Claire McAdams - Investor Relations Counsel Wendell Blonigan - President and CEO Charlie Eddy - Interim Chief Financial Officer.

Brett Piira - B. Riley and Company Mark Miller - Noble Financial Capital Markets Rich Kugele - Needham & Company Nihal Ozgurel - Maxim Group.

Good day. And welcome to Intevac's Third Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) Please note that this call is being recorded today, October 27, 2014.

At this time, I’d like to turn the call over to Claire McAdams, Intevac's Investor Relations Counsel. Please go ahead..

Thank you, and good afternoon, everyone. Thank you for joining us today to discuss Intevac's financial results for the third quarter of 2014, which ended on September 27. In addition to outlining the company's financial results, we will provide guidance for the fourth quarter and full year 2014.

Joining me on today's call are Wendell Blonigan, President and Chief Executive Officer; and Charlie Eddy, Interim Chief Financial Officer. Wendell will start with an update on our businesses and then Charlie will review third quarter results and provide guidance for Q4 and the full year before turning the call over to Q&A.

I'd like to remind everyone that today's conference call contains certain forward-looking statements, including, but not limited to, statements regarding financial results for the company's most recently completed fiscal quarter, which remains subject to adjustment in connection with the preparation of our Form 10-Q, as well as comments regarding future events and projections about the future financial performance of Intevac.

These forward-looking statements are based upon our current expectations, and actual results could differ materially as a result of various risks and uncertainties relating to these comments and other risk factors discussed in documents filed by us with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

The contents of this October 27 call include time-sensitive forward-looking statements that represent our projections as of today. We undertake no obligation to update these forward-looking statements made during this conference call. I will now turn the call over to Wendell..

Thanks, Claire. To begin with, I would like to thank all of our employees for their hard work and dedication in executing the quarter. Our thin film equipment group did an excellent job getting our two new PVD systems shipped and installed.

The team worked around the clock is needed to meet the needs of our customers in both the mobile display and solar industries. Additionally, as we did last quarter, our Photonics team delivered another record quarter in revenue and operating profit.

This achievement was largely due to the outstanding results in volume production yields of the Apache night vision camera, both teams did a fantastic job. On the call today, I will start with an update on our thin film equipment business followed by Photonics.

Our thin film equipment business includes the world’s leading platform for manufacturing hard drive media, as well as innovative high productivity thin film deposition systems for the vacuum coating industry.

In the hard drive industry, we are seeing improving fundamentals for media unit growth, which is the primary driver in our HDD thin film equipment business. The weakness in the PC market we witness over the last three years appears to have diminished.

The third quarter hard drive units exceeded expectation and were at their highest levels in over two years. Current forecast for the balance of the calendar year indicated return to growth in annual media shipments for the first time since 2010. These improving fundamentals are long-term positives for our thin-film business.

That being said, media production capacity still exceeds demand which limits the near-term demand for our systems. The primary driver of long-term demand for our HDD tools is growth in storage measured in exabytes. Projected growth in exabyte demand has fallen short of the industry's expectation going into this year.

Instead of 30% to 35% growth rate forecast for ‘24, it is now being forecast in the 15% to 20% range. Forecast for the next several years are for higher exabyte growth rates in 2015 and ‘16, an acceleration of those growth rates beginning in 2017.

Behind these growth projections is the expectation that the fast growing demand for cloud-based storage will continue to accelerate and grow to a level where it is dominant user of storage and become a major driver of total exabyte demand.

As a result of the most recent industry forecast, the supply-demand crossover point for media units has pushed from late 2015 into sometime in 2016. Once we absorbed existing capacity, the accelerating rate of exabyte growth should lead to increasing level of demand for capacity tools.

We still expect the tool demand to be within the ranges we’ve discussed previously albeit later year. In the meantime, R&D tool sales service and upgrades are drivers for cash flow in profits, pending the return of capacity buys in our HDD business.

In the third quarter, our customers reduced their capital budgets for tool upgrades, which has impacted our outlook for the current year.

We continue to collaborate closely with our customers to support their product roadmaps, offering upgrade products to improve their yields and ensure their install bases ready for technology inflection such as heat-assisted recording.

We are also positioning ourselves for future market share gains, leveraging our technology leadership, the industry shortest lead times and lowest cost of ownership.

