Oct 31, 2008
Executives
Donald Shippar - Chairman, President and Chief Executive Officer Mark Schober - Chief Financial Officer and Senior Vice President
Analysts
Larry Solow - CJS Securities Bob Chewning - Davenport & Company Eric Beaumont - Copia Capital James Bellessa - D. A.
Davidson & Co. Bernard Horn - Polaris Capital Todd Vencil - Davenport Neil Stein - Levin Capital
Operator
Good day and welcome everyone to this conference call announcing Allete’s third quarter 2008 financial results. Today’s call is being recorded.
You’re line will be muted for the presentation. Then, we will conduct a question-and-answer period.
(Operator Instructions) This conference may contain forward-looking statements within the meaning of Federal Securities Laws including statements concerning business strategies and there intended results and similar statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the Safe Harbor provisions of the Privates Securities Litigation Reform Act of 1995.
The forward-looking statements in the earnings release distributed this morning reflect management’s best judgment at this time, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements there in. Additionally information concerning potential factors that could affect the future financial results is included in the company’s annual report and from time-to-time in the company’s filings with the SEC.
At this time I’d like to introduce the Chairman, President and Chief Executive Officer Mr. Donald J.
Shippar. Please go ahead sir.
Donald Shippar
Thank you, good morning. Earlier today we announced our third quarter earnings results of $0.85 per share compare to $0.58 per share a year ago.
For the year we earned $2.04 per share and we expect to close 2008 within our previously stated earnings guidance range of $2.70 to $2.90 a share. Before we go through the quarterly financial results I will update you on a few new developments.
In September, Cliff Natural Resources formerly known as Cleveland Cliff and Minnesota Power signed new contracts for service to two of our industrial customers, the Taconite Company and United Taconite LLC. These agreements extent the existing contracts terms to at least December 31, 2015.
Now, on a related note, last Tuesday Cliff Natural Resources announced that in order to bring production levels inline with demand we’ll temporary align with too small pellet furnaces at Northshore Mining and one small pellet furnace at United Taconite. Due to the smaller size of these facilities and their contractual obligations to Minnesota Power, we believe the financial impact of these temporary shutdowns will be immaterial to our earnings in 2008.
We are actively involved in ongoing discussions with our large industrial customers, who indicate that while changes are occurring rapidly in their markets, they are bullish on their long-term outlooks. Turning back to the subject of contracts; as of September 30, Minnesota Power has signed new contracts with 15 of its Minnesota wholesale customers and two private utilities in Wisconsin including Superior Water, Light and Power.
The new contracts transition each customer to formula based rates, which mean they can be adjusted annually based on changes in cost. All of these contracts are regulated by the federal energy regulatory commission.
With respect to our retail rate case filed with the Minnesota Public Utilities Commission, new interim rates representing a 7.5% increase went into effect of August 1. The rate case schedule was approved in August and all scheduled public carryings were held in September and October.
The final rate order is expected during the second of 2009. Last quarter we announced times to develop several hundred megawatts of wind energy in North Dakota and purchase an existing 250 kilowatt DC transmission line to transport this wind energy to our service territory.
This project will allow us to meet and even exceed our state mandated renewal energy supply requirements. In September we signed a definitive agreement to purchase the transmission line for approximately $80 million.
This transaction is subject to regulatory approvals and is expected to close in 2009. At this time our Chief Financial Officer, Mark Schober will provide some of the financial details for the quarter, after which we will take your questions.
Mark.
Mark Schober
Thanks Don and good morning everyone. I’d like to spend a few minutes highlighting the major financial contributors for the quarter and I refer you to our third quarter 10-Q for complete details for the period.
As Don mentioned, for the quarter we earned $0.85 per share compared to $0.58 during the third quarter of 2007. The $0.27 per share improvement was comprised of $0.13 from the regulated utility, $0.02 from our investment in the American Transmission Company and $0.15 in our other segment.
These are offset by a $0.03 decline from our remaining businesses including dilution because of the increase in shares outstanding. The Regulated Utility business recorded net income of $16.7 million during the quarter up $3.7 million from a year ago.
Revenue from increased wholesale rates, new interim retail rates in effect since August 1 and current cost recovery writers was up $11.3 million compared to last year. Offsetting these items were lower revenue from sales to other product supplier and higher operating and maintenance, depreciation and interest expenses.
