Hello and welcome to The Walt Disney Company Quarter Three Fiscal Year '15 Earnings Conference Call. My name is Joe and I will be the operator for your call. At this time all participants are in a listen-only mode and later we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now like to turn the call over to, Senior Vice President of Investor Relations, Lowell Singer. Mr. Singer, you may begin.

Good morning and welcome to The Walt Disney Company's third quarter 2015 earnings call. Our press release was issued about 45 minutes ago and is available on our website at www.disney.com/investors. Today's call is also being webcast and a recording and the transcript of the call will be available on our website. Joining me for today's call are Bob Iger, Disney's Chairman and Chief Executive Officer; Tom Staggs, Chief Operating Officer; and Christine McCarthy, Senior Executive Vice President and Chief Financial Officer. Bob, Tom and Christine will each make some comments and then of course, we will be happy to take your questions. So with that, let me turn this call over to Bob and we can get started.

Thanks, Lowell and good afternoon, everyone. Before we begin I'd like to welcome our new CFO, Christine McCarthy. Christine has done a great job as the company's Treasurer over the past 15 years. She's highly respected in the financial community and her strong leadership and keen financial acumen make her ideal for the role of CFO. I am sure you all have the opportunity to get to know her and you will be hearing from her a little later. Now turning to the quarter we are very pleased with our performance in Q3, with record net income and earnings per share. Diluted EPS increased 13% to $1.45 and revenue was up 5% to more than $13 billion, strong results across the board. Since our last earnings call we had the pleasure of unveiling the exciting details of Shanghai Disneyland and with a 60 history of relentless innovation, fantastic storytelling and extraordinary experiences we are creating a truly one-of-a-kind world-class destination. China Disneyland will have six theme lands featuring the best of what everyone knows and loves about Disney Parks, as well as a number of amazing original attractions created specifically for Shanghai resulting in an authentically Disney and distinctly Chinese Disneyland. I am happy to say that since we unveiled the details, the response in China has been tremendous with nearly 150 million people expressing their excitement on the country's top social media platforms. This investment represents one of the biggest creative endeavors undertaken by the company and with an opening plan for spring of 2016 we are truly excited by the potential in the world's most populous market. For those of you who haven't seen the great images and details of Shanghai Disneyland you can view them online at shanghaidisneyresort.com and I think you will be impressed. Before Tom…

Thanks, Bob and good afternoon, everyone. The core part of our strategy and a key source of sustained advantage for Disney is developing and leveraging our powerful brand and franchises across our many lines of business and distribution channels. Our investments in Pixar, Marvel and Lucasfilm underscore and dramatically enhance that advantage. Benefit of our strategy is evident in this quarter's results as our branded content led the healthy increases in operating income with our Parks and Resorts, Studio Entertainment and Consumer Products segment. Parks and Resorts had their highest quarter ever in Q3, in terms of both revenue and operating income. We have seen remarkable excitement for Disneyland's 60th Anniversary Diamond Celebrations which features a new fireworks show, an electrifying nighttime parade and a re-imagined world of colors spectacular, resulting in the highest attendance and profit for any quarter in the resort's history. At Walt Disney World attendance hit a record level for Q3, while also delivering the highest profit for any previous quarter for that location. The Studio continues execute extremely well in our branded tentpole strategy by delivering high-quality, immensely creative and broadly appealing theatrical entertainment. Three of the top six films in the U.S. this year are from Disney; Cinderella, Marvel's Avengers - Age of Ultron and Disney Pixar's Inside Out and all three has helped drive our strong results in the quarter. Inside Out has grossed $330 million in the U.S. and more than $600 million worldwide with more overseas markets yet to open. Avengers - Age of Ultron is now the six highest grossing film of all time with $1.4 billion at the box office. Ant-Man the newest character to join the Marvel cinematic universe spent its first two weekends at number one and has already grossed nearly $300 million worldwide with multiple overseas…

