科林研發 (LRCX) 2005 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Lam Research 2004 financial results conference call.

At this time, all participants are in a listen-only mode.

Following today's presentation, instructions will be given for the question-and-answer session. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded today, Thursday, January 20, 2005.

I would now like to turn the conference over to Kathleen Bela, Director of Investor Relations and Corporate Communications at Lam Research.

Please go ahead.

Thank you, operator.

Good afternoon and thank you for joining us to discuss the financial results for the quarter ending December 26, 2004.

By now, you should have received a copy of today's press release, which was distributed by Business Wire at approximately 1:00 PM and is posted on our website.

Here today are Jim Bagley, Chairman and Chief Executive Officer;

Steve Newberry, President and Chief Operating Officer; and Martin Anstice, Chief Financial Officer.

Before we begin, please be advised that except for historical information, the information Lam is about to provide and the questions Lam answers in this call may contain certain forward-looking statements, including, but not limited to, statements that relate to the Company's future revenue and operating expenses -- (technical difficulty).

Thank you, operator.

We apologize.

We had a technical difficulty with the conference call, so we are going to restart it from the beginning, and again, we apologize for those of you who have been on standby.

Here today are Jim Bagley, Chairman and Chief Executive Officer;

Steve Newberry, President and Chief Operating Officer; and Martin Anstice, Chief Financial Officer.

Before we begin, please be advised that except for historical information, the information Lam is about to provide and the questions Lam answers in this call may contain certain forward-looking statements, including but not limited to statements that relate to the Company's future revenue and operating expenses, management plans and objectives for future operations and product development, and the demand, acceptance, and competitiveness of the Company's product.

These statements are subject to various risks, uncertainties, and changes in conditions (indiscernible) significant value and effect that could cause results to differ materially and in ways not readily foreseeable, and which are detailed in the Company's SEC report.

We encourage you to read those reports in their entirety.

Lam would also like to disclaim any obligation to correct or update any of the information we are about to provide.

This call is currently scheduled last until 2 P.M.

We ask that you limit questions to one per firm.

I will now turn the call back over to Martin for a review of the financial results.

Thank you, Kathleen.

Key messages today include new orders at the mid range of our original guidance, reporting an increase in backlog of 40 million; revenue of approximately 380 million; gross margin, operating profits and earnings per share that appreciably surpassed our earlier expectations; and earnings quality that generated record levels of cash from operations of 150 million.

New orders entered into backlog for the quarter were 387 million.

We had $16 million of order cancellations and backlog adjustments to record net bookings of 371 million.

Approximately 85 percent of total systems new orders were 300 millimeter and approximately 90 percent of total systems orders were for applications less than or equal to 130 nanometers.

New orders breakdown by customer segment were similar to the prior quarter, with approximately memory 57 percent, logic 24 percent, and foundry/other 19 percent.

Growth in new orders in Korea significantly mitigated the sequential new orders decline in other key regions.

Revenue of 380 million reflects our consistent focus on new system installation schedules and acceptance timelines of our customers around the world.

Added to the performance of the first three calendar 2004 quarters, these results underpin the progressive marketshare momentum for Lam.

The currently reported consensus for CapEx growth calendar year 2004 over 2003 is in the range of 55 to 60 percent.

In the same period of comparison, our new orders and revenues both increased by more than 80 percent.

Our shipments more than doubled.

The December ending unshipped backlog increased to 456 million.

Sustained on-time delivery performance against scheduling request by our customers through the holiday season resulted in a shipments book-to-bill of approximately 1.12.

For more complete details on orders and revenues geographic breakdowns, please refer to our press release today.

On sequentially lower revenues, our gross margins improved by 1.2 percentage points to 52.4 percent of sales, again, a new record for the Company in any meaningful comparison.

As presented in our November 2004 analysts' meeting, our targeted gross margin performance at these revenue levels is between 49 and 50 percent.

Clearly, in December, our efforts to achieve a responsive supply chain and a variable cost structure were significantly enhanced by a favorable mix of business that included high-quality installation and warranty performance, customer configuration choices, and the resulting benefits of lower material content as a percentage of sales.

At 90 million, our total operating expenses continue to be in the targeted range.

The sequential reduction of 3 million in R&D costs reflects certain opportunities identified to improve the efficiency and effectiveness of our spending.

