American Shared Hospital Services (AMS) Q3 2012 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to the 2012 Third Quarter and First 9 Months Financial Results Conference Call for American Shared Hospital Services. [Operator Instructions] I would now like to turn the call over to Dr. Ernest Bates, Chairman and Chief Executive Officer, Craig Tagawa, Chief Operating and Financial Officer; Norm Houck, Controller of American Shared Hospital Services; and Ernest R Bates, Vice President, Sales and Business Development. Mr. Tagawa, you may begin.

Thank you, operator, and thank you all for joining us for AMS' 2012 Third Quarter and First 9 Months Financial Results Conference Call and Webcast. Please note that various remarks that we may make on this conference call about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K for the year ended December 31, 2011, the quarterly report on Form 10-Q for the quarter ended March 31, 2012, and the quarterly reports on form 10-Q and 10-Qa for the quarter ended June 30, 2012 and the definitive proxy statement for the Annual Meeting of Shareholders held on June 7, 2012. The company assumes no obligation to update the information contained in this conference call. In a major breakthrough for AMS, last month, we announced that we received a firm financing commitment for the MEVION S250 Proton Therapy System AMS will supply for the proton therapy center now under construction at MD Anderson Cancer Center Orlando. MD. Anderson Orlando's new $25 million facility, the first proton center in Central Florida, is expected to begin treating patients by early 2014. The MEVION S250 received 510(k) clearance from the FDA in June. Our receipt of a firm financing commitment for this device is the next important step in AMS' long-term strategy to develop proton projects as rapidly as possible, even as we continue growing our Gamma Knife business. This debt financing is similar to the structure we have used for many years to finance our Gamma Knife projects, minimizing dilution for AMS shareholders. We are very comfortable with the structure that MD Anderson Cancer Center in Orlando will be the model for additional proton centers we are developing. With our first proton center now under construction, we expect AMS' proton therapy business to accelerate. What makes proton therapy so exciting is that it permits more precise radiation dose targeting and predictable tissue depth than conventional x-rays. This makes it possible to treat targets adjacent to critical structures without causing inadvertent damage. In centers here and abroad, proton therapy is proving its value in effectively treating an increasing variety of difficult to treat cancers. What makes the MEVION S250 so exciting is that it combines the elements of this superconducting synchrocyclotron mounted on a gantry with accelerator technology that has been proven to be reliable and simple for the user. The result is a device with significantly reduced cost, size and complexity compared to any other proton device. This advanced technology promises to bring accessibility, affordability and practicality to this innovative therapy. We are pleased to play a critical role in making this exciting cancer therapy available at an affordable price. AMS owns approximately 1% of Mevion Medical Systems, developer of the MEVION S250. In addition to Orlando, we are developing proton therapy centers in Boston and Long Beach, California, which are expected to employ the MEVION device. Mevion Medical has also sold a number of its devices directly to additional centers now under development around the country, so we believe our equity investment in MEVION will turn out to be a valuable asset for AMS and our shareholders. In addition, AMS is developing a 2-room proton therapy center in Dayton, Ohio. Turning now to our Gamma Knife business. Procedures volume increased in the third quarter, primarily a reflection of the upgrade of many of our existing sites to Perfexion specifications and the expansion of our client base and international footprint over the past couple of years. Our newest Perfexion site at Florence Nightingale Hospital Group in Istanbul through our EWRS Turkey subsidiary contributed to this growth. Revenue increased more modestly than procedure volume, due primarily to the mix of procedures by location in the quarter. The continuing headwinds created by the slow economic recovery and its effect on the health care industry overall also constrained our growth in the quarter. We remain bullish about the outlook for our Gamma Knife business. Our existing Perfexion sites are steadily maturing. In the first quarter of 2013, we are scheduled to install Perfexion, a new site, Sacred Heart Health System in Pensacola, Florida. In the second quarter of 2014, we are scheduled to install our 14th Perfexion system at Northern Westchester Hospital in Mt. Kisco, New York. The Gamma Knife we had contracted to provide to Hospital Center FAP in Lima, Peru is expected to begin treating patients early next year. So we have many reasons to believe that growth in our Gamma Knife business may accelerate. This should allow us to take advantage of the operating leverage inherent in our Gamma Knife business model. And we will continue our efforts to bring advanced radiosurgery and radiation therapy devices to additional partner hospitals in this country and around the world. We are pleased by our progress in both our proton therapy business and our Gamma Knife business. We believe we are on the right track for long-term growth and enhanced shareholder value. Now, I'm going to turn the call over to Norm to review our financial results. Norm?

