Thank you for standing by. Welcome to the Aqua America Fiscal Year 2007 Earnings Conference Call. Today's conference is being recorded. At this time, it's my pleasure to turn the conference over to Kevin Brophy. Please go ahead.

Thank you, Dwaine. Good morning everyone, and welcome to Aqua America's fourth quarter and year-end 2007 earnings conference. If you did not receive a copy of the press release, you can find it by visiting the Investor Relations section of our website at www.aquaamerica.com. There is also a live webcast of this event available on the site. Presenting today is Nicholas DeBenedictis, Chairman and President of Aqua America, along with David Smeltzer, the company's Chief Financial Officer. As a reminder, some of the matters discussed during this call may include forward-looking statements that involve risks, uncertainties, and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. Please refer to our most recent 10-Q, 10-K, and other SEC filings for a description of such risks and uncertainties. During the course of this call, reference maybe made to certain non-GAAP financial measures. Reconciliation of these non-GAAP to GAAP financial measures are posted in the Investor Relations section of the company's website. At this time, I would like to turn the call over to Nick for his formal remarks, after which we will open up the call for questions.

Thank you Kevin. Good morning everyone. We start with a broad overview and then get into some specifics regarding the year and the quarter. I would characterize 07 as a good year, not a great year. Cleary, rapid slowdown and challenges in the second half of 07 provides us some of our organic growth towards our 4% goal, somewhat erratic weather this year. Good weather in some of the states, heavy rains in Texas. Great weather throughout the [ph] Florida and Texas... excuse me, in North Carolina and Florida, which cut sales, where we had and inordinate amount of maintenance due to the colder than normal weather. It's a biggest disappointment that affected earnings and affected us to move reorganize around, which obviously is a disappointing rate case in Florida, but that's somewhere between $0.02 and $0.03 in our earnings. Overall, we are $0.71 versus $0.70. Once again slowing dilution, net income was up 3%, and earnings were up penny, $0.71 versus $0.70. The slow in division downed to now about 1.5%, and we expect that to continue to be down as I'll get into later in presentation. The quarter was actually a solid quarter, when we take up some of what I'll call noise and this is a non-accountant speaking, so forgive me. But in 06, we had really two $0.01 gains that were one-time. One was regarding our Texas rate case and that was based on the fact that the ALJ decision came out in late 06 is still not finalized. But the preliminary decision came out, and we account both of what we are reserving and felt that the decision of the estimates being accounted for a next gain about a penny, again obviously one-time. And the other was another penny that was reduced full, because we…

Sir. This is your operator. It's just... mic, if you would move it a little closer, mic will be a little clear, but and we are hearing you. Please proceed.

Can you hear me better now?

Yes. Thank you.

So, on the capital side, I am very, very pleased with the climate we built, stable climate we've built. And I think that bodes well for the future and for the controllability of our program going forward. Now, the next major thing we did this year, we changed out some people in our organization. We build a whole new treasury department. And I would say there was one major accomplishment. This was our major accomplishments for the year. First of all, we had a number of offerings, and in those offerings S&P reaffirmed the fact that we are having AA minus secured debt rating. They said that our senior secured first mortgage bonds are one notch higher than the corporate credit rating, which would be an A plus. And that we have a recovery rate of 1 plus, which means that you are pretty sure getting your money back, you borrow money... you borrow money from them. The other is the risk profile, which ranges from a low of one to a high of 10 of corporation will rank to two. So, I think we are very pleased with the stability, especially for our debt lenders, our interest... excuse me, debt holders, and the fact that we are secured and we are running this business in a secure way. We had an enormous year of refinancing financings to get started of. An example, this year we did over 205 million in new debt. The average price using tax frees, using low interest state loan into 4.92% that allowed us to lower our embedded cost of debt on 1.2 billion. I think it's our total debt now, from 5.72 to 5.58. So, we are clearly over the next decade or two in great shape from the standpoint for shareholders, and for…

Very good. [Operator Instructions]. Our first will come from Heike Doerr with Janney Montgomery Scott.

