DISH Network Corp (DISH) 2005 Q1 法說會逐字稿

Good afternoon, my name is Tiffany and I will be your conference facilitator today. At this time, I would like to welcome everyone to the EchoStar first quarter 2005 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [OPERATOR INSTRUCTIONS] Mr. Kiser, you may begin your conference.

Thank you for joining us. My name is Jason Kiser and I am the Treasurer here at EchoStar. I am joined today by Charlie Ergen, our Chairman and CEO; David Moskowitz, our Executive Vice President and General Counsel; and David Rayner, our CFO. Let me give you a quick recap of the financial performance for the quarter and then I will turn it over to Charlie for his comments, before we open it up for some Q&A at the end.

Before we get started, as you do know, we do need to do our Safe Harbor disclosure, so for that, I'll turn it over to David.

Good morning, everyone, and thanks for joining us. As you know we do invite media to participate listen-only on the call, so we ask that the media not identify participants and their firms in your reports. We also don't allow audiotaping of the conference call and ask that you respect that.

All statements we make during the call that aren't statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results or from any further -- pardon me, any future results expressed or implied by the forward-looking statements.

I am not going to go through a full list of all the factors that could cause our actual results to differ from historicals or forward-looking, but I'd ask you to take a look at the front of our 10-Q for a list of these factors. In addition, we can face other risks described in the 10-Q and in other reports we've filed with the SEC from time to time. All cautionary statements we make during the call should be understood as being applicable to any forward-looking statements we make wherever they appear. And you should, of course, carefully consider the risks described in our reports and not place undue reliance on any forward-looking statements we make. We don't assume any responsibility for updating any forward-looking statements as well.

Please also note that during the call we will refer to the non-GAAP liquidity measure of free cash flow. Please refer to our 10-Q, which is available on the Investor Relations page of our website, for a reconciliation of free cash flow to net cash flows from operating activities. I'd also note for those of you who may be interested in EBITDA that our 10-Q contains a reconciliation of EBITDA to net income.

With that out of the way, I will turn it back over to Jason.

Thanks, David. Let's take a look at the quarter. We will start with the total Company. Total revenue for the quarter was 2.02 billion, an increase of 5% over last quarter, and 28% higher than the same period a year ago. Continued strong subscriber growth and higher average revenue per subscriber were the primary drivers of the increase.

As we mentioned in our 10-K, during the quarter we sold our outstanding insurance claim related to EchoStar IV for $240 million. Of that amount, 134 million was in excess of the receivable on our books and has been classified as a gain during this quarter's results, which needs to be taken into account when looking at EBITDA, net income, and earnings per share. The gain did not impact free cash flow since it flows through the cash flow statement as an investing activity, which is not included in our definition of free cash flow. All the amounts we are mentioning here today include the $134 million gain.

From an EBITDA perspective, we generated 596 million during the quarter, an increase of 250 million over last quarter and 373 million higher than the same period a year ago. Net income for the quarter came in at 318 million, an increase of 247 million over last quarter and 360 million better than last year. Basic earnings per share for the quarter were $0.70 compared to $0.15 last quarter, and a loss per share of $0.09 for Q1 of '04.

During the quarter, free cash flow was $174 million. This represents a 269 million increase from last quarter, but a 7 million decline from the same period a year ago. The increase from the prior quarter resulted from an increase in operating margins and a decrease in satellite payments and refinancing costs.

Let's look at the DISH Network specifically. During the quarter, we added 325,000 net-new customers, this represents just over 39% of the incremental growth in the DBS industry for the quarter. We ended the quarter with 11,230,000 subscribers. Churn for the quarter was 1.44% compared to 1.51% in Q4 and 1.48% for the same period a year ago.

During the quarter, our average revenue per subscriber was $57, an increase of $1.21 per sub over the fourth quarter and an increase of $5.24 for same period a year ago. The increase year-over-year in ARPU was driven by several items. We continue to have reductions in the number of subscribers receiving free or discounted promotions. We had price increases of up to $3 in February. I should point out that based on billing cycles, less than a third of the increase actually flows into Q1 but we will get the full effect from this point forward.

We continue to see increases in advance set-top box households which show up as increased ARPU from the additional fees we receive. Equipment sales, installations, and other services related to our relationship with SBC has contributed to the overall increase as well. We also had higher equipment rental fees resulting from increased penetration of our lease program. And lastly, increased availability of local channels which has now increased to 158 markets has helped to increase ARPU as well.

Subscriber-related margins increased by nearly 170 basis points from Q4, but were below Q1 of last year by over 60 basis points. During the first quarter, subscriber acquisition costs plus the capitalized portion of amounts recovered under the lease program, increased 3% or $18 per add from Q4. For the quarter, we averaged approximately $623 per gross addition compared to $605 for Q4 and $604 for the same period a year ago.

The increases in SAC were primarily the result of several factors. First, the continued shift in mix towards leases, which adds to SAC, since lease customers tend to have a higher number of boxes and/or tuners per household which increases the metric. We've also offered more free equipment either through more set-top boxes or higher-cost boxes for advanced services.

It is important to reiterate while this has a negative effect of increasing SAC, there is ultimately a corresponding benefit in ARPU from less discounted programming and additional fees from multi-box households and advanced services. Additionally, the portion of SAC related to installation increased on a per-add basis as a result of more time-consuming and technically complex installs resulting from multiple-box households and the Super Dish product.

Let's take a quick look at the balance sheet. At the end of the quarter we had approximately $6 billion of debt. We also ended the quarter with cash and marketable securities of 1.23 billion, which excludes $60 million of restricted cash. During the quarter, we repurchased about 1.5 million shares of our Class A common stock for approximately $42 million under our current stock repurchase program.

On a total debt-per-subscriber basis, we ended the quarter at $532 per subscriber. On a net-debt basis, that dropped to $422 per sub. Capital expenditures in the quarter were 303 million, with about 224 million of that amount going for capitalized lease equipment and the remaining 79 million for satellites in general corporate CapEx.

That's everything on the numbers. With that, I will turn it over to Charlie for a couple of quick comments.

Well, I think it was a relatively non-eventful quarter, it was a solid quarter for us, with possibly the only -- the potential negatives being SAC up a little and SBC de-emphasizing -- continue to de-emphasizing satellite in their distribution network. But other than that, we made improvements in other areas of our business.

So with that, I will take questions.

