Speech by SEC Staff:
Seeing Down the Road: IFRS and the U.S. Capital Markets
John W. White
Director, Division of Corporation Finance
U.S. Securities and Exchange Commission
NYSE/Brooklyn Law School Breakfast Roundtable
New York, New York
March 23, 2007
Good morning. I am very pleased to be here, and I want to thank you, Professor Poser, for that kind introduction. Although she could not be here today, I also want to thank Roberta Karmel for inviting me to speak with you this morning. Professor Karmel, as you know, was a Commissioner at the SEC in the late 1970s and has remained a true friend of the Commission since that time.
As many of you know, Roberta is very focused on international securities matters, and I know she is in Vietnam today for her research on these topics. As part of her recognition of the Commission's work in this area, we were very fortunate to have her come down to Washington a couple of weeks ago and participate in the Roundtable that the SEC staff held on international financial reporting standards, or IFRS, and the "roadmap" to end reconciliation.1 She, like all of the panelists, made an invaluable contribution to the staff's and my thinking. As one of the moderators of our Roundtable, I hopefully did my job correctly by listening, managing the time for others and not talking too much myself. This morning, though, at your kind invitation, I would like to talk—about what I heard at the Roundtable and about some tentative thoughts I have about where we should be going with IFRS and reconciliation in light of what we have heard and learned, from the Roundtable and otherwise.
The Roundtable was very important to me. And, as you may know, so is transparency. So before I say anything further, I want to point out that you don't have to take my word on what was said at the Roundtable or settle for my reactions. The Commission has a video archive of the Roundtable panels available on its website, as well as a printed transcript of the remarks made. Before I say anything further, I also need to remind you that the Commission as a policy matter disclaims any private remarks of any of its employees. I am speaking solely for myself today, and my comments do not necessarily reflect the view of the Commission, of any individual Commissioner or of any members of the SEC staff other than myself.
As I already alluded to and as I'm sure you know, under the SEC's rules, foreign private issuers may file their financial statements in the U.S. using their home country GAAP or using IFRS. They may also use U.S. GAAP if they choose. If a foreign registrant reports in something other than U.S. GAAP, then it must reconcile those financial statements to U.S. GAAP in accordance with our rules. A foreign private issuer, or FPI, must file its annual report, including financial statements reconciled as appropriate, with the SEC six months after its year end.
In April 2005, the SEC's then-Chief Accountant Don Nicolaisen laid out a "roadmap" leading to a place and time in which issuers that file their financial statements using IFRS, as promulgated by the International Accounting Standards Board, or IASB, might no longer be subject to the requirement to provide reconciliations to U.S. GAAP.2 Among other things, the roadmap highlights several requisite "mile markers" along the way, including the convergence process between IFRS and U.S. GAAP (ultimately leading to one set of high quality, global standards); faithful and consistent application of IFRS across borders and comparability among and across users; and appropriate, high quality auditing standards. I have previously spoken about Corporation Finance's process for reviewing foreign private issuer filings with IFRS,3 and I believe we will have more to say on that in the near future. Faithful and consistent application of IFRS remains extremely important, and a step on which the SEC staff is focused. The auditing point is another very critical one, which I will not touch further upon today but that clearly must be considered in any comprehensive conversation about convergence and ending reconciliation.
The roadmap is publicly available and remains central to the SEC staff's views regarding the future of the reconciliation requirement. The Roundtable discussion on March 6 in large measure took the roadmap as its point of departure and explored questions of ending reconciliation of IFRS to U.S. GAAP and of allowing financial statements of foreign private issuers that report in IFRS to stand alone. It was appropriate to start with the roadmap and look forward; as our Chairman, Chris Cox, said in starting the Roundtable "We are committed to this process, and we aren't looking back."4
The Roundtable was organized according to three panels—each of which took up the same general questions and topics but from a different perspective or with a different constituency set as its focus. The first panel looked at the impact of IFRS and ending reconciliation on capital raising in the U.S.; the second panel was centered on the interests and needs of investors in the U.S.; and the third and last panel involved issuers, both foreign and domestic, and their interests and concerns in this area. If I could I would like to stick with the Roundtable's organizational structure in my remarks today and talk about what we heard on our topic. As I think you'll see, several themes emerged throughout the day and there was quite a bit of overlap among the panels in terms of comments and concerns, despite the panels' differing starting points.
