Overstock.com, Inc.
Q3 2015 Earnings Call Transcript

Published: 10 Nov 2015

[Dr. Patrick Byrne:]

Welcome to the Q3 earnings call script. Robert?

[Robert Hughes:]

Good afternoon, everyone. Welcome to Overstock’s Third Quarter 2015 Earnings Call. Before we begin, you should be aware that during this conference call, certain statements may contain forward-looking information. Actual results could differ materially from those that we projected during these discussions. Overstock’s policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available on our annual report on Form 10-K and our quarterly reports on Form 10-Q filed with the SEC. In addition, Overstock undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. If any non-GAAP financial measure is used on this call, a presentation of the most direct comparable GAAP financial measure and reconciliation of this non-GAAP financial measure to GAAP is provided as supplementary information through our release. Please note that you may listen to a live webcast or replay of this call by visiting Overstock’s website and then clicking on Investor Relations at the bottom of the home page and on our webcast. Now, I’d like to turn the call over to Overstock CEO, Dr. Patrick Byrne.

[Dr. Patrick Byrne:]

Thanks Rob, good afternoon everyone. Welcome to our third quarter call. Joining us today are Stormy Simon, our President; Rob Hughes, CFO; and Mitch Edwards, our new General Counsel. We had an important quarter in which we’ve made some strategic pellets, as you may have noticed. We are continuing to grow our trusted and respected online retail business but we’re also a leader in developing some, I think world historic technology that is going to transform capital markets for the benefits of investors; our Company; believe it or not, hedge funds; short sellers, just about everyone who’s not intermediary, more on that later. First, let’s do the numbers. Slide 3, in your slide deck. Our revenue in Q3 was $391 million, up only 11% from Q3 last year. Gross profit, $72 million, up 8%; contribution was up only 2%. Slide -- and I’ll go, I’d be hitting those in a bit more detail. Slide 4, quarterly revenue growth. We were back on that plateau, 15% to 20%. It has slipped. I will tell you -- I’ll tell you a few facts. So, some of this, we slipped the stitch here and there on a couple of initiatives. Secondly there was as always, a Google search change. Well, we slipped a stitch on a couple of initiatives. And we’ve gotten them straightened out. But that was -- I’d say that was a third of the problem. Third of the problem was the Google search change, as it affects everybody. It affected -- it was a little bit different this year than it was in previous years in some respects in who’d help and who’d hurt. But we think we’ve already learned our way out of that. And lastly, I think there’s a real secular, fundamental question mark about the economy. We have all kinds of ways of seeing in terms of shift, what’s going on and we’re looking at competitors’ traffic numbers and such. And it sure looks to us like, while housings remains strong, everything associated with housing remains strong, I think it’s at a really disposable income or -- that are say fashion, high end jewelry and stuff. We’re seeing some quick shifts that suggest were an underlying secular issue in the economy. So, I’m quite bearish in the regard. Slide 4, quarterly -- sorry, next slide, Slide 5. Quarterly gross profit growth grew 8%; contribution growth. Regarding -- Slide 6, contribution growth. Regarding contribution, the changes in the marketing environment, I mentioned earlier, mean that if you had everything optimized for one environment, when that environment shifts, you get caught off guard. And it’s always a question of how quickly you can change. If I could more optimize war [ph] from one environment, the more sort of it catches you out when that environment shifts quickly, as it has been. So, we have -- that’s why you see a contribution growth rate that while still positive, was lower in Q3 of this year than Q3 of last year. We -- but I must say, these gyrations have happened before and it’s really all the matter of who learns quickest about the changes in the unique digital marketing environment and figures out the root of it more quickly than the other folks, and of course, who’s going to lose the kind of capital. You see some of our competitors losing. Slide 7, quarterly gross margin contribution. The tick down in contribution margin to 10.8% is a result from a slight increase in marketing spend. We spent 7.7% marketing in Q3 this year versus 7.2% Q3 last year. We’re working hard on pricing algorithms and have built an expert team with analysts and statisticians and have brought in consulting experts who are working hard on our pricing models. Again, this is going to be continual ongoing learning experience. But we think we have a long we can optimize in pricing control. Slide 8, technology and G&A. We have been able to leverage our G&A. And so, our G&A expense is flattish in the three quarters of this year. Technology expenses are growing appropriately, given our continual improvement processes. And so, for Q3, the combined G&A and tech expenses are growing at 11.7%. [Ph] That’s obviously not sustainable with the sales only growing -- dropping to 11%. What is our expense control is really -- it’s one thing that we’ve managed over the years, mastered. I mean we set budgets for ourselves and we hit those budgets, and often save a lot of money on those budgets, unless I make -- and generally, it’s me when it happens, it’s just a conscious decision. Okay. And no, I budgeted this, but I see some opportunity. To be honest, Medici, like that, for us this year. We only thought, we were going to spend $2 million or $3 million. As the year developed and we see these opportunities, we’ve spent -- we’ll have spent $8 million directly by the end of the year. And I don’t regret a penny of it. So, our expense control is good but when the sales and especially the contribution margin has not coming in as anticipated. That’s where the Medici is. So, I have no qualms or concerns that we’re not going to be able to manage our expenses to whatever growth we’re able to achieve. And in fact we have risen our expenses, that we’ve structured in a certain way to make them easier to manage as of -- to make them easier to manage. Slide 9, operating free cash. We had $45.5 million in operating cash flow in the trailing 12 months. Free cash flow is declined. But remember we’re building a new building to increase the efficiency and productivity of our employees and teams. We have spent a significant percentage of our cash, so far this year, on this building. The good news is that the remaining costs of that building will be financed by approximately $46 million of bank debt. So, the big difference between operating and free cash flows should be somewhat mitigated by that financing going forward. We don’t have to -- we had to put it in our half the money upfront and then once we got the last of our money in, that’s when we started drawing on the banks. And when did we get the last of our money in?

