Restructuring and other 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.
Impairment (recovery) of assets held for sale. These charges consist of non-cash charges (recoveries) to assets held for sale and are excluded because such charges (recoveries) are non-recurring and do not reduce the Company’s liquidity.
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 24 percent for both 2019 and 2018, 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, deferred tax asset valuation allowance and the release of any deferred tax asset valuation allowance. Accordingly, the Company has applied these tax rates to its non-GAAP financial results for all periods in the relevant years to assist the Company’s planning. 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.
About Rambus Inc.
Rambus is a premier Silicon IP and chip provider that makes data faster and safer. With 30 years of innovation, we continue to develop the foundational technology for all modern computing systems. Leveraging our semiconductor expertise, Rambus solutions speed performance, expand capacity and improve security for today’s most demanding applications. From data center and edge to artificial intelligence and automotive, our interface and security IP, and memory interface chips enable SoC and system designers to deliver their vision of the future. For more information, visit rambus.com.
Forward-Looking Statements
This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including those relating to Rambus’ expectations regarding growth in product and service offerings and product revenue, expected benefits of our merger, acquisition and divestiture activity and related integration, and financial guidance for the fourth quarter of 2019, including licensing billings and revenue estimates, operating costs and expenses, interest and other income (expense), net and estimated, fixed, long-term projected tax rates on a GAAP and non-GAAP basis, as appropriate. 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.
Source: Rambus Inc.
Rambus Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
|||||||
|
September 30,
|
|
December 31,
|
||||
ASSETS |
|
|
|
||||
|
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
91,838 |
|
|
$ |
115,924 |
|
Marketable securities |
246,186 |
|
|
161,840 |
|
||
Accounts receivable |
38,610 |
|
|
50,863 |
|
||
Unbilled receivables |
182,934 |
|
|
176,613 |
|
||
Inventories |
9,854 |
|
|
6,772 |
|
||
Assets held for sale |
77,203 |
|
|
— |
|
||
| Prepaids and other current assets |
9,824 |
|
|
15,738 |
|
||
| Total current assets |
656,449 |
|
|
527,750 |
|
||
| Intangible assets, net |
35,362 |
|
|
59,936 |
|
||
| Goodwill |
164,488 |
|
|
207,178 |
|
||
| Property, plant and equipment, net |
38,571 |
|
|
57,028 |
|
||
| Operating lease right-of-use assets |
15,503 |
|
|
— |
|
||
| Deferred tax assets |
6,454 |
|
|
4,435 |
|
||
| Unbilled receivables, long-term |
376,619 |
|
|
497,003 |
|
||
| Other assets |
6,381 |
|
|
7,825 |
|
||
| Total assets |
$ |
1,299,827 |
|
|
$ |
1,361,155 |
|
|
|
|
|
|
||||
| LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
||||
|
|
|
|
|
||||
| Current liabilities: |
|
|
|
||||
| Accounts payable |
$ |
9,429 |
|
|
$ |
7,392 |
|
| Accrued salaries and benefits |
13,294 |
|
|
16,938 |
|
||
| Deferred revenue |
9,516 |
|
|
19,374 |
|
||
| Income taxes payable, short-term |
18,198 |
|
|
16,390 |
|
||
| Operating lease liabilities |
7,382 |
|
|
— |
|
||
| Liabilities held for sale |
14,620 |
|
|
— |
|
||
| Other current liabilities |
15,854 |
|
|
9,191 |
|
||
| Total current liabilities |
88,293 |
|
|
69,285 |
|
||
| Long-term liabilities: |
|
|
|
||||
| Convertible notes, long-term |
147,039 |
|
|
141,934 |
|
||
| Long-term imputed financing obligation |
— |
|
|
36,297 |
|
||
| Long-term operating lease liabilities |
9,415 |
|
|
— |
|
||
| Long-term income taxes payable |
64,765 |
|
|
77,280 |
|
||
| Other long-term liabilities |
29,032 |
|
|
24,247 |
|
||
| Total long-term liabilities |
250,251 |
|
|
279,758 |
|
||
| Total stockholders’ equity |
961,283 |
|
|
1,012,112 |
|
||
| Total liabilities and stockholders’ equity |
$ |
1,299,827 |
|
|
$ |
1,361,155 |
|
| Rambus Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
| Revenue: |
|
|
|
|
|
|
|
||||||||
| Royalties |
$ |
19,448 |
|
|
$ |
33,599 |
|
|
$ |
71,351 |
|
|
$ |
85,022 |
|
| Product revenue |
21,377 |
|
|
11,753 |
|
|
46,372 |
|
|
27,153 |
|
||||
| Contract and other revenue |
16,574 |
|
|
14,402 |
|
|
46,357 |
|
|
50,463 |
|
||||
| Total revenue |
57,399 |
|
|
59,754 |
|
|
164,080 |
|
|
162,638 |
|
||||
| Operating costs and expenses: |
|
|
|
|
|
|
|
||||||||
| Cost of product revenue (1) |
7,108 |
|
|
5,376 |
|
|
17,845 |
|
|
13,932 |
|
||||
| Cost of contract and other revenue |
5,466 |
|
