Dec 20, 2007
Operator
Good day and welcome to the American Greetings third quarter 2008 earningsconference call. (Operator Instructions)I would like to turn the call over to Mr.
Greg Steinberg. Please go ahead sir.
Gregory M. Steinberg
Good morning everyone and welcome to our third quarterconference call. I’m Greg Steinberg thecompany’s treasurer and joining metoday on the call areZev Weiss our CEO and Seven Smith or CFO.
We released our earnings for thethird quarter fiscal 2008 this morning. If you do notyet have our third quarter press release you can find acopy within theinvestor’s section of theAmerican Greetings website atinvenstors.americangreetings.com.
As you may expect some of our comments today includestatements about projections for the future. Those projections involve risks and uncertainties that could causeactual results to differ materially from the forward-looking statements.
We cannot guarantee the accuracy of anyforecasts or estimates and we do not plan to update any forward-lookingstatements. If you would like moreinformation on our risk involved in forward-looking statements please see ourannual report or our SEC filings.
Previous earnings releases as well as our 10Qs, 10Ks and annual reportare available on the investor section of the American Greetings website. We will now proceed with comments from both our CEO and CFOfollowed by aquestion-and-answer session.
Zev?
Zev Weiss
Good morning everyone. I am pleased to share with you today our fiscal 2008 third quarterresults.
During the third quarter wecontinued to see improved performance at retail as a result of our cardinitiatives. We realized improved grossmargins as we continued to effectively manage our supply chain costs and weannounced two acquisitions in the digital photo space.
I will comment on three broad topics today. Our strategic card initiatives, our capitaldeployment including our recently announced acquisitions and our full yearoutlook.
I am pleased with our cardperformance in North America this quarter. The positive performance we experiencedduring the first half of this year has continued into our third quarter in manyof the doors that we reset over the past 18 months.
The consumers and the retailers response toour strategic card initiatives was strong during the first half of the year andcontinues to be positive. I am pleasedwith the overall feedback we have received as many of the retailers have beendelighted by the improved product appeal and consumers are responding aswell.
We continue tracking towards thereturn hurdles we had hoped for and each successive quarter showing improvementin consumer response. Our ongoing consumer research continues to provide us withinsights that are being reflected in our products.
While consumer based research is not newwe’ve pushed the application of the research to the next level. We’ve dug deeper, conducting additional testing,looked at generational shopping habits and examined the overall card shoppingexperience.
Now, key learning’s and bestpractices are being integrated into our product lines and being delivered toour customers through their retail experience. To give you an example of how this consumer based researchis being delivered at retail let me explain how we are adjusting just one lineof cards; humor cards.
Funny cardscontinue to be a staple in our card line. Our newest cards reflect photo humor, real life situations anddistinguish between what women think is funny and what men think is funny.
We have and will continue to leverage theinsights we’ve gained from our research into our future card programs. Let me take a step back from the consumer research and sharewith you some perspective on the overall investment in scanned based tradingand the strategic card initiative.
Twoyears ago we expected the investment to be approximately $100 million over atwo year period. We now see that totaltracking towards $110 to $115 million.
As a result we are expecting the impact this fiscal year to include anincremental $10 to $15 million investment over the $36 million we originallyanticipated. The expected increase isbeing driven entirely by scanned based trading conversions.
We experienced a delay in scanned based trading conversionsduring the third quarter versus our internal expectations driven primarily bythe effort to properly coordinate the technical aspects with our retailpartners. While the scanned basedtrading technology is new for many of them our teams are working together tofinalize the data exchange required.
Asa result we expect to see a meaningful scanned based trading impact in ourfourth fiscal quarter. However, if thetechnology exchange is not completed during the fourth quarter we expect thatsome of the expenses associated with scanned based trading will occur in thefirst quarter of next fiscal year rather than this year’s fourth quarter.
Now I’m going to shift gears from a review of our cardinitiatives to an update on our several capital deployment activities. These activities have included our recentlyannounced acquisitions, our information systems refresh effort and the share repurchaseprogram.
During the third quarter we announced the acquisition ofWebShop and the intent to acquire PhotoWorks two Internet based digital photosharing businesses. WebShops is one ofthe largest online photo sharing sites on the Internet with more than 7 millionunique visitors monthly.
