Cirrus Logic Inc (CRUS) 2012 Q4 法說會逐字稿

Ladies and gentlemen, thank you far standing by. Welcome to the Cirrus Logic fourth quarter fiscal year 2012 financial results question and answer session. At this time all participants are in a listen-only mode. After a brief statement we will open up the call for questions from analysts. Instructions for queuing up will be provided at that time. As a reminder this conference call is being recorded for replay purposes. I would like to turn the conference call over to Mr. Thurman Case, Chief Financial Officer. Mr. case, you may begin.

Thank you, and good afternoon. Joining me on today's call is Jason Rhode, Cirrus Logic's President and Chief Executive Officer and Jeremy Allen, our director of Investor Relations. Today we announced our financial results for the fourth quarter fiscal year 2012.

The shareholder letter discussing our Q4 financial results, the earnings press release, including a reconciliation of non-GAAP financial information to the most directly comparable GAAP information, along with the web cast of this Q&A session are all available at the Company's Investor Relations website at www,investor.cirrus.com. This call will feature questions from the analysts covering our Company as well as questions submitted to us via email at our investor dot relations dot com website.

Please note that during this session we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information the Company under takes no obligation to update or revise any projections or forward-looking statements whether as a result of new developments or otherwise.

Please refer to the press release issued today which is available on Cirrus Logic's website and the latest Form 10K and 10Q as well as other corporate filings made with the Securities and Exchange Commission for additional discussion of risk factors that could cause actual results to differ materially from current expectations. Now I would like to turn the call over to Jason Rhode our President and Chief Executive Officer.

Thank you, Thurman. Let me start by saying that we lost a truly visionary leader with the passing of Mike Hackworth and his impact on the Company will be felt for many years to come. Before we begin taking questions I would highlight a few of the things that we discussed in our shareholder letter.

We expect to have an outstanding FY13 and in order to meet expected production cycles in the fall we expect to roughly double the inventory value on our balance sheet by the end of the June quarter. I would also like to mention that we are very excited to have begun shipping volume production of our new LED controller. In the March quarter we shipped half a million LED controllers. This is a fantastic start as we continue to build momentum to reach our goal of shipping between five to ten million units this year. Operator, we are now ready to take questions.

Thank you, sir. (Operator Instructions). Our first question is from the line of Tore Svanberg with Stifel Nicolaus. Please go ahead.

Yes. Thank you, and congratulations on the results.

Thank you.

First of all, could you just elaborate a little bit more on what you just said about doubling inventories. Looks like you are busy gearing up for some strong demand second half of the year. I was just hoping you could elaborate a little bit more sort of by product segment, where we should expect the biggest increase.

Well, the biggest is in audio. Obviously we're building inventory as well for our energy business with the new LED lighting controller et cetera but the biggest piece of it is in audio. And I don't want to get into a whole lot more detail than that.

Okay. And also in your press release you talked about 10% year-over-year growth in Q1 and your expecting a new level of revenues in the September quarter. I know you're not going to give out guidance but on a qualitative basis what exactly are we talking about here as far as revenue accelerating year-over-year in the September quarter?

Well, yes, as you say, we don't try to get too far out in terms of specific guidance just because it gets down to, in addition to what we're going to do then you get the economy and everything else and we don't have a very good crystal ball as far as all that is concerned. But if you look at between the inventory build and obviously whenever we're ramping new products we like to get a little bit ahead of the ramp. We've got to build it before our customers can build it and they've got to do that before they can sell it so there's a bit of pipeline there and we like to have some extra in stock so that we're we know we can take care of our customers under all circumstances.

So that at least puts a pretty good indication that it's fairly meaningful and then on top of that we continue to hire at a pretty good clip. We're adding expense at a significant rate in the R& d functions in particular and we think we've got leverage on that for the overall year. So, if you look at the OpEx spending chart, I think it's figure C in the shareholder letter, and just take a straight line ruler to that you can get some pretty good expectations for where we might go in the next year in terms of OpEx and then if you think about leverage on top of that, that probably gets you moving in the right direction in terms of the overall revenue.

Very good. And just on that last topic, the OpEx, I think you're guiding for about $44 million at the mid point for the June quarter. Should we assume that the biggest step-up to be in R&D then?

Yes. Yes. Definitely.

Okay. Okay. And is that going to be the step-up for now or should we expect some big step-up's again in the second half the year? I'm just trying to see how we model.

