Patterson Companies Inc (PDCO) 2003 Q1 法說會逐字稿

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  • Operator

  • Good day everyone and welcome to the Patterson Dental first quarter earnings teleconference. This call is being recorded. At this time for opening remarks, I would like to turn the conference over to the President and Chief Executive Officer, Mr. Peter L. Frechette. Please go ahead, Sir.

  • Peter L. Frechette - President and Chief Executive Officer

  • Thank you. Good morning and thanks for taking time to participate in our first quarter conference this morning. Joining me is Stephen R. Armstrong, our Executive Vice President and CFO, who will review our first quarter results following my opening remarks. At the conclusion of Steve's remarks, we will be happy to take any of your questions. Our conference call on March and first quarter earnings release are available in the investor relations section of our website at pattersondental.com. As you know, Regulation FD prohibits us from providing investors with any earnings guidance unless we release that information simultaneously. For this reason, we have included financial guidance in our earnings release, but it is important to understand that Patterson's actual results may vary from our forecast. The guidance is subject to a number of risks and uncertainties, which are discussed in detail in our annual report on Form 10K. Since that information forms the context of what will be seen today, we urge you to review that material. Turning now to the subject of this conference call, I will start off by saying that our first quarter earnings release is somewhat complex owing to the impact of recent acquisitions, one less selling day in this year's first quarter, in addition to mandatory accounting changes for goodwill. After adjusting for these various factors as we have done in our release, Patterson turned in a strong quarterly performance. Excluding recent acquisitions and adjusting for one less selling day in this year's first quarter, our Dental business is continuing to grow faster than our estimated annual growth rate of 7 to 9 percent for the North American market. Patterson is continuing to gain market share. In addition to the strength of our core consumables business, equipment sales remain a driving force behind the vitality of our Dental business. Robust sales of such basic equipment items as chairs, lighting, and cabinetry have been augmented by rising sales of the CEREC 3 dental restorative system. Growing numbers of dentists are recognizing both the therapeutic and productivity enhancing benefits of the new generation CEREC Technology. It is also important to realize that Patterson is the exclusive North American distributor of the CEREC equipment. In addition, sales in digital radiography systems and related digital software also performed very well in the first quarter. Digital software sales rose a strong 30 percent in the first quarter. However, total software sales were down due to unexpectedly lower volumes of traditional front office practice management software. As we have said in the past, our software operation is now being driven by a growing demand for digital radiography equipment and the resulting need for software that maximizes the productivity potential of digital technology. We are not intent to ignore the front office market and we are implementing strengthening sales and marketing programs for this front office product. We believe the total software sales will improve over the balance of fiscal 2003. As you know, acquisitions figured prominently in our strong first quarter operating results. Historically, acquisitions account for approximately 2 to 3 percentage points to the annual growth on our Dental business. That contribution will be 4 to 6 percentage points in fiscal 2003, due primarily to the acquisition of the Thompson Dental Company in last year's fourth quarter. This is why as previously reported, we expect our Dental operation to grow 6 points faster than the North American Dental market in fiscal 2003.

  • The Thompson Dental Company, which was integrated quickly into our southeastern US operations during the first quarter has exceeded our expectations thus far. This large value-added distributor has significantly strengthened Patterson's presence in this key market making the Thompson transaction a strategic acquisition in the best sense of the term. During the first quarter, we made a smaller acquisition in Canada, Quebec Dentaire or DQD was a full service value-added distributor primarily serving dentists in the province of Quebec. DQD has further strengthened our market position in our Canadian Dental operations, which has posted strongly improved operating results over the past two quarters. Canadian sales rose by an impressive 17 percent in the first quarter driven in part by growing equipment sales. DQD accounted for less than 2 percent of our first quarter Canadian sales, while exchange rates had a negligible impact on our Canadian revenues during this period. In other developments, our hardware and networking initiatives has been ruled out to over 50 percent of our branches and we expect to have this program fully implemented by the end of the calendar year. Under this program, dental officers say that by our digital radiography equipment and software, we will be able to have these systems along with all workstations networked throughout the entire office. As networking initiative, which is fully supported by local Patterson personnel is the newest component of our single source technology solution for dental offices. For the average dental office, our complete digital package runs between 30 and 50,000, which includes industry-leading digital X-ray equipment, software, network design, hardware, local support and service, and training.

