Good afternoon, and welcome to Matson's Third Quarter 2013 Earnings Call. For your information all participants will be in a listen only mode during the company’s presentation. There will be an opportunity to for you to ask questions at the end of today’s presentation. (Operator Instructions) The conference is being recorded. I would now like to turn the call over to Jerome Holland, Director of Investor Relations.

Thanks Kate. Aloha and welcome to our third quarter 2013 earnings conference call. Matt Cox, President and Chief Executive Officer; Joel Wine, Senior Vice President and Chief Financial Officer and Ron Forest, Senior Vice President Operations are joining the call from Oakland. Slides from this presentation are available for download at our website, www.matson.com, under the Investor Relations tab. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements within the meaning of the Federal Securities Laws regarding expectations, predictions, projections or future events. We believe that our expectations and assumptions are reasonable. We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward-looking statements, in the press release and this conference call. These risk factors are described in our press release and are more fully detailed under the caption Risk Factors on pages 9 to 15 of our 2012 Form 10-K filed on March 1, 2013 and in our subsequent filings with the SEC. Please also note that the date of this conference call is November 6, 2013, and any forward-looking statements that we make today are based on assumptions as of this date. We undertake no obligation to update these forward-looking statements, also, references made to certain non-GAAP numbers in this presentation. A reconciliation to GAAP numbers and description of calculation methodologies is provided in the addendum. With that, I will turn the call over to Matt.

Thanks Jerome. And thanks to those on the call today. We have an expansive call today with exciting news about our ship build program and attractive private placement financing and of course the review of the most recent quarter results and updated outlook for the fourth quarter. Third quarter results were mixed. Our core transportation services performed well despite a lull in container volume in the Hawaii market following strong volume growth in the first half of the year. Several unfavorable items impacted earnings in the quarter as well including higher than expected transition cost at SSAT’s Oakland terminal and adverse arbitration decision in Guam and response costs and third party claims related to the molasses incident in Honolulu Harbor. On the positive side, we continue to see strong demand for our premium service out of China, performance in Guam remain steady and logistics continues to rebound with stronger volume levels and improving warehouse operations. Today we also separately announced a contract with Aker Philadelphia Shipyard to construct two dual fuel containerships with delivery expected in 2018. The decision to build these TVR vessels was based on our continued confidence in a long-term prospects for Hawaii. We got a lot more on this later in the call but needless to say we are excited about bringing state-of-the-art green technologies to our home trade. And finally, we also announced an agreement for $100 million senior unsecured private placement of 30-year debt. We expect to take down the notes in early 2014 at an attractive low coupon rate of just 4.35%. Joel will speak more to this later. Now, I would like to discuss the results for the quarter. Turning to slide 4, you can see the financial results were off modestly from the prior year. EBITDA decreased $8.4 million in the…

Thank you, Matt. As shown on slide 13, Matson’s consolidated operating income for the quarter was $27.2 million as compared to $34.2 million for the third quarter of 2012. Ocean transportation’s operating income this quarter was $25.5 million, a decrease of $7.4 million from the prior year. The drop in operating income for ocean transportation was related to the low and Hawaii volume, lower China freight rates and $7.3 million in unfavorable non-operational items in three components. First, the adverse arbitration that Matt mentioned of $3.8 million, second, a $2.2 million tax allocation item related to our separation. This $2.2 million tax allocation hurt operating income that was offset by an equal reduction to our income tax expense for the quarter and therefore did not affect our net income or EPS. And thirdly, $1.3 million in cost directly related to the molasses release. Both the $3.8 million arbitration decision and the $1.5 million molasses release cost figures are pre-tax and did impact EPS on a after tax basis. In addition to these three unfavorable items year-over-year comparisons were also negatively impacted by $3.1 million from SSAT’s loss of $2.4 million this quarter compared to a positive $700,000 contribution in the third quarter of 2012. The loss attributable to higher than expected transition cost related to the expansion of SSAT’s new terminal at Oakland which Matt mentioned. These negative items in our ocean transportation segment were partially offset by freight rate and cargo mix improvement in select rates and lower vessel operating expenses. Turning to our logistic segment operating income was $1.7 million for the third quarter 2013 an increase of $0.4 million over the prior year primarily driven by lower G&A expenses. The next slide shows our year-to-date results. For the first nine months of 2013, consolidated operating income was…

