益華電腦 (CDNS) 2012 Q2 法說會逐字稿

Good afternoon, my name is David and I will be your Conference Operator today.

At this time, I would like to welcome everyone to the Cadence Design Systems' second-quarter 2012 earnings conference 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 Instructions)

I will now turn the call over to Alan Lindstrom, Group Director of Investor Relations for Cadence Design Systems.

Please go ahead.

Thank you, David, and welcome to our earnings conference call for the second quarter of fiscal year 2012.

The webcast of this call can be accessed through our website cadence.com and will be archived for two weeks.

With us today are Lip-Bu Tan, President and CEO of Cadence, and Geoff Ribar, Senior Vice President and CFO.

Please note that today's discussion will contain forward-looking statements and that our actual results may differ materially from those expectations.

For information on the factors that could cause a difference in our results, please refer to our filings with the Securities and Exchange Commission.

These include Cadence's most recent reports on Form 10-K and Form 10-Q including the Company's future filings and the cautionary comments regarding forward-looking statements in the earnings press release issued today.

In addition to financial results prepared in accordance with Generally Accepted Accounting Principles, or GAAP, we will also present certain non-GAAP financial measures today.

Cadence Management believes that in addition to using GAAP results in evaluating our business, it can also be useful to measure results using certain non-GAAP financial measures.

Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures with their most direct comparable GAAP financial results which can be found in the quarterly section of the investor relations portion of our website.

A copy of today's press release dated July 25, 2012 for the quarter ended June 30, 2012 and related financial tables can also be found in the investor relations portion of our website.

Now I'll turn the call over to Lip-Bu.

Good afternoon, everyone, thank you for joining us.

Cadence delivered strong results in Q2.

Revenue total $326 million.

Non-GAAP operating margin was 23%, and operating cash flow was $67 million.

Our business continues to be driven by design activity which remained robust in Q2.

The macro environment is challenging with slowing growth in China and the ongoing debt crisis in Europe and slow US recovery.

PC shipments and infrastructure equipment are showing weakness and foundry issues have hurt sales for some customers.

However, we believe design activity will continue at a good pace in second half.

We are working closely with customers on the most complex designs, our backlog remains strong and we continue to strengthen our product portfolio.

After reviewing our pipeline for the second half and taking into account the macro risk, we are modestly raising guidance.

Now let us look at a few of the highlights for Q2 starting with Silicon Realization.

Our 20-nanometer design technology continues to gain momentum both for digital as well as custom and analog.

We have previously announced 20-nanometer test chips with ARM, TSMC and Samsung.

STMicroelectonic used our Encounter Digital and Virtual Custom Analog platforms to complete a 20-nanometer mixed signal test chip.

Our Encounter and Virtuoso platforms received Phase I certification for TSMC 20-nanometer technology.

We collaborated with Samsung on a 20-nanometer methodology that includes double patterning technology.

The number of 20-nanometer engagements with key customers is growing in every region.

Overall, while working with 16 different customers at 20-nanometer with more than 30 designs in progress or complete using Encounter.

At 14-nanometer process node, we have joint projects underway and are working on test chips.

The increased complexity of modern SoC is driving demand for our advanced verification solutions.

In Q2, we closed a significant order for our Incisive Verification platform with a top 10 semiconductor company.

I have some exciting progress to report in the physical verification area.

As a result on ongoing collaboration, TSMC is now making DRC and LVS rule decks available for our Physical Verification System product at 28 and 20-nanometer nodes.

This is yet another proof point that our investment at 20-nanometer node is producing competitive products and creating new opportunities for us.

Our acquisition of Azuro and it's unique break through Clock Concurrent Optimization now integrated into our Encounter Digital solution.

It enables customer to materially improve the power, performance and area of their designs, especially those containing ARM cores.

This creates opportunities for us to expand our digital footprint with some customers.

Ambarella was one successful customer story during the quarter.

We are working with a number of major customers, including Renesas who are achieving outstanding results using Encounter with Azuro technology built in.

Next let us look at SoC realization.

Our design IP business is growing rapidly.

The DDR PHY and PCI Express controller product lines both had record bookings for the quarter.

We are aggressively expanding our product line as we strive to have products ready for new protocols when customers need them.

