O2micro International Ltd (OIIM) 2005 Q3 法說會逐字稿

Good day and thank you for joining us today to discuss O2Micro's earnings for the second quarter of the fiscal year 2005. If you would like a copy of the press release, please call Pamela Campbell at 408-987-5920, extension 8095, and we will fax you a copy immediately.

It is also posted on O2Micro's Web site at www.O2Micro.com. Today's call is being recorded and there will be a replay available through November 9th by calling 1-888-203-1112, or 1-719-457-0820. You'll enter the pass code of 8426898. Following the presentation by management, the conference call will be open for questions and answers as time permits. Gentlemen, please begin.

Good afternoon, and welcome to the O2Micro third quarter fiscal year 2005 earnings report conference call. This is Gil Goodrich, Director of Investor Relations - pardon me. I would like to remind listeners that this discussion of business outlook for O2Micro contains forward-looking statements.

Statements made in this release that are not historical fact are forward-looking statements within the meaning of the Federal Securities laws. Actual results may differ materially due to numerous risk factors. Such risk factors are enumerated in the Form F-1, Form F-3 and 20-F reports, and other documents filed with the SEC from time to time. Listeners are referred to the O2Micro earnings press release, and the documents filed with the SEC, to understand these forward-looking statements and the associated risk factors. The statements made herein are dated information.

The press release dated October 17, 2005 and October 21, 2005 announced an offering and listing on the Hong Kong Stock Exchange and the establishment of a test facility in the People's Republic of China. Listeners are referred to these press releases that are available on the O2Micro Web site. Until such time as the Hong Kong Stock Exchange application should be approved, the company is restricted from any further comment at this time. The company does not know when or if such application will be approved by the Hong Kong Stock Exchange.

With us on today's conference call are Perry Kuo, Chief Financial Officer; Jim Keim, Director; and Sterling Du, CEO and Chairman. After the report, the floor will be open for questions as time permits. Now I would like to introduce Perry Kuo, Chief Financial Officer of O2Micro, for a discussion of the revenue, income and financial highlights of the third quarter and fiscal year 2005 ended September 30th 2005.

Thank you and good afternoon, everyone. This is O2Micro's earnings announcement covering Q3, 2005 ending September 30th, 2005. I will highlight our operating results and predictions. Then Jim Keim, Director will provide much of highlights. Closing comments will be made by Sterling Du, CEO and Chairman of O2Micro. After which, we will answer questions. I will be brief in my oral report because everyone has a copy of the earnings report press release. I will report the highlights only.

During our conference call on August 3rd, 2005, we projected Q3 revenue to be up in the range of 8% to 10% from Q2 revenue of 25,636,000. Revenue for Q3 was 28,047,000, a record high revenue for the company. This revenue of 28,047,000 represents an increase of 9% from the preceding quarter and an increase of 27% from the comparable quarter of the prior year.

Net income for Q3 was $2,850,000, compared to $2,980,000 of the preceding quarter and to $3,059,000 for the comparable quarter of the prior year. Earnings per share fully diluted for Q3 ended September 30th for 2005 was $0.07 per share, compared to $0.07 per share for the preceding quarter and $0.08 per share for the comparable quarter of the prior year.

Earnings per share fully diluted, exclusive of litigation in the amount of 2,716,000 for Q3 was $0.14 per share. Gross profit margin for Q3 was 61.7%. R&D spent for Q3 was 6,617,000 and represented 23.6% of revenue. This is above the range of 18% to 23% of the long-term financial model.

SG&A expense for Q3 was 5,055,000 or 18.1% of revenue. This does not include the litigation expenses of 2,716,000. The total SG&A expenses, including litigation, is $7,780,000. We continue to carefully monitor and to conserve expenses.

Operating profit margin for Q3 was 10.4%, compared to the operating margin of Q2 of 8.2%. Operating profit margin, exclusive of litigation expense for Q3, was 20.1%. Income tax for Q3 was 432,000. This represents a tax rate of 13.2% for the quarter. Share repurchases in Q3 was zero. There were no share repurchases in Q3.

Revenue by end market as a percentage of total revenue for Q3 was in consumer in the range of about 16%, computer in the range of low 30% and industrial and communications each at small single-digit representative of the revenue.

