ParkerVision 2008.12.08 LG Innotek
December 8, 2008
Joseph Graves, a private investor
Wilson Jaeggli, Southwell Partners
Phil Anderson with Pinnacle Fund
Stacy: Please stand by. We're about to begin. Good day, everyone, and welcome to the ParkerVision conference call to discuss their LGI press release. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Paul Henning. Please go ahead, sir.
Paul Henning: Thanks very much, Stacy. But before we get started, I wanted to remind the listeners that this conference call will have certain forward‑looking statements, which involve known and unknown risks and uncertainties of our business and the economy and other factors that may cause actual results to differ materially from our expected achievements and anticipated results. [0:37] Included in this respect are the abilities to maintain signalon technology advantages in the market place, to achieve timely marketing introduction and acceptance of our products and maintain company patent protection, as well as the availability of capital.
Given these uncertainties and other factors of our business, listeners are cautioned not to place undue reliance on any forward‑looking statements contained within this conference call. Additional information concerning these and other risks can be found in our filings with the Securities and Exchange Commission.
Jeff Parker will speak this morning regarding our Friday press release about the new business relationship with LGI. Jeff, would you like to go ahead, please?
Jeff Parker: [1:17] Yes, Paul, thank you and good morning and thank you for attending our conference call this morning. I'm very pleased to discuss with you today an agreement we entered into this past Thursday with LG Innotek, who I'll refer to as LGI throughout this presentation. Normally, we would make our announcement and then have a conference call shortly thereafter, but attendance at the formal signing ceremony that LGI hosted and the subsequent travel back from South Korea caused us to defer the call until this morning.
We do appreciate very much the hospitality that was extended late last week by LGI in Korea.
LGI is a division of the LG Group, and they focus on manufacturing and selling electronic components into a variety of applications with approximately half of their $1.4 billion in annual revenue coming from sales of components into the mobile handset space.
They've had a fast rise in the mobile handset market over the past few years and, today, they provide components such as displays, wireless Bluetooth modules, GPS, RF front‑end modules, mobile phone transceivers and RF power amplifier modules.
You may notice a key word in the description of some of their product lineup and that is the word 'module.' One of LGI's product strengths is creating very small, highly‑integrated solutions that enable easier manufacturing and greater performance for their customers. It is in this context that LGI has had a strong interest in our technology for some time now.
After performing their due diligence on the company and the technology, and having observed our chip development progress, LGI decided that now was the time to enter into a product development and marketing agreement to incorporate ParkerVision's RF technology into multi‑mode, wireless modules with a target product launch in the second‑half of 2009.
The agreement is a product‑development and marketing agreement, whereby ParkerVision agrees to provide tested, unpackaged silicon dies that incorporate our patented RF technologies. LGI agrees to incorporate these dies into modules manufactured by LGI that will be sold to their existing, as well as new target, customers in the mobile handset area, as well as the customers in the data‑card market.
The dies will be sold to LGI under a supply agreement, the specific terms of which will be finalized as part of our program plan, which we anticipate will occur in the first quarter of 2009.
The parties have created a statement of work in connection with this agreement that outlines each party's responsibilities, the targeted product and market, and the timetable for completion. So, let me turn to a description of what LGI's first ParkerVision‑based application will be.
[4:27] They are bringing to market an LGI module that fully integrates all of the RF transmit and receive functions, including RF power amplification, for the mobile phone standards of 2G GSM, 2.5 G Edge, 3G Wideband CVMA and 3.5G 8HSPA, or what is being called 'hedge' in the industry.
As LGI said in the press release, our technology was chosen based on its unique multi‑mode capability combined with superior efficiency. It's these benefits that enable LGI to create modules with very small form factors for a number of reasons.
Our technology eliminates many of the redundant circuits traditionally required, and our efficiency results in much less heat than generated by the inefficiencies of traditional approaches. LGI will incorporate ParkerVision's D‑to‑D receiver technology into these modules, as well.
When we initially approached the market with our D‑to‑P transmit solution, we were asked by many of you if we thought we would also see adoption of our D‑to‑D receiver technology in the mobile handsets. We told you then that we thought D‑to‑P would pull the D‑to‑D technology into mobile handsets and that is exactly what is happening.
