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 they 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.
Restructuring charges. These charges may consist of severance, contractual retention payments, exit costs and other charges and are excluded because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.
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 core operation of the Company’s business.
Costs of restatement and related legal activities. These expenses consist primarily of investigation, audit, legal and other professional fees related to the 2006-2007 stock option investigation and related litigation, as well as recoveries received from third parties. The Company excludes these costs and recoveries from its non-GAAP measures primarily because the Company believes that these non-recurring costs and recoveries have no direct correlation to the core operation of the Company’s business.
Non-cash interest expense. 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.
Reversal of one-time litigation costs. This adjustment is a one-time litigation cost reversal of prior litigation costs accrued related to previously awarded costs in connection with the SK Hynix litigation. The Company excludes this reversal from its non-GAAP measures because the Company believes that this reversal has no direct correlation to the core operations of the Company’s business and it is a one-time event.
Severance costs. These expenses relate to the separation payment to the Company’s former chief executive officer. The Company excludes these costs from its non-GAAP measures because the Company believes that these non-recurring costs have no direct correlation to the core operations of the Company’s business.
Income tax adjustments. For purposes of internal forecasting, planning and analyzing future periods that assumes net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 36 percent. Accordingly, the Company has applied the 36 percent tax rate to its non-GAAP financial results to assist the Company’s planning for future periods.
On occasion in the future, there may be other items, such as impairment of goodwill and long-lived assets, or 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.
About Rambus Inc.
Rambus is the innovative technology solutions company that brings invention to market. Unleashing the intellectual power of our world-class engineers and scientists in a collaborative and synergistic way, Rambus invents, licenses and develops solutions that challenge and enable our customers to create the future. While best known for creating unsurpassed semiconductor memory architectures, Rambus is also developing world-changing products and services in security, advanced LED lighting and displays, and immersive mobile media. For additional information visit rambus.com.
RMBSFN
|
Rambus Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
||||||
|
|
June 30,
|
December 31,
|
||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 155,276 | $ | 148,984 | ||
| Marketable securities | 50,364 | 54,346 | ||||
| Accounts receivable | 1,003 | 529 | ||||
| Prepaids and other current assets | 8,694 | 10,529 | ||||
| Deferred taxes | 788 | 788 | ||||
| Total current assets | 216,125 | 215,176 | ||||
| Intangible assets, net | 139,395 | 153,173 | ||||
| Goodwill | 124,969 | 124,969 | ||||
| Property, plant and equipment, net | 75,831 | 86,905 | ||||
| Deferred taxes, long-term | 4,806 | 4,458 | ||||
| Other assets | 3,118 | 3,131 | ||||
| Total assets | $ | 564,244 | $ | 587,812 | ||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 5,300 | $ | 7,918 | ||
