Good morning. My name is Kathy and I will be your conference operator. At this time, I would like to welcome everyone to the Tessera Technologies Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) I will now turn the conference over to Moriah Shilton. Please go ahead.

Thank you, Kathy 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 speaks 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 from management are Tom Lacey, Chief Executive Officer and Robert Andersen, 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 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’ll open the call to your questions. I will now turn the call over to Tom.

Thanks very much, Moriah. Good morning to all. Whether live or via the webcast recording, thank you for joining us on the call today. There is a great deal going on at the company given the substantial decisions and recent developments. This morning, Robert and I look forward to providing much more insight into our IP business, so that shareholders and potential investors can better understand our company. As you will hear from us, we are very positive on the changes at the company and now are optimistic of the years ahead. Also in order to help provide clarity to this unique time in the company’s recent history, we have provided some slides that we’ll review later in the call. Before I get into the details, the high level message I hope you take away from the call is that after years of challenges and underperformance, the company expects to be profitable in the 2014 on a non-GAAP basis and is well positioned to move forward. Before I get to where we are and where we are going, let me provide a brief summary of what the company has looked like in the recent past. We have had declining annual revenues since 2010. On a cash basis, we invested approximately $475 million in our DigitalOptics business discontinued operations and approximately, $650 million on a GAAP basis. The overall cultured executive team work company communication overall operations of the company needed improvement. On our IP business, we did not always consider potential license fees as customers and at times did not seek ways to be value-added partners to our customers. Our relationship with our shareholders was tense at times. Our primary identified growth opportunity was our underperforming DOC business, our IP business was often of secondary importance. On the one hand,…

Thanks, Tom. Before I begin, I will note that it has certainly been an eventful first month. When I joined the Tessera at the beginning of January, I expected there would be a great deal of work to do in getting the company on the solid footing. This has certainly proven to be true, however, on the positive side; I have also found management team and employees who care very much about the company. I believe the company is heading in the right direction and feel positive about our ability to bring value to the customers and licensees going forward. It’s good to be here and good to be working with you again, Tom. Thanks. I will now for your listening pleasure cover our financial results from the fourth quarter 2013 and for the full fiscal year. Total revenue from continuing operations for the fourth quarter of 2013 was $54.6 million. Intellectual Property total revenue was $49.1 million and then included $30.8 million in episodic revenue in the fourth quarter of 2013. Compared to the third quarter of 2013, Intellectual Property revenue was up $16.8 million, primarily due to increased episodic revenue offset by the following two items. First, certain of our licensees have pricing structures in their contract that results in quarter-to-quarter fluctuations in our revenues that can negatively impact one quarter as compared to the next. These pricing structures negatively impacted us in the fourth quarter of 2013 and will also impact us in the fourth quarter of 2014. Second, we have a licensee who claim they are no longer subject to license payments beginning in the fourth quarter. We disagree with their position and are currently in discussions with the customer. We did not report any revenue in the fourth quarter for this customer and will not…

Thanks, Robert. Again, welcome to the company. Before I turn the call over to the operator for Q&A, let me provide our views on the patent legislation activities in Washington, D.C. and Robert and I will walk through the slides that were solicited this morning or sent out this morning. First, the patent legislation. After the rapid passage in the House last quarter, somewhat more deliberate Senate process is underway. A mark-up in the Judiciary Committee is expected later this quarter and the bill may reach the Senate floor for a vote in the second quarter. This approach is expected to produce a Senate product more acceptable to the patent owners. To briefly summarize the two bills, the Innovation Act in the House emphasizes the discovery, reform transparency, customer stay, reshipping and small business education. It was passed by the House on December 5, 2013, less than 50 days after its introduction. The Patent Transparency and Improvements Act in the Senate emphasizes bad-faith demand letters, customers stay transparency and small business education. The bill was introduced on November 18 in the first and currently only hearing before the Judiciary Committee was held on December 17. Both the House and the Senate bills reflect our basic principle that reforms your focus on views of litigation behavior, not specific business models. However, certainly overbroad provision such as proposed mandatory customer stay are likely to have unintended consequences. We are actively engaged on this issue and are working constructively with other stakeholders and the Senate to help achieve consensus. We also hope to help persuade the Senate to hold an additional open hearing to learn more about the potential impact of the proposed legislation on companies both big and small. Next, Robert and I will quickly walk through the slides as we have…

