Total non-GAAP operating costs and expenses in the fourth quarter of 2011 were $66.4 million, which included general litigation expenses of $16.8 million. This is compared to total non-GAAP operating costs and expenses for the third quarter of 2011 of $66.8 million, which included general litigation expenses of $23.5 million. Total operating costs and expenses in the fourth quarter of 2010 were $48.7 million, which included general litigation expenses of $5.8 million. Total non-GAAP operating costs and expenses for the year ended December 31, 2011 were $233.8 million, which included general litigation expenses of $61.0 million. This is compared to $183.5 million in the same period of 2010, which included general litigation expenses of $22.7 million.
Non-GAAP net income in the fourth quarter of 2011 was $9.7 million as compared to $14.0 million in the third quarter of 2011 and $32.1 million in the fourth quarter of 2010. Non-GAAP diluted net income per share was $0.08 in the fourth quarter of 2011 as compared to $0.12 in the third quarter of 2011 and $0.28 in the fourth quarter of 2010.
Non-GAAP net income for the year ended December 31, 2011 was $46.3 million as compared to $165.7 million in the same period of 2010. Non-GAAP diluted net income per share for the year ended December 31, 2011 was $0.41 as compared to $1.43 for the same period of 2010.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of December 31, 2011 were $289.5 million, a decrease of approximately $3.3 million from September 30, 2011. During the fourth quarter of 2011, the Company paid $10.9 million related to the settlement in the matter captioned Stuart J. Steele, et al. v. Rambus Inc., et al., related to stock option grants that were not correctly dated or accounted for prior to 2006, settling the claims against it and the individual defendants.
During the fourth quarter of 2011 and the year ended 2011, the Company recorded an income tax provision of approximately $4.3 million and $17.3 million, respectively. As the Company continues to maintain a full valuation allowance against its U.S. deferred tax assets, the Company’s tax provision consists of primarily withholding taxes and current state and foreign taxes.
The Company will host a conference call at 2:00 p.m. PT today to discuss its financial results. The call, audio and slides will be available online at http://investor.rambus.com/events.cfm. A replay will be available following the call on Rambus' Investor Relations website for one week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID# 44751731.
(1) Non-GAAP Financial Information:
In the commentary set forth above and/or in the financial statements included in this earnings release, the Company presents the following non-GAAP financial measures: customer licensing income, operating costs and expenses, operating income (loss) and net income (loss). In computing each of these non-GAAP financial measures, the Company combined revenue and gain from settlement and excluded charges or gains relating to: stock-based compensation expenses, CRI-related deal costs and retention bonus expense, amortization expenses, costs of restatement and related legal activities and non-cash interest expense. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show investors, how the Company’s performance compares to other periods. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release.
The Company’s non-GAAP financial measures reflect adjustments based on the following items:
Customer licensing income. Customer licensing income includes the Company’s measure of the total cash royalties received from its customers under its licensing agreements with them. Prior to the second quarter of 2011, the Company bifurcated royalty payments that it received from Samsung between revenue and gain from settlement, which was reflected as reducing expenses in operating expenses. The Company has combined revenue from its customers, including Samsung, and the gain from the Samsung settlement as customer licensing income to reflect the total amounts received from all of its customers for the periods presented. In addition, in the third quarter of 2011, the Company received patents transferred from a customer as part of the consideration for the patent royalty payment. As this was non-cash revenue, the Company excluded it from customer licensing income. Additionally, in the third and fourth quarters of 2011, the Company received patent royalty payments from certain patent license agreements assumed in the acquisition with CRI which were treated as favorable contracts. Cash received from these acquired favorable contracts reduced the favorable contract intangible asset on the Company’s balance sheet. The Company has combined these cash royalty payments as customer licensing income to reflect the total amounts received from its customers.
Stock-based compensation expense. These expenses consist
primarily of expenses related to employee stock options, employee stock
purchase plans, and employee nonvested equity stock and nonvested stock
units. The Company excludes stock-based compensation expense from its
non-GAAP measures primarily because they are non-cash expenses that the
Company does not believe are reflective of ongoing operating results.
Additionally, given the fact that other companies may grant different
amounts and types of equity awards and may use different option
valuation assumptions, excluding stock-based compensation expense
permits more accurate comparisons of the Company’s results with other