Peraso Inc (PRSO) 2002 Q4 法說會逐字稿

Ladies and gentlemen. Thank you for standing by. Welcome to the Monolithic System Technology Fourth Quarter End of Year Earnings Conference Call. During the presentation all participants will be in listen only mode. Afterwards we will conduct a question answer session. At that time if you have a question please press the'1' followed by the '4' on you telephone. As a reminder this conference is being recorded Thursday January 23rd 2003. I would now like to turn the conference over to Beverly Kleine of Shelton Investor Relations. Please go ahead ma'am.

Thank you Amy. By now everyone should have received our Press Release however if you haven't it is available on the Mosys Website at www.mosys.com. Before we begin the discussion of the fourth quarter end year result I'd like to acquaint you with our forward-looking statement.

The discussion during this conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Act of 1995, which include without limitations, statements about the market for the Mosys technology, benefits and performance expected from use of the 1T-SRAM Ram technologies. There strategy, the development and production of products that use there licensed technology in a financial performance. Any forward-looking statements made during this call are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Additional information concerning bankers that could cause actual results to differ material from any forward-looking statements made during this call are contained in the company's most recent annual report on Form 10-K filed with The Securities and Exchange Commission. In particular in the section entitled Risk Factors in the Form 10-K and in other reports of the company files from time to time with the Securities and Exchange Commission. Mosys undertakes no obligation to publicly update any forward-looking statement for any reason except as required by law. Even if new information becomes available or other events occur in the future. Thank you for you attention. I would now like to turn the call over to Dr Fu-Chieh Hsu, President and CEO of Mosys.

Good afternoon everyone and welcome to the Mosys fourth quarter and the year end earnings conference call. We will begin the call with our CFO Mark Voll giving a brief overview of the financial results for the fourth quarter and the fiscal year ended 2002. As well as provide our business outlook for the first quarter of 2003. After which I will discuss business and technology highlights of the fourth quarter in the past year. Finally we will conclude by answering any questions you may have. Now I will turn the call over to Mark.

Good Afternoon. Today as you know we reported financial results for the fourth quarter and year ended December 31, 2002. Here is a summary of the results. Net revenue in the fourth quarter was in line with previous dated guidance at $7.9m, an increase of 18% over the fourth quarter of last year. And a 13% increase from revenues of $7m last quarter. Total net revenue included licensing revenue of $3.3m, royalty revenue of $4m and product revenue of $599,000. Licensing revenue in the fourth quarter was $3.3m compared to $1.7m in the fourth quarter of 2001.

Licensing revenue was recognized from 19 different chip development projects, four of which are new to this quarter. Royalty revenue in the fourth quarter was $4m compared to $1.9m in the fourth quarter of 2001. We earned royalty revenue from eight different licensees, some of who have multiple SOC's in production. As a reminder we recognized royalty revenue from reports provided by the licensee, which are typically received following that in which the licensee had sold for manufactured products containing our 1T-SRAM technologies.

Total revenue from licensing of our intellectual property which includes both licensing and royalty revenues was $7.3m with the quarter representing the 103% increase over the fourth quarter of 2001 of $3.6m an 18% increase from IP revenues of $6.2m last quarter.

Product revenue was $599,000 in the fourth quarter compared to $3.2m in the fourth quarter of 2001. As we have stated in recent quarters we continue to see weakness in the communications market for our stand-alone memory chips. And believe that it is likely that we will continue to experience this weakness in product revenues for several more quarters.

For the year net revenues increased by 24% from $22.5m to $27.8m, with revenues from licensing our intellectual property which includes licensing and royalty revenues increasing to $24.9m from $9.5m representing a 162% increase. The gross margin percentage in the fourth quarter was 87% of net revenue compared to 75% in the fourth quarter of 2001.

This increase was attributable to the higher proportion of revenues from intellectual property when compared to the fourth quarter of last year. Operating expenses including research and development were $3.8m mostly attributable to the additional operating expenses from our ATMOS acquisition. SG&A increased due to additional pattern application expenses and increases in audit fees. Our fourth quarter operating expenses also included stock based compensation charges of $171,000. Stock based compensation charge increased by $74,000 due to the stock issue to ATMOS employees as part of our acquisition of ATMOS.

