Gentex Corp (GNTX) 2009 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Gentex first-quarter 2009 earnings conference call. I would now like to turn the meeting over to Ms. Connie Hamblin, Vice President of Investor Relations and Corporate Communication. Please go ahead, Ms. Hamblin.

Thank you. Good morning, everyone. This is Gentex Corporation's first quarter conference call. On the call with me today is Enoch Jen, our Senior Vice President; and Steve Dykman, our Chief Financial Officer.

This call is being broadcast live on the Internet on Gentex's website at www.gentex.com. There will be an auto playback of the conference call available at that site as well. I'm going to go through a few routine remarks and then I will turn it over to Enoch Jen, who will go through the quarter.

This call is being recorded by Gentex Corporation. All contents of Gentex Corporation's conference calls are the property Gentex. No such content may be copied, published, reproduced, rebroadcast, retransmitted, or otherwise redistributed without the express written consent of Gentex Corporation. Gentex Corporation alone holds such rights.

While we understand that there may be companies that transcribe and redistribute our conference calls, notwithstanding this warning, Gentex Corporation provides no authorization to do so and expressly disclaims any responsibility for any unauthorized use of the content. We advise that you should not rely on the content of any unauthorized transcripts, as Gentex Corporation will not be held liable for the content of any such transcript.

Gentex Corporation will hold responsible and liable any parties for any damages incurred by Gentex with respect to any such unauthorized use. Your participation implies consent to our taping and to the foregoing terms. Please drop off the line if you do not agree with these terms.

This presentation may include forward-looking statements that are based on management's belief, assumptions, current expectations, estimates, and projections about topline growth and the global automotive industry, the economy, the effect of stock-option expenses on earnings, the ability to leverage fixed manufacturing overhead costs, unit shipment growth rates and the Company itself.

Words like anticipates, beliefs, competent, estimates, expects, forecast, likely, plans, projects, and should, and variations of such words and similar expressions, identify forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, expense, likelihood, and degree of occurrence, and actual results may differ materially from those in the forward-looking statements.

The Company undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise. We urge you to review the full Safe Harbor statement that is contained in the news release that is posted on the website.

At this point, I will turn the call over to Enoch Jen. He will make his remarks with respect to the quarter and then we will open the call up to Q&A. We would ask that you ask one question at a time, so that everyone has the opportunity to participate. Thank you.

Good morning, everyone. Thank you for joining our conference call. Our revenues for the first quarter were $93.8 million, down 47% compared to $178 million in the first quarter of 2008. Our operating income for the first quarter 2009 was $2.2 million, down 95% compared to $40 million in the first quarter of 2008.

For the first quarter of 2009, we reported a net loss of $1.6 million. This compares to net income of $30.5 million in the first quarter of 2008. In the first quarter of 2009, we reported a loss of $0.01 per share compared to earnings of $0.21 per share in the first quarter of 2008.

Excluding realized losses of $3.9 million and the impairment loss on available for sale securities of $1.3 million, earnings per share in the first quarter of 2009 would've been approximately $0.01.

Next, we will look at automotive revenues and auto-dimming mirror unit shipments. In the first quarter of 2009, total auto-dimming mirror unit shipments decreased by 50% compared with the first quarter last year.

Automotive revenues decreased by 48% from $172.1 million in the first quarter of 2008 to $89 million in the first quarter of 2009. Auto-dimming mirror unit shipments in North America decreased by 56% in the first quarter of 2009 compared with the same period in 2008, primarily as a result of significantly lower light vehicle production.

North American light vehicle production declined by 52% in the first quarter of 2009 compared with the same prior year period. GMT 900 light vehicle production was down 31% in the first quarter of 2009 compared with the same period in 2008. And those vehicles utilize an interior and exterior mirror on each vehicle.

In addition, other automakers announced extended pickup and SUV plant closings during the quarter, resulting in total truck SUV production in North America being down by 52% in the first quarter of 2009 compared with the first quarter of 2008.

