MDU Resources Announces Record Earnings
BISMARCK, N.D. - Jan. 28, 2005 - MDU Resources Group, Inc.
(NYSE:MDU) announced financial results for the year ended Dec.
31, 2004, showing consolidated earnings of $206.4 million,
compared to $174.6 million for 2003. Earnings per common share,
diluted, totaled $1.76, compared to $1.55 for 2003.
Highlights for 2004
- Earnings per common share increased 14 percent to $1.76
- Record consolidated earnings of $206.4 million, up from
$174.6 million
- Reaffirms 2005 earnings per share guidance in range of $1.70
to $1.90
Earnings for 2003 included a $7.6 million after-tax noncash
transition charge, reflecting the cumulative effect of a change
in accounting for asset retirement obligations as required by the
adoption of Statement of Financial Accounting Standards No. 143.
"Our diversification strategy continues to show excellent results
with another record year of earnings," said Martin A. White,
chairman of the board, president and chief executive officer of
MDU Resources. "Our natural gas and oil production segment had an
outstanding year. In addition to benefiting from the strong
pricing environment, we increased natural gas production and
added to our reserve base. Our independent power production
business also saw significant growth in 2004, with new operations
both domestically and internationally.
"We are excited about the future and our opportunities to provide
the products and services that are essential to our country's
infrastructure," White said. "We look forward to continuing to
help build a strong America."
In its Jan. 10, 2005, issue, Forbes magazine named MDU Resources
to its Platinum 400 list of the best big companies in America.
The magazine's criteria for the list include such things as
corporate governance and accounting practices, as well as long-
and short-term sales and earnings growth and stock market
performance. This is the fifth consecutive year that MDU
Resources has been on the list.
ANNUAL PERFORMANCE SUMMARY AND FUTURE OUTLOOK
The following information highlights the key growth strategies,
projections and certain assumptions for the company and its
subsidiaries and other matters for each of the company's
businesses. Many of these highlighted points are "forward-looking
statements." There is no assurance that the company's
projections, including estimates for growth and increases in
revenues and earnings, will in fact be achieved. Please refer to
assumptions contained in this section as well as the various
important factors listed at the end of this document under the
heading "Risk Factors and Cautionary Statements that May Affect
Future Results." Changes in such assumptions and factors could
cause actual future results to differ materially from the
company's targeted growth, revenue and earnings projections.
Business Line Earnings Total 2004 Earnings Total 2003
(In Millions) (In Millions)
Natural gas and oil
production $110.8 $63.0
Construction materials
and mining 50.7 54.4
Independent power
production 26.3 11.4
Electric 12.8 16.9
Natural gas distribution 2.2 3.9
Pipeline and energy
services 8.9 18.2
Utility services (5.6) 6.2
Other .3 .6
Total $206.4 $174.6
On a consolidated basis, the following information highlights the
key growth strategies, projections and certain assumptions for
the company:
- Earnings per common share for 2005, diluted, are projected
in the range of $1.70 to $1.90.
- The company expects the percentage of 2005 earnings per
common share, diluted, by quarter to be in the following
approximate ranges:
- First quarter - 10 percent to 15 percent
- Second quarter - 20 percent to 25 percent
- Third quarter - 37 percent to 42 percent
- Fourth quarter - 23 percent to 28 percent
- These projections do not take into consideration any
potential effect from recent events related to the Brazilian
electric power sales contract.
- The company's long-term compound annual growth goals on
earnings per share from operations are in the range of 6 percent
to 9 percent.
- The company anticipates investing approximately $445 million
in capital expenditures during 2005.
- The company will consider issuing equity from time to time
to keep debt at the nonregulated businesses at no more than 40
percent of total capitalization.
Natural Gas and Oil Production
Earnings at this segment were $110.8 million for 2004, compared
to $63.0 million for the previous year. Earnings for 2003 include
a $7.7 million after-tax noncash transition charge, reflecting
the cumulative effect of the accounting change mentioned earlier.
The earnings increase in 2004 was the result of average realized
natural gas prices that were 20 percent higher and realized oil
prices that were 25 percent higher than 2003. Combined natural
gas and oil production increased 7 percent, primarily from
enhanced natural gas production from operated properties in the
Rocky Mountain region. These positive variances were partially
offset by higher depreciation, depletion and amortization expense
as a result of increases in rates and production, and by higher
general and administrative expenses. The company's combined
proved natural gas and oil reserves increased to 556 Bcf
equivalents, a 6 percent increase over 2003 reserves.