Thanks, Joel. We continue to be optimistic about our operations and prospects. While Hawaii volume hit a low during the third quarter, we remain confident in the long-term prospects for our home trade. Our China service continues to perform at a high level as we have established a strong niche in our expedited service that is reflected in the premium we command in our rates. We are also encouraged by better ongoing results and logistics, the results have a lot of hard work we put into the business in terms of expense control and improving operations. While there was a short-term impact from the transition at Oakland. We’re excited about the expansion of terminal operations at SSAT which will better service Matson, will also meet the needs of a growing customer base. All of these contribute to solid earnings in cash flow generation that gives us the confidence to invest in Hawaii future. With two new ships that will reinforce our market leadership position by adding a needed capacity for future growth while ensuring superior reliability the hallmark of Matson’s service. Turning now to Slide 21, we contracted with Aker Philadelphia Shipyard to construct two new 3,600 TEU containerships which we call the Aloha-class. These vessels have been designed specifically for Hawaii and will provide us with some key operating advantages. This considerable investment totaling $418 million is financially compelling and continues our tradition of introducing the most advanced ship to our trades. We expect to take delivery of both vessels in 2018, many of you may recall that Aker builds are for newer ships that are deployed today in our CLX service. So we have a longstanding relationship with the Aker team. The first of the two Aloha-class ships will be named in honor of the late Senator Inouye.…

Thank you, Matt. We’re very excited about the Aloha-class because these vessels will meet Hawaii’s future freight demand and will be environmentally friendly. We’re building these larger 3600 TEU ships with engine design to run at a high speed would ensures timely delivery of goods. The additional 45-foot capacity and additional repair outlets will optimize our future cargo mix and allows us to better transport perishable goods to the islands. We also have designed the vessels [indiscernible] spacing to carry construction materials more effectively. These vessels will have a wider beam providing enhanced stability and loadbility while reducing ballast water requirements. And as importantly, we will be able to navigate safely into some of Hawaii’s smaller ports. Finally, these new vessels will have state-of-the-art green technologies including a fuel efficient haul design, dual fuel engines, environmentally safe double haul fuel tanks and fresh water ballast systems. These advancements are important to Hawaii as a means to reduce fuel consumption and will result in significant emissions reductions over time. As shown on Slide 24, we have designed the vessels and the engines to use liquefied natural gas or LNG as a fuel source. For us to utilize the LNG, there are four requirements. First, commercially available LNG and bunkering capabilities on the West Coast; second, ships big enough to accommodate the LNG tanks without sacrificing the cargo package, third, dual fuel engines and fourth, piping and tanks. Today’s announced investment gives us two of these four components, vessel size and dual fuel engines. We have to finalize the piping and tanks components of the LNG package at a later date after we have to determine LNG is commercially available on the West Coast. If we do proceed, the additional work would cost approximately $20 million per ship and would include installation of the LNG tanks associated cryogenic piping and other related equipment. The prospect of LNG as a lower cost cleaner fuel for these vessels is exciting. Now, we certainly hope the industry matures in time for our vessel deliveries. With that, I will turn the call over to Joel.

Thank you, Ron. The vessels are a significant investment for us and when complete these new Aloha-class ships are expected to have among the lowest operating cost per TEU of any ship in the Jones Act [ph] trade. The cost efficiencies are driven by our ability to maintain enough for non-ship fleet deployment as much higher volumes in the past and also like significantly lowering our operating cost on a per TEU basis. In addition, lower fuel consumption, lower crude costs and reduced maintenance repair expenses will be important drivers to produce meaningful savings. In terms of CapEx timing for the investment, as the table at the bottom of Slide 25, it’s showing the new expected progress damage for the new build program. You can see that approximately 75% of the total investment comes in 2017 and 2018. As previously mentioned, we already made $111.8 million deposit into our CCF during this quarter which demonstrates that the timing of our CCF deposit will likely be different than the timing of the vessel construction progress payments for the shipyard shown on this page. Going forward, we anticipate making additional deposits in our CCF in order to maximize the benefits of that program and no CCF deposits are likely to occur before the scheduled progress payments listed here. Let me finish by saying that in summary, these vessels are expected to generate strong returns and have an attractive ROIC profile for the company. Overall therefore, we are excited about the shoulder value creation potential from this investment. With that I’ll now turn the call over to the operator for your questions.

