O2micro International Ltd (OIIM) 2012 Q2 法說會逐字稿

Good day, and thank you for joining us to discuss O2 Micro's financial results for the second quarter of fiscal year 2012. Today's call is being recorded. If you would like a copy of the press release we issued this morning, please call Pamela Campbell at (408) 987-5920, extension 8095, and we will fax you a copy immediately. It is also posted on the O2Micro website at www.O2Micro.com under the heading, Investors. There will be a replay available through August 8, 2012 at 9.59 p.m. pacific time by calling 1-888-203-1112, or 1-719-457-0820, with the passcode 8141652.

Following the presentation by management, the conference call will be open for question and answers as time permits. Gentlemen, you may begin.

Good morning, and thank you for dialing into O2Micro's financial results conference call for the second quarter 2012, ending June 30, 2012. This is Scott Anderson, Director of Investor Relations. I'd like to remind listeners that the 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 Company's 20-F annual filings, our annual 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 Company assumes no responsibility to provide updates to this information. With me today are Perry Kuo, our CFO and Director, our Head of Marketing and Sales; and Director Jim Keim; and Sterling Du, O2's Founder, CEO and Chairman. After their prepared remarks from these gentlemen, the floor will be open to your questions.

Now, we'd like to introduce Perry Kuo, CFO of O2Micro for a discussion of the financial highlights of the second quarter ending June 30, 2012. Perry?

Thank you, and good morning. This is O2 Micro's quarterly conference call. This call will cover our financial results for the second quarter of 2012. We will now review our financial results for Q2, 2012.

Please know that financial results will be presented on a non-GAAP basis unless we designate otherwise. The non-GAAP results exclude stock-based compensation expense, one-time charges, non-recurring debts and losses from discontinued operations. Our full GAAP results are available in our press release that was issued earlier today.

GAAP revenue in the second quarter of 2012 was $28.3 million. GAAP net loss in the second quarter of 2012 was $10.9 million. If we exclude stock-based compensation of $821,000, the income from discontinued operations of $465,000 and $9.4 million of litigation provision, the non-GAAP net loss will be $1.2 million.

GAAP net loss per ADS in the second quarter of 2012 was $0.35. Non-GAAP net loss per ADS was $0.04. Gross margin was 55.7% in Q2. The gross margin reflects the current product mix and remains in our target range. R&D expense was $8.6 million, or 30.3% of revenue. This amount excludes stock-based compensation expense of $251,000 in the quarter.

SG&A spend was $8.4 million or 29.6% of revenue. This amount excludes stock-based compensation expense of $570,000 and litigation provision of $9.4 million in this quarter.

Income tax was $299,000 in the second quarter and is mainly based on the estimated tax rate of each taxable location.

In Q2 2012 we repurchased [485,259] ADS units at a cost of $2.25 million.

Q2 2012 revenue by end market breaks down into the following percentages. Consumer was 45% to 50% of revenue. Computer was 35% to 40% of revenue. Industrial was 10% to 15% of revenue. Communications was less than 5% of revenue.

At this time, I would like to provide some additional information. O2Micro finished the second quarter with more than $119.5 million in unrestricted cash and short-term investment. This represents cash and cash equivalents of $3.83 per ADS. In addition, O2Micro has no debt.

Accounts receivable at the end of Q2 was $15.2 million. Our DSO is 49 days, and is in our target range of 40 to 60 days. Inventory was $8.2 million at the end of the second quarter. This represents 58 days of inventory, and inventory turnover was 6.2 times in Q2.

From a cash flow perspective, we generated $2.1 million cash inflow from operating activities in Q2. Capital expenditures were about $742,000 in the second quarter for IT, R&D and the machinery equipment. Depreciation and amortization was $1.4 million in Q2.

At the end of the second quarter of 2012, O2Micro had 821 employees, 56% of which are engineers.

Next, we issued a press release this morning announcing our intentions to evaluate strategic alternatives related to our Intelligent E-Commerce Group. We plan to explore separating the Intelligent E-Commerce Group through a spinoff or other transaction to focus on our key growth drivers.

Although we expect to realize lower revenue in the near terms, as our revenue guidance will reflect, we also expect to realize $8 million to $10 million in annual cost savings as a result of this major. We expect that the process could be completed within approximately two quarters. Sterling will discuss this announcement in greater detail during his prepared remarks.

