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Income Statement

2012

Revenues $154.030
Total revenues $154.030
YoY increase

Cost of Revenue $55.451


Total Cost of Revenue $55.451
Cost as % of sales 36.0%

Gross Income $98.579


Gross Margin % 64.0%

Operating Expenses
Selling, General & Administrative $57.840
Research & Development $18.790
Depreciation/Amortization $1.910
Total Operating Expenses ($78.54)
Operating Expenses as % of sales 51.0%

Operating income/EBIT $20.04

Unlevered Free Cash Flow

EBIT $20.04
(-) Taxes ($3.21)
(+) D&A $1.91
(-) CAPEX
(-) Increase in NWC
Total Unlevered Free Cash Flow $18.74

Net Working Capital (NWC) ($20,489)


% of sales (13302.0%)

Capital Structure Weights

Debt/Equity 0.0%
% Debt (wD) 0.0%
% Equity (wE) 100.0%

Cost of Debt and Equity

Beta 2.57
Risk-free rate (RFR) 2.2% 0.9357359683
Market Risk Premium (MRP) 6.0%
Cost of Equity (COE) 17.6%

Cost of Debt (COD) 0.0%


Tax Rate (T) 20.0%
After Tax Cost of Debt 0.0%

WACC 17.6%

Valuation

Discounted Cash Flows

2015E 2016E 2017E


Unlevered FCF $47 $52 $58
Discount Period 0.25 1.25 2.25
Discount Factor 0.96 0.82 0.69
Discounted FCF $46 $42 $40

Sum of Discounted FCF $200

Terminal Value

Exit Multiple Method Perpetuity Growth Method


Terminal Multiple 12.0x Future Growth Rate
WACC 17.6% WACC
Terminal Value $983 Terminal Value
Discounted Terminal Value $437 Discounted Terminal Value

Valuation

(+) Enterprise Value $638 (+) Enterprise Value


(+) Terminal Debt $0 (+) Terminal Debt
(-) Cash ($51) (-) Cash
(-) Net Debt ($51) (-) Net Debt
Equity Value $587 Equity Value
Number of Shares 39,790,000 Number of Shares
Projected Share Price $0.01 Projected Share Price
Current Share Price $35.04 Current Share Price

Implied Upside (100.0%) Implied Upside

Sensitivity

Share Price
WACC
(100.0%) 5.2% 6.2% 7.2%
Exit 9.0x (99.9%) (99.9%) (99.9%)
Multiple 10.0x (99.9%) (99.9%) (99.9%)
11.0x (99.9%) (99.9%) (99.9%)
12.0x (99.9%) (99.9%) (99.9%)
13.0x (99.9%) (99.9%) (99.9%)

Share Price
WACC
-103.6% 5.2% 6.2% 7.2%
Growth 1.8% -103.5% -103.5% -103.6%
Rate 1.9% -103.5% -103.5% -103.6%
2.0% -103.5% -103.5% -103.6%
2.1% -103.5% -103.5% -103.6%
2.2% -103.5% -103.5% -103.6%
2013 2014 2015E 2016E 2017E 2018E

$155.050 $201.540 $231.771 $254.948 $275.344 $297.371


$155.050 $201.540 $231.771 $254.948 $275.344 $297.371
0.7% 30.0% 15.0% 10.0% 8.0% 8.0%

$55.818 $74.570 $83.438 $91.781 $96.370 $104.080


$55.818 $74.570 $83.438 $91.781 $96.370 $104.080
36.0% 37.0% 36.0% 36.0% 35.0% 35.0%

$99.232 $126.970 $148.333 $163.167 $178.974 $193.291


64.0% 63.0% 64.0% 64.0% 65.0% 65.0%

$61.520 $65.650 $76.484 $76.48 $79.85 $83.26


$21.320 $19.500 $23.18 $20.40 $22.03 $23.79
$3.330 $4.530 $4.64 $5.10 $5.51 $5.95
($86.17) ($89.68) ($97.34) ($107.08) ($115.64) ($124.90)
55.6% 44.5% (42.0%) (42.0%) (42.0%) (42.0%)

$13.06 $37.29 $50.99 $56.09 $63.33 $68.40

$13.06 $37.29 $50.99 $56.09 $63.33 $68.40


($2.09) ($5.97) ($8.16) ($8.97) ($10.13) ($10.94)
$3.33 $4.53 $4.64 $5.10 $5.51 $5.95

($0.58) ($0.51) ($0.55)
$14.30 $35.85 $47.47 $51.63 $58.19 $62.85

($5,765) $7,063 $6 $6 $7 $7
(3718.2%) 3504.5% 2.5% 2.5% 2.5% 2.5%

idcc d/e=0.981 t=34% b=1.09 0.66


dlb 0 0.8 1.02 1.02
rmbs 0.278 0.65 1.49 1.26
rtec 0.41 0.75 1.27 0.97
amba 0 0.9 1.09 1.09