In Q2, we launched the industry first IP subsystem for the development of SoCs supporting the Non-Volatile Memory Express standard, an interface technology used in the rapidly expanding solid state drive market.

Nufront integrated Cadence DDR3 Memory Controller and Hard PHY in their dual-core ARM Cortex-A9 based mobile application processor.

Verification IP is one of our fastest growing product lines.

In Q2, we booked our single largest VIP transaction to date.

We continue to expand our VIP catalog.

In Q2, we introduced the industry first Accelerated VIP which is a VIP for use on an emulation platform such as our Palladiuim XP.

So far we have added Accelerated VIP for the following interface standards, ARM's AMBA, PCI Express Gen3, USB 3.0, 10-gigabit Ethernet, SATA 3 and HDMI 1.4.

Now let us talk about System Realization.

Our System Realization offering creates opportunities for both semiconductor and system companies.

The importance of package and broad design tools grows with the smaller, complex high speed boards used in today's mobile products.

Recognizing the design challenges that companies are facing in design complex ports for today's systems, we acquired Sigrity.

With Sigrity we become the leader in high-speed analysis, power and signal integrity for gigabit interface designs.

This is critical technology for high growth, vertical markets like hand-held multi-media devices and Cloud infrastructure.

With Sigrity, we added the leading sign-off technology for board and package design complementing both our PCB/IC packaging solutions and SoC sign-off tools.

Palladium XP demand continues to be strong.

Q2 sales significantly exceeded our expectations due to continuing customer demand for capability to design and verify large, complex systems and SoCs including software.

One customer alone ordered 14 systems in Q2.

It was a strong quarter for Palladium XP in Japan with further expansion into server, video and imaging markets.

Business in North America and Europe remains strong with both new and repeat business in networking, mobile and gaming markets.

Palladium capability now includes in-circuit accelerations and accelerated VIP which opens new business opportunity for us.

In conclusion, we deliver strong results in Q2 as customers continue to invest in new projects and design technology.

We are modestly raising our guidance for the year after taking into account on the ongoing challenges in the environment.

We are working with customers on their most challenging designs, and we continue to strengthen and expand our product portfolio.

With that, now I will turn it over to Geoff who will review the financial results and provide our outlook.

Thanks, Lip-Bu, and good afternoon, everyone.

I will review the results for the second quarter, present our outlook for Q3 and update the outlook for 2012.

For the second quarter, Cadence again produced strong operating results.

Total revenue was $326 million compared to $316 million for Q1 and $283 million for the year ago quarter.

The year-over-year growth was 15%.

Product revenue was $208 million, maintenance revenue was $89 million and services revenue was $29 million.

Revenue mix for the geographies was 46% for Americas, 20% for EMEA, 18% for Asia and 16% for Japan.

Total costs and expenses on a non-GAAP basis for Q2 were $253 million compared to $250 million for Q1 and $235 million for the year-ago quarter.

Headcount was 4,850 compared to 4,766 for Q1.

The increase was almost entirely due to hiring in R&D and technical field positions.

Non-GAAP operating margin for Q2 was 23% compared to 21% for Q1 and 17% for the year-ago quarter.

For Q2, we recorded GAAP net income per share for $0.13 compared to $0.11 for Q1.

For Q2, non-GAAP net income per share was $0.19 compared to $0.17 for Q1 and $0.12 for the year-ago quarter.

Operating cash flow for Q2 was $67 million compared to $61 million for Q1 and $69 million for the year-ago quarter.

DSOs for Q2 were 35 days compared with 25 days for Q1 and 51 days for the year-ago quarter.

The increase from Q1 was due to the timing of billings and collections.

Our DSO target remains 35 days or under.

Capital expenditures for Q2 were approximately $10 million.

Cash and short-term investments were $713 million at quarter end, about half in the US.

For Q2, approximately 90% of orders booked were ratable, including product, maintenance and services.

Weighted average contract life for Q2 was 2.5 years.

On a weighted average basis, run rates on Q2 contract renewals increased.

Now let's address our outlook for the third quarter of 2012 and our update for fiscal 2012.

We are increasing our fiscal 2012 outlook for bookings, revenue and earnings per share due to strong Q2 results and expectation of continuing strong demand in Q3.

For Q3 2012, we expect revenue to be in the range of $325 million to $335 million.

Non-GAAP, Q3 non-GAAP operating margin is expected to be in the range of 21% to 22%.