[Robert Hughes:]

That was in September.

[Dr. Patrick Byrne:]

So that’s really the big difference. Slide 10, GAAP inventory turns. GAAP inventory turns, 52; over 1200% GMROI. Unique customers -- Slide 11, unique customers and cost per customer. Unique customers are up bit from last year but so is the cost. I suspect acquisition costs are up across the industry. We have assembled the most serious team by far we’ve ever had on this with fantastic new hires in marketing and analytics with big company experience. I’ve seen the kind of talent walking through our door that we’re getting now. We’ve been looking for this kind of talent but I’ve never had a pipeline of these kinds of people before and that who’ve been starting over the last six weeks or two months and so forth. We -- and a lot of that has to do frankly with our type talent one [ph] who works Stormy Simon. She is [indiscernible], all these fantastic people get a kind herded and say they want to work for her. We also have some terrific people here who are getting librated. And we think that by salting them with this outside talent we’re starting, we have figured out a lot of things ourselves and then people coming from different large companies, well-known companies that they have had their own approaches and it’s really -- it’s a kind of intellectual environment. Okay, let’s go to Slide 12. New customers are flat year-over-year, partially due to that search algorithm challenge, another factor we’ve discussed earlier. Slide 13, unique visitors, slightly up last year but it can constrain by economic conditions and algorithm changes. Average -- Slide 14, average order size, increased every quarter this year and the number of orders is up in Q3, both sequentially as well as year-over-year. So, we have this wonderful 180 guys. I remember when it was double-digit, our average order size, up to 183. A lot of that is mixed shift change over the years. Slide 15, gross profit per transaction quite even with last year. Slide 16, up again from last year but at a lower rates than revenue growth. Employee count rose 7.5% year-over-year. And remember that includes that we have whole bunch of -- a couple of dozen people are involved directly in the Medici efforts. So, I think what we’re going year-to-date, 14%, 15% year-to-date and our headcount is up 7.5% and even some of that 7.5% has to do with really we’re standing up a new and unrelated business. So, we’re keeping our headcount inline and keeping at the lesser than growth. [Ph] Slide 17, loyalty -- key initiatives. Loyalty expanded to -- this is good time to talk about key innovations we’re bringing to the market and their effect on our business. Our loyalty program, we launched this quarter, our Club O Silver. We took 19 million people who were on our email address list and we moved them into Club O Silver, this new program. It’s Club O, but instead of paying $20 and getting 5%, it’s free and you get 2%. You start getting a minimum 2% back on every purchase. And we now have 19 million members in it. Where we have a some learning to do is we’ve gotten pretty good at using coupons, discount coupons to cause activity among those 19 million people when they received our emails. We’d like them to start using reward coupons, but there is a migration path from getting them to use the email -- the discount coupons to getting them to use reward coupons. And our experience has been that it’s kind of a 60-day picky. Now, when you make that transition and you start getting people off the discount coupons, on the rewards, we’re discovering as for about 60 days, it hurts you. And then so by day 60, you should be breakeven and then going forward. Turns out even to be -- what we’ve learned ,more complicated than that -- more complicated than that. But this