Auto-dimming mirror unit shipments to offshore customers decreased by 46% in the first quarter of 2009 compared with the same period last year. The decrease in unit shipments was primarily due to lower light vehicle production in Asia and Europe. Light vehicle production in Europe decreased by 42% in the first quarter and decreased by 43% in Japan and Korea in the first quarter of 2009 compared with the same period last year.

Looking at our average selling price per auto-dimming mirror unit, the ASP was $41.82 in the first quarter of 2009. This ASP was down sequentially per our prior guidance at $41.82 in the first quarter of 2009, primarily due to mix.

The ASP was up on a year-over-year basis compared with the first quarter of 2008, primarily due to a mix of higher featured mirrors, partially offset by annual customer price reductions. Based on CSM's end of March light vehicle production forecasts, we continue to expect ASPs to increase over the balance of calendar year 2009 as we begin shipping for additional RCD and SmartBeam programs.

First quarter of 2009 and calendar year 2009 ASPs exclude non-auto-dimming mirrors as well as microphone units. This is how we will be reporting ASPs going forward.

Fire protection revenues decreased by 17% to $4.9 million for the first quarter of 2009 compared with the same period last year, primarily due to the weak commercial construction market.

Looking at our gross profit margin, the gross profit margin of 23.8% in the first quarter of 2009 declined sequentially from 28.4% in the fourth quarter of 2008. Approximately three-quarters of the decline was due to the Company's inability to leverage fixed overhead costs due to the 23% sequential decline in revenues. The balance of the decline was due to annual customer price reductions.

The gross profit margin declined on a year-over-year basis from 35.2% in the first quarter of 2008 to 23.8% in the first quarter of 2009. Approximately three-quarters of the decline was due to the 47% year-over-year decline in revenues, resulting in the Company's inability to leverage its fixed overhead costs. The balance of the decline was due to annual customer price reductions and foreign exchange rates partially offset by purchasing cost reductions.

Based on the Company's expected revenues for the second quarter of 2009, which we will discuss later in our comments, we would expect the Company's gross margin to improve on a sequential basis. The gross profit margin will continue to be impacted by annual customer price reductions, uncertain global automotive production levels, our ability to leverage our fixed overhead costs, purchasing cost reductions, VAVE initiatives, and manufacturing yields.

Looking at engineering research and development expense, our ER&D expense decreased by 11% in the first quarter of 2009 compared with the same 2008 period, primarily due to reduced employee compensation expense. ER&D expense is currently expected to be down approximately 10% for the second quarter of 2009 compared with the second quarter of 2008, primarily due to reduced employee compensation expense.

Next, selling, general, and administrative expense -- SG&A expense decreased by 12% in the first quarter of 2009 compared with the same prior year period. Approximately two-thirds of the decline was due to reduced employee compensation expense and the balance was due to foreign exchange rates.

SG&A expense is currently expected to be down approximately 10% for the second quarter of 2009 compared with the second quarter of 2008, primarily due to reduced employee compensation expense and foreign exchange rates.

Looking at our allowance for doubtful accounts and our customer credit exposure, the Company increased its allowance for doubtful accounts by $3.8 million in the fourth quarter of 2008, related to financially distressed Tier 1 automotive customers.

While the Company is making progress in collecting a portion of the significantly past-due account balances from certain Tier 1 customers, the overall allowance for doubtful accounts related to all financially distressed Tier 1 automotive customers remains unchanged.

The Company's total credit exposure for the Detroit Three automakers was approximately $13 million as of March 31, 2009. Each automaker's credit exposure approximately represented their respective percentage of total company revenues during the quarter.

The Company does not have any specific allowance for doubtful accounts established for the Detroit Three automakers as of March 31, 2009. The Company is currently evaluating the government support program terms and effective dates, which currently appear to be after March 31, 2009, for General Motors and Chrysler. To date, the Company has not entered into the government's supplier support programs.

