Rambus Reports Fourth Quarter and Fiscal Year 2013 Financial

Rambus Reports Fourth Quarter and Fiscal Year 2013 Financial Results

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.

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Rambus Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited)

	December 31, 2013		December 31, 2012
ASSETS

Current assets:
Cash and cash equivalents	$	338,696	$	148,984
Marketable securities		48,966		54,346
Accounts receivable		2,251		529
Prepaids and other current assets		8,253		10,529
Deferred taxes		205		788
Total current assets		398,371		215,176
Intangible assets, net		117,172		153,173
Goodwill		116,899		124,969
Property, plant and equipment, net		72,642		86,905
Deferred taxes, long-term		4,797		4,458
Other assets		3,498		3,131
Total assets	$	713,379	$	587,812

LIABILITIES & STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	7,001	$	7,918
Accrued salaries and benefits		33,448		23,992
Accrued litigation expenses		498		9,822
Convertible notes, short-term		164,047		—
Other accrued liabilities		7,848		12,402
Total current liabilities		212,842		54,134
Long-term liabilities:
Convertible notes, long-term		109,629		147,556
Long-term imputed financing obligation		39,349		45,919
Other long-term liabilities		11,330		18,609
Total long-term liabilities		160,308		212,084
Total stockholders’ equity		340,229		321,594
Total liabilities and stockholders’ equity	$	713,379	$	587,812

Rambus Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)

	Three Months Ended December 31,						Year Ended December 31,
		2013			2012			2013			2012

Revenue:
Royalties	$	69,867		$	57,258		$	264,111		$	232,385
Contract and other revenue		3,555			185			7,390			1,666
Total revenue		73,422			57,443			271,501			234,051
Operating costs and expenses:
Cost of revenue (1)		10,358			6,340			33,215			28,372
Research and development (1)		26,803			33,088			117,981			140,503
Marketing, general and administrative (1)		18,511			21,311			76,448			112,594
Restructuring charges		2,211			679			5,546			7,301
Impairment of goodwill and long-lived assets		9,681			—			17,751			35,471
Gain from sale of intellectual property		—			—			(1,388	)		—
Gain from settlement		(356	)		—			(535	)		—
Costs of restatement and related legal activities		—			52			19			244
Total operating costs and expenses		67,208			61,470			249,037			324,485
Operating income (loss)		6,214			(4,027	)		22,464			(90,434	)
Interest income and other income (expense), net		(223	)		(116	)		(1,596	)		59
Interest expense		(9,595	)		(7,090	)		(32,885	)		(27,510	)
Interest and other income (expense), net		(9,818	)		(7,206	)		(34,481	)		(27,451	)
Loss before income taxes		(3,604	)		(11,233	)		(12,017	)		(117,885	)
Provision for income taxes		6,173			4,899			21,731			16,451
Net loss	$	(9,777	)	$	(16,132	)	$	(33,748	)	$	(134,336	)
Net loss per share:
Basic	$	(0.09	)	$	(0.14	)	$	(0.30	)	$	(1.21	)
Diluted	$	(0.09	)	$	(0.14	)	$	(0.30	)	$	(1.21	)
Weighted average shares used in per share calculation
Basic		113,217			111,332			112,415			110,769
Diluted		113,217			111,332			112,415			110,769
_________ (1) Total stock-based compensation expense for the three months and years ended December 31, 2013 and 2012 are presented as follows:

	Three Months Ended December 31,						Year Ended December 31,
		2013			2012			2013			2012
Cost of revenue	$	7		$	—		$	19		$	20
Research and development	$	1,431		$	1,974		$	6,597		$	9,546
Marketing, general and administrative	$	1,658		$	2,542		$	8,365		$	12,980

Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (In thousands) (Unaudited)

	Three Months Ended									Year Ended
	December 31, 2013			September 30, 2013			December 31, 2012			December 31, 2013			December 31, 2012

