Business and Financial Highlights
-
Signed broad five-year agreement with Nanya Technology Corporation,
resolving all outstanding disputes
-
Lensless Smart Sensor technology highlighted as one of the best
technologies at Mobile World Congress 2014
-
Generated quarterly revenue of $78.3 million; up 7%
quarter-over-quarter and up 17% year-over-year
-
First quarter GAAP diluted net income per share of $0.07
-
First quarter non-GAAP diluted net income per share of $0.17; up 21%
quarter-over-quarter and up 89% year-over-year
SUNNYVALE, Calif.--(BUSINESS WIRE)--
Rambus Inc. (NASDAQ:RMBS), the innovative technology solutions company
that brings invention to market, today reported financial results for
the first quarter ended March 31, 2014.
GAAP Financial Results:
Revenue for the first quarter of 2014 was $78.3 million, up 7% on a
sequential basis from the fourth quarter of 2013 primarily due to
increased revenue from Micron Technology and the new license agreement
signed with Nanya Technology Corporation during the first quarter of
2014. As compared to the first quarter of 2013, revenue was up 17%
primarily due to the license agreements signed with SK hynix, Micron
Technology and Nanya Technology Corporation, offset by lower royalty
revenue from Samsung and recognition of a one-time royalty revenue
during the first quarter of 2013 from LSI.
Total operating costs and expenses for the first quarter of 2014 were
$55.1 million, 18% lower than the previous quarter and 16% lower than
the first quarter of 2013. First quarter operating costs and expenses of
$55.1 million included $2.9 million of stock-based compensation
expenses, $6.8 million of amortization expenses and $1.4 million of
retention bonuses from acquisitions. This is compared to total operating
costs and expenses for the fourth quarter of 2013 of $67.2 million which
included $3.1 million of stock-based compensation expenses, $9.7 million
of impairment of long-lived assets, $2.2 million of restructuring
charges, $7.5 million of amortization expenses and $1.5 million of
retention bonuses from acquisitions. Total operating costs and expenses
for the first quarter of 2013 were $65.4 million, which included $4.9
million of stock-based compensation expenses, $2.2 million of
restructuring charges, $7.0 million of amortization expenses and $4.0
million of retention bonuses from acquisitions. The change in total
operating costs and expenses in the first quarter of 2014 as compared to
the fourth quarter of 2013 was primarily due to restructuring charges
and impairment of long-lived assets. The change in total operating costs
and expenses in the first quarter of 2014 as compared to the first
quarter of 2013 was primarily due to lower litigation expenses,
restructuring charges, retention bonuses from acquisitions, consulting
expenses and stock-based compensation expenses offset by higher cost of
sales due to the sale of lighting products.
Net income for the first quarter of 2014 was $7.8 million as compared to
net loss of $9.8 million in the fourth quarter of 2013 and net loss of
$10.4 million in the first quarter of 2013. Diluted net income per share
for the first quarter of 2014 was $0.07 as compared to diluted net loss
per share of $0.09 in the fourth quarter of 2013 and diluted net loss
per share of $0.09 in the first quarter of 2013.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the first quarter of 2014
were $43.9 million which was relatively flat as compared to the prior
quarter, and 6% lower than the first quarter of 2013.
Non-GAAP net income in the first quarter of 2014 was $19.6 million, 19%
higher than the prior quarter and 81% higher than the first quarter of
2013. Non-GAAP diluted net income per share was $0.17 in the first
quarter of 2014 as compared to $0.14 in the fourth quarter of 2013 and
$0.09 in the first quarter of 2013.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of March 31, 2014
were $403.4 million, an increase of $15.7 million from December 31,
2013. During the first quarter of 2014, the Company generated
approximately $17 million from operations.
During the first quarter of 2014, the Company recorded an income tax
provision of approximately $5.5 million. As the Company continues to
maintain a full valuation allowance against its U.S. deferred tax
assets, the Company's tax provision consists of primarily foreign
withholding taxes.
Second Quarter 2014 Outlook:
For the second quarter of 2014, the Company expects revenue to be
between $69 million and $74 million. Revenue is not without risk and
includes expectations that the Company will sign new customers for
patent as well as solutions licensing.
Conference Call:
The Company will host a conference call at 2:00 p.m. PT today to discuss
its financial results. The call, audio and slides will be available
online at investor.rambus.com.
A replay will be available following the call on the Rambus Investor
Relations website or for one week at the following numbers: (855)
859-2056 (domestic) or (404) 537-3406 (international) with ID#22388776.
(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: operating costs and expenses, operating
income (loss) and net income (loss). In computing each of these non-GAAP
financial measures, the following items were considered: stock-based
compensation expenses, acquisition-related transaction costs and
retention bonus expense, amortization expenses, costs of restatement and
related legal activities, restructuring charges, impairment charges,
severance costs, non-cash interest expense and certain other one-time
adjustments. 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:
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 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 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.