Hello everyone can you hear me, okay?

We can.

I am hoping may be this is a question for David Smeltzer. If we can iron out what the impact of the Fort Wayne condemnation would be on PP&E and revenue and operating expenses. What percentage of revenue we could see a decrease, how much the operating expenses were relative to the base. Can you put some numbers around this for us, Dave?

I will give you a general answer and Dave can either give you a specific or quality fact like that. The Fort Wayne north system was losing money. So, it tells you that we are going to do better without it until we got rates than before. We have put a lot of capital in. We were arguing over how much we owed them for the sewer disposals that we used there plant for our customers. The range was we told them we felt we owe them 300,000 day excess for 2 million, and we settled it 450, which was reserve. So it takes a lot of those question marks out now. So for 08, it's going to have a positive effect, because we are basically getting money for an O&M contract, which is breakeven at worse. And we also don't have the losses incurred through 08. On the other hand, if we had gotten a 100% rate increase, then it would have been making money. Dave will give you the specifics for 08 and it's really is relevant for 09, because they have taken it Supreme Court rule 352 [ph] in their favor.

Yes, I don't have handy the revenues or expenses.

Okay.

But we feel great, actually improves the results when that go well, but I can get you those detail.

Okay, we can handle that offline. And Nick maybe as a bigger picture customer growth question, I know that the target had normally been 4, 7, 10, 5. As the company gets bigger and 4% customer growth is difficult to attain, do we scale back and think that maybe 3% or 2.5% is a more realistic annual run rate.

So it's the IBM problem although we are nowhere near the size IBM, it's tougher to continue to grow on a bigger base, but I am still optimistic like there are so many out there that... and I think the new part will be the fact that municipalities are going to tighter now and maybe be looking again at selling their systems, where... And interest rates were so low on tax free and revenues were coming in because tax revenues and property tax increases. They were less willing to look at, where they should trim costs. And of course that's one of the areas assets sales would be one of the area. I do think you are correct, I am wrong and housing market stays in the tank for a year and a half, different story. Because I mean we do depend on 1% to 2% actually more in North Carolina and Texas of our growth being organic growth. So I'll answer it with if we can get the housing market back to where it was in even 06, not even the 05 peak, I am comfortable for if. Because it stays down consistently for a couple of years probably will be tougher to head for.

Okay, that's helpful. And one final question; when we look at this 250 million CapEx you expect to spend next year, and now all of the cleaning up of the systems is taken care of; how does that break down regionally?

Well, regionally it's mostly in Illinois, Pennsylvania, New York and New Jersey. Ohio is pretty steady. We have a plan to build in Ohio and some price that is not excess of an infrastructure although they do have a disk type programs called sick in Ohio. But at the place towards the capital spend slows down is in the south, because we fix things now and there was an inordinate amount of capital spend South over the year that we are not getting any return on and that's our goal going and get return in the south.

Okay, great. Thank you for your help.

Our next question is from Jim Lykins with Hilliard Lyons.

Good morning everyone.

Hi Jim.

First of all with Florida, the rate case were going to file down there; will be for the same amount as to one that you withdrew last year and I am also wondering I know there has been some issues with the regular, just curious as to whether you've been able to make any in roads with the regulators in that stage?

Well, we did successfully... I would say we have been in constant contact. And we are working with all the parties this time. Last time we had not touched pace with everybody, meaning the people flooring against this and were at the very final stages. And the withdraw of the case, it wasn't just as easy as just dropping case. We actually have a good refund back, which is not an easy task with the new customer information system. We also committed to public meetings and public phone calls, which we accomplish. And now we are doing some town meeting, which has been very helpful for us. We were hearing what's on peoples mind. And that will have to be done and that should be done shortly, before the old case can be shut down. We hired a person, who actually came from the Florida Commission, who is now our rates person in Florida. He has given us a lot of insights and lot of experience that we are going with. And we think that we are going to come up with an acceptable rate plan when we file in the second quarter to come up with a way to... we don't have 82 different systems we have to file for each time, which would make investment in Florida very difficult, because accounting and administrative cost overwhelmed the great case needs for service and for capital needs. So we are lot more optimistic and probably no a lot more at this time around. And it was about this time last year, where we are filing case that was ill -fated. So we are a year behind in Florida. Any... your first question was what will be asking for. I can't imagine that would be any less than last year, because we've actually... and that last year was 7 million. As we put more capital Florida we've put our automatic metering and then every thing else, so that we improve services to the customers. And we could justify the 7 million last time, so I can't believe it be any less. I think probably before the final decision is made though, it won't effect 08 earnings, it will only effect 09.

