Star Equity Holdings Inc (STRR) 2008 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Digirad Corporation 2008 second-quarter financial results conference call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (OPERATOR INSTRUCTIONS). This conference is being recorded today, Thursday, July 24, 2008. I would now like to turn the conference over to Mr. Dan Matsui of Allen & Caron. Please go ahead, sir.

Thank you. Good morning and thank you for joining us today. If you didn't receive today's press release and would like a copy please contact Nathan Abler in our California office at 949-474-4300, and he will send you a copy. Also this call is being broadcast live over the Internet and may be accessed at Digirad's website at www.Digirad.com. Shortly after the call a replay will be available on their website.

I would like to remind everyone that certain statements made during this conference call, including the question-and-answer period are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements include statements about the Company's revenues, cost and expenses, margins, operations, mobile imaging services, product division, camera fleet upgrades, relationships with academic medical centers, financial results, estimated market share and other topics related to Digirad's business strategy.

These forward-looking statements are based upon current assumptions and expectations and involve risk and uncertainties that could cause actual events and financial performance to differ materially. Risks and uncertainties include, but are not limited to, business and economic conditions, technological change and industry trends, changes in the Company's markets and competition. More information about risks and uncertainties are available in the Company's filings with the US Securities and Exchange Commission, including annual reports on form 10-K, quarterly reports on form 10-Q, current reports on Form 8-K and this morning's press release. The information discussed during this conference call should be used in conjunction with the consolidated financial statements and notes included in those reports and speak only as of the date of this call.

The Company undertakes no obligation to update these forward-looking statements. On the call for Digirad are Mark Casner, Chief Executive Officer and Todd Clyde, Chief Financial Officer. They will discuss the Company's business activities and financial results and comment on their strategy and outlooks. The question-and-answer period will follow. I will now turn the call over to Digirad chief executive, Mark Casner.

Thank you, Dan, and good morning, everyone. We began the year with some very specific goals to drive both revenue growth and profitability in both our product and mobile imaging divisions. The principal driver for DIS revenue growth would occur through our centers of influence strategy with a corresponding improvement to the bottom line by increasing the utilization of our imaging fleet, finalizing the DIS mobile camera fleet upgrade program which has led to shorter work days for our staff and a focus on other customer retention initiatives.

Our drive to black initiative launched in late 2007 projects profitability for the first time in the history of our product business through increasing product related revenue, reducing costs and improving product reliability. As we reach the midpoint of 2008 I am pleased with our progress in driving DIS revenue growth, which was up over prior year and first-quarter 2008 specifically around four of our centers of influence locations. A trend which we expect to continue throughout this year and into the future.

We have previously commented on the success ultrascan has had with Emory University. We subsequently designed a program to duplicate their accomplishments at other leading institutions. To that end we have signed up Vanderbilt University, Penn State, Methodist Hospital in Houston, UCLA, Johns Hopkins and the University of Chicago. We do not expect all of these centers to attain the success that we have enjoyed at Emory, however, we believe the majority have the capability over the next few years to add substantially to our growth.

For the first half of this year, including Emory, these centers have contributed $5.8 million in revenues, and we expect to see revenues of nearly $7 million for the remaining two quarters. Given the initial rollout at Vanderbilt, Johns Hopkins and Methodist, we remain bullish that this strategy is repeatable and sustainable in the years to come. Our pipeline of future centers remains strong, and we will continue to report on our progress in subsequent quarters.

We completed the upgrade of our DIS mobile camera fleet in the second quarter. This has been well received by our physician customers and extends our flexibility in either allowing us to perform more studies in a day or to reduce our on-site labor hours. We can report that on average we have been able to reduce the work day for our technologists by 1.5 hours and improve the quality of their lives. Combined with a guaranteed work hour program, we believe this has been an important tool in lowering our turnover.

Our strategic thrust this year for the product business had one essential component, make the business profitable. This included increasing product related revenue, reducing the cost structure for our cameras and improving product reliability. After disappointing product revenue results in Q1 2008, we rebounded with strong bookings that reached a record high and were able to deliver 20 cameras in the second quarter compared to 11 cameras in Q1. We still have a lot of work during the next six months to achieve our profit goal, but signs are encouraging.

