Good morning. My name is Brandy and I will be your Conference Operator today. At this time I would like to welcome everyone to Tessera Technologies’ Q2 2013 Earnings Conference Call. (Operator instructions.) Thank you. Ms. Moriah Shilton, you may begin your conference.

Thank you, Brandy, and good morning everyone. Thank you for joining us for the call today. This call is also being broadcast live over the internet. I will now read a short Safe Harbor statement. During the course of this conference call management will make a number of forward-looking statements which are statements regarding future events, including the future financial performance of the company. These forward-looking statements 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. You are cautioned not to place undue reliance on the forward-looking statements which speak only as of the date of this call. More information on the factors that may cause results to differ from the projections made in these forward-looking statements can be found in Tessera’s filings with the Securities and Exchange Commission including its Annual Report on Form 10(k) for the year ended December 31, 2012, and its Quarterly Report on Form 10(q) for the quarter ended March 31, 2013, especially in the sections entitled “Risk Factors.” The company disclaims any obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur after this call. Joining me on the call today from management are Tom Lacey, Interim Chief Executive Officer; and John Allen, acting Chief Financial Officer. During this call today management may discuss certain non-GAAP financial measures for comparison purposes only. A non-GAAP allowance of cost of revenues, research and development, selling, general, and administrative expenses, net income, and earnings per share do not include the following: discontinued operations, stock-based compensation expense, acquired intangibles’ amortization charges, charges for acquired in-process research and development, impairment charges on long-lived assets and goodwill, restructuring and other related exit costs and related tax effects. After management’s opening remarks we will open the call to your questions. I would now like to turn the call over to Tom.

Moriah, thanks a lot and good morning. Good morning to all and thanks for your interest in Tessera and for joining us on the call. Given that there have been a number of changes at the company I’m very pleased to have the opportunity to share my initial observations, to provide an update on my initial priorities for the company, an update on our DOC business unit, longer-term growth opportunities, and our views regarding the recently-proposed reforms to the patent system. First, let me share my observations after two months with the company. Number one, market opportunity for Tessera is substantial. Our people, innovation capabilities of our peak portfolios, uncollected episodic revenue and balance sheet are a strong collection of assets to expand on the success of our company. Number two, regarding our new Board: despite an at times heated proxy contest the new Board immediately put the proxy contest in the rearview mirror and began focusing entirely on the best interests of all stockholders. The new Board is a unified team and is focused on driving improved performance and results for the company. Number three, regarding our employees. Via one-on-ones, group meetings and online employee surveys I have spoken to and communicated to literally hundreds and hundreds of our employees. First of all, despite the turmoil at the company there are many extremely talented and dedicated employees who are passionate about both the company today and its future. The employee have welcomed an overall strong leadership tone at the top and are keen to look forward, not backwards, and to focus on the opportunities ahead. Number four, turning to my direct staff and the company’s structure I have made several changes to improve the overall efficiency of the company and the executive teamwork and collaboration; and have begun to…

Thank you, Tom. Before I begin my discussion of our financial results I want to briefly discuss changes in our financial presentation made in Q2 to classify certain activities as discontinued operations. As you may recall we announced in March of this year that we’re restructuring our DigitalOptics segment to focus our strategy on our MEMS-related technologies where we have proprietary assembly technology and expertise. And we are partnering with third-party manufacturers to produce other components of [full] camera module. As part of this restructuring we closed our Zhuhai camera module assembly facility. Revenue and expenses related to the Zhuhai facility are therefore classified as discontinued operations starting with Q2 2013, and also reclassified to discontinued operations for all prior periods. You may also recall in Q4 2012 as part of our overall DigitalOptics restructuring efforts we announced that we were exploring strategic alternatives for our DOC business located in Charlotte, North Carolina. We have determined this site is no longer part of our long-term strategy for the DOC business and we are actively pursuing a sale of this business. We have therefore classified our Charlotte operation as discontinued operations during Q2. Our discontinued operations relate so our DOC segment. I will separate continuing from discontinued operations in my discussion of our financial results. And now on to the financials. Total revenue for Q2 2013 was $49.3 million, with revenue from continuing operations of $46.6 million and revenue from discontinued operations of $2.7 million. Intellectual property total revenue was $42.9 million and included $18.9 million in episodic revenue in Q2. Compared to Q1 2013, intellectual property revenue was up $17.2 million. The primary components of this increase were increased episodic revenue and increased recurring royalties from our initial quarter under the new licensing agreements with SK Hynix. In comparison to…

