Landec Corporation F4Q10 (Qtr Ended 05/30/2010) Earnings Call Transcript

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Landec Corporation (NASDAQ:LNDC) F4Q10 (Qtr Ended 05/30/2010) Earnings Call August 4, 2010 11:00 AM ET


Gary Steele - Chairman and CEO

Greg Skinner - CFO


Tony Brenner - Roth Capital Partners

Morris Ajzenman - Griffin Securities

Chris Krueger - Northland Securities, Inc

Walter Sheckner - Titan Capital


Welcome to the Landec Fourth Quarter Fiscal Year 2010 Earnings Call. At this time listeners are in a listen-only mode and later we will conduct a question and answer session and instructions will follow at that time. (Operator Instructions) As a reminder this program is being recorded.

I would now like to introduce your host for today's program, Mr. Gary Steele, Chairman and CEO of Landec Corporation.

Gary Steele

Good morning and welcome to Landec's year-end and fourth quarter of fiscal year 2010 earnings call. I have with me today, Greg Skinnerm Landec's Chief Financial Officer.

This call is being webcast by Thompson CCBN and can be accessed at Landec's website at on our investor relations page. The webcast will be available for 30 days through September 3, 2010. A reply of the teleconference will be available for one week by calling 888-266-2081 or 703-925-2533. The access code for the replay is 1468225.

During today's call we may make forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially. These risks are outlined in our filings with the Securities and Exchange Commission including the company's Form 10-K for fiscal year 2009.

As reported in yesterday's press release for fiscal year 2010 Landec's revenues increased 1% to $238 million compared to revenues of $236 million in fiscal year 2009. Overall revenues increased slightly in spite of the difficult economic climate.

Net income for fiscal year 2010 decreased to $4 million or $0.15 per diluted share, compared to net income $7.7 million or $0.29 per diluted share last year. Reducing that income for fiscal year 2010 were $3.7 million in non-recurring charges, which are not tax deductible.

The $3.7 million reduction includes $2.7 million of acquisition related charges from the Lifecore acquisition, which closed on April 30, 2010 and $1 million from a non-cash partial impairment charge on our minority equity investment in Aesthetic Sciences. Excluding the $3.7 million in non-recurring charges, net income and earnings per share in fiscal year 2010 would have been the same as last fiscal year at $7.7 million or $0.29 per share, consistent with our guidance.

Under new accounting rules acquisition related expenses such as investment banking, legal and accounting fees are no longer capitalized but expense. In the quarter the transaction closes. We expensed $2.7 million in Lifecore acquisition related expenses in our fourth quarter.

Also during the fourth quarter we determined that our $1.8 million minority preferred equity investment in Aesthetic Sciences is unlikely to be fully recovered and therefore we recorded a $1 million non-cash partial impairment charge. This decision was driven by our review of the contractual terms of an asset sale and royalty agreement with Aesthetic Sciences entered into on July 16, 2010.

As we discussed in previous quarters Aesthetic Sciences has been in negotiations with multiple potential suitors over the past year, pursuing opportunities to either license or sell their Smartfil Injector System technology.

While management previously felt that these opportunities held sufficient upside to support the value of Landec's entire $1.8 million investment. It became during the fourth quarter in connection with the Aesthetic Sciences sale of its technology that significant uncertainty on the timing and magnitude of royalties from this agreement were in question and we may have difficulty in fully recovering our investment.

The non-cash impairment charge represents Landec's best estimate of the net realizable value of this investment in Aesthetic Sciences in light of the expected royalty stream associated with the technology sale. This does not affect Landec's cash in anyway,

Our remaining $800,000 investment in the Aesthetic Sciences will be periodically reviewed for possible additional impairment.

Turning to our fourth quarter of fiscal year 2010 results, revenues increased over 10% compared to the year ago quarter. Relative to the prior three quarters in fiscal year 2010 we improved our overall gross profit and gross margin. We are starting to see improvements in the fresh cut produce industry volume sales but victory should not yet be declared.

Pricing pressured continue as retailers continue to struggle with consumers' tight budgets. Also during the fourth quarter, we completed our acquisition of Lifecore. We also shipped large numbers of BreatheWay membrane for Chiquita's Avocado roll out. We advanced our technical work with Monsanto on seed coatings. We've launched new products with Air Products in the personal care field, including adding several new customers and we advanced our technology licensing discussions with several strategic partners as well as concluding and announcing a recent agreement with Windset Farms.