Expense management activities -- the Company continues to work to reduce expenses in a number of different areas. The primary items that we are working on include continued purchasing cost reductions and VAVE efforts, continued slowdown in hiring, reduced incentive employee compensation, reduced travel supplies, healthcare and freight expenses, and a significant reduction in capital expenditures resulting in slower growth of depreciation expense.

Looking at our other income expense line item, the breakdown for the first quarter of 2009 was as follows: investment income of $1.193 million; an impairment loss of $1.291 million; and other, a net expense of $4.487 million for a total other expense of $4.585 million. The decline in investment income was primarily due to lower interest rates on a year-over-year basis.

Under the current mark-to-market accounting rules, the Company reported a non-cash other than temporary impairment charge of $1.3 million for unrealized losses on the Company's equity investments in the first quarter of 2009. In addition, the Company reported realized losses of approximately $3.9 million on the sale of equity investments during the first quarter.

Next, we will look at several balance sheet items. As of March 31, 2009, our Accounts Receivable were $47.2 million, our inventories were $54.1 million, our patents and other assets were $10 million, our accounts payable were $19.3 million, and our accrued liabilities were $30.9 million.

Our tax rate -- the refundable effective tax rate of 34.75% during the first quarter of 2009 varied from the statutory rate of 35%, primarily due to the domestic manufacturing deduction. Excluding stock option expensing, we currently expect that the tax rate for 2009 will be approximately 33% based on current tax laws, primarily due to tax-exempt interest and the domestic manufacturing deduction. Our year-to-date cash flow from operations was $16.1 million for the first quarter of 2009.

Our capital expenditures for the first quarter of 2009 was $6 million. Our depreciation expense for the first quarter 2009 was $9.6 million. For calendar year 2009, our estimate for capital expenditures is approximately $30 million to $35 million. Our estimated depreciation expense for 2009 is $36 million to $38 million.

Next, we will look at our share repurchase plan. The Company did not repurchase any shares during the first quarter of 2009. The Company has a share repurchase plan in place with authorization to repurchase up to 28 million shares of the Company's stock. To date, the Company has repurchased approximately 26 million shares, leaving approximately 20 million -- 2 million shares authorized to be repurchased under the plan.

The Company's current share repurchase plan was originally announced in 2002. The objective of the plan was to have it be opportunistic and it's based on a number of factors, including market conditions, the market price of the Company's common stock, the anti-dilutive effect on earnings, available cash, and other factors that the Company deems appropriate.

Given the current market conditions, including market volatility, the uncertain production of sales levels, potential customer bankruptcies, and liquidity needs, you should expect that that factor is playing a more important role in the decisions that are being made as to the number of shares being repurchased and at what prices they are repurchased at.

Cash dividends -- on April 17, 2009, the Company paid a quarterly cash dividend of $0.11 per share to shareholders of record of the common stock at the close of business on April 7. The ex-dividend date was April 3.

The Company's cash dividend policy was established based on a number of criteria, including current US income tax laws, which dictate a favorable tax treatment, that the dividend be meaningful, sustainable, and that the dividend rate would increase generally in line with the Company's earnings and operating cash flow over time.

The cash dividend rate is an agenda item at every Board of Directors meeting. Investors have asked if the Company will continue to pay a cash dividend at the current level, given the current economic environment, or if the Company does not earn the dividend.

On a balance sheet basis, the Company could continue to pay a dividend within the criteria above for a long period of time. The decision on any change to the dividend policy is a Board decision and the Board will take into consideration the existing economic climate and would base any changes on their expectations as to the duration and magnitude of this global recession.

Next, an update on SmartBeam. We continue to make progress with automakers as they more broadly offer SmartBeam across their product lines. SmartBeam is a high beam headlamp assist product that we introduced in the 2005 model year. And we are currently shipping for 22 2009 vehicle programs to 6 OEM customers, including General Motors, Chrysler, BMW, Audi, Opel Vauxhall, and Toyota.