[OPERATOR INSTRUCTIONS] Your first question comes from Steve Mather with Sanders Morris Harris.

Thank you. Just one detail, the cost of sales related to sub promo, how is that so low at just 36 million. And then I have one kind of broader question, Charlie. I have kind of been studying your firm for a while, you have executed very well to date. I expect Q2 to be pretty decent quarter as well. Can you share a little bit about what you are doing now to adjust the challenges that will show in a few quarters. You list them out in your Q, you talk about SBC and improving DTV at DISH Network and to DISH local, and all these things, with SAC HD. Those are my two. Thanks.

I didn't understand the first part. But what was it, 36 million of cost of something?

Yes, SAC cost sales went down because of the increase of lease penetration [inaudible].

Oh, because we are capitalizing?

Correct.

So it is really because -- it is not -- it is a little bit misleading in a sense that it is lower because lease penetration is higher, and so that particular number is when we actually -- customers come in on a non-lease basis and own the equipment. That's why that is.

I think there are obviously a number of challenges for everybody in the paid television universe. I think it is pretty much across the board. I think in a market where you used to have -- I think in our NRTC territory, we used to have serious competition from a cable company maybe. Now we've got competition from -- from direct -- new -- a consolidated DIRECTV and a cable company and maybe a phone company in the future. In urban areas, you've always had at least three competitors, now we have at least four with the phone companies coming in. Obviously, there's more competition in the marketplace.

On the other hand, like anything, when there is change, there is tremendous opportunity for a company who -- whose management team can take advantage of it and of course remains to be seen whether we're good enough to do that. But obviously the first -- what you want to first do is control the things that you can control. So you want to control your costs, and make sure you are getting good customers. It is easy to get customers today if they don't have a Social Security number or don't have credit. We can add a million customers a month if we wanted to go that route. But we don't think that makes economic sense for us.

I think you have to have discipline and you have to make sure you control your cost. So you have to be very efficient in how you service your customers, install them, talk to them on the phone, build your product, install it, market it, and we'd have room -- I think -- I think everybody in the industry has got room for improvement there, and certainly we do. And if -- the company who gets those costs under control and has the discipline is going to be well positioned in a competitive -- is better positioned in a competitive marketplace.

Second thing that happens is, one of the opportunities with new technologies. Obviously broadband is something that both the phone and cable operators today have an advantage in, and so what -- what can we do as a company to take advantage of broadband opportunities? And, that's something that strategically we have to focus on as a company. And new technologies come along and allow us to -- we believe will allow us to compete in that marketplace, but obviously we are going to be later entrance into that marketplace than cable and phone.

Having said that, they've kind of made their bet, and they've made their bet with fairly expensive rebuilds and maybe there's -- we'll have to look and see if that's something that we can compete on. Maybe, maybe not. If we can't compete, we better be that much better at the video side of the business.

We never have built our business plan on partners selling our product for us like SBC, because that tends to be -- I mean obviously that appears from a phone company perspective to be relatively temporary strategy until they can get their plant equipment in place to do it themselves. Most of the phone companies are out getting their own programming contracts, deploying fiber and so -- as we said all along, that's not a surprise that that might be de-emphasized. On the other hand, our SBC relationship continues to be a good one for us at over 400,000 -- right at 400,000 subscribers. We have no SAC in those customers. Those are economic customers for us today.

And so I feel like the -- I feel like there are a lot of challenges, but nothing to the level of challenges that we have had in the past. Compared to 1994 when we had no money and no customers and no digital set-top boxes and no rocket launch, and I think the problems for us are manageable and the opportunities are there. And I think it is really up to us to decide where we place our bets. We are a company that will tread water until we are ready to place a bet, and then we will place a bet in a big way.

The good news is, our balance sheet is strong and our business is strong, and we are prepared to do that when we find out something we think is the -- we get a return on it. Do we have a road map that we are ready to put out there today? No, we don't. Because I think it is just too uncertain. Other people have made their bets, and that's a good thing for us because it allows us to see what the playing field is before we -- before we make those bets.

Thank you, next question.

Your next question comes from Tuna Amobi with Standard & Poor's

Tuna Amobi from Standard & Poor's Equity Group. Thank you. Good morning -- good afternoon, actually. First on the SBC partnership. Can I get a sense of kind of the breakout of -- out of the 400,000 subs that you mentioned, Charlie, how many of those were actually added this quarter? And DIRECTV actually also broke out their -- their Hispanic audience additions for the quarter. If we can get that metric from you as well, that would be helpful, because I know that you guys are actually the leader in that area.

And separately, we heard from Cablevision just a moment ago regarding your -- your deal on the -- on the VOOM. As I was actually looking for some thoughts on what -- what your strategy for those channels are? How do you see that kind of stake panning out over the next couple of -- couple of years and do you have the capacity -- is that part of your plan to kind of use your spare capacity? And how much of a capacity challenge will that present?

And finally, just not too many questions if I may, last week you guys filed a follow-up on the TiVo litigation. I am just kind of wondering if that's a distraction? How do you expect to settle that? Thanks.

Let's start with SBC and Spanish subscribers, we don't break those out. SBC may break those out on their conference call, but we don't break those out, but we have disclosed they continue to de-emphasize our product and we expect that to continue. Obviously, in the Spanish market, there's -- we are comfortable where we stand there, and obviously that -- that is a critical area to have credit controls in place and make sure you are getting Social Security numbers and so forth. I think we have shown good discipline there.

As far as VOOM, again, we have announced that we have a small equity interest in VOOM, and we are putting the channels up and including the VOOM packages in our HD packages going forward. We are doing ten of their 21 channels today at 61.5 so that their customers cannot be disenfranchised. We expect to expand that service with VOOM around the first of the year. So around the first of 2006 as we move to impact -- deploy MPEG-4 on a wider basis and expand the 21 channels of VOOM.

So we think we have a chance to be a leader in high-definition television. We think we have a chance to, as an industry to be -- if you look at what DIRECTV is doing with their K-Band satellites to expand their HDTV and local HD. I think our industry has potential for some momentum there for very high-end product, high-end customers. It's a product that cable has a very difficult time because of bandwidth restrictions. Phone companies will have a tough time to put that on multiple sets in a house. And it's something that we think, as an industry, we have -- potentially have some advantages.

