SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 27, 2004--Tessera Technologies, Inc. (Nasdaq:TSRA), a leading technology developer and services provider for semiconductor chip-scale and multi-chip packages, today announced financial results for the fourth quarter and year ended December 31, 2003.
"2003 was a record year for Tessera," stated Bruce McWilliams, Tessera's Chairman, President and Chief Executive Officer. "We excelled in every aspect of our business: financial performance, licensee growth and penetration, introduction of new technologies, strengthening of our IP portfolio and expansion of our services business. In addition to all of these achievements, we successfully completed our initial public offering in November. I am proud of what we've accomplished in 2003, and I believe the future has never looked brighter for Tessera."
Fourth Quarter 2003 Highlights
- Total revenue was $10.7 million, up 16 percent sequentially and 32 percent over the fourth quarter of 2002.
- Total intellectual property revenue was $8.4 million, up 15 percent sequentially and 37 percent over the fourth quarter of 2002.
- Service revenue was $2.3 million, up 21 percent sequentially and 15 percent over the fourth quarter of 2002.
- Net income for the fourth quarter was $3.1 million, up 93 percent sequentially and 35 percent over the fourth quarter 2002.
- Tessera completed its initial public offering in November.
"Tessera is benefiting from the continued market share growth of chip-scale and multi-chip packages within the semiconductor industry," continued McWilliams. "We also are benefiting from our continued addition of new licensees as well as the current strong performance of the overall semiconductor market. Since we recognize royalty revenues one quarter in arrears, our fourth quarter results reflect the strength of the semiconductor industry in the third quarter of last year."
Annual Financial Results
Total revenue for the year ended December 31, 2003 was $37.3 million, up 32 percent from $28.3 million for the year ended December 31, 2002. Total intellectual property revenue was $28.6 million, up 21 percent from $23.6 million in 2002. Service revenue was $8.8 million for the year, up 89 percent from $4.6 million the prior year.
Net income for the year 2003 was $9.4 million, up 43 percent from $6.5 million for the year 2002. Diluted earnings per share for 2003 were $0.22. Upon completion of Tessera's initial public offering, the number of common shares used to compute earnings per share increased significantly due to the resulting mandatory conversion of the company's preferred stock into common stock. As a result, Tessera's earnings per share in 2003 are not comparable to prior periods. Please read the footnote to the attached financial statements for a description of earnings per share calculations in 2003 and 2002.
Cash and short-term investments as of December 31, 2003 were $64.4 million compared to $25.2 million at the beginning of the fourth quarter and $20.2 million at the end of 2002. The cash increase is largely attributable to the company's initial public offering.
"We are pleased with the success of Tessera's initial public offering," said Doug Norby, Senior Vice President and Chief Financial Officer. "Tessera's balance sheet, already strong with no funded debt, is now further strengthened due to the IPO proceeds. The fourth quarter was the ninth consecutive quarter of profitability for Tessera, and our 93 percent sequential quarterly growth in profit after tax on a 16 percent growth in revenue illustrates the leverage in our business model."
Business Highlights
New licensees for the quarter included Powertech Technology Inc., Cochlear Limited and the recently announced Oki Electric Industry Co., Ltd. As the tenth Japanese semiconductor company to become a Tessera licensee, Oki will utilize Tessera's packaging technology in products manufactured by Oki and their subcontractor assemblers, in devices such as microcontrollers and ASICs. Powertech Technology, a Taiwan-based subcontract assembler, will provide Tessera technology to its broad customer base of semiconductor manufacturers. Cochlear Limited, a leader in cochlear implant technology, will use Tessera's advanced packaging technology in implantable hearing devices designed to allow individuals with severe to profound hearing loss to perceive sound.
Chip-scale and multi-chip packaging, Tessera's core markets, continue to demonstrate rapid growth. According to Gartner Dataquest, the market for chip-scale packaging is expected to grow from 4.4 billion units in 2002 to 18.9 billion units in 2006, representing a compound annual growth rate of 44 percent. Wireless handset shipments in 2003 exceeded 460 million units, a more than 7 percent increase over 2002. Wireless handsets are a major user of chip-scale and multi-chip packages.