  • saying that no other company is capable of providing this type of total digital solutions, we expect this single source concept to be an increasingly powerful growth driver for Patterson going forward. One last topic, I want to discuss before reviewing our earnings guidance is our Webster Veterinary Supply unit. Webster is continuing to perform at a very high level, having posted second quarter sales growth of 11 percent on a pro forma basis. Webster is growing significantly faster than our 5 to 7 percent annual growth estimate for the US Companion Pet Veterinary Supply Market. As a result, we believe Webster like our Dental business is gaining market share.

  • Turning now to our second quarter financial guidance, we are forecasting sales growth of approximately 14 percent, which is consistent with the expectation that our Dental operation will go 6 percent faster than the North American market in fiscal 2003. The reduced rate of sales growth we are forecasting in comparison to this year's first quarter reflects the impact of a full quarters contribution from Webster during the current quarter. In other words, in July of 2001 acquisition of Webster is now fully grandfathered into our revenue stream. Earnings for the second quarter of fiscal 2003 are estimated at approximately 41 cents per diluted share. Again, I want to reiterate that Patterson is performing exceptionally well. We are growing strongly with both of our businesses gaining market share and we are putting strategies in place aimed at securing a successful future for this organization as shareholder. Thank you and now I would ask Steve Armstrong to review our first quarter operating results in some detail. Steve.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Thanks Pete. Before I get started, I would remind you that the acquisition of Webster Veterinary Supply in July of 2001 continued to have a fairly dramatic impact on certain historic operating ratios. Webster's revenue was primarily included in the consumable category in a detailed revenue schedule accompanying the press release. I would also point out that we will require to adopt new accounting standards for goodwill in the current quarter. I will discuss the effect of the new standard on our results in greater detail in a few minutes. In a discussion that follows, I will provide comparable results, which exclude the impact of the new rule. Bearing these items in mind, both the US and Canadian operations saw revenue growth of nearly 17 percent in the quarter. US consumable sales adjusting for the estimated impact of acquisitions and one less selling day in the current period grew approximately 10 percent. The Colwell product line grew 3 percent in the quarter, while software sales, unit sales were down for the quarter, total EagleSoft revenues were up 12 percent lead by a 57 percent increase in our e-claims, statements, and software maintenance offerings. Consolidated gross margins were down 1 percentage point in prior year and the veterinary margins, which have a dampening effect on the historic dental ratios, are consolidated in the results. During the quarter, gross margins in our Dental business were the same as last year at 35.7 percent, reflecting a shift in sales mix. The shift in the revenue mix to a higher percentage of consumables in equipment due to the Thompson acquisition coupled with the diminished software revenues reduced dental margins from the fourth quarter level. Veterinary gross margins were in the mid 20's as expected.

  • On a comparable basis, operating expenses as a percent of revenue declined 20 basis points in our Dental business. This improvement is noteworthy considering the magnitude of investments in the business that we are undertaking during the quarter. We are in the process of implementing the new field service management tool for our technical service operation. As Pete mentioned, our customer hardware and networking initiative is also underway. We expect these programs to improve operating efficiencies and contribute to sales growth overtime. In a short-term, however, investments in these programs are putting pressure on our operating expense rate. Our expense rate also reflects the acquisition of Thompson Dental, which was marginally contributive to our operating earnings in the quarter. As we completed the integration of the distribution facility and have wrapped up the integration of the administrative process of the former Thompson entity. Webster's operating expenses was 16.1 percent of sales, as discussed in previous communication. Veterinary Supply business has a lower expense ratio than the Dental operation since there is no technical service structure within Webster currently. At 10 percent, consolidated operating margins were the same as last year on a comparable basis. We expect our operating margin to expand at more historic levels of improvement in the latter half of the year as acquisitions grant