Thanks, Tom and good afternoon, everyone. It's a pleasure to be here on my first earnings call and I look forward to working with many of you more closely in the near future. With three quarters of the fiscal year behind us, we are very pleased with how the year is progressing. Third quarter earnings per share increased 13% to a record $1.45 driven by strength across our businesses. At Media Networks growth in operating income was due to higher results at Cable partially offset by lower results at broadcasting. Cable operating income was higher in the third quarter due to growth at Disney Channel, ABC Family and ESPN. Disney Channel and ABC Family results benefitted from programs sales and higher affiliate revenue, while growth at ESPN was driven by higher affiliate revenue partially offset by a 3% decline in advertising revenue. The decrease in ad revenue at ESPN was due to a difficult comparison with the Men's World Cup in Q3 last year, which more than offset the benefit of an additional game of the NBA Finals in Q3 this year. We estimate that ESPN's ad revenue was up a little over 5% when you exclude the impact of these events. So far this quarter ESPN ad sales are pacing up compared to prior year. Programming and production costs at cable were relatively flat in the quarter consistent with our expectations and we still expect these costs to be up low teen percentage points for the full year. Domestic cable affiliate revenue was up mid single-digits in the quarter as a result of contractual rate increases and the addition of the SEC Network which launched in August of last year. These increases were partially offset by lower deferred revenue recognitions at ESPN. If you recall, ESPN recognized $176 million…

Thanks, Christine. Joe we are ready for our first question.

Thank you. [Operator Instructions]. Our first question here comes from Mr. Michael Nathanson from MoffettNathanson. Please go ahead.

Thanks. I have one for Christine and one for Bob. Christine following up on the guidance you just gave on foreign exchange, could you talk a bit about how Disney hedges and why are we seeing more foreign exchange impact in this fiscal year given movement in dollar a year ago versus being felt in '16? So talk a bit about the timing of that [impact].

Okay. Thank you, Michael, that's a great question. The way we hedge foreign exchange is on a multiyear basis. So it does have the benefit of mitigating the full impact of changes in currency rates on operating income. So let me just give you some perspective which I think will explain the year over year change. Back in the summer of 2014 when the U.S. dollar started strengthening we were mostly hedged for fiscal '15. With the continued dollar strength that we saw in this current year 2015, as we layered into additional hedges for fiscal '16 they were at less favorable rates. Hence the year-over-year '15 to '16 impact is currently estimated to be around that $500 million.

Okay. Thanks. And Bob something you said in the beginning. It's a question that I know all of us get and Lowell gets too. It's about the right number of subscriber losses at ESPN. And all us track Nielsen. You put it in your 10-K in terms of the yearly change in ESPN subscribers. What's the right level of subscriber growth? And when you think about your current guidance, what is the right level of future near-term subscriber losses, do you think, for ESPN, maybe for the big basic bundle in total?

Well first of all Michael we report in our filings Nielsen's numbers, but they don't necessarily track the number of subs that we get paid on and in fact the numbers that have recently been in the press which are Nielsen numbers were higher in terms of sub losses than those that we are seeing. But we're not at this point ready to give specifics in terms of what those numbers are. That answer that question?

Okay and the 10-K.

That's impartially.

Okay. And then your changing guidance is because have you taken a more conservative view over next year in subscriber or subscriber revenue or is it based on where you were?

On the revenue side Christine said we are sticking to the high single-digits. On the O/I side the combination of slightly less subscribers than we predicted at the time with foreign exchange rate changes leads to us taking the O/I guidance down from the high single-digits to the mid single-digits. But on the revenue side we are maintaining the high single-digit outlook.

Okay. Thanks, Bob.

Okay, Michael thank you. Operator next question please.

Of course our next question here comes from Alexia Quadrani from JPMorgan. Please go ahead.