0.94

2018E 2019E
$63 $69
3.25 4.25
0.59 0.50
$37 $35

uity Growth Method


ure Growth Rate 2.2%
17.6%
$461
ted Terminal Value $205

$405
Terminal Debt $0
($50,908)
($50,908)
$50,503
39,790,000
ed Share Price -$1.27
$35.04

ed Upside -103.6%

WACC
8.2% 9.2%
(100.0%) (100.0%)
(99.9%) (99.9%) 15.3-39.9
(99.9%) (99.9%) 2.9-24.9
(99.9%) (99.9%) 27.7-54.8
(99.9%) (99.9%)

8.2% 9.2%
-103.6% -103.6%
-103.6% -103.6%
-103.6% -103.6%
-103.6% -103.6%
-103.6% -103.6%
2019E

$315.214
$315.214
6.0%

$107.173
$107.173
34.0%

$208.041
66.0%

$88.26 38% 40% 33%


$25.22 12% 14% 10%
$6.30 1% 2% 2%
($132.39)
(42.0%)

$75.65

$75.65
($12.10)
$6.30

($0.45)
$69.41

$8
2.5%
$40.40 $49.02
$36.06 $43.76
$44.75 $54.24
In Millions of USD (except for per share items) 12 months ending 2012-12-31
Revenue 154.03
Other Revenue, Total -
Total Revenue 154.03
Cost of Revenue, Total 54.46
35%
Gross Profit 99.56
65%
Selling/General/Admin. Expenses, Total 57.84
38%
Research & Development 18.79
12%
Depreciation/Amortization 1.91
Interest Expense(Income) - Net Operating -
Unusual Expense (Income) -
Other Operating Expenses, Total 21.03
Total Operating Expense 133
Operating Income 21.03
14%
Interest Income(Expense), Net Non-Operating -
Gain (Loss) on Sale of Assets -
Other, Net 0.41
Income Before Tax 21.7
Income After Tax 16.23
Minority Interest -
Equity In Affiliates -
Net Income Before Extra. Items 16.23
Accounting Change -
Discontinued Operations -
Extraordinary Item -
Net Income 15.6
Preferred Dividends -
Income Available to Common Excl. Extra Items 16.23
Income Available to Common Incl. Extra Items 15.6
Basic Weighted Average Shares -
Basic EPS Excluding Extraordinary Items -
Basic EPS Including Extraordinary Items -
Dilution Adjustment 0
Diluted Weighted Average Shares 38.68
Diluted EPS Excluding Extraordinary Items 0.42
Diluted EPS Including Extraordinary Items -
Dividends per Share - Common Stock Primary Issue 0
Gross Dividends - Common Stock -
Net Income after Stock Based Comp. Expense -
Basic EPS after Stock Based Comp. Expense -
Diluted EPS after Stock Based Comp. Expense -
Depreciation, Supplemental -
Total Special Items -
Normalized Income Before Taxes -
Effect of Special Items on Income Taxes -
Income Taxes Ex. Impact of Special Items -
Normalized Income After Taxes -
Normalized Income Avail to Common -
Basic Normalized EPS -
Diluted Normalized EPS 0.42
12 months ending 2013-12-31 12 months ending 2014-12-31
155.05 201.54
- -
155.05 201.54
55.18 73.77
36% 37%
99.87 127.77
64% 63%
61.52 65.65
40% 33%
21.32 19.5
14% 10%
3.33 4.53
- -
- -
- -
141.34 163.45
13.71 38.09

- -
- -
0.24 1.1
14.11 37.92
10.97 32.61
- -
- -
10.97 32.61
- -
- -
- -
11.15 33.48
- -
10.97 32.61
11.15 33.48
- -
- -
- -
-0.18 0.09
39.16 39.5
0.28 0.83
- -
- 0
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
0.28 0.83
Trading Multiples
values in millions USD Equity Enterprise
Company Price Value Value

Vertical Industry Comps


Dolby Laboratories $32.4 $3,320 $2,710
Rudolph Technologies $12.7 $401 $292
Ambarella $94.8 $2,970 $2,780
CEVA $19.1 $393 $324
Immersion $11.6 $327 $261
InvenSense $10.2 $937 $828
Universal Display $36.9 $1,720 $1,390

Average
Median

Pure Play Comps


InterDigital $49.5 $1,780 $1,340
Rambus $13.5 $1,570 $1,370

Average
Median

Tessera Technologies $32.8 $1,710 $1,290

Overall Average
Overall Median

50th %
25th %
ading Multiples
EV/EBITDA P/E
LTM FY2015E FY2016E LTM FY2015E FY2016E

