Frank McAllister - Chairman and Chief Executive Officer
Greg Struble - Executive Vice President and Chief Operating Officer
Greg Wing - Vice President and Chief Financial Officer
John Stark - Vice President of Human Resources, Secretary, Corporate Counsel
Terry Ackerman - Vice President of Planning and Process Operations
Dawn McCurtain - Investor Relations.
John Ridges - JP Morgan
Stillwater Mining Company (SWC) Q2 2008 Earnings Call August 12, 2008 12:00 PM ET
Ladies and gentlemen, thank you for standing by and welcome to the Stillwater Mining Company 2008 Second Quarter Results Conference. 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). And also as a reminder, this teleconference is being recorded.
At this time, I will turn the conference call over to your host, Mr. Frank McAllister. Please go ahead, sir.
Francis R. McAllister - Chairman and Chief Executive Officer
Thank you, and welcome to everyone and I am sure we are missing a few people. If the technical mess up weren't, so serious I would make a joke at this point in time. But it is serious. We know we have lost a few people on the call. I'm not quite sure how that has happened, but we will try and make sure we get through the call.
Welcome everyone and we appreciate you joining us for the Stillwater Mining Company's 2008 second quarter results conference call. I am Frank McAllister, Chairman and Chief Executive Officer of the Stillwater Mining Company. And I have got with me here today, Greg Struble, our Executive Vice President and Chief Operating Officer; Greg Wing, our Vice President and Chief Financial Officer; and John Stark, the Vice President of Human Resources, Secretary, Corporate Counsel and also involved in our marketing and sales effort; Terry Ackerman, Vice President of Planning and Process Operations; and Dawn McCurtain, Investor Relations.
First let me just remind you of the usual statement. Statements in this conference call are forward-looking and therefore involve uncertainties or risks that could cause actual results to differ materially from projected results. We discuss these in more detail in the Company's filing with the Securities and Exchange Commission, including the risk factors discussed in the Company's 2007 Annual Report on Form 10-K.
Now for the second quarter, financially the Company had an excellent second quarter. Net income was $17.2 million or about $0.18 per fully diluted share on revenues of $218.8 million which reflected strong prices for platinum group metals or PGMs, our principal products. These results bring earnings for the first half of 2008 to $20.4 million or about $0.22 per diluted share on year-to-date revenues of $391.9 million.
By comparison in 2007 we reported a second quarter loss of $2.5 million on revenues of $161 million in the first half loss and a first half loss of $3.6 million on revenues of $307.4 million.
Most of the second quarter's strong financial results were driven by PGM prices. The Company's average realized price for platinum produced in our mines after taking into account the effect of contractual ceiling prices and some below market forward sales, was $1,607 per ounce in this year's second quarter, up about 78% from $949 per ounce in the same period a year ago.
Palladium realizations in the quarter just ended averaged $448 per ounce, compared to $386 per ounce in the 2007 second quarter. Driving the sharp increase in prices in early 2008 was the markets response to news or power restrictions for metal prices in South Africa -- to the metal mines in South Africa. Production short falls worldwide, driven by shortages of qualified mining professionals. And on the demand side, a weakening dollar and a corresponding move by investors in the commodities.
As recent weeks have demonstrated, there is substantial short-term volatility in these prices. The last of the Company's forward sales commitments on platinum were settled on June 30, 2008. These were financially settled commitments, covering a substantial portion of our mined platinum production that had been put in place several years ago as prices were well below the market price today.
We entered into these contracts to protect us from the decline in platinum prices while we were investing heavily to reestablish the developed state of our two mines. However, rising platinum prices over the past two years have led to large losses on these forward sales contracts. During the second quarter of 2008 and 2007 the losses were recognized on these financially settled forward contracts, which reduced revenues and earnings by $5.8 million and $8.1 million respectively.
Contribution to earnings from mining operations strengthened between 2008 and 2007's second quarters, increasing to $19.9 million from a loss of $1.4 million in the second quarter of 2007. Higher PGM prices in this year's second quarter more than offset lower sales volumes and higher operating costs.
Earnings from recycling including financing income, also increased to $8.7 million in the 2008 second quarter from about $7.8 million in the same period in 2007 as higher metal prices in 2008 more than offset a slight decrease in ounces delivered for sale. Because of the two to three month lag between when recycling catalysts are received processing and when they are released for sale, most of the benefit from very strong growth and recycling volumes fed to the smelter during this year's second quarter will not be recognized until the third quarter.
