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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________
Commission File Number: 000-22339
RAMBUS INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 94-3112828
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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ADDRESS
2465 LATHAM STREET, MOUNTAIN VIEW, CA 94040
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (650) 903-3800
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
The number of shares outstanding of the registrant's Common Stock, par
value $.001 per share, was 22,594,960 as of December 31, 1997.
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RAMBUS INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets
as of December 31, 1997 and September 30, 1997...................................... 1
Consolidated Condensed Statements of Operations
for the Three Months ended December 31, 1997 and December 31, 1996.................. 2
Consolidated Condensed Statements of Cash Flows
for the Three Months Ended December 31, 1997 and December 31, 1996.................. 3
Notes to Unaudited Consolidated Condensed Financial Statements...................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................... 6
Item 3. Quantitative and Qualitative Disclosures about Market Risk.......................... 10
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds........................................... 11
Item 6. Exhibits and Reports on Form 8-K.................................................... 11
Signature....................................................................................... 12
</TABLE>
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
RAMBUS INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1997
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 3,803 $ 20,641
Marketable securities................................................ 60,060 51,184
Accounts receivable.................................................. 607 925
Prepaid and deferred tax assets...................................... 10,369 5,974
Prepaids and other current assets .................................. 1,981 2,033
-------- --------
Total current assets ............................................. 76,820 80,757
Property and equipment, net ......................................... 4,405 4,338
Investments........................................................... 1,415 986
Other assets.......................................................... 1,716 1,797
-------- --------
Total assets ..................................................... $ 84,356 $ 87,878
======== ========
LIABILITIES
Current liabilities:
Accounts and taxes payable, accrued payroll and other liabilities.... $ 2,736 $ 6,166
Current portion of:
Capital lease obligations ......................................... 326 382
Deferred revenue .................................................. 22,156 24,473
-------- --------
Total current liabilities ........................................ 25,218 31,021
Capital lease obligations, less current portion ..................... 76 130
Deferred revenue, less current portion .............................. 27,581 30,066
-------- --------
Total liabilities ................................................ 52,875 61,217
-------- --------
STOCKHOLDERS' EQUITY
Convertible preferred stock, $.001 par value:
Authorized: 5,000,000 shares
Issued and outstanding: no shares................................... -- --
Common stock, $.001 par value:
Authorized: 60,000,000 shares;
Issued and outstanding: 22,594,960 shares at December 31, 1997
and 22,310,499 shares at September 30, 1997 ....................... 22 22
Additional paid-in capital .......................................... 63,187 59,865
Stockholders' notes receivable ...................................... (680) (680)
Accumulated deficit ................................................. (30,956) (32,511)
Cumulative translation adjustment ................................... (92) (35)
-------- --------
Total stockholders' equity ....................................... 31,481 26,661
-------- --------
Total liabilities and stockholders' equity ...................... $ 84,356 $ 87,878
======== ========
</TABLE>
See Notes to Unaudited Consolidated Condensed Financial Statements.
1
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RAMBUS INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------
DECEMBER 31,
---------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
Revenues:
Contract revenues............................................... $ 6,676 $ 4,066
Royalties....................................................... 2,714 1,425
------- -------
Total revenues........................................... 9,390 5,491
------- -------
Costs and expenses:
Cost of contract revenues....................................... 1,641 1,037
Research and development........................................ 2,806 2,263
Marketing, general and administrative........................... 2,823 2,088
------- -------
Total costs and expenses................................. 7,270 5,388
------- -------
Operating income......................................... 2,120 103
Other income, net.................................................. 471 45
------- -------
Income before income taxes............................... 2,591 148
Provision for income taxes......................................... 1,036 56
------- -------
Net income............................................... $ 1,555 $ 92
======= =======
Net income per share............................................... $0.07 $0.01
======= =======
Net income per share - assuming dilution........................... $0.06 $0.01
======= =======
Number of shares used in per share calculations:
Basic........................................................... 22,467 17,538
======= =======
Assuming dilution............................................... 24,310 19,971
======= =======
</TABLE>
See Notes to Unaudited Consolidated Condensed Financial Statements.
