Wausau Paper Q1 2010 Earnings Call Transcript

Apr.27.10 | About: Wausau Paper (WPP)

Wausau Paper Corp. (NYSE:WPP)

Q1 2010 Earnings Call

April 27, 2010 11:00 AM ET

Executives

Perry Grueber - Director IR

Tom Howatt - President and CEO

Hank Newell - SVP, Paper Segment

Scott Doescher - EVP and CFO

Analysts

Anna Torma

Mark Wilde

Ryan Rosenthal

Michael Roxland

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Wausau Paper 2010 first quarter results conference call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator instructions). As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Director of Investor Relations, Perry Grueber. Please go ahead.

Perry Grueber

Thank you, Stephanie. Good morning, everyone. Thank you for joining us for Wausau Paper’s 2010 first quarter analyst and investor call. I am pleased to be here today with Tom Howatt our President and Chief Executive Officer; Scott Doescher, Executive Vice President and Chief Financial Officer; and Hank Newell, Senior Vice President of our Paper Segment.

This call is being web caste and slides are provided to summarize key elements of our presentation. The presentation is also available as a download from the investor section of our Wausau Paper website.

In a moment Tom will begin our presentation by reviewing first quarter results for the corporation and our tissue segment. Hank will then review the paper segment’s financial performance and discuss current markets within which paper competes. Following those comments, Scott will provide a high level financial review, and update key elements of our financing and balance sheet strategies. And finally, Tom will comment on our second quarter outlook, after which we would be happy to address any questions you may have.

Before proceeding with the presentation, I’ll remind you that statements made during this presentation, other than those that refer to past results are forward-looking statements made pursuant to the Safe Harbor provisions of the Securities Reform Act of 1995. Such statements, including those concerning earnings, outlook, and price increases involve risks and uncertainties that may cause results to differ materially from our presentation set forth during the discussion. Among other things, these risks and uncertainties include the risks and assumptions described in item 1A and item 7 of the company’s Form 10-K for the year ended December 31, 2009. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. In addition our presentation refers to certain non-GAAP financial measures and reconciliation of these measures to GAAP is provided in the appendix of this presentation and is available on our website.

And with those formalities out of the way, I’ll now turn the call over to Tom. Tom?

Tom Howatt

Good morning everyone. I’ll begin with highlights of our first quarter performance. Continuing our favorable trend of recent quarters, first quarter adjusted earnings were solid $0.08 per share despite relatively lackluster demand in some market sectors and much higher input costs. Our tissue business reported record first quarter profits and a fifth consecutive quarter of year-over-year earnings gains while paper segment results improved despite a significant impact from much higher fiber costs.

During the quarter, we announced Board approval for $27 million investment to provide tape-backing capabilities at our Brainerd mill. And finally, we completed a debt facility at quarter-end which significantly increases our credit capacity. Market conditions for our product sectors are reflective of the weak economic recovery experienced to-date.

Away from home demand was essentially flat for the quarter while uncoated free sheet demand improved only modestly against a very weak comparable period. The one area where we had experienced notable demand gains is for our technical grades such as tape, food and industrial. At the same time, market pulp costs have risen at historic highs and have impacted paper sector margins. Strong first quarter earnings reflect the continued growth of our highly profitable tissue business as well as benefits from the recently completed restructuring of our paper segment.

Earnings gains were achieved despite fiber cost increases of $12 million. As we look to the future our focus remains on sustaining strong growth on our tissue business. While building on the competitive position of our newly formed paper segment.

Our tissue segment reported a strong start to the year with operating profits reaching a record $11 million for the first quarter. These results were achieved despite Wastepaper pricing that was double prior year levels. Shipments improved 7% over prior year in the phase of flat market demand supported by strong proprietary dispenser placements and a more normalized first quarter order pattern compared to the uncertainty of 2009.

Results also benefited from increased operating efficiency at our paper mill and converting plant. The key to the success of our tissue business in recent years has been the development of products for markets such as property management; education and government or environmentally sensitive products are preferred. The addition of towel and tissue capacity at our Middletown mill has enhanced our ability to service these markets while significantly improving our cost structure.

Hank will now review market conditions and the performance of our paper segment, Hank?

