Business and Financial Highlights for the Year:
- Generated fourth quarter revenue of
$72.0 million and annual revenue of $296.6 million
- Fourth quarter GAAP diluted net income
per share of $0.07; fourth quarter non-GAAP diluted net income per
share of $0.14
- Annual GAAP diluted net income per
share of $0.22; annual non-GAAP diluted net income per share of
$0.60
- Launched CryptoManager™ secure feature
management platform with Qualcomm as lead customer
- Introduced IP cores program with
easy-to-integrate solutions
- Unveiled enhanced LabStation™
validation platform to address complex IP design and
integration
- Signed license agreement with Cisco
Systems
Rambus Inc. (NASDAQ:RMBS), the innovative technology solutions
company that brings invention to market, today reported financial
results for the fourth quarter and year ended December 31,
2014.
GAAP Financial Results:
Revenue for the fourth quarter of 2014 was $72.0 million, up 3%
on a sequential basis from the third quarter of 2014 primarily due
to higher contract revenue. As compared to the fourth quarter of
2013, revenue was down 2% primarily due to lower royalty revenue
from Samsung and NVIDIA, offset by the royalty revenue from
Qualcomm and Micron Technology.
Revenue for the year ended December 31, 2014 was $296.6 million,
which was up 9% over the prior year period, primarily due to the
license agreements signed with SK hynix, Micron Technology, Nanya
Technology Corporation and Qualcomm, partially offset by lower
royalty revenue from Samsung and NVIDIA.
Total operating costs and expenses for the fourth quarter of
2014 were $54.5 million, 1% lower than the previous quarter and 19%
lower than the fourth quarter of 2013. Fourth quarter operating
costs and expenses of $54.5 million included $3.5 million of
stock-based compensation expenses and $6.3 million of amortization
expenses. In comparison, total operating costs and expenses for the
third quarter of 2014 of $55.2 million included $3.4 million of
stock-based compensation expenses and $6.7 million of amortization
expenses. Total operating costs and expenses for the fourth quarter
of 2013 were $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
bonus expense from acquisitions. The change in total operating
costs and expenses in the fourth quarter of 2014 as compared to the
third quarter of 2014 was primarily due to recognition of a
one-time gain in the fourth quarter from sale of intellectual
property, partially offset by an increase in prototyping costs. The
change in total operating costs and expenses in the fourth quarter
of 2014 as compared to the fourth quarter of 2013 was primarily
attributable to impairment of long-lived assets and restructuring
charges in the fourth quarter of 2013, gain from sale of
intellectual property in the fourth quarter of 2014 and lower
retention bonus expense from acquisitions partially offset by
higher cost of sales due to increased sale of lighting
products.
Total operating costs and expenses for the year ended December
31, 2014 were $221.2 million, 11% lower than the year ended
December 31, 2013. The year ended December 31, 2014 operating costs
and expenses of $221.2 million included $14.7 million of
stock-based compensation expenses, $26.6 million of amortization
expenses and $2.5 million of retention bonus expense from
acquisitions. This is compared to total operating costs and
expenses for the year ended December 31, 2013 of $249.0 million,
which included $15.0 million of stock-based compensation expenses,
$17.8 million of impairment of goodwill and long-lived assets, $5.5
million of restructuring charges, $9.0 million one-time reversal of
accrued SK hynix and Micron related litigation costs, $28.9 million
of amortization expenses and $10.4 million of retention bonus
expense from acquisitions. The change in total operating costs and
expenses was primarily attributable to impairment of goodwill and
long-lived assets and restructuring charges in 2013 and lower
retention bonus expense from acquisitions, partially offset by
higher cost of sales due to increased sale of lighting products and
as a result of the one-time reversal of accrued SK hynix related
litigation costs in the second quarter of 2013.
Net income for the fourth quarter of 2014 was $7.8 million
as compared to net income of $5.5 million in the third quarter
of 2014 and net loss of $9.8 million in the fourth quarter of
2013. Diluted net income per share for the fourth quarter of 2014
was $0.07 as compared to diluted net income per share of $0.05 in
the third quarter of 2014 and diluted net loss per share of $0.09
in the fourth quarter of 2013.
Net income for the year ended December 31, 2014 was $26.2
million as compared to a net loss of $33.7 million for the same
period of 2013. Diluted net income per share for the year ended
December 31, 2014 was $0.22 as compared to a diluted net loss per
share of $0.30 for the same period of 2013.
Non-GAAP Financial Results (1):
Total non-GAAP operating costs and expenses in the fourth
quarter of 2014 were $44.6 million, 1% lower than the previous
quarter, and 2% higher than the fourth quarter of 2013.