is a focus now for our marketing team and our new -- our marketing. We’ve got a seller, Saum Noursalehi, who’s been here forever. He’s actually a developer by background but he’s stepped up at a pinch he’s run -- he’s been our CMO on a number of occasions. But we want to get -- and he’s also a great innovator. And I want to get him back to being our Chief Growth Officer, really working with me. And we have a wonderful new hire with our [indiscernible], a women who’s come into to assume marketing roles, leadership in time. I think she’s quite close it now. So, we really do have to manage better this Club O Silver, the testing of how to make people respond to reward emails like we have years of experience getting them to respond to discount coupons, and are using rewards and so on and so forth. But there’s going to be some learning involved in that, some learning costs. Our Club O Gold has already become a very significant part of our business and it’s growing quickly. Club O Sliver is just a new free layer. It’s not only the question that you’ll see it introduced even higher and layer sometime you see right around $50 price point. Medici

[Robert Hughes:]

Fourth round of comments, we’re about to go five.

[Dr. Patrick Byrne:]

Yes, we just got our fourth round of comments now, last week; and we will be submitting our four fifth reply tomorrow or whatever. It’s causing, but the SEC has been notwithstanding our long history, has been amicable and professional partner to work through this with. I do feel we’re starting to get asked questions, they don’t have much to do with our registration statement. But we’re being super cooperative with all regulators and are sitting down with them, when they [indiscernible] the same back from Washington on one such script, we sit down and explain open book. I mean open book policy with as we said, so they can understand this. If I know it is going to be sea change in the capital markets? So far the relationship has been productive; I hope it stays that way. I mentioned the five patent applications for technologies surrounding an innovative way to bring transparency into the world of securities lending, the issuance we call short-term. And you who are familiar with the company’s history, may know that I took a special interest in this subject of stock locates in securities lending. I think that there is -- it’s an -- in the process of learning about it, I realized that it’s truly the last great opaque market on Wall Street that’s right for disruption. I think it’s -- there is a little security on Wall Street. How much money they make on securities lending. I think we have a better mousetrap and we have institutions lined up on both sides to use it, both hedge funds and beneficial owners. So you may be seeing that launch within -- we did do on a test basis, we did $110 million -- for token and we’re going to -- you may even see that -- it’s at a point we can turn it on. We can turn on tonight for the whole world. There is times of final crossing of Ps dotting of Is as far as legal matters before we expose that to the world. But it’s ready to go. So, human capital, I don’t want to miss this. I made a -- we’ve had -- we’ve never had the kinds of -- we have terrific human capital here and systems to develop human capital. And each row system that let us cooperate with each other online and such. But it’s always beneficial to get some outside thinking it. And we’ve really developed a stream of really qualified, high-end -- Mitch here being an example. Mitch is the guy who built Skullcandy or he would see it’s all supervision, at Skullcandy is how I would put it. He might be more modest, but Mitch built this $2.5 billion company, as General Counsel and CFO. And Mitch was also similar positions at BitTorrent.