[Inaudible] our sales to retail and minutes for customers increased by 2% over the third quarter of 2007, mainly due to a 4% increase in sales to industrial customers. Income from our investment in ATC was up $600,000 from last year due to our larger investment balance this year.
As of the end of September, we had an equity investment balance in ATC of $73.9 million. For your information, today we are investing another $2.3 million into ATC bringing year-to-date investments to $7.5 million.
We recorded $200,000 of net income at our real estate business during the quarter, down $400,000 from the same period a year ago. As of the end of the quarter, we had approximately $800,000 as deferred profit on our balance sheet, which we expect to recognize as income during the fourth quarter.
This has been a difficult year for the real estate market and we think it’s quite in accomplishment to show profitability during this challenging period. Income from the other segment was $4 million higher than last years third quarter.
This quarter we recognized a $2.4 million tax benefit on a previously uncertain tax position due to the closing of a tax year and a $2.9 million tax benefit due to the completion of an IRS review. These resulted in an effective tax rate of about 25% for the quarter, compared to 33% last year.
Our effective tax rate year-to-date is 32% and we expect it will be around 34% at the end of the year. Turning to the balance sheet we are in a favorable position was $78 million of cash and a debt to capital ratio of 41%.
In addition we have committed line of credit of $150 million, which we have not tapped. With respect to cash flow needs we believe we are very well positioned and project sufficient capital availability in the immediate term.
Don.
Don Shippar
Thanks, Mark and before we take your questions a couple of additional comments. As Mark said we believe we are well positioned to meet our cash flow needs and most of you’re right, that will lead us in the midst of a significant capital investment program and that over the next five years we plan to finance approximately half of it with internally generate cash and the reminder with a combination of debt and equity.
We also have flexibility in the portion of our capital investment program that deals within and addresses future years renewable energy initiatives. At this point, we’ll take your questions.
I’ll turn it back to the operator.
Operator
(Operator Instructions) Your first question comes from Larry Solow - CJS Securities.
Larry Solow - CJS Securities
Don on your guidance, I had to nip it, but considering the wide range will be like 66 to 86 for Q4. If you just plot that into your full year guidance you think maybe we can kind of assume it’s going to be mid to upper end of that guidance or what should the wide range be for Q4 then?
Mark Schober
There are a couple of things that are going on Larry and why we didn’t take our range and we’re going to leave it at that 270 to 290 is a couple of things are happening in the quarter and Don touched on the first ones of a bit of the uncertainty and the Taconite market and the impact on our industrial customers. Then also we do have some transactions in our real estate business that are scheduled for close later this year and again due to the uncertainty and our real estate market they may or may not close, so that’s why we’re leaving at that range.
We realize it’s relatively wide, but that is the best we can do as of this point.
Larry Solow - CJS Securities
Mark Schober
Are you looking at the investments?
Larry Solow - CJS Securities
No, just in the net income.
Mark Schober
The net income, no it will continue to trend up like that. It’s simply bumps and you’ll see increases as we make our investments.
So we’ll have the money we’re putting in today that would certainly increase earning strength for Q4, but we’ll have a better idea then once again information from ATC on ’09. So it’s probably a typical trend.
Larry Solow - CJS Securities
Then lastly, on real estate, I know you’re not giving ’09 guidance yet, but just to assume you had no sales. So, your revenue would be basically close to zero.
What would your kind of potential loss be in that segment?
Mark Schober
Yes, we’ve talked a little bit about this before realizing that we have a couple of events in 2008 that will not be reoccurring. Our deferred profit will be all recognized by the end of the year and we will not be obviously selling another shopping center or winter haven, so if we look at the business assuming no sales and assuming we do nothing to manage our terry cost down it’s probably around $5 million after tax and the big chunk of that is obviously property taxes of assessments on our real estate in Florida, but that is something we’re looking at and certainly working to minimize those costs to the extent we can.
Operator
Your next question comes from Bob Chewning - Davenport & Company.
Bob Chewning - Davenport & Company
First of all on the guidance, the 270 to 290, is that a GAAP or operating EPS number and does that include the $0.15 gain from the tax items in the quarter.
Mark Schober
Yes, it’s GAAP. That will be our reported results for the year and yes it does include both of the tax items that I commented on it few minutes ago.
