Martin Kropelnicki - VP & CFO Pete Nelson - President & CEO

Michael Roomberg – Ladenburg Thalmann & Co. Jonathan Reeder - Wells Fargo Tim Winter – Gabelli & Co.

Good morning Ladies and Gentlemen. Welcome to the California Water Service Group second quarter 2012 earnings results conference call.

Today's call is being recorded. I would now like to turn the meeting over to Mr.

Martin Kropelnicki, Vice President and CFO. Please go ahead, Sir.

Thank you, Brian. Good morning everybody, and welcome to the second quarter of 2012 earnings conference call for California Water Service Group.

With me today is Pete Nelson, Chairman of the Board and Chief Executive Officer. I would like to remind everyone that a replay of today's proceedings will be available from July 26th, 2012 through September 23rd, 2012 at 888-203-1112.

The replay code is 4684903. If you need a copy of the press release, you can find it on the company's website that we announced at close of market yesterday.

Before going through the results for the quarter and the corresponding commentary, I would like to remind everyone about forward-looking statements. In particular, during the course of this conference call, the company may make certain forward-looking statements.

Because these statements do future events, they're subject to various risks and uncertainties. And actually results could differ materially from the company's current expectations.

Because of this, the company strongly advises all current stockholders as well as all interested parties to carefully read and understand the company's disclosures on risks and uncertainties and other important information found in our form 10K, form 10Q, and other reports filed from time to time with the Securities and Exchange Commission. Now let's take a brief look at the quarterly financial results and I'll turn it over to Pete for some commentary.

And then I'll wrap up with the balance sheet discussion. During the quarter, the company recorded $143.6 million of revenue.

That was 9.3% or $12.2 million. Of that amount, new sales, our sales to new customers, added $200,000.

Rate increased added $3 million. Production offsets, these are costs associated with purchase power, purchase water.

Our pump taxes, there's no margin, but we're allowed to true it up or down added $5.9 million. And usage added $3.1 million.

Looking at production costs for the quarter, production costs for the quarter, again this is purchase power, purchase water; pump taxes, which is covered by the modified cost balance and account, increased 14% or $11.5 million and $92.6 million. Let me briefly give you the breakout of those three components.

Purchase water increased 20% or $7 million to $41.9 million. Purchase power increased $500,000 or 6.9% to $8 million.

And pump taxes increased $400,000 or 18.2% to $2.7 million. Again, all three of those components are covered by a two-way balancing account that will fluctuate up or down and not have an effect on the bottom line.

Mix for the quarter, there was an interesting trend going on in the mix in consumption. The company produced 95,000 acre feet in the second quarter of 2011.

Second quarter 2012, it was 100,000 acre feet, so we have been above our historical trend on consumption, at least what we've seen for the last two years and of that amount, last year well production was approximately 46% of the mix. This year, it's 47%.

So we've pushing on the well production. Again, if we can get our wells to produce more, it's lower cost for our customers.

And we're starting to see a little of the shift where our well water has been producing more. Going down the line looking at A&G expense for the quarter, A&G was $22.2 million, up $1.6 million or 7.9%.

That was driven primarily by increases in wages and benefits. Other operations was $2 million or 12.6% to $17.7 million driven by water conservation and water treatment costs.

Maintenance for the quarter was down $700,000 or 12.9% to $4.6 million. Not that we're doing any less maintenance, it's that we were able to capitalize some of that maintenance.

So when we're adding a unit of property, say we have a call on a main leak, we go out there, and we physically have to replace part of that unit, replace pipe, or we enhance the value of the use for life, we can capitalize that. Depreciation amortization for the quarter increased $1.3 million or 10.8% to $13.7 million.

And that was driven by the 2011 capital program that the company had in place and completed during 2011. Income taxes for the quarter increased $424,000 or 5% to $9.1 million, while property taxes and other decreased $500,000 or 11.7% to $4 million.

A couple things happening there. One, property taxes typically go up and add more on taxes.

And that was partially offset by an $800,000 refund that the company secured by challenging some property tax assessments in a couple of the counties that we operate in. We challenged them and we won.

Other income expense net was up 20% or $38,000 to $218,000, while interest expense was down $700,000 or 8.9% to $6.9 million. The decrease in interest expense is attributable to two things.

One, increased capital spending, so we were able to capitalize more of that interest. And two, cost associated from the line of credit that we amended and restated in the second quarter of 2011.