| Accrued salaries and benefits | 29,582 | 23,992 | ||||
| Accrued litigation expenses | 1,673 | 9,822 | ||||
| Convertible notes, short-term | 155,473 | — | ||||
| Other accrued liabilities | 5,957 | 12,402 | ||||
| Total current liabilities | 197,985 | 54,134 | ||||
| Long-term liabilities: | ||||||
| Convertible notes, long-term | — | 147,556 | ||||
| Long-term imputed financing obligation | 39,724 | 45,919 | ||||
| Other long-term liabilities | 10,600 | 18,609 | ||||
| Total long-term liabilities | 50,324 | 212,084 | ||||
| Total stockholders’ equity | 315,935 | 321,594 | ||||
| Total liabilities and stockholders’ equity | $ | 564,244 | $ | 587,812 | ||
|
Rambus Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
|
|
||||||||||||||||
| Revenue: | ||||||||||||||||
| Royalties | $ | 57,009 | $ | 55,723 | $ | 123,231 | $ | 117,766 | ||||||||
| Contract revenue | 910 | 492 | 1,554 | 1,312 | ||||||||||||
| Total revenue | 57,919 | 56,215 | 124,785 | 119,078 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of revenue (1) | 7,365 | 7,340 | 13,899 | 14,503 | ||||||||||||
| Research and development (1) | 30,777 | 38,347 | 63,625 | 76,741 | ||||||||||||
| Marketing, general and administrative (1) | 14,134 | 32,194 | 39,239 | 67,028 | ||||||||||||
| Gain from sale of intellectual property | (103 | ) | — | (1,388 | ) | — | ||||||||||
| Costs of restatement and related legal activities | 2 | 83 | 19 | 113 | ||||||||||||
| Restructuring charges | — | — | 2,206 | — | ||||||||||||
| Total operating costs and expenses | 52,175 | 77,964 | 117,600 | 158,385 | ||||||||||||
| Operating income (loss) | 5,744 | (21,749 | ) | 7,185 | (39,307 | ) | ||||||||||
| Interest income and other income (expense), net | (19 | ) | 89 | (39 | ) | 187 | ||||||||||
| Interest expense | (7,426 | ) | (6,719 | ) | (14,738 | ) | (13,299 | ) | ||||||||
| Interest and other income (expense), net | (7,445 | ) | (6,630 | ) | (14,777 | ) | (13,112 | ) | ||||||||
| Loss before income taxes | (1,701 | ) | (28,379 | ) | (7,592 | ) | (52,419 | ) | ||||||||
| Provision for income taxes | 4,743 | 3,837 | 9,254 | 7,687 | ||||||||||||
| Net loss | $ | (6,444 | ) | $ | (32,216 | ) | $ | (16,846 | ) | $ | (60,106 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.06 | ) | $ | (0.29 | ) | $ | (0.15 | ) | $ | (0.54 | ) | ||||
| Diluted | $ | (0.06 | ) | $ | (0.29 | ) | $ | (0.15 | ) | $ | (0.54 | ) | ||||
| Weighted average shares used in per share calculation | ||||||||||||||||
| Basic | 112,183 | 110,553 | 111,892 | 110,456 | ||||||||||||
| Diluted | 112,183 | 110,553 | 111,892 | 110,456 | ||||||||||||
|
_________ |
||||||||||||||||
|
(1) Total stock-based compensation expense for the three and six month periods ended June 30, 2013 and June 30, 2012 are presented as follows: |
||||||||||||||||
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Cost of revenue | $ | 5 | $ | 5 | $ | 5 | $ | 15 | ||||||||
| Research and development | $ | 1,660 | $ | 2,631 | $ | 3,536 | $ | 5,351 | ||||||||
| Marketing, general and administrative | $ | 1,909 | $ | 3,579 | $ | 4,981 | $ | 7,575 | ||||||||
|
Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (In thousands) (Unaudited) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
|
June 30,
|
March 31,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||||
| Revenue | $ | 57,919 | $ | 66,866 | $ | 56,215 | $ | 124,785 | $ | 119,078 | ||||||
| Adjustments: | ||||||||||||||||
| Other patent royalties received | 3,392 | 5,237 | 1,201 | 8,629 | 3,615 | |||||||||||
| Total customer licensing income | $ | 61,311 | $ | 72,103 | $ | 57,416 | $ | 133,414 | $ | 122,693 | ||||||
