Rambus Reports Third Quarter Financial Results

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 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.

Reversal of one-time litigation costs. These adjustments are a one-time litigation cost reversal of prior litigation costs accrued related to previously awarded costs that the Company was required to pay in connection with the SK hynix and Micron Technology litigation. The Company excludes these reversals from its non-GAAP measures because the Company believes that these reversals have no direct correlation to the operations of the Company’s core business and they are a one-time event.

Severance costs. These expenses relate to the separation payment to the Company’s former chief executive officer. The Company excludes these costs from its non-GAAP measures because the Company believes that these non-recurring costs have no direct correlation to the operations of the Company’s core business.

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 36 percent, 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 and deferred tax asset valuation allowance. Accordingly, the Company has applied the 36 percent tax rate to its non-GAAP financial results for all periods to assist the Company’s planning for future periods. 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.

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 including relating to Rambus’ expectations regarding revenue for the fourth quarter of 2014 and estimated, fixed, long-term projected tax rates. 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.

About Rambus Inc.

Rambus brings invention to market. Our customizable IP cores, architecture licenses, tools, services, and training improve the competitive advantage of our customers’ products while accelerating their time-to-market. Rambus products and innovations capture, secure and move data. For more information, visit www.rambus.com.



Rambus Inc.

Condensed Consolidated Balance Sheets

(In thousands)



September 30,



December 31,





Current assets:
Cash and cash equivalents $ 125,686 $ 338,696
Marketable securities 145,440 48,966
Accounts receivable 5,099 2,251
Prepaids and other current assets 7,959 8,253
Deferred taxes 1,379   205
Total current assets 285,563 398,371
Intangible assets, net 95,694 117,172
Goodwill 116,899 116,899
Property, plant and equipment, net 65,899 72,642
Deferred taxes, long-term 560 4,797
Other assets 2,542   3,498
Total assets $ 567,157   $ 713,379
Current liabilities:
Accounts payable $ 5,697 $ 7,001
Accrued salaries and benefits 11,840 33,448
Convertible notes, short-term 164,047
Other accrued liabilities 8,739   8,346
Total current liabilities 26,276 212,842
Long-term liabilities:
Convertible notes, long-term 113,692 109,629
Long-term imputed financing obligation 39,148 39,349
Other long-term liabilities 10,441   11,330
Total long-term liabilities 163,281   160,308
Total stockholders’ equity 377,600   340,229
Total liabilities and stockholders’ equity $ 567,157   $ 713,379

Rambus Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)




Three Months Ended

September 30,

Nine Months Ended

September 30,

2014       2013   2014       2013  
Royalties $ 64,009 $ 71,013 $ 207,387 $ 194,244
Contract and other revenue 5,703   2,281   17,131   3,835  
Total revenue 69,712   73,294   224,518   198,079  
Operating costs and expenses:
Cost of revenue (1) 10,540 8,958 31,199 22,857
Research and development (1) 27,014 27,553 81,580 91,178
Marketing, general and administrative (1) 18,200 18,698 55,639 57,956
Restructuring charges 1,129 39 3,335
Impairment of goodwill and long-lived assets 8,070 8,070
Gain from sale of intellectual property (170 ) (1,388 )
Gain from settlement (510 ) (179 ) (1,530 ) (179 )
Total operating costs and expenses 55,244   64,229   166,757   181,829  
Operating income 14,468 9,065 57,761 16,250
Interest income and other income (expense), net (549 ) 66 (432 ) (1,373 )
Interest expense (3,059 ) (8,552 ) (21,755 ) (23,290 )
Interest and other income (expense), net (3,608 ) (8,486 ) (22,187 ) (24,663 )
Income (loss) before income taxes 10,860 579 35,574 (8,413 )
Provision for income taxes 5,347   6,304   17,214   15,558  
Net income (loss) $ 5,513   $ (5,725 ) $ 18,360   $ (23,971 )
Net income (loss) per share:
Basic $ 0.05   $ (0.05 ) $ 0.16   $ (0.21 )
Diluted $ 0.05   $ (0.05 ) $ 0.16   $ (0.21 )
Weighted average shares used in per share calculation
Basic 114,523   112,640   114,080   112,144  
Diluted 118,206   112,640   117,540   112,144  

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