Good afternoon ladies and gentlemen and welcome to your Q3 2006 NAVTEQ Corp earnings conference call. (Operator Instructions) At this time, I'd like to turn the conference over to your host for today's call, Mr. Tom Fox, Director of Investor Relations.

Good afternoon, everybody. This is Tom Fox, Director of Investor Relations at NAVTEQ and welcome to our conference call to discuss financial results for the quarter ended October 1st, 2006. With me today are Judson Green, President and Chief Executive Officer; and Dave Mullen, Executive Vice President and Chief Financial Officer. By now you should have received a copy of our earnings release which was distributed earlier over the wire. Today's call is available by webcast and is being recorded. Information on the replay and the webcast is available in the release and on the Investor Relations' section of our website at www.navteq.com. Today's webcast also includes a PowerPoint slide presentation which you may access via the webcast. You may also download a PDF version of the presentation in the News and Events section of our IR website. Before we begin, I would like to remind you that some of the statements made during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations, assumptions and projections about NAVTEQ at the time that the statements are made. Such statements may include, but are not limited to, expectations of future operating results, growth in unit volume or share of business, penetration rates, product release schedules for NAVTEQ and our customers, and receipt of payments from our customers. The forward-looking statements are subject to certain risks and uncertainties that may cause the actual results to differ materially from our past performance and our current expectations and projections. For a discussion of these risks and factors that may affect future performance, please review the reports filed by NAVTEQ with the SEC in particular note the risk factors set forth under item 1A, Risk Factors, in the company's annual report on Form 10-K for the fiscal year ended December 31, 2005, and under the same heading in the company's quarterly report on Form 10-Q for the quarter ended July 2, 2006. NAVTEQ disclaims any obligation to update or revise any forward-looking statements except as required by law. We will begin today's call with some opening remarks by Judson and then Dave will walk you through some additional details on the quarter. Judson will had a few closing remarks and finally we will take your questions. During the question-and-answer session we would ask that you to limit yourself to one question. If you have additional questions, please re-enter the queue. We will finish the call no later than 6:00 P.M. Eastern time. I would like to turn the call over to Judson.