Only 08 earnings, not 09.

We file it in 08, but it's going to take at least six to nine months. I don't know what the rules are in Florida specifically how many months during a process they take. But I can't imagine having any effect on 08 earnings. So it's all back-end loaded in 09.

Okay

As there are by the way many of the cases, The 67 case, the biggest one 67 million in cases in nine out of 13 states, biggest being Pennsylvania, none of these will be actually coming to fruition before mid to late summer, most of them late in 08. So the biggest impact of the thought is going through. It's still going to be late 08, early and mid 09.

Okay.

Your quarterly model, I mean it's all going to happen in over a year of period, but where it bulges in the quarter, the quarter is all dependant on the litigation, time period, FDA files. And when you give you that separate list of the year, specific model, we can say it will be interested on. [ph]

Okay, that will be helpful. Regarding acquisitions and I think you mentioned something about some opportunities with municipals and how much money to do there that make us with the customer growth there. I am just wondering if you can give us feel for what you seeing out there right now. And if you think that at least in 08 it will be somewhat to what we have seen historically on the acquisition front.

Well, we'd like to do fewer, but bigger as some of these systems have been very small. It takes a lot of work to do any of them, you have closings and you have to go through the regulatory approval, but you take them as they come, because it's not like we can say we are ready to buy now, but they are ready to sell. So it's not a completely under our control, but we just had a meeting with our corporate development department before our Board meeting yesterday. And they think pipeline is full and they have a lot of... and this time a little bit larger. Now sometimes they are harder to close, but they are pretty confident that we can keep up the pace like Heike asked about 4%. Usually that's 2.5% of acquisitions and 1.5% to 2% of organic growth. We are asking our team now to come up with 3%, bar actually went up; we are not doing some bigger deals.

Okay. And one last thing, and I will let someone else ask questions. The economics stimulus that you mentioned; can you just maybe give us some color on what you think the impact would be from that?

For year 08 capital spend in the water business if you are private held utility, a tax rebate for... so 35% is our federal taxes, Dave, I guess.

Yes, it's actually bonus depreciation, not unlike that which was enacted after 9/11.

So if all 250 would be eligible, so multiply 250 times 35% and that's the amount of cash we would get by not paying taxes.

Okay.

250 times the 50% bonus depreciation and ten times.

That's right.

And that would only be reduced by some 30, 40, 60 million of the 250 that maybe financed by the low interest tax free and they therefore not be eligible for the bonus depreciation.

So if this 250 multiplied 250 times 50%, time 35%?

Right.

Okay, so 125 times, 35. So you can see it's pretty healthy there it's 30... in the $30 million to $40 million range.

Okay.

It's actually... we are generating more cash with the EBITDA really means that we will able and Dave that because you are paying less taxes for the equity side, retained earnings.

It's not an income item.

Okay.

They are just impairment [ph] effect.

Okay. So we are... we are seeing less need for equity too Jim in our analysis that it did a year ago at this time with the five year plan.

Okay. All right, thank you gentlemen.

Our next question is from Tim Winter with Smith Moore. Timothy Winter - Smith Moore & Co.: Good morning Nick.

Hey Tim. Timothy Winter - Smith Moore & Co.: I just have a couple of questions on the O&M expense line. You have talked about new computer system and three new customer information systems and kind of a wash out with the bad debt reserve. Can you quantify at least to some degree how much that impacted the O&M line?

