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Tessera Technologies Announces Fourth Quarter and Fiscal Year 2012 Results



  Tessera Technologies Announces Fourth Quarter and Fiscal Year 2012 Results

                       - Quarterly Dividend Declared -

Business Wire

SAN JOSE, Calif. -- February 7, 2013

Tessera Technologies, Inc. (NASDAQ: TSRA) (the “Company” or “we”) announced
its results for the fourth quarter ended Dec. 31, 2012. Total revenue for the
fourth quarter of 2012 was $53.2 million. Generally accepted accounting
principles (GAAP) net loss for the fourth quarter of 2012 was $19.6 million,
or $0.38 per basic share.

“Fourth quarter of 2012 Intellectual Property revenue of $43.0 million
resulted in full year 2012 Intellectual Property revenue of $192.9 million,
within our targeted long-term Intellectual Property average annual revenue run
rate of $180 million to $200 million,” stated Robert A. Young, president and
chief executive officer, Tessera Technologies, Inc. “Historically, our
Tessera, Inc. patent portfolio has generated our Intellectual Property
royalties. We also have semiconductor related patents and next-generation
technologies in our Invensas Corporation patent portfolio, which are key to
our broad DRAM re-licensing program. In January of 2013 we announced SK hynix
Inc. as the first DRAM maker to take a license to our Invensas Corporation
portfolio, which expanded our revenue base. The successful conclusion of the
SK hynix deal gives us confidence we are well positioned to maintain our
targeted long-term Intellectual Property average annual run-rate revenue.

“Turning to our DigitalOptics segment, we are excited to announce today that
John Thode has been appointed president of DigitalOptics Corporation. Thode, a
consumer mobile product industry veteran, will be responsible for the
Company’s DigitalOptics business, including strategy and operations. In the
fourth quarter of 2012 we shipped sample quantities of our MEMS autofocus
camera modules to three smartphone Original Equipment Manufacturers (OEMs). We
believe our MEMS autofocus camera modules focus faster and require less power
than the existing voice coil motor technology currently being used for the
autofocus mechanism in smartphone cameras. We are seeing strong demand for our
products, with their highly differentiated attributes, and this validates our
strategy of investing in this business, which offers a significant growth
opportunity in the foreseeable future.”

Fourth Quarter 2012

  * Total revenue was $53.2 million.
  * Intellectual Property segment revenue was $43.0 million.
  * DigitalOptics segment revenue was $10.2 million.

Total revenue for the fourth quarter of 2012 was $53.2 million, compared to
$56.7 million of total revenue in the fourth quarter of the prior year.
Intellectual Property segment revenue for the fourth quarter of 2012 was $43.0
million, compared to $49.0 million in the fourth quarter of the prior year.
The year-over-year decrease was due primarily to the absence of royalty
revenue from Micron Technology, Inc. and Powertech Technology Inc., which was
partly offset by the receipt of past production payments of $24.7 million in
the fourth quarter of 2012.

DigitalOptics segment revenue for the fourth quarter of 2012 was $10.2
million, compared to $7.7 million in the fourth quarter of the prior year. The
increase was due primarily to sales of fixed focus camera modules of $3.8
million that occurred in 2012 but did not occur in 2011, which was partly
offset by lower revenues from the Company’s image enhancement technologies and
weaker demand for the Company’s Micro-Optics products.

GAAP net loss for the fourth quarter of 2012 was $19.6 million, or $0.38 per
basic share, which included non-cash charges of $6.2 million for amortization
of acquired intangibles and $3.8 million for stock-based compensation.

Non-GAAP net loss for the fourth quarter of 2012 was $12.8 million or $0.24
per basic 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.

Year Ended Dec. 31, 2012

  * Total revenue was $234.0 million.
  * Intellectual Property segment revenue was $192.9 million.
  * DigitalOptics segment revenue was $41.1 million.

GAAP net loss for the year was $29.3 million, or $0.56 per basic share.
Non-GAAP net income for the year was $1.7 million, or $0.03 per diluted share.

Balance Sheet

Cash, cash equivalents and investments were $442.6 million at Dec. 31, 2012, a
decrease of $23.3 million from Sept. 30, 2012. In the fourth quarter of 2012,
net cash provided by operations was $1.8 million. The Company purchased $20.6
million of property and equipment and $900,000 of intellectual property in the
fourth quarter of 2012. On Dec. 13, 2012, $5.2 million was paid to
stockholders of record as of Nov. 22, 2012, for the quarterly $0.10 per share
of common stock cash dividend.

2013 Company Cost Cutting Efforts

The Company has reviewed its corporate general and administrative (G&A)
expense in relation to its two operating businesses and has determined that it
is appropriate to take steps to reduce corporate G&A spending in the range of
17% to 21% by the end of year 2013 as compared to 2012. These cost reductions
are in addition to the cost-cutting measures announced in November 2012. The
Company has determined that the Silent Air Cooling business is not a strategic
fit for its ongoing business, and management will be looking at a possible
sale of, or other strategic alternatives for, this business. In February 2013,
the Company announced a salary freeze until the summer, when compensation will
be reevaluated.