We will continue to seek such opportunities and remain fully committed to strengthen our competitive advantage through enhancements and introduction of new products and services.

In calendar year 2004, we targeted two cash related objectives, the first being cash from operations of approximately 300 million, the second, to end the year with essentially the same amount of cash as we started the year, but without the debt.

I am pleased to report that we exceeded both objectives.

With a focus on working capital, we generated cash from operations of 314 million in 2004.

We began the year with a cash balance of 704 million and ended with 762 million, including a constant 112 million of restricted cash related to our synthetic leases and 67 million of proceeds from the issuance of common stock in the twelve-month period.

Deferred revenue was 123 million and deferred profits were 74 million at the end of December.

These balances exclude the value of shipments to a Japanese customer where (indiscernible) has not yet transferred of approximately 53 million in revenue terms.

These shipments are currently recorded as inventory at cost.

Following Congressional approval of the R&D tax credit extension in October, our effective tax rate of expense is planned at 25 percent for the fiscal 2005 year.

In December, our effective tax rate was 23.9 percent.

Worthy of note, our cash outlay for taxes continues to be substantially lower than this income statement rate due to the consumption of our deferred tax assets.

To conclude, capital expenditures were 9 million, depreciation and amortization amounted to 7 million for the quarter.

At the end of the period, net fixed assets were 45 million and we employed approximately 2200 people.

We will now move to Jim's comments.

Thank you, Martin.

Good afternoon.

Sorry for the interruption, but we are kind of in an off-ramp here on the information highway in Silicon Valley.

Before I begin to discuss the market, I want to put 2004 into some kind of context.

During 2002 and 2003, I was asked almost every time I presented at a conference if in the next upturn we could achieve margins equal to or greater than the margins we achieved in the 2000.

The answer to that question is yes.

In 2004, our gross margin for the year was 50.1 percent, with our highest margin in this quarter at 52.4 percent.

During 2004, the cash generated from operations was $314 million, while in 2000 it was 190 million.

To support our discussions of market share gains, led me provide you with some information.

Our 2004 etched shipments exceeded our 2000 shipment, even though the 2004 CapEx was about two-thirds of the CapEx in 2000.

That implies a growth in marketshare of 50 percent, with the assumption that the etched market as a percent of CapEx was the same in both years, which should be a reasonable assumption.

In summary, 2004, in terms of operational performance as well as market share gains, was outstanding.

We have a continuing effort on the operational performance as well as in marketshare expansion.

We will continue to target accounts with large capital budgets and where our potential for success is high.

Let me provide you some perspective on our 300 millimeter marketshare.

We believe our 2004 shipped marketshare at 300 millimeters is 38 or 39 percent.

When examined by our customer groupings, that is, microprocessor producers, memory producers, foundries, and IDMs, we see the following.

In all but one microprocessor producer, we have more than our average 300 millimeter share.

In all but two memory producers, we exceed our average 300 millimeter share.

In three of the four major foundries, we have greater than our average 300 millimeter share.

In half of the major IDMs, we have greater than our average 300 millimeter share.

So our opportunities are clearly in the IDMs.

Of those where we are underperforming to our 300 millimeter average, three are located in Japan.

We still have work to do in order to achieve our three-year share objectives.

Now let me describe our view of the market today.

First, it is quite dynamic.

We expect our business at memory producers to be strong in first quarter and potentially in third or fourth quarter of 2005.

Memory producers we have talked to see strong bit growth in both flash and DRAM throughout 2005.

They are clearly cognizant of the amount of capacity that has been added during 2004 and understand better than all of us the rate at which you can ramp capacity at the leading edge.

They believe that the bit growth will exceed that capacity or, put in a different context, that the market will grow at least as fast as the capacity will grow.

So they are bullish for the year in general.

They do expect some weakness in the market in first and the early part of the second quarter.

We expect our foundry business to be stronger in the second half than in the first half.

The foundries that qualified early at 90 nanometer have higher utilization today because of the 90 nanometer loading and they are more bullish for the year.

In aggregate, we expect the market to be down about 15 percent for the year.

Now let's turn our attention to guidance for the March quarter.

For the March quarter, our bookings range will be down to 15 to 20 percent from the December quarter, remembering that our December quarter was relatively strong compared to the industry.

