Tessera Technologies Announces Third Quarter 2009 Results
SAN JOSE, Calif., Oct 29, 2009 (BUSINESS WIRE) --
Company: Tessera Technologies Inc (TSRA)
Tessera Technologies, Inc. (Nasdaq:TSRA) announced its results for the third quarter ended Sept. 30, 2009.
Revenue Highlights: Third Quarter 2009
-- Total revenues were $66.1 million.
-- Micro-electronics revenue was $59.1 million.
-- Imaging & Optics revenue was $7.0 million.
Third quarter 2009 Micro-electronics revenue was comprised entirely of Royalties and License Fees. Imaging & Optics revenue was comprised of $3.7 million in Royalties and License Fees, and $3.3 million in Products and Services.
Generally accepted accounting principles (GAAP) net income for the third quarter of 2009 was $12.1 million, or $0.24 per diluted share, which included non-cash charges of $6.9 million for stock-based compensation and $3.0 million for amortization of acquired intangibles.
Non-GAAP net income for the third quarter of 2009 was $19.2 million or $0.37 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, and related tax effects.
"Better than anticipated results from our Micro-electronics customers drove our third quarter 2009 revenue to $66.1 million," said Henry R. Nothhaft, president and chief executive officer, Tessera. "Roughly 60% of DRAM sold today is in the DDR2 format. DDR3, also packaged in our patented chip-scale packaging technology, is expected to become the primary DRAM format by mid-2010. Due to improvements in speed and performance, it is anticipated DDR3 will remain the primary format through at least 2013. Tessera is well positioned to benefit from this transition and the long-term growth of the DRAM market, which we expect will drive growth in our Micro-electronics business. With respect to our Imaging & Optics business, we signed three new licensing agreements in the third quarter, for technologies ranging from our Wafer-level Packaging to Optical and Embedded Image Enhancement, and expect them to further drive our Imaging & Optics royalty revenue growth in 2010. We continue to expand our research and development resources that are focused on Wafer-level Camera and Silent Air Cooling."
Revenue Highlights: Nine-month Period Ended Sept. 30, 2009
-- Total revenue was $243.0 million.
-- Micro-electronics revenue was $221.3 million.
-- Imaging & Optics revenue was $21.7 million.
Micro-electronics revenue for the nine-month period ended Sept. 30, 2009 was comprised of $221.2 million in Royalties and License Fees, and $48,000 in Products and Services. Imaging & Optics revenue for the nine-month period ended Sept. 30, 2009 was comprised of $13.3 million in Royalties and License Fees, and $8.4 million in Products and Services.
GAAP net income for the nine-month period was $63.4 million, or $1.30 per diluted share. Non-GAAP net income for the nine-month period was $85.5 million, or $1.71 per diluted share.
Fourth Quarter 2009 Financial Guidance
Fourth quarter 2009 total revenues are expected to range between $60.0 million and $62.0 million. This compares to fourth quarter 2008 total revenues of $69.1 million, which included a non-recurring option fee paid by Motorola, Inc.
Fourth quarter 2009 Micro-electronics revenue is expected to range between $53.0 million and $54.0 million, all of which will be royalty and license related. Tessera has two major DRAM customers with volume-based pricing incentives that will reduce the company's revenue sequentially in the fourth quarter 2009. As a reminder, Tessera recognizes revenue one quarter in arrears.
As a comparison, in the fourth quarter of 2008, Micro-electronics royalty and license fees revenue was $58.9 million and included the non-recurring option fee paid by Motorola, Inc. Products and services revenue was $872,000 and past production payments were $170,000, for a total of $59.9 million for this segment.
Fourth quarter 2009 Imaging & Optics revenue, in total, is expected to be between $7.0 million and $8.0 million. Imaging & Optics royalty and license fees revenue is expected to range from $3.0 million to $4.0 million. Imaging & Optics products and services revenue is expected to be $4.0 million. This compares to Imaging & Optics royalty and license fees revenue of $3.6 million and products and services revenue of $5.6 million in the fourth quarter of 2008, which totaled $9.2 million for this segment. The products and services revenue is down year-over-year primarily due to the slowdown in the semiconductor equipment market.
