Tessera Technologies Announces First Quarter 2005 Results; Total Reven

Tessera Technologies Announces First Quarter 2005 Results; Total Revenue Grew 113 Percent Compared to First Quarter 2004

    Business Editors/High-Tech Writers

    SAN JOSE, Calif.--(BUSINESS WIRE)--April 21, 2005--Tessera Technologies, Inc. (Nasdaq:TSRA), a leading provider of miniaturization technologies for the electronics industry, announced today its financial results for the quarter ended March 31, 2005.

    Highlights: First Quarter 2005 Compared to First Quarter 2004

--	Total revenue was $27.9 million, up 113 percent.
--	Total intellectual property revenue was $24.1 million, up 122 percent.
--	Services revenue was $3.8 million, up 67 percent.
--	Net income was $11.9 million, up 191 percent.

    Pro forma net income for the first quarter of 2005 was $17.1 million and pro forma net income per diluted share was $0.36. Pro forma net income is defined as income adjusted for non-cash tax expense and stock-based compensation. Earnings per share for the first quarter 2005 on a GAAP basis were $0.25.
    Bruce McWilliams, Tessera's chairman and chief executive officer, stated, "Our strong first quarter results were driven by the continued adoption of our technologies by the world's leading semiconductor companies. Our solid performance also reflects our ability to continue to expand our customer base, as evidenced by our new licensing agreement with Fujitsu and our expanded agreement with Samsung. Earlier this month, we also signed an expanded agreement with Hynix, the world's second largest DRAM manufacturer."
    McWilliams continued, "We continue to execute on all aspects of our business and are committed to driving our growth in the years ahead. To this end, we recently announced the formation of three groups at Tessera: the Advanced Semiconductor Packaging Group, the Emerging Markets & Technologies Group, and the Product Miniaturization Division."
    From time to time, Tessera may enter into litigation to ensure the company is fairly compensated for the use of its technology. On March 1st, Tessera filed a patent infringement suit against Infineon Technologies AG and Micron Technology, Inc., and on April 14th, Tessera amended this suit to include claims for violations of antitrust law and illegal business interference. Tessera is confident in its position and believes that this course of action is important for the company and its shareholders.
    "We ended the first quarter with cash and cash equivalents of $127.1 million, compared to $108.3 million at the end of the prior quarter," said Doug Norby, senior vice president and chief financial officer. "As Tessera remains a healthy and growing business, we are taking proactive steps to protect our patent portfolio. We are projecting litigation expenses to be approximately $1.7 million in the second quarter 2005 and $9.5 million for the full year 2005. We believe our recent legal actions and related expenses are sound, strategic investments that clearly are in the best interest of our shareholders."

    2005 Financial Guidance

    Tessera expects second quarter 2005 total revenues to be in the range from $16.5 million to $17.0 million. Expenses, which include cost of revenue, R&D, and SG&A are expected to be in the range of $10.7 million to $11.0 million. The book-tax rate is projected to be 36 percent with cash taxes paid ranging from 3 percent to 4 percent of revenue during this second quarter. Tessera estimates a fully diluted share count, using the treasury method, of approximately 48 million in the second quarter 2005 as compared to approximately 47.7 million in the first quarter of 2005.
    Norby continued, "Examination of financial performance in time periods longer than one quarter can be useful as this smooths out variations caused by the timing of new licenses. Using the mid-point of this second quarter guidance range, plus our actual first quarter 2005 results, our revenues for the six-months ended June 30, 2005 are projected to be $44.6 million and our expenses for the same time period are projected to be $20.6 million. As compared to the six-months ended June 30, 2004, this represents a 45 percent growth in revenue while expenses grew by 21 percent."
    For the full year 2005, Tessera expects total revenues to be in the range of $89 million to $91 million. Expenses, which include cost of revenue, R&D, and SG&A are projected to be in the range of $46 million to $47 million. This reflects a $5.5 million increase in litigation expense. The company's book-tax rate is projected to be 36 percent of pre-tax income with cash taxes paid ranging from 3 percent to 4 percent of revenue for the year as a whole. Diluted share count for the year as a whole are projected to be 48.2 million.