Hank Newell

Thank you, Tom. On January 1st, we completed the final step in our three year business restructuring initiative by combining our printing and writing and specialty products businesses into a single operating unit known as the Paper segment. The consolidation eliminates $2 million in annual administrative costs, enhances market access for a full range of products and creates a flexible manufacturing platform that supports both mature and growth oriented markets.

Our new operating unit, with revenues over $700 million in 2009 employs approximately 1,600 people with four mills, 14 paper machines and four distribution centers serving customers worldwide. The segment is focused on profitable growth in five strategic markets: food, liner, print and color, industrial and tape.

Our vision is to be the leading provider of paper-based environmentally sensitive brands and solutions to the markets reserve, driven by a business model of collaborative innovation. Despite significantly higher private costs, first quarter adjusted operating profit of $2 million increased modestly over 2009 models continuing benefits of the restructuring, price actions and improved sales volumes positioned the business to absorb more than $9 million in year-over-year private cost increases.

Current market conditions reflect modestly increasing demand levels in the liner, tape, food and industrial sectors while demand in print and color remained stable. During the first quarter, we implemented or announced price increases in each of our markets and further implemented a pulp surcharge on bleached grades in our technical sectors.

Our confidence is higher in the long-term profitable growth of the paper segment and our ability to demonstrate sustained profit performance in the pulp environment that is approaching record levels. Market pulp pricing has risen rapidly over the last nine months and some industry sources are projecting further increases before declining later this year.

It appears that the list price for Northern Bleached Softwood Kraft will soon eclipse the previous record for $1,000 for air-dried metric tons. Benefits associated with our restructuring initiative have positioned us to effectively manage to a period of record-high pulp prices.

The food sector which includes food processing, food service and consumer food packaging continues to be a strong growth sector for us with attractive margins. In this space, we’ve built on our strengths and grease barrier, food release properties, heat and char resistance and microwave structures. We continue to invest in product development and direct more capacity at both Rhinelander and Brainerd to support growth in this sector.

For liner space includes aerospace wind and solar energy, medical and a range of precious sensitive label and tape applications. We are well positioned in this sector to participate in the worldwide growth occurring in fiber composite manufacturing and its demands for the highest quality coated liners. We will leverage our position as an integrated producer of silicone coated liner and continue to invest in capabilities and capacity to support the growth of our customers worldwide.

The industrial sector includes interleaver; coating, saturating and micro market grades with end uses and steel and automotive production, commercial and residential construction and a wide range of made-to-order specialty products. This sector was most impacted by recessionary demand declines but is benefiting from an improved mix as demand begins to improve with economic recovery.

The food and color sector is our largest sector and is one where over many years we have built the leading position in premium print and color markets. We are the color leader in North America offering the broadest range of color grades serving our customers with an industry leading service model for both commercial and consumer channels. We will continue to invest to protect our leading position and exploit custom color opportunities. We also are the leading provider of crepe-tape backing papers in North America and number one or two globally. We are committed to supporting the growth of our customers and in the process becoming the leader in this sector on a worldwide basis.

In February, we announced Board approval to invest $27 million to rebuild our Brainerd, Minnesota paper machine, with a targeted startup in the first quarter of 2011. This investment will provide the crepe-tape asset that will be cost effective across the full spectrum of premium, intermediate and value product offerings.

Our priorities for 2010 are straight forward, demonstrate the sustainability of our earnings in our record pulp price environment and continue to position the business for profitable growth by our line in the paper segment around five core markets, leveraging our manufacturing flexibility and executing the rebuild of the Brainerd paper machine.

Scott will continue our presentation with the financial review.

Scott Doescher

Thank you, Hank. First quarter earnings of $0.06 per share compared favorably with the prior year losses of $0.03 per share included in first quarter results were income tax charges of $1.2 million or $0.02 per share related to recent federal health care legislation. Additional explanation of this item is contained in note two of our Condensed Consolidated Financial Statements. Excluding this charge are our effective tax-rate for the first quarter was 38%. We expect to apply a similar rate through the balance of 2010, adjusted for the impact of healthcare legislation, prior year facility closure and capital related expense, first quarter earnings were $0.08 per share compared to $0.07 per share in 2009. This modest improvement in adjusted earnings was achieved despite year-over-year fiber cost increases of approximately $12 million or the equivalent of $0.15 per share.

Also of note was our recent issuance of $50 million of seven year senior notes and entry into a $125 million Private Shelf facility. As I’ll discuss more fully in a minute, these agreements increase our credit capacity and enhance our financial flexibility.

