Good day, ladies and gentlemen, and welcome to Fourth Quarter 2012 NXP Semiconductors NV Earnings Conference Call. My name is Alex, and I will be your coordinator today. I would now like to turn the representation over to your host for today's call, Mr. Jeff Palmer, Vice President of Investor Relations. Please proceed, sir.

Thank you, Alex and good morning, everyone. Welcome to the NXP Semiconductors' fourth quarter and full year 2012 Earnings Call. With me on the call today is Rick Clemmer, NXP's President and CEO; Peter Kelly, our CFO will be available during the Q&A portion of the call today. If you've not obtained a copy of our fourth quarter 2012 earnings press release, it can be found at our company website under the Investor Relations section at nxp.com. Additionally, we have posted a supplemental earnings summary presentation and a document of our historical financials to assist in your modeling efforts. This call is being recorded, and will be available for replay from our corporate website. Please be reminded that this call will include forward-looking statements that involve risks and uncertainties that could cause NXP's results to differ materially from management's current expectations. The risks and uncertainties include, but are not limited to, statements regarding the macroeconomic impact on the specific end-markets in which we operate, the sale of new and existing products and our expectations for financial results for the fourth quarter of 2013. Please be reminded that NXP undertakes no obligation to revise or update publicly any forward-looking statements. For a full disclosure on forward-looking statements, please refer to our press release. Additionally, during our call today, we will make reference to certain non-GAAP financial measures, which exclude the impact of purchase price accounting, restructuring, impairment and other charges that are driven primarily by discrete events that management does not consider to be directly related to NXP's underlying core operating performance. Pursuant to Regulation G, NXP has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in our fourth quarter 2012 earnings press release, which will be furnished to the SEC on Form 6-K, and is available on NXP's website in the Investor Relations section at nxp.com. Before we begin the call today, I'd like to highlight our attendance at the upcoming Goldman Sachs TMT Investor Conference on February 12th, in San Francisco. Now I'd like to turn the call over to Rick.

Thanks, Jeff, and welcome everyone to our earnings call today. As this is our fourth quarter and full year report I would like to first spend a few moments highlighting our full year results. Overall, we're quite proud of our results, despite a difficult environment. We focused on delivering on our commitments while also acknowledging we have areas we can further improve. On the positive side, the highlights include; first, we delivered strong revenue growth, product revenue at $4.1 billion was up 7% year-on-year, against an overall semiconductor market which most analysts have projected to decline by several points. Our product revenue performance was due to continued traction within our High Performance Mixed Signal segment which actually grew a strong 13% to $3.28 billion versus 2011. Within HPMS, we saw robust growth within our ID business, which was up 41% year-on-year to $986 million. To help put this in context as of the end of 2012, ID business is on a run rate of over $1.1 billion a year, as compared to the time of the IPO, when it was a run rate of about $600 million, during two short years the team has nearly doubled this uniquely focused business on industry leading security competence. Also in our High Performance Mixed Signal segment, our Portable & Computing business grew 14% year-on-year to $753 million as a result of specific design wins in the mobility market. Second, we improved our profitability, from a non-gap profitability perspective HPMS gross margin - gross profit improved over 6% year-on-year, while HPMS operating profit improved 17% versus 2011. Third, we generate nearly half of billion in free cash flow, which we define as operating cash flow less net CapEx. For the full year free cash flow was $473 million or approximately 11% of total revenue.…

Thank you, Rick and good morning to everyone on today's call. As Rick has already covered the full year highlights as well as the drivers of the revenue during the quarter, I will move directly to the highlights of the P&L. Overall, despite the tough economic environment it was a good quarter and better than our original expectations. Total revenue, non-GAAP gross profit, operating profit and net income were all slightly better than the midpoint of our guidance resulting in non-GAAP earnings per share or $0.50. As we've discussed previously it's our strategic intent to exit 2013 on an operating margin of 25%. We've also said that in order to achieve this goal we need to improve our gross margin performance and reduce our SG&A as a percent of revenue. Before I turn to the operating results for the fourth quarter I'd like to highlight three actions we are undertaking to position the Company to achieve this goal. As highlighted in the press release we are implementing a number of programs that will reduce our SG&A to a level of 12% of revenue by the end of 2013. These programs are primarily focused in the area of G&A support functions. Secondly, we took steps to make our R&D more effective by reducing support costs and refocusing our resources towards more high value programs, while still maintaining our R&D at the 14% of revenue level. Lastly, we continue to manage our internal manufacturing costs. We plan to consolidate our MOS process technologies into our Dutch 8-inch fab and out of our German fab. In total, as a result of this overall plan, we booked $98 million provision in the fourth quarter of which $55 million is in SG&A, $23 million is in R&D and $20 million is in cost of goods…

Thanks, Peter. Alex, could we poll for Q&A?

