Aware Inc (AWRE) 2009 Q4 法說會逐字稿

Good day, everyone, and welcome to the Aware, Inc., fourth quarter 2009 conference call. Today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn things over to Mr. Rick Moberg, Chief Financial Officer. Please go ahead.

Thank you, operator. Good afternoon and welcome to Aware's fourth quarter 2009 earnings conference call. I'm Rick Moberg, the Company's CFO, and I'm with Edmund Reiter, our President and CEO. Thank you for joining us today.

Before I turn the call over to Ed, I'd like to point out that various remarks we may make about future expectations, plans and prospects for the Company in the DSL and biometrics markets constitute forward-looking statements for the purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the section titled Factors That May Affect Future Results in our annual report on Form 10-K for the year ended December 31, 2008. This Form 10-K is on file with the SEC.

A recording of this call will be available on our website at Aware.com after the call is completed.

And now I'd like to turn the call over to Ed.

Thank you, Rick. I'll start today by reviewing the major changes we implemented in 2009 and review our [businesses] for the Company going forward. Rick will then review the financials for the quarter and year. Following Rick's remarks, I'll discuss various accomplishments in each of our businesses in the fourth quarter in 2009 and our goals for 2010. Lastly, we'll take any questions people may have.

First, a review of changes in 2009.

On November 13, we closed the sale of our licensing assets to Lantiq. Prior to the sale, we were involved in the development and license of DSL and GHN silicon intellectual property to semiconductor vendors. This transaction involved the transfer of 41 engineer employees from Aware to Lantiq, along with certain related technical and patent assets.

In addition, cash considerations of $6.75 million, Aware and Lantiq have agreed to cooperate in the area of embedded or chip-based line testing. And Lantiq has agreed to provide certain chipset products to Aware for use in our test module business.

Royalties from Lantiq, as well as our other DSL licensee, Ikanos, are unaffected by this transaction and will continue to be paid on a quarterly basis.

With the completion of this transaction, we increased our cash balances relative to the start of the quarter by approximately $6.6 million and reduced our quarterly engineering expense by approximately $1.7 million $1.9 million going forward.

We have leased approximately 17,000 square feet of space in our Bedford, Mass location to Lantiq under a 12-month release and are providing limited IT and related support services.

In summary, we implemented a commonsense restructuring of our business in a manner which we believe serves the interests of our shareholders well.

Another change for the Company in 2009 and through January of this year occurred in our equity structure. Our Dutch auction tender in the first half of 2009 reduced the number of shares outstanding from approximately 23.3 million at the start of '09 to 19.8 million as of the end of the year.

In addition, we reduced our option overhang through, one, our employee option exchange program; and two, natural expiration of stock option grants as well as the effective Lantiq transactions. The number of stock options outstanding was reduced from approximately 7.5 million as of the start of 2009, to approximately 5.2 million as of January 2010.

As a result of these actions at the conclusion of our employee option exchange tender offering in early January 201, the overall reduction in share and options outstanding amounted to 14% and 31% respectively, relative to the start of 2009.

Now I'll turn to a review of the businesses.

Our overall strategy for the Company going forward is to pursue profitable growth opportunities in the DSL test and biometrics markets. I'll start by taking a moment to review our product offerings in these areas and some terminology we use and discuss in our businesses.

In our DSL test business we sell both hardware and software products. Let me first describe the hardware products.

We sell modules or printed circuit boards to vendors, who in turn sell handheld DSL test equipment and test heads to telcos. Our hardware products are not end-user products. They are components of an end-user system, and, hence, are only sold on an OEM basis. The customers for our hardware products are Tier 1 and 2 handheld test vendors and DSL test head vendors who sell to telcos worldwide.

Now we'll cover our DSL test software products. We have two different types of software products. The first is embedded software, which means that it runs only on our hardware modules. Since this type of software is found only in our hardware modules, it too is sold only on an OEM basis. These products are marketed under our trademarked brand name, Dr. DSL. Examples of some of our publicly disclosed OEM customers include Spirent, Tollgrade and JDS (inaudible).

The second type of software we sell is a standalone software product, which runs on standard Linux and Windows servers and is called a line diagnostic platform, or LDP. The LDP works with but does not require our hardware to operate. In other words, it can operate using a DSLAM as well as our test hardware. And it can be sold directly to integrators or to small and midsized telcos in addition to through OEM channels.

