Woodward Inc (WWD) 2004 Q2 法說會逐字稿

Welcome to the conference call for Woodward Governor Company's fiscal year 2004 second quarter earnings and six-months results. (OPERATOR INSTRUCTIONS) Your speakers today are Mr. John A. Halbrook, Chairman and Chief Executive Officer, and Mr. Steven P. Carter, Executive Vice President, Chief Financial Officer and Treasurer of Woodward Governor Company.

I would now like to turn the conference over to Mr. Steve Carter. Please go ahead, sir.

Thank you, operator. We'd like to welcome all of you to Woodward's second quarter fiscal 2004 conference call. I'm Steve Carter, Woodward's Chief Financial Officer. With me today at our corporate headquarters in Rockford is John Halbrook, Woodward's Chairman and CEO.

Most of you have probably seen a copy of the earnings announcement we released after 5:30 p.m. yesterday or you may have received a copy by e-mail or fax. For those who have not seen a copy, you can find one at our Web site at www.woodward.com. An audio replay of this call will be available through Friday, April 30th. The phone number was on the press release announcing this call and will be repeated by the operator at the end of the call. In addition, a replay of this call will be accessible on our Web site for 30 days.

Before we begin, I'd like to provide our cautionary statement. In the course of this call when we present information and answer questions, any statements we make other than the actual results or business facts may contain forward-looking statements. Such statements involve risks and uncertainties and actual results may differ materially from those we currently anticipate. Factors that might cause material difference include, but are not limited to, future sales, earnings, business performance, and economic conditions that would impact demand in both the industrial and aircraft markets. We caution investors not to place undue reliance on these forward-looking statements as predictive of future results. In addition, the company disclaims any obligation to update the forward-looking statements made herein. For more information about the risks and uncertainties facing Woodward, we encourage you to consult the press release and our public filings with the Securities and Exchange Commission.

Now, I'll turn the call over to John to discuss our second quarter results and progress to our strategic goals throughout 2004.

Thank you, Steve, and welcome to those who have joined us today. I'd like to discuss our second quarter and the six-month performance and give our best insight for the outlook for the second half of the fiscal year. Steve and I invite your questions when we open the line following the presentations, as well as after the call. First, I'll address our business segments and consolidated performance for the second quarter, then I'll talk about the future.

Let's start with our Industrial Controls business. Sales for the quarter were up significantly compared to the first quarter of last year, indicating we may be in the beginning of a fairly vibrant, broad-based economic recovery that is positively affecting many of our end markets. However, beyond about a six-month horizon, we are not getting specific guidance from our customers and are reluctant to give detailed forecasts on those future periods.

I want to share some examples of activities in our Industrial Controls business. We are benefiting from increased sales of large advanced natural gas engines, used primarily for power generation. As a key supplier in this market, Woodward provides fuel control emission systems, bypass valves, actuators and integrated throttle bodies. Also, sales of compressed natural gas or CNG engines, have been strong in Korea, China and South America. These alternative fuel engines power transit buses and trucks while meeting the demand to decrease dependency on oil and operate cleaner, more efficient, and lower cost engines. Woodward supplies complete engine fuel delivery systems and components for these CNG engines. These systems are successful examples of our approach to customer focused new product development, marketing and manufacturing.

Both the commercial and military marine markets are strong. Woodward's controls and fuel injection equipment are well represented in primary and auxiliary power applications. Recently, the Queen Mary II entered into commercial service on her maiden voyage. We applied our energy control technologies on the ship's diesel engine and gas turbine power plants. The engines use a Woodward electronically controlled common rail fuel injection system developed specifically for heavy fuel, medium speed engines. The turbines use our comprehensive standard electronic control, as well as fuel systems.

Regarding large gas turbines, order patterns suggest the market reached the bottom last quarter. Industry observers are projecting the large gas turbine OEM market to pick up in calendar year 2005. Until then, we remain focused on providing aftermarket products and services through our OEMs and strengthening relationships with additional large turbine manufacturers.

Now I'll turn to our other segment. Aircraft Engine sales for the second quarter were up 7% from the same quarter a year ago. The increase reflects a slight improvement in all our key markets, most notably the commercial aftermarket and military spares parts. As revenue passenger miles increase, Woodward's commercial aftermarket sales, service and repairs should benefit. Additionally, we are beginning to see signs of stabilization in the commercial OEM segments, particularly with order patterns for regional jets and narrow body aircraft, both popular choices for the low cost carriers. Also, there are indications that as the economy recovers, corporate aircraft purchases will stabilize and possibly improve. Our products are well represented on business jets, such as the Gulf Stream IV and the Bombardier Global Express.

