Form 425
FILING PURSUANT TO RULE 425 OF THE
SECURITIES ACT OF 1933, AS AMENDED
FILER: NORTHROP GRUMMAN
CORPORATION
SUBJECT COMPANY: TRW, INC. (NO. 1-2384)
FILING: REGISTRATION STATEMENT ON FORM S-4
(REGISTRATION NO. 333-83672)
Northrop Grumman/TRW Call
November 21, 2002
OPERATOR: Good day, ladies and gentlemen. Welcome to the
Northrop Grumman-TRW Road Show briefing conference call. My name is Caitlin, and I will be your coordinator today. At this time, you are all in listen-only mode. There will be a question and answer session to follow your presentation. You will
receive instructions how to do this at that time. If at any time during the call you require assistance, please key star-zero, and our operator will be happy to assist you. As a reminder, this conference is being recorded for replay purposes. At
this time, I would like to turn the program over to your host for todays call, the Vice President of Investor Relations, Mr. Gaston Kent. Please proceed, sir.
GASTON KENT: Thank you very much, Caitlin, and good morning, ladies and gentlemen. The purpose of this call is to discuss the combination of Northrop Grumman and TRW. Before we begin, you have
all read our safe harbor statement in many places. It is in the briefing that we filed today, and I urge you to read it. This morning, we filed a new briefing with the SEC on a Form 8K. Its available to you on our webpage under realtime SEC
filings. This conference call is for you, the sales side analyst only. We wanted you to be familiar with the briefing well be giving over the next several days and weeks, leading up to the shareholder votes. Well also be filing the
transcript of this call today, if your clients are concerned about what they might be able to see. Itll be available very, very shortly. Its not our intent to fully brief the briefing document to you this morning. We will have very brief
prepared comments.
Our purpose is to familiarize you with the strength of the combined company, including the expected financial outlook
over the next three years. The guidance we are providing today takes off from the NOC standalone guidance we provided with the third quarter release. There have been no changes to that underlying guidance, only our look at the combination with TRW
and the changes which have occurred since we first announced the agreement in July, such as the change in our stock price, the exclusion of discontinued operations, the actual auto transaction terms and the TRW performance at that point in time.
Following the prepared remarks, we will have a short Q&A session after which we will commence the
road show. And I do have to emphasize short there. Were literally walking out of the room to the airplane to start the road show this morning, and well be on the west coast today and tomorrow.
On the call today are Kent Kresa, our chairman and CEO, Ron Sugar, our president and COO, and Dick Waugh, CFO. Additionally, PHIL ODEEN, TRWs chairman, and
Bob Swan, TRW CFO, are also with us and will participate in the road show. With that, Ill turn the call over to Kent Kresa. Kent?
KENT KRESA: Well, thanks very much, Gaston, and good morning. I really want to thank you all for joining us on such short notice. Ron, Dick and I are here to talk about the new Northrop Grumman and to attempt to answer your
questions. And we very much appreciate the support of Phil and Bob in this endeavor. I often say Northrop Grumman has a bright future, and this picture only gets better when you add TRW. Defense spending is rising. Its up 18% in the 2003
budget. Obviously, it doesnt keep the growth at that rate, but it should continue to rise at 5% to 7% over the next several years. Theres a broad-based bipartisan support for this in Congress, and the needs are there. Additionally, we
see homeland defense with the creation of the new agency adding strongly to our market. We also believe well have the best positioned program portfolio in the industry with the major wins at both Northrop Grumman and TRW. And well have
the operational and financial strength to make the most of our opportunities. It all adds up to excellent, highly visible double-digit growth. Its the culmination of our transformation to a system of systems network centric warfare capable
integrator on land, at sea, in the air, and now in space and cyberspace. For Northrop Grumman and TRW shareholders, the combination offers an enhanced growth path and the ability to fully participate in more of the fastest growing areas of the
defense budget. TRW shareholders, in addition to receiving full value, will participate in a potent tier one combination of superior technology and employee talent. One that will yield powerful solutions across all platforms to the challenges of
21ST century national defense and homeland security needs. At the same time, we are raising the
competitive bar in our industry. Were confident that well receive HSR approval before the shareholder votes. We believe the question is when, as opposed to if. There is no doubt in my
mind that our combination is in the best interests of our customers, as well as our shareholders and
employees of Northrop Grumman and TRW.
