美國西屋制動公司 (WAB) 2005 Q4 法說會逐字稿

Hello and welcome to the Wabtec Corporation fourth quarter 2005 earnings results conference call. [OPERATOR INSTRUCTIONS] For your information this conference is being recorded. I now would like to turn over the call over to William Kassling, Chairman of the Board; Albert Neupaver, President, and CEO; and Alvaro Garcia-Tunon, Senior Vice President and CFO. Mr. Kassling, please go ahead.

Thank you. I want to welcome everybody to our fourth quarter and year end 2005 conference call. Not only is Alvaro on the call and Tim but Al Neupaver who is a new employee who has been on board about three weeks, comes to Wabtec as our new President and Chief Executive Officer after a long and successful career at AMETEK. He's been here only three-weeks but he certainly has hit the ground at a pretty fast pace.

Bill, thanks for the opportunity and I'm very happy to join the Company at such an important time in its history.

Well, it's a pleasure. It certainly has been a pleasure going through the process with you and I'm very excited about the leadership going forward. When I came back to become CEO almost two years ago I wasn't the man of the future. I had spent a lot of years but I wasn't the man of the future, but I did want to come back long enough to make sure that the Company was stable and in good hands. And really during the last two years I've been very pleased to be a part of a really a terrific management team, a good group when I came in. I think only one of the folks that worked for me had worked for me in my prior stint as CEO and they are just a tremendous bunch of leaders and they've seized on the growth opportunities on our rail transit business to drive Wabtec to a higher level of performance. That makes me feel very good about going forward with the addition of Al.

During this same time in this period over the last two years our customers really appear to be taking advantage of a tremendous growth opportunity in the rail industry both on the rail and the transit side of our business. That really bodes very well for Wabtec's future. My plans are to continue to be a part of that future as Chairman of the Company's Board of Directors and as a major shareholder. But going out and finding Al is just the right thing and we found actually the right man to lead Wabtec into the future. His track record of growth and operational excellence has been unmatched and we are really happy to have him aboard.

Now before I turn it over the call to our new CEO and our veteran CFO who remains in the job, I'll summarize some key points from our earnings release today. Before I do that I just want to call everybody's attention to our disclaimer regarding forward-looking statements that appears in the press release.

That being said the year and the quarter were excellent. Actually earnings grew 70% in the fourth quarter. And from continuing operations we almost doubled year ago results. For the year earnings were up 65% on the bottom line and up 73% to $1.21 from continuous operations -- continuing operations. So we really beat our initial target for the year quite handily. Cash flow commensurately was strong. We ended with debt at the end of the year net of cash of just $8 million, nearly no debt at all for the size of our company. That's $47 million lower than a year ago. And during that , in addition to that reduction we also during that period paid $37 million in cash for the CoFren acquisition early in 2005. So our cash flow was very strong adding back the acquisition.

Our end markets were of course strong in 2005 and we will talk about later why we expect that to continue. We also started to see some margin improvement in the second half of the year which we would also expect to continue. With that let me turn it over to Al who will give some thoughts about his first few weeks on the job Juan we can expect in 2006. Al?

Okay. Thanks, Bill in the first few weeks I've been quite busy and have learned a lot but I must say there's a lot more to learn. Last week we were able to tie a Board of Directors meeting, together with a general managers meeting and attend a transportation industry conference where we listened to all the major railroads and suppliers make presentations. The recurring theme of all those that presented was that this is a good time for the rail industry.

As for Wabtec specifically I've had time to interact with Bill, our Board and the management team, and I echo Bill's earlier comments, we have a talented and capable team of people and they are ready to build on their recent successes. During my interview process Bill and the Board were very deliberate and thorough. Although this took some time it gave me time to conduct my own due diligence on Wabtec and its markets. I'm happy to say that my instincts were right and that I'm now glad to be part of this great team. With that let's talk a little bit about 2006 and the outlook.

