Tessera Technologies Announces Third Quarter 2012 Results

  Tessera Technologies Announces Third Quarter 2012 Results

                       - Quarterly Dividend Declared -

Business Wire

SAN JOSE, Calif. -- November 01, 2012

Tessera Technologies, Inc. (NASDAQ: TSRA) (the “Company” or “we”) announced
its results for the third quarter ended Sept. 30, 2012. Total revenue for the
third quarter of 2012 was $72.7 million. Generally accepted accounting
principles (GAAP) net loss for the third quarter of 2012 was $1.1 million, or
$0.02 per basic share.

“During the third quarter of 2012, our Intellectual Property teams continued
to demonstrate infringement of Tessera, Inc. and Invensas Corporation patents
to many manufacturers. We look forward to new long-term licenses that will
give our customers freedom of operation under our portfolios of patented
ideas,” stated Robert A. Young, chief executive officer and president, Tessera
Technologies, Inc. “We also successfully gained initial original equipment
manufacturer adoption for our DIMM-IN-A-PACKAGE^TM solution for use in
Ultrabooks^TM and tablets.

“Turning to our DigitalOptics segment, in the third quarter we made further
progress towards our goal of shipping our MEMS autofocus technology in the
fourth quarter. We also began construction of our optical component
manufacturing site in Taiwan and began converting our production facility in
Zhuhai, China to enable the manufacture of our next-generation MEMS camera
modules, which we anticipate shipping in the first half of 2013.”

Third Quarter 2012

  *Total revenue was $72.7 million.
  *Intellectual Property segment revenue was $57.9 million.
  *DigitalOptics segment revenue was $14.8 million.

Total revenue for the third quarter of 2012 was $72.7 million, compared to
$59.3 million of total revenue in the third quarter of the prior year.
Intellectual Property segment revenue for the third quarter of 2012 was $57.9
million, compared to $50.3 million in the third quarter of the prior year,
which included a nonrecurring $1.0 million license fee. The year-over-year
increase was due primarily to the payment from Amkor Technology, Inc. related
to the International Court of Arbitration of the International Chamber of
Commerce interim award, offset in part by declining royalty income from Micron
Technology, Inc. and Powertech Technology Inc.

DigitalOptics segment revenue for the third quarter of 2012 was $14.8 million,
compared to $9.0 million in the third quarter of the prior year. The increase
was due primarily to camera module product sales from the Company’s recently
acquired manufacturing facility in Zhuhai, China.

GAAP net loss for the third quarter of 2012 was $1.1 million, or $0.02 per
basic share, which included non-cash charges of $6.2 million for amortization
of acquired intangibles and $4.0 million for stock-based compensation.

Non-GAAP net income for the third quarter of 2012 was $6.5 million or $0.12
per diluted share. Non-GAAP net income is defined as income and operating
expenses adjusted for acquired intangibles amortization, charges for acquired
in-process research and development, stock-based compensation expense,
impairment charges on long-lived assets and goodwill, and related tax effects.

Nine-month Period Ended Sept. 30, 2012

  *Total revenue was $180.8 million.
  *Intellectual Property segment revenue was $149.9 million.
  *DigitalOptics segment revenue was $30.9 million.

GAAP net loss for the nine-month period was $9.6 million, or $0.19 per diluted
share. Non-GAAP net income for the nine-month period was $14.5 million, or
$0.27 per diluted share.

Balance Sheet

Cash, cash equivalents and investments were $465.9 million at Sept. 30, 2012,
a decrease of $8.9 million from June 30, 2012. In the third quarter of 2012,
net cash provided by operations was $2.3 million. The Company purchased $6.3
million of property and equipment and $1.2 million of intellectual property in
the third quarter of 2012. On Sept. 13, 2012, $5.2 million was paid to
stockholders of record as of Aug. 23, 2012, for the quarterly $0.10 per share
of common stock cash dividend.

Quarterly Cash Dividend

On Oct. 31, 2012, the board of directors declared a cash dividend of $0.10 per
share of common stock for the fourth quarter, payable on Dec. 13, 2012, for
stockholders of record at the close of business on Nov. 22, 2012.