Corporate marketing, general and administrative costs increased to $10.4 million in the 2008 second quarter from $7.4 million in the 2007 second quarter, mostly reflecting the timing of marketing expenditures. Net unallocated interest expense excluding recycling was $800,000 in this year's second quarter, down from $1.5 million in the same period last year, which reflected the benefit of the lower interest rates on our new convertible debenture offering.
For the first six months of 2008, mining operations contributed $27.9 million to the company's earnings, which compares to $2.4 million in the first half of 2007. Higher PGM prices in 2008 accounted for virtually all of the improvement. Recycling activities earn $14.6 million in 2008 through June, up slightly from $13.2 million for the same period in the prior year. Recycling costs and revenues both were higher in 2008 as higher PGM prices drive up the cost of acquiring recycling catalysts for processing and the selling price realized for the finished metal.
For the first half of 2008, marketing general and administrative costs including exploration expense totaled $18.1 million, up from $16.2 million in the same period of 2007. With marketing and exploration costs being higher in this year's first half, net unallocated interest expense, again excluding recycling, increased to $3.9 million in this year's first half, up from $3 million in 2007's first half but mostly reflecting a $2.2 million write off in March of 2008 for the unamortized charges associated with the retirement of our previous credit facility.
Operationally, the mines continue to suffer from staffing shortages and logistical issues underground. Second quarter PGM production from the mines was 126,000 ounces, which is short of 133,000 ounces we produced in last year's second quarter. Year-to-date through June, mine production was 255,000 ounces, which is about on target through the first half with our earlier guidance. However, we no longer expect it to increase in the second half sufficiently to achieve our annual production guidance of between 550,000 and 565,000 ounces for 2008. As a result, we have revisited this guidance and will discuss this further in a few minutes.
We have talked a lot over the past several years about three key long term strategic initiatives the company is pursuing. These will be familiar with many of you, but as a reminder, we are first working on transforming the mines by improving safety compliance, strengthening our developed state, adjusting mining methods and introducing cost saving measures, all of which we expect will ultimately lead to increasing total mine production.
Second, we are working to expand the markets for our primary products and specifically for palladium by supporting and encouraging emerging applications for this extraordinary and unique metal. And thirdly, are seeking opportunities to diversify the company, thereby reducing its sole dependence on the performance of the two Montana mines.
While Greg Struble and I will speak more directly to our recent progress against these three broad initiatives in a moment, I just want to note that the purpose of these initiatives in the end is to position Stillwater Mining Company competitively to face the volatility of the metal markets so that the company benefits handsomely in periods of higher PGM prices and remains healthy and financially strong when PGM prices decline.
One stellar result of this effort to-date to diversify the company has been our PGM recycling business. Process wise the recycling material fits well for domain field to our smelter and base metals refining complex, which is conveniently located for receiving recycling product adjacent to Interstate 90 in Columbus, Montana. As it happens the byproduct, copper and nickel and the oil from our mines acts as metallurgical collectors for these metals in the recycling material in the smelter so the two activities are remarkably compatible. Recycling capacities are mostly metallurgically determined rather than facility constrained. So over the past several years, this compatibility has allowed us to enter into arrangements with several consolidated automotive catalytic converters to process this material extracting platinum, palladium and rhodium for sell back to the market.
During the second quarter of 2008, we set a record 115,000 ounces of recycled PGMs including platinum, palladium and rhodium into the smelter and refinery in Columbus up almost 24% from the 92,000 ounces processed in the second quarter of 2007. These volume spread include both spent catalyst material that the company purchases outright and materially sold for a fee on behalf of others and return the finished metal to them.
Revenues generated from the recycling business total $108.2 million in this year's second quarter on 59,300 ounces sold compared to $83.9 million on 62,500 ounces sold during 2007 in the second quarter reflecting the higher PGM prices in 2008. And likewise earnings from recycling including financing charges rose to $8.7 million in the quarter just ended from $7.8 million a year ago.
Now, because of the time required to process the recycled material we will not see full revenue or earnings benefit of the second quarter ounces fed until the third quarter of this year, but recycling materials we fed into or some other may remain in the process and in inventory for up to three months before being released for sale.