I’d like to briefly review turning to earnings reconciliation schedules. The first schedule compares first quarter 2009 adjusted earnings of $0.07 per share with first quarter 2010 adjusted earnings of $0.08 per share. Compared with last year, sales price, mix and volume variances favorably impacted first quarter earnings by $0.07 per share.

Additional sales volume also allowed us to operate our paper machines at full capacity through the first quarter, avoiding the market related down time executed during the same period last year. As compared to prior year, the elimination of market related down time increased earnings by $0.07 per share. As mentioned earlier, fiber prices increased $12 million or $0.15 per share on a year-over-year basis. Market pulp costs increased approximately 18% or $9 million while Wastepaper and Towel and Tissue parent rolls increased a combined $3 million.

And finally, operations and all other variances had a positive $0.02 per share impact on earnings. The second reconciliation compares fourth quarter 2009 adjusted earnings of $0.14 per share with first quarter adjusted results. This sequential reconciliation is dominated by one variance, fiber price. As compared with the fourth quarter, fiber costs increased nearly $7 million or the equivalent of $0.09 per share. Most of this variance was driven by market pulp which increased approximately 9% or $5 million, Wastepaper and Towel and Tissue parent rolls accounted for $2 million of the variance. Operations and all other variances were combined $0.03 per share favorable to the prior quarter.

Having strengthened considerably over the past year, our balance sheet remains solid on March 31st with a seasonal increase in working capital driving debt level somewhat higher as compared to the end of 2009.

First quarter, our capital spending was $6.2 million; full year spending of approximately $36 million is expected as we work to complete the recently approved $27 million paper machine rebuild at our Brainerd mill. Scheduled for completion in the first quarter of 2011 we expect to spend approximately one-third of the rebuild total in the current year.

Next I will comment on our 2010 finance objectives and provide an update on our progress with both our existing senior note and bank credit agreements maturing in 2011. We are working to replace both facilities well in advance of their exploration. In the process we plan to increase credit capacity by 50% to $300 million providing ready access to additional capital to support the strategic growth of our business units. The new structure is intended to not only provide the flexibility to increase debt as investment needs dictate, but also balance our variable and fixed rate exposure.

Given the extreme volatility in the debt markets in recent years we are working to renew our credit facilities in the current stable rate environment. Consistent with these objectives we recently issued $50 million of seven year senior notes and an annual interest of 5.69% and entered into a Private Shelf facility for the issuance of up to $125 million of additional notes.

The notes issued represent a competitive long-term source of capital while the Shelf Agreement provides the flexibility to tap additional capital based on investment needs. Also, we are planning to replace our current bank credit agreement with $125 million facility. Although terms have yet to be negotiated, we are targeting completion of the new agreement later this year.

Our targeted debt capacity provides a balanced exposure to long-term fixed and short-term variable rate debt. The new structure will provide the flexibility to increase debt as investment needs dictate while appropriately managing interest rate risk.

I’ll now return the call to Tom to discuss our second quarter outlook, Tom?

Tom Howatt

As we look at the future, we remained very encouraged by the continuing success of our tissue business and by the performance of our Paper segment and the current high input cost environment while the second quarter is a seasonally stronger period for our business, current year results will be impacted by the economy which has been slow to recover from recession by annual maintenance outrages at several facilities in the quarter and by historically high fiber costs.

As a result, we expect second quarter results to improve modestly from first quarter adjusted earnings of $0.08 per share. We would be pleased to answer your questions at this time.

Perry Grueber

Stephanie, if you could queue for questions please.

Question-and-Answer Session

Operator

(Operators Instructions) We have our first question from Anna Torma. Please go ahead.

Anna Torma

I was wondering if on the tissue side, you could just address the volume increases you have. Is really all of that still coming from the value added grades or are you starting to step back in and take some market shares while in some of the more commoditized segments of that market?

Tom Howatt

I would say it’s really predominately the value add component of the business where we’ve seen the gains. One of the successful factors for the business or a predictor is the placement of proprietary dispensers in this business and we had strong placements of those dispensers mid to late last year and that’s really showing up in the volume but we’re seeing here in the first quarter this year.