(Operator Instructions) And our first question comes from the line of Jack Atkins of Stephens. Your line is open.

Good afternoon, guys, thanks for taking my questions. First off, congratulations on the announcement of the new vessels and I guess my first question relates to that. Could you talk about, I know it’s early, but could you talk about where those vessels will likely be deployed, will they be in the Hawaii turnaround service or will they be in the Hawaii Guam China service?

Hey Jack, this is Matt, good question. We envision the two vessels that would come online in 2018 to be deployed in our Hawaii turnaround service to the West Coast. So we have four vessels that are in that position that sail from the West Coast to Hawaii and turnaround back to the West Coast. And as you mentioned five that go to on from West Coast to Hawaii then Guam and China. So it will be in one of the two West Coast turnaround positions.

Okay, got you. And the reason I asked that is, if you put it in the Hawaii Guam-China service that would help to increase your capacity in that lane which is fully utilized and also I would think would just enhance the fuel savings there. So could you maybe talk about the specific region why you need to have it, just in the turnaround service to Hawaii or --

You’re right in pointing out that the benefits could potentially accrue to our CLX service in the form of additional capacity. First in that LA position, Long Beach position to Hawaii and then potentially out of China. It’s a main part of the economic that Joel touched on at least initially was in allowing us to stay in a nine-ship fleet as the cargo volume returns to pre-recession levels.

Okay.

In order for us to do that we would need to keep those vessels on the West Coast turnaround position in order to allow us to stay into a nine-ship fleet rather than having to go to a 11-ship fleet if we hadn’t made the investment. So while, both sets of deployments potentially rather than take is, the larger advantage comes in the West Coast turnaround service.

Okay. That makes a lot of sense. And then Joel, as far as the $100 million borrowing, I guess the [indiscernible] replacement, could you talk about the rationale for that, is that going to used to fund the ships or the new vessels, the progress payments on those or other corporate purposes because just on the surface, it looks like you don't really have any significant capital needs that are imminent?

Sure, sure Jack. Thanks for the question. The use of proceeds to general corporate purposes, let me just say from a corporate finance perspective, we knew the transaction is very attractive for couple of different reasons. First, the debt structure itself blocking in 4.35% is attractive. We do that to attract the lock-in. And secondly, getting longer duration in our capital structure is a really advantageous thing to do given the long life nature of a lot of our assets. And then also thirdly, as pointed out structurally, we have about $100 million of scheduled amortization over the next four years and so this set of structures do not begin to amortize still, well, beyond that. So it has a very nice stead amortization schedule for us that fits well. So that’s kind of the corporate finance capital structure point of view. But I’ll also say strategically we view it as attractive as well. It allows us the first part of our funding sources we currently have some private placed debt; we’ve got bank capacity; and we’ve got Title XI debts. So we will look to diversify that. But also from a more strategic perspective, this will enhance our liquidity profile and allow us to really maintain strong financial flexibility to continue to pursue growth investments even as we enter this significant new CapEx space. So for all those really strategic reasons and financial corporate finance reasons, we felt like this is a very good deal for us and a good transaction.

Okay. Last question and I’ll jump back in queue. Joel, just to the point about redeploying that capital, could you talk about the internal hurdle rates but you guys target as far as deploying capital, what sort of return would you be looking for on that capital as you invest in the business?

Well, as market change, cap cost of capital changes. We think right now our weighted average cost of capital for this business is in the 8% to 9% range. So we have total thresholds as we look at all of our CapEx in excess of that. And so for these new vessels, we went back to be in excess as well. And we think this one is going to be in low double-digit. So I will say in the 10% to 12% to 13% range that’s what we think where we project out and forecast out this investment return to be.