Now let's turn to our biometrics business. In our biometrics business, we sell only software and related customization and maintenance services. We do not sell any hardware. These software offerings naturally breakdown into two categories; components and products.

Our component offerings are sold in the form of software development toolkits, or SDKs, and require our customer to add functionality in order to create a final application. Since our component offerings are not end-user products, they are sold only on an OEM basis. We have a large customer base ranging from Tier 1 US system integrators to vendors of biometric hardware. Example Tier 1 integrators include companies such as Lockheed Martin, Northrop Grumman are examples of biometric hardware vendors, include L1 [identity] and cross match.

We also sell standalone software products such as our BioSP and Universal Registration Client product. These products may be sold directly to end users such as government agencies in addition to OEM channels-- in addition to-- through OEM channels.

Now for a discussion on some common elements of these two markets and businesses. Both the DSL test and biometrics market share a series of characteristics which we believe make a compelling case for where to focus investment and can provide attractive returns for our shareholders should we execute successfully on the opportunities we see in them.

First, each market has a significant requirement for image or digital signal processing, which is challenging enough so as to provide both a barrier to entry to competitors as well as a central theme for the development of our product.

In the biometrics market, the image processing required to feel the high performance competitive biometric enrollment, printing, acquisition or card-scanning system is substantial. We currently offer products which support all of these functions and are continuously improving and offering new products in these and related areas.

In the DSL test market, our ability to utilize DSL chipsets from Lantiq and others as high-performance test devices depending critically on our signal processing expertise and our depth in DSL chipsets and systems, whether implementing single-ended line test techniques with dual-ended line test approaches on dedicated test hardware or deployed DSL infrastructure, sophisticated signal processing technologies are required.

Second, each market in our product offering image market offer the opportunity for us to add substantial value or functionality above and beyond the core signal and image processing blocks just mentioned.

For example, our system biometric transaction management product known as BioSP essentially provides key enabling interoperability between biometric enrollment stations and various core-matching systems, such as the (inaudible). BioSP does have key image processing elements to it, but our value proposition is increasingly that of a system-level product that allows our customers to cost effectively, and with very low risk, support fully interoperable biometric systems.

Similarly, in our DSL test business, the line diagnostics platform has substantial signal processing technology content that increasingly is addressing the needs of OEMs and service providers by solving end-market requirements of reducing the cost of deploying DSL networks.

Whether this is a achieved by sharing appropriately structured DSL line information database with other systems in the network or providing a user interface to a help desk or helping direct marketing efforts to sell ever higher speed services, we are adding functionality around a core signal processing foundation, allowing us to expand our value proposition accordingly.

Third, both markets have active technology standard development efforts, which we both participate in and use to guide product developments. Technology standards provide a ready-made market requirement, and we are experienced in the timely development of high-quality products to meet these requirements.

Fourth, in both businesses there is the potential for a high percentage of our sales to be software components or products, and as a result, for us to run a business model which is similar to that of a traditional software company.

Finally, both the biometric and DSL test markets are large, dynamic, worldwide markets in which we see substantial growth opportunities. Biometric applications have expanded from purely criminal justice 10 years ago, to border control, to military, biometric-enabled credentials, et cetera, as of today.

DSL test systems are being designed or redesigned in many cases to address the newest generation of VDSL and IPT-based-- IPTV-based deployments, and we see those sales opportunities growing around the world.

In summary, the reasonable amount of common ground in our two major operating areas of biometrics and DSL tests, while at first glance, the dissimilarities of the end markets may seem to be in contrast with this statement, analysis of our underlying product and business strategy tells a different story.

Next, in addition to the biometric business, we also participated in the medical imaging market with a set of products focused around supporting high-performance image transmission or streaming and storage. Historically, we approached the medical market using an SDK model centered around image compression. We are modifying this approach somewhat in response to changing market requirements and new standards developments and are focused on delivering interoperability between a variety of medical imaging information systems.

Also, alongside the previously discussed operating activities, we continue to invest in our patent portfolio and investigate various opportunities to monetize our patent. It's very clear to us that a strong patent portfolio is essential, both in creating valuable assets for [sale or] license as well as to protect product offerings in the highly competitive markets in which we operate.

While our portfolio is strong from the digital communications and signal processing area, we also have patent assets related to our imaging and biometrics businesses.