The difficulty gets to, for the year in all seriousness, if you look at the chart on OpEx spending in the shareholder letter and just lay a ruler across the top of it, it'll give you a pretty good idea of where we're going for the year. On a quarterly basis it kind of moves around a lot. Some quarters you get a lot of people to join, not that many people join right before the holidays. So it kind tends to be a little bit lumpy in the way that headcount expense lays in on a quarterly basis. But from a big picture sense we're hiring.

And the last couple years we've hired about a hundred, 120 people a year net. That's about as fast as we've been able to figure out how to hire people. We certainly expect to continue to do that this year. So if you use a reasonable loaded salary number that kind of gives you a pretty good sense in terms of the headcount expense we're adding for the year and we expect that to continue to go up a lot. And in the category of nice problems to have we think that even with the expense going up a lot we will still be under spending relative to our targets by the time we get to the end of the year.

That's very helpful. Last question. You're now obviously shipping the LED controller and I think you've said historically that initially you're going to be shipping with one big anchor customer. Have you started to see some design wins outside of that customer?

Yes. It's been a fantastic experience. You know, it's a funny market because everybody in that market has been talking about their products work with dimmers since they started shipping them and the plain fact is if you go by a light bulb on the shelf in the hardware store they don't work with all the dimmers that are out there. So as we go in to customer usually the response is, "Oh, yea yours works with a dimmer."

But that's what everyone says, and then they see our demo and the discussion takes a lot more serious turn. So we've gotten great feedback from everybody that we've talked to. We have had at least one more customer take over into the design win category which we've got a fairly precise internal definition of what that means and by the end of the year I would certainly expect to have a significantly larger customer and product count.

Very good. Congratulations again and condolences on the passing of your Chairman.

Thank you very much.

Thank you. Our next question comes from the line of Vernon Essi with Needham & Company. Please go ahead.

Thank you, very much, and I would like to also echo my sentiments about Mr. Hackworth. In terms of going back I guess to the inventory question, and I think you explained this pretty thoroughly so far, but is there anything that you also need to do behind the scenes to facilitate that? I mean before you had made this agreement with STATS ChipPAC's , are there any other things you're going to need in terms of freeing up any potential bottlenecks that we might have to look at in the model in terms of adjusting? I mean you have got a new credit revolver. Is there any more CapEx that you may have to spend or do any consignment capital spending with your

Yes. There's definitely some possibilities for additional CapEx. Thus far the only thing that is really been material enough that we've had to talk about it externally is some investment with STATS ChipPAC but obviously our supply chain planning team has been working all of these issues. It's rare that it's ever as clean as there's one bottleneck in your supply chain and then once you solve that everything is all smooth sailing. There's lots of things to be concerned about. But one of the benefits we've got in our business is that we really do have a fairly good amount of visibility about what's coming towards us.

All the products we sell are proprietary so we're designing them for years in advance when the customer starts shipping them and we have a pretty good idea of what's coming and so we have had ample time to work through these issues and make sure we're well-positioned in terms of foundry capacity, assembly test capacity, et cetera. But yes, we've had a lot of activity with the assembly and test houses both to make certain that we're not going to be slowing anybody down.

Thurman, did you have anything wanted to add on the CapEx side.

No. I mean with the exception that, along the lines of supply chain we've done that in the past so expect it to be opportunistic in terms of buying and consigning equipment in order to ensure the capacity.

Yes. Typically we really don't like to enter into really big deal agreements but often we can work with, in particular, test houses where we'll buy a tester and consigned it to their floor. These are things that are important but they're not, in any one case, they're not so large that they would rise to the level where we're talking about them on a call in particular, but yes,.

That's exactly what I was looking for. Obviously next quarter we're not going to hear about an investment in the test floor or something along those lines?

No. We're still very, very pleased with our fabulous model and that certainly extend to using our excellent partners for assembly and test.

Okay and I just want to maybe corner you on detail here on the headcount. What would you consider a healthy sales per headcount target on the low end of the range? Obviously you would like it to be very high but just curious, in the past you've bumped into the $600,000 to $700,000 per employee. Would you consider that be to a comfortable range?