Net income for the quarter was $4.1m; representing a 52% of total revenue or 13% fully diluted earnings per share, compared to $2.8m or $0.09 per share in the same period last year. Net income for the quarter included one time benefit of approximately $1,300,000 or $0.04 fully diluted earnings per share. And the reduction of the company's tax provision due to the use of available tax credits.

Fourth quarter fully diluted earnings per share for computers using 31,309,000 shares. Net income for the year was $12.4m compared to $7m recorded last year, representing a 77% increase. Fully diluted earnings per share for the year were $0.40 compared to the $0.25 earned in 2001. We used thirty one thousand two hundred and seventy five thousand shares to compute fully diluted earnings per share for the year.

Net income was calculated using the effective tax rate this year of 10% compared to only 5% last year. Another useful comparison in reviewing our results for the past year compared to 2001 is operating profit. Operating profit increased by 122%, from 5.5m to 12.2m due to a combination of strong revenue and growth and our diligence in operating expense levels.

In the fourth quarter Game-Cube revenues represented 41% of our total revenues. Significant revenues from other licensees including UMC representing 16% of our revenues and follow-on to Feldman projects with NEC representing 11% of our total revenues during the quarter.

As far as this year's first quarter guidance, we begin the year with a strong type line of license development activity, and thus believe that total revenues to range between $7.9m and $8.1m. We would expect to see licensing revenues to increase relative to the fourth quarter. We would also expect that revenues from Game-Cube to be less than 30% of revenues because of the seasonal adjustment and as such we would expect to see royalties decrease comparatively.

Operating expenses will range between $3.6m to $3.8m. Our tax rate for 2003 will be approximately 25%. With respect to the full year of 2003, we continue to experience limited visibility in the economy, which will limit our guidance to this first quarter. However should visibility increase during this year we'll extend our guidance range appropriately?

Our December 31, 2002 balance sheet continued to show strength with a current ratio of 18. Net cash provided by operating activities was $4.5m in the fourth quarter. Net cash provided by operating the activities for the full year was $7.6m. Cash, cash equivalent and short and long-term investments totaling $79.8m at quarter end.

Ladies and Gentlemen please continue to stand by. Your conference will be resumed shortly. Once again please continue to standby and thank you for your patience.

Please go ahead.

Ladies and Gentlemen, thank you for holding in there, technological difficulties. I will now turn the call back over to Mark Voll and he will continue on.

Our December 31 2002 balance sheet continued to show strength, with the current ratio of 18. Net cash provided by operating activities was $4.5m in the fourth quarter. Net cash provided by operating activities for the full year was $7.6m. Cash, cash equivalent and short and long-term investments totaled $79.8m at the end of the quarter.

At December 31, 2002 total accounts receivable were $943,000 of which $293,000 was attributable to product sales. Inventory at the end of the fourth quarter declined to $1m from $1.2m at the end of the previous quarter. At year end the combined employees now at Mosys now totals 95 of which 68 are engineers. That concludes my prepared remarks about the financial results. Dr Chieh will discuss the business highlights of the fourth quarter.

We continue to make good progress in the proliferation of our 1T-SRAM technology. During the quarter we announced a new technology licensing agreement with UMC. Through this licensing agreement UMC can provide customers with direct access to our 1T-SRAM taking point 1-8 point 1-5and .13 micron and ninety nanometer standard logic processes. UMC's access to this technology means that the funds they can provide its own customize versions of our high density 1T-SRAM memory.

We also announced licensing agreements during the quarter with Hitachi and the Hitachi Information Technology. We ended the year with a number of total licensees at 31, 14 of which were signed this past year. During this past quarter we introduced our new 1T-SRAM-Q technology. Q stands for quad density, which achieved four times the density of traditional SRAM and twice the density of our 1T-SRAM topic.

This addition to the 1T-SRAM family of technology addresses the industry's need for ever increasing memory density. Using upon our proven 1T-SRAM-R technology which is the ultra high reliability and low manufacturing cost technology. And now at the beginning of last year 1T-SRAM-Q memory, includes most of the transparent error correction offering the benefit of eliminating data repair. Improving yield, reliability and soft error rate while doubling the density.

Speaking of our 1T-SRAM-R technology, in the December 12th issue of EDM Magazine our 1T-SRAM-R memory technology was selected along with other innovative digital IT products in their annual top product of 2002. On August 30th we announced we had completed our acquisition of ATMOS. That's in four months after completing our acquisition we announced the availability of our first 1T-SRAM memory compiler in point 1-5 micron logic processors for the leading foundry.

