Tessera Technologies Announces First Quarter 2013 Results

  Tessera Technologies Announces First Quarter 2013 Results

                       - Quarterly Dividend Declared -

Business Wire

SAN JOSE, Calif. -- April 25, 2013

Tessera Technologies, Inc. (NASDAQ: TSRA) (the “Company” or “we”) announced
its results for the first quarter ended March 31, 2013. Total revenue for the
first quarter of 2013 was $31.1 million. Generally accepted accounting
principles (GAAP) net loss for the first quarter of 2013 was $44.6 million, or
$0.85 per basic share. This net loss includes non-recurring charges of $22.4
million, $6.4 million in amortization of acquired intangibles, and $2.5
million of stock based compensation. Tax adjustments in the first quarter of
2013 for Non-GAAP items were $6.1 million. Therefore, non-GAAP Loss was $19.4
million or $0.36 per share.

Year over year Comparison

In the first quarter of 2012, total revenue was $46.7 million. Compared with
our first quarter revenue of $31.1 million, this is a decrease in total
revenue of $15.6 million. The decline was due to a decrease in the
Intellectual Property business revenue of $13.4 million and a decrease in the
DOC revenue of $2.2 million.

In the Intellectual Property business, the Company’s revenue went from $39.0
million to $25.6 million year over year, a decrease of $13.4 million, which
was due to the absence of royalty revenue from Micron Technology, Inc., whose
license agreement expired in May of 2012, and Powertech Technology Inc. (PTI),
who defaulted on payments. We are currently in negotiations with Micron for
two new license agreements that give it access to our Tessera, Inc. and
Invensas Corporation patent portfolios. With regards to PTI, we are in
litigation with the company and believe we have a strong case.

In the DigitalOptics business, the Company’s revenue went from $7.6 million to
$5.5 million year over year, a decrease of $2.2 million, which was due to
lower revenues from the Company’s image enhancement technologies and weaker
demand for the Company’s Micro-Optics products.

Non-GAAP net loss for the first quarter of 2013 was $19.4 million or $0.36 per
basic share. Non-GAAP net income/loss is defined as income/loss and operating
expenses adjusted for restructuring and other exit costs, 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.

“Our first quarter of 2013 was a very difficult quarter for us,” said Richard
S. Hill, interim CEO of Tessera Technologies, Inc. “The confluence of a costly
proxy battle, PTI’s decision to default on their contract and Micron’s
decision to not renew their contract made it difficult to meet last year’s
performance metrics.”

Hill continued, “On the brighter side, we signed SK hynix to two new
eight-year patent license agreements to our Tessera, Inc. and Invensas
Corporation portfolios, which will begin contributing to our recurring revenue
in the second quarter, and, as recently announced this week, Samsung
Electronics Co., Ltd. signed a multi-year license for our Face Detection and
Face Tracking software, which will be used in the newly launching Samsung
Galaxy S® 4 smartphones.”

Balance Sheet

Total current assets were $431.2 million at March 31, 2013, a decrease of
$44.0 million from Dec. 31, 2012. Cash, cash equivalents and investments were
$402.7 million at March 31, 2013, a decrease of $39.9 million from Dec. 31,
2012. The quarter over quarter decrease resulted from a combination of the
cash loss from operations of $33.0 million, $5.3 million of dividend payments,
$5.6 million of capital expenditures, and $600,000 of intellectual property
purchases.

Quarterly Cash Dividend

On March 28, 2013, $5.3 million was paid to stockholders of record as of March
7, 2013, for the quarterly $0.10 per share of common stock cash dividend.

On April 23, 2013, the board of directors declared a cash dividend of $0.10
per share of common stock for the second quarter, payable on June 13, 2013,
for stockholders of record at the close of business on May 23, 2013.

Financial Guidance

“Starting with this quarter, we are re-initiating financial guidance for one
quarter out. This guidance will quantify the following lines on the P&L
statement: revenue, operating expenses, assumed tax rate, earnings after tax,
and earnings per share,” stated Hill.