Thanks, Craig. For the 3 months ended September 30, 2012, medical services revenue increased 1.7% to $4,236,000. This compares to medical services revenue for the third quarter of 2011 of $4,164,000. Total revenue for the third quarter of 2011 of $9,148,000 included revenue from equipment sales of $4,984,000. Net income for the third quarter of 2012 was $9,000 or $0.00 per diluted share. This compares to net income of $220,000 or $0.05 per diluted share for the third quarter of 2011. In March 2011, AMS announced a contract to upgrade the Gamma Knife to Perfexion specifications at Lehigh Valley hospital in Allentown, Pennsylvania. As part of the upgrade, AMS agreed to the early termination of the existing 10-year lease on the Gamma Knife system that's supplied to Lehigh in 2004 and Lehigh agreed to purchase the Perfexion system. Pretax income from this transaction of $844,000 was recognized in the third quarter of 2011. The number of procedures performed on Gamma Knife Perfexion systems supplied by AMS increased 16.2% for this year's third quarter and 8% for the first 9 months of 2012, compared to the same periods of 2011. The total number of procedures performed in AMS Gamma Knife business, including Gamma Knife and Gamma Knife Perfexion, increased 5.2% for this year's third quarter and 8.9% for the first 9 months compared to the same periods of 2011. The Perfexion system AMS supplied to Florence Nightingale Hospital Group in Istanbul through our EWRS Turkey subsidiary that began treating patients in May contributed to this growth. As Craig mentioned, revenue increased more slowly than procedure volume, primarily due to the mix of procedures by location in the quarter. Revenue comparisons also were constrained by the termination late in the third quarter of 2011 of the lease on the Gamma Knife system AMS supplied to Lehigh Valley Hospital and the expiration in the second quarter of 2012 of a customer contract at another site. Lehigh's impact our revenue comparisons will disappear beginning in the fourth quarter as we recognize 0 revenue from Lehigh in last year's fourth quarter. Medical services gross margin for this year's third quarter increased to 40%, compared to medical services gross margin of 38.8% for the third quarter of 2011. Selling and administrative expenses for the third quarter of 2012 decreased to $960,000, compared to $1,038,000 for the third quarter of 2011. Operating income for this year's third quarter was $210,000. This compares to operating income for the third quarter of 2011 of $813,000, which included income from the Lehigh transaction mentioned above. For the 9 months ended September 30, 2012, medical services revenue increased $12,923,000, compared to $12,737,000 for the first 9 months of 2011. Including revenue of $4,984,000 from the sale of the Lehigh unit, total revenue for last year's third quarter was $17,721,000. Net income for the first 9 months of 2012 was $33,000 or $0.01 per diluted share, compared to net income for the first 9 months of 2011 of $262,000 or $0.06 per diluted share, which included income from the Lehigh transaction. Cash flow, as measured by earnings before interest taxes, depreciation and amortization or EBITDA, was $2,112,000 for the third quarter and $6,239,000 for the first 9 months of 2012, compared to $2,691,000 for the third quarter and $6,772,000 for the first 9 months of 2011. On the balance sheet at September 30, 2012, cash, cash equivalents and certificates of deposit were $9,716,000 compared to $11,580,000 at December 31, 2011. Shareholders' equity at September 30, 2012 was $25,221,000 or $5.48 per outstanding share. This compares to shareholders' equity at December 31, 2011 of $25,171,000 or $5.46 per outstanding share. Craig?

Thanks, Norm. Now, we'd like to open the call to questions. Operator, we are ready for the first question.

[Operator Instructions] And our first question is from Steven Instanten [ph].

I have a series of questions. And the first one is, I've been a longtime shareholder of the company. I've been following you for over 10 years. There was a time when the company was quite profitable just working with the Gamma Knife centers, and although we've made considerable strides, the company is basically breakeven. What has happened from 5, 6 years ago to the present where we went from being a profitable company to being a breakeven company?