Anna Torma

Then on the paper side, can you just give us a little bit of additional color on what kind of growth you are seeing now in those higher margin, take back in Paper segments and how much that’s still perhaps below what would be considered a normalized market, just to give us a sense of what your upside could be there?

Hank Newell

I think we’re seeing a growth in our food industrial and tape sectors. We’ve seen significant improvement in tape although probably not quite to the same levels as they existed prior to entering into the recessionary environment. Food has continued to grow at very stable rate and I think the industrial sector is reflecting, in particular pick up in steel sector capacity.

Operator

And we have a question from Mark Wilde.

Mark Wilde

Can we talk first about the project up at Brainerd? When you are complete, what will the output at that will look like ideally and maybe Hank you could kind of tie that together with that little pie chart that you had that showed us your current end markets, and we could talk a little bit about how that’s going to shift?

Hank Newell

We will take the investment in Brainerd machine to give us the capability to support the growth in each of our strategic markets. So the mix of Brainerd will reflect what’s required to support food, tape and our print and color markets. So overtime depending on where we can see the most attractive margins overtime it will become predominantly a tape and food asset but in the short term we are going to use it to support those places where we can sustain attractive margins.

Mark Wilde

The second question I had was around the strategic growth initiatives that you mentioned, kind of in conjunction with that new financing package. Scott, I wondered if you or Tom would want to talk about that, put a little more color on that.

Tom Howatt

I can perhaps start, Mark. The investment in Brainerd highlights in area where we think we can achieve improved performance for the overall paper segment as we transition to areas of the market that show stronger growth characteristics on both the domestic and a global basis. More specific to the point though, we continue to want to accelerate, find ways of accelerating the growth of our tissue business and ultimately, that can take a variety of forms.

We’ve been very successful in growing, particularly the value add component of that business at well above the organic growth rate of this market and will continue to focus on that side of it as well but ultimately we will look for other opportunities to more rapidly grow this business and certainly undefined in terms of what approach that might take at this point.

Mark Wilde

Would that be staying in just the away-from-home market or could you move over in to the consumer tissue market at all?

Tom Howatt

I wouldn’t really envision us moving to the consumer side, but there are other aspects to the away-from-home market where there are potential opportunities but consumer is not a business that we know away-from-home is one that we do.

Mark Wilde

Has your view changed though all in terms of how much actual tissue production capacity you want to own versus focusing more on the converting side of the business?

Tom Howatt

Historically as you know, we have operated the business on a parent roll, short basis and have intentionally operated in that position and that has served us well over the long-term but we recognized that as the need for outside parent rolls grows, that represents a risk factor for this business. Thus the decision to invest in our towel machine at Middletown last year that expanded capacity significantly, it really helps service those Green-Seal certified product markets. So as we look to the future, we’re mindful of the fact that as we grow this business that increases our leverage to outside parent rolls and a part of our strategy overtime could well address that issue with potentially further integration of the business being one option.

Mark Wilde

Also in tissue, can you talk about where you are at right now in terms of pricing initiatives to recoup some of these fiber costs?

Tom Howatt

Yes, we announced price increases effective at the beginning of April 4, for the US market and we are in the process of implementing that increase at this point in time.

Mark Wilde

How much did you announce?

Tom Howatt

We announced up to 9%.

Mark Wilde

And sort of what’s an average number, Tom?

Tom Howatt

Over the long-term perhaps a third of what gets announced is typically makes its way to the marketplace but that varies quite substantially based on market conditions. As you know in this marketplace we had gone for some period of time without price increases and with the rapid run up in the Wastepaper we have made an effort to recapture some of that cost increase. And so I think ultimately what we attempt to achieve really is reflective of that run up in the input cost side of the business.

Mark Wilde

Okay. And then finally in tissue I was at a industry event couple of weeks ago out on the West Coast, at kind of a nice resort and if you look at the tissue that they are using in this resort and it looks like its Indonesian tissue. I am wondering how much inroads you see that product making, it was in a very nice setting and whether there is anything new or the industry might do to kind of raise questions from an environmental standpoint about where this Indonesian tissue is being sourced from?

Tom Howatt

We are aware that there is some offshore tissue that has made its way into some markets. And from our perspective, we characterized that as something that is not a significant impact and so far as our supply chain or our customer base is concerned.

