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 | ||||||||
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(in thousands) |
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|
(unaudited) |
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| 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 | ||||
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TESSERA TECHNOLOGIES, INC. |
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| 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) |
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| 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 | ||||