Let me turn it over to Greg Skinner to discuss the specifics of our results.

Greg Skinner

Thank you, Gary. Good morning, everyone. As outlined in yesterday's new release, Landec reported total revenues for fiscal year 2010 of $238 million versus revenues of $236 million for the same period a year ago.

The increase in total revenues during fiscal year 2010 was due to a $6.8 million or 4% increase in revenues from Apio's value added vegetable business, and from $1.5 million of revenues generated by Lifecore in the month of May. These increases were partially offset by $5.5 million or 9% decrease in revenues from Apio's commodity trading business.

For fiscal year 2010, the company reported net income of $4 million or $0.15 per share compared to $7.7 million or $0.29 per share for last fiscal year. The decrease in net income in fiscal year 2010 compared to the same period last year was due to several factors. In addition to the $3.7 million of non-reoccurring charges associated with the acquisition of Lifecore and the impairment charge of our investment in Aesthetic Sciences gross profit in Apio's value-added vegetable business decreased $759,000, primarily due to increased costs associated with leather related produce sourcing issues during the fourth quarter, as well as shift in product mix. The company's research and development expenses increased $696,000 primarily due to the hiring of additional scientific staff.

These decreases in net income were partially offset by decrease in income tax expense of $1.3 million due to a decrease in taxable income. It should be noted that owing $400,000 or 10% of the $4.3 million book income tax expense recorded in fiscal year 2010 is expected to be paid in cash because the cash tax benefit from the repurchase of subsidiary options and from R&D tax credit.

For the fourth quarter of fiscal year 2010, Landec reported revenues of $58.2 million versus revenues of $52.2 million for the fourth quarter of last year. The increase in total revenues during this year's fourth quarter compared to last year's fourth quarter was primarily due to first, a $3.5 million increase in revenues from Apio's commodity trading business, due to an increase in trading and sales volumes.

Second, $1.5 million revenues generated by Lifecore in the month of May, and third a $515,000 increase in revenues from Apio's value-added vegetable business due to increased sales volume.

For the fourth quarter of fiscal year 2010, the company recorded a net loss of $1.5 million compared to net income of $1.9 million during the fourth quarter of fiscal year 2009. This decrease of $3.4 million is due to several factors. In addition to the $3.7 million of non-recurring charges associated with the acquisition of Lifecore and the impairment charge on our investment in Aesthetic Sciences.

There was a $1 million decrease in gross profit and Apio's value-added vegetable business primarily due to increased costs associated with weather-related produce sourcing issues during the fourth quarter as well as a shift in product mix. These decreases in net income were partially offset by a decrease in income tax expense of $508,000 due to a decrease in taxable income.

Turning to Landec's financial position, during fiscal year 2010, the company generated $7.5 million in net cash flow from operation. The company ended the year with $48 million in cash and marketable securities. For fiscal year 2010, capital expenditures were $5.2 million and depreciation and amortization was $3.4 million. Gary?

Gary Steele

Thanks Greg. Let me address the question, where is Landec heading and why should an investor want to own Landec stock. As background, Landec began launching its initial products in the mid to late 90s and we became profitable in 2003. We've remained profitable ever since.

From fiscal year 1999 to fiscal year 2008, revenues grew from $21 million to $238 million and we significantly improved our balance sheet during that time by accumulating considerable cash balances and paying off all of our debt.

Beginning in the second half of fiscal year 2008, a severe economic recession affected our food business, challenged our existing licensing partners such as Monsanto, Chiquita and Air Products and essentially shut down new licensing activities with prospective corporate partners.

Fiscal years 2009 and 2010 have been relatively flat years from both a revenue and net income perspective. During this past two years, we have continued to invest in R& D, we have continued to take market share in our fresh cut vegetable packaging business, and we have continued to work with Chiquita, and others to identify new target applications.

Over the past year, we have also continued to identify additional growth opportunities and based on our strong balance sheet we were able to make a strategic acquisition of Lifecore Biomedical, on April 30, 2010.

The acquisition of Lifecore included $40 million in cash, the assumption of $4 million of low interest debt, and a potential future payment of $10 million in earn-outs to the seller, based on life for achieving certain revenue targets in calendar years, 2011, and 2012.