Today we affirm our previous guidance for 2006 of about $1.50 earnings per share which does not include expenses for restructuring actions that we are currently evaluating. Although I can't share or we can't share any specifics about the possible restructuring right now Alvaro will talk a little bit more about our financial goals as they relate to any actions we might take. As you know this 2006 outlook is based on current assumptions and market conditions which I'll cover later. And we always face certain risks, some of which we can't control such as geopolitical events, currency exchange rates, market conditions, and so forth.

If we look at freight after market Wabtec had double-digit sales growth in this market segment in 2005 as freight railroad set records for total traffic and intermodal volume. As you know higher traffic means they are running their equipment harder, and that leads to good demands for our components and services in the aftermarket. We are seeing more of the same industry growth so far in 2006. Carloadings are up 3% year to date with coal and aggregates leading. Intermodal is up 6% still driven by strong imports and exports. As I mentioned previously last week at the transportation industry conference we heard all about the growth opportunities that the railroads continue to see in the future. All of this is of course encouraging news for Wabtec.

If we look at the freight OEM market, market continues to be strong. Freight cars, industry backlog is about 69,000 units at year end. That number at the end of '04 was 58,700. Orders for the year came in just over 80,000 with a strong fourth quarter number of about 26,000. At the end of '04 in the fourth quarter that was only 12,200. Deliveries were about 68,000 units in 2005. Obviously demand here is strong and we don't see any weakness at this time. Locomotive deliveries were about 1200 in 2005 and we see similar demand going into 2006.

As you know we've announced a major locomotive contract in recent months that really solidify this business for the next several years. The contract for locomotives for Go Transit in Canada, Toronto, we have a contract for 27 units for about $112 million with an option of 26 more for a total potential value of over $217 million. Another contract with MTA of New York for work locomotives, a contract 28 units for 93 million with an option of ten more for a total potential of $112 million.

In addition to locomotive orders we also have growth opportunities in our traditional transit business which has been to supply components for subway cars and buses. One of the major contracts in this area is with New York City R160 project for 1700 new subway cars. We are supplying breaks, doors, and couplers for these cars and we expect our revenues to start ramping up late this year. Including options this is worth 250 million in revenue to Wabtec over the next few years. Another order from Port Authority Tans Hudson, PATH, for subway car components worth about 80 million including options should be starting in early 2007 as well.

Some of the key market drivers in transit are Federal funding, passenger ridership and both indicators are positive. The new Federal spending bill was passed in 2005. It comes with annual increases of about 8%. Writership meanwhile was up 2% through the third quarter of last year. And was gaining strength in the second half, probably due in part to higher fuel costs for commuters. That's an update on the market. Now for the details of the fourth quarter I will pass this on to Alvaro.

Thanks, Al, and good afternoon, everyone. Before I start the customary financial review I would also like to put my two cents in and say a few words on behalf of management and really I'm speaking on behalf of all management in regards to our change in CEO. First of all I would like to thank Bill for coming back after our tragic loss of Greg. All of us think we've made great progress over the last couple of years. I will probably make a little better progress in talking as I go along, but Bill has a style that is always demanding but always fair as well. It was truly a pleasure to work with Bill and we look forward to continuing our relationship with Bill through the coming years.

Having said that I would also like to let you know how much all of us have been impressed with Al during his short tenure here and how excited we all are to be working with him to improve the performance of our company. We put Al in a tough spot. We made him lead our annual general managers conference after only ten days on the job and we all truly felt we were in the hands of a seasoned Wabtec veteran. We were impressed by his team concepts and share his goal of making a good company great. Wabtec as you all well know is all about continuous improvement and we are eager to continue our progress along that path with Al. And having said that and pandering to both of my superiors I will turn over the financial results which I think you all will agree was a good quarter and a good performance for the year.