And now Id like to see if Phil would like to add something. Phil?
PHIL ODEEN: Yes, thank you, Kent. Id like to echo what Kent said. This is going to be a powerhouse combination. I know our shareholders are
disappointed in the way the stock price had acted, but we all realize this is in line with the market performance of our industries. At todays price, compared to both how the auto and the defense industry stocks have traded, the deal still
represents an attractive premium to our shareholders. The Northrop merger is the best strategic direction available to TRW and offers the best realization value for TRW businesses. Were also excited about the expanded opportunities available
to our employees. This is going to be a winner for all involved.
Let me turn it over to Ron.
RON SUGAR: Thanks, Phil. And I also want to thank you for joining us. Last July, we said that we couldnt convey strongly enough the excitement we
felt over what Northrop Grumman and TRW could accomplish as a single company. Since we announced our agreement, our excitement has grown. TRW posted an outstanding third quarter and anticipate their backlog at year end to increase by $5 billion,
with several outstanding wins. And on Tuesday, we announced an agreement to sell TRWs auto business. When that major step is complete, TRWs integration will be straight-forward, and it will be a stand up of their space and electronics
and systems businesses as two new Northrop Grumman sectors. By straight-forward, I mean much simpler than Litton, and very much like Newport News, which we stood up as a single sector earlier this year. TRW will be our 16th acquisition since we began with Grumman in 1994. Our core competency and integration has been developed over nearly
a decade, and were highly confident that the integration of TRW will be smooth and successful.
TRWs space and electronics and systems businesses have outstanding management, technologies and employees. And as a part of Northrop
Grumman, their full potential can be realized. We both look forward to an outstanding future as the new Northrop Grumman, a true powerhouse. This company will have a pipeline of business second to none in our industry.
We will have a rock solid base of stable production business, such as the aircraft carrier programs, submarines, destroyers, F-18s, E-2C Hawkeyes, the various EW
and sensor programs and on and on. Weve recently won some of the largest new programs to come along in many years, such as the F-35 joint strike fighter, DDX, Deepwater and several large international air defense programs. TRW has several
magnificent wins recently, including SBIRS low, NPOESS, the next generation space telescope, the Army Force XXI program and several others. Beyond those wins, theres an exciting list of future programs, including Advanced Hawkeye, the littoral
combat ship and dont forget homeland security issues. From these programs, we see sales in 2003 of $25 billion to $26 billion, growing at a double digit rate in 2004 and 2005. The future of this company is bright, indeed. Now with that,
Ill turn the call over to Dick Waugh so he can describe the financial outlook for our combination. Dick?
DICK WAUGH:
Thanks, Ron. Ill begin by recapping financials from our press release, and then well be open for call for questions. Our guidance for the combined company as economic earnings per share will grow by 15% to 20% to the range of $7 to $7.50
in 2003. We provide in the briefing a reconciliation between our July 2002 estimate for the combined operations and this estimate. The adjustments are 34 cents per share for discontinued operations, 42 cents to reflect the additional shares to be
issued because we have reached the lower end of the collar, 9 cents to reflect the final structure of the auto transaction and the overall transaction accounting assumptions. And an increase of 5 cents to reflect recent large contract wins. In 2004,
economic earnings per share is expected to grow by about 13% to $7.90 to $8.40 per share, and to again grow at a high double digit rate in 2005. These numbers are based on expected segment operation margin rates of approximately 8.5% in 2003, nearly
9% in 2004 and approaching 10% by 2005, as well as a tax rate on economic earnings of 32% in 2003, 34% in 2004 and again 34% in 2005.
We expect about $1 billion in cash from operations in 2003. Thats before the B2 tax payment. About $1.5 billion in 2004, and averaging
over $2 billion into the future. 2003 is a little lower than we previously advised, and also because of discontinued operations adjustment this is due to the discontinued operations adjustments, the burn off of the reserves on polar tanker
and F-16 block 60, and the pull forward of some cash from 2003 into this year. The cash items we normally discuss are capex, which we estimate at $720 million for 2003, depreciation at $520 million and amortization of $264 million.
Our balance sheet also improves dramatically with TRW. Our pro forma net debt to total capital using a Northrop Grumman stock price of $100 and
assuming the close of the auto sale will be approximately 26% versus nearly 40% for Northrop Grumman stand alone. This will offer us a great deal of strategic flexibility going forward. Please note that this is not considering the possibility of an
equity charge for pension at the end of this year.