Bob Chewning - Davenport & Company
Secondly, can you give us some sort of sense in terms of Regulated Utility margin? How much of that is coming from the Taconite sector?
Donald Shippar
It is typical as we talked in the past Bob. Were kind of the unique utility with our revenues and our margin.
Almost half of ours on the Regulated Utility side of the business come from our large industrial customers.
Bob Chewning - Davenport & Company
Okay, but that would include other sectors as well, not their product etc.?
Mark Schober
That’s energy from our Regulated Utility, about high 40%, close to 50% of it comes from our 12 industrial customers.
Donald Shippar
You’re right Bob; it includes paper customers as well as Taconite producers.
Bob Chewning - Davenport & Company
And lastly, given that you’ll going to be going to external financing markets, debt markets; can you give us any sense today as to what you are seeing as a current new issuance cost?
Mark Schober
Yes, we are looking at issuing some additional debt by the end of the year and then obviously some more into ’09 and the number we are seeing range probably between 8%, 9%, 9.5%.
Bob Chewning - Davenport & Company
That’s a long-term majority?
Mark Schober
We’re looking at 5 to up to 20 years. Depending on what those rates look at we haven’t decided on what terms or the length of the bonds that we want to put out.
We are not looking at what will fit into our current debt maturities. For your information we have no debt maturities until 2013, so we certainly have some room here too.
Operator
(Operator Instructions) Your next question comes from Eric Beaumont - Copia Capital.
Eric Beaumont - Copia Capital
Most of my questions are answered, but it’s pretty easy, this quarter was meant to see how the other mechanisms really set in the earnings. I think that with the rate increase could really see the strength that you told where we expected to be.
We can all make the assumption of real estate and ATC. One thing on that though, you’ve had a very strong year in the other category, both in the tax benefits and the gains on the short-term investments you had earlier in the year and I’m trying to understand how I should normalize that going forward and think about the other category.
These tax reversals, is there anything that’s kind of an ongoing mechanism or tax change that’s going to be carrying forward and how should we think about kind of the short-term investment seems you had earlier in the year and as far as how that goes?
Mark Schober
All of those are not reoccurring. So, as you would start looking forward you need to takeout the gains that we had in Q1 from the guarantor trust and then both of these tax benefits that I mentioned, which are above $5 million.
So, those are not reoccurring.
Eric Beaumont - Copia Capital
Okay and just otherwise obviously you touched debt markets, but given you have a little bit of a slowdown in the tax that is anticipated just to be short-term. Do you have any expectations shifting on any of the capital expenditures you have outlaid for ’09 or is that still pretty much as expected?
Donald Shippar
Well, I think what we are looking at and we’ve got flexibility built in is some of the staging of our renewable projects. We’ve got, as you know several renewable projects particularly wind development that we’re looking at over the next several years and so we have some options and flexibility on how we can stage those projects and those other kinds of things we’re looking at.
We do plan the we’ll complete some of our environmental projects. For example at our Bozil station, we’re at year three of a three year plan, so we will complete that and some other maintenance CapEx operations obviously, but the real flexibility we have is on some of those renewables and we can’t extent those out if necessary.
Eric Beaumont - Copia Capital
And one last thing; when should we expecting ’09 guidance and other things?
Mark Schober
We will be issuing ’09 guidance sometime in early December.
Operator
Your next question comes from James Bellessa - D. A.
Davidson & Co.
James Bellessa - D. A. Davidson & Co.
The tax issues that you’ve already called out this morning, did you know about those going into the quarter and if you knew about them and they were significantly up for the quarter why wouldn’t you call them out earlier?
Mark Schober
James Bellessa - D. A. Davidson & Co.
Don in your narrowed view, you indicated something about a deferred profit that’ll posted in the fourth quarter, I think the real estate; can you go over that again please?
Donald Shippar
That was Mark and Mark will go over that.
Mark Schober
What we have left on our balance sheet Jim is our deferred profit from prior sales at real estate and we can’t recognize that until we complete development obligations. Right now we’re completing those development obligations and plan on completing them by the end of the year, so that remaining $800,000 of deferred profit that’s on the Q3 balance sheet will come through the income statement and will recognize it in Q4 at real estate.
James Bellessa - D. A. Davidson & Co.
