Benchmark Electronics Inc (BHE) 2007 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Benchmark Electronics' fourth-quarter 2007 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Don Adam. Please go ahead.

Good morning. Welcome to the Benchmark Electronics' conference call to discuss our results for the fourth quarter and full year of 2007. I am Don Adam, Chief Financial Officer of Benchmark Electronics. Today, we will begin our call with Cary Fu, our CEO, providing a review of our fourth quarter and year and an overview of the current marketplace. I will then continue with a discussion of our estimates for the first quarter of 2008 and our financial metrics for Q4 in greater detail. After our prepared remarks, Gayla Delly, our President, and Cary and I will take time for your questions in our Q&A session. We will hold this call to one hour.

During this conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the Company. We would like to caution you that those statements reflect our current expectations and that actual events or results may differ materially.

We would also like you to refer to Benchmark's periodic reports that are filed from time to time with the Securities and Exchange Commission, including the Company's 8-K and S-f filings, quarterly filings on Form 10-Q and our annual report on Form 10-K. These documents contain cautionary language and identify important risk factors, which could cause actual results to differ materially from our projections or forward-looking statements. We undertake no obligation to update those projections or forward-looking statements in the future. Now I would like to turn it over to Cary Fu.

Good morning. Our fourth-quarter results rebounded as expected. We finished our 2007 with a solid result with both Q4 revenue and EPS hitting the high end of our guidance. I want to take this opportunity to thank our team for working hard and driving toward our goal for our shareholders and these customers as we close up 2007.

First of all, I would like to discuss our current view of the business environment. As we look into 2008, it appears there is a level of inconsistency in the overall market. We see the financial markets have indicated a slowdown, yet the demand from our customers have not yet slowed.

Our Q4 customer demand was stable. We also see stable Q1 demand. Although Q1 will be impacted somehow by the difficult, but mild seasonality in the computing sectors, we will monitor the demand level very closely in this uncertain environment.

Now I would like to highlight some of our 2007 achievements. Number one, we expanded our customer base by adding additional new customers. Our revenue concentration with our largest customers was approximately 21% for Q4 and 22% for the full year. 2007 was a year of strong bookings, which continued into Q4 and should give us a positive momentum moving into 2008. The sales pipeline for the new business development was also very robust.

Number two, we enhanced our manufacturing engineering capability. We have added additional 190 design engineers, which allows us to expand our service offering to our customers. Number three, we completed our global resource realignment. As you can see, our restructuring charges for Q4 were higher than we had originally anticipated as we see operations in five different locations. We should see the benefit of this realignment activity in 2008 and we anticipate no significant restructuring activity in 2008.

Number four, we generated cash flow from operations of approximately $285 million for the year. Our cash and short-term investment decisions increased by $158 million for the year, after paying out $72 million in debt and spending approximately $52 million for the stock repurchase plan.

Overall, 2007 was a transitional year for benchmark. We are delighted to have the heavy lifting behind us. We are well-positioned for a strong 2008. Now we will turn it over to Don to provide comment on our first-quarter guidance and the fourth-quarter results. Don?

Thank you, Cary. As Cary mentioned, we did complete 2007 with revenues and EPS at the high end of our guidance. Our results rebounded nicely from Q3 and we've continued to see stable demand from our customers. We booked seven new programs during the fourth quarter with $64 million to $81 million in potential annual revenues. We are pleased with the bookings we have seen in total during 2007 and expect our bookings to remain strong in Q1 based on new bookings in January and the positive pipeline of opportunities in front of us. These new program opportunities are with both new and existing customers and are from a mix of the industries that we serve, including industrial controls, computer, test and instrumentation and telecommunications. We anticipate that the revenue and earnings benefits of these new 2007 bookings will begin to be realized in 2008 and into 2009. Keep in mind that these are estimates and actual revenues may differ significantly. Based on the current indications from our customers, including new program ramps in the current macroenvironment, we expect first-quarter revenues to be in the range of $700 million to $725 million. The corresponding earnings per share is in the range of $0.33 to $0.37, which excludes stock-based compensation expenses of approximately $800,000 and the amortization of intangibles of $447,000. Please note that the earnings per share guidance includes the impact of our stock repurchase program.

