Total revenue of $67.4 million, above the Company's guidance range
Raises 2015 recurring revenue estimate to $240 million
Repurchased $40.0 million of common stock during the quarter
SAN JOSE, Calif.--(BUSINESS WIRE)--
Tessera Technologies, Inc. (NASDAQ: TSRA) (the "Company" or "we") today
announced financial results for the third quarter of 2015. Total revenue
was $67.4 million, above the Company's guidance range of $64 to $66
million. GAAP net income for the third quarter of 2015 was $32.5
million, or $0.62 per diluted share, and non-GAAP net income was $34.8
million, or $0.65 per diluted share.
"Our third quarter financial results were above our expectations,
reflecting execution on growth initiatives and the strength and
stability of our business model," said Tom Lacey, CEO of Tessera
Technologies, Inc. "Our acquisition of Ziptronix in August enhances our
extensive intellectual property portfolio in the 2.5D and 3D-IC markets,
and Ziptronix's recently announced collaboration with Fraunhofer
IZM-ASSID is an example of the range of new business opportunities we
now address. FotoNation continues to build its roster of customers and
development partners with the recent addition of leading phone and
imaging companies QiKU, Huawei and Socionext. We are pleased to have
delivered the seventh consecutive quarter of GAAP and non-GAAP
profitability and we see strong momentum as we enter 2016."
Third Quarter 2015 Results
Total revenue was $67.4 million in the third quarter of 2015, compared
with revenue of $93.3 million in the third quarter of 2014. Recurring
revenue was $66.4 million in the third quarter of 2015, compared with
recurring revenue of $47.3 million in the third quarter of 2014. Third
quarter 2015 revenue included $1.0 million of episodic revenue, compared
with episodic revenue of $46.0 million in the third quarter of 2014 from
our settlement with Powertech Technology, Inc.
Operating expenses were $27.6 million in the third quarter of 2015,
compared with $31.3 million in the third quarter of 2014, a decrease of
$3.7 million, or 12%. Litigation expense in the third quarter of 2015
decreased by $2.9 million, or 50%, from the third quarter of 2014, due
to settlements reached during fiscal 2014 and 2015. Research and
development (R&D) and selling, general and administrative (SG&A)
expenses decreased by a combined $1.3 million, or 6%, compared with the
prior year.
Net income was $32.5 million, or $0.62 per diluted share, compared with
net income for the third quarter of 2014 of $108.7 million, or $2.04 per
diluted share. Results for the third quarter of 2015 were favorably
impacted by the reversal of valuation allowances of $6.3 million.
Results for the third quarter of 2014 were favorably impacted by the
reversal of a valuation allowance of $48.0 million on deferred tax
assets in the U.S., and by an episodic revenue payment of $46.0 million.
Non-GAAP net income for the third quarter of 2015 was $34.8 million, or
$0.65 per diluted share, compared with non-GAAP net income in the third
quarter of 2014 of $47.1 million, or $0.87 per diluted share. Non-GAAP
net income is defined as income and operating expenses adjusted for
discontinued operations, restructuring and other exit costs, acquired
intangible asset amortization, charges for acquired in-process research
and development, stock-based compensation expense, impairment charges on
long-lived assets and goodwill, and related tax effects.
Balance Sheet
Total current assets were $431.3 million as of September 30, 2015, a
decrease of $44.2 million from December 31, 2014. Cash, cash equivalents
and short-term investments were $387.2 million as of September 30, 2015,
a decrease of $47.2 million from December 31, 2014. The decline in cash
in the first nine months of the fiscal year was due to the previously
announced acquisition of Ziptronix for $38.6 million, common stock
repurchases of $97.5 million and the payment of $31.5 million of
dividends, largely offset by cash generated from operating activities.
Dividends
On September 18, 2015, the Company paid $10.4 million to stockholders of
record as of August 28, 2015, for the quarterly cash dividend of $0.20
per share of common stock.