This past October, Fidelity was recognized with a major
environmental stewardship award from the Interstate Oil and Gas
Compact Commission. Fidelity earned the award for its sponsorship
of a three-year soil and crop testing program in conjunction with
coalbed natural gas.
The following information highlights the key growth strategies,
projections and certain assumptions for this segment:
- The company is expecting to drill up to 500 wells in 2005,
dependent on the timely receipt of regulatory approvals. Delays
in receipt of drilling permits are affecting producers throughout
the Rocky Mountain region.
- In 2005, the company expects a combined natural gas and oil
production increase of approximately 6 percent to 8 percent over
2004 levels. A portion of this increase is predicated on the
timely receipt of various regulatory approvals.
- Estimates of natural gas prices in the Rocky Mountain region
for February through December 2005 reflected in the company's
2005 earnings guidance are in the range of $4.25 to $4.75 per
Mcf. The company's estimates for natural gas prices on the NYMEX
for February through December 2005, reflected in the company's
2005 earnings guidance, are in the range of $5.00 to $5.50 per
Mcf. During 2004, more than three-fourths of this segment's
natural gas production was priced using Rocky Mountain or other
non-NYMEX prices.
- Estimates of NYMEX crude oil prices for February through
December 2005, reflected in the company's 2005 earnings guidance,
are projected in the range of $35 to $40 per barrel.
- The company has hedged a portion of its 2005 estimated
natural gas production. The company has entered into agreements
representing approximately 35 percent to 40 percent of its 2005
estimated annual natural gas production. The agreements are at
various indices/prices and range from a low Ventura index of
$4.75 to a high NYMEX price of $10.18 per Mcf. Ventura is an
index pricing point related to Northern Natural Gas Co.'s system.
- This segment has hedged a portion of its 2005 oil
production. The company has entered into agreements at NYMEX
prices with a low of $30.70 and a high of $52.05 representing
approximately 45 percent to 50 percent of its 2005 estimated
annual oil production.
- For 2005, the company may hedge up to 70 percent of its
existing natural gas and oil production that qualifies for
hedge accounting, based on established pricing criteria.
Construction Materials and Mining
Earnings for 2004 for this business segment totaled $50.7
million, compared to last year's $54.4 million record earnings.
Several operations reported significant increases in earnings
because of improving economies and strong housing markets;
however, wet weather severely impacted operations in Texas.
Construction and aggregate sales margins were lower as a result
of the adverse weather and higher fuel costs, as well as the
absence of certain large projects reflected in 2003 results.
Operations also were affected by higher general and
administrative expenses. Earnings from new acquisitions and
higher ready-mixed concrete and cement volumes partially offset
the decreases.
The following information highlights the key growth strategies,
projections and certain assumptions for this segment:
- The company anticipates improved earnings in 2005 with an
expected return to more normal weather conditions in Texas.
- Aggregate, ready-mixed concrete and asphalt volumes in 2005
are expected to be comparable to 2004 levels.
- Revenues in 2005 are expected to be comparable to 2004
levels.
- The company expects that the replacement funding legislation
for the Transportation Equity Act for the 21st Century (TEA-21)
will be equal to or higher than previous funding levels.
- Work backlog as of Dec. 31, 2004 was approximately $426
million, compared to $332 million at Dec. 31, 2003.
Independent Power Production
Earnings at this segment were $26.3 million, compared to $11.4
million in 2003. Higher earnings were primarily attributable to
the effects from changes in the value of the embedded derivative
in the Brazilian electric power sales contract, net of the lower
operating margins resulting from the contract annual revenue
reset provision. Significantly lower financing costs, as well as
the benefit from acquisitions made during the year, also
positively affected earnings.
In November 2004, the MDU Resources Board of Directors named Paul
Gatzemeier, 54, president and chief executive officer of
Centennial Energy Resources LLC. Gatzemeier previously served as
vice president and general manager of Centennial Energy after
joining MDU Resources in June 2001. He previously held executive
positions with another energy company and also was a private
business consultant specializing in energy companies seeking to
make acquisitions or improve their business strategies.