Coupling the recent record volumes being fed and the smelter with the high PGM prices in the first half of this year, we have committed a lot of working capital for this business. The dollars tied up in the company's recycling inventories and related advances, reached $172.8 million at June 30, of 2008 up from $97.1 million at the same time last year.
Although the numbers are large, but the nature of this business that the inventories turnover several times each year also finding selling prices for most of this material is set at or close to the time when material is acquired, so the price risk on the inventories is limited. And we are growing throughput volumes in the critical role of the Smelter all of the metal processing.
We announced previously that we would construct a second somewhat larger smelting furnace at our facility in Columbus. Engineering design work for the second furnace was completed last year and bids were led earlier this year. Actual construction of the furnace began a few weeks ago and is now in full progress with expected completion around the end of this year.
The total cost to construct the furnace should end up in the neighborhood of $22 million. Besides increasing capacity and mitigating operational risk. The new furnace may allow us to improve metal recoveries modestly. Once the new furnace is on line, we plan to shutdown the old furnace for a few weeks to replace the refractory brick and otherwise refurbish it for new standby furnace and potentially for slab cleaning.
Let me add one final comment with regard to recycling. We have pursued this business because it provides us with an additional source of earnings and cash flow, thereby diversifying our financial structure. It compliments the mining business and our processing capacity, besides blending nicely with our other environmentally friendly products and activities.
Now I would like to turn it over to Greg Struble our Chief Operating Officer to discuss the company's operational results in more details. Greg.
Greg Struble - Executive Vice President and Chief Operating Officer
Thanks, Frank. Let me spend a few moments describing our production challenges in a little more detail. Starting with Stillwater Mining, production of 88,000 ounces in the second quarter was up 4.3% from 84,500 ounces in the same period last year. This was in line with our expectations and however, production growth at the mine continues to be primarily constrained by an overall industry shortage of skilled miners in the camps. While the very high attrition rates experienced last year declined significantly, they are still too high and facilitate increased production levels from our more selective smelting areas.
Additionally as the mine has grown, we are experiencing logistical constraints around infrastructure and support activities. Most of these constraints center on ventilation and equipment upgrades required to meet the more stringent diesel particulate matter or DPM standards as well as how we better deploy our haulage and mine support teams.
We do feel the mix of mining that we are now using at the Stillwater mine better fits the geology, the reserves than in the past and givers us greater flexibility, particularly with the introduction of mechanized ramp and fill mining about a year ago on the upper west area of the mine. However, we are to maintain and grow production, we need to continue leveraging the more selective techniques and focus on improve our -- and extending our new miner training efforts to compensate for the tight labor environment we continue to face.
So in the short-term our strategy at the Stillwater Mine is to continue to focus on our new miner training efforts and aggressively attack our logistical and infrastructure constraints to improve our operating efficiencies. Completing these efforts will take some time, but we are confident we are moving in the right direction.
At East Boulder production of this year's first quarter was about as expected, but since this dropped off quite steeply. Second quarter production of 38,000 ounces was 21.8% below production of 48,600 ounces in last year second quarter and compares to 43,000 ounces produced in the first quarter of this year. Binary attrition East Boulder has been exceptionally high this year complicating the already challenging task of transitioning the mining to allow for more selective techniques, as well as personal believe a number of otherwise available mine store some man. On top of that, the new much more restricted limits on Diesel Particular Matter DPM that took effect in May of this year have constrained in our apology in some cases necessity is repositioning our mind average.
Although we are making excellent progress in implementing the technical changes required to comply with new standards, and in fact that we are leading the industry in these compliance efforts. On May 21st, 2008 we were granted at East Boulder mine and one year expansion of time to fully comply with the new DPM standards. Subject of course to search specific conditions being met during the term of this potential.
As with the Stillwater mine, there are opportunities to become more efficient with any above mentioned constraints by aggressively looking in the overall operations and planning systems that we are currently using to deploy manpower resources. This effort will begin our earnings in the second half of the year. Therefore, our short term strategic objectives at the East Boulder mine include again continued emphasis on the new miner training program to eliminate staffing concerns, some added investment in the mines developed state to assist with the DPM compliance and improved logistics underground through a focused systems review of operations on plan constraints. While discussing East Boulder, I should also point out that on July 8, 2008 representative employees at this mine ratified a new four years labor agreement. The new agreement provides for a 4% annual wage increase for the represented workforce over the life of the agreement.