PhotoWorks isa leading online personal publishing company that allows consumers to use theirdigital images to create quality photo personalized products like greetingcards, calendars and photo books. Theacquisition of WebShops has given us access to many more potential onlinecustomers.
PhotoWorks offers productioncapabilities that position us for a comprehensive photo strategy bringingtogether both digital and physical products. The acquisition of PhotoWorks is expected to close in mid to lateJanuary, 2008.
While we have a lot of integration to accomplish over thenext year our strategy to bring together the strengths of both sites thenleverage the users across all of our websites. By having consumers using all of our sites we will also have theintentional collateral benefit of enhancing our online advertising model.
Further into the future we will explore waysto leverage our own retail stores and bring the conversions of digital photosand physical products to our retail partners. That is our vision.
Now let me speak about the near term realities. Additional costs will be incurred toreposition the two acquired sites and their brands.
We are currently working through our plans onhow to reposition offerings and the specific investments that we will make inthe future and have not reached a conclusion on the band around thesecosts. Again, the PhotoWorks transactionis not expected to close until later in our fourth quarter.
As you may recall earlier this year we provided a wider bandthan typical for us for our capital expenditures this year due to our expectedincreased spending on information systems. We have made a few decisions in this area of spending as we focus in onthree strategic components of investing in information technology.
One, replacing outdated systems; two, drivingefficiencies within the business; and three, adding new capabilities. We will roll out these three strategic componentsin a serious of phases or waves over a seven to ten year period.
Some of the cash outflow will be expensesimmediately and some will end up on our balance sheet and be expensed at alater date. You may have noted that our capital expendituresyear-to-date are higher than the prior year.
While there are several pluses and minuses in how we deployed thiscapital versus last year one of the larger incremental items was the selectionand purchase of our first large piece of the software and that expenditure isreflected in our year-to-date capital expenditures. We expect to provide additional clarityregarding next year’s investment on information systems in the spring.
Shifting to our share repurchase activity during the thirdfiscal quarter the company purchased approximately 1.7 million shares of itsClass-A common stock for about $41 million under the $100 million sharerepurchase program we launched this past April. My last topic is our guidance for this fiscal year.
We are still on target to meet our projectedearnings per share goal of $1.35 to $1.55 and about $125 million of cash flowfrom operating activities less capital expenditures. With upside to these estimates depending onseveral items.
There are a couple ofmajor factors that could impact the first quarter. The first is the [inaudible] of the strengthor weakness of the holiday season.
Theseasonality of Christmas is a risk to our performance every year and face thisrisk both domestically and internationally. However, given changes in consumer buying patterns both domestically andinternationally it has become even more difficult to predict Christmasperformance for many of our business units.
T The second major factor affecting this year’s performance isthe pace of the roll out of our card initiatives. We have a significant amount of activity plannedfor the fourth quarter.
Most of which isalready underway. These activitiesinclude both scanned based trading conversions and various programs still to berolled out for our strategic card initiatives.
Our ability to execute all these items during the remainder of thefourth quarter is key to our full year performance and our ability to staywithin the estimates. Note worthy is thefact that failure to execute all of the planned activities would mean lower expensesthan expected and would represent upside to our estimates.
As you look at the remainder of our fiscal year the risksand opportunities ahead of us lead us to a view that our original guidanceremains unchanged a $1.35 to $1.55 of diluted earnings per share. Now, let me turn the call over to Steve whowill provide a detailed review of the quarter and then we’ll take yourquestions.
Steve?
Stephen J. Smith
Today I will have three sections to my preparedremarks. First, a few comments on ourconsolidated revenues.
Second, a briefreview of our business segments. Third,a walk through of some key components of our financials for the third fiscalquarter.
We will then open up the linefor questions. Our reported revenues were down $35 million from last yearsthird quarter or 6.8%.
Revenuesbenefited from both foreign exchange and lower spending on our strategic cardinitiatives. These benefits were almostcompletely offset but a loss of revenue due to the candle product linedivestiture last year.
The revenuebenefit from exchange was $13 million over the prior year’s third quarter. We also had a $3 million benefit versus theprior year as our strategic card and scanned based training initiatives hadless activity than last y ear’s third quarter.
However the candle product line divestiture reduced our sales to $14million versus last year. These threeitems when netted together increased revenues by $2 million.
