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 35 percent for both 2017 and 2016, 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 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 impairments or 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.

Rambus Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
		September 30,			December 31,
		2017			2016
ASSETS
Current assets:
Cash and cash equivalents		$	182,345		$	135,294
Marketable securities		1,287			36,888
Accounts receivable		49,799			21,099
Inventories		5,015			5,633
Prepaids and other current assets		10,998			17,867
Total current assets		249,444			216,781
Intangible assets, net		102,545			132,388
Goodwill		209,318			204,794
Property, plant and equipment, net		54,035			58,442
Deferred tax assets		206,503			168,342
Other assets		2,283			2,749
Total assets		$	824,128		$	783,496
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	7,016		$	9,793
Accrued salaries and benefits		12,278			14,177
Deferred revenue		21,224			16,932
Convertible notes, short-term		131,490			—
Other current liabilities		10,731			10,399
Total current liabilities		182,739			51,301
Long-term liabilities:
Convertible notes, long-term		—			126,167
Long-term imputed financing obligation		37,471			38,029
Other long-term liabilities		14,381			15,217
Total long-term liabilities		51,852			179,413
Total stockholders’ equity		589,537			552,782
Total liabilities and stockholders’ equity		$	824,128		$	783,496

Rambus Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2017				2016				2017				2016
Revenue:
Royalties		$	72,787			$	68,298			$	211,733			$	194,010
Product revenue		8,661				7,092				27,966				14,306
Contract and other revenue		17,686				14,465				51,506				30,722
Total revenue		99,134				89,855				291,205				239,038
Operating costs and expenses:
Cost of product revenue (1)		5,152				7,031				17,882				12,581
Cost of contract and other revenue		14,456				12,393				43,274				33,139
Research and development (1)		36,196				33,820				109,718				91,100
Sales, general and administrative (1)		26,799				24,795				82,122				69,679
Gain from sale of intellectual property		(479		)		—				(479		)		—
Gain from settlement		—				—				—				(579		)
Total operating costs and expenses		82,124				78,039				252,517				205,920
Operating income		17,010				11,816				38,688				33,118
Interest income and other income (expense), net		208				142				491				1,522
Interest expense		(3,287		)		(3,193		)		(9,754		)		(9,497		)
Interest and other income (expense), net		(3,079		)		(3,051		)		(9,263		)		(7,975		)
Income before income taxes		13,931				8,765				29,425				25,143
Provision for income taxes		6,236				4,254				16,119				14,878
Net income		$	7,695			$	4,511			$	13,306			$	10,265
Net income per share:
Basic		$	0.07			$	0.04			$	0.12			$	0.09
Diluted		$	0.07			$	0.04			$	0.12			$	0.09
Weighted average shares used in per share calculation
Basic		109,555				110,214				110,353				109,951
Diluted		113,119				113,723				113,861				112,805

_________

(1)

Total stock-based compensation expense for the three and nine months ended September 30, 2017 and 2016 is presented as follows:

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2017			2016			2017			2016
Cost of product revenue		$	20		$	14		$	53		$	42
Research and development		$	2,969		$	2,337		$	9,048		$	6,526
Sales, general and administrative		$	3,975		$	3,092		$	11,068		$	8,788

Rambus Inc.
Supplemental Reconciliation of GAAP to Non-GAAP Results
(In thousands)
(Unaudited)
		Three Months Ended												Nine Months Ended
		September				June 30,				September				September				September
		30, 2017				2017				30, 2016				30, 2017				30, 2016
Operating costs and expenses		$	82,124			$	86,476			$	78,039			$	252,517			$	205,920
Adjustments:
Stock-based compensation expense			(6,964	)			(6,609	)			(5,443	)			(20,169	)			(15,356	)
Acquisition-related transaction costs and retention bonus expense			(47	)			(90	)			(441	)			(218	)			(3,038	)
Purchase accounting adjustment for inventory fair value step-up			—				—				(1,168	)			—				(1,168	)
Amortization expense			(10,498	)			(10,450	)			(10,174	)			(31,436	)			(26,045	)
Non-GAAP operating costs and expenses		$	64,615			$	69,327			$	60,813			$	200,694			$	160,313
Operating income		$	17,010			$	8,244			$	11,816			$	38,688			$	33,118
Adjustments:
Stock-based compensation expense			6,964				6,609				5,443				20,169				15,356
Acquisition-related transaction costs and retention bonus expense			47				90				441				218				3,038
Purchase accounting adjustment for inventory fair value step-up			—				—				1,168				—				1,168
Amortization expense			10,498				10,450				10,174				31,436				26,045
Non-GAAP operating income		$	34,519			$	25,393			$	29,042			$	90,511			$	78,725
Income before income taxes		$	13,931			$	5,112			$	8,765			$	29,425			$	25,143
Adjustments:
Stock-based compensation expense			6,964				6,609				5,443				20,169				15,356
Acquisition-related transaction costs and retention bonus expense			47				90				441				218				3,038
Purchase accounting adjustment for inventory fair value step-up			—				—				1,168				—				1,168
Amortization expense			10,498				10,450				10,174				31,436				26,045
Non-cash interest expense on convertible notes			1,801				1,774				1,700				5,324				5,026
Non-GAAP income before income taxes		$	33,241			$	24,035			$	27,691			$	86,572			$	75,776
GAAP provision for income taxes			6,236				2,507				4,254				16,119				14,878
Adjustment to GAAP provision for income taxes			5,398				5,905				5,438				14,181				11,644
Non-GAAP provision for income taxes			11,634				8,412				9,692				30,300				26,522
Non-GAAP net income		$	21,607			$	15,623			$	17,999			$	56,272			$	49,254
Non-GAAP basic net income per share		$	0.20			$	0.14			$	0.16			$	0.51			$	0.45
Non-GAAP diluted net income per share		$	0.19			$	0.14			$	0.16			$	0.49			$	0.44
Weighted average shares used in non-GAAP per share calculation:
Basic			109,555				110,060				110,214				110,353				109,951
Diluted			113,119				112,565				113,723				113,861				112,805