There was a striking consensus among various speakers at the Roundtable that the Commission should end its reconciliation requirement with regard to IFRS as soon as possible,5 but I do not think any of the panelists had come to that position lightly or without reflection. Reconciliation has served a useful and important purpose even if our increasingly global markets make it seem increasingly prosaic and archaic, at least with respect to IFRS financial statements. Ending the requirement must be done thoughtfully. I think the roadmap shows that, and the SEC and its staff remain committed to approaching this topic thoughtfully.
Convergence of IFRS and U.S. GAAP is an important project which has not yet reached full fruition. I am not one of the people who believe we need full convergence before the reconciliation requirement can and should end, but I am sensitive to how the two are interconnected. We heard some of that at the Roundtable, and my own accounting expert friends within the SEC tell me similar things. We also have unanswered questions about the future of IFRS separate from convergence. One point on which we all seem to agree is that reconciliation can only end if IFRS remains a high quality, comprehensive, widely-used standard that is consistently and faithfully applied across companies and jurisdictions. I just wanted to lay out some of these considerations for you to keep in mind this morning, not to detract from the arguments for ending reconciliation in the near-term, but to help us all have a fuller picture in mind as we put the end of reconciliation front and center in our scope.
The Roundtable and Some of Its Messages.
So with all of that (and more in fact) as backdrop, the comments and points raised at the Roundtable were truly fascinating and engaging, if not, in some sense, particularly surprising. Listening to those comments along the three lines of capital raising, investors and issuers, we heard repeatedly and consistently that reconciliation is costly and that ending reconciliation would produce real benefits for all three constituencies.
1. Capital Raising. As I said, the first panel was the one that looked at all of this through the lens of capital raising and our markets in the U.S. The NYSE's own Catherine Kinney was one of the panelists on that first panel, along with representatives from investment banking and the credit rating agencies, securities lawyers, and auditors from the Big 4 accounting firms. And, of course, Professor Karmel. What I heard from the capital raising panel fell in large part to my mind into a couple of key categories.
1. The reconciliation requirement imposes costs in terms of ease, timing and ability of foreign private issuers to come to the U.S. markets.
There are real monetary costs for foreign private issuers to produce and provide their U.S. GAAP reconciliations, but those costs were not the focus of this first capital raising panel. More critically here, what I heard was that the reconciliation requirement is keeping foreign private issuers from bringing transactions to the U.S. public capital markets. In that way, reconciliation is standing between our U.S. investors and possibilities they might otherwise have to invest in foreign capital. This fact seems to me to be detrimental for foreign private issuers, who cannot tap the liquidity and depth of the U.S. markets, U.S. investors, who have fewer options in terms of the investment decisions they might choose to make, and the U.S. markets that are disadvantaged as well.
As many of you presumably know, the Commission voted two days ago to approve significant revisions to its rules on how foreign private issuers may deregister with the Commission and terminate their U.S. reporting obligations. As is hopefully clear, though, we do not affirmatively want foreign private issuers out of our markets; we want them in. By making our rules for how a foreign private issuer may leave in the future more efficient and less onerous, it's my hope at least that more foreign companies may enter our markets, knowing that they won't be "stuck" if their circumstances change in the future. I believe that is true. But as we heard from the capital raising panel, the reconciliation requirement may be a critical factor keeping some foreign companies out of our markets anyway. Foreign companies may take their initial public offerings to other markets to the exclusion of coming to ours. This was one point that we heard from Cathy Kinney of the NYSE—an expectation that if the reconciliation requirement were lifted, more foreign companies would list in the U.S. markets. Again, to my mind, the fact that reconciliation may keep foreign companies from coming to our markets may result in lost opportunities for U.S. investors to invest in these securities in our markets, which would be unfortunate for the parties on both sides as well as for our markets more generally.
The comment that reconciliation is a door that keeps foreign private issuers out of the U.S. was made repeatedly by practically the entire panel. Nick Grabar, from Cleary Gottlieb, provided a striking variant of this comment and pointed out that the benefits of securities offering reform are not particularly available to foreign private issuers in many cases. Perhaps I should pause and explain that point for a moment. In June 2005, the Commission dramatically revised its rules pertaining to public securities offerings. Among other things, the Commission designated a new class of issuers—well-known seasoned issuers—and considerably eased the time and other constraints for how these large, well-followed issuers can take an offering to our markets and complete it. The new model for well-known seasoned issuers, or WKSIs, was in my own opinion (and I was not the Director when these rules were adopted and implemented) a very important advance on the Commission's part. It rationalized the offering rules and removed unnecessary burdens on WKSIs and their capital raising.