Sales were 20% higher than the prior year quarter. This was primarily led by the freight group where sales increased due to higher sales of components for new freight cars and locomotives in North America and the CoFren acquisition which I think you are all familiar with. Gross margin was 25.7% for the quarter compared to 24.8 in the year ago quarter. However, both quarters included some restructuring expenses. There was about 1.8 million in '05 and about 750,000 in '04. If you exclude these expenses in both quarters the gross margin for the quarter, for the '05 quarter was 26.4% compared to 25.1% last year which shows I think even more progress.

As you know we said that we continue to evaluate ways to improve our gross margins. Our expectations and we've been very consistent on this, are that we will be able to accomplish this through price increases, applications of our lean manufacturing principals, sourcing, and by taking possible restructuring actions. We talked about restructurings in our guidance release and if we decide to take these restructuring actions we would expect to achieve significant ongoing benefits. The actions would also require significant one time expenses but a large portion of these would be non-cash. On cash expenses we've said that we are targeting a pay back of less than two years. As you know these are very sensitive matters and we have to announce them at the right time, we've made no decisions yet about timing or just what these actions may be in the end so it's really premature for us to discuss any more specifics at this time.

In terms of continuing with the income statement operating expenses I think we did well there. As a percent of sales they were 14.9% in this years fourth quarter versus 17.6% in the year ago quarter. So we are getting the benefits of our operating leverage which increase our bottom line. Right now we are probably running at about the same run rate that we would expect for operating expenses in '06 so we're pretty much in the ballpark. Interest expense decreased to 1.8 million net primarily due to our lower debt level and higher interest income. We offset our interest expense with interest income and earned on cash balances.

Income taxes we accrued at 35% versus 36.5% in the year ago quarter. So it's a nice little improvement there. The decrease rate was due to lower effective rates in foreign jurisdictions and more income in lower tax states in the U.S. Continuing with the income statement we had a 1.6 million loss from discontinued operations. This was primarily due to a decision we made to liquidate our bus door joint venture in China. We said before we entered the China market in a small way to kind of get our feet wet, familiarize ourselves with the market and figure out where we are going to go from there. The operation was doing okay, but we never really thought it would progress to the point where our expectations for superior performance would be met and so we've decided to liquidate our position there.

Our earnings per share for the quarter was $0.34 versus $0.20 in the year ago quarter so was up 70% from continuing operations, I think Bill mentioned this as well, EPS was $0.37 which was almost double the year ago figure. Working capital, one of the principal elements of lean and one which we follow very closely is working capital management. And I think overall we did a very good job of working capital management. For the year even though sales were up significantly inventory was only up about 15 million. Receivables did increase somewhat during the fourth quarter but this was driven by a particularly strong sales performance in that quarter. I think Bill mentioned this number as well but I will emphasize it because it's one we are proud of. Debt net of cash on hand we have about $150 million worth of debt and we have about 142 million cash on hand. So net debt was 8 million at December 31, '05, and this compares to about 54.8 million at December 31, '04, and a peak of about 562 million in 2000. So essentially we are debt free. And I think we have tremendous flexibility on our balance sheet. And the question which we always get then is where do we go from here and what are we going to use our cash for.

Acquisitions remain at the top of our list but we continue to be very disciplined and highly selective in our approach. We've set no timetable for making acquisitions because we believe that's when you make mistake. We do have opportunities. We continue to explore them. And right now we will continued to the same. I think one of the benefits of having Al on board is this is going to be one of his areas of major focus and I think we will have more on this subject as we go forward.

Depreciation really to wrap up the final items was about 5.2 million versus 6 million last year. Amortization was about 1 million in both quarters relatively flat. CapEx for the quarter were 5.5 million versus 6.2 million last year. For the year CapEx came in at about 22.7 million versus 19.3 million last year, well under a D&A of 26 million and I think pretty much in line with our run rate again for '06 in general.

The backlog which has grown and which we've made several announcements right now stands, the total company backlog stands at 827 million versus 694 million at September 30. This is up 19% and just for clarification purposes because it's slightly different from what we've announced before this is a total backlog number not a rolling twelve-month total as we've previously disclosed. The number had gotten to be so significant that we thought total backlog would be more meaningful. Including option orders our multi-year backlog now remains over 1 billion which is I believe an all time high for the Company. And that pretty much wraps up the financial summary. With that I will turn it back over to Al.

