Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Full Year 2015 NXP Semiconductors Earnings Conference Call. My name is Turia and I'm your operator for today. As a reminder, this conference call is being recorded for replay purposes. Now, I would like to hand it over to Mr. Jeff Palmer, Vice President of Investor Relations. Please proceed, sir.

Thank you, Turia. Good morning, everyone. Welcome to the NXP Semiconductors' fourth quarter and full year 2015 earnings call. With me on the call today is Rick Clemmer, NXP's President and CEO; and our new CFO, Dan Durn. If you have not obtained a copy of our fourth quarter 2015's earnings press release, it can be found at our company website under the Investor Relations section at nxp.com. Additionally, we have posted on our Investor Relations website a supplemental earnings summary presentation and a document of our historical financials to assist you in your modeling efforts. This call is being recorded and will be available for replay on our corporate website. Our call today will include forward-looking statements that include risks and uncertainties that could cause NXP's results to differ materially from management's current expectation. These risks and uncertainties include, but are not limited to, statements regarding the macroeconomic impact on specific end markets in which we operate, the sale of new and existing products, and our expectations for financial results for the first quarter of 2016. 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 today. Additionally, during our call, we will reference certain non-GAAP financial measures which exclude the impact of purchase price accounting, restructuring, stock-based compensation, impairment, merger-related costs 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 2015 earnings press release, which will be furnished to the SEC on Form 6-K and is available on NXP's…

Thank you. Our first question comes from the line of John Pitzer of Credit Suisse. Your line is now open. John William Pitzer - Credit Suisse Securities (USA) LLC (Broker): Yeah. Good morning, guys. Thanks for letting me ask the question and congratulations on the strong full year results. I guess, Rick, my first question is just around your growth rate in the December and March quarter relative to peers. And I understand there's a lot of M&A divestiture messiness which makes apple-to-apple compares difficult. And I've got to make some assumptions here. But as we run through and try to come up with apples-to-apples, it does look like December and March are going to be down both double digits year-over-year for you, which is a little bit worse than the peer groups. To what extent is that just the issue with the distribution channel? And it sounds like you're going to under ship the distribution again in the March quarter or is there other things going on? And I guess importantly, when would you expect your relative growth rate to return to what's been more a normal of outperformance? Richard Lynn Clemmer - President, CEO & Executive Director: Well, John, I think, first off, I don't think you can look at growth rates on a quarterly basis. I think you really have to look at that over a more sustained basis. If we look at annually, I think it's very clear that NXP continue to outperform our peers in 2015. And we feel confident we'll continue to outperform the industry in 2016. If you look at it quarter by quarter, clearly, Q4 and Q1 are messy as we bring the two companies together. I think we were pretty clear that when we went through the combination that we felt…

Thank you. Our next question comes from Ross Seymore of Deutsche Bank. Your line is now open.

Hi, guys. Thanks for letting me ask a few questions. I guess I wanted to focus on the biggest end market that you have, which is the Automotive side. Lots of concern outside of the semiconductor industry about that peaking from a SAAR perspective. So, in general, can you just talk about what you are seeing from a demand perspective in Automotive? And then if, in fact, SAAR is rolling over, what are the items that you think that NXP has to offset that with content gains? Richard Lynn Clemmer - President, CEO & Executive Director: Yeah. Thanks, Ross. So, I guess, what we see is we continue to see strong demand in the segment from both the U.S. and Northern European manufacturers. We think that's really fundamental to the growth. The best thing that we can see for 2016 is we still expect a 2% or 3% SAAR growth. So we don't see it going up, clipping up significantly. We don't see it falling off. Demand in Europe continues to be solid. The demand in the U.S. continues to set records as of the recent input. And then in China where we had seen the fall-off kind of in the follow-up last year with some of the government tax incentives, we've seen the smaller car production move back up associated with that. So, I think that's kind of the fundamentals that we see relative to the industry with the discussion about what the implications are if SAARs did not grow. I think the key for us is really our opportunity to focus on the emerging area in ADAS, or assisted driving, because I don't know that it's going to really be pure automated driving near term, but assisted driving, making driving safer and then making it more secure by…

