Peter Blackmore - President, Chief Executive Officer, Director Viraj J. Patel - Interim Chief Financial Officer, Vice President, Chief Accounting Officer, Corporate Controller

Steven Koffler - Khan Real Rahiv - BWS Financial

Good afternoon. My name is Angelina and I will be your conference operator today. At this time I would like to welcome everyone to the UTStarcom Second Quarter 2009 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. (Operator's Instructions). This call will include forward-looking statements relating to, among other things, the company's restructuring initiatives and projected business models. Forward-looking statements are generally indicated by such words as will, expects, estimates, goals, plans, or similar words. These statements are forward looking in nature and subject to risks and uncertainties that may cause actual results to differ materially. These risks include the ability of the company to realize anticipated results from operational improvements and execute on its business plans, as well as risk factors identified in its latest annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K as filed with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements. In addition, today's call will include certain pro forma non-GAAP financial measures. The most directly comparable GAAP information and reconciliation between the pro forma, non-GAAP, and GAAP figures, is attached to the company's earnings release issued earlier today and filed in a Form 8-K. The reconciliation is also available at UTStarcom's website in the investor relations section. Now I would like to turn the call over to Peter Blackmore, Chief Executive Officer.

Thank you very much and good afternoon, everybody. I appreciate you joining our call. I'm joined today by Viraj Patel, our Interim Chief Financial Officer, and I just want to mention that Barry who would normally be on the call has got a very good excuse for not being here, his wife just delivered their second child, a baby boy, this morning. So our best wishes go to them. What I wanted to do is start with a discussion of our progress towards 2010, which I think is the main part of what I'd like to discuss today. It includes an update on our cash position, an update on our progress on restructuring efforts, and also importantly, an update on our bookings. I'm sure you would agree that all of these help drive our momentum towards the target business model we have set for ourselves for 2010. I want to highlight that we ended the quarter with $276 million in cash and equivalents. That means in the first half of this year we used less than $38 million of our cash resources, which is an indication of the increasing stability in our business. As we continue to execute our restructuring and lower the operating expenses significantly, we expect the cash flows to reduce and to stabilize in early 2010. Therefore, we are becoming increasingly confident that we'll end 2009 with plenty of liquidity to grow the company. Since we announced our major restructuring in June, we have made good progress. As an indication of this we reduced the employee base by 1,100 people in June and July. Therefore we're moving very fast and we'll continue to move forwards with further reductions in quarter three. I also want to remind you that our headcount will decline further in quarter four when our manufacturing operations are outsourced. All of this shows we are currently on track to complete the restructuring by the end of quarter four, and the run-rate operating expenses will decline rapidly as a result. Very importantly I also want to take time to recognize the support of all of our employees as we go through this. It's not an easy time and they're showing great professionalism and great loyalty to the company as we go through this. Let me now turn to bookings. In the second quarter we continued to see good demand for our IP systems business in our target markets, and I'll discuss some wins in a moment. Based on our sales pipeline for the balance of 2009, we continued to expect to have good booking levels in the second half of the year. We expect these orders to translate into revenue in 2010 as our revenue recognition cycle is typically nine months, depending on the specific product and contract provisions. In addition, our balance sheet shows a meaningful amount of deferred revenue from products already installed and waiting for FAC or final customer acceptance. We expect to recognize much of this revenue in 2010. Let me move now to comment briefly on quarter two, before Viraj takes you through it in more detail. Liquidity revenue of $80 million is driven mostly by the IP based infrastructure business that is core to our long-term strategy. This is an important indication that our IP business did achieve growth in quarter two compared to quarter one. Our total revenue did decline sequentially because in the first quarter it included $39 million in revenue from our Korea handset business. In contrast, the second quarter did not include any revenue from the Korean operations. We have now closed the Korean operation, asp planned, on July the 31st, but there will be some revenue in quarter three as we sell off remaining inventory. I'd now like to go into a little bit more detail on our business units, starting with the multimedia communication unit, MCBU. I think you know this business unit provides IP-based products including IPTV and the related IP signage offering. Our IP TV wins during the quarter include expansion contracts with China Telecom across a broad range of provinces, which include Fujian, Hainan, Shenzhen, and Shanghai. A partnership with CCTV also enabled China Telecom's first IPTV deployment in Hunan. Our PDSN offering also received a contract expansion order from China Telecom, covering 10 provinces. Today we are the market leader in China's pDSN market with approximately 35% share, and that is ahead of major competitors including Cisco and Starent, as well as the local Chinese competitors. During the quarter, the multimedia business also achieved meaningful operational milestones worth nothing. These include in April, China's first mobile TV deployment which went commercial during a (inaudible) forum. China (inaudible) market is also starting to utilize the IPTV 2.0 set-top box standard. In the next several quarter we plan to upgrade the existing level one set-top boxes to level two, and this is primarily a software upgrade. Next we finished the deployment of dual SP for China Telecom. This is a particularly noteworthy feature because it lets the operator introduce alternative content and service providers. We also continue to work on building up our IP signage business, and I'd remind you this has potential to add additional revenue streams based on advertising revenues. We also importantly started a pilot project with SMIC that explores new opportunities for interactive TV service using our IPTV solution. This is a cable, and this can target an additional 1.5 million subscribers in the next three years. And looking outside China and India, our IPTV work with Ashk and MTNL launched an infotainment service which provided commercial and businesses information and poll-based advertising service revenues via IPTV. So there's been a lot of activity in the whole IPTV area in quarter two. For broadband, let me highlight a number of areas. As you know, we continue to have the leading market share in India's broadband market and we've also recently started to reenter the China market successfully as well. During the second quarter our MSAN offering won business from a range of customers in these regions. Most notably our wins include a large win from PLDT in the Philippines, additional business from both BSNL and Barthi, who are both based in India. And importantly in SoftBank we have products that are in evaluation-testing status which I've mentioned before, but we now have received pilot orders for the TN product in SoftBank. We’ve also commercial deployed our GEPON product with China Telecom in 25 cities across 11 provinces. Also I want to mention that we're in advanced discussions with BSNL for the phase three order for the contract we have with BSNL, and this order will be place late quarter three, but more probably in quarter forum this year. We're also working on building our professional services, and in the second quarter we signed multi-year professional service contracts with both China Telecom and (Inaudible) Telecom. We want to continue to support our customers and particularly our systems offerings with long-term professional service contracts that include consulting, the areas of network design, project management and system utilization. This helps our customers ensure the project deployment will go smoothly and their network is affective over the longer term. Importantly, the service contracts are typically multi-year arrangements which further solidify customer relationships and obviously lead to repeat business. And these contracts also tend to generate good grace margins consistent with the rest of our systems offerings. I'd now like to give a