There continued to be a number of follow-on programs for existing and new customers scheduled for the 2009 calendar year. For the 2008 calendar year, we shipped approximately 295,000 SmartBeam units.

Based on our current forecast, volumes and incremental sales dollars for SmartBeam will become more meaningful in the 2009 calendar year. However, due to the continued uncertainties with vehicle production volumes, we do not plan to provide an estimate for SmartBeam unit shipments for 2009 at this time.

Next, an update on rear camera display. We currently have announced 22 OEM rear camera display programs with four automakers, including Ford, Hyundai Kia, General Motors, and Toyota, and four aftermarket accessory programs with Mazda, Gulf States Toyota, and Suzuki.

There continues to be significant interest in Gentex's RCD mirrors and we are working with a number of additional customers on original equipment programs that will be announced during 2009. The Company shipped approximately 270,000 RCD mirror unit shipments in calendar year 2008.

If light vehicle production starts to stabilize and does not significantly decline from currently forecasted levels by CSM Worldwide, we still believe that there is sufficient customer demand and that shipments of RCD mirrors can nearly double in calendar year 2009.

Regarding legislation, the automakers currently offering a rear camera display product are doing this absent any legislation and made the decision before any was pending. A legislation that was signed into law in February 2008, called the Kids Transportation Safety Act of 2007, orders the Secretary of Transportation at the National Highway Traffic Safety Administration to revise the federal standard to expand the field of use so that drivers can detect objects directly behind vehicles.

The phase-in period during which automakers will need to meet the requirements set by NHTSA is expected to be between now and 2016.

Next, an update on dimmable aircraft windows. Boeing currently expects the first 787 Dreamliner aircraft to go into service in late 2009 or early 2010. Due to the Boeing production delays, we currently anticipate that we will begin to deliver our windows to the aircraft production line in 2009. Boeing has also expressed interest in utilizing dimmable windows for other of their aircraft.

In October 2008, Gentex and PPG Aerospace announced that we will also be shipping dimmable aircraft windows for use on the passenger cabin windows of the 2010 Beechcraft King Air 350i aircraft. This will be the first aircraft in the general and business aviation market with dimmable windows.

Each King Air 350i will have 15 windows and we expect to begin shipment sometime during calendar year 2009. Other aircraft manufacturers continue to have interest in this technology, and we are working on these potential programs with PPG Aerospace.

Next, looking at revenue estimates -- the following projection for revenues in the second quarter of 2009 is based on CSM's end of March light vehicle production forecasts. Due to the significant uncertainties with global vehicle production volumes, we do not plan to provide an estimate for revenues for calendar year 2009 at this time.

For the second quarter of 2009, our estimate for revenues is a decline of approximately 30% compared with the same period in 2008, again, based on CSM's end of March forecast for light vehicle production levels. However, due to the many uncertainties in the marketplace, we believe that there is potentially more downside than upside to global light vehicle production levels.

For the second quarter of 2009, light vehicle production per CSM for North America is at 2.1 million vehicle units. This represents a 40% decline compared to the second quarter of 2008.

The second quarter 2009 light vehicle production for Europe is at 4.2 million vehicle units, a 29% decline compared to the second quarter of 2008. And for Japan and Korea, the second quarter 2009 light vehicle production is at 2.5 million vehicle units, a 33% decline compared to the prior year period.

For the calendar year 2009, light vehicle production for North America is forecasted to be 8.2 million vehicles, a 36% decrease compared to 2008. For Europe, calendar year 2009 light vehicle production is forecasted at 15.9 million vehicles, a 23% decline compared to the prior year. And for Japan and Korea, the calendar year 2009 light vehicle production is at 10.7 million vehicles, a 26% decline compared to the prior year.

At this time, I'll turn the call back over to Connie.