That's very helpful. I guess for my follow-up, if I could switch over to Dan. You gave the leverage ratios, but clearly those were with only the stub from the Freescale side. Could you give us an update on kind of an adjusted basis where the leverage ratios are now? And then probably more importantly, looking forward, give us an update on the target to get down to that 2 times leverage ratio? And then after that fact, how much cash does the company plan to hold before returning it to shareholders? Daniel Durn - Chief Financial Officer & Executive VP: Thanks, Ross. So, from a leverage standpoint, you rightfully point out that the numerator includes all of the debt. The denominator includes partial credit from a profitability standpoint. And I think where the expectations were set pre-close from a leverage ratio standpoint. We're very close to that in terms of where we sit today around 2.7 from a net-debt-to-EBITDA perspective. In terms of the long-term targets, I think it'll be premature to get out in front of the Analyst Day. We'll come back with more specific guidance of how we see those ratios trending over time and make smart choices with our capital structure with respect to debt and equity.

Thank you.

Thank you. Our next question comes from Stacy Rasgon of Bernstein Research. Your line is now open. Stacy Aaron Rasgon - Sanford C. Bernstein & Co. LLC: Hi, guys. Thanks for taking my questions. I know you only want to talk about the synergy, I guess, on an annual basis at this point, and you don't want to give a trajectory, but I was wondering if you could give us a little more transparency in terms of how much of the cost synergies are actually embedded in the Q1 guidance, at least to give us a starting point. Daniel Durn - Chief Financial Officer & Executive VP: Yeah. So, I think what you're asking fundamentally at the core of that question is to do what we said we wouldn't do, which is begin to parse out the profile of synergy capture throughout the year. And so, again, I would stick with my comments that we feel confident about where we're going in terms of overall synergy capture for the year. And we feel like we're off to a really good start in that. Stacy Aaron Rasgon - Sanford C. Bernstein & Co. LLC: I'm not asking you to try to parse anything. I am trying to get a feeling for our starting point because otherwise it's very difficult to do the comparison to actually know what you are capturing and what you are not. So, is it possible you could give us just a little bit more color on just Q1, like how much is in there?

Yeah. Hey, Stacy, it's Jeff. I think as Dan mentioned, I don't think we're going to parse out where the starting point is on the synergies as Dan has prepared – at beginning of his prepared remarks said we feel very good that we've identified these synergies. The teams are off to a fast start monetizing those synergies. But, look, as the company continues to grow and do very well, we will invest in the business. But the synergies are very identified, and we're not going to break them out on a quarter-by-quarter basis. So I understand the question. Stacy Aaron Rasgon - Sanford C. Bernstein & Co. LLC: Okay, thank you. If I can follow up, I want to ask about your inventory levels, your internal inventories. If I look at the Q4 combined level on the balance sheet, it's about $360 million higher than NXP and Freescale together were in Q3, but your cash flow statement actually shows an inventory decrease. So, is there some accounting or something else going on? What's actually going on with the inventories in Q4? Why did they go up on the balance sheet and what are your plans for your inventories going forward? Daniel Durn - Chief Financial Officer & Executive VP: Yeah. Thanks, Stacy. As you know, in any merger, purchase price accounting has a lot of moving pieces, but I would suggest on this rather than getting into the nuance of the movements one way or another. We take it as an action item to follow up with you, walk you through the full detail from a purchase price accounting standpoint and go into the detail as granular as you'd like with respect to this. Stacy Aaron Rasgon - Sanford C. Bernstein & Co. LLC: Did actual physical inventories go up or down then? Because the cash flow statement shows a decline. Did they go down?

I think, Stacy, what's difficult, as Dan mentioned, is given purchase price accounting, there are a lot of movements. So, what I'd like to do is maybe when you and I have a call back later on today, we go through the details of that. Stacy Aaron Rasgon - Sanford C. Bernstein & Co. LLC: Fine. And if I could just follow up really quickly, which parts of Freescale were stronger than expected and which parts of NXP were weaker?