We only need a little market improvement in the balance of the year to preclude such
a charge. The margin rates that you will see in our charts for the two TRW segments are conformed for the Northrop Grumman accounting conventions for pension and corporate expense. That is a brief summary of the discussions we intend to have over
the next several days and weeks. We wanted you to be familiar with the data, and now well have a relatively brief Q&A session, and well try to keep this as informal as possible.
Thank you.
GASTON KENT: Okay, operator, were ready for
questions.
OPERATOR: Okay, sir. Ladies and gentlemen, if you wish to ask a question at this time, you may do so by keying
star-one on your touch tone telephone. If your question has been answered, or you wish to withdraw it, please key star-two. Questions will be taken in the order received. Please key star-one to begin.
Your first question, sir, from CAI VON RUMOHR.
CAI VON RUMOHR: Great. Thanks an awful lot. Dick, could you walk us through the consolidating adjustments? It looks like, you know, your
guidance for TRW is margins of 8%, 8.5%, probably more than we were looking for. What are the consolidating adjustments, and specifically, what sort of a pension expense add back are you using in these numbers?
DICK WAUGH: Obviously, we, in our add back, we add our pension back. And with regards to the add back for TRW, its approximately $100 or $100
million, pardon me.
CAI VON RUMOHR: Thats the FAS, you mean?
DICK WAUGH: Thats the CAS.
CAI VON RUMOHR: I thought
thats the F.A.S. is the add back.
DICK WAUGH: No, financial accounting is not the add back. Financial accounting,
thats the income side to date, which is excluded.
CAI VON RUMOHR: Okay, but thats what Im saying, is as TRW on
GAAP reporting will have FAS 87
DICK WAUGH: Well, Cai, let me say, were not projecting at this time what our
financial accounting expense or income its going to be expense, we assume is going to be because, quite frankly, as we said before, thats just a stab in the dark at this moment. We havent made a forecast for our FAS
87 expense for the company at all, Cai. And let me say, when you look at the charts thats on file on the reconciliation thats in our press release, youll see that were not identifying what our pension expense is going to be
for next year or the following years at this point in time.
Cai? Caitlin?
OPERATOR:
Your next question, sir, comes from BYRON CALLAN. Please proceed.
BYRON CALLAN: Yeah, good morning, gentlemen. A couple of quick
things. First, just the big picture, any idea how the TRW numbers change since when you guys first talked about this back in July? Clearly, they had some big wins, but some other aspects had changed in the automotive business. Is there any way to
quickly flush that out?
DICK WAUGH: Well, Byron, we say at least for 2003, its up a nickel. Obviously, theyve had
some great wins, commencing the wedge of those programs going in the future. Thats the basis for the growth in sales. Theyve been doing extremely well in terms of cash. Thats also reflected in our numbers. So I would say that
theyre doing well. Also recognize in our numbers, as I said, weve conformed their segment operating margin to how we would report it. But I will say, the basic underlying operations are doing very well.
BYRON CALLAN: Does that mean theyve had this whole tech bank. Does that mean some of those costs or expenses have dropped down to the
corporate expense line? Is that the way to think about this, Dick?
PHIL ODEEN: Byron, this is Phil. Let me just respond to that.
Two questions. First one, we do project both higher sales and profits now than we had in July, especially for space and electronics. Youd expect because of their major wins. So theyll be growing at a very, very strong double digit growth
rate next year reflecting these several wins that Ron mentioned earlier. So we project for those two sectors top line growth of about 13% and profits at about twice that, growth rates about twice that, well over 20%.
With respect to the tech bank, I think as weve said before, weve been working hard to take expenses out of that program to try to
get the expenses more in line with revenue given the fact that the telecom sector that that supports has been moving out farther in the future all the time. So next year, we expect that the costs of those programs, the various commercial electronics
programs, will be roughly in line with the revenue there. So it ought to be a wash, plus or minus $2 million. It no longer in 2003 and on, it will not have an impact on the profit side of space and electronics.
BYRON CALLAN: Okay, two quick things. Any thoughts or guidance on capital expenditures 2003 to 2005? And also, did you retain or does the agreement with
Blackstone entail that you retain any liabilities on the automotive business above and beyond Youve got some of that through the 20% minority stake. Go ahead.