It is important to note that throughout this lengthy period of time that LGI has been in dialogue with ParkerVision, that no other solution has emerged that enables a highly‑integrated module that, in LGI's view, brings their customers the smallest complete hedge radio module available in the market, enabling their customers to meet their goals of size, cost and performance.
So, what are the next steps in terms of this agreement with LGI?
First, let me give you a little background. If you'll recall from previous conversations we've had, we always felt that investing in the development of the silicon, even for our licensees, would be a good investment for the long term, as we would have the opportunity to redeploy some or all of it for other customers. As you are no doubt aware, we are delivering production‑ready silicon to our first commercial customer this quarter that they will then productize for their customer base.
Our customer is focusing on the launch of single‑mode 3G applications. These silicon components are largely reusable in our program with LGI. In fact, a good deal of the development work necessary to support LGI for a second‑half '09 product launch includes modification of our existing silicon to support their hedge application. This is one of the reasons for the relatively short timeframe for delivery to LGI.
So, now let's discuss a little more about how LGI is positioned to go to market with its offering and a little about the potential of this market application.
[7:32] LGI's largest customer is LG Electronics, also known as LGE. LGE is battling with Motorola and Sony for the number three slot among the tier‑one handset OEMs. LGE is expected to ship approximately 100 million handsets this year. The majority of the LG handsets currently contain one or more LGI components. Additionally, LGI has provided components in phones that are branded by Nokia, Motorola, Sony and Sharp.
One of the exciting aspects of our relationship with LGI is that their sales organization is well positioned with customers who represent over half the mobile handset market. Under our agreement, LGI's organization will be marketing modules that incorporate ParkerVision technology throughout the industry.
In addition, LGI produces cellular data cards and our agreement includes the incorporation of our technology into data cards, as well.
[8:35] So, what does this mean financially for us? As we indicated in the release, industry forecasts predict hedge mobile handsets will represent approximately 80 million units in 2009, growing by over 130% to 186 million in 2010, with significant continued growth beyond that. These numbers were provided to us by the firm Allied Business Intelligence, and it's based on their latest research.
Our agreement with LGI is to supply unpackaged silicon dies, which LGI will then package with other supporting components into an integrated RF module. While it would be inappropriate, for competitive reasons, for us to disclose anticipated unit pricing for our silicon, we do want to provide our investors with enough information to analyze the financial potential of this relationship.
So, as we have attempted to do so in the past, we will address this from a market‑share perspective. We estimate that for each five percent share of market for HEDGE applications, based on the 2010 industry HEDGE unit forecast, this will yield a range of between 10 to 15 million in gross margin dollars for ParkerVision.
As stated in the agreement, LGI and ParkerVision both believe that a successful commercialization of this product can result in LGI becoming a leading global supplier in the market for HEDGE RF modules, for mobile handsets and data‑card applications.
[10:15] By the way, I also want to provide a little visibility into what a complete HEDGE‑RF solution costs the OEMs today. Based on our analysis from industry tear‑down reports from recently introduced HEDGE mobile phones, the OEM cost for the necessary components of the complete RF transmit and receive functions is in the 15 to 16‑dollar range. Greater than half of this is attributable to the semiconductor chips which our technology replaces.
With regard to our operating costs and infrastructure, we do not anticipate that this business relationship will have a significant impact, for a couple of reasons. First, we've already established the infrastructure to develop chips to support our current and future target licensees. The additional cost to provide silicon to LGI is in the incremental expenses of setting up certain production tools for archives of products. We anticipate the LGI business as a build‑to‑order‑business, and therefore we don't expect significant inventory carrying costs.
LGI has committed their engineering resources to incorporate our RF components into their products, and they have also committed their sales organization to market and promote these jointly developed products to both existing as well as new customers.
[11:43] Although the purpose of our call today is to discuss our exciting news with LGI, some of you have asked if we could also keep you updated on the progress of our delivery of production‑ready silicon to our commercial customer. We remain on target to deliver silicon for their applications this quarter. We have also populated a small circuit board that uses the same form‑factor as the board they test their solutions on, which will allow them to easily test and demonstrate their complete mobile‑phone platform that includes our silicon.
The complete board that we will deliver to them is awaiting delivery of the final filter, which just arrived this morning. And we will perform final testing, and expect to deliver these boards before the end of this year.
These boards are fully compliant with the 3G mobile‑phone requirements, and thoroughly tested over all necessary operating conditions, such as temperature, voltage, and other varying conditions.