And I think as everybody knows, interest rates have been lower, so we've been able to effectively use LIBOR locks to help finance the company's short term credit needs, and that's showing up into the bottom line. Net income for the quarter was $13 million, up 6.4% or $800,000 from the $2,012 million recorded in the second quarter of 2011.

And earnings per share on a fully diluted basis was $.31 a share, up 6% from the $.29 a share recorded in 2011. And I'll turn it over to Pete now for some commentary on our operations.

Pete.

Okay, good morning all. Thank you, Marty.

I will cover a couple of rate making issues and then quickly comment on the second quarter results. And then go back to Marty for a couple other issues.

Our big rate news since our last quarter call really are two rate cases. One is now active and the other has been put to bed.

And although both of these are public knowledge at this point, we're just to talk through them. First issue or first rate case is the active one, and that's our 2012 general rate case filed the first week of July this year.

And we're asking for a $93 million in new revenue in year one, which is year 2014, an additional $17 million in year two, which is 2015, and then an additional $17 million in 2016. This is the beginning of a long, long process.

The next few months, we're going to see data requests coming from the commission. We respond to those.

They go back and forth between the staff and the company. Maybe visits by the commission staff members working on the case to all of our field operations locations to get familiar with what we're asking for in the operations.

Really the next milestone, we expect in February next year, which is when the commission staff releases their report. So there won't be much information until the first quarter of 2013 as this process grinds ahead.

The second rate making item is our cost to capital case, which took much longer than we expected to get through the process. The case was approved by the commission.

In fact, they approved the all party settlement. And it's retroactive to the January 1st of this year.

And this is a three year effective cost to capital decision. We've been recording data as if it was retroactive to the first of the year, so you won't see any changes in our numbers.

But as you all know, the commission granted us and adopted a 9.99% return on equity and 53.4% equity structure. The case interestingly and importantly also continued our water cost of capital adjustment mechanism, which can change the adopted ROE each year as it's tied to the Moody's Double A Utility Bond Index.

And we measure that number from September to September, so we will know for sure this October if that mechanism will trigger for 2013. If there is a change in the adopted ROE, it will affect the three water companies.

The large water companies are in that cost to capital case. And that's Golden State, which is American States water, SJW, and Cal Water also.

Going back to earnings, second quarter came in as we expected. EPS is beginning to pick up as we enter the summer months when we collect the bulk of our margin.

As a reminder to us and everyone, this is year two of a three rate case cycle. And we did not expect a lot of rate relief and we didn’t get much rate relief.

In fact, the attrition increase for 2012 was a little less than $9 million or 1% and 2%. That puts pressure on our budgets, and they are tight, and we're progressing through those.

And I'm feeling good about how people are staying on budget, and really watching costs, and running efficient operations. So in summary, solid second quarter.

Cost of capital is behind us. We are focused on the 2012 general rate case to give us a good outcome there late next year and keeping pressure on financial management.

So now I'll go back to Marty. I think he wants to give a couple more details about the general rate case and some mechanisms we're requesting in there.

And then maybe a thought or two about financial management before we go to the balance sheet and then take questions, so back to Marty.

Great, thanks Pete. Yes, a couple things to point out on the rate case that was recently filed.

One, the capital budget that we're requesting for years 2013 to 2016 is approximately $480 million. That's about $160 million a year of new capital.

In addition, we are asking for a, or added into the rate case, a sales reconciliation mechanism. As you may recall as we talked about my favorite accounting topic EIPF927 deferred revenue accounting, one of the drivers of that is there wasn’t a true-up for the sales forecast mechanism.

And we've requested that we add a mechanism, it basically puts a dead band of 5% or collars the sales mechanism. And if it goes up or down, that 5%, we would request that we change about 50% of the change of the swing, so within the band.

In addition, we're requesting a healthcare balance in account to offset changes in the healthcare costs as part of preparing for the rate case. We did an actuarial study with two different firms looking at our healthcare costs compared to a fully insured plan.

And it looks like we run about 10% to 16% cheaper than a fully insured plan. And that's the right answer for the rate payers.

It's the right answer for the stockholders. But if there's any swings in that cost, it puts the risk on the stockholders, and we want to try to mitigate that risk.

And then lastly, we're asking a chromium-6 memorandum account. And as those regulations come out with the chromium-6, we want to make sure that we are ready for that.