We, too, are looking at local-to-local for HDTV. It is not a 2000 -- HDTV is not a 2005 event for DISH Network. It is a 2006 event, because realistically, we're just not going to have new volumes of MPEG-4 product this year. We have got working models that we are showing and we are testing, but my experience has been from the time we get working samples, it's at least six months before we can get those into production, so you are looking at 2006 kind of factor for our business, but we think that that's an area that we can compete in very well. I think maybe the consensus is that HDTV is more of a cable advantage. But I disagree with that. I think history will show that will ultimately be a satellite advantage product.

And we are pleased to be able to do something with VOOM, where the management there has a vision of taking HDTV to another level, and at least for those customers who believe HDTV is important to them, VOOM has a tremendous chance if they execute it and make the investment to be the leader and become the destination of choice for HDTV. We don't control that company. We don't make the decisions day to day. But we really like the people there that we are working with, and we're excited about the prospect of working with them.

As far as TiVo, our expectation there is that we will prevail on the litigation against us, and that we will prevail on our litigation against them. So, David, maybe you want to comment on that?

Well, I think that is exactly right. Any litigation is something of a distraction from your core business, but the TiVo litigation is not a major distraction for us. We always look -- look at the cost of everything, but we feel very strong about our position in the litigation they filed and the litigation we filed against them.

There are a lot of companies that you might want to litigate for patent infringement, I don't think EchoStar would be your first choice. But we'll see. We have a good track record and we intend to build on that track record. I think it is very difficult for the investment community to understand the ins and outs of patent litigation. But we take people's intellectual properties seriously.

We use all reasonable precautions to make sure we don't violate somebody's intellectual property, and we don't appreciate it when people violate our intellectual property. And we have -- we obviously have some intellectual property, particularly in the DVR space, and we have obviously more applied for that we are hopeful that we will be granted in the future that will strengthen our portfolio. And where we think we have issues such as, to where we think there is business deals to be done, we have done deals in the past with the Gemstars of the world that we think are win-win situations for both companies and where we think that they -- where we don't violate, we fought it to the -- we fought it to --

To your conclusion.

And I think it is one the strengths -- I think it is one of the strengths of our Company is our patent team and our engineering team. But you can make your own bets.

Next question

Your next question comes from Robert Peck with Bear Stearns.

Robert, are you there? Operator, go on to the next question.

Your next question comes from Tom Eagen with Oppenheimer.

A question about SAC. Charlie, you seem to have some success in capturing some of the boxes and then reselling them. My first question on that is how much you think you may be able to reduce the overall SAC because of that? And then secondly, on average, how much do you think SAC will increase, say in later in '06, with the advent of rolling out MPEG-4 and HD service. Thanks.

That's a good question, Tom. I think that you got two factors going -- kind of the rest of this year. One is that we see continued improvement for recapture boxes as that builds -- as that obviously builds momentum with a more mature base out there on our lease, it's been going out for 18 months or so. So you've got that -- that is a positive influence.

You have negative influences on SAC as SBC becomes less a percentage of our business than were -- to the extent we replaced those customers with sales -- our own sales and we have a higher SAC, because, obviously we had no SAC in their model. So you have those two counterbalancing factors. It is too early to tell how that kind of shakes out for the year, but those are the -- those are counterbalancing factors out there.

As you go -- as you move to MPEG-4, it is going to be very interesting, because it -- we have a little different strategy. Our -- we have been shipping something called 8-PSK for a couple of years now, which it gives you about -- gives you about a 30% improvement in your -- in your broadcasting. And MPEG-4, obviously, is going to be very expensive in 2006 and then come down in price as mass productions comes in place.

MPEG-4 is not going to give you the full -- because the encoders are going to get better and better, it's not going to give you the full benefit in 2006. It will in 2007, 2008, 2009 before we get all the benefits. So we have a relatively slow transition to MPEG-4 probably versus our competitors, and so I think that it will -- I think it will be an influence in a couple different areas. It will be a negative influence in the sense that a MPEG-4 box will be a little more expensive next year than a MPEG-2 box today.

Secondly, you will have more upgrade retention potential cost than would you have, say, this year. That's somewhat counterbalanced by the fact that you are only going to MPEG-4, at least we are only going to MPEG-4 initially for things like high-definition television, which are very good subscribers and very high ARPU subscribers, so you're getting a much better class of subscriber.

And second, we believe that maybe we've made some mistakes in the sense that we don't charge as much as perhaps the competition for upgrades, and we have an opportunity to maybe to revisit that and see whether -- whether we should be making the customer bear some of the freight for the new improvements and new channels and so forth. And, again, to the extent that the market -- the marketplace allows us to do that as it appears that maybe that is the case, then we have a chance to spend a little bit less in retention marketing or upgrade for our customers there.

So how those factors all come together and how that actually flows to the bottom in 2006. it's a little bit early for us to tell because we haven't started our budget process. But we think we have got a much -- we think that we've got a much better -- we thought about our transition a couple of years ago and I think we have a little bit better path to a transition to MPEG-4 than perhaps cable does to digital or our competition does to MPEG-4. We are a bottom-line oriented company and I think we see opportunity there.

Thanks. Operator, next call?

Your next question comes from Kathy Styponias, Prudential Equity, GR.

Hi. Kathy Styponias from Prudential. Two questions. Charlie, since you are talking about sort of looking forward at SAC and retention costs, I was also wondering if you would comment on what your expectations are for churn, just qualitatively, as you roll into the second half of the year in '06 as we are seeing the cable companies getting more aggressive on phone, we are seeing pretty dramatic reductions in their churn. And I am just wondering whether you are assuming that your churn rate, which was very impressive this quarter, is going to trend up. Thanks.

Yes, I think that we will follow the historical seasonality of churn. We are probably not through all the churn on our price increase because your price increase, the customer gets a bill in late February. He's got until -- he's got until the end of March to pay before he goes into a soft disconnect. He becomes a churn sometime in April.

So you are not through the whole effect of that, but we have price increases pretty much every year now, so that from a seasonality point of view, won't probably have a material difference, but we tend to be lowest churn in the first quarter. Highest churn, I think, in the third quarter if I'm not mistaken, because of summer, because of movers, and we would expect that that historical trend will continue.

And, again, you can get a feel for that based on how our first quarter this year has compared to first quarters in other years, it would probably give you some indication of where we might end up. And, obviously we have had credit policies for well over a year now, and we know that hurts our gross additions, but we know that on the back end, that -- that it doesn't make sense to invest $600 on a customer who is not going to last 30 months. So we make those hard decisions here and I am -- I am pleased that we've made that transition to credit, Social Security numbers, and so forth, because we know that has a positive impact on us long term.

