高塔半導體 (TSEM) 2013 Q1 法說會逐字稿

Thank you and welcome to TowerJazz financial results conference call for the first quarter of 2013.

Russell will open the call followed by Oren, a discussion of our results in the first quarter.

After management's prepared remarks, we will open up the call to the question-and-answer session.

Before we begin, I would like to remind you that some statements made during this call may be forward-looking and are subject to uncertainties and risk factors that could cause actual results to be different from those currently expected.

These uncertainties and risk factors are fully disclosed in our Forms 20-F, F-4, F-3 and 6-K filed with the Securities and Exchange Commission, as well as filing with the Israeli securities authorities.

They are also available on our website.

TowerJazz assumes no obligation to update any such forward-looking statements.

Now I would like to turn the call to our CEO, Mr. Russell Ellwanger.

Russell, please go ahead.

Thank you, Noit.

Welcome to all for our first-quarter 2013 results conference call.

During today's call, I will review our business performance in the first quarter and relate to how that will impact the rest of the year and beyond.

Oren will then provide a detailed financial summary for our first-quarter financial results.

Our Q1 revenues were in line with our expectations in the second quartile of our guidance at $113 million.

The quarter did have several noteworthy achievements.

At the last call, we spoke of the three megatrends in our industry, Green Everything, Wireless Everything (sic) and Smart Everything.

Our progress within these megatrends and our express target to be a foundry leader in the analog predominant portion of these trends is strong.

The first quarter of 2013 had about 100 design wins and set a record for the amount of mass sets entering into the factory for each Nishiwaki, Newport Beach and Migdal Haemek.

The photomask released to the factory is the last formal step in the design development cycle in order to start product manufacturing.

From the time of mass tape into the factory to volume manufacturing is typically one year with a net volume lifetime of 2.5 to 3 years.

The number of masks entering into Newport Beach was up in Q1 year-over-year by about 60%, in Migdal Haemek at about 40%, for a total of about 4000 masks entering into the factory.

Nishiwaki also had a 60% year-over-year increase, but from a much lower base.

We should consider, however, that the reason we bought Nishiwaki was to meet our customer demand forecast.

The volume ramp of a portion of these tapeouts will be realized by our operational cross-qualification and offloading strategies mainly into Nishiwaki.

To restate, we did not buy Nishiwaki specific for the Micron business.

We bought it due to the need for capacity and the opportunity to buy that capacity at a low cost with an excellent human resource core technical capability.

Of course, it was wonderful to enter into a formal relationship with Micron, which opens the door to multiple other present business opportunities.

But the specific Micron contract in Nishiwaki served one purpose -- create cash flow during the period of qualifying our flows and customers in the Nishiwaki fab.

We believe it has served us well.

In reference to our analog objectives and leadership within the aforementioned three megatrends, this is the strongest the Company has ever been.

We guided Q2 midrange up 13% and foresee continued significant quarter-over-quarter growth throughout the year.

I will speak to a few key activities in each of our business unit areas.

Within the scope of Smart Everything, I mentioned a Tier 1 customer project for gesture control Near IR sensor.

Not only is this project, which has a very high volume customer forecast, progressing well, but the platform is serving the flagship capability attracting other top-tier customers.

In Q2, we will be releasing a new design kit for LCOS devices, which stands for liquid crystal on silicon for projectors.

This technology is becoming popular as it provides very high brightness and contrast allowing projection in a sunlit room with no need for shading.

We have a Japanese customer currently evaluating a prototype and we are seeing numerous requests from other potential customers in Europe, Korea and the US.

Our focus for 2013 for image sensors remains on high-end photography, x-ray and machine vision sensors.

In each area, we are in the process of releasing the next generation pixels and process capabilities having partnered with our lead customers to enable next-generation product differentiation.

This includes global shutter pixel for machine vision at Near IR automotive applications, very low noise pixels for high-end still and video cameras and special high dynamic range pixels with x-ray noise rejection for medical and dental x-ray applications.

In our Power Management business unit, we continue to progress in both 0.18-micron BCD, as well as the 700 volt platforms.

In particular, we see a ramp in LED lighting for 700 volt platforms, but this ramp is happening at a slower pace than our initial expectations.

In 0.18-micron BCD, we successfully transferred the technology from our Israeli factory to our Japanese plant and taped out initial products directly to Japan for a major Japanese automotive customer.

