Rambus Reports Fourth Quarter and Fiscal Year 2016 Financial Results

_________

(1) Total stock-based compensation expense for the three months and years ended December 31, 2016 and 2015 are presented as follows:

 
  Three Months Ended   Year Ended
December 31, December 31,
2016   2015 2016   2015
Cost of revenue $ 14 $ 12 $ 56 $ 63
Research and development $ 2,639 $ 1,459 $ 9,165 $ 6,762
Sales, general and administrative $ 3,004 $ 1,876 $ 11,792 $ 8,271
 
 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results
(In thousands)

(Unaudited)

 
  Three Months Ended   Year Ended
December 31,  

September 30,

  December 31, December 31,   December 31,
2016

2016

2015 2016 2015
 
Operating costs and expenses $ 97,035 $ 78,039 $ 56,439 $ 302,955 $ 224,858
Adjustments:
Stock-based compensation expense (5,657 ) (5,443 ) (3,347 ) (21,013 ) (15,096 )
Acquisition-related transaction costs and retention bonus expense (197 ) (441 ) (3,235 ) (2 )
Purchase accounting adjustment for inventory fair value step-up (1,136 ) (1,168 ) (2,304 )
Amortization expense (11,093 ) (10,174 ) (6,160 ) (37,138 ) (25,074 )
Impairment of long-lived assets (18,300 ) (18,300 )
Restructuring charges (3,576 ) (3,576 )
Change in contingent consideration 6,845       6,845    

Non-GAAP operating costs and expenses

$ 67,497   $ 60,813   $ 43,356   $ 227,810   $ 181,110  
 
Operating income $ 524 $ 11,816 $ 20,334 $ 33,642 $ 71,420
Adjustments:
Stock-based compensation expense 5,657 5,443 3,347 21,013 15,096
Acquisition-related transaction costs and retention bonus expense 197 441 3,235 2
Purchase accounting adjustment for inventory fair value step-up 1,136 1,168 2,304
Amortization expense 11,093 10,174 6,160 37,138 25,074
Impairment of long-lived assets 18,300 18,300
Restructuring charges 3,576 3,576
Change in contingent consideration (6,845 )     (6,845 )  
Non-GAAP operating income $ 30,062   $ 29,042   $ 33,417   $ 108,787   $ 115,168  
 
Income (loss) before income taxes $ (2,506 ) $ 8,765 $ 17,562 $ 22,637 $ 60,231
Adjustments:
Stock-based compensation expense 5,657 5,443 3,347 21,013 15,096
Acquisition-related transaction costs and retention bonus expense 197 441 3,235 2
Purchase accounting adjustment for inventory fair value step-up 1,136 1,168 2,304
Amortization expense 11,093 10,174 6,160 37,138 25,074
Impairment of long-lived assets 18,300 18,300
Restructuring charges 3,576 3,576
Change in contingent consideration (6,845 ) (6,845 )
Non-cash interest expense on convertible notes 1,723   1,700   1,627   6,749   6,372  
Non-GAAP income before income taxes $ 28,755 $ 27,691 $ 32,272 $ 104,531 $ 110,351
GAAP provision for (benefit from) income taxes 939 4,254 4,570 15,817 (151,157 )
Adjustment to GAAP provision for income taxes 9,125   5,438   7,048   20,769   190,884  
Non-GAAP provision for income taxes 10,064   9,692   11,618   36,586   39,727  
Non-GAAP net income $ 18,691   $ 17,999   $ 20,654   $ 67,945   $ 70,624  
 
Non-GAAP basic net income per share $ 0.17 $ 0.16 $ 0.19 $ 0.62 $ 0.62
Non-GAAP diluted net income per share $ 0.16 $ 0.16 $ 0.18 $ 0.60 $ 0.60
Weighted average shares used in non-GAAP per share calculation:
Basic 110,788 110,214 111,476 110,162 114,814
Diluted 114,060 113,723 113,388 113,140 117,484
 
 

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)

 
  Three Months Ended   Year Ended
December 31,  

September 30,

  December 31, December 31,   December 31,
2016

2016

2015 2016 2015
 
GAAP effective tax rate (38 )% 49

 %

26 % 70

 %

(251

)%

Adjustment to GAAP effective tax rate 73

 %

(14 )% 10 % (35 )% 287

 %

Non-GAAP effective tax rate 35

 %

35

 %

36 % 35

 %

36

 %

 
  (1) 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 year to assist the Company’s planning for future periods.
 
Rambus Inc.
Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates
(In millions, except per share amounts)
(Unaudited)
 
  Three Months Ended
March 31, 2017
 
Low   High
 
Forward-looking operating costs and expenses $ 87.6 $ 84.6
Adjustments:
Stock-based compensation expense (7.1 ) (7.1 )
Amortization expense (10.5 ) (10.5 )
Forward-looking Non-GAAP operating costs and expenses $ 70.0   $ 67.0  
 
Forward-looking operating income $ 5.4 $ 13.4
Adjustments:
Stock-based compensation expense 7.1 7.1
Amortization expense 10.5   10.5  
Forward-looking Non-GAAP operating income $ 23.0   $ 31.0  
 
Forward-looking income before income taxes $ 2.7 $ 10.7
Adjustments:
Stock-based compensation expense 7.1 7.1
Amortization expense 10.5 10.5
Non-cash interest expense on convertible notes 1.7   1.7  
Forward-looking Non-GAAP income before income taxes $ 22.0 $ 30.0
Forward-looking GAAP provision for income taxes 0.9 3.7
Adjustment to Forward-looking GAAP provision for income taxes 6.8   6.8  
Forward-looking Non-GAAP provision for income taxes 7.7   10.5  
Forward-looking Non-GAAP net income $ 14.3   $ 19.5  
 
Forward-looking Non-GAAP basic net income per share $ 0.13 $ 0.18
Forward-looking Non-GAAP diluted net income per share $ 0.13 $ 0.17
Weighted average shares used in forward-looking Non-GAAP per share calculation:
Basic 111.0 111.0
Diluted 114.0 114.0
 

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