Business and Financial Highlights
GAAP Financial Results:
Revenue for the fourth quarter of 2012 was
Revenue for the year ended
Total operating costs and expenses for the fourth quarter of 2012 were
Total operating costs and expenses for the year ended
Net loss for the fourth quarter of 2012 was
Net loss for the year ended
Non-GAAP Financial Results (1):
Customer licensing income in the fourth quarter of 2012 was
Customer licensing income for the year ended
Total non-GAAP operating costs and expenses in the fourth quarter of
2012 were
Total non-GAAP operating costs and expenses for the year ended
Non-GAAP net income in the fourth quarter of 2012 was
Non-GAAP net income for the year ended
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of
During the fourth quarter of 2012 and the year ended
The Company will host a conference call at
(1) Non-GAAP Financial Information:
In the commentary set forth above and in the financial statements included in this earnings release, the Company presents the following non-GAAP financial measures: customer licensing income, operating costs and expenses, operating income (loss) and net income (loss). In computing each of these non-GAAP financial measures, the Company combined revenue, other patent royalties received but not recognized as revenue and gain from settlement, and excluded charges or gains relating to: stock-based compensation expenses, acquisition-related deal costs and retention bonus expense, amortization expenses, costs of restatement and related legal activities, restructuring charges, impairment charges and non-cash interest expense. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show investors, how the Company's performance compares to other periods. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release.
The Company's non-GAAP financial measures reflect adjustments based on the following items:
Customer licensing income. Customer licensing income includes the Company's measure of the total cash royalties received from its customers under its licensing agreements with them. Prior to the second quarter of 2011, the Company bifurcated royalty payments that it received from Samsung between revenue and gain from settlement, which was reflected as reducing operating expenses. The Company has combined revenue from its customers, including Samsung, and the gain from the Samsung settlement as customer licensing income to reflect the total amounts received from all of its customers for the periods presented. In addition, customer licensing income includes other patent royalties received but not recognized as revenue. In both the third quarter of 2012 and the fourth quarter of 2012, a receipt of a patent royalty payment from a customer was not recognized as revenue as not all revenue recognition criteria were met during the period. Additionally, since the third quarter of 2011, the Company has received patent royalty payments from certain patent license agreements assumed in the acquisition of CRI which were treated as favorable contracts. Cash received from these acquired favorable contracts reduced the favorable contract intangible asset on the Company's balance sheet. The Company has combined these cash royalty payments as customer licensing income to reflect the total amounts received from its customers.
Stock-based compensation expense. These expenses consist primarily of expenses related 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 they 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 other peer companies.
Acquisition-related deal 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.
Impairment of goodwill and long-lived assets. These charges consist of non-cash charges to goodwill and long-lived assets and are excluded because such charges are non-recurring and do not reduce the Company's liquidity.
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 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
RMBSFN
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Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
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December 31, 2012 |
December 31,
2011 |
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| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 148,984 | $ | 162,244 | ||
