奇景光電 (HIMX) 2007 Q4 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Himax Technologies Incorporated Fourth Quarter 2007 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Joseph Villalta of The Ruth Group. Thank you, Mr. Villalta, you may begin.

Thank you, operator, and welcome everyone to Himax's fourth quarter 2007 earnings call. Joining us from the Company are Mr. Jordan Wu, President and CEO; and Mr. Max Chan, CFO. After the Company's prepared comments, we will then have time for any questions. If you have not received a copy of today's results call, please call the Ruth Group at 646-536-7026 or you can get copy off of Himax's website at www.himax.com.tw.

Before we begin the formal remarks, the Company's attorneys advise that certain statements in this conference call, including statements regarding expected future financial results and industry growth are looking-forward statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this conference call. Factors that could cause actual results to differ include general business and economic conditions and the state of the semiconductor industry, level of competition, demand for end use application products, reliance on a small group of principle customers, continued success in technological innovations, ability to develop and protect our intellectual property, pricing pressures including declines in average selling prices, changes in customer order patterns, shortages in supply of key components, changes in environmental laws and regulations, exchange rate fluctuations, regulatory approvals for further investments in our subsidiaries and other risks described from time to time in the Company's SEC filings, including its form 20-F dated June 22, 2007 as amended. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

At this time I would now like to turn over the call to Mr. Jordan Wu. Please go ahead, sir.

Thank you, Joseph, and thank you everybody for joining us on today's call. I will now start with a brief highlight of financial performance during the fourth quarter of 2007 and discuss the outlook for the first quarter of 2008. Next, our CFO will then provide further details on our financial performance.

We have concluded another remarkable quarter with revenues, net income and EPS all achieving record high levels. Also, our fourth quarter revenues, gross margin and EPS all came in higher than our previous guidance. We achieved net revenues of $267.1 million representing a 20.9% growth year-over-year and a 9.8% growth sequentially. Revenues from large panel display drivers were up 11.9% from the same period last year or up 7.0% sequentially and accounted for 80.8% of our total revenues in the fourth quarter.

The increase in revenues was primarily due to the strong demand for LCD TVs in the Holiday seasons. Revenues from small and medium display drivers grew 88.5% year-over-year and grew 28.3% sequentially. Small and medium sized revenues accounted for about 16.6 % of our total revenues. Among various applications demand for our handset drivers was especially strong in the fourth quarter, as we were ramping shipments for both the China market and international brands. For the full year of 2007 our small and medium sized display driver revenues achieved an impressive growth of 76.2% year-over-year. As a percentage of our total revenues small and medium sized display drivers accounted for 15.5% in 2007, a significant increase from 10.8% in 2006.

The strong growth was a result of our continued effort in furthering our product lines and customer base and the acquisition of Wisepal in February 2007. As we continue to strengthen our working relationship with several of the world's top tier mobile display module makers, we are very positive about a long-term growth prospect of our small and medium sized product line.

Our gross margin was 24.7% in the fourth quarter of 2007, up 580 basis points year-over-year and 220 basis points sequentially. We are pleased that we were able to improve our gross margin for the fifth consecutive quarter. These positive trends show the result of our continued efforts in diversifying our product offerings by reducing costs. Max will discuss our financials in further details.

Towards the end of 2007 we announced a couple of new products in the display driver space. We produced HX8352 a new generation handset singe chip display driver that emphasizes a strong combination of high-speed data transmission and low power consumption. These products were accepted by a number of our handset panel module customers across Taiwan, China, Japan and Korea and it's in its early stage of mass production. We believe that this latest display driver together with a series of other products of the same generation can provide significant value to customers in their design of new multimedia rich and power conscious portable devices.

Also, we introduced a patented technology CMDI, an interactive interface, which when used in lap top computers enables thin and light form factor and lower power consumption. It supports resolutions up to 1,920 by 1,200. The CMDI technology has passed qualifications at certain North American notebook brands and is in its early stage of mass production. The introduction of this innovative and leading edge product again illustrates Himax's capability in setting new industry standards and providing values to our customers' development of new products.