I'll now turn the call over to Rick to take you through the financials.

Let's start with the results for the quarter. Revenue in the fourth quarter was $5.5 million, which is a 55% decrease from $12.1 million in the fourth quarter of 2008. I'll talk about the reasons for the decrease when I discuss revenue.

Net income for the quarter was $5.8 million or $0.29 per share. Net income includes a $6.2 million gain on the sale of assets to Lantiq. This compares to net income of $5 million or $0.21 per share from the fourth quarter of last year.

We also report net income and EPS on a non-GAAP basis. Our non-GAAP results excludes stock-based compensation expenses. These expenses were $261,000 this quarter. Excluding these charges, non-GAAP net income was $6.1 million or $0.31 per share. A reconciliation of GAAP to non-GAAP results has been included in today's earnings release.

Results for the year were as follows.

Revenue for 2009 was $22 million, which is down 28% from $30.5 million in 2008. Net income for the year was $1 million or $0.05 per share. This compares to the net income of $1.8 million or $0.07 per share at 2008.

Non-GAAP net income for 2009, excluding the effect of $1.7 million of stock-based compensation, was $2.7 million or $0.13 per share.

Now turning to revenue.

Product revenue for the quarter was $4 million compared to $2.2 million in the fourth quarter of 2008. The $1.8 million increase is largely due to higher sales of biometric software revenue this quarter versus the year-ago quarter.

Product revenue for 2009 was $15.4 million, compared to $14 million in 2008. The $1.4 million increase was primarily due to higher sales of DSL test and diagnostic software and hardware.

Biometric software revenue was slightly lower in 2009 after a year of strong growth in 2008.

Contract revenue, which includes patent, license and engineering service fees, was about $900,000 for the quarter. This compares to $9.3 million in the fourth quarter of 2008. The $8.4 million decrease is mostly due to an $8.5 million patent sale that occurred in the fourth quarter of 2008. There were no patent sales in this quarter.

Contract revenue for 2009 was $4.6 million compared to $14.7 million in 2008. The $10.1 million decrease was primarily due to the aforementioned patent sale in the fourth quarter of 2008 and lower revenue from biometrics technology contracts.

Royalty revenue was $555,000 for the quarter, compared to $527,000 in the fourth quarter of 2008. For all of 2009 royalty revenue was $2.1 million compared to $1.8 million last year.

The quarterly and annual increase in royalties was due to higher DSL chipset sales reported to us by our two principle royalty customers, Infineon and Ikanos.

Now turning to spending and margins. Fourth quarter spending was $5.9 million versus $7.3 million in the fourth quarter of 2008. The $1.4 million spending increase is primarily due to three reasons. Number 1, engineering spending was approximately $970,000 lower due to the transfer of 41 engineers to Lantiq in mid-November. Number 2, product cost of sales was approximately $200,000 due to lower manufacturing period costs in the current quarter. And Number 3, total sales commissions were approximately $250,000 lower this quarter versus the year-ago quarter.

For all of 2009, total spending was $27.5 million compared to $29.9 million for 2008. The $2.4 million spending decrease was due to for primary reasons. Number 1, costs related to biometrics technology contracts was $1 million lower due to lower revenue from such contracts.

Number 2, engineering spending in our license group in the 10.5-month period leading up to the sale to Lantiq was approximately $800,000 lower than the prior year.

And Number 3, engineering spending in our licensing group was approximately $970,000 lower in the last 1.5 months of the year after the sale to Lantiq.

And finally, Number 4, we spent $400,000 less in legal fees this year.

The spending decreases were offset by higher product COGS due to higher hardware sales this year, higher spending on biometrics engineering, sales and marketing, and higher stock-based compensation charges primarily due to a one-time event in the third quarter of 2009.

Our reported product gross margins were 88% this quarter, compared to 72% in the fourth quarter of 2008. Higher margins this quarter are primarily due to a higher proportion of software revenue in product sales and better hardware margins.

Our reported product gross margins for 2009 were 81.2%. This is virtually unchanged from 81.5% in 2008.

Interest income for the fourth quarter and year were significantly lower than the corresponding periods in 2008. The decrease was primarily due to much lower money market interest rates in 2009.

And now turning to the December 31st balance sheet. Cash was $39.7 million at year end. Cash increased by $7 million in the fourth quarter, mostly due to the Lantiq transaction.