2
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RAMBUS INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income.......................................................... $ 1,555 $ 92
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization..................................... 673 326
Other............................................................. 514 20
Change in operating assets and liabilities:
Accounts receivable.............................................. 318 (2,201)
Prepaid and deferred tax assets.................................. (2,159) --
Prepaids and other current assets................................ 52 2
Other assets..................................................... 81 141
Accounts and taxes payable, accrued payroll and other
liabilities..................................................... (3,442) 503
Deferred revenue.................................................. (4,802) 2,989
--------- -------
Net cash provided by (used in)
operating activities............................................. (7,210) 1,872
--------- -------
Cash flows from investing activities:
Purchase of property and equipment.................................. (672) (530)
Proceeds from sale of property and equipment........................ 1 --
Purchases of marketable securities.................................. (151,816) (6,369)
Maturities of marketable securities................................. 142,940 5,362
Investments......................................................... (1,000) --
--------- -------
Net cash used in investing activities............................. (10,547) (1,537)
--------- -------
Cash flows from financing activities:
Net proceeds from issuance of common stock.......................... 1,086 414
Proceeds from bank loans............................................ -- 794
Principal payments on capital lease obligations..................... (110) (158)
--------- -------
Net cash provided by financing activities........................ 976 1,050
--------- -------
Foreign currency translation adjustment.............................. (57) (19)
--------- -------
Net increase (decrease) in cash and cash equivalents................. (16,838) 1,366
Cash and cash equivalents at beginning of period..................... 20,641 742
--------- -------
Cash and cash equivalents at end of period........................... $ 3,803 $ 2,108
========= =======
Supplemental disclosure of cash flow information:
Interest paid....................................................... $ 20 $ 64
Income taxes paid................................................... $ 6,459 $ 208
Tax benefit of stock option exercises............................... $ 2,236 $ --
License of technology in exchange for common stock.................. $ -- $ 1,200
</TABLE>
See Notes to Unaudited Consolidated Condensed Financial Statements.
3
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RAMBUS INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements include the
accounts of the Company and its wholly owned subsidiary, Rambus K.K., located in
Tokyo, Japan. All intercompany accounts and transactions have been eliminated in
the accompanying consolidated condensed financial statements.
In the opinion of management, the consolidated condensed financial
statements include all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position and results of operations for
each interim period shown. Interim results are not necessarily indicative of
results for a full year.
The consolidated condensed financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission (SEC) applicable to interim financial information. Certain
information and footnote disclosures included in financial statements prepared
in accordance with generally accepted accounting principles have been omitted in
these interim statements pursuant to such SEC rules and regulations. The
information included in this Form 10-Q should be read in conjunction with the
consolidated financial statements and notes thereto, for the year ended
September 30, 1997, included in the Company's 1997 Annual Report on Form 10-K.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income." This statement establishes requirements
for disclosure of comprehensive income and will become effective for the
Company's 1999 fiscal year, with reclassification of earlier financial
statements for comparative purposes. Comprehensive income generally represents
all changes in stockholders' equity except those resulting from investments or
contributions by stockholders. The Company is evaluating alternative formats
for presenting this information, but does not expect this pronouncement to
materially impact the Company's results of operations.
In June 1997, the Financial Accounting Standards Board issued Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS
131). This statement establishes standards for disclosure about operating
segments in annual financial statements and selected information in interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. This statement
supercedes Statement of Financial Accounting Standards No. 14, "Financial
Reporting for Segments of a Business Enterprise." SFAS 131 will become
effective for the Company's 1999 fiscal year and requires that comparative
information from earlier years be restated to conform to the requirements of
this standard. The Company is evaluating the requirements of SFAS 131 and the
effects, if any, on the Company's current reporting and disclosures.
4
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RAMBUS INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--
(CONTINUED)
2. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In October 1997, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position No. 97-2 (SOP 97-2), "Software Revenue
Recognition," which supercedes SOP 91-1. SOP 97-2 will become effective for
transactions entered into beginning in the Company's 1999 fiscal year.
Retroactive application of the provisions of SOP 97-2 is prohibited. The
Company does not expect SOP 97-2 to materially impact the Company's results of
operations.