(Operator Instructions) Our first question comes from John Pitzer from Credit Suisse.

Yeah, good morning guys or afternoon I guess your time. And I appreciate all the detail in the press release always very helpful. But my first question just had to do with the Q1 guide can you talk a little bit about in ID of the trends in emerging versus core. You also seemed to be guiding overall about in line with normal seasonal with no sort of impact from potentially a cyclical uplift in the semi industry. I was wondering if you could comment on the cyclical side of things? And then lastly, on the Standard Products side is the up Q1 a reflection of catch up from some of the quality issues you had in Q4 or should I think about that as being in the lead indicator that [orders] growth in HPMS given that most of Standard Products is distribution and selling?

Let me do the Standard Products question first, I guess the move from Q4 to Q1, it's a relatively small jump from a revenue perspective, we're just talking about a few million dollars there really. I don't think that indicates anything in terms of a major change in the economic downturn.

So, John, your question about ID specifically, the interesting thing about our ID business, and you know, from a security perspective it's interesting portfolio of number of different businesses with different things happening at any one time, as we've talked about on the government side and even some of the banking side it's much more project oriented than economic oriented. And so, the strength that we've had with in Q4 where we saw such strong strength from a year ago we're assuming that that will taper off somewhat in Q1 and frankly there are some parts of the portfolio that we have a problem just filling all of the requirements associated with it. So that's reflected and what we talk about with our guidance for Q1 for the ID business as well. So, I think as far as the general economic environment we're still a little bit conscious about the general economy. Clearly, there's some indications of improvement that are taking place, but not sufficient for us to feel like that we want to count on a robust economic improvement in our projections or guidance associated with it. And we clearly don't see orders on a strong uptick, we see clearly a slight improvement associated with it, but not something that would give us a strong enough position to feel like that Q1 will be significantly stronger. I think that we do still feel pretty good about the general environment and we think that clearly Q1 will be the bottom and we'll be moving up from there. So I think that is a positive associated with it, but still with somewhat anemic economic environment. Even though with the recent results on the U.S. economy but even that having a significant share of that that's focused on housing market which really doesn't have a lot to do with our business in itself.

Rick, and then as my follow-up just thinking about gross for the balance of '13, I mean clearly last year you guys outperformed the industry as emerging ID, accelerated in product cycle wins and PMC also accelerated. As you think about the components about growth this year I know you've got the sensor hub expected sometime mid-year to begin to ramp. But what other areas should we be looking at either by product cycle or by end market where you feel the highest level of confidence about growth?

I think we feel very comfortable that we'll outgrow the market by at least another 50% in 2013. I think, we want to get out of talking about specific programs as much as we can and talk about general indications associated with it. But as we talk about LTE and base stations it clearly will contribute to our growth in 2013 by some of the strong design wins we have. Our automotive business, we expect to continue to see an improvement associated with the general environment. So there's a lot of areas that are going to contribute to the double-digit growth that we're expecting our ID business for 2013. So, all of that added together is what give us the comfort to be pretty specific about being able to outgrow the industry by at least 50% in 2013.

Great, thanks guys. Congratulations.

Thanks a lot, John.

Thanks, John.

Our next question is coming from C. J. Muse from Barclays.

Good after noon. Thank you for taking my question. I guess first question on gross margin, your guide for Q1 despite seasonal down tick is a gross margin level that surpasses any number that you printed in 2012. So curious what's driving that is that mix is that a pickup in utilization on the Standard Products. How should we think about that and how should we think about the trajectory through the remainder of the year?

We'd like to say - I would say two things. One is in Q4 specifically our Standard Products business was hit by some one-off costs. So, that will help the Standard Products business in Q1. Mix is certainly a factor, we've also talked about some of the issues that we've had in 2012 as we ramp some of these big designs. And I think in terms of the trajectory, what we talked about is we really would like to exit 2013 at the 25% operating level and in order to do that we need to move our gross margins up to about the 50% level by the time we exit the year.

But, CJ as we've talked about that's a clear priority and focus for us is how we continue to improve our margins and where we're spending a reasonable amount of time from a management team perspective. We feel very comfortable with our growth opportunities and now we've got to be sure that we drive the kind of margin growth and the right kind of operating income improvements that we think exist.

