Tessera Technologies Inc. (TSRA) filed Quarterly Report for the period ended 2009-09-30.
Tessera Technologies develops semiconductor packaging technology that meets the demand for miniaturization and increased performance of electronic products. Tessera licenses its technology to its customers enabling them to produce semiconductors that are smaller and faster and incorporate more features. These semiconductors are utilized in a broad range of communications computing and consumer electronic products. Tessera Technologies Inc. has a market cap of $1.06 billion; its shares were traded at around $21.48 with a P/E ratio of 12.6 and P/S ratio of 4.3. Tessera Technologies Inc. had an annual average earning growth of 50.7% over the past 5 years.
Highlight of Business Operations:
Cost of revenues primarily consists of direct compensation, materials, amortization of intangible assets related to acquired technologies, supplies and depreciation expense. Amortization of certain acquired intangible assets was reclassified as a component of cost of revenues from R&D started in the fiscal year of 2009 as revenue was generated from these assets. The amortization of acquired intangible assets as a component of cost of revenues relates primarily to royalty and license fees revenues derived from our imaging and optics technologies. Excluding amortization of acquired intangible assets, cost of revenues relates primarily to product and service revenues. For each associated period, cost of revenues as a percentage of total revenues varies based on the rate of adoption of our imaging and optics technologies, the product and service revenues component of total revenues, and on the mix of product sales to semiconductor optics and communications industries. Cost of revenues for the three months ended September 30, 2009 was $3.9 million, as compared to $4.1 million for the three months ended September 28, 2008, a decrease of $0.2 million, or 5%. Cost of revenues for the nine months ended September 30, 2009 was $11.9 million, as compared to $12.8 million for the nine months ended September 28, 2008, a decrease of $0.9 million, or 7%. The decrease in each period was primarily attributable to the transition of our resources from government funded projects into research and development projects and a decrease in personnel expense, partially offset by increases in amortization of acquired intangible assets and depreciation expense.
R&D costs for the three months ended September 30, 2009 were $16.8 million, an increase of $0.9 million, or 6%, as compared to $15.9 million for the three months ended September 28, 2008. The increase in the three month period was primarily due to increased personnel related and equipment expenses of $1.7 million for increased labor hours spent on various research projects, offset by a decrease in amortization expense of acquired intangible assets of $1.0 million reclassified to cost of revenues as revenue was generated utilizing these assets. R&D costs for the nine months ended September 30, 2009 were $50.3 million, an increase of $5.4 million, or 12%, as compared to $44.9 million for the nine months ended September 28, 2008. The increase in the nine month period was primarily due to increased personnel related and equipment expenses of $5.6 million primarily related to increased labor hours spent on various research projects in line with our research and development strategy, increased stock-based compensation expense of $2.9 million, increased outside services of $1.0 million and increased depreciation expense of $0.6 million related to capital additions. These increases were offset by the one-time charge of $2.5 million occurring in the first quarter of 2008 related to in-process research and development acquired through an acquisition and also by a decrease in amortization expense of acquired intangible assets of $2.8 million reclassified to cost of revenues. R&D headcount decreased from 280 at September 28, 2008 to a total of 269 at September 30, 2009.
Selling, general and administrative (“SG&A”) expenses for the three months ended September 30, 2009 were $19.5 million, an increase of $1.6 million, or 9%, as compared to $17.9 million for the three months ended September 28, 2008. The increase was mainly attributable to increased legal, tax and consulting expenses of $1.1 million related to corporate development activity in pursuit of our ongoing investigations of various businesses and technologies that we might acquire to further our strategic goals, increased amortization and depreciation expense of $0.5 million from acquired intangible assets and capital additions, and increased stock-based compensation expense of $0.3 million, offset by a decrease in travel and entertainment spending of $0.3 million. SG&A expenses for the nine months ended September 30, 2009 were $54.2 million, an increase of $3.4 million, or 7%, as compared to $50.8 million for the nine months ended September 28, 2008. The increase was primarily attributable to an increase of $1.6 million in legal, tax and consulting expenses, $1.2 million in amortization and depreciation expense from acquired intangible assets and capital additions, $0.8 million in facilities expense related to the new corporate headquarters and $0.5 million in stock-based compensation expense.
Litigation Expense. Litigation expense for the three months ended September 30, 2009 was $6.1 million, a decrease of $23.1 million, or 79%, as compared to $29.2 million for the three months ended September 28, 2008. Litigation expense for the nine months ended September 30, 2009 was $20.2 million, a decrease of $46.4 million, or 70%, as compared to $66.6 million for the nine months ended September 28, 2008. The decreases were primarily attributable to a decrease in case activities in our legal proceedings in 2009. Refer to Part II, Item 1—Legal Proceedings for additional details.
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