Okay, great. Thanks so much for the time.

Thanks Jack.

Our next question comes from the line of Steve O'Hara with Sidoti & Company. Your line is open.

Hi, good afternoon.

Hi, Steve.

Could you just talk about the -- with SSAT and how long you expect this transition cost to continue? And then I don't know if you can kind of break this up, but I mean in terms of, what they were in the quarter and would you have been possible without that maybe it’s not as simple as that. And then in terms of the -- how should we think about cash taxes going forward with the deposit into the capital construction fund?

Okay, Steve. This is Matt. I’ll answer the first two questions and I’ll leave the question about taxes to Joel to comment on. The questions around SSAT were in part, we do see some, we observed one of the drivers and lower performance in the quarter was our underperformance at SSAT. I would say almost all of those costs that we recorded in the quarter related to the transition expenses as we open for created the single terminal from the multiple terminal turnover our operating beforehand. We do see again some trailing costs into the fourth quarter. We expect that those would be the largely behind us as we get to the end of the year and we could – we are going to be starting 2014 without all those transition costs. And so the results would have been far better earlier in the previous quarter, we were looking at about breakeven performance for SSAT without those expenses, we would have been about at that level. And then I’ll leave to Joel to comment on the tax question.

Sure. On cash taxes and the way to think about the CCF, we’ll get a tax shield basically for the – at approximate effective tax rate of 38.5% for the amount that we deposit into the CCF fund, Steven, with one caveat, if that triggers it down into, [ph] alternative minimum tax status level, then we wouldn’t necessarily get the full 38.5% tax benefit but it would a significant tax benefits which we’ll see this year as you look at our cash flow, up in the cash flow from operation, you’ll see a significant benefit of tax add back in defer taxes. And then on the balance sheet, what you see is an increase in our long-term defer tax liability and so effectively what’s happening, we’re getting the shield today and your trading future tax shields out in future for tax shield today. That make sense?

Yes, that helps. Thank you very much.

Okay. Thank you.

Our next question comes from the line of Ben Nolan with Stifel. Your line is open.

Okay, great. I had a few follow up questions. It relates to the new buildings and then also on $100 million. First of all, in the new buildings, I think you guys did a really nice job of sort of laying out with the vessel timetable is going to be like in the CapEx requirements and that’s why I think, one of the things that caught me off-guard a little bit was how little was required upfront? Is that typical of these type of transactions or could you maybe just walk me through how the negotiating process went in terms of capital outlay?

Yes. Hi, Ben. This is Matt. I’ll comment and then if Ron wants to add something that I had missed will do then. Our process just to start with the last part of your question, we’ve had a -- we sent our bit package around, we’ve been, we engaged a number of ship building entities that were interested in working with us on our project and certainly the price of the vessels and the timing of those payments were part of our own internal decision-making. But I would take part -- it’s not unusual to have a relatively nominal amount of contract signing and of course there is some mobilization by the yard but one of the factors that relates to the delay is the fact that the vessels themselves wouldn’t be delivered until 2018. Part of the reason for that is that, all of the yards are -- many of the yards we’re in discussion had fairly active backlogs of existing vessels owing to in part this resurgence of Jones Act shipbuilding associated with the energy boom and fracing. And so the yards themselves are busy on other projects and therefore won’t get started with the actual purchasing of the steel and bending and cutting until little further along in the project and another reason why the payments were delayed somewhat. And Ron, I don't know what I missed.

I think you covered.

Okay.

Nothing to add.

Okay, great. And then as relates to the vessels and the design specifically, is this your own proprietary design or is it, would it done on half of the blue print of an existing Korean design or something else?

Yes, Ben, this is Ron Forest. The design each shipyard that we negotiated with provided a design from the Korean partners. And it was based specifications that we required on what we wanted to ship to carry and speed. We gave a list of specifications and then they went to the Korean partners and came up with the design that was probably somewhat off the shelf and then tweaked to fit our requirements.

Okay. That’s helpful. So, it’s not a starting from the ground up process really it’s already somewhat pretty well established in terms of the ship design aspect I suppose.