Thank you, Alvaro. Thank you very much for the kind comments. In summary, we've exceeded our financial targets for 2005. And generated strong cash flow once again. Forecasting about $1.50 in earnings per share for 2006, excluding any restructuring costs. That's a growth rate of about 30% versus 2005. With most of that growth due to higher margins. We are completely focused on improving our margins and positioning Wabtec for future growth through the execution of our growth strategy. That completes our formal portion of the presentation. We would be more than happy to entertain questions.

[OPERATOR INSTRUCTIONS] First question, Wendy Caplan, Wachovia.

A couple of questions. First of all I would like to say welcome to Al and, Bill, it's been real. And I wish you all the best going forward. As to my questions, the backlog question, Alvaro, you said that it was a multi-year backlog. Can you give us some indication of how much of that should be worked off of over the next, through '06.

Through '06, let me see if I can answer your question slightly different. Most of the major contracts that we've announced, for example, Go Transit in Toronto, the Amtrak Locomotive -- I'm sorry, not Amtrak, New York City Locomotive Order and the PATH order in transit, those won't really have any meaningful effect in '06. Those are really '07 and beyond. And I think apart from that you can see kind of the normal operations in '06. I would say about half the total will be executable in '06 and the balance going forward.

Okay. And related to that the issue of the transit delays, we were sort of thinking it might be an end of '05 event and then it was a beginning of '06 and now sounds like it's an end of '06. Can you just help us understand what the issues are and I'm guessing they have nothing to do with your products but it's just the way things go. Is there anything that's meaningful there?

Again, Wendy, I said this before and I will say it again and I'm sure everybody has heard me say it so I'm just boring everybody but the one certainty in transit contracts is that there will always be a delay. The reason is the nature of the beast, unfortunately it's unfortunate for the car vendors, it's unfortunate for the suppliers, all these cars are basically almost designed from scratch and it's a very complex piece of equipment. They have numerous subs and somewhere along the way some of the subs will trip out. They will cause delays. Again the car manufacturer is doing this contract from scratch and he may experience some difficulties and you're right we thought that originally we would be starting to get a small amount of revenue in '05 and it would be ramping up in '06 and now it looks like there's been about a years delay and it will start ramping up towards the tail end of '06. But again it's simply a deferral, it's not a cancellation of any orders.

And it's not your products, right?

No.

Yes, right, correct?

It is not our products that caused them to delay, Wendy, but we are obviously just part of that chain of events.

And a couple other short things. CoFren, can you speak to it? It was about 5 points of the top line growth in Q3. Was it a similar amount in Q4? And how is it doing relative to its profitability at this point? And are there any other CoFren's out there?

Well, I'll take them in reverse order, Wendy. Hopefully there are a lot more CoFren's out there and I know Al has already taxed us with, we've been looking for them, but I think Al is going to increase our desire, our goal of looking for more of them but I think there are more of them out there and we would really like to give them. In terms of how it's performed in relation to our projections when we bought them I think it's done very well. It really achieved a number of goals for us as you well know. It increased our after market presence, it helped us expand internationally. It had technology which we can use here and we can transfer some of our technology over there and we think we can have a beneficial impact on our cost. So I think it helped us -- basically that's what we are really looking for in an acquisition, it really helped us on all those costs and I think the performance has also been in line with our expectation. In terms of what they added, we closed the purchase on January 31, for the year and the sales have been relatively constant. It's added about 25 to 30 million to the top line.

Thanks. And one, actually two more. Sorry, I'm not believable.

That's okay. We have got time.

What happens in China? I'm not sure I really understand it? And does the withdrawal from China have any -- state anything for the future in terms of your willingness to look internationally for business?