We're not going to go to that level of granularity. The question is completely obvious. But what Rick said is we're a single company going forward. We're very excited about the two companies together. In the last quarter, NXP was slightly weaker against our guidance, Freescale a little bit better against their guidance, the midpoints, but we're not going to parse them down to the individual level because it's just – it's apples and oranges. Quite honestly, we only had one month stub of Freescale, full quarter of NXP. I don't think we're going to be able to go there for you. Stacy Aaron Rasgon - Sanford C. Bernstein & Co. LLC: All right. I guess, I'm 0 for 3, then. Thanks, guys.

Thank you. Our next question comes from Vivek Arya of BofA Merrill Lynch. Your line is now open.

Thank you for taking my question. I know that you're still working out the base of cost synergies, but just conceptually do you think there is a way to accelerate them given the demand environment is very different than when you announced the acquisition? So, I think when you announced the acquisition, you mentioned $200 million of synergies in the first year and then $500 million longer term, but the demand environment is very different. So, just conceptually, is there a way to accelerate the cost synergies? And more importantly, given that you are not providing cost synergy on a quarterly basis, what is the right way to measure NXP? Is it an operating margin number that we should be tracking instead of a specific cost synergy? Daniel Durn - Chief Financial Officer & Executive VP: Yes. So a couple points. I want to disaggregate the cost synergies from just driving a disciplined business as the cycle fluctuates up and down. So if we talk about synergies, the company is driving hard to capture the $200 million. Feel very confident that we'll actually probably exceed that. But let's stick with the $200 million target. On the April 28 Analyst Day, we will provide margin guidance to the community which shows progression over time and it'll reflect the capture of those synergies. With respect to how we operate the business, given the fluctuations up and down in the cycle and the discipline with which we do that, they're not related to the synergies. And so, accelerating the synergies because of the ups and down movements of the cycle, we're just going to run a disciplined business and position ourselves for success going forward. I think we have appropriately aggressive targets with respect to synergy capture, and we're going to stay disciplined…

Got it. Thanks, Rick. Dan, very helpful. And as my follow-up, so I think the automotive part of the story is clear. It's very interesting. But traditionally, Rick, you've had other strong secular growth opportunities, whether it was in banking cards and mobile wallet or other areas. Can you just give us just conceptually how those opportunities look going forward, so just something beyond autos that you are excited about as you look at the rest of the year? Richard Lynn Clemmer - President, CEO & Executive Director: So, we talked about the combination of the two companies really positions us quite well on connected devices, and actually if you're more complete in that connected devices than the infrastructure to support that with connected devices. So, a lot of people called that the Internet of Things and talk about opportunity. You can read all over the place, from 25 billion to 30 billion items by 2020 to as many as 50 billion items by 2020. So, clearly, bringing the strength of both companies together positions us extremely well to be able to participate in that high-growth market between now and 2020. When you think about the overall semiconductor demand outside of automotive, we think that the high-end smartphones business is not going to have the same growth it has historically. We think we're getting to levels that are not going to have the same kind of growth. The interesting thing that we have is, is that the deployment of the mobile wallet in smartphone is still at a relatively low level in total. And with the implementation of Apple Pay, which I understand is going to be implemented in a few months in China, we think that the rest of the market that's supplying the market besides iPhone will have…

Okay. Thank you.