For the year we used $5.8 million of cash. Most of this cash was used to repurchase our stock in the second quarter of 2009. We repurchased $3.5 million shares for $9 million.

Receivables were $3.6 million at the end of the year, which equates to DSOs of 60 days. Inventory was $1.1 million, which was unchanged from last quarter. We had no debt. And there were approximately 19.8 million shares outstanding at December 31, 2009. As of today, there are 19.9 million shares outstanding.

The small increase in shares outstanding from year end is due to the employee option exchange program we initiated in mid-December. Under the terms of the program, rank-and-file employees had the right to exchange options for shares of unrestricted stock. There were a total of $1.1 million options eligible for exchange when the program ended in mid January. Employees had exchanged 820,000 options for 118,000 shares of stock.

And finally, at the end of the fourth quarter we had 82 full-time employees, 48 of whom were engineers.

This is the end of the financial section, and now I'd like to turn the call back over to Ed.

Thank you, Rick. I'll now discuss some highlights of the fourth quarter in 2009, beginning with the biometrics business.

In the fourth quarter we sold approximately $800,000 of software to a US Federal Government customer for use in applications involve a biometric credentialing system. This win involved various enrollment related components and our BioSP product, and once again validated that we can be successful in highly competitive market situations in the US federal marketplace.

We also won a $240,000 order from a systems integrator involved in a border control application that involved various enrollment related components as well as BioSP. In this activity, for which future revenue potential exists but is not assured, a strong middleware offering in the form of BioSP, coupled with our strong toolkit offering on the enrollment client was crucial.

Our customer desired to develop and brand their own client, which our SDK OEM model enables, while using BioSP to manage a wide variety of system-level functionality. In a nutshell, the customer appreciate our product prep but also the flexibility inherent in our business model.

For the year, we made progress in expanding our professional services customer base. We now routinely offer software customization services which complement the capabilities of our customers. While our reputation in the market is one of a product company, we and our customers see the benefit of adding services component in certain cases. In general, sales opportunities which involve more system-level products, such as BioSP provide greater opportunity to sell services than do our SDK products.

We also saw some increase in customer activity and sales in the European region. This has been a more difficult market for us than the US federal space, but increased sales focus and a good product line led to improved results there. Our detailed knowledge of biometric transaction formats has allowed us to provide interoperability (inaudible) allowing one country's legacy system to interoperate with another's.

The biometric enrollment client is a real cornerstone for our SDK business, and for that matter for our overall business. The term biometric enrollment client refers to a broad class of systems in which a biometric sample or samples are collected, formatted into an interoperable transaction and either stored or sent on to another element of the biometric system.

Over the last year, our product development efforts in this overall area were focused, in part, on lowering the lifetime cost of ownership to the client.

We enabled this benefit in our products by allowing a customer to select the best price performance option among the various third-party fingerprint scanning and camera devices, which may be required in their system, and ensuring a high-quality interoperable high-performance solution. In other words, our software enables our customer to reduce the cost over the lifecycle of the system and avoid being locked into expensive or out-of-date hardware technology.

We began this effort years ago by developing software to support low-cost flatbed scanners, fingerprint cards as well as printers, and have extended this theme to live-scan facial camera and iris camera devices. These efforts have strengthened our tradition in the enrollment client market.

I'll now discuss the DSL test business. In the fourth quarter we saw positive trends in our handheld DSL tester customer base. By this I mean that our core value proposition of highly interoperable DSL modules, which can emulate both the [CPD] and DSLAM elements to the network was increasingly desired in the marketplace.

Our ability to deliver this value proposition is based on our source-code-level access to DSL chipsets from our partner Lantiq. This access allows us to quickly modify source code so as to ensure interoperability with the telcos and stalled equipment. It also allows us to dual purpose low-cost silicon, primarily intended for use on CPE devices as a [CO] device.

Traditional CODSL chipsets are significantly more expensive than CPE devices and are available primarily as 4 to 15 core chipsets, which are not well suited for handheld DSL test equipment.

We saw an uptick in designing activities as signs of improved sell-through from established customers to their telco customers. For example, an OEM handheld DSL test customer of ours recently commenced shipment to several Tier 1 service providers.

Turning to DSL test software for the year, we continue participation in several telco trials of our LDP software product. While the sales cycle's been longer than we'd like, the opportunity for us to sell our software products out of telcos to a third party, who in turn sell to telcos, is attractive.