For the year 2008, we expect top-line growth of 5% to 8% for the year and earnings per share growth in the range of 15% to 20%, excluding amortization of intangibles of $1.8 million and the impact of stock-based compensation expenses of approximately $3.8 million. Please note that the earnings-per-share guidance provided includes the impact of our stock repurchase program.

As Cary discussed, 2007 was a transitional year for Benchmark. Even with the challenges of the year, we also saw many positive trends. Let me share some of those with you. We generated cash flows from operations of approximately $59 million for Q4 and $285 million for the year. As Cary noted, our revenue concentration with our top customer was approximately 21% in the fourth quarter and 22% for the year.

Operationally, we were able to handle a large number of customers with the continued diversity of our customer base. We completed our planned realignment of our resources and we had strong bookings that continued throughout the year.

Please note that the fourth-quarter results contain three special items. They are as follows. Restructuring and integration costs of $4.6 million or $3.1 million net of tax, stock-based compensation expenses of $679,000 or $478,000 net of tax, amortization of intangibles of $447,000 or $291,000 net of tax related to the acquisition of Pemstar. Also note that the Q4 '06 included special items, which we have detailed in the press release.

To provide a more meaningful comparative analysis, we will present certain financial information, including these special items during the conference call. We will call your attention to the fact that these items are excluded and when we do so, in today's press release, we have included a reconciliation of our GAAP results to our results, excluding these items. Our operating margin for the fourth quarter was 3.7%, excluding the special items noted earlier. This is an improvement over Q3 with the rebound in our revenues.

Our operating margin is still being impacted by inefficiencies and resources as related to the closing and wrap-up of several facilities. We expect to realize these benefits in the first quarter of '08. GAAP net income for the fourth quarter was $20.9 million compared to $28.3 million for Q4 of last year. Excluding the special items, net income was $24.7 million compared to $29 million in the fourth quarter of last year. Diluted earnings per share for the fourth quarter was $0.29. Diluted earnings per share, excluding special items, were $0.35. Diluted earnings per share for the fourth quarter of '06 was $0.44, excluding special items.

Our ROIC was 9.7% for the fourth quarter of 2007. Interest and other income was approximately $3.8 million. Interest expense was $397,000, primarily related to the acquired debt. Other expenses, primarily foreign currency-related, were $1 million. Excluding special items, our effective tax rate was approximately 17% for the fourth quarter and for the full year. On a GAAP basis, the effective rate was 13% for the quarter and 8% for the year. Our tax rate has continued to benefit from favorable tax incentives on our expanded business levels in Asia.

Weighted average shares outstanding for the quarter were $71.6 million. Our cash and short-term investment balance was $382 million at December 31. Our cash and short-term investment balance increased $158 million when compared to December 31 of last year. This increase is after reducing our acquired debt by approximately $72 million during the year and $52 million of stock repurchases. In addition, we have purchased an additional $22 million of stock from January 1, 2008 through yesterday, February 4.

For the fourth quarter, our cash flows from operations were approximately $59 million. Capital expenditures for the fourth quarter were approximately $6.7 million. Depreciation and amortization expense was approximately $11.1 million. Receivables were $486 million at December 31, an increase of $35 million from last quarter, primarily due to the increase in sales for the quarter. Inventory was $362 million at December 31. Our inventory turns were 7.6 times for the quarter compared to 6.6 times last quarter. During the fourth quarter, we were able to reduce inventory levels with increased demand. Current assets were approximately $1.3 billion and the current ratio was 3.1 to 1 in Q4 compared to 3.3 to 1 in Q3. As of December 31, we had $12.5 million in debt outstanding, all as a result of the acquisition. The remaining debt outstanding is primarily a long-term capital lease on one of our facilities.

Comparing the fourth quarter of 2007 to the same period in 2006, the breakdown by industry segments is as follows. In 2007, medical was 11% compared to 11% in 2006. Telecommunications was 16% in 2007 compared to 13% in 2006. Computers was 55% in 2007 compared to 58% in 2006. Industrial controls was 13% in 2007 compared to 12% in 2006. Test and instrumentation was 5% in 2007 compared to 6% in 2006.

Sequentially, when comparing the quarters ended September 30 to December 31, we saw revenues from the computing sector increase by 17%. Telecommunications sector increased by 5%. The medical sector decreased by 1% and the test and instrumentation sector decreased by 4% and the revenues from the industrial control sectors remained flat.