One thing for sure and I will let Alvaro talk about what happened. This is Al speaking. It will not dampen our enthusiasm about doing business in China or Asia at all. And obviously that's an important part of our strategy related to not only sourcing but the marketplace itself. And I will let Alvaro handle the portion of what happened there and why it became necessary to do what we did.

I guess I am still more of the repository of historical information. But what happened there Wendy and I think we said this from the very beginning we took a position it was a bus door manufacturing operation. And we basically did it in the form of a joint venture. And we did it as a way of putting our toe in the water to test the market. The operations there were as I said they were so so. We didn't set the world on fire. It wasn't a catastrophic loss or anything. We were basically slightly below break even but what we did is we evaluated our market position and we saw that even if everything went perfect that we still wouldn't achieve the critical mass and that it wouldn't make the difference in our operations that we'd hoped for going in. And it's kind of a little bit of the 80/20 rule, you spend a lot of time and attention on the joint venture and it's not really producing the results you want so in the end you make the difficult decision to get out and we explored different ways to do it and we just figured the best way was to just go ahead and liquidate the joint venture.

Okay. And finally and I promise finally, it seems to me as if people, investors are -- were very disappointed that your guidance was as low as it is given that most of us are above that level. I know about can mean, can have a wide swing but can you kind of give us some sense of whether it's -- some people don't know you as well as I and I guess I'm wondering whether this is just you being conservative as usual or whether there is something that we don't know that you know.

I can't again speak about the past. Statements or anything else nor would I want to talk about our guidance directly, but I think that it's very important that we have credibility and that one could say that being conservative is part of that but I will let Alvaro speak to really your question,

I think that's pretty much it, Wendy. Long-term we believe that our performance is what really drives the Company and we like our guidance to be something that people can be assured of. Obviously you can never be 100% assured of, but a little conservatism never hurts, but really the guidance speaks for itself and we will just stand by the guidance we have given.

Thanks.

Thank you, Wendy.

The next question comes from Jim Lucas at Janney Montgomery Scott.

Thanks. Good afternoon and extend my congratulations and welcome to you as well, Al.

Thank you very much, Jim.

And Bill I'm sure you are still going to be in the background as well.

I hope to be.

First question, Al, just, I know you are still relatively new but it strikes me you are moving from one company that is well known for its prowess and operational excellence to another company that has been immersed on the lean journey for quiet some time and I was wondering if you could offer a few general observations on what you have seen in your initial time at Wabtec.

Yes, Jim. When I go back with my experience with AMETEK, one of the first assignments I had when I became group president was to take over the operational excellence initiative for a whole company. And I actually advised one of the America standard plants. And as you know the history with American Standard and Wabtec exists. A lot of what have I see here existed in AMETEK. The one thing that we have here at Wabtec is they have imitated very closely to the Danaher business system in total and I think there is some tremendous advantages to that. I think if you take a look at the metrics for Wabtec they are very, very good results from an inventory turn standpoint, working capital as a percentage of sales and the culture here is good.

AMETEK was a great operational company as you know and part of, I think of any growth strategy that anyone has it's really critical that the cornerstone of that growth strategy is operational excellence or as we call it hear at Wabtec now QPS. Our business system. If you are going to grow the business and going to go after acquisitions it's really key that you could add value to the business systems that you are acquiring. So I'm really encouraged about what I see here and I hope to bring the good things that AMETEK did to Wabtec and make it even better.

Jim, I would only comment that when Al stepped in, I have a clear feeling that we are going to have a significant renewal not only of our past commitment but in terms of going forward, a rededicated commitment. I'm very excited about the continuous improvement to come.

That's very helpful color. If we switch gears on the gross margin side you've talked about the journey of the longer term going from 24 to 30%, the three buckets, price, sourcing, and lean. If you look at the improvements that were made in 2005, one of the areas that you alluded to during the year were the commodity headwinds that you were facing and the lag in getting the pricing put through. Can you talk a little bit about what you saw on the buckets exiting '05 going into '06 particularly as it relates to the price versus commodity GAAP.