Let me highlight one item for which we attribute our booking success in Q2. We have increased our visibility in the marketplace with our independent dealer network. About 18 months ago we launched our dealer network, which has now grown to 16 independent companies, covering nearly the entire lower 48 states, as well as Canada and Puerto Rico. As you might expect, our experience has been mixed with a combination of average performance, as well as strong contributors. But those better dealers offer great value in expanding our reach. Together these dealers have added an additional 60 feet on the street, and we estimate will represent approximately 30% of our camera bookings in 2008.

We also hit our midyear product cost reduction and reliability targets. We began shipping our newly cost reduced camera in July and expect these efforts to translate into improved product margins for the second half of 2008.

Third, we remain committed to advancing our technology, never one to rest on our laurels, we continue to improve the quality of our cameras. This year has seen the adoption of nSPEED, our fast acquisition software, introduction of STASYS, our motion correction software with a corresponding $1500 savings per camera and the launch of X-ACT, our attenuation correction initiative. We remain the leader in solid-state technology, and each of these activities has or will result in maintaining that leadership.

There is no question that corresponding with the growth in revenue for the second quarter was significant compression on the margins. I would take this opportunity to highlight a few items. DIS margins during the first half of 2008 were under pressure as we cautiously made a decision in late 2007 to put in place a guaranteed work hour program to reduce employee turnover and increase customer retention. This was a major contributor to our flat margins over the past three quarters. Although we are pleased this and other initiatives have resulted in reduced employee turnover; now about 30% annualized, we are not content with the margin results.

A few months ago we analyzed this program and beginning June 1 fine tuned it to benefit employee and customer retention but at the same time improve our gross margins. We expect this change, as well as an expected cost reduction of the generic radiopharmaceutical event scheduled for August 1 to increase DIS margins by Q4 2008 to the mid 20% range. We still believe we can drive DIS margins closer to 30% as we increase our mobile camera utilization and improve efficiencies with our DIS labor and fixed costs while we grow revenues.

Finally, we have been exploring other initiatives that may not have the same significant impact, but nonetheless may help improve revenues or increase customer retention. One such initiative, Artery Age, was launched in our Georgia market earlier this year. A test and measure carotid intima-media thickness, a good prognostic tool for the onset of atherosclerosis, will add incremental revenues for our current customers with minimal related expenses. We are reviewing a number of these types of add-on procedures.

One non-revenue producing activity but important to customer retention has been the addition of our billing hotline. Many of our customers have ongoing issues related to reimbursement. Since the advent of this free service we have assisted a number of customers and have avoided losing their business.

I will now turn the call over to Todd Clyde, our Chief Financial Officer, who will provide more specific detail regarding our financial results.

Thank you, Mark, and good morning, everyone. Please note that all quarterly comparisons are for the three months ended June 30, 2008 compared to the three months ended June 30, 2007. Consolidated revenues for the quarter were $19.9 million compared to $18.8 million. DIS revenue increased to $14.2 million from $13.3 million in 2007 and included revenue contributions from our centers of influence program and ultrasound revenues.

Product related revenue for the quarter rose to $5.7 million from $5.5 million as camera sales increased to 20 cameras in the second quarter 2008, nearly double the 11 units sold in first quarter 2008.

Service and maintenance revenues continue to grow as a strong source of recurring revenue. Our installed base is now approximately 560 cameras. Gross profit declined to $4.6 million or 23% of revenue in the second quarter of 2008 from $5.8 million or 31% of revenue in the prior year period. The decline was due to lower product volume, higher labor and other servicing costs related to DIS and investment in growth initiatives.

[Distributable] utilization for the quarter was 57% of 164 nuclear and ultrasound cameras compared to 60% of 130 last year. Operating expenses were about unchanged as they have been over the past year representing 30% of second-quarter 2008 revenues compared to 32% of second-quarter prior-year revenue, but may increase slightly due to higher levels of marketing and sales, including staffing and campaigns. However, we expect to keep general and administrative and research and development costs at bay in an effort to keep operating expenses on a relatively flat trend.

Net loss for the quarter was $1.2 million or $0.06 per basic and diluted share compared to net income of $238,000 or $0.01 per share diluted for second-quarter 2007. With completion of the fleet upgrade during the second quarter and much stronger operating cash contribution from the product business, we return to positive cash flow for the quarter. We expect to burn cash in the third quarter in the range of $1.75 million to $2.5 million primarily due to an extra pay period compared to the second quarter of 2008 with slight net cash contributions in the fourth quarter 2008.