As you may have noted the common theme of both mines is a shortage of qualified miners. While we are pleased with the results of our miner training program and expect to graduate around 80 new miners this year, employee turnover continues to be a challenge for us. Strong competition for miners in the industry as a whole make staffing a difficult issue for everyone. On top of that, the timing of mining cycles at the Stillwater Mine, right now is resulting in lower grades for the mill.
So, more ore in the mine achieve the same production outfits. It is clear that we do not have the manpower resources to ramp up tonnage in the second half of the year as plan. Consequently as Frank mentioned we have adjusted our production guidance for 2008. We now believe 2008 mine production will likely fall between 550,000 ounces to 525,000 mine ounces below 2007's mine output, but little stronger than our trend during the fist half of this year.
The lower production -- the lower production outlook has forced us to also revisit our cost per ounce guidance as well. We initially gave guidance that 2008 total cash cost for ounce mine would end up averaging between 355and $375 per ounce. The lower 2008 production combined with the much higher than planned energy costs now suggests that total cash costs will average for the year in the range of 380 to $395 per mined ounce.
Guidance on 2008 capital expenditures including the estimated 22 million cost for construction of the second record furnace with smelter and Columbus was a 110 million. Capital expenditures this years-to-date of 41.6 million coupled with our current spending outlook for the balance of the year indicate that actual capital spending in 2008 is likely to be around 100 million.
Beside the new furnace and ongoing mine development cost, our 2008 capital program includes the development of dedicated system of ramps in the Stillwater Mine for future electric truck haulage of ore from those levels of this mine.
Finally, before I turn the time back over to Frank, as the new guy on the block I want to share a few observations on what I have found here at Stillwater and where I think we are headed operationally. We are mining in some of the highest great PGM reserves in the world. We have excellent dedicated employees with the strong work ethic, who work safely and productively in some very difficult mine conditions. Undergrounds mining is hard work. And to some degree, the more selected mines that we have targeted are particularly strenuous. However, our work force has responded to the challenge and is moving forward.
All that being said I do see several opportunities for improvement. First I believe we could do a better job of listing the collective expertise of our employees in overcoming some of the logistical models that have constrained our mine production and support activities. As mentioned earlier, we have already started to aggressively address this front.
Second, I think we can further strengthen our mine planning efforts by sharing its expertise and again involving a broader cross-section of the work force. Third, we are also are considering some fine tuning adjustment to our new hire training program to credit development deploy these miners as they complete their initial training into the production ranks.
However, the manpower limitations we have discussed are real, and they will continue to that mine production, not only for us but world wide throughout the mining industry. Competition for mining skills is scarce. I think we are on the right track with a new miner training program and a new generation of home grown miners to fill in behind those now leading the industry. With many years of proven and probable reserves in front of us we are well positioned to invest in this sort of training, but to date, despite a steady stream of applicants we have been hard pressed just to hold our own against employee attrition.
We have clearly recognized hat we will not be able to grow mine production unless and until we can get ahead of this situation and actually expand our work force. I can only comment that this issue is getting a lot of management attention right now. Frank?
Frank McAllister - Chairman and Chief Executive Officer
Well thanks Greg. Let me spend just a couple of minutes commenting on the status of other two head lines, strategic initiatives that market development especially for palladium and company diversification. The marketing front we announced in our first quarter release that PGM industry under the auspices of the international Platinum Group Metals Association had reached collective agreement to fund a substantial market development program of platinum jewelry, initial emphasis was to be on China and the US with the effort led by Norlisk Nickel and supported by several major palladium producers in south Africa and by us.
During the second quarter Norilsk Nickel has indeed taken the lead in this effort, period in the work of establishing the organization and coordinating among the participants. However, there is still much to be done. Until the new program is fully funded in operational Stillwater has continue to direct since 2008 market development efforts through the palladium international with precursor organization through the industry effort. With regard to company diversification, I have already discussed the recent growth from our recycling activities.
Recycling is a nice diversification because although it still falls within our core PGM focus, the characteristics in the business are very different from binding. Recycling earnings are the changes in metal price in our mining operations. Besides recycling we also hold small equity investments in two independent exploration companies that target PGM and other precious metals. The first of these, specific North West Capital Corporation is directing an exploration network with our financial participation at Good News Bay in Alaska, historically an important source of PGMs. The 2008 summer drilling program there addressing several geological anomalies identified last year was just recently completed and we expect to see the results within the next few weeks.
