A channel with output

is examined, The state

and the noise

are multivariate Gaussian random variables (

is the identity matrix.). The input

satisfies the power constraint

. If

is unknown to both transmitter and receiver then the capacity is

nats per channel use. However, if the state

is known to the encoder, the capacity is shown to be

, independent of

. This is also the capacity of a standard Gaussian channel with signal-to-noise power ratio

. Therefore, the state

does not affect the capacity of the channel, even though

is unknown to the receiver. It is shown that the optimal transmitter adapts its signal to the state

rather than attempting to cancel it.