[12:42] As I indicated in our last quarterly conference call, we will continue to work closely with our customer over the next quarter to assist them in setting up for volume products, and believe that royalties will start from them shortly thereafter. I will provide an update on this topic again during our year‑end conference call in the first quarter.
Our customer has certainly indicated to me, in a recent meeting, that they are anxious to start selling the D2P solution to their customers, and are motivated to get it into the market as quickly as possible.
So, before I open up this call for your questions, I just want to conclude by saying how excited we are about our latest customer, LGI. We look forward to bringing you progress on all of our customer relationships in the coming quarters.
And so now, why don't we open up this call for your questions?
Stacy: Thank you. If you would like to ask a question, please press star‑one on your touch‑tone phone. Please deactivate any mute functions before signaling to be sure your signal can reach our equipment. Once again, that's star‑one for a question. We'll pause for a moment to assemble our roster.
We'll take our first question, from Joseph Graves.
Joseph Graves: [13:58] Hey, Jeff.
Jeff Parker: Hi, Joe.
Joseph: [14:01] My question surrounds: could you give us some figures of measure surrounding the number of connections in this board that you'll be delivering in the near future, part count, and then the underlying footprint for all these parts that you'll be delivering. I know you can't tell us everything, but just give us some sort of idea of the part‑count reduction, board‑space savings, and incremental manufacturing efficiencies you realize with this technology.
Jeff Parker: [14:33] Yeah. Joe, I can only give you right now kind of a high level, because that's some of the decision, now, that will be made between us and LGI over the coming few months, as we start rolling through this program plan. Because there's a lot of different ways in which they can put the module together, and there's a lot of opportunities for them to either include or not include certain components that today would be sitting discretely that now could be included in a module because of the low heat that we generate. It could incorporate some of those external, other supporting parts, or choose not to, just depending upon what their own product plans are.
But I can tell you that when we last studied some of the industry‑leading HEDGE solutions that are out there today, and we look at the amount of PC‑board space that they require, we are seeing that we're able to reduce that amount of space by over half. And how far beyond that LGI chooses to go, again, really is going to be determined by how they want to define this module and what ultimately ends up inside of there.
But that really is their area of expertise. And we've seen some of the things that they've done with other products, and it's pretty impressive. So, I think they're an extremely good fit to take a technology like ours that's now in silicon chips and to start to really get the benefits out of that in these very small form‑factors.
Can you speak specifically to the relationship you have a delivery in silicon this quarter to? Can you speak to some of those efficiencies?
Jeff Parker: Well. I mean, it's right on track. We've always believed the 3G application that we targeted for them is one where battery life today is not overly impressive. And the efficiencies, like what we've published on previous calls and discussed previously, is pretty much what we're still seeing we're going to achieve. [16:35] The boards that they'll be getting in the next week or two‑‑certainly before the end of the year‑‑will allow them now to take all the things that we've tested and to duplicate that themselves. Although, we work with them very closely on a weekly, sometimes daily, basis, so we are very familiar with what they will be looking for, and they should be able to go through the tests pretty quickly.
But what they'll find is that, just as with LGI has seen, the devices will generate very little heat, which gives them, again, very nice packaging opportunities, will give them increased battery life for the clock times for their customers, eliminate the gallium‑arsenide power amplifiers that they currently have to use so they'll be able to make all this using silicon‑based semiconductors.
It's the same exact discussion that we've had in the past, just delivered in real, working, production‑ready hardware.
Joseph: All right. Thanks.
Jeff Parker: Thank you.
Stacy: And, as a reminder, that is star‑one if you'd like to ask a question. We'll go next to Wilson Jaeggli with Southwell Partners.
Wilson Jaeggli: Good morning. Congratulations.
Jeff Parker: Thanks, Wilson. Good morning.
Wilson Jaeggli: [17:46] A couple things. What contracts have you actually signed here? Can you give us a little more specific detail? Is this a letter of intent? Is this an actual, finalized contract? I guess it's certainly not but what did you sign?
Jeff Parker: No it's a finalized contract though there are elements that will be kind of a living document. What we finalized right now is the product of developing and marketing agreement. So what that defines is: what's the product, what is each party responsible for, what do we deliver to them, what do they expect from us, what will they do with it when they get it, how do the parties interact and then there's the whole statement of work that's been put together already that outlines how we go down this path to get from where we are today to be able to launch or for them to be able to launch a product in the second half of 2009. That's what I described earlier in the call a hedge fully integrated modular solution. What will continue to be refined is as they make decisions along the way as to exactly what they want to incorporate into the module versus not. There's this normal decision that you develop a product that will be made throughout that will continue to be added to this kind of living document.