To briefly summarize the outlook for our business segments, many observers believe OEM commercial aircraft markets will not begin to show significant improvement before 2005 and demand for our OEM commercial aircraft products will most likely follow the industry trends. In the meantime, we have seen some recovery in our aftermarket activity, which could continue if commercial revenue passenger miles continue to increase. In addition, our military aftermarket business has not shown any signs of weakening. The uptick in Industrial Controls orders and shipments suggest that most of our markets may have bottomed last fall. However, because our industrial customers are cautious in making projections about their business, our visibility of the future remains limited. We will wait for more specific industry information before expressing an outlook on the conditions likely to prevail for next year.

Regarding this fiscal year, we currently expect net sales in the second half of the fiscal year to approximate the run rate of the second quarter. At this sales levels, combined with some anticipated increased product development activities and some other initiatives, we expect net earnings in the second half of the year will be approximately the same as were generated in the first half. In the meantime, we remain steadfast in our business strategies to build long-term market share and translate increased sales into higher earnings through operating leverage, prudent cost management, and industry leading quality. The investments we've made in new product development in the past several years are continuing to open doors and generate attractive returns in both the industrial and aerospace markets. As the economy and our end markets revive, Woodward's opportunities are becoming even more real and concrete. We have the resources, the engineering talent, the products and technologies, and efficient capacity to capitalize on our past growth in market share and to continue building our market presence for the future.

Now I'll turn the meeting over to Steve to discuss the financial results in a little bit more detail.

Thank you, John. As I review financial items today, I'll first talk about our second quarter results, followed by the six-month results and comments on some balance sheet items.

Net sales for the second quarter of fiscal 2004 were 173 million compared to 146.2 million in the second quarter a year ago. Net earnings for the quarter were 9.1 million, or 79 cents per diluted share, compared to 4.5 million, or 40 cents per share last year.

Second quarter sales for Industrial Controls were 104.8 million, a 27% increase over the same quarter last year. The increase is composed of three components. First, businesses acquired in the past year provided 13.5 million in sales. Second, changes in currency exchange rates added 4.8 million. And finally, higher sales volumes, particularly in Asia and North America, added 4.2 million. Segment earnings for Industrial Controls were 5.4 million compared to a $1.8 million loss in the second quarter of last year. Improved results were driven by higher sales and related operating leverage, as well as the effects of recent cost reduction activities. In addition, we incurred approximately $2.5 million of expense in last year's second quarter loss for workforce management costs and a lease termination.

Aircraft Engine Systems sales for the second quarter were 68.1 million, a 7% increase over the second quarter last year. The sales increase reflects strength in military and commercial aftermarket sales and increases in other key markets. Segment earnings for Aircraft Engine Systems increased to 13.7 million compared to 12.2 million in the same quarter last year. During the second quarter last year, we recorded approximately $1 million for integration and workforce management costs.

Now let's look at the six-month results. Net sales for the six-month period ended March 31st were 331.9 million, up from 291 million a year ago. Net earnings were 16.5 million, or $1.43 per diluted share, compared to 10.8 million, or 95 cents per share last year. Year-to-date sales for Industrial Controls were 201.7 million compared to 160.8 million last year. Business acquisitions provided 25.7 million of the sales increase, currency translations added 9.6 million, and sales volume increased 5.5 million. Industrial Controls earnings were 10 million compared to a loss of 178 thousand in the first six-months of fiscal 2003. In the first half of fiscal 2003, we accrued 3 million in workforce management and lease termination costs. Aircraft Engine Systems sales were 130.3 million, about the same as fiscal 2003. Segment earnings were 25.1 million, also essentially flat compared to last year's earnings. In the first six-months of last year, we recorded 3.3 million in the workforce management cost, primarily related to the consolidation of Buffalo Operations into our Rockford facilities. Total company cost of goods sold dropped to 80.3% of sales, down from 82.6% a year ago. Workforce management charges booked in fiscal year 2003 affected cost of goods sold by 4.6 million, or 1.6%.