We are now focusing nearly all our development resources on our carefully-chosen growth drivers like the general lighting sector and we are confident this will drive significant growth beginning in the future quarters.

We have also initiated a plan to reduce operating expenses through various measures until we return to profitability.

At this time, I would like to provide our financial guidance for the third quarter of fiscal 2012. This guidance reflects our best estimate for the current environment and is subject to change. This is the only official guidance we will provide unless we update with a public announcement in the future.

O2Micro expects Q3 revenue to be down 8% to 15% sequentially. We are guiding the Q3 gross margin to be in the range of 54% to 56%. R&D expense excluding stock-based compensation should be $8 million to $9 million in Q3. SG&A should be $7.5 million to $8.5 million in Q3, excluding stock-based compensation expense.

Stock-based compensation should be in the range of $800,000 to $900,000 in the third quarter. Based on the service income of our subsidiaries in different countries, we expect our tax amount to be in the range of $250,000 to $350,000 in the third quarter. Finally, we have great strength in our balance sheet and we are optimistic about our future.

I would like to thank everyone for participating and turn the call over to Jim Keim to talk more about our business. Jim?

Thank you, Perry, and good morning, everyone. As we noted in our second quarter financial guidance update on June 29, Q2 demand was affected by ongoing worldwide economic concerns coupled with the ongoing excess inventory correction.

Consumer markets were soft including those in Europe, Japan, North America, and China. As the slowdown accelerated late in the quarter, OEMs responded quickly in an effort to reduce their inventory exposure at retailers and limit their on-hand inventories.

In the near term, we are maintaining our conservative stance on all of our end markets, and the China market in particular. We built this into our guidance. We believe that the China market will recover and O2Micro is very well-positioned to capitalize based on our long-standing relationships with our customers and partners in this important region.

As we enter the second half of 2012, the ongoing economic concerns have resulted in a combination of very conservative forecasts from our customers, low inventories being held by the supply chain, and weak consumer discretionary purchases. Due to our direct visibility into our customer base over the last several weeks we have witnessed a significant decrease in sell-through by our customers in the markets where we have the greatest exposure. We plan to navigate through the lower demand in our traditional markets by expanding our product offerings and increasing share in our high-growth markets while maintaining our existing leadership position in our traditional markets.

Let's review the results of our markets and provide an overview of the opportunities in these markets going forward.

We expect that the softness in the consumer electronics market in the first half of 2012, specifically in TVs and monitors, will continue into the second half of 2012. We expect the demand for backlighting ICs in the TV market to remain sluggish for the remainder of 2012. In these traditional markets, we continue to be the industry leader in lighting control. We have positioned ourselves well as these markets continue to transition from CCFL to LED lighting.

While traditional markets are slow, we are positioning our company to take a leadership position in general lighting. We now expect our general lighting market position to continue to rapidly expand, reaching approximately 1 million units per month by Q4 of this year.

Additionally our Intelligent Lighting Group has been granted 33 patents with 626 claims in the first half of 2012. This incredible achievement reflects our rapidly-expanding product portfolio in general lighting that now covers a wide range of applications enabling the customer to choose the most desired solution for their specific needs.

This rapid portfolio expansion was highlighted with the recent announcement of our OZ8022 family of free dimming general lighting products that are already going into volume production with industry-leading suppliers. This patented OZ8022 LED driver family dims using any on-off switch and features ultra-low bill of material cost in the smallest form factor.

Besides free dimming, our products now include integrated MOFSETs, Triac control, 110 to 220-volt universal power correction circuitry and both isolated and non-isolated designs. Applications for these products involve customers worldwide. As a result, new general lighting products are continuing to ramp into higher production levels for LED lighting applications, including AC-to-DC product for LED bulbs and tubes, DC-to-DC for MR16 bulbs, street lighting products and flashlight and backlight controllers.

Our expanding work with customers not only includes most of the world's lighting companies such as GE, Orion, OSRAM and Sonic, Phillips and Toshiba, but also a list of many new technology-based companies that will play an important role in this strongly-diversified market going forward.

We remain confident that O2Micro will continue to emerge as a major supplier in this rapidly-evolving general lighting market. We are excited about the growth prospects of the general lighting market and we expect solid growth year-over-year from our general lighting products due to new customer penetration and production ramps in the next quarter.