Yes. I think in an ideal world there's not that many companies that over the long sustain revenue per employee that is any higher than say $600,000, $700,000 per employee. That's a great number. The model shakes out really well there and in vague terms that does tie in pretty well to our 20% R&D, 15% SG&A. And, as I say, while we expect to be a bit above that in terms of spending for Q1 we don't have the luxury of managing that on a quarter by quarter basis and by the end of the year we expect to be pretty significantly under spending relative to that target.

So, our internal directive to hiring managers and everything else, we've got a very detailed annual operating plan, we know where we're hiring and what's approved, et cetera. But our instructions to those folks is that keep your foot to the floor and lets make sure we're staffed up for success in the future.

And just my last question on the product front you had highlighted an audio amp that I guess enables speaker protection. Any further elaboration on that product and what it does and is there something like that you already have shipping and something a next-generation product? Any more detail on that would be appreciated.

Yes. This is something a little bit new and there are a couple of tricky nuances to the product that we are not going to talk about until the things is out having some success in the market. Essentially I think everybody has had the experience with their mobile phone or other devices where the ring isn't loud enough or the speakers aren't loud enough or that kind of thing and this is an attempt to address that in a very cost effective fashion.

Saves customers a lot of external components and it's an area where, a lot of times people are designing with a certain baseband chip set and a lot of the features are dictated there in terms of audio CODEC et cetera so unless a customer is really trying to add value to the audio quality they're reproducing, they maybe not willing to go to the expense or the trouble to design in a specific different CODEC.

But in terms of the power amp, that's an area where it's a little simpler product to design in and it's an area where almost everybody, regardless of your view on audio, would like their speakerphone to be a little louder, would like their ring tones to have the option of being a little louder, maybe much to the chagrin of everybody around them. But having your phone ring in your pocket and not hear it is a frustrating experience we've all had. The manufacturers that we've talked to are pretty keen on solving that problem and so we think it's a better opportunity for us to get into some additional handset suppliers tablets, et cetera.

Okay. That's helpful. Thanks, Jay.

Thanks.

Thank you. Line of Andrew Huang with Sterne Agee. Please go ahead.

Thanks, guys. Sorry to beat a dead horse, but on your plans to double the inventory at the end of the June quarter, is that for a new product? The only reason I'm asking because if it is, I was curious if you have all your testing procedures set at a Seth Chickpack?

It's for both new and existing. It's a little bit more difficult to answer that question because a lot of times, we will take advantage with existing products we can get a little further ahead. They're a little more stable and that clears up capacity later down the road for newer stuff. But it's composed of both new and existing.

In terms of test procedures bring up boards, manufacturing, all that kind of thing, that's work-in-progress. It's something actually turns out you're never done, because we're always driving improvements either in test coverage or test time or what not but we've got a very well thought out detailed plan for how we support all of our new product ramps and we're just marching to that plan so.

Okay. Great. And when I went through your shareholder letter, which I find very helpful by the way so thanks for that. I think in the last shareholder letter you had a section to talk about your new design wins and like how much of revenue that accounts for. Do you have an update to that slide or did I miss it?

We didn't put it in this one. Not for really any particular reason. We had it in there in the initial draft and we don't really have anything to say about it. It is, I think, in the investor presentation that will be on website. So if you want to see that it's in the investor presentation. Probably the only story I would say on that is a couple of pretty significant products for us moved from new to prime which is actually a good thing that they've gotten enough longevity to continue shipping that kind of volume for three years. So if you see new dip down, you need to look at close enough to realize that prime ticked up by a pretty significant percentage as well. And we would expect the percentage in the new category to go back up at a pretty significant clip towards the second half of this year.

Got it. Okay. Sorry. And I think energy products looks like it had a pretty good rebound this quarter. And I know that some of it was, you said I think 500,000 units for LED lighting controllers. So how much of that is kind of a rebound in your legacy business and do you expect that strength to continue into the June quarter?

Yes. Q4 was up pretty good in some of the legacy seismic other old energy areas. Q1 we do not expect that to continue. It's kind of a one time buy. We really try, especially with seismic, it's very difficult business to forecast so unless something is on backlog we like to call it zero and then when something comes in that is even sometimes when it's expected, then it's a positive surprise. Customers in that space are, well they're just very difficult to figure out, and often times their forecasts are wrong so we'd like to not count on it until it actually happens.

Got it. But is it reasonable for me to assume that your LED controller ramp, or driver, should continue to ramp in the June quarter?