Total non-GAAP operating costs and expenses for the year ended
December 31, 2014 were $177.4 million as compared to $180.0 million
in the same period of 2013 due primarily to lower litigation
expenses offset by higher cost of sales due to increased sale of
lighting products.
Non-GAAP net income in the fourth quarter of 2014 was $16.7
million, 13% higher than the prior quarter and 2% higher than the
fourth quarter of 2013. Non-GAAP diluted net income per share was
$0.14 in the fourth quarter of 2014 as compared to $0.13 in the
prior quarter and $0.14 in the fourth quarter of 2013.
Non-GAAP net income for the year ended December 31, 2014 was
$70.1 million as compared to $49.7 million in the same period of
2013. Non-GAAP diluted net income per share was $0.60 for the year
ended December 31, 2014 as compared to non-GAAP diluted net income
per share of $0.43 for the year ended December 31, 2013.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of December
31, 2014 were $300.1 million, an increase of $29.0 million
from September 30, 2014.
During the fourth quarter of 2014, the Company recorded an
income tax provision of approximately $6.8 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.
2015 First Quarter and Annual Outlook:
For the first quarter of 2015, the Company expects revenue to be
between $70 million and $75 million. For 2015, the Company expects
revenue to be between $300 million and $315 million. Revenue is not
without risk and includes expectations that the Company will sign
new customers for patent as well as solutions licensing and renew
or extend agreements with existing customers.
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 as a webcast on the Rambus Investor Relations
website and for one week at the following numbers: (855) 859-2056
(domestic) or (404) 537-3406 (international) with ID#64238473.
(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 as discussed below: 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 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.
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 operation of the Company’s core
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 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.
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 operations of the Company’s core 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 operations of the Company’s core business.
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
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 2015 revenue for the first
quarter and year, 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)
December 31,
2014
December 31,
2013
ASSETS Current assets: Cash and cash equivalents $
154,126 $ 338,696 Marketable securities 145,983 48,966 Accounts
receivable 6,001 2,251 Prepaids and other current assets 8,541
8,253 Deferred taxes 187 205 Total current assets 314,838
398,371 Intangible assets, net 89,371 117,172 Goodwill 116,899
116,899 Property, plant and equipment, net 64,023 72,642 Deferred
taxes, long-term 536 4,797 Other assets 2,612 3,498 Total
assets $ 588,279 $ 713,379
LIABILITIES &
STOCKHOLDERS’ EQUITY Current liabilities: Accounts
payable $ 6,962 $ 7,001 Accrued salaries and benefits 14,840 33,448
Convertible notes, short-term — 164,047 Other accrued liabilities
12,856 8,346 Total current liabilities 34,658 212,842
Long-term liabilities: Convertible notes, long-term 115,089 109,629
Long-term imputed financing obligation 39,063 39,349 Other
long-term liabilities 7,847 11,330 Total long-term
liabilities 161,999 160,308 Total stockholders’ equity
391,622 340,229 Total liabilities and stockholders’ equity $
588,279 $ 713,379
Rambus Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2014
2013
2014
2013
Revenue: Royalties $ 64,134 $ 69,867 $ 271,521 $
264,111 Contract and other revenue 7,906 3,555 25,037
7,390 Total revenue 72,040 73,422 296,558 271,501
Operating costs and expenses: Cost of revenue (1) 10,748 10,358
41,947 33,215 Research and development (1) 28,445 26,803 110,025
117,981 Sales, general and administrative (1) 19,131 18,511 74,770
76,467 Restructuring charges — 2,211 39 5,546 Impairment of
goodwill and long-lived assets — 9,681 — 17,751 Gain from sale of
intellectual property (3,359 ) — (3,529 ) (1,388 ) Gain from
settlement (510 ) (356 ) (2,040 ) (535 ) Total operating costs and
expenses 54,455 67,208 221,212 249,037
Operating income 17,585 6,214 75,346 22,464 Interest income and
other income (expense), net 156 (223 ) (276 ) (1,596 ) Interest
expense (3,065 ) (9,595 ) (24,820 ) (32,885 ) Interest and other
income (expense), net (2,909 ) (9,818 ) (25,096 ) (34,481 ) Income
(loss) before income taxes 14,676 (3,604 ) 50,250 (12,017 )
Provision for income taxes 6,835 6,173 24,049
21,731 Net income (loss) $ 7,841 $ (9,777 ) $ 26,201
$ (33,748 ) Net income (loss) per share: Basic $ 0.07
$ (0.09 ) $ 0.23 $ (0.30 ) Diluted $ 0.07 $ (0.09 ) $
0.22 $ (0.30 ) Weighted average shares used in per share
calculation Basic 115,024 113,217 114,318
112,415 Diluted 117,620 113,217 117,624
112,415
_________
(1) Total stock-based compensation expense
for the three months and years ended December 31, 2014 and 2013 are
presented as follows:
Three Months Ended
December 31,
Year Ended
December 31,
2014
2013
2014
2013
Cost of revenue
$
10
$
7
$
44
$
19
Research and development
$
1,642
$
1,431
$
7,216
$
6,597
Sales, general and administrative
$
1,883
$
1,658
$
7,470
$
8,365
Rambus Inc.