Additionally, on October 28, 2015, the Board of Directors approved a
regular quarterly dividend of $0.20 per share of common stock, payable
on December 15, 2015 to stockholders of record on November 24, 2015.
Stock Repurchase Program
During the third quarter of 2015, the Company repurchased 1,191,000
shares of common stock for an aggregate amount of $40.0 million. These
purchases were executed under the Company's stock repurchase program. As
of September 30, 2015, the Company had approximately $51.1 million
remaining under its current repurchase program.
Financial Guidance
For the fourth quarter of 2015, the Company's guidance is as follows:
-
Total revenue is expected to be between $60 million and $62 million;
-
GAAP earnings per share are expected to be between $0.39 and $0.41 per
diluted share;
-
Non-GAAP earnings per share are expected to be between $0.50 and $0.52
per diluted share.
The Company raised its baseline recurring revenue guidance by $5 million
to approximately $240 million for fiscal year 2015.
Conference Call Information
The Company will hold its third quarter ended September 30, 2015,
earnings conference call at 2:00 PM Pacific time (5:00 PM Eastern time)
on Tuesday, November 3. To access the call in the U.S., please dial
(888) 723-9308, and for international callers dial (615) 489-8916,
approximately 10 minutes prior to the start of the conference call. The
conference ID is 62433699. The conference call will also be broadcast
live over the Internet at www.tessera.com
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 (855) 859-2056. International
callers please dial (404) 537-3406. Enter access code 62433699.
Safe Harbor Statement
This document 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 and guidance and new business opportunities.
Material factors that may cause results to differ from the statements
made include the plans or operations relating to the businesses of the
Company; market or industry conditions; changes in patent laws,
regulation or enforcement, or other factors that might affect the
Company's ability to protect or realize the value of its intellectual
property; the expiration of license agreements and the cessation of
related royalty income; the failure, inability or refusal of licensees
to pay royalties; initiation, delays, setbacks or losses relating to the
Company's intellectual property or intellectual property litigations, or
invalidation or limitation of key patents; fluctuations in operating
results due to the timing of new license agreements and royalties, or
due to legal costs; the risk of a decline in demand for semiconductors
and products utilizing FotoNation technologies; failure by the industry
to use technologies covered by the Company's patents; the expiration of
the Company's patents; the Company's ability to successfully complete
and integrate acquisitions of businesses; the risk of loss of, or
decreases in production orders from, customers of acquired businesses;
financial and regulatory risks associated with the international nature
of the Company's businesses; failure of the Company's products to
achieve technological feasibility or profitability; failure to
successfully commercialize the Company's products; changes in demand for
the products of the Company's customers; limited opportunities to
license technologies due to high concentration in the markets for
semiconductors and related products and smartphone imaging; and the
impact of competing technologies on the demand for the Company's
technologies. You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this
release. The Company's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year ended
Dec. 31, 2014, and its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2015, include more information about factors that could
affect the Company's financial results. The Company assumes no
obligation to update information contained in this press release.
Although this release may remain available on the Company's website or
elsewhere, its continued availability does not indicate that the Company
is reaffirming or confirming any of the information contained herein.
About Tessera Technologies, Inc.
Tessera Technologies, Inc., including its Invensas, FotoNation and
Ziptronix subsidiaries, licenses its technologies and intellectual
property to customers for use in areas such as mobile computing and
communications, memory and data storage, and 3DIC technologies, among
others. Our technologies include semiconductor packaging and
interconnect solutions, and products and solutions for mobile and
computational imaging, , including our FaceToolsTM, FacePowerTM,
FotoSavvyTM, DigitalApertureTM, LifeFocusTM,
face beautification, red-eye removal, High Dynamic Range, autofocus,
panorama, and image stabilization intellectual property. For more
information call 1.408.321.6000 or visit www.tessera.com.
Tessera, the Tessera logo, FotoNation, the FotoNation logo, Ziptronix,
the Ziptronix logo, FaceSavvy, FaceTools, FacePower, DigitalAperture,
and LifeFocus are trademarks or registered trademarks of affiliated
companies of Tessera Technologies, Inc. in the United States and other
countries. All other company, brand and product names may be trademarks
or registered trademarks of their respective companies.