Yes. It's continuing to ramp. You now I wouldn't expect it to be up massive unit volumes in the June quarter, but the most important thing there is that the design win momentum is continuing and we're continuing to go through qualifications et cetera with other customers and other platforms within the same customer.

Okay. And just one last question if you don't mind. Your gross margin guidance of I think 53% to 55% that's down quite a bit relative to the March quarter so if you could give us some color there, that would be helpful.

Yes. The color mainly is that we shipped a fair amount of seismic in the March quarter and then also we had a pretty significant shipment of previously reserved products that we were able to reclaim at test so that obviously ships out at a significantly higher margin. So those were kind of two blue birds, blue birds isn't giving our people enough credit, a lot of people worked very very hard on that. Especially on that reserve product shipment to make sure we were able to reclaim really good quality product to ship to the customer. But any way, it was kind of a one-time benefit that we had that quarter.

Okay.

Again, we don't see anything taking us away from our kind of mid 50% range target, but I would encourage everybody to not get too hung up about a percent or two up or down in a given quarter. You know, our business is not that precise. It can move that much based on mix pretty easily.

Okay and sorry I had one more. I think you mentioned in your press release that you revalued your deferred tax asset. So does that affect how much you have in NOL carry-forwards at this point or maybe you can just give me that number if you have it?

Well, relative to the federal NOLs this puts them all on the balance sheet as a TTA.

Okay. Okay. Thanks very much.

You're welcome. Thank you.

Thank you. Our next question if from the line of Jeff Schreiner with Capstone Investments. Please go ahead.

Yes. Thanks for taking my question, gentlemen. Jason or Thurman, whichever would like to handle this, typically you have some seasonality in the second half with the business kind of building up and then seeing somewhat of either a plateau or slowing down in December or into the March quarter. Given the language used in the shareholder letter about expectations following the June quarter, should we expect some type of change in normal second half seasonality?

Well, I think looking at us as a seasonal story is maybe, I think, to the large part we're a new product introduction kind of a story, a product cycle story. And actually last year our December quarter was record revenue for us. So the fall is a lot of times very difficult to call in terms of the split between Q2 and Q3, you know, because a change in timing of even a few weeks relative to a Christmas ramp that September, October kind of a boundary is right on when people are really trying to build a lot of products to ship for Christmas.

A change of just a few weeks can have a pretty big difference and we spent a lot of time talking about that last year that what we were at the time modeling as a big Q3 could pull into Q2, et cetera. At any rate we expect to transition to a pretty significantly higher run rate starting in the September quarter. We expect obviously real good things in the December quarter as well. Currently we're modeling Q3 to be higher, the December quarter to be higher, than the September quarter like it was last year. Stranger things have happened than some of that pulling in and bumping up the September quarter.

And then you discussed in the shareholder letter about expansion, I think you might have even used the word significant, but I don't want to get it wrong here, but expansion in the custom product portfolio. Could you elaborate on that and why that matters? Is it a shift from more stand alone to where you're finally finding some integration opportunities or what could you tell us about that, Jason?

Well, it's just another reference to what we've been talking about I think since even the call in the October time frame where we talked about we had six new custom products in development. Typically in the past we had something on the order record of one or two, so it was quite a big increase. And those same products are moving through the pipeline and as we said at the time hopefully going to production and driving a significant amount of revenue for us this year. That effort is continuing.

We've got new products coming behind those. We're continuing to build that custom product portfolio. The reason we highlight the significance of the custom stuff, is when we look at our business, when we're able to partner up with one of our customers whether it's in the audio or the energy space, when we're able to partner them at a level where they're investing time to help us figure out exactly what they would like us to build and investing their engineering time in it as well, it's a much higher probability that those products really go to production and really see their full potential. So that's really the reason we hi

ghlight the fact that the custom products are growing. That is a fundamental part of our strategy is to partner with customers that are really differentiating on our technology enough that they're willing to invest the time and make sure we get it right for them. Now, I will take a second to highlight, just in case there's any confusion about it. Just because something is custom doesn't necessarily mean it's exclusive to them. In many cases it is. But in many cases, for example, a lot of times there's some very smart customers that don't have actually a lot of volume.

And so in some cases we partner with them and develop a custom product to their spec that we can either directly sell to other customers or maybe after some period of time we're able to sell it to other people, et cetera. So pretty much in with you think about our custom business all manner of different arrangements are in there, but the main take-away is that when we talk about something that is custom it's something where we're receiving really critical key specs from the customer designing it to their needs and that's a very good sign that we're investing our R&D dollars well.

