Revenue Run Rate
Richard Valera – Needham & Company: Brian, a question with respect to one of the comments you made. I think you said the revenue run rate was positive on the quarter and I wondered if that also applied to the bookings run rate versus the prior years on average?
Brian Beattie – CFO: That’s in fact how we do measure the revenue run rate. So we’re looking at the bookings and compare that to the beginning of the year, looking at revenue that we’ll be expecting to get in the deals as we go forward.
Richard Valera – Needham & Company: So that exactly is your sort of standard measure of run rate?
Brian Beattie – CFO: Yeah.
Richard Valera – Needham & Company: Okay, that was positive on an aggregate. Great, thank you. And then Art, just wanted to ask couple of questions on the IP business which is clearly a big focus and a nice growth driver for you guys. I wanted to try to understand where the margin of that business is today. I believe it’s below the corporate average, but where you see it today, and where you see it going and does that require any meaningful upfront investment for the move to FinFET to sort of crank out all of the different FinFET versions of these products which obviously you would benefit from down the road?
Dr. Aart J. de Geus – Chairman and co-CEO: Okay, in general, that business is strong and we have continued our push to improve its profitability at the same time balancing it I think well with the amount of continued investment in creating the product available for next year. The good news is on the FinFET side, we have actually invested already quite a while ago and so I think we’re going to start to see the benefits of that as the early investments will start to turn now into growing revenue from that. So, I actually see it as a very positive outlook for that business…
Richard Valera – Needham & Company: And with respect to the Intel renewal, a couple of questions, first was it really exclusively the Intel deal that drove up to the average duration for the quarter, whether it was the rest of the business kind of in line with your norm? And two, we would’ve thought all things equal, your deferred revenue would’ve gone up sequentially with that renewal in the quarter, but it actually went down a bit, just wondered if you could comment on and of those couple of items.
Dr. Aart J. de Geus – Chairman and co-CEO: Well, as you know, in general we are very shy to comment about anything regarding a specific customer and that includes Intel. Needless to say, this is an important customer for us and a significant agreement. Let me now break it up further given that we don’t want to comment about the specifics of the transaction.
Brian Beattie – CFO: And to your question on the deferred revenues, Rich, just recall that increases in deferred revenue happen only when we are able to invoice the customers.
Richard Valera – Needham & Company: So, could I take it that maybe you didn’t yet invoice for that particular large deal?
Brian Beattie – CFO: Same comment in terms of providing, we don’t provide the details of the individual accounts.
Richard Valera – Needham & Company: And I understand you don’t want to provide the duration of that specific deal, but can you say if we should be expecting any change in duration going forward, any other change in your average duration other than that one deal?
Brian Beattie – CFO: What we do is look at the total weighted average renewal lengths that we have been able to close in the quarter. And the impact as we said for our Q2 is that it became greater than four years, and then the impact as we look at bookings perspectives for all of FY ’13 will be just over three years as well.
IP Business Outlook
Krish Sankar – Bank of America Merrill Lynch: Art, in the past, you have spoken about growing your IP business in the double-digit range or the low double-digit. Is it still the target for this year? And can you talk a little bit about the competition now that Cadence has Tensilica?
Dr. Aart J. de Geus – Chairman and co-CEO: Yes, we have not changed our outlook. We think that this is a part of our business that is growing in double-digit range. We foresee it to continue to be there, and of course, at any point in time, we’re dealing with variety of competitors and I think that is more an indication that it’s a healthy business than anything else.
Krish Sankar – Bank of America Merrill Lynch: Then on the emulation side of the market, after you guys purchased EVE, can you talk about what kind of trends you’re seeing there? I know that everyone believes in it being a secular grower. Are there any cyclical trends within that because two of your competitors have two different views at least for this year on how the emulation revenue is going to trend? And along the same path when I look at your operating margin or the margin profile, you are going to improve your margins with IT business. How is the margins on the emulation business and where do you think it can get to?
Dr. Aart J. de Geus – Chairman and co-CEO: Well, let me go backwards. We actually do not break out the margins of any of the individual businesses, partially because there are some fluctuations as we decide to invest or not. The key objective of course is to manage the overall profitability of the Company to be in line with our even higher level objective, which is to grow the earnings per share in high-single-digit range. And so all of this fits together nicely in that regard. As we look at EVE particularly, we are now in the very interesting phase of integrating it while we simultaneously are integrating the debugging capability acquired from SpringSoft. And so our aim and objectives is really to now take what is a fabulous collection of really best-in-class technologies and deliver a well thought-out integrated platform. And EVE absolutely is a key piece in that, and so far I think it’s going very, very well.
Krish Sankar – Bank of America Merrill Lynch: Then the final question, on the FinFET side, clearly you guys have a lot of experience on the FinFET design. When you interact with the foundries, most foundries are expected to start manufacturing FinFET-based chips sometime next year. I don’t think there’s any specific timing quite yet. But when you look at it, is the challenge in FinFET more on the design side or do you think it’s more on the manufacturing side?
Dr. Aart J. de Geus – Chairman and co-CEO: Well, I don’t want to be not humble and say, well, this hindsight we have it sort of under control, but the reality is, I think it is both. Meaning that these are new structures that are simultaneously being introduced with much, much smaller node, so that’s sort of squaring the complexity of the problem and simultaneously achieving much higher density of transistors which brings a lot of challenges for the tools. The only reason that I speak with I think a fairly high degree of confidence is we have already held customers tape our chips that are on the market today with this technology and in that sense the proof of concept is beyond concept that is absolutely in production. Now, having said that, there is no question that there are multiple players that are all racing forward to deliver their own version of this technology and that requires adjusting to their specific technologies, adjusting to how they would like to see the designs come together and we are extremely engaged with all of them which from my perspective is a really, really positive sign because I think that FinFET is one of the enablers for truly a next-generation meaning a decade or so of advanced design. And I think this is moving at super high speed.
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