Thanks, Tom. Good afternoon, everybody and thank you for joining us. We are pleased with our third quarter results, especially with revenue given the headwinds we have faced this year. In addition, our cost management program, which we put into place earlier in the year, was effective in improving our margins and profit growth. We achieved record third quarter revenue of the $142.7 million, which grew 16% over the prior year. The revenue increase was driven by unit volume growth of 36%, which was partially offset by lower average selling prices. The lower ASPs were caused by a mix shift to less expensive portable navigation map units and license fee discounts, driven in part by higher volume. Excluding our distribution business, which declined slightly year-over-year, map data licensing revenue grew 22% in Q3. Operating income was $37.0 million. Net income for the quarter was $27.1 million, or $0.28 per diluted share. For the first nine months of 2006, revenue of $400.9 million grew 14% over the same period last year. Excluding the distribution business and other revenue, core map licensing revenue grew 18% for the first nine months. Year-to-date operating income was $90.9 million. Net income for the first nine months was $67 million or $0.70 per diluted share. Net cash provided by operating activities was $62.6 million for the first nine months of 2006. We ended the quarter with $278.7 million in cash and marketable securities and no debt. Before I begin discussing the various business areas, I'd like to provide an update on the customer receivables collection issue that arose during the second quarter. The customer completed an interim financing recently and we received a partial payment from this customer. The net revenue impact on our third quarter was $2.9 million related to the reversal of the revenue reserve. We have deferred an additional $3 million in revenue related to this customer as of quarter end. While we are encouraged by the recent progress, we now see it as unlikely that we will receive full payment of all overdue receivables by year end. Instead, we expect to receive additional partial payments in Q4 and the balance of what we are owed in 2007. As indicated in the press release, our Q3 revenue by geography is as follows: European revenue grew 10% over the prior year and 6% on a constant currency basis. Excluding the distribution business and other revenue, European license fee revenue grew approximately 19% over last year and 14% on a constant currency basis. Revenue for the Americas grew 31% over the prior year. Asia Pacific revenue, principally derived from our Korean subsidiary was $1.4 million in the quarter, which was lower than our original plan due to our decision at the beginning of the year to get out of an unprofitable hardware business. I'd now like to spend a few moments talking about Q3 developments in each of the major businesses. Let me begin with in-dash, which continues to be a challenging environment for us. Weakness in overall car sales and a mix shift away from SUVs and luxury cars have been the most significant obstacles to our growth in 2006. In the United States, we believe that gas prices and interest rates have combined to alter the consumers' car buying behavior, at least in the short term. They have been opting for smaller, more fuel-efficient cars and are able to afford fewer options based on the higher cost of financing. While we are disappointed with these trends, we are pleased with our own accomplishments in this area. And we're optimistic about the longer-term health of this space. Car sales and the price of in-dash systems are beyond our control, but we have put in place ancillary programs to help drive revenue growth such as our Take Rate Improvement Program, which trains OEMs and their dealers to sell in-dash systems more effectively; and our renewal program for maps, which is a multi-tiered initiative focused on map update sales. While making a positive contribution, these programs have not been enough to offset the impact of unfavorable car sales dynamics. Historically, the third quarter has been a slower growth period that for the sale of cars in general and navigation systems in particular. This trend continued this quarter with in-dash units up 8% over the prior year, but down 6% sequentially. In Europe, overall car sales were down 3% compared to the prior year's third quarter. In terms of key models for navigation, sales of the BMW 5 series were down 17%, but sales of the Mercedes Benz E-Class grew 2% over the prior year reversing the negative trend we observed over the past several quarters. The Mercedes S-class continued its strong 2006 performance with sales up 94% over last year. Despite the success of PNDs, we still are seeing navigation take-rate and penetration improvements in all but the lowest price categories. In particular, we are seeing better than expected penetration growth in the non-luxury C category, which we had thought would be adversely impacted by the PNDs. Instead, take-rate performance has exceeded our plans. We are seeing minimal penetration growth in the value priced a and b categories where take rates are generally in the low-single digits to the relatively high price of in-dash systems. The traditional vehicle after-market continued its decline with map units down over 30% year-over-year in Q3. Turning to the North America in-dash business, Q3 unit growth was improved over the first half of the year, but car sales growth remained sluggish. Overall, car sales were down 6% versus the prior year's third quarter, but more importantly, consumers again favored lower-priced vehicles and more fuel-efficient models, which generally have lower navigation take rates. According to Global Insight data and our own estimates, Q3 sales of SUVs were down 8%, crossovers and pickups were down 15% and luxury cars were down 9% compared to the prior year. We have seen strong growth this year in OEM adoption of in-dash systems. In Q3, NAVTEQ enabled in-dash systems were offered for the first time on eight new vehicle models including the Acura RDX, Buick Lacrosse, Ford F-150 and Mitsubishi Gallant. Our formal update program is rolling out more slowly than we originally anticipated, but we feel like we are finally getting some traction. We are making good progress with a number of our OEM customers, and we expect to see improvements in when we update growth in the fourth quarter and next year. We are pleased to announce two pieces of future business we were awarded recently. First, Volkswagen selected NAVTEQ maps in Europe for platforms beginning in 2007. Second, we have been nominated by Harman-Becker for both next-generation PSA Peugeot Citroen platforms, the RMEG and MG4 scheduled to launch in 2008. The RMEG is a particularly exciting development in that it will offer a navigation-ready head unit resulting in a new level of flexibility for the consumer. The consumer will be able to easily upgrade coverage, content, and functionality by purchasing additional SB cards from Harman-Becker and NAVTEQ with data that meets their changing requirements. We anticipate that this will significantly increase the take rate of this line fit system. Based on these and other recently announced in-dash wins, we expect our share of OEM business in Europe to remain at current levels or even increase slightly over the next several years. We believe more affordable in-dash units are still on track for introduction in calendar 2008. With respect to the portable device business, we are pleased by the growth trends in this area. Q3 portable device map units climbed 60% over the prior year and 14% sequentially. For many customers, the holiday sell-in to the retail channel began in September but the associated map royalty reports typically are received in October, which is Q4 revenue for us. In Europe, we saw a slight improvement over Q2 in both units and expectations. But with the exception of Garmin, no one has gained meaningful share as TomTom continues to perform very well holding its leading position with around 50% PND share. During the quarter, we expanded our relationship with TomTom in Europe to include support of a brand new PND called the TomTom 1 Europe. Our maps are being used on the 1 Europe units that offer full Western European coverage. We are pleased with the development of this relationship and look forward to the success of this new product. This device began shipping in mid-September, but no revenue from the 1 Europe is reflected in our Q3 results because the royalty report is not received until October. A handful of product launch delays pushed some revenue in the future periods. In most cases, these delays have been caused by technical setbacks related to integration of hardware components with navigation software. We are not aware of any delays related to the map data. Of the six portable products we identified as delayed in our second quarter report, one was launched in Q3, four should launch in Q4, and one has been delayed until next year. We still expect a number of new NAVTEQ enabled portal solutions in the fourth quarter for most of our key customers including Garmin, Acer and Packard Bell. In addition, I would like to highlight two innovative new products using NAVTEQ maps. First, the Fujitsu Siemens n100, which comes with real-time traffic capability and MP3 functionality. About the size of a digital music player, the n100 is one of the smallest and lightest PNDs available anywhere. And second, Navman's new mobile Traffic Assist is a new GPS solution for smart phones that enables users to navigate to photos taken with their phone. In addition, the application combines navigation on the phone with access to valuable travel-related content. This product won the prestigious Mobile Choice Consumer Award this year. In North America, we saw map units for portable device more than triple in Q3 over the prior year. Based on recent data from MPD Group, a retail research firm, Garmin was able to achieve near 60% share in August. Another key customer, Magellan, showed share improvement in August after a weaker July performance. In terms of new business, AT&T is using NAVTEQ maps were announced or launched in North America in Q3, including new products from Uniden, Rand McNally, Whistler, and Via Michelin. These new entries are expected to contribute incrementally to Q4 revenue. In terms off-board solutions, Verizon Wireless continues to advertise the VZ Navigator service in the US. One of their executives recently commented that the service was exceeding their internal expectations and they would be extending the service to additional phones. We are encouraged by the positive feedback we have received and we look for an even bigger contribution next year as the subscriber count grows. Turning to product news, we launched our first Australia map in Q3, which brings our total coverage to 58 countries and territories and expands our global footprint to a sixth continent. With the significant driving population and a reasonably large and complex road network, we look forward to growing our business in this new region. I would now like to turn the call over to Dave, who will review some of the third quarter numbers in more detail.