The next slide is litigation spend, which gives a good visual on the varying nature of the company’s litigation spend. The blue bars show the amount of litigation spend by year as measured in dollars on the left side Y axis. The green lines spots litigation spend as percentage of revenue with the values measured on the right side Y axis. The horizontal red line indicates the litigation spend of the company’s near-term target operating model, all together to the right side Y axis. As you can see the litigation spend as a percent of revenue has been both above and below the target, by this nature with litigation spend is difficult to forecast, it will be uncertainty of the future business negotiations and the phases through which a case you can perceive prior to settling or go into judgment. On the next slide, the near-term operating model is intended to give directional guidance on where the company is heading from an expense standpoint. The model contemplates non-GAAP operating expenses at an annual revenue rate of $180 million to $200 million. As just noted the litigation expense is difficult to forecast, so this model should serve only as a reasonable estimate. The title Near-Term means that the company could meet the model’s guidelines as it exits the fiscal fourth quarter, provided the revenue assumption is met. We plan to update the model as the business outlook changes. The remaining slides address some of our growth opportunities. The slide entitled “Mobile” is Driving Unit Volume/Licensing Opportunities, there is really three simple messages here. Our primary growth area is target the growing tablet, laptop, and smartphone markets. The laptop and tablet markets are totaled in the hundreds of millions in units in the smartphone market is certainly in excess of the billion…

(Operator Instructions) Your first question comes from the line of Krish Sankar. Krish Sankar – Merrill Lynch Global Securities: It’s Krish. Can you hear me?

Yes.

Krish Sankar – Merrill Lynch Global Securities: Hey good morning guys. Couple of quick questions; first and foremost on the guidance of revenue, $32 million to $36 million, I’m just trying to get a sense of what is embedded in that in terms of DigitalOptics and IP and are you assuming any episodic revenue in the guidance?

Yes, so the guidance that we are providing we’re not breaking out the specific type of guidance. We do expect some small amount of DigitalOptics contemplated in that number. The bulk of it is the IP business. Krish Sankar – Merrill Lynch Global Securities: And I’m guessing there is some episodic revenue embedded in that IP revenue guidance?

We’re not going to break out that detail in the forecast, because it’s difficult for us to forecast the episodic revenue with accuracy, but…

We’ll provide insight into as we just did with the previous quarter and next quarter.

Yes, next quarter, but in terms of guidance I’m not going to breakout the episodic and the recurring. Krish Sankar – Merrill Lynch Global Securities: All right. That’s fair enough. And then you guys mentioned that you’re going to be like on a non-GAAP basis, profitable on the recurring revenue basis. So two questions on that. (A), number one, does your non-GAAP assumption include litigation cost? If so, what are your assuming for that? And number two, at what recurring revenue level would you be breakeven?

The non-GAAP expense include litigation cost that’s intrinsic in our model, so as we discussed on the target operating model, we do make an assumption around litigation expense at 14% of revenue and keep in mind that that – the breakeven numbers that we’re talking about are forecasted at a particular revenue level. So we’re looking at the overall target operating model. That’s between $180 million to $200 million on a non-GAAP basis. But if you also look at the level of recurring revenue, we’ve got that alone will get us there on a non-GAAP basis for the year. Krish Sankar – Merrill Lynch Global Securities: Okay. So the breakeven is, obviously has to be much lower than $180 million to $200 million recurring, right?

Yes, that’s correct. Krish Sankar – Merrill Lynch Global Securities: Okay, got it. And then one final question from my end. On the PTI case, it seems like, the favorable like ruling in your end seems to be the good news for you guys, but I think I read somewhere that there was a – you have been asking for $300 million or something like that. (A), number one, is it true? And, (B), number two, kind of what is the assumption band getting into that figure?