During the past few months we also made a couple strategic moves in our non-driver IC areas where we formed business alliances with leading players in the industry. We believe these moves will provide significant value to our shareholders in the long-term. In the beginning of 2008 CMO, one of the world's leading LCD panel makers, and TVV Technologies Limited, the world's largest LCD monitor maker and the world's largest LCD TV ODM, each took up minority ownership stake in Himax Media Solutions Inc., a subsidiary of Himax. After the transaction Himax retains a controlling stake of 80.1% in Himax Media Solutions, with CMO taking 6.6% and TVV taking 4.4% respectively. The remainder of the shares is held primarily by our employees.

We believe that these strategic investments will provide Himax Media Solutions added competitive strength and further validate our strategy in the non-driver IC space. Separately, right before CES BCA in Las Vegas we announced a strategic alliance with 3M, one of the world's leading companies in optics technologies to commercialize the LCOS module projectors by combining the two companies' proprietary technologies to deliver a complete mobile projector solution to consumer electronics manufacturers.

Under the strategic alliance agreement 3M provides a unique optical engine while Himax display at 87.8% on subsidiary of Himax offers its proprietary single-panel color filter type LCOS focal display. And Himax Technologies, the parent Company, provided the driving circuit and related electronics. We believe this combination enables the best mobile projection solution in the market. Many consumer electronics manufactures have shown a strong interest in the mobile projection solution offered by 3M and Himax. We expect this solution to be adopted in applications such as mobile phones, mobile PCs, digital cameras and portable multimedia players and it's scheduled to be introduced to market in the second quarter of 2008.

In summary, 2007 was a remarkable year for Himax. We achieved revenue of $918.2 million in 2007, representing a year-over-year growth of 23.3%. We expect the product mix and cost structure our 2007 full-year net income and EPS came in at $412.7 million and $0.50 per share respectively, representing a year-over-year growth of 49.9% and 46.2% respectively.

Looking ahead, despite uncertainties in the worldwide economy we remain confident of our long-term prospects. During 2008 display drivers will continue to be our main business for which our primary is still to gain for the market share across all LCD panel applications. In addition, we remain fully committed to making Himax a world leading semiconductor solution provider for displays with a more diversified product portfolio beyond display drivers. The recent developments in Himax Media Solutions and the 3M strategic alliance were illustrations of our continued efforts towards that goal. While these new areas are now in their early stages of commercialization, we believe they will provide good contribution to our shareholder value in the long-term.

Now, let me talk about our guidance for the first quarter of 2008. Overall, we expect revenues to decline sequentially in the first quarter of 2008 primarily due to seasonality. We expect revenues to decline by around 15% and gross margin to remain flat or decline slightly. We expect higher operating expenses primarily due to higher R&D expenses for the quarter and higher personnel costs beginning in January 2008. Therefore, we expect diluted EPS to be in the range of $0.13 to $0.15 cents.

Now, let me turn over to the Max Chan, our CFO, for some financial details.

Thank you, Jordan. Our net revenues in the fourth quarter were $267.1 million, a record high, representing a year-over-year growth of 20.9% and a sequential growth of 9.8%. Our gross margin increased to 24.7% from 22.5% a quarter ago primarily due to our continuing effort in diversifying our customer base and product offerings and reducing our unit costs. Our GAAP operating income was also a record high at $42.4 million, up 90.1% year-over-year and up 113.3% quarter-over-quarter. The year-over-year increase was the result of record high quarterly revenues and improved gross margins.

The sharp sequential increase of profit was also attributed significantly to a major reduction in share based compensation. Please be reminded that we grant our annual RSUs or Restricted Share Unit at the end of September each year. Of the total 2007 RSU grant of $26.4 million 54.5% or $14.4 million was vested immediately. The amount was, therefore, expensed during the third quarter causing the third quarter profit to be substantially lower, while the balance will be expenses evenly each quarter across the next three years subject to adjustment to the estimated for future rate.

Our GAAP operating expenses were $23.4 million in the fourth quarter, down from $34.8 million in the previous quarter. Share based compensation accrued in the fourth quarter was $1.6 million, which included a reduction of $0.9 million to reflect change in the estimated for future rate, as compared to 1.5 million accrued in the same period last year and $15.7 million in the third quarter of 2007. Both our GAAP net income and EPS reached record levels. Our GAAP net income was $46.1 million, up 48.1% from the same period last year and up 111.5% sequentially. GAAP EPS was $0.23 up from $0.16 in the same period last year and $0.11 in the previous quarter. A tax benefit of $2 million was recognized in the fourth quarter due to an adjustment to reflect the actual full-year 2007 effective tax rate.