SG&A expenses were 10.2% of sales this year, the same as last year. These expenses increased nearly $4 million this year due to business acquisitions, higher performance based variable compensation, and changes in foreign currency exchange rates. These increases were partially offset by cost reductions initiated last year. Interest expense year-to-date was 2.7 million compared to 2.1 million a year ago. The increase is due primarily to higher average outstanding levels of debt.

Depreciation and amortization expense for six-months was 17 million compared to 15.7 million last year. Amortization expense increased 1.4 million from last year because of acquisitions made in 2003. Depreciation expense remained flat at about $13.5 million. Capital expenditures were 9.4 million in the first six-months this year. We currently expect capital expenditures for fiscal 2004 to be about $20 million compared to $19 million in fiscal 2003. Depreciation expense is expected to be about $27 million.

Our effective income tax rate for the first six-months was 38%, equal to our current expectation for the full-year. Last year, our effective tax rate was 38.5% for the first six-months, and 38.1% for the full fiscal year.

Now I'd like to make a few comments on the balance sheet and any comparisons are to the September 30th year-end amounts. Accounts receivable decreased 3.7 million to 84.1 million due to normal variability in the timing of collections from customers. Inventories increased 10.2 million, to 136.4 million, reflecting the higher level of sales activity. Accounts payable increased 10 million, to 36.7 million, primarily due to increased business activity and normal variations in the timing of payments.

That completes our comments on the business and results of the second quarter of fiscal 2004. Operator, we're now ready to open the call to questions.

(OPERATOR INSTRUCTIONS)

Your first question comes from Mike Harris of Robert W. Baird. Please state your question, sir.

Good morning, guys.

Morning, Mike.

Good morning, Mike.

John, you commented in the press release that shipments of large industrial gas turbines was encouraging for the second consecutive quarter. Can you comment how much this area was up year-over-year in fiscal Q2?

I think year-over-year it was not a...

OK.

It's only up compared to what - to where the bottom was.

OK, fair enough. So let's say within - you said for the second consecutive quarter, so if you would look at fiscal Q3 of 2002, I mean, can you give us an appreciation of the magnitude of the pickup you've seen?

It's relatively small. I mean, it is not significant. I'd say quarter-over-quarter we may be talking, I don't know, a million or two. You know, quarter-to-quarter.

I mean, your key point is that it appears that the bleeding has stopped.

Oh, absolutely, and we do see a little bit of strengthening, but not necessarily in new turbines. There's some aftermarket activity that's probably accounted for some of the increase.

OK, fair enough. Kind of switching gears here, you had 5% organic growth in the Industrial Controls segment overall and when you look at the margins that you reported in that segment of 5.1%, it appears a little modest to me. Is there anything unusual in the quarter that negatively impacted profitability in the segment, were there mix issues, pricing pressures, negative impact from acquisitions? Just a little more detail.

No, acquisitions actually were I'd say a positive there. We are certainly not back to our operating margin levels that we expect to get this business to. You know we've made some improvements and I think the improvements that we see are really reflecting of the additional volume and the leverage we have on that actually quite modest real organic volume that we've seen. But there's - any negative I would see is that on a - in a couple of our businesses, we did see quite a increase of orders in the last quarter and we've probably - that were not expected, and we probably had to scramble a little bit to address all those and we probably weren't as efficient as we'd like to be. But that's - I would say that's kind of a one-time situation.

Not a bad problem to have.

Oh no, we like those kind of problems.

Just talking about Barber-Coleman and Synchro-Start acquisitions made last year where you commented these acquisitions contributed almost 14 million in revenues. Can we just get an idea of the earnings contributions from these acquisitions in the quarter? Are you willing to disclose that?

Well, not specifically. But I would say they are probably in the range of what our normal other businesses that are running effectively produce.

OK.

We like the results, OK, from the acquisitions.

OK.

Of those acquisitions.

You know, with all that's said, would you expect margins in the segment to continue to improve on a sequential basis going forward, assuming that the demand environment remains improving?

Yes, we would.

OK. What is kind of your long-term goal of the margins in this segment? I mean, can we get back to the margins that you saw during prior peak periods or is that unrealistic?

I think it's in the range of possibilities. We do have a little bit different mix of businesses now than we had then.

Sure.

And we have also a broader cost base with some of the acquisitions, so we've go to get our volumes up significantly over where they were in our peak periods to get back to these margins. I think it's a challenge for us, but I certainly think it's in the realm of achievability.

