Rambus Reports Third Quarter 2019 Financial Results

Restructuring and other 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 (recovery) of assets held for sale. These charges consist of non-cash charges (recoveries) to assets held for sale and are excluded because such charges (recoveries) are non-recurring and do not reduce the Company’s liquidity.

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 24 percent for both 2019 and 2018, 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. 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.

About Rambus Inc.

Rambus is a premier Silicon IP and chip provider that makes data faster and safer. With 30 years of innovation, we continue to develop the foundational technology for all modern computing systems. Leveraging our semiconductor expertise, Rambus solutions speed performance, expand capacity and improve security for today’s most demanding applications. From data center and edge to artificial intelligence and automotive, our interface and security IP, and memory interface chips enable SoC and system designers to deliver their vision of the future. 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 growth in product and service offerings and product revenue, expected benefits of our merger, acquisition and divestiture activity and related integration, and financial guidance for the fourth quarter of 2019, including licensing billings and revenue estimates, operating costs and expenses, interest and other income (expense), net and estimated, fixed, long-term projected tax rates 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.

Source: Rambus Inc.

Rambus Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

September 30,
2019

 

December 31,
2018

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

91,838

 

 

$

115,924

 

Marketable securities

246,186

 

 

161,840

 

Accounts receivable

38,610

 

 

50,863

 

Unbilled receivables

182,934

 

 

176,613

 

Inventories

9,854

 

 

6,772

 

Assets held for sale

77,203

 

 

 

Prepaids and other current assets

9,824

 

 

15,738

 

Total current assets

656,449

 

 

527,750

 

Intangible assets, net

35,362

 

 

59,936

 

Goodwill

164,488

 

 

207,178

 

Property, plant and equipment, net

38,571

 

 

57,028

 

Operating lease right-of-use assets

15,503

 

 

 

Deferred tax assets

6,454

 

 

4,435

 

Unbilled receivables, long-term

376,619

 

 

497,003

 

Other assets

6,381

 

 

7,825

 

Total assets

$

1,299,827

 

 

$

1,361,155

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,429

 

 

$

7,392

 

Accrued salaries and benefits

13,294

 

 

16,938

 

Deferred revenue

9,516

 

 

19,374

 

Income taxes payable, short-term

18,198

 

 

16,390

 

Operating lease liabilities

7,382

 

 

 

Liabilities held for sale

14,620

 

 

 

Other current liabilities

15,854

 

 

9,191

 

Total current liabilities

88,293

 

 

69,285

 

Long-term liabilities:

 

 

 

Convertible notes, long-term

147,039

 

 

141,934

 

Long-term imputed financing obligation

 

 

36,297

 

Long-term operating lease liabilities

9,415

 

 

 

Long-term income taxes payable

64,765

 

 

77,280

 

Other long-term liabilities

29,032

 

 

24,247

 

Total long-term liabilities

250,251

 

 

279,758

 

Total stockholders’ equity

961,283

 

 

1,012,112

 

Total liabilities and stockholders’ equity

$

1,299,827

 

 

$

1,361,155

 

Rambus Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Royalties

$

19,448

 

 

$

33,599

 

 

$

71,351

 

 

$

85,022

 

Product revenue

21,377

 

 

11,753

 

 

46,372

 

 

27,153

 

Contract and other revenue

16,574

 

 

14,402

 

 

46,357

 

 

50,463

 

Total revenue

57,399

 

 

59,754

 

 

164,080

 

 

162,638

 

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of product revenue (1)

7,108

 

 

5,376

 

 

17,845

 

 

13,932

 

Cost of contract and other revenue

5,466

 

 

5,952

 

 

18,954

 

 

29,163

 

Research and development (1)

41,486

 

 

43,131

 

 

119,995

 

 

120,944

 

Sales, general and administrative (1)

26,691

 

 

24,462

 

 

79,244

 

 

79,143

 

Restructuring and other charges

1,374

 

 

 

 

4,233

 

 

2,223

 

Impairment (recovery) of assets held for sale

(1,853

)

 

 

 

15,137

 

 

 

Total operating costs and expenses

80,272

 