Lifecore expands Landec's polymer technology platform to include the area of hyaluronan materials, also referred to as HA materials, which are used in our opthalmics, orthopedics, veterinary markets worldwide. Additionally the acquisition is lucrative with projected incremental EBITDA in fiscal years 2011 of $7 to $8 million.

Lifecore also has attractive margins with an expectation that Lifecore is projected to help Landec, increase its overall gross margins. As Landec develops new medical applications, Lifecore is already established to make and sell pharmaceutical grade products and has an experienced staff in quality and regulatory affairs.

Lastly Landec and Lifecore technical teams will work together to find synergistic applications for our polymer materials. As we turn to fiscal year 2011, which began by the way in June, we looked for return to double-digit growth in sales and earnings this year and beyond. So why own Landec stock?

First we believe we are a growth stock story once again as we implement our fiscal year 2011 plan. We estimate that during fiscal year 2011 we will grow revenues 15% or more and grow earnings 25% to 40%. We see additional licensing partnerships that are strategic and more narrowly focused allowing us to capitalize on our partner's commercial capabilities while leveraging our technology investment.

With Chiquita, we see good progress in the Avocado program as they begin their nationwide roll out using four processing centers, plus the availability now of year round avocado sourcing along with the use of their well known Chiquita brand and their unique product positioning, all combined to accelerate the sales of ripe and ready to eat avocados. There are over 1.6 billion pounds of avocados consumed each year within the US.

In addition to Chiquita taking market share in avocados there is an opportunity for expanding the market as consumer and fruit service providers begin to have access to avocados that are ripe and ready to eat.

We are working on other potential applications for our BreatheWay packing technology with Chiquita and other partners, such as the application we recently announced with Windset Farms, where we will use our membrane technology to package and ship greenhouse-grown cucumbers, peppers and tomatoes.

With Monsanto, we are making good technical progress in our seed coating program. It is a tough scientific challenge from a chemistry and biology point of view to coat seeds with active insecticide and fungicides to be released at the right time to accomplish the dual benefit of maximizing yields and substantially lowering the environmental adverse effects associated with the traditional application of insecticides and fungicides.

The real task will be in greenhouse and field trials in the next 12 months. The problem we are jointly attacking with Monsanto represents a big commercial opportunity but the solution will require considerable effort as we scale the field trials. I think of this as sizeable upside for Landec but too early to factor into financial models.

Last, but definitely not least, during the fiscal year 2011, we plan to invest over $9 million in R&D and over $6 million in capital expenditures in order to continue to drive future growth based on developing new materials and new applications. We have the team in place, a clear plan and the balance sheet to support our growth in fiscal year 2011 and beyond.

We are now ready for your questions.

Question-and-Answer Session


(Operator Instructions) Our first question comes from the line of Tony Brenner from Roth Capital Partners. Your question please?

Tony Brenner - Roth Capital Partners

A couple of questions. First of all, Gary you said early in your comments that you're seeing an acceleration in Apio's volume and yet in your guidance you imply a significant decline in volume versus last year. I'm wondering why that is?

Gary Steele

We've seen some improvements in the last couple of quarters in terms of volumes but what we are seeing is more a price compression and so on a dollar basis we are little bit concerned. So we want to be conservative in terms of projecting what growth we will get.

We are going to see year-over-year dollar improvements, but we are just concerned about this price compression and we will also continue to see mix changes Tony and since that we are selling more bags and less trays and the trays seem to be pretty sensitive to the recession. Anything you want to add, Greg?

Greg Skinner

No, if you are referring to the industry itself Tony, recall '09 was a pretty bad year for the industry. So the 9% growth from in '10 to '09 is coming off the very little base here, so by growing 5% or project a 5% in '11, we are growing off a higher base here. So if that was part of your question, I just want to clarify that.

Tony Brenner - Roth Capital Partners

In other words, you are not assuming any improvement in the macro trends that you are encountering right now. Is that right?

Greg Skinner

Slight improvement.

Gary Steele

Very slight.

Greg Skinner

We may be often there. We'd love to be wrong in that. It's just that the consumer is still very skittish and the retailers will feel more pressure than ever on pricing.

Tony Brenner - Roth Capital Partners

Okay. Second question, you are bringing in how some of the costs for Landec Ag, so no revenue or income offset to those expense is being projected?

Greg Skinner

There is some. We have this product called Pollinator Plus, which is little bit less than a million dollars in sales. It's a high margin program for us, but right now we are eating some of the internal R&D costs that we brought in-house.