For the second quarter of 2013, the Company’s guidance is as follows:

The Company expects total revenue for the upcoming Second Quarter of 2013 to
range between $42 million and $50 million. Intellectual Property revenue is
expected to range between $38 million and $45 million. The Company expects
DigitalOptics revenue in the range of $4 million to $5 million.

GAAP operating expenses are expected to range between $77 million and $81
million, which includes expected litigation expenses of between $16 million
and $20 million, and restructuring and impairment charges of between $5.5
million and $6.5 million. The Company’s assumed tax rate is 30%. GAAP loss per
share is expected to range between $0.40 and $0.45.

Hill continued, “As the Intellectual Property business is composed of both
recurring revenue and “episodic” revenue, we have decided to experiment with
additional guidance for our stockholders to help them understand the true
economic potential of the business. Beginning this quarter, we are going to
quantify the revenue potential we see from our episodic sources, that we can
reasonably expect to materialize over the next 12 months. Our episodic revenue
forecast is in excess of $200 million over the next 12 months, of which at
least $19 million is expected in the second quarter of 2013.”

Recurring revenue is defined as revenue from payments made pursuant to a
license agreement or other agreement that are scheduled to occur over at least
one year of time. Episodic revenue is revenue other than revenue payable over
at least one year pursuant to a contract. Episodic revenue includes
non-recurring engineering fees, initial license fees, back payments resulting
from audits, damages awards from courts or other tribunals, and lump sum
settlement payments. Although the royalty revenue reported by our licensees
quarterly is generally not assured, for ease of reference, we refer to these
revenues as “recurring revenue.”

Importantly, a source of episodic revenue may become a source of recurring
revenue, when, for example, a company settles litigation with the Company by
paying a settlement amount and entering into a license agreement that calls
for an initial license fee and ongoing royalty payment over several years. In
that scenario, the settlement amount would be episodic revenue, as would the
initial license fee, and the ongoing royalties would be recurring revenue.

Conference Call Information

The Company will hold its first quarter 2013 earnings conference call at 4:30
A.M. Pacific (7:30 A.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 and guidance,
including the episodic revenue guidance, negotiations with Micron for new
license agreements, the litigation with PTI, and the effects and duration of
the SK hynix patent license agreements and Samsung’s license to the Company’s
Face Detection and Face Tracking software. 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; 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; 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, 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, restructuring and other
related exit costs, 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 loss to the Company’s
reported GAAP net loss.

                              - Tables Follow -


TESSERA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

                                                  March 31,    December 31,
                                                     2013         2012    
                                                                  
ASSETS
Current assets:
        Cash and cash equivalents                   $ 73,736      $  103,802
        Short-term investments                        328,977        338,801
        Accounts receivable, net                      5,048          11,595
        Inventories                                   1,012          1,507
        Short-term deferred tax assets                4,271          3,880
        Other current assets                         18,198       15,701  
                  Total current assets               431,242      475,286 
                                                                  
Property and equipment, net                           68,050         72,544
Intangible assets, net                                103,793        120,432
Long-term deferred tax assets                         41,892         22,499
Other assets                                          6,873          7,677
Goodwill                                             -            6,664   
                  Total assets                      $ 651,850    $  705,102 
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
        Accounts payable                            $ 10,743      $  14,437
        Accrued legal fees                            11,840         11,726
        Accrued liabilities                           18,152         22,140
        Deferred revenue                             5,579        4,869   
                  Total current liabilities          46,314       53,172  
                                                                  
Long-term deferred tax liabilities                    -              3,102
Other long-term liabilities                           6,010          6,403
                                                                  
Stockholders' equity:
        Common stock                                  53             53
        Additional paid-in capital                    487,339        480,347
        Treasury stock                                (10,681 )      (10,642 )
        Accumulated other comprehensive income        147            119
        Retained earnings                            122,668      172,548 
                  Total stockholders' equity         599,526      642,425 
                                                                  
                  Total liabilities and             $ 651,850    $  705,102 
                  stockholders' equity