OK, fair enough. If I can get some detail on pricing trends. Did the quarter benefit from any selling price increases on a year-over-year basis?

No.

No, none at all?

No, none.

Do you expect - I mean, was there actually a negative impact from pricing?

Well, I would say it was probably neutral. I mean we have some areas that maybe we can get a little price increase here and there, but for the most part, our customers really are going after deflation in the prices and that pressure has not relented any.

So you don't expect, let's say over the next quarter or two, to be raising prices at all?

No.

OK. It seems like this is a pretty good environment to try to get price increases, though, in several industries. But you're saying not with your business.

We haven't - we try as best we can, but we don't have it planned.

Mike Harris. Well, I would imagine that on the raw materials side, I mean you're probably seeing a pickup in your input costs and raw material year-over-year, but probably not to the level of some other capital goods manufacturers who - where raw material is a much higher percentage of the total cost of their product.

I think that's a fair statement considering the company as a whole. We've got a couple of areas where it's probably a greater impact, but the significance in the materiality of those segments are not huge.

OK. Actually, I have more questions, but I'll get back in the queue.

OK.

Thank you.

Thank you. Our next question comes from Tyler Hojo of Sidoti & Co. Please state your question, sir.

Hey, good morning.

Morning, Tyler.

First of all, I just wanted to see how you guys were positioned on the latest engine wins from Rolls Royce and GE on the 77.

We haven't - neither company has awarded a contract for the fuel delivery portions and we are certainly diligently working with both of those customers to secure our positions. But that's really all we know right now.

No idea of when that might be awarded?

Oh, I expected this - I expect sometime in the summer.

All right, great. And as far as acquisitions go, what exactly is your focus there and if you could comment there, that would be great.

We've - basically what we've said, that we're probably not going to do any for a few more months.

OK.

Just because we had - we haven't really quite digested what we had already done. So we've been spending - basically we're going to spend this year getting our house in order, getting control of things working effectively before we take on any more. But after that we plan to be as aggressive as we have been in the last several years.

OK. Would you care to comment on exactly what business segments you're looking to enhance?

Well, probably any of those business segments that really fit with what we're already doing, OK? We will be consistent, we will do acquisitions that are in the same markets, or in the same general technology lines that we're already in.

OK, fair enough. Also, last quarter, if I remember correctly, you guys saw pretty good demand for your Gen-Sets out of Iraq. If you could comment as far as what products are moving over there, basically?

I don't think - probably - we don't have full visibility of where our customers send all of their equipment, OK? So we've known that some of the large customers have shipped some of their turbines and engines to Iraq, but exactly when they ship those engines, we don't have full visibility of that. But we know we have our components on those engines.

OK.

OK?

One more question. If you could just comment, seems like transportation was pretty strong. Was that pretty much based on what we're seeing out of Asia? If you could comment as far as what's going on in the Asia market?

I'd say Asia is the major driver of that. We see the busses with the CNG. It's interesting that it's not really an emissions driver over there. They're trying to reduce their dependency on oil and they have lots of natural gas, so they're trying to put infrastructure in that'll use gas instead of oil. So you've got that driver. And then you've got the shipbuilding that's in the -- primarily a lot of it in Korea, and that's been fairly strong as well. And that takes big diesel engines to power those ships.

OK, great. Thanks a lot, guys.

Thank you. Our next question comes from Tom Lewis of Rockhouse Research. Please state your question, sir.

Yes, good morning.

Morning.

Good morning, Tom.

Could you elaborate a little bit on - or explain what's driving your decision to put more emphasis on product development activity? Is it a reflection of the fact that we're kind of passed through the storm or is it more about your customer's beating on you to take on more projects or is it something else?

Well, I think it's - I think we're seeing the economy recover in areas. We are seeing opportunities to apply our technologies in new ways and to help our customers produce a cleaner, more efficient engine, and that activity and the demand in the marketplace where we can make a difference just seems to be higher now than it was when every - all the engine builders and everybody were in a downturn. We just didn't see that kind of activity a year ago and we're seeing it pick up a little bit.

So it would be fair to say that 90 or 180 days ago your customers were - well, we'll put it the other way. As compared with 90 to 180 days ago, your customers are less hunkered down and looking for you to take on more development. Would that be a...