Yes.

So and then my last question it relays and it goes back to what Jack was asking a little bit. On the $100 million debt financing, that seemed to me to be really pretty favorable financing terms both in terms of duration of the money and the interest rate and any amortization. I suppose that you guys think the same but could you maybe walk me through why you maybe you didn’t do more of that and then pay down some existing debt currently or just increase the size of the deal a little bit given the pretty favorable terms that you got?

Yes, Ben. It’s Joel. Thanks for the question. We basically pay down all the debt that we can that’s pre-payable without penalty. So what’s left on our balance sheet really can only be bought back and treasury has bought 50. So we are trying to replace that but similar to straight bond market debt, you got a buyback 50:50. So there is a real penalty to do that. So you’re right. This is very attractive long duration. We’re pleased with it but this is why we manage your balance sheet -- we had a really strong investment credit metrics. So we can access discount capital but it is the downside that we can’t take out previous capital issue in the past just because of the expensive pre-payment penalties.

Okay, that’s helpful. That does it for my question. Thanks.

Our next question comes from the line of John Mims with FBR Capital Markets. Your line is now open.

Can you hear me?

Yes, hi, John.

All right. I have a little problem with the phone. So let me -- thanks for taking my question. Let me shift focus away from the ships for a minute and talk about operations. When you look at ocean volumes across the board for the quarter down about 6% of revenue up 1%, how much of that GAAP was mix versus peer price improvement?

Yes, I don't think, it’s a combination of both. I think, let me just answer the question a little more indirectly by saying that in the Hawaii trade, we seek annual increases at the beginning of the year of modest amounts generally in line with our increases in underlying operating costs. And that’s what we did as in January of this year. And so that is certainly part of the increase. And again, the balance is really due to mix issues. We did not in the Guam trade for the last several years increase our freight rates due to the fact that Horizon had pulled out and for the time being, we felt, it was, we would wait on any future rate increases there. So and then the China trade, we saw actually freight rate declines as we’ve been mentioning because of the competitive dynamics and so it was a bit of a mixed bag but again, the two factors I would say mix was probably a slightly bigger driver than rate increases if you look at our total revenue package.

Good. That’s fair. Are you at a point now where you can start ratcheting at Guam or do you think that’s kind of stay relatively flat and is it enough to move the needle?

Yes. I mean our thinking and for those that have been familiar with our story for sometime or the story of Guam, there was a significant level of interest and potential growth in Guam associated with the relocation of then 8,000 marines from Oakland to Guam and a significant amount of additional infrastructure required to accommodate those marines. That has been pushed off. We now think that, that’s not going to happen probably before 2016 at the earliest or probably between 2016 and 2018. So we’ll certainly provide a more at the year-end call. We’ll certainly provide our views about 2014 but absent any large catalyst, we’re looking for relatively muted activity in Guam volumes at this point.

Okay. One more on pricing, in the China trade certainly when you look at index rates very volatile changing kind of week to week, some of your business is contract and then you’re getting a premium on all of it. But in the spot rate, even with that premium, are you seeing the volatility week to week or you able to is your pricing a little more stable?

Yes. So by way of context, about half of our business moves under annual contract that are generally done around April 30 to May 1 or May 1 to April 30. So that portion is relatively known at that period of time. The spot market, we have seen relatively low changes in our own freight rates week to week. We certainly monitor the spot rates but for our spot rate business, it tends to be significantly more stable especially during the six months a year when we’re at peak. And so, we’ve seen not very much movement. But again, we’re expecting, we’re not immune from the rate cycle. We’re expecting to move into the traditional slack season and our expectation is that our rates will moderate in the fourth quarter as they did in the previous year’s fourth quarter.

Okay. But still even in the spot business, it just, it’s relatively stable but still depressed year-over-year?

Our business is lower year-over-year at a rate level that is significantly higher than the overall trade.

Okay. Yes, perfect. Now switching, one question on logistics, can you segment out on the margin improvement, segment out, but that’s more net revenue side? What is more -- related to cost and obviously there is an industry headwinds across the board everybody seeing that. I’m trying to see if you’re able to buy better rate now or if you’re -- the 1.6% was more of a company specific cost issue?