9.2 8.4 7.6 19.7 17.9 16.2


6.8 6.2 5.6 15.8 14.4 13.1
41.1 34.2 28.5 30.5 25.4 21.2
68.8 54.2 42.7 31.3 24.7 19.4
44.2 38.5 33.4 - - -
26.0 21.7 18.1 17.9 14.9 12.4
40.9 34.6 29.4 26.9 22.8 19.4

28.0 23.9 20.4 23.7 20.0 17.0


33.5 28.0 23.3 23.3 20.4 17.8

6.8 5.4 4.2 21.3 16.8 13.2


14.2 11.6 9.5 34.5 28.3 23.2

10.5 8.5 6.9 27.9 22.5 18.2


10.5 8.5 6.9 27.9 22.5 18.2

5.8 4.8 4.0 15.7 13.1 10.9

23.7 20.1 17.1 24.8 20.7 17.3


20.1 16.7 13.8 24.1 20.4 17.8

source: yahoo finance

Percentile Ranges
EV/EBITDA P/E
LTM FY2015E FY2016E LTM FY2015E FY2016E
11.99 9.77 7.95 30.56 24.84 21.20
9.04 7.26 5.83 25.29 20.25 17.21
Data Table

Price Equity Value Enterprise Value

IDCC $49.5 $1,780 $1,340


RMBS $13.5 $1,570 $1,370

DLB $32.4 $3,320 $2,710


RTEC $12.7 $401 $292
AMBA $94.8 $2,970 $2,780
CEVA $19.1 $393 $324
IMMR $11.6 $327 $261
INVN $10.2 $937 $828
OLED $36.9 $1,720 $1,390

TSRA $32.8 $1,710 $1,290


Data Table

Ebitda Net income Shares FTM EPS

$196 $89 35.9 $2.32


$96 $30 116.4 $0.39

$295 $181 51.9 $1.65


$43 $8 31.6 $0.80
$68 $64 31.3 $3.11
$5 $1 20.5 $0.61
$6 $3 28.2 $0.05
$32 $2 91.7 $0.57
$34 $7 46.5 $1.37

$222 $200 52.1 $2.09

source: factset
5Y Revenue Growth

1.27
1.22

1.1
1.1
1.2
1.27
1.15
1.2
1.18

1.2
Implied Share Price by EV/EBITDA
Values in millions USD
Financial Implied
EBITDA Metric Multiple Range Enterprise Value
LTM $222 9.04 - 11.99 $2,010 - $2,666
FY2015E $267 7.26 - 9.77 $1,937 - $2,607
FY2016E $320 5.83 - 7.95 $1,867 - $2,546

Implied Share Price by P/E


Values in millions USD
FTM Financial Implied
EPS Metric Multiple Range Share Price
LTM $2.09 25.29 - 30.56 $52.86 - $63.87
FY2015E $2.09 20.25 - 24.84 $42.32 - $51.92
FY2016E $2.09 17.21 - 21.20 $35.97 - $44.31
d Share Price by EV/EBITDA
Fully
Less: Implied Diluted Implied
Net Debt Equity Value Shares Share Price
($51) $2,061 $2,717 52.12 $39.55 - $52.13
($51) $1,988 $2,658 52.12 $38.15 - $51.00
($51) $1,918 $2,597 52.12 $36.79 - $49.82
Precedent Transactions
values in millions USD Per Share Enterprise
Date Acquirer Co. Target Co. Price Value

1-Mar-15 NXP Semiconductors Freescale Semiconducter $36 $11,800


27-May-15 Avago Broadcom $55 $37,000
29-Apr-15 Hue Capital OmniVision Technologies $29 $1,680
27-Jan-15 Avago Technologies LSI Corporation $11 $600
13-May-15 Cypress Semiconductor ISSI $20 $640

Average
Median

Valuation
values in millions USD Price Per Enterprise
Share Value

Tessera Technologies $35 $1,390


nt Transactions
Equity Enterprise Multiples Equity Multiples
Value Sales EBITDA EBIT P/E Book Value

$6,989 2.5 38.8 38.8 164.3 N/A


$37,084 4.4 52.6 52.6 160.3 4.3
$1,966 1.2 20.2 20.2 290.0 1.8
$716 2.3 61.5 92.7 50.7 3.3
$774 1.9 19.4 19.4 658.3 2.5

2.5 32.8 44.8 204.9 3.0


2.3 29.5 38.8 164.3 2.9

aluation
Equity Enterprise Multiples Equity Multiples
Value Sales EBITDA EBIT P/E Book Value

$1,830 5997 2 794.8