So, cutting through all the noise and holdingaside foreign exchange, differences in initiative timing and the effect ofdivestitures our revenues were down $37 million compared to the prior year’sthird quarter or about 7%. Moving to our segments the North American social expressionsegment revenues were down $37 million versus the prior year’s thirdquarter.
About $14 million of that 37 or40% of the lower revenue was the result of the candle product linedivestiture. Holding aside thisstrategic decision this segment’s revenues were down $23 million or 7%.
Of the $23 million $20 million relates to twoproduct lines where we are sacrificing low margin revenue in order to increasereturns. I will speak to this trade offin just a moment.
The remaining $3million in revenue decline was caused by roughly $6 million related to timingof terms with a retail partner partially offset by $3 million of benefit oflower spending on strategic card initiatives. As I just mentioned $20 million of the decreased revenue isrelated to two product lines those being packaging and party goods.
In both of these areas our results this yearhave been generally in line with our internal plan as we have consciouslyaccepted the trade off of lower sales for higher margins. This trade off has been especially prominentin the promotional gift wrap piece of our gift packaging business.
The decreases in gift packaging and partygoods were driven by a few items. First,the focus has been to improve the overall annual return within the product lineand as a result we did not pursue or we walked away from traditionally lowmargin business that would have been pursued in past years.
Second, with respect to the gift packaging wehave seen continued softness in demand for gift wrap over the past few years asconsumers are purchasing more gift cards which are of course not wrapped like atraditional present. Our North American social expression segment’s earnings were$50 million which is down $38 million versus the prior year.
However, last year’s results included a $20million pre-tax gain in the quarter as a result of retailer consolidation andthe effect the consolidations had on several long term supply agreementsbetween the company and the affected retailers. Separately, this year’s earnings benefited from $4 million of lowerspending with the strategic card and scanned based trading initiatives.
So, taking into account the $20 million gainin the prior year’s quarter and the $4 million earnings benefit from lowerinitiative spending this quarter segment earnings were down $22 million. Thelower earnings were driven by three factors.
First, a reduction in verbal margin due to lower sales accounted forabout 50% of the decline. The negativeimpact of term timing as an issue with the retailer partner accounted for 30%of the decline and various manufacturing, merchandising and distribution costwere the balance.
Switching to our international social expression segmentrevenues were off about 2% or $2 million. Despite lower revenues segment earnings improved $4 millionquarter-on-quarter.
About one half ofthe earnings improvement came from our Australian business and the other halffrom our European business. OurAustralian business improved their gross margin in the quarter while ourEuropean business benefited from lower distribution costs.
Our retail store segment increased same store sales by 4.6%this quarter. Total revenues for thissegment were down almost $3 million as a result of 67 fewer doors compared to ayear ago.
Segment earnings declined abit less than $1 million versus last year’s third quarter primarily driven byhigher payroll related costs. Thissegment again benefited from the performance of juvenile gifting products.
While our store count remains at 429 doors wewill continue to evaluate our stores and close them when it makes economicsense. Based on our current forecasts westill expect to close approximately 25 stores this entire fiscal year and wehave closed seven year-to-date.
For the quarter or AG interactive segments revenues weredown $3 million versus the prior year. The decline in revenue is the result of exiting our mobile ring toneproduct line last year.
Segment earningswere $2 million which is flat versus a year ago. While we realized some savings from exiting thering tone business last year it was offset by investment in the traditionalonline business.
While we generally don’t spend much time commenting on ournon-reportable segment during our conference calls let me at least mention thatthe revenues in this segment were down about $4 million quarter-on-quarter withthe decline driven by lower third party sales in our fixtures business. Let me pause here and explain the status of our licensingbusiness.
Licensing revenue for thequarter which is reported as other revenue was about $11 million which isessentially flat with the prior year. Licensingexpenses were about $10 million which is up about $1 million versus lastyear.
So, for the third quarter thecompany’s net licensing effort revenues less expenses was about $700,000 whichwas down about $1.5 million from the prior year’s third quarter. Now, let me move to the third of my three topics thismorning a review of our key financial statement items.
The company’s manufacturing, labor and otherproduction costs or MLOPC were down $22 million and improved 100 basis pointscompared to last year’s third quarter. Lower sales volume drove a $17 million favorable variance.