Excluding share based compensation and acquisition related charges, our non-GAAP operating income net income and EPS all achieved record high levels in the fourth quarter of 2007. Non-GAAP operating income was $44.4 million, up from $23.8 million in the same period last year and $36.2 million in the previous quarter. Non-GAAP net income was $48.1 million, up considerably from $32.6 million in the same period last year and $38 million in the previous quarter. Non-GAAP EPS was $0.24, up from $0.16 in the same period last year and $0.19 in the previous quarter. Our non-GAAP operating expenses, which exclude share based compensation and acquisition related charges, were $21.4 million in the fourth quarter, an increase from $18.9 million in the previous quarter. This increase of non-GAAP operating expenses was primarily due to our increased R&D expenses as we continue to develop new products to service our expanding customer base.

In the fourth quarter our share based compensation was $1.6 million and acquisition related charges were $.5 million. On November 1st, our Board approved a share repurchase program that authorized the Company to repurchase up to 40 million worth of the Company's American depositors shares. Since then a total of 7.4 million of the Company's ADSs has been repurchased from the open market for a total of $32 million. Of the $32 million 27.9 million were used in the fourth quarter of 2007, while the remainder was used in January of 2008. The Company's issued and outstanding shares were reduced accordingly.

We generated a net operating cash flow of $42.3 million in the fourth quarter. Our net cash and the marketable securities available for sale were $110 million at the end of 2007, down from $135.4 million a quarter ago. This decrease in cash was primarily due to a cash dividend of $39.7 million or $0.20 per ADS distributed at the end of October and cash used for share repurchase of $27.9 million in the fourth quarter of 2007.

Our total headcount remained literally unchanged at around 1,050 at the end of the fourth quarter. This includes all subsidiary companies where we have a majority control. Jordan provided our first quarter of 2008 outlook earlier. We are basing that guidance on 192.5 diluted weighted average outstanding shares.

Operator, that concludes our prepared remarks. We can now take any questions.

[Operator Instructions] Our first question comes from the line of David Duley with Merriman Curhan.

Thanks, this is Chris on behalf of Dave. I was just wondering on operating expenses for 2008, should we still expect another increase in 3Q like we had in 2007?

Yes, that is primarily because of the expenses of our RPU. So every Q3, Q3 of every year you could expect the same.

Okay, so about 60% from Q2 or is there any way to think about that quantitatively?

Yes, roughly around 50 to 60% of the annual grants will be left and expensed in the end of Q3 and the balance will be expensed and that's over the next three years.

Okay, great.

We probably have to come back to you on whether it is exactly 50% increase, but when you do your model you make your assumptions on how much RPU we are going to grant this year and roughly about half of that will be expensed immediately in Q3.

Okay. With the mobile projector market, what type of unit volumes are you targeting there and is that higher than corporate gross margin?

Much higher. What type of what, excuse me?

Unit volumes, what do you think the addressable market is in units?

Oh. I think it is probably still too early for us to tell. I mean we are not here really to make market research or make projections on that kind of thing.

Okay.

I can assure you the reception from our customers is extremely high. We have been [inaudible] up to be extremely low key in terms of our progress on the product until we have a very high degree of certainty that the product is indeed mass production ready. And so, that's when we really the first time ever formally make an introduction to the outside world during CES and since then we've been very, very busy handling customer requests and inquiries. And while a number of our sort of more mature customers, meaning they are in sort of more advanced stages of product designing, have provided us with preliminary guidance in terms of their perceived volume for the next year or two. I think that we will be reluctant with that kind of numbers for now because bear in mind we are really the pioneer in the whole world in terms of commercializing this concept, but I can tell you the reception is extremely strong and that includes many brand names across a wide range of mobile applications and the gross margin is much higher than our current products indeed.

Okay, great. Were there any 10% customers in the quarter?

What do you mean 10% customers? For display driver or--?

For the whole Company.

10% of revenue?

CMO remains our single largest customer and--.

I'm sorry, can you repeat your question?

Yeah, that was the answer. What percent were your greater than 10% customers and who are they?