Just a quick reminder, all listeners should note that this call is being recorded by Gentex Corporation. All contents of Gentex's conference calls are the property of Gentex Corporation. No such content may be copied, published, reproduced, rebroadcast, retransmitted, or otherwise redistributed without the express written consent of Gentex Corporation. Gentex Corporation alone holds such rights.

While we understand that there may be companies that transcribe and redistribute our conference calls, notwithstanding this warning, Gentex Corporation provides no authorization to do so and expressly disclaims any responsibility for any unauthorized use of the content. We advise that you should not rely on the content of any unauthorized transcripts, as Gentex Corporation will not be held liable for the content of any such transcript.

Gentex Corporation will hold responsible and liable any party for any damages incurred by Gentex Corporation with respect to any such unauthorized use. Your participation implies consent to our taping and to the foregoing terms. Please drop off the line if you do not agree with these terms.

At this point, we will open it up for Q&A. Again, we would ask that you try to ask one question at a time to allow others to participate. Operator?

(Operator Instructions) John Murphy, Merrill Lynch.

I will try to keep this to one. It's tough; there's a lot of questions out there. But I guess just focusing on gross margin, it was significantly weaker than we were expecting in the first quarter. And I'm just trying to understand that as volumes potentially stabilize and recover in the future -- hopefully they will -- if we will see a real recovery in the gross margin?

And if you can kind of explain the components of the pressure on gross margin, really, in sort of major buckets and sort of negative operating leverage, pricing pressure, maybe negative mix shift and just kind of give us an idea of what the major levers were there. And if it was 90% operating leverage and that will just come back over time. I'm just really trying to understand what's going on with the gross margin?

Okay. If you look at our margin, both on a sequential basis and on a year-over-year basis, the primary driver is our inability to leverage our fixed overhead costs. And with the significant declines we're experiencing in revenues, that obviously has put some downward pressure on our margins.

So as that stabilizes, we anticipate that the margin will improve over time. And obviously, our objective to get back to a historical average of this 35% that we were at prior to the third and fourth quarter drop in vehicle production levels.

So there's nothing that's changed that would make you believe that that 35% is not achievable if volumes recover in the current quarter?

Not at this time, no. So if you think about it sequentially and year over year, about three-quarters of the margin drop was solely due to our inability to leverage fixed overhead costs.

And there's nothing that you would do with costs in the interim to -- would you do anything with cutting costs in the interim to get closer to that margin, or are you kind of comfortable with the restructuring actions you've taken to date and maybe some variable costs around the fringes over the next couple of quarters and you're kind of -- it's a waiting game for this volume to stabilize and recover?

I think we're making progress on the cost side of things, and we continue to look at cost reductions. However, from the fixed overhead cost standpoint, it takes a little bit more time and you can't react quite as quickly. And with a significant revenue decline, it's really difficult.

Okay, thank you very much.

Rich Kwas, Wachovia.

Following up on John's question on the margin, if -- you mentioned the sequential decline in revenue. It looks like North American production is going to be up somewhere in the neighborhood -- 400,000, 500,000 units sequentially.

Should we think about the margin improvement in Q2 kind of corresponding to that increase in production here in North America? Is that the way to think about it in terms of the magnitude of potential improvement?

I think one way to look at it, if you're going to calculate an estimate for margin in Q2, is if you look at our guidance for revenue declines of approximately 30%. And what we said in the past is that our fixed overhead costs run about 10 to 15 percentage points of revenues. So you can do the math and see that there's going to -- we're anticipating some sequential improvement in our margins in the second quarter.

Okay, so the contribution margin should get a little bit better or decremental margin should get a little bit better, sequentially speaking?

Yes.

Okay. Okay. And then for the other expense line, that $8 million negative, how do we think about that? Is that kind of the run rate to use or is that going to come down over the next few quarters?

Well, I think when you look at the investment income, that's been dropping significantly on a year-over-year basis, primarily due to lower interest rates, so that trendline should be similar going forward, with the exception of the fourth quarter, where we historically have some year end mutual fund distributions in.

