(Mark One)
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2018
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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94-3112828
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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1050 Enterprise Way, Suite 700
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Sunnyvale, California
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94089
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $.001 Par Value
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The NASDAQ Stock Market LLC
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(The NASDAQ Global Select Market)
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Success in the markets of our products and services or our customers’ products;
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•
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Sources of competition;
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Research and development costs and improvements in technology;
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Sources, amounts and concentration of revenue, including royalties;
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Success in signing and renewing license agreements;
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Terms of our licenses and amounts owed under license agreements;
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Technology product development;
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Dispositions, acquisitions, mergers or strategic transactions and our related integration efforts;
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Impairment of goodwill and long-lived assets;
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•
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Pricing policies of our customers;
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Changes in our strategy and business model, including the expansion of our portfolio of inventions, products, software, services and solutions to address additional markets in memory, chip, mobile payments, smart ticketing and security;
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Deterioration of financial health of commercial counterparties and their ability to meet their obligations to us;
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Effects of security breaches or failures in our or our customers’ products and services on our business;
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Engineering, sales and general and administration expenses;
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Contract revenue;
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Operating results;
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International licenses, operations and expansion;
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Effects of changes in the economy and credit market on our industry and business;
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Ability to identify, attract, motivate and retain qualified personnel;
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•
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Effects of government regulations on our industry and business;
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Manufacturing, shipping and supply partners and/or sale and distribution channels;
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Growth in our business;
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Methods, estimates and judgments in accounting policies;
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Adoption of new accounting pronouncements, including adoption in 2018 of the new revenue recognition standard on our financial position and results of operations;
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Effective tax rates, including as a result of the new U.S. tax legislation;
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Restructurings and plans of termination;
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Realization of deferred tax assets/release of deferred tax valuation allowance;
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Trading price of our common stock;
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Internal control environment;
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The level and terms of our outstanding debt and the repayment or financing of such debt;
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Protection of intellectual property;
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Any changes in laws, agency actions and judicial rulings that may impact the ability to enforce intellectual property rights;
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Indemnification and technical support obligations;
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Equity repurchase plans;
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Issuances of debt or equity securities, which could involve restrictive covenants or be dilutive to our existing stockholders;
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Effects of fluctuations in currency exchange rates;
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Outcome and effect of potential future intellectual property litigation and other significant litigation; and
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Likelihood of paying dividends.
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Item 1.
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Business
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•
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Memory and Interfaces (MID)
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•
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Security (RSD)
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•
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Emerging Solutions (ESD)
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Name
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Age
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Position and Business Experience
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Luc Seraphin
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55
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Mr. Seraphin is President & Chief Executive Officer. With over 20 years of experience managing global businesses, Mr. Seraphin brings the overall vision and leadership necessary to drive future growth for the company. Prior to this role, Mr. Seraphin was the senior vice president and general manager of the Memory and Interface Division, leading the development of the company’s innovative memory architectures and high-speed serial link solutions. Mr. Seraphin also served as the senior vice president of Worldwide Sales and Operations where he oversaw sales, business development, customer support and operations across the various business units within Rambus.
Mr. Seraphin started his career as a field application engineer at NEC and later joined AT&T Bell Labs, which became Lucent Technologies and Agere Systems (now Avago Technologies). During his 18 years at Avago, Mr. Seraphin held several senior positions in sales, marketing and general management, culminating in his last position as executive vice president and general manager of the Wireless Business Unit. Following this, Mr. Seraphin held the position of general manager of a GPS startup company in Switzerland and was vice president of Worldwide Sales and Support at Sequans Communications. During his career, Mr. Seraphin has advised and supported companies in both the product and IP markets.
Mr. Seraphin holds a bachelor’s degree in Mathematics and Physics and a master’s degree in Electrical Engineering from Ecole Superieure de Chimie, Physique, Electronique, based in Lyon, France where he majored in Computer Architecture. Mr. Seraphin also holds an MBA from the University of Hartford and has completed the senior executive program of Columbia University.
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Rahul Mathur
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45
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Senior Vice President, Finance and Chief Financial Officer. Mr. Mathur joined us in his current position in October 2016. Prior to joining us, Mr. Mathur served as senior vice president of finance at Cypress Semiconductor Corp., a provider of embedded memory, microcontroller, and analog semiconductor system solutions, from March 2015 to September 2016, where he was responsible for financial planning and investor relations. From August 2012 to March 2015, Mr. Mathur served as vice president of finance at Spansion, Inc. (later acquired by Cypress Semiconductor Corp.). Mr. Mathur served as vice president of finance at Picaboo Corporation from January 2012 to August 2012 and vice president of finance at CDNetworks Inc. from January 2011 to December 2011. Prior to January 2011, Mr. Mathur held senior finance positions at Telesis Technologies, Inc., NetSuite Inc. and KLA-Tencor Corporation. Mr. Mathur holds a Bachelor of Arts in applied mathematics from Dartmouth College and an M.B.A. from the Wharton School of Business at the University of Pennsylvania.