That's helpful. And as my follow up, you talked about headwind from auto, infrastructure and Standard Products in 2012 at lease relative to the other two businesses that really shined. I am curious today, where do you expect the most improvement, the most growth, where are the green shoots that are cyclically or led by a design win momentum that you know you have in your back pocket today, that could really drive that 50% of performance or greater in 2013?

Well, clearly our ID business we had said we expect double digit growth again in 2013, so it will it will continue to contribute to a strong growth position. Our INI business from the ramp up the base stations for LTE and China we think it represents a significant opportunity while it varies a lot quarter-by-quarter we see those design wins materializing with the shipments of base stations so that we feel comfortable on the year-on-year basis. And in general automotive terms we had record shipments in North America and China in our automotive shipments for last couple of quarters. So continue to see that what's kind of a stabilization of some of the other regions of the world clearly presents an opportunity to being more in line with overall semiconductor growth then it certainly represented in 2012. And then Standard Products, we expect that to continue to be fairly link to what's happening in the general economic environment, although we do expect that there's the opportunity for some growth in China. You know as we talked about near on the strong growth that we had in our shipments in China represent a significant opportunity and clearly that's an area for us in 2013 in Standard Products that we would be helpful, we'll demonstrate some growth.

We shouldn't also forget, Rick, that the design wins and new opportunities we have in PMC will continue to ramp up from midyear onwards.

They will

Very helpful, guys, thank you.

Thanks, C. J.

Our next question comes from Vivek Arya from Bank of America.

Thanks for taking my question. I think you just mentioned mix as one of the factors that impacted HPMS gross margins in 2012. But as we look at 2013 it appears as if mix is not really likely to change, because ID and your Portable & Computing business are expected to be the faster growers in your business. So is that an accurate understanding and appears, can you help us understand how you will improve gross margins and HPMS.

Yeah, I think what I actually said Vivek, was the growth of the mobile designs wins has affected our margin there's a number - I guess I was referencing some discussions on earlier calls, but what's happened is we were forced to ramp some of these products very very quickly. So we didn't necessarily get the best pricing from our foundry partners. We ended up in putting in PE structures and manufacturing structures that were not optimal. And we've been working pretty diligently on clearing those up. So it's from that perspective, we really had some headwinds in 2012, that have not helped us, clearly we have some other product ramps that are going to help us in 2013, as well. But from a mix perspective this is not going to be a huge switch in our mix a way towards very higher margin products that will just make this all easy to look.

Thanks, Peter, that's very helpful. And one question on NFC, I understand it's not a big product of business, but nevertheless it's still a very prominent part of your business. So Broadcom on their call spoke about gaining double digit share I think Qualcomm was also a little bit vocal about their NFC potential. So how are you seeing that competitive situation develop this year as you look at your pipeline of design wins and engagements? Thank you.

Yeah, so it's interesting because in some ways it actually helps the NFC market to have more suppliers in the market. You know clearly we want to continue to maintain our leadership position, but with the growth of the opportunity in the significant increase of smartphones that will have NFC included with those we think it still represents a good growth opportunity for us. As far competition, we've always known we'd have competition, we always knew that ultimately when you've got to be, NFC got to be a significant share of the market at we had see some risk of integration into the overall connectivity chip and as that takes place then we want to be sure we're focused on the secure element to be able to provide the bulletproof security that's really required associated with having NFC implemented in a fashion where the consumer feels comfortable associated with it. So, yeah we know we're going to have more competition, yeah it doesn't surprise me at all that some of our competitors are talking about strong market share growth because the market is growing, so rapidly it still represents a opportunities for growth for us even if some of our competitors do actually gain share associated with it.

Okay. Thank you, Rick.

Thanks.

Our next question comes from Jim Covello, Goldman Sachs. Go ahead please.

Great, thank you so much for taking my question I appreciate it. Rick you mentioned that your sell in to distribution was down 6% and the sell out there was minus 1%. What does your guidance assume about that dynamic going forward? Do you assume balance or do assume continued just the liquidation or draw down?

It's an arm wrestling that goes on with each distributor, each quarter, and we're planning on it being fairly normalized, Jim. We want to be sure that we maintain our inventory levels around 2.4, some of the big guys would like to take that down closer to two months of inventory, as they are focused on their turns and earns, but our view is the margins that they get is based on not only the customer service but maintaining some of that inventory in place. So we would like to keep it in the 2.4, 2.5 months of inventory. But our plan really for our guidance for Q1 is predicated or based on that continuing it roughly at the same level associated with it.