While we look forward to recovery in our hard drive business, we are busy driving revenue growth opportunities by leveraging our core capabilities and technology into new thin-film deposition applications. Our traction today is meaningful. As I've spoken to previously, all our allocation of R&D capital is managed through a phase gate process.

A fundamental gate in this process is commercial engagement with technology leading tier 1 customers. Additionally we set hurdles for our continued investment based on our customers’ commitment to our development efforts and judged forecasted demand for our systems.

With three of our new equipment growth programs, we have passed the important gates focused around customer engagement and see the potential for significant revenue with positive returns on investment.

In the mobile display covered glass protection application, our first PVD tool has been installed and is now depositing protective carbon coatings in pilot production. Volume production by this tier 1 customer would require several additional systems. This system is driving a new end market application which if adopted could be a large growth driver.

Although at this stage, it is difficult to scope the opportunity with any amount of accuracy. If one-half of the projected market growth in cell phones and tablet cover glass would adopt this protective coating, over the next five years, the TAM for deposition tools could exceed $300 million.

Given that we have leveraged our thin-film coating technology from our HDD product line, we expect to recover our invested capital for this opportunity by achieving success with our first customer. Our first Intevac MATRIX PVD system sold for solar cell metallization will be used for the manufacture of next-generation high-efficiency devices.

This tool has been installed and is in the final qualification process. This customer is also a tier 1 company and as they validate their pilot factory, is planned to buildout significant capacity. We estimate our SAM for equipment in this space to be over $100 million over the next five year.

If we achieved success with his initial customer, we will recover our total investment on the matrix which is a versatile platform leveragable into additional thin-film application. In regards to our technology developed for ion implant doping of solar cells.

We significantly reduced our spending and have put gates and milestones around continued investments at the beginning of this year. In the third quarter, our ion implant technology passed escapes specifically around customer engagement.

We have entered into a joint technology development program with the Tier 1 solar company to implement our technical solutions into their next-generation solar cell architecture. This joint technology development approach allows us to offset our investments as we retire technical program risks.

If successful, we estimate the SAM for this niche application to be around $50 million over the next several years, with the complete payback of our ongoing investment in this initiative in the first factory build.

In all, we are making good progress in our equipment growth strategy, and our commitment to disciplined capital allocation provides a path to positive return on investment for each of our current initiatives. Turning now to photonics, which delivered yet another record quarter in Q3.

This business has achieved sequential revenue growth for four straight quarters now, with Q3 sales volumes 55% higher than the same period last year. This revenue growth is largely attributed to the well executed production and delivery ramp for our Apache program, where we are prime contractor providing digital night vision cameras to the U.S.

Army helicopters. We also achieved operating profitability of 27%, which is another record and well above our long-term model, which is to operate photonics in the 15% profitability range as a supplier to the U.S. government.

Strong revenue growth and faster than planned ramp to yield on both ISIE11 sensors and cameras assemblies enabled significantly better than model performance this year. This is a testament to exceptional work done by the operations’ team is a transition to volume production.

We expect photonics revenue growth of at least 30% in 2014 and photonics will also, for the first time be the largest contributor to our company's revenues. The Apache program has transitioned from ramp to full rate production. At the same time, our program with our NATO partners is winding down.

We expect revenues to continue to be strong but not exceeding the Q3 level until additional development programs like the Joint Strike Fighter camera begin to transition into full production programs.

We believe that our continued outstanding performance with the Apache program will facilitate success in an additional digital night vision programs, and that feedback from the pilots of Apache helicopters using our cameras will validate our differentiated solutions cross the user community.

We recently received our next limited production order for ISIE11 camera assemblies for integration into the F-35 Joint Strike Fighter helmets. While only in the initial stages of the F-35 program, the five year SAM for this project is approximately $20 million with programs scaling in volumes at the end of that period.

And this program continues for many years to follow. Our funded development program for the digitally fused goggles completed in the quarter and we have received important feedback from the user community as well as excellent performance evaluations.

We continue to drive multiple goggle programs, leveraging off our progress to date and are funding these programs with the mix of substantial outside development funding from our customers to augment our internal capital locations.

In total, we are increasingly being recognized as a critical source provider of digital night vision technology, with an opportunity pipeline of $350 million over the life of the programs and which we are currently engaged. In summary, strengthening fundamentals in the hard drive industry are long-term positive for our media business.