Thank you. I guess Bob just sort of staying on that same topic about the outlook for ESPN and subs how do you balance sort of maintaining the current ecosystem and help them sustain, traditional subs with sort of new opportunities that are over-the-top can present themselves? I guess ultimately on that same point, as over-the-top platforms expand do you think it's just a share shift from linear TV or do you think it actually can expand the reach of the market for ESPN?

Well I think you can look at this many different ways. One, you can look at it in terms of the overall television landscape and the linear MVPD expanded basic business versus the growth in so-called over-the-top businesses or you can look at specifically with regard to ESPN. I guess I will take the broader sort of market look first. First of all I think while there has been a lot said about what's going on in the multichannel universe and as I said in my comments, it's still the dominant form of television viewing and it is the dominant form clearly for sports viewing as well. And we mentioned 83% -- statistic 83% of all U.S. households watched ESPN, U.S. multichannel households watched ESPN in the first quarter. So you are still looking at a significant amount of consumption through the multichannel universe. We also look at that business and we look at it as a consumer offering and we see huge variety of programming, a lot of live or kind of topical programming that's on, meaning you don't have to wait a year to watch library as a for instance. I mentioned significant amount of variety and quality obviously for prices generally considered reasonable and the price is often bundled with broadband and in some cases with telephony. So when we look at the universe we don't really see dramatic declines over the next say five years or so and therefore we are not taking what I would call radical steps to move our products into over-the-top businesses to disrupt that business because we don’t think right now that is necessarily the greatest opportunity. We just don’t think it's necessary. That said there are new platforms that are launching, some multichannel and some other types of platforms that…

Thank you very much.

Thank you, Alexia. Operator next question please.

Of course. Our next question comes from Todd Juenger from Sanford Bernstein. Please go ahead sir.

Guess what I want to talk about, too? Just the multichannel universe and PayTV subscribers. Let me take a shot at this and see what you're willing to engage in. I'd love to hear, as you construct your traditional distribution arrangements, especially for ESPN but your general Cable Networks, would you be willing to talk about what type of protections or options you generally might look for in the case that subscriber losses accelerate or are more than you expected? Are there minimums? Are there pricing resets? Are there opportunities to protect yourself? I'm sure there are on the downside. We'd love to hear those.

Todd we cannot get specific about it. I can tell you that our distribution agreements do address the number of subs that are being delivered or that were being paid for and there are facets of those agreements that enable us to amend the business relationship or the contractual relationship that we have with these distributors should subs go below a certain number. When I say amend I am not going to get specific about how we would go about that or what the specific mechanisms are in the contracts for that because frankly its confidential. Since you I guess asked a little bit about maybe the future and new deals, I can only say and you know a lot of these deals run for multiple years, but I can only say that when we enter new deals we will probably take an even longer term view about what threats and what opportunities exist for us in the marketplace. So that we are both protective against the threats and we are given full opportunity to take advantage of changes in the marketplace that could strengthen our business alike going direct to consumers should we conclude that that becomes the more attractive alternative to us.

Fair enough. And then one follow-up, if you don't mind. I'll make it quick. Somebody has got to ask -- just anything that you care to say about the status of your relations with Verizon and what's going on there? Thanks.

No. Not commenting on that except to say that we have got ongoing discussions with them. I think they clearly recognize that the channels and the product that we offer have great value to them in their current services and the new services that they are contemplating launching.

All right. Then thank you.

Thank you, Todd. Operator next question please.

Of course. Our next question comes from Jessica Reif Cohen from BofA. Please go ahead.

It's BAML, but okay. I have two topics. One is film and one is theme parks. And then just some couple of small questions. On film, can you clarify it was -- any shortfall in Tomorrowland's fully in the third fiscal quarter? And Bob just following up on the comments you made about television viewing and your view that viewing will actually go up because there's more ways to see including Netflix, do you have a point of view on films? Like both film distribution change or film viewing change because of technology? And then I guess I will come back with the theme park questions.