The other thing I'd like to comment on is really the cost of capital adjustment mechanism. As Pete mentioned, it is in place.

And we do track the Moody's Double A Utility Bond Index. At September 30th of last year, that index, the 12-month average was at 5.04.

As of last week, the 12-month average has been between about 3.9 to 3.95. So at this point, I would fully expect that we will have to reset our ROE probably about 50 to 55 basis points effective January 1st, 2013.

Just to remind everyone, that is a two-way mechanism. I think one of the analysts named Michael Roomberg mentioned in his notes, a year ago when we were talking about this, we thought there was no way in heck interest rates could go any lower.

And then low and behold, Mr. Bernanke made some comments about the Fed being ready, and interest rates started to drop again, and here we are.

So it is a two-way mechanism. So as interest rates start to rise, we can swing it back the other way, but for now, we are telling people that they should expect at least a 50% basis point ROE come January 1st, 2013.

Having said that, a quick comment on cost savings. As Pete said, it's absolutely critical for the company to really manage the costs in the second and third year of the rate case cycle.

Accordingly, we've had a couple projects underway to make sure we're maximizing the value for the stockholders, and minimizing costs for the rate payers. And as a result, we've had some savings.

We achieved approximately a $500,000 in our savings just by trimming the outside services and tightly managing the legal budgets as well as travel. As I mentioned in the financial analysis, the cost savings associated with the amended restated line of credits, the property tax adjustment that I mentioned earlier, that was achieved by challenging the county that has been taxing us for some time.

And going through an audit process with them where we believe they were wrong, and it was affirmed that our calculations were correct. And they owe us a refund on that.

So we're going to continue looking at these things on a day-to-day basis. Items such as maintenance, some companies talk about capital maintenance and expense maintenance.

We've always just talked about maintenance because we try to budget our capital projects. But we are taking a very close look at all our maintenance activities.

And to the extent, we are replacing any element or unit of property that enhances the value of the assets and its' capital life. We will capitalize it.

So we're going to stay tightly focused on cost controls through 2012 and well into 2013. 2013 will be tight as well.

And for those of you that know Pete, he's a great boss, but he can be a tough boss. And it's a lot easier to go in there showing him results of our efforts versus cost overruns, and so it's my goal to stay on the good side of that discussion with my boss.

Looking at the balance sheet, a couple of things to point out that are relevant. Net utility plant was up 6.9% or $91 million to $1.419 billion.

So we're happy to see the continued growth in that utility plant. CapEx for the quarter was up 20% or $10 million to $57 million.

So we spent $10 million more in the second quarter of 2012 compared to 2011. Cash flow from operations was a positive $32.1 million.

But as you can see, that's short of what we need to finance our capital programs, so we have been utilizing our line to fund our CapEx programs. So overall, the balance sheet continues to be strong during the quarter.

S&P reiterated and reaffirmed our A+ rating as well as our A- rating on our first mortgage bonds. And so we're clearly going into our busy season where we spend a lot of cash on capital.

The company has plenty of room on the balance sheet to finance that capital. And with the RAM amortization issue behind us, we anticipate that we'll see about a 15% pickup in cash flow during the third and fourth quarter from amortizing those RAM balances that previously were not being amortized.

So Brian, with that, we will open it up for questions please.

Thank you. (Operator instructions).

And we'll take our first question from Michael Roomberg with Ladenburg Thalmann.

Thank you, good morning, guys.

Good morning, Michael.

Good morning, Michael.

Marty, just a quick question on the cash from Ops. You said $32.1 million in the quarter.

Why the big jump from the second quarter of 2011? Was that just a timing related issue or can you elaborate on that a little bit?

Sure, there's a couple things that kind of go into that. One, don’t underestimate the collectability of the RAM issue.

And with the new amortization schedules, we got about one and a half months collection with the new amortization schedules. So I would have liked to have seen a bigger pop on that, but really, we had to file the applications with the commission.

And then we start amortizing it 30 days later. The second thing that kind of flow through cash flow for the quarter is we have a long term receivable on the RAM as well as a short term.

And the short term I think is 12 months or less. The long term is anything greater than 12 months.

With the new amortization schedules associated with the RAM, you had about a $6 million swing that moved the receivable from the short term to the long term. So that's slowing through it as well.