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Jae Kim
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48
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Senior Vice President, General Counsel and Secretary. Mr. Kim has served as the senior vice president, general counsel and secretary since February 2013 and as our vice president, corporate legal since July 2010. Prior to his tenure at Rambus, Mr. Kim held senior legal positions at Aricent Inc., a privately-held communications technology company and Electronics for Imaging Inc., a digital printing technology company. Mr. Kim has also had significant experience in private practice with the law firm of Wilson Sonsini Goodrich & Rosati, P.C., where he advised high technology and emerging growth companies on mergers and acquisitions, private financings, public offerings, securities compliance, public company reporting and corporate governance. Mr. Kim began his legal career as an attorney with the United States Securities and Exchange Commission, Division of Corporation Finance, in Washington, D.C. Mr. Kim is a member of both the California State Bar and New York State Bar, and received a J.D. from the American University, Washington College of Law, and his bachelor’s degree from Boston University.
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Item 1A.
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Risk Factors
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•
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expenditure of significant financial and research and development resources in efforts to analyze, correct, eliminate or work around breaches, errors, bugs or defects or to address and eliminate vulnerabilities;
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financial liability to customers for breach of certain contract provisions, including indemnification obligations;
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loss of existing or potential customers;
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delayed or lost revenue;
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delay or failure to attain market acceptance;
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negative publicity, which would harm our reputation; and
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•
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litigation, regulatory inquiries or investigations that would be costly and harm our reputation.
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hiring, maintaining and managing a workforce and facilities remotely and under various legal systems, including compliance with local labor and employment laws;
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non-compliance with our code of conduct or other corporate policies;
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natural disasters, acts of war, terrorism, widespread illness or security breaches;
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export controls, tariffs, import and licensing restrictions and other trade barriers;
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profits, if any, earned abroad being subject to local tax laws and not being repatriated to the United States or, if repatriation is possible, limited in amount;
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adverse tax treatment of revenue from international sources and changes to tax codes, including being subject to foreign tax laws and being liable for paying withholding, income or other taxes in foreign jurisdictions;
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unanticipated changes in foreign government laws and regulations;
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increased financial accounting and reporting burdens and complexities;
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lack of protection of our intellectual property and other contract rights by jurisdictions in which we may do business to the same extent as the laws of the United States;
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potential vulnerability to computer system, internet or other systemic attacks, such as denial of service, viruses or other malware which may be caused by criminals, terrorists or other sophisticated organizations;
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social, political and economic instability;
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geopolitical issues, including changes in diplomatic and trade relationships; and
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cultural differences in the conduct of business both with customers and in conducting business in our international facilities and international sales offices.
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any progress, or lack of progress, real or perceived, in the development of products that incorporate our innovations and technology companies' acceptance of our products, including the results of our efforts to expand into new target markets;
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our signing or not signing new licenses and the loss of strategic relationships with any customer;
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announcements of technological innovations or new products by us, our customers or our competitors;
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changes in our strategies, including changes in our licensing focus and/or acquisitions or dispositions of companies or businesses with business models or target markets different from our core;
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positive or negative reports by securities analysts as to our expected financial results and business developments;
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developments with respect to patents or proprietary rights and other events or factors;
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new litigation and the unpredictability of litigation results or settlements;
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repurchases of our common stock on the open market;
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issuance of additional securities by us, including in acquisitions; and
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changes in accounting pronouncements, including implementation of the New Revenue Standard.
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we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions;
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our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, litigation, general corporate or other purposes may be limited;
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a substantial portion of our cash flows from operations in the future may be required for the payment of interest and principal when due at maturity in February 2023; and
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we may be required to make cash payments upon any conversion of the 2023 Notes, which would reduce our cash on hand.