Oh, okay. CMO was the only one [inaudible].

Okay. All right, that's it for me. Nice quarter guys.

Frank Wang, Morgan Stanley.

Congratulations for a good quarter.

Thank you.

A couple of questions from me. The first one is on the LCOS mobile projector would you please tell me the frame when you think there could be some commercial product available at a retail space for handset using this product and can you also use this opportunity to compare the LCOS technology with other competing technologies such as DLP or maybe other alternatives? Thank you.

The first question is the time for commercialization for the retail market. In the first phase most of our customers when applying these products for [certain] modifications they basically make an accessory projector to be connected with the third one, while also they are already customers trying to build our optical engine into the [inaudible], meaning creating an embedded model, but the accessory model will hit the market earlier, much earlier for sure.

Now, is the time for 3GSM in Barcelona and there are already a number of our customers displaying such product. Some of them are actually much beyond prototype. They are actually ready for mass production. Exactly when they are going to hit the market, I think we are saying it's going to be Q2 of this year when certain countries consumer may get to have access to such projectors, but that is entirely our customer's call certainly, but we know sort of a more advanced stage of our customers. Customers in the more advanced stage of development already have products very, very close to ready for mass production that's for sure.

Now, as far as a comparison of LCOS technology with DLP, we believe firstly our product is mass production ready. I think that is beyond any that is reached for the time being anyway. I don't know how long it's going to take for them to reach to this point, but this is a highly complicated problem in a sense that it combines electronics and optics together and there are a lot of low electronics issues, reliability issues, etcetera in addition to the fact that you need to be very, very good on power consumption size, long-term costs or price prospect and certainly the brightness and the [concert] that kind of performance. So we need to look at the combination of all these factors to make your comparative more objective solution

So I believe our solution at this time is smaller than anybody's as we are much better in power consumption than anybody's and it is reasonably bright with reasonably good color, even under sort of normal ambient light environment. And LCOS offers very good long-term cost prospect and so we have encountered experiences wherein with certain leading sort of brand name users we actually have had to encounter a beauty contest against some of our competitors and I think we have so far won literally all of them. So we are pretty confident. We are in the leading edge and we also believe the entry barrier of this product area is very, very high. Himax has spent a total of 6.5 years doing this. We now have a team of 450 people doing this full time, so it's quite a commitment for us because we've been doing this since day one of our history.

Okay great. Thank you and the second question is you had a very strong handset driver achievement in the fourth quarter and given that had been some noise in terms of inventory in China related on the handset [ACOA] market and would you please maybe share some view on that and also the recent storm, has that-- will that have any impact on you in terms of shipments and orders? Thank you.

Yes indeed. The inventory level in the handset market is relatively high at the moment, so we do expect a major decline in our handset related driver shipments, Q1 versus Q4 last year. Having said that though, the good news is we are not ourselves encountering major inventory problems, so that is a relief. However, the overall market is pretty tentative at the moment.

And has the China storm created any disruptions for transportation or other related logistical issues for your shipments?

No not really.

And the last question for me please, yesterday Power Chip and Renesas set up a joint venture targeting the small medium size primarily for China market in the future. Would you please maybe share some view in terms of how you think that could be impacting the industry and yourself in the small, medium sized growth potential in 2008, maybe beyond into 2009?

Indeed there is always competition but I think if you have a new stellar Company focusing only on handset display drivers, then I think it is a pretty tough business proposal in the sense that the market size overall entirety is so great, in particular if you are focused, if you can access to first tier makers and the R&D expenses, however, is relatively high. Now you are talking about 0.13 micron kind of [OU 0.11] kind of tooling and you need to have a family of products to make your solutions attractive to any of your customers, meaning you need to have multiple takeouts, so the combination of limited market size and the relatively high R&D expenses in addition to that, also the factor that the certainality and the market cycle we all know in terms of space, in particular in China, it is pretty hard to control, so all these factors combine if your sole proposal is to do handset drivers in particular, focusing only in China market I think this is a pretty tough market to do.

In comparison, as you all know, give and take it varies every quarter but handset drivers accounts for about 10% of our business at the moment and we have very good access to first tier, so overall I think we-- and certainly we take our competition very, very seriously but I don't think that is going to be very competitive for our customers, that kind of new venture.