As Enoch mentioned, $1.3 million related to an impairment loss due to the accounting rules, so that's going to be largely dependent on the future performance of the equity markets. And then, I think, as far as realized gains or losses in Q2, that also will be largely dependent on the general equity market performance. So we are not anticipating any significant shifts to the recent trend line.

Okay. Last question. I know this is the third one, but did the -- just going back to the margin longer term, is there kind of a -- to get back to that 35% level, is there a production level that you are benchmarking for North America and Europe to get to that level?

Because some other suppliers have talked about getting to a certain production level to achieve breakeven, and some have gotten to levels that are going to probably be realized this year in terms of getting to a breakeven point. So just trying to think about getting back to that 35% level, I assume that production that would be much higher than it is right now, but I just wanted to get your thoughts on where that would be?

Well, I think, Rich, first of, I think we tend to look at global production levels just because our customer base is more diversified and more concentrated overseas. I think in the past, what we've said is in order for us to achieve the 35% gross margin that we would need a flat global production environment, and obviously we've had a significant decline over the past six to nine months.

So we are going to have to get back to significantly higher global production levels, which we think could take a few years. And I think CSM is beginning to agree with that outlook.

Okay, okay. That's helpful. Thank you.

Himanshu Patel, JPMorgan.

Enoch, you had mentioned earlier the -- Gentex was assessing whether or not it was going to participate in the supplier receivable backstopping program from US Treasury. Can you just tell us what considerations are going into your assessment there?

Okay, well, like many other suppliers, I think we are trying to make sure that we understand all of the terms and conditions of the program. And I think there's a certain group of suppliers that have such a large percentage of their business with GM and/or Chrysler, and also their financial fortunes are very closely tied to those two automakers that regardless of the terms and conditions, those suppliers needed to sign up for the program regardless.

And I think with our situation, where GM and Chrysler represent a smaller percentage of our total business and that's our current understanding that only a percentage of our business with GM and Chrysler would be covered under the program, we want to make sure that we understand what we are signing up for.

On a financial condition or balance sheet basis, obviously, we could absorb the loss as business people, with the increasing likelihood that one or both automakers will need to declare bankruptcy. Obviously, we are looking to minimize any potential bad debt losses.

Is this a discussion that involves some sort of situation where in order to participate, you are being asked to give back more on pricing?

Well, I think to date, GM has not indicated that there are many additional terms and conditions. Chrysler has verbally indicated that there are some additional terms and conditions, and we just want to make sure that we understand what we would be signing up for before we commit ourselves.

And certainly I think Chrysler, for those of you who follow the industry and this situation, there are some indications that Chrysler is talking about price reductions as well as extended payment terms.

Okay. The European scrappage program that's been launched -- clearly, your volumes are being helped, but there's been an adverse shift on mix. I'm just wondering what are you guys seeing in your forward production schedules for April, May, and June? Are the platforms that Gentex is exposed to in Europe -- are they actually seeing any improvement in production schedules, or is that not the case?

Well, like you indicated, the short-term result of the scrappage -- government scrappage programs in Europe have primarily resulted in significantly increased sales of very small vehicles. And so as we look out, there has not been much noticeable impact on our European customer base, which is primarily focused on luxury -- near luxury and midsize vehicle segments. So we are not seeing any change in production levels for the vast majority of the vehicles that we ship to based on the scrappage program.

Okay, and then just one last question on the gross margins. I haven't gotten a chance to go through the math, but just -- you guided to 30% down on revenue. That's about $120 million of revenue for Q2 -- that's basically what your Q4 revenues were. Is there a reason to think your gross margins would be that much different than what you just posted in Q4?

No.

Okay, thank you.

Brett Hoselton, KeyBanc.

Looking at your mirror shipments, just comparing them to production, it looks like your mirror shipments were a little bit worse than production in the first quarter, and you�re expecting them to be a little bit better than production in the second quarter. And my question is is that simply a mix issue?

