Question-and-Answer Session
Operator
Our first question comes from Peter Thompson - Coho Partners.
Peter Thompson - Coho Partners
My question is really about your convertible. I understand rates have come down significantly, but just on balance sheet management, why would you not retire that convert and avoid the bondholders essentially from converting over to common stock? Just seems to me you would be picking up earnings doing that.
James O’Leary
No, you wouldn’t. In the fully diluted EPS calculation, the conversion is already fully assumed, so as far as incremental shares on the market, or the negative impact of interest expense, they’re both fully eliminated when you do the as-if calculation to get the diluted EPS.
Peter Thompson - Coho Partners
But your cash is earning 2.4, and your convert is costing you 4.
James O’Leary
Yes, but that would only if you settled for cash, which would essentially be a share repurchase which we have said we are considering and have accelerated. The only way to put the cash to work relative to the shares hitting the market is just to do a straight repurchase, and then you could retire some of the bonds for cash, but I look at that as a Dutch auction.
Peter Thompson - Coho Partners
Okay.
James O’Leary
Since you raised it, I do think it’s worth mentioning. The reason we don’t convert is because there are tax benefits which are considerable, given we have no debt other than the covert.
That’s one of the reasons or the arguments for leaving it outstanding, but as we find either acquisition opportunities, or expand the capital program, I think we would be considering, in the interest of balance sheet clean up, potentially converting.
We’ve had a number of people come and convert, but even the $11 million done this quarter, Peter, it’s neutral to EPS because they’re fully eliminated when you do the as-if calculation.
Peter Thompson - Coho Partners
That helps me a lot. Appreciate it, thanks.
Operator
Our next question comes from Richard Marshall - Longbow Research.
Richard Marshall - Longbow Research
You raised the target for 2008 wind sales to $90 million from $80 million. I’m just wondering if there’s any change to the out years 2009, or even looking beyond that to 2010?
James O’Leary
We could do a little bit better than I think that $175 million we expect it to do in 2009. But remember we’re bounded somewhat by the $200 million rough full run rate capacity, which we expect to have in place.
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