We also believe that the consumer electronics markets, including TV and monitor, will recover as the macro environment improves and new products and technologies will deliver revenue growth.

Our intellectual property in both Asian and Western countries continues to strengthen our market leadership position in all lighting areas. We are continuing to file more patents to extend this lead.

In the computer market, while the overall notebook market will grow, we anticipate it will be at a lower rate due to third-quarter softness and anticipation of Windows 8, the macroeconomic conditions and overall inventory. Our design win momentum remains intact and will help fuel our notebook business through this challenging environment.

Our intelligent power products continue to enjoy broadening market acceptance in DC-to-DC applications for both Intel and AMD-based platforms in many market sectors worldwide. These design wins at major computer OEMs include our new OZ8296 IMVP7 DC-to-DC for a major tablet application, OZ8321 and OZ8322 DC-to-DC controllers for next-generation notebooks that improve efficiency and enhance overall CPU performance.

We are also seeing an expansion of charger products and design wins including our OZ8680 SMBus Level 2 battery charger and our OZ8686 SMBus Level 2 battery charger with hybrid power boost.

In our industrial markets we continue to develop our business opportunities around battery products with power tools and other cordless home appliances. Specifically our battery management products are targeting first-generation devices with motors.

The Company's intelligent battery management products continue to enjoy design wins worldwide. While our major design wins include industrial application for power tools, robotic vacuum cleaners, UPS systems, and electric vehicles, we continue to see growing opportunities in other markets including tablets and communication devices.

Specifically during the quarter we have achieved design wins with our OZ8806 cooling counter for multiple tablet applications in China, OZ9350 analog front-end with cell balance for multiple power tool applications, OZ8920 high power battery management unit for military backpack, and also continue to work with an industry-leading major notebook manufacturer with the OZ9310 battery gauge.

Our product and technology leadership strategy in the automotive markets has enabled us to continue to improve our position in order to address larger markets including electric vehicles in which we have made significant product progress with several automotive manufacturers around the world.

Although the automotive market will be slow to ramp into high volume, we expect growing volumes to ramp over the next several quarters. We believe our technology leadership in the market is already assured by our strategic positioning and rapidly-increasing intellectual property in this critical area.

To summarize our overall market activity, we continue to see a rapid expansion of design activity into new markets that includes all product areas, notably intelligent battery, intelligent lighting, and intelligent power.

Overall, O2Micro is executing on a growth and diversification strategy built on product and technology leadership. We are delivering best-in-class products to the world's leading manufacturers. We believe that our new products will continue to constitute a growing percentage of our overall business, increase our revenue base, make our company less prone to adverse economic conditions, and increase in competition and commodity products. We believe O2Micro wins because of the breadth and depth of our product portfolio, relationships with our partners and customers, and our performance leadership.

At this time I will turn the call over to Sterling Du for some additional remarks.

Thanks, Jim. We announced our intention to evaluate strategic alternatives linked to our Intelligent E-Commerce Group. It is all about driving shareholder value, and addressing the challenges we face in our business.

We also continue our commitment to focus our development resources on our fast-moving growth drivers, improving operating margins, and a better focus on core competence which is high performance, [analog] power management IC business.

We'd like to focus most of the development resource on our priority chosen growth drivers which includes general lighting, power management, backlighting and battery management. By implementation of this strategy we are confident in our ability to [just] deliver [growth] beginning in the first quarter of 2013.

We believe that our Intelligent E-Commerce Group is an asset that would be better-served as spinning off business operating in Asia, where it will be able to compete more effectively in the markets. We believe this measure will reduce any operating expense by $8 million to $10 million and enable us to achieve our target operating model in this weak macro environment.

This [competitive] direction is an important component of our strategy to sharpen O2Micro focus on core growth markets while we continue expand and leverage our strong intellectual property position.

Let us now our discuss of second quarter results. We report revenue of $20.3 million, a decrease of 30% from a year ago and 5% sequentially quarter-over-quarter. Our results were in line with the revised financial guidance. After a reasonable start, we saw business [in lots of these] slow down in the later part of the quarter result in this revenue [base].

This second quarter revenue so far was largely driven by two key factors. Number one, broad bases weak sales of our CCFL backlighting product for TV and monitor markets, which is primary in China and Europe. The market regularly turning to the LED and our market share in the LED-based product is less than our share in CCFL, and that's leading to the revenue decline.