Your next comes from Craig Moffett with Sanford Bernstein.

Yes, good morning. You announced the -- your May promotion where you have gone back to a discount on the programming itself. You changed that in June, as I understand it. But can you talk about the decision to resume a program that, Charlie, I think you said that you weren't particularly enamored with programming-related discounts about a year ago. Has anything changed your mind? And can you talk about the impact that it's likely to have on ARPU.

Nothing has changed my mind. I don't like the promotion. But I'll make -- but that's what -- that's what our marketing distribution guys felt they needed to do based on the marketplace. And I didn't have any better ideas. But I don't like it, because that's really our core -- I don't like the discount programming because it's -- I just think that it -- so it is a very watered-down -- a very watered-down kind of promotion in the sense it is three months. You have to sign a one-year commitment. Some people don't sign a one-year commitment, so they don't get it. And -- but yet it allows you to go out with a price point that a lot of people -- it is really standard now.

I mean really the -- almost everybody is discounting programming somehow for the first month, three months, six months. They buy your dish back. Maybe it is discounted for the first year. I think it's -- I am a bit disappointed that that's what we are doing. It is a bit of "me too" kind of promotion that I prefer not to do, but I don't have any better ideas. So I am spending a little bit of my time on what we will do next year, not so much what we're doing this year. Our team -- the management team this year has to figure out for this year. So nothing has really changed my mind.

It does have negative impact on ARPU, because -- at least short term, because you get a customer coming in at 19.99 that might normally be coming in at 45 -- 40 -- let's see, about $40 or you're giving a $12 discount, so you can probably calculate that out with your gross additions, come in at $12 discounts, and you can figure that out. And so that has an impact on ARPU. Negative impact. Of course, that goes away and becomes actually a slight positive as some of the customers retain the higher-end programming, so if a guy gets 180, a lot of customers will retain 180 and it actually -- it can play to a benefit post the three-month period.

It will have an impact on ARPU for both the second and third quarter because we will have people come on in July, that will go July, August, September, and even into October on lower ARPU. So it will effect us the next two quarters and actually a little bit in the fourth quarter. The other thing that will affect ARPU in a negative way is SBC's -- if SBC does, in fact, de-emphasize, continues to de-emphasize our product, then our gross additions and installs go down and some of that money flows through to ARPU in a kind of awkward way, but it does flow through ARPU, so that will have a negative impact.

On the positive side of ARPU, some of our price increase is not in ARPU today. In this quarter it will be fully -- and next quarter. And obviously we have opportunity to sell additional features, whether it be interactive or increase advertising or increase pay-per-view. We have other ways we have to -- that we have to increase ARPU.

How all those factors come together into ARPU? Don't know. Right? It is kind of -- it's interesting. We have -- we have pulling forces in SAC. Kind of tug of war in SAC, both positive and negative. We have tugging variables in ARPU, both positive and negative. Of course, our goal in management is to tug on the positives and more than the negative. So, we are just pointing out the factors.

Your next question comes from Tom Watts with SG Cowen.

Hi, Charlie. In terms of the lease program, have we seen pretty much a stabilization of what percentage of subscribers are leasing versus purchasing or is that still changing? And have you had any changes in terms of how you use the lease program? Is it virtually everybody who -- is the purchase program only for people who don't pass credit checks? And how is that likely to trend in the future?

I think the trend continues to be more and more towards lease. I don't know that we're -- I certainly think we're nearing a maturation point of that in terms of lease. We don't lease to anyone who doesn't have credit. So you have to have good credit, and if you don't -- if you don't have credit, we are really in more of a no-SAC model. Which means, you've got to pay for the equipment, and if you churn on us, while our churn number looks worse, from on a bottom-line perspective, we're no worse off.

For example, SBC churn, to the extent that that tracks higher than our churn, because we don't control -- we don't control who they sell to and we don't control their credit policies, if they have one. While that might increase our SAC in a negative way -- I mean, our churn in a negative way, it doesn't really affect us in the bottom line the same way that our churn of our customers would affect us.

So, we're very comfortable where we are on our lease. It is the right thing to do. It is logical thing to do. You know it does have the benefit of reducing your SAC going forward. And it obviously is more important on the more advanced products. I think you heard earlier this week that our competition is looking at emulating some of the things we are doing there, which I think makes sense.

Sure. I know you commented on the direction of point-loaded SAC going forward and the factors driving that. Is that a number that we can get -- could it get to 700 over the next year or two as you start putting MPEG-4 product and other products out there?

That's so much by what the competition does

I don't know the answer to that, but I would say in a general way, to the extent that we ever spend $700 on somebody, we would expect a higher ARPU and a lower churn. For us, it's a number of variables. We talked about this on virtually every conference call we have had. Not all SAC -- not all customers are equal. There are customers that you can justify $1,000 a SAC for. There are customers you can't justify even $1 of SAC for. There is churn, there is churn that hurts you. Your top customers. There is churn that doesn't hurt you so bad, an SBC customer that churns has a lot less impact on us than a churn -- a guy that's paying us $75 a month.

We don't break those out in our financials, so you only have a general feel for that, but I -- the CFO, Mr. Rayner can answer this, but I bet you -- I bet you there are half a million customers that we have today that we lose money on. And I would love to have churn them tomorrow. And I don't know why we haven't churned them off. And I wouldn't feel bad telling you I had 10% churn one quarter and I got rid of 500,000 customers I don't make money on, because they don't have a very high ARPU and they call all the time and they have service calls all the time and they don't pay their bills on time and that kind of stuff. Now you guys would think the churn -- you would go crazy because churn went up. I would be the happiest guy in the world because my bottom line would be better long term.

So I think from an analyst point of view, at some point you got to say, do we trust this management team to be physically sound and disciplined or do we want to look at the same metrics that everybody else does, and try to value the Company just on metrics. And I think that -- while we certainly look at all those metrics, we are looking behind those numbers and trying to make sure we do the right thing, which is why ultimately you're going to go down to free cash flow and earnings, and it all falls out. You can't hide it when you get down to those kind of metrics.

Great. Thanks a lot.

Your next question comes from Doug Mitchelson with Deutsche Bank.