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our board of directors is authorized, without prior stockholder approval, to create and issue preferred stock, commonly referred to as “blank check” preferred stock, with rights senior to those of common stock, which means that a stockholder rights plan could be implemented by our board;
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our board of directors is staggered into two classes, only one of which is elected at each annual meeting;
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stockholder action by written consent is prohibited;
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nominations for election to our board of directors and the submission of matters to be acted upon by stockholders at a meeting are subject to advance notice requirements;
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certain provisions in our bylaws and certificate of incorporation such as notice to stockholders, the ability to call a stockholder meeting, advance notice requirements and action of stockholders by written consent may only be amended with the approval of stockholders holding 66 2/3% of our outstanding voting stock;
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our stockholders have no authority to call special meetings of stockholders; and
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our board of directors is expressly authorized to make, alter or repeal our bylaws.
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any current or future U.S. or foreign patent applications will be approved and not be challenged by third parties;
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our issued patents will protect our intellectual property and not be challenged by third parties;
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the validity of our patents will be upheld;
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our patents will not be declared unenforceable;
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the patents of others will not have an adverse effect on our ability to do business;
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Congress or the U.S. courts or foreign countries will not change the nature or scope of rights afforded patents or patent owners or alter in an adverse way the process for seeking or enforcing patents;
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changes in law will not be implemented, or changes in interpretation of such laws will occur, that will affect our ability to protect and enforce our patents and other intellectual property;
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new legal theories and strategies utilized by our competitors will not be successful;
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others will not independently develop similar or competing chip interfaces or design around any patents that may be issued to us; or
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factors such as difficulty in obtaining cooperation from inventors, pre-existing challenges or litigation, or license or other contract issues will not present additional challenges in securing protection with respect to patents and other intellectual property that we acquire.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Number of
Offices
Under Lease
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Location
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Primary Use
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7
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United States
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Sunnyvale, CA (Corporate Headquarters)
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Executive and administrative offices, research and development, sales and marketing and service functions
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Chapel Hill, NC
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Research and development
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Brecksville, OH (2 locations)
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Research and development, prototyping and light manufacturing facility
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San Francisco, CA
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Research and development
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Richardson, TX
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Research and development
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Agoura Hills, CA
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Research and development
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1
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Bangalore, India
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Administrative offices, research and development and service functions
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1
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Tokyo, Japan
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Business development
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1
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Seoul, Korea
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Business development
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1
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Shanghai, China
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Business development
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1
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Singapore
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Business development
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1
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Taipei, Taiwan
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Business development
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1
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Melbourne, Australia
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Business development
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1
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Rotterdam, The Netherlands
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Administrative offices, research and development, sales and marketing and service functions
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1
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East Kilbride, United Kingdom
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Administrative offices, research and development, sales and marketing and service functions
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1
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Toronto, Canada
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Research and development
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1
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Espoo, Finland
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Research and development
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Year Ended
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Year Ended
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||||||||||||
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December 31, 2018
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December 31, 2017
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||||||||||||
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High
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Low
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High
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Low
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||||||||
First Quarter
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$
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14.63
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$
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11.85
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$
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14.24
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$
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12.37
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Second Quarter
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$
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14.30
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$
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12.54
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$
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13.41
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$
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11.39
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Third Quarter
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$
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13.61
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$
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10.76
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$
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13.64
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$
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11.30
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Fourth Quarter
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$
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10.99
|
|
|
$
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7.17
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$
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15.50
|
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$
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13.32
|
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|
12/13
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12/14
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12/15
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12/16
|
12/17
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12/18
|
Rambus Inc.
|
100.00
|
117.11
|
122.39
|
145.41
|
150.16
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80.99
|
NASDAQ Composite
|
100.00
|
114.62
|
122.81
|
133.19
|
172.11
|
165.84
|
RDG Semiconductor Composite
|
100.00
|
128.26
|
118.01
|
157.41
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216.98
|
197.02
|
Period
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
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Cumulative shares repurchased as of December 31, 2017
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12,565,372
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$11.94
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12,565,372
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7,434,628
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|
January 1, 2018 - March 31, 2018 (1)
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|
3,117,693
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|
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$13.21
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3,117,693
|
|
|
4,316,935
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|
April 1, 2018 - June 30, 2018 (1)
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|
667,653
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$13.21
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667,653
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3,649,282
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Cumulative shares repurchased as of December 31, 2018
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16,350,718
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16,350,718
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Item 6.