| Operating costs and expenses | $ | 52,175 | $ | 65,425 | $ | 77,964 | $ | 117,600 | $ | 158,385 | ||||||
| Adjustments: | ||||||||||||||||
| Other patent royalties received | 965 | 1,285 | — | 2,250 | — | |||||||||||
| Stock-based compensation | (3,574 | ) | (4,948 | ) | (6,215 | ) | (8,522 | ) | (12,941 | ) | ||||||
| Acquisition-related transaction costs and retention bonuses | (3,385 | ) | (4,012 | ) | (7,699 | ) | (7,397 | ) | (17,050 | ) | ||||||
| Amortization | (6,997 | ) | (7,040 | ) | (7,943 | ) | (14,037 | ) | (15,559 | ) | ||||||
| Reversal of one-time litigation costs | 8,482 | — | — | 8,482 | — | |||||||||||
| Restructuring charges | — | (2,206 | ) | — | (2,206 | ) | — | |||||||||
| Severance costs | — | (514 | ) | — | (514 | ) | — | |||||||||
| Costs of restatement and related legal activities | (2 | ) | (17 | ) | (83 | ) | (19 | ) | (113 | ) | ||||||
| Non-GAAP operating costs and expenses | $ | 47,664 | $ | 47,973 | $ | 56,024 | $ | 95,637 | $ | 112,722 | ||||||
| Operating income (loss) | $ | 5,744 | $ | 1,441 | $ | (21,749 | ) | $ | 7,185 | $ | (39,307 | ) | ||||
| Adjustments: | ||||||||||||||||
| Other patent royalties received | 2,427 | 3,952 | 1,201 | 6,379 | 3,615 | |||||||||||
| Stock-based compensation | 3,574 | 4,948 | 6,215 | 8,522 | 12,941 | |||||||||||
| Acquisition-related transaction costs and retention bonuses | 3,385 | 4,012 | 7,699 | 7,397 | 17,050 | |||||||||||
| Amortization | 6,997 | 7,040 | 7,943 | 14,037 | 15,559 | |||||||||||
| Reversal of one-time litigation costs | (8,482 | ) | — | — | (8,482 | ) | — | |||||||||
| Restructuring charges | — | 2,206 | — | 2,206 | — | |||||||||||
| Severance costs | — | 514 | — | 514 | — | |||||||||||
| Costs of restatement and related legal activities | 2 | 17 | 83 | 19 | 113 | |||||||||||
| Non-GAAP operating income | $ | 13,647 | $ | 24,130 | $ | 1,392 | $ | 37,777 | $ | 9,971 | ||||||
| Loss before income taxes | $ | (1,701 | ) | $ | (5,891 | ) | $ | (28,379 | ) | $ | (7,592 | ) | $ | (52,419 | ) | |
| Adjustments: | ||||||||||||||||
| Other patent royalties received | 2,427 | 3,952 | 1,201 | 6,379 | 3,615 | |||||||||||
| Stock-based compensation | 3,574 | 4,948 | 6,215 | 8,522 | 12,941 | |||||||||||
| Acquisition-related transaction costs and retention bonuses | 3,385 | 4,012 | 7,699 | 7,397 | 17,050 | |||||||||||
| Amortization | 6,997 | 7,040 | 7,943 | 14,037 | 15,559 | |||||||||||
| Reversal of one-time litigation costs | (8,482 | ) | — | — | (8,482 | ) | — | |||||||||
| Restructuring charges | — | 2,206 | — | 2,206 | — | |||||||||||
| Severance costs | — | 514 | — | 514 | — | |||||||||||
| Costs of restatement and related legal activities | 2 | 17 | 83 | 19 | 113 | |||||||||||
| Non-cash interest expense on convertible notes | 4,145 | 4,089 | 3,557 | 8,234 | 7,067 | |||||||||||
| Non-GAAP income (loss) before income taxes | $ | 10,347 | $ | 20,887 | $ | (1,681 | ) | $ | 31,234 |
$ |
3,926 | |||||
| Non-GAAP provision for (benefit from) income taxes | 3,725 | 7,519 | (606 | ) | 11,244 | 1,413 | ||||||||||
| Non-GAAP net income (loss) | $ | 6,622 | $ | 13,368 | $ | (1,075 | ) | $ | 19,990 | $ | 2,513 | |||||
| Non-GAAP basic net income (loss) per share | $ | 0.06 | $ | 0.12 | $ | (0.01 | ) | $ | 0.18 | $ | 0.02 | |||||
| Non-GAAP diluted net income (loss) per share | $ | 0.06 | $ | 0.11 | $ | (0.01 | ) | $ | 0.17 | $ | 0.02 | |||||
| Weighted average shares used in non-GAAP per share calculation: | ||||||||||||||||
| Basic | 112,183 | 111,599 | 110,553 | 111,892 | 110,456 | |||||||||||
| Diluted | 116,162 | 118,021 | 110,553 | 116,009 | 116,909 | |||||||||||