The category of WKSI is not limited to domestic issuers. What we heard at the Roundtable, though, is that foreign private WKSI's are not able to avail themselves of the speed and ease of the new model in many cases because of the reconciliation requirement. Our Exchange Act rules for foreign private issuers only require that they provide financial statements once a year (and six months after their year-end at that) but those financials that foreign private issuers supply in their Annual Report on Form 20 F may be stale in terms of conducting an offering at many points of the year. So in order to bring a securities offering to the U.S. markets during much of the year, even a company that is already a U.S. registrant and is in fact a WKSI, will find itself facing considerable time and cost burdens in order to supply a necessary interim financial period reconciliation. The benefits of speed and enhanced liquidity that the Commission tried to set up for WKSI's just don't exist in that sense for our foreign private issuers. Many of them then, not surprisingly, decide to take their offerings to other markets instead.
2. Our capital markets do not particularly use the reconciliation even once it's available. For due diligence, credit rating and other purposes, players in our capital markets for the most part are already comfortable relying on IFRS alone when engaging in transactions with foreign private issuers.
If the Commission is going to end its reconciliation requirements, the various users of financial reports will obviously have to rely on IFRS financials. What I heard at the Roundtable is that they already do so in large measure. Or certainly that is true of the various intermediaries—underwriters, analysts, and credit rating agencies—who help in the investment process. I want to set retail investors apart as a different category, for a moment, because I did not hear that they are necessarily ready today for IFRS-only financial statements, and given the SEC's strong mandate for investor protection we cannot lose sight at any time of the needs of all investors, institutional or retail.
With regard to the world of capital market participants other than retail investors, I heard from this panel that they are already relying on financial statements in IFRS, or even perhaps in some other home country GAAP in some cases. Our capital market participants do not turn for their purposes to the U.S. GAAP reconciliation. The capital markets, as we all know, are truly global, and underwriters and others who participate in securities offerings by foreign private issuers tend to start on the same ground as the issuer, literally. If a French company is bringing an offering to market, its disclosure will be reviewed by and its offering will be marketed by individuals in France, at least in the first instance, even if its underwriter is a global powerhouse headquartered in the U.S. We should not expect, based on comments from this panel at least, to lose any investor or market protections afforded by underwriters, securities counsel (and others similarly situated) or auditors if we end reconciliation. Reconciliation may be keeping foreign issuers out of our markets; it is not particularly facilitating the offering work done by other participants in the capital raising process.
But let's not lose sight of our retail investors as we go down this road. What did we hear at the Roundtable about them? Well, Professor Karmel spoke most eloquently on their behalf during this panel. I would like to memorialize one comment that I heard from Roberta, and others, with regard to capital transactions and retail investors. Individuals and institutions on Wall Street in many cases are prepared today to transact in IFRS alone, but individuals on Main Street may not be, not if those individuals were left on their own. But in many ways, those investors already rely on intermediaries (auditors, analysts, brokers, etc.)—those folks on Wall Street, at least metaphorically speaking—and those intermediaries do stand ready to deal with IFRS-only financials. So in that sense, ending reconciliation would not be expected to create a substantial burden for retail investors. Furthermore, we heard that retail investors today are, in the case of some people at least, very interested in the securities of foreign companies that are not available today in our U.S. markets. Those investors thus may go overseas (virtually speaking) in order to have more investment opportunities, but without the coverage of the Exchange Act. So here, too, reconciliation is imposing an indirect cost that seems hard to justify.
With that as a natural lead-in, let me turn to what we heard from our investor panel.
2. Investors. Like the panel before it, the investor panel generally favored the end of the reconciliation requirements. These panelists had other stated reasons for their views, however, and I would like to highlight two strong themes of this panel's comments as well, as those themes appeared to me.
1. The timeliness of information is critical to investors and to the extent reconciliation slows the availability of information to U.S. investors, it operates counter to their interests.
