Rambus Reports Fourth Quarter and Fiscal Year 2016 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.

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.

Impairment of long-lived assets. These charges consist of non-cash charges to long-lived assets and are excluded because such charges are non-recurring and do not reduce the Company’s liquidity.

Change in contingent consideration. This change is due to a reduction of acquisition purchase consideration. This is a non-recurring benefit that has no direct correlation to the operation of the Company's business and no cash flow impact.

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 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 first quarter of 2017, 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 innovative hardware and software technologies, driving advancements from the data center to the mobile edge. 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)
 
  December 31,   December 31,
2016 2015
ASSETS
 
Current assets:
Cash and cash equivalents $ 135,294 $ 143,764
Marketable securities 36,888 143,942
Accounts receivable 21,099 16,408
Prepaids and other current assets 17,867 10,396
Inventories 5,633 1,080
Total current assets 216,781 315,590
Intangible assets, net 132,388 64,266
Goodwill 204,794 116,899
Property, plant and equipment, net 58,442 56,616
Deferred tax assets 168,342 162,485
Other assets 2,749 2,165
Total assets $ 783,496 $ 718,021
 
LIABILITIES & STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 9,793 $ 4,096
Accrued salaries and benefits 14,177 12,278
Deferred revenue 16,932 5,780
Other accrued liabilities 10,399 6,212
Total current liabilities 51,301 28,366
Long-term liabilities:
Convertible notes, long-term 126,167 119,418
Long-term imputed financing obligation 38,029 38,625
Other long-term liabilities 15,217 5,079

Total long-term liabilities

179,413 163,122
Total stockholders’ equity 552,782 526,533
Total liabilities and stockholders’ equity $ 783,496 $ 718,021
 
Rambus Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended   Year Ended
December 31, December 31,
2016   2015 2016   2015
 
Revenue:
Royalties $ 70,604 $ 66,242 $ 264,614 $ 262,415
Contract and other revenue 26,955   10,531   71,983   33,863  
Total revenue 97,559 76,773 336,597 296,278
Operating costs and expenses:
Cost of revenue (1) 21,370 11,340 67,090 45,344
Research and development (1) 38,744 25,604 129,844 111,110
Sales, general and administrative (1) 25,466 16,853 95,145 70,554
Restructuring charges 3,576 3,576
Impairment of long-lived assets 18,300 18,300
Change in contingent consideration (6,845 ) (6,845 )
Gain from sale of intellectual property (424 ) (3,686 )
Gain from settlement   (510 ) (579 ) (2,040 )
Total operating costs and expenses 97,035   56,439   302,955   224,858  
Operating income 524 20,334 33,642 71,420
Interest income and other income (expense), net 218 350 1,740 1,224
Interest expense (3,248 ) (3,122 ) (12,745 ) (12,413 )
Interest and other income (expense), net (3,030 ) (2,772 ) (11,005 ) (11,189 )
Income (loss) before income taxes (2,506 ) 17,562 22,637 60,231
Provision for (benefit from) income taxes 939   4,570   15,817   (151,157 )
Net income (loss) $ (3,445 ) $ 12,992   $ 6,820   $ 211,388  
Net income (loss) per share:
Basic $ (0.03 ) $ 0.12   $ 0.06   $ 1.84  
Diluted $ (0.03 ) $ 0.11   $ 0.06   $ 1.80  
Weighted average shares used in per share calculation
Basic 110,788   111,476   110,162   114,814  
Diluted 110,788   113,388   113,140   117,484  
 

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