Despite our more positive outlook overall, particularly from the DIS via growth in revenues from centers of influence, and improved product sales, we are still subject to general economic conditions, market conditions and even business conditions of our customer base of physicians and hospitals. Therefore for the present we reiterate our revenue guidance for full year 2008, which is for consolidated revenues ranging from $75 million to $81 million consisting of DIS revenues in the range of $56 million to $60 million, and product related revenues of $19 million to $21 million.

We also reiterate guidance for our full year 2008 consolidated net loss in the range of $2 million to $4.5 million, including estimated stock-based compensation expense of nearly $1 million. We will now open the call for questions.

(OPERATOR INSTRUCTIONS) Tycho Peterson, JPMorgan.

It is (inaudible) here for Tyco. Just a couple questions for you. First is about will you give any sort of breakout in terms of the number of systems you have that are nuclear versus ultrasound in your 164? We know the 71 mobile nuclear. You break that down any further?

Yes, there are 102 total nuclear cameras. There is obviously some fixed site cameras that we run down in our Georgia market and there are 62 ultrasound imaging systems.

Great. Thank you. Actually getting on to the August 1 (inaudible) patent expiration date, can you say what percent of cost of goods that is and (inaudible) rated portion and do you expect that pricing to be sort of decrease to be comparable with Myoview and with Cardiolite?

Good question. We have never broken out the specific percentage of cost. Clearly it is a strong cost contributor, so it is a pretty large cost in the base. We do expect to pick up a pretty decent improvement in the cost position that we are paying today in the back half of the year.

As far as what that relationship will look like between Cardiolite and Myoview, we are not exactly certain at this time. And we clearly recognize that there will be downward pressures on the revenue in out periods, although we certainly don't expect that until sometime in 2009, maybe even later than that. So we will have to see how that kind of shakes out.

I've got some other questions, but I will get back in the queue.

Stephen Silk, C. Silk & Sons.

Let's just start with the dealer network growth and the growth in the unit sales for the quarter. Where do those sales occur? Do they directly to cardiologists, are they more into the hospitals; we had talked about getting more mobile in that area. Is it multiple sales to existing customers, or are you reaching new customers?

I think the best answer is all of the above, Stephen. There were a number of mobile opportunities this past quarter particularly with cardiologists as opposed to anyone else. Some increased visibility in the hospital, a couple of multiple unit sales. I think, quite frankly that is why we've been a little more bullish about this strategy. As we have gained more visibility out on the street it has opened up a great deal more opportunities for us.

Probably, Stephen, the most important insight I would offer is that we are now getting into larger groups and also kind of regional thought leader locations when before we weren't penetrating those locations as well. So that is where the multi-yield cameras have come in to play. Not necessarily much of an increase at all in the hospital market as of yet.

That kind of leads me to another question in that area where you, in the prepared remarks were talking about your gaining market share. How are you doing that? Are you beating them on price? Is it a product that is superior to what else is out there? Can you talk a little bit about that?

The estimate on our part is that the market has been -- well, it has been flat to down over the last number of quarters and down more specifically. So although we don't have the NEMA Q2 data, we expect that because we have such a strong quarter that we've actually increased our market share. And I think that really just has to do with the broadening of that network and the ability to go into locations that we didn't go into before.

And then on your comment about in the prepared remarks about the growing pipeline, what was the pipeline like in the first quarter where the sales were lower -- I mean, was it that you started to see more interest and you were able to make that pipeline into completed sales in the second quarter? And then what does the pipeline look like in the second quarter that would lead us to think that this could continue in the third quarter?

I would probably go back to even the back half of 2004 where the pipeline was weak. It wasn't necessarily growing. We had mentioned that on a few calls, that bookings were light. In Q2 the bookings were light, but the pipeline was actually growing. And if you think about the sales pipeline and finally we were able to get that to really pop and translate into actual bookings in the second quarter.