Okay, great that's helpful. And then for my follow-up you mentioned you saw some improvement in orders. When did that improvement start and has it continued through the January?

Well I think the, as we tried to say Jim and I just want to be very clear about it. We don't think it's like momentous improvement in orders.

Right.

I know some of our peers are talking about you know they have seen improvement in orders and clearly we've seen you know order improve where, as we track it on a weekly basis we've seen more weeks that are better than worse. So but as far as being able to draw a trend from it I think we still are not counting on a huge uptick in orders associated with the outlook. We still see a rather anemic economic environment and we are not counting on clearly through the Q1 timeframe seeing a robust improvement associated with it. I think that we do see enough indicators that we feel comfortable that Q1 is truly the bottom and we feel pretty good about some of the opportunities for growth coming out of the Q1 timeframe. But, it's not like we see a definite robust turnaround in order rates that gives us a great deal of confidence it's just more of the general indicators and what we see from customers specifically associated with the design wins we have in place and being able to support those.

That's really helpful. Thanks so much I appreciate it.

Thanks Jim.

Great, thanks, Jim.

Our next question comes from Joe Moore from Morgan Stanley. Go ahead please.

Great, thank you. I wonder if you could talk about your inventory level, where you think that goes and where the factory utilization goes in the next couple of quarters.

So, factory utilization in the current quarter was 85, in Q4 it was 85%. We don't guide going forward but a little bit of color. We've seen in the - and this is a trend that we've seen over the past six months or so. Our IC factories are running pretty full and we're underutilized in our Standard Products factories and I guess I don't see any big change in that in the very, very short term. Inventory, we have seen inventory pickup over the past few quarters, so we're now at 107 days. One of the big items in there I have about $50 million of inventory which is I related to the closure of our ICN4 and ICN6, so that's to facilitate the closure and transfer of products into ICN8. And given we've been limited in terms of our 0.14 capacity over the past couple of quarters we've not really been able to build the buffer inventory that some of our larger customers would like us. So we're continuing to focus on that. I don't think you're going to see much of a change in terms of the number of days, but I'm pretty confident in our working capital control. I think, we understand what we did in inventory, our receivables are just excellent and our payables are extremely well managed.

And you really have to take into account the factory shutdown and the inventory built to support that when you think about our inventory levels.

Yes, the $50 million.

That's very helpful, thank you very much.

Next question comes from the line of Chris Caso, from Susquehanna Financial Group.

Hi, thank you. I'm just following on to some of your earlier comments with respect to Q1 potentially bottoming here. What do you guys typically think about seasonality going forward as you look into Q2, Q3 obviously, it's early days now, but what are the puts and takes and what would you guys consider normal?

You know the interesting thing is when you look at it historically, Q1 is usually our worst seasonal quarter. What we usually see is a little bit of down tick from Q4 and Q1, then we see a pretty robust growth in Q2, growth in Q3 and then see a little of roll off in Q4 and then further roll off again in Q1. So, it follows with those typical seasonal patterns that we see, although to be fair seasonal patterns are hard to determine by some of the economic environment we've seen over the last couple of years. But I think based on what we see from our customers and the indications associated with it, it gives us really confidence that we will in fact see the pickup in Q2 that we would expect on a seasonal basis and so we feel good about that.

All right, great. And just following up on gross margins as well and with respect to your goals of improving that as we go through the year, could you work on it, talk about the timing of that obviously, part of that would be improving some of the factory loadings in Standard Products, I assume, could you give us, perhaps quantify some metrics on as the revenues grows, what we should expect with regard to gross margins as we model that through the year, how much falls through as the revenue improves?

We're not really going to get into those kind of forward looking statements, I guess as far as we want to go as we're expecting by the time we exit the year, we want to get to about 50% on gross margin.

All right, great. Thanks.

Our next question comes from William Stein from Sun Trust. Go ahead please.

Great, thanks for taking my question. If we take a step back and look at the capital structure and the use of cash, clearly, you've been primarily focused on paying down the debt and spending a bit to realign the cost structure, but if you get close to your margin targets as we exit the year and if see just a little bit of growth, it seems like you're going to hit your two times net lever target that you've discussed in the past, can you remind us about how the change in cash use priority will, what might unfold there?