Okay thank you. Congratulations for a great quarter.

[Jay Liu] with Susquehanna.

This is Jay Liu from Susquehanna. First off, our congratulations on the quarter. My first question is for Max. Your related party account receivables increased from $108 million in first quarter '07 to $195 million in 4Q '07. How should we think about these receivables going forward?

I think the increase in receivable is primarily due to the increase of revenues from related parties and for the past two years I think that most of the customers also the payment terms have been extended. Now our receivable turnover days is about 100 days turnover, so I think the primary reason is the increase of revenue from related parties.

So do you think the balance of this account will trend down throughout the year or it's going to stay there for a while?

I think that they will for the next quarter I think the related party will account for a similar at 60% part of our total revenues and so the numbers of account receivable from related parties should remain at similar percentage as previous quarter.

Okay. All right. Could you give us an update on listing your stock on the Taiwan Stock Exchange?

That's-- we know we have studied it and but it's not on the top of priorities. We know that that's a timing issue, that just take a few months to process and we are already qualified for this but we haven't decided to go for it.

Okay and finally my last question is how should we think about your gross margin for the whole year 2008?

I think we are not really providing guidance for that but there's no reason to believe why it should be much different from the previous year, although this is so early in the year, so we are not really providing a guidance.

(Operator Instructions) David Duley with Merriman.

Just wondering what you think your market share is in the handset drivers in China?

Our market share in handset driver I would say way over one-third, although it is actually a very tough question because of the tricky issue of how you define the China market, whether it's planned on for China consumption or it's planned on for China module makers and our (inaudible) is I guess it's more of China makers. In this case in each we fluctuate over time but it's in between one-third to probably half, in between, and I am talking about [TFP] only for (inaudible) measures only. We don't do PSTN or (inaudible) STN

Okay and when you talked about your LCOS mobile projector you think it's more power efficient than any on the market. Do you think-- I know the DLP isn't renowned for power efficiency but are there some laser solutions that might be-- isn't laser technology maybe more power efficient? Or why is LED solution more power efficient?

It's actually a rather complicated issue to answer if there's anything. But in terms of power consumption you have-- you talk about the LED and also you talk about the panel. These are the two major elements, which are both-- which could be both power hungry. In our case for the panel I am sure the panel or the monitor display for LCOS is much more power efficient than other technologies.

As far as laser is concerned, I believe even our competitors which had focused on laser for a very long time is now gradually switching to LED because of the fact that the laser, I think two major issues. One is the so called speckle issue, so you do have image quality problems and there are research papers from-- coming from economics how you in theory can resolve that speckle issue but we haven't really seen any convincing solution to resolve that issue.

And the second thing is the image of laser being not safe for consumers. However it is. It's very, very proven because every single one of your handsets has got the LED inside, so it's very proven.

Jessica Chang with Credit Suisse.

Congrats to the good results again. I have a few questions. First, you have on the first quarter revenue guidance is down 15% quarter-on-quarter. If we look at the large size segment and for the bigger size segment can we say that the most medium sized segment will be seeing more sharper decline versus the average?

Yes you are correct.

Okay and for the full year '07 your revenue (inaudible) were around 15.5%. Do you see that the ratio could go up to maybe close to 20% this year?

I am sorry you are sort of on and off for us, your noise. Small size?

Yes small to medium size panel drivers accounted for 15 to 15.5% for the revenue in '07. Are you guys expecting the ratio to rise to maybe nearly 20% this year?

I think in long-term this ratio should grow year-over-year but in the very short term, in the first quarter this ratio declined actually. But '08 now we are because it is very uncertain for the small and medium size but I would say year-on-year basis this ratio should continue to grow but whether it will reach 20% towards the end of '08 we are not sure.

To be more sort of specific, in Q1 our consumer electronics drivers, meaning the PSCs, the photo frames etcetera, will continue to rise in both shipment revenue and percentage terms revenue contribution. However, we are seeing a major reduction in handsets. So overall on a combined basis our large panel will become larger proportionally in Q1.

And when would you expect the mobile phone segment inventory to be relatively improved? Can we expect this to happen second quarter?

It looks to be. However, we basically-- we look at our customers' forecasts and at the moment I am afraid we don't have such a long visibility.