The pipeline continues to be strong, heading out of Q2. I would remind you that Q3 is usually a much slower bookings quarter, and I think that is why our expectations is that you are not going to see a huge pop in Q3, and we expected that come back and push really hard into Q4. In fact, in the product margins we expect those to be somewhat flat maybe slightly better in Q3 versus what they were in Q2, and a lot of that has to do with volume production that happened in Q1. So we didn't have to produce as much in Q2 and so then we have efficiencies that kind of bleed into the Q3 numbers.

And then just on that, in that area of sales, what are you seeing as far as the environment of being able, having customers finance that? Has that been holding things down at all? Considering you --

Not really. Because their practices are continuing to grow and there is a lot of strength in average. I talked to four different leasing companies to see if there were any trends there, and they didn't feel like that was a problem. And we haven't felt much of a pinch either. Sometimes a slight delay but that is really about the extent of it.

Let's hop over to centers of influence and that part of the business. You had said that it would be difficult for some of the new centers to duplicate the success that you've had at Emory. I just wanted to find out what are you learning as far as how they need to be set up and how you need to get any new particular center of influence jumpstarted so it has that Emory type of potential? Or what are the things that you are finding that perhaps more difficult on some of the new centers as far as not ramping up as quickly?

There is no question, Stephen, that we are getting a heck of a lot better with it, with each one that we both identify and operationalize. And there clearly are some very key ingredients for us. Not least of which is the density of the market. There has to be a sufficient physician base and opportunities there that allow us to roll out that program. So I contrast, for example, a couple of the newer programs like Johns Hopkins in Chicago which are in very robust markets versus a Penn State, which is not.

And clearly Penn State is not a market that we think is going to grow at all whereas we are very bullish about Hopkins in Chicago markets. A second key ingredient for us has been the quality of the sales team and the operations team in those respective markets. We've got two firecrackers in the Baltimore market, for example, both on the ultrasound and the nuclear side that have just done a terrific job in penetrating that market.

The third ingredient has been our ability to prequalify the market, if you will. Michael Keenan who heads up that division, rolled out a new program at the beginning of the year; our inside sales team, if you will, based here in San Diego where the folks here are actually calling the physicians ahead of time, setting up an appointment so that when the territory managers are out there they are not just cold calling thousands of doctors, they've got preset appointments out there. And I think that has made a huge difference in their ability to penetrate the market much quicker.

And then maybe the last thing -- and there's probably a lot more to that but we are not waiting any longer. A lot of the lead times for these centers -- I can tell you Hopkins took nearly a year to kind of push them over the finish line. But we are pre-selling those markets even before we have a signature on the paper. So we are not waiting for that opportunity, if you will. We are going ahead and preselling that. So again, I think we get a little smarter with each one. We clearly, in terms of Hopkins in Chicago have identified two markets we feel very good about. We have several others that are in the pipeline now, so we will continue to work on those as well and update you in future calls.

Just to clarify, when you talk about hitting the ground once a center is set up or even you are preparing a center it is getting on the ground to the actual end-user doctors and having them sign up?

That's absolutely correct. The first critical piece, obviously, is getting the buy-in on the part of the academic center. And really there the issue has not been selling the medical community. They are ready to go the moment Michael walks in the door. The issue, quite frankly has been getting it through the legal department. In some cases it is a painful process and a rather long one. But as soon as that happens, and quite frankly even before now as I said we are kind of pre-selling those markets, is getting out to the primary care practitioners in that market and educating them about this new program.

Could you use existing doctors that are having success as far as talking to the new people, as far as how well or how easy it is to use; if it is easy?

Yes, and we actually use that in two ways. One is there is no question that that allows us to next approach an academic center where -- it is one thing when you just had Emory and they were very good at opening doors and still are for that matter. But now as we begin to build our own pipeline with seven centers now under contract, I think a lot of the folks now can say hey, it is not just one and done. They've got seven. Maybe they are going to whatever number, so we are using our own development to help that along. And clearly in the community doctors all talk to one another, and if you convince one it really helps you get the second one and the third one and the fourth one. So it is obviously identifying those thought leaders in the community that help you push that along.

When you talk about the growth revenue from the centers in this past quarter and that hopefully will continue to grow, are you seeing that the existing doctors are doing more procedures, or are you having the growth in the total number of doctors. So how has that been working out?

I don't know that the growth per doctor has been remarkably different this year versus last, but there is no question that we are adding more providers. So I think that is where you are seeing most of the growth.

