Rambus Reports Fourth Quarter and Full Year Financial Results

CRI-related deal costs and retention bonus expense. These expenses include all direct acquisition costs of CRI and the current periods’ portion of the $50.0 million retention bonus expense which is payable to certain legacy CRI employees and contractors. The Company excludes these expenses in order to provide better comparability between periods.

Amortization expense. The Company incurs expenses for the amortization of intangible assets in connection with 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 core operation of the Company’s business.

Costs of restatement and related legal activities. These expenses consist primarily of investigation, audit, legal and other professional fees related to the 2006-2007 stock option investigation and related litigation, as well as recoveries received from third parties. The Company excludes these costs and recoveries from its non-GAAP measures primarily because the Company believes that these non-recurring costs and recoveries have no direct correlation to the core operation of the Company’s business.

Non-cash interest expense. 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 assumes net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 36 percent. Accordingly, the Company has applied the 36 percent tax rate to its non-GAAP financial results to assist the Company’s planning for future periods.

On occasion in the future, there may be other items, such as significant asset impairments, restructuring charges or significant gains or losses from contingencies that the Company may exclude if it believes that doing so is consistent with the goal of providing useful information to investors and management.

About Rambus Inc.:

Rambus is one of the world’s premier technology licensing companies. As a company of inventors, Rambus focuses on the development of technologies that enrich the end-user experience of electronic systems. Additional information is available at www.rambus.com.

RMBSFN

Rambus Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

  December 31,

2011

  December 31,

2010

ASSETS
 
Current assets:
Cash and cash equivalents $ 162,244 $ 215,262
Marketable securities 127,212 296,747
Accounts receivable 1,026 2,600
Prepaids and other current assets 8,096 10,898
Deferred taxes   2,798   2,420
Total current assets 301,376 527,927
Deferred taxes, long-term 7,531 2,974
Intangible assets, net 181,955 40,986
Goodwill 115,148 18,154
Property, plant and equipment, net 81,105 67,770
Other assets   6,539   5,361
Total assets $ 693,654 $ 663,172
 
LIABILITIES, CONTINGENTLY REDEEMABLE COMMON STOCK & STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 16,567 $ 5,952
Accrued salaries and benefits 31,763 31,634
Accrued litigation expenses 10,502 4,060
Other accrued liabilities   6,479   14,165
Total current liabilities 65,311 55,811
Long-term liabilities:
Convertible notes, long-term 133,493 121,500
Long-term imputed financing obligation 43,793 27,899
Other long-term liabilities   21,263   9,679
Total long-term liabilities   198,549   159,078
Contingently redeemable common stock  

  113,500
Total stockholders’ equity   429,794   334,783
Total liabilities, contingently redeemable common stock and stockholders’ equity $ 693,654 $ 663,172

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

  Three Months Ended

December 31,

  Year Ended

December 31,

  2011       2010     2011       2010  
 
Revenue:
Royalties $ 82,583 $ 90,242 $ 299,004 $ 320,155
Contract revenue   776     679     13,359     3,235  
Total revenue   83,359     90,921     312,363     323,390  
Operating costs and expenses:
Cost of revenue (1) 7,453 1,911 24,085 6,937
Research and development (1) 35,841 25,028 115,696 92,706
Marketing, general and administrative (1) 44,715 30,602 164,131 119,475
Costs of restatement and related legal activities 13,484 797 16,187 4,190
Gain from settlement       (10,300 )   (6,200 )   (126,800 )
Total operating costs and expenses   101,493     48,038     313,899     96,508  
Operating income (loss) (18,134 ) 42,883 (1,536 ) 226,882
Interest income and other income (expense), net (821 ) (192 ) (3,018 ) 861
Interest expense on convertible notes   (5,453 )   (4,990 )   (21,247 )   (19,699 )
Interest and other income (expense), net   (6,274 )   (5,182 )   (24,265 )   (18,838 )
Income (loss) before income taxes (24,408 ) 37,701 (25,801 ) 208,044
Provision for income taxes   4,308     4,617     17,252     57,127  
Net income (loss) $ (28,716 ) $ 33,084   $ (43,053 ) $ 150,917  
Net income (loss) per share:
Basic $ (0.26 ) $ 0.30   $ (0.39 ) $ 1.34  
Diluted $ (0.26 ) $ 0.29   $ (0.39 ) $ 1.30  
Weighted average shares used in per share calculation
Basic   110,171     111,530     110,041     112,456  
Diluted   110,171     114,461     110,041     115,884  
 

