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 both 2017 and 2016, 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
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.
|
|
|
Rambus Inc.
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
182,345
|
|
$
|
135,294
|
|
Marketable securities
|
|
1,287
|
|
36,888
|
|
Accounts receivable
|
|
49,799
|
|
21,099
|
|
Inventories
|
|
5,015
|
|
5,633
|
|
Prepaids and other current assets
|
|
10,998
|
|
17,867
|
|
Total current assets
|
|
249,444
|
|
216,781
|
|
Intangible assets, net
|
|
102,545
|
|
132,388
|
|
Goodwill
|
|
209,318
|
|
204,794
|
|
Property, plant and equipment, net
|
|
54,035
|
|
58,442
|
|
Deferred tax assets
|
|
206,503
|
|
168,342
|
|
Other assets
|
|
2,283
|
|
2,749
|
|
Total assets
|
|
$
|
824,128
|
|
$
|
783,496
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
7,016
|
|
$
|
9,793
|
|
Accrued salaries and benefits
|
|
12,278
|
|
14,177
|
|
Deferred revenue
|
|
21,224
|
|
16,932
|
|
Convertible notes, short-term
|
|
131,490
|
|
—
|
|
Other current liabilities
|
|
10,731
|
|
10,399
|
|
Total current liabilities
|
|
182,739
|
|
51,301
|
|
Long-term liabilities:
|
|
|
|
|
|
Convertible notes, long-term
|
|
—
|
|
126,167
|
|
Long-term imputed financing obligation
|
|
37,471
|
|
38,029
|
|
Other long-term liabilities
|
|
14,381
|
|
15,217
|
|
Total long-term liabilities
|
|
51,852
|
|
179,413
|
|
Total stockholders’ equity
|
|
589,537
|
|
552,782
|
|
Total liabilities and stockholders’ equity
|
|
$
|
824,128
|
|
$
|
783,496
|
|
|
|
Rambus Inc.
|
|
Condensed Consolidated Statements of Operations
|
|
(In thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Royalties
|
|
$
|
72,787
|
|
|
$
|
68,298
|
|
|
$
|
211,733
|
|
|
$
|
194,010
|
|
|
Product revenue
|
|
8,661
|
|
|
7,092
|
|
|
27,966
|
|
|
14,306
|
|
|
Contract and other revenue
|
|
17,686
|
|
|
14,465
|
|
|
51,506
|
|
|
30,722
|
|
|
Total revenue
|
|
99,134
|
|
|
89,855
|
|
|
291,205
|
|
|
239,038
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of product revenue (1)
|
|
5,152
|
|
|
7,031
|
|
|
17,882
|
|
|
12,581
|
|
|
Cost of contract and other revenue
|
|
14,456
|
|
|
12,393
|
|
|
43,274
|
|
|
33,139
|
|
|
Research and development (1)
|
|
36,196
|
|
|
33,820
|
|
|
109,718
|
|
|
91,100
|
|
|
Sales, general and administrative (1)
|
|
26,799
|
|
|
24,795
|
|
|
82,122
|
|
|
69,679
|
|
|
Gain from sale of intellectual property
|
|
(479
|
)
|
|
—
|
|
|
(479
|
)
|
|
—
|
|
|
Gain from settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(579
|
)
|
|
Total operating costs and expenses
|
|
82,124
|
|
|
78,039
|
|
|
252,517
|
|
|
205,920
|
|
|
Operating income
|
|
17,010
|
|
|
11,816
|
|
|
38,688
|
|
|
33,118
|
|
|
Interest income and other income (expense), net
|
|
208
|
|
|
142
|
|
|
491
|
|
|
1,522
|
|
|
Interest expense
|
|
(3,287
|
)
|
|
(3,193
|
)
|
|
(9,754
|
)
|
|
(9,497
|
)
|
|
Interest and other income (expense), net
|
|
(3,079
|
)
|
|
(3,051
|
)
|
|
(9,263
|
)
|
|
(7,975
|
)
|
|
Income before income taxes
|
|
13,931
|
|
|
8,765
|
|
|
29,425
|
|
|
25,143
|
|
|
Provision for income taxes
|
|
6,236
|
|
|
4,254
|
|
|
16,119
|
|
|
14,878
|
|
|
Net income
|
|
$
|
7,695
|
|
|
$
|
4,511
|
|
|
$
|
13,306
|
|
|
$
|
10,265
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
Diluted
|
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
Weighted average shares used in per share calculation
|
|
|
|
|
|
|
|
|
|
Basic
|
|
109,555
|
|
|
110,214
|
|
|
110,353
|
|
|
109,951
|
|
|
Diluted
|
|
113,119
|
|
|
113,723
|
|
|
113,861
|
|
|
112,805
|
|
|
|
|
|
(1)
|
Total stock-based compensation expense for the three and nine months
ended September 30, 2017 and 2016 is presented as follows:
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Cost of product revenue
|
|
$
|
20
|
|
$
|
14
|
|
$
|
53
|
|
$
|
42
|
|
Research and development
|
|
$
|
2,969
|
|
$
|
2,337
|
|
$
|
9,048
|
|
$
|
6,526
|
|
Sales, general and administrative
|
|
$
|
3,975
|
|
$
|
3,092
|
|
$
|
11,068
|
|
$
|
8,788
|
|
|
|
Rambus Inc.