As I mentioned in my introductory comments, foreign private issuers are not required to file their annual reports on Form 20 F until six months after their fiscal year end. This compares to the filing deadlines for U.S. issuers which range from 60 to 90 days depending on an issuer's size and seasoning. The need to provide the U.S. GAAP reconciliation is often cited as one of the justifications for the extra filing time allowed foreign private issuers because reconciling can itself be a time-consuming endeavor.
One result of all this is that many foreign private issuers report their year-end results and base financial reports in their home countries significantly in advance of when they file their Form 20 F's. The reconciliation requirement then, coupled with the Form 20 F filing deadline, delays the delivery to U.S. investors of the entire range of annual report disclosures and information, not just the reconciliation itself. For large institutional investors and analysts, this fact results in those parties going to the foreign private issuer's home markets for their information, and using IFRS to make their investment decisions. Credit rating agencies may do similarly. By the time the reconciliation arrives, it's "old news". For retail investors (although this is perhaps becoming less true in the increasingly internet age), those disclosures and information may just be absent because the individual investor cannot have agents located around the world.
Moreover, to the extent an investor goes abroad to obtain information, it obviously gets that disclosure without the protections of the Exchange Act which apply to public reporting made in the U.S. This panel also reminded us that investors also find themselves in foreign markets when buying or selling the securities of foreign private issuers who have declined to enter the U.S. market, at least arguably, in part because of the reconciliation requirement. There is obviously a different comfort zone for this with institutional as compared to retail investors and echoing Roberta Karmel's points earlier, I was reminded during this panel that retail investors may be losing investment options they would otherwise have had in the U.S. markets.
2. Investors have already learned to evaluate IFRS financial statements and do not particularly use the reconciling information. At the same time, they recognize the benefits that reconciliation has brought to financial reporting generally and to convergence of accounting standards specifically and are focused on the need for a single body of high quality "global GAAP".
When asked how the headlines would read the day that reconciliation ended, one panelists suggested that the markets and investors would note it but beyond that would "yawn". I was struck by how consistently the investor panelists told us they were not really using the reconciliation and in some sense preferred IFRS to U.S. GAAP. They pointed out that for many industries and peer groups, IFRS is the most common accounting standard and so in order to understand that industry or sector, analysts must know IFRS and in fact, institutional investors sometimes "reconcile" U.S. GAAP financial statements to IFRS in order to make their comparisons and investment decisions. Greg Jonas of Moody's Investors Service made a point very similar to one from the first panel when he advised that with regard to the vast majority of the foreign private issuers his firm covers, their analysts are themselves located in the relevant foreign countries and are more comfortable with IFRS as a base standard for financial reporting than they are with U.S. GAAP. Moreover, the reconciliation doesn't provide adequate data for analysis in U.S. GAAP—analysts must return to the underlying IFRS (or home country GAAP) for a meaningful understanding of a foreign registrant.
At the same time that some investor panelists reported that they had essentially already moved to analytic models that do not use the reconciliation, some of them also acknowledged that the requirement has served a very important purpose in the more than two decades it has been around. As the auditors on this panel described, reconciliation had imparted a "discipline" to reporting by foreign private issuers in the U.S. and led to increased rigor and reliability of financial reporting. The academic on this panel, Christian Leuz from the University of Chicago, made the fascinating observation—often referred to as the "bonding hypothesis"—that studies show one reason foreign private issuers come to the U.S. markets is precisely because they want to be recognized as companies that accept a rigorous reporting model and regulatory oversight, although not specifically reconciliation for this point.
These panelists supported the end of reconciliation but more as a means to an end in that they really emphasized the need for a single body of high quality GAAP used and applied consistently around the globe. They are not looking for this to be U.S. GAAP but they did speak highly of U.S. GAAP, and to the extent that IFRS is the most obvious candidate for a "global GAAP", the investors on this panel seemed to have an interest in its continuing convergence with U.S. GAAP which is known, among this audience, for its rigor and quality. And to the extent that investors seek one global GAAP in order to improve comparability and transparency across companies, unless the abolition of U.S. GAAP is in sight (and I would not say it is at this point) convergence of IFRS and U.S. GAAP facilitates some of those underlying goals as well. Several panelists made the connection between convergence and ending reconciliation quite expressly: if ending reconciliation would cause progress on convergence to cease, they would not support it; if ending reconciliation is one step on the way to having a single body of "global GAAP," then they do support removing the reconciliation requirement.
