- Fourth Quarter 2007 Royalties and License Fees Grew 31 Percent
versus Prior Year Quarter -
- 2007 Royalties and License Fees Grew 60 Percent versus 2006 -
- Signs Definitive Agreement to Acquire FotoNation -
SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 31, 2008--Tessera
Technologies, Inc. (Nasdaq:TSRA), a leading provider of
miniaturization technologies for the electronics industry, announced
its results for the fourth quarter and full year ended December 31,
2007.
Revenue Highlights: Fourth Quarter 2007
Total revenue was $53.0 million.
Royalty and license fees were $45.5 million.
Product and service revenue was $7.5 million.
Generally accepted accounting principles (GAAP) net income for the
fourth quarter of 2007 was $13.0 million, or $0.27 per diluted share,
and included non-cash charges of $4.9 million for stock-based
compensation and $1.9 million for deal amortization.
Non-GAAP net income for the fourth quarter of 2007 was $25.1
million, or $0.51 per diluted share. Non-GAAP net income and operating
expenses are defined as income and operating expenses adjusted for
non-cash tax expense, deal amortization charges, and stock-based
compensation. Non-GAAP net income per share equals non-GAAP net income
divided by the weighted diluted share count as of that period end.
"Solid DRAM and wireless unit growth and new consumer optics
licensees drove our full year 2007 royalties and license fees up
approximately 60 percent compared to 2006," said Bruce McWilliams,
chairman, president and CEO for Tessera. "We are currently involved in
two enforcement actions, and we believe their successful resolution
could greatly increase our wireless market share in 2008."
"Our consumer optics business continues to flourish with the
recent signing of new consumer optics licensees, Toshiba and Nemotek.
Today, we also announced we have signed a definitive agreement to
acquire FotoNation, a leading provider of embedded imaging solutions
for digital still camera and mobile phone applications. This agreement
will add a powerful range of image enhancement technologies to what we
are calling our "smart optics" portfolio, broadening the range of
camera imaging technologies we are able to offer our customers on a
single platform. We believe this will enable us to capture even
greater market share of consumer optics and positions us well for
strong long-term growth," McWilliams concluded.
Revenue Highlights: Year Ended December 31, 2007
Total revenue was $195.7 million.
Royalty and license fees were $158.9 million.
Payments for past production were $2.2 million.
Product and service revenue was $34.6 million.
GAAP net income for the year ended December 31, 2007 was $45.1
million, or $0.93 per diluted share. Non-GAAP net income for the year
was $96.5 million, or $1.95 per diluted share.
"Fourth quarter royalties and license fees were $45.5 million.
DRAM and wireless unit growth remained strong, and we signed new
consumer optics licenses in the quarter," stated Charlie Webster,
Tessera's chief financial officer. "Total operating costs for the year
were in line with annual guidance, and produced GAAP pre-tax operating
profit of 34 percent of 2007 revenues, and non-GAAP pre-tax operating
profit of 47 percent. For the fourth quarter and full year 2007, we
generated $22 million and $106 million in operating cash flow,
respectively. At December 31, 2007 we had $290 million in cash, cash
equivalents and short-term investments and no debt."
2008 Financial Guidance
Tessera has entered into a definitive agreement to acquire
FotoNation and expects the transaction to close in February, 2008. The
company expects the FotoNation acquisition will be neutral to 1-2
cents dilutive to non-GAAP earnings for the full year 2008 and
accretive thereafter. In the first quarter of 2008, as a result of the
acquisition Tessera anticipates recording a non-cash charge to GAAP
earnings for in-process research and development. While revenues will
not be material to Tessera near term, the company is confident
FotoNation will contribute meaningfully to its long-term consumer
optics royalties and license fees.
Total revenue for the first quarter of 2008 is expected to be
within the range of $55 million to $57 million. First quarter 2008
royalty and license fees are projected to be between $47 million and
$49 million. Products and Services revenue should be approximately $8
million.
Non-GAAP operating expenses for the first quarter are projected to
be approximately $25.5 million, excluding litigation expenses but
including expenses the company expects to incur as a result of its
FotoNation acquisition. Litigation expenses are projected to range
from $10 million to $15 million. The company's book tax rate is
projected to be 43 percent of pre-tax profit, but could be higher
depending on the magnitude of the charge for in-process research and
development. Cash taxes are projected to approximate $3.3 million in
the first quarter. The fully diluted share count is expected to be 50
million shares.