3. COMPUTATION OF NET INCOME PER SHARE
Financial Accounting Standards Board Statement No. 128, "Earnings Per
Share" (SFAS 128), specifies the computation, presentation, and disclosure
requirements for net income per share and became effective for the Company's
1998 fiscal year. Accordingly, net income per share for the three months ended
December 31, 1997 has been computed in accordance with SFAS 128 and all prior
period net income per share data presented has been restated to conform with
SFAS 128.
A reconciliation of the numerators and denominators of net income per share
and net income per share-assuming dilution follows (in thousands, except per
share data; unaudited):
<TABLE>
<CAPTION>
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
---------------- ------------------ -------------
Three Months Ended December 31, 1997:
- ------------------------------------
<S> <C> <C> <C>
NET INCOME PER SHARE:
Income available to common stockholders $1,555 22,467 $0.07
=====
EFFECT OF DILUTIVE SECURITIES:
Additional dilutive options -- 1,843
------ ------
NET INCOME PER SHARE - ASSUMING DILUTION:
Income available to common stockholders + assumed conversions $1,555 24,310 $0.06
====== ====== =====
Three Months Ended December 31, 1996:
- ------------------------------------
NET INCOME PER SHARE:
Income available to common stockholders $ 92 17,538 $0.01
=====
EFFECT OF DILUTIVE SECURITIES:
Additional dilutive options -- 2,433
------ ------
NET INCOME PER SHARE - ASSUMING DILUTION:
Income available to common stockholders + assumed conversions $ 92 19,971 $0.01
====== ====== =====
</TABLE>
5
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The forward-looking statements contained in this discussion and analysis
involve risks and uncertainties which could cause future actual results to
differ materially. Such risks include market acceptance of the Company's
technology; systems companies' acceptance of Rambus ICs produced by the
Company's licensees; market acceptance of the products of systems companies
which have adopted the Company's technology; future dependence upon the PC main
memory market and Intel; the loss of any strategic relationships with systems
companies or licensees; announcements or introductions of new technologies or
products by the Company or the Company's competitors; delays, lack of cost-
competitiveness or other problems in the introduction or performance of
enhancements or future generations of the Company's technology; fluctuations in
the market price and demand for DRAMs and logic ICs into which the Company's
technology has been incorporated; competitive pressures resulting in lower
contract revenues or royalty rates; changes in the Company's and system
companies' development schedules and levels of expenditure on research and
development; personnel changes, particularly those involving engineering and
technical personnel; costs associated with protecting the Company's intellectual
property; changes in Company strategies; foreign exchange rate fluctuations or
other changes in the international business climate; and general economic
trends. A more detailed discussion of risks faced by the Company is set forth
in the Company's 1997 Annual Report on Form 10-K filed with the SEC.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of total revenues represented by certain items reflected in the Company's
consolidated condensed statements of operations and the percentage change of
such items between periods:
6
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<TABLE>
<CAPTION>
PERCENT OF TOTAL REVENUES,
THREE MONTHS ENDED PERCENT
DECEMBER 31, CHANGE,
-------------------------------- 1997 V.
1997 1996 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Contract revenues ....................... 71.1% 74.0% 64.2%
Royalties ............................... 28.9 26.0 90.5
----- -----
Total revenues ..................... 100.0 % 100.0 % 71.0
===== =====
Costs and Expenses:
Cost of contract revenues ............... 17.5 18.9 58.2
Research and development ................ 29.9 41.2 24.0
Marketing, general and administrative ... 30.0 38.0 35.2
----- -----
Total costs and expenses ........... 77.4 98.1 34.9
----- -----
Operating income ............................. 22.6 1.9 *
Other income, net ............................ 5.0 0.8 *
----- -----
Income before income taxes ................... 27.6 2.7 *
Provision for income taxes ................... 11.0 1.0 *
----- -----
Net income ................................... 16.6% 1.7% *
===== =====
</TABLE>
___________________
* Not meaningful
Revenues. Total revenues for the three months ended December 31, 1997
increased 71.0% to $9.4 million over the comparable three-month period in the
previous year. Contract revenues increased 64.2% to $6.7 million (71.1% of total
revenues) in the first three months of fiscal 1998 from $4.1 million (74.0% of
total revenues) in the comparable period of fiscal 1997. The increase in
contract revenues was a result of the Company's entering into contracts with new
licensees and additional contracts with current licensees for new developments,
especially for an extension of the Company's technology to provide a higher
bandwidth interface for future PC main memory applications. While quarterly
revenues from existing licenses are predictable over the contracts' respective
lives, total contract revenues will decline in the future if the Company does
not continue to obtain new licensees or if it is unsuccessful in securing new
engineering implementation work from existing licensees.