Well just very briefly, Jessica this is Tom. On Tomorrowland, we did see an impact of Tomorrowland in the quarter. Obviously that was more than offset by the success of the other titles. But yes, the underperformance there did show up.

On the motion picture side we see global motion picture consumption actually growing. A lot of that is obviously due to the number one growth market in the world in terms of grosses and that's China where we have seen just massive increase in movie-going over the last two to three years. I know a lot's been said about the window and weather technology and the opportunity to view under higher-quality circumstances in the home is going to compress the theatrical window. For the kind of movies that we make which are largely what I will call tent-pole films, we actually believe the theatrical window is incredibly important to us and at the moment we don't really see any need to aggressively compress it. We time our -- call it this the home video product that goes into the marketplace very carefully, mostly the track, the retail opportunities that we have as a company, retail opportunities to both sell the movie into that window and retail opportunities to take advantage of the Consumer Products sales that we generally get at retail from a lot of the movies that we make. So we think that generally motion picture consumption is increasing in the world, it's been relatively flat in the United States by the way I don’t think that's going to change and for at least us we don’t really see taking steps to decrease the most -- the theatrical window because frankly its working for us.

And then on theme parks, just a couple of really quick ones. But you mentioned the currency and exchange impact you expect in fiscal '16 overall. But is there any -- are you seeing an impact from international visitors, with stronger dollar in international visitors? Second, the 60th anniversary -- is there any way you could frame the impact of that for Disneyland? And then finally -- sorry about that, but finally there has been speculation that you guys have gotten approval. I think you've gotten some approvals in California. So there's speculation that you are building a new land. Do you have any comment on Star Wars land or something like that?

Okay, Jessica its Tom. First of all on the foreign exchange Christine talked about that overall impact for next year, but in terms of looking at international attendance right now, the overall we haven't seen dramatic impact on the currency rate in terms of the total attendance. Now if we look at the correlation with where the economies around the world are weakest we also see that in the attendance. So for example, the U.K. was relatively strong this past quarter, while Brazil was a bit lower and so that economic status coupled probably with some changes in exchange rates does have an impact. But if you look at international attendance for Q3 as an example, now Q3 by the way is a perennially lower of the quarters in terms of international attendance percentage wise. It was in the range that we normally experience. So we don’t discern it has a very big impact there. With regard to the 60th there is no question that people have responded well to the 60th and there is obviously a lot of attachment to Disneyland and that has led to what we talked about which is the best quarter ever at Disneyland Resort in terms of attendance and profitability. And so I would say that the 60th is one of the key drivers there but as well as the new content and product that we put in around the 60th to drive it. So Disneyland we expect to continue to do well going forward. And then with regard to Star Wars, as we have said we are excited about Star Wars across the company and parks is no exception. So I would say stay tuned for more specifics about our plans there.

Thank you.

Thank you, Jessica. Operator next question please.

Our next question here comes from David Bank from RBC Capital Markets. Please go ahead.

Thank you very much. I will not ask about ESPN and the evolving ecosystem. You guys have two incredibly seminal events that are going to occur over the next 12 months, in the re-launch of Star Wars and the opening of Shanghai. And we are really close to the eve of those events at this point. And I think, for many of us, I know the questions I get, we still have a pretty hard time putting our arms around the incremental income statement impact from those two incredibly seminal events in '16 and beyond. And so, I guess I'm hoping for a little more color as we sit on the eve. I think we have a framework for the box office. But is there any sense of sort of incremental order of magnitude you could talk to us about, aside from the Force Friday impact on Consumer Products? Like what is the order of magnitude on the income statement? And for Shanghai, can you give us kind of a basic sense of impact on that first 12 months? Is it kind of breakeven? Is it earnings drag? Is it earnings lift? Any incremental color on those two events in the income statement would be really, really helpful.