Thank you, Judson. I'd like to provide some additional color on our results. As I do that, please note that for comparison purposes, our fiscal third quarter had 91 days compared to 91 days in last year's Q3 and 91 days in Q2. With respect to foreign currency, the average dollar euro exchange rate for the third quarter was $1.27, which compares to $1.22 in last year's third quarter. The stronger Euro increased third quarter revenue by $3.4 million and EPS by $0.01. Compared to the $1.20 rate used in our guidance at the beginning of the year, the stronger Euro increased third quarter revenue by $4.3 million and EPS by $0.01. On board or media-based revenue represented approximately 88% of our revenue in the third quarter with total map units sales up $2.6 million. Licensing revenue excluding the distribution business and other revenue comprised 80% of total revenue in Q3 compared to 76% in the year-ago quarter. Distribution comprised approximately 17% of our total revenue. We performed distribution services on 40% of our total in-dash volume, which was down from 43% in the prior year. The mix of distribution units in Europe was 57% and in North America was 22%, both down from the prior year. The year-over-year declines in distribution are caused by three factors: The downward trend in distribution units and related revenue should continue as non-vehicle and server-based revenue becomes a bigger piece of our business and hard disk drive navigation systems are introduced on more vehicle models over the next several years. We have calculated the change in the license fees paid to us from the third quarter of last year to the third quarter this year by our top ten customers in each of Europe and the Americas on their most popular NAVTEQ map product. This percentage change reflects base license fee reductions as well as volume discounts and other considerations. For the third quarter of 2006, license fees at our top ten customers decreased by an average of approximately 6% compared to a year ago. Turning next to our operating expenses, our cost grew 14% in Q3 over the prior year compared to 27% growth in Q1 and 20% growth in Q2, in line with our plans. On a constant currency basis growth would have been 11% over the prior year. On a sequential basis, total spending grew only 3%. The slower growth in spending was due to first, a revised spending pattern which we describe it to you at the beginning of the year; and second, a cost management program we began in the second quarter. The program involves delaying or canceling discretionary spending and was effective in reducing our Q3 non-distribution-related spending by approximately $4.6 million on a constant currency basis compared to our original plan. Database creation and distribution costs were up 14% over the year-ago periods but rose just 6% compared to Q2. Distribution-related and other direct costs represent approximately 21% of total company-wide expenses. Reduced distribution volumes also contributed to the slower cost growth. SG&A expenses grew 14% in the quarter compared to the year-ago periods but were actually down 2% compared to the second quarter. We continue to invest in the sales and business development resources we need to develop existing relationships and pursue new sales opportunities such as wireless solutions in emerging geographies especially in the Asia Pacific region. SG&A growth was also driven by higher stock-based compensation expense. Excluding stock-based compensation expense, SG&A expense grew 14% over the prior year and 2% versus Q2. Q3 reflected the full expensing of options in accordance with FAS 123 R which we adopted on January 1st. Total stock-based compensation expense was $2.7 million in Q3 of which $2.1 million was related to stock options. Of the total stock-based compensation expense $2.1 million was recognized in SG&A. We continue to look for cost reduction opportunities in 2006, but in doing so, we will not put our long-term plans at risk or compromise commitments to our customers. Excluding distribution-related expenses, we expect double-digit sequential spending growth in Q4, which is typically an important period for the completion of projects and initiatives in our annual operating plan. Our operating margin in the quarter was 26% compared to 24.7% in the year-ago quarter. Our effective tax rate was 32.25% in Q3. During the second quarter, we utilized the last of our net operating loss carry-forwards in Europe, and therefore we became a cash taxpayer for the first time in the third quarter. We do not expect to pay cash taxes in the US for several years. One quick comment on the balance sheet. Our accounts receivable balance increased significantly in Q3 compared to the previous quarter and the prior year due in large part to the timing of shipments in our in-dash distribution business. So, while days sales outstanding clearly increased, the weighted average age of invoices actually shrank to 38.5 days, which is the lowest level that it has been in the last three years. Now with respect to guidance, as Judson mentioned, we were pleased with our third quarter performance in light of the challenges we face this year. However, our results for the year being negatively impacted by a number of factors: First, we decreased our revenue forecast for the in-dash business primarily based on the year-to-date performance. We do not anticipate further deterioration in car sales trends for the balance of the year, but this is obviously a risk. Second, our European portable device business is not growing as quickly as we had anticipated. As a result, we felt it prudent to scale back our portable device revenue expectations in Europe. And third, we now expect to receive only partial payments in 2006 from the customer undergoing a restructuring which has reduced our revenue forecast. We now expect full year revenue of $565 million to $580 million and earnings per diluted share of $1.10 to $1.16. With that, I would like to turn it back over to Judson.