Yes, I can give you exactly... will call you back, 1.7 million, that was bad debt. Yes, bad debt was 1.7 million [ph] more, but we also have to quantify the increased operating expenses year-over-year, which will call you back on Tim, of the new call centers versus how much we had staff at the old. And the hidden dollar in there is that fact that we couldn't reduce the local staff until the new staff overlap with them and the strain. And so here is an example: we have people in our Kentucky office and our Dunhill office and then our Woodhaven office or in Illinois. We probably had 10 people entering those. We eased up a call center and happened to be in Kentucky, one of our three regional call centers, where we hired 25 people. They are handling the whole country, all 13 states. But we couldn't reduce the ten people that were local until the others got up in the running and the systems are up and running, so we had that overlap for the probably two quarters, which it will go away offset. Timothy Winter - Smith Moore & Co.: Okay. And then as far as this pruning process goes. Did you take a gain on the Virginia sale, and if so how much? And what is roughly the price to book are selling... that you sold Virginia for and what the $16.9 million represents as price to book?

Okay. Well, let me start with the Virginia, because it's a 69 is Fort Wayne. In Virginia we sold for a little under 1.5 million average purchase price negotiated it was 2.5 times our book value if not more, almost three times. And therefore that difference after we expense the lawyers and all that was put as part of the way we accounting a system does it. If you take at reductions from O&M.

Yes,since it's been a sale of an operating asset, it needs to appear in the operating section of the income statement up top. And since it's relatively immaterial, we incorporated as a deduct in line O&M expense.

It's that 2.5 times book. Timothy Winter - Smith Moore & Co.: It's always not on that item on the press release that's gain on sale of other assets?

No, it's not; that's the security sale. Timothy Winter - Smith Moore & Co.: All the $0.5 million that is Basin Water?

Basin Water, yes. Timothy Winter - Smith Moore & Co.: Okay.

Mr. Winter, any follow-up question? Timothy Winter - Smith Moore & Co.: Right. And then Fort Wayne?

Fort Wayne, the way... because we are still in court debating what the final cost is. Timothy Winter - Smith Moore & Co.: Right.

It's impossible to book the gains. I can tell you 69 covers our book value. We think it's worth a lot more. Timothy Winter - Smith Moore & Co.: Okay. And can you give any kind of timeframe? I mean could this go on for years or...

The court... the Supreme Court ruling was about 6 months in waiting for the bearing on the scrutiny and then took them a year 3 to 2. This is not at Supreme Court; this will be at Allen County Court. But if either party after Fort Wayne disagrees with that court, then you have access to the Supreme Court. So, I can't tell you what the final is going to settled. Whether we will both agree with what the jury says, the judge says, it's a guess. I could argue probably a year ago. Timothy Winter - Smith Moore & Co.: Okay, Thank You.

Our next question is from Steven Gambuzza with Longbow Capital.

Good morning.

Good morning, Steven.

If you were to receive 100% of your requested rate relief, the pending right now, just curious if you can give me some approximation of how much would flow through in 2008 based on the timing of expected decisions?

Well, behalf of Pennsylvania, you want 100%?

Just if you've got the amount that you referenced in the press release.

Actually 67, I'd say 40 of it half year 20, 65% of 20 will be 12, so $12 million in top line revenues.

Okay, is that just Pennsylvania or is it a full amount?

That's a $12 million net income, there because I already took 35% on it. Yes, you asked for 100%; Pennsylvania we asked for 40, assuming we get it some time this summer, I just made broad adjustment half a year, and since all the expenses that we have asked for are already the expend that there is no more expenses once we get paid so it all falls to the bottom-line on today's run rate.

Okay. And what about the other $27 million that we released outside the Pennsylvania?

New Jersey we probably won't see until late fall maybe winter, maybe a month. New Jersey's filing was for $7 million. And the Illinois ones are due in 11 months filed in December. So they won't be out for November and the... with the Illinois ones total is about 4 million. It's a one month $4 million, 35% of the taxes and that goes to the bottom-line, that's going to roll in the next year for 11 months then.

