Rambus Reports First Quarter Financial Results

The Company’s non-GAAP financial measures reflect adjustments based on the following items:

Stock-based compensation expense. These expenses primarily relate to employee stock options, employee stock purchase plans, and employee non-vested equity stock and non-vested stock units. The Company excludes stock-based compensation expense from its non-GAAP measures primarily because such expenses 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 peer companies.

Acquisition-related transaction costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current periods’ portion of any retention bonus expense associated with the acquisitions. The Company excludes these expenses in order to provide better comparability between periods.

Restructuring 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.

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 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 impairments and 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 second quarter of 2015 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.

RMBSFN

 

Rambus Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

March 31,
2015

 

December 31,
2014

ASSETS
 
Current assets:
Cash and cash equivalents $ 171,567 $ 154,126
Marketable securities 146,194 145,983
Accounts receivable 6,541 6,001
Prepaids and other current assets 10,141 8,541
Deferred taxes 1,123   187
Total current assets 335,566 314,838
Intangible assets, net 83,049 89,371
Goodwill 116,899 116,899
Property, plant and equipment, net 61,577 64,023
Deferred taxes, long-term 447 536
Other assets 2,333   2,612
Total assets $ 599,871   $ 588,279
 
LIABILITIES & STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 5,697 $ 6,962
Accrued salaries and benefits 10,477 14,840
Other accrued liabilities 11,855   12,856
Total current liabilities 28,029 34,658
Long-term liabilities:
Convertible notes, long-term 116,508 115,089
Long-term imputed financing obligation 38,974 39,063
Other long-term liabilities 10,418   7,847
Total long-term liabilities 165,900   161,999
Total stockholders’ equity 405,942   391,622
Total liabilities and stockholders’ equity $ 599,871   $ 588,279
 
 

Rambus Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended
March 31,

2015   2014
 
Revenue:
Royalties $ 66,963 $ 73,637
Contract and other revenue 5,951   4,651  
Total revenue 72,914   78,288  
Operating costs and expenses:
Cost of revenue (1) 10,756 10,022
Research and development (1) 28,534 26,898
Sales, general and administrative (1) 18,502 18,820
Gain from sale of intellectual property (2,260 ) (170 )
Gain from settlement (510 ) (510 )
Restructuring charges   39  
Total operating costs and expenses 55,022   55,099  
Operating income 17,892 23,189
Interest income and other income (expense), net 132 13
Interest expense (3,083 ) (9,926 )
Interest and other income (expense), net (2,951 ) (9,913 )
Income before income taxes 14,941 13,276
Provision for income taxes 5,439   5,472  
Net income $ 9,502   $ 7,804  
Net income per share:
Basic $ 0.08   $ 0.07  
Diluted $ 0.08   $ 0.07  
Weighted average shares used in per share calculation
Basic 115,336   113,590  
Diluted 117,442   116,629  
 

_________

(1) Total stock-based compensation expense for the three months ended March 31, 2015 and 2014 are presented as follows:

 

Three Months Ended
March 31,

2015 2014
Cost of revenue $ 12 $ 7
Research and development $ 1,767 $ 1,311
Sales, general and administrative $ 1,987 $ 1,581
 
 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(In thousands)

(Unaudited)

 
Three Months Ended

March 31,
2015

 

December 31,
2014

 

March 31,
2014

 
Operating costs and expenses $ 55,022 $ 54,455 $ 55,099
Adjustments:
Stock-based compensation expense (3,766 ) (3,535 ) (2,899 )
Acquisition-related transaction costs and retention bonus expense (2 ) (6 ) (1,435 )
Amortization expense (6,323 ) (6,323 ) (6,797 )
Restructuring charges     (39 )
Non-GAAP operating costs and expenses $ 44,931   $ 44,591   $ 43,929  
 
Operating income $ 17,892 $ 17,585 $ 23,189
Adjustments:
Stock-based compensation expense 3,766 3,535 2,899
Acquisition-related transaction costs and retention bonus expense 2 6 1,435
Amortization expense 6,323 6,323 6,797
Restructuring charges     39  
Non-GAAP operating income $ 27,983   $ 27,449   $ 34,359  
 
Income before income taxes $ 14,941 $ 14,676 $ 13,276
Adjustments:
Stock-based compensation expense 3,766 3,535 2,899
Acquisition-related transaction costs and retention bonus expense 2 6 1,435
Amortization expense 6,323 6,323 6,797
Restructuring charges 39
Non-cash interest expense on convertible notes 1,559   1,536   6,242  
Non-GAAP income before income taxes $ 26,591 $ 26,076 $ 30,688
GAAP provision for income taxes 5,439 6,835 5,472
Adjustment to GAAP provision for income taxes 4,134   2,552   5,576  
Non-GAAP provision for income taxes 9,573   9,387   11,048  
Non-GAAP net income $ 17,018   $ 16,689   $ 19,640  
 
Non-GAAP basic net income per share $ 0.15 $ 0.15 $ 0.17
Non-GAAP diluted net income per share $ 0.14 $ 0.14 $ 0.17
Weighted average shares used in non-GAAP per share calculation:
Basic 115,336 115,024 113,590
Diluted 117,442 117,620 116,629
 
 

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

 
Three Months Ended

March 31,
2015

 

December 31,
2014

 

March 31,
2014

 
GAAP effective tax rate 36 % 47 % 41 %
Adjustment to GAAP effective tax rate %

(11)

%

(5)

%

Non-GAAP effective tax rate 36 % 36 % 36 %




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