Hey, Krish, this is Tom. So, yes, I would agree with the first part of you wholeheartedly. We did view that Judge Wilkins ruling quite favorably and it certainly is, again, we think it’s good news for the company. I think you’re right. In one of those fillings it had ranges of – the company’s view, I guess, on potential settlements and PTI’s view would be substantively lower. It’s not uncommon on these kinds of matters for kind of both parties to exaggerate their positions albeit but I don’t mean exaggerating. It’s well founded and there is thing that you would expect to settle somewhere likely in the middle unless it goes to jury trial and then there may be damages or they may not be. That’s a bit of a wild card. So we certainly aren’t going to on this call suggest what we think that range is because as I mentioned there’s been mediation and the thing is scheduled to go to trial in early April. But again, I would confirm we think it’s very – we’re in a favorable situation, feeling pretty excited about it. Krish Sankar – Merrill Lynch Global Securities: Great, all right. And then, just one last question from my end. You guys mentioned in the prepared comments about a pricing structure unfavorably impacting your 4Q and 1Q. Does the pricing structure – is that pricing structure also part of Invensas or is it some of the legacy deals that you guys find?

That’s part of the legacy deals that we have. So it’s an IP contract. Krish Sankar – Merrill Lynch Global Securities: Okay. This state here that you don’t have such pricing structure volume discounts with the Invensas portfolio?

We consider the Invensas portfolio really part of the overall IP structure. So I think the contract itself doesn’t really distinguish. I would consider it to be part of our legacy business, but the way that we structure the contracts for IT business would include Invensas type arrangements or would – it includes Invensas. Krish Sankar – Merrill Lynch Global Securities: Got it. All right. Thank you, guys. Thank you very much.

Krish, thanks a lot.

Thanks, Krish.

Your next question comes from the line of Mohit Khanna. Mohit Khanna – Value Investment Principals Ltd.: Hello, good morning guys. I just have a couple of questions regarding the ongoing discussions with the current customer. So first of all, on the IP side, are you seeing some kind of traction coming in from the mobile technology?

Are we seeing some? Yes, we are. That was, yes. Mohit Khanna – Value Investment Principals Ltd.: And would it be fair to assume that there could be some kind of success in getting some mobile manufacturers, getting the revenues from kind of mobile manufacturers on the memory side?

Your question is, do we expect to have some successes in targeting the mobile sector for some of our mobile technology in the Invensas. In Tessera portfolios, the answer is yes. We do. Mohit Khanna – Value Investment Principals Ltd.: Okay. and how do you see – do you see business patent portfolio, would you be inclined towards selling it off entirely or you would be inclined towards licensing these FotoNation technologies? Thank you.

Are you talking about the IP or the FotoNation business unit or both? Mohit Khanna – Value Investment Principals Ltd.: The FotoNation business unit now. Would you be inclined to sell off all the patents, or would you be inclined to license that going forward?

Okay. So you’re talking about the patents within the FotoNation business unit. As we said, we’re running – I mentioned in previous calls, we’re running a process where on the DOC intellectual property where we’re seeing if there is interest in potentially people buying those patents and depending upon what kind of market feedback we get on that we’ll then weigh that against running a licensing campaign or continuing to operate what we call a software licensing, a royalty base model with our FotoNation business unit. and as I mentioned, we may be able to use the patents more so to help us potentially grow unit ASPs. There’s a number of different options even a combination thereof, that would expect to kind of complete this go forward path, as I mentioned, in the next couple of quarters. Mohit Khanna – Value Investment Principals Ltd.: Great, okay.

We’re excited about what we’ve seen there, right. It’s – suffice it to say we like what we see given our internal analysis on that asset. Mohit Khanna – Value Investment Principals Ltd.: Thank you so much. That was helpful.

Thank you.

(Operator Instructions) Your next question comes from Sandy Maheta [ph].

Good morning. On your Slide number 7, where you talked about your near-term operating model, when do you – can you give us some sense of when you expect to achieve this level of profitability, just a sense on timing on this?

The way that we’re looking at this is, if we can get to a revenue level that touch the $180 million to $200 million mark, you would be exiting the year, so fourth quarter of this year under our model like the one that’s current here on the slide.

Okay. So just to be clear. So hopefully you are at this run rate of profitability as well as revenue around the fourth quarter of this year.

I would be very happy if that’s the case.

Do you expect that or is that – that’s your aim is?