I think some of the contracts that we had earlier were early adopters, and they were some very large institutions where, quite frankly, the margins were higher than they are today. I think with the introduction to Perfexions, we hope to start growing the business, because if you look at what the Gamma Knife treats well and what the largest pool of indications are, it's with metastatic brain tumors, which there are about 180,000 of those diagnosed annually. So we're marketing aggressively to really educate physicians as to some of the benefits of Gamma Knife treatment. I think that's going to take a little bit longer to do, but we're seeing progress in that space already.

This is Dr. Bates, and I agree. The other thing that we have been suffering from in the last 2 years, 3 years, is the economy. A lot of people, having lost their jobs, having lost their insurance -- we don't have as many private pay patients as we have done in the past, but I think that's coming back. And I think it's clear that the Perfexions are such a far superior machine to the regular Gamma Knife that we'll start seeing volumes go up there. And also, I think that our international operations is going to improve dramatically over the next year or so, and that's going to be helpful.

All right. And how big is the company's sales force?

Right now, the 3 corporate executives are doing most of the sales. And the reason is it's a very -- what we do is a very high-level sale, especially with protons. And we're trying to keep our cost down at this point. But essentially, we have -- we work very closely with the Elekta sales force in terms of Gamma Knife leads, so we do get numerous leads from them as well. So although we don't have any direct salespeople employed, we do have people out there assisting us in sales.

And that follows into the next question. With the MEVION S250 system being approved by the FDA, why not increase the sales force?

I think one of the issues is we're -- the hardest part of doing proton therapy projects, and I think you'll see this throughout the industry, is getting the financing structured appropriately so that you can make these very profitable projects. And what we've done with our first one is structured the financing so that we believe it will be very good for American Shared and its shareholders on the going forward basis. We have several more under commitment that we're working to finalize as well as a third project -- there's a 2-room center -- that we're looking to finance. So at this point, we're trying to get those structured and completed so that we can get those online as quickly as possible. But we are looking to potentially add another person if that's what it needs.

In the past, you've mentioned that a PB system can bring in roughly about $6 million in EBITDA; that's an approximate number. A big portion of your expenses appear to be interest in depreciation, which is part of that EBITDA. In terms of -- let's not focus on that, but what do you expect the net profit margins and the expected revenues to be on the PB system looking forward, approximately?

They're going to vary by project. And we've been cautious about giving that type of guidance, mainly because it's a very competitive industry. And at this point, while there is a -- there are a lot of people that are trying to do these transactions, so I think we've been suspect about providing too much detail other than the -- what we believe our share of the EBITDA will be from these transactions.

Okay, that's fair. And then going back to the period around the last conference call. A statement was made that if the stock stays roughly approximately below $3 per share, the company would look to actively buy shares in the open market. Since the approval of the MEVION S250, we've had 73 days where the stock has been below $3 per share. How many shares has the company purchased back on the open market?

We've purchased about 9,000 shares on the open market to back around the end of June or early July, some place in that time period, and none since then.

Okay. Why none since then?

I think what we're trying to do is that during the period where we made the comment, there was a lot of volatility in the stock. Subsequent to that, I think the stock has stabilized and what we're looking at is, like everybody else, the allocation of capital. And should we -- now, that we've got our first proton system with a firm commitment, we want to put everything behind that and all their efforts are going to generate as much cash as possible so we could do more projects as opposed to less projects. And we think, in the long-term, that's a better use of the company's money than buying a few more shares back.

Okay. And there's 3 other PB centers that currently need a firm commitment on financing. Can you offer a probability on getting financing for those 3 centers?

I would say that we're very comfortable that with some of the arrangements that we're working on, that we can get the 3 done. It's never easy, as you can imagine from hearing about some of the other centers, but we believe that the business model that we have put forward is a sound and prudent business model in terms of what lenders look at as risks. The 1- and 2-room models that Dr. Bates has espoused in the past, we think that at the centers that we're going to putting them at, there isn't very much risk that we can't fill up 1 and 2 rooms. We believe that if you put the 3 and 4 and 5 rooms, those are much more difficult to make sure that you have adequate patient flow to really support that debt. So the models of partnering with good hospitals and only doing 1 or 2 rooms, we think, make it a lot more probable that financing can be obtained on a, what I would say is, at a level that the shareholders will think makes a good transaction for American Shared.