    Conference Call Information

    Tessera will host an investor conference call today at 1:30 P.M. Pacific (4:30 P.M. Eastern). The call will be accessible live by dialing 877-866-5534, or 706-679-0753 for international callers, approximately 10 minutes prior to the start of the conference call. A 48-hour replay will be available by dialing 800-642-1687 or 706-645-9291 for international callers. Enter access code 5316303. The call will also be simultaneously webcast and available on Tessera's web site at http://www.tessera.com and will remain posted on the web site for a period of 90 days.

    About Tessera Technologies, Inc.

    Tessera Technologies, through its wholly-owned subsidiary Tessera, Inc., 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, 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, 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 Ended March 31, March 31, 2005 2004 ------------ ------------ Revenues: Intellectual property revenues $11,833 $8,896 Other intellectual property revenues 12,310 1,974 Service revenues 3,756 2,251 ------------ ------------ Total revenues 27,899 13,121 ------------ ------------ Operating expenses: Cost of revenues 2,963 1,850 Research and development 1,505 2,221 Selling, general and administrative 5,164 4,212 Stock-based compensation 134 125 ------------ ------------ Total operating expenses 9,766 8,408 ------------ ------------ Operating income 18,133 4,713 Other income, net 587 109 ------------ ------------ Income before taxes 18,720 4,822 Income tax provision 6,777 723 ------------ ------------ Net income attributable to common stockholders $11,943 $4,099 ============ ============ Basic and diluted net income per share attributable to common stockholders: Net income per common share; basic $0.28 $0.11 ============ ============ Net income per common share; diluted $0.25 $0.09 ============ ============ Weighted average number of shares used in per share calculations; basic 42,873 38,465 ============ ============ Weighted average number of shares used in per share calculations; diluted 47,689 45,904 ============ ============

-------- (1) Operating expense line item detail excludes stock-based compensation, as follows:

Research and development $24 $31 Selling, general and administrative 110 94 ------------ ------------ Total $134 $125 ============ ============

SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA (in thousands) (unaudited)

Non-cash income tax expense $5,035 $723

TESSERA TECHNOLOGIES, INC. CONSOLIDATED SUMMARY BALANCE SHEET INFORMATION (In thousands)

March 31, December 31, 2005 2004 ------------ ------------ (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $127,127 $108,339 Accounts receivable 4,781 3,263 Other current assets 12,087 16,475 ------------ ------------ Total current assets 143,995 128,077

Property and equipment, net 3,345 2,484 Other assets 9,139 9,121 ------------ ------------ Total assets $156,479 $139,682 ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,360 $984 Accrued liabilities 2,942 3,615 Deferred revenue 55 107 ------------ ------------ Total current liabilities 4,357 4,706 ------------ ------------

Stockholders' equity:

Common Stock 43 42 Additional paid-in capital 172,671 167,359 Deferred stock-based compensation (524) (414) Accumulated deficit (20,068) (32,011) ------------ ------------ Total stockholders' equity 152,122 134,976 ------------ ------------

Total liabilities and stockholders' equity $156,479 $139,682 ============ ============

TESSERA TECHNOLOGIES, INC. RECONCILIATION OF PRO FORMA NET INCOME TO NET INCOME (In thousands) (unaudited)

Three Months Ended March 31, March 31, 2005 2004 ------------ ------------

Pro forma net income $17,112 $4,947

Less: Stock-based compensation 134 125 Non-cash income tax expense 5,035 723

------------ ------------ Net income, as reported $11,943 $4,099 ============ ============

Pro forma net income per common share; diluted $0.36 $0.11 ============ ============ Weighted average number of shares used in per share calculations; diluted 47,689 45,904 ============ ============

--30--JC/sf*

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 Moriah Shilton, 415-433-3777 (Investor Relations) Moriah@lhai-sf.com Kirsten Chapman, 415-433-3777 (Investor Relations)

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: HARDWARE TELECOMMUNICATIONS EARNINGS CONFERENCE CALLS SOURCE: Tessera Technologies, Inc.

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