|
|
Supplemental Reconciliation of GAAP to Non-GAAP Results
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September
|
|
June 30,
|
|
September
|
|
September
|
|
September
|
|
|
|
30, 2017
|
|
2017
|
|
30, 2016
|
|
30, 2017
|
|
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses
|
|
$
|
82,124
|
|
|
$
|
86,476
|
|
|
$
|
78,039
|
|
|
$
|
252,517
|
|
|
$
|
205,920
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
(6,964
|
)
|
|
|
(6,609
|
)
|
|
|
(5,443
|
)
|
|
|
(20,169
|
)
|
|
|
(15,356
|
)
|
|
Acquisition-related transaction costs and retention bonus expense
|
|
|
(47
|
)
|
|
|
(90
|
)
|
|
|
(441
|
)
|
|
|
(218
|
)
|
|
|
(3,038
|
)
|
|
Purchase accounting adjustment for inventory fair value step-up
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,168
|
)
|
|
|
—
|
|
|
|
(1,168
|
)
|
|
Amortization expense
|
|
|
(10,498
|
)
|
|
|
(10,450
|
)
|
|
|
(10,174
|
)
|
|
|
(31,436
|
)
|
|
|
(26,045
|
)
|
|
Non-GAAP operating costs and expenses
|
|
$
|
64,615
|
|
|
$
|
69,327
|
|
|
$
|
60,813
|
|
|
$
|
200,694
|
|
|
$
|
160,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
17,010
|
|
|
$
|
8,244
|
|
|
$
|
11,816
|
|
|
$
|
38,688
|
|
|
$
|
33,118
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
6,964
|
|
|
|
6,609
|
|
|
|
5,443
|
|
|
|
20,169
|
|
|
|
15,356
|
|
|
Acquisition-related transaction costs and retention bonus expense
|
|
|
47
|
|
|
|
90
|
|
|
|
441
|
|
|
|
218
|
|
|
|
3,038
|
|
|
Purchase accounting adjustment for inventory fair value step-up
|
|
|
—
|
|
|
|
—
|
|
|
|
1,168
|
|
|
|
—
|
|
|
|
1,168
|
|
|
Amortization expense
|
|
|
10,498
|
|
|
|
10,450
|
|
|
|
10,174
|
|
|
|
31,436
|
|
|
|
26,045
|
|
|
Non-GAAP operating income
|
|
$
|
34,519
|
|
|
$
|
25,393
|
|
|
$
|
29,042
|
|
|
$
|
90,511
|
|
|
$
|
78,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$
|
13,931
|
|
|
$
|
5,112
|
|
|
$
|
8,765
|
|
|
$
|
29,425
|
|
|
$
|
25,143
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
6,964
|
|
|
|
6,609
|
|
|
|
5,443
|
|
|
|
20,169
|
|
|
|
15,356
|
|
|
Acquisition-related transaction costs and retention bonus expense
|
|
|
47
|
|
|
|
90
|
|
|
|
441
|
|
|
|
218
|
|
|
|
3,038
|
|
|
Purchase accounting adjustment for inventory fair value step-up
|
|
|
—
|
|
|
|
—
|
|
|
|
1,168
|
|
|
|
—
|
|
|
|
1,168
|
|
|
Amortization expense
|
|
|
10,498
|
|
|
|
10,450
|
|
|
|
10,174
|
|
|
|
31,436
|
|
|
|
26,045
|
|
|
Non-cash interest expense on convertible notes
|
|
|
1,801
|
|
|
|
1,774
|
|
|
|
1,700
|
|
|
|
5,324
|
|
|
|
5,026
|
|
|
Non-GAAP income before income taxes
|
|
$
|
33,241
|
|
|
$
|
24,035
|
|
|
$
|
27,691
|
|
|
$
|
86,572
|
|
|
$
|
75,776
|
|
|
GAAP provision for income taxes
|
|
|
6,236
|
|
|
|
2,507
|
|
|
|
4,254
|
|