Non-GAAP total cost and expenses will be up sequentially due to the acquisition of Sigrity.

The Sigrity acquisition is expected to be $0.01 or $0.02 dilutive to the second half results, primarily due to the impact of purchase accounting rules on deferred revenue and a transition to a ratable license model for the Sigrity business.

GAAP EPS for the third quarter is expected to be in the range of $0.17 to $0.18.

Non-GAAP EPS for Q3 is expected to be in the range of $0.18 to $0.19.

Now for our update of fiscal 2012 outlook.

We are raising our outlook for the year based on our first half results and our expectations for the second half.

This outlook takes into account the ongoing risk of global economic slow down.

Sigrity is expected to be $0.01 or $0.02 dilutive to the second half 2012 results, primarily due to the impact of purchase accounting rules on deferred revenue and a transition of this business to a ratable model.

We expect Sigrity will be slightly accretive for 2013 and after transition of Sigrity's business to Cadence's ratable business model, amortization of Sigrity's deferred revenue will be substantially complete by the end of 2013.

Bookings are now expected to be in the range of $1.305 billion to $1.335 billion compared to a prior range of $1.295 billion to $1.335 billion.

We expect a weighted average contract life between 2.4 and 2.6 years for 2012 and to book at least 90% of our business for the year under ratable arrangements.

We now expect revenue to be in the range of $1.295 billion to $1.315 billion for 2012 compared to the prior range of $1.27 billion to $1.3 billion.

Non-GAAP operating margin is expected to be in the range of 21% to 22% on an annual basis for 2012, unchanged from our prior guidance due to the Sigrity acquisition.

Non-GAAP other income and expense for 2012 is expected to be in the range of negative $13 million to negative $10 million.

For 2012, we are assuming a non-GAAP tax rate of 26% and weighted average shares outstanding of 276 million to 282 million shares.

GAAP EPS for 2012 is expected to be in the range of $0.51 to $0.55 compared to the prior range of $0.45 to $0.49.

Non-GAAP EPS is now expected to be in the range of $0.70 to $0.74 compared to the prior range of $0.66 to $0.70.

For 2012, we expect operating cash flow in the range of $290 million to $310 million compared to the prior range of $275 million to $305 million.

DSOs for 2012 are projected to be 35 days or under.

Capital expenditures for 2012 are expected to be in the range of $30 million to $35 million.

Q2 was another good quarter backed by solid execution.

With a 23% non-GAAP operating margin for the second quarter, we are on track to achieve our goal of the mid 20s for 2013.

Finally, design activity remains good.

So we're modestly raising our guidance after carefully reviewing our pipeline for the second half and taking into account the macro risks.

Operator, we'll now take any questions.

(Operator Instructions) Raj Seth with Cowen.

Geoff, first, from a bookings perspective in the current quarter, if you were to exclude the upside that you talked about for emulation, were bookings still better than expectations or were they in line?

Bookings across the board were better than our expectations.

And just on the emulation front, we've talked about this before, hypothetically if the world weakened, that might be a place where you would see people pull back first, you're seeing the opposite.

How sustainable, you had guided that flat to down for the year, has your perspective for the full year changed?

And Lip-Bu talked about a very big order, I forget exactly the number, 14, 15 boxes, over what period is the rev rec there, how does that work?

I think Raj, a couple of points.

Let me answer first.

First of all, I think that demand for the hardware emulation is continuing to increase as customers are moving to below 14-nanometer.

Time to market is critical.

Identify the box earlier would be better.

So I think clearly the whole hardware emulation is growing very rapidly because of the demand.

And so meanwhile our product is a gold standard and we continue to have a very good success in that.

And as far as what we see going forward on emulation, we expect it, we're still guiding flat to slightly down for the second half of the year.

Again, Lip-Bu said, we agree there's a secular trend but because of the macro economic conditions we're going to pay attention to that and we do have a competitor in the space who's doing well and is competitive.

As far as the revenue recognition on the 14 boxes, that will be over a number of quarters.

Okay.

And last question maybe Lip-Bu for you, you've been doing quite well, some of it I suppose at least in previous periods is digging yourself out of a hole and in some cases easily compares.

Now I think you're through a lot of the model transition.

As you think about share in the industry, what do you think the share trends are?

