Rambus Reports Third Quarter Financial Results

The Company’s non-GAAP financial measures reflect adjustments based on the following items:

Stock-based compensation expense. These expenses primarily relate to employee stock options, employee stock purchase plans, and employee non-vested equity stock and non-vested stock units. The Company excludes stock-based compensation expense from its non-GAAP measures primarily because such expenses are non-cash expenses that the Company does not believe are reflective of ongoing operating results. Additionally, given the fact that other companies may grant different amounts and types of equity awards and may use different option valuation assumptions, excluding stock-based compensation expense permits more accurate comparisons of the Company’s results with peer companies.

Acquisition-related transaction costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current periods’ portion of any retention bonus expense associated with the acquisitions. The Company excludes these expenses in order to provide better comparability between periods.

Purchase accounting adjustment for inventory fair value step-up. These adjustments are the result of accounting for certain business acquisitions and are excluded because such adjustments are non-recurring. Additionally, the Company excludes these expenses in order to provide better comparability between periods.

Amortization expense. The Company incurs expenses for the amortization of intangible assets acquired in acquisitions. The Company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from the Company’s prior acquisitions and have no direct correlation to the operation of the Company’s core business.

Non-cash interest expense on convertible notes. The Company incurs non-cash interest expense related to its convertible notes. The Company excludes non-cash interest expense related to its convertible notes to provide more accurate comparisons of the Company’s results with other peer companies and to more accurately reflect the Company’s ongoing operations.

Income tax adjustments. For purposes of internal forecasting, planning and analyzing future periods that assume net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 35 percent for periods in 2016 and 36 percent for periods in 2015, which consists of estimated U.S. federal and state tax rates, and excludes tax rates associated with certain items such as withholding tax, tax credits, deferred tax asset valuation allowance and the release of any deferred tax asset valuation allowance. Accordingly, the Company has applied these tax rates to its non-GAAP financial results for all periods in the relevant years to assist the Company’s planning for future periods. The Company has provided below a reconciliation of its GAAP provision for income taxes and GAAP effective tax rate to the assumed non-GAAP provision for income taxes and non-GAAP effective tax rate.

On occasion in the future, there may be other items, such as impairments and significant gains or losses from contingencies that the Company may exclude in deriving its non-GAAP financial measures if it believes that doing so is consistent with the goal of providing useful information to investors and management.

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 including those relating to Rambus’ expectations regarding financial guidance for the fourth quarter of 2016, including revenue, operating costs and expenses, earnings per share and estimated, fixed, long-term projected tax rates. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by Rambus’ management. Actual results may differ materially. Rambus’ business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission. Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

About Rambus Inc.

Rambus creates cutting-edge semiconductor and IP products, spanning memory and interfaces to security, smart sensors and lighting. Our chips, customizable IP cores, architecture licenses, tools, services, training and innovations improve the competitive advantage of our customers. We collaborate with the industry, partnering with leading ASIC and SoC designers, foundries, IP developers, EDA companies and validation labs. For more information, visit www.rambus.com.

RMBSFN

 

Rambus Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

   

 

September 30,
2016

December 31,
2015

ASSETS
 
Current assets:
Cash and cash equivalents $ 89,479 $ 143,764
Marketable securities 61,310 143,942
Accounts receivable 26,363 16,408
Prepaids and other current assets 22,150   11,476
Total current assets 199,302 315,590
Intangible assets, net 164,862 64,266
Goodwill 207,531 116,899
Property, plant and equipment, net 59,191 56,616
Deferred taxes 165,661 162,485
Other assets 3,749   2,165
Total assets $ 800,296   $ 718,021
 
LIABILITIES & STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 10,188 $ 4,096
Accrued salaries and benefits 10,209 12,278
Deferred revenue 17,772 5,780
Other current liabilities 21,632   6,212
Total current liabilities 59,801 28,366
Long-term liabilities:
Convertible notes, long-term 124,443 119,418
Long-term imputed financing obligation 38,194 38,625
Other long-term liabilities 25,018   5,079
Total long-term liabilities 187,655   163,122
Total stockholders’ equity 552,840   526,533
Total liabilities and stockholders’ equity $ 800,296   $ 718,021
 

Rambus Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

   

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

2016   2015 2016   2015
 
Revenue:
Royalties $ 68,298 $ 66,823 $ 194,010 $ 196,173
Contract and other revenue 21,557   6,956   45,028   23,332  
Total revenue 89,855   73,779   239,038   219,505  
Operating costs and expenses:
Cost of revenue (1) 19,424 11,111 45,720 34,004
Research and development (1) 33,820 27,784 91,100 85,506
Sales, general and administrative (1) 24,795 17,860 69,679 53,701
Gain from sale of intellectual property (106 ) (3,262 )
Gain from settlement   (510 ) (579 ) (1,530 )
Total operating costs and expenses 78,039   56,139   205,920   168,419  
Operating income 11,816 17,640 33,118 51,086
Interest income and other income (expense), net 142 539 1,522 874
Interest expense (3,193 ) (3,117 ) (9,497 ) (9,291 )
Interest and other income (expense), net (3,051 ) (2,578 ) (7,975 ) (8,417 )
Income before income taxes 8,765 15,062 25,143 42,669
Provision for (benefit from) income taxes 4,254   (166,971 ) 14,878   (155,727 )
Net income $ 4,511   $ 182,033   $ 10,265   $ 198,396  
Net income per share:
Basic $ 0.04   $ 1.56   $ 0.09   $ 1.71  
Diluted $ 0.04   $ 1.52   $ 0.09   $ 1.67  
Weighted average shares used in per share calculation
Basic 110,214   116,444   109,951   115,940  
Diluted 113,723   119,542   112,805   118,997  

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