Quarterly Cash Dividend

On Jan. 30, 2013, the board of directors declared a cash dividend of $0.10 per
share of common stock for the first quarter, payable on March 28, 2013, for
stockholders of record at the close of business on March 7, 2013.

Annual Stockholder Meeting

The Company also announced today that it intends to hold its Annual Meeting of
Stockholders on May 23, 2013.

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 fourth quarter 2012
earnings conference call will include brief remarks from management, followed
by a Q&A session.

The Company will hold its fourth 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 at
www.tessera.com.

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; the appointment
of Mr. Thode as DOC's President and the impact of his appointment on the
Company and DOC; adoption of the Company’s technology and use in additional
applications; growth opportunities; the effects and duration of the new
agreements with SK hynix, including future payments and running royalties and
the certainty and magnitude of the Company’s revenue and profitability on a
long term basis; the Company’s DRAM re-licensing program; growth drivers; the
characteristics, benefits, features, disruptive qualities and potential of the
Company’s technologies and products, including MEMS autofocus camera module
technologies; product shipment and market introduction predictions, including
for DigitalOptics MEMS autofocus camera module technologies; the timing and
anticipated impact of the Company’s planned 2013 cost cutting efforts; a
possible sale of, or other strategic alternatives for, the Company’s Silent
Air Cooling business; and the date of the Company’s Annual Meeting of
Stockholders. 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 Sept. 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. Our Intellectual
Property segment, managed by Tessera Intellectual Property Corp., generates
revenue from manufacturers and other implementers that use our technology. Our
DigitalOptics business delivers innovation in imaging systems for smartphones.
For more information call 1.408.321.6000 or visit www.tessera.com.

Tessera, the Tessera logo, DOC, the DOC logo, 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.

Additional Information and Where to Find It

Tessera Technologies, Inc. (the “Company”), its directors and certain
executive officers and employees may become participants in the solicitation
of proxies from stockholders in connection with the Company’s 2013 Annual
Meeting of Stockholders (the “Annual Meeting”). The Company plans to file a
proxy statement with the Securities and Exchange Commission (the “SEC”) in
connection with the solicitation of proxies for the Annual Meeting (the “2013
Proxy Statement”).

Robert J. Boehlke, John B. Goodrich, Richard S. Hill, David C. Nagel, Kevin G.
Rivette, Timothy J. Stultz, Anthony J. Tether, and Robert A. Young, all of
whom are members of the Company’s Board of Directors, and C. Richard Neely,
Jr., Executive Vice President and Chief Financial Officer, Bernard J. Cassidy,
Executive Vice President, General Counsel and Secretary and Moriah C. Shilton,
Senior Director, Investor Relations, may become participants in the Company’s
solicitation. Information regarding the Company’s directors’ and executive
officers’ respective interests in the Company by security holdings or
otherwise is set forth in the Company’s proxy statement relating to the 2012
annual meeting of stockholders. No other participants own in excess of 1% of
the Company’s common stock. Additional information regarding the interests of
such participants will be included in the 2013 Proxy Statement and other
relevant documents to be filed with the SEC in connection with the Annual
Meeting.

Promptly after filing its definitive 2013 Proxy Statement with the SEC, the
Company will mail the definitive 2013 Proxy Statement and a proxy card to each
stockholder entitled to vote at the Annual Meeting. STOCKHOLDERS ARE URGED TO
READ THE 2013 PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE WITH THE
SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Stockholders may obtain, free of charge, copies of the definitive
2013 Proxy Statement and any other documents filed by the Company with the SEC
in connection with the Annual Meeting at the SEC’s website
(http://www.sec.gov), at the Company’s website
(http://ir.tessera.com/financials.cfm) or by writing to the Secretary, Tessera
Technologies, Inc., 3025 Orchard Parkway, San Jose, California 95134.

 
TESSERA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
                                                                     
                                                                       
                       Three Months Ended             Year Ended
                       December        December       December        December
                       31,             31,            31,             31,
                       2012            2011           2012            2011
Revenues:
Royalty and license    $ 20,958        $ 54,270       $ 182,521       $ 237,201
fees
Past production          24,650          -              24,729          -
payments
Product and service      7,628           2,461          26,773          17,375   
revenues
                                                                       
Total revenues           53,236          56,731         234,023         254,576  
                                                                       
Operating expenses:
Cost of revenues         12,261          7,026          40,366          23,493
Research,
development and          27,551          19,888         100,481         75,976
other related costs
Selling, general and     23,637          20,707         96,695          83,378
administrative
Litigation expense       13,413          7,091          33,318          29,354
Restructuring and        2,524           252            2,524           5,249
other charges
Impairment of            -               (569   )       -               (569    )
long-lived assets
Impairment of            -               -              -               49,653   
goodwill
                                                                       
Total operating          79,386          54,395         273,384         266,534
expenses
                                                                       
Operating income         (26,150 )       2,336          (39,361 )       (11,958 )
(loss)
Other income and         492             619            5,872           2,643    
expense, net
                                                                       
Income (loss) before     (25,658 )       2,955          (33,489 )       (9,315  )
taxes
Provision for
(benefit from)           (6,017  )       317            (4,239  )       9,985    
income taxes
                                                                       