So between increased CapEx, some stuff moving around on the RAM receivable, and getting about half of the faster amortization with the quarter, those are all things that affected the cash flow.

Got you, okay. What was the life insurance mark to market in the quarter?

I didn’t hear that mentioned in the prepared remarks.

You know, I am very happy to say it was zero. It has not happened in a long time.

We spent a lot of time looking at the investments that were behind the life insurance. And we rebalanced those significantly and hopefully bring down the volatility associated with it.

So for 2012, Q2, it was essentially zero. And that compares to a loss of $400,000 in the second quarter of last year.

Okay.

And so in just going forward, several notes, to the extent there are big swings, we'll obviously report those. And there will be more details on that in our queue as well.

So we try to be very transparent with that.

Okay. And then lastly, you did speak to the A&G expense in the prepared remarks.

It was encouraging from our end to see the deceleration from kind of a low double digit growth rate in the first quarter to mid to high single digits in the second quarter. As we look towards the second half of the year, where do you expect that to shake out from a growth rate?

It looks like third quarter of 211, it was up about 25%, so I'm not sure if there was some timing issues with respect to that. And the growth rate would be in the lower end of that range for the rest of the year.

What are your thoughts with that?

You know, our goal is to keep it in the lower end of the range. But frankly, the biggest risk factor, there are two things that really feed into that.

One, if we have a lot of overtime and we've had a fairly warm summer so far this year, overtime if things go wrong. Overtime, the bulk of it becomes an expense.

That's one item. That’s not the big item.

The real big item frankly is healthcare. And being self-insured, if we have a surge in claims, and we've talked about this in previous quarters, we've had a couple years where in a quarter, you'll have a number of terminal illnesses show up in the healthcare plan.

Premature babies, or events start to happen that drive up those healthcare costs. Now we do have a self-insured retention level, but it's basically $250,000 per employee before that level kicks in.

So really, you've got to watch the healthcare claims. That's the big thing to really watch.

Before the last generated case, I'd say the pension. You've got to watch the pension.

But we do have a two-way pension balance in account. And so you do see incremental costs flowing through the income statement right now associated with the pension, but it's offset by the balance in account.

And so with interest rates that have continued to go down, the present value of the liability associated with the pension plan goes up. And as result, that increases your pension expense in the next period.

So not only does the low interest rate affect the cost of capital adjustment mechanism, but it potentially means higher pension expense for a lot of companies. The good news is for us, we have that pension balance in account, so it does flow through A&G, but it nets to zero on the bottom line.

Got you, and with respect to the medical costs, I mean my understanding is that it reduces your overall long term costs for medical benefits, but increases sort of the short term volatility. Is that the right way of thinking about it?

Yes, that's right. And essentially the risk is really put on the shareholder because we've done a really good job at saving the rate payer money.

But as you've seen and we've had I think two quarters in the last five years where we've had a significant spike in claims that were associated with major medical events. And medical costs being so high, you only need that to happen to three or four people in your population, and you can really spike your premiums or your reserves that you have to set up in your self-insured plan.

So yes, I think the company's done a fabulous job. I was very happy with the actual study.

In fact, the first one looked so good, I had a separate firm come in and do one just to make sure it was right. But on average, it looks like we save about 14% to 16% a year being self-insured.

But the risk of that is all on the stockholder. And ultimately, we want to keep rates low for the customer, but we don’t really want to unduly burden the stockholder.

In this case, we think a balance in account would be the right answer for both parties. We want to continue with our plan.

Keep costs low, but we want to try to minimize the risk to make it more predictable.

Okay, thank you very much.

All right, thanks, Michael.

(Operator Instructions). And we'll take our next question from Jonathan Reeder with Wells Fargo.

Good morning Marty and Pete.

Hey, Jonathan.

Hey, Jonathan.

A quick question, can you remind us if the filing and the GRC, is that based on a 10-2 or the 999 allowed ROE?

It's based on the 999 ROE.

Okay, and then what would the sensitivity to your request be based on a 50 basis point change in that imbedded ROE, do you know?

The request doesn’t change because we're asking for capital and then expense, or the rate case doesn’t change. It just, we'll drop the adopted, could drop the adopted ROE, which would reduce rates next year.

Does that make sense?

Right, but do you know like I guess how that changes your revenue requirement?