That’s certainly is the poll.

Okay, okay.

Yes, absolutely.

And when I look at your guidance for the first quarter, is there some – and I think you alluded to this a little bit in your comments. Is there some seasonality to the business where and I saw that I think in your results last year also the first quarter was seasonally the lowest. So can you just explain to us why you have that seasonality or you – the recent seasonality you expect the next three quarters of the year to be slightly higher in revenue?

Yes, I would say that this has to deal with the way that the contracts are structured, which creates a seasonality to the returns on those particular engagements with our customers.

Okay. So is it – I’m sorry. Go ahead.

I was going to say, so most of that impact that I highlighted because we felt some impact during Q4 and we expect some impact during Q1 and then during – beginning in Q2 that revenue comes back online.

So is it fair to say that the Q1 will be the low point of the year in terms of revenue?

We haven’t given guidance for quarters going out for the remainder of the year. I just wanted to highlight – the reason I said that in the remarks is because I wanted to highlight that there is because of the structural arrangement of the contracts, we do experience a degree of seasonality that impacts the guidance specifically for Q1.

Okay. And then this – coming back to your slide number 7, the $180 million to $200 million revenue, does that – how much of episodic revenue is included in that or does that not include any episodic revenue?

What we’re seeing now and what we’ve guided is that we have visibility to recurring revenue of $120 million. So it can be some combination between episodic and recurring. It would be great if it was all recurring, but I would suspect that there would be some degree of episodic revenue to hit the levels that we’re discussing on the target operating model.

And on your slide number 4 and again referring to the $120 million for 2014 guidance on that page, but that – there is other – this is not your – is this the total recurring revenue, are there some other parts that I’m missing here?

Well, it’s – what we’re telling you today is this is what – there is a couple of messages here, one it’s the recurring that we’ve identified today. And clearly, as Robert had said, we’re going to continue to try to add to that as we march through the year. And second front on a non-GAAP basis that the company is profitable on this revenue, recurring revenue.

Okay. All right. Thank you so much. Thank you.

Sandy thanks.

Thanks.

.:

Hi, great execution on getting the Samsung deal. Just curious if you can maybe bridge the gap for us in terms of the recurring revenues of $91 million in 2013 going to $120 million, how much of that is coming from signing new license versus organic growth in kind of your existing customer base. And just help us understand how to build the bridge there? Thank you.

Roger thanks. So I think you’re referring to slide number 3.

Yes.

Thanks on the Samsung; I would agree with you it’s a pretty substantial event to the company. In terms of kind of recurring revenue detail, which you’re asking to do, I think is to – you rightfully said, it says a $102 million on the slide you take out the $11.5 million you get to call it, $90.5 million, $91 million and that’s the recurring revenue growth from go forward recurring revenue growth from 2013 to 2014 that we’ve identified today. I can’t split that up and tell you that how much comes from which customer for obvious reasons, both non-disclosure and for competitive reasons. But we’ve super important to us that we were able to convey to the market to our existing shareholders and potential shareholders, kind of the significance of getting these two major guys re-licensed and the fact again, that we could be on a non-GAAP basis profitable based on this non-recurring – or excuse me, on this recurring revenue stream, we should be able to provide you with the exact details on each, but we really can’t.

Okay.

Let me state it another way. Clearly as you in your opening comments, re-licensing Samsung is the substantial impact to this – to the number here.

Great. And then just one follow-up question. You mentioned earlier with respect to the PTI claim you’re claiming $300 million. What’s – could you remind us what PTI is claiming in terms of the damage that you – they owe to you?

Well, they were claiming the opposite, right, they claimed that them on right. So they’re quite claiming zero, I guess is the way to think about it.

Okay, right, right, right.

And the judge dismissed their claims.

Okay, all right. Thank you.

Thank you.

Hey thanks, Roger.

(Operator Instructions) Your next question comes from the line of Keith Curtis. Keith Curtis – Brant Point Investment Management LLC: Question, just on operating expenses, if I’m doing my math correctly, I think on a non-GAAP basis on the fourth quarter you’re run rating around $188 million. And then on your target model plus the $190 million that would imply approximately $95 million. So can you just reconcile how we’re getting from kind of where we are now on the OpEx to what the guidance implies on the target model?