I guess you could say that. It's hard for me to characterize our customers in general in one way or another because I'm not sure we have the total visibility of all of that. But it - what we are seeing is that - we believe what we are seeing now and as we go forward, we're going to have some additional opportunities for product development activities associated with what our customers are needing. So it's hard to characterize our customers and what they were doing six months ago and what they're doing now other than we see a little bit of difference.

OK. Just one other question. In terms of where this revenue surprise or at least, you know, I would have thought 90 days ago came from - is there one or a couple of areas within your product mix that standout as a surprise relative to what you would have been thinking at the first of the quarter?

No, I don't think any one in particular. For the most part, we have seen it's been pretty much across the board. The improvements we've seen in our sales.

Tom, one thing you may recall when we were talking about this after the first quarter was that we were seeing recovery in our markets. We talked just we didn't know what the slope was going to be.

And I think that's one of the things that's evident with all the amounts - people have been making that our customers are seeing their markets come back. And as a result, that's flowing to us. So, maybe that slope is maybe a little higher than we originally anticipated.

But that's the issue we said going into this quarter was as we look forward. And I think it's still true today - just how steep that slope is going to be will always be the issue we're dealing with. I don't think it was a surprise. I just think it was - I would almost call it in today's environment it's a normal corridor of variability.

OK, but ...

But the improvements, I think, have been broad based across our product lines, OK? It hasn't been one product line that's making all the difference. It's all of them we've seen, you know, a little bit of improvement.

OK, well that's certainly consistent with I'm hearing these last couple of weeks. So, keep up the good work, guys.

Thank you. As a reminder, ladies and gentlemen, should you have a question please press star one on your push button telephones. Our next question comes from Greg Macosko F of Lord Abbott. Please state your questions.

Yes. Thank you. Could you talk a little bit with regard, you mentioned these opportunities with regard to product development. Would this perhaps include environmental regulations? And are we seeing action on the part of some of the OEM's in that regard?

Definitely. That's where most of the product development that we're doing comes from. It's driven by emissions and the need for our customers to get their engines cleaner. So, in general, the answer to that question is yes. That's where we're seeing the drive come from.

And those regulations are coming on, some of them, in '06. Are there still projects in the works or still to be decided for '06 yet?

Probably '06 - it's probably '07 is the first critical. And then there's an '010 standard as well. Most of the things for '07 are probably in the hopper by now.

OK.

Being worked on - and being worked on.

Yes. How about steel costs? Is there any issue here? Does that effect you much, you know, materials cost? And is there any thoughts about a surcharge or anything like that?

For areas of our business that use a lot of steel we have seen, you know, the prices - the increase. Also with copper in a couple of our product lines that use a lot of copper. And you know, we're trying to decide how we're going to deal with that.

But we have seen that impact us. But that would be in a couple of product lines. And I would characterize that as if you look at the impact of that to our whole company, it's certainly negative, but it's not a huge issue for us in total.

But in any particular business, what's the most steel could be as a cost of goods sold? Just, I mean, in a particular area?

Oh, in a particular area it could be - well, in a specific area where it impact is, you know, you could have material be 50% or so.

I see. OK. And the CNG (ph) activity in South America and Asia. Is that something fairly new? Or I have - or I mean, I hadn't heard it before and just if it had come up suddenly or have you been in that a long time now?

Oh, you know, we've been marketing down there for a long time in Brazil and selling. And we have a nice little business down there. We've had a presence there for many many years.

And you know, the bus business and the emissions and all that is, you know, that's been going on for a while. We're just starting to see a few orders now.

And finally, in terms of a realization of cost savings, et cetera the purchasing economies - are those pretty much all realized? Are we still seeing some gains going forward in the second half?

Oh, no. We will see gains going forward in the second half. That's a continuous activity for us. And you know, we set ourselves pretty reasonable goals to continually make progress in our cost of materials and purchases.

And that will continue on into '05 then, too?

Oh, yes.

And bundling. Has that been an opportunity system replacement in components and putting things together in a bundle? Have we seen that activity in the marketplace?

Yes, we are beginning to see more and more where Woodward can bring the technology - the different technologies together into a single solution and to helping our customers. And that let's us provide a larger content of fuel management equipment on any one engine.

So, you know, it's a gradual thing and some customers are more willing to do it than others. But I think it's a growing dimension of how we're able to sell our products.

Thank you.

Thank you. Our next question comes from Mike Harris of Robert W. Baird. Please state your questions.