Mark Wilde

Then finally Tom, when we think about the second quarter, it looks like you’re really pointing to a number that will come up short of last year’s second quarter and I’m just curious about where you see the greater weakness will be, I think you did about $5.9 million in EBIT in the two Paper segments last year and if my numbers are correct here and Towel and Tissue you did about $11.7 million, so just sort of order of magnitude, where we might be seeing the greater weakness year-over-year?

Tom Howatt

Well, there are couple of factors here. One is the input cost environment, principally market pulp and that impact is directly tied to the Paper segment. While Wastepaper costs in the first quarter will double prior year, we have seen Wastepaper begin to ease and so the input cost to the fiber situation is probably not as significant for tissue as it is for the Paper segment. At the same time, we also have mill outages at three locations in the second quarter and those will have an impact relative to prior year.

Operator

Next we have a question from Ryan Rosenthal.

Ryan Rosenthal

First question concerns as this is the first quarter of your consolidated Paper segment, could you discuss kind of the changes that took place during the quarter, and fundamentally if we should expect more legacy Specialty Products to be shipped relative to your legacy Printing & Writing segment?

Hank Newell

Structurally in the first quarter, we completed the majority of our restructuring activity except for the final consolidation of last year. Going forward, the growth profiles of sectors such as food, industrial and tape are very attractive and positive and we expect to grow at an above GDP rate. Other sectors liner or print and color are going to have less attractive growth profiles. So overtime, we would expect our mix to reflect that.

Ryan Rosenthal

I understand you ran a full capacity for that segment this quarter. Would your expectation be that you’ll reach the 550 million ton capacity by year-end and it will be more on balance again with the legacy Specialty Products?

Scott Doescher

Recall that a year ago, not quite a year ago. We did shut down, mill out in Otis, or Jay and Maine rather, which took some capacity offline for us. We did run essentially at capacity for both Printing & Writing and Specialty Products in the third, fourth and then into the first quarter this year as we mentioned we operated at full capacity. So that I think gives you a sense in terms of what that annual capacity was up to.

Ryan Rosenthal

And then just turning to input cost, considering that future prices seem to suggest a gradual decline input cost, how does this still affect your ability to extract price increases from both Towel & Tissue as well as the paper division customers.

Tom Howatt

I can comment on tissue perhaps first. Again I think that if you take a look at cost recovery we are behind the equation if you will in terms of the rapid run-up in Wastepaper costs over the course of the last year or so and even though Wastepaper has begun to ease, it is still up dramatically over where it was prior year or so. From our perspective there is still a need for recovery of that input cost equation even though that would past the peak for Wastepaper.

Then on the Paper segment side within our technical sectors we have a combination of contractual relationships and market based pricing that allows us to protect our margins and within the Print sector as pulp has increased. We are less successful and willing to get full recovery on pricing. So as pulp moderates, I think we would actually see a margin improvement and be able to sustain our pricing levels.

Ryan Rosenthal

Just one final question concerning your 2Q ‘10 guidance, specifically the timing of your annual machine maintenance expense. I'm trying to get an understanding of the expense this year versus the first half of 2009?

Tom Howatt

Yes, if you compare prior year we actually have two facilities that did not have outages in the second quarter of last year but do have outages this year are tissue mill and our Rhinelander facility.

Operator

We have our next question from Michael Roxland.

Michael Roxland

On the 4Q call, you had guided originally that 1Q was going to be lower than 1Q ‘09's $0.07. Just want to get a sense from you what were some of the biggest surprises in the quarter that led you to beat your original guidance?

Scott Doescher

Sure we can comment on that Mike. When you take a look at our first quarter performance, certainly we ended up with a very strong performance out of our tissue business at record first quarter levels and it was unclear. In fact, the impact that Wastepaper pricing we’re going to have on full first quarter performance and so as we saw those costs begin to tip over, late in the quarter as Tom mentioned and continuing into the second quarter, that was certainly a contributing factor and we were slightly stronger than the guidance we had provided but I would say, that would be the largest single variance.

The other piece that I would mention was that in terms of overall operation as an example with respect to the rebuilt number one paper machine, towel machine down at our Middletown operation, we also saw a benefit from that rebuild and as we move closer to the design production levels for that machine.

Tom Howatt

Just maybe adding one more comment and also I’ll have to say that we in (inaudible) rather pleased with the volume and mixed gains we ultimately achieved in the first quarter of this year.

