Good morning, ladies and gentlemen. My name is Monsirat and I will be your Conference Operator today. At this time, I would like to welcome everyone to the Tessera Technologies’ Third Quarter 2013 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. Following the speakers’ remarks there will be a question-and-answer session. (Operator Instructions) I’d now like to turn this call over to today’s host, Ms. Moriah Shilton. Ma’am, the floor is yours.

Thank you, Monsirat, 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 about 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 September 30, 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. On the call today for 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. The non-GAAP amounts of cost of revenues, research and development, selling, general, and administrative expenses, net income or loss, and earnings per share or loss 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. Now with that I would turn the call over to Tom.

Moriah, thanks a lot. Hey, good morning to all. During the quarter we had the opportunity to speak to many stockholders and potential investors and we thank you for your support and interest in Tessera and for joining us on our third quarter results conference call today whether it’s live, I know many will listen via recording. I’m pleased to provide an update on our progress against the key milestones and priorities highlighted during last quarter’s conference call, which will include an update on our intellectual property and our DigitalOptics service, we refer to the DOC businesses. We are making excellent progress against virtually all key milestones and priorities. As a reminder, our short-term priorities remain relicensing DRAM companies, rationalizing our DOC strategy and stabilizing the organization. As I mentioned, we have implemented a partner-first approach to intellectual properties licensing discussions where we aim to have a value-for-value exchange negotiations at the right organizational level with our partners and customers. We are currently engaged in negotiations at the corporate levels with both Samsung and Micron and are making solid progress on each. We have had a number of in-depth discussions, meetings and calls with each it remains our intent and goal that we reach agreement with each of these important customers by year-end. If we are unable to reach agreement by year-end litigation, of course, remains an option as I mentioned previously it is our intent to use litigation as a tool not as a strategy, a tool to be used when we can’t reach an agreement through negotiations. Even if we have to resort to litigation we continue to remain open to settlements with our counter parties. This in fact was evidenced last week as we were able to avoid a costly trial and reach a settlement with Sony.…

Thanks Tom. Total revenues from continuing operations for the third quarter of 2013 was $37.3 million. Intellectual property total revenue was $32.3 million and included $9.5 million in episodic revenue in the third quarter of 2013. Compared to the second quarter, intellectual property revenue was down $10.5 million primarily due to decreased episodic revenue. In comparison to the prior year, intellectual property revenue was down $25.5 million primarily due to the absence of royalty revenue in this year’s quarter for Micron and PTI. DigitalOptics total revenue from continuing operations for the third quarter of 2013 was $4.9 million compared to $3.7 million in the second quarter of 2013. The increase was due primarily to sequentially higher revenues from our image enhancement technologies including a one-time fee recognized in the quarter. In comparison to the prior year, third quarter 2013 DOC revenue from continuing operations was up $2.4 million, the increase was due primarily to higher revenues from our image enhancement technologies. DigitalOptics revenue from discontinued operations was $1.2 million in the third quarter of 2013 – related to products and services sold from our Charlotte facility. Total GAAP operating expenses from continuing operations in the third quarter of 2013 was $56.2 million as follows; cost of revenues was $850,000, operating fees $20.9 million, SG&A $17.4 million, litigation expense $12.7 million and restructuring impairment along with the assets and other charges was $4.4 million was about $1 million of this expense line representing cash expenditures. We took a $3.4 million impairment charge related to our Charlotte plant building and clean room which was not anticipated when we gave third quarter guidance. Our GAAP operating expenses include amortization of acquired intangibles of $5.2 million and stock-based compensation expense of $2.7 million. Third quarter total GAAP operating expenses from continuing operations were lower…

John, well done. Before Q&A, let me give a brief update on patent reform. Before I get into specifics, I’d like to make a few points on this somewhat complicated matter. We believe in and strong support from patent system, the U.S. patent system candidly as made our innovative industry as envy of the world. Tessera’s business is invention plus licensing business, model embraced by company companies such as Dolby and universities like Stanford, Cal and others. That license their technology for others to commercialize rather than build product themselves. Point three, however, there are any entities out there making frivolous patent assertions and seeking cost of litigation settlements. We believe those are the entities the SEC and Congress are seeking to reign in. Just candidly, not our business model. Now on to the present activity surrounding the potential changes in patent legislation coming out in Washington DC, in particular and most recently House Judiciary, Chairman, Bob Goodlatte patent litigation bill that was announced on October 23. First, let me say, we applaud efforts to ensure Americas patent ecosystems which remained strong and welcome some of the reforms being proposed including enhanced disclosure of real party’s interest, balanced fee shifting and heightened pleading standards. Although, we opposed other reforms as drafted as to leading companies such as 3M, GE and Johnson & Johnson amongst others including the mandatory state language and the expansion of the covert business patent program. We also remained concerned with proposed changes to the Americas Invent Act, the estoppel standard for post grant review. That said, we expect Goodlatte’s bill and other proposed patent reforms will be debated and changed over the coming months as they move through the legislative process and compete with other initiatives such as the Affordable Healthcare Act. We remain actively involved in a debate most directly and through industry groups and to help guide discussion in various IT policy recommendations. I suspect this will be a topic continued interest and that we will be commenting on in the future. Now, what I’d like to do turn the call back over to the operator for Q&A with John and I. Monsirat? Operator, are you there?