Prepared Remarks and Conference Call Information

Concurrently with the publication of its earnings press release, the Company
will post to its website management’s prepared remarks regarding the Company’s
quarterly performance. These prepared remarks are being made available in
order to provide the investment community with additional time to analyze the
Company’s results prior to the conference call. The third quarter 2012
earnings conference call will include brief remarks from management, followed
by a Q&A session.

The Company will hold its third quarter 2012 earnings conference call at 2:00
P.M. Pacific (5:00 P.M. Eastern) today. To access the call in the U.S., please
dial 888-723-9308, and for international callers dial 706-643-3789
approximately 10 minutes prior to the start of the conference call. The
conference call will also be broadcast live over the Internet and available
for replay for 90 days at www.tessera.com. In addition, a replay of the call
will be available via telephone for two business days, beginning two hours
after the call. To listen to the telephone replay in the U.S., please dial
855-859-2056. International callers please dial 404-537-3406. Enter access
code 39819195.

Safe Harbor Statement

This document contains forward-looking statements, which are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements involve risks and uncertainties that could
cause actual results to differ significantly from those projected,
particularly with respect to the Company's financial results for the third
quarter of 2012; the adoption of the Company’s technologies, including its
DIMM-IN-A-PACKAGE solution and its MEMS autofocus technology; new long-term
licenses for the Company’s patented ideas; the shipment of MEMS autofocus
technology in the fourth quarter; and the manufacturing and shipment of
DigitalOptics next-generation MEMS camera modules. Material factors that may
cause results to differ from the statements made include the plans or
operations relating to the Company's businesses; market or industry
conditions; changes in patent laws, regulation or enforcement, or other
factors that might affect the Company’s ability to protect or realize the
value of its intellectual property; the expiration of license agreements and
the cessation of related royalty income; the failure, inability or refusal of
licensees to pay royalties; initiation, delays, setbacks or losses relating to
the Company’s intellectual property or intellectual property litigations, or
invalidation or limitation of key patents; the timing and results, which are
not predictable and may vary in any individual proceeding, of any ICC ruling
or award, including in the Amkor arbitration; fluctuations in operating
results due to the timing of new license agreements and royalties, or due to
legal costs; the risk of a decline in demand for semiconductor and camera
module products; failure by the industry to use technologies covered by the
Company’s patents; the expiration of the Company’s patents; the Company’s
ability to successfully complete and integrate acquisitions of businesses,
including the integration by DigitalOptics Corporation (“DOC”) of its recently
acquired camera module manufacturing facility in Zhuhai, China; the risk of
loss of, or decreases in production orders from, customers of acquired
businesses; financial and regulatory risks associated with the international
nature of the Company’s businesses; failure of the Company’s products to
achieve technological feasibility or profitability; failure to successfully
commercialize the Company’s products; changes in demand for the products of
the Company’s customers; limited opportunities to license technologies and
sell products due to high concentration in the markets for semiconductors and
related products and camera modules; the impact of competing technologies on
the demand for the Company’s technologies and products; failure by DOC to
become a vertically integrated camera module supplier; and the reliance on a
limited number of suppliers for the components used in the manufacture of DOC
products. You are cautioned not to place undue reliance on the forward-looking
statements, which speak only as of the date of this release. The Company's
filings with the Securities and Exchange Commission, including its Annual
Report on Form 10-K for the year ended Dec. 31, 2011, and its Quarterly Report
on Form 10-Q for the quarter ended June 30, 2012, include more information
about factors that could affect the Company's financial results. The Company
assumes no obligation to update information contained in this press release.
Although this release may remain available on the Company's website or
elsewhere, its continued availability does not indicate that the Company is
reaffirming or confirming any of the information contained herein.

About Tessera Technologies, Inc.

Tessera Technologies, Inc. is a holding company with operating subsidiaries in
two segments: Intellectual Property and DigitalOptics. The Intellectual
Property business, comprised of engineering, licensing, account administration
and litigation teams, generates revenue from manufacturers that use its
patented ideas. The DigitalOptics business delivers innovation in imaging and
optics with products and capabilities that enable expanded functionality in
increasingly smaller devices. DigitalOptics’ miniaturized camera module
solutions provide cost-effective, high-quality camera features, including
Micro Electro Mechanical Systems (“MEMS”)-based autofocus, extended depth of
field (“EDoF”), zoom, image enhancement and optical image stabilization.
DigitalOptics also offers customized micro-optic lenses from diffractive and
refractive optical elements to integrated micro-optical subassemblies. For
more information call 1.408.321.6000 or visit www.tessera.com.