This technology will be dual-sourced between the fabs providing flexibility and additional capacity to satisfy growing demand.

During the quarter, we also saw strong adoption with several tape-ins of a customized version of our 0.18-micron BCD flow specific for AMOLED display drivers and other Power Management ICs, which have integrated drivers.

In this instance, we developed an innovative, fully isolated silicon platform, which eliminates the need for SOI starting material, the solution used by our competition.

This innovation offers our customers two large benefits.

Firstly, the design implementation requires only an incremental addition to a modular process design kit with which they are familiar and for which they can continue to use their own developed IPs.

And secondly, a less-expensive manufacturing cost, which cost benefit can be shared with their customer.

We recently announced an expansion of collaboration with ON Semiconductor to result in new products for ON Semi manufactured in TowerJazz's BCD platform.

The initial product announced was a programmable PMIC with integrated display driver.

In our 700 volt productline, we continue to see a steady, albeit slower than planned ramp in LED lighting, while we are prototyping initial designs in a high side version of the process intended for driver ICs for IGBT and for MOSFETs.

Also in 700 volt this quarter, we released design kits for a new device that reduces on resistance cutting the size of the 700 volt driver by more than 30%.

We expect the new device to result in increased design wins, greater enablement of our customers throughout the rest of this year, which will impact production in early 2014.

In short, we have and continue to make strong progress in Power Management.

25% of this quarter's design wins were in Power Management.

This is the first order of capacity drive that will be filling the Nishiwaki facility.

In our RF and high precision analog business unit, we continue to achieve significant customer engagements and marketshare gain in the fast-growing front-end module market.

We are pleased to say that, in Q1, we were recognized by a leader in this area, Skyworks Solutions, who selected us both as Foundry of the Year and as well for an Ironman Quality Award.

Also, during the first quarter of 2013, we began volume production of our latest industry-leading SOI process flow.

TowerJazz's latest RFSOI technology offers the industry best figure of merit for antenna switch and antenna tuning applications.

This technology is quickly replacing gallium arsenide and has already been adopted by multiple customers worldwide with over 50 separate designs taped in and with initial designs ramping to production.

We also continue to make strong progress in our power amplifier offering, delivering prototypes of our most advanced silicon germanium power amplifier technology, which includes a thick copper back end and the latest technology, a through-silicon-via, with our implementation differentiating by allowing a thinning to 80 micron and post-thinning processing without the need for a carrier wafer, which in turn enables reduced cost, greater flow efficiency and reduced wafer breakage.

Without disclosing any specifics, it should be no surprise that the prevalent end-users of FEM technologies are Samsung and Apple since users have vigorous qualification cycles and certain windows for platform entry.

Hence, for this specific application, the level of our customer activity is a good litmus test of our growth within the front-end module applications.

The question is not if it will grow, nor if it will grow big, but simply just a short-term question of exactly when.

Within our high-performance silicon germanium productline, in late March, we announced a significant partnership with Avago.

This will enable us to manufacture leading-edge optical transceivers and components for Avago's fiber optics products division using our advanced 200 gigahertz and 280 gigahertz silicon germanium technologies.

The latter being the fastest commercially available silicon germanium platform anywhere.

In our CMOS business unit, we are seeing strong traction and we currently have multiple tapeouts in our manufacturing site in Nishiwaki, Japan, which already supports our 0.18 platform.

We will continue to focus on transferring more of our technologies to Nishiwaki.

During the quarter, we worked closely with the leading manufacturer of LCD drivers on providing a high-voltage CMOS solution for several high-volume products.

We also saw increased demand for solutions such as our 16 kilobit Y-Flash, high SD rating, low-power IP libraries and more.

Looking forward, we aim to continue announcing our 0.18 platform for analog applications, which require low voltage and high rate ESD support.

Our transfer optimization and process services business unit continues to perform with transfers and/or on-site co-developments in all of our factories.

The press release (inaudible) activities in Japan are progressing well with multiple technologies.

Additionally, in this quarter, we had several substantial new wins to both Japan and Migdal Haemek with binding commitments from our customers.

We have spoken in the past about our involvement in the consortium bidding for a government tender to own, build and operate an advanced technology node 300 millimeter factory in India.

The government has indicated the decision is shortly forthcoming.

Mr. Kapil Sibal, Indian Cabinet Minister of IT and Communications, whose department is responsible for this project, will be in Israel next week.

I have a scheduled meeting with him.