At this time, I would like to open it up for the Q&A session. During the session, we request that you limit yourself to one question and one follow-up question in order to allow enough time for everyone's questions. Thank you.

(OPERATOR INSTRUCTIONS). Steven Fox, Merrill Lynch.

Good morning. Actually, this is Celeste Santangelo for Steve. I had a question. Looking at your expectations for sales growth in '08, how much our wins from the new customers you mentioned contributing to that growth versus pure end demand?

At this point in time, I believe that the majority of the growth is coming from new product introductions and new sales wins that we have had over the last few months because I don't think that you see as much strength simply coming from units increases in sales forecasted in the current environment. I don't have a specific percentage to apply to that, but clearly we see part of our growth and a significant portion of the reason we feel good about 2008 is because of the groundwork that we laid in 2007, not because of the current environment.

Okay. And then just following up on that, can you provide a little more detail around the new customers, just maybe how many wins and what kind of markets they are in?

Yes, let me get Don to go back over the market wins.

As we said, for the fourth quarter, the wins were $64 million to $81 million.

Right. But I think you said those were from new and existing, so I was just asking on the new customers.

A guess I am not following your question. We had -- again, let me --

It's a mix of --

Right, it's a mix of new and --

New and existing customers, so it is about half and half typically in any given quarter.

Okay. Okay. And then just one more question on the operating leverage in '08, how do you plan to hit the earnings growth target of 15% to 20%?

I think what you will see, as you model through the numbers, that we have not anticipated --although our goal is still to get greater leverage on the operating margin targeting back to 4.5%. If you model through the numbers, we have not put that out there in the current environment. So making it more consistent with the current performance and planning for improvement, but not modeling the improvement in the numbers that are expected because of the general environment and the NPI ramps that always have costs associated with those.

Okay. So I mean a bulk of it is from the realignment put in place in '07?

Absolutely. We are really expecting good leverage from that.

Okay, great. Thank you.

Amit Daryanani, RBC Capital Markets.

Good morning. How are you guys doing?

Good.

Good.

I just have a quick question. Just to follow up on the full-year revenue guidance numbers, if I just look at the wins you have had in the last four quarters, the trailing four quarters, the average is about $465 million of incremental sales. If I take the midpoint of your guidance, it looks like sales will be up about $190 million. That seems a little less than 40% conversion of the new wins, so are end markets that soft or are you being a little bit conservative given what we have seen in the markets and can you help explain the differential on those numbers I guess?

Yes, we are trying to take into consideration the macroenvironment, which, of course, we can't escape; we have to participate in. And then at the same time, as you pointed out, it was an excellent year last year for new bookings. But the second thing there is always the timing and the actual ramp to volume. So kind of when you take a midpoint and then try to anticipate, okay, where are we going to be on these ramps and look at the macroenvironment, all of those have been considered in giving our guidance and clearly, we want to give closest-to-the-pin capability, but we certainly don't want to fall short of the guidance we have put forth. So we want to make sure that we consider everything that is available to us at any point in time when we give guidance.

Fair enough. And then just the new wins number, it looks like things slowed down a little bit. I mean we were running north of $100 million pretty consistently for the whole of 2007. Q4 is a little bit shy. Is anything meaningful to read into that or what drove that softness I guess?

No, I think it is the last -- Thanksgiving to the end of the year is typically not a significant point of time of answer, so I don't think that is unusual. Usually Q4 is whatever is a fallout or left over from the Q3 announcement.

And then just finally, didn't hear you guys talk about the medical segment. I know we had some FDA issues in 2007 that impeded revenues. Could you just update us on that?

Yes, what we see is the issues that we faced in 2007 are behind us and will not impact us going forward or no anticipation of impacting us going forward in '08.

So yes, we do expect the medical sector to be one of the higher growth sectors coming forth in 2008.

All right, thanks a lot. And nice job on the quarter, guys.

Thanks.

Thank you.

Kevin Kessel, Bear Stearns.

Good morning, guys. I just wanted to ask a question here on the servers and storage end market. That one was up the most of all of your end markets and your number one customer was up significantly on a sequential basis. It seems to me like it is even more than a seasonal bounce. Can you maybe say what drove that? Is that maybe new program growth?

