Radware Ltd (RDWR) 2005 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to today's Radware, first-quarter earnings conference call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions given at that time. [OPERATOR INSTRUCTIONS] and as a reminder, today's conference is being recorded. I'd now like to turn the conference over to our host, President and CEO, Mr. Roy Zisapel.

Good morning everyone. Welcome to the Radware's first quarter 2005 conference call. Joining me today is Meir Moshe, our Chief Financial Officer. We've pleased to announce another record quarter for Radware. Revenues of $20 million, a net profit of $4.4 million represent record results for Radware. This represents a sequential growth in Radware revenues for the 14th quarter in a row and continuously improved profitability. Before I discuss the highlights of this quarter, Meir will review the financial results. After my comments, we'll open the call for Q&A. Meir?

Thank you, Roy, and welcome, everyone, to our first quarter conference call. First up I would like to read the Safe-Harbor language. During this course of this conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that such statements are just predictions, that actual events or results may differ materially. We refer to the documents the Company files from time to time with the Securities and Exchange Commission, specifically the Company's last file form 20-F filed in April of 2005. And now ladies and gentlemen, for the financials.

In the first quarter of 2005, Radware continued its trend of the past 14 quarters with improved performance. Our revenues and earnings are in line with projections alongside continued improvement in our operating results and cash. We are pleased to show continued and stable growth in sales for 14 consecutive quarters. Revenues for the first quarter '05 were $20 million, up from $19 million in the fourth quarter of '04, and an increase of 29% over the first of $15.5 million in the first quarter of '04. As we anticipated revenues were devised from all product lines.

We have continued to maintain our high gross margin of 82.2%. The operating income for the quarter was $3.2 million compared to $3.1 million in the fourth quarter '04. This is an increase of 90% compares with the operating income of $1.7 million in the first quarter '04. The net income for this quarter was $4.4 million or $.22 per diluted share compared with net income of $4.3 million in the fourth quarter '04. This is an increase of 59% compared with the net income of $2.8 million in the first quarter of '04.

The DSOs for the first quarter was 59 days. The company continues to maintain a positive operating cash flow for the 14 consecutive quarters. During this quarter, we generated cash in the amount of $4.5 million, thereby increasing our cash position including long term deposits and marketable securities to $161.5 million. And we have no debt.

The head count for this quarter was 378 employees and the share of holders equity increased to $167 million.

Guidance, with respect to the second quarter of '05, we anticipated sales will increase to $21 million and earnings per diluted share will range between $.23 to $.24. As you can see, ladies and gentlemen, in the first quarter, revenues continued to increase to record sales of $20 million, the cash position is up by $4.5 million, we have maintained our high gross margins, improved operating results, and increased profitability. We are optimistic about the results for second quarter '05, and we look forward to having a sequential increase of top and bottom line in each of the remaining quarters of '05. And now I would like to return you to Roy.

Thank you, Meir. The first quarter of 2005 continued our momentum and results starting strongly a new year for Radware of ability and performance and security solutions. Despite what seems to be a difficult Q1 spending environment, we produced record results. Our focus on mission critical applications coupled with the huge value our solutions brings terms of full availability, optimized performance, and enhanced security enabled us to grow our revenues and profitability.

Our SynApps architecture, which is the only integrated architecture in the market for availability, performance, and security, continues to be the engine of our growth. The SynApps architecture provides customers with a full set of applications aware capabilities including health monitoring, disaster recovery, and traffic redirection for application availability, load balancing, network proximity, bandwidth management, connection pooling, web compression, and [INAUDIBLE] acceleration for application performance, and multi-Gigabit intrusion prevention and denial of service protection for application security. Our SynApps architecture runs on our all of our switching platforms ranging from our entry-level branch platform for five megabit connection and up to our industry-leading Application Switch III switches with three gigabit performance for high [INAUDIBLE] environment.

This quarter 28% of our units were SynApps enabled versus 21% a year ago and 27% in Q4. In the first quarter, we announced a new addition to the SynApps services with the IP sec VPN module. With the VPN module, we're offering the most integrated and consolidated offering for branch to central office connectivity. Our LinkProof Family provides multi-homing, link load balancing, bandwidth management, IPS and now VPN, all in one unit , replacing three to four units at the branch level. Thus, we reduce Cap Ex and Op Ex while guarantee performance, security and availability for the branch applications. In sum, Radware is the only vendor in the market to offer a unified, integrated, and scalable architecture formfitting application availability, performance and security, and we believe this will continue to be a differentiated factor for us going forward.