Royalties totaled $2.7 million, or 28.9% of total revenues in the three months
ended December 31, 1997, an increase of 90.5% from $1.4 million, or 26.0% of
total revenues in the prior year quarter. The Company believes that much of the
increase in royalties during the first quarter of fiscal 1998 was due to a
seasonal increase in shipments of Rambus ICs for use in the Nintendo 64 home
video game system. These shipments and the associated royalties to Rambus are
likely to decline in the post-holiday period. In addition, the Company's
current potential to generate royalties is largely dependent on system sales by
Nintendo and, to a lesser extent, sales by Cirrus Logic and Chromatic Research
of logic ICs incorporating RACs for PC graphics and multimedia applications.
Nintendo faces intense competitive pressure in the home video game market, which
is characterized by extreme volatility, frequent new product introductions and
rapidly shifting consumer preferences, and there can be no assurance as to the
unit volumes of Rambus ICs that will be purchased by Nintendo in the future or
the level of royalty-bearing revenues that the Company's licensees will receive
from Nintendo. None of the systems companies currently incorporating Rambus
interface technology into their products is contractually obligated to continue
using Rambus ICs. For these reasons, total royalties could decrease in the next
two quarters. However, as Rambus ICs are incorporated into additional
applications, the Company believes that royalties will become an increasing
portion of revenues over the long term. Given the concentration of royalties
from a limited number of sources, however, it is likely that royalties will
continue to vary greatly from quarter to quarter.
7
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As of December 31, 1997, the Company had 23 licensees compared to eighteen at
December 31, 1996. Because all of the Company's revenues are derived from its
relatively small number of licensees, the Company's revenues tend to be highly
concentrated. In the first quarter of fiscal 1998, the Company's top five
licensees accounted for 60% of total revenues. During the same period, NEC
accounted for 34% of revenues and no other licensee accounted for more than 10%
of revenues. The Company expects that it will continue to experience significant
revenue concentration for the foreseeable future. However, the particular
licensees which account for revenue concentration may vary from period to period
depending on the addition of new contracts, the expiration of deferred revenue
schedules under existing contracts, the volumes and prices at which the
licensees sell Rambus ICs to systems companies in any given period and the
royalty rates on those sales.
To date, companies based in Japan and Korea have accounted for most of the
Company's revenues, and for the substantial majority of its international
revenues. In the first quarter of fiscal 1998, international revenues comprised
81% of total revenues. The Company expects that revenues derived from
international licensees will continue to represent a significant portion of its
total revenues in the future. All of the revenues from international licensees
to date have been denominated in United States dollars.
While a substantial portion of the Company's revenue is derived from Asian
sources, the Company does not consider itself to be abnormally vulnerable to
problems in the economies of Asian countries. A substantial portion of future
contract revenues will be based on nonrefundable payments of license and
engineering fees which have already been received from Asian and other licensees
but not yet recognized. Royalties are based on sales of Rambus ICs by licensees
to system companies located in the United States, Japan and, to a lesser extent,
Taiwan. The Company is not aware of any significant current or planned future
sales of Rambus ICs to system companies located in any other Asian countries.
In a few cases, the Company has received nonrefundable, prepaid royalties
which offset the earliest royalty payments otherwise due from the licensee. As
of December 31, 1997, $3.2 million of such nonrefundable, prepaid royalties had
offset initial royalties, and the Company had a balance of $3.6 million
remaining to be offset against future royalties.
Substantially all of the license fees, engineering service fees and
nonrefundable, prepaid royalties are bundled together as contract fees because
the Company generally does not provide or price these components separately.
The contracts also generally include rights to upgrades and enhancements.