Yes, it's primarily a mix issue, Brett. We were impacted in the first quarter by a number of the vehicles that we ship to, which would include the light truck segment in North America and the luxury passenger car segment in Europe that, on average, tended to offer two or three mirror systems.

And as you think about that 25% of the gross margin decline that you attribute to price reductions versus -- and FX versus cost reductions, if I were to strip out the FX portion, are you able to reduce your costs as quickly as you were able -- or as quickly as the - your price reductions are occurring?

That has been our objective and it is close to offsetting the annual customer price reduction.

Okay, very good, thank you.

David Leiker, Robert W Baird.

I missed a bit of your initial call. Hopped on something else. But if we look at the second-quarter production, and I'm sure you talked about this, but we're hearing from a couple of different places that there are some schedule production plant closings here in May and June that some folks are saying could end up in Q2 build being flat with Q1 build. I was just curious if you are seeing that in any of your releases as you look out over the next several weeks.

We are starting to see some of the final assembly plants announce shutdowns longer than the historical two-week shutdowns around the Fourth of July. And our expectation is that we will see an increased number of these extended plant shutdowns. At this time, we are not expecting the shutdowns to be so great as to bring second-quarter production levels down to first-quarter production levels.

From our standpoint, quite a few customer assembly plants extended their Christmas shutdowns into January and even into February. And certainly there is some downside risk in June as we approach the end of the model year and excess vehicle inventories, if they continue to remain high.

And then I think a number of the extended plant shutdowns more likely will occur in the third quarter, into the second half of July and possibly into August.

Do you think what you're seeing out in that June time period is captured in the CSM numbers already or not?

We are not thinking it's fully captured in the CSM numbers.

Okay. And then just one other item here on a different topic. On just kind of take rates or penetration rates on particular vehicles. And I know it's difficult to cross the entire universe to do it, but if you look at particular plants -- take a Camry plant -- you know how many near as you ship them, you know how many Camrys they make. Have you seen any change in the penetration rates when you look at -- not necessarily Camry, but when you look at specific plants and your shipments relative to that?

We have not seen any significant changes in any take rates across the vehicles that we ship to.

Okay, great. Thank you very much.

(Operator Instructions) Jason Rogers, Great Lakes Review.

You gave the figure for the ASP in the quarter. I missed the year-ago figure, though.

Okay, I think probably we didn't give it, Jason. So you didn't miss anything.

Okay.

The year-ago figure, so this would be for the first quarter of 2008, was $40.94.

Okay. And looking at your balance sheet, could you break out the dollar figure as far as cash and investments? What's in equities, what's in money markets, and what's in short-term governments and CDs?

Sure. As of March 31, we had cash and cash equivalents of just under $309 million. Short-term investments were just under $25 million -- that's primarily in government securities -- and long-term investments were just under $59 million. And the primary driver of the drop in value from December 31 were there were some equity investments that were sold during the quarter and not reinvested back into the market as of March 31.

Okay. And just finally looking at your guidance, based on the CSM numbers, you're looking for roughly a 25% or 30% sequential improvement in sales. And that -- is that based just totally on the CSM forecast?

That just seems fairly aggressive, given what's happened with the economy and talking about extended plant shutdowns. Just trying to get a better feel for maybe the sequential optimism you're looking for?

That is based on the CSM end of March forecast, as the take or option rates have not changed significantly. So I think there's a couple of things -- one is is that we've said that I think there is some downside to the CSM forecast as we approach the end of the model year.

Okay, thanks.

Brett Hoselton, KeyBanc.

The mix of investments that you just mentioned -- the long-term $59 million -- does that include equity?

That is primarily all equities.

Okay. And then as you think about the percentage of euro-denominated contracts as a percentage of revenue, where does that stand at this point in time?

For calendar year 2009, it's approximately 12%.