And then tax rate of 34% for the full-year is that unlikely to be that low going forward. What might be a good expectation for ’09?
Mark Schober
I don’t have that number yet, it will be higher than that. I would guess 35% to 36%, but that’s the number we’ll give you when we give our ’09 guidance here in December Jim.
James Bellessa - D. A. Davidson & Co.
Do you see any pushback in this transmission line negotiations and the finalization of that and the regulatory approvals? You’re now saying expected to close in 2009; originally you said it could have been end of ’08 early ’09 and now you are just saying ’09?
Mark Schober
Well, we don’t see any change at all. We continue to work with this core group and with Minnesota on that and things are moving ahead.
The timing is more around when we would file that for approval and when we expect to get approval and ultimately close it and so that’s where we rise the ultimate closing, but no there is no changes in direction or negotiation, everything is moving ahead.
Operator
Your next question comes from Bernard Horn - Polaris Capital.
Bernard Horn - Polaris Capital
Three questions; first of the taconite producers; how quickly do you know or how much can you forecast ahead their demand and will it affect your ability to optimize the utility generations, so that you can sort of balance offloads and so forth? Second question is, how do you think about the CapEx staging that you’re talking about with respect to your alternative and win projects.
I guess my question is really, how do you think about the real economic value of those projects as opposed to the tax benefits you get from them and is it likely that with current fossil fuel prices that those projects just don’t make economic sense anymore despite the tax benefits and so, you’ll wait for the oil price to get to a certain level before it makes sense to go ahead with them. Then the third thing is just an observation generally speaking.
I mean on this question of the disclosure, on the tax issues, I guess as an owner or shareholder of the company, if you do know something, its better I think for shareholders to at least disclose it and say “hey look here’s the issue, here’s how much it might impact us and by the way, we don’t know, which way is going to go or when it’s going to happen, but at least knowing it is better than being surprised by it,” so that’s just an observation. So I’ll let you answer the questions.
Donald Shippar
On the taconite side, these customers typically nominate increments if you well and what they expect to do in going forward periods and typically those are broken down in four months periods. So, we would know at the planned time when they nominate for the next period, what their production plans are during that time period and then make certain commitment for that time period that if they are to change or to not run at those levels then they are obligated under the contracts and they sill pay us for some portion of that demand revenue.
So, that’s typically how that’s laid out along those periods and of course we have access to the MISO market and obviously we can sell energy into the MISO market and we can do that either in the real time market on a longer-term, if we obviously have an indication that we’re going to be surplus if you will for several weeks or several months. So, that’s typically how those transactions are noted and how they’re put together.
On the wind initiative, all of the issue you read and are kind of we’re into that and additional issue such as under the mandated in Minnesota, we have to have 25% renewal energy by 2025 and there’s certain milestones or steps we have to make along the way. So for example by 2015, we have to be a certain percentage, by 2018 we have to be at a higher percentage, so we have to pace into that in and be at those certain points as we move towards that 2025 date.
We are currently at about 11% renewals, so we’re in a pretty good position relative to the mandate and where we stand. So, that’s where some of that flexibility comes in or if we feel the need to delay some of these projects, obviously we won’t make as much progress, but we still don’t feel like we’ll be vulnerable if you work on not making those milestones.
Your point about the production tax credits is important and also and that they’ve only been extended for this year hopefully and our expectation I’m sure along with many others is that there is an extension of those into the future, because they are a pretty important part of the whole economics of the wind energy and I don’t know if Mark, you have any other comments on the tax issue?
Mark Schober
No, the only other one I want to call your attention too and I know its difficult reading, but we do talk about our tax positions in our income tax note and do talk about these uncertain positions, but it’s a thick read, but the information is in there, but we will at the enhancing --
Bernard Horn - Polaris Capital
I will look at that. Just on the Taconite, going back to Taconite follow-up, where are we in this four month nomination period?
I mean are you coming to the end of a four month or is that rolling?
Donald Shippar
Yes, we’ll come to an end of on here; I think this calendar year they will be nominating and sometime in November for the next period.
Bernard Horn - Polaris Capital
Okay, but as far as you can tell up to this point and looking out between now and the end of the year have they started reducing. I mean it’s clear that steel consumption around the world was starting to throttle back quite hard and my guess is that they would probably be affected by that somehow as I’m just questioning if you can give us any guidance to which way they are looking right now?