bit more color around our restructuring progress. As you remember in mid-June we announced a series of corporate actions that will position UTStarcom for profitability in 2010. These actions together streamline our operations and product focus, and I also would like to emphasize that this restructuring is consistent with the priorities we outlined in late 2007 which were to provide innovative products and services based on IP technology to focus on selected markets where we have good position and significant growth potential, and obviously China and India are the two most important, and obviously to leverage our strong relationships with telecom carriers which solve not only provide technology, but solve their problems and help build their revenue streams. The actions we announced, I will remind you, will reduce our 2010 operating expense to below $100 million a year, and our restructuring plan is carefully put together to allow us to achieve this goal without sacrificing our long-term strategic focus on key IP products, and also to enable us to continue to be successful in selected geographic regions. As part of this we stated our intention to reduce our support for certain legacy businesses, and as we approach 2010 our business will be almost entirely focused on IP-based systems products and the related professional services. This benefits our ability to use our cash well, and also removes operational risks with handsets, which can have a more volatile demand. We’ve also since the announcement aggressively moved to change our operation approach towards the various unctions. In particular we focused our research and development investment and employee base around the products and regions which will drive the highest growth and profitability. We also made the important decision to outsource our manufacturing operations and expect to complete that process by the end of quarter four this year. In June I said that I would reduce the headcount by 2,300 people and I'm remind you that by the end of July we had already reduced our employee headcount by over 1,100 people. Restructuring charge we took in quarter two is for approximately 1,850 people and we plan to take an additional, but smaller charge, in quarter three, for the balance of the restructuring. The aim, as I stated before, is to start 2010 with less than 2,000 employees. Our sales strategy is in place cross-regions we operate in. Our lead markets, to remind you, are China and India, and they run primarily with a dedicated direct sales team focused on our broadband and IPTV products. In other regions we have a combined approach that uses direct sales team to support current or high potential clients which supplements this effort with channel and OEM partnerships, and ew continue to work on building up OEM partnership sin key areas such as Latin America and parts of Europe. I'd also like to remind you that as we stated in June, we are continuing to work on monetizing the whole joint facility which as you know, represents a considerable asset. With that update I’ll now ask Viraj to review the quarter two financials and I’ll comment at the end of this, before our Q&A, on our approach to the targeted business models. So, Viraj? Viraj. J. Patel: Thanks, Peter. We'll start by discussing the consolidated GAAP results as this afternoon's press release a number of significant items. It's important to note that the majority of the special items relate either to our restructuring announcement or to our Korea-based handset business. In the second quarter of 2009, our GAAP revenues were $80 million compared to $633 million in the prior quarter a year ago. The vast majority of the difference is due to PCD's divesture that was completed in July, 2008, and the continued decline in our past business. The GAAP gross profit in quarter two was $-16 million, or -20%. As indicated in this afternoon's press release, the gross profit was significantly impacted by three major items. First, as you recall on July 1st we announced a settlement with PCD. As a result we took a charge of $11.1 million in quarter two related to that agreement. We also provided an additional charge related to the inventory write-downs of $17.6 million, and for the China handset business we recorded an additional charge of $5.7 million in quarter two. Again as I point out, the majority of these charges relate to our Korea-based handset operation. Our GAAP operating expenses were $70 million, and also greatly impacted by certain significant items. As you'll recall, we recorded a charge of $28 million as indicated in the press release, related to the restructuring charge that was announced earlier. This charge is almost entirely related to one-time severance payments to impacted employees already identified. We'll take, under the smaller restructuring charge in Q3, as the rest of the workforce reduction is finalized. The second item is we have a benefit in our P&L of $10.5 million related to the recovery of bad-debt accounts reflecting our increased success in collecting our old receivables. A smaller amount of $1.4 million net gain related to our PCD divestitures is already reflected in the P&L. The GAAP operating loss came at $85 million. Below the operating income line we have recorded $5.4 million of other income primarily relating to the Indian rupee improvement against the US dollar, partially offset by an investment impairment charge. The result of the above is as second quarter 2009 net loss of $84 million or loss of $0.66 per share which compares to a net loss of $39 million or $0.31 a year ago. Now let me take you through some non-GAAP results. As you know we have taken actions to greatly narrow our focus on IP-based products and related services, including our divestiture of PCD in July and the volume down of our Korea-based handset business. At this point I want to highlight the pro forma non-GAAP results which excluded these activities. These non-GAAP results can help consider our performance in the context of our 2010 business model. However, these non-GAAP results do not adjust for the restructuring charge or other special items unless those items are specifically tied to one of the business units we have exited. After making the relevant adjustments, our non-GAAP revenue and gross margins for the second quarter of 2009 were $83 million and 14% respectively. This compares to the second quarter 2008 non-GAAP revenue and gross margins of $184 million and 25% respectively. Both 2009 metrics reflect the anticipated decline in our past business. The 2009 non-GAAP gross margin is also impacted by the $5.7 million inventory charge for the China handset business that I mentioned earlier. Our non-GAAP OPEX was $68 million in the second quarter. Even including the special items from the period, these results compare favorably to $96 million in non-GAAP OPEX a year ago. Clearly this is a marked improvement that indicates we are making process towards reducing our cost structure. The Q2 non-GAAP operating loss was $55 million versus a loss of $49 million a year ago. Let me quickly take you through some individual business units' discussion. For multimedia segment, revenues and gross margins were $39 million and 31% respectively. This compared to $74 million and 39% for the comparable quarter last year. As mentioned in prior periods, our multimedia segment is impacted from China's move from the past technology which accounts for the decline in the revenue and partially offset by growth in IPTV systems. For broadband, revenue for quarter two of $14 million, which his down from $36 million a year ago, reflecting our planned edit for certain low-margin broadband products. Outside from revenue recorded now, we do have a significant amount of broadband activity reflected in our balance sheet as deferred revenue and customer advances. The gross margin were comparable to last year which is 5%. Our services business directly support our infrastructure customers and deployment projects. In Q2 the revenue from the service business was $14 million. This continues to be a high margin business for us as reflected in the margin which is at 39%. For handset, revenue recorded was $13 million and none of it reflects the active (inaudible) Korea operations. The year-over-year decline from last year's quarter is entirely related to the anticipated decline in the past handset activity. The negative gross margins are mainly due to the significant items I described earlier. You recall that in June we had outlined a target 2010 business model that includes gross margin in the high twenties. You can see that our comfort with this target is driven by the performance of our IP baed products and services. Briefly touching on the cash flow in the cash position, as we execute our restructuring and transition, the company towards 2010, we continue to be more aggressive on our working capital management actions. As Peter said, we ended the quarter with cash and short-term investments of $276 million. At this point I'd like to give the call back to Peter so he can provide his views regarding our 2009 business objectives and model.