For the March quarter, our revenue will be 340 to 355 million, with gross margins of between 48 and 49 percent.

Shipments will be approximately 10 percent up to 350 to 365 million.

Our operating expenses will be modestly above December, with earnings per share ranging from 40 to 44 cents on 144 million shares and a tax rate of 25 percent.

I can't say enough about the outstanding effort and accomplishments of the Lam employees.

The fruits of their effort through the downturn were clearly demonstrated by the Company's performance in 2004.

I would like to reiterate my appreciation for their continued efforts and their loyalty.

With that, we will open it for questions.

Thank you, sir. (OPERATOR INSTRUCTIONS) Timothy Arcuri with Smith Barney.

Thanks a lot.

Jim, from your comments, it kind of sounds like there could be a hole in memory in Q2.

Am I reading that right?

Yes.

That is not unusual, Tim. the memory producers typically buy in significant quantities and they all have patterns to when they place orders.

So our expectation is that the memory business will be down in second quarter, but should come back in either third or fourth, based upon what the customers are telling us.

Suresh Balaraman with ThinkEquity.

Can you (indiscernible) outperform the semiconductor (indiscernible) market in 2005 given the lack of exposure to Intel?

And also give your thoughts on how you expect Japan to fare for you in 2005.

Thanks.

I'm sorry.

You cut out at the first part of your question.

Yes, given the lack of exposure to Intel, which is ramping its process (indiscernible) spending more than 70 percent in 2005, can you still perform in line or outperform the (indiscernible) market in 2005.

And how do you expect Japan to fare this year?

I think that -- to answer your question, I think that we will have to see how the foundries perform in the second half of the year to be able to give you a full-year commentary on that.

If the foundries in the second half of the year perform as they expect to perform and as -- I just got back from Taiwan, and when I looked at the capital plans of the foundries in Taiwan and Singapore and China, I think there is an opportunity for us to outperform the industry because we will continue to benefit from share gains and 300 millimeter expansion.

In Japan, we have some aggressive programs in Japan.

I am not sure that they are going to achieve what we would like to achieve in the next 12 months in total.

I think we will make our milestones for Japan.

I just don't think it's going to be that impressive in 2005.

I suspect that we will see a lot better performance in Japan relative to our peers in 2006.

Bill Lu with Piper Jaffray.

I am not sure if I misunderstood you, but when you say memory is strong in the first quarter, is that revenues or bookings?

If it is bookings, then why is bookings down sequentially?

What segments do you expect to be weak in the first quarter?

All of the segments will be weak in the first quarter, I think, except memory.

We will continue to see -- the foundries are going to be down in the first quarter.

The memory producers will be down but still be strong in first quarter.

The IDMs are also going to be relatively weak for us in the first quarter.

Robert Mayer (ph) with Needham & Company.

Congratulations on the superb numbers.

Question about yen/dollar.

Given that one of your major competitors is Japanese cost-based, what impact are you seeing or are you seeing any substantial impact in terms of pricing or ability to hold pricing or competitive pricing given the yen/dollar move over the past year?

From a pricing point of view in Europe, Europe is an easy one to answer because the primary component of our revenue stream in Europe is priced and invoiced in U.S. dollars.

So the natural hedging of the Company's cost structure means that the exposure is extremely low.

With the yen, we have for a number of years had a hedging program in place, not just for the assets in the Company, but also for the pricing and respective bookings.

So again, negligible impact.

And I will let Jim, if he wishes, comment to the competitive side of your question.

I don't think the yen in the last 12 months has moved enough to make a significant difference in pricing for us in Japan.

Steve O'Rourke with Deutsche Bank.

Good afternoon.

With memory weakening in calendar Q2, do you see a bottoming in orders or should we view 2005 orders as kind of declining through midyear and then maybe resuscitated by both sounding foundry and memory later on -- just from a qualitative perspective?

On the basis of the way we have modeled the year -- and this doesn't mean anything except this is the way we are going to plan for the Company -- we think second quarter is likely to be weaker than first, and third and fourth quarters, we are expecting to become stronger.

But that is the extent to which we would comment on the year.

When we aggregated the numbers, it looked like we would be down about 15 percent year-on-year in terms of market.

Not in terms of our revenue would be.

John Pitzer with Credit Suisse First Boston.

Good afternoon.