Donald Shippar
The only guidance we can give you up to this point has been what Cliff has communicated to us which of course we just talked about here in our guidance and then again we don’t have any other upfront information until they actually make those nominations and inform us of what their intentions are.
Bernard Horn - Polaris Capital
And then on the wind, if you get a 11% from renewables right now, how does that affect your generation cost and how should we think about your profitability going forward now. I oppose you do go right up to 25%, does that mean that you’re going to become less profitable because of this given alternative energy costs?
Mark Schober
No, really I look at it as same as other any other utility investment. Our plans at this point for the wind are to own those assets or rate base those assets and become a regulated assets, so our profitability will be based on the rate of return we get from our regulators.
Bernard Horn - Polaris Capital
If you had two generation assets, you put them both into the rate base and you get a return on that, doesn’t your profitability also dependent on how profitable those; how efficient those units are and you could be ultimately more profitable with one type of energy generation versus another?
Mark Schober
No, because they are ultimately based on your regulated rate of return and your revenue requirements and what’s your regulator’s plans. It’s really a matter cost I think what you’re driving it.
Bernard Horn - Polaris Capital
So in another word, if you’re giving a rate of return on something and it costs more to do it, does that mean that everybody just pays more for their electricity?
Donald
In essence that’s it, yes and as the cost for those resources go up, they go into rate base and then everybody’s costs track that…
Shippar
In essence that’s it, yes and as the cost for those resources go up, they go into rate base and then everybody’s costs track that…
Bernard Horn - Polaris Capital
And some how the efficiency of that generation winds up becoming embedded in the cost, it’s not just a return on capital?
Mark Schober
That’s where the earnings come from, the actual cost and if you look at whether its fuel for our generators that flow through our fuel adjustment cost, that to our customers versus wind. We’ll have a higher capital cost, but lower or nil variable cost, correct.
Donald Shippar
Yes and we don’t want leave the impression that the wind certainly is more costly in all cases than fossil fuel. I mean I think, if you look at the cost of new coal generation for example, wind is a pretty attractive cost relative to building new coal operation.
Bernard Horn - Polaris Capital
Okay, that’s good to know because I’m assuming that in some ways the cost of wind is inherently more expensive, so that’s good to know.
Operator
Your next question comes from Todd Vencil - Davenport.
Todd Vencil - Davenport
A quick question on the real estate segment; maybe I missed it, but I didn’t see that the backlog information in the Q?
Donald Shippar
Yes, it’s still in there.
Todd Vencil - Davenport
Okay, can you just give me the bottom line numbers at the end of the quarter?
Mark Schober
I don’t have that with me, but we can get it to you Todd, but it is in the Q.
Todd Vencil - Davenport
Can you talk about, where you might have seen the quarter in terms of contract renegotiations or delays?
Donald Shippar
There was minimal during the quarter, no incremental cancellations, we didn’t signed anything new either, so minimal changes.
Operator
Your next question comes from Brinson Neef - Levin Capital.
Neil Stein - Levin Capital
It’s actually Neil Stein. I just had one question and it might be a little bit repetitive, so bear with me.
If you look at your guidance, the 270 to 290 for this year, can you just summarize these sort of non-recurring type items that are in there? I guess there’s a small sale and that for short can happen again next year and then there will be tax items as well, which I guess are around $0.15.
Mark Schober
The items that are non-reoccurring on the real estate segment, there’s two. One is the sale of our Winter Haven Shopping Centre and also deferred profit that was on our balance sheet that has come through incomes during the year.
Neil Stein - Levin Capital
How much does those are up to an EPS?
Mark Schober
I don’t have it in EPS. Looking at it from a net income standpoint, I believe that shopping center was probably about $3 million and I think the deferred profit was probably about $2 million and then in the other segment, there’s two items.
One is the sale of some of investments that you talked about, that’s about $4.5 million, and then these tax benefits. There’s two of then that we talked about that we’re both recognized here in Q3 and those total about $5 million net.
Neil Stein - Levin Capital
So looking here, I guess you have around $30 million shares outstanding, so I’m just doing that?
Mark Schober
Right in there, yes.
Neil Stein - Levin Capital
So there was $4.5 million related to what?
