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 | ||||||||||||