| Marketable securities | 54,346 | 127,212 | ||||
| Accounts receivable | 529 | 1,026 | ||||
| Prepaids and other current assets | 9,386 | 8,096 | ||||
| Deferred taxes | 788 | 2,798 | ||||
| Total current assets | 214,033 | 301,376 | ||||
| Intangible assets, net | 153,173 | 181,955 | ||||
| Goodwill | 124,969 | 115,148 | ||||
| Property, plant and equipment, net | 86,905 | 81,105 | ||||
| Deferred taxes, long-term | 4,458 | 7,531 | ||||
| Other assets | 4,274 | 6,539 | ||||
| Total assets | $ | 587,812 | $ | 693,654 | ||
| LIABILITIES & STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 7,918 | $ | 16,567 | ||
| Accrued salaries and benefits | 23,992 | 31,763 | ||||
| Accrued litigation expenses | 9,822 | 10,502 | ||||
| Deferred revenue | 8,113 | 509 | ||||
| Other accrued liabilities | 4,289 | 5,970 | ||||
| Total current liabilities | 54,134 | 65,311 | ||||
| Long-term liabilities: | ||||||
| Convertible notes, long-term | 147,556 | 133,493 | ||||
| Long-term imputed financing obligation | 45,919 | 43,793 | ||||
| Other long-term liabilities | 18,609 | 21,263 | ||||
| Total long-term liabilities | 212,084 | 198,549 | ||||
| Total stockholders' equity | 321,594 | 429,794 | ||||
| Total liabilities and stockholders' equity | $ | 587,812 | $ | 693,654 | ||
|
Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
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Three Months Ended
|
Year Ended
|
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenue: | ||||||||||||||||
| Royalties | $ | 57,258 | $ | 82,583 | $ | 232,385 | $ | 299,004 | ||||||||
| Contract revenue | 185 | 776 | 1,666 | 13,359 | ||||||||||||
| Total revenue | 57,443 | 83,359 | 234,051 | 312,363 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of revenue (1) | 6,340 | 7,453 | 28,372 | 24,085 | ||||||||||||
| Research and development (1) | 33,088 | 35,841 | 140,503 | 115,696 | ||||||||||||
| Marketing, general and administrative (1) | 21,311 | 44,715 | 112,594 | 164,131 | ||||||||||||
| Restructuring charges | 679 | — | 7,301 | — | ||||||||||||
| Costs of restatement and related legal activities | 52 | 13,484 | 244 | 16,187 | ||||||||||||
| Impairment of goodwill and long-lived assets | — | — | 35,471 | — | ||||||||||||
| Gain from settlement | — | — | — | (6,200 | ) | |||||||||||
| Total operating costs and expenses | 61,470 | 101,493 | 324,485 | 313,899 | ||||||||||||
| Operating loss | (4,027 | ) | (18,134 | ) | (90,434 | ) | (1,536 | ) | ||||||||
| Interest income and other income (expense), net | (116 | ) | 92 | 59 | 563 | |||||||||||
| Interest expense | (7,090 | ) | (6,366 | ) | (27,510 | ) | (24,828 | ) | ||||||||
| Interest and other income (expense), net | (7,206 | ) | (6,274 | ) | (27,451 | ) | (24,265 | ) | ||||||||
| Loss before income taxes | (11,233 | ) | (24,408 | ) | (117,885 | ) | (25,801 | ) | ||||||||
| Provision for income taxes | 4,899 | 4,308 | 16,451 | 17,252 | ||||||||||||
| Net loss | $ | (16,132 | ) | $ | (28,716 | ) | $ | (134,336 | ) | $ | (43,053 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.14 | ) | $ | (0.26 | ) | $ | (1.21 | ) | $ | (0.39 | ) | ||||
| Diluted | $ | (0.14 | ) | $ | (0.26 | ) | $ | (1.21 | ) | $ | (0.39 | ) | ||||
| Weighted average shares used in per share calculation | ||||||||||||||||
| Basic | 111,332 | 110,171 | 110,769 | 110,041 | ||||||||||||
| Diluted | 111,332 | 110,171 | 110,769 | 110,041 | ||||||||||||
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_________ |
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(1) Total stock-based compensation expense for the three months
and years ended |
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Three Months Ended
|
Year Ended
|
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Cost of revenue | $ | — | $ | 76 | $ | 20 | $ | 575 | ||||||||
| Research and development | $ | 1,974 | $ | 2,742 | $ | 9,546 | $ | 10,519 | ||||||||
| Marketing, general and administrative | $ | 2,542 | $ | 3,640 | $ | 12,980 | $ | 16,902 | ||||||||
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Supplemental Reconciliation of GAAP to Non-GAAP Results (In thousands) (Unaudited) |