One thing that you really did not talk about that was more of a central focus in the past is the regular doctor customer base, the cardiologist. How has that been progressing or is that kind of not been progressing as well since you don't really bring it to the forefront?

No, I don't know that we are ignoring that at all. But there is no question that the focus today has been on the centers of influence markets, and that is directed quite frankly at the primary care market. But certainly we have 40 hubs around the country now, a good many of them still in non-COI markets, and Michael and his team continue to improve on the density in those markets, as well.

I didn't mean it wasn't important as far as the company, just wasn't written or brought up as far as a talking point in your release.

And I think primarily Stephen, because it is not that it hasn't been a focus of ours, but I think in terms of pure growth drivers the centers of influence is going to be the strategy that kind of takes us to the next level.

And finally, it looks like a little cash flow positive here and a drain next quarter and back to cash flow positive in the fourth quarter, the price of the stock seems to be depressed, to put it nicely. Would you use some of your cash for share repurchase or something to do as far as if the cash is holding and you are generating some cash to put it towards rewarding shareholders if things turn around in the future?

That is a question we get asked all the time, Stephen, and I can tell you it is reviewed at almost every board meeting now. I think for now we have no intention of doing a stock repurchase primarily because I think this Board is certainly looking for long-term stability, long-term consistency and being cash flow positive. And if there is a quarter up, a quarter down whatever, I think we are looking for some more long-term consistency there. And at this point in time I think, quite frankly, you were generous in terms of how people have approached our stock. The one thing I think has kept it at least at the level it has been our balance sheet. And our hope is that as our numbers continue to improve and we string together many more of these quarters that the street will appreciate the progress that we are making and reward us for our performance as opposed to our balance sheet.

One final question would be, as you look to do more things that you can bring to the doctors, is that -- is that the whole basic idea, you've got them signed up, you're showing them they can make money through this and here is new ways to make money. And then it's just a matter of selling into an existing base of clients?

The really neat thing about that -- you know, we're not really sure yet because it is pretty brand-new; we think it does a couple things. One, there is no question that it brings more things to the table for the physician and allows them to do some other clinical tests that perhaps they weren't exposed to before. So hopefully it improves the lives of their patients. It is a convenience for them. It is a convenience for the physicians. Adds some incremental revenues. We are looking at things today that, quite frankly, don't bring much, if any additional expense to the table, so any incremental dollars that you generate drop through to the bottom line. We think it also will make the physicians a little more loyal to us. If you are just do an ultrasound or nuclear services for them and somebody comes along and offers a better price or whatever, perhaps they will leave. I think the more things you are doing with a physician it is a better value proposition and our expectation is that that is a little more long-term relationship.

One kind of summary comment is that every initiative we have does one of three things and hopefully all three. It drives revenue, it improves our margin, and it helps us retain our customers. And that happens by having a thought leader behind you getting more fuel behind the traction that you are making on the revenue side; by building more density in one location, which allows you to be much more efficient with your cost base. And if you expand the services it can have a similar view. And then utilization is important, so you are trying to utilize the assets and the people that you have in place.

That's all I have. I appreciate the time to take my call.

Our next question is a follow-up question from the line of Tycho Peterson, JP Morgan.

Thanks for taking the follow-up. Just a couple questions. First is just to clarify the private label business that you mentioned, is that -- that has no impact up or down on the revenue or margins from a non-private label. Is that correct?

I'm not sure I understand your question, [Tays]. This is additional incremental business, and you know when you go into a grocery store you will have Hunt's ketchup and you will have store brand, and really what we are doing -- Michael is rolling this program out with a group in the Southeast market where essentially we will go in under their brand name. It is our equipment, it is our staff, it is our everything, but marketed under their name to their customers. And we really feel like there is a number of customers out there that want to be able to roll these programs out, have expressed interest in it but want to do it under their banner, which from our purposes is fine and so we are rolling this out. They have a pretty -- they seem to have a pretty good pipeline. The first one should be up and running in a few weeks, and if all goes well I think it is going to be a pretty neat program. And we have some other folks that are interested, as well.

That's clear. Second question is in terms of I guess from product pipeline and new tracers, we've been hearing that [Adraview] is going to be launched fairly soon. It is a I-123-based agent, and my understanding is that the Digirad camera can handle that. Is that something you expect to go to rollout as a service or in parallel if that agent ever takes off?