We cannot predict nor commit to the outcome of their decision, but we believe to be in good position to win it.

To summarize, we are in a better position than ever before with regards to customer acceptance, platform qualification and exciting new opportunities.

Operational execution is in line and poised for the task at hand with a combined efficiency demonstrating a sitewide composite annual $60 million decrease in cost.

Thank you.

Oren?

Thank you, Russell and hello, everyone.

I would like to start my financial review by providing a balance sheet analysis as of the end of the first quarter of 2013.

Our net current assets, which is the amount of our current assets less the amount of our current liabilities, continued its trend of improvement and increased from $125 million as of the end of March 2012 and $129 million as of December 31, 2013 to become $141 million as of March-end 2013.

Our current ratio has improved from 1.61 times as of March 31, 2012 to 1.76 times as of the end of 2012 and to 1.98 times as of the end of the first quarter of 2013.

Our short-term debt was reduced from $50 million on December 31, 2012 to $30 million as of March 31, 2013.

Our shareholders' equity was $190 million at the end of the quarter and our cash balance as of the end of this quarter is $120 million of cash and deposits.

During the quarter, we generated $18 million in positive cash flow from operations, excluding $5 million debt interest payment and invested $26 million in CapEx for growth.

During the quarter, we extended our Israeli bank loans resulting in a reduction of $70 million in reduced principal payments in 2013 and '14.

This loan of $131 million carries an interest of LIBOR plus 3.5% and have a final maturity date in mid-2016.

In regard to the capital note, during the first quarter of 2013, the Israel Corporation, our major shareholder, converted all its capital notes into approximately 13.7 million ordinary shares of Tower and the banks converted an amount of note that positioned them with a less than 5% holding each in our ordinary shares as required under their (inaudible).

As a result, we currently have 39 million in issued ordinary shares and in addition, less than 10 million in capital notes, a figure which is 63% lower than the number of capital notes outstanding we had as of December 31, 2012, which stood at 26 million.

In this respect, Israel Corp.

has stated that the conversion of the capital notes to shares is in line with its long-term investment strategy in TowerJazz and that it is its target to become a major shareholder in TowerJazz with 39% strategic ownership.

Israel Corp.

further stated that it has no intention to trade or to sell these shares.

I will now go to the P&L analysis for the first quarter of 2013.

Revenues for the quarter were $113 million compared with $148 million in prior quarter, reflecting a reduction directly resulting from the previously disclosed contractual decrease of the Micron committed volume agreement for the Japanese (inaudible).

Still, we were able to minimize the impact of this Japanese fab revenue reduction over our corporate results by maintaining positive growth in operating and net profit on a non-GAAP basis and maintaining our GAAP loss to not expand beyond the $23 million included in the previous quarter.

On a non-GAAP basis, gross operating and net profits were $34 million, $15 million and $6 million in the quarter as compared to $49 million, $32 million and $22 million in the prior quarter.

Non-GAAP basic earnings per basic share resulted in $0.27 per share for the quarter and the weighted average number of ordinary shares outstanding was 24 million.

On a fully diluted basis, we reported non-GAAP earnings per share of $0.13 with a fully diluted weighted average number of share count of 49 million.

This number excludes an additional 22 million shares of securities that carry an exercise price or conversion ratios, which are above the average price of the Company's stock.

GAAP loss per ordinary share was $0.96 in the quarter as compared to $1.05 for the prior quarter.

I would like to describe three other specific items in our P&L report for the quarter.

One, we have increased R&D expenses in the quarter by $2 million as there are a number of projects and opportunities that we believe will be beneficial to us in the coming years in which we need to invest now so that we can capitalize on them in the future.

Two, operating expenses on a GAAP basis in the quarter include $2 million of non-cash amortization expense associated with early termination of an office building lease.

And number three, the statement of operations for the third quarter includes a positive effect of $7 million of financing income net recorded under GAAP as a result from the previously announced March 2013 agreement with the Israeli bank for the extension of our loan maturity dates.

That ends my financial summary and I would like to transfer the call back to Noit Levi.

Thank you, Oren.

Before we open up the call to the Q&A session, I would like now to add the general and legal statement to our results in regard to statements made and to be made during this call.

Please note that the first quarter of 2013 financial results have been prepared in accordance with US GAAP and the financial tables in today's earnings release include financial information that may be considered non-GAAP financial measures under Regulation G and related reporting requirements as established by the Securities and Exchange Commission as they apply to our Company.