  • into our results and we begin to realize the benefits of our investments in technical service processes and our hardware initiative. As I mentioned earlier, we adopted a new accounting standard for goodwill in the quarter. Under the new rules, we are no longer allowed to amortize goodwill. While the impact of this change is negligible to our earnings in the quarter, it does affect our operating ratio. For this reason, we included a comparable year income statement in our press release. What's more, while the elimination of goodwill amortization may not be noticeable to earnings in any one quarter, it will impact annual earnings per diluted share by approximately 2 cents. We were also required to remove our deferred credits or negative goodwill from our balance sheet. Net income for the current quarter includes a one-time benefit of 3.4 million or 5 cents per diluted share to reflect this. A one-time benefit is

  • effective in accounting change on our income statement. Since this is non-cash, non-operating item, we believe it should be ignored in evaluating our financial performance. Our effective tax rate in the quarter was 37.6 percent, which is adjusted up from the 37.4 rate used in prior periods to reflect the impact of the elimination of the amortization of deferred credits.

  • A couple of points on our cash flow and balance sheet. We consumed about 11.8 million of cash in operations in the first quarter. We paid down accounts payable, accrued liabilities, and invested in inventory. The increase in inventory levels from year-end reflects our normal practice of letting interim levels expand slightly to assist with service levels. We then managed down the inventory in fiscal year end before calculating our

  • reserves. Inventory turn over did increase slightly to 6.7 from 6.5 at the end of April. During the quarter, we entered into a new funding arrangement when a commercial bank conduit, commercial paper conduit, I'm sorry, managed by Bank

  • . This facility is used in the financing offerings that we make available to our customers. Because we are moving into a new computer system within our Finance business during the quarter, we moved a little slower than we initially intended in using this funding resource. We will be fully implemented by the end of the second quarter and should see that the accounts receivables balances reduced accordingly as we sell off the majority of the inventory and finance contracts we are currently caring.

  • This concludes my formal comments. Pete and I will now open it up for questions. Operator are there questions?

  • Operator

  • Thank you. Our question and answer session will be conducted electronically. If you'd like to ask a question, firmly press the star key followed by the digit one on your touchtone telephone. We will take the questions as you have signaled us and take as many questions as time permits. Once again, that is star one to ask a question and we will pause for just a moment to assemble our roster. And our first question comes from Derek Lechow with Barrington Research.

  • Derek Leckow - Analyst

  • Good morning. Congratulations on a nice quarter, you guys. A sort of question here on the inventory, I wondered if you can expand a little bit on your strategy there. It looks like inventories are up about 9.5 percent from the end of last quarter and while sales were down sequentially. I think it might be helpful if you could explain the strategy as it relates to your Dental business and is it in certain product categories or is it across the board? I just wanted to get more color on that.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Derek, this is Steve. If you go back and look at last year, we let our inventory to expand last first quarter, ran at a little bit higher level through the end of the third quarter and then diminished into the fourth quarter, because we are on

  • , we tried to manage those inventories down as much as we can at the end of the year and minimize the impact of

  • on the financial results. But if we try to operate that in a way the entire year our service levels and consumables could suffer and we try to avoid that situation. So, we do expand our inventories historically during the mid part of the year. And as far as the categories there's no specific categories, it's all categories, it's not in the equipment business it's mostly in the consumable business that you see that expansion.

  • Derek Leckow - Analyst

  • Okay, great so it's mostly in consumables. As it relates to the CEREC system, can you talk about the penetration level for this product in the industry currently?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Yeah, Derek. At this particular point in time there are about 2000 plus placements of CEREC, if you assume there's roughly 120,000 dental locations out there.

  • Derek Leckow - Analyst

  • Okay.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • You can do the math and see that the penetration level. We got a continuing substantial opportunity with CEREC going forward.

  • Derek Leckow - Analyst

  • Okay, thanks and finally just the front office software market. Wonder if you could talk about that. Do you think the slowdown there might be related to a market issue, or do you think that's, I mean is there a new product out there that might be affecting that, what's your thought on that?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • We don't think it's related to a market issue or a new product out there, we really think, quite honestly that we need to come with some new programs to place some emphasis in terms of that product line going forward and clearly we have been emphasizing that the digital radiography aspect to that software program. So, we don't think the opportunities have changed, we think we need to re-emphasize it.