And this is Dr. Bates. I want to add to that since we announced the successful financing of the unit in Orlando, we have been approached by several institutions that are now interested in looking at our projects and helping us with those projects, including one most recently that I feel really comfortable with, that these gentleman will probably move forward and help us finance our next unit if we don't do it with the people that have already financed our first, who has expressed an interest in doing and going beyond the one machine that they've agreed to finance. I don't think financing either 1-room machine or the 2-room machines going forward, now that they are FDA-approved, will be a major obstacle.

The next question is from Lenny Dunn with Freedom Investors.

Hopefully, this is our last treading water quarter. I do understand as well before we start to see revenue from the proton beams, but it's starting to look like at least the first quarter of 2013, you're going to have enough Gamma Knifes up and running to show us some real profitability from our basic business. Is that a leap of faith?

We believe that the projects that will be instituted will be accretive to the company.

Okay. And it's also my understanding that you are likely to move from the very expensive Empresserial (sic) [Embarcadero] center, and I'm probably mispronouncing it, to a less expensive space in the near future that you are probably very close to having that released. Is that also accurate?

Yes, Lenny, that is correct. We do have a nonbinding offer now that we've found it acceptable to take over this week. And we are now looking for office space elsewhere. And I think this will happen probably in April of next year, and the savings could be as much as, and I'll let Craig correct me if I'm wrong, could be as much as $150,000 a year.

Significant. Not the mention the wear and tear on everybody getting to the center of San Francisco. So I would assume that that would free up...

Yes. And, Lenny, I want to make another comment now we're talking about savings. Craig has been very successful working on refinancing 3 of our equipment loans. And I think if Craig succeeds, and I believe he's pretty close to that happening, this will result in savings of approximately $35,000 per month per machine, which would be about a savings of about $1.26 million annually. So we're very excited about that. And Craig, you might want to say a word about that?

Yes, I think what we're doing is the interest rate environment is lower and subsequent to when we first put on the debt on these machines, we've been able to extend the contracts. So there's a possibility of having a longer amortization period, which reduces the monthly debt service on these. So I think it's -- we're taking advantage of where we can to drive as much cash through the company as possible so we can do as many projects as possible in the shortest time possible.

Certainly very, very good news because that's far more substantial even in than the rent savings by long shot. Next question is, with the election behind us, and Obamacare clearly going to be in place now, do you foresee any problems with reimbursement with the proton beam, or do you think that that's actually a positive for it?

I think the proton is not -- from a CMS standpoint for provider-based proton centers, it's not related necessarily at this point to the election. It's just a system that they go through as to what the rate will be. And the rate appears like it will go down slightly in 2013 as proposed, but we will not have any units up in 2013. And the reason it's going down is it's my understanding that a cost report was put -- was used in the analysis that was -- turned out to be incorrect and it's been subsequently modified, and that wasn't taken into account. So it's -- although the rate looks like it's going down in 2013, based on the mechanics of how they calculate the rate, we don't believe that there'll be any significant reduction from the 2012 rate when we actually start treating patients in 2014 from the CMS or Medicare standpoint.

Won't the addition of all these patients -- one of the problems you had with the slowdown of the economy was less people going in for treatment, no matter how badly they needed it, because of lack of insurance. And if in fact, you have people more insured, that certainly solves that problem, unless I'm misreading that.

Well, you're correct. There are going to be 30 million more people that are now going to have an insurance who did not have it before. So that is going to be helpful. And I think that's going to be good for us going forward.

We're running to the black clouds, so to speak. But anyhow, I also wanted to know what your opinion is as to getting a couple more of these proton beam centers up and financed in the near-term, in the next 3 months or so?

Craig is looking at me and I'm looking at him who should answer this, but I'll take a crack at it. I think it's pretty good that we will probably announce another one within the next 2 months, 3 months.

Okay, good. And just looking at the balance sheet, which is fantastic, and I do understand your reluctance to buy back stock if you're in the process of arranging financing and want to show as much cash as possible on the balance sheet. So it is a balancing act. But that -- once we get these things up and running, stock [indiscernible] I mean, we're trading for such a huge discount to book value that it's a pretty compelling buy. So I guess you know what the other side of that is by the time you get everything going, we may not be selling on a discount to book value, so it's at Catch-22 there?

Yes. Lenny, as a longtime shareholder, are you suggesting that the company should step to the market and buy back stock? The Board looks at this every meeting. What's your suggestion?