Yes. I would say that we have seen like everyone else has seen margins under pressure and those have tightened. I would just attribute and we’re not immune from those market margin pressures. I would say that the majority of our increase relates to increases in our G&A and cost structure which we’ve been very actively managing.

Okay. That’s great. And then, actually Joel, let me ask you one question about ships and I’ll turn it back over. You said, the new ships will be the most efficient in the Jones Act which make sense, but can you give a range of how big that GAAP will be versus the ships you’re replacing like x percent of your -- per container operating expense savings not relative to the industry or relative to the ship you will be taking out in the market?

Yes, John. Well, let me first just clarify that these new ships will be -- we’re confident will be among the lowest in the industry. We don't obviously have debt on everybody and so I can’t say that this is going to be the lowest. So just make that. What we can say is in our own fleet on per TEU basis, we expect to have the lowest cost. And so that will be meaningful. It will be important source to the return thesis that I mentioned before. But, we’re not going to break out how much is coming from each of the individual component parts that we talked about but we will say that it will be all of them blended together will lower in a significant way across our per TEU delivered basis for containers in these new ships.

And this is Matt. I would just add those savings come in two forms as I said earlier. One is the fact as you point out that the vessels that are being, that will be put in, will be replaced are nearing the end of their economic lives and these new vessels will be much more efficient on a vessel per vessel basis. But the other and large benefit is that we’ll have to operate fewer of them because we built them large enough that would allow us to operate fewer of them to carry at the same cargo package compared to where we were previously. So both of those elements create the returns that make this investment work well.

Okay. That make sense. Actually I have one more on the new debt, am I right that we should see about $0.25 a year in interest expense after tax or is there some other debt coming off, I guess starting in 2014?

Yes. There won’t be debt come out because of this. So if you look at our -- if our share count stays the same at 43.3 million after tax, this will be about [ph] 16 in the year on an annual basis, just a $100 million at 4.35% after tax divided by 43 --

Yes, yes. That’s right, sorry. [indiscernible]. Okay, cool. Perfect. Thank you so much.

Okay, thanks.

Our next question comes from the line of Michael Webber with Wells Fargo. Your line is open.

Hi, guys, Don [indiscernible] for Michael.

Hi, Don.

I actually had a just one quick question about you mentioned that double-digit construction growth is a positive indicator for the Hawaiian container trade, is there a specific inflection point that we can look to or maybe another indicator that will indicate stronger outside for the Hawaiian economy going forward?

No. The data that we specifically look at are construction jobs done and building premise -- we’ve always cautioned on building premises can be a lot in ways especially quarter-to-quarter, year-to-year on building premise. So we continue to say construction jobs people actually working in Hawaii in the industry that’s going to be probably your best highest correlated variable to actual container volumes. Does that answer the question you asking?

Yes.

Okay.

That’s actually my only question [indiscernible].

Great. Thanks Don.

Our next question is a follow up from the line of Steve O'Hara with Sidoti & Company. Your line is open.

Hi, thanks for taking the follow up. I guess just in terms of the dual-fuel vessel, how does that work, I mean if you, I mean, can you, how often can you kind of switch back and forth beside on a fuel for a certain period of time or you can kind of switch back and forth?

Yes. This is Ron. I mean our goal would be to use LNG, if it was available all the time. But, we will have capability to switch back and forth. The ship will have fuel tank dedicated for heavy fuel oil tanks as well as distillates and LNG tanks. So we could switch back and forth.

Wow. So, you can potentially -- whatever [indiscernible] reported at that time?

Yes.

Okay. And then in terms of -- if I remember back to the pre-separation kind of the Investor Day or update you had in New York. There was a talk about Hawaiian infrastructure and you had a statement not spent on infrastructure for -- they kind to missed the cycle I guess and are we any closer to kind of getting that moving again, its not like the Hawaiian light rail or Honolulu light rail maybe moving again, I mean where are we in that cycle?