Congratulations.

Jim, I wonder if you could comment what percent of the backlog today is at 200 millimeter versus 300.

I guess my question is, do you think there is any risk to the 200 millimeter backlog as we move through the first half of '05?

Our backlog at 200 millimeter is really quite small, John.

It is just largely 300 millimeter.

And when I say largely, that is very largely 300 millimeter.

And no, we don't see any particular risk at 200 millimeter in our backlog.

It is not large enough and the backlog that we have we think is good.

Jay Deahna with JP Morgan.

Good afternoon.

Congratulations again on the results.

Jim, has your outlook on capital spending for the year and the order profile changed meaningfully since the end of the holidays?

Yes -- I don't want to start fanning a fire here, but when we were going through the last days of December, the outlook in first quarter and in second quarter looked weaker than it does today.

So things began to strengthen.

I think it is really a case of people got back, really saw what their performance was in fourth quarter, looked at the incoming orders and things looked better.

There has been a tremendous amount of discussion about foundry underutilization.

If you look at the underutilization in the foundries with a maybe one or two -- just one exception that I'm aware of, the foundry underutilization is all at trailing edge capacity.

It is not at 130 down. 130 down, it is loaded very well.

For those foundries who are not performing well at the 130 and below it is principally because of when they got qualified on 90 nanometer and how well they are being loaded and some competitive issues with other foundries.

The memory people are continuing to move ahead, and we have talked to our major memory customers, the ones that we have the highest share in, and their outlook is really surprisingly bullish, from my perspective.

I thought that they would be concerned about the level of activity that was going on just in general with memory capacity, and I think we have seen that written by many of the people who observe the industry.

The fact is I had a very extensive discussion with one of the major memory suppliers who outlined the share capacity -- wafer capacity that has been put in place, how fast it could be ramped, how many bits they would get out based upon what they knew about their competitors' product sets, was it at 110 nanometer, 90 nanometer, etc.

And they looked at both flash and DRAM and they projected a bit growth that was modestly above what they computed the additional capacity would yield all through 2005.

So I was quite encouraged by that tutorial.

Mark Bachman with Pacific Crest Securities.

Martin, at your last analysts' day you, gave us four different scenarios on how Lam would perform given varying levels of capital expenditures; so I guess I have a two-part question.

One is are these scenarios still valid?

And two, which scenario do you think that Lam is in right now?

I will certainly answer the first part of your question, which is is the model still valid?

And the answer to that question is yes.

No change relative to the performance of the last quarter in terms of impact in 2005.

And as I said in our analysts' meeting and I will repeat today, I think you need to pick the scenario for CapEx that you think is appropriate and we guide how we believe Lam will perform in that context.

We certainly see the range of down 5 to down 15 and those were the presentations that I made.

David Duley with Merriman.

Could you just maybe remind us what your cash generation goals are for 2005, and also give us a little bit more color on the bookings increases throughout Southeast Asia, specifically Korea?

I will speak to the cash generation.

We have not specifically defined an absolute number in terms of floating that in the public domain, but I would approximate for now that we will plan to generate a similar level of cash from operations in 2005 as we have in 2004, assuming the current consensus in terms of CapEx, the down 5 to down 15.

And primarily that stream of cash will obviously come from profits and operations of the Company and not from a continuing rationalization of the working capital in the Company.

Relative to our fourth-quarter bookings in Asia, we just had a spectacular quarter in Korea.

We knew that we were going to have a very strong quarter from at least one of the major supply memory producers in Korea.

It turned out there were more orders from Korea from that supplier, as well as others.

So our Korean business was very strong.

The rest of Asia was came in essentially as we expected it, and we expected it to be somewhat weaker than the December quarter.

Tim (indiscernible) with Morgan Stanley.

Just congratulations on a very strong quarter.

Just a quick question.

Can you maybe just give us a little bit more granularity?

You talked about, Martin, the margin improvement, and you basically mentioned three components to that improvement -- warranty expenses through high-quality installation, tool configuration, and thirdly, lower materials content.

Can you maybe break this down a bit?

Are they all three present in equal measure or is there a skew to one of those?

I would say the two or three things that I spoke to all contributed to the margin improvement in relatively equal measure, and I think best characterized the change in the sequential improvement.

Avinash Kant with Adams Harkness Hill.