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Selected Financial Data
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Years Ended December 31,
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||||||||||||||||||
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2018 (3) (4) (5)
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2017 (3) (4)
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2016 (1) (2)
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2015 (2) (3) (4)
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2014 (2)
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(In thousands, except per share amounts)
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||||||||||||||||||
Total revenue
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$
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231,201
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|
$
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393,096
|
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$
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336,597
|
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$
|
296,278
|
|
|
$
|
296,558
|
|
Net income (loss)
|
$
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(157,957
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)
|
|
$
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(22,862
|
)
|
|
$
|
6,820
|
|
|
$
|
211,388
|
|
|
$
|
26,201
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|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
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||||||||||
Basic
|
$
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(1.46
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.06
|
|
|
$
|
1.84
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
(1.46
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)
|
|
$
|
(0.21
|
)
|
|
$
|
0.06
|
|
|
$
|
1.80
|
|
|
$
|
0.22
|
|
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and marketable securities
|
$
|
277,764
|
|
|
$
|
329,376
|
|
|
$
|
172,182
|
|
|
$
|
287,706
|
|
|
$
|
300,109
|
|
Total assets
|
$
|
1,361,155
|
|
|
$
|
891,072
|
|
|
$
|
783,496
|
|
|
$
|
718,021
|
|
|
$
|
586,235
|
|
Convertible notes
|
$
|
141,934
|
|
|
$
|
213,898
|
|
|
$
|
126,167
|
|
|
$
|
119,418
|
|
|
$
|
113,045
|
|
Stockholders’ equity
|
$
|
1,012,112
|
|
|
$
|
571,584
|
|
|
$
|
552,782
|
|
|
$
|
526,533
|
|
|
$
|
391,622
|
|
(1)
|
The net income for the year ended December 31, 2016 included $18.3 million of impairment of in-process research and development intangible asset and a reduction of operating expenses due to the change in our contingent consideration liability of $6.8 million.
|
(2)
|
The net income (loss) for the years ended December 31, 2016, 2015 and 2014 included $0.6 million, $2.0 million and $2.0 million, respectively, of gain from settlement which was reflected as a reduction of operating costs and expenses.
|
(3)
|
The net loss for the year ended December 31, 2018 included a $113.7 million impact of an increase in our deferred tax asset valuation allowance. The net loss for the year ended December 31, 2017 included a $21.5 million impact due to the recording of a deferred tax asset valuation allowance and $20.7 million related to re-measurement of deferred tax assets as a result of the tax law changes. The net income for the year ended December 31, 2015 included $174.5 million related to the reversal of the deferred tax asset valuation allowance.
|
(4)
|
Stockholders' equity includes $50.0 million paid under the accelerated share repurchase program initiated in both March 2018 and May 2017, and $100.0 million paid under the accelerated share repurchase program initiated in October 2015 as well as the $174.5 million net impact of the reversal of the deferred tax asset valuation allowance.
|
(5)
|
Reflects the impact from the adoption of ASC 606. See Note 3, “Recent Accounting Pronouncements,” of Notes to Consolidated Financial Statements of this Form 10-K for further discussion.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Revenue of $231.2 million;
|
•
|
Operating Costs and Expenses of $318.2 million
|
•
|
GAAP diluted net loss per share of $1.46;
|
•
|
Net cash provided by operating activities of $87.1 million
|
•
|
Revenue recognized for certain patent and technology licensing arrangements has changed under the New Revenue Standard. Revenue for (i) fixed-fee arrangements (including arrangements that include minimum guaranteed amounts), (ii) variable royalty arrangements that we have concluded are fixed in substance and (iii) the fixed portion of hybrid fixed/variable arrangements is recognized upon control over the underlying intellectual property (“IP”) use right transferring to the licensee rather than upon billing under ASC 605, net of the effect of significant financing components calculated using customer-specific, risk-adjusted lending rates and recognized over time on an effective rate basis. As a consequence of the acceleration of revenue recognition and for matching purposes, all withholding taxes to be paid over the term of these licensing arrangements were expensed on the date the licensing revenue was recognized.
|
•
|
Adoption of the New Revenue Standard resulted in revenue recognition being accelerated for variable royalties and the variable portion of hybrid fixed/variable patent and technology licensing arrangements. Under the New Revenue Standard, royalty revenue is being recognized on the basis of management’s estimates of sales or usage, as applicable, of the licensed IP in the period of reference, with a true-up being recorded in subsequent periods based on actual sales or usage as reported by licensees (rather than upon receiving royalty reports from licensees as was the case under ASC 605).
|
•
|
Adoption of the New Revenue Standard also resulted in revenue recognition being accelerated for certain professional services arrangements, including arrangements consisting of significant software customization or modification and development arrangements. Under the New Revenue Standard, such arrangements are accounted for based on man-days incurred during the reporting period as compared to estimated total man-days necessary for contract completion, as the customer either controls the asset as it is created or enhanced by us or, where the asset has no alternative use to us, we are entitled to payment for performance to date and expect to fulfill the contract. Revenue recognition is no longer capped to the lesser of inputs in the period or accepted billable project milestones as was the case under ASC 605.