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 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 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.
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
core operations of the Company's 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 core
operations of the Company's business.
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.
Forward-Looking Statements
This release contains forward-looking statements under the Private
Securities Litigation Reform Act of 1995 relating to Rambus'
expectations regarding revenue for the second quarter of 2014. 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 rambus.com.
RMBSFN
|
Rambus Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
March 31,
2014
|
|
December 31,
2013
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
346,576
|
|
|
$
|
338,696
|
|
Marketable securities
|
|
56,848
|
|
|
48,966
|
|
Accounts receivable
|
|
7,816
|
|
|
2,251
|
|
Prepaids and other current assets
|
|
8,766
|
|
|
8,253
|
|
Deferred taxes
|
|
1,009
|
|
|
205
|
|
Total current assets
|
|
421,015
|
|
|
398,371
|
|
Intangible assets, net
|
|
109,260
|
|
|
117,172
|
|
Goodwill
|
|
116,899
|
|
|
116,899
|
|
Property, plant and equipment, net
|
|
70,110
|
|
|
72,642
|
|
Deferred taxes, long-term
|
|
643
|
|
|
4,797
|
|
Other assets
|
|
3,071
|
|
|
3,498
|
|
Total assets
|
|
$
|
720,998
|
|
|
$
|
713,379
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
5,555
|
|
|
$
|
7,001
|
|
Accrued salaries and benefits
|
|
27,257
|
|
|
33,448
|
|
Convertible notes, short-term
|
|
168,658
|
|
|
164,047
|
|
Other accrued liabilities
|
|
8,171
|
|
|
8,346
|
|
Total current liabilities
|
|
209,641
|
|
|
212,842
|
|
Long-term liabilities:
|
|
|
|
|
|
Convertible notes, long-term
|
|
110,962
|
|
|
109,629
|
|
Long-term imputed financing obligation
|
|
39,295
|
|
|
39,349
|
|
Other long-term liabilities
|
|
9,115
|
|
|
11,330
|
|
Total long-term liabilities
|
|
159,372
|
|
|
160,308
|
|
Total stockholders' equity
|
|
351,985
|
|
|
340,229
|
|
Total liabilities and stockholders' equity
|
|
$
|
720,998
|
|
|
$
|
713,379
|
|
|
|
|
|
|
|
|
|
|
Rambus Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Royalties
|
|
$
|
73,637
|
|
|
$
|
66,222
|
|
|
Contract and other revenue
|
|
4,651
|
|
|
644
|
|
|
Total revenue
|
|
78,288
|
|
|
66,866
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
Cost of revenue (1)
|
|
10,022
|
|
|
6,534
|
|
|
Research and development (1)
|
|
26,898
|
|
|
32,848
|
|
|
Marketing, general and administrative (1)
|
|
18,820
|
|
|
25,122
|
|
|
Restructuring charges
|
|
39
|
|
|
2,206
|
|
|
Gain from sale of intellectual property
|
|
(170
|
)
|
|
(1,285
|
)
|
|
Gain from settlement
|
|
(510
|
)
|
|
—
|
|
|
Total operating costs and expenses
|
|
55,099
|
|
|
65,425
|
|
|
Operating income
|
|
23,189
|
|
|
1,441
|
|
|
Interest income and other income (expense), net
|
|
13
|
|
|
(20
|
)
|
|
Interest expense
|
|
(9,926
|
)
|
|
(7,312
|
)
|
|
Interest and other income (expense), net
|
|
(9,913
|
)
|
|
(7,332
|
)
|
|
Income (loss) before income taxes
|
|
13,276
|
|
|
(5,891
|
)
|
|
Provision for income taxes
|
|
5,472
|
|
|
4,511
|
|
|
Net income (loss)
|
|
$
|
7,804
|
|
|
$
|
(10,402
|
)
|
|
Net income (loss) per share:
|
|
|
|
|
|
Basic
|
|
$
|
0.07
|
|
|
$
|
(0.09
|
)
|
|
Diluted
|
|
$
|
0.07
|
|
|
$
|
(0.09
|
)
|
|
Weighted average shares used in per share calculation
|
|
|
|
|
|
Basic
|
|
113,590
|
|
|
111,599
|
|
|
Diluted
|
|
116,629
|
|
|
111,599
|
|
|
|
|
|
|
|
|
_________
|
|
(1) Total stock-based compensation expense for the three months
ended March 31, 2014 and 2013 are presented as follows:
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
Cost of revenue
|
|
$
|
7
|
|
|
$
|
—
|
|
|
Research and development
|
|
$
|
1,311
|
|
|
$
|
1,876
|
|
|
Marketing, general and administrative
|
|
$
|
1,581
|
|
|
$
|
3,072
|
|
|
|
|
|
|
|
|
|
|
|
|
Rambus Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Results
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
2014
|
|
December 31,
2013
|
|
March 31,
2013
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses
|
|
$
|
55,099
|
|
|
$
|
67,208
|
|
|
$
|
65,425
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
(2,899
|
)
|
|
(3,096
|
)
|
|
(4,948
|
)
|
|
Acquisition-related transaction costs and retention bonuses
|
|
(1,435
|
)
|
|
(1,463
|
)
|
|
(4,012
|
)
|
|
Amortization
|
|
(6,797
|
)
|
|
(7,489
|
)
|
|
(7,040
|
)
|
|
Reversal of one-time litigation costs
|
|
—
|
|
|
566
|
|
|
—
|
|
|
Restructuring charges
|
|
(39
|
)
|
|
(2,211
|
)
|
|
(2,206
|
)
|
|
Impairment of goodwill and long-lived assets
|
|
—
|
|
|
(9,681
|
)
|
|
—
|
|
|
Severance costs
|
|
—
|
|
|
—
|
|
|
(514
|
)
|
|
Costs of restatement and related legal activities
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
Non-GAAP operating costs and expenses
|
|
$
|
43,929
|
|
|
$
|
43,834
|
|
|
$
|
46,688
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
23,189
|
|
|
$
|
6,214
|
|
|
$
|
1,441
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
2,899
|
|
|
3,096
|
|
|
4,948
|
|
|
Acquisition-related transaction costs and retention bonuses
|
|
1,435
|
|
|
1,463
|
|
|
4,012
|
|
|
Amortization
|
|
6,797
|
|
|
7,489
|
|
|
7,040
|
|
|
Reversal of one-time litigation costs
|
|
—
|
|
|
(566
|
)
|
|
—
|
|
|
Restructuring charges
|
|
39
|
|
|
2,211
|
|
|
2,206
|
|
|
Impairment of goodwill and long-lived assets
|
|
—
|
|
|
9,681
|
|
|
—
|
|
|
Severance costs
|
|
—
|
|
|
—
|
|
|
514
|
|
|
Costs of restatement and related legal activities
|
|
—
|
|
|
—
|
|
|
17
|
|
|
Non-GAAP operating income
|
|
$
|
34,359
|
|
|
$
|
29,588
|
|
|
$
|
20,178
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
13,276
|
|
|
$
|
(3,604
|
)
|
|
$
|
(5,891
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
2,899
|
|
|
3,096
|
|
|
4,948
|
|
|
Acquisition-related transaction costs and retention bonuses
|
|
1,435
|
|
|
1,463
|
|
|
4,012
|
|
|
Amortization
|
|
6,797
|
|
|
7,489
|
|
|
7,040
|
|
|
Reversal of one-time litigation costs
|
|
—
|
|
|
(566
|
)
|
|
—
|
|
|
Restructuring charges
|
|
39
|
|
|
2,211
|
|
|
2,206
|
|
|
Impairment of goodwill and long-lived assets
|
|
—
|
|
|
9,681
|
|
|
—
|
|
|
Severance costs
|
|
—
|
|
|
—
|
|
|
514
|
|
|
Costs of restatement and related legal activities
|
|
—
|
|
|
—
|
|
|
17
|
|
|
Non-cash interest expense on convertible notes
|
|
6,242
|
|
|
5,927
|
|
|
4,089
|
|
|
Non-GAAP income before income taxes
|
|
$
|
30,688
|
|
|
$
|
25,697
|
|
|
$
|
16,935
|
|
|
Non-GAAP provision for income taxes
|
|
11,048
|
|
|
9,251
|
|
|
6,096
|
|
|
Non-GAAP net income
|
|
$
|
19,640
|
|
|
$
|
16,446
|
|
|
$
|
10,839
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic net income per share
|
|
$
|
0.17
|
|
|
$
|
0.15
|
|
|
$
|
0.10
|
|
|
Non-GAAP diluted net income per share
|
|
$
|
0.17
|
|
|
$
|
0.14
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in non-GAAP per share calculation:
|
|
|
|
|
|
|
|
Basic
|
|
113,590
|
|
|
113,217
|
|
|
111,599
|
|
|
Diluted
|
|
116,629
|
|
|
116,211
|
|
|
118,021
|
|
Rambus Inc.
Carolyn Robinson, 408-462-8717
Corporate
Communications
crobinson@rambus.com
Nicole
Noutsios, 408-462-8050
Investor Relations
nnoutsios@rambus.com
Source: Rambus Inc.
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