That's why we are in an active mode of finding one or more new partners in the Ag field. It's going to take us a little while but we've got a couple of partners identified and recall that these rights came back to us, in a renegotiated agreement with Monsanto. So we are on it, Tony. It's just that we haven't consummated a new partnership yet.

Not sure when and if that will happen, but we have got to deal with this issue of sustaining some losses in the Landec Ag area, outside of the Monsanto agreement. So we want to deal with that in the next twelve months.

Gary Steele

The number to that, is in the guidance page, seemed a little lot are tied, but remember, this is a change from 10' to 11' in the first half of fiscal year, 10' Monsanto was picking up all our operating cost and recall from years ago, when we owned the seed business, all the other revenues in this business happened in the second half of the year, so we got the benefit of only a half a year of operating cost, but all of the profits from the sales of the products, in the fourth quarter of last year.

This year we are going to have twelve months of operating costs and yet will still have the same degree of profits, in the fourth quarter.

Tony Brenner - Roth Capital Partners

Okay. Last question, your projection over $9 million obviously and big part of that increases is Lifecore but it would seem that, your still ratcheting up R&D and Apio packaging, and [content] licensing as well and I wonder if you can quantify that increase and also quantify what benefits you have been seeing from the last four years of a pretty strong increase in that particular R&D spending? What is coming back from it?

Gary Steele

Yes, lets answer your first question, the increase year-over- year that we are adding here, at Landec, not counting Lifecore is about a 30%, increase or about a million bucks, and what we have seen over the last couple of years, is that we have, the investment in R&D, has allowed us to roll out over now up to about 15 products in our personal care products program with Air Products.

It's allowed us to get Monsanto from rather passive indifferent state in terms of our license agreement to a very excited about what we are doing in the controlled release area. It's allowed us to expand our Apio product line to about a dozen new products per year. It's allowed us to move beyond bananas with Chiquita to other areas of tropical fruit including this Avocado program that we are pretty excited about because that required a new membrane development effort.

It's allowed us to enter into an area where we are looking at how we can release various types of small and large molecules under our control released system with using our side chain crystallizable polymer in the drug delivery area, which could also benefit the Monsanto relationship. It's also allowed us to come up with some new investigative programs that we are working on that include smart coatings.

So it's variety of different advances that this R&D has allowed us to have and we are expecting more from the R&D team over the next 24 months.


Thank you. Our next question comes from the line of Morris Ajzenman from Griffin. Your question please.

Morris Ajzenman - Griffin Securities

Just two questions, one on the cash flow, you talked about projection to your cash flow from operations have doubled from fiscal 2010 which brings you to about $15 million and I presume that's before CapEx and then D&A add back in there.

Maybe an other way of going at the question is, again, in your release right above that you show us projection of $0.36 to $0.41 EPS. How of that is non-cash compensation you add back. If you kind of went to work through those numbers information you gave us, what would be the per share or the gross cash flow from operations, free cash flow in CapEx, depreciation amortization etcetera?

Greg Skinner

Okay, well, I'll take it from the high points. You're right. The guidance we're doubling our year-over-year, so our projections are around $15 million in operating cash. That does include the add back of non-cash items like depreciation, amortization, stock-based compensation, deferred taxes, so on and so forth, very similar to what we had in this last year in each quarter and which you'll in our 10-K.

Our projected CapEx is about $6 million, so you're talking about free cash flow around $9 million. Then there is two components that need to be either added back or subtracted and that is we now have debt that we're going to be paying, which is going to approximate about $4 million or $4.5 million next year, but as I mentioned in the script, we're only going to be paying 10% of our tax expense. So that is actually a benefit. So when you add all that up, if you want a round figure, we expect the cash to increase about $10 million year-over-year.

Gary Steele

You asked Morris what, how much can you attribute to stock-based non-cash expense?

Greg Skinner

So, it's about 1.8 million.

Morris Ajzenman - Griffin Securities

$1.8 million, okay. Can you just give us a little more color on Chiquita with the avocados. I know the roll-out is kind of commencing here. Its come really, I know you and Chiquita are very excited about, but what can you tell us about how this plays out in the next couple of quarters, in to the next fiscal year, can you just give us a little more color on what you see happening?

Greg Skinner

Well, as best as we can, Morris, I mean, we are relying on Chiquita to launch and implement and expand and market and promote. What we can tell you is what we've said is that they've established four processing centers.