Where do you think you're actually poised to or seeing share gains across your business?

And I wonder if you could pay particular attention just to the digital side where you continue to reference increasing wins.

Thanks.

Sure, thanks so much for the question.

So first of all I think we have a very good team, Executive team, continue to really focus on execution.

And then the other thing is we're heavily investing in terms of product in the leap-frogging in some of the areas like digital, mixed signal and advanced nodes and somewhat the IP and the system level.

And so clearly we want to provide the best tool, the best IP to our customer to enable their success in their design, and that's our ultimate goal.

And then with that now we continue to win, continue to -- able to compete successfully.

And then the customer likes that kind of engagement level we have.

Gives them a commitment that we want to make them successful, that ultimately we'll win.

And any perspective on share, or do you feel like you're gaining share or is this just a strong tide for everybody?

Yes, I just felt that first of all I think the design activity, at least from our side, we see tremendous activity.

And meanwhile I think we create a lot of opportunity with the improved product and portfolio.

This gives us a lot of competitive advantage.

And then customers like to see us have a road map to facing all this challenge in design when you [molt] out the 28, 20 and below.

Clearly I think we want to be the best solution to provide to the customer and ultimately that is -- give us position us well for win.

And I think it's clear, Raj, that we're growing faster than the industry as a whole, and that means we believe that we are winning market segment share in places.

And just to put a point on that, Geoff, I promise I'll go away, but the outsized growth that you're showing, I guess your assertion is that's really not so much model transition at this point.

Model transition is, Raj, you're correct, model transition is in the very low single digits now impact on our business.

Okay, great.

Thank you.

Nice quarter.

Great, thank you.

Rich Valera of Needham & Company.

Good afternoon, this is Steven Zaccone on behalf of Rich Valera.

All of my questions have been answered.

Thank you.

Jay Vleeschhouwer of Griffin Securities.

Lip-Bu, would like to ask you about your system interconnect or PCB business.

Other than the Sigrity acquisition, in what other ways do you think you will be making new commitments or investments to renew your overall competitiveness in the PCB business?

A number of years ago you recall with the restructuring that the Company pulled back in some ways from that area and now you seem to be renewing your interest in that area, so in what broader ways are you looking to grow that business other than this particular acquisition?

Sure, I think that's a good question.

First of all, I think the Sigrity acquisition has fit very well into our system strategy.

And then look at the whole PCB and board, it becomes very important.

If a customer want to see an end-to-end beside the through design and all the way to IC packaging to PCB packaging and especially the power and our signal integrity, high speed analysis, this is a critical piece.

And we integrate that into the vertical PCB market.

And that's a lot of vertical market we can serve from automotive to computing to Cloud and anything that is high speed going to be a critical piece.

So I think you correctly point out that we are investing and we are growing the business, and it becomes very important for us to serve our customer in the vertical markets.

In the hardware emulation business, would it be fair to say that you're going to be selling the current version of Palladium until sometime well into next year?

So Mentor has a new box in the market, of course, but you're going to continue to have available the version you've had the last couple of years, at least until next year?

Yes.

I think as I mentioned earlier, I think the chip is going to be more and more complex.

And when you move down the geometry below 14, that's a lot of complex.

And if you can identify the box earlier, you can address the box earlier.

Time to market is tremendous for the customer.

So we're going to continue to see growth in this area.

And then meanwhile I think as I mentioned we are the gold standard and we continue to have the record quarter in term of growing and significant exceeded our expectation.

And as I mentioned, one customer ordered 14 units in Q2.

So we continue to see that demand I think is good for the industry and it's very badly needed by the customer and we continue to improve, continue to drive success with the customer.

Lip-Bu, just to clarify, you're not going to have a product refresh necessarily in that business until sometime in 2013, would that be right?

Jay, we don't disclose our product road map.

All right.

Geoff, for you, you pick up the low end of the product bookings forecast for the year by about $10 million which would seem to roughly correlate to the upside that you had in emulation business in Q2.

So just, again, to clarify from an earlier question, you are ticking up your software only bookings expectations for the remainder of the year?

Yes.

The bookings is going up for both reasons.

Okay.

And then lastly for Lip-Bu again, you refer to a positive development with respect to physical verification.

But how do you foresee your prospects outside of DRC and LVS in other forms of physical verification?

What investments are you making there or what kind of prognosis would you have for yourselves there?