Thanks, Dave. I would like to wrap up the call this afternoon by offering a few comments on our year-to-date performance and offer a preview of 2007. 2006 has certainly been a challenging year. Our year-to-date performance has not met our own expectations, which is why we have adjusted our full-year outlook. However, I am pleased with the way we have executed, and we remain optimistic about our future growth potential. Since our IPO more than two years ago, we have said that we would strive to balance the demands for reinvestment in our business with a desire to demonstrate the operating leverage in our model. From 2003 to 2005, our revenue exceeded our forecasts, and we were able to comfortably increase investment during the year. The opposite has been true this year. In 2006, we have responded to slower than expected revenue growth with a targeted cost management program, which has been effective. However, it would not have been consistent with our long-term objectives to offset the impact of every dollar of the revenue shortfall with cost savings. We're very much aware of the changes in our business and they have indeed caused us to think a bit differently about next year. Only three weeks ago, we kicked of our annual budgeting process for 2007. This is one of the most important things we do as a company and it involves input from employees at all levels from around the world. It is during this two-month process that we determine the appropriate investment level to grow the business and respond to the needs of our customers. The determination also involves careful consideration of our forecasted of revenue growth, targeted margin expansion, and desired profit growth. We see positive signs in the marketplace for next year. For example, 81 vehicle models in North America are expected to be launched or redesigned in 2007, up from 69 in 2006. Of these 81 models, over 70% will offer in-dash navigation and approximately one-quarter of those will be doing so for the first time. In addition, Global Insight, a leading research firm following the auto industry, estimates that SUV sales next year will increase 15% in North America when compared with this year. In the consumer business, we also see a steady pipeline of new portable products for our customers including more portable multimedia players and travel assistance, which will incorporate navigation with other useful functions and new form factors that will make portable GPS devices even more attractive and convenient. More and more navigation and location-based services solutions for the mobile phone are also coming to market. So while it is still early in our budgeting process, we are upbeat about our prospects and feel good about our ability to deliver margin expansion and profit growth in 2007. As we look even further into the future, we're confident in our ability to overcome challenges and take advantages of the growth and opportunity we see in the marketplace. This concludes our prepared remarks. Thank you for your attention. Now I'd like to ask the operator to open the lines so that we might answer questions.