In the IPS market, we continue to progress winning many new accounts as well as leveraging our existing layer 4-7 installed base. Continental Airlines is an excellent example to our long-term Radware customer that enhanced the Radware deployment adding our DefensePro product line for IPS and DoS protection. Continental Airlines is using an end-to-end Radware solution to ensure availability of the mission critical applications, to optimize their ISP links, to accelerate their E-ticketing applications, and guarantee availability and on-demand scalability for the web [INAUDIBLE]. Continental was already using our LinkProof W and CT100 product lines across their network. As they face the need to block malicious traffic and protect their applications and website from those attacks, it was a natural choice for them to deploy DefensePro units across the network for multi-Gigabit internal security. Using our Insight Management System, they now can control all aspects of the mission critical applications from a central location. From directing more application traffic to one of their ISP's, through adding on-demand more servers to support a web server event, all the way to full network protection against a new my doom variant.

A good example for a new customer win for DefensePro was Nu Horizons. As part of [INAUDIBLE] compliance, in order to ensure data integrating and user security, Nu Horizons was looking for a network IPS device that can inspect all layers of application traffic and block malicious activity. DefensePro, with its leading performance, highest port density in the market, and integrated IPS and DoS protection in a single unit perfectly matches what many customers are looking for in application level security. With Nu Horizons, like with any other DefensePro new customer, we're discussing the installation of an additional Radware Application Switching solutions to serve other mission critical application needs. We believe the ability to leverage the layer 4-7 install base for IPS sales and the ability to leverage IPS sales to new customers to enhance layer 4-7 market share can provide us very strong growth opportunities in 2005 and beyond.

On the marketing front, Radware was noted as a leader in the annual Magic Quadrant by Gartner. This is the second year in a row we are positioned as a leader for layer 4-7 switching. We believe that this reaffirms our market-share gains as well as our differentiated solution and competitiveness.

To summarize, in Q1 2005 we continue to demonstrate consistent growth as we have done in the past 14 quarters. Despite what seems to be challenging spending environment and seasonal weak quarter, we were able to post record revenues and profits, continued sequential and annual growth. Our business fundamentals continue to improve, and we're seeing traction across the world for our operation switching solution for both existing and new customers. We are confident that this positive trend continue together with our continued product innovation and focus on the Application Switching market will enable us to continue to grow revenues sequentially. With that, I would like to open the discussion for Q&A.

[OPERATOR INSTRUCTIONS] And we will first go to the line of Alex Henderson with Citigroup. Please go ahead.

Hi, guys.

Hi.

So the comment about weak conditions in the first quarter, can you give us some granularity on what the linearity the looked like during the quarter? Did you see a slow down in the latter half of the quarter as some of the other companies had, and if there was pushouts of the quarter have you seen any change in conditions in April?

Practically about the first quarter, first month and second months of the quarter was about 50% of total sales, and the third month in March we booked 50% of the sales. As far as April, I believe it's now too early to check the full, the full impact of April but we have -- haven't seen any change up until now.

So, did you -- are you implying that you had normal linearity during the quarter then?

Yes, we believe that in the June quarter we'll see linearity about 25%, in April about 25 to 30%, in May and about 45% in June.

Now I'm sorry, I'm referring to the current quarter. Are you saying that the current quarter had normal linearity?

Yes.

Then why are you implying that there were weakness in spending conditions in the first quarter?

We see that from other companies in the market. We hear what our channels are telling us. We speak to customers and basically we have noticed that phenomena. On the other hand, since we are focused on mission critical applications, we think Radware is and should be more immune to those trends.

So you're saying that you saw weakness in the -- you're aware that there's weakness the field. But it's not impacting you is what you're saying.

That's correct.

I got it. Second, can you give us a little more granularity on the magnitude of the DefensePro products and the penetration of SynApps architecture in the quarter?

As we said, in the last conference call we don't intend to continue to break DefensePro sales and concerning the SynApps, it was 28% versus 21% a year ago and 27% in Q4.

Okay. Thank you.

Thank you very much. Next we'll hear from the line of Mark Sue, RBC Capital Markets. Please go ahead.