They now have year-round sourcing, which took them a while to line up since they were not a year-round sourcer of avocados in the past. I know that they have several which I cannot name; they have several large retail chains that have agreed to launch the product. I believe those mostly are east of the Rockies initially but they will also be expanding here in the West Coast. They have certainly ordered a lot of BreatheWay membrane product from us. I don't want to disclose that exact number but it's very substantial.

So it looks to us that the stars and the moon are aligning for a fairly broad launch. I think it would mostly likely that they will penetrate those store side center initially closest to their four processing centers, two of which are on the East Coast, one I think is in Midwest and one on the West. So that's what I know.

They plan to do quite a bit of promotional efforts so that people know when they buy the product that it is truly right and you can take it home and immediately eat it as opposed to what consumers have today, which is something that has to be ripened at home over several days. So that's what we know and the best window we have is their order patterns on the BreatheWay membranes.


Our next question comes from the line of Chris Krueger from Northland Securities, Inc.

Chris Krueger - Northland Securities, Inc

You have mentioned that sourcing in the quarter, leather-related sourcing issues, can have an impact on margins in the fourth quarter. How have those conditions, been in a first couple of months of the first quarter, and should we look for a gross margin in that segment to be similar to the forth or may be little up or down?

Gary Steele

Yeah, we are, you know, “Knock on wood” the first quarter weather is fine and for those non-Californians, we typically have little to absolutely no rain from late April to late October, and then and then we go into our rainy reason, November through mid April, and so in our fourth quarter, we recall from our last earnings call, we were building arcs out here, it was just a one major storm after an another, and it was very difficult to get product and so it affected our fourth quarter, but so far so good, on the first quarter.

We always build in some conservatives in terms of weather-related challenges that we face in the produce industry, but this last year, this fourth quarter, was just unbelievably bad, so it did affect our fourth quarter result.

Greg Skinner

So the first quarter looks good?

Chris Krueger - Northland Capital Securities, Inc.

Okay, another thing that you guys have mentioned, your efforts on the East Coast, they had another facility, and can you give us an update on that?

Gary Steele

Thanks Chris, for reminding us, we did not mention that, we are often running in the southeast for those who may not recall this issue, we do all of our shipping from California where the produce is grown, and we have a very large substantial, over 100,000 square foot processing plant in the Central Coast of California right near the growing area.

We are able to take fresh produce in packages and get it to customers very expeditiously, but it still takes four or five days by refrigerated trucking to get product to the East Coast. There is a market on the East Coast that we have not been able to address because of that strategy, which we call the next day delivery market, we think it's substantial and so we felt that we needed to access that market, and beginning in September we will be up and running in the South East and we will be able to ship product to first established customers and then some new customers starting in September.

So, the equipment is being put in place, the team is being put in place. We are working with the partner, it's not a greenfield building project, it doesn't require much CapEx, and so we will be up and running starting in September.

Chris Krueger - Northland Capital Securities, Inc

Okay. The Windset Farms, can you give us any idea on the timing of maybe the initial cucumber roll out?

Gary Steele

There are a significant player and market leader in greenhouse-grown cucumbers, peppers and tomatoes, and they are initially planning to launch cucumbers. There are significant players on cucumbers and their initial plan for launch are in November for cucumbers and then within six months following that they will launch with peppers and then within the next year they will launch with tomatoes. So it's sequenced approach.

They have the exclusive rights for greenhouse-grown cucumbers, peppers and tomatoes not regularly grown but greenhouse-grown. They have the right to use our BreatheWay technology as long as they are achieving certain minimums and this involves the sale of our membrane product as well as its royalty bearing as well. So the good folks, we've known for a while they're market leaders in what they do and so they in stage cucumbers, peppers and then tomatoes.

Chris Krueger – Northland Securities

Okay. Last on Lifecore acquisition, I know there is lot of talk about new business and new contracts and expanded customer relationships and things like that were boosting the growth outlook. Any update on if some of that new business has begun to produce sales last couple of months, or are they certain to rollout or the timing on that as well?

Gary Steele

Yes, there is a rollout some new products that are taking place now. The customers, the new customers I cannot name for a number of reasons, but some of this requires what I call FDA [light] submissions, so some of these are in FDA submission right now. Everything we hear is that those submissions have been on track. They are being reviewed by the FDA. They should be relatively straight forward. They're showing equivalence so to speak.