We're confident in our core tech-- we're confident that our core technical does good or better than any of our competitors. And we continue to progress in these sales efforts. We continue to work on achieving compatibility with the various DSLAMs which provide the majority of the test data to the LDP.

Our experience and our neutral posture as a software vendor makes us a logical partner and vendor in this market. Our long-time customer, Spirent, continue to deploy equipment and software (inaudible), and we continue to support this activity.

In general, DSL deployments, coupled with IPTV service offerings are driving the overall DSL test market. The revenue opportunities provide by IPTV are attractive to the telco. And the demands on the DSL infrastructure are typically far greater than for the original servers of high-speed internet access.

We're finding that the specific architecture of today's test infrastructure can take on many forms. And given our exposure, the handheld testers, test head and soft test solutions, Aware has exposure to all of these.

Going into 2010, in biometrics we feel good about our competitive position, the overall health and size of our end market and our customer base. Our goal in 2010 is to grow sales by increasing our exposure to the overall market, whether by specific product introductions, services offerings or combinations of the two.

In the DSL test business, exiting 2009, we have strong OEM relationships with Tier 1 and Tier 2 vendors of test heads and handheld testers and are actively competing for business with our LDP product.

Our product line provides us exposure to what we believe are the gross segments of the overall DSL test infrastructure. While our focus is clearly on DSL, the adjacent technology of home networking is of growing interest to our customers. Our goals for 2010 are growing sales by expanding our handheld customer base into the lower cost, higher-volume segment to that market and winning business with our LDP software product.

For 2009, our biometrics and imaging business accounted for $10.6 million or 48% of 2009's overall revenue. Revenues attributed to the sales of DSL test hardware and software products, plus, those portions of the licensing revenue, which remain with Aware following the Lantiq transaction. Specifically, royalties from DSL chipsets and ongoing legacy support activities totaled $8.6 million for 39% of 2009's revenue.

We expect GAAP operating expenses, excluding COGS, to be in the $4.5 million to $4.7 million range on a quarterly basis for the first half of the year.

Our focus in 2010 is firmly one of growth in our two main business areas. While we do not have sufficient visibility to provide guidance, our goal is clearly to achieve operating profitability on a consistent basis. We believe the major end markets we're operating in are easily sufficient in size and health for us to achieve this goal. We also believe our product offerings in business now will support this goal.

Therefore, our ability to achieve this goal will require a good execution in 2010, and we're well focused on this agenda.

This concludes our prepared remarks, and we'll now turn the call over to the operator and take any questions you may have.

Thank you. (OPERATOR INSTRUCTIONS) We'll go first to Stanley Cohen with Atrium Advisors.

Hi, guys. How are you?

Hey, Stanley.

Hi, Stanley.

Okay. First of all, congratulations on all the restructuring of the Company you've done this year. Did I hear you correctly when you said, going forward, quarterly R&D expenses will be less by $1.7 million to $1.9 million than what it previously was?

That's correct.

Okay. And this quarter you seem to get-- it was only half the quarter, so it only went down by $900,000?

That's right.

Okay. And how-- how much of the contract over this quarter came from old DSL contract business that won't be present in the future?

That's a level of granularity we'd prefer not to break out on this call.

Was it some biometric contract?

So, Stanley, what we said last quarter about that-- so let me answer the question this way. The last quarter we said that over the last several years contract revenue from the part of the business that went over to Lantiq, ranged anywhere from a $0.5 million to $1 million a quarter. So if you put those two sets of numbers together, we're saying that we're reducing engineering expenses by $1.7 million to $1.9 million a quarter. You can estimate that contract revenue is going to also decline by somewhere between $0.5 million to $1 million a quarter.

Well, it was only $887,000 this quarter, so it's up. I don't see what the big difference is.

Well, that falls in that range, right?

Yes. I mean, that doesn't tell me how much was biometric contract revenue in the quarter. Was it proportionate the amount of contract-- did it all the sudden end in the middle of the quarter? I want to figure out how much money you'd make if the business was gone this quarter. So that's what I'm getting at. How much more would it have gone to the bottom line.

Well, I'll--

Half of your expenses were definitely gone. Was half your revenue gone, or was it more than that?

