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.
About Rambus Inc.
Dedicated to making data faster and safer, Rambus creates innovative hardware, software and services that drive technology advancements from the data center to the mobile edge. Our architecture licenses, IP cores, chips, software and services span memory and interfaces, security and emerging technologies to positively impact the modern world. We collaborate with the industry, partnering with leading chip and system designers, foundries and service providers. Integrated into tens of billions of devices and systems, our products power and secure diverse applications, including Big Data, Internet of Things (IoT) security, mobile payments and smart ticketing. For more information, visit rambus.com.
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 our new product and service offerings, growth for 2018 and financial guidance for the fourth quarter of 2018, including revenue, operating costs and expenses, earnings per share and estimated, fixed, long-term projected tax rates, both on a GAAP and non-GAAP basis as appropriate. 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.
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Rambus Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
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|
September 30,
2018 |
December 31,
2017 |
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| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 134,534 | $ | 225,844 | |||
| Marketable securities | 113,637 | 103,532 | |||||
| Accounts receivable | 42,674 | 25,326 | |||||
| Unbilled receivables | 164,487 | 566 | |||||
| Inventories | 6,272 | 5,159 | |||||
| Prepaids and other current assets | 14,434 | 11,317 | |||||
| Total current assets | 476,038 | 371,744 | |||||
| Intangible assets, net | 65,411 | 91,722 | |||||
| Goodwill | 208,116 | 209,661 | |||||
| Property, plant and equipment, net | 49,174 | 54,303 | |||||
| Deferred tax assets | 3,930 | 159,099 | |||||
| Unbilled receivables, long-term | 535,422 | — | |||||
| Other assets | 5,879 | 4,543 | |||||
| Total assets | $ | 1,343,970 | $ | 891,072 | |||
| LIABILITIES & STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 8,572 | $ | 9,614 | |||
| Accrued salaries and benefits | 14,353 | 17,091 | |||||
| Deferred revenue | 12,727 | 18,272 | |||||
| Income taxes payable, short-term | 17,784 | 258 | |||||
| Convertible notes, short-term | — | 78,451 | |||||
| Other current liabilities | 5,942 | 9,156 | |||||
| Total current liabilities | 59,378 | 132,842 | |||||
| Long-term liabilities: | |||||||
| Convertible notes, long-term | 140,279 | 135,447 | |||||
| Long-term imputed financing obligation | 36,558 | 37,262 | |||||
| Long-term income taxes payable | 81,400 | 3,344 | |||||
| Other long-term liabilities | 17,351 | 10,593 | |||||
| Total long-term liabilities | 275,588 | 186,646 | |||||
| Total stockholders’ equity | 1,009,004 | 571,584 | |||||
| Total liabilities and stockholders’ equity | $ | 1,343,970 | $ | 891,072 | |||
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Rambus Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
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Three Months Ended
September 30, |
Nine Months Ended
September 30, |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue: | ||||||||||||||||
| Royalties | $ | 33,599 | $ | 72,787 | $ | 85,022 | $ | 211,733 | ||||||||
| Product revenue | 11,753 | 8,661 | 27,153 | 27,966 | ||||||||||||
| Contract and other revenue | 14,402 | 17,686 | 50,463 | 51,506 | ||||||||||||
| Total revenue | 59,754 | 99,134 | 162,638 | 291,205 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of product revenue (1) | $ | 5,376 | $ | 5,152 | $ | 13,932 | $ | 17,882 | ||||||||
| Cost of contract and other revenue | 5,952 | 14,456 | 29,163 | 43,274 | ||||||||||||
| Research and development (1) | 43,131 | 36,196 | 120,944 | 109,718 | ||||||||||||
| Sales, general and administrative (1) | 24,462 | 26,799 | 79,143 | 82,122 | ||||||||||||
| Gain from sale of intellectual property | — | (479 | ) | — | (479 | ) | ||||||||||
| Restructuring charges | — | — | 2,223 | — | ||||||||||||
| Total operating costs and expenses | 78,921 | 82,124 | 245,405 | 252,517 | ||||||||||||
| Operating income (loss) | (19,167 | ) | 17,010 | (82,767 | ) | 38,688 | ||||||||||