This is Brian Marcomi for Mark Sue. Meir, can you -- sales and marketing expenses went up pretty quickly this quarter, was that a one-time thing or do you expect it to go up at a faster rate going forward and the tax rate went down a little bit. Can you give us an idea of what you expect that be and also can you give us a geographic breakdown of revenues?

The geographic breakdown of revenues was similar for Q4, 42% for the US and 58% being international. As for the operating expenses, actually it was as planned, even a little bit less by around $100,000 less than expected and this is due to our investments in our marketing and sales infrastructures.

The tax rate?

Yes, the tax rate we mentioned last conference that we closed our tax returns for previous years and as a result of that were '04 -- excuse me, '05 is going to be tax rated for Radware. We anticipate for the tax rate throughout the year will range between 1% to 2%. This was less than expected before.

Thank you.

Thank you. And next we'll hear from the line of -- pardon me of. Next we'll hear from the line of Ryan Hutchinson, WR Hambrecht. Please go ahead.

Hey, good morning. Couple questions here. Just, in terms of revenues you've given or broken out old customers or repeat business versus new customers and then new customers in the quarter, could you give that? And then I have a quick follow-up.

New customers for and this was a contributed 45% of our sales, and repeat was 55%. Again, very similar to what we had in Q4 also.

Okay. And how about deal sizes or average ASPs?

The deal size remain about $60,000 average price. Again this is very similar to Q4 last year.

Okay. Great and then just one quick follow up on the product road map. How should we be thinking about that over the next couple quarters with the introduction of new products specifically in your core markets and as well as in your security space? Any update there would be helpful.

Without giving any specifics we've said in the last quarter that we believe 2005 is going to be a very busy year for us in terms of product introductions. We believe that we will enter beta phase of a new application switch product toward the end of this quarter. And probably will release also in Q3 and in Q4 new products both in the Application Switching or layer 4-7 switching markets as well as the ISP market. On top of that, we believe that we toward the end of Q2 we are going to release major versions for our core Application Switching products. And a strong version for the IPS product in Q3, and again another strong version for the Application Switching platform in Q4. That's basically the overall what you can expect.

Okay. And I know you're not giving break out this DefensePro business, but is it fair to assume that DefensePro is in line with your expectations or did they exceed your expectations for the quarter?

It was in line in Q1.

Great, thank you.

Thank you. We'll go to the line of Steven Kamman CIBC World Markets. Please go ahead.

Howdy. Just one housekeeping. Enterprise service spreader split still 65-35?

35 enterprise, 35%, yes.

Okay. And then the interest rate in net interest income seemed to come down a little bit. Just anything specific going on there?

Yes, this is a small change between the euro and the dollar affected about $150,000 the financial income for this quarter. And since we booked some of our revenues in Europe in Euros not in dollars.

Got it. And then just a question on visibility, and I think this always is a source of some confusion for people who are new to you. You know, my assumption is your visibility remains about something like four to six months out. Is that still the case? And can you just talk through sort of how your sales cycles are going right now in terms of products and also I think you've talked in the past about some of the new customers, old customers and sort of how that's working out for in you terms of your ability to continue to kind of punch outnumbers like you have.

Okay. First of all, concerning sales cycle, on average, those are varying between four to six months. Obviously there are exceptions both ways meaning generally if there was an existing customer, that is just buying more for additional applications or for additional needs their sales cycles will be more. On the other hand, on the carrier market, we are seeing longer sales cycles and generally between six to 12 months so that's in terms of sales cycle. Concerning visibility, the way we're doing that, we don't carry backlog between quarters, meaning we're shipping all the orders we get. But from the pipeline and from the statistics that we have on repeat business and how our customers are coming back to us, we can bring quite good visibility for the next three months and that's what we provide on the call. We are -- we believe we are conservative overall in the last several years in guidance, but also in some difficult times it provided us with very good accuracy on those numbers. So while we don't carry backlog, while we don't affirm agreements for orders or frame or frame orders through the statistics, through the buying patterns of our repeat customers and the traction we're seeing with the pipeline, we can focus pretty well for the next quarter.

And you have definitely done so. Just a question on the new products then, finally. Obviously DefensePro is a real winner. Any thoughts on, I don't necessarily want to assume that we're going to have the same kind of ramp for anything new you come out, but any of the new products going to be kind of similar to that in sense of being adjacent functionality but sort of adding a new addressable market? Is that a good way to think about it?