In addition, favorable product mix added $12million to the reduction as we benefited from a higher percentage of cardproducts and the divestiture of lower margin candle product lines lastyear. Partially offsetting these twoitems was approximately $5 million of unfavorable foreign exchange.
Selling, distribution and marketing costs were up $2 millionversus the prior year’s third quarter. Foreign exchange was a $4.5 million negative variance and that variancewas partially offset by $2 million of lower expenses as a result of closure ofretail stores in the prior year.
Theadministrative and general expenses were down about $5 millionquarter-on-quarter due to a continued effort to lower corporate overheadcosts. Other operating income was down$20 million versus the prior year.
Lastyear’s results included a $20 million gain as a result of retailerconsolidation and the effect the consolidations had on several long term supplyagreements between the company and the affected retailers. Continuing down the income statement other non-operatingincome increased $4.7 million which was almost completely driven by foreignexchange gain.
For the quarter interestexpense was down $2 million from last year. This decrease is a result of lower debt levels during the quartercompared to the prior year.
Ourquarterly tax rate was 33.7%. However,due to the discreet items of the first quarter we are still expecting our taxrate for fiscal 2008 to be in the high 30s.
Now let me shift gears from a review of the income statementto three major items found in our financial statements: deferred costs onbalance sheet, capital expenditures on the cash flow statements; and ouraverage share count. On our balancesheet you will see that our net deferred costs were essentially flat comparedto the prior sequential quarter at $363 million and down $45 million from theprior year’s third quarter end.
The fourline items of deferred costs on our balance sheet at the end of this year’sthird quarter were: one, prepared expense of $135 million; two, other assets of$314 million; three, other current liabilities of about $57 million; and four,other liabilities of $29 million. On our cash flow statement let us look at capitalexpenditures for a moment.
The companyspent just over $37 million so far this year which is $8 million more than theprior year’s investment of almost $30 million. We expect to spend $50 to $60 million on capital expenditures this yeardue in part to our increased spend for information systems some of whichalready occurred during the third quarter.
One final note on our share count; based on our actual sharerepurchases year-to-date and assuming we complete the $100 million sharerepurchase program during the fourth fiscal quarter I would expect that ourfull year average shares outstanding will be about 55 million shares. That concludes our prepared comments for today.
I would now like to turn the call over to ouroperator to handle our question and answer period.
Operator
(Operator Instructions) Well go first to Jeff Stein with KeyBanc Capital Markets.
Jeffrey S. Stein –KeyBanc Capital Markets
First, it sounds to me like the potential swing factor inthe fourth quarter is more expense related than revenue related. Would that be correct?
Zev Weiss
There clearly is on the revenue side the seasonal componentfor both Christmas and Valentines Day affect us. But, I think if you just looked at the bottomline impact of both I think I would agree with that.
Not having looked through the numbers, Ithink that sounds right.
Jeffrey S. Stein –KeyBanc Capital Markets
Can you just quantify the aggregated amount of scanned basedtrading activity that you would expect to occur in the fourth quarter thatwould potentially swing or hold between fourth quarter or first quarter.
Stephen J. Smith
While we don’t forecast specific line items let me aggregatescanned based trading and our card initiative together and for that you wouldsee that we have spent year-to-date in the order of magnitude around $19million. What we’ve said for the year isthat we could spend $36 to up to the high 40s in expense for the year.
So, all of that roughly $20, $25 to $30million would occur in the fourth fiscal quarter.
Jeffrey S. Stein –KeyBanc Capital Markets
You talked about the fact that you’re continuing to see goodresults in the reset doors. I’m wonderinggiven all the noise that’s going on with currency, with switch to scanned basedtrading and all and lost doors year-over-year, on a comp store basis what kindof performance are you seeing in the reset doors relative to let’s saynon-reset doors?
Zev Weiss
I’m not going to get into all the details of that. I can tell you that in general the trendsthat we had been seeing which were positive trends have continued and so we’vebeen very pleased with it.
Jeffrey S. Stein –KeyBanc Capital Markets
Does this have any implications for spending on strategiccard initiatives for next year?
Zev Weiss
I would expect that there would be some spending but, we’restill working through our plans for next year and we’re still trying to ironout all the details to see exactly what we’re going to do.
Jeffrey S. Stein –KeyBanc Capital Markets
I know you’re not quite ready yet to comment on the impactthat you might incur for integrated WebShops and PhotoWorks but would you putthat number in the material range?