Thank you. Our next question comes from Craig Hettenbach of Morgan Stanley. Your line is now open. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Yes, thank you. First, just a question on the strength in gross margins in the quarter and outlook, if you could just talk to some of the maybe elements of mix. And then also I know for Freescale there were initiatives to drive gross margins up with new products in manufacturing; if there is any update on that, please. Daniel Durn - Chief Financial Officer & Executive VP: Absolutely. So, in any given quarter, you're going to have puts and takes and you're going to have some businesses performing stronger, others performing weaker. And as we aggregate that performance in Q4, we get the type of margins we're talking about. What I would say, though, is the last 10 months, last year of merger integration planning and being able to get out of the box strong and having the operations team that has a standard set of metrics in place, factories are aligned to a consistent set of goals. Technology roadmaps are integrated and locked in place. We've got a number of pieces in place that allow us to nimbly manage the infrastructure based on the environment we find ourselves in to produce the results that we saw in Q4. So, it's as much a mix as it is the way in which the teams are coming together and aggressively managing in the tough environment. As we roll forward to Q1, again, there's going to be puts and takes. First quarter as a combined company out of the box. We want to be disciplined and appropriate from a guide standpoint. But with Q1, it's typically a difficult quarter because annual price negotiations that we…

Thank you. Our next question comes from Ambrish Srivastava of BMO Capital Markets. Your line is now open.

Hi, thank you. Good morning. Rick, I had a question on the distribution and the channel inventory that had built up last quarter, which had led to the disappointment. You had mentioned that you were going to address that and good to see that the levels have come down. But what specific or mechanical actions have you taken to ensure that this kind of disruption does not occur in the future, given that now you're a much bigger company with the combined assets of Freescale? Richard Lynn Clemmer - President, CEO & Executive Director: Well, we've definitely taken actions relative to legacy NXP basis where we had some of our Asian distis that were providing us information on a monthly basis, considerable weekly basis that we've now corrected and have that information flow in on a weekly basis so we can do a much more complete and thorough analysis of the inventory levels on a more real-time basis than what we're able to do in the past. We also made some organizational changes to be sure that we have the detailed analysis to be able to support that. So, I think we've taken some of the right steps. We have more to do as we go forward to be sure that we drive that, but really the key is shipping a lot less in. So, we reduced the shipments into the distribution channel by 22% in the quarter on a combined basis while the shipments out of distis was only down 5%. So, I think we took proactive measure as we really saw that inventory grow to be able to adjust that on a pretty real-time basis although, clearly, we've got caught in on the quarter end in Q3 where we had to take the actions in Q4 to actually get back to the sustainable level or a level that we felt comfortable with. But I think we've taken the actions. We've taken appropriate actions. It's been a high priority for us in the last few months to be sure that we do that. And Dan's put some people on specifically to be sure that we're looking at it in a different fashion, a more thorough fashion. And we've been able to work with our distribution partners to be sure that we get that information on a more consistent basis as well.

Okay. Very good. And a quick follow-up is last quarter also, and I know it's a smaller piece of the business that aftermarket in China had ballooned up a lot. Has that normalized on a combined basis? I'm sure it's less than 1% now but that was an area that had caused disruption. Thank you. Richard Lynn Clemmer - President, CEO & Executive Director: So, I think we've talked about that earlier. But if you look at that, we still have inventory levels that are higher than what we would like in the car radio aftermarket. We made some progress in the Q4 levels that we would anticipate not getting down to the absolute level that we'd like to be at for at least another quarter. I think we have seen the market improve somewhat which is good in the car radio aftermarket. And maybe you didn't catch it earlier when we talked about that from last earnings call where we said a fourth to third of the car infotainment market was in the car radio aftermarket, that was really in terms of quantity, not in terms of dollars. When you actually take it into dollars, it's more like high-single to low-double-digit percent of the car infotainment market which would put it at half that from a (53:11) legacy NXP basis and on a combined NXP and Freescale basis at even much more reduced, so it would be roughly a fourth or so of that level. So, it's not really significant or material in the combination of the two companies, but the inventory level is not the level that we'd like for it to be on a consistent basis. And we still have actions underway to get that down to the appropriate level.

Thank you, Rick, for clarifying again. Richard Lynn Clemmer - President, CEO & Executive Director: Great. Thanks.

Thank you. Our next question comes from Blayne Curtis of Barclays. Your line is now open.