So Lifecore is geared up for expanding here in the next couple of quarters. So it looks its all on track Chris. As we are going to be more specific about customer names and things like that we will, we just can't do right now, but everything we see says that our plans and forecast for the first year of regarding Lifecore are right on track.


(Operator Instruction) Our next question comes from [Walter Sheckner from Titan Capital].

Walter Sheckner - Titan Capital

A couple of things, first, I am not sure I understand exactly what you are trying to tell us in respect to margin pressure. That is the premium you can get for your packaged products is under pressure or just generally fresh vegetables are being sold into end-customers at tighter margins.

Gary Steele

Yes, it's both actually but it's generally, what's happening in the food industry and it's not just produce, is that the consumer as you know is fighting for survival. We sell fresh-cut produced products at a premium. There's no question about it, and we have a bigger premium with products that are in a tray format, I don't know if you have seen our products that have very…

Walter Sheckner - Titan Capital

No, no, I have seen it.

Gary Steele

Those are higher margin premium priced. There's a lot of pressure on those because people are entertaining less and they are more hesitant to pay a premium for those types of products, and if you have someone unemployed in your household, make him chop and wash and slice and dice.

In general, the food industry, not just produces under this margin pressure, and the industry, the produce industry really consolidated on the customer side over the last ten years. So you've got very gigantic buyers, Wal-Mart and Supercenter and Safeway and Supervalu and folks like that. So all we are saying is, we've a done a very good job of holding your margins the last few years even in these recessions.

We just want to signal that we are somewhat concerned that the margin pressure is still or high and that we will have to deal with those and we will have to get more efficient in our plan and we have to deal with the reality that our product mix is going more towards, we see more growth in the bag business this year than we do in the trade business, so we have to deal with the mix issue as well. We are saying, hey there is a lot of pressure out there and we are having to live with it, and we are hoping we can hold the line with our margins.

Walter Sheckner - Titan Capital

Okay. Second question, can you spend a little bit more time on where avocados are find, we spend years tweaking about bananas, just sort of bring us up-to-date on what is going on, little bit more on bananas?

Gary Steele

It's not much, the Chiquita growth program is continues to roll out. You're probably seeing more and more of it in Starbucks. MacDonald's did not pick up the program they launched. Their bananas smoothie program with frozen puree bananas because you don't have the consumer that receives the bananas, so they weren't concerned about the appearance.

In my mind, they choose an inferior quality for this roll out. So McDonald's is somewhere between non-existing or we hope that when the recession is over and people start caring about nutrition again, we will resume our conversations with them on what we really care about which is a Banana breakfast program.

There are some other large chains that are valuating the technology with Chiquita, but I am frankly little tired of telling about it, because I'd like to see the results. So it's been a slow growth mode, and it's become a very profitable program for Chiquita. From a margin point of view highly profitable for us, but it is just still rather a niche.

Walter Sheckner - Titan Capital

Okay. Just a couple of last questions, first I which you heard before, I got to commend you, I can't think of any another company I follow, which not only talks about the coming year but breaks it down with the specificity you do, so I think that's great. Then by doing that you create more questions so and…

Gary Steele

It's okay.

Walter Sheckner - Titan Capital

It gives specificity; I have more questions on the specificity. Just in respect to the item increase in operating expenses for corporate R&D and compensation including stock-based compensation which is $0.03 to $0.04. That is more stock-based to more corporate R&D, I am not asking for it, you just sort of equally?

Gary Steele

Yes, it's about equal, and we had gone quite a few years without making some stock rewards. We also brought in a couple of Vice President level of people and so we want to make sure that we had a team that was going to be incentivized and stick around here, so it was about equal R&D and stock-based comp.

Walter Sheckner - Titan Capital

Okay. Then the $0.01 or $0.02 for new corporate licensing in R&D collaborations that is largely on things like cosmetics which you also have or sort of the expectation each year, you can expand that a little bit?

Gary Steele

New deals.

Walter Sheckner - Titan Capital

Okay. So it's that new deals that have not been announced.

Gary Steele



(Operator Instructions) I am not showing any further questions at this time, I would like to turn the program back to you.

Gary Steele

We just want to thank everybody for joining us in our year-end earnings call, and we look forward to keeping you apprised of our progress. Thank you very much.


Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

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