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| Three Months Ended | Year Ended | |||||||||||||||
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
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| Revenue | $ | 57,443 | $ | 57,530 | $ | 83,359 | $ | 234,051 | $ | 312,363 | ||||||
| Adjustments: | ||||||||||||||||
| Other patent royalties received | 4,175 | 4,875 | 1,125 | 12,665 | (750 | ) | ||||||||||
| Gain from settlement | — | — | — | — | 6,200 | |||||||||||
| Total customer licensing income | $ | 61,618 | $ | 62,405 | $ | 84,484 | $ | 246,716 | $ | 317,813 | ||||||
| Operating costs and expenses | $ | 61,470 | $ | 104,630 | $ | 101,493 | $ | 324,485 | $ | 313,899 | ||||||
| Adjustments: | ||||||||||||||||
| Stock-based compensation | (4,516 | ) | (5,089 | ) | (6,458 | ) | (22,546 | ) | (27,996 | ) | ||||||
| Acquisition-related deal costs and retention bonuses | (4,191 | ) | (4,437 | ) | (7,878 | ) | (25,678 | ) | (21,915 | ) | ||||||
| Amortization | (6,811 | ) | (7,977 | ) | (7,283 | ) | (30,347 | ) | (20,192 | ) | ||||||
| Restructuring charges | (679 | ) | (6,622 | ) | — | (7,301 | ) | — | ||||||||
| Impairment of goodwill and long-lived assets | — | (35,471 | ) | — | (35,471 | ) | — | |||||||||
| Costs of restatement and related legal activities | (52 | ) | (79 | ) | (13,484 | ) | (244 | ) | (16,187 | ) | ||||||
| Gain from settlement | — | — | — | — | 6,200 | |||||||||||
| Non-GAAP operating costs and expenses | $ | 45,221 | $ | 44,955 | $ | 66,390 | $ | 202,898 | $ | 233,809 | ||||||
| Operating loss | $ | (4,027 | ) | $ | (47,100 | ) | $ | (18,134 | ) | $ | (90,434 | ) | $ | (1,536 | ) | |
| Adjustments: | ||||||||||||||||
| Other patent royalties received | 4,175 | 4,875 | 1,125 | 12,665 | (750 | ) | ||||||||||
| Stock-based compensation | 4,516 | 5,089 | 6,458 | 22,546 | 27,996 | |||||||||||
| Acquisition-related deal costs and retention bonuses | 4,191 | 4,437 | 7,878 | 25,678 | 21,915 | |||||||||||
| Amortization | 6,811 | 7,977 | 7,283 | 30,347 | 20,192 | |||||||||||
| Restructuring charges | 679 | 6,622 | — | 7,301 | — | |||||||||||
| Impairment of goodwill and long-lived assets | — | 35,471 | — | 35,471 | — | |||||||||||
| Costs of restatement and related legal activities | 52 | 79 | 13,484 | 244 | 16,187 | |||||||||||
| Non-GAAP operating income | $ | 16,397 | $ | 17,450 | $ | 18,094 | $ | 43,818 | $ | 84,004 | ||||||
| Loss before income taxes | $ | (11,233 | ) | $ | (54,233 | ) | $ | (24,408 | ) | $ | (117,885 | ) | $ | (25,801 | ) | |
| Adjustments: | ||||||||||||||||
| Other patent royalties received | 4,175 | 4,875 | 1,125 | 12,665 | (750 | ) | ||||||||||
| Stock-based compensation | 4,516 | 5,089 | 6,458 | 22,546 | 27,996 | |||||||||||
| Acquisition-related deal costs and retention bonuses | 4,191 | 4,437 | 7,878 | 25,678 | 21,915 | |||||||||||
| Amortization | 6,811 | 7,977 | 7,283 | 30,347 | 20,192 | |||||||||||
| Restructuring charges | 679 | 6,622 | — | 7,301 | — | |||||||||||
| Impairment of goodwill and long-lived assets | — | 35,471 | — | 35,471 | — | |||||||||||
| Costs of restatement and related legal activities | 52 | 79 | 13,484 | 244 | 16,187 | |||||||||||
| Non-cash interest expense on convertible notes | 3,839 | 3,789 | 3,296 | 14,695 | 12,622 | |||||||||||
| Non-GAAP income before income taxes | $ | 13,030 | $ | 14,106 | $ | 15,116 | $ | 31,062 |
$ |
72,361 | ||||||
| Non-GAAP provision for income taxes | 4,691 | 5,078 | 5,442 | 11,182 | 26,060 | |||||||||||
| Non-GAAP net income | $ | 8,339 | $ | 9,028 | $ | 9,674 | $ | 19,880 | $ | 46,301 | ||||||
| Non-GAAP basic net income per share | $ | 0.07 | $ | 0.08 | $ | 0.09 | $ | 0.18 | $ | 0.42 | ||||||
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Non-GAAP diluted net income per share |
$ | 0.07 | $ | 0.08 | $ | 0.08 | $ | 0.17 | $ | 0.41 | ||||||
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Weighted average shares used in non-GAAP per share calculation: |
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| Basic | 111,332 | 110,826 | 110,171 | 110,769 | 110,041 | |||||||||||
| Diluted | 118,022 | 117,738 | 115,315 | 117,619 | 114,099 | |||||||||||
crobinson@rambus.com
nnoutsios@rambus.com
Source:
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