Tessera, Tessera, Inc., the Tessera logo, DigitalOptics Corporation, and
Invensas Corporation are trademarks or registered trademarks of affiliated
companies of Tessera Technologies, Inc. in the United States and other
countries. All other company, brand and product names may be trademarks or
registered trademarks of their respective companies.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S.
Generally Accepted Accounting Principles (GAAP), the Company’s earnings
release contains non-GAAP financial measures adjusted for either one-time or
ongoing non-cash acquired intangibles amortization charges, acquired
in-process research and development, all forms of stock-based compensation,
impairment charges on long-lived assets and goodwill, and related tax effects.
The non-GAAP financial measures also exclude the effects of FASB Accounting
Standards Codification 718, “Stock Compensation” upon the number of diluted
shares used in calculating non-GAAP earnings per share. Management believes
that the non-GAAP measures used in this release provide investors with
important perspectives into the Company’s ongoing business performance. The
non-GAAP financial measures disclosed by the Company should not be considered
a substitute for, or superior to, financial measures calculated in accordance
with GAAP, and the financial results calculated in accordance with GAAP and
reconciliations to those financial statements should be carefully evaluated.
The non-GAAP financial measures used by the Company may be calculated
differently from, and therefore may not be comparable to, similarly titled
measures used by other companies.

Set forth below are reconciliations of non-GAAP net income to the Company’s
reported GAAP net income.

TESSERA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
                                                             
                                                                   
                          Three Months Ended         Nine Months Ended
                          September    September     September     September
                          30,          30,           30,           30,
                          2012         2011          2012          2011
  Revenues:
  Royalty and license     $ 60,114     $ 55,271      $ 161,563     $ 182,931
  fees
  Past production           79           -             79            -
  payments
  Product and service      12,497     4,071       19,145      14,914  
  revenues
                                                                   
  Total revenues           72,690     59,342      180,787     197,845 
                                                                   
  Operating expenses:
  Cost of revenues          16,748       5,594         28,105        16,467
  Research, development
  and other related         24,615       18,690        72,930        56,088
  costs
  Selling, general and      24,010       20,432        73,058        62,671
  administrative
  Litigation expense        9,689        9,059         19,905        22,263
  Goodwill impairment       -            49,653        -             49,653
  Restructuring charges    -          2,938       -           4,997   
                                                                   
  Total operating           75,062       106,366       193,998       212,139
  expenses
                                                                   
  Operating loss            (2,372 )     (47,024 )     (13,211 )     (14,294 )
  Other income and         3,725      690         5,380       2,024   
  expense, net
                                                                   
  Income (loss) before      1,353        (46,334 )     (7,831  )     (12,270 )
  taxes
  Provision for
  (benefit from) income    2,465      (1,598  )    1,778       9,668   
  taxes
                                                                   
  Net loss                $ (1,112 )   $ (44,736 )   $ (9,609  )   $ (21,938 )
                                                                   
  Basic and diluted net
  loss per share:
  Net loss per            $ (0.02  )   $ (0.87   )   $ (0.19   )   $ (0.43   )
  share-basic
                                                                   
  Net loss per            $ (0.02  )   $ (0.87   )   $ (0.19   )   $ (0.43   )
  share-diluted
  
  Cash dividends          $ 0.10      $ -          $ 0.20       $ -       
  declared per share
                                                                   
  Weighted average
  number of shares used    52,093     51,364      51,908      50,980  
  in per share
  calculations-basic
                                                                   
  Weighted average
  number of shares used    52,093     51,364      51,908      50,980  
  in per share
  calculations-diluted