And the second, we also noticed LED markets suffered from weak demands including but not limited to TV, monitors, handheld devices, and notebook computers.

At this time, we do not believe that the macroeconomic environment is improving, there's a [inaudible] in Europe and our region persists. However, we are doing well with many of our product lines including power management and general lighting. But, before we are a high performance power management solution showing steady and continuous growth, we continue to gain market share in this segment in both DC-to-DC and the charger markets for the notebook computer, which requires competent power management.

During this quarter, we secured major plays on design wins for our OZ8321 and OZ8322 DC-to-DC controllers, which are compliant with AMD SVI2 specification for notebook computer applications, [principal] high-end advanced GPU power needs.

This design win is significant for O2Micro as highlights company growth to next generation GPU plus secure leadership in CPU DC-to-DC. We also introduced a highly integrated charger which contacts high side and low side switch both. This [part] will provide our customer favorable ease of design and the power-saving solutions.

O2Micro fast-growing general lighting products will achieve significant revenue by end of this year. Our general lighting business growing rapidly an achievement of on target to hit our goals including [isolation and a non-isolating] solution. We are actively engaging supporting our customers in China, Taiwan, Japan and the United States. We see these rapid growth profile continue to [mesh] with us in the future and remain excited about the business.

During the quarter we are [debuting] architecture for the global LED lighting market. O2Micro patented three dimming technology enabling LED light bulb to dim using any on-off switch, thus eliminating the burden of installing expensive dimmers. This technology offers the best alternative to traditional [tryout] designs.

We are also excited about increasing activity in our battery business. We continue to focus our battery major product on the power tool, automotive market, and certain market like Japan, there's a government regulation that require the use of battery product [this for the taking] [Isis] and we are pursuing new design to help customers meet their requirements. This is contributing to our success in Asia market, where leading manufacturers are adopting our battery protection and self-balancing [battery] in more and more models.

These units are also shipping to globally in some cases. We are ramping out with a new design in a key customer for tools and expect to ship later in 2012 and 2013. As you can see, we are being active in our major business segments.

In spite of the macro economy setback in the quarter, we continue to move forward confidently, and we are taking the right steps to strengthen our business, enhance shareholder value. Looking at our growth opportunity from a high level, O2Micro's work position our customer, consumer, computer market that delivers best-in-class product to the world-leading manufacturers.

Moving beyond our traditional market, we are seeing increased customer traction in our general lighting product and we are looking forward to expanding this business as driver of the future growth for the company. We anticipate our improving financial in December quarter. Will be highlight by our return to sequential revenue growth and an expansion of margins.

At this time I'd like to thank you for listening to our conference call and I turn it back to Scott.

Thank you, Sterling. Operator, at this point we'd like to open the call to questions.

(Operator Instructions) We'll go first to Christopher Longiaru with Sidoti & Company.

Hey guys, thanks for taking my question. You said $8 million to $10 million is what you're going to end up stripping out. Would you give us an idea of how that progresses from a timing perspective?

Timing? Speaking of timing. Yes, we estimate, we will evaluate our different alternatives and spinoff is one of the options, and we estimate the timing to be in the two quarters.

Two quarters for all the cost cuts?

Yes, two quarters to have the cuts, to have the expense cut, yes.

Okay, and just in terms of the lighting business, what kind of ramp can we expect? You said you're going to ship in the near term and start to ship, and just in terms of the growth in that business what are your expectations for 2013?

Well, we expect the business to continue to grow rapidly. I think it's too early to give specific projections, however, we have seen very fast ramp in this product and we would expect it to continue to ramp in 2013.

Okay, thank you guys.

We'll take our next question from Andrew Huang with Sterne, Agee.

Oh, thank you. I was wondering if you could give us a little more color, and I apologize, I just jumped on -- a little more color about these new key customer program ramps, and what kind of -- you know, how material they're going to be to, I guess, revenue on a quarterly basis?

You refer to general lighting, is it?

Yes.

Okay. Well, general lighting in specific, we mentioned that we do expect to get to the million unit amount level in the Q4 time frame. And the previous question we do expect ramp to continue in 2013. So as we do get into 2013 we would expect to see some revenue that would add to our total revenue activity in the company.