In the beginning -- in the -- depends on the introduction. We have several introductions coming along, and I would like to discuss one by one as time comes but we definitely see some of them as more overlapping and some of them as creating major, what we believe are now major new opportunities for us in different markets whether those are adjacent or just going after the same Application Switching market but a different segment, and we'll discuss in future quarters.

Okay. Then one last question, I apologize. U.S. obviously a year ago had a little bit of a hiccup. Things seem to be pretty tidied up there but just any commentary.

This quarter as you see also from the numbers, U.S. was up sequentially which I think as very strong statement for all U.S. business. And if at all, you know, we would expect Asia-Pac to do even better going forward but overall we are satisfied with the U.S., we're satisfied with the mix between international and the U.S., and all of our territories are currently growing.

And is it true you hired the last AlTion service guy in all of China or is it a just a rumor?

I don't know. I don't speak Chinese, but we are growing our presence in China, that's correct.

Thanks very much.

Thank you. Next we'll go to the line of Troy Johnson of ThinkEquity. Please go ahead, sir.

Nice quarter, guys couple questions on my side. First of all, Meir, could you give us maybe an international split, was it 29% HR, any movement away from that even split?

Yes, the international split is 34% and Asia-Pac 24% for this quarter.

So it looks like Asia was down sequentially but Europe was up pretty strong. All right then last question, I know, historically, you guys have had pretty impressive leverage with, you know, $1 million equating to four to $.05 in EPS and I understand you're investing in sales and marketing, but do you think maybe later this year or in '06 we can get back to the model that has that much leverage in it?

The leverages we have continue to be the same leverage, additional $1 million, marginal $1 million should bring additional $.04 on the EPS. As I mentioned before, we decided by purpose to increase our investments in marketing and sales, some extent also in R&D, just to take leverage from opportunities which we believe will contribute to sales in the second half of this year and '06. So we carry, right now, a little bit more expenses, but the marginal $1 million and the impact of $.04 on the EPS of additional $1 million continue to be the same.

Perfect. Hey, good luck, guys.

Thank you.

Thank you. And we'll hear next on the line of William Becklean of Oppenheimer, please go ahead.

Yes, hi, thanks. Just to track, you know, your sales and marketing expenses have been trending in a percentage basis until this quarter when they trended up, which I understand, you made some investment. Can we expect that to turn back around and trend down? And secondly related to the same thing, I think in the last call, you talked about a target of operating margins approaching 20% by the end of '05. And do you still think that's a reasonable objective?

Yes. We think to the same statement of last call that we've been on exiting '05 with 20% of operating margins. By that, of course, our spending, percentage-wise, on sales and marketing, will go down. As I mentioned before, now it's done by purpose since we build the infrastructure for higher sales in the second half of the year and in '06.

Okay. So that's, that target still stands. Another question that just kind of pops out. You've had five quarters of gross margins exactly on 82.2%. Can we expect that to continue, I guess the question is how can you manage such control over your gross margins on your products as that products mix changes?

Okay. Actually there is no price pressure in the market so the sales -- the sales price continues to be the same. On the other hand, we outsource the manufacturing and we buy the product at same price as we buy, usually, this is the reason for maintaining the 82.2% of gross margins. As far as for the future, we stick to the same guidance as we gave the market that we plan for our gross margin to decline, just to remind you, that we made the same statements four years, and so far, we're able to maintain the same gross margins but it's a conservative measure, we continue to guide the market, the gross margins may be declined.

And just a last question regarding your comments again about the difficult spending spending environment. I think the difficult spending environment, a lot of us have seen has been in the core switching and routing area. I presume that's what you're seeing as well. On the other hand, s number of the companies that are in this application traffic management and security space are seeing better spending. Is there, in fact, a tendency to spend more dollars for application traffic management than other sectors of the market according to what you're seeing?

You know, our view is limited as we are operating only in a single market, but overall, my view is the following: Organizations, they don't spend money on networks. They spend money on rolling new business applications. Sometimes that translates also into new network buildouts. Now overall, since we are very tied to the application, we are more immune, I would say, to the overall budget cuttings or budget allocations as people continue to invest always in the mission critical applications and business applications. So, I believe, if you take the networking technologies, the different networking technologies and put them on the graph who's more tied to the application and to the mission critical missions,specifically, I believe those markets will be more immune to budget cuttings. And, of course, we'll enjoy, to a less extent, also ramp-up in budgets or free money that can go to the generic network.