This web-based compiler automatically generates a wide variety of design views for Mosys 1T-SRAM memory. Thus enabling design engineers to easily and graphically evaluate different memory configurations in their designs. During the quarter we continue to make progress on our cell-phone application with the delivery and verification of several one key SRAM macros to our customers.

In our prepared comments we have outlined our business results and guidance for the first quarter 2003. I would like to reiterate that due to the confidential nature of our licensing agreements we cannot always provide detailed information on a specific project or licensee. This is a contractual obligation that we must uphold in order to preserve our relationship with our customers. At any point in time when we are able to disclose those details we will publicly provide that information. That concludes our prepared comments and we are now ready to take questions. Please introduce yourself including your firms name when you ask your questions.

Thank you ladies and gentlemen if you'd like to register for a question please press the '1' followed by the '4' on your telephone. You'll hear a three tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration please press the '1' followed by the '3'. If you are using a speakerphone please lift your handset before answering your request.

One moment please for your first question. Ladies and gentlemen as a reminder to register for a question please press the '1' followed by the '4' on you telephone. Your first questions will come from the line of Chris Chaney with A.G Edwards your line is now open please go ahead.

Thank you. It sounds like my name and firm were already given so I just wanted to go right into the question or questions here I have. First of all could you talk about or could you repeat what you said earlier about the revenues regarding the Game-Cube in the first quarter, I guess it was part of the guidance section Mark that you were mentioning that.

Right we would expect that revenues from Game-Cube would be less than 30% of our total revenues.

Okay so that's about roughly $2.4m or less. It sounds like it would be down substantially from the close to 4m or so. Total royalty revenue that was in the fourth quarter of this past year. Could you describe possibly how the royalty revenue might -- the pattern might work the remainder of the year. Are you expecting royalty to grow each quarter sequentially or sort of how should that pattern look given what you know about royalty revenue trends coming in this fiscal year?

Chris we haven't as of yet gotten to those forecasts yet or to really comment on that.

Okay, could you also talk about, you mentioned some other major customers like UMC, NEC etc. Could you say what you can about Sony, previously Sony had been a very quick time to revenue, type of customer. They had a couple of products out that -- should have done well I would hope in the Christmas season and might also help to positively impact the Q1 period. There's talk about progress with Sony and maybe what percent of sales they are they yet a 10% customer?

Yes I think that we commented on the last quarters conference call so Sony is the significant customer and the, we continue to see the different levels and there's the increase not there yet, a 10% customer yet that's why we're not [testing] them with us.

Okay. Of the amounts, the revenue amounts generated this past quarter could you sort of break it down to end markets. Such as what percent was the -- from communications oriented applications and what percent was strong maybe consumer electronics applications. I'd like someone to give us some more color on them you know sort of where the revenues coming from.

Well I think we apologize for that because the application is actually quite broad with not [inaudible] and the advantage individually so.

Okay

I would say that I think we have answered that many times before that the consumer product that continue to dominate our intellectual property, the business.

Okay, then I guess my final question would be: the tax rate for the first quarter is assumed to be I believe it was 25% in Marks guidance. Should we assume that for the remainder of the quarters in the year and also look at that for 2004 or would there be a sort of step up in 2004?

I would expect that the guidance that we gave on the tax rate for first quarter would be the tax rate for the entire year. A little bit premature at this point in time to comment on what the tax rate would be for 2004.

Okay. Well thanks guy, nice quarter and I'll look forward to hearing other questions thanks.

Your next question will come from the line of Dan Scovel with Needham, your line is now open please go ahead.

Thank you again a good quarter. A question, I notice on the balance sheet this time there's both deferred revenue as well as unbilled receivable. Is that to be netted our or I guess what is new here to provoke the addition of that unbilled receivable line item.

Two components of that. The first is the unbilled of receivable; we've been disclosing that in our 10-Q's in prior quarters. Now we're putting that on our balance sheet when we disclose the - for end financial statements and that'll be in our 10-K also. It's just a disclosure that we feel that we want disclosed as far as our overall revenue recognition is concerned.

Typically those are either billed within 30-60 days of the close of the quarter. So we make that disclosure. As far as deferred revenue again as we had stated previously we don't believe deferred revenue is a indication of our licensing business. It just so happens that -- as you know we recognize deferred revenue on cash payments and we received a number of cash payments par for the quarter.