Okay, and then I guess when I look at your revenue guidance for Q3, it seems quite a bit lower than some of your competitors. So, can you maybe offer an explanation for the disparity?

As I indicated in the conference, there is two key factors. Number one is the CCFL backlighting, which is we are the world market leader, and it's being convert with a LED. We have been very high percentage in market in CCFL, which is less than the LED.

And this number two factor is, even LED-based TV and monitor also suffer from the macro economy and that is not limited to TV and monitor but also we also see some handheld, the LED applications which we serve. So, these two together has been -- give us low revenue guidance.

And also we can see that the -- during the section of Jim Keim, Mr. Jim Keim, he also mentioned about the conservative mindset to work to the near futures of which we believe is near term, it's not for the long term. Because the macro-economy makes the supply chain very thin and also keep very least of the inventory and also shorten the cycle time. And we do see that in the last past couple weeks, we do see that the tendency to be more cautious, to build up the whole supply chain. So, that has affected our guidance for the Q3.

Okay. So, can I take that to mean that when you look at your customers, their inventory of your products is probably pretty low right now?

Yes, yes indeed, and let me add that we've seen just in the last couple weeks for instance, DigiTimes announced that Quantum, Compal and Listron expected to see their notebook shipments in fact drop in July by 10% to 15%. And as they have seen that very quick dropoff in demand they have tightened up very, very significantly on their whole inventory base. So, we are seeing these companies and others in the whole consumer area at this point carry very minimal inventory, and as you know we do not have distributors in place so we see that immediately in our system.

Right, okay. Thank you for the clarification.

And we'll take our next question from Tore Svanberg with Stifel Nicolaus.

Yes, thank you. Several questions. First of all, just to clarify the guidance does not reflect anything related to divesting e-commerce, right?

No.

Okay, very good. And just so I understand this, is E-Commerce, was that generating meaningful revenue? Is that a business that was operating at a loss currently?

Not big one, less than 10%.

Okay.

Yes, it's about minus 5, yes, it is not profitable right now.

Okay, very good. And going back to questions about the guidance and you mentioned the transition from CCFL to LED, when do we see a crossover for O2Micro, meaning when can LED actually be a higher percentage than CCFL in your revenue base?

That's already happened, but what has happened is when the TV market got very soft we saw some of the manufacturers quickly do a crossover from the CCFL to the LED. And also that is somewhat customer-specific, there were some customers that got hurt in this market substantially. We won't mention names, but they were more CCFL based.

Fair enough, and you had a legal expense this quarter. I If I recall correctly you had already reserved for that expense?

Yes, we have the legal provisions of $9.4 million in Q2.

Okay, and anything going forward that we should be keeping an eye on, on the legal front, or is this pretty much it?

Already consider in the regular SG&A, so it's for the appeal, the additional expenses will be very minimal and our SG&A later.

Right, and there is an appeal on this case, and based on a recent Supreme Court ruling we do feel we have a strong appeal position.

Very good, and what's going to be I guess the one question that I'm going to have now, is if you look at the current revenue run rate, where's the cash flow breakeven point? And as you exit the E-Commerce business, is that number going to change?

Okay, the current cash breakeven point is about in the area of the $27 million. $27 million, and after the E-Commerce, after the spinoff, alternative or other solutions, we expect to low down the break-even point down to [$25-$26 million] break even and cash break even will be in the area of the $21 million, $22 million.

Excellent, very good. Last question, I'm still a bit confused about what you said beyond Q3. Q4 is usually a down quarter for you. You did mention you expect to grow in Q1. I'm just thinking since customers are bringing inventories down so hard in Q3 is there a potential that Q4 could actually be up sequentially?

Yes.

Very good, thank you very much.

(Operator instructions) We'll go next to Vernon Essi with Needham & Company.

Thank you very much for taking my questions. I wanted to just ask about -- I guess going back to this litigation provision that you have. You seem to have taken also a liability on your balance sheet, I think that's related to that. Perry, can you just walk through the mechanics of what this is? It's obviously a non-cash charge, but at some point is this going to hit your balance sheet from a cash perspective.

The cash, now we -- I think in the balance sheet like we have higher prepaid [flow] in the balance sheet, we moved out the, from the cash to the [bond], [bond] cash.

So in other words, you don't expect any of your cash balance to be impacted from this provision on a go-forward basis?