I think the only logical way to get there is that we’re going to have to reconcile our expenses over the course of the year to the target operating model. And that's obviously something is getting a lot of focus since I’ve arrived this last month. So, there is obviously there is a closure of the DOC business, which is going to have a substantial impact on our spending. and then we will also be looking at ways to optimize the business as we go forward over the course of the year. Keith Curtis – Brant Point Investment Management LLC: Okay. Got it. And then just following up on the Q1 guidance, as it relates to also this – is the $120 million actually got – is that your guidance the recurring guidance for 2014?

No, it’s where we stand today, right. As both Robert and I mentioned we hope to do better than what. What we have kind of under contract today and have line of sight what I have said to you right now. Keith Curtis – Brant Point Investment Management LLC: Okay. And then just lastly could you just update us on your, I saw you bought back some stock in the fourth quarter and how you feel about buyback and return of capital use of the balance sheet going forward? Thank you.

I’ll take a whack at that and then Robert can jump in. As we mentioned on previous calls, there is broad capital allocation policy and the Board in the fourth quarter at our recommendation increased the buyback. What you can see now is a profitable – non-GAAP profitable operating company, right, generate cash and returning some of that cash to shareholders in the form of dividends, episodic dividends and stock buyback is a key part of our – if you will, our investment thesis. So, we also bought back more in the fourth quarter than the company has in its history. So, we feel pretty good about that. Robert, if you want to add anything.

I would agree with those comments. And we do believe it’s important to return capital to shareholders. So, that’s something I expect the Board to continue to do. Keith Curtis – Brant Point Investment Management LLC: Thank you.

Your next question comes from the line of Rich Hummel. Rich H. Hummel – Kirr, Marbach & Co. LLC: Good morning.

Good morning. Rich H. Hummel – Kirr, Marbach & Co. LLC: Hey thanks for the presentation, guys. Pretty helpful. Listen, I was going through the file on Amkor, trying to find what your expectations are on that particular settlement. In looking at my notes, I had something in the neighborhood of $130 million. Is that still reasonable? Am I looking at that correctly?

Yes. What the company issued, they said at one point that was expected in the neighborhood of $150 million, $20 million of which is paid. So, that’s why you get to $130 million. Your math is correct. Rich H. Hummel – Kirr, Marbach & Co. LLC: Okay. Does that still stand?

Nothing has changed. Definitely nothing is changed until you have it, you don’t have it, right. There’s certainly risk in it, but yes, our position hasn’t changed. And one thing we talked about in the last conference call, we found interesting is Amkor’s own guidance in this matter, they increased reserve a little bit in this area. So, as I mentioned, this tribunal – that’s one of the reasons, put more clarity in the script on when can we expect an answer, because the real answer is we don’t know, but based on history, all right, we would expect something this year, but again, there is no specific date or timeline. It’s much different than a case when we have a trial date, you got to a trial and when you’re going to trial this, we’re not sure. And again, as I mentioned, we feel good about our chances on this one too. Rich H. Hummel – Kirr, Marbach & Co. LLC: Well, thanks a lot. And for one shareholder I appreciate all the additional color you provided in the call.

Well, Rich, thank you. We’ve heard that enough. And Robert and I really share that views, trying to provide as much transparency as we can. This is a big time in the company’s history, isn’t it right? It really is and inflection point and being able to provide more color and clarity around our underlying IP business helps the shareholders and potential investors understand the opportunities as we see them. So, I’m glad to have worked for you at least. Thank you.

At this time, there are no further questions. I will now turn it over to management for closing remark.

Thanks, Kathy, and thanks everybody for joining. Again, I hope you found the format and the information provided useful to better understand the company. We’ve come a long, long way over the recent past. The management team and I believe that with the recurring revenue stream, episodic opportunities, optimized spending, profitable structure, partnership style approach to our customers, strong employee team improved, internal communication, improved transparency on our business with investors and the growth opportunities including FotoNation and our DOC IP, mobile focused licensing amongst others that hopefully you can tell from Robert and I, we’re quite optimistic about the future. So, thanks again.

This concludes today’s conference. You may now disconnect.