Yes, it's a good question.

As I mentioned in my prepared remarks, we continue to see good record there and continue to win.

And we also are investing in some of the technology to improve further, especially in the advanced nodes.

And so that is important area for us and we continue to invest.

Gus Richard of Piper Jaffray.

Just a couple quick housekeeping questions.

Your service margins were up quite sharply in the quarter, could you just talk about that briefly?

Sure.

First of all, I wouldn't take it as a trend or a commitment that that's where we're going to be going forward.

As always, we've been moving resources gradually away from services to support our IP and SoC business.

And so that's showing up in the improved margins I think is one of the major reasons.

And in some cases, we booked revenue here based on past practices where we didn't have -- we book revenue sometimes when we collect cash for certain types of customers and we book some revenue where we collected cash that we didn't necessarily have expenses associated with it.

The margins aren't sustainable at that level.

Okay, all right.

And then in terms of the Sigrity acquisition, can you just give us a handicap.

I'm assuming there's no -- little to no revenue from that this year because of accounting -- purchase accounting.

And I just wondering what the incremental OpEx is going to be for that business this year?

So, Gus, there is actually some revenue in that business where we're still working through the acquisition accounting.

So deferred revenue will take a big chunk and the model change will take another big chunk away from what -- the expected revenue.

We also have some piece that's a retention piece for some of those employees, and that's also showing up in expenses.

It is about $0.01 or $0.02 different on our EPS, and I think that's probably the key message.

It does also affect the operating margin percentage a little bit also, which is why the operating margin percentage is actually going down a little bit for the second half of the year.

Got it.

And then on the DSOs, the increase sequentially, is that really a function of increased emulation sales in the quarter?

Yes, it's mostly a hardware business that's driving that.

There's also some amount of billings we make to a Japanese customer that we will get paid for in Q3.

Perfect.

Okay, got it.

There's nothing unusual or unexpected from us.

Okay.

That's it for me.

Thanks so much.

(Operator Instructions) Krish Sankar of Bank of America.

This is Thomas Yeh calling in for Krish Sankar.

Thanks for taking my questions.

First off, during the DAC Conference, Cadence and some peers highlighted some of the design challenges related to 20-nanometers which require a potential step-up in investments from EDA vendors.

Can you help us quantify that and talk about any differences you might see in regards to the level of investment it took to get from say 45-nanometers to 32-nanometers and how that can differ from the move from 28 to 20?

Yes, so let me take a crack at it.

And, Krish, I think the 20-nanometer is not as easy and it's much more complex and so we have a jumpstart on it.

And so we are committed to the 20-nanometer.

We -- and as I mentioned in my remark, ARM, TSMC, ST, Samsung we have engaged heavily, and we also have 16 customers working with us and more than 30 in our designs.

And so clearly it's a very difficult and complex and customer invest quite a bit in that and they also like to see the road map when they get -- with when they go to production sometime next year.

And so we are engaging and we are working really hard with the customer and so we're investing.

But it's factored in pretty much in the financial model that Geoff prepared.

And so answer your question, yes, we are investing and it's not as easy, it's very complex.

And, Thomas, I do want to emphasize it is a substantial investment that Cadence is making for this business.

Substantial investment because it's critical to us and critical to our customers.

Okay, thanks.

That's helpful.

And then second, digging a lit bit more into the Sigrity acquisition, can you highlight for us what kind of incremental market size that opens up?

And just in regards to margins you mentioned that it would be lower but longer term, is it safe to assume that that could be brought up back to your corporate average?

So maybe before I address Sigrity, back a little bit on the 20-nanometer.

So as you imagine quite a lot of FinFET, double patterning, 3D-IC and all those area are the investment area that we work with our customer.

On the Sigrity side and as I mentioned, it fit in very well with our system strategy and also our PCB packaging related design and it becomes very complex.

Customers want to really design the chip knowing the packaging would not be a problem.

And so this is strategically important to us in terms of high-speed analysis, power, signal integrity and in the gigabit interface.

So all this and also the sign off will be critical.

So all this going to be adopted and is very important for us and then Geoff maybe can answer the second half.

Yes, so, Thomas, it will be slightly dilutive in 2012 and slightly accretive in 2013.

But both of those numbers are materially impacted by the accounting and merger and acquisition accounting.