Balance sheet. O2Micro has over 114 million in cash and short-term investments. This represents cash and equivalents per share of $2.88. In addition, O2Micro has no debt. Short-term investments or money invested in corporate bonds of at least A-rating and a government bonds of certain developed countries.

Accounts receivable at the end of Q3 was 13,350,000 for a DSO of 43 days. Inventory turns ratio for Q3 was 3.2 compared to 3.9 for the previous quarter and 3.1 for the comparable quarter of the prior year. Cash flow from operation for Q3 was a negative 195,000. Cash flow for 2005 year-to-date was 8,656,000. Human resources O2Micro now has 576 employees, 66% of which are engineers. This positions us well for new product development, the continuous introduction of new products and the more customer design wins in the future.

Guidance for Q4. 02Micro estimate Q4 revenues compare to Q3 to be in the range of up 10% to 12%. The gross profit margin target range of the company's financial model is 55% to 60%. And we expect gross profit margin in Q4 to be in the high end of the range of 55% to 60% or slightly higher. The R&D expense range of the company's financial model is 18% to 23%. And we expect R&D in Q4 to be in the high end of this range or slightly higher, as continued investment in R&D is vital to the future growth of the company. The SG&A target range of the company financial model is 13% to 18%. We expect SG&A, without litigation expense, for Q4 to be in the high-end of this range or slightly higher. We expect litigation expense for Q4 to be in the range of 2.5 million to 3 million.

I will now pass the call to Jim Keim, Director, and he will review the market and customers.

Thank you, Perry. While Q3 saw continuation of our expansion in the consumer market, we're pleased to report that we saw an increasing number of design wins in the notebook market with our new families of intelligent e-commerce and intelligent power products. We expect these design wins to have revenue impacts starting in the first half of 2006. Additionally, we are expanding our intelligent power family beyond notebooks. And we'll focus on additional opportunities in both the consumer and industrial markets. We expect to see increasing revenue growth from our intelligent power products in these markets in 2006.

Our Intelligent Lighting Group, where we are the established industry leader, is seeing a wide diversity of design wins coupled with an ever-increasing customer base. We remain very optimistic in this area as we continue to see market expansion and expect LCD TV to experience strong growth for the foreseeable future. We are also pleased with the continued expansion of our Intelligent Lighting patent portfolio with a total of 19 United States patents having been issued. Progress is ongoing with our Intelligent Battery product line that has the evaluation silicon at key customers. We expect to begin generating revenue in 2006 in both computing and industrial applications from this new product area.

Development activity in our VPN Firewall continues to expand. Although this market will take time to develop we do expect some revenue contributions from this product line in Q4 and onward. To summarize, we now expect to see growth in the notebook, consumer, and industrial business in 2006 as our broadening product lines enjoy increasing numbers of design win opportunities. This growth can place a burden on our supply chain. In fact, we are now shipping many multiples and the quantity of product we were shipping just a few years ago. As we see both our product offerings and customer base broadening, we'll need to make sure we have the resources in place to properly service our growth. This means increasing strategic investments in our supply chain. We recently announced our plan for test facility. We'll also need to focus on strategic supply, and wafers and packaging that remain critical to our growth plans.

I will now pass the call onto Sterling Du, CEO and Chairman for closing remarks.

Thank you, Jim. Our third quarter of 2005 finished with a record high revenue of 28 million. That was an increase of 9% from the preceding quarter, and an increase of 27% from the comparable quarter of the prior year. The EPS for the third quarter 2005 fully diluted was $0.07 per share, compared to $0.07 per share in the preceding quarter and $0.08 per share in the comparable quarter of the preceding year. We grew our engineering staff in China from 221 in the second quarter 2005 to 277 in the third quarter 2005. We expanded our activities in China and plan to build a test facility and further workgroup (ph) suppliers. We participated in several corporation projects with famous universities, such as Chingwa University in Beijing. We promoted IP awareness to our team and trained our current engineers to the experience level. We also think the financial and accounting team can expand in more financial activities in the greater China area, including Hong Kong.

As previously mentioned, the PMU IC for Portable Media Players is highly integrated including modular functions, power maintenance solutions. It is now an MP. Our VideoDJ PMU IC for camera phone is one of the most highly integrated for major IC and is still in the variations stage. On notebook computer Charger IC and the DC/DC IC is getting relevant momentum. We expect to see more in the activities for this product line in the next year.