Thanks, and you haven't talked anything about competitive environment. Are you seeing any changes in competitors out there, and who are the main competitors you end up competing against?

I think in Q1 we didn't see any change and, as a matter of fact, over the last couple of quarters I don't think there was any significant change. In the layer 4-7 market, in the enterprise, Cisco is the prime competitor and obviously a 5. In the service provider or carrier markets, we're seeing Cisco and Nortel mainly. In the security markets, and we're playing in the only a small niche of it, the intrusion prevention market, we're seeing MacAfee and 3Com with the Tipping Point acquisition and to some extent, ISS.

Thank you very much.

Thank you.

Thank you. And we'll hear next from the line of Don Harvard from Deutsche Banc. Please go ahead.

Hi, nice quarter. Couple of questions. I know you don't break out revenues by product line, but could you just discuss which products you're seeing better demand for and which perhaps weaker demand, and on the same line with your channel partners, where are you seeing stronger demand coming from?

Okay. Basically in terms of product lines, we're seeing growth both in the core layer 4-7 switches as well as in the IPS. Inside the layer 4-7, the highest growth is in the data center and server applications, that's where we're seeing the majority of growth. When we speak about channels, it's also evident from the spread. We believe U.S. is becoming better and better, and we're seeing very strong demand in Europe from, mainly from the leading markets like UK, France, Germany and Italy is the core market for us. So, overall, I think the demand from channel or the traction with the channel is becoming stronger and stronger as they see the good margins that this type of product or application aware solutions can provide them on top of the regular networking or on top of the regular security business that they have. So the continuous spending on this, coupled with the good margins, they still enjoy, I think makes it very attractive to resellers and channels worldwide.

Do you think the strong demand you're seeing in Europe is due to a particular channel relationship or some change in the European market?

We didn't do any specific change in the European channels. I think we're just increasing our market share very effectively and we execute well. As all, I think Radware is a small to medium company, so a lot is tied to our own execution and not necessarily to the macro economic environment.

Okay. And just one final question. I noticed just a couple of changes to the board of directors. Is there anything behind that?

We continue to bring people with more experience, more senior and those are additions, and not changes. So we've added two very senior people lately. One is Ken Sichau, which was previously the president of AT&T business, and the second one is Hagen Hultzsch, who was the previously the CTO of Deutsche Telekom. Both I think will help us considerably in our marketing and sales efforts globally and specifically into the interior market as well when we believe there is a very big upside for the IPS and layer 4-7 solutions.

Thank you very much.

Thank you. Next we will hear from the line of Orin Hirschman, Investment Partners, please go ahead.

Congratulations on the results. My compliments on that. On -- for some of the trying to break out on the revenue side further, we see better sequential growth than what we see for this coming Q hopefully it sounds like we have a chance to see that in the second half of the year. In particular on the IPS side, is it a matter of getting a lot of customers of to convert the pilots in production and is it heavily dependent upon the carrier side versus the enterprise? Can you give us some more insights on that?

On the IPS side, we are penetrating many new customers and also for some of our repeat customers as I've mentioned, in my prepared remarks, were selling well but since it's a new will market and it's a new technology, I think the buying patterns are similar to what we've seen in the layer 4-7 switching market four or five years ago. Meaning customers are starting to deploy, but they're starting in small quantities in critical locations in their network. Once they're becoming more comfortable with the technology, once they see the benefits, they are increasing their purchases from us. So currently we're seeing many projects but most of the of them are small in terms of amounts of units served. We already have customers coming back for additional purchases both from the enterprise as well as in the carrier markets. Today we have a lot of pilots out there, a lot of projects that are either now being converted to first production implementations or people are just finished their first production implementation. And we believe that upon success, in six to nine months those companies will come back and buy considerably in higher amounts than they did so far.

Would that make the difference in terms of a material revenue acceleration for the company as a whole when that begins to happen?

Obviously, as DefensePro sales are growing, and once we are going to see this increase in amount of units, that can be a meaningful impact to the DefensePro itself in particular, but as it becoming more and more significant for the company on the overall as well. We definitely believe that in the IPS, we're progressing well.

So one follow-up question. I didn't hear you mention NetScreen on a competitor list. Any change there?

NetScreen is basically or for the majority of the player in the spyware market and in the VPN markets. Those two markets we're not playing in. They have a product called IDP in the IPS market as well, but that product is targeting a lower-end customer segment than what we're doing. We're approaching the very large enterprise interiors and the Juniper NetScreen product for IDP is a PC-based appliance that is targeting more of the mid-size enterprise segment, so we hardly meet them in competitive environment.