Namely distributors represented financial data, which is reconciled as indicated by the footnotes below the tables on a non-GAAP basis after deducting depreciation and amortization, compensation expenses with respect to options, grants and filing expenses net other than interest accrued such that non-GAAP financial expenses net include only interest accrued during the reported periods.

Non-GAAP financial measures should be evaluated in conjunction with and are not subject to [forget] financial measures.

The tables also contain the comparable GAAP financial measures to the non-GAAP financial measures, as well as the reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures.

EBITDA as presented is defined in our quarterly financial release.

EBITDA is not a required GAAP financial measure and may not be comparable to a similarly titled measure employed by other companies.

EBITDA and the non-GAAP financial information presented herein should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, per share data or other income of cash flow statement data prepared in accordance with GAAP and is not necessarily consistent with the non-GAAP data presented in previous filings.

I would now like to turn the call over to the operator.

Operator?

(Operator Instructions).

Jay Srivatsa, Chardan Capital Markets.

Yes, thanks for taking my question.

Russell, your guidance seems to reflect some pretty good demand bounceback.

Are you sensing that Q1 could be the bottom in terms of where the semiconductor market is and as you look to the rest of the quarters, what is your read on how the overall market growth could be?

For us, certainly, Q1 appears to have been the bottom, but for a variety of reasons.

I would say that the first sign that maybe we had seen of softening was when MOSFET and discrete demand had come down.

We certainly see MOSFET and discrete demand going up right now.

I mean Q2, it is very, very reasonable.

In Q3, the present customer forecasts are very in line with what initial forecasts had been.

So if that is a bellwether of the industry, and I think discretes and MOSFETs themselves are somewhat of a prediction because they are used in most devices, I would say that probably the semiconductor industry is looking pretty decent.

Certainly, in our specific areas, we are looking good.

If we look at Q3 over Q2, I don't want to give a specific number as we have never given that type of a forward-looking guidance, but we see right now in our forecast very substantial growth and the same thing Q4 over Q3.

So we see a good trend of tens of millions of increase over the quarters and looking strong.

Now some of that is certain industries rebounding such as MOSFET as a whole I think is.

The other is increase of marketshare and increase of served market.

All right.

In terms of your margin profile, lately, it has been trending down I guess with lower revenue run rates.

Given that you are expecting good growth in the coming quarters, would it be fair to expect your margin profile to get back into the mid-30%s?

Yes, certainly, mainly considering that the reduced revenue is like we mentioned from this Micron-committed contract, which is supposed to have lower margins than the margins we have.

So since the reduction is in this less profitable business and the increase expected to be in our other activities with our margins, so it is supposed to be even better margins than before when we come back to those revenue numbers that we were.

All right.

And then speaking specifically on Micron, is there still a trailing tail on that business or are you completely done with the contract, meaning you are back to the foundry business that originally was running at Tower?

No, there is still a -- we had said at the onset of the agreement that it was a three-year contractual take-or-pay decreasing after the initial period of one year to 18 months.

But that is still continuing; it is at a much lower level than it had been at the onset.

All right.

And then last question in terms of your Japanese fab, part of the rationale was that you had expected local presence in Japan to positively impact your business within that territory itself.

So can you give us some update on how you are seeing demand from other Japanese companies who traditionally were not TowerJazz customers?

Certainly.

Now one little clarification though.

When we bought the factory, we did not buy the factory because of the local business in Japan.

We said that that would be an incremental benefit.

We bought the factory really because of the forecast and capacity need that our forecast would predict and that still is the case.

However, that being said, probably one specific area where we would not have had any type of stickiness or attraction would be in the area of Japanese automotive and related to that today had spoken, I think mentioned it at the last quarterly release as well, that we have a major Japanese automotive integrator who has taped out to us.

I think that the presence of the Japanese factory in and of itself has been the enabler for us to get into the Japanese automotive market, which is a quite substantial market.

I don't believe we would have been able to get into that market without a local presence.

Now, in addition to that, there is several other activities, Japanese customers that we have brought into the factory that are at different levels of qualification or very low volume production at this point.

But outside of activities that are in Japan, we have engaged with several very well-known companies and are prototyping or in different levels of qualification at other factories with Japanese customers that the presence in Japan, the Japanese technical interface, large technical interface and (technical difficulty) salesforce has enabled.