"We believe there will be significant legal rulings in both the
International Trade Commission and our action with Amkor in the first
half of 2008. As this is an active time period for enforcement related
activities, we are providing a wider range of litigation expense
guidance. In addition, as these enforcement actions could result in
significantly higher revenues in the second half of 2008, we are
providing guidance for the first two quarters only," Webster
concluded.
Tessera expects revenue for the second quarter ending June 30,
2008 to be within the range of $53 million to $55 million. The second
quarter's 2008 royalty and license fees are projected to be between
$46 million and $48 million. Products and Services revenue should be
approximately $7 million.
Non-GAAP operating expenses for the second quarter of 2008 are
projected to be approximately $27.0 million to $27.5 million,
excluding litigation expenses but including expenses the company
expects to incur as a result of its FotoNation acquisition. Litigation
expenses are projected to range between $6 million and $10 million.
The company's book tax rate is projected to be 43 percent of pre-tax
profit. Cash taxes are projected to approximate $3 million in the
second quarter. The fully diluted share count is expected to be 50.2
million shares.
As per company policy, quarterly guidance does not include
settlements from the company's current enforcement actions.
Conference Call Information
Tessera Technologies will host its fourth quarter 2007 conference
call on January 31, 2008 at 1:30 p.m. Pacific Time. To access the call
in the U.S., please dial 877-866-5534, and for international callers,
dial 706-679-0753 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 30192448.
About Tessera Technologies, Inc.
Tessera is a leading provider of miniaturization technologies for
the electronics industry. Tessera provides a broad range of advanced
packaging, interconnect, and consumer optics solutions which are
widely adopted in high-growth markets including consumer, computing,
communications, medical and defense electronics. Tessera's customers
include the world's top semiconductor companies such as Intel,
Samsung, Texas Instruments, Toshiba, Micron and Infineon. The
company's stock is traded on the Nasdaq National Market under the
symbol TSRA. Tessera is headquartered in San Jose, California.
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
that are adjusted for non-cash tax expense, and stock compensation and
the requirements of SFAS No. 123(R), "Share-based Payment" ("123R").
The non-GAAP financial measures used by management and disclosed by
the company exclude the income statement effects of non-cash tax
expense, either one-time or ongoing non-cash deal amortization charges
and all forms of stock-based compensation and the effects of 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 the non-GAAP net income to
our reported GAAP net income.
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. 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, 2006 and its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2007 include more information about
factors that could affect the company's financial results.
TESSERA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
(in thousands, except per share amounts)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2007 2006 2007 2006
------- ------- -------- --------
Revenues:
Royalty and license fees $45,501 $34,789 $158,878 $ 99,606
Past production payments - 5,499 2,167 83,132
Product and service revenues 7,539 9,974 34,643 25,988
------- ------- -------- --------
Total revenues 53,040 50,262 195,688 208,726
------- ------- -------- --------
Operating expenses:
Cost of revenues 3,791 5,736 17,708 19,359
Research, development and other
related costs 10,420 7,474 37,526 20,063
Selling, general and
administrative costs 22,716 16,218 74,314 70,309
------- ------- -------- --------
Total operating expenses 36,927 29,428 129,548 109,731
------- ------- -------- --------
Operating income 16,113 20,834 66,140 98,995
Other income, net 3,255 2,098 11,941 6,499
------- ------- -------- --------
Income before taxes 19,368 22,932 78,081 105,494
Income tax provision(1) 6,366 9,095 32,943 44,143
------- ------- -------- --------
Net income attributable to common
stockholders $13,002 $13,837 $ 45,138 $ 61,351
======= ======= ======== ========
Basic and diluted net income per
share attributable to common
stockholders:
Net income per common share -
basic $ 0.27 $ 0.30 $ 0.95 $ 1.33
======= ======= ======== ========
Net income per common share -
diluted $ 0.27 $ 0.28 $ 0.93 $ 1.27
======= ======= ======== ========
Weighted average number of shares
used in per share calculations -
basic 47,912 46,687 47,566 46,102
======= ======= ======== ========
Weighted average number of shares
used in per share calculations -
diluted 48,837 48,852 48,637 48,385
======= ======= ======== ========
(1) Includes a one-time tax benefit due to a tax rate change in a
foreign jurisdiction.