|
•
|
We applied the practical expedient whereby we primarily charge commission costs to expense when incurred because the amortization period would be one year or less for the asset that would have been recognized from deferring these costs.
|
•
|
We applied the practical expedient which allowed us to reflect the aggregate effect of all contract modifications occurring before the beginning of the earliest period presented when allocating the transaction price to performance obligations.
|
•
|
We applied the practical expedient to not assess a contract asset or contract liability for a significant financing component if the period between the customer's payment and our transfer of goods or services is one year or less.
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Total Revenue
|
|
|
|
|
|
|
|
|
|
||||||||
Royalties
|
$
|
130.5
|
|
|
$
|
289.6
|
|
|
$
|
264.6
|
|
|
(55.0
|
)%
|
|
9.4
|
%
|
Product revenue
|
38.7
|
|
|
36.5
|
|
|
26.1
|
|
|
6.0
|
%
|
|
40.1
|
%
|
|||
Contract and other revenue
|
62.0
|
|
|
67.0
|
|
|
45.9
|
|
|
(7.4
|
)%
|
|
45.9
|
%
|
|||
Total revenue
|
$
|
231.2
|
|
|
$
|
393.1
|
|
|
$
|
336.6
|
|
|
(41.2
|
)%
|
|
16.8
|
%
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Cost of product revenue
|
$
|
18.3
|
|
|
$
|
23.8
|
|
|
$
|
21.3
|
|
|
(23.1
|
)%
|
|
11.5
|
%
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Engineering costs
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of contract and other revenue
|
$
|
11.7
|
|
|
$
|
20.3
|
|
|
$
|
16.1
|
|
|
(42.1
|
)%
|
|
26.1
|
%
|
Amortization of intangible assets
|
23.7
|
|
|
35.1
|
|
|
29.7
|
|
|
(32.4
|
)%
|
|
18.2
|
%
|
|||
Total cost of contract and other revenue
|
35.4
|
|
|
55.4
|
|
|
45.8
|
|
|
(36.1
|
)%
|
|
21.0
|
%
|
|||
Research and development
|
145.7
|
|
|
136.9
|
|
|
120.6
|
|
|
6.4
|
%
|
|
13.5
|
%
|
|||
Stock-based compensation
|
12.6
|
|
|
12.2
|
|
|
9.2
|
|
|
3.3
|
%
|
|
33.0
|
%
|
|||
Total research and development
|
158.3
|
|
|
149.1
|
|
|
129.8
|
|
|
6.2
|
%
|
|
14.9
|
%
|
|||
Total engineering costs
|
$
|
193.7
|
|
|
$
|
204.5
|
|
|
$
|
175.6
|
|
|
(5.3
|
)%
|
|
16.5
|
%
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Sales, general and administrative costs
|
|
|
|
|
|
|
|
|
|
||||||||
Sales, general and administrative costs
|
$
|
94.8
|
|
|
$
|
95.8
|
|
|
$
|
83.3
|
|
|
(1.1
|
)%
|
|
14.9
|
%
|
Stock-based compensation
|
9.1
|
|
|
15.1
|
|
|
11.8
|
|
|
(39.6
|
)%
|
|
28.4
|
%
|
|||
Total sales, general and administrative costs
|
$
|
103.9
|
|
|
$
|
110.9
|
|
|
$
|
95.1
|
|
|
(6.3
|
)%
|
|
16.6
|
%
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Restructuring charges
|
$
|
2.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
100.0
|
%
|
|
0.0
|
%
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Impairment of in-process research and development intangible asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18.3
|
|
|
—
|
%
|
|
(100.0
|
)%
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Change in contingent consideration liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6.8
|
)
|
|
—
|
%
|
|
(100.0
|
)%
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Interest income and other income (expense), net
|
$
|
32.6
|
|
|
$
|
1.4
|
|
|
$
|
1.7
|
|
|
NM*
|
|
|
(20.5
|
)%
|
Loss on extinguishment of debt
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
|
(100.0
|
)%
|
|
100.0
|
%
|
|||
Interest expense
|
(16.3
|
)
|
|
(13.7
|
)
|
|
(12.7
|
)
|
|
18.7
|
%
|
|
7.7
|
%
|
|||
Interest and other income (expense), net
|
$
|
16.3
|
|
|
$
|
(13.4
|
)
|
|
$
|
(11.0
|
)
|
|
NM*
|
|
|
21.9
|
%
|
|
Years Ended December 31,
|
|
2017 to 2018
|
|
2016 to 2017
|
|||||||||||
|
2018
|
|
2017
|
|
2016
|
|
Change
|
|
Change
|
|||||||
|
(Dollars in millions)
|
|
|
|
|
|||||||||||
Provision for income taxes
|
$
|
87.3
|
|
|
$
|