Recurring and Episodic Revenue
Recurring revenue is defined as revenue from payments made pursuant to a
license agreement or other agreement that are scheduled to occur over at
least one year of time. Episodic revenue is revenue other than revenue
payable over at least one year pursuant to a contract. Episodic revenue
includes non-recurring engineering fees, initial license fees, back
payments resulting from audits, damages awards from courts or other
tribunals, and lump sum settlement payments. Although the royalty
revenue reported by the Company's licensees on a quarterly basis is
generally not assured, for ease of reference, the Company refers to
these revenues as "recurring revenue".
Importantly, a source of episodic revenue may become a source of
recurring revenue, when, for example, a company settles litigation with
the Company by paying a settlement amount and entering into a license
agreement that calls for an initial license fee and ongoing royalty
payment over several years. In that scenario, the settlement amount
would be episodic revenue, as would the initial license fee, and the
ongoing royalties would be recurring revenue.
Discontinued Operations
In January of 2014, the Company announced the cessation of all mems|cam
manufacturing operations. This was the Company's last manufacturing
operation. The Company has classified the expenses of its DigitalOptics
business as discontinued operations starting with the first quarter of
2014, and also reclassified results from this business to discontinued
operations for all prior reporting periods.
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
discontinued operations, either one-time or ongoing non-cash acquired
intangibles amortization charges, acquired in-process research and
development, all forms of stock-based compensation, impairment charges
on long-lived assets and goodwill, gain on sale of patents,
restructuring and other related exit costs, and related tax effects. The
non-GAAP financial measures also exclude the effects of FASB Accounting
Standards Codification 718, "Stock Compensation" upon the number
of diluted shares used in calculating non-GAAP earnings per share.
Management believes that the non-GAAP measures used in this release
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. All financial data is presented on a GAAP basis
except where the Company indicates its presentation is on a non-GAAP
basis.
Set forth below are reconciliations of non-GAAP net income (loss) to the
Company's reported GAAP net income (loss) for the third quarter of 2015
and non-GAAP earnings per share to GAAP earnings per share guidance for
the fourth quarter of 2015.
|
|
|
TESSERA TECHNOLOGIES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
32,028
|
|
|
$
|
50,908
|
|
|
Short-term investments
|
|
|
355,157
|
|
|
|
383,513
|
|
|
Accounts receivable, net
|
|
|
795
|
|
|
|
4,478
|
|
|
Short-term deferred tax assets
|
|
|
16,425
|
|
|
|
19,334
|
|
|
Other current assets
|
|
|
26,899
|
|
|
|
17,277
|
|
|
Total current assets
|
|
|
431,304
|
|
|
|
475,510
|
|
|
|
|
|
|
|
|
Intangible assets, net
|
|
|
96,502
|
|
|
|
72,925
|
|
|
Long-term deferred tax assets
|
|
|
5,514
|
|
|
|
21,759
|
|
|
Other assets
|
|
|
17,603
|
|
|
|
6,929
|
|
|
Total assets
|
|
$
|
550,923
|
|
|
$
|
577,123
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
892
|
|
|
$
|
3,509
|
|
|
Accrued legal fees
|
|
|
3,638
|
|
|
|
4,143
|
|
|