Revenue	$	73,422		$	73,294		$	57,443		$	271,501		$	234,051
Adjustments:
Other patent royalties received		75			850			4,175			9,554			12,665
Gain from settlement		356			179			—			535			—
Total customer licensing income	$	73,853		$	74,323		$	61,618		$	281,590		$	246,716

Operating costs and expenses	$	67,208		$	64,229		$	61,470		$	249,037		$	324,485
Adjustments:
Other patent royalties received		—			—			—			2,250			—
Stock-based compensation		(3,096	)		(3,363	)		(4,516	)		(14,981	)		(22,546	)
Acquisition-related transaction costs and retention bonuses		(1,463	)		(1,512	)		(4,191	)		(10,372	)		(25,678	)
Amortization		(7,489	)		(7,383	)		(6,811	)		(28,909	)		(30,347	)
Reversal of one-time litigation costs		566			—			—			9,048			—
Restructuring charges		(2,211	)		(1,129	)		(679	)		(5,546	)		(7,301	)
Impairment of goodwill and long-lived assets		(9,681	)		(8,070	)		—			(17,751	)		(35,471	)
Severance costs		—			—			—			(514	)		—
Gain from settlement		356			179			—			535			—
Costs of restatement and related legal activities		—			—			(52	)		(19	)		(244	)
Non-GAAP operating costs and expenses	$	44,190		$	42,951		$	45,221		$	182,778		$	202,898

Operating income (loss)	$	6,214		$	9,065		$	(4,027	)	$	22,464		$	(90,434	)
Adjustments:
Other patent royalties received		75			850			4,175			7,304			12,665
Stock-based compensation		3,096			3,363			4,516			14,981			22,546
Acquisition-related transaction costs and retention bonuses		1,463			1,512			4,191			10,372			25,678
Amortization		7,489			7,383			6,811			28,909			30,347
Reversal of one-time litigation costs		(566	)		—			—			(9,048	)		—
Restructuring charges		2,211			1,129			679			5,546			7,301

	Three Months Ended								Year Ended
	December 31, 2013			September 30, 2013		December 31, 2012			December 31, 2013			December 31, 2012

Impairment of goodwill and long-lived assets		9,681			8,070		—			17,751			35,471
Severance costs		—			—		—			514			—
Costs of restatement and related legal activities		—			—		52			19			244
Non-GAAP operating income	$	29,663		$	31,372	$	16,397		$	98,812		$	43,818

Income (loss) before income taxes	$	(3,604	)	$	579	$	(11,233	)	$	(12,017	)	$	(117,885	)
Adjustments:
Other patent royalties received		75			850		4,175			7,304			12,665
Stock-based compensation		3,096			3,363		4,516			14,981			22,546
Acquisition-related transaction costs and retention bonuses		1,463			1,512		4,191			10,372			25,678
Amortization		7,489			7,383		6,811			28,909			30,347
Reversal of one-time litigation costs		(566	)		—		—			(9,048	)		—
Restructuring charges		2,211			1,129		679			5,546			7,301
Impairment of goodwill and long-lived assets		9,681			8,070		—			17,751			35,471
Severance costs		—			—		—			514			—
Costs of restatement and related legal activities		—			—		52			19			244
Impairment of investment		—			—		—			1,400			—
Non-cash interest expense on convertible notes		5,927			5,135		3,839			19,296			14,695
Non-GAAP income before income taxes	$	25,772		$	28,021	$	13,030		$	85,027		$	31,062
Non-GAAP provision for income taxes		9,278			10,088		4,691			30,610			11,182
Non-GAAP net income	$	16,494		$	17,933	$	8,339		$	54,417		$	19,880

Non-GAAP basic net income per share	$	0.15		$	0.16	$	0.07		$	0.48		$	0.18
Non-GAAP diluted net income per share	$	0.14		$	0.15	$	0.07		$	0.47		$	0.17
Weighted average shares used in non-GAAP per share calculation:
Basic		113,217			112,640		111,332			112,415			110,769
Diluted		116,211			116,052		118,022			115,670			117,619

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