Hey John, thank you very much. Well done! Before I turn the call back over to Brandy for Q&A, given the importance of our episodic revenue I want to provide a high level summary of the cases with trial dates in the next 18 months. Please understand for legal and commercial reasons John and I aren’t able to provide additional details on these cases beyond the summary. We have one case with a current trial date in 2013, what we refer to as the Sony Audit case; and four with trial dates in 2014 – the Susman arbitration, PTI, Renesas and the remaining parties in the AMD Consolidated cases. In the Amkor arbitration we are looking forward to the ICC issuing a final damages award after their partial award in the July 5, 2013, ruling on validity and infringement and finding that Amkor owes significant royalties. Since then the parties have engaged in further damages briefing and damages discovery, and that process will end in the next few months. We still cannot yet give a definitive date on when the ICC’s final damage award will be issued. In the AMD Consolidated cases in the Northern District of California, four defendants have already settled – AMD, AGI Expansions, [Fill and ShipPac] – and five defendants remain, that’s [ASD, Chip Moss, SC Micro], Qualcomm, and [Free Scale]. The case is currently scheduled for trial in August, 2014. In the PTI case there has been increased activity lately in terms of discovery and expert reports. We believe PTI’s purported termination of this agreement in June, 2012, was improper and that we are owed significant back royalties. The case is set for trial in April, 2014. In the Sony Audit case we believe we are owed significant back royalties. The case is set for trial in October, 2013. This ends our prepared remarks. I’d like to turn the call over to Brandy for any Q&A.

(Operator instructions.) Your first question comes from the line of Krish Sankar with Bank of America. Krishi Sankar – Bank of America: Hi, thanks for taking my questions. I have a few of them, Tom. So first and foremost in your guidance for IP, so that is all the recurring revenue and there’s no other episodic revenue in the guidance so $30 million to $33 million, right?

Hi Krish, this is John. The guidance would be for a combination of recurring and episodic revenue but we do not split out what the breakage is between the recurring and the episodic within the guidance. Krishi Sankar – Bank of America: Okay, so the $30 million to $33 million for Q3 includes both recurring and episodic.

That’s correct. Krishi Sankar – Bank of America: And so it is fair to assume that on the last earnings call, Rick mentioned it’s possible you have $200 million in episodic revenue over the next four quarters. Is it fair to assumet hat is off the table at this point or…

No, quite the opposite. As I indicated in my prepared statements we are not continuing to give specific guidance on the episodic on a quarter-over-quarter basis, but nothing has changed about our views of the opportunity we have from those episodic revenue cases that are out there . What we’re trying to get away from is giving guidance that might be actually hindering our ability to negotiate effectively with our customers if we put out specific guidance that can put us at a bit of a disadvantage in those discussions. Further these are cases that don’t necessarily usually fall within a given quarter. We want to settle these things in the best way; not in a fashion that is driving us to try to solve them within a particular quarter.

Krish, it’s Tom. The thinking here is that it can put us, as John mentioned it can put us in the negotiation potentially at a disadvantage. If we publicly state that we’re going to collect X, Y, or Z in a given quarter and we’re in active negotiations with that particular party or parties, it’s fundamentally playing a game of cards where they see what our four cards are. But there’s every intent to continue to be as transparent as possible. Krishi Sankar – Bank of America: Got it, alright. And then you guys have definitely done a good job in cost reduction on the DOC side, and it’s gone down dramatically. But I did notice that the OPEX on the IP side went up. I’m just kind of curious what drove it?

On a quarter-over-quarter basis, the one main driver in Q2 is we did have fees related to proxy contests, a little over $3 million. Those would not be recurring on a going forward basis. There are other investments we see making in particular as we review some of the patent activities we have going forward in Q3 that can raise certain costs, but there certainly is an ongoing effort to manage and reduce the costs. Krishi Sankar – Bank of America: Got it, alright. Fair enough. And then the reduction in DOC, the OPEX, is it all primarily from the Zhuhai facility? It came down from about $54 million in Q1 to almost $27 million in Q2 – is it all coming from the Zhuhai facility or is there something else going on?

It’s more than the Zhuhai facility. Remember that we had to close Tel Aviv back beginning in Q4 and further into Q1, so we have all the costs behind us related to that. Clearly the Zhuhai activities contribute to the cost reductions but there has been an effort to make cost containment efforts in a variety of places. Krishi Sankar – Bank of America: Got it, alright. And just a final question. Back to the IP revenue guidance, I know you don’t want to break it between recurring and episodic but is recurring going to grow sequentially or is it going to be down sequentially?

Let me think, if I do that math there’s two numbers, right? [laughter] I would stick with the guidance right now, Krish, what we said about what we see as the opportunity of episodic over time. We still have a strong opportunity there. We will continue pursuing that as well as continuing to pursue the relicensing opportunities that can make a substantial impact on the recurring revenue going forward. Krishi Sankar – Bank of America: Got it, alright. Thank you guys.

Thank you, Krish.

(Operator instructions.) There are no other questions at this time. I’ll now turn the floor back over to Tom for any closing comments.

Hey Brandy, thanks a lot, and thanks everybody for joining, both live and those of you listening after the fact. I did want to thank all of you for your interest in Tessera in joining us live or via recording. As I mentioned at the start of the call, we’re very optimistic about the market opportunities and future for Tessera. We have a number of passionate, dedicated and very talented employees who are focused on our top priorities. Our innovation capability remains core to our company, our customers, our partners as we work towards receiving their value for our innovations and intellectual property. Thanks again.

Thank you. That concludes today’s conference. You may now disconnect.