Again, we are always perplexed on how to appropriately handle and respond to questions that are specific to a unique customer, but we've continued to have good strength with our customer base and are committed to growing with our customer base and aligning with them on very successful products and I think we are doing an excellent job of continuing to support our customers. So I don't know the frame of reference or why you are shocked by our strong results there, but I think it was as planned.

Okay. And then in terms of -- in terms of the Pemstar integration, it has almost been -- well, I guess it has been actually a year since integration happened. What would you say at this point is left to do and where would you say you are in terms of -- originally there was an outlined cost savings target of around $20 million, so where are we in that and what do you think about it going forward?

I think, as we said probably a couple of quarters ago, there is no separate entity, there is no segregation. It is clear lines of reporting, of [mission]. So it is done and what do we have now to do is to continue to grow with each of our existing customers and the combined organization and get the expected bookings and we are on path for that and continue to expect more on growth from that base.

Yes, Kevin, every time we do an acquisition, we will have a review of the transaction a year after that and recently, we had an over review that we did to this particular transaction and we have seen it, our operations and the financial goal for the acquisition. I think the synergies are there. It's much better than we anticipated. That is no way a surprise for the transaction. As Gayla indicated, once you integrate the operations together, it is difficult to segregate the information, but we are very pleased with the transaction. And the only thing left will be we still have the building in Tianjin we are working on and all other issues have been resolved, including the realignment activity has been complete and we are very happy those have been a little bit behind us, so we should begin with a good start for 2008.

And then just to clarify, when you guys are talking about your bookings, like today when you referenced seven new programs and you give a range, are these bookings also -- is it inclusive of certain programs that are going into the life where you get the next generation program or is it all additive?

No, we do not do generational refresh. That is not included in the bookings. That is expected performance.

That is expected? So this is supposed to be all additive then?

This is a new platform. For the current customer base, will be new platform or completed new programs.

New platform that does not replace --

I'm sorry?

I'm sorry. You were saying like a new platform that does not replace an existing one, one that would coexist?

That's correct, yes.

It is designed by definition to be incremental revenue.

Incremental? Got it. Okay. And Cary, you said 190 new design engineers or 109?

190, 1-9-0.

1-9-0? Thank you.

Will Stein, Credit Suisse.

Thanks, good morning, guys. I am just wondering if you can help us think about the end-market performance in March and for the full year. Can you give us an idea as to which you would expect to be strong or strongest and then which you think might be a little bit weaker for the quarter and for the year?

Well, I think you will see some consistent dynamics as far as first-quarter goes in that you will see the computing segment is typically not at their strongest in Q1. Medical is going to be stronger as we are coming out and also because they are not as significantly impacted by a Q4 versus a Q1 seasonality. Telecom I expect to be fairly strong because we have been growing there and industrial controls continues to be strong. Test and instrumentation I would expect to be somewhat flattish, but maybe shows signs of strength going into Q2.

Great. And then just a housekeeping question, can you update us on the tax rate? Should we expect that still -- I think traditionally we have been looking at 16% there. Is that what we should think for the full year and for next quarter?

Well, for the full year, we should be at 14% to 15%.

Great. Thank you.

Jim Suva, Citigroup.

Great, good morning. At the beginning of your opening comments, you made a couple of comments around the financial slowdown, what you have been seeing or whatever or at least reading about versus your demand hasn't slowed. Can you just be a little more clear on that? Is that what you have been hearing like in the newspapers and seeing or have your customers been talking to you or how can we kind of connect those two?

Well, of course, looking at the current uncertain market from a financial side, as well as from a housing side, we have spent a lot of time talking to our customers, major customers as well, we talk to our suppliers and the general consensus that we got back was that we will not see a significant deterioration of the demand so far and if you are looking at the other press release, the earnings release for the last couple of weeks, you will see a lot of tech companies doing fairly well and you will not see the significant deterioration. So from that point of view, we saw a very stable Q4 demand and going into the start of 2008 and Q1 results, the demand is still also stable. So that is why we see somehow a disconnect between the financial market and the manufacturing demand at this point in time.

Great. That's very helpful. And in past cycles, the leadtime when you picked up in changes, has it been a couple of quarters, a couple of months or what type of notifications did you receive of a potential slowdown.