Hey, guys, thanks for taking my question. Dan, on the interest guidance it seems flat quarterly. I was just trying to understand the decision. You did buy back some stock in the quarter, just the decision between de-levering or buying back stock. And is that guidance for the year reflective of your thought of what you would do or are you leaving that for when you do it? Daniel Durn - Chief Financial Officer & Executive VP: Yeah. So, a couple of things on that, Blayne. First, we're straight-lining interest expense throughout the year. We'll come back on April 28, talk about long-term capital structure, target ratios, those types of things and still get a little bit more granular in terms of the puts and takes and how that profile is not only for the balance of the year, but looking into subsequent years with respect to near-term decisions on the capital structure. But we're going to make smart choices about how we deploy the strong cash flow profile of this company and do smart things. But on April 28, we'll spend more time talking about what that looks like longer-term.

Great. And then I just wanted to follow up on a previous comment or a question on gross margin. Obviously, you had upside there. What specific products or segments drove that mix that you referenced to the upside? And then if you could just talk about – a similar other question – as a starting place usually the gross margin synergies happen later. Is it accurate to think this is your starting point and you can add those synergies on top of this? Daniel Durn - Chief Financial Officer & Executive VP: Yeah. So, from a timing standpoint, look, we understand the power in the gross margin. If we really want to invest for future growth in this business, every ounce of efficiency we drive into the operating assets, every ounce of efficiency we drive from an SG&A standpoint, allows us to invest in a way that will drive future growth. So, we understand the importance of the bookends for the R&D line from a synergy standpoint, and we're not wasting any time driving really, really hard and getting a fast start. And I think you see some of the evidence of that in the current quarter, and you'll see that profile over 2016. And I think Rick went into detail on the businesses where we are seeing some signs of strength and certain areas that were showing some signs of weakness. And I would hesitate to go into more granular detail than what he's sort of offered at the highest level now between the different operating segments.

Thanks, Dan.

Thank you. And our next question comes from C.J. Muse of Evercore. Your line is now open.

Yeah. Good morning. Thank you for taking my question. I guess, first question, Rick, in terms of your outlook for SCD, and I know you don't want to go out beyond a quarter, but curious if you can just talk at a high level, given the slowdown we're seeing in premium phones, how UnionPay agreement with Apple will start to flow through and whether or not the confidence you have in terms of growth for that segment this year. Richard Lynn Clemmer - President, CEO & Executive Director: Well, C.J., thanks. I think the key is basically what I talked about earlier. So, while we believe that Apple Pay deployment in China and not, by the way, just China, but I think they announced four or five countries that they're deploying Apple Pay too in a very near-term basis. I think that's going to change the landscape for all of the China Inc. high-end smartphones where they're going to have to have an equivalent capability to Apple Pay to be able to capture their share of the market. So, I think that's really the important facet, but the thing I also mentioned was that if we've actually taken steps to accelerate that. We're working with the transit authorities in China in the 10 largest cities actually implementing the transit ticketing capability on the smartphones, which is extremely convenient in accelerating the boarding of the mass transit systems and the ability to make it much more convenient as well as secure for the users. So, we see that opportunity being one of the significant contributors to that. We also have in that segment the microcontroller business and we can plan to continue to see strong growth there based on the design wins we have and be a significant contributor as well. So, with the combination of both of those areas that we think gives us the ability to see that growth going forward and allows us to feel comfortable about the opportunity to significantly outgrow the overall market.

That's very helpful. And then I guess, if I could follow up, Dan, and I know you're hesitant to talk about standalone Freescale. It's now one combined company. But Freescale gross margin uplift was clearly a part of the old story and now a part of the combined story. So, curious how we should think about the uplift there and what are the key milestones we should be looking at? Daniel Durn - Chief Financial Officer & Executive VP: Thanks. I think if we rewind the clock a year and we look at a similar quarter from a year ago and what was communicated in terms of the long-term approach Freescale was going to take to drive gross margins, I don't think anything changes there. What I would say is use that as the starting point. We're very confident in what we laid out a year ago. We still see the same opportunities in front of us. And on April 28 we'll spend a little more time talking about what that means inside of the combined company and how we drive that gross margin profile on a go-forward basis. Richard Lynn Clemmer - President, CEO & Executive Director: C.J., we still believe that the important thing is the operating income percent and not gross margin percent. But at the same token, we finally have gotten to the point where we can join that 50-plus club and are very pleased with the opportunity to continue to move forward from where we are.