Net income (loss)      $ (19,641 )     $ 2,638        $ (29,250 )     $ (19,300 )
                                                                       
Basic and diluted
net income (loss)
per share:
Net income (loss)      $ (0.38   )     $ 0.05         $ (0.56   )     $ (0.38   )
per share-basic
                                                                       
Net income (loss)      $ (0.38   )     $ 0.05         $ (0.56   )     $ (0.38   )
per share-diluted
                                                                       
Cash dividends         $ 0.10          $ -            $ 0.30          $ -        
declared per share
                                                                       
Weighted average
number of shares         52,226          51,517         51,977          51,082   
used in per share
calculations-basic
                                                                       
Weighted average
number of shares         52,226          51,678         51,977          51,082   
used in per share
calculations-diluted
                                                                                 

TESSERA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
                                             December 31,     December 31,
                                             2012             2011
                                                               
ASSETS
Current assets:
Cash and cash equivalents                    $  103,802       $  55,758
Short-term investments                          338,801          436,687
Accounts receivable, net                        11,595           8,599
Inventories                                     1,507            1,574
Short-term deferred tax assets                  3,880            1,892
Other current assets                            15,176           13,664   
                                                                          
Total current assets                            474,761          518,174  
                                                               
Property and equipment, net                     71,744           36,319
Intangible assets, net                          120,432          141,326
Long-term deferred tax assets                   22,499           18,223
Other assets                                    7,677            2,484
Goodwill                                        6,664            -        
                                                                          
Total assets                                 $  703,777       $  716,526  
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                             $  14,437        $  7,203
Accrued legal fees                              10,226           6,110
Accrued liabilities                             21,340           20,824
Deferred revenue                                4,869            2,610    
                                                                          
Total current liabilities                       50,872           36,747   
                                                               
Long-term deferred tax liabilities              3,102            4,083
Other long-term liabilities                     6,403            5,017
                                                               
Stockholders' equity:
Common stock                                    53               52
Additional paid-in capital                      480,347          462,697
Treasury stock                                  (10,642 )        (10,505 )
Accumulated other comprehensive income          119              24
Retained earnings                               173,523          218,411  
Total stockholders' equity                      643,400          670,679  
                                                               
Total liabilities and stockholders' equity   $  703,777       $  716,526  
                                                               

TESSERA TECHNOLOGIES, INC.
RECONCILIATION TO NON-GAAP INCOME FROM GAAP NET LOSS
(in thousands, except per share amounts)
(unaudited)
                                                                  
                                                                              
                   Three Months Ended              Year Ended
                   December 31,                    December 31,
                   2012           2011             2012            2011
                                                                              
GAAP net income    $        )     $ 2,638          $ (29,250 )     $ (19,300 )
(loss)             (19,641
Adjustments to
GAAP net income
(loss):
Stock-based
compensation -     137              119              641             458
cost of revenues
Stock-based
compensation -
research,          1,465            1,685            6,455           8,233
development and
other related
costs
Stock-based
compensation -
selling, general   2,185            3,516            9,940           16,879
and
administrative
Amortization of
acquired           1,782            1,702            7,673           6,819
intangibles -
cost of revenues
Amortization of
acquired
intangibles -
research,          1,354            1,455            5,408           3,820
development and
other related
costs
Amortization of
acquired
intangibles -      3,023            1,618            11,988          6,684
selling, general
and
administration
Impairment of
long-lived         -                (569   )                         (569    )
assets
Impairment of      -                -                -               49,653
goodwill
Tax adjustments
for non-GAAP       (3,078   )       (2,513 )         (11,126 )       (12,016 )
items
                                                                              
Non-GAAP net       $        )     $ 9,651          $ 1,729         $ 60,661   
income (loss)      (12,773
                                                                              
Non-GAAP net
income (loss)      $ (0.24  )     $ 0.18           $ 0.03          $ 1.15     
per common share
- diluted
                                                                              
Weighted average
number of shares
used in per
share
calculations       53,261           52,708           53,061          52,549
excluding the
effects of
FAS123R -
diluted
                                                                              

TESSERA TECHNOLOGIES, INC.
CONSOLIDATED REVENUE DETAILS
(in thousands)
(unaudited)
                                                                    
                                                                      
                           Three Months Ended          Twelve Months Ended
                           December 31,                December 31,
                           2012         2011           2012          2011
Revenues:
Intellectual Property
Segment
Royalty and license fees   $ 18,374     $ 48,998       $ 168,097     $ 213,412
Past production payments     24,650       -              24,729        -
Product and service          -            -              66            -
revenues
Total Intellectual           43,024       48,998         192,892       213,412
Property revenues
                                                                      
DigitalOptics Segment
Royalty and license fees     2,584        5,272          14,424        23,789
Product and service          7,628        2,461          26,707        17,375
revenues
Total DigitalOptics          10,212       7,733          41,131        41,164
revenues
                                                                      
Total revenues             $ 53,236     $ 56,731       $ 234,023     $ 254,576
                                                                        

TSRA-E

Contact:

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