Thanks. Hi, guys. A few questions. I will just throw them at you one at a time. To help us on HDTV, maybe you can give us a sense with the capacity level you have in the air this year, how many national HDTV channels you could broadcast, how many local markets could you cover now? And then what capacity you're working on and additional coverage that might bring?

Okay. With the -- the VOOM satellite has not been approved by the FCC, but we expect that, again, in the next several months that we will get approval. Cablevision had -- there's no opposition to that transaction today. All the opposition has been dropped, so I think we're -- we're cautiously optimistic that that will be approved before the next quarterly conference call. That will give us capacity to do -- and we do 20 -- over 20 national channels today of HDTV. That will give us capacity to probably do in the neighborhood of 50 HDTV national channels in probably 20 local markets of -- between the 148-degree satellite and the 61.5-degree satellite. So with a two-dish solution for those HDTV lovers out there, we probably have the capacity to do 20 local markets and 50 national channels or we can do maybe 30 local markets and 30 national channels. I mean you can bury it around a little bit.

And more capacity comes on in '07 and '08.

More capacity comes on in '06 with Echo 10, and Echo 11 in '07. So you have more capacity coming each year.

And then --

With '06 being -- I mean, the problem -- HD on a national basis is relatively economical. As long as somebody has a pretty good program, that's going to be economical. HD on a local level is unknown. The cost of [inaudible] fiber is astronomical, it is four times what it is for analog. The terrestrial, as broadcasters build out their terrestrial networks, the signal, you either get it perfectly or you don't and that's a big difference from analog.

And so in many markets what the broadcasters are centrally located on, and they do a good job of broadcasting as they -- then the terrestrial solution is a pretty good solution because it interfaces into our set-top boxes with the guide and recording capability and it is free. And so that's one we are still wrestling with in terms of which markets are actually economical. It doesn't make us-- do any good for us to do the 45th biggest market and lose $100,000 a month on HDTV all-in.

We have some challenges to economically figure out strategically where we would go there. And each city is a little different. Of course, and the law now is the broadcaster doesn't broadcast a digital signal, but there may be opportunity to bring in a national signal in some cases. That's not clearly defined in all cases yet, but those economics are -- I mean, we are pretty sure the top 20 markets are going to make some sense. We are not sure the 21st market is going to make sense. We are clearly not sure that the 51st market makes sense. But we will see. Even in analog, we are at 158 markets, the economics of the 159th market are not very good when you consider fiber cost and the incremental customers that you are going to get.

Okay. Let me -- moving on --

We -- I think there is still opportunity in the local-to-local HD, and to grow our industry, and I think the analog is pretty much done. And, I mean, you could spend money like a drunken sailor in this business pretty easily to do everything, and you will find out that you made money on some of your investments and you didn't make money on others. We are trying to spend money where we think we have a 51% chance of making money. Not a 49% chance. Right? And right now we are spending money on stuff that we got a 90% chance of making money on.

That's a nice segue into -- you talked in the past few quarters about managing your cost base better. Have you achieved your targets there for cost?

We have room -- we still have room to -- it is nice that we saw some margin increase in -- pre-marketing cash flow and EBITDA and so forth. That's a little bit -- part of that is the price increase. You can't get too carried away -- I mean, we should get some credit and it's not quite maybe as good as it looks because of the price increase. We still have room for improvement there. And, we are not -- we are not there yet, and we are probably not moving ahead as fast as I would like to see, but we are improving, and I think it is critical that we do that.

Can you point us to any particular cost categories that we should be paying attention to?

Well, I think that the cost improvements for us are just how we manage our business and every step of the way from payroll to variable costs to just everything, we could be better in every -- there isn't one piece of business that I look at that I can't see room for improvement in. And, of course, that hasn't changed in 25 years because I am a perfectionist, but there is always room for improvement, and I think to compete in a very competitive market -- in a more competitive marketplace, we have to do that.

And then --

And then for the last two quarters, we made progress. We had a couple -- had about six quarter in a row where we went the wrong way. And hopefully we bottomed out and are going the right way now.

And then last question in terms of the share shift with DIRECTV this quarter. DIRECTV talked about the gains in the RTC and Spanish-language. I know you don't want to break it out, but is that the area where you saw the share shift this quarter?

Well, I guess I would say we felt we had a solid quarter and we kind of look at how -- what we think -- what we are capable of doing, and I think we were in line with where we thought we were capable of doing it. And I think that to DIRECTV's credit -- as long as we do what we think we are supposed to do, we are pretty happy, but to DIRECTV's credit, I think they are doing better than maybe they expected to do, and obviously -- obviously, we knew that the phone companies, that the new -- the phone companies get pretty excited the first -- the first year they are selling your product, right?

And they get all excited about it, but it gets a little tougher when you don't really understand the business as well as somebody who has been in it for 10 or 15 or 25 years. They are going to get some momentum there and we obviously expected that. Obviously, the NRTC territories are areas where they have had negative growth for the last three years, and obviously, they had nowhere to go but up there, and so, obviously that has been a strategic disadvantage, which is now a strategic advantage.

Hispanic, it's hard to tell on the Hispanic side because that's a very -- that's an easy market to grow with no credit. That's not as easy a market to grow with credit policies. So, I think that they -- I think they talked about it in their -- about 10% reductions when they go to credit. I would guess that a fair amount of that would come out of the Hispanic market as opposed to their normal customers. But -- look, they can have every -- look, if there is a customer out there that we can't make money on, I hope cable gets them.

I hope first and foremost the cable companies get them. But if cable companies don't get them, I'm okay if DIRECTV gets them too.

Thanks for all the time.

Operator?

Your next question comes from Vijay Jayant from Lehman Brothers.

Thanks. Charlie, your business is strong and your balance sheet is strong. You haven't bought back that much stock, at least we thought. Following up on that, are there any plans in your mind to take this Company private given the stock has languished and your business has improved in the last year?

We haven't looked at -- we haven't looked at taking it private seriously if that's the question. We are opportunists and we look at -- I'll say it again, we look at all the factors in terms of should we buy back debt? Should we buy back stock? Should we invest in another company? Suffice it to say that there are times when we feel that our stock is at a value where we should buy it back, vis-a-vis other investment opportunities. Obviously, we still hold a fair amount of cash, so we believe there are -- there may be other investment opportunities for us as well. We have -- we do have a debt issue that is callable January of 2006 that is 9 and an eighth, depending on where the interest rates are. We will take a look at that. It's -- there is a price where we buy our stock back.