  • Derek Leckow - Analyst

  • So it's my understanding, that there is a longer selling cycle, because obviously you are talking about retooling the, the opportunities as well as the front office and usually the software component to that is tied into that

  • .

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Yes.

  • Derek Leckow - Analyst

  • Is that fair?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Yes and it's not only a longer selling cycle if you can imagine, just like you the dentist doesn't like to change his major software program any more than you do.

  • Derek Leckow - Analyst

  • Okay, that's good for now, thank you very much.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Thanks Derek.

  • Operator

  • The next question comes from Robert Willoughby, with CS First Boston.

  • Robert Willoughby - Analyst

  • Thank you. Pete can you comment on the number of Patterson plus accounts, maybe the growth year-over-year or sequentially and then just possibly some metrics sales to those accounts, what were they up?

  • Peter L. Frechette - President and Chief Executive Officer

  • I don't

  • to comments specifically on the quarter rather than comment

  • for the first of the year where we quite frankly added over 3000 Patterson Plus Accounts and we, sales of those accounts are obviously up substantially and we continue to be very positive about the Patterson Plus opportunity, going forward.

  • Robert Willoughby - Analyst

  • Do you have a sense how many accounts you have on the program already?

  • Peter L. Frechette - President and Chief Executive Officer

  • I don't know if we really made that public, let me just say it's over 20,000.

  • Robert Willoughby - Analyst

  • Okay. And just an net, Steve, the interest income was higher in the quarter substantially so relative to our expectations, is that just out for lunch, or was there something driving that?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • No, I think it's a couple of things Bob. It's relatively flat, I think quarter-over-quarter sequentially, but we did, because we carried those contracts a little bit longer than we wanted to, we had more finance income coming off those. But our cash earnings did not generate earnings substantially more and cash earnings were actually down a little bit, quarter-over-quarter but the finance income coming off the contracts offset that.

  • Robert Willoughby - Analyst

  • Okay, so on a quarterly basis that year-over-year it should be fairly comparable?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Yeah and less interest rates were moved significantly, but we're going to see, I think if we, I won't say

  • , it's when we get those contracts that grow off our balance sheets, that could have a bit of an impact, but it's not going to be significant.

  • Robert Willoughby - Analyst

  • Okay, thank you.

  • Operator

  • Larry Marsh, with Lehman Brothers has our next question.

  • Lawrence Marsh - Analyst

  • Thanks and good morning. I guess, Pete and Steve, could you elaborate a little bit more, first of all confirm did you give a number for the front office sales for the quarter, I think you said it's 7 percentage reduction from last year and just putting this in context, again is this something where you are saying as a manager, hey we need to focus on this area a little bit more by putting in new programs and should we anticipate seeing some results of that later this year? Are you able to identify this as an issue and we want to address it you know forthwith and we are going to see some new programs put in place you know quickly or is this just something where you look at and say well we need a little bit more emphasis you know here, over the next six months?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Yeah, I think you seem to have gotten it right Larry, this is an area that we need to go back and refocus on. We have programs in this area and we need to refocus on those both ends and we would expect to see improving results as it relates to products or front office software sales as we continue on for the fiscal year.

  • Lawrence Marsh - Analyst

  • Okay and Stephen did you give a percentage number in terms of growth in the quarter in this area?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • No, I would tell you that our software was up 12 percent in total the whole line and we were down about a million dollars in expense.

  • Lawrence Marsh - Analyst

  • Okay. Secondly I guess, just reflecting back on the balance sheet, to your point Steve, you tend to bring up inventories in the first quarter of every fiscal year. In fact, if you look back over the last 3 or 4 years, it looks like on a percentage basis it wasn't quite as much left in inventory this quarter versus past year. I wondered if that was intentional and you know, it looks like just some timing on payables. Could you confirm that and also any confirmation on expected cash flow from operations for the full year whether that has changed or not? That will be great.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • On the last part of your question on expectations for the year, the expectations have not changed. We would continue to anticipate that somewhere around 80 to 85 percent of earnings would go into the cash account ex-acquisitions and CAPEX. The management of the balance sheet was very candidly a little disappointing to me in the quarter, but because of the issue we were fighting on the new software, which most of you know can cause you some problems sometimes, ours has been rather short-term at this point, but we are getting those problems resolved and fully expect by the end of the second quarter to have those contracts back off the books. We did pay down payables that were strictly due to some timing issues and then of course with the end of the year, we have bonuses and so forth that we have to end up paying down the first quarter and that's pretty much what happened in the cash flow for the quarter.