TESSERA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                             
                                                  September 30,   December 31,
                                                  2012            2011
                                                  (unaudited)
ASSETS
Current assets:
      Cash and cash equivalents                   $  124,954      $  55,758
      Short-term investments                         340,952         436,687
      Accounts receivable, net                       14,083          8,599
      Inventories                                    3,261           1,574
      Short-term deferred tax assets                 2,032           1,892
      Other current assets                          23,695        13,664  
                Total current assets                508,977       518,174 
                                                                  
Property and equipment, net                          50,987          36,319
Intangible assets, net                               126,128         141,326
Goodwill                                             6,844           -
Long-term deferred tax assets                        15,456          18,223
Other assets                                        10,597        2,484   
                Total assets                      $  718,989     $  716,526 
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Accounts payable                            $  13,086       $  7,203
      Accrued legal fees                             7,003           6,110
      Accrued liabilities                            18,190          20,824
      Deferred revenue                              4,223         2,610   
                Total current liabilities           42,502        36,747  
                                                                  
Long-term deferred tax liabilities                   4,083           4,083
Other long-term liabilities                          5,407           5,017
                                                                  
Stockholders' equity:
      Common stock                                   53              52
      Additional paid-in capital                     478,770         462,697
      Treasury stock                                 (10,588  )      (10,505 )
      Accumulated other comprehensive income         374             24
      Retained earnings                             198,388       218,411 
                Total stockholders' equity          666,997       670,679 
                                                                  
                Total liabilities and             $  718,989     $  716,526 
                stockholders' equity

TESSERA TECHNOLOGIES, INC.
RECONCILIATION TO NON-GAAP INCOME FROM GAAP NET LOSS
(in thousands, except per share amounts)
(unaudited)
                                                            
                                                                             
                         Three Months Ended           Nine Months Ended
                         September 30,              September 30,
                         2012         2011            2012         2011
                                                                             
  GAAP net loss          $ (1,112 )   $ (44,736 )     $ (9,609 )   $ (21,938 )
  Adjustments to GAAP
  net loss:
  Stock-based
  compensation - cost      106          67             504          339
  of revenues
  Stock-based
  compensation -
  research,                1,326        1,694          4,990        6,548
  development and
  other related costs
  Stock-based
  compensation -           2,548        3,598           7,755        13,363
  selling, general and
  administrative
  Amortization of
  acquired intangibles     1,860        1,703          5,891        5,117
  - cost of revenues
  Amortization of
  acquired intangibles
  - research,              1,348        872            4,054        2,365
  development and
  other related costs
  Amortization of
  acquired intangibles     2,985        1,736          8,965        5,066
  - selling, general
  and administration
  Impairment of            -            49,653          -            49,653
  goodwill
  Tax adjustments for     (2,564 )    (3,947  )     (8,048 )    (9,503  )
  non-GAAP items
  Non-GAAP net income    $ 6,497     $ 10,640       $ 14,502    $ 51,010  
  Non-GAAP net income
  per common share -     $ 0.12      $ 0.20         $ 0.27      $ 0.97    
  diluted
                                                                             
  Weighted average
  number of shares
  used in per share
  calculations             53,029       52,590          52,986       52,396
  excluding the
  effects of 123R -
  diluted

TESSERA TECHNOLOGIES, INC.
CONSOLIDATED REVENUE DETAILS
(in thousands)
(unaudited)
                                                             
                                                                     
                                 Three Months Ended      Nine Months Ended
                                 September 30,           September 30,
                                 2012       2011         2012        2011
Revenues:
  Intellectual Property
  Segment
    Royalty and license fees     $ 57,721   $ 50,312     $ 149,723   $ 164,414
    Past production payments       79         -            79          -
    Product and service           66        -           66         -
    revenues
    Total Intellectual             57,866     50,312       149,868     164,414
    Property revenues
                                                                     
  DigitalOptics Segment
    Royalty and license fees       2,393      4,959        11,840      18,517
    Product and service           12,431    4,071       19,079     14,914
    revenues
    Total DigitalOptics            14,824     9,030        30,919      33,431
    revenues
                                                                  
    Total revenues               $ 72,690   $ 59,342     $ 180,787   $ 197,845

TSRA-E

Contact:

Tessera Technologies, Inc.
Rick Neely, 408-321-6756
Chief Financial Officer