Company Raises Full Year Revenue Guidance Range to Between $207 Million and $208 Million
Business Editors
SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 1, 2006--Tessera
Technologies, Inc. (Nasdaq:TSRA), a leading provider of
miniaturization technologies for the electronics industry, announced
today its results for the third quarter and nine-month period ended
September 30, 2006. In addition, in a separate release today, the
company also announced it has signed a new technology licensing
agreement with NXP, formerly Philips Semiconductors, one of Europe's
largest semiconductor companies.
"Tessera posted a strong third quarter with revenue of $110.5
million," stated Bruce McWilliams, Tessera's chairman, president and
chief executive officer. "During the third quarter, we signed new
licenses with Micron and Qimonda and now have the top four DRAM
manufacturers as customers. We believe we are well positioned to fully
capitalize on the transition of the DRAM industry to DDR2. In
addition, with the signing of Infineon and NXP, we added as customers
two leading suppliers to the wireless and consumer electronic markets.
With six new and expanded license agreements in 2006, our business is
clearly on track with an increasing recurring royalty revenue base."
Revenue Highlights: Third Quarter 2006
- Total revenue was $110.5 million.
- Royalties and license fees were $25.9 million.
- Payments for past production were $76.0 million.
- Product and service revenue was $8.6 million.
Generally accepted accounting principles (GAAP) net income for the
third quarter of 2006 was $47.4 million, or $0.98 per diluted share.
Pro forma net income for the third quarter of 2006 was $85.1 million
and pro forma net income per diluted share was $1.75. Pro forma net
income is defined as income adjusted for non-cash tax expense,
stock-based compensation and either one-time or ongoing non-cash deal
amortization charges. Pro forma net income per share equals pro forma
net income divided by the weighted diluted share count as of that
period end.
Revenue Highlights: Nine-month Period Ended September 30, 2006
Compared to Nine-month Period Ended September 30, 2005
- Total revenue was $158.5 million, up 126 percent.
- Royalties and license Fees were $64.8 million, up 65 percent.
- Payments for past production were $77.6 million, up more than
300 percent.
- Product and service revenue was $16.0 million, up 33 percent.
GAAP net income for the nine-month period was $47.5 million or
$0.99 per diluted share. Pro forma net income for the nine-month
period was $92.9 million, or $1.91 per diluted share.
McWilliams continued, "We are excited about our prospects within
the consumer optics space. In July, we acquired Digital Optics
Corporation and already its financial results are exceeding our
expectations. Our acquisition of certain assets of Shellcase Ltd. has
led to a new product, Shellcase CF, and in September we signed a
license agreement on this technology with a major manufacturer of
camera modules. We believe our consumer optics business will be a
substantial part of our total revenues by the end of the decade."
2006 Financial Guidance
Tessera expects fourth quarter 2006 total revenue within the range
of $49 million to $50 million. As per company policy, quarterly
revenue guidance does not include the impact of new agreements that
are not already signed. Royalties and license fees are projected to be
up approximately 33 percent compared to the third quarter of 2006.
Past production payments are projected to be $5 million. Services
revenue, including the impact of the Digital Optics acquisition is
projected to be $10 million.
Expenses for the fourth quarter are projected to approximate $24
million, including $4 million of litigation expense. This includes
cost of revenue, research and development, and selling, general and
administration expenses, but excludes stock based compensation and
deal-related expenses.
Other income is projected to be $1.8 million. The company's book
tax rate is projected to be 42 percent of pre-tax profit, as a portion
of stock compensation expense is not deductible for tax purposes. Cash
taxes are projected to approximate $1.7 million in the fourth quarter.
Stock based compensation expense is projected to be $4.0 million.
Non-cash deal amortization is expected to be $900,000 and inventory
revaluation related to the Digital Optics acquisition is expected to
approximate $600,000.
The fully diluted share count is expected to be 49.0 million
shares.
Charles Webster, Tessera's chief financial officer, stated,
"Tessera's fourth quarter 2006 and outlook into 2007 has been
strengthened by the transaction with NXP, which will become an ongoing
customer in the fourth quarter. In addition, we expect to receive $5.0
million for past production in the fourth quarter of 2006."
Tessera expects 2006 total revenues to be within the range of
approximately $207 million to $208 million, as compared to previous
total revenue guidance given on August 1, 2006 of $195 million to $200
million. As per company policy, 2006 annual revenue guidance does not
include the impact of new agreements that are not already signed.
Annual royalties and license fees are projected to be up approximately
75 percent as compared to 2005.
Expenses for 2006 are projected to be approximately $91 million,
including $29 million of litigation expense. This includes cost of
revenue, research and development, and selling, general and
administration expenses, but excludes stock based compensation and
deal-related expenses.
Other income is projected to be $6 million. The company's book tax
rate is projected to be 42 percent of pre-tax profit. Cash taxes are
projected to approximate $4 million for the year. The fully diluted
share count is expected to be 49.0 million shares.
Conference Call Information
Tessera Technologies will host its third quarter 2006 conference
call on November 1, 2006 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 7551449.
About Tessera Technologies, Inc.
Tessera Technologies 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
interconnects. 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, Texas Instruments,
Toshiba, Infineon and Micron. 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.