Accordingly, Rambus recognizes contract revenues ratably over the period during
which post-contract customer support is expected to be provided. The excess of
contract fees received over contract revenue recognized is shown on the
Company's balance sheet as "deferred revenue." As of December 31, 1997, the
Company's deferred revenue was $49.7 million, substantially all of which is
scheduled to be recognized in varying amounts over the next five years.
Engineering Costs. Engineering costs, consisting of cost of contract
revenues and research and development expenses, increased 34.8% to $4.4 million
in the first quarter of fiscal 1998 over the comparable period in fiscal 1997
due primarily to an increase in engineering personnel. As a percentage of
total revenue, engineering costs decreased to 47.4% in the first quarter of
fiscal 1998 from 60.1% in the comparable period in fiscal 1997 as a result of
the Company's growth in revenues.
Cost of Contract Revenues. Cost of contract revenues as a percentage of total
revenues decreased to 17.5% in the first quarter of fiscal 1998 from 18.9% in
the comparable period of fiscal 1997 as a result of the Company's growth in
revenues partially offset by an increase in the proportion of the Company's
engineering costs attributable to cost of contract revenues. The Company
believes that the level of cost of contract revenues will continue to fluctuate
in the future,
8
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both in absolute dollars and as a percentage of revenues, as new generations of
Rambus ICs go through the normal development and implementation phases.
Research and Development. Research and development expenses as a percentage of
total revenues decreased to 29.9% in the first quarter of fiscal 1998 from 41.2%
in the comparable period of fiscal 1997 as a result of the Company's growth in
revenues and a decrease in the proportion of engineering costs attributable to
research and development expenses. The Company expects research and development
expenses to increase over time as it enhances and improves its technology and
applies it to new generations of ICs. The rate of increase of, and the
percentage of revenues represented by, research and development expenses in the
future will vary from period to period based on the research and development
projects underway and the change in research and development headcount in any
given period, as well as the rate of change in the Company's total revenues.
Marketing, General and Administrative. Marketing, general and administrative
expenses increased 35.2% to $2.8 million in the first quarter of fiscal 1998
primarily due to a buildup of marketing, sales and administrative support
personnel in both the U.S. and Japan, increased costs associated with
applications engineering and other technical support provided to systems
companies, and increased administrative costs associated with Rambus becoming a
public company. As a percentage of total revenue, marketing, general and
administrative expenses decreased to 30.0% in the first quarter of fiscal 1998
from 38.0% in the comparable period in fiscal 1997 due to the increased revenue
base. The Company expects marketing, general and administrative expenses to
increase in the future as the Company puts additional effort into marketing its
technology and assisting systems companies to adapt this technology to new
generations of products. The rate of increase of, and the percentage of revenues
represented by, marketing, general and administrative expenses in the future
will vary from period to period based on the trade shows, advertising and other
sales and marketing activities undertaken and the change in sales, marketing and
administrative headcount in any given period, as well as the rate of change in
the Company's total revenues.
Other Income. Other income consists primarily of interest income from the
Company's short-term cash investments, offset by interest expense on leases and
other equipment financing. Other income increased to $471,000 (5.0% of total
revenues) in the first quarter of fiscal 1998 from $45,000 (0.8% of total
revenue) in the comparable period of fiscal 1997 primarily due to higher
interest income on a higher average cash investment balance. This was partially
offset by a $500,000 reserve taken against the Company's equity investments,
recorded by the Company as a prudent reduction to potential general exposure in
this area.
Provision for Income Taxes. The Company recorded a provision for income taxes
of $1.0 million in the first quarter of fiscal 1998 compared to a provision of
$56,000 recorded in the first quarter of fiscal 1997. The provision for both
years was based on an estimated federal and state combined rate of 40% on income
before income taxes.
At December 31, 1997 the Company had gross deferred tax assets of
approximately $22 million, primarily relating to the difference between tax and
book treatment of deferred revenue. The Company has established a partial
valuation allowance against its deferred tax assets due to the uncertainty
surrounding the realization of such assets. If it is determined that it is more
likely than not that the deferred tax assets are realizable, the valuation
allowance will be reduced.
OTHER
The Company has granted to Intel Corporation a warrant for the purchase of
1,000,000 shares of its common stock at an exercise price of $10.00 per share.