Non-GAAP operating expenses for the fourth quarter of 2009 are projected to range between $30.0 million and $31.0 million, excluding litigation expenses.
Conference Call Information
Tessera will hold its third quarter 2009 earnings conference call at 1:30 P.M. Pacific (4:30 P.M. Eastern) today. To access the call in the U.S., please dial 866-531-1286, 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 800-642-1687 and for international callers, dial 706-645-9291. Enter access code 34561594.
Safe Harbor Statement
This press release 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, industry and technology trends, and the company's IP protection efforts, including litigation. Material factors that may cause results to differ from the statements made include delays, setbacks or losses relating to our intellectual property or intellectual property litigations, or any invalidation or limitation of our key patents; fluctuations in our operating results due to the timing of new license agreements and royalties, or due to legal costs; changes in patent laws, regulation or enforcement, or other factors that might affect our ability to protect our intellectual property; the risk of a decline in demand for semiconductor products; failure by the industry to adopt our technologies; competing technologies; the future expiration of our patents; the future expiration of our license agreements and the cessation of related royalty income; the failure or refusal of licensees to pay royalties; failure to achieve the growth prospects and synergies expected from acquisition transactions; and delays and challenges associated with integrating acquired companies with our existing businesses. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this release. Tessera's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2008 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, include more information about factors that could affect the company's financial results. Tessera assumes no obligation to update information contained in this press release. Although this release may remain available on Tessera's website or elsewhere, its continued availability does not indicate that Tessera is reaffirming or confirming any of the information contained herein.
About Tessera
Tessera Technologies, Inc. invests in, licenses and delivers innovative miniaturization technologies for next-generation electronic devices. The company's micro-electronics solutions enable smaller, higher-functionality devices through chip-scale, 3D and wafer-level packaging technology, as well as high-density substrate and silent air cooling technology. Tessera's imaging and optics solutions provide low-cost, high-quality camera functionality in electronic products and include image sensor packaging, wafer-level optics and image enhancement intellectual property. The company also offers customized micro-optic lenses, from diffractive and refractive optical elements to integrated micro-optical subassemblies. Tessera licenses its technologies, as well as delivers products based on these technologies, to promote the development of the supply chain infrastructure. The company is headquartered in San Jose, California. For information call 1.408.321.6000 or go to www.tessera.com.
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, and related tax effects. The non-GAAP financial measures also exclude the effects of FAS 123R upon the number of diluted shares used in calculating non-GAAP earnings per share. Management believes that the non-GAAP measures used in this report 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 Tessera's reported GAAP net income.
Tessera and the Tessera logo are trademarks or registered trademarks of Tessera, Inc. or its affiliated companies in the United States and other countries. All other company, brand and product names may be trademarks or registered trademarks of their respective companies.