One of the things we did do at the general managers meeting is that the way that our strategies are set up here at Wabtec we have our corporate strategic objectives which are really based on growth. And part of that is a performance first culture that we establish with goals of increased margin from strategic sourcing, QPS application, and pricing, the three buckets that you've mentioned there, Jim. And we did well in all three. When you look at the individual goals that were established, strategic sourcing did a fine job of offsetting as you know a tremendous amount of material installations and this business bangs a lot of steel and steel prices were up dramatically. And so that really helped in the performance in '05.

If I look at the pricing I think that this marketplace is probably traditionally hard place to get some prices in some of the areas although one thing we did here at the conference was a lot of good statements about pricing increases at our customers so that's encouraging and we are going to continue to push that. But there was pricing improvement year on year. And the QPS, the cost reductions I think we were able to get and meet our goal on the projects that we conducted in 2005. So I'm really encouraged and I think that we are well on our way to that journey of getting to that 30%. And we are going to continue working on it and it's going to take a lot more effort. It's going to be a little ways out there but I'm confident that we can get there.

Okay. And then finally on long-term top line drivers, two different areas if you could just touch on an update on the ETMS And, secondly, intermodal there's -- continues to be a lot of good news there. I was wondering how much of that do you think is contributing to the growth that you are seeing? And is what we are seeing in intermodal would you view that more as a economic cyclical recovery or do you think that there's a long-term secular trend? What are your views? And I think that might actually be more for you, Bill, given your long-term tenure in the industry?

Yell, I would say on intermodal certainly what has driven it recently has been the importation of goods from offshore. That does not show any signs of abating, but I think a secondary driver which has yet to really fully play itself out is a world where energy costs are significantly higher. And where there are considerable driver shortages for the trucking industry. The trucking industry needs to move more off the roads and more over the rails and really particularly the long haul aspect of what they do do. So I believe that -- and I think that we would find that trailer iron flat car probably had some growth in '05 after some many years of having trailer iron flat cars shrink. So those are very much positive factors going forward.

On the ETMS if there was any updates?

ETMS just where we are and have previously announced that the BNSF has completed over 1500 error free runs. They from all sources appear to be enthusiastic about ETMS and its potential for improved productivity and safety. And so we continue to monitor it. It's going to be a long process. But it still has significant growth opportunity for us and opportunity to improve railroad productivity.

Thanks a lot.

The next question comes from Robert Ravits with David J. Green & Co.

Yes, good afternoon. Two questions, first, sometime during 2005 the aftermarket business trended up. I'm wondering if you could update us on that and what are the drivers and the outlook? And I have got one more question after that.

Yes, Robert, I haven't heard from you in a couple of calls. Welcome back. Always a pleasure. The aftermarket did continue to grow albeit not at the rapid pace of the OE market but it still continued it's growth. In terms of the drivers really the key driver for aftermarket is traffic and utilization of the equipment. Carloading, revenue, ton miles, the increase in coal shipments, intermodal all those factor into after market growth because you are basically using the equipment more. So it increases the need for services and repairs.

You haven't heard from me because I've been watching it on the Internet. It frees up the telephone. But look, I couldn't -- can't resist asking you again to tell us the international business where do you think -- where you are now and where do you think you will be by the end of the year in terms of percentage of your revenues?

Robert, that's your question. We've missed it.

Here it is.

You want to answer?

Well, again, really for the benefit of everyone, international is an area where we think we have made a lot of progress. As a matter of fact we were reviewing it at our recent general managers conference. And the numbers still I think pretty impressive. When we went public in 1995 4% of our revenues and I think it was on a base of about 450, 500 million, were outside of NAFTA, were non-NAFTA and this year on a revenue base in excess of 1 billion, about 25%, just shy of 25% of our revenues came from non-NAFTA sources. So obviously that's been a significant source of growth for the Company.