Mark Schober
That $4.5 million related to and again in the other segment that’s assets that we had in a benefit plan throughout earlier in the year that was really out of sync with our allocations and we liquidated those assets and reinvested to meet defined allocation criteria. That happened in Q1, so you will see detail through that earlier in the year.
Neil Stein - Levin Capital
And then there is also the tax items?
Mark Schober
Yes.
Neil Stein - Levin Capital
Okay. So these add up to about $0.50 of share.
So it seems like maybe a good base line to think about when we’re forecasting into ’09 would be maybe something closer to like 2.30 or 2.35?
Mark Schober
I haven’t looked at ’09 yet, but those are the five items that you’d have to factor in as non-recurring, correct?
Operator
Your next question comes from Larry Solow – CJS Securities.
Larry Solow - CJS Securities
Just quickly; you talked about steel related to taconite. Have you heard any else from any other customers, your large customers; any indications of cuts in production?
Donald Shippar
Not at this point as far as being formally notified that they have. I mean we certainly know and I think the steel companies earning releases this past, they indicate that they are looking at their production levels etc, but at this point we’ve not received any formal notifications of any cutback other than what we’ve talked about in clips.
Larry Solow - CJS Securities
And then just assuming that there is some modest cuts, it would be a good likely that you would be able to just turnaround and sell that to MISO and to the wholesale market correct?
Donald Shippar
Yes, that’s important. The energy that is not metered to service those customers, we certainly would look to the market to sell that energy and of course the market has been a pretty strong market to MISO.
So, yes that would be what we would look to.
Larry Solow - CJS Securities
Okay and then your CapEx plans; I think you guys outlaid in your recent slide show that I had seen, kind of like a 325 number for ’08 or 323 to be exact? That would kind of imply like 115 in capital expenditure in Q4; are you still on target for that?
Donald Shippar
Yes.
Larry Solow - CJS Securities
Last question; ATC did they recently have a rate case over the last 12 months or about 11% number; are they up for rate case or what’s the status there?
Donald Shippar
No, ATC their rate are set on a forward looking basis and with a true-up at the end of the years; that’s the arrangement they have under deferred regulation.
Operator
Your next question comes from Todd Vencil - Davenport.
Todd Vencil – Davenport
I found the backlog information. Sorry I hadn’t seen that before.
Utilization, I’m looking at the number and it looks like there is $12.4 million of backlog in that and I believe that number was about 22.5 last quarter and it appears that there was a pretty significant fall out in commercial square foot Town Center if my 2Q numbers are right, am I remembering that right?
Donald Shippar
I don’t remember from the quarter, I know the big one that fell out was a low transaction that came out last quarter that was the big one.
Todd Vencil – Davenport
It was about 260,000 square feet of commercial, at about $8 million bucks.
Donald Shippar
I’d have to look back Todd; I don’t recall what dropped out during the quarter.
Operator
Your next question comes from James Bellessa – D.A. Davidson & Co.
James Bellessa - D. A. Davidson & Co.
Yes, with the macroeconomic conditions like they are, I want to be betting that everybody is believing real estate is going to turn up anytime soon; what can you tell us about your business there down in Florida and what can you tell us about your strategy to look for other real state elsewhere?
Donald Shippar
I mean, I would generally agree with you Jim. We’re not expecting any kind of a rapid turnaround certainly in real estate.
There is nothing indicate that that’s likely to happen and certainly not next year. We’re assessing where we are in further obviously where we’ve continued to sell some and we still continue to look for some opportunities in Florida as well as the Carolina to buy and these would be relatively smaller types of opportunities and we think that with some of these developments, we feel ultimately will have to be sold or somehow liquidated that there maybe some very attractive buying opportunities for us.
So, that’s why we continue to look for those and will continue to work for those in the next year.
Operator
And gentlemen, we have no further questions at this time. I’d like to turn the call over to Mr.
Shippar for any additional or closing remarks.
Donald Shippar
Okay. Before we conclude the call I want to let you know that our next planned conference call will be in February, when we release our year end 2008 earnings.
Also we plan to issue an 8-K and press release in early December in which we will initiate our 2009 earnings guidance. We’ll advise you, when we set these exact days.
So, thanks for joining us and I look forward to speaking again with you in February.
Operator
Ladies and gentlemen that does conclude today’s conference. We appreciate your participation.
You may disconnect at this time.