Thanks, Viraj. So at this point I'd like to make a few comments about the rest of 2009, and importantly, our progress going to 2010. Before I do that I'd also like to comment that as I think you all know, we announced earlier this week that Hong Lu is stepping down as Executive Chairman. He will continue to be actively engaged as a board member and we appreciate all his work and really wish him very well as he changes his role. The board also wants to increase its expertise in the China market and we are looking at expanding our board to include board members with more familiarity with the China market. I'd like you to also know that I'm spending over 50% of my time in China. As we are in the middle of a major restructuring and a transition of the company to a new operating model, I will not provide specific third quarter guidance. What we are very focused on is delivering the cash position, the bookings, and the restructuring to position us for our new model in 2010. As I said in June, the business model for 2010 is built around revenues in excess of $350 million, gross margins in the high twenties, and operating expenses below $100 million. Achieving these metrics will drive profitability and our objective is obviously to exceed these numbers. Our 2010 revenues will be driven largely by the 2009 bookings plus a proportion of the bookings in the first quarter of 2010. In addition, we'll also have the benefit of a meaningful amount of deferred revenues, much of which we shall recognize in 2010 as we get a final customer acceptance. For gross margins, I repeat the target outlined in June that calls for a gross margin percentage in the high twenties. We are comfortable with this target, giving our results on the IP based products and servies in the first half of this year. The anticipated gross margins are consistent with this expectation. The second quarter operating expenses included a number of one-time adjustments, bu the underlying quarter two run rate is consistent with the target levels outlined in June, and the OPEX run rate clearly will decline significantly in the second half as the restructuring takes effect. Our target business models continue to reflect a quarterly operating end expense of under $25 million in 2010. The drivers of our year-end cash levels include the starting point of ending June with $276 million in cash and equivalents. We expect our operating loses in the second half of 2000 to be lower than the first half as we significantly reduce our OPEX and benefit from the demand of our IP products. And in the third and fourth quarters we will pay the restructuring of approximately $40-$45 million, the majority of which is one-time cash severance. A large part of this is already being reflected in our quarter two operating expense as part of the restructuring charge. So I repeat that we are confident that we have ac ash position that allows us to pursue our desired growth opportunities and do that successfully. I will now ask the operator to open the call for questions. Operator?

