Tessera Technologies Announces Second Quarter 2008 Results

- Second Quarter 2008 Royalty and License Fees of $49.9 Million
Grew 37 Percent Versus Prior Year Quarter -

- Third Quarter Royalty and License Fees Expected to Range Between
$55 Million and $57 Million -
SAN JOSE, Calif.--(Business Wire)--
Tessera Technologies, Inc. (Nasdaq:TSRA), a leading provider of
miniaturization technologies for the electronics industry, announced
its results for the second quarter ended June 30, 2008.

Revenue Highlights: Second Quarter 2008

-- Total revenue was $56.3 million.

-- Royalty and license fees were $49.9 million.

-- Product and service revenue was $6.4 million.

Generally accepted accounting principles (GAAP) net income for the
second quarter of 2008 was $84,000, or $0.00 per diluted share, and
included non-cash charges of $5.8 million for stock-based compensation
and $2.9 million for amortization of acquired intangibles.

Non-GAAP net income for the second quarter of 2008 was $9.1
million, or $0.18 per diluted share. Non-GAAP net income and operating
expenses are defined as income and operating expenses adjusted for
non-cash tax expense, acquired intangibles amortization charges,
charges for acquired in-process research and development, and
stock-based compensation. Non-GAAP net income per share equals
non-GAAP net income divided by the non-GAAP weighted diluted share
count as of that period end.

"The significant year-over-year growth in our high margin,
recurring royalties highlights the fundamental strength of our
business," said Bruce McWilliams, chairman, president and CEO for
Tessera. "In the second half of 2008, we expect to build on the
traction gained in our Consumer Imaging business, as illustrated by
the new license agreement with Samsung. Long-term, we are well
positioned for strong growth in our business of providing high-value
electronics and consumer technologies critical to the realization of
advanced wireless, consumer and computing products."

Revenue Highlights: Six-month Period Ended June 30, 2008

-- Total revenue was $115.7 million.

-- Royalty and license fees were $100.2 million.

-- Product and service revenue was $15.5 million.

GAAP net income for the six-month period was $2.3 million, or
$0.05 per diluted share. Non-GAAP net income for the six-month period
was $25.2 million, or $0.51 per diluted share.

Third Quarter 2008 Financial Guidance

Tessera expects third quarter total revenue to be within the range
of $62 million to $64 million. Royalty and license fees are expected
to range between $55 million and $57 million. Product and service
revenue is expected to be approximately $7 million.

"We believe our royalty and license fees will increase
significantly in the third quarter of 2008 due to solid unit growth in
our core end markets of DRAM and wireless, and catch-up royalty
payments that will be recognized in the third quarter," stated Charlie
Webster, CFO for Tessera. "These catch-up payments are the result of
royalty self-audits by several of our customers, including licensed
subcontractors. The self-audits were conducted at the request of some
of the respondents in our current litigations and are an encouraging
indicator of the progress of our litigation efforts."

Non-GAAP operating expenses for the third quarter of 2008 are
projected to range between $29 million to $30 million, excluding
litigation expenses.

As per company policy, quarterly guidance does not include
settlements from the company's current enforcement actions.

Conference Call Information

Tessera Technologies will hold its second quarter 2008 earnings
conference call at 1:30 P.M. Pacific (4:30 P.M. Eastern) on Thursday,
July 31, 2008. To access the call in the U.S., please dial
866-531-1286 and for international callers, dial 706-643-3789
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 2 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 55789231.

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 acquired intangibles
amortization charges, acquired in-process research and development,
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, 2007 and its Quarterly Report on Form 10-Q for
the quarter ended March 30, 2008, include more information about
factors that could affect the company's financial results.

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TESSERA TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
(in thousands, except per share amounts)
----------------------------------------------------------------------
(unaudited)
----------------------------------------------------------------------

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 (1) 2008 2007 (1)
-------- --------- -------- --------
Revenues:
Royalty and license fees $ 49,944 $ 36,290 $100,184 $73,746
Past production payments - - - -
Product and service revenues $ 6,370 $ 10,385 $ 15,481 $19,748
-------- --------- -------- --------
Total revenues 56,314 46,675 115,665 93,494
-------- --------- -------- --------
Operating expenses:
Cost of revenues 4,395 5,612 8,727 10,314
Research, development and other
related costs 14,894 8,833 29,047 17,186
Selling, general and
administrative 34,742 17,789 70,259 33,943
-------- --------- -------- --------
Total operating expenses 54,031 32,234 108,033 61,443
-------- --------- -------- --------
Operating income 2,283 14,441 7,632 32,051
Interest and other income, net 1,479 2,848 4,313 5,606
-------- --------- -------- --------
Income before taxes 3,762 17,289 11,945 37,657
Provision for income taxes 3,678 7,429 9,635 16,703
-------- --------- -------- --------
Net income $ 84 $ 9,860 $ 2,310 $20,954
======== ========= ======== ========
Basic and diluted net income per
share:

Net income per share - basic $ 0.00 $ 0.21 $ 0.05 $ 0.44
======== ========= ======== ========
Net income per share - diluted $ 0.00 $ 0.20 $ 0.05 $ 0.43
======== ========= ======== ========
Weighted average number of
shares used in per share
calculations - basic 47,793 47,424 47,973 47,178
======== ========= ======== ========
Weighted average number of
shares used in per share
calculations - diluted 48,225 48,977 48,424 48,770
======== ========= ======== ========

(1) Certain prior year amounts have been reclassified to conform to
current year presentation in the Consolidated Statements of
Operations.
*T

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TESSERA TECHNOLOGIES, INC.

SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA
----------------------------------------------------------------------
(in thousands)
(unaudited)

Three Months Six Months
Ended Ended
June 30, June 30,
2008 2007 2008 2007
------- ------- ------- -------

Non-cash income tax expense $ 272 $ 4,937 $ 4,812 $13,407
Stock-based compensation - cost of
revenues $ 148 $ 747 $ 253 $ 1,297
Stock-based compensation - research,
development and other related costs $ 1,703 $ 611 $ 3,114 $ 1,119
Stock-based compensation - selling,
general and administrative $ 3,943 $ 3,789 $ 6,920 $ 6,412
Amortization of acquired intangibles -
cost of revenues $ 766 $ 422 $ 1,360 $ 844
Amortization of acquired intangibles -
research, development and other
related costs $ 1,677 $ 1,265 $ 3,100 $ 1,942
Amortization of acquired intangibles -
selling, general and administration $ 460 $ 202 $ 790 $ 404
Acquired in-process research &
development charge $ - $ - $ 2,500 $ -

Weighted average number of shares used
in per share calculations excluding
the effects of 123R - diluted 48,980 49,003 49,235 48,855
*T

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TESSERA TECHNOLOGIES, INC.

CONSOLIDATED SUMMARY BALANCE SHEET INFORMATION
----------------------------------------------------------------------
(in thousands)

June 30, December 31,
2008 2007(a)
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 175,142 $ 207,158
Short-term investments 69,111 82,566
Accounts receivable, net 11,830 13,464
Inventories 1,718 1,817
Deferred tax assets 5,680 5,291
Other current assets 3,711 3,544
------------ ------------
Total current assets 267,192 313,840

Property and equipment, net 29,859 29,443
Intangible assets, net 75,137 51,336
Goodwill 42,732 35,489
Deferred tax assets 14,919 12,937
Long-term investments 31,697 -
Other assets 5,806 1,391
------------ ------------
Total assets $ 467,342 $ 444,436
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,841 $ 2,301
Accrued legal fees 10,621 4,789
Accrued liabilities 10,712 9,532
Deferred revenue 696 469
Income tax payable 2,343 1,274
------------ ------------
Total current liabilities 27,213 18,365
------------ ------------

Deferred tax liabilities 10,934 7,747
Other long-term liabilities 1,178 -

Stockholders' equity:
Common stock 48 48
Additional paid-in capital 331,915 313,387
Treasury stock (10,505) (544)
Accumulated other comprehensive loss (1,678) (494)
Retained earnings 108,237 105,927
------------ ------------
Total stockholders' equity 428,017 418,324
------------ ------------

Total liabilities and stockholders'
equity $ 467,342 $ 444,436
============ ============

(a) Derived from audited financial statements
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TESSERA TECHNOLOGIES, INC.

RECONCILIATION TO NON-GAAP INCOME FROM GAAP NET INCOME
----------------------------------------------------------------------
(in thousands, except per share amounts)
(unaudited)

Three Months Ended June 30, 2008

Amortization
Stock-based of Acquired
GAAP Compensation Intangibles
------- ------------- -------------