A good size portion of that growth has come through acquisitions, and it's difficult to predict acquisitions but again we did CoFren in January of last year, that's proven to be very successful and we are looking for similar ones. And I think our organic growth from international was in double digits this year and we would hope that we could continue that growth. It's hard but we would hope so. And again we are actively looking for acquisitions abroad. So where it could be in the future it's hard to tell, but again it will be one of our key growth areas.

Thanks.

Thank you.

The next question comes from John Barnes, at BB&T Capital Markets.

Real quick, back on ETMS real quick I know it's a long process but do you require other rails to sign on to this project before it becomes commercially viable? And I guess I mean I understand being a launch customer but do you need one of the other rails or all of the other rails to get involved before the thing can really realize the full potential to Wabtec?

My understanding right now, John, this is Al speaking, that really an order of one would be commercialization of the product. And obviously we would love to have more involvement by the other rail companies but we are working hard and moving forward to try to make that happen.

The only thing I would add to that is that typically in the rail industry if you have a champion that really supports something, it tends to get to more general practice. Certainly our aspirations I think are beyond the BNSF. The only announced railroad thus far is however, the BNSF.

Very good. In terms of looking at the quarter and going forward revenues up 20% plus, but total cost looked like they were engineering and SG&A were only up about 2% and I realize you are getting some leverage and this is where a lot of this performance is coming from but is that disparity in the growth of those two categories, is that something that is sustainable or do you think those things will begin to converge a little closer together as time goes on?

Basically let me take them separate if I could, John. On SG&A, on the run rate you see for the quarter, is actually I think a pretty decent run rate for '06 so I think you always have a little bit of inflation, you always have one timers that go one way or the other. But in general when you average all those out that's a pretty decent run rate. In terms of engineering it's actually probably for the year '05 and even for that last quarter a little bit lower than what you would expect. We've had a couple of contracts were basically due to the new revenue recognition rules, we've actually received the cash but deferred recognizing the profit and the cost until a later date. And so engineering is a little bit lower than it would be normally, maybe by 250, $500,000 a quarter, it's not a great deal but somewhere along those lines.

Okay. As you are looking at the restructuring, and I know you don't want to get into a ton of detail but you started talking to us about that towards the end of last year and now we are here at the earnings period, and I kind of note some frustration that you haven't been able to announce something. Am I reading that right? And can you give us a general, not even a general time frame, is this more like an'06 event or do you think because of how long it takes to communicate and work these things out we could see a restructuring pushed off as late as 2007?

No. We feel that we should be able to give a clear picture of what will happen in '06.

Okay. And then last question, I guess about this time a year ago you guys were putting out numbers. You put out the same language. We went back and looked at the press release, it looked like you cut and paste, the about number on your earnings guidance and I'm comfortable with that, I understand where you are coming from but about a month later you put out a press release saying that you were raising numbers for the year. I'm just kind of curious, could you give us the date of when that press release is coming?

[Laughter] Let me say a couple of things, John, if you can take the about out of the guidance and give them an exact number come on up to Pittsburgh. The weather is not as good as Richmond but you can have it. I will go down to Richmond I like it down there, and you and I can just switch because I can't take the about out of it. As to when the next one will occur, you know as well as I do, the guidance speaks for itself. We're glad we've been able to -- sitting from my perspective and from Al's perspective, Tim's, everybody in the room, the world is a lot nicer when you can raise your guidance than when you can decrease it. The guidance is what the guidance is. It speaks for itself and we will just go from there.

Listen I got no problem with the play book you all are using. More importantly though I think we ought to go to Miami because in Richmond today it is not pleasant.

Well, you put on a very nice conference we appreciate being part of it.

What a great opportunity for me to meet all those people and get a real good picture of the industry.

We and our Board learned a lot from that event.

You all are making me blush, stop. Hey, thanks, guys, nice quarter.

Thank you.

[OPERATOR INSTRUCTIONS] There do not appear to be any more questions at the present time.

Al?

Well, thank you very much. Thank you, everybody. We will see you again in three months.