Yes, with the cost of capital adjustment trigger, Jonathan, if it triggers, let's say it's 55 basis points. I think if we had to adjust right now, if we had to file, that's what it would be.

That would probably be about $.045 a share going into 2013 that our earnings would go down.

Okay, and then Marty, can you go into that sales reconciliation mechanism just a little more, like how that differs I guess from your current RAM?

Sure, so the current RAM, you have an adopted forecast and then you have actuals. And to the extent you're over or under, we're always looking back to that adopted number.

That's how the basics of the RAM mechanism works. But one of the problems we experience going into this kind of first full cycle with the coupling is that consumption was going down and our adopted numbers were going out at or slightly above where they were in previous years because of the way it looks at like the averaging of the previous years' consumptions.

So essentially, we're always booking it up or down, but there was never a reset on that adjustment mechanism. So that receivable continued to grow.

So by the end of 2011, the company went from about $28 million of receivables to about $100 million of receivables. And of that $100 million of AR, the current portion based on the current billing was about $28 million.

That was turning fine with the DSO of about 27 days. We had turned that receivable over.

But the long term receivable just continued to build, so there was no true up mechanism that would allow us to collect that cash, which ultimately brought down our cash flow from operations, which was making our radiating agencies very upset. So the idea is to have a mechanism that trues up the sales forecast annually based on any significant swing in consumption.

And so just like the cost to capital adjustment mechanism, if there's a swing in interest rates, we can go up or down. Kind of same concept with the sales adjustment mechanism.

If we see greater than a 50% swing, we want to build a true that up on an annual basis, which is very much like the electric and gas companies in the state of California. They true up every January 1st.

Okay, so it would be an annual mechanism and then the goal is to essentially just reduce the receivables that would then be collectable under the RAM?

Yes, and the threshold is 5%. If there's a 5% swing in consumption, then we would apply to change the sales forecast.

So think of it this way. What happened to us in the last couple years was the receivable continued to grow.

We were recording revenue. But we weren't getting a cash flow.

And basically, that could suffocate us pretty quick. So we've got to be able to record the revenue and collect the cash within a two year period in order to account for it as current revenue.

And the way you're requesting it, would the adjustment be on a one for one kind of basis once it hits that 5% swing in consumption?

It would be 50%.

Okay, so just 50%.

Yes, and so that's like if you think of it almost like the cost of capital adjustment mechanism. It gives us the ability to true it up or true it down based on swings.

And that will allow us to kind of fully achieve the benefits decoupling and promote conservation without choking ourselves off from our cash flow.

Sure. And then lastly Marty, I missed it right up front.

What was the size of the property tax refund that you received in the quarter?

It's about $800,000.

Okay. And that would be viewed as something that's non-recurring then?

I think so, but from a personal perspective, there's a balloting issue in California to raise sales tax. I don’t know if that's going to pass.

The point I've seen has been pretty spotty about that. Cities and counties are hurting for cash.

And so from a company perspective and from a shareholder perspective, we're scrutinizing all the tax bills that come in. And if we think they're wrong, we're going to challenge them.

And our goal is to be a good corporate citizen. We want to pay the amount of tax that were owed, but we don’t want to be incorrectly charged.

And in this case, we were incorrectly charged.

So are you saying you think there may be some opportunities in some of your other jurisdictions for something similar?

Yes, I mean if you look at how many properties that we have, I think if you look at the situation the cities and counties are in, I think they're being a little bit more aggressive. It's kind of like next time you're in California, don’t speed because they're writing a lot of speeding tickets right now.

I'll need to take heed of that advice.

You know, so I'm not saying they're doing it deliberately, but physically speaking, things are tight in the state of California. And again, our job is to make sure that the stockholder interests are protected accordingly and the rate payer is not unduly charged.

I appreciate you taking my questions today.

All right, thanks Jonathan.

Thanks.

And we'll take our next question from Tim Winter with Gabelli and Company.

Good morning Marty and Pete. I just want to follow up on Jonathan's questions just to clarify.

The reconciliation request is really a cash flow issue and much less of an earnings issue?

Yes, I mean from an earnings perspective, decoupling shields us from big changes in consumption. The problem is if you can't collect the cash, then you trigger this alternative revenue recognition, which is EITF 92-7.

And if you cannot collect that cash within 24 months of the end of the first period in which it was billed, you have deferred revenue accounting. And that's what we triggered at the end of 2011.