Accrued liabilities
|
|
|
9,780
|
|
|
|
16,157
|
|
|
Deferred revenue
|
|
|
7,757
|
|
|
|
10,217
|
|
|
Total current liabilities
|
|
|
22,067
|
|
|
|
34,026
|
|
|
|
|
|
|
|
|
Long-term deferred tax and other liabilities
|
|
|
2,632
|
|
|
|
1,738
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock
|
|
|
58
|
|
|
|
58
|
|
|
Additional paid-in capital
|
|
|
596,132
|
|
|
|
576,341
|
|
|
Treasury stock
|
|
|
(203,715
|
)
|
|
|
(106,231
|
)
|
|
Accumulated other comprehensive income
|
|
|
(512
|
)
|
|
|
(333
|
)
|
|
Retained earnings
|
|
|
134,261
|
|
|
|
71,524
|
|
|
Total stockholders' equity
|
|
|
526,224
|
|
|
|
541,359
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
550,923
|
|
|
$
|
577,123
|
|
|
|
|
TESSERA TECHNOLOGIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Royalty and license fees
|
|
$
|
67,426
|
|
|
$
|
93,334
|
|
|
$
|
211,464
|
|
|
$
|
218,883
|
|
|
Total revenues
|
|
|
67,426
|
|
|
|
93,334
|
|
|
|
211,464
|
|
|
|
218,883
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
62
|
|
|
|
125
|
|
|
|
370
|
|
|
|
228
|
|
|
Research, development and other related costs
|
|
|
8,551
|
|
|
|
8,914
|
|
|
|
23,781
|
|
|
|
25,404
|
|
|
Selling, general and administrative
|
|
|
10,912
|
|
|
|
11,820
|
|
|
|
33,032
|
|
|
|
36,171
|
|
|
Amortization expense
|
|
|
5,186
|
|
|
|
4,599
|
|
|
|
14,573
|
|
|
|
13,772
|
|
|
Litigation expense
|
|
|
2,938
|
|
|
|
5,821
|
|
|
|
10,961
|
|
|
|
22,986
|
|
|
Restructuring, impairment of long-lived assets and other charges
|
|
|
--
|
|
|
|
66
|
|
|
|
--
|
|
|
|
1,593
|
|
|
Total operating expenses
|
|
|
27,649
|
|
|
|
31,345
|
|
|
|
82,717
|
|
|
|
100,154
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income from continuing operations
|
|
|
39,777
|
|
|
|
61,989
|
|
|
|
128,747
|
|
|
|
118,729
|
|
|
Other income and expense, net
|
|
|
755
|
|
|
|
338
|
|
|
|
2,173
|
|
|
|
1,101
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes from continuing operations
|
|
|
40,532
|
|
|
|
62,327
|
|
|
|
130,920
|
|
|
|
119,830
|
|
|
Provision for (benefit from) income taxes
|
|
|
7,596
|
|
|
|
(40,357
|
)
|
|
|
36,647
|
|
|
|
(18,795
|
)
|
|
Income from continuing operations
|
|
|
32,936
|
|
|
|
102,684
|
|
|
|
94,273
|
|
|
|
138,625
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(437
|
)
|
|
|
6,012
|
|
|
|
(68
|
)
|
|
|
(5,260
|
)
|
|
Net income
|
|
$
|
32,499
|
|
|
$
|
108,696
|
|
|
$
|
94,205
|
|
|
$
|
133,365
|
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.64
|
|
|
$
|
1.96
|
|
|
$
|
1.81
|
|
|
$
|
2.62
|
|
|
Diluted
|
|
$
|
0.63
|
|
|
$
|
1.93
|
|
|
$
|
1.78
|
|
|
$
|
2.59
|
|
|
Income (loss) from discontinued operations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
0.11
|
|
|
$
|
--
|
|
|
$
|
(0.10
|
)
|
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
0.11
|
|
|
$
|
--
|
|
|
$
|
(0.10
|
)
|
|
Net income:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.63
|
|
|
$
|
2.07
|
|
|
$
|
1.81
|
|
|
$
|
2.52
|
|
|
Diluted
|
|
$
|
0.62
|
|
|
$
|
2.04
|
|
|
$
|
1.78
|
|
|
$
|
2.49
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.20
|
|
|
$
|
0.10
|
|
|
$
|
0.60
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in per share
calculations-basic
|
|
|
51,825
|
|
|
|
52,500
|
|
|
|
52,167
|
|
|
|
52,842
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in per share
calculations-diluted
|
|
|
52,514
|
|
|
|
53,286
|
|
|
|
52,992
|
|
|
|
53,519
|
|
|
|
|
TESSERA TECHNOLOGIES, INC.