DICK WAUGH: Byron, if you will, we have on file what the contract provides. And yes, there are some limited instances in which we are going to participate in some contingent liabilities. But we
dont perceive it as being significant. What was the other, cap? 720 this year, we didnt say what it was from there, but 720 for 03.
BYRON CALLAN: 720 for 2003 combined company.
DICK WAUGH: Yes, let me say, we dont necessarily see
that growing into the future.
BYRON CALLAN: Right, it was another way of asking, you know, is there any kind of special charges
or anything that get baked into this, into the capex number in the out years. Okay, Ill turn the mike over to someone else. Thanks.
KENT KRESA: I might just point out that with respect to the automotive, theres several small things that we have, some litigation and some conventional environmental things. But theres no product liability carried
forward.
BYRON CALLAN: Great, thanks.
MALE SPEAKER 2: Thank you, Byron.
OPERATOR: Your next question, sir, comes from George Shapiro, Salomon
Smith-Barney.
GEORGE SHAPIRO: Yeah, good morning. If you just get, you know, people been beating around the bush. Could you spell
out what the assumptions are for TRW in 2003 and 2004, just in terms of revenues and rough margin that youve baked into the estimates youve given to us?
DICK WAUGH: Well, weve said for 2003, let me say, its in our charts in our presentation. I hate to give out point references. But for TRW, for sales in the systems area, we expect it
to be approaching about $4 billion, a little less than $4 billion. And with regards to sales and space and electronics, we expect it to be about $2.5 billion for 2003. And of course, its growing after that.
MALE SPEAKER 4: Yeah, its all on chart 26.
GASTON KENT: The charts are available to you on our webpage, and you can get that data.
MALE SPEAKER 4: 18
and 19, George.
GEORGE SHAPIRO: Okay, I didnt get a chance to look at them yet. And then Dick, the definition that
youre using for cash flow from operations, is this available to pay down debt, or is this before dividends, or if you could just define it cause you use different definitions.
DICK WAUGH: Cash flow from operations is prior to capex and prior to dividends. And its also prior to any cash were going to
get with regards to sales of our CT sector.
GEORGE SHAPIRO: Okay, and then on the auto piece, you mention that youre going
to reduce from 42% equity interest to 20% before it closes. How is that going to occur?
DICK WAUGH: Well, if you will, Blackstone
is going to be placing shares with other buyers during this period of time, and we get to participate fully with them in that process.
GEORGE SHAPIRO: And then is there any timeframe that you have for getting out of the 20% equity interest that youll have?
DICK WAUGH: Obviously, its a very good business. Its a premiere business, but I guess at the back end, clearly whenever Blackstone exits, that would be the time that we would be exiting. And of course, we would be
looking at what would be in the best interest of our shareholders in the interim. Okay.
KENT KRESA: George, just so you know, we
have the right to sell our interest if we so choose, and well be making those decisions going forward. Obviously, the first thing is get it syndicated and do all that, but we do have that right.
GEORGE SHAPIRO: Okay, thanks a lot.
OPERATOR: Your next question, sir, comes form CAI VON RUMOHR.
CAI VON RUMOHR: Okay, great. Maybe you could
give us the CAS, add back 02 and then with TRW 03 and 04 rough guidance?
DICK WAUGH: When you mean CAS, you
literally mean the CAS add back?
CAI VON RUMOHR: Well, basically, what
DICK WAUGH: Well, Cai, let me say, we dont have the CAS contribution, which is the funding, for TRW for 2002 because its not going to be comparable to what were going to be using for 2003 because we
use different actuarial methods. So theyre not comparable.
CAI VON RUMOHR: Could you give us a rough sense of what your
number will be for 03, 04?
DICK WAUGH: Yes, yes, yes. Im just saying its tough to give you a trim line,
but I will say that with regards to the combined company going forward, its going to be our contributions are going to be something less than $300 million in 03 and approaching $400 million in 04.
CAI VON RUMOHR: Thats your contribution?
DICK WAUGH: Yes.
CAI VON RUMOHR: Okay, and then your recovery would be 75%, 80% of that, approximately?
DICK WAUGH: Yes, thats our CAS allowable costs that goes into our contracts, yes.