Very good. Thank you.

Operator, we'll take one last question here today, please?

Thank you. And our next question comes from Will Stein of SunTrust. Your line is now open.

Hi. Thank you for squeezing me in. I have a question about the integration and maybe the cultural aspect of it. When I think about the two companies historically, I think there is two big differences I think of, and one is the very centralized around Austin culture that was in place at Freescale versus the much more decentralized one at NXP. And the other is NXP's historical very clear focus on achieving 1.5 times RMS. It's difficult for Freescale business, especially given the big microcontroller focus. I'm wondering as – and I'm sure you'll elaborate on this at the Analyst Day but initial impressions as to how the cultural integration is working from both of those perspectives would be helpful. Richard Lynn Clemmer - President, CEO & Executive Director: So, thanks, Will. I think it's really important to understand that we still maintain that true leadership is the only way to managing the semiconductor business. So, you'll see the combined business be very focused on at least the one-and-a-half times RMS on the areas that we're investing in. And we'll clearly drive a focus on our investment to be sure that we're doubling down in those areas where we can do that and we're cutting back in the areas where we don't have that same opportunity. So that is one of the culture fundamentals of the combined company that we believe will be important in contributing shareholder value for us. As far as the management styles, I think you've been a little kind on us. I mean, the historic NXP management style, I would tell you, is more about a nomadic management style, while clearly Greg and the team were very fortunate to primarily be in Austin with kind of a hub-and-spoke management style. So, I think that's clearly…

I guess I will try an end markets question. I am not sure if this is on or off limits, but it looks – relative to my expectations anyway when I glued the two models together, it looks like the Q1 outlook is quite a bit stronger in Automotive and the Secure Interface and Infrastructure segments. And I'm wondering if you might comment as to whether management feels the same way (65:07) that those two end market groups are doing better. And then perhaps any detail as to product categories one layer below in terms of strengths and weaknesses. It seems like those are the longer cycle end markets, which is encouraging, and I wonder if I have that right. Richard Lynn Clemmer - President, CEO & Executive Director: I think you're – I mean, that's very observant, Will. I think when you look at it, the Automotive strength in the guidance for Q1 clearly is there and we've seen a real strong uptick from our customers in both legacy sides of the house associated with that. So, it's not any one side or the other. We see a very strong position in Automotive across the board. When you talk about the interface and the infrastructure, a significant share of that comes from – of the outlook comes from an improvement in the RF Power business in the near-term. Now, how sustainable that is over the long-term, I think that we've proven that the logistics capability of our base station customers is not world-class. But the bottom line is for the near term, we see an improvement, we see requirements, and so that definitely contributes to the Q1 outlook that we laid out. And clearly, everyone knows that the smartphone market is much weaker than what it's been and continues to be reflected in our outlook as well.

Great. Thanks and congratulations. Richard Lynn Clemmer - President, CEO & Executive Director: Thanks a lot, Will. We appreciate it. Richard Lynn Clemmer - President, CEO & Executive Director: So, in closing, I guess we'd like to share with you four key messages. Integration of the two companies is on track. We see even more opportunity on the product side than we had originally anticipated, and our customer reaction to the combination has been enthusiastic. NXP becomes more diversified in terms of product, customers, end markets and geographic exposure. The merger will substantially enhance our margin profile due to the ongoing operational improvements combined with the cost synergy. Finally, the cash generation capability of the combined company is very significant even in the challenging environment as we demonstrated the capability in our Q4 results and become even more so as we move forward with the benefit from the combination. Thank you very much for your interest and support.

Thank you, everyone. This will end the call today.

And ladies and gentlemen, thank you for your participation on today's conference. This concludes the call. You may now disconnect. Everyone, have a nice day.