You mentioned that you have 19 different programs generating license revenue and eight different licensees with royalties. What would be I guess a target that you might be looking to add either by quarter or for 2003?

We have no specific target relating to the number of licensees. Certainly on the development side the size of the contracts vary so there's no typical or targeted number of licensees that we would forecast.

On your Sofon based end processors what is your current take as to when some of that business may begin to start generating royalties?

Well I think that's probably one of the fairly commonly asked questions and I think that the occurrence still remains on chance would be that the earlier the possible time will be a second half of this year.

And you have I guess three of those different designs?

I don't think that we have made any addition of the disclosure at the last quarter.

Okay, thank you, good luck.

Your next question will come from the line of Noel Atkinson with Emerging Growth Equities. Please go ahead.

Hi it's actually Noel Atkinson but that's okay. Nice quarter guys. I was wondering if you could talk a little bit about if you're seeing any of your specific variance that seem to be driving licensing lately?

Well I think the -- I think certainly we can refer back to the 1T-SRAM-R technology which was announced at the beginning of last year. And we have come in on that year. We've had very good success with the technology. In fact we have converted the pretty much all of the events that new project development if you want TS-RAM-R technology. And so from that point of view we would see a fairly complete conversion and we also mentioned that we're very proud that our 1TS & R technology was indeed recognized as the top product for the 2002 for the DC area so. But we think that it's good technology beside many other people concur.

Okay, great. In terms of, there was a question before about end market segments for licensing. What are you seeing in terms of demand that happens in Q4 and then also what you see for Q1 in terms of demand from end market segments for your products?

I think that Mark actually commented a little bit earlier is that the [inaudible] for Q1 that's something we have a heavy consumer applications so the seasonal year the fluctuations will definitely happen as we're reflecting our guidance for the current year the first quarter. And we continue to see that from the business opportunity point of view that the customer has patience and we remain the focal office going forward.

And I guess the last thing is even though you're not really giving any guidance for all 2003 you had folks had previously talked about how Game-Cube would be. Less than 30% of sales exiting 2003 and do you expect that to be significantly less now given now what you're looking at in Q1?

Well we certainly talked of the reduction of percentages due to the growth in our business and the out of that seasonal fluctuations rather than the other way around.

Okay are you seeing any significant weakness in Game-Cube relative to what you folks have expected?

I don't think that would be appropriate for us to comment on our customers business and I think the feeling we have is that our customers don't have a whole lot of visibility in the year 2003. And actually that's one of the primary reasons why we don't feel comfortable where we have to get a better vision than our customers.

Okay, thank you very much.

Your next question will come from the line of Matthew Curtis with Kenny Securities, your line is now open, please go ahead.

Good afternoon everyone. Just a couple of real quick questions for you. First on the income tax credits for the year. Could you give us a little bit of color as to what exactly drove the amount of credits that you recognize this last quarter?

Right, the change from the provision that we had in the prior quarters was in fact due to foreign tax credits, mainly available to the company. Those were available because the credits are available on IT revenue and as such IT revenue was higher than we originally anticipated going into the year. And that foreign revenues were also higher compared to what we had forecast at the beginning of the year also.

And real quick, with customers such as Sony that you were discussing earlier when you were saying that they're not quite a ten percent customer. Have customers such as those picked up additional product designs from you guys that maybe generating revenue sometime in the near future. That maybe hasn't been put out in a necessarily a press release, since they're already announced licensees?

I think that with the remarks that are coming earlier we do have a fairly large number of the customers than the in the product cycle at any given time, and the ten percent customer disclosure and percentage increase includes something of the very high volume the production programs which has Nintendo Game-Cube. As for other programs then they intend to be and only a reflection is how many projects are being done within a short time period for any particular customer, rather than being representative as the overall the development activity. So for example we have customers that have a large number of projects that customers going over a radically uniform and they tend not to show up. So I think I just want to clarify that a little bit.

And then just finally to touch on the cell phone applications that you all had to address a little while ago. I believe what I am understanding from that is that you're not sure exactly when those projects might begin to ship at this point. Whether it will be during the first quarter or whether it might be later in the year.