Pro Forma 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 pro forma 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 pro forma 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 compensation and the effects of 123R upon the
number of diluted shares used in calculating pro forma earnings per
share. The pro forma 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 pro forma
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 pro forma 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. 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 Annual Report on Form 10-K for the year
ended December 31, 2005 and its Quarterly Report on Form 10-Q for the
second quarter ended June 30, 2006 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 Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
--------- -------- --------- --------
Revenues:
Royalty and license fees $ 25,916 $14,113 $ 64,817 $39,238
Past production payments 76,000 1,161 77,633 18,830
Product and service revenues 8,625 4,470 16,014 12,036
--------- -------- --------- --------
Total revenues 110,541 19,744 158,464 70,104
--------- -------- --------- --------
Operating expenses:
Cost of revenues 6,201 3,059 13,623 9,309
Research, development and other
related costs 5,317 2,074 12,589 5,225
Selling, general and
administrative 20,116 7,744 54,091 19,378
--------- -------- --------- --------
Total operating
expenses 31,634 12,877 80,303 33,912
--------- -------- --------- --------
Operating income 78,907 6,867 78,161 36,192
Other income, net 1,677 1,067 4,401 2,427
--------- -------- --------- --------
Income before taxes 80,584 7,934 82,562 38,619
Income tax provision 33,229 2,904 35,048 13,921
--------- -------- --------- --------
Net income attributable to common
stockholders $ 47,355 $ 5,030 $ 47,514 $24,698
========= ======== ========= ========
Basic and diluted net income per
share attributable to common
stockholders:
Net income per common share;
basic $ 1.02 $ 0.11 $ 1.04 $ 0.56
========= ======== ========= ========
Net income per common share;
diluted $ 0.98 $ 0.11 $ 0.99 $ 0.52
========= ======== ========= ========
Weighted average number of
shares used in per share
calculations; basic 46,252 44,452 45,892 43,720
========= ======== ========= ========
Weighted average number of
shares used in per share
calculations; diluted 48,422 47,632 48,131 47,727
========= ======== ========= ========
TESSERA TECHNOLOGIES, INC.
SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA
----------------------------------------------------------------------
(in thousands, except share amounts)
(unaudited)
Non-cash income tax expense $ 32,292 $ 2,369 $ 32,279 $10,434
Stock compensation - cost of
revenues $ 709 $ 179 $ 2,319 $ 179
Stock compensation - research,
development and other related
costs $ 334 $ 13 $ 443 $ 109
Stock compensation - selling,
general and administrative $ 2,798 $ 333 $ 8,188 $ 552
Amortization of acquired
intangibles $ 687 $ 101 $ 1,235 $ 134
Adjustment for acquired
inventory $ 905 $ - $ 905 $ -
Weighted average number of
shares used in per share
calculations excluding the
effects of 123R; diluted 48,737 47,632 48,580 47,727
TESSERA TECHNOLOGIES, INC.
CONSOLIDATED SUMMARY BALANCE SHEET INFORMATION
----------------------------------------------------------------------
(in thousands)
September 30, December 31,
2006 2005
------------ ------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $156,784 $127,594
Accounts receivable 9,095 4,602
Inventory 2,230 -
Short term deferred tax assets 1,190 1,190
Other current assets 12,796 1,039
------------ ------------
Total current assets 182,095 134,425
Property and equipment, net 25,232 8,751
Intangible assets 28,422 12,757
Goodwill 36,305 24,154
Long term deferred tax assets 25,296 9,982
Other assets 368 58
------------ ------------
Total assets $297,718 $190,127
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,031 $ 3,043
Accrued liabilities 6,568 6,443
Deferred revenue 859 324
Income tax payable 31,788 359
------------ ------------
Total current liabilities 42,246 10,169
------------ ------------
Long term deferred tax liabilities 8,990 -
------------ ------------
Total liabilities 51,236 10,169
------------ ------------
Stockholders' equity:
Common Stock 47 45
Additional paid-in capital 199,483 182,720
Deferred stock-based compensation - (2,245)
Retained earnings
(accumulated deficit) 46,952 (562)
------------ ------------
Total stockholders'
equity 246,482 179,958
------------ ------------
Total liabilities and
stockholders' equity $297,718 $190,127
============ ============
TESSERA TECHNOLOGIES, INC.
RECONCILIATION OF PRO FORMA NET INCOME TO NET INCOME
----------------------------------------------------------------------
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
--------- -------- -------- --------
Pro forma net income $85,080 $ 8,025 $92,883 $36,106
Less:
Stock compensation - cost of
revenues 709 179 2,319 179
Stock compensation -
research, development and
other related costs 334 13 443 109
Stock compensation - selling,
general and administrative 2,798 333 8,188 552
Amortization of acquired
intangibles 687 101 1,235 134
Adjustment for acquired
inventory 905 - 905 -
Non-cash income tax expense 32,292 2,369 32,279 10,434
--------- -------- -------- --------
Net income, as reported $47,355 $ 5,030 $47,514 $24,698
========= ======== ======== ========
Pro forma net income per common
share; diluted $ 1.75 $ 0.17 $ 1.91 $ 0.76
========= ======== ======== ========
Weighted average number of
shares used in per share
calculations excluding the
effects of 123R; diluted 48,737 47,632 48,580 47,727
========= ======== ======== ========
CONTACT: Tessera
Charlie Webster, 408-894-0700 (CFO)
Mike Forman, 408-894-0700 (Vice President, Finance)
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.