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)
		Three Months Ended									Nine Months Ended
		September 30, 2017			June 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
GAAP effective tax rate		45	%		49	%		49	%		55	%		59	%
Adjustment to GAAP effective tax rate		(10	)%		(14	)%		(14	)%		(20	)%		(24	)%
Non-GAAP effective tax rate		35	%		35	%		35	%		35	%		35	%

			(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 35 percent for both 2017 and 2016, 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 Other GAAP to Non-GAAP Items
(In thousands, except percentages)
(Unaudited)
		GAAP								Non-GAAP
		Three Months Ended								Three Months Ended
		September 30,								September 30,
			2017				2016				2017				2016
Revenue (i)		$	99,134			$	89,855			$	99,134			$	89,855
Operating income (ii)			17,010				11,816				34,519				29,042
Operating margin (ii/i)			17	%			13	%			35	%			32	%

		GAAP								Non-GAAP
		Nine Months Ended								Nine Months Ended
		September 30,								September 30,
		2017				2016				2017				2016
Revenue (i)		$	291,205			$	239,038			$	291,205			$	239,038
Operating income (ii)		38,688				33,118				90,511				78,725
Operating margin (ii/i)		13		%		14		%		31		%		33		%

		Three Months Ended
		September 30,
		2017				2016
Net income		$	7,695			$	4,511
Add back:
Interest and other income (expense), net		3,079				3,051
Provision for income taxes		6,236				4,254
Depreciation expense		3,249				3,423
Amortization expense		10,498				10,174
EBITDA (1)		$	30,757			$	25,413
Adjustments:
Stock-based compensation expense		6,964				5,443
Acquisition-related transaction costs and retention bonus expense		47				441
Purchase accounting adjustment for inventory fair value step-up		—				1,168
Adjusted EBITDA (2)		$	37,768			$	32,465

(1)	EBITDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is net income. EBITDA is net income adjusted for net interest expense, income taxes, and depreciation and amortization. It should not be considered as an alternative to net income computed under GAAP.
(2)	Adjusted EBITDA excludes the impact of other non-GAAP adjustments indicated in the above tables.

Rambus Inc.
Reconciliation of GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates
(In millions, except per share amounts)
(Unaudited)
		Three Months Ended
		December 31, 2017
		Low				High
Forward-looking operating costs and expenses		$	87.5			$	82.5
Adjustments:
Stock-based compensation expense		(7.5		)		(7.5		)
Amortization expense		(11.0		)		(11.0		)
Forward-looking Non-GAAP operating costs and expenses		$	69.0			$	64.0
Forward-looking operating income		$	10.5			$	21.5
Adjustments:
Stock-based compensation expense		7.5				7.5
Amortization expense		11.0				11.0
Forward-looking Non-GAAP operating income		$	29.0			$	40.0
Forward-looking income before income taxes		$	7.5			$	18.5
Adjustments:
Stock-based compensation expense		7.5				7.5
Amortization expense		11.0				11.0
Non-cash interest expense on convertible notes		1.7				1.7
Forward-looking Non-GAAP income before income taxes		$	27.7			$	38.7
Forward-looking GAAP provision for income taxes		2.6				6.5
Adjustment to Forward-looking GAAP provision for income taxes		7.1				7.0
Forward-looking Non-GAAP provision for income taxes		9.7				13.5
Forward-looking Non-GAAP net income		$	18.0			$	25.2
Forward-looking Non-GAAP basic net income per share		$	0.16			$	0.23
Forward-looking Non-GAAP diluted net income per share		$	0.16			$	0.22
Weighted average shares used in forward-looking Non-GAAP per share calculation:
Basic		111.0				111.0
Diluted		114.0				114.0

« Previous Page 1 | 2 | 3 | 4 | 5  Next Page »