63.9
|
|
|
$
|
15.8
|
|
|
36.8
|
%
|
|
NM*
|
Effective tax rate
|
(123.6
|
)%
|
|
155.8
|
%
|
|
69.9
|
%
|
|
|
|
|
*
|
NM — percentage is not meaningful
|
|
December 31,
2018
|
|
December 31,
2017
|
||||
|
(In millions)
|
||||||
Cash and cash equivalents
|
$
|
115.9
|
|
|
$
|
225.9
|
|
Marketable securities
|
161.9
|
|
|
103.5
|
|
||
Total cash, cash equivalents, and marketable securities
|
$
|
277.8
|
|
|
$
|
329.4
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
87.1
|
|
|
$
|
117.4
|
|
|
$
|
95.6
|
|
Net cash used in investing activities
|
$
|
(68.0
|
)
|
|
$
|
(75.5
|
)
|
|
$
|
(105.2
|
)
|
Net cash provided by (used in) financing activities
|
$
|
(127.7
|
)
|
|
$
|
46.5
|
|
|
$
|
2.7
|
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||||
Contractual obligations (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Imputed financing obligation (2)
|
$
|
8,081
|
|
|
$
|
5,677
|
|
|
$
|
2,404
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Leases and other contractual obligations
|
20,548
|
|
|
5,999
|
|
|
5,117
|
|
|
5,193
|
|
|
3,271
|
|
|
968
|
|
||||||
Software licenses (3)
|
12,002
|
|
|
7,510
|
|
|
2,995
|
|
|
1,497
|
|
|
—
|
|
|
—
|
|
||||||
Convertible notes
|
172,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
172,500
|
|
||||||
Interest payments related to convertible notes
|
10,680
|
|
|
2,372
|
|
|
2,372
|
|
|
2,372
|
|
|
2,372
|
|
|
1,192
|
|
||||||
Total
|
$
|
223,811
|
|
|
$
|
21,558
|
|
|
$
|
12,888
|
|
|
$
|
9,062
|
|
|
$
|
5,643
|
|
|
$
|
174,660
|
|
(1)
|
The above table does not reflect possible payments in connection with uncertain tax benefits of approximately
$23.5 million
including
$21.4 million
recorded as a reduction of long-term deferred tax assets and
$2.1 million
in long-term income taxes payable, as of
December 31, 2018
. As noted in Note 16, “Income Taxes,” of Notes to Consolidated Financial Statements of this Form 10-K, although it is possible that some of the unrecognized tax benefits could be settled within the next
12 months
, we cannot reasonably estimate the outcome at this time.
|
(2)
|
With respect to the imputed financing obligation, the main components of the difference between the amount reflected in the contractual obligations table and the amount reflected on the Consolidated Balance Sheets are the interest on the imputed financing obligation and the estimated common area expenses over the future periods. The amount includes the amended Ohio lease and the amended Sunnyvale lease.
|
(3)
|
We have commitments with various software vendors for agreements generally having terms longer than
one
year.
|
•
|
For fixed-fee arrangements (including arrangements that include minimum guaranteed amounts), variable royalty arrangements that we have concluded are fixed in substance and the fixed portion of hybrid fixed/variable arrangements, we recognize revenue upon control over the underlying IP use right transferring to the licensee, net of the effect of significant financing components calculated using customer-specific, risk-adjusted lending rates ranging between 3% and 6%, with the related interest income being recognized over time on an effective rate basis. Where a licensee has the contractual right to terminate a fixed-fee arrangement for convenience without any substantive penalty payable upon such termination, we apply the guidance in the New Revenue Standard to the duration of the contract in which the parties have present enforceable rights and obligations and only recognizes revenue for amounts that are due and payable.
|
•
|
For variable arrangements, we recognize revenue based on an estimate of the licensee’s sale or usage of the IP during the period of reference, typically quarterly, with a true-up being recorded when we receive the actual royalty report from the licensee.