Tessera continues to develop and deploy new technologies. In the fourth quarter, Tessera signed an agreement with EEMS Italia SpA under which EEMS will manufacture Tessera's MicroZ(TM)-Ball Stack packaging technology. EEMS, a leading European provider of backend manufacturing services for memory semiconductors, will provide this technology to its international customer base of semiconductor companies. Tessera's engineering services group is supporting this transfer of technology, which EEMS will then customize to address their customers' requirements.
"In 2003, Tessera achieved a major broadening of our customer base, with the addition of seven new customers, including Epson, Sanyo and Renesas, the third largest semiconductor company in the world. This led to significant growth in revenue and income," said McWilliams. "In 2004, we expect to continue to add new licensees, develop and introduce new technologies, and expand the scope of the markets we address. We believe Tessera is well positioned to benefit from the growing demand for advanced packaging technology, which is a key enabler of miniaturized, high performance electronic products."
2004 Financial Guidance
Tessera expects first quarter 2004 total revenues in the range of $11.0 to $11.5 million. As we had previously estimated, we also anticipate incurring approximately $500,000 per quarter in 2004 in additional expenses associated with the cost of being a public company. Including these new expenses, Tessera expects net income to range from $3.0 to $3.4 million, or approximately $0.07 per diluted share. Tessera estimates a full dilution share count of 46 million in the first quarter of 2004 as compared to 44.7 million in the fourth quarter of 2003.
Tessera expects full year 2004 total revenues in the range of $50.0 to $52.5 million. Net income is expected to range from $16.0 to $18.5 million, or $0.35 to $0.40 per diluted share.
Conference Call Information
Tessera will host an investor conference call today at 1:30 P.M. Pacific (4:30 P.M. Eastern), January 27, 2004. The call will be accessible live by dialing 877-866-5534. A 48-hour replay will be available by dialing 800-642-1687, pass code 4816321. The call will also be simultaneously webcast and available on Tessera's web site at http://www.tessera.com.
Tessera will hold its Annual Meeting on May 20, 2004, at a location to be determined.
About Tessera
Tessera develops semiconductor packaging technology that meets the demand for miniaturization and increased performance of electronic products. Tessera licenses its technology to its customers, enabling them to produce semiconductors that are smaller and faster, and incorporate more features. These semiconductors are utilized in a broad range of communications, computing and consumer electronic products.
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. Factors that might cause or contribute to such differences include, but are not limited to, fluctuations in Tessera's operating results due to the timing of new license agreements and royalties, Tessera's ability to protect its intellectual property and the risk of a decline in demand for semiconductor products. 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 Registration Statement on Form S-1, filed with the Securities and Exchange Commission September 4, 2003, as amended, include more information about factors that could affect the company's financial results.
TESSERA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Year Ended
----------------------------- -----------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2003 2003 2002 2003 2002
---------- --------- -------- -------- --------
Revenue:
Intellectual
property $7,356 $5,987 $5,821 $25,393 $17,925
Other intellectual
property 1,000 1,293 260 3,169 5,715
Services 2,321 1,924 2,013 8,759 4,630
---------- --------- -------- -------- --------
Total net
revenues 10,677 9,204 8,094 37,321 28,270
Cost of revenues 1,843 1,849 1,169 6,734 4,264
Research &
development 1,960 1,997 1,766 7,661 6,700
Selling, general
and administrative 3,305 2,839 2,048 11,030 7,552
Stock-based
compensation 102 612 300 1,110 1,942
---------- --------- -------- -------- --------
Total costs
and expenses 7,210 7,297 5,283 26,535 20,458
---------- --------- -------- -------- --------
Operating Income 3,467 1,907 2,811 10,786 7,812
Other income
(expense) (7) 69 (176) 195 45
---------- --------- -------- -------- --------
Income before taxes 3,460 1,976 2,635 10,981 7,857
(Benefit) provision
for income taxes 365 370 341 1,626 1,318
---------- --------- -------- -------- --------
Net income 3,095 1,606 2,294 9,355 6,539
Cumulative preferred
stock dividends in
arrears -- -- 3,235 6,187 12,941
---------- --------- -------- -------- --------
Net income attributable
to common stockholders 3,095 1,606 (941) 3,168 (6,402)
========== ========= ======== ======== ========
Shares basic 23,539 6,870 6,890 11,141 6,784
Shares diluted 44,711 40,869 6,890 41,653 6,784
Net income per
share basic $0.13 $0.23 (0.14) 0.28 (0.94)
========== ========= ======== ======== ========
Net income per
share diluted $0.07 $0.04 (0.14) 0.22 (0.94)
========== ========= ======== ======== ========
Note: Generally accepted accounting principles (GAAP) require that
cumulative dividends related to our preferred stock be deducted from
net income in the computation of earnings per share if this results in
dilution. As a result, 2002 earnings per share (EPS), both basic and
diluted, was a loss of $0.94. Without the impact of preferred
dividends, basic and diluted EPS in 2002 would have been $0.20 and
$0.19 respectively, while basic and diluted EPS for the fourth quarter
of 2002 would have been $0.07 and $0.07, respectively. All of our
preferred stock converted to common stock upon completion of our
initial public offering in November of 2003.