[Mitch Edwards:]

BitTorrent.

[Dr. Patrick Byrne:]

Anything else?

[Mitch Edwards:]

Razer Inc. in Singapore.

[Dr. Patrick Byrne:]

Yes. So, Mitch has built some pretty cool companies. And why don’t you want to shed light.

[Mitch Edwards:]

That’s enough.

[Dr. Patrick Byrne:]

Mitch is serious player and has come as our General Counsel but can spread his wings and have lots more positive contribution for us, be soft beyond that. That’s a big different trust, the real -- the difference in the systems we have to develop human talent and the fact that we now have an inflow extremely talented and experienced people. The cause of this really is Stormy Simon. She’s made ways in the industry. And what is happening is that strong entrepreneurial people in e-commerce especially women are applying to work for us. She goes out to these [indiscernible] where she’s become a legend and she gives thoughts and she comes back with resonations and all kinds of very powerful women in other companies, who feel made that they hit glass ceilings. And they’re applying to us. So, we’re getting this terrific talent from women and also men who to get to know Stormy and want to come, work here. Okay, that’s the -- now I would want to just check my notes, is there any thoughts to say. No. Let’s leave the call open to questions. We’ll go with -- there’s a number of people who want to ask questions. So, let’s limit it to two questions per person. And then -- Mitch, somebody emailed in a couple of questions. Would you start with that?

[Mitch Edwards:]

Absolutely.

[Dr. Patrick Byrne:]

Then we’ll go to two questions per person, so we can get through everybody and go round arm.

[Mitch Edwards:]

Patrick, thank you. Two questions have been emailed in and then we have several that are on the line. The ones emailed in, first one from Sam Park, [ph] a shareholder. Could you comment on your mote for the tØ platform; how can you prevent another firm from doing what you’re trying to accomplish better than Overstocks?

[Dr. Patrick Byrne:]

Well, there’s a few motes, one is of course patents. When we do patents, those are good motes. Secondly, it’s turning out to be the case of the launching. All these people making announcements. I got to tell you from our experience, a lot of the announcements in this field is vaporware, just absolute vaporware. Some folks who are making announcements, don’t even have technologists yet and what they’re learning is it’s really hard to get the higher technologists in this field. Utah has for some reason in the last year become known as a bit of a microcenter in this field, maybe it has to do with us taking Bitcoin. We’ve had all kinds of crypto talent applied to us. And we’re building out -- we have built out a very strong tech team in this area and that itself is quite unusual. Signing some of these other companies. And I mean their real -- some of that is getting the talent to do this kind of work technologically. And we have it. In fact we’re growing that team nicely. It’s just I want to probably go to two to three times its current size, just because I think that the team itself has such intrinsic value. So that’s another mote. And I’d say another mote is we have very -- 0between us and our experience in the famous lawsuit, which really all regard to microstructure and the settlement system of Wall Street. And contacts we made 10 years go in the course of that lawsuit. It was not -- basically we got a bunch of those kinds of folks who really understand the microstructure of the market, together with the bunch of our crypto technologists, our development leaders, lawyers, loaded everybody up to the hill to the -- and let them start learning things. And that started over a year ago. And so that’s a pretty -- it was a pretty odd confluence of ingredients here, while other people shambling around, trying to get money, so they can then go and hire the right technologists and things like that and find the right projects to work on, we have a number of business models that are just rolled right out as if you apply this technology to Wall Street -- there is processes on Wall Street. And we didn’t pick the most obvious ones which were really payment systems. We knew that the banks were going to go for payment systems and we had some good sort of good -- a little birdy with strings [ph] in my ear, and that’s what the banks want. But that’s what we stayed away from. That’s the big obvious one is going to save tens of millions of dollars for the financial industry but we want to [Audio Gap] other areas. And so I think we have a nice head start. We have some patents; we have a team; we have funding. So, those are the mote. But ultimately it’s going to come back to how quickly do we innovate and learn versus the other folks.