I think that our general comment is that in the IT business that we provide the memory macros, the memory moving blocks to our customers so on those the development activity where you should have very good visibility and once we have completed our development it will be up to our customers upon us to complete there SOC integration depending on the complexity of it. And it could be relatively lengthen process and also they have to look at the market, the requirements and decide what's under the production schedule. So that's not a parameter we have any control over and suddenly we think this is a very exciting area. We continue to develop technology to make our technology our offering more and more attractive. But we really have no specific ability to predict accurately or even control the specific timeframe.

Thank you gentlemen.

Your next question will come from the line of Chris Chaney with A G Edward, your line is now open please go ahead.

Thank you I have a follow-up here regarding pretty much just a landscape and that is that one of your competitors very recently announced that the spending environment, well the R&D budget environment was getting more and more tight. And as a result it appears that the design work on point 1-3 and 90. Point 1-3 micron and then the 90 nanometer designs was slowing down significantly. Kind of leading it to the point 1-8 micron design volume work to generate the license revenue and the royalty revenue. I was wondering if you all have seen a similar pattern and talking with your customers and sort of what the landscape looks like from your prospective.

Something we see the industry conditions I think it's quite difficult and they last for several years and continues at this time, and the I think however that because our technology is relatively new and we continue to see as Mark mentioned earlier the 30 strong licensing activity, even though we have the seasonal adjustment and maybe the royalty and sometimes the going down at forecast for the first quarter we feel predicting that the licensing activity will make up for it. So I think that generally the industry's in a very difficult environment and we think that our technology will provide a lot of benefit to our customers so we continue to see a lot of the activity development activity along that line.

Okay were there any licensing projects that would have closed in Q4 that got pushed into Q1 plus is there any sort of budgeting issues at the customer level.

Pardon me that's a large number of programs where the discussing what the best way to deploy them at all times, so I guess to say our business is generally true. And when the industry's difficult customers certainly want to make sure every decision they make is the very best. But we don't see any specific-- the time and particular date the significance of it I guess.

Okay, is the bulk right now of the licensing work the true designs, not just in general broad license the most specific license of what you're doing is this in the 0.18 or 0.13 micron node?

I think out of the in terms of the other development of the 1T technology always favors what's available a wide range of the processor technology and we continue to see activity along most of the all the processors now. But certainly the point 1-3 micron technology was getting more mature, we also see the reasonable percentage of activity in that processor now.

Alrighty and just finally, this is public information on Artisan you know freely talked about their royalty rates and says that on average their rates are somewhere between 2.5% and 3.5% kind of weaker price. I was wondering, I understand that earlier that yours were higher than that. Could you sort of characterize the how your royalty rates have been recently? Have they been pressured at all? Have they risen some due to some you know newer higher value licensees that you've signed up for. Sort of what has been the trend in your royalty rate recently, the past couple of quarters?

Okay, I think first of all the royalty licensing count rate is very different. I think by and large that our technology will save our customer the cost in producing the SOC chips. So our royalty is really a cost sharing of the cost saving that approaches so that's very different. And the [inaudible] convention of royalty accounts for that really is very very difficult to compare apple to orange. And the second is that the vast majority are licensees is that the royalty isn't paid down the average sell on price of the SOC device or the direct proportion of the fact memory usage. And so maturity of our licensing arrangement actually is based on a torally different basis.

I see, so would it be fair to say that for your largest volumes royalty generating licenses that as the ASP's of those chips change this is particularly in a downward direction that your royalty dollars per chip would also follow in step? Or does there tend to be a change in the royalty rate when the APS's hit a certain percent decline?

Not really, I think that if a customer is based on the percent, 60% of the royalty, the model there so there I mean our contribution and he's happy if ASP's drops us I would care less so from that point of view we always share with our customers the different model.

Makes sense, alright thanks.

Your next question will come from the line of Noel Atkinson with Emerging Growth Equities. Your line is now open, please go ahead.

Thanks, I think I just missed a couple of things maybe in the guidance. I was wondering if you could go over again with your guidance for OPEX in Q1.

Sure, we gave a range of operating expenses at $3.6m - $3.8m.

Okay, thanks. And in terms of you say you have a strong licensing pipeline. Is that being driven by existing customers or new customers is there one group that's driving it more than the other.

It's pretty broad base, a combination of existing development projects and new projects come down the line.

Okay, but in terms of customers, like as repeat customers to you folks as versus new customers.