(Operator Instructions) Your first question comes from Noelle Swatland.

Hi guys, just two quick questions. First, could you just provide an update on the pricing environment? I think last quarter you had said that you felt like the in-dash pricing was a little bit tougher. I guess just on that, is it possible to see in that type of environment any renegotiations around some of the, say, 2007 business even though I recognize most of the bidding that your competitor is doing is on the '08 models? And then just lastly you had mentioned that you had given some new thought to your '07 guidance moving forward. Does that mean that we should start to anticipate a quarterly update in terms of your guidance moving forward? Thanks.

Well, I think there were two or three questions there. First of all, I don't think we have detected any big changes in the pricing environment. It remains competitive. As new markets emerge or new segments emerge, it's important for us to educate new entrants as to the value of the map content and the vital role it plays in applications which the consumers are looking for. We're pleased with our approach to pricing and our consistent application of our pricing strategy. So, we really haven't detected any big changes in the pricing environment. With respect to I think another aspect was renegotiations, I would say that occasionally it may become necessary for us to enter into discussions about renegotiation, but I would say for the most part when we finish a negotiation, it's done, and it holds. I think your final question was about our guidance policy. I will let Dave answer that.

Yes, I think it's our intention in the future on quarterly calls to either confirm or update guidance going forward for the full year.

Terrific. And then just lastly --

That was two questions.

Sorry.

I tell you what. You come back in after and we give somebody else a chance.

All right. That's fair, yes. Thanks, guys.

Thank you, sir. We will go to Greg Cappelli.

Don't cut me off, Dave. Hi, guys. I guess my question is, can you just talk a little more about how order flow for handhelds are shaping up in the fourth quarter and what seasonality was like in Europe moving from Q2 to Q3?

I think with respect to seasonality, Greg, that we didn't see any difference this year that we saw last year both in the in-dash and the portable business. And with respect to Q4, I think I make a general comment that we are pleased with the growth in the environment we expected to grow. I think getting more precision on that, you probably do a better job getting it from the people who are directly with the retailers. The public companies who are directly with the retailers can probably give you a better perspective on the details of how that market is going to grow in the fourth quarter. But we are enthusiastic about it.

Okay. And then just a quick follow-up. When you think about the model here and how it's evolved, is there any reason to change our thought process on your 40% incremental margin long-term guidance perspective going forward?

I can't remember us ever saying 40%.

Incremental margin.

Incremental. You know, that is a very rough benchmark, and each individual year we make our own judgments about what we want to do. As you have seen from historically, sometimes we have been higher than that, sometimes we have been lower. That's a very, very rough benchmark.

Okay, all right, thanks guys.

Thank you, sir. We will go to Maynard Um - UBS.

Hi, thank you. Can you just expand a little on the mobile side and the business with Verizon? If I understand correctly you received a small amount of the monthly fees. But when do you anticipate this becomes a more meaningful percentage of revenue? Can you just provide the percentage of the database creation and SG&A that were related to fixed costs? Thanks.

I think the first question had to do with when will revenue from off-board become more significant. I think we'd have to just to point out that we are still in the infancy of this business. We're very pleased with the consumer reaction but we're really at the onset of this evolution. I think it's going to take, over the next two or three years maybe, for this to become significant. We're pleased with the progress we've made, but this is a new segment of the business, and it takes time to work through a lot of technical issues and market issues and understanding the issues.

This is the portion of expenses that are generally, relatively fixed, I think is the way describe it which we typically put in the 10-Q, but its 54% of our database creation distribution costs we would classify as relatively fixed and 75% of our SG&A.