We believe that forecasted HDD media capacity crossover point has pushed into 2016, but system needs are in the range of what has been projected over the next five years. We are monitoring the performance of the industry versus the forecast and managing the business accordingly.

In growing our equipment business, we have achieved meaningful progress in our strategy to penetrate new thin-film vacuum deposition applications, the potential for which should not be overlooked.

In our Photonics business, we are achieving better than 30% annual growth in 2014, is a major contributor to the company's revenue and is operating with outstanding profitability.

We will continue to leverage our success on the Apache program into additional military applications, extending our sole-source position in digital night vision technology to capture the program opportunity pipelines in front of us.

We continued to manage the company dynamically and are focused on continuous improvement in our performance in these diverse markets we serve. Each area of organic development continues to be managed through a phase gate process to align investment levels with anticipated returns.

Comparing 2013 to the current year, we have cut approximately $10 million in equipment operating expenses related to HDD and implant. We directed half of this amount into the development of the Intevac MATRIX platform and we will recognize the other half as an overall reduction to our expense levels.

Since our Q2 call, we have reduced our outlook for the fiscal year. As I discussed earlier, reduction in our upgrades business was unexpected and materialize during the third quarter, moving us off to high end of the 2014 guidance.

Additionally, we no longer expect to recognize revenue in Q4 on two systems as originally planned, a 200 Lean and a MATRIX PVD tool. We expected the 200 Lean order any day now, but the order will not be in-time to ship this year.

The MATRIX PVD system for solar shipped and installed, but this customer is experiencing delays not tied to our tools performance, making it unlikely they will have time to execute through the sign-up process this year.

Without the push-out in revenue for these two systems just mentioned, we would have been new to midpoint of our previous revenue guidance for the year.

All of the efforts we’ve discussed today are focused on driving revenue growth, positioning the company for return to profitability and deploying capital in the best long-term interest of our shareholders.

Before turning the call over to Charlie, I would like to express my appreciation for his taking a break from his retirement to step in as interim CFO. Our CFO search continues to progress well and we expect to name a CFO in the next few weeks.

I will now turn the call over to Charlie to discuss our third quarter results and provide guidance for the remainder of 2014..

Thank you, Wendell. It’s been a great pleasure returning to Intevac on an interim basis and supporting you and the Intevac team. First quarter revenue totaled $14.8 million, which was slightly above the top end of our guidance range due to better than expected results for Photonics.

Equipment revenue totaled $3.4 million and did not include any systems. Photonics revenue of $11.4 million included $2.5 million of contract R&D and product sales of $8.9 million. Shipments of NightVista cameras for Apache helicopters and LIVAR target ID cameras for fixed wing aircraft were the largest contributors to Photonics product revenue.

Consolidated gross margin was 32.6% towards the upper end of our guidance range. Photonics gross margin was 45%, slightly up from the second quarter and significantly up from Q3 of last year and above long-term expectations for this business.

The high gross margin in Q3 was due to excellent yields on our sensor-based products and a richer mix of product shipments versus lower margin contract development.

Equipment gross margin was a negative 9.5%, down from the second quarter of this year and the third quarter of last year, due primarily to unabsorbed factory overhead and to a lesser extent inventory reserves.

Q3 operating expense was $8.9 million, down from the second quarter and lower than our guidance due to good expense control across all our operating units and subsuming a greater than expected portion of our Photonics engineering resources into revenue related activities rather than spending them on internal research and development.

We also benefited from $78,000 acquisition related credit on an implant product line. Our Q3 net loss was $3.6 million or $0.15 per share, significantly better than our guidance of $0.20 to $0.23 loss per share. Our backlog was $44 million at quarter end.

Equipment backlog of $13 million included one 200 Lean and the two new thin-film systems, which are currently undergoing factory acceptance testing. Backlog in our Photonics business was $31 million. We ended the quarter with total cash and investments of $72 million equivalent to $3.07 per share.

Since the beginning of 2014, exclusive of the stock buyback, we’ve consumed $2 million in cash. Late last year our Board approved the repurchase of up to $30 million of Intevac stock. During the third quarter, we bought back 868,000 shares with $6 million at an average price of $6.89 per share.

Since the end of Q3, we have purchase an additional 121,000 shares for $812,000. This brings the total buyback since the launch of the program to 1.4 million shares for $10 million at an average price of $6.97 a share. Capital expenditures during the quarter were $60,000 and depreciation and amortization were $1.2 million.