| Interest income and other income (expense), net | 8,008 | 208 | 25,373 | 491 | ||||||||||||
| Interest expense | (3,976 | ) | (3,287 | ) | (13,031 | ) | (9,754 | ) | ||||||||
| Interest and other income (expense), net | 4,032 | (3,079 | ) | 12,342 | (9,263 | ) | ||||||||||
| Income (loss) before income taxes | (15,135 | ) | 13,931 | (70,425 | ) | 29,425 | ||||||||||
| Provision for income taxes | 89,069 | 6,236 | 84,825 | 16,119 | ||||||||||||
| Net income (loss) | $ | (104,204 | ) | $ | 7,695 | $ | (155,250 | ) | $ | 13,306 | ||||||
| Net income (loss) per share: | ||||||||||||||||
| Basic | $ | (0.97 | ) | $ | 0.07 | $ | (1.43 | ) | $ | 0.12 | ||||||
| Diluted | $ | (0.97 | ) | $ | 0.07 | $ | (1.43 | ) | $ | 0.12 | ||||||
| Weighted average shares used in per share calculation | ||||||||||||||||
| Basic | 107,897 | 109,555 | 108,324 | 110,353 | ||||||||||||
| Diluted | 107,897 | 113,119 | 108,324 | 113,861 | ||||||||||||
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_________ (1) Total stock-based compensation expense for the three and nine months ended September 30, 2018 and 2017 is presented as follows: |
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Three Months Ended
September 30, |
Nine Months Ended
September 30, |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Cost of product revenue | $ | 2 | $ | 20 | $ | 7 | $ | 53 | ||||||||
| Research and development | $ | 3,184 | $ | 2,969 | $ | 9,662 | $ | 9,048 | ||||||||
| Sales, general and administrative | $ | 3,003 | $ | 3,975 | $ | 5,922 | $ | 11,068 | ||||||||
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Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (In thousands) (Unaudited) |
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| Three Months Ended September 30, | ||||||||||||
| ASC 606 | ASC 605 | |||||||||||
| 2018 | 2018 | 2017 | ||||||||||
| Operating costs and expenses | $ | 78,921 | $ | 78,921 | $ | 82,124 | ||||||
| Adjustments: | ||||||||||||
| Stock-based compensation expense | (6,189 | ) | (6,189 | ) | (6,964 | ) | ||||||
| Acquisition-related transaction costs and retention bonus expense | (10 | ) | (10 | ) | (47 | ) | ||||||
| Amortization expense | (5,083 | ) | (5,083 | ) | (10,498 | ) | ||||||
| Non-GAAP operating costs and expenses | $ | 67,639 | $ | 67,639 | $ | 64,615 | ||||||
| Operating income (loss) | $ | (19,167 | ) | $ | 20,919 | $ | 17,010 | |||||
| Adjustments: | ||||||||||||
| Stock-based compensation expense | 6,189 | 6,189 | 6,964 | |||||||||
| Acquisition-related transaction costs and retention bonus expense | 10 | 10 | 47 | |||||||||
| Amortization expense | 5,083 | 5,083 | 10,498 | |||||||||
| Non-GAAP operating income (loss) | $ | (7,885 | ) | $ | 32,201 | $ | 34,519 | |||||
| Income (loss) before income taxes | $ | (15,135 | ) | $ | 18,419 | $ | 13,931 | |||||
| Adjustments: | ||||||||||||
| Stock-based compensation expense | 6,189 | 6,189 | 6,964 | |||||||||
| Acquisition-related transaction costs and retention bonus expense | 10 | 10 | 47 | |||||||||
| Amortization expense | 5,083 | 5,083 | 10,498 | |||||||||
| Non-cash interest expense on convertible notes | 2,191 | 2,191 | 1,801 | |||||||||
| Non-GAAP income (loss) before income taxes | $ | (1,662 | ) | $ | 31,892 | $ | 33,241 | |||||
| GAAP provision for income taxes | 89,069 | 89,069 | 6,236 | |||||||||
| Adjustment to GAAP provision for income taxes | (89,468 | ) | (81,415 | ) | 5,398 | |||||||
| Non-GAAP provision for (benefit from) income taxes | (399 | ) | 7,654 | 11,634 | ||||||||
| Non-GAAP net income (loss) | $ | (1,263 | ) | $ | 24,238 | $ | 21,607 | |||||
| Non-GAAP basic net income (loss) per share | $ | (0.01 | ) | $ | 0.22 | $ | 0.20 | |||||
| Non-GAAP diluted net income (loss) per share | $ | (0.01 | ) | $ | 0.22 | $ | 0.19 | |||||
| Weighted average shares used in non-GAAP per share calculation: | ||||||||||||
| Basic | 107,897 | 107,897 | 109,555 | |||||||||
| Diluted | 107,897 | 109,780 | 113,119 | |||||||||
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Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1) |
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| Three Months Ended September 30, | |||||||||
| ASC 606 | ASC 605 | ||||||||
| 2018 | 2018 | 2017 | |||||||
| GAAP effective tax rate | (589 | )% | 484 |
% |
45 |
% |
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| Adjustment to GAAP effective tax rate | 613 |
% |
(460 | )% | (10 | )% | |||
