies and gentlemen, if there are any additional questions, please press the one, followed by the four at this time.

I am showing there are no further questions at this time. I would like to switch it back to you for any closing remarks you may have.

I would just say, when you net it all together with the momentum we have and the asset management and 5 by 5 initiatives that we started, all of that gives us - considerable internal momentum in cost effectiveness. So we're - think we are conservative on our sales number, but we know we -- even with a kind of conservative sales number, that will be very well leveraged for '03. So we're very optimistic about '03.

And on the other hand, we have a lot of good things going on the revenue side that make us pretty optimistic for the year. Now, usually when you have a successful year, as we've had in proved share (ph), what happens is the competitive set gets tougher. And so we expect a more competitive and tougher market arena for us. We're geared up and prepared for that. But we know that it's going to be more intense, either in new products or pricing or new programs.

So -- but all in all, the momentum is strong, and the leverage is working, and I think '03 looks - we're just - as optimistic with '03 as we were -- as we got through '02. So I thank you for your attention, and I hope you all have a very nice holiday here in the next few weeks, and we'll look forward to our first quarter call in three months.

Ladies and gentlemen, that does conclude your conference call for today. We thank you for your participation, and ask that you please disconnect your lines.