(Operator's Instructions) Our first question is from the line of Steven Koffler from Khan Real. Steven Koffler - Khan Real: Hello. A couple of questions here, if I could I'd like to focus on gross margins a little bit. Did I hear, Viraj, correctly, that the pro forma gross margin did not exclude $5 million roughly in inventory write-down in handsets? Viraj. J. Patel: That's right. Because the pro forma table present only excludes the Korea and the PCD business. Steven Koffler - Khan Real: All right. So that $5 million write-down that was excluded or — this is confusing, I’m sorry, but it was not excluded — that relates to ongoing handset business? Viraj. J. Patel: In China, that' exactly right, Steven. Steven Koffler - Khan Real: All right. Then one could easily make the argument that could be excluded. So if we added that back just roughly speaking we would take 5 million divided by roughly 80 million in revenue and add back about six points plus in gross margin? Am I thinking about this correctly? Viraj. J. Patel: Yes. Steven Koffler - Khan Real: Okay. So if you think about it that way, gross margin was something closer to 20%. Viraj. J. Patel: That's correct. That's right. Steven Koffler - Khan Real: Okay. I just wanted to make sure I understood that. Now then onto the segments, I mean clearly what's going on with the IP related is great, broadband gross margins at 5% — I forget exactly the breakdown, but I remember from year's past, UTStarcom was competing pretty aggressively against Wawe and others in China for DSL lines. And that's never been a price supportive business, shall we say. I mean is that still a big part of what you're doing in that area and is that the reason or part of the reason for the gross margin?