TESSERA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Royalty and license fees $ 62,743 $ 57,587 $ 234,470 $ 157,771
Product and service revenues 3,380 5,914 8,500 21,395
Total revenues 66,123 63,501 242,970 179,166
Operating expenses:
Cost of revenues 3,941 4,074 11,941 12,801
Research, development and other related costs 16,780 15,898 50,259 44,945
Selling, general and administrative 19,455 17,866 54,233 50,775
Litigation expense 6,066 29,217 20,229 66,567
Total operating expenses 46,242 67,055 136,662 175,088
Operating income (loss) 19,881 (3,554 ) 106,308 4,078
Other income and expense, net 590 (1,033 ) 4,448 3,280
Income (loss) before taxes 20,471 (4,587 ) 110,756 7,358
Provision for income taxes 8,337 770 47,317 10,405
Net income (loss) $ 12,134 $ (5,357 ) $ 63,439 $ (3,047 )
Basic and diluted net income (loss) per share:
Net income (loss) per share - basic $ 0.25 $ (0.11 ) $ 1.31 $ (0.06 )
Net income (loss) per share - diluted $ 0.24 $ (0.11 ) $ 1.30 $ (0.06 )
Weighted average number of shares used in per share calculations - 49,201 47,904 48,598 47,951
basic
Weighted average number of shares used in per share calculations - 49,862 47,904 48,981 47,951
diluted
TESSERA TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2009 2008*
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 160,412 $ 87,890
Short-term investments 217,946 188,610
Accounts receivable, net 13,651 14,724
Inventories 1,341 1,534
Deferred tax assets 2,836 2,409
Other current assets 5,131 8,220
Total current assets 401,317 303,387
Property and equipment, net 42,429 36,984
Intangible assets, net 75,214 71,312
Goodwill 45,150 40,444
Deferred tax assets 19,227 19,756
Long-term investments 18,714 22,134
Other assets 4,017 7,572
Total assets $ 606,068 $ 501,589
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,523 $ 2,924
Accrued legal fees 6,526 13,945
Accrued liabilities 18,416 17,747
Deferred revenue 6,639 6,085
Income tax payable 12 1,385
Total current liabilities 35,116 42,086
Deferred tax liabilities 8,991 8,991
Other long-term liabilities 4,208 3,608
Stockholders' equity:
Common stock 50 49
Additional paid-in capital 394,229 347,568
Treasury stock (10,505 ) (10,505 )
Accumulated other comprehensive loss (29 ) (777 )
Retained earnings 174,008 110,569
Total stockholders' equity 557,753 446,904
Total liabilities and stockholders' equity $ 606,068 $ 501,589
* Derived from audited financial statements
TESSERA TECHNOLOGIES, INC.
RECONCILIATION TO NON-GAAP INCOME FROM GAAP NET INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
GAAP net income (loss) $ 12,134 $ (5,357 ) $ 63,439 $ (3,047 )
Adjustments to GAAP net income (loss):
Stock-based compensation - cost of revenues 199 92 450 345
Stock-based compensation - research, development and other related 2,379 2,457 8,489 5,571
costs
Stock-based compensation - selling, general and administrative 4,312 4,046 11,498 10,966
Amortization of acquired intangibles - cost of revenues 1,705 766 5,115 2,126
Amortization of acquired intangibles - research, development and 642 1,677 2,021 4,777
other related costs
Amortization of acquired intangibles - selling, general and 685 459 1,673 1,249
administrative
Tax adjustments for non-GAAP items (2,896 ) (1,803 ) (7,218 ) (4,300 )
Adjustment for acquired in-process research & development charge - - - 2,500
Non-GAAP net income $ 19,160 $ 2,337 $ 85,467 $ 20,187
Non-GAAP net income per common share - diluted $ 0.37 $ 0.05 $ 1.71 $ 0.41
Weighted average number of shares used in per share calculations 51,326 49,154 49,889 49,277
excluding the effects of FAS 123R - diluted
TESSERA TECHNOLOGIES, INC.
CONSOLIDATED REVENUE DETAILS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Micro-Electronics
Royalty and license fees $ 59,060 $ 56,035 $ 221,199 $ 150,858
Product and service revenues 3 554 48 3,775
Total Micro-Electronics revenues 59,063 56,589 221,247 154,633
Imaging and Optics
Royalty and license fees 3,684 1,552 13,271 6,913
Product and service revenues 3,376 5,360 8,452 17,620
Total Imaging and Optics revenues 7,060 6,912 21,723 24,533
Total revenues $ 66,123 $ 63,501 $ 242,970 $ 179,166
TSRA-E
SOURCE: Tessera Technologies, Inc.
Tessera Technologies, Inc. Company Contact: Michael Anthofer, 408-321-6711 Chief Financial Officer Investor Relations Contact: Moriah Shilton, 408-321-6713 Sr. Director, Investor Relations
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Company: Tessera Technologies Inc (TSRA)
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