Recently MDU Resources confirmed that MPX Termoceara in Brazil in
which it has a 49 percent interest, is continuing discussions
with Petrobras regarding a possible renegotiation or buyout of
Petrobras' power purchase agreement with MPX. Petrobras obtained
a court order on Jan. 13, 2005, permitting it to cease making
monthly capacity payments to MPX and to instead deposit the
payments into a court account until the matter is resolved. The
court order creates a 30-day period for accelerated negotiations.
MPX Termoceara is working diligently to obtain a negotiated
settlement that is fair for both parties.
The following information highlights the key growth strategies,
projections and certain assumptions for this segment:
- Earnings projections for 2005 are expected to be slightly
lower than 2004 earnings primarily due to benefits realized in
2004 from foreign currency gains and the effects of the embedded
derivative in the Brazilian electric power sales contract.
- Earnings projections do not take into consideration any
potential effect from recent events related to the Brazilian
electric power sales contract.
- The company anticipates making an additional investment in
an international project in 2005 which is reflected in earnings
projections.
- The company is constructing a 116-megawatt (MW) coal-fired
electric generating project near Hardin, Mont. A power sales
agreement with Powerex Corp., a subsidiary of BC Hydro, has been
secured for the entire output of the plant for a term expiring
Oct. 31, 2008, with the purchaser having an option for a two-year
extension. The projected on-line date for this plant is late
2005.
Electric
Earnings for this segment totaled $12.8 million, compared to 2003
earnings of $16.9 million. Higher sales-for-resale prices and
favorable resolution of federal and related state income tax
matters positively affected earnings but were more than offset by
lower retail sales because of cooler summer weather and higher
operation and maintenance expenses, including payroll, severance-
related expenses and pension.
In November 2004, the MDU Resources Board of Directors named
Bruce Imsdahl, 56, to the additional position of chief executive
officer of Montana-Dakota Utilities Co. and Great Plains Natural
Gas Co., both of which are utility divisions of MDU Resources.
Imsdahl had been president of both divisions since July 2003. He
began his career with the company in 1970, advancing through
various positions in power production and the corporate office.
The following information highlights the key growth strategies,
projections and certain assumptions for this segment:
- The expected earnings in 2005 are anticipated to be slightly
lower than 2004 earnings because of anticipated higher operation
and maintenance expenses primarily related to higher benefit
costs, and the absence of the favorable resolution of income tax
matters.
- As part of the North Dakota Industrial Commission's Lignite
Vision 21 project, the company submitted an air quality permit
application in May 2004 to construct a 175-MW coal-fired plant at
Gascoyne, N.D. The air permit application is now under review at
the North Dakota Department of Health. This segment also is
involved in the review of other potential projects to replace
capacity associated with expiring purchased power contracts and
to provide for future growth. The costs of building and/or
acquiring the additional generating capacity needed by the
utility are expected to be recovered in rates.
Natural Gas Distribution
This segment reported earnings of $2.2 million, compared to 2003
earnings of $3.9 million. Rate relief approved by various public
service commissions and the favorable resolution of federal and
related state income tax matters positively affected earnings.
However, these factors were more than offset by higher operation
and maintenance expenses, including payroll, severance-related
expenses and pension, as well as lower retail sales volumes,
which include the effect of weather that was 6 percent warmer
than in 2003.
In June 2004, a natural gas rate case for the Black Hills service
area was filed with the South Dakota Public Utilities Commission
requesting an increase of $1.3 million annually, or 2.2 percent.
The commission approved a settlement authorizing an increase in
revenues of $670,000 annually, or 1.4 percent, effective Dec. 1,
2004.
The following information highlights the key growth strategies,
projections and certain assumptions for this segment:
- The expected earnings for this segment for 2005 are
projected to be somewhat higher than the earnings for 2004
primarily the result of rate relief and the assumed return to
normal weather, which for 2004 was 9 percent warmer than normal.
- In April 2004, a natural gas rate case was filed with the
Montana Public Service Commission requesting an increase of $1.5
million annually, or 1.8 percent. On Jan. 14, 2005 the company
and the Montana Consumer Counsel filed a Stipulation with the
Commission agreeing to an increase of $125,000 annually to be
effective Feb. 1, 2005. A final order is expected by Feb. 1,
2005.