Revenues:
Royalty and license fees $49,944
Past production payments -
Product and service revenues 6,370
-------
Total revenues 56,314
-------
Operating expenses:
Cost of revenues 4,395 (148) (766)
Research, development and other
related costs 14,894 (1,703) (1,677)
Selling, general and
administrative 34,742 (3,943) (460)
------- ------------- -------------
Total operating expenses 54,031 (5,794) (2,903)
------- ------------- -------------
Operating income 2,283 5,794 2,903
Interest and other income, net 1,479
------- ------------- -------------
Income before taxes 3,762 5,794 2,903
Provision for income taxes 3,678
------- ------------- -------------
Net income $ 84 $ 5,794 $ 2,903
======= ============= =============
Basic and diluted net income per
share:
Net income per share - basic $ 0.00
=======
Net income per share - diluted $ 0.00
=======

Weighted average number of
shares used in per share
calculations - basic 47,793
=======

Weighted average number of
shares used in per share
calculations - diluted 48,225
=======

Three Months Ended June 30, 2008

Acquired In-
process
Non-cash Research & Non-GAAP,
Tax Development as
Expense Charge adjusted
-------- ------------ ---------

Revenues:
Royalty and license fees $ 49,944
Past production payments -
Product and service revenues 6,370
---------
Total revenues 56,314
---------
Operating expenses:
Cost of revenues 3,481
Research, development and other
related costs - 11,514
Selling, general and
administrative 30,339
-------- ------------ ---------
Total operating expenses - - 45,334
-------- ------------ ---------
Operating income - - 10,980
Interest and other income, net 1,479
-------- ------------ ---------
Income before taxes - - 12,459
Provision for income taxes (272) 3,406
-------- ------------ ---------
Net income $ 272 $ - $ 9,053
======== ============ =========
Basic and diluted net income per
share:
Net income per share - basic
Net income per share - diluted $ 0.18
=========

Weighted average number of
shares used in per share
calculations - basic

Weighted average number of
shares used in per share
calculations - diluted 48,980(a)
=========

(a) Excludes the effects of 123(R)

Three Months Ended June 30, 2007

Amortization
GAAP Stock-based of Acquired
(1) Compensation Intangibles
------- ------------- -------------

Revenues:
Royalty and license fees $36,290
Past production payments -
Product and service revenues 10,385
-------
Total revenues 46,675
-------
Operating expenses:
Cost of revenues 5,612 (747) (422)
Research, development and other
related costs 8,833 (611) (1,265)
Selling, general and
administrative 17,789 (3,789) (202)
------- ------------- -------------
Total operating expenses 32,234 (5,147) (1,889)
------- ------------- -------------
Operating income 14,441 5,147 1,889
Interest and other income, net 2,848
------- ------------- -------------
Income before taxes 17,289 5,147 1,889
Provision for income taxes 7,429
------- ------------- -------------
Net income $ 9,860 $ 5,147 $ 1,889
======= ============= =============
Basic and diluted net income per
share:
Net income per share - basic $ 0.21
=======
Net income per share - diluted $ 0.20
=======

Weighted average number of
shares used in per share
calculations - basic 47,424
=======

Weighted average number of
shares used in per share
calculations - diluted 48,977
=======

Three Months Ended June 30, 2007

Acquired In-
process
Non-cash Research & Non-GAAP,
Tax Development as
Expense Charge adjusted
-------- ------------ ---------

Revenues:
Royalty and license fees $ 36,290
Past production payments -
Product and service revenues 10,385
---------
Total revenues 46,675
---------
Operating expenses:
Cost of revenues 4,443
Research, development and other
related costs 6,957
Selling, general and
administrative 13,798
-------- ------------ ---------
Total operating expenses - - 25,198
-------- ------------ ---------
Operating income - - 21,477
Interest and other income, net 2,848
-------- ------------ ---------
Income before taxes - - 24,325
Provision for income taxes (4,937) 2,492
-------- ------------ ---------
Net income $ 4,937 $ - $ 21,833
======== ============ =========
Basic and diluted net income per
share:
Net income per share - basic
Net income per share - diluted $ 0.45
=========

Weighted average number of
shares used in per share
calculations - basic

Weighted average number of
shares used in per share
calculations - diluted 49,003(a)
=========

(a) Excludes the effects of 123(R)

(1) Certain prior year amounts have been reclassified to conform to
current year presentation in the Consolidated Statements of
Operations.
*T

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TESSERA TECHNOLOGIES, INC.