Michael Roxland

And that machine that rebuild, is that supposed to take, is it going to be fully up and running sometime this year, in the second half, when you are exploring to see the full benefit of that rebuild?

Scott Doescher

We’ll tell you by the end of the first quarter, we were quite close to those design production rates. So we’ve got a bit more to go but we expect to achieve that in the near term.

Michael Roxland

And just one last question on tissue, obviously there are competitors out there who are interested in investing in new tissue capacity. I'm sure you've seen the announcements. I would like to just grab your thoughts on that and whether we’ll also get an update on any type of plan that you may have for further, either tissue capacity expansion or integration within this tissue?

Tom Howatt

With respect to the industry if you look at the size of away-from-home market under normal conditions when this market is growing at 1.5% to 2% per year, the marketplace needs a machine per year just to maintain service capabilities with that growing marketplace. It’s not surprising that we see on an ongoing basis. The capacity increases within this sector and utilization rates remain reasonably solid. With respect to our plans we really have nothing formal at this point to disclose with respect to our approach to future integration of the business.

Operator

(Operator Instructions) We have our question from Anna Torma.

Anna Torma

Just one additional follow-up, can you just give us an update on your timberland sale program. Are you seeing any improved demand and what’s your expectation or are there any changing expectation at the timing of the completion of that?

Scott Doescher

Actually timberland sales were really non-existent during the first quarter for us. We have approximately 12,000 acres remaining in our sales program. But the market has been very soft and I think one of the things we’ve done and done effectively is we’ve been patient particularly through a period of market weakness for that timberland and we certainly have the flexibility to hang on to that and then to sell that as the market strengthens and we would intend to do so as opposed to lowering price just to move those additional acres.

Anna Torma

Have you seen any kind of pickup, though in interest at all, or it is still a very weak market?

Scott Doescher

In the upper Midwest, specifically here in Wisconsin typically interest picks up and in mid-summer to early fall. I would say generally we’ve had additional enquiries early in the year but I take that perhaps to be more window shopping than serious buyers at this point.

Operator

We have our next question from Mark Wilde.

Mark Wilde

I wondered if we could just talk briefly about the release liner market. I guess I am curious about a couple of things. One, you put a lot of capital into that business about 10 years ago to grow in the high-performance liner market. And now what we are hearing about is that that business in a relative sense probably going to contract for you. I wonder if you could talk a little bit about that and then also, just give us some update on what impact a new competitor out on the West Coast might have had on the business over the last couple of years?

Hank Newell

I think within our total liner exposure and with the shutdown of the number 10 paper machine at Otis, we significantly reduced our exposure to kind of the more commodity portion of the business. As several competitors in the space that can do to play in the label piece of liner and has become more commoditized. Our intent is to continue to carve out those niches that high-performance liners valued in and continue to invest in the more value added aspects of our coated silicone liner business. That piece of the business is really targeted towards our fiber composite manufacturing. We see attractive growth there that values our integrated value proposition. So we’ll continue to diversify that mix in the liner and have some reasonable expectations on margin.

Mark Wilde

And then Hank, in that business I was with some folks in the label business last week and they talked about the first quarter industry data was not for the label converters and it was up I think 10% plus and I just wondered if you got any benefit from that in your business?

Hank Newell

Again, that piece of the business tends to be a little bit more commoditized and we’re very selective in the selection and the line up with strategic customers. So it’s really more a function of how our customers specifically is going versus overall market trends.

Operator

There are no more further questions at this time, please continue.

Tom Howatt

Our strong first quarter results in the face of a weak economic recovery and historically high fiber costs are reflective of the confidence we have in the future performance of the business and our ability to deliver strong results over the long-term. We look forward to reporting our second quarter results on Monday, July 26th.

Our next scheduled conference call is set for 11 a.m. Eastern Daylight Time, on Tuesday July 27th. We appreciate you taking part in today’s discussion and your interest in Wausau Paper. Thank you for your participation.

Operator

Ladies and gentlemen, this conference will be available for replay after today at 12 p.m. Central Standard Time through 11:59 p.m. Central Standard Time on May7th, 2010. You may access the AT&T Teleconference replay system at anytime by dialing 1800-475-6701 and entering the access code of 152090. For international participants dial 320-365-3844.

Those numbers again are 1800-475-6701 and 320-365-3844 with an access code of 152090. This does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.

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