Sir, we will go to Bill Benton -William Blair. Bill Benton -William Blair: Good afternoon, guys. Maybe just a first clarification. If you could just Dave, on the AR that was up sequentially, obviously given the delay in when you received those royalty reports, that would suggest maybe an unusually strong July and August for in-dash shipments. Is that correct?

No, I don't think we saw that particularly. I think if you look at the unit volume, I think unit volume from in-dash declined about 6%; last year it declined 5%. So that's pretty much about the same kind of seasonality that we've had in prior years. I don't think, in terms of the timing of shipments, what we're saying by that is there were more September shipments perhaps than there were July and August. That's what we meant by timing. Bill Benton -William Blair: I am trying to understand because you get your royalty reports about 30 days afterwards so it will be more of an August shipment than a September.

Well, most of that, when we're talking about shipments, we really talking about the distribution business and that doesn't depend on royalty reports because we're actually shipping the units. Bill Benton -William Blair: Okay.

So we don't have to wait for a royalty report on those. Bill Benton -William Blair: Okay. Thanks for that. And then when you talk about next year, you used the term “caused us to think differently about next year” in terms of budgeting. You talked about an expansion of margins and profit growth, you didn't talk about revenue. Was that just your feeling that with the pricing competition and those things out there, a little more cautious in terms of revenue growth? Could you expand on that?

I think we expect revenue to grow. We're not at the point where were prepared to quantify what's going to happen in '07. We are in the middle of the process of doing that, which is what Judson was describing. I think what we're trying to communicate there, Bill, is that in large part, we decide how much to spend based on what we think revenue will be and a desire to show investors that there is operating leverage in the business. So, those two things influence how we decide how much we can spend. Bill Benton -William Blair: Okay. Okay great. Thanks a lot.

Thank you sir. We will go to Steve Koenig - Jefferies.

Hi, congratulations. A question on the PNDs and the volumes that you had. It looks as if the unit growth was okay, but revenue growth even after we look at reversing the receivables turned out to be pretty good. I am just wondering, are you able to say within say the PND category or within the in-dash category that your mix of units allowed pretty good pricing results? You know, maybe better than usual?

I'm not sure how the mix affects pricing. They are really too independent things. If what you're asking is, you know, relative to our price decline, was there more or less on the in-dash side than on the portable side? I think it's pretty consistent. I suppose that if we look at it, it would probably be a slightly greater decline on the in-dash side and less on the portable side. But if your question is about ASPs rather than pricing, I don't know that we know enough about ASPs to look at it to comment.

I think it was probably more about ASPs. It just looks like ASPs within a category, with an PNDs may have improved this quarter and in-dash may even have improved this quarter as well. I just wondered if you track it that way, and if that's consistent with what you had seen?

I don't think that we've looked at it close enough to know the answer, unfortunately.

Okay, fair enough. Thank you.

Thank you sir. We'll go to Jeff Rath - Canaccord Adams.

One question here as it pertains to [ADAS]. There seems to be an increasing awareness of this opportunity. I was wondering, Judson, maybe if you could give us your view of that market; timelines, opportunities, scope, and what might be some of the applications that you see rolling out in the coming years? As an adjunct there, if you feel that the data sets that you're building today are sufficient to enable that functionality in a lot of your OEM auto customers? Thanks.

Okay. Well, first of all, we continue to believe that [ADAS] is an attractive long-term opportunity for us because it has the possibility of getting digital maps into more cars for uses other than navigation. You are correct. We have also noted that there appear to be number, perhaps more than the normal, of articles and even commercials that deal with the subject and are somewhat, if you will, teasing the public about what the possibilities are. Because this is part of the automotive industry, keep in mind that this kind of technology use is going to be adapted over a long period of time. This isn't something that's going to pop in the market anytime soon. We're very pleased, we already have a major customer which is using our digital maps for [ADAS] applications and we expect more to follow over the next two, three, four years. But this is going to be a long timeline. And yet an attractive one, because we think the types of applications that they're thinking about, a number of those applications are better informed with maps. Maps are not the only sensor or source of additional information or data that could impact an ADAS application, it could be radar, it could be other kinds of technologies. But when it comes to digital maps, things like lane departure, things like curb warning, adaptive cruise control, adaptive front lighting, adaptive transmission are examples where, in the R&D work that we've been working on for many years, we think there's a good body of evidence that suggests that this is a direction that the car OEMs want to go in. Once again, what comforts us and we get excited about is the fact that this is a different use of digital maps. It is addressing and helping the car companies to address a very real need to put more technology into the automobiles to reduce fatalities. I think that fundamental drive is not going to go away anytime soon. So we're going to continue to work and invest on this. I think the last aspect of your question had to do with building the data sets. And obviously, since we've been working on this for well over ten years I would guess, as we are creating each year's plan in terms of what we want to do with the database, we're taking into account the long-term needs from potential ADAS applications and incorporating those requirements into our map collection and building efforts. So, it's part of our long-term roadmap.