(Operator Instructions) Your first question comes from the line of Krish Sankar with Bank of America-Merrill Lynch.

Thanks. It’s Krish. Hey, Tom and John, how are you guys doing?

Great, Krish.

Good morning.

Good morning. Few questions here first and foremost, Tom in your prepared comments you alluded to hopefully getting some resolution that Samsung and Micron by end of the year. Just kind of curious that, is there any confidence level you can put around it, do you feel relatively confident now versus three months ago that you can get a new deal with Samsung and Micron by end of the year?

As I said Krish that it certainly, it maintains seems to be super high priority for us. And it is getting tremendous amount of attention. We are engaged in exactly the right levels that has always been the case. As you are aware of and active discussions continue and yes, I’m confident that we are going to reach resolution on those. As I mentioned resolution can be hopefully reaching agreement on a fair value for licensing and that’s really the goal of all three companies us and each of the companies you mentioned. In the event, we can’t reach fair value then litigation remains a tool.

Got it.

Yes. We are confident.

All right. That's good to know. The second one is, I think I asked this last quarter too, is there any way you can give us some color on the recurring revenue in Q4 directionally or if you can quantify it, is it going to be better versus Q3, flat down?

John, go ahead.

Hi, Krish. This is John. What we said in previous quarters is, we do not plan to break up the revenue guidance between recurring and episodic. We did give the range overall, between 56 and 60 and we broke that up between the IP business and the DOC business. That’s as far as we want to go with the guidance at this point but we certainly will give more color and detail when we announce our Q4 results.

Okay. Let me ask it this way. The recent fire at Hines, did it have any impact on your Q4 numbers or your Q4 guidance?

The fire itself did not have any appreciable impact on our guidance.

Got it. Okay. All right. And then on the DigitalOptics side, first and foremost, did you guys ship any mems|camera module units in Q3 or any kind of camera module?

Pre-production, not for revenue but pre-production stuff, yes, we did – on track.

Got you. And then in your Q4 – embedded in your Q4 guidance, are you looking at like 200,000 to 300,000 units for Q4 for revenue or --?

Yes. Good point. One of the – for those aren’t familiar with Krish with the milestones we laid out, one of our milestones, we laid out was shipping – shipping multiple hundred thousand units in calendar fourth quarter and we remain on track to that. Whether it may happen and I don’t know, what happens in early productions is, you ramp heavily, week upon, week upon, week and as we get through into December and the back half of December, the weekly volume shipments go decline each week. So if we do better we can end up pulling a little bit of volume in there. And if we slip for whatever reason, we might push off some volume now. Again, we remain on track to shipping multiple hundred thousand units during the calendar fourth quarter and as John mentioned for the first time there is actually mems/cam revenue in the fourth quarter.

Okay. Is there anyway you can qualify what the opportunity for you in calendar 2014 would be, would it be 1 million to 2 million units, [2 to 4 type]?

Very, very substantial volumes. And there are a -- as we have chronicled, they are a large player in the market. So yes, it could be millions and millions of units with these guys.

Okay. Fair enough. And then a final question for John, is the 100 million to 150 million buyback authorization, is there a timeline on that?

Krish, that has a specific timeline in that. In discussions with the Board, decision was to give a bit more latitude and ability to make larger buybacks if that is appropriate. And it has been before we expect to have a 75 in place part of that but there would also be an opportunity for the – opportunistic buys if the executive team concluded that was the best opportunity of the company. We do think there is a tremendous upside to the company’s stock and we can take advantage of that through buyback to current prices that something we may seriously consider.

Well, I’ll just add one thing on that Krish. The reason we expanded, increase the ceiling on it because we do intend as John mentioned under right circumstances, we do intend to be an active participant there. As we have in the last quarter and a half right but when we go above and beyond the episodic buybacks that we previously announced.

Got it. Got it. Thanks a lot guys and good luck.

Thank you.

Thank you, Krish. Thanks a lot.

(Operator Instructions) There seems to be no questions at this time.

Hey. Well, thanks. This is the final comment again, thanks again for your interest in Tessera. We are in fact very pleased with our progress in many areas of the company. And we look forward to reporting on continued progress against our priorities and milestones. We will be in New York City in December at the 2013 Midtown Cap Summit. And I do hope to see some of you there. Thanks again.

Thank you for your participation. This does conclude today’s conference call. You may now disconnect.