But, Charlie, what is different from last year when you bought back $1 billion?

We have less cash. $1 billion less cash. And -- and I think that we see -- we probably see a fair -- a greater number of opportunities out there as well. I mean, we see a lot of options for opportunities that maybe we didn't see last year. We look at all those factors. We don't -- and we evaluate it -- stock, because you have -- what are those things called, those buy programs? 10B-51s (ph) is typically how we do it and we just evaluate every quarter.

Great, thanks.

And our buyback program ends in August, I think. So -- and I don't know if our Board would do anything different or extend it or redo another one or whatever.

Your next question comes from Doug Shapiro from Banc of America.

Thank you. I guess a couple of things. One is, besides Echo 10 and 11, I think you also have deals for four capital lease satellites with SES, and I think you also have [inaudible] in satellites on order. If you are unconvinced about the economics of local-to-local HDs, then what is all that capacity for? I guess that is the first one and I have a follow-up as well.

Okay. Basically, we are putting our -- I think you are likely as a company to put yourself in a position to take advantage of those things that might happen, and we think there are things that might happen that make those prudent investments in leases. And we think that we have business opportunities for all of those. We obviously will re-evaluate those before we -- we have opportunities to not deploy those in some cases, and we evaluate those before we do. We have two of those satellites up today.

In the FSS business, we think we have solid uses for those in terms of moving forward, and one of those uses is broadband, and we are taking a serious look at re-entering the satellite broadband business. We may or may not. It's -- it still has some technical hurdles to overcome. And we believe that -- that we believe there is capacity for HD that -- that we do believe HD is a business, and we believe that there is capacity needed for that. And so, we are positioned to have that capacity. We either have that capacity or are positioned to have that capacity.

And we are also in the business of -- we have a small business of lease -- of leasing transponders to other people, and we still have that business we think will grow with our capacity as well. So not so different than what a [Inaudible] does. I think we are in a position now where we probably have more satellites at our disposal over the United States than anybody else. I think that is probably true.

We have -- we have great -- we have great uplink centers. Great fiber connectivity across the country from 158 cities, and we have encryption system and set-top box and DVRs and a lot of things that would be attractive to a lot of customers, and I think we just have to build that business, and we probably haven't done as good a job as we can there. It is a good -- it is a good profitable business, and as we deploy assets with extra capacity, we will video the ability to do that.

Some of those contracts are cancelable is what you are saying, right?

Yes.

Okay. Then the follow-up was, I had heard that at the dealer summit last week, you -- maybe this is the wrong report -- but that you'd unveiled a broadband product that you intend launch near the end of the year. Is that right?

We showed several broadband products, none of which we've launched. So we have showed the technology, we showed what we can do, and we have a few more hurdles to -- a few more hurdles to overcome before I would give the go ahead to do that. I am cautiously optimistic that we would overcome those hurdles, but it's not clear that we will. We wouldn't launch it unless we thought it could be a profitable business. We wouldn't do it to be a loss leader.

Okay, thank you.

Your next question comes from Jason Bazinet with Smith and Barney.

Good afternoon. Charlie, other than expanding potential into the broadband market, do you see any opportunities to expand either Internationally or vertically into content? Thanks.

I think there is opportunity in both those today. Content has not been a strategic focus for us, but we did get -- we took a small minority interest in VOOM, as an example. So there are opportunities and we have small minority interests in several other programming entities, so we are opportunistic in that regard.

Internationally, there may be opportunities there on a limited scale that we would obviously look at. It's -- I'll say this, I think the economics of a U.S. subscriber at $600-plus SAC in a more competitive marketplace, when you look at that, that's still pretty -- that is still the best place for us to put money today.

But somebody asked the question about $700 SAC. Well, $700 SAC, maybe that starts to become -- maybe it's another opportunity to spend a $700 SAC. And so what I try to do is make sure that -- that we kind of know where our points -- our economic points of indifference are, and we get to some -- we are not there today, but to the extent we got to an economic point of indifference, we might put money in a different spot, and that certainly can be -- that can be anything.

But it probably would be something -- probably something in our core businesses, which would be technology, I mean nobody does digital better than we do today. We have a lot of good intellectual property. We will start to monetize, I hope. We have -- we have satellite service business where we do lease capacity, business television and so forth. It is a small business. We do have a small International business today. And then we have -- and we have small plain content.

So all those -- and we have a relationship with over 11 million homes today. And there are things that you can sell them video that you can probably sell them something else if you are doing a good job selling video. So all those things are things we look at. But having said that, today -- today absolute best place for our money is to put it into a customer or even a $600 SAC where we get a revenue per subscriber and a churn rate that we are experiencing. That is still a great economic model for us. And it continues -- it fortunately continues to grow, but it won't forever, and we better be ready to go some place else when it matures.

Your next question comes from Lee Cooperman with Omega Advisors.

Good morning, good afternoon. Hello, everybody. What are your current thoughts on the pros and cons of sharing spectrum with DIRECTV. And secondly, we have spoken a little bit about broadband. What degree of optimism, pessimism, whatever you want to say regarding having broadband capability of services say within the next 12 to 18 months. Thank you.

I mean obviously I've tried to share spectrum with DIRECTV for ten years now unsuccessfully, so I think that -- that's probably not likely. We both have a little bit different encryption systems and we are both moving to a little bit different modulation systems and MPEG-4. I would never say it is impossible, but I think that -- I think as long as both companies are doing as well as they are, that's probably not a high priority for them. And it is hard to figure out without a merger, it is hard to figure out how you can do it in a fair way that doesn't impact one or the other negatively or more negative than the other. There may be other things that we can share as a company, but that may be a difficult one.

As far as broadband, I think there is a number of technologies. You heard about WiMax. You heard about Cities building their own wireless systems. My personal belief is that -- that wireless will be a competitive threat to the cable and phone companies sometime, particularly if the government wants to increase competition. There is certainly bandwidth out there that the government has today that they can make available to compete. Certainly the wireless broadband has tremendous advantages in certain locations over a fixed wire. It can be mobile. It can -- it can cover a wide range of houses without thousands of dollars per home of deployment. So it -- it's starting to be used Internationally in a way that's more efficient than some of the things we are doing in the United States.