Good afternoon.

Talking about your R&D spending, it seems like over the last few quarters, the R&D as a percentage of revenue seems to becoming down from close to 20 percent; now it's stabilizing at around 12 percent level.

Do you think that's what is going to be the percentage of spending going forward?

I would prefer that you not model the Company on R&D as a percent of revenue.

That is the quotient of a numerator and a denominator.

The denominator varies.

The numerator, we try to hold relatively constant based upon the investment opportunities we see in our product set.

So we have not controlled R&D spending as a percent of revenue.

We have controlled R&D as an investment based upon opportunities.

Brett Hodess with Merrill Lynch.

My question is on gross margins.

Can you give a little bit of color on the favorable customer configurations in the quarter?

Is that due to the fact (ph) of the customer mix or product type being ordered?

And is it something that's predictable going forward when you give gross margin guidance?

It is actually not very predictable going forward, because if we sell process chambers retrofitted to a system that is out there already, that we previously delivered, that has two or three chambers on it, we are selling two or one chambers to add to that machine.

The gross margin is typically higher.

If we sell machines with four process chambers rather than three, the gross margin is typically higher.

So really this is a case of mix.

Also, if we sell some of the highest performing systems that we have, particularly in silicon etch, where we are selling systems that we are providing leading-edge capability of about 3 nanometer CD control over a 12 inch wafer, those systems are typically higher priced and have better margins.

Jim Covello with Goldman Sachs.

Quick question.

Recognizing that the gross margin performance in the last quarter was phenomenal, with shipments up, it would seem that -- it seems a little odd that gross margins are down for the March quarter.

Could you help me understand that a little bit?

Thanks.

I think the best way to answer that, Jim, is to first of all recognize that what shows up on the face of the P&L in terms of margins is a function of the systems that get accepted by our customers in that period.

So almost independent of the period of manufacturing or factory efficiency, we try, as we are supposed to by U.S.

GAAP, to make sure that the costs on the face of the P&L are consistent and matched with the stream of revenues.

So when you see a higher level of shipments being guided by the Company, we will ultimately carry that benefit to the extent there is one, and match it against the systems when they are accepted by our customers.

Ted Berg with Lehman Brothers.

Thanks.

Same topic.

Was the boost to gross margins in the December quarter, was some of that stuff more of a onetime issue or it really helped out the December quarter?

Because if you look at the incremental gross margin for March on a quarter-to-quarter basis, it looked like gross margins would have been higher than the 48 to 49 percent guidance that you gave.

And if you go back to the June quarter, I think you're at 49 percent that quarter on a lot lower revenues than where you are in March.

Let's kind of put December into context as to where it should've been, which would be on that revenue level, closer to 50 percent, and we articulated why it was 52.4 as a function of those three parameters.

When you look at the decline in revenue that is occurring and going back to a more normal mix of what the configurations are, coupled with the fact that in March, we are shipping and going to be heavily involved in the process of what we call first in fab startups as a function of the penetration wins that we booked in the second half of '04.

Those systems shipped in the late December quarter, are shipping early in January, and they will make up a significant portion of our acceptance activity in the March quarter, which will then be reported as revenue.

Those first in fab startups are longer and are more expensive to operate to, and so that will have an impact on gross margins relative to the December quarter.

Also, our favorable mix situation that was present in December goes back to a normal mix in the March quarter.

And we fundamentally have overall lower total volume that we are going to be revenuing, and the associated inefficiencies that are associated with that particular volume level manifesting itself with the revenue recognition in the March quarter.

Ben Pang with Prudential.

Yes, I had a question on the foundries.

You mentioned that, I guess, the leading edge is filling up pretty nicely over there but that they are waiting for second half of the year.

What is the trigger point that will cause the foundries to spend more if the spending is dominated on the leading edge and the leading edge looks like not only is it filling up, but the yields are getting better?

What would cause the foundries to increase the capital spending in the second half of the year?

One of the things I would like to reiterate as I am answering this question is we sell leading-edge equipment.

A preponderance of our revenue in almost any period is leading-edge.

And as soon as leading-edge gets qualified, then you typically have people buying that.

We seldom have a quarter where a preponderance of our revenue is trailing-edge equipment that is being put in wafer fab because the trailing edge is growing rapidly.