The investors panel, like the capital raising panel before it, made a number of fascinating points. They also generally supported ending the reconciliation requirement, subject to the caveat I just mentioned. This panel also left me with a question—with the elimination of reconciliation, should the filing deadline for the Annual Report on Form 20 F be accelerated, at least for some foreign private issuers, as has already been done for the 20-F's domestic counterpart, the familiar Form 10 K? I do not recall the panelists expressly recommending it, but several of their comments certainly left the suggestion hanging in the air.
3. Issuers. The third and final panel of the day was composed of issuer representatives, including three individuals from the senior accounting management and finance groups at foreign private issuers in Europe as well as one person from a domestic registrant, U.S. securities counsel, and Don Nicolaisen (who currently serves on the audit committees of several companies, domestic and foreign). I mentioned earlier that the archived webcasts from all three of the panels at the Roundtable are available on the Commission's website. If you do not have five hours to spend watching all three, I would encourage you to at least view the beginning of the third panel and hear what Don had to say. Don provided some very interesting and insightful remarks about his current views on the roadmap, the progress that has been made, and what still lies ahead.
As I did in recounting the first two panels, I would like to take a few moments to discuss a couple of points that struck me as key themes for the issuers panel.
1. Reconciliation is costly, in monetary terms but also in terms of resources and personnel as well as lost investment opportunities for U.S. investors.
This panel (more than the other two perhaps) was positioned to speak directly about the high costs of reconciling IFRS financial statements to U.S. GAAP. And they spoke about this burden at some length and with clear conviction and evidence of their point. Denis Duverne, the CFO of AXA, the global insurance and asset management company headquartered in Europe, reported that the annual reconciliation for AXA's Form 20 F cost his company approximately $25 million. Other panelists representing foreign private issuers did not have such precise figure to invoke, but they spoke consistently of high costs. They also spoke of the costs of needing to have personnel and time devoted to being expert in U.S. GAAP and the task of reconciliation when it really provided no other benefit and served no other purpose for the company or its shareholders. We heard on the preceding investors panel the view that reconciliation may have imparted a certain discipline and rigor to the accounting and reporting processes at foreign private issuers. The speakers on this panel certainly represented their organizations as having mature, robust and reliable accounting and reporting processes—one panelist even spoke well of Section 404 and its rules for internal control over financial reporting—but reconciliation did not seem tied into that rigor for the large, multinational foreign private issuers that participated in this third panel at least.
The speakers on this panel also pointed to other costs that reconciliation was exacting from them, and from their U.S. shareholders. Like some of the participants on the capital raising panel, the foreign private issuers representatives spoke compellingly of the burdens imposed on their own capital raising and securities transactions by the reconciliation requirement. I heard that because of this one simple thing, U.S. shareholders in foreign private issuers lose out on being included in rights offerings and other investment opportunities. This is true even though these companies are already registered with the SEC, and are in fact WKSI's. Reconciliation simply closes doors that they cannot easily open.
2. U.S. issuers should also be able to use IFRS for their financial reporting.
This point did not consume as much time for the third panel as the discussion of costs and offering burdens, but I wanted to highlight it all the same because it was clearly a strongly held position by the one representative of U.S. issuers on this panel and I have heard it from many other quarters as well. Phillip Jones, Director of External Reporting and Accounting Policies and Procedures at Dupont, spoke of his company's willingness to see reconciliation end for foreign private issuers. But as a competitive point, it was suggested that U.S. issuers should be afforded the same opportunity to report in IFRS without reconciliation. I have spoken with a number of finance and accounting executives at large, multinational corporations in the U.S., and I have heard this same point made consistently. They all see the benefits and appeal of being able to report in IFRS. These companies are already using IFRS for various reasons, whether at their international subsidiaries or for reporting purposes with various regulators in other jurisdictions, and it could improve their disclosure and reporting processes overall, in terms of transparency and internal consistency, if they were allowed to file with us using IFRS. As Chairman Chris Cox commented in his opening remarks at the Roundtable, the roadmap had always contemplated a destination in which domestic issuers may report in IFRS.
I spoke a moment ago about Don Nicolaisen's general comments at the start of this panel. I would be remiss if I didn't note that Don asserted at the Roundtable his belief that eventually U.S. issuers should be required to report in IFRS. Certainly what we heard from Dupont, and what I have heard from others, is that U.S. issuers would like the choice. But Don's suggestion is very intriguing. It is obviously also consistent with and responsive to the expressed desire of investors for one "global GAAP", assuming that IFRS is in fact a robust, high quality set of standards that is consistently applied across businesses in various countries.
