Rambus Reports First Quarter 2018 Financial Results

_________

(1) Total stock-based compensation expense for the three months ended March 31, 2018 and 2017 is presented as follows:

   

Three Months Ended
March 31,

2018 2017
Cost of product revenue $ 3 $ 14
Research and development $ 3,192 $ 3,012
Sales, general and administrative $ 4,319 $ 3,570
 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(In thousands)

(Unaudited)

 
Three Months Ended
ASC 606   ASC 605

March 31,
2018

March 31,
2018

 

March 31,
2017

 
Operating costs and expenses $ 90,039 $ 90,039 $ 83,917
Adjustments:
Stock-based compensation expense (7,514 ) (7,514 ) (6,596 )
Acquisition-related transaction costs and retention bonus expense (30 ) (30 ) (81 )
Amortization expense (10,531 ) (10,531 ) (10,488 )
Restructuring charges (3,245 ) (3,245 )  
Non-GAAP operating costs and expenses $ 68,719   $ 68,719   $ 66,752  
 
Operating income (loss) $ (43,613 ) $ 10,420 $ 13,434
Adjustments:
Stock-based compensation expense 7,514 7,514 6,596
Acquisition-related transaction costs and retention bonus expense 30 30 81
Amortization expense 10,531 10,531 10,488
Restructuring charges 3,245   3,245    
Non-GAAP operating income (loss) $ (22,293 ) $ 31,740   $ 30,599  
 
Income (loss) before income taxes $ (38,918 ) $ 7,601 $ 10,382
Adjustments:
Stock-based compensation expense 7,514 7,514 6,596
Acquisition-related transaction costs and retention bonus expense 30 30 81
Amortization expense 10,531 10,531 10,488
Restructuring charges 3,245 3,245
Non-cash interest expense on convertible notes 2,679   2,679   1,749  
Non-GAAP income (loss) before income taxes $ (14,919 ) $ 31,600 $ 29,296
GAAP provision for (benefit from) income taxes (1 ) 1,488 7,376
Adjustment to GAAP provision for (benefit from) income taxes (3,580 ) 6,096   2,878  
Non-GAAP provision for (benefit from) income taxes (3,581 ) 7,584   10,254  
Non-GAAP net income (loss) $ (11,338 ) $ 24,016   $ 19,042  
 
Non-GAAP basic net income (loss) per share $ (0.10 ) $ 0.22 $ 0.17
Non-GAAP diluted net income (loss) per share $ (0.10 ) $ 0.21 $ 0.17
Weighted average shares used in non-GAAP per share calculation:
Basic 109,358 109,358 111,464
Diluted 109,358 112,968 115,325
 

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

 
Three Months Ended March 31,
ASC 606   ASC 605   ASC 605
2018 2018 2017
GAAP effective tax rate 0

%

20 % 71

 %

Adjustment to GAAP effective tax rate 24 % 4 % (36 )%
Non-GAAP effective tax rate 24 % 24 % 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 24 percent for 2018 and 35 percent for 2017, 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 March 31, Three Months Ended March 31,
ASC 606   ASC 605 ASC 606   ASC 605
2018 2018   2017 2018 2018   2017
     
Revenue (i) $ 46,426 $ 100,459 $ 97,351 $ 46,426 $ 100,459 $ 97,351
Operating income (loss) (ii) (43,613 ) 10,420 13,434 (22,293 ) 31,740 30,599
Operating margin (ii/i) (94 )% 10 % 14 % (48 )% 32 % 31 %
 
 

Three Months Ended
March 31,

ASC 605
2018   2017
 
Net income $ 6,113 $ 3,006
Add back:
Interest and other income (expense), net 2,819 3,052
Provision for income taxes 1,488 7,376
Depreciation expense 2,942 3,392
Amortization expense 10,531   10,488
EBITDA (1) $ 23,893 $ 27,314
Adjustments:
Stock-based compensation expense 7,514 6,596
Acquisition-related transaction costs and retention bonus expense 30 81
Restructuring charges 3,245  
Adjusted EBITDA (2) $ 34,682   $ 33,991
 
      (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)

   
ASC 606 ASC 605

Three Months Ended June 30,
2018

Three Months Ended June 30,
2018

Low   High Low   High
 
Forward-looking operating costs and expenses $ 86.5 $ 82.5 $ 86.5 $ 82.5
Adjustments:
Stock-based compensation expense (7.5 ) (7.5 ) (7.5 ) (7.5 )
Amortization expense (11.0 ) (11.0 ) (11.0 ) (11.0 )
Forward-looking Non-GAAP operating costs and expenses $ 68.0   $ 64.0   $ 68.0   $ 64.0  
 
Forward-looking operating income (loss) $ (44.5 ) $ (34.5 ) $ 7.5 $ 17.5
Adjustments:
Stock-based compensation expense 7.5 7.5 7.5 7.5
Amortization expense 11.0   11.0   11.0   11.0  
Forward-looking Non-GAAP operating income (loss) $ (26.0 ) $ (16.0 ) $ 26.0   $ 36.0  
 
Forward-looking income (loss) before income taxes $ (48.9 ) $ (38.9 ) $ 3.1 $ 13.1
Adjustments:
Stock-based compensation expense 7.5 7.5 7.5 7.5
Amortization expense 11.0 11.0 11.0 11.0
Non-cash interest expense on convertible notes 2.7   2.7   2.7   2.7  
Forward-looking Non-GAAP income (loss) before income taxes $ (27.7 ) $ (17.7 ) $ 24.3 $ 34.3
Forward-looking GAAP provision for (benefit from) income taxes (11.7 ) (9.3 ) 0.7 3.1
Adjustment to Forward-looking GAAP provision for (benefit from) income taxes 5.1   5.1   5.1   5.2  
Forward-looking Non-GAAP provision for (benefit from) income taxes (6.6 ) (4.2 ) 5.8   8.3  
Forward-looking Non-GAAP net income (loss) $ (21.1 ) $ (13.5 ) $ 18.5   $ 26.0  
 
Forward-looking Non-GAAP basic net income (loss) per share $ (0.20 ) $ (0.13 ) $ 0.17 $ 0.24
Forward-looking Non-GAAP diluted net income (loss) per share $ (0.20 ) $ (0.13 ) $ 0.17 $ 0.23
Weighted average shares used in forward-looking Non-GAAP per share calculation:
Basic 107.0 107.0 107.0 107.0
Diluted 107.0 107.0 111.0 111.0

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