Usually it is very rapid inactivity as far as when there is a slowdown, but again, it is anticipated based on leading indicators in the marketplace kind of downstream or upstream. That is why I think all of us, both customers, suppliers, the marketplace, is staying very tied out to look for any signs of weakening, which is what Cary was indicating. As you look around at all the activities around you in technology, we are not seeing it. You see it in housing. You see it in financials. You see it in so many different areas as a consumer, but you are not seeing it in technology. So you would see people react to the changes very timely, but you would start hearing reverberations of concern by the data points that you keep and that is what we are looking for that we have not seen yet.

Great. And a quick update on your greenfield site in China.

The facility is scheduled to go online Q3 this year and we see a snowstorm situation in China. We saw it slowly delayed, but the construction team we believe they can recover from that. So taken to a Q3 opening.

And was it planned to open in the first half of '08, so it has bumped a quarter or two?

Right, right, yes.

Okay. Thank you and congratulations.

Thank you.

Thank you.

Sean Hannan, Needham Group.

Thank you. Just a quick question. In terms of the recent Chinese laws in terms of wages and other changes from a cost standpoint, does that impact any of your current plans for your facility in China?

No.

No, I don't believe so. There is a lot of -- a lot of changes, tax law changes throughout the country, throughout the world all the time and the current labor law changes and the tax law changes, maybe it will be significant, but all the manufacturing companies are subject to it and so nobody has a business advantage. Everybody is operating in the same environment and that is probably the number one point.

The second point will be -- and our footprint in China is not really a significant portion of our total offering and the number three, we look for the -- demand step point of view, there is more and more end product consumed in China than the tech market. The tech companies will continue to invest in China to support the demand. So if you combine those three factors and actually the impact of Benchmark will be very significant and we will continue to pursue our activity in China.

Okay. That's helpful. And if I could just ask a little bit around the compute space and your top customer there, your percentage with them has -- obviously you pulled back as you have diversified over the last couple of quarters and years. Is it reasonable to now expect that we should continue to think of this customer in the low 20% range or do you perhaps see some further product transitions that could be disruptive there?

We continue to expect to have opportunities to grow our revenue base with them, but we don't expect it to take it up as a percentage effect. We like to continue to see growth in the remainder of our customer base as we have seen and therefore, we would expect that to stay at or below 20% as we grow the remainder of the customer base and continue to be committed and grow that customer also.

Great. Thank you.

Yuri Krapivin, Lehman Brothers.

Good morning. Do you expect the pricing environment to worsen and sort of the overall environment in the EMS space to become more competitive in 2008? The reason I am asking that question is that I think your guidance implies basically a flat operating margin, both year-over-year and relative to the December quarter and yet you will see some volume growth or I think you expect to realize some additional benefit from Q4 restructuring. You mentioned NPI, but you always have NPI, so I guess I am a little bit surprised that you essentially are guiding to flat operating margin here.

Well, I think we anticipated that the revenue will be ramping in the second half. Definitely, the operating margin will be an increase from the first half to the second half. As Gayla talked about earlier, in this uncertain environment, we had to take into consideration the impact of the macroenvironment and the inefficiency of the revenue new program into our guidance. And as far as the pricing environment, we do not see a very significant change as the -- with the several major transactions happening in 2007. As a more footprint we are taking out of the capacity, so we should not see a very significant deterioration in the pricing environment.

And can you review your capital expenditure plans for 2008?

We should be in the $40 million range for 2008.

That includes the building project in --

In Suzhou, correct.

Okay. And then the final question, can you give us the sharecount as of the end of 2007?

Weighted average shares?

No, you gave us weighted average, but do you know the count as of the end of the year?

Oh, for the --

Yes.

We estimated --

Factoring in the buybacks from Q4.

70 million shares.

How much?

(inaudible) is what is used for 2008, if that is what you are asking. If you need the actual count, then we will have to look that up.

The weighted average shares was 70 million.

Yuri Krapivin. That is for -- I'm sorry -- that is 70 million for Q1?

For the year.

For '08?

Yes.

Yes.

Okay. Thank you.

Brian White, Jefferies.

When we look at just the revenue growth for '08, what are a couple of the markets that you think will outperform? You mentioned medical growing nicely, but if you had to mention a couple, what do you think they are?