The other company, Benton Resource Corporation holds an attractive resource position in the Goodchild project a nickel PGM target north of Marathon Ontario in Canada that lies adjacent to a recent the large adjacent to our recent potential discovery by another company. The 2008 drilling program again with our participation has just now started on that particular property. Both of these investments are very speculative but they give us access to experience PGM exploration teams into potential new PGM projects in various stages of evaluation.
Now several of our shareholders have inquired recently regarding the sharp decline in PGM prices. Some of this may be seasonal, midsummer PGM market tend to be fairly thinly traded as Europe goes on Holiday and demand softens, but compounding this are of course have been the reports of exceptionally weak US automobile sales, smaller automobiles, and with a little prospect of relief in site. Ironically, almost all of the major PGM producers have announced production shortfalls in share, but the market appears to expecting demands for PGM’s to be even softer than the supply demand, supply has been softening.
I suppose that it is important to note that despite the current market weakness, current PGM prices are historically rather high levels. And as we speak it seems like everyone's mind is on the state of the economy. So let me editorialize just a bit about our experience in the metals industry. In the US and western Europe the read of the vicious cycle and in which declining in home prices have resulted in mortgage defaults and bank losses that restricts the banks capacity to learn and this puts added pressures on housing market weakening economy and so on. In the meantime, the weak dollar and strong demand for commodities in the developing world have given up prices for raw materials, inflationary cycle that has led some investors to flea into inflation proof hard assets further driving up material at home have reduced consumers' disposable income and acted as an added break on the economy. In the US, the Fed faces an election year and so has responded by keeping interest rates low, trying his best to stimulate a weak economy, but further weakening the dollar. In Europe, the ECB has elected to fight inflation by keeping interest rates comparatively high, protecting the value of the Euro but sapping the economic activity in that region.
Now in theory given enough time, all of this should slow down the western economies and cool the red-hot demand for commodities, bringing prices down somewhat and easing some of the downward pressure on the economy. To some extent, this may already be happening with the decline of some commodity prices over the past several year weeks.
However let me remind everybody, the major driver of the commodity boom has been the developing countries, in particular China, which arguably has large foreign reserves and cannot afford the political consequences of letting its now huge economy slow. In the face of declining western demand, they will be compelled to continue their internal infrastructure growth, thereby sustaining an even further growing industrial output. If so, the decline in commodity prices may be constrained by this continuing demand.
Now if one doubts this, just remember that China is on track to consume over 50% of the world's iron ore production and of the world's ore and other important metal commodities. That's a significant change from the recent past. What does that imply for Stillwater Mining Company? In the near term, the weaker global economy has reduced western demand for automobiles and so for the PGMs in catalytic convertors, probably more than the compensating for announced production short falls for most PGM producers this year and therefore, pulling PGM prices somewhat lower.
However, automobile production is often less in US and Western Europe this year, but Chinese auto production is at record high levels and growing in the first half of 2008. And they're likely to build 10 million cars during 2008 and that production rate will continue to grow.
Furthermore, they have now moved into Euro three emission standards and PGM demand continues to grow there. Stillwater's mine production of PGMs is largely committed for delivery under long-term sales contracts, but those sales could be at substantially lower prices in the second half of the year. Of course our contractual floor prices on palladium remain in effect and they're currently at about $368 for the remainder of this year, cushioning in part the price fall impact. Also our PGM recycling activity is a margin business that should remain reasonably profitable even at lower prices.
Longer-term, we believe the future of these metals looks fairly bright. Supply growth appears to be constrained by a lack of new high-grade deposits and perhaps, by infrastructure and skill shortage issues in South Africa that we expect will continue. In recent years, major producers have regularly failed to deliver on promised steady year-on-year increases in production. In fact, the productions have actually fallen. Demand for PGMs is driven first by catalytic converting usage which is mandated in almost all new vehicles constructed worldwide and by other industrial applications that in many cases, do not lend themselves to easy substitution. Jewelry use tends to take up the slack in these metals with demand rising as prices fall and then subsiding as prices rise.
Although future technology likely will reduce the quantity of PGMs required in each automobile, this may be offset to some degree by the emerging trend toward diesel powered automobiles, increasing regulatory requirements -- and increasing regulatory requirements which inherently will consume larger loadings of PGMs. In short, we believe that the ever present desire for improved living standards in the developing world, on top of the normal vehicle replacement needs in the west, should provide ongoing demand growth for our metals well in the future.