And in the past, we had very strong difficulty to get the penetration in Japan.

So I would say twofold that, in the area of Japan itself, we have brought customers into that factory that probably otherwise we would not have been able to get, but the presence in Japan has given us a different brand that enabled us to acquire customers into other factories within our fleet that otherwise we were not getting traction before.

Thank you.

George Burmann, JP Turner & Co.

Good morning, gentlemen.

Thank you for taking my question.

My pleasure.

First, a quick question on Japan.

The recent devaluation of the Japanese yen, shouldn't that put you also in a little bit more competitive position as you manufacture over there?

Yes, it's a good question.

For the long term and mid-term you are correct that the current trend in the Japanese yen is helping us a lot in the future because the revenue is expected to be in dollars and some in yen, but mostly in dollars and the expenses are in yen.

So it is a good thing for the mid and long term.

Currently, most of the revenues from there are for Micron, which is a contract, which is denominated in yen.

So this is a natural hedge against the expenses, so actually currently there is not too much of effect.

Okay, great.

Then in general terms, congratulations to you, Mr. Ellwanger.

I think you have built over the last four or five years, I have been sort of a shareholder/investor with the Company since the Jazz takeover, a very, very substantial company.

If I look at your track record, some of the shows you attend, you have consistently been almost the number one specialty fab performer in the world.

What, in your opinion, is leading to an almost devastating stock price performance of your Company and how would you explain the currently very, very low valuation?

So it's a good question.

It is a question that is in big discussion at my staff level, also in the Boardroom.

It is certainly not something that I can comment on publicly without firstly having thrown my comments through legal review.

So I really do stay away from share price-type statements.

I have something that I will say in the conclusion that is a little bit related to that, but I will say that, in reality, over time, questions are answered and all things are borne out.

I think the activities that we are doing are the right activities.

I believe our strategies are the right strategies and I very much thank you and appreciate your comments about having built a substantial company.

I believe that that certainly is the case.

So does the management team, as well as the Board of Directors.

I think that certainly is the case.

We have a very interesting period of time in front of us.

We have given very big targets in the end of '14/2015 timeframe and that would -- 2015 will be my 10-year anniversary at the Company.

I had made some strong commitments to major shareholders when I joined on performance and in my mind, we are in strong play to realize the goals of the Company in the '14/'15 timeframe top and bottom line.

Certainly as we went about and bought the Nishiwaki factory, I think we did it in a very smart way, very cost-effective way to acquire 60,000 wafer per month capacity with a seasoned engineering staff at the factory and operations staff.

We had known at that time that there would be a lull in the utilization of the factory during a period that Micron was phasing out and we were qualifying and building up the other revenue in the factory.

So I think maybe people are waiting to see, okay, you have grown, you have grown quite substantially, let me see it in the bottom-line performance.

And that is what the task is at hand for us at this point is to realize all of these design wins, to realize all of the tape-ins and to show what this fleet of factories can do at high utilization, which we believe will be the case as we exit this year and enter into the next.

I know that that is a very -- it is not a direct answer to you and I apologize, but I really cannot answer that too directly.

Maybe on that note, I saw that your GAAP to non-GAAP adjustments, the depreciation and amortization charge, which always looks very, very rough on the financial statements at least for the untrained eye, they have come down from a little over $40 million to $31 million.

Are we continuing to expect that to scale down as the year progresses?

Yes, this is a result of all the investment that was required mainly to construct Fab 2 and this is indeed -- it was constructed in stages, so this is indeed the stage to end each time when seven years pass from the time that it started.

So indeed, the trend is to go down.

I wouldn't expect it would go down dramatically during this year, but, for sure, 2014, '15 numbers will be much lower than that because depreciation of CapEx that has arrived to the factory in 2006, 2007 will end.

And one could say you put how much money in the ground for Fab 2, probably close to $1 billion, right?

Yes.

A few years back when you built Fab 2?

Yes, it was 10 years back.

Yes, and you have essentially now acquired with the Nishikawa facility similar capabilities for much, much less money with a lot, lot less depreciation.

Right.

Correct.

Good.

Well, good luck to you in the future.

Thank you very much.

Thank you for your comments.

[Dennis Russell].

Yes, thank you for hearing me.

I want to follow up on a previous question here about the share price.

And I know you can't say very much about it, but still it's just baffling to me that the share price doesn't reflect all the optimistic growth and it was much higher two years ago when you didn't have any of these promising things in the pipeline.