Our e-commerce new product has gained a few major design wins among first year notebook computer companies, and expect to see growth starting next year. Our VPN Firewall Internet Security System solutions had effect in SSL base machines will have more revenue in end of this year. Our next phase is to build up our efficacious engineering team and build an execution team for the Asian marketplace.

Our intellectual property portfolio continues to grow with patent growth increasing to 115 at September 30th, 2005 from 103 in the preceding quarter patent client increasing to 3,055 from the preceding quarter 2,517.

Thank you for listening to our conference call today.

Operator, could we open the floor to questions please.

(Operator Instructions). We'll go first to Tore Svanberg of Piper Jaffray.

Yes. Good afternoon. A couple of questions. First of all it looks like you are starting to goners some more design wins in the notebook market again. Can you talk a little bit about these products and is it safe to say that your notebook business is pretty much bottomed at this point?

Yes. As Jim, stated we do see the e-commerce product go to the notebook has been quite enough around this -- end of this year. And our Charger IC for notebook and DC/DC IC for notebook has continue our many design wins from the last -- end of last year and this year begin to realize as (inaudible) activity and we expect that will be also contribute to the revenue in the next year for the notebook segment.

And on the same topic, when it comes to profitability I know in the past to have had the lower margin CardBus in the notebook area. How about 2006? Should we assume that some of these products are moving into production and are carrying higher gross margin?

For the Charger IC and the DC/DC IC, of course, that is consistent to the -- our Company gross margin or even over. And for the e-commerce that depends on the product type. And generally speaking, they are a little bit below the corporation gross margin.

Okay. And this it looks like to you've been adding a lot of engineering to China. Could you maybe share some color with us? Are these engineers working on current products or these products for '06, '07? Just trying to understand that the R&D there and when we can expect some returns from that R&D?

We started the Design Center in China since 2001. And the engineering staff that was hired before 2003 is working on the current MP product line and those already realize as revenue, which is there we contribute to company bottom-line and also topline. And that including our leadership such as the inverters ICs for the different area and also including the e-commerce, which is we are currently producing and also have the -- some of the Charger ICs. And -- the most recent hires staring from 2004 and 2005 those engineering, of course, some of them are people who are working on the next generation ICs, and some of that are fresh squad DCF. And we are just training up and talk with them in company, and they're not involved with any revenue contribution. But usually, the engineers we train mode in one year or two that could be involved better with contribution for the revenue.

Great. A final question for Jim. Jim in your prepared remarks, you did expected the LCD TV market to continue to be robust. Could you give us an idea of where we are as far as 02Micro plays in this market? I'm just trying to understand the penetration rate of CCFL versus Royer and also how well you are entrenched in let say larger panel versus smaller panel TVs.

Okay. That's a broad area of subjects. Let me try to just focus in a few areas. First of all, we see the definite trend in LCD TV as we move onward to -- move to a larger screen sizes and we feel that as unless production continues to go up price points in the market will continue to come down on LCD TV and that would be very positive for larger screen TV. O2Micro's position is very strong at the high end of the LCD TV market, where we have some very unique and very strong intellectual property. And we think we are uniquely positioned to take advantage of the growth in that market. At the same time, in the, what I would call the lower end of the LCD TV market, we also have our standard products which are broadly used. And we think that we have a very strong market position and we intend to continue to maintain that strong market position. So those are my comments.

Okay. And I guess I know it's very hard to quantify this market, but I think this year people are talking about maybe 20 million LCD TV's. Would you have any idea what your penetration rate is there?

We don't really care to announce our penetration rate nor do we care to really announce customers and some of the customers we do have non disclosure agreements with. So that's also a problem

Fair enough. Thank you very much.

Thank you. We will go next to Quinn Bolton, Needham & Company.

Hi. First thing, just a clarification. I missed the revenue guidance. Could you just repeat that?

10%, 10% to 12%.

Okay. Thank you. Sorry about that. Second question just, Perry, it looks like for now a few quarters in a row R&D and SG&A have been trending above your sort of longer-term targets. Can you give us a sense as to when do you think you're going to back in the 18 to 23 and 13 to 18 respective ranges for R&D and SG&A? Or is this something that we may need to start to rethink the long term model. I, mean obviously the gross margins would like they may become embedded in corporate average so we just see in a whole model moves up a couple of percentages points?