 

78,921

 

 

255,408

 

 

245,405

 

Operating loss

(22,873

)

 

(19,167

)

 

(91,328

)

 

(82,767

)

Interest income and other income (expense), net

6,727

 

 

8,008

 

 

21,112

 

 

25,373

 

Interest expense

(2,497

)

 

(3,976

)

 

(7,302

)

 

(13,031

)

Interest and other income (expense), net

4,230

 

 

4,032

 

 

13,810

 

 

12,342

 

Loss before income taxes

(18,643

)

 

(15,135

)

 

(77,518

)

 

(70,425

)

Provision for (benefit from) income taxes

(1,312

)

 

89,758

 

 

3,369

 

 

85,514

 

Net loss

$

(17,331

)

 

$

(104,893

)

 

$

(80,887

)

 

$

(155,939

)

Net loss per share:

 

 

 

 

 

 

 

Basic

$

(0.16

)

 

$

(0.97

)

 

$

(0.73

)

 

$

(1.44

)

Diluted

$

(0.16

)

 

$

(0.97

)

 

$

(0.73

)

 

$

(1.44

)

Weighted average shares used in per share calculation

 

 

 

 

 

 

 

Basic

111,315

 

 

107,897

 

 

110,633

 

 

108,324

 

Diluted

111,315

 

 

107,897

 

 

110,633

 

 

108,324

 

_________

(1)

Total stock-based compensation expense for the three and nine months ended September 30, 2019 and 2018 is presented as follows:

 

Three Months Ended
September 30,

 

Nine Months Ended

September 30,

 

2019

 

2018

 

2019

 

2018

Cost of product revenue

$

2

 

 

$

2

 

 

$

4

 

 

$

7

 

Research and development

$

3,008

 

 

$

3,184

 

 

$

9,276

 

 

$

9,662

 

Sales, general and administrative

$

4,378

 

 

$

3,003

 

 

$

12,377

 

 

$

5,922

 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(In thousands)

(Unaudited)

 

 

Three Months Ended
September 30,

 

2019

 

2018

 

 

 

 

Operating costs and expenses

$

80,272

 

 

$

78,921

 

Adjustments:

 

 

 

Stock-based compensation expense

(7,388

)

 

(6,189

)

Acquisition-related/divestiture costs and retention bonus expense

(3,052

)

 

(10

)

Amortization expense

(3,186

)

 

(5,083

)

Restructuring and other charges

(1,374

)

 

 

Recovery of assets held for sale

1,853

 

 

 

Non-GAAP operating costs and expenses

$

67,125

 

 

$

67,639

 

 

 

 

 

Interest and other income (expense), net

$

4,230

 

 

$

4,032

 

Adjustments:

 

 

 

Non-cash interest expense on convertible notes

1,725

 

 

2,191

 

Non-GAAP interest and other income (expense), net

$

5,955

 

 

$

6,223

 

 

 

 

 

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

 

 

Three Months Ended
September 30,

 

2019

 

2018

GAAP effective tax rate

7

%

 

(593

)%

Adjustment to GAAP effective tax rate

17

%

 

617

%

Non-GAAP effective tax rate

24

%

 

24

%

(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 both 2019 and 2018, 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)

(Unaudited)

 

2019 Fourth Quarter Outlook

Three Months Ended
December 31, 2019

 

Low

 

High

 

 

 

 

Forward-looking operating costs and expenses

$

73.6

 

 

$

69.6

 

Adjustments:

 

 

 

Stock-based compensation expense

(7.4

)

 

(7.4

)

Amortization expense

(3.2

)

 

(3.2

)

Forward-looking Non-GAAP operating costs and expenses

$

63.0

 

 

$

59.0

 

 

 

 

 

Forward-looking interest and other income (expense), net

$

4.3

 

 

$

4.3

 

Adjustments:

 

 

 

Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements

(5.0

)

 

(5.0

)

Non-cash interest expense on convertible notes

1.7

 

 

1.7

 

Forward-looking Non-GAAP interest and other income (expense), net

$

1.0

 

 

$

1.0

 


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