On the Star Wars front David, we know that there is just incredible interest in this film. We have put two teaser trailers out and the response has been enormous. Anything that moves gets a lot of attention and anticipation is obviously huge and we've seen some examples already of Star Wars product going to the marketplace on the Consumer Products front including in markets like China that are very, very encouraging. That said as enthusiastic as we are for what we know of the film, we've not seen a Star Wars film than the original one since 2005 and there are markets around the world that are less familiar with Star Wars than say the United States for instance. So while the enthusiasm is I think rather apparent we just want to be careful that the world doesn’t get ahead of us too much in terms of the estimates and we've seen them as well. We are making at this point no estimates whatsoever in terms of what we believe the film will do. We know we have probably the most viable film franchise that ever existed. We know we have the ability as a company to leverage it in very, very compelling ways whether it's in Disney Infinity, whether it's at Parks Tim sited, whether it's on the Consumer Products front or on the TV front. And we fully expect that the success of this film will reverberate throughout the company not only in 2016 but in the years beyond because we obviously have a rich slate of Star Wars films coming. So we just want to be careful here that the market doesn’t get too far ahead of us or ahead of itself even on this. Let's all continue to anticipate the movie and be optimistic about it, but we have to take a wait-and-see approach in terms of what it will do. On the Shanghai front I am going to let Tom talk about the economic impacts in '16. But you know there to like Star Wars in many ways there is huge anticipation. And as I mentioned in my comments the reaction to what we revealed a couple of weeks ago in Shanghai was extraordinary not just in terms of the level of interest, but the level of enthusiasm. And the positive reaction to the fact that we are building a Park that was of such scale and was so unique in many ways particularly in a blend of what I call traditional Disney Theme Park experiences and a lot of things that are both original and very, very specifically tailored for the Chinese market.

And I think the real headline for 2016 and as we get closer to the opening we will do more to help you understand how to look down the road with Shanghai. But for right now this is really about the preopening expenses. So in 2014 we started to incur some opening expenses of size that were noticeable. That number of course has gone up in 2015 which is part of what you see in the International Theme Park results and then that will ramp even further in 2016. You should anticipate that roughly half of the total preopening expenses for the project we will see in 2016. And so the net result of that is Shanghai won't contribute to profitability in 2016 based on our best assumption right now, but then in future years you'll see the real impact and the financial returns which we continue to believe will be quite attractive.

Terrific. Thank you very much.

Thanks, David. Operator next question please.

Our next question comes from Anthony DiClemente from Nomura. Please go ahead.

Thanks a lot. I have two questions, one for Christine and one for Bob. Christine, just given the clarification to the ESPN guidance, I wanted to just follow up on that. Maybe I'm getting ahead of myself, but as we look even further beyond that guidance window, you don't have any big sports right step ups in fiscal 2016. But in first quarter 2017 you have the NBA rights fee step up, which is a big step up. So what are the things that you are doing or plan to do in order to make room for that in the budget at ESPN for the increase in the NBA rights fee at that time? And then secondly, for Bob, you talked about China. We were talking about Shanghai and the park. I wanted to just talk about the media market or get your thoughts. The theatrical market -- obviously huge and massively growing. Your release slate will presumably help you with share gain there. But what about the home entertainment market? You recently partnered with Youku for exclusive local marketing of Marvel films. I know there's a lot of piracy there but also presumably a massive opportunity. What is the strategy for home video distribution in China? Thanks.

Okay. Anthony your question about ESPN, the new NBA deal will occur in 2017 and we still believe that ESPN has plenty of room for growth.

On the question about China, the announcement that was made about a deal with Youku I think you mentioned was not correct. We have not entered into a partnership arrangement with them. The home-video market in China is obviously challenged by the fact that it's a market that's been you know rife with piracy and so a legitimate home-video market never quite developed there. There are a number of new platforms that have launched or that are expected to launch and we are in a number of conversations none that we can discuss because we are not ready to announce it with some of them about output deals for our films. And we feel good about essentially digital delivery of these films into a window that's likely to be lucrative for us over a long period of time. And essentially enable us to put legitimate products into the marketplace swiftly to hopefully counter what we've encountered in a lot of Asian markets which is piracy.