The main reason was low volume of revenues in broadband. We are being very careful when we target the China business. We've targeted a lot of GEPON that have been specific about which provinces we go into to get a better margin position, but you're right, the China broadband business will always be competitive. Steven Koffler - Khan Real: I mean what's the capability of bringing these up to something like the corporate average, and what was the amount of revenue in this area again, I forgot? Viraj. J. Patel: For the broadband sector it's about $14 million. A very small percentage right now is in China because primarily it's driven from the international markets, but we have entered the China markets right now. Steven Koffler - Khan Real: All right. Again, why are you confident that this can get to something closer to the targets you want from such a low level?

Well, our international business is — we're hopeful of good success in Japan with the transport network TN product. Broadband margins in Japan have typically been very good and the Japan market, I think you can check yourself, it continues to have high margins. We also get high margins from other countries in Asia and so we just have to be careful what we do in the China market to your point. And in India we get reasonable margins outside of the BSNL contract in companies like Barthi, Tata, Reliance, which are good broadband customers. Steven Koffler - Khan Real: Okay. Maybe I'll tackle that offline a little later. I've got two other areas of question. I'll just do one now and maybe go back in queue for the other and give someone else a chance. On the Hanzo facility, can you remind us, is that about 2 million square feet? Viraj. J. Patel: Yeah, the built-up space is 2.5 million square feet. Steven Koffler - Khan Real: Okay. And how much of it is being occupied by UTStarcom now?

It's less than 50% which is why we think we could do very well in a smaller facility more appropriate to our needs, but it's a very nice building. Steven Koffler - Khan Real: Yeah, I know. I’ve been there. I'll go back in queue and come back in if there's time.

Very good. Thank you.

(Operator's Instructions) Our next question is from the line of Hamed Khorsand from BWS Financial. Rahiv - BWS Financial: Hi . It's actually Rahiv calling in for Hamed. Sales seem to be declining in China and I wanted to see what the competitive landscape was treating you like there.

So the competitive landscape really hasn't changed throughout this year so just give me a bit more color in your question as to what you're looking for? Rahiv - BWS Financial: I'm trying to see why it seems declining so quickly. I mean is it just the down economy, is it just more competitors are coming in or the competitors are dropping prices —

No, no. I mean, historically it's due ot the decline in the PHS revenues which were ac combination of a lot of handsets and some PHS infrastructure. If you remember in January of this year the Chinese government said the PHS frequency would be stopped by 2011, and that really brought the PHS business to a grinding halt. So that's the primary change in China. What we've then been doing is building up our IPTV business which has been growing and entering the broadband market. But obviously those revenue revamps are slower than the past decline. Rahiv - BWS Financial: Are you anticipating winning more Chinese contracts to ramp up the sales?

Absolutely, both in IPTV we continue to have the leading market share, continue to win contracts, and broadband, as I said in respond to the previous question, will target the broadband market particularly in GEPON and the TN product, but will pick battles to try and get a good margin rather than just go face to face on every bid. But clearly we have a small market share on broadband, so plenty of potential to grow broadband which his a huge market in China. Rahiv - BWS Financial: Do you think you'll be a part of the Chinese activity in regards to network equipment anytime soon?

Well, with the transport network and GEPON products, absolutely, yes. We are already. We won GEPON contracts in quarter one, we won some more in quarter two, and also the PDSN which we won in quarter four last year and there's a follow-on business for PDSN which we just won in quarter two. So both those areas which were new businesses for us, we've broken into the market. Rahiv - BWS Financial: So should we expect to hear more news going forward about more activity?

Yes. We're pushing very hard in the China market. We have dedicated sales teams on broadband and PDSN. Rahiv - BWS Financial: And finally, what measures are you taking to ensure revenue is not hurt by the restructuring you're undertaking?

Well, we're spending a lot of time working with customers, reassuring them — a lot of time also coaching our sales force and we're doing all of the things that you need to do to minimize any impact. Rahiv - BWS Financial: Okay, thank you.

Our next question is a followup from the line of Steve Koffler from Khan Real. Steven Koffler - Khan Real: I'd like you to just give us some insights further into India and IPTV, what's really going on there? How many large potential deployments of IPTV are in a reasonable phase or progress or process now, meaning concrete RSPs that could potentially roll out over years to several million users at least? Can you provide some kind of sizing in that way?