Thanks.

Thank you sir. We'll go to Peter Friedland - Soleil.

Hi guys. A couple of clarifications. First, on the delinquent customer, could you just walk us through how that impacted your unit numbers in Q3 and in Q2? The second thing is if you could give some color on the timing, you mentioned that some PND royalty reports were pushed into October and just as much color as you can provide there would be great? Thanks.

Peter, it's Tom. On the first question, all of the units related to the delinquent customer are in the figures we reported in the presentation and in the remarks. So, there's no adjustment there.

But does that mean that the units were left out in Q2 and they came back in Q3?

No, I don't think so. I think the units have always been in there.

I think the units were in Q2 without the revenue and probably the revenue without the units in Q3.

Okay.

Not sure. We have to check on it, but I think that's the way it worked. With respect to the royalty reports, the only comment we made was that with respect to the TomTom 1 and this is typical of a customer, we would typically not get that royalty report until sometime, in the next month. Typically, that's not in time to get it into our financial results. That was the case with TomTom.

But does that mean your PND, the numbers that you reported, are they more indicative of June, July, August numbers?

That's probably right.

And has that always been the case?

Yes.

Okay, thank you.

Thank you sir. We'll go to Steve Lidberg - Pacific Crest Securities.

Good afternoon. I was wondering if you could talk about the adjacent data streams that are starting to flow into PND devices and systems; that being real time traffic monitoring as well as fuel prices and how that may or may not change your value proposition as you go into customers that may be looking at negotiating with separate sources with regards to providing those features? Thanks.

Well, the adjacent data streams that you mentioned, fundamentally in our opinion increase the value of the systems that you're talking about, increase the utility to the end consumers. Just a simple example is, we think there are some consumers who may feel they may not have an interest in a map system whether it's in-line or PND. Yet when you begin to talk to them conceptually about introducing real-time traffic and other dynamic data, all of a sudden, it takes on a much bigger value proposition to the end consumer. Therefore to answer your question, we think this is a positive for us to be able to offer real-time traffic and in the future other dynamic content. It provides a service to our customers in that we're figuring out what this is, how to get it, licensing it, or developing it, as the case may be. Finding a way to properly quality control it, finding a way to properly tie it to the map, so that it works seamlessly with the application. We would look at this as a positive influence as we go forward, and I think time will tell just what consumers ultimately want. But our belief is that real-time traffic and other dynamic content added to our static content maps are going to be a positive.

As you look at the customers like a Garmin or TomTom, however, they seem to be presenting a strategy or be willing to negotiate independently with the separate providers. Is that generally the occurrence, or is that a relatively small portion of the customers as you see the market developing?

Well, I think there's going to be a variety of different solutions. I think at the moment, it is a small portion. But the point is, if we have a customer who feels they want to do that on their own for some set of reasons, that's their choice. The fact of the matter is as this area of dynamic data is going to become more complex and richer as we look to the future, there's going to be more and more involved in working with it. We are able to get involved in this, do a good job of integrating it and quality controlling it as I said and be able to do that more cost effectively than if anyone of our customers who are out there trying to do it on their own. So, some may choose to go on their own and I would expect many wouldn't because it would be more efficient to get it from us. But, this aspect of the business will evolve over time and there will be a variety of different models and we will be flexible in working with our customers to offer the best we can and they can make their selection as to what they want to use and what they don't want to use.

Great. Thank you.

Thank you, sir. We will go to Brett Manderfeld - Piper Jaffray.

Hi guys a couple part question related to market share. I think first on the index side, I think you mentioned that Europe, you think you could see some market share increases looking out over the next couple of years. Can you comment on that related to the US? On the PND side, wondering if you see any market share shifts looking out to '07, especially given the new TomTom win? Thanks.