Well what we've said specifically as we're very focused on continuing to reduce our debt until we get down to the metrics of investment grade and at the time we get down to the metrics of investment grade, we'll look at it from a shareholder perspective and depending on where our stock price is, the equity value and opportunities that may exist in the market what creates the most shareholder value associated with it. If our interest rates continue where they are than there is clearly an opportunity to continue to pay down our debt and drive pretty significant leverage associated with that, but we'll continue to act in the best interests of shareholders about what would drive the most value after we get to metric associated with investment grade.

Yeah and our stock was still at $30 I guess we'd be big time buyers of our stock as well.

That's helpful and as a follow-up if I can, you spoke about a refocus of the R&D afford and part of the expenditure or the expense recognized in the quarter was to realign R&D a bit, can you elaborate a little bit on the changes there please?

Yeah, yeah sure, we expect to run about 14% of our revenue in R&D. We think R&D is absolutely the critical part of the company, you know if we don't have the right products as there is no way to go. Having said that, these things with our R&D which we can improve, so we can be more effective in our support of R&D and our IT cost for example and some of the back office support, but also we have different types of resource that we're constantly looking at some of it seems like moving away from say some hardware engineers in the west towards software engineers in India, other parts of it are looking at, you know we are constantly look at our portfolio and term various projects so that we can create more investment for our more successful product lines. So it is that kind of thing, there is no, you know, there is nothing really, really big.

Clearly we'll be increasing our R&D investment in areas where we think it drives a much higher level of probability. So it's more about tuning than anything else in R&D. The primary focus of the investments we'll be doing are improving our back office processes to be sure we've world class you know kind of non-customer phrasing expenses where we want to be sure that we're driving industry leading levels associated with it and this is really just taking that step to be able to facilitate them.

Your next question comes from Ross Seymore from Deutsche Bank.

Hi guys, congrats on the solid results. First question is on the OpEx side of the things. With the new restructuring plan that you are putting into place Peter, I know you gave the percentages, but can you talk a little bit about that 305 to 310 range that you are guiding for the first quarter and how we should expect OpEx to trend on an absolute dollar basis through the year given this restructuring?

Well, I guess first I am going to say I am not going to give guidance for the rest of the year other than the fact that I want to get to 12% of revenue for SG&A by the time we exit 2013. So I am not really going to go into any more detail than that. I think what I would say though is we know how to manage OpEx and the plan that we do have is again really around support costs. So it's not planned to impact our customer facing teams, it's really expected to impact the support groups throughout the organization and obviously I understand its painful for them individually. But, you know we have come down to I'd rather spend less on finance and more on sales, I would rather spend less in IT and more on sales, and I would rather spend less on either support functions and that's really what we're doing Ross. I mean, again no big significant items. I guess the one thing that is difficult in Western Europe it just takes more time to work with the various works councils and unions and come up with an appropriate solution, so that is a bit more challenging then what we would normally expect to do in the U.S. or maybe out in Asia.

Thanks, then I guess my second question changing over to the interest expense side of the things. Given what you did in the fourth quarter and paying down some debt and today's announcement with another $500 million coming. How should we think about that 210 interest expense guidance that was the midpoint of your 2013 guidance before. It seems like you are already running below the midpoint of that range obviously any shot that you can update that for us?

Gosh, you're so tough, Ross. Yes, I will - probably $195 million to $200 million will be for the full year.

Great, thank you.

Thank you.

Thanks, Ross.

Our next question comes from Vijay Rakesh, from Sterne Agee. Go ahead please.

Hi guys, looks like you guys brought your interest expense down to $50 million a quarter and I saw you guys put up this press release on a debt offering. Just wanted to get some more thoughts around what you are going to do with it, how do you see that for the rest of the year of interest expense etcetera?

Well, interest expense we'd expect for the full year to be about $195 million to $200 million. We think we have a very, very solid balance sheet, but we will be opportunistic and to the extent that there is opportunities to address our debt we will do it.

Go it. And on the auto side, obviously 2012 was pretty good how do you see 2013 in terms of new products new customers that you're adding how do you see that growth above market in 2013.

I am sorry. Ask the question again, Vijay?

On the automotive side how do you see 2013 in terms of new markets and new products, where do you expect to get the traction on automotive side in 2013?

So if you look at our automotive business we still have some ramp up taking place with the second largest north America automotive manufacture on the remote keyless entry, but primarily growth that will take place associated with our automotive business will be in the care infotainment side in the development countries associated with the more in Asia and China in 2013. We expect with the overall car production to be flat 2% growth with actually Asia representing fairly healthy growth and may be Europe slightly down. So obviously the participation in automotive comes from additional platforms that were designed into in infotainment that's ramping now and we will continue ramp through of remainder of this year and then the growth that takes place in those developing countries in automotive.