Now moving on to our expected Q4 financial results. We are projecting Q4 revenues of $18.5 million to $21.5 million. The high-end of the range includes a 200 Lean and the new display cover glass system Wendell discussed earlier. The system has been installed and is running well and producing product in the pilot line environment.

As soon as our customer completes their acceptance test, the timing of which is not fully in our control, we expect the system to be accepted. Accordingly, this system has been excluded from the low end of our guidance. Fourth quarter gross margin is expected to be between 29% and 32%.

The paucity of higher margin technology upgrade sales and equipment, the slip of two systems out of the quarter, a lesser mix of photonics higher-margin products and underutilization in factory capacity are all impacting these expected gross margins in Q4. Q4 OpEx is expected to be between $8.3 million and $8.6 million.

Q4 depreciation and amortization are expected to be $1.4 million and fixed asset adds are expected to be approximately $1.05 million. Fourth quarter operating loss is expected to be between $1.8 million and $2.9 million, which equates to a loss in the range of $0.07 to $0.12 per share.

Consistent with the Q4 guidance, we expect Q4 full year results as follows. We expect revenues of $65 million to $68 million. This is down from our previous guidance of $73 million to $78 million. The reductions in the high-end of the ranges are the two system push outs, Wendell described earlier, as well as lower-than-expected upgrade revenues.

We expect photonics revenues in the range of $40 million to $41.5 million. We expect full year gross margin of 31% to 32% versus our prior guidance of 34.5%. This reduction is due to the lower volume of upgrades, too fewer systems and low factory utilization, partly offset by higher margins in the photonics.

We expect full year operating expense of $37.2 million to $37.5 million versus our prior guidance of $39 million. Full year depreciation and amortization are expected to be approximately $4.9 million and capital spending is expected to be no more than $4 million. We expect a tax rate of 4% based on a small tax benefit in Singapore.

We expect an operating loss of $15.8 million to $17 million versus our prior guidance of $11 million to $13.5 million and a net loss of $0.63 to $0.67 per share, as compared to our prior guidance of a loss of $0.45 to $0.54 a share.

We expect an operating cash burn of less than $6 million, which includes a $1 million for the proxy contest and is consistent with our prior guidance. This completes the formal part of our presentation. Operator, we’re now ready for questions..

Thank you. (Operator Instructions) The first question is from Brett Piira of B. Riley and Company. Your line is open..

Thanks for taking my question.

Maybe on the Photonic side, given some of your commentary around the 3Q kind of peaking revenues until other programs kick in, care to help us out with any growth expectations in the calendar '15?.

Well, we will talk about '15 guidance on our next call. I think the message that we’re putting out is we had just an outstanding quarter and unpreceded growth through the 2014 timeframe. We have additional programs that we’re working on. But as we said in the script, the Q3 in the near-term looks like a peak number..

Okay. That’s fair. And then maybe moving onto the HDD side. Just around your expectations kind of pushed out into calendar '16. Also that’s kind of when your top customers is talking about HAMR coming into production, give or take around there.

So what are your expectations around that side and how is that influencing your projections?.

We will talk about the capacity crossover. I think that as we moved, we came into 2014, there was pretty high expectations on what that growth rate look like going through '14. As we move through the first two quarters, it became pretty clear that it was going to be really tough to meet those expectations.

We certainly are seeing much better numbers rolling in this quarter and the forecast that we’re seeing in the last calendar quarter of this year. That’s putting the growth rates as I said probably -- I said 15 to 20, look at some of the numbers today, it might be a little bit better than that. We will have to wait to see all the numbers run out.

But as we fill in our projection curves that we started in '14 with the real data, the slope of the curve makes it look quite doubtful that we could hit that 2015 crossover point.

So as we draw that curve and we continue to update it with the hard data coming in, it’s '16 and exactly wherein '16, we just need to wait and see the numbers to see how that’ll play out. So that’s our commentary on that.

On the HAMR transition, I think we let certainly our customers talk to that timing and when it rolls out and how many products lines it rolls out on, and -- but we will say that we have been working in this space. We have solutions to upgrade our tool such for that and we look forward to that transition..

Okay, great. And maybe I will squeeze one more in here and get back in the queue. Just on the new upgrade programs, you kind of mentioned that they have kind of been pushed out there a little.