_________

(1) Total stock-based compensation expense for the three months and year ended December 31, 2011 and 2010 are presented as follows:

 
Three Months Ended

December 31,

Year Ended

December 31,

  2011     2010     2011     2010  
Cost of revenue $ 76 $ 27 $ 575 $ 173
Research and development $ 2,742 $ 2,423 $

10,519

$ 10,165
Marketing, general and administrative $ 3,640 $ 4,870 $ 16,902 $ 20,210

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(In thousands)

(Unaudited)

 
  Three Months Ended   Year Ended

December 31,
2011

 

September 30,
2011

 

December 31,
2010

December 31,
2011

 

December 31,
2010

 
Revenue $ 83,359 $ 100,263 $ 90,921 $ 312,363 $ 323,390
Adjustments:
Gain from settlement

10,300 6,200 126,800
Other patent royalties received 1,125 (8,625 )

(750 )

Total customer licensing income $ 84,484 $ 91,638 $ 101,221 $ 317,813 $ 450,190
 
Operating costs and expenses $ 101,493 $ 89,527 $ 48,038 $ 313,899 $ 96,508
Adjustments:
Stock-based compensation (6,458 ) (7,219 ) (7,320 ) (27,996 ) (30,548 )
CRI related deal costs and retention bonuses (7,878 ) (7,702 )

(21,915 )

Amortization (7,283 ) (6,927 ) (1,479 ) (20,192 ) (5,066 )
Costs of restatement and related legal activities (13,484 ) (832 ) (797 ) (16,187 ) (4,190 )
Gain from settlement

10,300 6,200 126,800
Non-GAAP operating costs and expenses $ 66,390 $ 66,847 $ 48,742 $ 233,809 $ 183,504
 
Operating income (loss) $ (18,134 ) $ 10,736 $ 42,883 $ (1,536 ) $ 226,882
Adjustments:
Other patent royalties received 1,125 (8,625 )

(750 )

Stock-based compensation 6,458 7,219 7,320 27,996 30,548
CRI related deal costs and retention bonuses 7,878 7,702

21,915

Amortization 7,283 6,927 1,479 20,192 5,066
Costs of restatement and related legal activities 13,484 832 797 16,187 4,190
Non-GAAP operating income $ 18,094 $ 24,791 $ 52,479 $ 84,004 $ 266,686
 
Income (loss) before income taxes $ (24,408 ) $ 4,558 $ 37,701 $ (25,801 ) 208,044
Adjustments:
Other patent royalties received 1,125 (8,625 )

(750 )

Stock-based compensation 6,458 7,219 7,320 27,996 30,548
CRI related deal costs and retention bonuses 7,878 7,702

21,915

Amortization 7,283 6,927 1,479 20,192 5,066
Costs of restatement and related legal activities 13,484 832 797 16,187 4,190
Non-cash interest expense on convertible notes 3,296 3,254 2,834 12,622 11,075
Non-GAAP income before income taxes $ 15,116 $ 21,867 $ 50,131 $ 72,361 258,923
Non-GAAP provision for income taxes 5,442 7,872 18,047 26,060 93,212
Non-GAAP net income $ 9,674 $ 13,995 $ 32,084 $ 46,301 $ 165,711
 
Non-GAAP basic net income per share $ 0.09 $ 0.12 $ 0.29 $ 0.42 $ 1.47

Non-GAAP diluted net income per share

$ 0.08 $ 0.12 $ 0.28 $ 0.41 $ 1.43
 

Weighted average shares used in non-GAAP per share calculation:

Basic 110,171 112,334 111,530 110,041 112,456
Diluted 115,315 115,552 114,461 114,099 115,884

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