RECONCILIATION TO NON-GAAP INCOME FROM GAAP NET INCOME
----------------------------------------------------------------------
(in thousands, except per share amounts)
(unaudited)

Six Months Ended June 30, 2008

Amortization
Stock-based of Acquired
GAAP Compensation Intangibles
-------- ------------- -------------

Revenues:
Royalty and license fees $100,184
Past production payments -
Product and service revenues 15,481
--------
Total revenues 115,665
--------
Operating expenses:
Cost of revenues 8,727 (253) (1,360)
Research, development and other
related costs 29,047 (3,114) (3,100)
Selling, general and
administrative 70,259 (6,920) (790)
-------- ------------- -------------
Total operating expenses 108,033 (10,287) (5,250)
-------- ------------- -------------
Operating income 7,632 10,287 5,250
Interest and other income, net 4,313
-------- ------------- -------------
Income before taxes 11,945 10,287 5,250
Provision for income taxes 9,635
-------- ------------- -------------
Net income $ 2,310 $ 10,287 $ 5,250
======== ============= =============
Basic and diluted net income per
share:
Net income per share - basic $ 0.05
========
Net income per share - diluted $ 0.05
========

Weighted average number of
shares used in per share
calculations - basic 47,973
========

Weighted average number of
shares used in per share
calculations - diluted 48,424
========

Six Months Ended June 30, 2008

Acquired In-
process
Non-cash Research & Non-GAAP,
Tax Development as
Expense Charge adjusted
-------- ------------ ---------

Revenues:
Royalty and license fees $ 100,184
Past production payments -
Product and service revenues 15,481
---------
Total revenues 115,665
---------
Operating expenses:
Cost of revenues 7,114
Research, development and other
related costs (2,500) 20,333
Selling, general and
administrative 62,549
-------- ------------ ---------
Total operating expenses - (2,500) 89,996
-------- ------------ ---------
Operating income - 2,500 25,669
Interest and other income, net 4,313
-------- ------------ ---------
Income before taxes - 2,500 29,982
Provision for income taxes (4,812) 4,823
-------- ------------ ---------
Net income $ 4,812 $ 2,500 $ 25,159
======== ============ =========
Basic and diluted net income per
share:
Net income per share - basic
Net income per share - diluted $ 0.51
=========

Weighted average number of
shares used in per share
calculations - basic

Weighted average number of
shares used in per share
calculations - diluted 49,235(a)
=========

(a) Excludes the effects of 123(R)

Six Months Ended June 30, 2007

Amortization
GAAP Stock-based of Acquired
(1) Compensation Intangibles
------- ------------- -------------

Revenues:
Royalty and license fees $73,746
Past production payments -
Product and service revenues 19,748
-------
Total revenues 93,494
-------
Operating expenses:
Cost of revenues 10,314 (1,297) (844)
Research, development and other
related costs 17,186 (1,119) (1,942)
Selling, general and
administrative 33,943 (6,412) (404)
------- ------------- -------------
Total operating expenses 61,443 (8,828) (3,190)
------- ------------- -------------
Operating income 32,051 8,828 3,190
Interest and other income, net 5,606
------- ------------- -------------
Income before taxes 37,657 8,828 3,190
Provision for income taxes 16,703
------- ------------- -------------
Net income $20,954 $ 8,828 $ 3,190
======= ============= =============
Basic and diluted net income per
share:
Net income per share - basic $ 0.44
=======
Net income per share - diluted $ 0.43
=======

Weighted average number of
shares used in per share
calculations - basic 47,178
=======

Weighted average number of
shares used in per share
calculations - diluted 48,770
=======

Six Months Ended June 30, 2007

Acquired In-
process
Non-cash Research & Non-GAAP,
Tax Development as
Expense Charge adjusted
--------- ------------ ---------

Revenues:
Royalty and license fees $ 73,746
Past production payments -
Product and service revenues 19,748
---------
Total revenues 93,494
---------
Operating expenses:
Cost of revenues 8,173
Research, development and other
related costs - 14,125
Selling, general and
administrative 27,127
--------- ------------ ---------
Total operating expenses - - 49,425
--------- ------------ ---------
Operating income - - 44,069
Interest and other income, net 5,606
--------- ------------ ---------
Income before taxes - - 49,675
Provision for income taxes (13,407) 3,296
--------- ------------ ---------
Net income $ 13,407 $ - $ 46,379
========= ============ =========
Basic and diluted net income per
share:
Net income per share - basic
Net income per share - diluted $ 0.95
=========

Weighted average number of
shares used in per share
calculations - basic

Weighted average number of
shares used in per share
calculations - diluted 48,855(a)
=========

(a) Excludes the effects of 123(R)

(1) Certain prior year amounts have been reclassified to conform to
current year presentation in the Consolidated Statements of
Operations.
*T

Tessera Technologies, Inc.
Charlie Webster, 408-894-0700
Chief Financial Officer
Moriah Shilton, 408-952-4356
Director, Investor Relations

Copyright Business Wire 2008