Now that's my editorial and I appreciate your attention, and appreciate those of you sticking with us as we solved some of our technical issues at the beginning of this call. A number of you have joined us after the call began. We appreciate that and we turn over the time to Tony to take questions this morning.
Question and Answer Session
Thank you sir. (Operator instructions). And our first question will come from the line of John Ridges with JP Morgan. Please go ahead.
Hi Frank this is Ankush on behalf of John, congratulations on the results.
Thank you Ankush.
Frank was any production during the quarter lost due to the negotiation at east boulder at all or?
Not that we would be able to measure. Were there discussion and comments that were going on amongst the workforce during that period of time, of course that always have and John that perhaps lead to some loss of production. Perhaps the first – there is nothing that we could measure. The second quarter was a reduction in production that east boulder in the second quarter was really related more to operating issues and the reduced work force than it was to the negotiations.
Okay. And then just to get some thoughts Greg did elaborate a lot on the steps and initiatives you’re taking in the mines, but – looking forward into ’09 how should we see the labor situation…?
Labor situation in ’09 will be quite steady, we entered into a full year contract at east boulder this year and a full year contract at Stillwater and a metallurgical complex a year ago so that – we still have several years to run and it should be quite stable. That is as with negotiations. Now, that’s not as with respect to attrition and our training program and Greg has talked about that, we continue to work and focus on our training program, and obviously the effort is then to stand both the attrition rate but also to grow our work force.
So, any sort of time lines you have in terms of the training program?
Let me have Greg speak to this.
Hi Ankush this is Greg. We think the training program is going to take some time, its going to take really a closer look in terms of how we can make it better. I think to kind of answer your question in terms of overall projections, we are seeing actually nice reduction in the attrition rate in Stillwater mine, that is somewhat offset by what we saw happened at the Stillwater mine. I think it is fair to say that we’re going to hold a lot of these levels in the next year or so and then really focus on how we can better engage and deploy mine as they come out of training.
Okay, thanks a lot and good luck guys.
Thank you Ankush, I appreciate your call and participation.
(Operator Instructions). And at this time we are showing no additional questions. Please continue.
Okay. I just really comment to obviously the markets are in a bit of the turmoil right now and I am sure a lot of callers have probably dropped off the line to go back and watch the market and see what’s going on at the market. I will just comeback and add one additional comment, John Stark and I were in China three weeks ago we went from Hong Kong to Shanghai to Beijing. I have to tell you what’s happening in China is quite remarkable in terms of the constructions that’s going on, the continued constructions and the amount of trading through the country. I mentioned about the car deal, the car deal was increased over the last 10 years probably 3 million, 4 million, 5 million, 6 million, 7 million and as I commented earlier 10 million now. Obviously many of these cars are small, but many of them are also very large cars where you can build Buicks and catalytic and lots of Mercedes and lots of BMW in the country and our guess is and our expectations are that this will continue. We met with one of the catalytic converter builders who is actually here in the town of billings yesterday who commented that prices went up, their demand for the catalytic converters go up a bit, but if the prices came back down in particular in recent couple of weeks, but the demand is growing quite substantially. You attributed this basically to the fact that you know the car companies are in difficult time, perhaps they ran down inventories a bit, but now they’re ramping in back up. While General Motors and Ford and Chrysler are cutting back we know that some of the automobile, other automobile manufacturers are basically either maintaining their build or not experiencing the shortcut back. So our guess is that this is a correction, but to the shortfall both in our own production as well as South Africa and Russia we likely meet some of that fall off in demand and these prices could continue really quite strong as they are right now. And we’ve got some other people that like to ask questions. We would be able to take those questions now. Tony, if we don’t perhaps we will end the call.
And so, at this time there is no question.
Thank you. And then we thank you everybody. And Tony, would you just announce the playback of this.
Thank you sir. And ladies and gentlemen this conference call will be available for replay after 2 pm Eastern Time today through August 19, 2008 at midnight. You may access the AT&T Teleconference Replay System at anytime by dialing 1800-475-6701 and entering the access code of 956361. International participants may dial 320-365-3844. And the phone numbers again are 1800-475-6701 and 320-365-3844 using the access code of 956361. And that does conclude the conference for today, we thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.