It is very depressing as an American to go overseas and see people with 70% penetration of broadband, and we have 26% penetration as a country or something. So we are not even the top ten countries anymore in broadband deployment. So I think the government ultimately has to recognize that their policies are hindering the productivity in the United States. And I expect that -- I expect that they will make wireless -- that they will -- that they will have an interest in making that -- the broadband business more competitive. And when they do that, I think they will look at more wireless technologies.

And people like Intel are better -- better for to you ask about this kind of stuff, because there's big, big companies that have big, big projects to make -- to make wireless a competitive threat. So that would be our -- certainly one of the things, but not certainly the only thing that we would continue to monitor. But do I see anything in the next 12 months that's going to be material to EchoStar from that perspective? No, I do not.

Next question comes from Evan Rothschild with Founder Asset Management.

Hi, thanks. I was wondering if you could explain what the timing was going to be for the possible $100 million spend in the SHBERA two-dish, single-dish situation. And if you could talk about how big the 30 markets that are involved are? And also, whether or not 100 million would be CapEx or if it would flow through the P&L.

We have until June of next year, a little over a year to make the transition. The majority of that spend will be -- we're, our plan today is we need a successful launch of Echo 10 to be able to comply along with some other things. We have got some applications in front of the FCC that we are anxiously awaiting approval on. And I would expect that we will have some spend in the second half of this year, but the majority will be the first half of next year, when we expense our CapEx, I don't know.

It is really going to depend on exactly how we end up deploying the capacity and solution. It will inevitably be a combination of capital and P&L, but at this point in time, it is difficult to even quantify it internally much less externally.

But I guess I don't know -- I don't of anything today that will back me off of that -- it could be less. Obviously we try to be innovative to be less and obviously have transitions to MPEG-4, and there's things we can do that would soften the blow, but it is going to be a material expense to the Company probably. It will probably show up in retention marketing or in other places.

We do still, though, have paths and opportunities that could result in our being able to switch -- switch those customers out at very minimal expense, and so as both Dave and Charlie said, we are looking at a number ways to do it. The more help we get from the FCC, the higher the likelihood we will be able to absolutely minimize that expense.

Your next question comes from Robert Peck with Bear Stearns.

Hey, Charlie, can you hear me now?

Now I can hear you. We don't always give people a second chance, you know.

Well, thanks for the opportunity. A couple of quick questions. One is, inventory increase going into the week 2Q. Could you comment a little bit about that? Number two, is could you talk about your percent of subs that are non-urban. Our sort of thoughts are, as the RBOCs roll out their fiber-to-the-parameter, fiber-to-the-node, that the subs outside the urban areas will probably be a little more insulated. And then I have one quick follow-up.

On the second part of the question, I think we are pretty well-positioned. We always skewed more rural because our heritage comes that way, and of course, NRTC. The partnership with DIRECTV was not so great for them the last years. So we've got a -- all things being equal, we have got a more insulated base. The -- what was the first --?

Inventory.

Yes, inventory probably a little higher than -- skewed a little higher than we would like, but we have a few new -- we have a new model, 625, and when you do a model changeover, you got -- you got to have enough the old because you don't know what problems you have with the new, and so I expect as we go to MPEG-4, for example, that you have really got to -- that you really got to be careful about how you do that. Inventory levels may be a little higher than we would like as we go through transitions.

Last question --.

It's a fairly minimal cost for us because we have the cash to do it, and the cost of running out, which we have done in the past, I think it was a couple of years ago in the fall, we just left at least 100,000 subscribers on the table because we just ran out of product. I think if we would air on the side of -- we are within ranges of where we need to be on inventory, and we're probably below where we needed to be at the end of last -- at the end of last year we probably got a little low. So we are somewhere in between there that we probably should be.

Last question. There has been a lot of discussion on the call today about HD. Could you give us a little more color, total cost whether it is CapEx or through the income statement. What do you think it is going to cost EchoStar for capacity, trunk rolls, HD set-top box, subsidization. Do you have any big number that you sort of target on what it is going to cost to ultimately transition to HD.

Well, I look at it a little different way. I don't care what it costs as long as I make a return. And we have ideas that we should make the kind of returns we are making today on HD. All right, so I will come to your house and put $1,000 in your house if you will pay me $250 a month or $200 a month. I will be happy to do that. So I think we have economic models that say here is what we are going to do. I think that HD -- because of the way we have -- because we knew we had a transition several years ago, I think that our -- I think the cost to transition to -- to MPEG-4 are fairly great. And I think one of the reasons you see us with a lot of capacity, applications for a lot of capacity is, obviously to the extent that you are not replacing set-top boxes in 2006, you actually -- becomes more economical to have the extra capacity and in some cases continue to simulcast in MPEG-2 particularly if we can go -- particularly as we switch on our 8-PSK modulation.

I think you will see us with a slower transition than others and I think you'll see us save a fair amount of money, and part of which will be used for satellite capacity, but when you look at the savings for the extra cost of satellite capacity versus the savings, it is a no-brainer in terms of how you want to do that. And, again, as we transition customers, we will transition those customers that are going to be additional -- additional revenue to what we are doing, so if somebody signs up for the VOOM service today, that's an extra $5 a month. There's -- and there is a profit for us in that $5 a month. We are willing to spend a little bit more to upgrade that guy, because we are getting extra revenue and we get a better -- we'll upgrade them in terms of return that we get.

If somebody wants local-to-local HD, we will be happy to upgrade them, but there will be a cost for that, and there will be a return for us, and that return will both -- will be in lower SAC -- I mean lower churn and that return will be in higher ARPU. Will we go out and upgrade a customer that is not a very good customer and upgrade with a big investment, no, because they have to pay for that upgrade. We have room for improvement there.

I think that you are likely to see our industry or maybe even the cable industry realize that you just can't give away stuff free forever. You can't just take a customer and hook them up and then continue to upgrade them with new product every year before you have even gotten a return on the customer. That would be a death spiral. And I think we have done a better job than most. But as other people get more disciplined, it allows us to get more disciplined. And we have room for improvement there.

I mean I am not particular -- I think we have lots of challenges, but, again, I mean, compared to the challenges we have had in the past, I feel pretty good. And I never -- I have never seen more opportunity for us as a company. Never. It might be a little confusing to us, but I have never seen more opportunity.

Your next question comes from Randy Hay with Goodnau Grey.

Thank you. Just a quick question on programming. Do the annual increases, do they get layered in generally over the course of the year, or is it skewed to the first quarter or some other quarter for that matter?