Okay. Last question for me is that you talked about being in full production having some key products, or multiple new products, for both new and existing customers. Could you talk about where the new customers would come from outside of LED?

Well, the biggest area that we expect to see that kind of a customer base growth is in LED. That said, the new audio amp that we talked about has, of course that product is at fab so we don't like to declare design wins before we actual get the thing back from the foundry, but there is a lot potential for it and it is a lot of new names that we've not had discussions with in the past that are looking at that device.

So portable audio and LED lighting. And I should mention that the DSP that we've talked about in the past, that's continued to get momentum. In particular we've got some additional design wins in Japan. That type of business is something we've got to build one brick at a time but the signs are definitely pointing to that that's going to be a good business for us.

Okay. Thank you very much, gentlemen.

You bet. Thank you. Our next question comes from the line of Rick Schafer with Oppenheimer. Please go ahead.

Hey, guys. This is Sean Simmons calling in for Rick.

Hey Sean.

Most of my questions have been asked but I just want to get a little bit more clarity on gross margins going forward. Obviously, you guys are seeing a nice step-up in the back half here in revenues and it's probably going to be more focused on your portable audio side. Can you just talk a little bit about what you're doing there whether it's on the back end or wafer pricing? Any sense to possibly lift margins in that business or keep them relatively stable or what exactly are you guys doing there?

Overall for margins I think we've said about what we will say on that is that we expect them to remain in the mid 50's and I wouldn't get too hung up about a point up or down in any event. You know, it's a challenging word. Customers have very strong expectations for price reductions. That is not new despite what is always entertaining to read in the press about how this customer or that customer suddenly woke and decided to focus on their supplier's pricing. Turns out they've been focused on it for a while. So it's nothing really all that new for us. We just keep working on it hard, we try to leverage the volume that we're driving with our wafer vendors assembly and test, et cetera.

Obviously we're more able to enter into significant volume purchase agreements with folks that can have some positive impacts, but it's really about a lot of details. You know, a good engineer spending a lot of time working on a test program to dial down the number of minutes it takes to test a wafer can have a meaningful impact at the kind of volumes we're take about. So we try to work at all the little things and in the end if adds up to some pretty good results. But like I say I don't expect us to drift too far out of the mid 50s.

Okay. Great. Focusing back on that second half ramp, can you just talk a little bit about what you're doing with ASP's and portable audio? Are you guys starting to increase functionality there? Maintaining ASP's, any color would be great.

Well, in portable audio we've been able to increase ASP's over time very successfully. You know, the nice thing about portable audio is that the volumes are pretty high, the design cycles are short, and that gives us the opportunity to continue to refresh the product line either to include new functionality or to help our customers eliminate external components or incorporate them in our device. You can track what we obviously track in detail the ASP overall for that product line and it's gone up since we started it pretty significantly and we think there's more opportunity in front of us to continue to do that.

Okay. Great. And then I guess my last question is just going back on the new amplifier product that you're talking about. Would you guys be targeting high end smart phones, mid-tier smart phones? Who do you think is going to be someone to adopt that type of solution?

I think it's a little more random than that from what type of skew that it falls into. Obviously we wouldn't expect to be in the absolute bottom of the barrel low cost phones but I don't know that there's any margin to be had there any way. But really it's a different kind of a dynamic when you talk about amps because again, it doesn't matter whether you've got the fancy data plan or anything else you still want to be able to hear your phone ring in your back packet or in your purse.

So, for customers that are trying to do something a little bit different and have it be a relatively easy design in process where they can try it out and see if anybody salutes, it's a little random cross section through the customer base. So there's some folks that are interested in it that are at multiple parts of the spectrum there.

Okay. Great. Thanks, guys.

Sure.

Thank you. (Operator Instructions). Our next question is from the line of Chris Longiaru with Sidoti & Co. Please go ahead.

Hey, guys. Congratulations on the results.

Thanks, Chris.

So a couple questions. First, you talked a lot about the LED market. You said you were working specifically with one large customer. Is that still the case are there multiple customers now on the horizon and also this contribution you saw in this quarter was that that one customer or several customers?

The contribution this quarter was one customer. We've now have got something internally we track as the official design win but we don't talk too much about that externally because it gets into all sort of specifics and every company uses different metrics for what they call a design win. Ours is pretty conservative as you might imagine. But anyway, we officially do have something that we call internally another design win.