Yes. There are three main India customers for IPTV. We're present in all of them. Barthi, which completed its pilot and announced in quarter one this year they would roll out into 20 cities so that has a lot of potential. BNSL which only launched IPTV early this year and they, as you recall, cover the rural cities and their counterpart MTNL, cover New Delhi and Mumbai. So BSNL is rolling out IPTV using our equipment and MTNL also uses our equipment and that was the Asht MTNL I referenced in the commentary I gave on the call. All of these have the potential to grow fast. What predicates it obviously them promoting the product aggressively, plus the broadband rollout in India needs to accelerate because obviously — and that's the other reason we're in India and have a lot of expectations is because of the expansion in broadband and it's a bit chicken and egg. The expansion in broadband is needed for the expansion in IPTV. It can run on slower lines and does do, but it's much more effective on the faster lines. Steven Koffler - Khan Real: Right. Do you have any insights working with the customers, how they plan to price the service when they have it available?

It varies. In MTNL the service is actually operated by a joint partner of ours called Asht, and they price it purely on advertising revenues so people would use the Google analogy, but that's their methodology. BNSL has a mixture of advertising revenues plus subscriber charges, Barthi is a little bit more traditional on subscriber charges, but Barthi is also probably one of the most creative companies so it's very clever on market and promotion. But it's still early days in India. I don't want to set the wrong expectation, but the potential is significant, as you can imagine. Steven Koffler - Khan Real: Alright, but I mean based on the lead time of order — I understand you correctly to say that the orders you have in India, there are orders in the book for IPTV deployments and those should start to ship or recognize revenue in 2010, correct?

Yes. That's right. The first revenue actually recognizes in quarter two from orders we took in 2008 so it shows you the lag. That was the Asht NTNL which was the first implementation India and we just have recognized our first IPTV revenue in India. Steven Koffler - Khan Real: Last question on this, in China when people were talking earlier years about IPTV and the revenue to the OEM, I often heard a number of about $1,500 per line is what you could make. Is there some similar metric or have you calculated or sliced it in a way like that that we could think about?

Not really. The way we get revenue is as follows: we get revenue on the core IPTV infrastructure which depends on how loud it is. They say provide a service for a quarter of a million subscribers, we provide as et of computer equipment and the risk to do that plus — the main area for our revenue there is frankly not the hardware which we get from third parties, but we primarily get revenue from our software, so it's a high margin. And then we get revenue from the set-top boxes and that's a totally different equation. A set-tpo box is, in US dollars, about $50, and teen margin. The only difference there to clarify is just people replace the current set-top one 1.0 set-top boxes in China. With the 2.0 set-top boxes this is primarily a software upgrade as opposed to a hardware replacement, so that will be going on in the next several quarters in addition to new implementation. So it's not exactly the way you wanted it answered, but it's the best way I can give it. Steven Koffler - Khan Real: That's okay. I'll actually throw in one more quick one on IPTV — oh, rather on regions. Could you characterize by percentage, if possible, in terms of your deferred revenue and orders, how much is in India?

Well, India's huge because it has BSNL and there the deferred revenue is beyond 2010. So what we were trying to do — be very careful on the call, is talk about deferred revenues which with an FAC could become revenue in 2010 and it's in the 10-Q and you can read it — it is 111 of — Viraj. J. Patel: Yeah. It is $110 million.

But that does not include BSNL which would be another 200 million, but that is beyond 2010. So the revenues we can work on with the right FAC to get recognition 2010 it's 110 million. Viraj. J. Patel: Steve, if you also look at the financial, there’s the customer advances. A bit part of the customer advances is BSNL. There's $180 million of customer advances which at some point will go into revenue also in the future. Steven Koffler - Khan Real: Okay. But that's already included in cash, correct? Viraj. J. Patel: Yes. Steven Koffler - Khan Real: All right. Is there any potential for them to say well, you know what, we're scaling this back or we need to return this? How, if at all, are you protected from that?

Well it's all being used and they're looking to order a lot more in phase three. So one, the contract doesn't allow that sort of return, but secondly the practicalities are they need more, not less (laughs). Viraj. J. Patel: Yeah. And more so, the equipment that we are collecting cash is already delivered to them. That's in production already. It's a commercial revenue producing (inaudible). Steven Koffler - Khan Real: Okay. I'll take some stuff offline later. Thank you very much. Viraj. J. Patel: Thank you, Steve.

Thanks, Steve.

(Operator's Instructions) There are no further questions at this time. I would now like to turn the call back over to the presenters for any closing remarks.

Well thank you very much, really appreciate you joining the call and thank you for the questions. We got many investor calls tomorrow so I look forward talking to those that have scheduled with us and thank you again for joining us, appreciate it. Viraj. J. Patel: Thank you.

This concludes today's conference call. You may now disconnect.