|
|
16,119
|
|
|
|
14,878
|
|
|
Adjustment to GAAP provision for income taxes
|
|
|
5,398
|
|
|
|
5,905
|
|
|
|
5,438
|
|
|
|
14,181
|
|
|
|
11,644
|
|
|
Non-GAAP provision for income taxes
|
|
|
11,634
|
|
|
|
8,412
|
|
|
|
9,692
|
|
|
|
30,300
|
|
|
|
26,522
|
|
|
Non-GAAP net income
|
|
$
|
21,607
|
|
|
$
|
15,623
|
|
|
$
|
17,999
|
|
|
$
|
56,272
|
|
|
$
|
49,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic net income per share
|
|
$
|
0.20
|
|
|
$
|
0.14
|
|
|
$
|
0.16
|
|
|
$
|
0.51
|
|
|
$
|
0.45
|
|
|
Non-GAAP diluted net income per share
|
|
$
|
0.19
|
|
|
$
|
0.14
|
|
|
$
|
0.16
|
|
|
$
|
0.49
|
|
|
$
|
0.44
|
|
|
Weighted average shares used in non-GAAP per share calculation:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
109,555
|
|
|
|
110,060
|
|
|
|
110,214
|
|
|
|
110,353
|
|
|
|
109,951
|
|
|
Diluted
|
|
|
113,119
|
|
|
|
112,565
|
|
|
|
113,723
|
|
|
|
113,861
|
|
|
|
112,805
|
|
|
|
|
Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax
Rate (1)
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30, 2017
|
|
June 30, 2017
|
|
September 30, 2016
|
|
September 30, 2017
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP effective tax rate
|
|
45
|
%
|
|
49
|
%
|
|
49
|
%
|
|
55
|
%
|
|
59
|
%
|
|
Adjustment to GAAP effective tax rate
|
|
(10
|
)%
|
|
(14
|
)%
|
|
(14
|
)%
|
|
(20
|
)%
|
|
(24
|
)%
|
|
Non-GAAP effective tax rate
|
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
(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 both 2017 and 2016, 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 Other GAAP to Non-GAAP Items
|
|
(In thousands, except percentages)
|
|
(Unaudited)
|
|
|
|
|
|
GAAP
|
|
Non-GAAP
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
|
|
Revenue (i)
|
|
$
|
99,134
|
|
|
$
|
89,855
|
|
|
$
|
99,134
|
|
|
$
|
89,855
|
|
|
Operating income (ii)
|
|
|
17,010
|
|
|
|
11,816
|
|
|
|
34,519
|
|
|
|
29,042
|
|
|
Operating margin (ii/i)
|
|
|
17
|
%
|
|
|
13
|
%
|
|
|
35
|
%
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Non-GAAP
|
|
|
|
Nine Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenue (i)
|
|
$
|
291,205
|
|
|
$
|
239,038
|
|
|
$
|
291,205
|
|
|
$
|
239,038
|
|
|
Operating income (ii)
|
|
38,688
|
|
|
33,118
|
|
|
90,511
|
|
|
78,725
|
|
|
Operating margin (ii/i)
|
|
13
|
%
|
|
14
|
%
|
|
31
|
%
|
|
33
|
%
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Net income
|
|
$
|
7,695
|
|
|
$
|
4,511
|
|
Add back:
|
|
|
|
|
|
Interest and other income (expense), net
|
|
3,079
|
|
|
3,051
|
|
Provision for income taxes
|
|
6,236
|
|
|
4,254
|
|
Depreciation expense
|
|
3,249
|
|
|
3,423
|
|
Amortization expense
|
|
10,498
|
|
|
10,174
|
|
EBITDA (1)
|
|
$
|
30,757