Again I would say it's a broad range of repeat customers and new customers that make up that development total.

Okay, thank you.

Your next question will come from the line of Sanjay Chhabra with Sidoti & Company, your line is now open please go ahead.

Hi this is Sanjay Chhabra with Sidoti & Company. I guess a lot of my questions have already been asked so this should be pretty short. First of all in regards to the ATMOS acquisition are there any further developments with the compiler technology? And do you see any impact to the IP revenue next quarter as a result of the addition of the ATMOS people.

Well there will definitely be additional announcement yes in the quarter to come and I think we mentioned before the ATMOS thing represented significantly addition to our R& D capability. And so with that we can be happy a lot of the program where embarking would actually seen as [inaudible] at this time.

Okay. The next question, I may be mistaken but I believe earlier comments were that the Game-Cube will probably account for less than 30% of total revenue in Q4. Did that come as a surprise that the Game-Cube accounted for 40% of sales or was that higher for percentage expected?

Less than 30% of total revenues was the guidance for Q1.

Earlier though had you commented though that the guidance for Q4 the Game-Cube would also account for probably less than 30%? That was my assumption that you had previously provided that guidance.

We did not.

You did not, okay. And did the number of licensees pay royalties for in Q4 increase from Q3?

It remained unchanged.

It remained unchanged, okay. That's all I have thank you.

Your next question will come from the conference of Rouhl Nurink with Apex Capital, your line is now open, please go ahead.

Oh thank you I got on the call a little late. Two questions: one could you just please go over your Q1 facts again in revenues and EPS what was that?

The guidance for Q1 was revenues ranging between $7.9 and $8.1m.

And for earnings pressure.

There was no guidance on EPS the guidance on operating expenses was $3.6m-$3.8m.

Rouhl Nurink Okay and then just looking at the balance sheet can you just tell me what was in the prepaids account went up sequentially by $1m.

The prepaid included a deferred tax benefit that we have.

How much was that?

A little over $1m.

Okay gotcha, great, thank you.

Your next question will come from the line of Karen Payne with Pacific Edge Asset Management. Your line in now open please go ahead.

Thanks. So if you're going to are your estimates your Game-Cube related royalty revenue will be down about $800,000 sequentially. Would you expect to se that made up because you're revenue guidance is roughly flat sequential. Would you expect to see increases in licensing revenue or in royalty revenue from other customers offset that? That is which category would you think would growth offset that decline?

In our guidance we stated that the development activity is quite strong and that we would see increases and a licensing revenue.

Okay so that's $800,000 that you expect to decline will be made up in licensing?

We said that licensing revenue would be increasing from Q4.

Okay, thank you.

Ladies and Gentlemen as a reminder to register for a question please press the '1' followed by the '4' on your telephone. Ladies and gentlemen as a reminder to register for a question just press the '1' followed by the '4' on your telephone. Your next question will come from John Barhams from [Buckingham Capital], your line is now open please go ahead.

You guys I wondered on the unbilled receivables do you think that that stays kind of flat or do we see that increase over time as your business grows.

As we would have more development contracts and if we would have higher licensing revenue that would likely increase.

Mark what was last quarter?

Last quarter was 260,000 the quarter before that was 410,000

Okay, great, thank you.

And what we are during the development cycle.

Yes, thanks.

Ladies and gentlemen to register for a question please press the '1' followed by the '4' on your telephone. I'm sorry no further questions at this time. Please continue with your presentation earnings closing remarks.

Dr Fu-Chieh Hsu; Thank you again for participating in our call before we close I would like to reiterate the key highlights and the achievements of the past year. Revenue is strong intellectual property increased 162% over fiscal year 2001. Net income increased by 77% over last year. We announced our 1T-SRAM-R technology with ultra high reliability and low manufacturing costs. We launched our 1T-SRAM-Q technology achieving four times the density of traditional SRAM. We completed our acquisition of ATMOS Corporation. We announced our first one year DRAM Compiler for leading foundry's. We announced additional licensing agreement with Philips, Motorola, National Semiconductor, Hitachi, UMC and NEC. Mosys licensees reached a tremendous milestone having shipped over 15 million integrated circuits utilizing 1T-SRAM technology. Thank you again for your participation in this call.

Ladies and gentlemen that concludes your conference call for today. We thank you for your participation and please ask that you disconnect your line.