Thanks a lot.

Okay, Anthony, thanks. Operator next question please.

Of course. Our next question here comes from Doug Mitchelson from UBS. Please go ahead.

Let me add my welcome to Christine. Bob, I think we've gotten what we can from you on ESPN. So I'm going to turn to Tom and Christine. Tom, I just wanted to make sure you could give us a sense about the benefits the domestic park investment cycle, MyMagic+, in particular, relative to the 2% per cap rate for the quarter. Was that just a tough comp? Or are we starting to see any kind of wind-down in the benefits of prior investments at the U.S. Parks? And for Christine, the comment on the $500 million of FX and the fact that you hedge over a multiyear period suggest there could be some lag in fiscal 2017 or beyond, above the $500 million relative to the current interest rate levels. Is that right? Is there further impact if you mark to market everything to current exchange rates? And lastly and I guess also for Christine, maybe I'd missed it. But the moderating EBIT growth for Cable Networks from fiscal 2013 to fiscal 2016, is some of that currency as well as the subscriber growth that we have all been talking about? Or is it just ESPN subscriber growth?

So Doug, let me start with the first question. The Parks per cap the growth of 2% that you saw, the real driver there really was the attendance mix where we saw very strong demand at the local level, and especially in the annual pass and that then shows up on the attendance per cap. Food and beverage and merchandise were in line with what we've been seeing prior quarters. So that really is guest mix. But the major initiatives -- we continue to be very pleased with them broadly and with MyMagic+ in particular. This has been broadly available for about a year now. In fact we had about 13 million folks use the MagicBands and they have overwhelmingly called it an excellent experience. So we are very pleased there. We intend to return all of those metrics that we look are pointed in the right direction and MyMagic+ actually was a contributor to the results positively in the quarter. And then also you continue to see the strength of things like the relaunch of California Adventure driving the games at Disneyland. So we feel very good about both that set of initiatives and their continued ability to drive our results.

Thanks Tom.

Doug, on the $500 million that's another good question regarding foreign exchange. It's not the simplest subject. But if we had not hedged at all, the FX impact would have been more significant in fiscal '15. But the reason I say that is we don't know what rates are going to do in '16. But right now for fiscal '16 we are expecting that $500 million adverse impact. And the hedge ratios that we have in place are actually more favorable than current levels. So if there were changes in different directions during the year we would continue layering in during '16 for '17. But right now the hedges that we have in place for '17 albeit more modest than where we are for '16, they are with -- right now they look like they would benefit us in a strong dollar market. ESPN in particular, you know the FX issue there is separate and distinct from the $500 million that we talked about. The foreign exchange impact for ESPN is over that three-year period and when we talked back in 2014 at the Investor Day for that outlook, right at that point in time the U.S. dollar had not started its significant strengthening. That was in the summer of '14. So during that period the dollar has significantly strengthened across a number of key currencies for our cable nets, including the yen, euro, the pound as well as the Brazilian real. So that FX impact is part of that outlook guidance that we gave.

Okay. And just to be clear, the lowering from the high single digit to mid-single digit was a mix of currency and domestic subscribers or just domestic subscribers shortfalls?

It's a combination -- it's the -- it's both the adverse impact of lower expected sub levels and the adverse impact of the stronger dollar.

Okay. Great. And there's no way you can give us the breakdown of those two, by chance?

No. I think just the way it was explained is what we can do.

Thank you so much.

Okay. Thanks, Doug. Operator next question please.

Our next question comes from Ben Swinburne from Morgan Stanley. Please go ahead.

I have questions for Bob and then for Christine. First, Bob, you have been very vocal about the shift of advertising from TV to digital. Can you just help us think about how you think about ESPN, ABC ad sales going forward? Do you expect those businesses to grow over time? And do you expect the industry to grow when you look out over sort of a multiyear forecast?