Okay. Thank you very much. And next we'll go to the line of Jonathan Half with UBS, please go ahead.

This is Michael Wallace calling on Jonathan's behalf. Just a question on tax, can you go over the low tax rate this year, and can you give us any sort of guidance for '06, where we should be modeling? Thanks.

Okay. First of all, this year, the tax we enjoyed some tax holiday. We mentioned in the last conference call. We believe that this year we'll have to carry tax in the range of 1% to 2% only. From '06 for very long term, our tax rate will be in the high single digits. 8 to 9%. This is and this was and is really basic logic company will benefit on tax incentive. This is the reason for the relatively low tax rate from '06 and on.

Thank you.

Thank you. Next we'll hear from the line of Ehud Einstein with Oscar Gruss, I believe, please go ahead.

Hi, guys. Any thoughts on Japan in the quarter?

Yes. We had a record quarter in Japan.

More than 10% of total revenue?

No.

Okay. And then where do you see the SynApps by the end of this year? You received a very nice progress from last year.

We don't want to give specific number but obviously as our security and security portion of our sales is growing, it immediately impacts SynApps. as well as we're selling more high end of application switches platforms and end-to-end scenarios, I and that's the direction that we are focusing our sales team. We're seeing an increase there. So, we believe it will continue to go up. but we don't want to give a specific guidance on the number.

Okay. Thank you very much. Good luck.

Thank you. Next we'll hear from the line of Alex Henderson of Citigroup. Please go ahead.

Thanks. Just a couple of things. On the DefensePro, can you remind me what the target you have for year end on that product was and are you maintaining that target? And then second, just on the operating expense lines, you had generally pushed through cost-of-living adjustments to your employees in the first quarter. Isn't that a fairly meaningful portion of the quarter-to-quarter increase and expenses here, which obviously done repeat as we go into the second quarter, you only do that once a year, and isn't that the normal pattern of things, generally you only see that in the first quarter? We should see that again, for instance, in the first quarter next year as well, I would assume?

Yes, okay concerning the first question on DefensePro. We didn't set publicly a target, but obviously we believe that that portion of our business can grow much faster than the overall company or the expectations that are out. Concerning the salary update in compensation, compensation issues, yes, in Q1 for our worldwide field in sales groups we updated obviously their salary. That contributes to some of the increase that you're seeing. I would say it's roughly split half and half between increasing headcount and sales marketing and support, and the compensation adjustments. In Q2, for Israel, for the Israeli operation, which is mainly R&D, there are also some salary adjustments that we're doing in Israel in April and those adjustments, and that will impact to some extent, to some extent Q2, but as you mentioned, the salary adjustments are done once a year, they're not expected to repeat themselves until next year.

Thank you.

Thank you. And we will hear next from the line of Ryan Hutchinson, WR Hambrecht. Please go ahead.

Just a follow-up here. I don't mean to beat a dead horse. But I'm looking at the transcript on last quarter's call, and I want to get some clarification. I know it's very difficult to hear. But it reads that you expected the tax rate to be roughly 4 to 5%. So I guess my question is, this a change from last quarter to 1% to 2%, or was that a misprint in the transcript? Thank you.

Yes. At the end of last year, we anticipated, that's correct, tax rate of 4 to 5% but as we unplayed the situation, we check it better and now the expectation for this year is only 1% to 2% of tax rate.

Great. Thank you.

That you think. And ladies and gentlemen, if there are any further questions, please press star one on your phone keypad. We'll hear from -- pardon me, return to the line of Don Harvard. Please go ahead.

Hi, I was going to beat the same dead horse, so no further questions.

Very good. Thank you. And, speakers, we have no one else queueing up for questions at this time.

Thank you very much, everyone, for joining us today and have a great day.

Thank you. And ladies and gentlemen, this conference will be available for replay starting today at 12:15 eastern U.S.A. time and running through Tuesday, May 3 at midnight. You may access the AT&T executive playback service at any time by dialing 1-800-475-6701 is and entering the access code 776418. International participants dial 320-365-3844. Those numbers are 1-800-475-6701 and 320-365-3844 with an access code of 776418. That concludes our conference for today. Thank you very much for your participation and for using AT&T executive teleconference, and you may now disconnect.