Are we still looking at the same type of $100 million pipeline? Or just can you update us on expectations when that should get back to a normalized kind of service, spares and upgrades revenue?.

Yeah. As we said in the prepared material in the quarter, there was an unexpected reduction in the forecasted work that we’re going to do coming in. We look at our upgrade pipeline. And to finish answering your question right upfront, yeah, we still see those same set of upgrades that we've been working on.

You can kind of bucket them in yield enhancement activity which we continue to work on qualifying a significant upgrade solution to improve yield as well as to interface some new factory concepts. It can also help improve the yields. Then we look at the upgrade set for HAMR.

And again, we’ve just talked about that what the timing of that is, but we certainly are seeing more positive discussions on the introduction of HAMR. Recently then, we’ve maybe a year ago. So, that's still there. And then we look at different products, different film stacks and film enhancements in putting additional chambers onto our existing tools.

So we all see -- we see that all still there, although we do see a pause here at the end of '14 as far as what was forecasted. We’re still doing work but not at the volume that we had anticipated..

Great. Thanks for the color. Congrats guys..

Thank you. And the next question is from Mark Miller of Noble Financial Capital Markets. Your line is open..

Good afternoon..

Hi, Mark..

I was wondering in some of your modeling for the crossover which you pushed up, what are you assuming in terms of TAM growth if anything after 2015?.

Well, we are looking at the data that’s been put out there publicly and clearly one of our large customers is Seagate. What we are trying to communicate is that we’re seeing a positive move to media growth this year. The forecast for the ‘15, ‘16 time frame is improved growth over the ‘14 growth rate.

And then an acceleration of the growth rate as we move 2017, 2018 as far as media shipments and that’s consistent with what -- what our customers and so the analyst has been saying. When we look at what -- how that equates to systems for us, it’s still right in the range that we have been talking about.

But we’ve added 2018 into the forecasting time window now that we’re all almost through ‘14..

The NAND flash producers are having all sorts of problems as our FinFET manufactures, logic manufacturers. In fact some of the FinFET manufactures are now expanding, going back to their old node. And the NAND Flash, the three NAND flashes, they are struggling a great deal bringing that product to line.

Most people feel its pushed up one perhaps two years or longer? I m just wondering any thoughts if this continues to get pushed out, what does that mean in terms of -- have you factored any event thinking into what that could imply if they cannot reduce cost.

What that could mean for answer of TAM growth that it drives -- drives stocks?.

Typically when we look at our forecast and we are looking what’s being forecasted on spinning drives. So if we look and if we believe that there are difficulties or timing delays in 3D, that’s pushing out. I think that only looks positive, sort of, the spinning drive market near term..

Stepping over to your solar business, has there been any repercussions over the recent decline in all prices.

Was there any feedback from your customers about this or are there still eagerly interested in your products or has there been some cautionary signals given?.

I think it really depends on the application. Clearly, we’ve entered into -- it’s a very important agreement for us to work on the technology in some new architectures.

I would say, in general, the interest in the implant still revolves in the areas of the higher efficiency cell architectures, some of the HIT, the places where you’d use spotted metal versus a screen print application. I think when we talked in Q2, there was some tariff activity going on.

We’ve seen some declines in factory utilization come after that. I think it’s all come pretty much backup. So I think its pretty much the same environment as the last time we talked in Q2..

And final question and then I’ll jump back in the queue. First, in your competitors the name plane error just announced in the first quarter.

I was wondering if you competed for that order? And if you did, what was the criteria that determine your competitor taking the price there?.

I would have to talk to the guys on the implant side to see about what that opportunity was but I am not aware of any particular implant opportunity that we were actively engaged with that was lost..

Thank you..

Okay..

Thank you. The next question is from Rich Kugele of Needham & Company. Your line is open..

Thank You. Good afternoon..

Hi, Rich..

Good to hear your voice again, Charlie, if you will..

Thanks..

So a couple of questions, I guess, first the low end of guidance, just a clarification there.

Does that assume the Lean or not?.

It does include the lean..

It does include the lean.

So that should get recognized and I think the question is really the matrix one?.

Yeah. Keep in mind, there are two leans. There’s the one that shipping in Q4 and there’s the one that we imminently expect to get an order from the ship next year..

Okay.

So if you would do the low end then the range we should probably assume that in Q1, you’ll get both the Lean and the Matrix recognized?.

I think right now that’s a fair assumption, yeah..