Yes, this is Matt, Steve. I would say there are four or five brands. We think about the construction opportunities in Hawaii, they held into several categories. One, of course, the other ones you’re pointing out which are the infrastructure which is, whether it’s water and sewer, it’s road way, it’s light rail. And we do see that in each of those cases, there are and again especially as the state finances continues to improve, there will be more spending on those public works type projects. And again as you point out rail is back on track and we’re encouraged by where light rail is now. The second is in military construction and there -- we continue to believe that while the overall DoD budgets are impacted by sequestration and other spending, we do over the longer term fuel encouraged by the importance of the pacific and we do think that both into Hawaii and Guam over time, there will be ongoing an important military construction that will take place for that part of the economy. And then lastly, its really in the area of private investment and that takes the form of residential high rise construction or Wahoo and other forms of remodeling and hotel either brand new hotels are a significant refurbishments and in that segment of the economy we are very much encouraged by what we are hearing to be especially in Wahoo relatively strong and healthy cycle in which – while there continues to be some surplus in building based on the current need that we are going to see a relative robust period of private investment construction. So its really all of those together as we think about the broader Hawaiian economy and what investments are going to be made over the next 5 to 10 years.

Okay. And then maybe just one last one, I know it is that the auto volumes was down pretty good anything – I mean it seem like you have been kind of suspect of volumes were kind of report or kind of maybe happily surprised in the past – recent past, is that just kind of returning to normalization there?

Really are two the way we think about the auto market, there are two pieces, one are the retail sales of new cars and manufacture movement of those cars. There we have seen relatively good improvement in year-over-year auto purchases relatively consistent with what we are seeing in the mainland and other U.S. markets. The bigger mover of the needle for these auto shipments are really the timing of rental car replenishments and each year depending on how the holidays fall and the agreements reach between the manufactures and the rental car companies, they tend to move in different quarters but overall not by dramatic amounts. That is over time their relatively stable although we have noted that from year-to-year they tend to move in slightly different periods. But overall, we don’t – those were not significant profits especially the rental car refurbishments of new manufacture cars are rather significant contributor to our operating results in an any given quarter.

Thank you very much.

Our next question is a follow up from the line of Jack Atkins with Stephens. Your line is open.

Yes, guys. Thanks for taking my follow up question. Just back to the ships for a moment, I’m sorry, if you have already answered this. But you intend to see Title XI financing for those vessels, and sort of how does that work, do they have to be delivered to you before you can finance them through that avenue can you just talk about that for a moment?

Sure. We made no decision on Title XI financing at this point Jack. And you have any time to do Title XI financing, you got to get the application underway but we advancing tends to occur in close upon delivery. So we have to start the application process relatively soon. But it wouldn’t be something that we come to conclusion and we fund it until the delivery times, we have got a number of years. So but at this point in time, we have made a decision one way or the other.

But the only thing I would say is that based on the way that we are seeing the world now, I think Joel is right at preserving our ability to do that. But the way we see it at this moment these vessels are largely going to be financed through this $100 million financing that Joel mentioned and operating cash flows over the next few years before the delivery of the vessels.

Got you. But generally speaking Title XI financing would probably be more attractive in terms of a coupon rate then down you get to the public markets?

Not Jack, not dramatically.

Okay.

Little bit, but remember its secured. And so what 21 security does in your capital structure is it shows off unsecured capital. So the rest of your balance and we talked to our lenders about this a lot, the rest of your balance between a little bit some security if its not much because otherwise you lose your investment grade type profile for your unsecured debt, which is a criticail piece for us.

Okay.

And the last point I would make. This is Matt. The last vessel that the Model A, which is the last of the Aker carrier vessels that we acquired in 2006. The private placement financing net-net all in was actually less expensive for us versus using Title XI on a NPV basis. And in part because of our preference to stay investment grade credit metrics and if you are in that position then that there is not as dramatic an incentive to use Title XI relative to more marginal borrowers.

Okay. That’s great. That’s very helpful. Thanks for the time.

Thanks Jack.

(Operator Instructions) And I’m not showing any further questions at this time. I would like to turn the call back over to Matt Cox for closing remarks.

Okay. Thanks for all of your interest today. We look forward to catching up with you at our year-end call and Aloha. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a good day.