TESSERA TECHNOLOGIES INC.
CONSOLIDATED SUMMARY BALANCE SHEET INFORMATION
(In thousands)
Dec. 31, Sept. 30, Dec. 31,
2003 2003 2002
----------------------------------------- -------- --------- ---------
Assets
----------------------------------------- -------- --------- ---------
Current Assets:
----------------------------------------- -------- --------- ---------
Cash and cash equivalents $64,379 $132 $1,341
----------------------------------------- -------- --------- ---------
Short term investments 0 25,059 18,829
----------------------------------------- -------- --------- ---------
Accounts receivable 2,540 3,052 1,883
----------------------------------------- -------- --------- ---------
Other current assets 1,335 1,521 763
----------------------------------------- -------- --------- ---------
----------------------------------------- -------- --------- ---------
Total current assets 68,254 29,764 22,816
----------------------------------------- -------- --------- ---------
Property and equipment, net 1,725 1,743 1,220
----------------------------------------- -------- --------- ---------
Other assets 102 105 134
----------------------------------------- -------- --------- ---------
Total assets 70,081 31,612 24,170
----------------------------------------- -------- --------- ---------
----------------------------------------- -------- --------- ---------
Liabilities and Stockholders Equity
----------------------------------------- -------- --------- ---------
Current Liabilities:
----------------------------------------- -------- --------- ---------
Accounts payable 876 693 650
----------------------------------------- -------- --------- ---------
Accrued liabilities 3,014 3,223 2,012
----------------------------------------- -------- --------- ---------
Deferred revenue 202 463 0
----------------------------------------- -------- --------- ---------
Total current liabilities 4,092 4,379 2,662
----------------------------------------- -------- --------- ---------
----------------------------------------- -------- --------- ---------
Preferred stock 0 121,257 96,000
----------------------------------------- -------- --------- ---------
Stockholders (deficit) equity
----------------------------------------- -------- --------- ---------
Common stock 38 7 7
----------------------------------------- -------- --------- ---------
Additional paid in capital 157,178 359 26,561
----------------------------------------- -------- --------- ---------
Deferred stock based compensation (153) (174) (620)
----------------------------------------- -------- --------- ---------
Accumulated deficit (91,074) (94,169) (100,429)
----------------------------------------- -------- --------- ---------
Accumulated other comprehensive loss 0 (47) (11)
----------------------------------------- -------- --------- ---------
Total stockholders (deficit)
equity 65,989 (94,024) (74,492)
----------------------------------------- -------- --------- ---------
----------------------------------------- -------- --------- ---------
Total liabilities and stockholders equity 70,081 31,612 24,170
----------------------------------------- -------- --------- ---------
CONTACT: Tessera Technologies, Inc.
Doug Norby, 408-894-0700
Senior Vice President, Chief Financial Officer
Mike Forman, 408-894-0700
Vice President, Finance and Administration
or
Lippert / Heilshorn & Associates
Investor Relations Contact:
Lillian Armstrong/Moriah Shilton, 415-433-3777
Moriah@lhai-sf.com
SOURCE: Tessera Technologies, Inc.