SAN JOSE, Calif.--(BUSINESS WIRE)--Feb. 2, 2005--Tessera
Technologies, Inc. (Nasdaq:TSRA), a leading provider of
miniaturization technologies for the electronics industry, announced
today its results for the fourth quarter and year ended December 31,
2004.
Revenue Highlights: Fourth Quarter 2004 Versus Fourth Quarter 2003
- Total revenue was $18.3 million, versus $10.7 million, an
increase of 72 percent.
- Total intellectual property revenue was $14.3 million, versus
$8.4 million, up 71 percent.
- Intellectual property revenue was $12.2 million, versus $7.4
million, rising 66 percent.
- Other intellectual property revenue was $2.1 million, more
than doubling from $1.0 million in the fourth quarter of 2003.
- Service revenue was $4.1 million, versus $2.3 million, an
increase of 75 percent.
As a result of its strong earnings history and its prospects for
continued profitability as well as the recent successful resolution of
its dispute with Samsung Electronics, Tessera recognized a $24.7
million income tax benefit in the fourth quarter based on the reversal
of the valuation allowance against its deferred tax asset, which
consists mainly of net operating losses carried forward (NOL) from
prior periods. This is a non-recurring, non-cash item. As a result,
net income for the fourth quarter increased to $32.5 million, or $0.69
per diluted share, compared to net income of $3.1 million, or $0.07
per diluted share, for the comparable quarter in the prior year.
Pro forma net income for the fourth quarter of 2004 was $7.7
million and pro forma net income per diluted share was $0.16. Pro
forma net income is defined as income adjusted for non-cash tax
expense and stock-based compensation.
Free cash flow was $7.1 million and free cash flow per diluted
share was $0.15 for the fourth quarter of 2004.
"In 2004 our core business, intellectual property revenue, derived
primarily from recurring royalties, grew 56 percent," stated Bruce
McWilliams, Tessera's chairman, president and chief executive officer.
"Already in 2005, we are taking actions to build upon this strong
growth in revenue, as evidenced by our recent agreement with Samsung
Electronics announced on January 27th. As Samsung Electronics holds
market leading positions in DRAM, SRAM, and Flash devices and is
expected to lead the industry in manufacturing DDR2 in chip scale
packages in 2005, we feel this is a major accomplishment of our
licensing program that is expected to significantly impact our revenue
in the future."
"In addition to computing, we believe the wireless and consumer
electronics markets will increasingly adopt our chip scale and multi
chip packaging technology in 2005, driving another year of strong
revenue growth for the company," McWilliams continued. "We also
anticipate growth in our product development services. Product
development services revenue grew sequentially each quarter in 2004
and now comprises 18 percent of our total revenue. We believe our
product development services and company-funded R&D programs will
continue to produce highly innovative advanced packaging technologies
that uniquely meet the challenges that our customers and the industry
are facing today and in the future."
Highlights: Year Ended December 31, 2004 Versus Year Ended 2003
- Total revenue for 2004 was $72.7 million, increasing 95
percent.
- Total intellectual property revenue for 2004 was $59.6
million, up 109 percent.
- Intellectual property revenue for 2004 was $39.6 million,
rising 56 percent.
- Service revenue for 2004 was $13.1 million, a 50 percent
increase.
- Net income for 2004 was $59.1 million, or $1.27 per diluted
share, including the $24.7 million non-cash income tax benefit
the company recorded in the fourth quarter.
- Pro forma net income for 2004 was $35.0 million and pro forma
net income per diluted share was $0.75.
- Free cash flow for 2004 was $34.0 million and free cash flow
per diluted share was $0.73.
"The reversal of our NOL reserve in the fourth quarter provided an
obvious non-cash, non-recurring increase to our fourth quarter net
income," said Doug Norby, senior vice president and chief financial
officer. "More importantly, however, is the $44 million in cash
Tessera generated throughout the year, demonstrating the leverage of
our highly profitable business model. We ended 2004 with $108.3
million in cash and cash equivalents. We have a healthy, growing
business and feel measures such as our pro forma and free cash flow
metrics allow a more accurate understanding of our operating
performance."