Okay and the next question can you talk about your CMDI test and take a measure and you compare this measure with some similar competing (inaudible) in the market?

The conception with CMDI is sort of you power your chip already on the glass or CLG banding. However, it's more than the traditional so called CLG because a lot of signals can be transmitted on the panel itself from IC to IC meaning with so many for many of the terminal ICs you don't need a PC coming from outside to transmit signal from outside to the driver, meaning you save not just the competitive [COS] packaging. You set the field of material costs and compared to CLG packaging you save (inaudible) material costs. So it is-- initially it was supposed to be a very cost saving technology.

We took a long time to develop this because it requires a lot of cooperation between the (inaudible) provider and the panel makers. A lot of technical issues need to be resolved on the panel side, so when it's successful we realize (inaudible) because of IC dye string and also geometry migration. The (inaudible) solution is actually worth the more price competitive compared to what we call WOA array or WOA. CMDI is the interface but the type of technology is something we call WOA, so WOA has sort of lost its price edge. However, we then realize when you want to use our LED tech light for very thin and very smart form factor design because there is no IPC coming from outside so your LED backlight in terms of (inaudible) is a major issue for LED backlight. It's easily resolved, so it becomes a mechanical or thermal issue for system makers so it becomes-- all of a sudden it becomes a very, very competitive solution. If you want to use LED tech light then LED tech light appears to be the best solution for notebook makers when trying to make very, very smart thin design.

It's the technology again requires a very high degree of cooperation between panel makers and driver makers, so it is has certain entry barriers and we are certain-- we divided CMDI interface and we have certain penalty technologies for that as well. We are not aware of a technology as mature as our CMDI to assure the same purpose for the time being, although I know for sure our competitors are trying to develop similar technologies.

And the next question, can you give us some color on Himax media solutions, a recent update and the strategy?

Let me put it simply. We are-- our focus for Himax media solutions is to do our TV chip set and monitor as scheduled, so we do both. We have pretty if I may start from scale of business we have a pretty complete [total panel] already being designed by our anchor customers. We had dramatical products for imperial and we expect mass production in first half of this year and that covers a wide range of customers' product line.

And for TV chip set our strategy for now is to focus on (inaudible) made to lower resolution or price TV products and we provide a single chip solution with a high degree of integration. I guess this is not dissimilar to several of our competitors but again, we have-- we are not focusing only a number of customers with each customers having a multiple design project ongoing in the moment and again, we expect first shipment to be in the first half of this year.

Okay thank you and can you tell us what the reference price may be in your, as you know, in your customers or in your partner's mind for the LCOS mobile projector, the final price for the accessory?

It really depends on the application. If you have a very simple connector, simple interfaces, you just need a projector just for the sake of being a projector, then it could be very low priced. However, you can have for example one of our customers is trying to have a positioned TV with TV still a physical TV reception capability and that becomes very expensive and so there's a very wide range of-- there could be a wide range of prices and in turn, as I said earlier, some of our customers are trying to actually embed the projector inside the main device. What we can tell for sure is that the optical engine per se certainly unlike, and similar to others fellow (inaudible) electronic things, the price is going to decline with much better or improved performance going forward in the next few years. That's for sure and we will try very hard to achieve that, 3M and us.

Okay and my last question I know it could be a little bit early--

Jessica, let me just add one last point on the price of projector. 3M and us, our strategy is to make this a very popular product. It's not just top of the pyramid kind of thing, so our-- we are talking to our customers. We are even doing our own market research in terms of what the right price at the lowest point to make this a very popular product to everybody so-- and our goal is to achieve that one day, hopefully in the not too distant future.

Okay and my last question is I know you could be a little bit too early to tell but can we-- are you thinking maybe first quarter could be the lowest appear for this year, so the--

We certainly hope so.

There's always been a pattern. Actually we if you look at last year the decline I know it's Q1 is always the low season and last year you were so so on a sequential basis Q1 declined quite substantially from Q4, so it doesn't really come to as a big surprise to us, so I certainly hope so.

Thank you very much and very happy to see your good results.

There are no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Well, thank you again everybody for spending the time with us and Happy New Year everybody and I'll look forward to talking to you again next quarter. Thank you.

This concludes today's conference. Thank you for your participation.