[Mitch Edwards:]

Another question from Mike Arnold, a shareholder. What sort of IP protection do we have tØ.com? And related to that, do we have patents covering software code to trade securities peer-to-peer? If so, is your plan to outlicense the technology to the brokerage industry or our are we more focused on keeping it for priority and going to market solo?

[Dr. Patrick Byrne:]

Well, the IP protection -- first of all is the patents. And we have five provisionals applied for. Now, provisional patents normally plans that you can spit on a piece of paper and submit it and say have a provisional patent. But we’ve got Perkins Coie to do the patent research and year-and-half ago, this was wide open. Year and half ago, I stood, go and look at the speech on the YouTube where I am up in Amsterdam talking on the stage about you can -- this isn’t about Bitcoin, this is about you can change Wall Street and how few people even got it a year and a half ago. Now the whole world gets it, but they’re paying any attention at all for the financial press like everyday there is war announcements about this. But we got there, we got the lawyers together, with crypto people, with small suite guys and we -- so part of it we really have first mover advantage. It’s kind of odd how their story is coming out now in certain respect in journals which go away out of their way not to mention us. We war the unquestioned leader in application crypto this financial technology. We got there first; we have this classified board; everybody knows us; we’ve built systems; we’ve launched systems; we’ve done a private crypto security. We are ready to do a public crypto security where negotiations with all kinds of major -- people on Wall Street who are lightning in, go and pick. And it’s going be like -- be like Damien, in the movie -- the old man where he goes to the church and his head spins around on its axis. I thought but actually everybody things super-gracious and they understand. We seem to be on the same side. There is a whole new generation of leadership in some of these institutions. We all seem to be understanding this side. They power understand the power of this technology to disrupt the world and they don’t’ want you disrupt it and they actually see the value of it and so forth. So, these are different the motes and approaches we’re taking. As far as licensing, absolutely we want to license it. We are not about creating monopoly. We want to breakup monopolies. This is about we’re doing God’s work here with this crypto set. We designed it; we built it, we want to license it to people who are going to use. This is absolutely not about trying to create an alternative to this system and force adoption but it is to license throughout the system and we have had unbelievable meetings and conversations with the most high level people you can imagine across all Wall Street, major institutions who want to be part of it.

[Mitch Edwards:]

Okay. Another question emailed in from Eric Burnside, an investor with Acme Capital. What are the biggest challenges management is facing in operating the business, including instant tech ventures?

[Dr. Patrick Byrne:]

Let me just start with the main business, what we used to call our core business, but core means something else internally now. Just the retail business, we did conduct a long strategic review and we found two real levers that we can pull that we can pull over the next four months. One of them starting a couple of weeks and it will four months; and one of them -- another one will take a few months that I don’t want to describe these as challenges. All I’m going to say is there is a big opportunity in the marketing side and a big opportunity on the change at how we do our sourcing, not going to say specifically what they are because they -- for competitive reasons. But we realized -- we’ve been marking very, very well to certain groups and the population but really missing some groups. And we’ve been revising plans in the last couple of weeks and work with outside parties to figure how to get those groups we’ve been missing. Another internally, I would say the other biggest challenge at this point is competition, competition is really heating up. It’s heating up from brick and mortars. And by the way I think that in general, the Gods of economics think that the most efficient model is brick and click. There are such synergies between having a brick operation and a click because look at how much money we spend on marketing. If somebody is a brick and click, they get all the benefits -- Walmart and Target got -- entering 2005 or ‘06, they got their websites sorted out, were good. And then they just started putting around receipt. We visit target.com, visit walmart.com, so with no marketing costs or just hanging some signs in their stores, they start getting traffic and that’s when they exploded bull buyers. So, now I think they’re bigger than they look, a good margin. It’s such efficiency to brick and click. And there is a number of large brick and click mark working clip, IKEA; Bed Bath and Beyond; others, I won’t name who have made clear over the course of this summer that they’re going to be targeting that they missed the first generation of ecommerce but now they’re targeting into it. There’s also some pure plays who’re coming in, who’re getting lofty valuations and lofty amounts of capital put in their pockets. We have a $2 billion business that’s been profitable. I think we’ve been the most consistently profitable pure play etailer around for about five years. This is our first losing quarter in 15 quarters, is it, something like that?