Well, I don't think we are in a position to be very specific. I think what we were saying that our share of the business when it comes to vehicle, I think, I said we would expect to be about the same or actually drift upward slightly over the next few years. I think our share of business in the North American vehicle for that part of your question, is relatively stable. So I don't see any big changes there. With respect to the portable device sector, I think we're well positioned for our share of business there as well. I don't know at this moment that I would make a forecast or predictions about how it might change, but we think we're well-positioned and pleased with our share of business in both Europe and North America for portable devices.

Very good. Thank you.

Thank you sir. We will go to Jay Vleeschhouwer - Merrill Lynch.

Thanks. Good afternoon. Judson, I'd like to ask you to elaborate on some of your in-dash comments. What are your expectations in terms of how quickly in-dash pricing could come down? Is there any indication at all that the car companies and the dealers might be willing to forego some of the margin that now seems to account for a good portion of that four-to-one difference in pricing between in-dash and PND to finally drive the market? I think it was something you touched on in our last call. Could you elaborate on why you think some of the renewal and take rate programs might be a little slower? Is it a pricing issue? Is a market coverage issue or what?

I think with the first question with respect to in line, in-dash pricing, you are correct. This is something we've mentioned before. But I'm not in a position to predict that it's going to come down any time soon. I think what we have said is that there's been a bifurcation of sorts, if you will. I think because the technology is so popular, you have on the one hand some OEMs, potentially for the luxury segment, feeling that this is something that could actually go north, not south, because of the popularity of the technology, the consumers want it, and I think there is a thinking that maybe over time there is going to be more content, more functionality. It's going to become a more important part of the car. At the same time that bifurcation involves the OEM is realizing that they really need to address the popularity of PNDs in their space and are coming up with as we've described a more of a lower-cost in-line system. There are multiple examples of those kinds of systems at retail prices less than a $1,000 or less than a EUR 1,000 that are in development. But again, I think I said it might be calendar year 2008 and even 2009 before I think that this would be significant enough to be noticeable. So, I think there's going to be more of a bifurcation there and I'm not in a position to predict what might happen in 2007 with in-line system prices because of all the reasons that we've described and just repeated. With respect to the renewal program for maps, which is really the update program and the trip program, which is really the take rate improvement program, I think we're very pleased with the take rate improvement program. I think that we've demonstrated time and time again where this has been helpful, where it is actually created new revenue opportunities both for the OEM and the system vendor, and this has good traction and a very good track record. We are less pleased with the renewal program for maps because it's just so obvious that this is something that should catch on and it's growing, but simply does not make the priority list for OEMs or their dealer organizations when they have got so many issues that they're worried about and dealing with. I don't have to enumerate all the challenges of the automotive industry, but then when you try to gather attention about a renewal program for maps and what is fundamentally a driver of their consumers' long-term satisfaction, that just not the most important thing on their list. That doesn't mean that we're not going to keep banging away at this and we expect to see continued progress on this and dividends from it. But we wish it were going faster, too.

At your developers conference a few weeks ago in LA, there was an interesting product roadmap comment that may tie into this issue with updates and that is your intent apparently to do more frequent, even so-called continuous, updates of the map. Is that something you really need to do and what might the business impact really be as a result of that?

Yes, we clearly have an expectation. I think that our customers want it. Really, if you think about it, it's creating a more accurate map, reducing the latency between when the real world changes and when that change is incorporate into our map and more importantly when it's incorporated into the customers' map. I think all of our customers have an interest in that, obviously, in the in-dash business. They first have to build the capability to get that updated information into the vehicle, but there is an appetite for it and it's something that is definitely a priority for us. I think what it does, Jay, is it represents an opportunity to perhaps move to a subscription model over time where somebody will sign up to receive continuous updates rather than paying us the one-time fee that 88% of our customers do today.

Thanks, Dave.

Thank you, sir. We will go to Max George - Ivory Capital.

Hi, guys. Just had a quick question. I think you mentioned it earlier in the call. What was the percentage of the media revenue as a percent of total for the quarter?

88%.

It was 88%?

Correct.

Right. Perfect. I was reading it wrong. Thank you.

Thank you, sir. There are no further questions. I will turn it back to you for closing remarks.

All right. Thank you everybody for joining us today. Have a good evening.

Thank you, sir. Thank you again ladies and gentlemen, this brings the call to a close.