Good question. I think our annual increases for programming happen throughout the year. So you typically -- that's why I want to temper your margin analysis a little bit, because you typically would have, oh, you probably have your best margin in the first or second quarter after a price increase, and then slowly, all things being equal -- all things being equal your margins would tend to deteriorate until the next time you have a price increase to your customers. And, of course, in our case, that would be true except that we probably are not as efficient as a company, and so the great -- the great tug of war is going to be, can we -- can we make up in efficiencies the kind of price increases that we are going to see throughout the year.

Well, ex the --

So we don't have -- we do have price increases in January. It probably skews a little higher to January than it does to May, as an example, but there are price increases throughout the year.

So we are not going to see, notwithstanding, the promotional things you are doing in May and June, we're not going to see the incremental $200 of the price increase that didn't hit in the first quarter? We're not going to see that.

I don't think there is $200 million of incremental price increase anyway. The price increase for our customers was anywhere between -- some customers was nothing. Some customers as much as $3. But it was between -- it was between -- it wasn't quite as high -- you can't just look as if everybody paid $2 or $3 more, because it just depends -- some packages had no increase.

What was the second -- the second thing was -- I forgot what I was going to say on the second thing. Oh, in the -- so it's not quite $200 million. And, oh, the price increase, I think Jason said one-third of it was in the first quarter, I think it was probably a little -- or less than third. I think it is less than a half. I think it is more than that. It is a little screwy how it goes out, because you start the first of February, and the guy whose billing statement comes up the 28th of February doesn't get his price increase until the end of the month, but it's -- it is factored into the first quarter more than you might think and has a way to go in the second quarter.

The key point, Randy, which I pointed out first, was it wasn't a price increase of $3, it was up to $2 or $3. So it is not $3 across the board. It does seem confusing.

I will have to check my bill to see what I was charged.

Hopefully you were charged more.

More than $3.

I think I was actually.

Perfect. Thanks for paying that on time by the way.

But programming is expensive.

That's good.

I think we will take one more question with that.

we should have finished there, but we will take one more.

That one pretty much wrapped up this thing. Maybe we'll take one more question

Your next question comes from Aryeh Bourkoff with UBS.

Yes, thank you. Just a few questions to wrap it up. Thank you for the opportunity. When you are talking about wireless broadband and potentially getting into that business this year or whenever it is appropriate. Would you ever consider extending a product offering into a voice offering in some way, whether it is wireless or even a VoIP partnership, given the more favorable economics in that business now than they have been in the past.

Second question is, now that the telephone companies are negotiating content deals, do you get a sense of where your content contracts kind of sit in between a cable company and telephone company. Do you think you are able to sort of negotiate more parody with the cable industry now that you have had this kind of subscriber base, and do you use that as sort of a leverage point.

Lastly, you mentioned uses of cash, and obviously bought back some stock in quarter and may have other investment opportunities in the future, you mentioned. But buyback versus dividend. You did a dividend last quarter, buyback this quarter, how do you look at buyback versus dividend if you are going to return the cash to shareholders? Thanks.

There are a lot of questions there. In terms of buyback, the dividend was kind of a -- that made a lot of sense because some of that was tax-deferred. Ended up being more than 50%. What was it?

Exactly 50% actually.

Was it? Exactly 50% of that was tax-deferred based on some law I can't believe that if you don't have earnings, you give a dividend. This reduces your basis in the stock. So that was a -- if I had known that we'd have done it a year earlier and it would have been 100%.

Would have been a bigger percent.

Would have been 100% tax-deferred, I think, maybe not. But anyway, that was kind of a let's take advantage of that IRS tax code. So that was a real driving force on that one.

I am not big on dividends particularly, but hopefully we can find other ways to use the money. It doesn't mean we wouldn't do it, it doesn't mean our Board wouldn't do it. Sometimes our shareholders want liquidity. So, we look at everything. We just don't have predetermined ideas there when we look at it. We do look at that like every day to figure out what makes the most sense.And then I don't know what the other part of the questions were.

Programming.

Oh. I think we get -- look, we're the third-largest MSO out there. We have contracts that -- we were the 10th largest MSO that expire, and we expect to be treated fairly for our size. And if we are not treated fairly, then we will lose some programming. We will lose some partners. As long as we are treated fairly then we think -- we think we should be treated more fairly than a person who has no subscribers. So a phone company coming into the business today doesn't have any subscribers and they've got a lot of promises, but there's no history that they are going to be successful.

I suspect that we will continue to have advantages over new entrance into the programming business and I expect we will have advantages over those companies that are smaller than we are. I don't realistically think we're going to get Comcast prices in every situation, but in some cases, if you look at the Hispanic market or places where we do better business than they do, we should get a better -- we get better than they do.

So it's all up to negotiation, and, I think, from time to time, we may lose some programming as a result if we don't get treated fairly. And I think we know enough about the industry to know what fair is. And we value our programming partners, but they shouldn't -- they have historically treated DBS not as favorably as cable, and DBS has given them all their growth for the last five years, and therefore, we expect that that's a strength of ours given our size.

The other part of the question was wireless broadband and voice.

Voice and wireless broadband? Well, I think -- I think we are way premature -- we don't have a wireless plan today. I am just telling you from a big picture perspective, I see in other countries you have -- you have a very much an oligopoly of a phone company and a cable company who have fairly high broadband rates. I think, you have big companies like Intel who said, look, we can do this more efficiently and put it in every computer.

I think -- I just think you're going to see a lot of momentum towards that wireless world, and whether we participate -- I'll say it a different way, I believe our main objective is to be absolutely the most efficient delivery of point-to-multi-point video. If we can achieve -- I think we are that today and I think to the extent that we continue do that, we have opportunities in wireless either as a partner for somebody, with our video or somehow being involved in the evolution of that, but that remains to be seen, but my bet would be that -- that wireless will be a factor in the United States. Certainly over the next ten years.

And potentially a much more economical model than running fiber-to-the-curb, fiber-to-the-home, fiber-to-the-premise or coax -- fiber-to-the-curb, coax into the house, I just think that you have an -- that that huge fixed cost when new technologies are coming, which scare the bejesus out of me if I were the CFO of one of those companies. And one thing I learned about technology, what looks good today doesn't look so good tomorrow sometimes.

All right, so I think that was it. We are back on in probably August?

Probably August.

August, and we appreciate your time and we will talk to you then.

This concludes today's conference call. You may now disconnect.