So no one asked this question, but let me point out just the importance. Of the amount that we had to defer at 12/31/2011, there was $.04 of earnings there, $.03 of reverse.

There's still another $.01 of earnings or $700,000 hanging out there that we anticipate will reverse here in the third and fourth quarter. And remember, it's plus the interest cost too, so these balances earned the money market rate of interest, which it's not much, but again it flows both ways.

If we owe it, it's accruing interest. If we're due it, it's accruing interest as well, so it's the collection of the interest.

Okay, and then is there any sort of response from the staff or any other parties on this request?

No, in fact if you read the cost of capital or the RAM application we filed for clarity on this, it punted it to the general rate case, and so it was included in our general rate case on how to handle it going forward.

Okay, and then can you talk a little bit about water consumption trends? And maybe if you just start say five years ago, I guess I'm just sort of trying to figure out what the causes of the consumption this particular quarter and how that compares?

What would you expect going forward?

Yes, let me kind of talk average consumption compared to the adopted revenue number. So up through 12/31/11, we have been running about 80% to 86% of our adopted number, which meant we were booking at 14% differential between the adopted and the actual was being booked in the RAM.

So far this year, we've been running about 90% to 91% of our adopted number. So we have seen in the last six months consumption increase from where it has been over the last couple years.

Now the offset to that is we had a very dry winter. You know, January and February were really dry months.

In fact, I'm going to go to any rain in the San Francisco Bay Area for the first four weeks of the year, which I don’t think has ever happened before. Maybe it was one other time since they've been keeping weather records.

So you had more consumption kind of in the first quarter. And then we kind of had late rains, and so we had rains kind of through the middle of May, some of which were fairly heavy.

One to two inches I know in my neighborhood during May is very uncommon. And we had in one week about two inches of rain.

So it's been kind of balancing around. I would say on average, I don’t have the average temperature in front of me, but I would say it's been slightly warmer this summer as well.

So we're seeing the actual usage higher than what it's been compared to the adopted numbers. And so assuming that continues, that RAM balance we think we'll be down below the balance at 12/31/11 because we're collecting more of it.

So just from a purely unit change, you saw roughly 15% annual declines for a couple of years and now you're – it's tough to tell in just a couple of quarters, but maybe bottomed out?

Yes, I mean I think so. That's why we've been giving quantities on the last few calls so people can see that.

But yes, the second quarter of 2012, we produced 5,000 more acre feet of water that was put into our system and consumed.

Okay, final question. You talked a little bit about the well number.

When you look at your say longer term planning process CapEx, are there any major water supply projects or anything on the drawing board?

Sure, I'll tell you right now, we have seven wells that we're trying to procure property for down in the Southern California region. We think the real opportunity here for both rate payer and for shareholders is where we can invest capital to reduce purchase water costs.

So we would like to put more wells in place in Southern California. So we do have a number of open projects down there.

For those of you that have been to Southern California and you know where we operate, East L.A. or most of the Redondo Beach, P.V., West Lake, those are very high real estate areas.

And I personally have been involved with the negotiating of land for some of these areas. And it's very, very expensive.

And real estate's at a premium and scarce down in Southern California. So the hard part is really finding the property.

Once you find the property, then the process of getting the permits, the process of putting a well in, testing the well, and then putting it in production, it takes a couple years. But that's really what we're focused on in Southern California.

So where we can invest capital, reduce purchase water costs, we're going to do it.

Okay, thank you.

Thanks, Tim.

And there are no further questions at this time.

Great, thanks, Brian. Just closing remarks.

I want to thank everybody for joining the call this morning and hanging with Cal Water as we went through a couple regulatory issues to get resolved. It's very nice to have the RAM amortization issue resolved as well as the cost to capital, now the general rate cased filing.

As Pete mentioned, we're going to stay keenly focused on kind of cost management throughout '12 and '13 and then keenly focused on the general rate case efforts that the company's put in. It's a very big rate case.

The teamwork has worked very hard to pull that rate case together. And we will be going into process of reviewing our costs with the commission.

And as Pete said, it's a very long process. It's a lot of work, but we'll start that process here shortly.

So that's it for Q2, 2012. Thanks for joining us, and any questions, feel free to give us a call.

Have a good day.

And Ladies and Gentlemen, that concludes today's conference. We appreciate your participation.