Without the merger and acquisition accounting, those numbers would clearly be better.

So it is material impact, but those things will be complete by the end of 2013 and much more normal business model for that business going forward.

Thanks.

And then last one from me, revisiting just the impact of the Synopsys acquisition of Magma, can you highlight for us whether you've seen any changes in the pricing environment or any new customers that might be seeking a dual source?

Yes, so let me address that.

So first of all, I think clearly open doors for additional engagement.

We see tremendous interest from customer to work with us for a couple of factors.

One, clearly the mixed signal SoC and is very important for them.

And then secondly, we are much improved our digital flow and implementation they are attracted to us.

And then thirdly, our advanced development and engagement in the 20-nanometer and below, and of course the other thing is very big opportunity for us is the ARM relationship that we have been engaging and working closely with them in the design and the flow.

So all this, I think, is just enhance customer want to engage with us and work with us and selecting us and it give us a quick opportunity that we are really excited.

And we continue to drive the best tool, best solution IP to our customer that can enhance and provide value to our customer and enable them to win.

Thanks so much.

Sterling Auty of JPMorgan.

I heard the commentary in terms of your outlook, but I just want to circle back to it.

Listening to a lot of the semiconductor earnings calls here for June, I was wondering if anything really pops out to you in terms of how they're allocating or looking at their R&D spending relative to their spend for EDA?

And specifically what I mean, you have Intel and Texas Instruments that seem to be slowing their spend.

There are others that it feels like they're reallocating out of other areas to spend in R&D.

Do you feel there's an increased level of nervousness around the spend, or do you still feel like the heightened design activity should remain constant through this year and into next year?

Yes I think, Sterling, it's a good question.

And first of all, I think we don't see big across the board customer spending cut or freeze and we still see tremendous R&D development, at least the customer we're working with.

And clearly the design activities continues to grow.

And then as you know, the design engineer, they're the last people that you want to cut.

And so our relationship in the EDA spend a lot to do with the design engineers and then chip is not getting easier, the design is much more complex.

So I think the place that they spend a lot of money is clearly in the digital mixed signal space that we see and also in the PCB side, in the hardware emulation side.

So anything that can help them to design the product faster and then low power is critical for a lot of mobile infrastructure player.

And also easier -- earlier to identify the box.

And then the hardware, software, co-design, co-verification becomes really important for them.

And so I think and as we kind of taking out bets in some in terms of the area that we think we can really helpful to them and then in their design.

So far in those area that we pick, we don't see slow down.

I think the other thing right, Sterling, is when they have revenue impacts, one of the things they want to do is get new products out the door and that leads to design activity, leads to engineers, leads to value for the whole EDA food chain in costs.

Got it.

Two other questions, first one did you give us a sense, because I didn't quite hear it, if you were to split your business in terms of the core EDA versus the IP and other, how would you kind of characterize or quantify the growth in both of those buckets for this quarter?

So I think both businesses grew quite strongly if you want to just divide core EDA, IP and other and the System Realization.

I think all those things grew very steadily and very well for us.

I don't think any of them grew particularly faster than anything else.

VIP was probably the fastest growing business for us as a percentage.

But I think we saw strong growth all across that.

So I think we're quite happy with the growth.

Okay.

And last question, on the emulation, it feels like you've been almost capacity constrained in the first half.

Did you change any of your manufacturing order plans here for the back half to increase and meet some of this higher than expected demand?

Yes I think, Sterling, that clearly on the hardware emulation side we continue to drive improvement, execution, supply change, that is kind of ongoing effort and then with sense of urgency.

And clearly the demand is strong, we like the business, and we continue to invest and continue to improve so that we can meet the customer requirement.

All right.

Great, thank you.

Thank you.

And this was our last question.

I will now turn the call over to Lip-Bu Tan, President and CEO of Cadence, for closing remarks.

Thank you.

In closing, the strength and momentum of our technology, whether it's expanding existing relationship as well as creating new engagements lead to strong operating result for the first half.

Our level of customer engagement and growing product portfolio gives me confidence that the rest of the 2012 will be also good for Cadence.

Thank you, everyone, for joining us this afternoon, and I'm looking forward to speaking with you soon.

Thank you for participating in today's Cadence Design Systems' second-quarter 2012 earnings conference call.

You may now disconnect.