| Non-GAAP effective tax rate | 24 |
% |
24 |
% |
35 |
% |
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| (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. | ||||||
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Rambus Inc. Reconciliation of Other GAAP to Non-GAAP Items (In thousands, except percentages) (Unaudited) |
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| GAAP | Non-GAAP | |||||||||||||||||||||||
| Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||
| ASC 606 | ASC 605 | ASC 606 | ASC 605 | |||||||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2018 | 2017 | |||||||||||||||||||
| Revenue (i) | $ | 59,754 | $ | 99,840 | $ | 99,134 | $ | 59,754 | $ | 99,840 | $ | 99,134 | ||||||||||||
| Operating income (loss) (ii) | (19,167 | ) | 20,919 | 17,010 | (7,885 | ) | 32,201 | 34,519 | ||||||||||||||||
| Operating margin (ii/i) | (32 | )% | 21 | % | 17 | % | (13 | )% | 32 | % | 35 | % | ||||||||||||
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Three Months Ended
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| ASC 605 | |||||||
| 2018 | 2017 | ||||||
| Net income (loss) | $ | (70,650 | ) | $ | 7,695 | ||
| Add back: | |||||||
| Interest and other income (expense), net | 2,500 | 3,079 | |||||
| Provision for income taxes | 89,069 | 6,236 | |||||
| Depreciation expense | 2,578 | 3,249 | |||||
| Amortization expense | 5,083 | 10,498 | |||||
| EBITDA (1) | $ | 28,580 | $ | 30,757 | |||
| Adjustments: | |||||||
| Stock-based compensation expense | 6,189 | 6,964 | |||||
| Acquisition-related transaction costs and retention bonus expense | 10 | 47 | |||||
| Adjusted EBITDA (2) | $ | 34,779 | $ | 37,768 | |||
| (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. | ||||||
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Rambus Inc. Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates (In millions, except per share amounts) (Unaudited) |
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| ASC 606 | ASC 605 | |||||||||||||||
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Three Months Ended
|
Three Months Ended
|
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| Low | High | Low | High | |||||||||||||
| Forward-looking operating costs and expenses | $ | 77.4 | $ | 73.4 | $ | 77.4 | $ | 73.4 | ||||||||
| Adjustments: | ||||||||||||||||
| Stock-based compensation expense | (7.0 | ) | (7.0 | ) | (7.0 | ) | (7.0 | ) | ||||||||
| Amortization expense | (5.4 | ) | (5.4 | ) | (5.4 | ) | (5.4 | ) | ||||||||
| Forward-looking Non-GAAP operating costs and expenses | $ | 65.0 | $ | 61.0 | $ | 65.0 | $ | 61.0 | ||||||||
| Forward-looking operating income (loss) | $ | (21.4 | ) | $ | (11.4 | ) | $ | 21.6 | $ | 31.6 | ||||||
| Adjustments: | ||||||||||||||||
| Stock-based compensation expense | 7.0 | 7.0 | 7.0 | 7.0 | ||||||||||||
| Amortization expense | 5.4 | 5.4 | 5.4 | 5.4 | ||||||||||||
| Forward-looking Non-GAAP operating income (loss) | $ | (9.0 | ) | $ | 1.0 | $ | 34.0 | $ | 44.0 | |||||||
| Forward-looking income (loss) before income taxes | $ | (19.1 | ) | $ | (9.1 | ) | $ | 17.5 | $ | 27.5 | ||||||
| Adjustments: | ||||||||||||||||
| Stock-based compensation expense | 7.0 | 7.0 | 7.0 | 7.0 | ||||||||||||
| Amortization expense | 5.4 | 5.4 | 5.4 | 5.4 | ||||||||||||
| Non-cash interest expense on convertible notes | 2.7 | 2.7 | 2.7 | 2.7 | ||||||||||||
| Forward-looking Non-GAAP income (loss) before income taxes | $ | (4.0 | ) | $ | 6.0 | $ | 32.6 | $ | 42.6 | |||||||
| Forward-looking GAAP provision for (benefit from) income taxes | (4.6 | ) | (2.2 | ) | 4.2 | 6.6 | ||||||||||
| Adjustment to Forward-looking GAAP provision for (benefit from) income taxes | 3.6 | 3.6 | 3.6 | 3.6 | ||||||||||||
| Forward-looking Non-GAAP provision for (benefit from) income taxes | (1.0 | ) | 1.4 | 7.8 | 10.2 | |||||||||||
| Forward-looking Non-GAAP net income (loss) | $ | (3.0 | ) | $ | 4.6 | $ | 24.8 | $ | 32.4 | |||||||
| Forward-looking Non-GAAP basic net income (loss) per share | $ | (0.03 | ) | $ | 0.04 | $ | 0.23 | $ | 0.30 | |||||||
| Forward-looking Non-GAAP diluted net income (loss) per share | $ | (0.03 | ) | $ | 0.04 | $ | 0.23 | $ | 0.29 | |||||||
| Weighted average shares used in forward-looking Non-GAAP per share calculation: | ||||||||||||||||
| Basic | 108.0 | 108.0 | 108.0 | 108.0 | ||||||||||||
| Diluted | 108.0 | 110.0 | 110.0 | 110.0 | ||||||||||||
