Rambus Reports Fourth Quarter and Fiscal Year 2016 Financial

Rambus Reports Fourth Quarter and Fiscal Year 2016 Financial Results

_________

(1) Total stock-based compensation expense for the three months and years ended December 31, 2016 and 2015 are presented as follows:


	Three Months Ended				Year Ended
	December 31,				December 31,
	2016		2015		2016		2015
Cost of revenue	$	14	$	12	$	56	$	63
Research and development	$	2,639	$	1,459	$	9,165	$	6,762
Sales, general and administrative	$	3,004	$	1,876	$	11,792	$	8,271


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

	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2016			2016			2015			2016			2015

Operating costs and expenses	$	97,035		$	78,039		$	56,439		$	302,955		$	224,858
Adjustments:
Stock-based compensation expense	(5,657		)	(5,443		)	(3,347		)	(21,013		)	(15,096		)
Acquisition-related transaction costs and retention bonus expense	(197		)	(441		)	—			(3,235		)	(2		)
Purchase accounting adjustment for inventory fair value step-up	(1,136		)	(1,168		)	—			(2,304		)	—
Amortization expense	(11,093		)	(10,174		)	(6,160		)	(37,138		)	(25,074		)
Impairment of long-lived assets	(18,300		)	—			—			(18,300		)	—
Restructuring charges	—			—			(3,576		)	—			(3,576		)
Change in contingent consideration	6,845			—			—			6,845			—
Non-GAAP operating costs and expenses	$	67,497		$	60,813		$	43,356		$	227,810		$	181,110

Operating income	$	524		$	11,816		$	20,334		$	33,642		$	71,420
Adjustments:
Stock-based compensation expense	5,657			5,443			3,347			21,013			15,096
Acquisition-related transaction costs and retention bonus expense	197			441			—			3,235			2
Purchase accounting adjustment for inventory fair value step-up	1,136			1,168			—			2,304			—
Amortization expense	11,093			10,174			6,160			37,138			25,074
Impairment of long-lived assets	18,300			—			—			18,300			—
Restructuring charges	—			—			3,576			—			3,576
Change in contingent consideration	(6,845		)	—			—			(6,845		)	—
Non-GAAP operating income	$	30,062		$	29,042		$	33,417		$	108,787		$	115,168

Income (loss) before income taxes	$	(2,506	)	$	8,765		$	17,562		$	22,637		$	60,231
Adjustments:
Stock-based compensation expense	5,657			5,443			3,347			21,013			15,096
Acquisition-related transaction costs and retention bonus expense	197			441			—			3,235			2
Purchase accounting adjustment for inventory fair value step-up	1,136			1,168			—			2,304			—
Amortization expense	11,093			10,174			6,160			37,138			25,074
Impairment of long-lived assets	18,300			—			—			18,300			—
Restructuring charges	—			—			3,576			—			3,576
Change in contingent consideration	(6,845		)	—			—			(6,845		)	—
Non-cash interest expense on convertible notes	1,723			1,700			1,627			6,749			6,372
Non-GAAP income before income taxes	$	28,755		$	27,691		$	32,272		$	104,531		$	110,351
GAAP provision for (benefit from) income taxes	939			4,254			4,570			15,817			(151,157		)
Adjustment to GAAP provision for income taxes	9,125			5,438			7,048			20,769			190,884
Non-GAAP provision for income taxes	10,064			9,692			11,618			36,586			39,727
Non-GAAP net income	$	18,691		$	17,999		$	20,654		$	67,945		$	70,624

Non-GAAP basic net income per share	$	0.17		$	0.16		$	0.19		$	0.62		$	0.62
Non-GAAP diluted net income per share	$	0.16		$	0.16		$	0.18		$	0.60		$	0.60
Weighted average shares used in non-GAAP per share calculation:
Basic	110,788			110,214			111,476			110,162			114,814
Diluted	114,060			113,723			113,388			113,140			117,484


Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)

	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2016		2016		2015		2016		2015

GAAP effective tax rate	(38	)%	49	%	26	%	70	%	(251	)%
Adjustment to GAAP effective tax rate	73	%	(14	)%	10	%	(35	)%	287	%
Non-GAAP effective tax rate	35	%	35	%	36	%	35	%	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 35 percent for periods in 2016 and 36 percent for periods in 2015, 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 GAAP Forward Looking Estimates to Non-GAAP Forward Looking Estimates
(In millions, except per share amounts)
(Unaudited)

	Three Months Ended
	March 31, 2017

	Low			High

Forward-looking operating costs and expenses	$	87.6		$	84.6
Adjustments:
Stock-based compensation expense	(7.1		)	(7.1		)
Amortization expense	(10.5		)	(10.5		)
Forward-looking Non-GAAP operating costs and expenses	$	70.0		$	67.0

Forward-looking operating income	$	5.4		$	13.4
Adjustments:
Stock-based compensation expense	7.1			7.1
Amortization expense	10.5			10.5
Forward-looking Non-GAAP operating income	$	23.0		$	31.0

Forward-looking income before income taxes	$	2.7		$	10.7
Adjustments:
Stock-based compensation expense	7.1			7.1
Amortization expense	10.5			10.5
Non-cash interest expense on convertible notes	1.7			1.7
Forward-looking Non-GAAP income before income taxes	$	22.0		$	30.0
Forward-looking GAAP provision for income taxes	0.9			3.7
Adjustment to Forward-looking GAAP provision for income taxes	6.8			6.8
Forward-looking Non-GAAP provision for income taxes	7.7			10.5
Forward-looking Non-GAAP net income	$	14.3		$	19.5

Forward-looking Non-GAAP basic net income per share	$	0.13		$	0.18
Forward-looking Non-GAAP diluted net income per share	$	0.13		$	0.17
Weighted average shares used in forward-looking Non-GAAP per share calculation:
Basic	111.0			111.0
Diluted	114.0			114.0

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