The warrant will become exercisable only
9
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upon the achievement of certain milestones, which will result in a charge to the
statement of operations at the time of achievement of the milestones based on
the fair value of the warrant.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents and marketable securities of $63.9
million as of December 31, 1997 and total working capital of $51.6 million,
including a short-term component of deferred revenue of $22.2 million. Deferred
revenue represents the excess of cash received from licensees over revenue
recognized on license contracts, and the short-term component represents the
amount of this deferred revenue to be recognized over the next twelve months.
Without the short-term component of deferred revenue, working capital would have
been $73.8 million as of December 31, 1997.
The Company's operating activities used net cash of $7.2 million in the first
three months of fiscal 1998 compared to a net cash provision of $1.9 million in
the first three months of fiscal 1997. Net cash used by operations in the first
three months of fiscal 1998 was primarily the result of an increase in prepaid
and deferred tax assets, a decrease in taxes payable and a decrease in deferred
revenue, partially offset by net income. The changes in prepaid and deferred tax
assets and taxes payable were the result of tax payments in excess of the tax
provision in the first fiscal quarter. The decrease in deferred revenue for the
three months ended December 31, 1997 was due to revenues recognized on license
contracts in excess of new billings thereon.
Net cash used in investing activities was $10.5 million in the first three
months of fiscal 1998 compared to $1.5 million in the first three months of
fiscal 1997. Net cash used in investing activities in the fiscal 1998 period
consisted primarily of net purchases of marketable securities.
Net cash provided by financing activities was $976,000 in the first three
months of fiscal 1998 compared to $1.1 million in the first three months of
fiscal 1997. Net cash provided by financing activities in the fiscal 1998 period
was due to sales of the Company's common stock pursuant to employee stock plans,
partially offset by principal payments on capital lease obligations.
The Company presently anticipates that existing cash balances will be adequate
to meet its cash needs for at least the next 12 months.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
10
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PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(d) Use of Proceeds
The Company completed its initial public offering pursuant to a Registration
Statement on Form S-1 (File No. 333-22885) declared effective by the Securities
and Exchange Commission on May 13, 1997 and issued 3,162,500 shares (including
the underwriter's over-allotment option) of its Common Stock, par value $0.001
per share, to the public at a price of $12.00 per share. The managing
underwriters for the initial public offering were Morgan Stanley & Co.
Incorporated, Hambrecht & Quist LLC and Robertson, Stephens & Company LLC. The
offering has been terminated and all shares have been sold. The Company
received approximately $34,117,000 of cash from the initial public offering, net
of underwriting discounts, commissions, and other offering costs and expenses.
Since August 22, 1997 (the date of the Company's Initial Report on Form SR),
the Company used approximately $10.8 million of the net proceeds from the
Company's initial public offering to fund operating expenses, $1.4 million to
purchase and install machinery and equipment, and $0.2 million to repay
indebtedness. The Company has placed approximately $14.5 million in temporary
investments pending future use.
No payments constituted direct or indirect payments to directors, officers,
general partners of the issuer or their associates, or to persons owning ten
percent or more of any class of equity securities of the issuer or to affiliates
of the issuer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
ITEMS 1, 3, 4, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
11
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RAMBUS INC.
January 30, 1998
Date: _______________________ By: /s/ Gary Harmon
---------------------------------------
Vice President and Chief Financial
Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,803
<SECURITIES> 60,060
<RECEIVABLES> 617
<ALLOWANCES> (10)
<INVENTORY> 0
<CURRENT-ASSETS> 76,820
<PP&E> 11,928
<DEPRECIATION> (7,523)
<TOTAL-ASSETS> 84,356
<CURRENT-LIABILITIES> 25,218
<BONDS> 0
0
0
<COMMON> 22
<OTHER-SE> 31,459
<TOTAL-LIABILITY-AND-EQUITY> 84,356
<SALES> 9,390
<TOTAL-REVENUES> 9,390
<CGS> 1,641
<TOTAL-COSTS> 1,641
<OTHER-EXPENSES> 5,629
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20
<INCOME-PRETAX> 2,591
<INCOME-TAX> 1,036
<INCOME-CONTINUING> 1,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,555
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.06
</TABLE>