Regarding the SG&A to come back to the model, I think we are now parting soon some Taiwan for the meeting Sarbanes-Oxley. So we spend more in the professional fees. And up until this period of time, I think that next year we will be back to the model.

Okay. How about on the R&D side?

R&D area -- we are actually now in the area of the high-end of the 18%. So the momentum of the increase of the R&D, I think, has also reached a peak. We've set up several offices in China this year. This actually is the infrastructure. The infrastructure we set up is already good for the next two years. So the increase of the R&D in the fixed area will be slower now. So with the increase of the sales, I expect that the R&D to fall into the range in the second quarter of next year. It's just on the current status.

Okay. Thank you. That's helpful. Next question, could you just sort of talk about the competitive landscape you're seeing in the TV market? In particular it sounds like both your competitors Monolithic Power and Microsemi claim to be winning designs there. Do you think it -- is this a market where you're just seeing conversion from the Royer topology to inverter topology and so everybody can kind of begin sort of gaining wins without that negatively impacting market share? Can you just sort of talk about what you see in terms of trends in market share moving forward in the LCD TV market?

I think that's a fair statement, regarding the conversion from Royer certainly to single-stage type advanced topologies. And yes, I think you will see people claiming various portions of this, depending upon who they're working with. And certainly, there is a growing supply -- or growing customer base in this area. Many, many various companies are trying to enter this area. Nevertheless, as I indicated, we do see a strong trend toward the high-end growth of this market toward the larger screen sizes. And again, we have a very strong and unique intellectual property position there, and we think we're very, very well positioned to hold our market share. And we actually intend to improve our market share over time.

Okay. Last two questions. Just quick question, any updates on your move or decision to try and bring more wafer production to mainland China? And then the final question is, is the Taiwan Sumida lawsuit still scheduled to go to court, I believe it's next week on the 15th?

Well, first of fall, I'll answer the last question, first. We can never predict an exact court calendar. But at this point, we do believe there is a good chance that the Sumida trial will begin in mid November. So as far as we are concerned, that is on track and that is our plan.

Okay. And then, any comments about just wafer sourcing to Mainland China?

Yes. We -- as Jim mentioned in the - in his - speaking that we are focusing on more developing with the technology - not only technology but also hardware area in China. So we are expecting to have more wafer produced from China.

Okay. Thank you.

Thank you. We'll go next to Andrew Huang of American Technology Research.

Thank you. I was wondering if you could first comment on your LCD TV exposure. I think a few quarters back you mentioned that it was still below 10% of sales. And I was wondering if we could get an update there.

We're not actually disclosing, nor do we care to disclose, at this point in time, our exact LCD TV percentage of the business. What we will say is that marketplace is growing rapidly and we do feel we're well-positioned in that market and we are pleased with our position.

Okay. Great. And then, I was wondering, you mentioned, in your perspective about the -- in the use of proceeds that you wanted to open-up a test center. And I was wondering if you could give us a feel for maybe how much you're spending on quarter on testing with your outsource partners.

We can't comment at this point in time any of the aspects of the Hong Kong filing application and we have not in the past disclosed nor care to disclose now, what our cost of testing is as either a percentage of revenue or percentage of cost of goods sold.

Okay. Can you give us a rough idea on a quarterly basis, how many units - absolute units you're doing a quarter?

No. Sorry, we don't comment on these.

Okay. Thank you.

Thank you. We'll go next to Shawn Slayton, of SG Cowen.

Good afternoon. This is Deepak Sitaraman for Shawn, a couple of questions if I may. Gil or Jim, in the context of ongoing litigation activity, can you remind us of the various events that are coming down the pike here over the next couple of months? You talked about Taiwan Sumida and the fact that that could happen in the -- starting mid November. What are the time lines for BI Tech and the other MPS action that's ongoing?

The activity with BI Tech, SPI, Lien Chang is currently scheduled for early December. There's always possibilities that the court can readjust their court calendar but that trial could in fact happen in December. And we are at this point presuming that it will happen and planning on the fact that it very likely will happen in December. There are at this point no other court dates that are firmly established.

Okay. And it looks like the patents involved in the BI Tech action is pretty much the same as Taiwan Sumida plus I believe another. Is it fair to infer that the outcome in the BI Tech action will be influenced by the outcome in the upcoming Taiwan Sumida trial?