"Also in the fourth quarter, we successfully resolved our lawsuit
against Samsung Electronics," Norby continued. "While the settlement
was obviously a positive development for the company, we did incur
approximately $2.5 million in litigation expenses in the quarter,
which were $500,000 higher than expected. Our litigation expenses for
the year were 10 percent of revenue."
2005 Financial Guidance
Tessera expects first quarter 2005 total revenue in the range of
$21.5 to $22.0 million. Expenses including cost of revenue, research
and development, and selling, general and administration, are
projected in the range of $8.4 to $8.8 million. The company's book tax
rate is projected to be 40 percent, with cash taxes paid ranging from
six to seven percent of revenue in this first quarter.
Tessera expects full year 2005 total revenue in the range of $89.0
to $91.0 million. Expenses including cost of revenue, research and
development, and selling, general and administration, are projected in
the range of $39.0 to $40.0 million. The company's book tax rate is
projected to be 40 percent, with cash taxes paid ranging from three to
four percent of revenue for the year as a whole.
This guidance does not include any impact relating to the
expensing of stock options under the Financial Accounting Standard
Board's statement 123R, which is effective for quarters beginning
after June 15, 2005. Expensing of stock options will increase our
reported expenses for 2005 beyond the amounts projected above.
Conference Call Information
Tessera Technologies will host its fourth quarter and year-end
2004 conference call on February 2, 2005 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 3308407.
About Tessera
Tessera is a leading provider of miniaturization technologies for
the electronics industry. Tessera enables new levels of
miniaturization and performance by applying its unique expertise in
the electrical, thermal and mechanical properties of materials and
interconnect. As a result, Tessera's technologies are widely adopted
in high-growth markets including consumer, computing, communications,
medical and defense. Tessera's customers include the world's top
semiconductor companies such as Intel, Samsung, Renesas, Toshiba and
Texas Instruments. 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
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, the pace of adoption of Tessera's
chip scale and multi-chip packaging technologies by the consumer
electronics industry, Tessera's ability to protect its intellectual
property and increases in the costs of that effort 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 Annual Report on
Form 10-K for the year ended December 31, 2003 and its Quarterly
Report on Form 10-Q filed for the quarter ended September 30, 2004,
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)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
---------------- -----------------
2004 2003 2004 2003
-------- ------- -------- --------
Revenues:
Intellectual property revenues $12,193 $7,356 $39,624 $25,393
Other intellectual property
revenues 2,068 1,000 19,998 3,169
Service revenues 4,063 2,321 13,114 8,759
-------- ------- -------- --------
Total net revenues 18,324 10,677 72,736 37,321
-------- ------- -------- --------
Cost of revenues 3,116 1,843 9,613 6,734
Research & development 1,541 1,960 7,107 7,661
Selling, general and
administrative 6,311 3,305 20,144 11,030
Stock-based compensation 25 102 231 1,110
-------- ------- -------- --------
Total operating expenses 10,993 7,210 37,095 26,535
-------- ------- -------- --------
Operating Income 7,331 3,467 35,641 10,786
Other income 353 (7) 828 195
-------- ------- -------- --------
Income before taxes 7,684 3,460 36,469 10,981
Income tax provision/(benefit) (24,813) 365 (22,594) 1,626
-------- ------- -------- --------
Net income 32,497 3,095 59,063 9,355
Cumulative preferred stock
dividends in arrears - - - (6,187)
-------- ------- -------- --------
Net income (loss) attributable to
common stockholders $32,497 $3,095 $59,063 $3,168
======== ======= ======== ========
Net income (loss) per common
share; basic $0.78 $0.13 $1.47 $0.28
======== ======= ======== ========
Net income (loss) per common
share; diluted $0.69 $0.07 $1.27 $0.08
======== ======= ======== ========
Weighted average number of shares
used in per share calculations;
basic 41,657 23,539 40,077 11,141
======== ======= ======== ========
Weighted average number of shares
used in per share calculations;
diluted 47,229 44,711 46,622 41,653
======== ======= ======== ========
SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA
(In thousands)
(unaudited)
Depreciation $236 $241 $962 $895
Purchases of property and equipment 818 305 1,800 1,489
Income taxes paid 9 365 1,885 1,480
Non-cash income tax expense/
(benefit) (24,822) - (24,325) 63
Free cash flow 7,118 3,133 33,977 10,017
Net free cash flow per common share;
diluted $0.15 $0.07 $0.73 $0.24
TESSERA TECHNOLOGIES INC.