Yes, John. I just would be interested in your thoughts on, you know, really on a company-wide basis how overall order trends progressed during the quarter? Did you see sequentially improving trends as the quarter progressed?

I'm not sure I can really characterize it one way or any specific progression. The quarter itself, you know, we saw a lot of activity and new orders. And basically, like we said in our report - in our comments - that, you know, we would expect that we would see that same order rate for the rest of the year.

Now, whether or not it gets higher than our second quarter rate, I guess we don't have that kind of visibility. But we do have enough visibility to have a pretty good handle on, I'd say, the next six months.

Well, if you look at April thus far, how are order trends progressing relative to what you saw in fiscal Q2? Same ...

Well, I would - as of this point I'd say it's the same.

OK. And just in looking at your update guidance, I mean, essentially if you do the math you're guiding let's say 680 million revenues and, you know, $2.86 in earnings. You also commented in your prepared comments about increased product development initiatives or activities and other initiatives.

I just, you know, when looking at, you know, the conditions in your end markets and what you did this quarter, you know, your guidance appears, I guess, conservative to me. Can you talk about like the investment in R&D? I mean, is that going to increase as a percentage of sales in the second half?

Or just some other areas where you expect incremental costs kind of weigh down earnings a little bit?

Well, I think we will see some probably a little bit of growth in our R&D. We will also believe that we are seeing areas of marketing opportunities. We'll probably add some key sales in application engineering focused on - particularly in Asia where we see opportunities starting to blossom for us.

So, you know, we are going carefully, you know, probably add some resources and invest in where we think we can really leverage. And that's basically why we said, you know, our earnings aren't going to be the run rate of the second quarter. It'll probably be more like the run rate of the average of the first and second quarter because we are intending to invest a little bit more in some of the opportunities.

OK. Fair enough. Steve, just some questions for you to - just some small items regarding variances that I saw in your actual results relative to my modeling. You know, interest expense is a little bit higher than I expected despite overall debt dropping by about 25 million.

Anything unusual there? You talked about a higher mix of higher cost debt. Anything else at all?

Well, just a little bit of the drop in the debt also occurred at the very end of the quarter. Just some variability in the way cash was flowing. Things like. The level during the quarter on an average basis was higher.

OK.

Although the absolute ended up being lower. So, you know, it's a little bit of that. A little bit of the mix in the rate. But principally because the level was higher for most of the quarter.

What is your blended cost of debt right now? Roughly?

You always come up with these good questions, Mike !

We can follow up after.

I'm really going to have to think about this one, because you know we have the long-term debt's at 6.39 coupon rate. And we've slot some of those in for some floating. And we've got a mix of fixed and floating. So, I think if you look at what the average was running for last year, it's probably going to be at a slightly better rate than that.

OK. And then when I look at other income you had a positive contribution this quarter. Can you just give us a sense what was all in there? Was there any foreign currency benefit within that line item?

There was some. It's, you know, that other expense net item as you know floats. I mean, it can trend up. It can trend down. It trends between a slight positive and a slight negative. We also have some royalty income that we get at various times. And so between the royalty income and some of the foreign currency aspects we ended with a little positive this quarter.

OK. You didn't have like a gain on any asset sales this quarter?

No.

OK. Well, the reason why I asked you is that I just saw seven cents EPS variance relative to what I had modeled. So, I just wanted to make sure. I know it's tough to forecast what you're going to see in any given quarter.

But it sounds like there wasn't anything really meaningful there.

No, as far as, I mean, if you're looking for was there any unusual items would have had an impact we felt we should note. No.

OK. All right. Great. Well, appreciate it. Thank you.

Thank you. As a reminder, ladies and gentlemen, should you have any further questions please press star one at this time.

Mr. Halbrook, there are no further questions at this time. I will now turn the conference back to you.

OK. Thanks everyone. And we will look forward to talking to you after our third quarter results that we have announced in late July. And again, thanks for joining us today. Goodby.

Thank you, sir. Ladies and gentlemen, that does conclude our conference call ...

for today. If you would like to listen to a rebroadcast of this conference call, it will be available at 9:30 A.M. Central Time by dialing 1-800-428-6051 or 973-709-2089 and by answering an ID number of 351299.

rebroadcast will also be available at the company's Web site, www.wordward.com for 30 days. We thank you for your participation on today's conference call and ask that you please disconnect your line.

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