|
|
|
$
|
25,413
|
|
Adjustments:
|
|
|
|
|
|
Stock-based compensation expense
|
|
6,964
|
|
|
5,443
|
|
Acquisition-related transaction costs and retention bonus expense
|
|
47
|
|
|
441
|
|
Purchase accounting adjustment for inventory fair value step-up
|
|
—
|
|
|
1,168
|
|
Adjusted EBITDA (2)
|
|
$
|
37,768
|
|
|
$
|
32,465
|
|
|
|
|
(1)
|
EBITDA is a non-GAAP measure that management uses to evaluate the
cash generating capacity of the company. The most directly
comparable GAAP measure is net income. EBITDA is net income adjusted
for net interest expense, income taxes, and depreciation and
amortization. It should not be considered as an alternative to net
income computed under GAAP.
|
|
(2)
|
Adjusted EBITDA excludes the impact of other non-GAAP adjustments
indicated in the above tables.
|
|
|
|
Rambus Inc.
|
|
Reconciliation of GAAP Forward Looking Estimates to Non-GAAP
Forward Looking Estimates
|
|
(In millions, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
December 31, 2017
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
Forward-looking operating costs and expenses
|
|
$
|
87.5
|
|
|
$
|
82.5
|
|
|
Adjustments:
|
|
|
|
|
|
Stock-based compensation expense
|
|
(7.5
|
)
|
|
(7.5
|
)
|
|
Amortization expense
|
|
(11.0
|
)
|
|
(11.0
|
)
|
|
Forward-looking Non-GAAP operating costs and expenses
|
|
$
|
69.0
|
|
|
$
|
64.0
|
|
|
|
|
|
|
|
|
Forward-looking operating income
|
|
$
|
10.5
|
|
|
$
|
21.5
|
|
|
Adjustments:
|
|
|
|
|
|
Stock-based compensation expense
|
|
7.5
|
|
|
7.5
|
|
|
Amortization expense
|
|
11.0
|
|
|
11.0
|
|
|
Forward-looking Non-GAAP operating income
|
|
$
|
29.0
|
|
|
$
|
40.0
|
|
|
|
|
|
|
|
|
Forward-looking income before income taxes
|
|
$
|
7.5
|
|
|
$
|
18.5
|
|
|
Adjustments:
|
|
|
|
|
|
Stock-based compensation expense
|
|
7.5
|
|
|
7.5
|
|
|
Amortization expense
|
|
11.0
|
|
|
11.0
|
|
|
Non-cash interest expense on convertible notes
|
|
1.7
|
|
|
1.7
|
|
|
Forward-looking Non-GAAP income before income taxes
|
|
$
|
27.7
|
|
|
$
|
38.7
|
|
|
Forward-looking GAAP provision for income taxes
|
|
2.6
|
|
|
6.5
|
|
|
Adjustment to Forward-looking GAAP provision for income taxes
|
|
7.1
|
|
|
7.0
|
|
|
Forward-looking Non-GAAP provision for income taxes
|
|
9.7
|
|
|
13.5
|
|
|
Forward-looking Non-GAAP net income
|
|
$
|
18.0
|
|
|
$
|
25.2
|
|
|
|
|
|
|
|
|
Forward-looking Non-GAAP basic net income per share
|
|
$
|
0.16
|
|
|
$
|
0.23
|
|
|
Forward-looking Non-GAAP diluted net income per share
|
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
Weighted average shares used in forward-looking Non-GAAP per share
calculation:
|
|
|
|
|
|
Basic
|
|
111.0
|
|
|
111.0
|
|
|
Diluted
|
|
114.0
|
|
|
114.0
|
|