CAI VON RUMOHR: Okay, okay. And then can you walk us through you know, TRW reports on one basis. You report on another basis where you take pension
income or expense out of the separate line item. They have it in their numbers. You take state and local taxes out. Can you walk us through the major adjustment items we need to think about as we go from TRW reporting to the TRW businesses in
Northrop reporting?
DICK WAUGH: Well, Cai, thats getting into a lot of detail for me.
CAI VON RUMOHR: The major issue is maybe Im wrong.
DICK WAUGH: We would expect their operations to show about a push down to we ourselves have about $20 million of corporate office that we show thats not allocated out. And quite
frankly, we expect that to be more or less the run rate going forward. It may be a little higher.
CAI VON RUMOHR: Okay, if you
were to have owned them in 02, would there have been a pension expense, you know, take out in the sense that their numbers assume FAS 87 pension expense would be included under GAAP, and as you do economic EPS, you dont include that. So
is there, what Im asking is, is there, you know, if we convert their 02 number to Northrop, is there a $100 million add back for that pension FAS 87?
DICK WAUGH: Yeah, let me say there would be something less probably than about $100 million add back using our methodology. But no, pardon me. In terms of their actuals, itd be something less than $100 million,
but recognize thats using their actual methods, not ours.
And I dont know that number because you got to go through the
whole actual exercise to know what theirs would have been for 2002 under our actuarial assumptions, and we have no reason to do that.
CAI VON RUMOHR: Okay, okay. Okay, I got you. Also, youre going to get $5.3 billion in cash from the sale of auto and aerospace, and TRW has $5.3 billion in debt, and you talk of pay down. But kind of in looking through
some of the debt indentures, it looks like it might be expensive to buy back some of that debt. Could you walk us through kind of how you plan to handle the debt pay down?
DICK WAUGH: Well, Cai, were not going to speak to that. We have various options. Obviously, we are fully aware of the debt instruments that TRW has. Were fully aware of the debt
instruments that Northrop Grumman has. Were looking at various options as to how were going to handle the debt. Were not
prepared at this time to talk to that. But I will tell you the guidance were giving you is consistent with those options.
CAI VON RUMOHR: Okay, okay. And the last question is, youre obviously going to have a very good-looking balance sheet increasingly so as
we move forward. Would you tell us, and obviously it sounds like youre not considering additional acquisitions. What are you going to do with that financial flexibility? Would you consider share repurchase, under what circumstances, and
whats the earliest point at which you could consider it given IRS tax rulings?
KENT KRESA: Well, Cai, obviously the balance
sheet is terrific, and were delighted with that. As Ive said previously, we wish to have a number clearly between 30% and 40%. This will clearly get us to that point immediately, and then as we drive on cash for next year and beyond,
well be going down even lower, which says most likely we need to do something with that money. Ive said before that we will look at all alternatives at that point, and clearly one of those, the baseline is buying back our own stock
because this is a great company. That will clearly be the baseline. And we will look at that aggressively as we go forward.
CAI VON
RUMOHR: And last question, acquisitions, you know, are we done?
KENT KRESA: One hates to put oneself in a box, but clearly, I
believe that this really adds the important additional piece into the company that sort of makes us again a clear powerhouse. Its a capstone to the whole transformation of the corporation, and so I would say in terms of large things, yes, in
terms of small things, it could make some difference in the margin for a program or for a sector. Well still see some shaping over time. So I wont say were done, but certainly in terms of big strokes, I think were done.
CAI VON RUMOHR: Thank you.
OPERATOR: Your next question, sir, comes from BYRON CALLAN of Merrill Lynch.
BYRON CALLAN: Yes, just a couple more quick follow-ups. Do the projections assume any revenue synergies, or this is kind of the two businesses putting the plans together?
DICK WAUGH: Byron, we did, in fact, assume revenue synergies. We have that in the book. I know you probably havent had a
chance to look at it yet. Page, somebody help me with the page number for this thing. Let me say, its in the order of magnitude in 05 of about $700 million.
BYRON CALLAN: Okay, good.
DICK WAUGH: And obviously growing after that
because what we see ourselves in terms of what were going to be able to do as a combined company in that marketplace.
MALE
SPEAKER 10: We took, I think, a fairly conservative view of the possibilities. We see some terrific opportunities in missile defense and other areas, tactical systems, where the combinations of the company can make a significant difference. We
did not assume, essentially any significant synergies in 03. we build a little bit in 04, and then the number that Dick gave you for 05, I think is a very reasonable one. It does not represent a very large fraction of the
companys revenues in that year.