|
|
RECONCILIATION TO NON-GAAP INCOME FROM CONTINUING OPERATIONS FROM
GAAP NET INCOME FROM CONTINUING OPERATIONS
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income from continuing operations
|
|
$
|
32,936
|
|
|
$
|
102,684
|
|
|
|
$
|
94,273
|
|
|
$
|
138,625
|
|
|
Adjustments to GAAP net income:
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation - research, development and other related
costs
|
|
|
1,109
|
|
|
|
601
|
|
|
|
|
2,805
|
|
|
|
1,890
|
|
|
Stock-based compensation - selling, general and administrative
|
|
|
1,777
|
|
|
|
2,545
|
|
|
|
|
6,164
|
|
|
|
6,399
|
|
|
Amortization of acquired intangibles
|
|
|
5,186
|
|
|
|
4,599
|
|
|
|
|
14,573
|
|
|
|
13,772
|
|
|
Restructuring, impairment of long-lived assets and other charges
|
|
|
--
|
|
|
|
66
|
|
|
|
|
--
|
|
|
|
1,593
|
|
|
Non-GAAP tax adjustments (1)
|
|
|
(6,162
|
)
|
|
|
(63,426
|
)
|
|
|
|
(11,068
|
)
|
|
|
(68,343
|
)
|
|
Non-GAAP net income from continuing operations
|
|
$
|
34,846
|
|
|
$
|
47,069
|
|
|
|
$
|
106,745
|
|
|
$
|
93,936
|
|
|
Non-GAAP net income from continuing operations per common share -
diluted
|
|
$
|
0.65
|
|
|
$
|
0.87
|
|
|
|
$
|
1.98
|
|
|
$
|
1.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP weighted average number of shares used in per share
calculations excluding the effects of stock-based compensation -
diluted
|
|
|
53,543
|
|
|
|
54,351
|
|
|
|
|
53,981
|
|
|
|
54,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Company has disclosed a GAAP to Non-GAAP tax adjustment in the
periods when the valuation allowance against deferred tax assets is
reversed.
|
|
|
|
EPISODIC AND RECURRING REVENUE
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Episodic
|
|
$
|
1,000
|
|
$
|
46,000
|
|
$
|
30,000
|
|
$
|
112,371
|
|
Recurring
|
|
|
66,426
|
|
|
47,334
|
|
|
181,464
|
|
|
106,512
|
|
Total revenues
|
|
$
|
67,426
|
|
$
|
93,334
|
|
$
|
211,464
|
|
$
|
218,883
|
|
TESSERA TECHNOLOGIES, INC.
|
|
RECONCILIATION FOR GUIDANCE ON
|
|
GAAP TO NON-GAAP EARNINGS PER SHARE
|
|
|
|
|
|
Three Months Ended
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
Low
|
|
High
|
|
Diluted earnings per share - GAAP
|
|
$
|
0.39
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
0.12
|
|
|
|
0.12
|
|
|
Stock based compensation
|
|
|
0.06
|
|
|
|
0.06
|
|
|
Subtotal GAAP adjustments
|
|
|
0.18
|
|
|
|
0.18
|
|
|
|
|
|
|
|
|
Impact of income tax and share count
|
|
|
(0.07
|
)
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
|
Effect on net income
|
|
|
0.11
|
|
|
|
0.11
|
|
|
|
|
|
|
|
|
Diluted earnings per share - non-GAAP
|
|
$
|
0.50
|
|
|
$
|
0.52
|
|
TSRA-E
View source version on businesswire.com: http://www.businesswire.com/news/home/20151103006841/en/
Tessera Technologies, Inc.
Robert Andersen, 408-321-6779
Executive
Vice President and Chief Financial Officer
- or -
The Piacente
Group | Investor Relations
Don Markley, 212-481-2050
tessera@tpg-ir.com
Source: Tessera Technologies, Inc.
News Provided by Acquire Media