Steven Lewis: That’s what you’re doing now?
Daniel Baker : Yes.
Steven Lewis: In the higher rate. Okay?
Daniel Baker : Yes. So when we reinvest in a bond that matures so we have bonds that mature occasionally, and then we reinvest them and the interest rates are typically higher with the reinvestment with the new bonds than the old bonds. Some of our bonds might be several years maturity — and so when we bought them several years ago, interest rates were lower. When we — when those bonds mature in we can roll them over into higher interest rate bonds than our interest income increases.
Steven Lewis: Assuming you can forecast your cash flow near term, do you think you will eradicate the difference between cost and fair value by the end of the year?
Daniel Baker : Unlikely by the end of the year because the maturities of the bonds are longer. So we typically invest in multiyear bonds because we have strong cash flow and we don’t expect to need the funds immediately. But — so when the bonds mature, they — we expect them to pay their proper value. So if we have $1 million bond, the book value might be lower now, but we expect it to pay off $1 million. But that will be over the term of the bond where the value will tend to converge on the par value and then the loss will decrease.
Steven Lewis: Thank you. Regarding the average hearing aid business, there has been a lot of publicity about the ability to buy cheaper hearing aids without having to go through the doctor. I haven’t checked to see but has any comments on their call today. But — is that business holding up versus your estimates?
Daniel Baker : The hearing aid business continues to hold up. It’s an important part of our market. The broader market that you referred to about over-the-counter hearing aids and hearables is an excellent market for us. Hearing aids are a large underserved market. The estimates are that only 20% of those that could use a hearing aid seek help as you implied that many are discouraged by the cost as well as the inconvenient dispensing. So having over-the-counter hearing aids and lower cost hearing aids, we believe, will expand the market, and we have a convincing benefit proposition in hearing aids. So we see that as a good long-term opportunity.
Steven Lewis: Have you secured an OTC backlog?
Daniel Baker : We have talked about some design wins in that space and the broader hearables market, which would be things that would go in once a year but may not necessarily be a hearing aid. It’s a relatively small market now, but we expect it to grow.
Steven Lewis: You said you are pleased with the solid earnings for the quarter and the six months. Does that mean that the actual results for the quarter September were within 3% to 5% of your estimate going into the quarter, so to be pleased?
Daniel Baker : Well, we were pleased under the circumstances of the industry downturn and the — as Daniel mentioned in the prepared remarks that we have a defense business that can be lumpy and can be somewhat volatile. And it wasn’t — it was down significantly in the September quarter, but we expect it to recover in coming quarters. So in the context of the industry and the particular effects of the defense and the particular lumpiness of the defense business for us. We were pleased with the results. We were certainly pleased with the cash flow and the profitability that Daniel mentioned in the prepared remarks.