  • Lawrence Marsh - Analyst

  • Okay. All right very good. Thanks.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • You are welcome.

  • Operator

  • We will now hear a question from Ms. Judie

  • with Banc of America Securities.

  • Judy Hayes - Analyst

  • Hi, thanks. A couple of questions. First one is if you could give us a general commentary on what you are seeing in the Dental market now that

  • is becoming a stronger competitor and has this forced you to modify in any way your sales strategy and second, I would like to know what the status is on getting a ventenary equipment repair team together and when one might expect a more aggressive roll out of equipment sales and then finally last question is on the Dentair acquisition. Were you able to retain all of the sales reps there? Thanks.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Judy let me

  • as it relates to Shine's impact in the marketplace. We are not seeing any significant changes vis-�is whatever has changed at Shine and second of all have not, at this particular point in time, changed any marketing programs or approaches in terms of our customer. In terms of the Webster approach, these are the equipment that currently is clearly being talked about. We, as you know, have gotten those reps up on

  • . We will beginning to offer

  • to customers shortly etc. So we continue to take those steps first and I would estimate that any real attempt from the equipment area, probably 6 months down the road quite frankly. And does it relates to DQD in Canada, I am not aware of any sales rep losses up there that have occurred at this point in time.

  • Peter L. Frechette - President and Chief Executive Officer

  • That was 100 percent retention.

  • Judy Hayes - Analyst

  • Okay great thank you.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • You are welcome.

  • Operator

  • Once again if you would like to ask a question, please press star one. Moving on we will hear from Glen Santangelo with Salmon Smith Barney.

  • Charles Reasony - Analyst

  • Hi, actually this is Charles Reasony for Glen. You know talking about

  • little bit can you give us an update on the integration that was going on there. I guess, you know, I think if you recall, you talking about trying to integrate the warehousing and IT functions to get some synergies there and you know given where you are in that path right now, is there an appetite or an ability to expand your presence in the vet business in the near term?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Charles, excuse me. Well may be I wont be able to talk at all. From the point of view of the Webster integration, you got it correct in the sense that it is an IT integration from primarily getting everybody on a common system platform. Currently, Webster is operating with Imagin etc., which obviously is part of a Patterson System etc. I think where we are at this point in time is we are still on track. We set it into the first calendar quarter of next year to complete that process and we are still on that track. But that does not preclude us if your direct question was, is there a potential of making an acquisition prior to the completion of that acquisition we set all along, but should that opportunity come along, we would be more than willing to do that. We would however given our

  • like to complete integration because we think that's a critical part of our ability to affectively integrate acquisitions once made.

  • Charles Reasony - Analyst

  • That's great and then if that's the case you know, when we think about competitive landscape in the Veterinary business, I mean, you know with Webster, if I am correct, you know their presence in the mid-Atlantic and the South, you know, who would say are you know sort of large competitors out may be like in the West or the North West?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Yeah Charles, I wouldn't specifically give you any names and they are all

  • with their opportunities out there for us, but we are not prepared to talk about any specific names at this particular point.

  • Charles Reasony - Analyst

  • Great. Well thanks for the comments.

  • Operator

  • Once again, if you would like to ask a question, please press star one

  • . And our next question comes from Suey Wong with Robert W. Baird.

  • Suey S. Wong - Analyst

  • Thank you. Pete and Steve, could you talk about your equipment sales, they are obviously very strong this quarter. Could you compare and contrast the basic equipment sales versus the newer technology such as CEREC?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Suey, the answer, you know, kind of goes back to what we have talked about before as an initial kind of

  • dentists are busy. They are recognizing the value of incremental productivity as a key part of their ability to continue to increase practice of revenues and I think in that process you first talked about the kind of the retooling concept and I think it is fair to say that our basic equipment kinds of products, chairs, lights, and

  • etc., were up in the mid double digit to teens in the quarter and we frankly expect that rate has increased to continue and we see the market to remain very strong in the equipment areas.