Okay. And then I can understand the drive industry not going in ordering new capacity at this point. But I am a little bit surprised by your commentary around the supplies and spares and upgrades.

Are they just running their systems a little harder, have they changed something in their own process, can you just give any color there?.

I think that’s probably the question for our customers. Certainly what we’ve seen is that we had forecast business rolling through and there was, I think, after the drive companies went through their fiscal year end and re-budgeted. There was a change in some of the capital then that was being allocated.

How that plays out? Well, we have to see as we go through the year..

Should we assume that the equipment gross margin will also be negative in Q4?.

No..

Okay. All right. Thank you very much..

Thanks, Rich..

Thank you. (Operator Instructions) And our next question is from Nihal Ozgurel, Maxim Group. Your line is open..

Yeah. Thank you for taking my question. Few questions actually.

So on the equipment COGS, cost of goods sold, that was actually up $0.3 million Q-over-Q? Can you explain why that was given that the revenue was actually down Q-over-Q? And perhaps, do explain why you expect the gross margin go back to positive as well?.

Well, the -- we had very low volume in equipment this last quarter about $3 million and it just does not support our factory overhead, that resulted in the way we do the accounting about $1 million of unabsorbed overhead.

We also did a little bit in some inventory reserves and so once you get the volume back than the overhead is not such a big percentage of that -- that such a big percentage of revenue, which is why will go back to positive on higher revenue..

Okay.

So the inventory reserve is the reason why the COGS picked up Q-over-Q?.

Well, I wasn’t here last year, so I am not sure what we did this quarter before. It was a much smaller effect than the overhead absorption.

The absorption tends to carryover from quarter-to-quarter until we get that plan for this year?.

Okay. All right. And on the buyback, that looks like that pretty significantly accelerated pace there.

What’s behind that decision to accelerate that pace and do you expect to continue at that pace now that you started?.

We talked to the Board every quarter and decide what we are going to do. It’s opportunistic, to the extent we see all the stock is lower we tend to buy more. If the stock is higher we probably tend to buy less. So we have done that every quarter since we started the plan. We keep evaluating it every quarter.

We keep reporting to you each quarter on what we have done..

Okay.

And then, finally, it seems it’s a pretty heavily aged equipment base out there? I know the focus is on when do we cross the capacity utilization point? But is there an opportunity for that aged equipment pace still need to be replaced rather than just we need to add capacity?.

I think there are some of the equipment that’s out there that’s specifically for certain type of substrate that at some point has the opportunity to be retired.

The machines are just well designed, well-build equipment and we had -- we continue to work on upgrades and spares in replacing mechanical ware components and tell there is a complete shift away from the technology, there is still opportunity for those tools to run..

Okay..

It will generate business for us as it….

Build what? Hello..

Hello..

Hello. I seem to have lost you..

We are still connected..

Okay..

We are still connected..

Yes..

I’m sorry, what did you say, there are still, what?.

The -- just because of the equipment is not going to be completed replace, there are still significant opportunity for us to upgrade the chambers to source technology, add additional functionality to the tools, so they continue to be a revenue source..

Right. Okay. Thank you..

Thank you. And the next question is from Mark Miller of Noble Financial Capital Markets. Your line is open..

I see it has begun to ship [single] (ph) media, I don’t believe Western Digital has announced at least any large amounts.

I’m just wondering how much that’s impacting since it has the higher early density impacting your assumptions? Does that play any role in pushing back the crossover port or is that still relatively small amount, you don’t expect that to be large anytime soon?.

From our look as we build out the models, we think and we believe that the Shingle media is product specific. It’s not something that just occurs one afternoon when you turn everything over to Shingle. It is product based. It rolls out with products. It’s a new technology, needs to be proved out.

So in the near-term and as far as where we see those curves crossing, we assume some small amount of Shingle in there but it’s not dramatically infecting the aerial density movement through that time..

All right. Just want to double -- but thank you. Just wanted to double-check. Your cash consumption this year, is it $2 million? I had a problem with my phone for a while..

$2 million so far..

Yeah..

That’s consumed. Okay. Thank you..

(Operator Instructions) There are no further questions at this time. I will now turn the call back over to Mr. Blonigan for closing remarks..

Thank you. We want to thank you for joining us today and we look forward to updating you in our Q4 call next year until then so long and Go Giants..

This concludes today’s teleconference. You may now disconnect..