Okay. And as we think about maybe -- let's see, the mismatch between the cost -- your costs and the revenue side of that � very, very roughly, the percentage of your costs that are euro-denominated?

Well, what we've said is that we are about 50% naturally hedged. And if you think of in the first quarter, just under one percentage point of our revenue decline related to foreign exchange rates and then there would be roughly half of that offset through material and SG&A cost, so it's not that significant.

Probably, with the greater decline in revenues, our natural cost hedge is probably a higher percentage than it has been historically.

Okay. And then -- I was typing as fast as I could as you went through the other expenses and income lines, so I may have gotten this wrong, but the $1.2 million in investment income, that's basically your interest rate yielding items, correct?

Correct.

Okay. The $1.2 million impairment charge are just basically mark-to-market your equity portfolio?

Correct.

$3.9 million realized losses is entirely just your realized equity losses, right?

Correct.

Now I've got a -- now the $4.5 million other, what is that?

Well, $3.9 million of that $4.5 million relates to the realized losses on the sale of equity investments -- so that's the majority of it.

Okay. So then basically the remainder of it is just miscellaneous stuff?

Correct.

Okay, perfect. Thank you very, very much.

John Murphy, Merrill Lynch.

Now that the one question rule has been busted wide open, I will follow up with sort of a two-part question here. There's two areas where you guys appear to be thrifting cash. First in share repurchase and second sort of in that combination of R&D and CapEx pullback.

I was just wondering with the shares where they are and your cash position where it is, why you haven't been more aggressive on share buybacks. Because you certainly -- you don't have any debt, you've got a lot of cash. So that's sort of the first part of the question.

I think, John, in today's environment, we are more concerned about the potential downside. And with not being sure during the first quarter exactly where production levels were going to bottom out or in fact whether they were going to, and with the increasing risk of customer bankruptcies, which could disrupt the entire automotive supply chain -- because many suppliers supply most of the OEMs globally -- we felt it was important to be more cautious.

And in looking at the cash dividend versus share repurchases, the Board, at our most recent meeting, felt that until they had a better handle on the magnitude and duration of the recession, that they preferred to elect to maintain the cash dividend and be more cautious on share repurchases.

Okay. And then if you think about the R&D and CapEx -- clearly, I guess the same thought process goes there just as far as conserving cash, but what kind of an impact might that have on the business going forward?

Is this all real variable stuff that you're able to knock out of the cost and CapEx equation, or is there anything in the future as far as product launch delays or anything like that that are working into the equation here and will have any impact in the business in the next couple years?

Yes, I think on the ER&D and CapEx, the focus is not so much at conserving cash. But on the capital expenditures, we've always said that it's been a combination of increasing our capacity and maintenance or improving our processes, replacing other equipment.

And so with the decline in global production levels and therefore a decline in our production, we have not needed most of the capital expenditures that historically has been dedicated to increasing our production capacity.

On ER&D, I think we've talked about a couple of things. One is we've said that we are taking a closer look at all of our ER&D programs and making sure that there is a tangible payoff in a shorter time period than maybe we were willing to accept previously on all new programs.

So this is business that we have been awarded to begin production and shipments in the next two to three years. We are funding all of those programs and ensuring that they do meet the customer milestones. There have been a few customer programs that have been delayed or canceled, so that's had some impact on the historical increase in ER&D expenses, also.

Okay, and then just lastly, the exposure to Chrysler that you're at right now, what's the level -- I think it's been 13% or 14% at the end of last year. What was the level in the first quarter? I might be --

[Well], what we have said is that as a percentage of revenues, they account for mid-single digits.

Okay, great. Thank you very much.

And there are no further questions at this time. Ms. Hamblin, I would like to turn the conference back over to you for any additional or closing remarks.

[Jen], I would like to thank everybody for participating in the conference call and we will be here if you have additional questions. Thank you. Have a good day.

Thank you for joining this Gentex conference call. That does conclude our presentation. Have a nice day.