I would suggest that at anywhere in the $2.90 to $3.10 range, that it makes some sense to buy back, not just to support the share price, but it enhances the value of everyone else's shares.

We'll take that into consideration. Thank you for your opinion.

Okay. And otherwise, I don't have any complaints and was patient. And the other thing -- the last thing is Mevion had an announcement last night and they do put out announcements from time to time, they tend to be positive. Isn't there any way that you're going to incorporate some of that into announcements that you make so that people are up-to-date on what's going on with Mevion?

We can. I think we -- what we've tried to do is make announcements that are directly affect American Shared. But there are other announcements they make in terms of additional commitments that they get on units sold, but we have not been keeping track of those, to be honest with you.

Well, we're 1% shareholder. I think it's likely by mid-next year they go public and that certainly have -- could have a significant effect on our balance sheet. So ...

You're correct. We'll look at that and see how we can do that as well.

Okay. Because it looks like Mevion is certainly growing quickly and they're backordered now. And from the announcement last night, I could see them going public certainly within the next 6 months.

I agree, Lenny. They have a very, very large, now, backlog and people do use that for evaluations. And I think if you look at their backlog, their evaluation for going public would be very positive.

Okay. Okay. Well, that's the only reason I think people should kept up to date because this is part of a share of AMS is just a little bit of Mevion too.

That's a good point, Lenny. Thank you.

Our next question is from Tony Kamin from Eastwood Partners.

I missed the beginning of the call, so if some of this was addressed, I apologize for that. Markets are little crazy today. In terms of your pipeline, and I realize Lenny just asked in terms of your expectations of getting another one of your current contracts with Long Beach toughs and catering are [ph] done. And those were all contracts, obviously, that you had before MEVION approval. But can you talk about the potential pipeline now for more proton beam contracts, say, over the next 6 months to a year?

I think we've got one that is very, very, I would say, in that latter stages of where we're at. And so I think we will give you some information on that as Dr. Bates mentioned shortly, both in terms of financing and contracting and how we'll do that. But I think there are a number of people that we've reached out to in the past and we are approaching them again. I think our primary focus right now is to get these that we've contracted for up and running as quickly as possible.

I think, and one other thing that I want to point out is that this financing that we announced for MD Anderson is really what amounts to conventional financing as we have done all of our Gamma Knives, and I think that it's the first time this has happened in protons. And that in itself was an exciting event, because I think this is how most of these are going to be financed going forward, just as we've done the Gamma Knife over the last 15 to 20 years.

Okay. So the -- Okay, so you have the MD Anderson and the other 3 that you already had, and then in terms of -- but in terms of developing a wider sales pipeline, I guess I'd probably echo the first gentleman that had questions in terms of suggesting if you see the need for it in the idea that maybe another salesman would help that effort. Because the risk reward in terms of getting a contract which might have a $6 million year EBITDA, if you had salesman that could sell 1 or 2 machines more a year, to give you some more hands on deck, it certainly seems like the upside, downside on that is pretty significant.

Yes. Well, Tony, where we are right now, I am personally talking to 5 or 6 hospitals that I've known over the years. Craig is probably talking to another 5. We don't really need a salesperson to conclude those. We just need to get those signed up and get the financing. And that's the kind of thing that nobody does as well as Craig Tagawa. I mean that's beyond the average salesman's capabilities. And then we've got the 20 or 30-odd hospitals that we've dealt with over the last few years for Gamma Knives who are ready to go as soon as we can present a financing package and show FDA approval for all the machines that we're looking at. So not to say that a salesman would not be helpful, but I think what we're working on now, a salesman is not necessary.

Okay. And then on the Gamma side and I noticed that Craig had mentioned you sort of get to leverage Elekta's sales force. But can you just talk about what you see maybe as the pipeline on that side? You've got 3 new -- or 2 new Perfexions and a Gamma going in at sometime in 2013, it sounds like in the early part. Is it possible that you might have visibility into pipeline beyond the early part of next year?

Absolutely. We're working with Elekta on probably about another 3 or 4 projects. And these are existing customers that aren't American Shared customers, but are looking for upgrades and they want to partner with people. So we're looking at those now. And if we're successful, I think you'll see some activity in the second half of 2013.