CONSOLIDATED SUMMARY BALANCE SHEET INFORMATION
(In thousands)
(unaudited)
December 31, December 31,
2004 2003
Assets
Current Assets:
Cash and cash equivalents $108,339 $64,379
Accounts receivable 3,263 2,540
Other current assets 16,475 1,335
------------ ------------
Total current assets 128,077 68,254
Property and equipment, net 2,484 1,725
Other assets 9,121 102
------------ ------------
Total assets $139,682 $70,081
============ ============
Liabilities and Stockholders Equity
Current Liabilities:
Accounts payable $984 $876
Accrued liabilities 3,615 3,014
Deferred revenue 107 202
------------ ------------
Total current liabilities 4,706 4,092
------------ ------------
Stockholders (deficit) equity
Common stock 42 38
Additional paid in capital 167,359 157,178
Deferred stock based compensation (414) (153)
Accumulated deficit (32,011) (91,074)
------------ ------------
Total stockholders' equity 134,976 65,989
------------ ------------
Total liabilities and stockholders' equity $139,682 $70,081
============ ============
TESSERA TECHNOLOGIES INC.
RECONCILIATION OF PRO FORMA NET INCOME TO NET INCOME
(In thousands)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
---------------- ----------------
2004 2003 2004 2003
-------- ------- -------- -------
Pro forma net income $7,700 $3,197 $34,969 $4,341
Less:
Stock-based compensation 25 102 231 1,110
Non-cash income tax
expense/(benefit) (24,822) - (24,325) 63
-------- ------- -------- -------
Net income, as reported $34,497 $3,095 $59,063 $3,168
======== ======= ======== =======
Pro forma net income per common
share; diluted $0.16 $0.07 $0.75 $0.10
======== ======= ======== =======
Weighted average number of shares
used in per share calculations;
diluted 47,229 44,711 46,622 41,653
======== ======= ======== =======
TESSERA TECHNOLOGIES INC.
The Company has chosen to add a Free Cash Flow ("FCF") measure to its
earnings reporting. The measure in combination with GAAP earnings
provides additional insight into the actual cash generation of the
Company. However, this does not represent the residual cash flow
available for discretionary expenditures. The presentation of FCF is
not intended to replace net income (loss), cash flows, financial
position or comprehensive income (loss), and it is not a measure of
financial performance as determined in accordance with generally
accepted accounting principles in the United States.
RECONCILIATION OF FREE CASH FLOW TO NET INCOME
(In thousands)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
---------------- -----------------
2004 2003 2004 2003
-------- ------- -------- --------
Free cash flow $7,118 $3,133 $33,977 $10,017
Less:
Depreciation 236 241 962 895
Stock-based compensation 25 102 231 1,110
Income tax provision (24,813) 365 (22,594) 1,626
Cumulative preferred stock
dividends in arrears - - - 6,187
Add:
Purchases of property and
equipment 818 305 1,800 1,489
Income taxes paid 9 365 1,885 1,480
-------- ------- -------- --------
Net income, as reported $32,497 $3,095 $59,063 $3,168
======== ======= ======== ========
Net free cash flow per common
share; diluted $0.15 $0.07 $0.73 $0.24
======== ======= ======== ========
Weighted average number of shares
used in per share calculations;
diluted 47,229 44,711 46,622 41,653
======== ======= ======== ========
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
Kirsten Chapman/Moriah Shilton, 415-433-3777 (IR)
Moriah@lhai-sf.com
SOURCE: Tessera Technologies, Inc.