We're seeing real growth but it is still relatively small in terms of total dollars versus what we see on the traditional platforms. In ESPN's case as we have said before they package their ad sales across all of their platforms. They are basically their linear more analog platforms as well as all their digital platforms and platforms like radio and even their magazine. But we think that there is going to be tremendous growth from a percentage basis of digital and we're going to continue to work with advertisers and with the research firms that are out there to work to not only get more creative but to provide more details, essentially more consumption research, so that we can grow the business even more. The demand is clearly there. What you see in the advertising community not only have you seen much more opportunity for local addressable advertising but you see a huge demand from the advertising community as well. By the way while we are on the subject of ESPN because we have been on it a lot, so why not. I want to make one other point about it. First of all we have said a number of times, you think ESPN, you have to think about the NFL, the NBA, Major League Baseball, the best package available on College Football, College Football Championships, College Basketball, events like Wimbledon and U.S. Open et cetera. The other thing you have to consider is that in many of these cases we are only at the beginning or in some cases not even at the beginning like the NBA of new deals to kick in. Those new deals all provide for more programming, more opportunity for content on digital platforms, which will enable us to increase consumption on digital platforms and grow that business even more and generally more flexibility in terms of how we distribute this product. So the NBA's a great example. You can have a huge increase in essentially inventory on ESPN across its platforms. So while there is definitely increasing costs, there is a huge increase in terms of opportunity as well to reach more people, to serve advertisers more effectively and to grow our digital platforms.

Thank you. Christine, just on the 53rd week, any way to think about the impact, the benefit in Q4? You mentioned ESPN was pacing up in the quarter. I didn't know if that was both including and excluding the 53rd week impact. And then any way to think about the 53rd week impact in '16, when you are going to comp the 2015 benefit?

Thanks, Ben. You can think about the 53rd week in terms of it being an additional week of operations. So it's relatively proportional in the year. So would be a benefit here in fiscal '15 and it would have the reverse effect in fiscal '16.

Okay. Thank you.

Okay. Thanks, Ben. Operator we have time for one more question.

Your last question here comes from Spencer Hill -- I am sorry, our next question here comes from Jason Bazinet from Citi. Please go ahead.

Maybe quick question for Ms. McCarthy. Regarding leverage, the gross leverage has come down very gradually over the last decade to below one time. The cost of debt is quite low, obviously, in the markets. Your ROICs, even if I include goodwill in all divisions, seems to be in the low double-digit range. So why is this the right level of leverage for a firm like yours?

Thanks, Jason. You are absolutely correct, our leverage has reduced as the company has continued to perform. We generate cash flow that we deploy to returning to shareholders as well as investing in businesses, doing strategic acquisitions. So when we look at our leverage, the number that you quote is actually a gross number and we do look at our leverage in terms of the way the rating agencies look at it, so they will make some adjustments to that for things like pension obligations. So that's a little bit higher from a rating agency perspective. That being said we do enjoy a Mid Single A credit rating. We also are Tier 1 commercial paper issuer. So as it currently stands we feel like we are returning capital to shareholders as well as investing in businesses, doing acquisitions and at the same time we are maintaining financial strength and flexibility.

Okay. Thank you very much.

Thank you, Jason. And thanks again everyone for joining us today. Note that a reconciliation of non-GAAP measures that were referred to on this call to equivalent GAAP measures can be found on our Investor Relations website. Let me also remind you that certain statements on this conference call may constitute forward-looking statements under the securities laws. We make these statements on the basis of our views and assumptions regarding future events and business performance at the time we make them. We do not undertake any obligation to update these statements. Forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from the results expressed or implied in light of a variety of factors, including factors contained in our annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. Thanks again for joining us today.

And thank you, ladies and gentlemen. This does conclude today's conference. Thank you for participating and you may now disconnect.