|
5,952 |
|
|
18,954 |
|
|
29,163 |
|
||||
| Research and development (1) |
41,486 |
|
|
43,131 |
|
|
119,995 |
|
|
120,944 |
|
||||
| Sales, general and administrative (1) |
26,691 |
|
|
24,462 |
|
|
79,244 |
|
|
79,143 |
|
||||
| Restructuring and other charges |
1,374 |
|
|
— |
|
|
4,233 |
|
|
2,223 |
|
||||
| Impairment (recovery) of assets held for sale |
(1,853 |
) |
|
— |
|
|
15,137 |
|
|
— |
|
||||
| Total operating costs and expenses |
80,272 |
|
|
78,921 |
|
|
255,408 |
|
|
245,405 |
|
||||
| Operating loss |
(22,873 |
) |
|
(19,167 |
) |
|
(91,328 |
) |
|
(82,767 |
) |
||||
| Interest income and other income (expense), net |
6,727 |
|
|
8,008 |
|
|
21,112 |
|
|
25,373 |
|
||||
| Interest expense |
(2,497 |
) |
|
(3,976 |
) |
|
(7,302 |
) |
|
(13,031 |
) |
||||
| Interest and other income (expense), net |
4,230 |
|
|
4,032 |
|
|
13,810 |
|
|
12,342 |
|
||||
| Loss before income taxes |
(18,643 |
) |
|
(15,135 |
) |
|
(77,518 |
) |
|
(70,425 |
) |
||||
| Provision for (benefit from) income taxes |
(1,312 |
) |
|
89,758 |
|
|
3,369 |
|
|
85,514 |
|
||||
| Net loss |
$ |
(17,331 |
) |
|
$ |
(104,893 |
) |
|
$ |
(80,887 |
) |
|
$ |
(155,939 |
) |
| Net loss per share: |
|
|
|
|
|
|
|
||||||||
| Basic |
$ |
(0.16 |
) |
|
$ |
(0.97 |
) |
|
$ |
(0.73 |
) |
|
$ |
(1.44 |
) |
| Diluted |
$ |
(0.16 |
) |
|
$ |
(0.97 |
) |
|
$ |
(0.73 |
) |
|
$ |
(1.44 |
) |
| Weighted average shares used in per share calculation |
|
|
|
|
|
|
|
||||||||
| Basic |
111,315 |
|
|
107,897 |
|
|
110,633 |
|
|
108,324 |
|
||||
| Diluted |
111,315 |
|
|
107,897 |
|
|
110,633 |
|
|
108,324 |
|
||||
| _________ |
|
| (1) |
Total stock-based compensation expense for the three and nine months ended September 30, 2019 and 2018 is presented as follows: |
|
|
Three Months Ended
|
|
Nine Months Ended September 30, |
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
| Cost of product revenue |
$ |
2 |
|
|
$ |
2 |
|
|
$ |
4 |
|
|
$ |
7 |
|
| Research and development |
$ |
3,008 |
|
|
$ |
3,184 |
|
|
$ |
9,276 |
|
|
$ |
9,662 |
|
| Sales, general and administrative |
$ |
4,378 |
|
|
$ |
3,003 |
|
|
$ |
12,377 |
|
|
$ |
5,922 |
|
| Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (In thousands) (Unaudited) |
|||||||
|
|
Three Months Ended
|
||||||
|
|
2019 |
|
2018 |
||||
|
|
|
|
|
||||
| Operating costs and expenses |
$ |
80,272 |
|
|
$ |
78,921 |
|
| Adjustments: |
|
|
|
||||
| Stock-based compensation expense |
(7,388 |
) |
|
(6,189 |
) |
||
| Acquisition-related/divestiture costs and retention bonus expense |
(3,052 |
) |
|
(10 |
) |
||
| Amortization expense |
(3,186 |
) |
|
(5,083 |
) |
||
| Restructuring and other charges |
(1,374 |
) |
|
— |
|
||
| Recovery of assets held for sale |
1,853 |
|
|
— |
|
||
| Non-GAAP operating costs and expenses |
$ |
67,125 |
|
|
$ |
67,639 |
|
|
|
|
|
|
||||
| Interest and other income (expense), net |
$ |
4,230 |
|
|
$ |
4,032 |
|
| Adjustments: |
|
|
|
||||
| Non-cash interest expense on convertible notes |
1,725 |
|
|
2,191 |
|
||
| Non-GAAP interest and other income (expense), net |
$ |
5,955 |
|
|
$ |
6,223 |
|
|
|
|
|
|
||||
| Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1) |
|||||
|
|
Three Months Ended
|
||||
|
|
2019 |
|
2018 |
||
| GAAP effective tax rate |
7 |
% |
|
(593 |
)% |
| Adjustment to GAAP effective tax rate |
17 |
% |
|
617 |
% |
| Non-GAAP effective tax rate |
24 |
% |
|
24 |
% |
| (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 24 percent for both 2019 and 2018, 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, deferred tax asset valuation allowance and the release of any deferred tax asset valuation allowance. Accordingly, the Company has applied these tax rates to its non-GAAP financial results for all periods in the relevant year to assist the Company’s planning for future periods. |
| Rambus Inc. Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates (In millions) (Unaudited) |
|||||||
| 2019 Fourth Quarter Outlook |
Three Months Ended
|
||||||
|
|
Low |
|
High |
||||
|
|
|
|
|
||||
| Forward-looking operating costs and expenses |
$ |
73.6 |
|
|
$ |
69.6 |
|
| Adjustments: |
|
|
|
||||
| Stock-based compensation expense |
(7.4 |
) |
|
(7.4 |
) |
||
| Amortization expense |
(3.2 |
) |
|
(3.2 |
) |
||
| Forward-looking Non-GAAP operating costs and expenses |
$ |
63.0 |
|
|
$ |
59.0 |
|
|
|
|
|
|
||||
| Forward-looking interest and other income (expense), net |
$ |
4.3 |
|
|
$ |
4.3 |
|
| Adjustments: |
|
|
|
||||
| Interest income related to significant financing component from fixed-fee patent and technology licensing arrangements |
(5.0 |
) |
|
(5.0 |
) |
||
| Non-cash interest expense on convertible notes |
1.7 |
|
|
1.7 |
|
||
| Forward-looking Non-GAAP interest and other income (expense), net |
$ |
1.0 |
|
|
$ |
1.0 |
|