We are working with multiple customers at this point and on multiple different skews. Unlike some of the other markets we're in, the lighting market is very, very fragmented. There's quite a few suppliers that matter in the lighting market and each one of those has potentially a hundred some odd skews that you could penetrate over time.

So our focus is try to get in with some of the bigger guys, make sure that we penetrate a skew or two that is really going to move the needle and have some significant volume and then hopefully they will have a real good experience with us an get some good reviews and feedback on their product and then rapidly design across the board.

But it is an area even when we do real well with a customer, will take a wile for it to penetrate our whole product line, but we think our opportunities to do that are really, really good. We're feeling very good about the investments we've made in LED lighting.

And just from a timing perspective, part of that big September ramp that you're expecting I imagine is a ramp with the customer that you're already shipping to. When would a second shipment or an additional customer start to add to that? What's the time frame on your penetration of that market?

We expect to ship to multiple customers in the LED lighting space this year.

Okay.

It's actually quite a technically challenging design in process. Any time you get into power electronics, inductors and you know, you've got a lot of issues to be concerned with in a light bulb. But once the design is done at the terminals it's a fairly simple product. It's got two pins and lights coming out and it's not anywhere near as complicated from the end-user experience as the innards that the bulb would imply.

So the qualification cycle while it is detailed and rigorous, is not quite as long as it might be for some of the portable audio devices, for example. So we think we've got some very good opportunities to have multiple customers and multiple products hitting the shelves in the fall.

Okay. And then the last question I have is just on the tax rate. What do you expect the tax rate to be going forward after this adjustment you've taken?

I think cash taxes for the year are still kind of in the 5%.

They're going to be around 3% to 4% on cash taxes and you can still look at a 35% tax rate on the GAAP tax calculation that is a non cash number.

Got it. Alright. Thank you guys.

Sure. Thank you.

Thank you. Our next question is a follow-up question from the line of Andrew Huang with Sterne Agee. Please go ahead.

Oh, thanks guys.

Sure.

I just wanted to ask a little bit more about LED lighting and it seems like you're right now focused on LED lamps or light bulbs as they call them. I was just curious about on the lumineer side because on the lumineer side they still need drivers as well and I was wondering what your plans are for that segment of the market?

Well, there's nothing that would stop somebody from using one of our devices in a lumineer. We're focused on the lamps, or bulbs rather, segment just because we think it's going to grow faster it's going to be a higher percentage of the market in the long run, and we want to take share there while the market is still new. Additionally, one of the things that makes the lamp such a difficult challenge is the space constraints, and you don't have that quite so much in the lumineer market. But that said, we do expect to win some lumineers along the way, we're just a little bit more focused on the lamps and bulbs at the moment.

Okay. Thanks very much.

Sure. Thanks, Andrew.

Thank you. And gentlemen I'm showing no further audio questions at this time.

Great. Well, this is Jeremy. We have one question written in that we would like address that wasn't already addressed on the call today and that related to the recently announced booster ramp from our APAC's precision power line of out of Tucson. Jason, if you could just elaborate on that part what it does and the market it affects.

Sure. That's essentially it's a very high power amplifier. The markets for that are semi cap equipment, test equipment, things like that. As you might imagine for that market it's not the highest volume segment but the ASP's are quite high. So in total, this is a product that's more on the base hit kind of a category. I wouldn't expect it to be something you will see headlines about in the financials for us.

But you'll recognize that our press releases have multiple constituencies and this one I would say is targeted more at the customer base than the investor base, but nevertheless it's a great product and a good effort from the folks out in Tucson.

Alright. I think that's all the questions we have. I would like to thank everyone for the questions today and if you have any questions that were not addressed you can submit them to us via our investor website at www.investor.relations@cirrus.com. Let me close by saying that Q4 was another good quarter for our Company both in terms of financial performance as well as engineering performance. With a variety of new audio and energy products ramping into full production later this year we perfect a sharp transition to higher level revenue during fiscal 2013. In short we are very excited about our outlook.

Thank you, sir. Ladies and gentlemen, for replay of today's conference 1 800 406-73235 or 303-590-3030 using the access codes of 4531962 followed by the pound key. This does conclude the Cirrus Logic fourth quarter fiscal 2012 conference call. Thank you very much for your participation. And you may now disconnect.