That would be great. When you look at the 2 sides of the business with -- as Lenny was mentioning when you -- and I followed Mevion pretty closely. And they have been making a lot of public awareness out there. And then if you guys are seeing that sort of potential on the Gamma Knife side, it seems like this would really be an appropriate time, now that you've got the financing, to make more of an investor outreach. More of an attempt to really reach out and get this story out there, because it's just -- I mean, that it is just so dramatically undervalued when you look at the potential. So is part of the plan to really start to reach out more to new investors?

Yes, I think Neil is trying to line up some conferences for us to present to. But quite frankly, we've been pretty focused on getting our first proton beam really buttoned up, so I think -- because we think that would be, really, the news going forward in terms of the difference that is in -- that it will be an American Shared in the future. So we've concentrated as a team to finish that. So I think we will. I think you're absolutely right. We should go and present the story to the market, and we'll work with Neil to make sure that that does happen.

That's great. And then, Dr. Bates, just if you could comment maybe on -- is there anything new in terms of clinical results or medical literature on protons over the last few months?

Nothing that I'm aware of. It's not any different than what we've talked about in the last conference call. But if you look back on what's been coming out over the last 2 or 3 years, the results for protons are really exciting. I mean, we're talking about, in some cases, for diseases that we thought were incurable, we're getting close to what I want to call curative kind of treatments with protons and, of course, other heavy particles. That's very exciting. I mean, clearly the physics suggest that this is how it should be. If you've got a machine that can deliver more dose to the tumor, you've got to get better results. And again, I personally feel that the cure for cancer is going to be a combination of heavy particles and proton beam machines and probably, genetic therapy, and maybe some chemotherapy. And hopefully, we're going to see that in our lifetime.

Great. Well, I -- just as a closing comment, I mean I think you guys have done a tremendous job on getting the financing for this MD Anderson system and I'm surprised that it's not -- that the market isn't realizing what's to come here for the company. But I think you guys have done a great job.

Our last question is from Paul Thomas with Leenix [ph] Investments.

Yes. I just had a couple of questions. The first one was for the $1.26 million in annualized savings. Was that in interest savings? Or was that you're going to be amortizing the machines over a longer period of time? So it's really not that huge of savings.

It's -- the savings will be in the cash flow. The actual debt service savings. And there'll be some interest savings as well due to lower interest rates.

But really, it's more spreading it out than it is getting cheaper money?

Correct. But it's, in terms of on an annual basis, what the debt service requirement would be, it's over $1 million a year potentially.

Okay. Okay. That's just -- and historically, you kind of amortized the Gamma Knife machines over 7 years and maybe stretching them now over 10 or something like that?

Well, as we extend the contracts, we're able to extend them -- extend the amortization by refinancing. If you look at some of the customers we have, they've been with us for well over 10 years after we've been able to renegotiate the contracts.

Okay. And I guess just a little bit on your capital structure. So you're seeing $9 million in CDs on your -- on the balance sheet and that's just the parent level, correct?

Correct.

Okay. And then the -- and then that's kind of held the kind of offset, the short-term revolver that you guys have, so that's not really free cash, it's more restricted and kind of collateral for the revolver? Is that...

That's correct.

And so how much free cash would you say that you do have on the balance sheet? I mean, the $9 million is pledged, so just whatever is left is pretty much what's accessible for share buybacks and all that kind of stuff?

Correct, correct.

Okay. And then, in terms of the financing that you guys just lined up, is it going to be of the same nature, non-recourse to the parent, and all of that just kind of a standalone financing?

No, it will not because the proton contract is actually with the parent.

I see. I see. So it's not -- okay.

The Gamma Knife was done a little differently originally because the manufacturer, Elekta, actually owns 19% of the operating entity, which is TK Financing, and American Shared only owns 81%.

I see. But -- and so because of that, like the $38 million in debt for to buy all the Gamma Knife machines is non-recourse to the parent. But going forward, with the proton machines, those are going to be recourse to the parent?

That's correct.

Mr. Tagawa, there are no further questions. Would you like to make your closing remarks?

I'd just like to thank everyone for joining us this afternoon, and we look forward to speaking with you on our 2012 fourth quarter results conference call in about 4 months or so.

Thank you. This call will be available in digital replay immediately following today's conference. To access the system, dial (888) 843-7419 and enter the passcode 33706680 followed by the pound sign to access the replay. The webcast of this call will be available at www.ashs.com and www.earnings.com. This concludes today's teleconference. Thank you for participating. You may now disconnect.