TESSERA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
                                                               
                                                                   
                                                     Three Months Ended
                                                     March 31,
                                                      2013        2012    
  Revenues:
  Royalty and license fees                           $ 26,715      $ 43,264
  Past production payments                             1,500         -
  Product and service revenues                        2,909       3,409   
                                                                   
  Total revenues                                      31,124      46,673  
                                                                   
  Operating expenses:
  Cost of revenues                                     7,942         5,760
  Research, development and other related costs        25,949        23,445
  Selling, general and administrative                  25,250        24,611
  Litigation expense                                   14,081        3,492
  Restructuring, impairment of long-lived assets       15,755        -
  and other charges
  Impairment of goodwill                              6,664       -       
                                                                   
  Total operating expenses                             95,641        57,308
                                                                   
  Operating loss                                       (64,517 )     (10,635 )
  Other income and expense, net                       336         668     
                                                                   
  Loss before taxes                                    (64,181 )     (9,967  )
  Benefit from income taxes                           (19,558 )    (1,879  )
                                                                   
  Net loss                                           $ (44,623 )   $ (8,088  )
                                                                   
  Basic and diluted net loss per share:
  Net loss per share-basic                           $ (0.85   )   $ (0.16   )
                                                                   
  Net loss per share-diluted                         $ (0.85   )   $ (0.16   )
                                                                   
  Cash dividends declared per share                  $ 0.10       $ 0.10    
                                                                   
  Weighted average number of shares used in per       52,471      51,738  
  share calculations-basic
                                                                   
  Weighted average number of shares used in per       52,471      51,738  
  share calculations-diluted


TESSERA TECHNOLOGIES, INC.
RECONCILIATION TO NON-GAAP INCOME FROM GAAP NET LOSS
(in thousands, except per share amounts)
(unaudited)
                                                                
                                                                    
                                                      Three Months Ended
                                                      March 31,
                                                       2013        2012   
                                                                    
  GAAP net loss                                       $ (44,623 )   $ (8,088 )
  Adjustments to GAAP net loss:
  Stock-based compensation - cost of revenues           54            150
  Stock-based compensation - research, development      1,089         1,712
  and other related costs
  Stock-based compensation - selling, general and       1,404         2,194
  administrative
  Amortization of acquired intangibles - cost of        1,782         2,016
  revenues
  Amortization of acquired intangibles - research,      1,532         1,353
  development and other related costs
  Amortization of acquired intangibles - selling,       3,075         3,004
  general and administration
  Restructuring, impairment of long-lived assets        15,755        -
  and other charges
  Impairment of goodwill                                6,664         -
  Tax adjustments for non-GAAP items                   (6,125  )    (2,559 )
  Non-GAAP net loss                                   $ (19,393 )   $ (218   )
  Non-GAAP net loss per common share - diluted        $ (0.36   )   $ (0.00  )


TESSERA TECHNOLOGIES, INC.
CONSOLIDATED SEGMENT RESULTS
(in thousands)
(unaudited)
                                                          
                                                              
                                                 Three Months Ended
                                                 March 31,
                                                 2013         2012
Revenues:
      Intellectual Property Segment:
          Royalty and license fees               $ 24,138     $ 39,028
          Past production payments               1,500        -
          Product and service revenues           -            -
          Total Intellectual Property revenues   25,638       39,028
                                                              
      DigitalOptics Segment:
          Royalty and license fees               2,577        4,236
          Product and service revenues           2,909        3,409
          Total DigitalOptics revenues           5,486        7,645
                                                             
          Total revenues                         31,124       46,673
                                                              
Operating Expenses:
      Intellectual Property Segment              29,345       20,091
      DigitalOptics Segment                      53,812       24,652
      Corporate Overhead                         12,484       12,565
                                                              
          Total operating expenses               95,641       57,308
                                                              
Operating Income (Loss):
      Intellectual Property Segment              (3,707)      18,937
      DigitalOptics Segment                      (48,326)     (17,007)
      Corporate Overhead                         (12,484)     (12,565)
                                                              
          Total operating loss                   $ (64,517)   $ (10,635)
                                                              

TSRA-E

Contact:

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