[Robert Hughes:]

Right.

[Dr. Patrick Byrne:]

So, what we could do is $500 million or $200 million to burn like some of our competitors is -- is amazing to me. But we’ve -- so, a third challenge is competition. I’ll put it this way. Third challenge is competition from the brick and mortars who’re going to now be pushing hard into ecommerce. We’ve got really been players before. Fourth form is the competition from the pure plays who’re getting huge funding and huge buckets of cash and who’re going out and spending -- suddenly they’re bidding two or three times what we see as the economically correct price to bid for a term on Google. They’re spending two or three times that. And they’re just throwing money and their shareholders are willing to accept $100 million losses and they’re saying this can be that way for however many years and such. So, that’s the fourth challenge. And I’d say the fifth challenge is the economy. I think the economy -- I don’t ever -- I’ve said this before, I don’t ever think there was a recovery. I think there was a -- we refloated [ph] the bubble and we got to a nothingburger of a couple of percent growth and I’m not even with that because who knows about who’s -- they’re stating inflation and such. So anyway they’ve done the best they could with zero interest rate policy, they got us back to nothing over recovery and even the air is starting to go out of this recovery. There’s been this whole kabuki dance, about well, we’re going to raise -- we’re going to raise interest rates when unemployment gets to 6% and when the sun rises in the west and when this and that happens. Well, this unemployment is 5%; they don’t raise. And the reason is they believe the force participation rate is below as it’s been 40 years and it really can’t. The most are -- our economy is really so fat; so the most they can afford to pay zero. And that affects us as a company. That would be the last challenge I would hit. Thank you. Mr. Burnside.

[Mitch Edwards:]

A question from [indiscernible] from [GDS] Investment. You used to disclose your net promoter score in the earnings presentation. Does it still rank in the retail elites?

[Dr. Patrick Byrne:]

Yes, it does. Our net promoter score is running just where it was or a point or two higher than last year. Yes, I don’t why we stopped. I think we decided our deck has just gotten so fit, but yes our net promoter score, customer satisfaction is up. It’s extraordinary, it’s like 72% last -- last day, I haven’t checked; a few days ago. And we get that score every day, I mean it’s -- I don’t think its -- I’m not -- don’t hold me true if it’s 72% that’s really what it is, as an average, but it runs very high, at least in the 60s and or low 70s. Next question?

[Mitch Edwards:]

Okay. A question from Richard Kreger from Source GRP. Can you comment on the status of the new office building, the headquarters, as well as when you expect it to be complete? Second, can you give some guidance on what improvement of free cash flow should be in the year after completion of the capital expenditures to build the new headquarters?

[Dr. Patrick Byrne:]

Sure. The new headquarters, our goal was to get it all in for under a $100 million. The full cost of building it should be about $98 million, with furniture, with Kitten Caboodle and we’ve gotten back about $10 million of various government incentives. So, you might think of the whole thing is being about a $90 million cost of which we’re putting up half, the bank is putting up half. The economics, just continuing on the economics, in our current headquarters, here we’re spending $5 million. If we resign the lease, we’d be spending $5 million. We have a data center where we’re spending at least $2.5 million. And well for that we got let’s just call it x amount of seat capacity. We will have in the new building, we’ll be spending about -- well we’ll have about a 165% of x capacity for people, we will have the data center right there with everyone. We will have combined these two forces from office at [indiscernible] So, we have people driving back and forth 15 miles a day, now between the two buildings. And we have a $100 million payroll. How much does that inefficiency cost us per year. On an on, if you look at all these efficiencies and you say well the whole thing is going to cost -- the outlay of about $46 million upfront or call it $50 million upfront and then the debt service on $46 million. And what was the debt service on the $46 million Rob, what’s that rate?

