Rambus Reports Second Quarter Financial Results

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 third 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)

   

 

June 30, 2015 December 31, 2014
ASSETS
 
Current assets:
Cash and cash equivalents $ 201,477 $ 154,126
Marketable securities 146,649 145,983
Accounts receivable 6,745 6,001
Prepaids and other current assets 9,690 8,541
Deferred taxes 1,113   187
Total current assets 365,674 314,838
Intangible assets, net 76,694 89,371
Goodwill 116,899 116,899
Property, plant and equipment, net 60,689 64,023
Deferred taxes, long-term 454 536
Other assets 3,345   2,612
Total assets $ 623,755   $ 588,279
 
LIABILITIES & STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 5,187 $ 6,962
Accrued salaries and benefits 11,857 14,840
Other accrued liabilities 14,325   12,856
Total current liabilities 31,369 34,658
Long-term liabilities:
Convertible notes, long-term 117,949 115,089
Long-term imputed financing obligation 38,874 39,063
Other long-term liabilities 10,818   7,847
Total long-term liabilities 167,641   161,999
Total stockholders’ equity 424,745   391,622
Total liabilities and stockholders’ equity $ 623,755   $ 588,279
 

Rambus Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
June 30,

Six Months Ended
June 30,

2015 2014 2015 2014
 
Revenue:
Royalties $ 62,387 $ 69,741 $ 129,350 $ 143,378
Contract and other revenue 10,425   6,777   16,376   11,428  
Total revenue 72,812   76,518   145,726   154,806  
Operating costs and expenses:
Cost of revenue (1) 12,137 10,637 22,893 20,659
Research and development (1) 29,188 27,668 57,722 54,566
Sales, general and administrative (1) 17,339 18,619 35,841 37,439
Gain from sale of intellectual property (896 ) (3,156 ) (170 )
Gain from settlement (510 ) (510 ) (1,020 ) (1,020 )
Restructuring charges       39  
Total operating costs and expenses 57,258   56,414   112,280   111,513  
Operating income 15,554 20,104 33,446 43,293
Interest income and other income (expense), net 203 104 335 117
Interest expense (3,091 ) (8,770 ) (6,174 ) (18,696 )
Interest and other income (expense), net (2,888 ) (8,666 ) (5,839 ) (18,579 )
Income before income taxes 12,666 11,438 27,607 24,714
Provision for income taxes 5,805   6,395   11,244   11,867  
Net income $ 6,861   $ 5,043   $ 16,363   $ 12,847  
Net income per share:
Basic $ 0.06   $ 0.04   $ 0.14   $ 0.11  
Diluted $ 0.06   $ 0.04   $ 0.14   $ 0.11  
Weighted average shares used in per share calculation
Basic 116,027   114,116   115,683   113,854  
Diluted 120,939   117,398   119,225   116,733  
 

_________

(1) Total stock-based compensation expense for the three and six months ended June 30, 2015 and 2014 are presented as follows:

 

Three Months Ended
June 30,

Six Months Ended
June 30,

2015 2014 2015 2014
Cost of revenue $ 27 $ 15 $ 39 $ 22
Research and development $ 1,988 $ 2,615 $ 3,755 $ 3,926
Sales, general and administrative $ 2,400 $ 2,225 $ 4,387 $ 3,806
 

Rambus Inc.

Supplemental Reconciliation of GAAP to Non-GAAP Results

(In thousands)

(Unaudited)

   
Three Months Ended Six Months Ended
June 30, 2015   March 31, 2015   June 30, 2014 June 30, 2015   June 30, 2014
 
Operating costs and expenses $ 57,258 $ 55,022 $ 56,414 $ 112,280 $ 111,513
Adjustments:
Stock-based compensation expense (4,415 ) (3,766 ) (4,855 ) (8,181 ) (7,754 )
Acquisition-related transaction costs and retention bonus expense (2 ) (1,028 ) (2 ) (2,463 )
Amortization expense (6,323 ) (6,323 ) (6,757 ) (12,646 ) (13,554 )
Restructuring charges         (39 )
Non-GAAP operating costs and expenses $ 46,520   $ 44,931   $ 43,774   $ 91,451   $ 87,703  
 
Operating income $ 15,554 $ 17,892 $ 20,104 $ 33,446 $ 43,293
Adjustments:
Stock-based compensation expense 4,415 3,766 4,855 8,181 7,754
Acquisition-related transaction costs and retention bonus expense 2 1,028 2 2,463
Amortization expense 6,323 6,323 6,757 12,646 13,554
Restructuring charges         39  
Non-GAAP operating income $ 26,292   $ 27,983   $ 32,744   $ 54,275   $ 67,103  
 
Income before income taxes $ 12,666 $ 14,941 $ 11,438 $ 27,607 $ 24,714
Adjustments:
Stock-based compensation expense 4,415 3,766 4,855 8,181 7,754
Acquisition-related transaction costs and retention bonus expense 2 1,028 2 2,463
Amortization expense 6,323 6,323 6,757 12,646 13,554
Restructuring charges 39
Non-cash interest expense on convertible notes 1,581   1,559   5,469   3,140   11,711  
Non-GAAP income before income taxes $ 24,985 $ 26,591 $ 29,547 $ 51,576 $ 60,235
GAAP provision for income taxes 5,805 5,439 6,395 11,244 11,867
Adjustment to GAAP provision for income taxes 3,190   4,134   4,242   7,324   9,818  
Non-GAAP provision for income taxes 8,995   9,573   10,637   18,568   21,685  
Non-GAAP net income $ 15,990   $ 17,018   $ 18,910   $ 33,008   $ 38,550  
 
Non-GAAP basic net income per share $ 0.14 $ 0.15 $ 0.17 $ 0.29 $ 0.34
Non-GAAP diluted net income per share $ 0.13 $ 0.14 $ 0.16 $ 0.28 $ 0.33
Weighted average shares used in non-GAAP per share calculation:
Basic 116,027 115,336 114,116 115,683 113,854
Diluted 120,939 117,442 117,398 119,225 116,733
 

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

   
Three Months Ended Six Months Ended
June 30, 2015   March 31, 2015   June 30, 2014 June 30, 2015   June 30, 2014
 
GAAP effective tax rate 46

 %

36 % 56

 %

41

 %

48

 %

Adjustment to GAAP effective tax rate (10 )% % (20 )% (5 )% (12 )%
Non-GAAP effective tax rate 36

 %

36 % 36

 %

36

 %

36

 %

      (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 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.

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