And there's a supply agreement when the final decisions that have been made between this will happen in the first quarter will then enter into that which defines what we sell this to them for and how the whole supply exchange between us and the customer, LGI, will occur.
Wilson Jaeggli: [19:29] Is the supply here going to be IBM's fab?
Jeff Parker: To start with we definitely will be an IBM's fab or part of the implementation and the TSMC fab for another part.
Wilson Jaeggli: [19:42] Will you take possession of the silicon here since you're going to need working capital?
Jeff Parker: We don't see taking possession of the silicon. I mean we'll take possession of samples which we'll then pass on to them so they can complete their modules and testing. But beyond that we will only build silicon to order. So they'll go out, they'll sample those modules, they'll get design ones for those modules, and they'll say, "OK Parker Vision we need X number of units to support X number of modules and we need them by a certain date. And we'll get a purchase order and we'll go off and supply them under that type of an arrangement.
Wilson Jaeggli: OK. I see. There's not going to be a buildup?
Jeff Parker: We will not carry inventory for that. No.
Wilson Jaeggli: Good. Good, good.
Jeff Parker: Yeah that's why we like this arrangement. We think it's an interesting relationship in that it's not a licensing arrangement because their providing hardware but it doesn't create the need for us to have to stack a bunch of inventory and try to forecast what the markets going to do and worry about the out flux into that inventory center.
Wilson Jaeggli: [20:42] Exactly. Now since the final design hasn't been determined here, the assumption is correct that LGI doesn't have any orders for this product. Is that correct?
Jeff Parker: That's right. What they've done is they've gone out, they've canvassed as any large company would do, they've gone off and done a study of the market and come back and said, "Oh we think there's a big market opportunity for this product." [21:05] And they went out and studied it based on the market conditions and what the markets looking for and then try and fit that into what they thought our technology brought to the market. And came back and said, "This is how we want to go to market with your technology. We think there's a very significant market for a hedge module that integrates all this together. Nobody else has been able to do that. If we can do that together we think we have a real competitive advantage and capture a significant market share.
Wilson Jaeggli: And just to understand the complexity of this. How long have you been talking to LGI?
Jeff Parker: They actually were a company that started looking at us early in the D to P when we started going out talking about D to P very early and started talking about, "Hey this is what we're going to develop. This is the potential of what we've got. This is the promise of the technology." And they fairly early communicated to us, "Look we're not a company that would necessarily be a licensee because we don't develop our own internal silicon." However, they said, "We hope you stay in communication with us because if you have silicon chips, we could be an excellent customer to take those to market for you because we do modules which can integrate all this together. And if you really do have high efficiency and lower feed, et cetera, we probably could make some really stunning products out of that that could capture some really good market share for both our firms.
So we stayed in touch and as we got closer and closer to having production ready silicon, they became more and more interested in entering into a relationship. And they recently said, "Yep, this is the time. Let's go do it."
Wilson Jaeggli: Again do you recall when you actually...I'm just trying to understand the complexity of it. How long does it take to deal with a customer like this. Do you recall when you started this dialogue, the actual dialogue with them?
Jeff Parker: Well we first met them literally two years ago. But I wouldn't suggest to you that we've been in negotiations for two years. We understood pretty early what their needs were and therefore how to stay in touch with them and then when to reengage.
Wilson Jaeggli: Just again the complexity. How many pages in this document? Can you recall?
Jeff Parker: Yeah maybe twenty pages or something like that.
Wilson Jaeggli: So it was complex enough in here.
Jeff Parker: Oh yeah it was not a trivial thing to put together.
Wilson Jaeggli: Make sure I understand your hedge guidance in here or the industry estimates a 186 million in 2010.
Jeff Parker: That's correct.
Wilson Jaeggli: That's a correct number. And you say if you get five percent of that, you get ten to fifteen million in gross margin dollars.
Jeff Parker: That's correct. I'm trying to give the community something that you can easily put your arms around and say, "Well how will this relationship...If this relationship captured five percent of the hedge market in 2010... Your respective is what we sell to the chips to LGI for. What would be the margin dollars that Parker Vision should be expecting from this to contribute to our P&L.
