About a $1 million of services revenue that would have been recognized had it been another type of transaction will be pushed from this year into next year just related to services, but also the run rate of this contract which is about $2 million in product revenue, that will not begin until the system goes live .So we will get virtually no revenue recognition off the New Mexico deal, obviously have both selling and other upfront cost that we will incur this year and all the revenue benefit will begin next year.
Amy Junker (Robert Baird): About the two gains, just for purposes of modeling, if we wanted to strip those out what the after-tax amount of the $4 million gain that you got as well as the $3.3 million from D2L. Do you have that information?
Mike Beach: Yes, basically pretax income back out those gains and then apply the 35% effective rate that we applied that we had guided to, the impact of those items are going about $0.12 in the quarter.
Amy Junker (Robert Baird): Just to clarify, when you provided guidance for the second quarter in your last conference call, did that assume either the $4 million gain or the proceeds from the patent judgment?
Mike Beach: No.
Amy Junker (Robert Baird): Do you expect any more gains from the patent judgment or is that a one-time thing that should not continue going forward?
Mike Beach: Yes, we would not expect anything and it is not in guidance.
Amy Junker (Robert Baird): Talk about the announcement that you made with the plan to develop the Sakai Integration, what exactly do you hope to achieve with that announcement and can you talk a little bit on the timing?
Mike Chasen: At the Blackboard World, we talked about how in the future of our product and this is an issue we are actually working closely with a couple of universities on, that our learning system will be able to load other course management system courses through our interface. One of the issues they were having is a lot of campuses have standardized on the Blackboard system and we are the standard product for almost the entire campus, but there maybe an individual teacher or a very small department that is using either a home-grown system or maybe an open-source solution and then why really should the students or faculty members have to go to a separate url or a separate log-in to be able to access those courses.
So recognizing that Blackboard is that campus industry standard we have actually gone ahead and opened up our course management APIs to allow for home-grown systems or home-developed systems or other third-party systems to be served if you will and load through our interfaces so that you can log in once and access all of their courses whether they are Sakai courses as you mentioned or other open source or home-grown solutions all from the Blackboard Interface and I think this will help improve teaching and learning on the campus because you are able to aggregate all of your courses in one area.
As well as to show that if you are looking at installing Blackboard on your campus, you are installing a very open system that you can customize to meet your institution''s needs. We have had nothing, but tremendous positive feedback from the industry and in particular our clients on that announcement.
Amy Junker (Robert Baird): Can you talk about the trends you are seeing internationally, what the growth was like in the quarter and how that has been faring?
Mike Chasen: We continue to see a lot of opportunity internationally. We are doing certainly very well throughout Europe and as you know I like to focus some of my time on some of the emerging markets such as China and the Middle East which I will be heading back to in just a month or two for our very second Blackboard Dubai Day.
The SENA is now one of the largest international e-learning installation and that continues to grow at a very large rate and we are very proud that it is our technology that is powering that initiative. So, globally around the world we are really starting to see some strong demand in different countries.
Tom Roderick (Thomas Weisel Partners): Could you go into more detail on some of these big deals, New Mexico, in particular, with respect to the impact on the financials of some of the metrics? So you talked a bit about the impact of the cost side and the revenues will be taken later. Can you give us a sense as to how much some of these deals impacted the contract value? Then also, as we look at the balance sheet, there is big jump in accounts receivable this quarter. So help us get our hands around the DSOs as well, were those impacted by the big deals?
Mike Beach: So as it relates to contract value, New Mexico is not in contract value. Will not be until this system goes live, the other two deals, I believe, are. We look at them from an order of magnitude. The New Mexico deal has about $2 million run rate of product revenue. The other deals are more in the $0.5 million range with some potential to become much larger over time.
About the revenue recognition on the other deals we talked about, we will have revenue recognition on those starting in the third quarter. However, New Mexico is the one that is going to have the largest delay right now. As it relates to receivables, what is driving that is a lot of these large deals closed at the end of the quarter, so we had had some very large receivables that were created and sent out at the end of the quarter, and that is driving that dynamic.
Kirk Materne (Bank of America): You have rolled our some new starter products in the K-12 area. Could you give some color in terms of how those are doing thus far and some of your thoughts around that area?
Mike Beach: It is still very early to say we have really just started to work to make sure that our e-learning product is specifically fitted to tackle the unique challenges of the K-12 market base. We have some very good early positive momentum and we are started to build up a lot of excitement in the K-12 space around it.
Kirk Materne (Bank of America): You have done a lot of work around the code-base and WebCT. Talk about some of the customer perceptions that you came away from at Blackboard world? Is that customer base now able to be up sold into at this point in the back half of the year? Is that more of an opportunity for 2009, in your view?
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