Okay.

Right now versus most of this revenue from REITs are going to really come... little bit... a little a lot half the year at Pennsylvania is a lot cross, but the rest is all going to be really back end loaded in to 09 with the two big cases still to file in Florida and North Carolina definitely won't show up in 08, they will all be in 09.

Okay. And then I was just wondering if you could comment on the outlook for O&M expense in Ohio. I think you mention that you expect some moderation back force of 3% to 4% growth rate. I am just wondering if you could maybe talk about risks and opportunities associated with that given potential opportunities better or given the inflation trends that everyone in the industry isn't feeling broadly, where are some risk of the upside might be?

The risk of the upside is more people needed than what we have said. We think we are going to be flat to down in number of costs. This year we will up considerably based on what Tim Winter asked me about this about how many people did we add for the customer service in our IS [ph] department. So we would get to that, but that should not be and that's the biggest part of our factor, I mean people is 40% of the budget, O&M budget. Healthcare we have locked in pretty good rates for all of 08, but shouldn't be a major increase and that maybe 3% or 4% and we have had people pay to their benefit, which is not normal in the utility business to cuts back on the... moderated the increase, hence it is hard to figure at this point, I mean it's absolutely based on how well the stock market values. But at this point, the retention could be pretty bad; and we already are putting money in each year for expensing pension increases. Insurance is always a risk although we are now on an accrual basis on a year or 12 months and will be radical quarterly. We don't have any major litigation that we have noted in the K, but we are tripping those every day. I'd say a car accident, something like that what would be. And in tower, Texas is a very valuable in tower price and the obviously big tower users in there. Most of the states, we figured increases. And on the positive side as we sell these systems, I think we will see that those systems have higher expense to revenue ratios and systems were keeping. So that could be a moderate risk.

The $250 million of CapEx, I know this is... I am shifting gears from thought give out CapEx versus operating costs. But I would imagine a substantial portion is capitalized labor associated with the pipe refurbishment and other activities, is that fair?

That's fair. We try and keep that pretty steady, so do not want that... as long as the total spend is steady the amount of capitalized labor remains steady, I guide you that right. I don't know what the exact percentage is, probably in the teens but yes, we use own workforce to do some of the work on capital which means that their labor gets capitalized against that project. Then it's recovered in the next rate case.

Okay, thank you very much for your time.

Thank you.

Our next question is from Ryan Connors with Boenning & Scattergood.

Good morning Ryan. Ryan Connors - Boenning & Scattergood: Morning.

Good morning Ryan. Ryan Connors - Boenning & Scattergood: Yes. I want to kind of go back to the topic of CapEx budgeting for a minute and just kind of more conceptually get your thoughts on the strategic outlook or capital deployment. You have talked Nick about the sinology of with RIET where you are sort of now in a mode where you are evaluating and prioritizing among your different assets and territories and what I am wondering is in some of the states where there is at least some uncertainty as to whether you can get a decent return on capital on a timely fashion, how do you manage the process of capital deployment there as it pertains to capital improvement projects, in other words --

Great question. Ryan Connors - Boenning & Scattergood: In theory you would want to invest where you know you can get a good return and you got a good confidence that you can do that in a timely fashion, so do you hold back on some of the more proactive projects in the states where you have concerns about the regulatory climate.

As of '07 your answer is yes. And that was one of the issues both with our new computer system and with the reorganization of rates and spreading the responsibility of time to tie your capital spend into what you can recover in rate including that responsibility on the President of that state, by measuring ROEs so you don't get too much lag, there's major organizational shift we made. Dave now has a program that we call the quack analysis. Ryan Connors - Boenning & Scattergood: Can you afford the capital?