- - In September 2004, a natural gas rate case was filed with
the Minnesota Public Utilities Commission requesting an increase
of $1.4 million annually, or 4.0 percent. The company requested
an interim increase of $1.4 million annually and in November
2004, the Commission issued an Order approving the requested
interim increase effective January 10, 2005, subject to refund. A
final order is expected in late 2005.
Pipeline and Energy Services
This segment earned $8.9 million in 2004, compared to $18.2
million in 2003. The 2004 results include a third-quarter noncash
goodwill impairment of $4.0 million (after tax) relating to the
company's cable and pipeline magnetization and location business
and a $1.3 million (after tax) adjustment reflecting the reduced
value of certain gathering facilities in the Gulf Coast region.
Also contributing to the decrease were higher operating expenses,
which were partially the result of increased costs associated
with the expansion of pipeline and gathering operations, and
lower transportation rates. Partially offsetting the decreases
were higher natural gas transportation volumes, including volumes
transported on the Grasslands Pipeline, and higher gathering
rates.
The following information highlights the key growth strategies,
projections and certain assumptions for this segment:
- In 2005, total natural gas gathering and transportation
throughput is expected to increase approximately 5 percent to 10
percent over 2004 levels.
- Firm capacity for the Grasslands Pipeline is currently 90
million cubic feet per day with expansion possible to 200 million
cubic feet per day.
- Transportation and storage rate reductions due to the
estimated effects of a Federal Energy Regulatory Commission rate
order received in July 2003 and rehearing order received in May
2004 have been reflected in the company's 2005 earnings
projections.
Utility Services
This segment reported a loss of $5.6 million for 2004, compared
to earnings of $6.2 million in 2003. Decreased inside electrical
margins in the Central and Northwest regions, including the
effect of losses on several large jobs, were somewhat offset by
increased line construction margins. Also negatively affecting
results were severance-related expenses and other general and
administrative expenses.
The following information highlights the key growth strategies,
projections and certain assumptions for this segment:
- Revenues are expected to be in the range of $440 million to
$490 million in 2005.
- The company anticipates margins to increase substantially in
2005 as compared to 2004 levels.
- Work backlog as of Dec. 31, 2004 was approximately $238
million, compared to $148 million at Dec. 31, 2003.
The company will host a webcast at 1 p.m. EST Jan. 28 to discuss
earnings results and guidance. The event can be accessed at
www.mdu.com. The replay will be available beginning at 4 p.m. EST
Jan. 28. An audio replay also will be available by calling (877)
519-4471 or (973) 341-3080, access code 5568317.
Risk Factors and Cautionary Statements that May Affect Future
Results
The information in this release includes certain forward-looking
statements, including earnings per share guidance and statements
by the chairman of the board, president and chief executive
officer of MDU Resources, within the meaning of Section 21E of
the Securities Exchange Act of 1934. Although the company
believes that its expectations are based on reasonable
assumptions, actual results may differ materially. Following are
important factors that could cause actual results or outcomes for
the company to differ materially from those discussed in forward-
looking statements.
- The company's natural gas and oil production and pipeline
and energy services businesses are dependent on factors,
including commodity prices and commodity price basis
differentials, which cannot be predicted or controlled.
- The construction and operation of power generation
facilities may involve unanticipated changes or delays that could
negatively impact the company's business and its results of
operations.
- The company's utility services segment operates in highly
competitive markets characterized by low margins in a number of
service lines and geographic areas. This segment's ability to
return to profitability on a sustained basis will depend upon
improved capital spending for electric construction services and
management's ability to successfully refocus the business on more
profitable markets, reduce operating costs and implement process
improvements in project management.
- Economic volatility affects the Company's operations and, as
a result, may have a negative impact on the Company's future
revenues.
- The company relies on financing sources and capital markets.
If the company is unable to obtain financing in the future, the
company's ability to execute its business plans, make capital
expenditures or pursue acquisitions that the company may
otherwise rely on for future growth could be impaired.
- Some of the company's operations are subject to extensive
environmental laws and regulations that may increase costs of
operations, impact or limit business plans, or expose the company
to environmental liabilities. One of the company's subsidiaries
is subject to litigation in connection with its coalbed natural
gas development activities. The ultimate outcome of the actions
could have a material effect on existing coalbed natural gas
operations and/or the future development of its coalbed natural
gas properties.