Stephen J. Smith
For the fourth quarter we could tell you that we expect itto be a few pennies of drag on earnings. I’m not sure if you would consider that material or not.
In the next fiscal year because we haven’tyet closed on the PhotoWorks transaction as you know we’re going through atender offer process. We would yet knowwhat the total impact both acquisitions will be next fiscal year.
As we get into – as we close that transactionhopefully in late January then we’ll offer more guidance on that specificbusiness area in April.
Operator
(Operator Instructions) We’ll go next to Kathleen Reed with Stanford Financial.
Kathleen Reed –Stanford Financial
Can you give us an overall qualifications statement to whatyou’re seeing in terms of the holiday season so far? How it compares to prior years?
If there are other trends other than theprevalence of gift cards that you’re really seeing? If you’re seeing increased traffic across thenation?
Just some morequalification. It’s kind of confusingmessages we’re hearing from some other companies.
Zev Weiss
Obviously we hear a lot of the same things that you hearthat’s being reported publicly. Giventhat there’s so much that happens at the end of the holiday and it’s literallyhappening day-by-day as we speak I just would prefer not to comment on it atall.
We’ll hear more about it when weget together again for the next call. Ijust think there’s so much – as you know the holiday’s been happening later andlater every year and it really does come down to that last three to 10days.
Kathleen Reed –Stanford Financial
With that said can you give us any – on your third quarterthen just how actual cards did seasonal versus everyday? Were seasonal cards down year-over-year?
What kind of growth are we seeing in cards?
Stephen J. Smith
We can speak to some of the data. As you know we generally generate thatinformation for the Q which comes out for us right at the beginning of the newcalendar year.
So while we’re stillcrunching some of the details behind it I would share that the seasonal cardsand everyday cards were very close to our plan and the plan was for them to beroughly at flat for this quarter, third quarter.
Kathleen Reed –Stanford Financial
So, flat year-over-year?
Stephen J. Smith
Correct.
Kathleen Reed –Stanford Financial
I think when you were going through your comments just interms of your gross margin improvement in the quarter you said that lower saleshelped you with that. Did I hear thatright?
Stephen J. Smith
Lower revenues were about two thirds of the reason for thelower MLOPC in the quarter.
Kathleen Reed –Stanford Financial
On a dollar basis?
Stephen J. Smith
On a dollar basis.
Kathleen Reed –Stanford Financial
So, on the gross margin improvement though?
Stephen J. Smith
Right. So, of the 100basis point improvement 60 basis points is related to lower revenues.
50 was related to the improved quality or mixas I called it and then that ends to 110 and the other 10 basis point offsetwas foreign exchange.
Kathleen Reed –Stanford Financial
I’ll ask that question a different way later. Zev, when you were speaking about thepositive trends you were seeing from the card program that you were – I thinkyou said they were either meeting your hurdle or getting towards yourhurdle.
Are we seeing actually somepositive pricing trends from that card program?
Zev Weiss
The first year that we did the roll out just because the waythe cards mixed in the everyday section it wasn’t that we intended necessarilyto drive pricing but some of the mix drove pricing. This year as we’ve comped that we’re on thesecond year of it – its much more unit based than it is pricing based.
Kathleen Reed –Stanford Financial
Just to again clarify the fact that your guidance may comein at the high end of your guidance. Didyou say that if spending on the scanned based trading gets rolled into thefirst quarter of 09 you would be higher than your $1.55?
Or, that would be one of the reasons why youwould come in at the higher end of the $1.35 to $1.55?
Stephen J. Smith
I would say yes to those two parts of your question. Yes, the SBT to the extend it rolls into thefourth quarter will cause us to have less spending and therefore have us higherin the fourth quarter and that is the reason we would be at the higherend.
Kathleen Reed –Stanford Financial
On the segment results the interactive segment I thought wehad anniversary’d the divestiture of the shut down of the ring tone businessback in the summer. So, I’m a little bitconfused why that’s still a drag.
Gregory M. Steinberg
The wind down of the ring tones business happened over acouple quarter periods so it was actually spread primarily across the third andfourth quarter a year ago. So, some ofit was anniversary’d – there’s pieces of it in the second quarter and as wewent through processes to shut down offices and some of those operations it wasspread out over a couple of quarter periods.
Kathleen Reed
Are we done with that now?