I think we are very open to continuing to drive nuclear cardiology forward. I was talking to someone yesterday in the community and they continue to highlight that really nuclear is one of the best cardiac tests that is available. And it also provides solid economics to the physicians compared to a number of alternatives. We are committed on the technology side and that will include radio tracers. We talk often about getting the quantitative blood flow measurements, which if profusion imaging could get to that level where you could really measure the amount of blood that is actually being pushed through an artery, that makes a huge difference and you need development advancement in artery tracers to -- I'm sorry radioisotopes to actually do that.

Okay, thank you. And the last question just if you can comment about the reimbursement teams that have come through and how your customers are seeing those.

I think we got some really good news, actually. All of the C cuts that were scheduled for this year and got delayed until July 1 have been completely been done away with, and I think there should be no further discussion on that through the end of 2009. So I think everybody is breathing a collective sigh of relief on that. And that is, again, we've talked about this in previous calls. I've been in healthcare an awfully long time. This is kind of an annual rite of passage with the Congress where there is a proposed fee cut, and there is a big hue and cry and it ends up getting rolled back. This year it got delayed a little bit, and I'm not sure that wasn't impacted by the fact that we are in the middle of a presidential campaign. But I think long story short we feel pretty good about the reimbursement climate.

Now having said that, there is still no question that the private payers still take a hard look at utilization. There is going to be continued pressures on the their part in terms of provider access, et cetera. We deal with those as they come along, and it is one of the things that where your competitors and us work together on those kinds of things because it is the common issue that we have to deal with. So I don't expect that those are going to go away anytime soon. It is just I think part of the environment that we are in.

Okay. Thanks, guys.

Marc Silk, C. Silk & Sons.

Thanks for taking my questions. On the centers of influence are you still expecting to sign up one per quarter?

We do, Mark. We've got -- we originally targeted approximately 100 centers of influence, if you will. And not surprisingly it is the top 100 heart hospitals in the country. I think what we are looking to do is we have to maintain that pipeline because of the long lead time here. So clearly our focus right now is -- and we talked about the three or four top producing centers of influence already. We are going hard at it to really get those things up and running, and prove the model out. Be that as it may, we continue to add more. And as quarters go on here we will continue to update you with our progress there.

Okay. And then with the unfortunate death of Tim Russert it brought up a lot of questions about stress tests. And you watch the news and they are talking about a protein test. How has that affected you? I'm sure people might have not thought about nuclear but now they might be looking at that. I just didn't know if that affected you in some capacity.

I think it affects anybody in imaging right now. So what is the best test? Is it nuclear, is it CT angiography? I think we've heard -- for those of us who have been in nuclear for a while have heard of the demise of nuclear medicine for 40 years. I think unfortunately in the case of Tim Russert I'm not sure that any test would have accurately predicted what might have happened with him. Because in fact he had stress test and all the other things; I think they knew he had heart disease and what you can't predict is when is that plaque going to break off. And that has been the problem, quite frankly, with CT angiography is, it tells you it gives you great pictures but it doesn't tell you the vulnerability of the plaque in the arteries.

So there is no question that people are still focused on this. And now nuclear in our opinion is still the preferred gold standard. We don't think that is going to change anytime soon. I think when you look at the value in terms of what does it cost to put a nuclear camera in an office versus these faster CTs, there is no question that the price point there favors us. So we are going to continue down our pathway. We talked about some of the innovations that we've been working on. Faster studies, a lot of things that we think will impact the quality of the studies that we perform.

Okay. Thank you.

Mr. Casner, there are no further questions at this time. Please continue with any closing remarks you may have.

Thank you. We are encouraged by our record revenue quarter, continuing strength in bookings and revenue growth in key centers of influence locations. Strategic decisions to build revenues are beginning to pay off, and we are pursuing opportunities to increase momentum. The challenges in the economy and business environment are still substantial but we will stay focused on our core initiatives and keep executing according to plan. And we will look forward to reporting third-quarter results. We appreciate your interest in Digirad and we will keep you apprised of our progress. Thank you.

Ladies and gentlemen, this concludes the Digirad Corporation 2008 second-quarter financial results conference call. Thank you for your participation. You may now disconnect.