|
•
|
For our contract and other revenue, revenue is recognized as services are performed on a percentage-of-completion basis, measured using the input method. Due to the nature of the work performed in these arrangements, the estimation of percentage-of-completion is complex and involves significant judgment. The key factor reviewed by us to estimate costs to complete each contract is the estimated man-days necessary to complete the project. If circumstances arise that change the original estimates of extent of progress toward completion, revisions to the estimates are made that may result in increases or decreases in estimated revenues or costs. Revisions are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known. We have adequate tools and controls in place, and substantial experience and expertise in timely and accurately tracking man-days incurred in completing customization and other professional services, and quantifying changes in estimates.
|
•
|
All fixed-fee arrangements result in cash being received after control over the underlying IP use right has transferred to the licensee, and over a period exceeding a year. As such, all these arrangements include a significant financing component. We calculate a customer-specific lending rate using a Daily Treasury Yield Curve Rate that changes depending on the date on which the licensing arrangement was entered into and the term (in years) of the arrangement, and take into consideration a licensee-specific risk profile determined based on a review of the licensee’s “Full Company View” Dun & Bradstreet report obtained on the date the licensing arrangement was signed by the parties, with a risk premium being added to the Daily Treasury Yield Curve Rate considering the overall business risk, financing strength and risk indicators, as listed.
|
•
|
We recognize revenue on variable fee licensing arrangements on the basis of estimates. In connection with the adoption of the New Revenue Standard, we have set up specific procedures and controls to ensure timely and accurate quantification of variable royalties, and implemented new systems to enable the preparation of the estimates and reporting of the financial information required by the New Revenue Standard.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
(i)
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of assets;
|
(ii)
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
|
(iii)
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
Page
|
/s/ PricewaterhouseCoopers LLP
|
|
San Jose, California
|
|
February 22, 2019
|
|
|
|
We have served as the Company's auditor since 1991.
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands, except shares and per share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
115,924
|
|
|
$
|
225,844
|
|
Marketable securities
|
161,840
|
|
|
103,532
|
|
||
Accounts receivable
|
50,863
|
|
|
25,326
|
|
||
Unbilled receivables
|
176,613
|
|
|
566
|
|
||
Inventories
|
6,772
|
|
|
5,159
|
|
||
Prepaids and other current assets
|
15,738
|
|
|
11,317
|
|
||
Total current assets
|
527,750
|
|
|
371,744
|
|
||
Intangible assets, net
|
59,936
|
|
|
91,722
|
|
||
Goodwill
|
207,178
|
|
|
209,661
|
|
||
Property, plant and equipment, net
|
57,028
|
|
|
54,303
|
|
||
Deferred tax assets
|
4,435
|
|
|
159,099
|
|
||
Unbilled receivables, long-term
|
497,003
|
|
|
—
|
|
||
Other assets
|
7,825
|
|
|
4,543
|
|
||
Total assets
|
$
|
1,361,155
|
|
|
$
|
891,072
|
|
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
7,392
|
|
|
$
|
9,614
|
|
Accrued salaries and benefits
|
16,938
|
|
|
17,091
|
|
||
Convertible notes, short-term
|
—
|
|
|
78,451
|
|
||
Deferred revenue
|
19,374
|
|
|
18,272
|
|
||
Income taxes payable, short-term
|
16,390
|
|
|
258
|
|
||
Other current liabilities
|
9,191
|
|
|
9,156
|
|
||
Total current liabilities
|
69,285
|
|
|
132,842
|
|
||
Convertible notes, long-term
|
141,934
|
|
|
135,447
|
|
||
Long-term imputed financing obligation
|
36,297
|
|
|
37,262
|
|
||
Long-term income taxes payable
|
77,280
|
|
|
3,344
|
|
||
Deferred tax liabilities
|
18,960
|
|
|
9,830
|
|
||
Other long-term liabilities
|
5,287
|