The chorus of voices calling for the U.S. to recognize and accept financial reports filed with IFRS has become louder and louder in recent months. Such a move was one of the eight recommendations of the report that Mayor Michael Bloomberg of New York City and Senator Charles Schumer of New York commissioned and released recently.6 If you attended (or watched on C-Span, like I did) the conference on U.S. competitiveness that Secretary Paulson hosted at Georgetown last week, you also heard a number of people including John Thain from the NYSE and former Federal Reserve Chairman Paul Volcker call for the acceptance of IFRS without reconciliation. Chairman Cox has spoken of his goals on this front as well. I would say that you can add to those voices the ones that we heard at the Roundtable. And while that is true, what was in some ways more striking to me is that many (if not all) of the people behind those voices are already ahead of us. The various players and participants in our capital markets, whether intermediaries or investors, already accept IFRS. Foreign private issuers would like reconciliation to end; U.S. domestic issuers also seem ready for that, at least in the case of large companies with multinational operations. In fact, those U.S. issuers want IFRS for themselves and already use IFRS in many cases for various purposes..
I will be the first to acknowledge (or the first to second some of the sound thinking we heard at the Roundtable) that reconciliation cannot be ended carelessly, nor overnight. I have heard concerns about the sustainability of funding for the IASB (without which, what would happen to the care and maintenance of IFRS?), and other steps or considerations laid out in the roadmap that cannot yet be confidently checked off. For the reasons I heard at the investors panel, I think we must remain focused on the convergence process and on the robustness and strength of IFRS. At the same time, I believe that reconciliation should end for the benefit of investors as well as other participants in our capital markets as soon as we pass the remaining mile markers. And the discussion at the Roundtable bears witness to tremendous support for passing those markers with alacrity. It might also be useful to consider some sort of phase-in, whereby certain issuers could be relieved of the reconciliation requirement on a trial basis even before the roadmap's conditions have been fully achieved. For example, in light of what we heard at the Roundtable, the staff might consider recommending that the Commission end the requirement to reconcile interim period financial statements. But this is a very early thought and one that clearly needs more consideration among the staff before going further.
Like the speakers at Secretary Paulson's conference, I believe ending reconciliation and allowing IFRS reporting in the U.S. would improve the attractiveness and competitive position of our capital markets. I also believe that the staff of the Commission needs to work in earnest to analyze and address the question of allowing U.S. issuers to report in IFRS rather than U.S. GAAP. That issue also has competitive angles, in our markets as well as for U.S. companies operating overseas, and it seems to me an essential piece of the larger pictures. There are also hidden landmines in this one, I suspect, and we must walk forward deliberately. For example, I was surprised to learn that colleges in the U.S. do not today generally teach IFRS to accounting students. So, while we might allow U.S. companies to report in IFRS, there would seem to be a large learning curve before there would be sufficient accountants to prepare those financial statements, or to audit them for that matter. All the same, I feel that U.S. issuers reporting in IFRS, like ending reconciliation, is an end we can see. We just need to figure out how to get there. And I do not believe that ending reconciliation for foreign private issuers should be held up while we figure out our route on this other trip. This was another point I heard from more than one commentator at the Roundtable, including your own Professor Karmel.
Obviously there are a lot of questions and a lot of exciting ideas that came out of (or were repeated at) the Roundtable. I would like for the Commission to get more public input from yet more affected parties and the public on these topics and then to consider moving forward expeditiously. I would also hope the Commission might speak in this area in the next few months. By formally entering the discussion, the Commission could express its views on the roadmap and ending reconciliation in its own voice rather than just being a staff position. I believe that could be a powerful signal of the seriousness with which we take these matters and a good next step down the road of aligning the Commission's rules with a world in which those who file their financial statements in IFRS, as promulgated by the IASB, do not need to provide a U.S. GAAP reconciliation.
As you hopefully can tell, I truly enjoyed listening to all of the insightful and valuable comments made at our IFRS roundtable two weeks ago. I have also very much enjoyed talking with all of you today. Thank you again for the invitation to be here this morning. I will be happy now to take any questions anyone might have.