In 2004, the trailing edge grew substantially less than the leading edge, and so you see by 300 millimeter and our reporting that most of our equipment has gone into sub-130 nanometer -- 130 and below applications.

What drags the leading-edge is two things.

One, the customer's anticipation of orders or actual orders that they have gotten for their leading-edge capacity.

In the foundries case, they have to have -- what they are selling, their product, is capacity.

They have to have capacity in place.

If they believe the leading edge is going to grow and their demand will grow there, they have to add the capacity or they have no product to sell.

Their inventory is capacity.

And if you think about the foundries that way, you can get a little bit better idea of why they act the way they do.

Just like we don't like to carry inventory -- when there is not a prospect of growing business, we don't buy.

We don't buy products.

When the foundries believe that there is going to be slow or modest growth at the leading edge, they quit adding leading-edge capacity because they don't need it for inventory purposes.

So if you'll think of the foundries as requiring capacity in excess of demand as inventory, one of the things they have done is they have tightened up their supply chain so that they get higher inventory turns.

In other words, they hold the inventory a lot less than they used to.

So the foundries that are doing well at the leading edge will continue to buy, and they will buy more aggressively as they go through the year if they believe 90 nanometers is going to require more capacity than they currently have projected and are ordering for early in the year.

Steven Chin with UBS.

Thank you.

I was just hoping you could give us some more color on the -- I think you said, Martin, there were 16 million in cancellations.

Was this older technology and was it more than one customer?

And as a quick follow-up, did Lam buy back any stock in the quarter?

I commented we had $16 million of cancellations and adjustments, and I think the split was 11 or so of cancel, and it was a couple of customers.

Related to stock repurchase, we did not repurchase stock in the quarter.

A follow-up from Timothy Arcuri with Smith Barney.

I am a little confused on the shipment number.

When you gave a 1.12 book-to-ship, was that off of the net bookings number, i.e. off of the 371, which would imply shipments were like 330?

Is that the right way to look at it?

I will run through the math, Tim, just to make it absolutely clear.

We opened with a backlog of 415.

We had net bookings of 371.

We shipped 330.

That is the ship book-to-bill of 1.12.

And we ended with a backlog of 456.

And that statement of shipments, the 330 and the book-to-bill of 1.12, is almost identical to the guidance that Steve gave in our last earnings call when he said 1.1 to 1.

Tim Summers with Stanford Financial Group.

I wanted to know do you expect your Korean business to remain at the second-quarter levels as we go into the second half of fiscal '05.

I am not sure the basis of the question.

We haven't really talked about Korean business in the second quarter.

I think in the prepared remarks, you indicated that the Korean business was pretty strong, and that is the genesis of the question.

Are you talking about fiscal quarter or calendar quarter?

We don't understand.

The only person who understands fiscal quarters in the company is Martin.

The rest of us work on a calendar year basis.

He is British and so he is more adaptable than the rest of us.

Let me put it this way, then.

In the fourth calendar quarter of '04, you obviously had strong Korean business.

As you look into the first half of calendar '05, do you anticipate the level of Korean business to remain at the fourth-quarter levels?

It will be below the fourth quarter levels.

Great.

Thanks.

John Pitzer with Credit Suisse First Boston.

Our next question is a follow-up from Tim (indiscernible) with Morgan Stanley.

We will try to take one more and then we will conclude the call if there are no further questions.

Steven Pelayo with Fulcrum Global Partners.

Martin, on the 53 million that is excluded as shipments to Japan, I am curious on an apples-to-apples basis, what was that in the September quarter?

Secondly, is the margin on that 53 million similar to what we see on your deferred profit margins?

So effectively, if you were including that, your deferred revenues would be about $123 million more, because that would be about a 60 percent margin if you were carrying it at its full revenue amount rather than at cost.

The September equivalent of the 53 was a little less than half that number.

And I am not going to specifically comment to the margins number for, hopefully, very obvious reasons, but you're not going to go that far wrong if you apply the average margin of the Company.

Okay, we would like to conclude the call at this point.

Again, we apologize for the technical troubles that we had at the start of the call.

We thank you for joining us today and look forward to updating you next quarter.

Ladies and gentlemen, that does conclude Lam Research December quarter 2004 financial results conference call.

We thank you again for your participation on today's conference and you may now disconnect.