Based-- so we have several different arrangements, or we had several different arrangements with Infineon. So I don't want to get into those specifics. I think it's fair to say that some of the contract revenue went away this quarter. But going forward you should model between $0.5 million and $1 million a quarter. That's not necessarily representative of what happened in Q4 just based on the specifics of our arrangements with Infineon.

So there definitely was in this quarter some contract revenue from the biometric software and business.

There was a small amount.

Minor.

A small amount. And there'll continue-- and it could be a minor amount from ongoing support or your old DSL customers. Is that correct?

On a going-forward basis.

Okay. Well, even if it was all from DSL business this quarter you basically would have been profitable with all of the expenses going away this quarter. If next quarter goes to zero and everything else is the same, you'll be profitable by a few hundred thousand dollars. If everything else stays exactly the same.

Approximately speaking, yes.

And besides-- you put all the cost savings in R&D. There's no savings in G&A or--

No. The cost savings are in R&D.

All in R&D. Okay. It also looks like you're testing diagnostic business quarter to quarter was down based on the strength in the biometric business and the high-gross margins. Is that correct? And why?

I mean, that business-- I would have to go back and look at Q3 to be perfectly sure, but that business-- the biometrics business had a good quarter. The test business was probably a little bit down from-- the test business was down from Q3, but the biometrics business had a pretty strong quarter.

Right. So the quest-- any reason why the test business was down from Q3?

I wouldn't say. I mean, that business-- as I mentioned during the prepared remarks, from a design-win perspective, especially on the handheld side, we feel pretty good about Q4 there. On the revenue side it was down some. But overall I think our position there really took an uptick in the second half of 2009.

Okay. Just basically how the cards fell this quarter. Nothing-- no trends or anything. Okay. And do you expect contract revenue to start increasing pretty soon on the biometrics side? You talk about it a lot, but it doesn't seem like there is any going on.

Yes. Well, we had a big year there in 2008, and in 2009 it fell off, though we did expand the customer base. I would hope that in 2010 we kind of get somewhere in between those two years. We've got some good sales opportunities in the pipeline that would fall onto the contract line. And I think we're doing the right things there. But as of right now we're looking to close business to get that element of the business back up to where it was and to grow it further.

Okay. And at some point it'll be less lumpy, it'll be more of an ongoing type of thing? Right now it seems like onesie, twosies.

We hope that it could be. You know, we hope that it could be a stabilizing influence for the business. And it would be an area in which we could build backlog. But that's our goal. And we're pursuing business opportunities that are consistent with that goal. And I hope to be sharing some news on that front sometime soon.

Okay. And finally just two number questions. What was the headcount at the end of the quarter? And where do NOLs stand at the end of the quarter?

The headcount was 82 heads. And NOLs are going to look a lot like the end of last year. I think it's roughly $46 million or $47 million worth of NOLs at the end of the year.

Great. Okay. Thanks a lot.

Thanks, Stanley.

(OPERATOR INSTRUCTIONS) And it appears we have no further questions from the phone audience. I'll turn the conference back over to Mr. Edmund Reiter for any additional or closing remarks.

Okay. Thank you. Thanks very much for joining us today. Before we close the call I'd like to review some of the upcoming tradeshows and industry events we'll be participating in.

In the biometrics area we'll be attending the Security Document World in London, February 9 through 10. This is a show that draws a good crowd, a European-focused crowd interested in biometrically secured credentials such as e-passports, (inaudible) used as driver's licenses, national ID cards, et cetera. We're a sponsor of this show, and we'll chair a session titled Nuts and Bolts of Advanced Border Control.

We'll also be at the DOD Biometrics and Forensics Show in San Diego from March 30 through April 1. The focus here is on military applications of biometrics.

We'll also be at the ISC Brazil Show April 14 to the 16th. This focus here is on broad security systems, some of which use biometrics across a pretty broad array of government and private sectors.

In the medical area we'll be attending the HIMMS Conference in Atlanta from March 1 to 3rd. We'll be exhibiting as well as participating in the HIMMS interoperability showcase, which is part of an industry-wide activity to encourage interoperability among medical information systems vendors.

In the DSL test area we'll be attending the T&O Show at the Hague in the Netherlands, March 16 to 17th. This show is focused on European service providers with a concentration on (inaudible) and IPTV. And we'll be sponsoring and speaking at the event.

Thanks again. And we look forward to speaking with you on our Q1 2010 earnings call. Thanks. Bye-bye.

Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation. You may now disconnect.