Wilson Jaeggli: So if my third grade math is correct here. You're talking about a $1.10 to a $1.60 per module gross margins to you.
Jeff Parker: Yeah. You're in the right range.
Wilson Jaeggli: I passed the third grade then.
Jeff Parker: OK.
Wilson Jaeggli: [24:13] A question for us English majors. What is an unpackaged silicon dye?
Jeff Parker: OK. So if you were to open up a consumer electronic today, a cell phone as an example. You see a number of little black plastic packages in there. And if you would take the top of those packages off you'd see inside of those packages is a semiconductor dye. So you make an integrated circuit out of a semi‑conductor material, those wafers that they're produced on get chopped into square (typically square, could be rectangular, sometimes people do other shapes) but typically square, rectangular dies which get put into a package.
Often times in today's cell phones you would open up a package and see multiple dies and now that would become instead of a package it would become a module. And LGI has quite a bit of experience in taking multiple dies and even other components that might support those dies, passive components like resistors and capacitors, possibly and other filters, and incorporating all of those into a single package which is now called a module.
So we provide them the semi‑conductor dies that will go into their module. Then they will source or manufacture other components that will go around that that will also go inside the module. And that will become now a single package device that makes it very easy now for the manufacturer of the cell phone just to put that onto a circuit board.
And instead of having maybe today's equivalent of eight or ten different packages, that will now be in one package. And instead of having a whole bunch of external supporting components around that package, those would either be inside the package or they'll disappear altogether because our technology tend to either integrate those or eliminate many of them.
So that's what we provide them. If a semiconductor dies, which typically Wilson accounts for between 60 and 70%, maybe 65% of the total cost of a packaged component, to give you a sense of that.
Wilson Jaeggli: OK. You talked about replacing $15 to $16 per unit in here of the chips. Secondly you are going to space or reduce by half...
Jeff Parker: So let me comment on that. So the $15 to $16 is the total RF transmit received solution today which includes the chips and their external supporting parts. So using my guidance from 60% to 65% of that is semiconductor dies, semiconductor pieces. I would say $8 or $9 of that is in semiconductors; $8 or 9, $9 or $10, somewhere in that range, is what our pieces of solution replaces.
Wilson Jaeggli: Right. So we are selling ‑ OK, so there is substantial savings. I don't know what the markup is on $1.10 to $1.60, but even if it has happened here, there is substantial savings to the cellphone manufacturer.
Jeff Parker: There is savings and you should remember, our architecture is different than a traditional approach. We eliminate gallium arsenide power amplifiers we traditionally use today in favor of our silicon germanium, which is a less expensive material. We have single transmit chain that can do all these different standards through a single chain, so again we eliminate multiple redundant circuits. There are a lot of things we do differently that make them more efficient use of the semiconductor material to make a more cost effective solution, yes.
Wilson Jaeggli: And the battery life, rough number on battery life improvement?
Jeff Parker: Depends on the standard, again they are doing a HEDGE, so on the 2G and 2.5G standards of GSM and HEDGE, those are already pretty efficient today. I would expect that we will be on par, maybe a little savings there. When you get to the 3G and the 3.5G is where you start to see the benefits of our technology kick in. So on wideband CDMA, I would expect to see talk times that could increase by 40 or 50% over what they are currently getting. When you start to get into ‑ a lot of these HEDGE applications are going to be going into smart phones, where you are going to use a lot of data communications and that tends to really eat up a lot of battery life, not just because of the display, but the type of radio signal that is used for that is very power consumptive and we save significant energy there as well.
So between the three and the 3.5G carriers, I would expect to see another 40, 50, maybe 60% again increase in the talk time or the battery life of those applications.
Operator: And we will go next to Philip Anderson with Pinnacle Funds.
Philip Anderson: Good morning Jeff, welcome back.
Jeff Parker: Good morning, thank you.
Philip Anderson: [29:21] OK, Will snapped lot of the good questions. I just want to drill down a bit more on market share opportunity and you have said a lot and I was writing down quickly. So to make sure I have this clear, LGE is battling with Motorola and Sony for the number third slot among the top tier companies.
Jeff Parker: That's right.
Philip Anderson: And they are going to ship about 100 million phones this year?