BYRON CALLAN: Okay, good.
DICK WAUGH: But let me say, we also expect that to be expanding in the years beyond that.
BYRON CALLAN: Yeah, okay. Secondly, I think you guys mentioned that you were assuming about $100 stock price, still below the collar. I somehow thought thered be a higher number of shares outstanding. I was using, I
dont now, about 143 million TRW shares and equivalents in order to arrive at the calculations.
I assume that numbers off, based on the 70 million share issuance number for TRW?
DICK WAUGH: Actually, Byron, we got a number thats pretty close to 130, 131 is my recollection.
BYRON CALLAN: Okay, I had options. I can follow up at some point. Ill see if I can talk to Denny or something. Last thing, the tax rate increase. That just is a question that may come up.
What caused that?
DICK WAUGH: Well, again, as you know, for your tax rate, it depends on how much your permanent tax benefits
are. And you have greater sales, greater margins, and were not presuming a great increase in our permanent tax differences, although that might be the case. But we dont know enough at this point in time to be projecting that to assume a
flat, effective tax rate.
BYRON CALLAN: Okay. Okay, great. Thanks.
OPERATOR: Your next question, sir, comes from George Shapiro of Salomon Smith Barney.
GEORGE SHAPIRO: Yeah, Dick, just a question. Are you considering defining economic earnings using the net of the size in CAS? Because one could argue at this point whether CAS is built into the margins by just taking out all
of the FAS 87 expense. Youre kind of double counting to some extent.
DICK WAUGH: Well, George, I dont think
were double counting at all. We are excluding the FAS income at least to date. Let me say, our accounting convention has been to add back the CAS in the segment operating margin. Weve been very transparent of that over time. As you may
recall, years ago, we in fact pulled one out and put one in specifically. But nobody seemed to really care or seem that that was appropriate way back when, so we changed.
GEORGE SHAPIRO: But the numbers were a lot smaller then, so nobody seemed to care as much.
DICK WAUGH: Well, all Im saying is were following our current methodology. Should we choose to change, that obviously would
be part of that change. But were not changing our methodology at this point in time for purposes of this road show.
GEORGE
SHAPIRO: Okay, and then on the share count, the increase in 04 is just reflecting the mandatory convert for about half the year. Is that it?
DICK WAUGH: Yeah, I think its more toward the end of the year, if I recall correctly. And then its an average number.
GEORGE SHAPIRO: Yeah. Okay, thats what I thought. Thanks a lot again.
DICK WAUGH: Youre
welcome.
OPERATOR: Your next question, sir, comes from ANDREW KAPLOWITZ, Lehman Brothers.
ANDREW KAPLOWITZ: Yeah, hi, good morning. Just wanted to ask you a question about the margin extension between 03 and 05. It looks like it
goes up quite a bit by 05. Just wondering what your assumptions are there. Is it mostly TRW, or is it the other segments?
DICK
WAUGH: Again, Andy, if you look at the briefing charts, you can see it segment by segment where we see margins moving over the next two to three years. It varies by segment, by sector.
ANDREW KAPLOWITZ: Do you also have in there a breakdown of cash flow by TRW, Northrop?
DICK WAUGH: No, because thats not relevant to the combined company.
ANDREW KAPLOWITZ: Okay, okay. Thank you.
GASTON KENT: Okay, I think were going to have to break off at this point because were about to get on an airplane and start the process, but I want to thank you all. Were really excited. I think when you have
an opportunity to go through the charts, youll get as excited as we are about what this combination will really mean and what its going to mean for growth in the future, really tremendous growth opportunities. And all the other things,
were at the right part of the business cycle. Were got the best positioned portfolio. Were going to really be a powerhouse in this industry. We know how to integrate, so we think that thats going to be not a difficult thing
to do. We wont miss a beat as we go forward here. And you know, weve got double digit growth, high double digit growth, frankly, as we go forward. So this is an exciting story, and were going to go out and tell it. I thank you very
much for participating.
GASTON KENT: Denny will be here to answer any additional questions that you might have. Thank you very
much, ladies and gentlemen.
OPERATOR: Ladies and gentlemen, thank you for your participation in todays conference. This
concludes your program. You may now disconnect.