Supplemental Reconciliation of GAAP to
Non-GAAP Results
(In thousands)
(Unaudited)
Three Months Ended Year Ended
December 31,
2014
September 30,
2014
December 31,
2013
December 31,
2014
December 31,
2013
Operating costs and expenses $ 54,455 $ 55,244 $ 67,208 $
221,212 $ 249,037 Adjustments: Stock-based compensation expense
(3,535 ) (3,441 ) (3,096 ) (14,730 ) (14,981 ) Acquisition-related
transaction costs and retention bonus expense (6 ) (6 ) (1,463 )
(2,475 ) (10,372 ) Amortization expense (6,323 ) (6,741 ) (7,489 )
(26,618 ) (28,909 ) Reversal of one-time litigation costs — — 566 —
9,048 Restructuring charges — — (2,211 ) (39 ) (5,546 ) Impairment
of goodwill and long-lived assets — — (9,681 ) — (17,751 )
Severance costs — — — — (514 ) Costs of restatement and related
legal activities — — — — (19 )
Non-GAAP operating costs and expenses $ 44,591
$ 45,056 $ 43,834
$ 177,350 $ 179,993
Operating income $ 17,585 $ 14,468 $ 6,214 $ 75,346 $ 22,464
Adjustments: Stock-based compensation expense 3,535 3,441 3,096
14,730 14,981 Acquisition-related transaction costs and retention
bonus expense 6 6 1,463 2,475 10,372 Amortization expense 6,323
6,741 7,489 26,618 28,909 Reversal of one-time litigation costs — —
(566 ) — (9,048 ) Restructuring charges — — 2,211 39 5,546
Impairment of goodwill and long-lived assets — — 9,681 — 17,751
Severance costs — — — — 514 Costs of restatement and related legal
activities — — — — 19
Non-GAAP operating income $ 27,449
$ 24,656 $ 29,588
$ 119,208 $ 91,508
Income (loss) before income taxes $ 14,676 $ 10,860 $ (3,604 ) $
50,250 $ (12,017 ) Adjustments: Stock-based compensation expense
3,535 3,441 3,096 14,730 14,981 Acquisition-related transaction
costs and retention bonus expense 6 6 1,463 2,475 10,372
Amortization expense 6,323 6,741 7,489 26,618 28,909 Reversal of
one-time litigation costs — — (566 ) — (9,048 ) Restructuring
charges — — 2,211 39 5,546 Impairment of goodwill and long-lived
assets — — 9,681 — 17,751 Severance costs — — — — 514 Costs of
restatement and related legal activities — — — — 19 Impairment of
investment — 600 — 600 1,400 Non-cash interest expense on
convertible notes 1,536 1,515 5,927 14,762
19,296 Non-GAAP income before income taxes $ 26,076 $
23,163 $ 25,697 $ 109,474 $ 77,723 GAAP provision for income taxes
6,835 5,347 6,173 24,049 21,731 Adjustment to GAAP provision for
income taxes 2,552 2,992 3,078 15,362
6,249 Non-GAAP provision for income taxes 9,387 8,339
9,251 39,411 27,980
Non-GAAP net
income $ 16,689 $ 14,824
$ 16,446 $ 70,063
$ 49,743 Non-GAAP basic net income
per share $ 0.15 $ 0.13 $ 0.15 $ 0.61 $ 0.44
Non-GAAP
diluted net income per share $ 0.14 $ 0.13 $ 0.14 $ 0.60 $ 0.43
Weighted average shares used in non-GAAP per share calculation:
Basic 115,024 114,523 113,217 114,318 112,415 Diluted 117,620
118,206 116,211 117,624 115,670
Supplemental Reconciliation of GAAP to
Non-GAAP Effective Tax Rate (1)
Three
Months Ended Year Ended
December 31,
2014
September 30,
2014
December 31,
2013
December 31,
2014
December 31,
2013
GAAP effective tax rate
47
%
49
%
171
%
48
%
181
%
Adjustment to GAAP effective tax rate
(11
)%
(13
)%
(135
)%
(12
)%
(145
)%
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.
Rambus Inc.Linda Ashmore, 408-462-8411Corporate
Communicationslashmore@rambus.comorRambus Inc.Nicole Noutsios,
408-462-8050Investor Relationsnnoutsios@rambus.com
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