Can we afford the capital? On every system there is a rate base so that we decide okay you want to spend this money as part of our 250 when will you get the money back and what kind of rate case will it need and if it doesn't seem realistic we cut back spending. So in some our states... there been a shift in the '08 capital budget although you are seeing the same number 250 that we told you about for couple of years, more of it has been shifted to states where we were ready to go in for rates or state that have a surcharge program. Ryan Connors - Boenning & Scattergood: Okay and so when you look at the states that you laid out where there is going to be a lot of spending PA, New York, New Jersey, Ohio those seem to be states where the regulatory climate is fairly favorable. And so you are saying that that's not a reaction to some of the issues that you have seen in the south, it's more just that the improvements have made in the south and its nothing really not a lot more to do there.

Both because as far as the engineers in the south have plenty projects there.

Right.

I would say it's not Ohio, its Illinois that brings us more money. The south has fixed those immediate problems there whether we get it back in rates or not we had spend the money because the environmental agency will sue this and service was down. Now we are in the more of discretionary phase where we are now saying we will give you the money to spend if you can show you will get quick return and the regulators wants you to do this.

Okay, that's helpful thanks.

We do have one question remaining. [Operator Instructions]. Our question is from Ajay Jain with UBS.

Hi, good morning. Maybe I will address my first question to Dave. Could you just confirm how much cash you have on hand right now and what the remaining proceeds are on the forward purchase agreement, how much of that is available for you to draw down on at this time.

Yes, cash at the end of the year, we would see in the balance sheet when we file it today is about $14 million and funds restricted from construction activity which is the un-drawn portions of the tax free debt that was issued in the last year or so is about 77 million. We expect to bring a large portion of that down during 2008 as part of our financing.

Okay, so on that basis and I guess taking into account your CapEx budget for this year, I mean if you like you may need to raise any additional equity in 2008, can you comment on that at all.

We don't have any new equity plans for 2008 other than the standard equity that we will bringing as a matter of course with our drip program.

Okay.

Well Ajay we may look and this is Nick. We may look at all the alternatives provided under that forward equity provision because you know that is such a flexible provision, it says that could we put to us this August, we don't have any yield, if that's the case but it also gives buyback provisions and everything else. And obviously the value of the stock that UBS is holding in our account is let's say $23, $22.30 which under the current market conditions we are in the money, I guess you could call.

Got it, okay, and Nick can you give any more specificity on some other drivers behind the revenue deceleration last year in 07, what's like sequentially the top line growth decelerated pretty consistently each quarter and that's been and obviously you have got the regulatory set back in Florida and you talked about the impact of housing and erratic weather and I know there is always a lot of moving parts with your results but are there any major issues based on what you are seeing in terms of underlying consumption fronts

Yeah, the acceleration if you look at the slope of the increase more than the total so let me qualify it that way. Your acceleration was more in the first half than the second half because Pennsylvania that's rate case in June or July or August I think of '08 excuse me '06. So your first two quarter comparisons in '07 were huge 11% to 12% on our biggest day. Adding to that New York water which was an additional 8% or 7% right of the back near quarter we did a run rate against 23 million in revenues on that 500 base and there they were heavy in revenues up till the fourth quarter. So that was on of the regions for the deceleration of fourth quarter. The third I would argue is that the most of the acquisitions that you did, came in very late in the year so there was really no unlike other years where its been a steady... you got average 4% or 2% over the whole year. We didn't have that advantage in 07, as a matter of fact we didn't get sequenced [ph] until mid-year and that was our biggest one and Antino [ph] was late in the year and so on, so whether really there is much comparison that next year will be a better comparison than that

Okay and just in terms of the situation in Florida assuming the discussions are back on track and Nick you mentioned that '09 is your anticipated recovery period I just wanted to clarify if there is a retroactive component to that or should we except that the write-off is basically permanent as it relates to '07 and '08?

Very seldom do regulators ever go retroactive. We call it retroactive rate making and although we could argue it is fair I don't think we get it anyhow so I don't think we're asking for it. So I think that is lost forever.

Alright and just lastly Nick I think you mentioned in your prepared commentary you characterized the tax provision as a little bit of a headwind and that was based to a large degree on Sea Cliff or may be I misinterpreted but it looks like the tax rate was actually lower in '07 and it was materially down year-over-year in the fourth quarter up to 36%, is there anything I am missing in terms of the implications of...