[Robert Hughes:]

The interest rate is 4.6%.

[Dr. Patrick Byrne:]

So, we’re talking about reducing an ongoing expenditure of $6 million to $7 million through a expenditure of a fraction of that but having to put $50 million to do it, but again getting all these operational efficiencies and 65% more space. We will be moving in furniture in June and we will be -- sort of tipping at occupancy and moving it ourselves in August of next year. And then once we get through all that transition and of course there is cost associated with the transition, I do expect even assuming no operating efficiencies, yet a couple -- few million dollars a year -- dropping to the bottom -- a couple of million dollars a year just in direct savings. This has been designed for heat from the data center, heats the building in the winter and all this kind of stuff that it’s not frivolous; it may look odd. It may look frivolous to people because it’s a P sign. Well every little piece f of this has been thought out. That P sign is under the approach task of the main runway to Salt Lake City International Airport which is a hub for delta which -- and 22 million people a year land on that flight pad. And they’re going to look at the right wing and see there is iconic building that’s posed P sign and a giant O at 500 feet beneath them. I think that has some value. So, it’s clearly going to be a money saver for us even before we get through efficiency, it’s going to be great branding of assets; it’s going to be great for the morale, and even the fact that it will make it that easier for us to recruit people and retain people because it’s going to be as Fortune Magazine wrote a story just a week where they quoted me I think as saying we’re the happiest place to work. It’s going to be just a great building. So, just a moment. Okay, what part of that question from -- Mr. Kreger, thanks. What part of that question I missed, the new building when we’re moving in, the economics of it?

[Mitch Edwards:]

And cash flow.

[Dr. Patrick Byrne:]

Rob?

[Robert Hughes:]

Other than we did in our last conference call, we had even more information about the new building, those slides are still out there on our Investor Relations website.

[Dr. Patrick Byrne:]

David Kanen, Aegis Capital. We will refer to next any more questions.

[Mitch Edwards:]

Are there -- it looks like those are the email questions.

[Dr. Patrick Byrne:]

Okay. Well, thank you. I am sorry, we broke our 14 or 15 quarter winning streak on this. On this quarter, we spent -- also one other thing I’d add. Our new General Counsel may get hard over this. Our lawsuit I think is we’re going to for a low 9 digit number. I think it’s moving trial in March and I think they owe you $100 million. And that’s what our damage model supports, 100 or 100 something plus or minus a few giblets and we have a great case. And I think they’re shaking in their boots. We have them dead to rights. There is a story coming out, maybe within hours because I happen to know that because somebody has been fast chatting with me and another story. There is a couple of stories in the work that I hope hit over the next weeks or maybe the days that will maybe make it somewhat more explicable why I have been on the warpath I’ve been on for 10 years. There are some people who will try to destroy this business specially went to extraordinary length to destroy this business 10 years ago and you will be reading all about it quite shortly. And they owe us money, they owe us a nine digit number, they owe us a nine digit number. And now when those stories hit -- the stories are out, will be -- the trial’s now scheduled for mid-March. We fought 10 years; we’ve gotten more few months away. And I think that -- well, I just can’t predict what we’re going to win, but we are -- our case is for a nine digit number and it’s worth fighting on. Mitch, how about you all, you take over from there.

[Mitch Edwards:]

Well, hard to comment on ongoing litigation other than we believe we have a great case, it’s great law firm; we’ve been preparing for it. And we will see in the next months how that all turns out but it could be very favorable to us. Yes.

[Dr. Patrick Byrne:]

Anything else?

[Mitch Edwards:]

No.

[Dr. Patrick Byrne:]

To come before this I got dotty. Well, thank you very much. Thank you for your face and look forward to talking to you in probably early February. Bye-bye. Stormy, would you like to add anything.

[Stormy Simon:]

No.

[Dr. Patrick Byrne:]

I guess not. Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.