- The company is subject to extensive government regulations
that may delay and/or have a negative impact on its business and
its results of operations.
- The value of the company's investments in foreign operations
may diminish due to political, regulatory and economic conditions
and changes in currency exchange rates in countries where the
company does business. In addition, the company's future earnings
from its investment in Brazilian power operations may be affected
by the outcome of negotiations between its 49%-owned investee,
MPX, and Petrobras over continuing payments by Petrobras under a
power contract covering capacity and energy associated with MPX's
220 megawatt electric generating facility.
- Competition is increasing in all of the company's
businesses.
- Weather conditions can adversely affect the company's
operations and revenues.
- Other factors that could cause actual results or outcomes
for the company to differ materially from those discussed in
forward-looking statements include:
- Acquisition, disposal and impairment of assets or facilities
- Changes in operation, performance and construction of plant
facilities or other assets
- Changes in present or prospective generation
- The availability of economic expansion or development
opportunities
- Population growth rates and demographic patterns
- Market demand for, and/or available supplies of, energy
products and services
- Cyclical nature of large construction projects at certain
operations
- Changes in tax rates or policies
- Unanticipated project delays or changes in project costs
- Unanticipated changes in operating expenses or capital
expenditures
- Labor negotiations or disputes
- Inability of the various contract counterparties to meet
their contractual obligations
- Changes in accounting principles and/or the application of
such principles to the company
- Changes in technology
- Changes in legal proceedings
- The ability to effectively integrate the operations of
acquired companies
For a further discussion of these risk factors and cautionary
statements, refer to the Introduction and to Item 2 -
Management's Discussion and Analysis of Financial Condition and
Results of Operations - Risk Factors and Cautionary Statements
that May Affect Future Results of the company's most recent Form
10-Q.
MDU Resources Group, Inc., a member of the S&P MidCap 400 index,
provides value-added natural resource products and related
services that are essential to energy and transportation
infrastructure. MDU Resources includes natural gas and oil
production, construction materials and mining, domestic and
international independent power production, electric and natural
gas utilities, natural gas pipelines and energy services, and
utility services. For more information about MDU Resources, see
the company's Web site at www.mdu.com or contact the Investor
Relations Department at investor@mduresources.com.
* * * * * * * *
Contacts:
Warren L. Robinson - Executive Vice President and Chief Financial Officer
(701) 222-7991 or
Cathi Christopherson - Vice President, Corporate Communications
(701) 222-7959
MDU Resources Group, Inc.
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
-------- -------- ---------- -----------
(In millions, where applicable)
Consolidated Statements of
Income
Operating revenues:
Electric $ 44.1 $ 46.9 $ 178.8 $ 178.6
Natural gas distribution 108.0 93.5 316.1 274.6
Utility services 116.4 105.5 426.8 434.2
Pipeline and energy services 100.6 73.4 357.2 252.2
Natural gas and oil production 92.0 65.8 342.9 264.3
Construction materials and
mining 348.6 293.1 1,322.2 1,104.4
Independent power production 9.9 6.3 43.1 32.3
Other 1.3 .5 4.4 2.7
Intersegment eliminations (75.0) (64.9) (272.2) (191.1)
745.9 620.1 2,719.3 2,352.2
Operating expenses:
Fuel and purchased power 15.5 17.2 64.6 62.0
Purchased natural gas sold 91.3 60.5 249.9 184.2
Operation and maintenance 483.5 405.0 1,772.5 1,525.3
Depreciation, depletion and