Gregory M. Steinberg
At the end of this fiscal year we’ll have fully lapped itfrom last year.
Kathleen Reed –Stanford Financial
So even fourth quarter will the problem.
Gregory M. Steinberg
I would expect it to be smaller in the fourth quarter.
Operator
(Operator Instructions) We’ll go to Brian Delaney with EnTrust.
Brian M. Delaney –EnTrust Capital
I’m sorry if I missed it. In the other non-operating income line the $4.5 million what was thatagain?
Stephen J. Smith
That’s foreign exchange.
Brian M. Delaney –EnTrust Capital
All of it is in there because the foreign – that’s the totalnet impact of it?
Stephen J. Smith
Well, the foreign exchange that is in that line item is $4.5million. The next effect for us acrossthe entire P&L spectrum is a net effect to us of $2.7 million positiveEBITDA.
Operator
We’ll go next to Dax Vlassis with Gates Capital Management.
Dax Vlassis
I was wondering what percentage of the business is currentlybased on scanned based trading for the segments it’s applicable to?
Zev Weiss
It’s still under a third.
Dax Vlassis
Under a third. Howdoes that compare to let’s say a year or two years ago?
Stephen J. Smith
It’s creeping up Dax in the neighborhood of three to fourpercentage points per year if you look out over the last few years. But, it’s very much lumpy in that some ofthese contracts get signed occur within a quarter and you see a step up whereall three or four percentage points might occur in that particular quarter.
Dax Vlassis
Where do you expect that to go with the current plans thatyou have for scanned based trading?
Zev Weiss
It’s very difficult to predict something like that becausethis is sort of one component of an overall negotiation and it’s difficult tosay how that’s going to play out. Soeven on say a short term basis let’s say a 12 month period it’s very hard tosay exactly how that will play out.
Ican’t give you an exact number on it. There’s lots of different scenarios but it depends on how things playout.
Dax Vlassis
What about your cap ex ongoing? I know you’re going to spend $55 to $60 wouldyou expect a similar number next year and the year after that?
Stephen J. Smith
We haven’t forecast next year yet Dax. Historically we’ve been running in that rangebut as we mentioned in the last two calls we anticipate incremental spending onsystem refresh and we haven’t yet shared how much that could be for next fiscalyear.
Dax Vlassis
I’m just saying if I’m looking going forward would youexpect the next few years to be above $60 million?
Stephen J. Smith
Again, we haven’t forecast out the next few years publicly. In April we may do that.
Dax Vlassis
Did you say your comps for retail were up 4.6?
Stephen J. Smith
Yes we did.
Dax Vlassis
Is WebShops profitable?
Stephen J. Smith
The business in this quarter had less than a $1 million dragon EBITDA so no it was not.
Dax Vlassis
I just mean the business that you bought at it stands was itprofitable?
Stephen J. Smith
It’s slightly negative on a consolidated basisannually.
Dax Vlassis
Just so I understand the scanned based trading. For this quarter did I hear it right it wasapproximately $8 million?
Stephen J. Smith
For this quarter, yes $8 million on the pre-tax line.
Dax Vlassis
For strategic card or just scanned based trading?
Stephen J. Smith
A combination of both was $8 million roughly split equallyfor the quarter.
Dax Vlassis
For the full year you’d expect to spend somewhere, ifeverything goes as planned, around high 40s?
Stephen J. Smith
It will be in a band because we’re not sure which contractscould be executed from a technical perspective so it will be a band from the low30s to the high 40s maybe a tad above.
Dax Vlassis
Would most of the incremental spending be in scanned basedtrading in the fourth quarter?
Stephen J. Smith
Yes.
Dax Vlassis
Would you expect that to be 50/50 at year end if everythinggoes as planned?
Stephen J. Smith
50/50 between the card initiative and the scanned basedtrading? No.
It will be more heavily weighted toward thescanned based trading initiative.
Operator
With no further question in the queue I’d like to turn theconference back over to Greg Steinburg for any additional or closing remarks.
Gregory M. Steinberg
That concludes the question-and-answer portion of ourconference call today. We look forwardto speaking with you again at our fourth quarter earnings release which isanticipated to occur in April.
We thankyou for joining us this morning and Happy Holidays.
Operator
That does conclude our conference call today. We appreciate your participation.
You may disconnect atthis time.