Well, in fact, there are more patents being asserted in the later action against BI Tech, SPI and Lien Chang. But we certainly don't care to comment further on outcomes or the effect of one case on another case.

Okay. Thank you very much.

Thank you. We'll go next Vijay Rakesh of Oppenheimer.

Yes. Hi, guys. Couple of questions. One, just wondering on the cool charge, what kind of revenues or units are you expecting in Q4 or in the first quarter or in the first half of '06?

So, Vijay, we don't disclose the breakdown for the particular product lines.

Do you have any revenues on the cool charge in Q4? Are you expecting any in Q4?

We're expecting something in Q1.

Q1? Okay. And is that significant to your revenues or?

As -- every new product is initially, that will not be there significantly.

Okay. What -- your legal expenses for the next quarter what are you expecting that to be (inaudible - accent)?

I'm sorry Vijay, could you restate that question?

Your legal expenses for Q4? I don't know if you already gave it out?

Yes. It's in the range of 2.5 million to 3 million.

Okay. Also, going back to the inverters that you're selling into TV's. What percent of your revenues today going to TV is on the inverter side?

We do not disclose that. Nor do we care to disclose that.

Okay. And on the VPN/Firewall Solution, is that going to -- are you going to see revenues from that in Q1 also?

Yes.

And is that going to be significant or -- since that's the new introduction that's going to be muted also?

It does as it is a new product, it always take times.

Okay. Great. Thank you.

(Operator Instructions). We will go next to Craig Berger of Wedbush Morgan Securities.

Good afternoon, and thank you for taking my question. I just want to understand what type of visibility you have into that 10% to 12% revenue growth estimate in light of the fact that -- I guess, the economy seems to be slowing down or at least that's the fears. And potentially, the electronics retailers are going to be left with some inventory on their shelves heading into Q1. Are you seeing any of those fears from your customers roll into their forecasts?

That varies largely from customer to customer. We certainly try to follow both the general economic trend as well as carefully monitor the inventory situations. And let me simply say that, yes, we are aware of that information and we have tried to figure that into our projections.

Excellent. And I know you haven't provided any Q1 guidance. But as you look at the LCD TV business next year, is that the type of market where we could see secular growth offsetting what would typically be seasonally down type of trends in Q1? Or do you think we should we be seeing unit volumes kind of further market decline?

We're really not prepared to give any guidance for Q1 or 2006 at this point in time.

Okay. Thank you. And then just, with respect to pricing for -- in the inverter market, what should we think is typical pricing, price declines and sort of where -- how has recent activity been relative to what you guys consider normal?

Well, certainly recent activity has been normal, but I don't think we really care to comment on future trends at this point in time.

Got it. And then just one last question. I know you guys are spending quite a bit on litigation. As you step back and look at -- you have a lot of these system level patents. What's kind of the end point to the litigation? Is it -- you'd like to see royalties or licenses or you hope more chip business is diverted your way? Sort of what's kind of the end goal for this litigation?

Well, the end goal we'll simply say is to maximize shareholder value. And we really don't care to give details on strategic thinking at this point.

Great. Thanks a lot.

Thank you. We will go next to Darspal Mann of Delta Partners.

Yes, I think -- again that -- both these answers was related to litigation as well as on the Q1 only. I know you guys don't care to give lot of it. But, can you throw in some more light on it because first of all, along the earlier question of Q1 guidance, it's been all over the place, I guess. Last to last year, it was down 10% to 12%. And in the last year, it was down only 2%. Can you give some light how the -- especially the consumer market has just a product profile inside the consumer 60% revenue has changed over the year with which -- just whatever light you could throw in. And then, on the patent litigation like, when can we see -- start to see shareholder appreciation from those kind of changes are for those spending (ph)? Thanks.

Well, we certainly, hope to see more clarity as we move through the upcoming trial situations in the legal area. Again, as far as guidance into 2006, at this point, we do not care to give any guidance on 2006.

Can you talk about how the consumer product profile has changed? Is it -- has it skewed more towards TV over the last two years or not skewed toward TVs?

Well, certainly our business has moved in the consumer direction, and we can certainly tell you that TV is an important part of our strategy.

Great. Thanks.

Thank you. We'll take a follow-up from Tore Svanberg of Piper Jaffray.