Jeff Parker: That's correct.
Philip Anderson: Of the 100 million phones they are going to ship this year and the market for HEDGE is going from 80 million next year to186 million, what market share of LGE's phones might our solution apply to in 2010?
Jeff Parker: Here is probably the best way I can answer that. If the market share for HEDGE phones is pro rata, it distributes itself evenly across where the market share is for the handset companies themselves, you know what I am saying.
Philip Anderson: Yeah.
Jeff Parker: So if your company and you have 5% of the market overall and then that means you get 5% of the HEDGE market, which is an assumption that we will make for the purpose of this conversation. If you assume LG will be pro rata, then out of a 186 million phones, assuming their market share doesn't increase or decrease, they stay status quo to where it is today, they would be probably in that 17'ish, 17, 18 million handsets a year market.
Philip Anderson: It seems to me that HEDGE has an increasing market share going for them, these are the cooler phones, prices are coming down.
Jeff Parker: Well yeah, you know we didn't quote Allied Business Intelligence beyond 2010, but I can tell you we have looked at some of the forecast and when we hear that they say there is a significant increase even beyond the forecast that we have seen for HEDGE beyond 2010 into 2011, grows it from a 186 million by another 60‑some percent to over 300 million. So it is a very fast part of the market and I think the exciting thing for ParkerVision is we have worked long and hard to get our technology readied for this mobile handset space and we find ourselves because of our willingness to stay the course and your great support, we find ourselves in the position of being right in the sweet spot. I mean the technology brings all these things that people are looking for and it brings it for exactly where the market growth is occurring, so this is what we have all been waiting for.
Philip Anderson: And what is the sales or the relationship, a supplier relationship between LG Innotek and LG, which maybe actually making its own OEM branded phones?
Jeff Parker: [32:13] Well recognize now, LGI is specifically a component company, so they don't make any handsets that I am aware of, so they were setup by the LG Group to be a component supplier. I think one of the neat things or one of the clever things about the way they set them up, is they set it up so that they could be a supplier to their own home team, LGE, but they also set them up in a way that they could also be a viable supplier to other companies as well. And so that is why they have a relationship with Nokia and Sony and Sharp ‑ I missed one ‑ oh Motorola. So they are a very strong component supplier and they have not been in the mobile handset business that long, I don't want to quote how many years, but I know it has not been that long and they have been a real fast riser in that space. And again, I think it is because they have got a lot of expertise in making these very small very attractive modules that make it easy for the handset companies to manufacture.
The more complexity that you can take out of the production of these more complicated phones, the more attractive the product becomes to these handset OEMs and LGI will certainly simply put quite a few separate parts, quite a few separate chips into a single module that will be tested and ready to be dropped onto a phone and it will take a big burden I think off of a lot of these companies.
I can't say specifically what exactly the relationship between LGI and LGE is, but I imagine it is no accident that LGI's components are in well over half of LGE's phones.
Philip Anderson: Super. And then not to look a gift horse in the mouth Jeff, but can you give us an update as to how you are progressing with the other prospective customers, our ability to service additional customers?
Jeff Parker: [34:04] Sure. It is going very well. Our first customer is moving right on target. We are delivering the board as I mentioned earlier in the call here in the next week or two. We are very happy with the performance of that board. As I mentioned in my last call, I don't think we should trivialize the success of being able to put all this together and have it work as well as it works and right out of the box first shot. As far as other customers go, I think the best thing I can tell you guys right now is I believe that success will breed success in this marketplace, and that there will definitely be I think more customers coming after this. I am not right now going to draw my line in the sand and predict when the customer will come, but I definitely believe that from LGI's activities and their willingness to stand up and be counted in this announcement, that we will definitely see other customers coming on board to use the d2p and probably the d2d technologies as well in the not too distant future.
Philip Anderson: OK. Well, thanks very much Jeff and congratulations again.
Jeff Parker: Thank you.
Stacy: And as a reminder, if you would like to ask a question, please press "*1."
Jeff Parker: Well folks, if there aren't any other questions, I am just going to thank you for your attendance on today's call. We appreciate you taking some time and hearing the update. We are very excited as I mentioned earlier about this latest customer relationship and I look forward to many more wonderful and successful trips to Korea as ours was last week and thank you and have a great week, bye‑bye.
Stacy: And this does conclude today's conference. We thank you for your participation.