  • Suey S. Wong - Analyst

  • How about CEREC?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • CEREC in the quarter was up

  • our expectations and on a percentage basis, I am just kind of doing some quick math in my head, it was up over 50 percent.

  • Suey S. Wong - Analyst

  • Okay that's up over a 50 percent

  • ?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • Up over 50 percent.

  • Suey S. Wong - Analyst

  • Okay and then just one last question on Veterinary, has there been much consolidation in the market this year so far?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • The general answer to that question is no. We are aware of one acquisition that was made in the Veterinary market this year and that essentially as we understand the acquisition was a financial acquisition and was not an acquisition, we would have been interested in making.

  • Suey S. Wong - Analyst

  • Okay. Great thank you.

  • Operator

  • We will now have a followup question from Derek Leckow.

  • Derek Leckow - Analyst

  • I think, just wondered if you could comment on your cash and short-term investment assets and your thoughts for use of cash going forward. I know you have said in the past that obviously you have opportunities to deploy that cash in terms of acquisitions and so forth and you also have an outstanding share repurchase program out there. Do you sense any change among the board as it relates to a possible dividend policy change?

  • Peter L. Frechette - President and Chief Executive Officer

  • There has been no change in terms of that approach versus our pervious comments. We continue to believe there will be opportunities for us to invest that, re-invest that cash in the business. Our repurchase, share repurchase program has not changed at this point in time, Derek. So, there have been no additional conversations and as I said that position remains the same.

  • Derek Leckow - Analyst

  • Okay, thank you very much.

  • Operator

  • And we do have a followup question from Judy Hayes.

  • Judy Hayes - Analyst

  • Hi. I am not sure if gave this number or not, but could you tell us how many customers have signed up for your single-source concept and also, will this revenue be booked entirely in equipment and software or will there be a portion that would be focused in the other category?

  • Peter L. Frechette - President and Chief Executive Officer

  • Yeah, what we did talk about was our Patterson Plus program, which really moves us towards, at this time of the quarter, that single-source process. There are, as we mentioned earlier Judy, over 20,000 customers signed up on that program. And then what was the second part of your question?

  • Judy Hayes - Analyst

  • Actually what I was wondering though about the Patterson Plus is just more, how many ..?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • You are asking about One

  • Judy?

  • Judy Hayes - Analyst

  • I guess what I am curious about is how many customers have signed up for this entire office networking solution?

  • Peter L. Frechette - President and Chief Executive Officer

  • Oh, okay.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • We don't have and have not given out that details Judy. You know, it basically is the way we do business with our customers now and we have not given our unit volume in the past.

  • Peter L. Frechette - President and Chief Executive Officer

  • Yeah, Judy, I want to be sure with you, I am now on track with your question. You are asking us how many customers have signed up. You had Patterson come in, sell me the computers, network my office, sell me the software, set it all up, and service the entire

  • .

  • Judy Hayes - Analyst

  • Fine.

  • Peter L. Frechette - President and Chief Executive Officer

  • Yeah, no, we haven't given that information out.

  • Judy Hayes - Analyst

  • Okay and then in terms of where the revenue would be reported, would it all be in equipment and software?

  • Stephen R. Armstrong - Executive Vice President and CFO

  • No because there is a, there is a service element to that, so the service element is differed and recognized over a three year period and would be categorized as the other, in the other revenue category.

  • Judy Hayes - Analyst

  • Okay, great, thank you.

  • Stephen R. Armstrong - Executive Vice President and CFO

  • You are welcome.

  • Operator

  • Once again if you would like to ask a question please press star one. Mr. Frechette, it appears there are no further questions. I will turn the conference back over to you for final and closing remarks.

  • Peter L. Frechette - President and Chief Executive Officer

  • Thank you very much. We appreciate your continued interest and support. We remain very, very positive about our position and opportunity in the marketplace and look forward to speaking with you at the end of our second quarter. Thank you so much.

  • Operator

  • Thank you. That does conclude today's conference. Thank you for your participation.