Thank you. Sterling, I think you talked about consumer and notebook being growth drivers for '06. But I think you also mentioned industrial. Can you maybe elaborate a little bit on that? And what type of applications that we should look out for?

The industrial, right now, in next year -- the possible contribution still coming from our CCFL Inverter revenue. And we maybe also see some of the derivatives product line go through industrial for the battery permitting IC area.

And can you maybe just elaborate a little bit on the competitive landscape in both areas?

In the automotive area, Q2 is very strict quality of qualification of procedure and they like inverter CCFL. Normally people either using traditional or they using a Microsemi. And we are the - we have the product already and make for that into several major car -- automotive in Japan and the one of in USA. And talk about the landscape, we are still a very small percentage in terms of market share. The other thing we need to put effort put on the another industrial design for paid reform into IC. That competition landscape today is using the discreet, which is a using the rent and logic, either is a analog or some of the mixing their to make together. And we're trying to go there to haveintegrated and to achieve the performance cost ratio and maximize this ratio for our customer.

Great. Thank you.

Thank you. We'll return to Andrew Huang of American Technology Research.

Oh, thanks. I was wondering if you could a kind of give us a ballpark range for modeling purposes for litigation expense for the year 2006?

I'm sorry. Andrew, could you restate the question? You were cutting in and out -- we couldn't hear you.

Okay. Do you hear me know?

Yes. Better. Thank you.

I just wanted to get some guidance on litigation expenses for the full year of our 2006.

No. We don't comment on the year 2006.

Okay. Is there another core charge products, that's going to ramp in a Q1, I'm sorry, shift in 'Q1 of next year? Have you worked with, I guess, the Notebook Power supply manufacturers on kind of designing this product? And if you could give us an idea, who you have been working with, we'd appreciate it.

This is very new product. And all the activity to date is under the NDA. And the second is, because is, in fact that the notebook design and also AC adapter design. So that will take even longer time. I would like to say it would take 2X time than regular check to design the customer side. Because we needed the industry to partner to work together. And we do see this is going to be very slow to pick up, it's not going to be seen as significant.

However, we work with Intel and if you have joined the Intel recent ITF(ph) and the similar concept technologies Intel has heavily promoted and that total reach the goal. Number one, is decrease the heat dissipation inside the box. As you know thermal is a major issue for the high speed notebook design -- high speed CPU for the notebook design. And number two, it's going to be objective to try to gather a component of the notebook design is more simpler, and also the range of the voltage try to narrow, and so that we can also achieve the simpler design and also increase the reliability. So for these three objectives Intel has some campaign and also technology promotion to this direction. And our co-charge is consistent with this direction. So I'd like to say that it's going to be change in notebook design sales and also AC Adapter, and we will see that will be slower than the normal momentum for the new product to pick up.

Thank you.

Thank you. We'll go next to Patrick Kirksey of Trusco.

Yes. I just wanted to ask a question about the inventory build that you saw quarter-to-quarter. Could you provide a little color on that?

Yes. Because of the increase in the sales and also the longer lead-time in the given(ph) area. So we build up our inventory in both our raw materials - that's wafer - and also our working process.

And then you gave cash flows from operations for the quarter and that was negative. And I think that's the first negative that we've seen in a couple of years on a quarterly run rate. Do you expect that to be in short-term function due to the kind of the working capital changes that you saw in the quarter and that that would return to positive going forward?

Yes. I think we will return to positive in Q4.

Okay. Thank you very much.

Okay.

(Operator Instructions). We'll take a follow-up from Shawn Slayton of SG Cowen.

Actually, my questions have been answered. Thank you.

(Operator Instructions). And we'll return to Darspal Mann of Delta Partners.

Just a quick clarification, I think you guys mentioned our R&D and SG&A, especially the guidance going forward, do you expect to stay flattish in terms of dollar terms or in terms of percentage of revenue?

As percentage.

Sorry?

As percentage.

Okay. Great. Thanks. And where do you see the flattening out in terms of dollars terms?

No. I think somewhat supposing of this spend will be related to the increase of the sales.

Got it. And what about SG&A?

Yes.

Okay. Thanks.

Thank you. That will conclude today's conference. As a reminder, a replay is available through November 9th by calling 1-888-203-1112 or 1-719-457-0820 and you'll enter in the passcode of 8426898. Again, thank you for you participation. That does conclude today's conference. You may disconnect at this time.