TESSERA TECHNOLOGIES, INC.
SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA
----------------------------------------------------------------------
(in thousands)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2007 2006 2007 2006
------- ------- ------- -------
Non-cash income tax expense $ 5,285 $ 6,592 $26,301 $38,871
Stock compensation - cost of revenues $ 478 $ 604 $ 2,200 $ 2,924
Stock compensation - research,
development and other related costs $ 798 $ 581 $ 2,629 $ 1,021
Stock compensation - selling, general
and administrative $ 3,611 $ 3,233 $13,270 $11,422
Amortization of acquired intangibles -
cost of revenues $ 423 $ 422 $ 1,690 $ 704
Amortization of acquired intangibles -
research, development and other
related costs $ 1,265 $ 269 $ 4,471 $ 1,075
Amortization of acquired intangibles -
selling, general and administration $ 202 $ 202 $ 807 $ 349
Adjustment for acquired inventory $ - $ 657 $ - $ 1,562
Weighted average number of shares used
in per share calculations excluding
the effects of 123R - diluted 49,594 49,262 49,453 48,851
TESSERA TECHNOLOGIES, INC.
CONSOLIDATED SUMMARY BALANCE SHEET INFORMATION
----------------------------------------------------------------------
(in thousands)
December 31, December 31,
2007 2006(2)
-------------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 207,158 $ 194,076
Short-term investments 82,566 -
Accounts receivable, net 13,464 6,783
Inventories 1,817 1,548
Short-term deferred tax assets 5,291 4,814
Other current assets 3,544 13,434
-------------- --------------
Total current assets 313,840 220,655
Property and equipment, net 29,443 24,705
Intangible assets, net 51,336 27,529
Goodwill 35,489 35,425
Long-term deferred tax assets 12,937 12,530
Other assets 1,391 444
-------------- --------------
Total assets $ 444,436 $ 321,288
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,301 $ 3,895
Accrued legal fees 4,789 3,166
Accrued liabilities 9,532 7,350
Deferred revenue 469 646
Income tax payable 1,274 376
-------------- --------------
Total current liabilities 18,365 15,433
-------------- --------------
Long-term deferred tax liabilities 7,747 -
Stockholders' equity:
Common Stock 48 47
Additional paid-in capital 313,387 245,019
Treasury Stock (544)
Accumulated other comprehensive loss (494) -
Retained earnings 105,927 60,789
-------------- --------------
Total stockholders' equity 418,324 305,855
-------------- --------------
Total liabilities and stockholders'
equity $ 444,436 $ 321,288
============== ==============
(2) Derived from audited financial statements
RECONCILIATION TO NON-GAAP INCOME FROM GAAP NET INCOME
----------------------------------------------------------------------
(in thousands, except per share amounts)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2007 2006 2007 2006
------- ------- ------- --------
GAAP Net Income $13,002 $13,837 $45,138 $ 61,351
Adjustments to GAAP net income:
Stock compensation - cost of
revenues 478 604 2,200 2,924
Stock compensation - research,
development and other related
costs 798 581 2,629 1,021
Stock compensation - selling,
general and administrative 3,611 3,233 13,270 11,422
Amortization of acquired
intangibles - cost of revenues 423 422 1,690 704
Amortization of acquired
intangibles - research,
development and other related
costs 1,265 269 4,471 1,075
Amortization of acquired
intangibles - selling, general
and administrative 202 202 807 349
Non-cash income tax expense 5,285 6,592 26,301 38,871
Adjustment for acquired inventory - 657 - 1,562
------- ------- ------- --------
Non-GAAP net income $25,064 $26,397 $96,506 $119,279
======= ======= ======= ========
Non-GAAP net income per common share
- diluted $ 0.51 $ 0.54 $ 1.95 $ 2.44
======= ======= ======= ========
Weighted average number of shares
used in per share calculations
excluding the effects of 123R -
diluted 49,594 49,262 49,453 48,851
======= ======= ======= ========
CONTACT: Tessera Technologies, Inc.
Charlie Webster, 408-894-0700
Chief Financial Officer
or
Lippert/Heilshorn & Associates
Kirsten Chapman, 415-433-3777 (Investor Relations)
Moriah Shilton, 415-433-3777 (Investor Relations)
mshilton@lhai.com
SOURCE: Tessera Technologies, Inc.