I think medical definitely will outperform all the segments as anticipated. So the issue is behind us, as well as a lot of new projects ramping. And probably the second one I will probably still put into the computing side as we add in more customers in that segment and it is not necessarily reflecting a strong recovery market, which is additional customers.

Okay. And if you had to think about the growth rate and parse it out between new programs and just your customers growing, what type of percentage would that be?

That is a hard one. I mean that would be just kind of guesstimating, but think of it this way, Brian. If I think out loud, the reality is we have a significant number of new programs that, over the last six to nine months that we are bringing on and that are coming out in the upcoming months in the second half of 2008, so I don't know where you want to consider them new and old, but to me, if I borrow the phrase from Europe, long in the tooth, we have more that are young programs taking market share, growing, providing new solutions, innovative ideas to our customers' customers than we have a long in the tooth that are a portion of our revenues. So how we want to say that 50%, I don't know what I would put in there as a percentage, but I have more products that I am excited about that have good upside opportunities than I do worried about the off ramp.

Okay. And just in the past, when companies went through big ramps in the MS industry, it impacted margins. How should we think about that as we move through 2008?

Definitely, we hope that that impacts into our numbers already and you always have some impact on your margin as you ramp new programs and that is what the guidance we have given is incorporated into our guidance.

Okay. And Cary, if you had to quantify though, I mean what is it? You ramped -- is it 10 basis points a quarter, it is 20 basis points? I mean I know you incorporate it, but what do you think it is, what do you think the impact is?

That is another hard one. I mean I think as someone pointed out on the call earlier, without that, you would expect to get more leverage from having things in there. What is the right answer? 10 to 15 basis points, I don't know. I would be kind of guesstimating kind of a with and without calculation.

Okay. And just finally, appetite for acquisitions, do we have any appetite for acquisitions in '08?

We will continue to work on the acquisition front. We have a team working very hard and diligently looking at all opportunities available. Again, we are looking for certain assets to be mixed in for Benchmark in the longer term and most likely, we are looking closely for the scale-related acquisitions, i.e. the capability we don't have or capability we don't have as well. So those are assets we look at and definitely there are a lot of assets out there and it is difficult to find a good one, but we are working very closely all the time. So the acquisitions still is part of our focus at this point in time.

Okay, thank you.

Alex Blanton, Ingalls & Snyder.

Alex Blanton, your line is open.

Operator, we will take the next call.

Amit Daryanani.

Thanks, just a question, calendar '08 guidance, obviously you may complete the entire $125 million buyback that is authorized or what is built into that?

We are only -- our base -- the guidance was based on a $70 million sharecount for the year. If we buy more, we would reduce accordingly.

Okay. And then just -- in terms of follow up to the last question in terms of acquisitions, what is the appetite to potentially do more buybacks versus acquisitions? I mean how do you look at those two options right now?

We will continue to discuss with our Board and the management team as to what will be the best way to utilize our assets and as you see, our cash position was significant and we will look at the best way to deploy the cash.

And just looking at cash flow in 2008, 5% to 8% growth is certainly not a high amount of growth, so would it be reasonable to expect you guys to continue to generate cash in '08?

Yes, I think for '08, cash flow from operations is probably $75 million to $100 million.

Okay, thanks a lot, guys.

We will take one more question, operator.

David Fondrie, Heartland Funds.

Yes, good morning. Could you help me understand the increase in SG&A expense sequentially? It looks like it went from about $22 million to $24.5 million, a little over 10%.

Well, as we said on the call notes in the opening comments, we accelerated the facility closures and resulted in some inefficiencies and again, just accelerated the closure. So we are well-positioned to go into '04 -- I mean '08. So that is the primary reason -- again, just accelerating the closure of our five facilities.

So there is costs associated with the restructurings that are not technically restructuring costs that were incremental to an (inaudible) base of costs.

Okay. Were there some costs of that nature also in cost of sales?

Yes.

And then lastly, if you would, please, could you give us an idea of the average cost at which you bought back your shares, the average price that you bought back the shares?

Well, I mean you can do the simple math. You have got the shares --

It was $74 million through February 4 and about 3.9 million shares.

Great. Thank you very much.

Thank you, operator and thank you, everyone, for joining us on the call today and we look forward to seeing you in the near future.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T executive teleconference. You may now disconnect.