We actually, we already moved this amount from the free cash to the [bond] cash. Do I answer your question?

Yeah, that's helpful. And then I also wanted to just go back to the E-Commerce spinoff. It sounds like basically you're going to put this up for sale potentially, and you've sort of put a milepost at the end of the year. What happens if you don't get any bids that are satisfactory, what is your intention after that? Will you shut the business down to save these costs or will this just kind of keep going on the pace that it's been? I mean, is this sort of a definitive plan of action or will you go back to where it was if you weren't successful in actually selling it or spinning it out, I guess, as a separate entity?

Well, the option will be quite open from the spin-off, joint venture, acquire, or independent. So our intentions are to find a reasonable option to evaluate that, and to try to find, complete the process before end of the year. And that is our intentions to try to find a solution and also have the exit for the group.

At this moment we don't view any opportunity and as you say if there's a worst case that -- we will continue doing that direction, probably what's going to happen if not satisfied, that would be extended, maybe one or two months beyond the two quarter, and try to finish the process, yes.

Okay, so it's fair to say, I mean again, the $8 million to $10 million in operating expense savings, I assume this is by the way an annual figure, is pretty much inevitable from management and the Board's perspective in terms of E-Commerce?

Yes.

Yes.

Okay. And then finally, I just wanted to go back. I mean, you've been buying back shares and it certainly makes sense. It looks to be even though like this morning your stock is actually trading at a discount to cash. How should we think about the share count going forward, and your intent to continue that effort? Should we assume this is just going to continue if your stock is down in this area, or are you going to take a pause for a while, while these other things are going on?

You refer to the stock repurchase?

That's correct.

Yes, I think fair to say that we will continue from time to time, yes.

And can you remind us where you're at in terms of your authorization? I apologize if you already said this.

Very hard to hear you, could you, would you repeat again?

How much is left.

Can you say again?

How much money do you still have in your share repurchase authorization?

It's about $31 million.

Okay, all right, thank you.

And we do have a couple of follow-up questions coming through. The first one comes from Andrew Huang with Sterne, Agee.

Thank you. So, I understand your explanation for the Q3 guidance. I was wondering if you could give us some color, maybe for example your dollar content in CCFL versus LED for a TV, so we could understand what's maybe driving the guidance?

In actuality, there's not a huge difference in the dollar content of a CCFL versus an LED. However, as Sterling indicated, we had a very, very high share rate in CCFL. We actually have a good share rate in LED, but we had a very, very dominant position in CCFL. There was hardly any competition in that area.

So, as some customers quickly phased out of the CCFL with recent downturns in the TV area, that did hurt us. However, the CCFL now is at a very low level, and given that, we do not expect further issues of this type going forward.

Okay, thank you very much.

And we'll go next to Tore Svanberg with Stifel Nicolaus.

Yes, just have two follow-ups. First of all, Jim, is there a way to put a percentage or at least try and quantify what's still sort of a [secular] headwind in the CCFL business for you? I mean, business that is just for sure going to continue to come down just because of the shift to LED?

Again, the CCFL now is at a very, very minimal level, Tore, so we do not really expect that to be an issue going forward. We do expect our TV business to expand as soon as we see some economic pickup in the industry. We are very well-positioned in LED going forward with good market share.

That's very helpful, and last question on inventory, you actually managed it really well this quarter in spite of the macro. What's your plan for the September quarter as far as your inventory level's concerned?

For the September quarter, I think in the June quarter, we add a little bit of [die bank] to support our customers on the new products, which is actually under strong request. So in September we'll continue to monitor the need and start more [die bank] for the new product. However, we will continue to work on the control over the finished goods so that we can continue to manage our inventory trends in the area of the fixed [kind] for the business.

Very good, that's helpful, thank you very much.

And Mr. Anderson, at this time that's the last question we have in the queue. I'll turn the call back over to you for any closing comments.

Thanks, everyone, for attending. Please feel free to contact me at area code 408-987-5920 with follow-up questions. Have a nice day.

And ladies and gentlemen, I'd like to again give you the replay information for today's call. The replay is available through August 8, 2012 by calling 1-888-203-1112 or 1-719-457-0820, and entering the passcode 8141652. Again, that's 8141652. This does conclude today's conference, we appreciate your participation. You may disconnect at this time.