You know the federal tax?

Yes.

Maybe I have to help you with that.

The federal inactive tax credit for the direct term of sketch me right now for the production credit was enacted a couple of years ago and at 3% and its double now in 2008, so you will find that the biggest chunk of the reduction in our effected tax rate is related to the doubling of the federal production credit.

Okay, that's another cash generation for us.

Yes, okay, thank you very much.

And where the cash business is.

Our next question is from Selman Akyol with Stifel Nicolaus.

Thank you. Couple of quick questions if I may. First of all, in terms of the revenue in the quarter can you say how much of that was acquired and then as well as O&M how much of that was --

Some of the acquisition of the increased items 13% year-over-year, 55% was acquired in Sea Cliff, New York Water Manteno and the other small acquisition.

But that's looking at '07 over '06 I am just looking at the quarter.

Oh, for the quarter. I can't, I'll have to get back to you on that. 9% -- most of the quarter this is what I said earlier the rates really didn't really help us in the first half of the year. For the quarter it was revenues grew 9% or 12.2 million, 7.6 of that was acquisitions.

Okay.

Bulk of it was acquisitions. New York Water and Sea Cliff and then the other 4 or some million were the rates.

Okay and when I look at the O&M line how much of that was up to the acquisitions.

See those 8.7 million acquisitions were well over 3 million of that, insurance was 1.8 million, we threw up the insurance that was the big hit in the fourth quarter. And post retirement benefits for million which was the... what I mentioned will get to factor in rates to see a year end through up.

Got it. And then just one other question, you had North Carolina and Florida sort of file I guess net part of the 67 million total, can you break those two out?

North Carolina and Florida are not part of the 67.

Okay.

They are in addition and I am going to say that Florida is just on my last filing you could judge that it's a year later and we have put more capital and expenses went up. We thought we justified 7 million last time. So that could be the floor and on the North Carolina, I just don't have the number but I think its high single digits. Because it's a bigger state and we haven't been in for a number of years and we put a lot of capital in North Carolina to figure $7 million, $8 million, $9 million.

I got you. Do have a number for Ohio?

Yes, Ohio will be negotiated with... we already got one rating freeze in the first quarter that was 400,000. We had the late counting rate increase which is part of the $67 million... and that's in final stages of negotiation now we are hearing it. In fact we are hearing it since last night. And the other one is the start, the million which we locally negotiate and that's probably about 0.5 million to 0.75 million.

So in total approximately $4 million for Ohio?

Yes.

Okay, Thanks so much. Operator: And our final question from Vishal Katriwal [ph] from Stanford Group.

Well Nick and Dave how you're doing?

Hi, how are you Vishal?

Doing good, just a quick question about the Fort Wayne system, the litigation they are offering 16.9 million Nick, what is the fair value according to you?

That's the fair value of... I think because of the litigation. The lawyers told me I am only allowed to say I apologize but I am only allowed to say that's more than our booked value. You see we're going to be negotiating in court.

Okay, and again like the difference between book value and what you get in after the litigation, will that hit the O&M, line just like the Virginia systems or will that be a separate line item.

We would expect, Vishal that any gains at the end of the Fort Wayne negotiation might be more significant than those gains which are realized in the past. And if so we likely have a separate line in the operating section to break that out. The gains historically have been somewhat immaterial and that's why they have been included in the O&M line

Okay, that helps a lot thanks.

And with that I would like to turn the call back to management for closing comments.

Well I think the core training program and all the questions we have got and we will clarify much more individually with people. It's going to be part of our ongoing story, its going to be generating cash and equity for the company which means less need for new stock sales which should be less diluted in the sense of what's happened in the past and I think we will try and clarify it on the accounting stage just mentioned. So its very clear what we bring in but I consider that's absolutely part of our ongoing business model now as to how we are going to achieve our goal of 4.7 to 10.5. So I appreciate all your time, it was kind of granular but I thought this was an important lesson for the year end involve. Thank you.