Great. And last question on the fab side, obviously you're doing some good actions consolidating the fabs, there, how many fabs are down to now as you look at 2013 and how do if you were to take a stab at how do you see that going forward in 2014?

The way to think about it really is in the Netherlands that we have 3 fabs in 2013 and 2014 that will be one fab. That will go from 4 to 6 and 8 into an 8" fab. And other than that we don't have any plans to eliminate any fabs the consolidation of MOS Technologies from the German fab to the Dutch fab is more of a these is a profit opportunity really and allows us to optimize both the German fab and on the Dutch fab.

Got it, thanks. Good job guys.

Thanks.

Our next question comes from Nitin Kumar from BNP Paribas. Go ahead, please.

Good morning, guys. And congratulations, solid quarter. Quick question, you've been a little bit more retrospect in your macro outlook than some of the other guys in the industry but you're still looking at a pretty decent growth especially, thinking about your long-term margin goals can you help us understand like how much of that is coming from revenue growth and how much from just your cost reduction that you're talking about?

What I've said in the past is that the model that we have looked at I guess most recently is that industry might, our (inaudible) in the industry might grow about 2-3% in 2013 and we would think maybe we'd grow up to double that. So we achieve then, that gives me more enough revenue growth to hit the right number by the end of the year. And after that its focusing on the various cost reductions and margin improvements that we have in the plan.

In addition to that, by the end of the year we would expect to have some monetization from our IP portfolio that would contribute towards to 25% operating income as well. Especially in areas of technology that are emerging where we have a very strong patent portfolio position.

Okay great. And just a housekeeping question on Automotive. Can you give a geographic breakdown between the different regions in terms of your sales?

It's impossible for us to do that, we can tell where we ship the product to but, Continental or Bosch may ship - product that we ship into - Europe into china Asia and all over the world and product that we ship into China and they may ship into Japan and other regions, so it really -- that is not so meaningful about our shipment and it's very difficult for us to track associated with it.

Great, fair. Thank you.

Thanks, Nitin.

Our next question comes from Philip Scholte from Rabobank. Go ahead, please.

Yes, good morning, or afternoon. Regarding the IP licensing you just mentioned, can you quantify that little bit more and also in terms of timing when that will impact your margins. And my second question will be on your reiteration of the 25% EBIT margin target, does that include any significant recovery in the Standard Products because I mean you're obviously quite cautious on the economy so I would expect that in terms of utilization you wouldn't expect any improvement there, so does that assumes a flat environment for Standard Products?

No. Our Standard Products business we'll have to improve the margins from the performance in Q4, we did have some one-shot items et cetera, but we fully expects Standard Products' margins to improve even without a robust economic environment improvement. So, the 25% definitely counts on Standard Products getting back into the operating model of 18% to 23% operating income margins that we have for that business.

(Inaudible)

On the intellectual property income, we've been involved in this process for some time as you monetize our intellectual property, I've done this in previous companies before it takes a long time you have to go, search patents you have to actually follow law suits, go through that process. We're actually in process with at least - law suits with at least one other company at this point in time. And we'll see how that develops, but we would like to see something that would be contributing maybe as much as a 100 basis points to operating income by the end of the year associated with IP, and we actually have some IP income that takes place to today.

Right. All right. Thank you.

Thank you.

Thank you.

Alex we'll take one last caller if there's any more questions in the queue?

We have no further questions in the queue at this time.

Great. Well with that I think we'll end the call today. Thank you very much for all your time, Rick, did you want to make some closing remarks.

Sure, thanks a lot for your support as well as you continued interest in NXP. In summary, we feel very good about our results in 2012 and believe that they demonstrate measurable success in executing our long-term strategy. The full year product revenue growth of over 7% despite an anemic economic environment, clearly indicates the share gains that we have specially in our HPMS market were we saw revenue growth of 13%, combined with 17% increase in our High Performance Mixed Signal operating income. Clearly, we believe that with the current economic environment as well as the seasonal patterns Q1 represents the bottom of the semiconductor cycle for us. And we expect to see good growth beyond Q1. And will help us continue to have strong cash flow generation over and above the $0.5 billion or so of pre-operating cash flow that we were able to generate in 2012. With all of that we think that we'll continue to be able to drive bottom line results that will continue to demonstrate strong improved performance. Thank you very much.

Thank you very much for your interest.

Thank you for joining today's conference call. This concludes your presentation. You may now disconnect good day.