So I have got to think that maybe no big shareholders are not coming in perhaps because of all this dilution.

And I am just wondering why you just keep on diluting and selling these shares at such low prices and why there is no insider buying?

I think what I mentioned in the script that what Israel Corp.

has done when actually they converted all its capital notes and also the bank converted to the 5%, so actually 63% of the overhang dilution that people were afraid of actually has now materialized.

So the remaining overall dilution is very small now.

I mean it is 63% lower.

It is like $9.

something million over $40 million.

So now, I think it should be a lot of much better balance sheet and capital structure to prevent that and I understand your comment about the past.

In regards to dilution from fundraising, so I don't remember we did any equity fundraising or dilution type of stuff like that in the last two years, so I don't exactly understand what you (inaudible).

Well, I am talking about the $23 million raising of the [mixed] security shelf there.

Ah, the convertible bond in October?

So half a year ago, it was $20 million.

It is actually a bond.

The conversion feature, there is $10.50, which is 40% above the current market price.

So anyway it is not a significant amount, right, I mean $25 million.

Okay.

And just one thing so I'm clear, is insider buying allowed or is there some kind of restriction of why some of the officers wouldn't buy the shares at this kind of a price?

Well, I don't believe there is any restriction, if that is the first part.

As to the second, any officers what they do or don't do with their money is their personal decision.

Well, that speaks volumes.

Thank you.

Roy Weintraub, (inaudible) Funds.

Thank you for taking my question.

My first one is regarding the Micron activity.

Is it exclusively in the Nishiwaki fab?

Yes.

Okay.

Thank you.

And could you provide us the share of Micron in Q1 revenue?

No, we could not because then you would know exactly the contract with Micron and that is not public information.

Okay, thank you.

So can you comment maybe -- because when I am analyzing your recent use of revenue, it grew dramatically, but if I am taking it net of Micron, so we see it is quite declining meaningfully.

Can you maybe comment on that?

Sorry, the question again please?

So if we are taking the revenue in last years, in recent years net of Micron, it seems as if it was decreasing quite meaningfully.

So maybe can you comment on that?

Our wafer revenue actually is going up.

We have always had deals that are nonwafer revenue that have given revenue into the Company.

As a specialty foundry, we have a business group called TOPS business group that both brings certain integrated device makers and their flows into the Company and as well has licensed technology outside of the Company.

We had fairly big activity in that that occurred in 2010, 2011, which is a pure part of our business model.

But wafer revenue is looking good.

Wafer revenue has actually gone up in 2012 versus 2011 -- I'm sorry -- in 2013 versus 2012 and we see that continuing to grow.

Okay, thank you.

There are no further questions at this time.

Mr. Ellwanger, would you like to make your concluding statement?

Certainly.

Again, thank you for the questions, thank you for your time and interest.

I was looking at an art study a few weeks ago by a young artist by the name of [Camulin] Robinson and what brought my attention to it, it is an interesting study to where she looked at red, green, blue color arrays, put them into different sized squares, made clothing with it and then filmed the model moving around with these clothes.

Now obviously the red, green, blue matrix is something that is very close with us in being an image sensor company.

So it was an interesting study.

Without getting into the study because that is not necessarily important to this call, but in describing it, there is a statement she made that was a direct quote -- what is seen in the moment is different from what is seen with time.

From where I specifically sit, from where the other executives, from where the Board would sit, we have a very, very strong view of the Company because we know the details of the activities and the specific plans, revenue, P&L over time.

Where I sit, the Company is in an amazing position, truly amazing.

I thank all of you as investors.

I thank you as people, if there is customers on the phone, for your trust in the Company because the statement that was made about what we have developed the Company into is very, very true.

The amount of energy and some of that energy is cash, if you are a small $100 million company, $200 million, $300 million, $400 million, $500 million, throughout our evolution, it does take cash to be able to feed in order to grow.

It is very difficult to have the type of growth that we have had and to try to do that organically, especially when you start off with a cash negative per year position.

But the activities that we have had have brought us to a point that I think we are in excellent position to see great rewards in the Company in all financial performance indices as we complete this year and go into 2014, 2015.

As stated, we see quarterly growth throughout this year and we see so much design activity and customer excitement in these three megatrend areas that we are extremely excited about our future.

So I thank you for your support and with that, we will close the call.