amortization 54.4 49.6 208.8 188.3
Taxes, other than income 23.8 19.0 96.7 80.3
Asset impairments --- --- 6.1 ---
668.5 551.3 2,398.6 2,040.1
Operating income:
Electric 6.0 8.5 26.8 35.8
Natural gas distribution 4.4 4.9 1.8 6.5
Utility services (.7) 3.7 (5.7) 12.9
Pipeline and energy services 8.1 8.0 24.7 35.2
Natural gas and oil
production 50.6 27.4 178.9 118.3
Construction materials and
mining 10.6 15.3 86.0 91.6
Independent power production (1.1) .9 8.1 10.6
Other (.5) .1 .1 1.2
77.4 68.8 320.7 312.1
Earnings from equity method
investments 6.7 2.7 25.0 6.0
Other income - net 5.8 8.3 12.7 16.2
Interest expense 13.7 13.5 57.4 52.8
Income before income taxes 76.2 66.3 301.0 281.5
Income taxes 23.1 20.1 93.9 98.6
Income before cumulative effect
of accounting change 53.1 46.2 207.1 182.9
Cumulative effect of accounting
change --- --- --- (7.6)
Net income 53.1 46.2 207.1 175.3
Dividends on preferred stocks .1 .1 .7 .7
Earnings on common stock:
Electric 3.1 4.1 12.8 16.9
Natural gas distribution 4.2 3.4 2.2 3.9
Utility services (.9) 1.9 (5.6) 6.2
Pipeline and energy services 3.4 4.1 8.9 18.2
Natural gas and oil production 32.0 17.0 110.8 63.0
Construction materials and
mining 7.3 12.9 50.7 54.4
Independent power production 4.2 2.8 26.3 11.4
Other (.3) (.1) .3 .6
$ 53.0 $ 46.1 $ 206.4 $ 174.6
Earnings per common share -
basic:
Earnings before cumulative
effect of accounting change $ .45 $ .41 $ 1.77 $ 1.64
Cumulative effect of accounting
change --- --- --- (.07)
Earnings per common share -
basic $ .45 $ .41 $ 1.77 $ 1.57
Earnings per common share -
diluted:
Earnings before cumulative
effect of accounting change $ .45 $ .40 $ 1.76 $ 1.62
Cumulative effect of accounting
change --- --- --- (.07)
Earnings per common share -
diluted $ .45 $ .40 $ 1.76 $ 1.55
Dividends per common share $ .18 $ .17 $ .70 $ .66
Weighted average common shares
outstanding:
Basic 117.6 112.6 116.5 111.5
Diluted 118.6 113.8 117.4 112.5
Pro forma amounts assuming
retroactive application
of accounting change:
Net income $ 53.1 $ 46.2 $ 207.1 $ 182.9
Earnings per common share -
basic $ .45 $ .41 $ 1.77 $ 1.64
Earnings per common share -
diluted $ .45 $ .40 $ 1.76 $ 1.62
Operating Statistics
Electric (thousand kWh):
Retail sales 581,533 599,843 2,303,460 2,359,888
Sales for resale 233,475 254,582 821,516 841,637
Natural gas distribution (Mdk):
Sales 11,765 12,657 36,607 38,572
Transportation 4,734 5,095 13,856 13,903
Pipeline and energy services (Mdk):
Transportation 29,193 20,346 114,206 90,239
Gathering 20,878 19,482 80,527 75,861
Natural gas and oil production:
Natural gas (MMcf) 15,374 14,360 59,750 54,727
Oil (000's of barrels) 385 476 1,747 1,856
Average realized natural gas
price $ 5.03 $ 3.70 $ 4.69 $ 3.90
Average realized oil price $ 37.09 $ 26.56 $ 34.16 $ 27.25
Construction materials and
mining (000's):
Aggregates (tons sold) 11,797 9,700 43,444 38,438
Asphalt (tons sold) 2,057 1,765 8,643 7,275
Ready-mixed concrete
(cubic yards sold) 1,053 896 4,292 3,484
Independent power production:*
Generation capacity - kW 279,600 279,600 279,600 279,600
Electricity produced and sold
(thousand kWh) 27,045 27,634 204,425 270,044
Other Financial Data**
Book value per common share $ 14.09 $ 12.66
Dividend yield (indicated
annual rate) 2.7% 2.9%
Price/earnings ratio*** 15.2x 15.4x
Market value as a percent
of book value 189.4% 188.1%
Return on average common
equity*** 13.2% 13.0%
Fixed charges coverage,
including preferred
dividends*** 4.7x 4.7x
Total assets $ 3,733.5 $ 3,380.6
Total equity $ 1,681.0 $ 1,450.6
Long-term debt (net of
current maturities) $ 873.4 $ 939.5
Capitalization ratios:
Common equity 65% 60%
Preferred stocks 1 1
Long-term debt (net of
current maturities) 34 39
100% 100%
*Excludes equity method investments
**Reported on a year-to-date basis only
***Represents 12 months ended
Note: Common stock share amounts reflect the company's three-for-two common
stock split effected in October 2003.