|
|
763
|
|
||
Total liabilities
|
349,043
|
|
|
319,488
|
|
||
Commitments and contingencies (Notes 11 and 17)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Convertible preferred stock, $.001 par value:
|
|
|
|
||||
Authorized: 5,000,000 shares; Issued and outstanding: no shares at December 31, 2018 and December 31, 2017
|
—
|
|
|
—
|
|
||
Common Stock, $.001 par value:
|
|
|
|
||||
Authorized: 500,000,000 shares; Issued and outstanding: 109,017,708 shares at December 31, 2018 and 109,763,967 shares at December 31, 2017
|
109
|
|
|
110
|
|
||
Additional paid in capital
|
1,226,588
|
|
|
1,212,798
|
|
||
Accumulated deficit
|
(204,294
|
)
|
|
(636,227
|
)
|
||
Accumulated other comprehensive loss
|
(10,291
|
)
|
|
(5,097
|
)
|
||
Total stockholders’ equity
|
1,012,112
|
|
|
571,584
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,361,155
|
|
|
$
|
891,072
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Royalties
|
$
|
130,452
|
|
|
$
|
289,594
|
|
|
$
|
264,614
|
|
Product revenue
|
38,690
|
|
|
36,509
|
|
|
26,052
|
|
|||
Contract and other revenue
|
62,059
|
|
|
66,993
|
|
|
45,931
|
|
|||
Total revenue
|
231,201
|
|
|
393,096
|
|
|
336,597
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of product revenue*
|
18,299
|
|
|
23,783
|
|
|
21,329
|
|
|||
Cost of contract and other revenue
|
35,402
|
|
|
55,364
|
|
|
45,761
|
|
|||
Research and development*
|
158,339
|
|
|
149,135
|
|
|
129,844
|
|
|||
Sales, general and administrative*
|
103,911
|
|
|
110,940
|
|
|
95,145
|
|
|||
Restructuring charges
|
2,217
|
|
|
—
|
|
|
—
|
|
|||
Impairment of in-process research and development intangible asset
|
—
|
|
|
—
|
|
|
18,300
|
|
|||
Change in contingent consideration liability
|
—
|
|
|
—
|
|
|
(6,845
|
)
|
|||
Gain from sale of intellectual property
|
—
|
|
|
(533
|
)
|
|
—
|
|
|||
Gain from settlement
|
—
|
|
|
—
|
|
|
(579
|
)
|
|||
Total operating costs and expenses
|
318,168
|
|
|
338,689
|
|
|
302,955
|
|
|||
Operating income (loss)
|
(86,967
|
)
|
|
54,407
|
|
|
33,642
|
|
|||
Interest income and other income (expense), net
|
32,621
|
|
|
1,384
|
|
|
1,740
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
(1,082
|
)
|
|
—
|
|
|||
Interest expense
|
(16,282
|
)
|
|
(13,720
|
)
|
|
(12,745
|
)
|
|||
Interest and other income (expense), net
|
16,339
|
|
|
(13,418
|
)
|
|
(11,005
|
)
|
|||
Income (loss) before income taxes
|
(70,628
|
)
|
|
40,989
|
|
|
22,637
|
|
|||
Provision for income taxes
|
87,329
|
|
|
63,851
|
|
|
15,817
|
|
|||
Net income (loss)
|
$
|
(157,957
|
)
|
|
$
|
(22,862
|
)
|
|
$
|
6,820
|
|
Net income (loss) per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.46
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.06
|
|
Diluted
|
$
|
(1.46
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.06
|
|
Weighted average shares used in per share calculations:
|
|
|
|
|
|
||||||
Basic
|
108,450
|
|
|
110,198
|
|
|
110,162
|
|
|||
Diluted
|
108,450
|
|
|
110,198
|
|
|
113,140
|
|
* Includes stock-based compensation:
|
|
|
|
|
|
||||||
Cost of product revenue
|
$
|
8
|
|
|
$
|
78
|
|
|
$
|
56
|
|
Research and development
|
$
|
12,582
|
|
|
$
|
12,185
|
|
|
$
|
9,165
|
|
Sales, general and administrative
|
$
|
9,146
|
|
|
$
|
15,140
|
|
|
$
|
11,792
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Net income (loss)
|
$
|
(157,957
|
)
|
|
$
|
(22,862
|
)
|
|
$
|
6,820
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(4,447
|
)
|
|
7,798
|
|
|
(13,485
|
)
|
|||
Unrealized gain (loss) on marketable securities, net of tax
|
(747
|
)
|
|
613
|
|
|
(396
|
)
|
|||
Total comprehensive loss
|
$
|
(163,151
|
)
|
|
$
|
(14,451
|
)
|
|
$
|
(7,061
|
)
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Gain (Loss)
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
||||||||||||||
|
(In thousands)
|
|||||||||||||||||||||
Balances at December 31, 2015
|
109,288
|
|
$
|
109
|
|
|
$
|
1,130,368
|
|
|
$
|
(604,317
|
)
|
|
$
|
373
|
|
|
$
|
526,533
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
6,820
|
|
—
|
|
|
6,820
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,485
|
)
|
|
(13,485
|
)
|
|||||
Unrealized loss on marketable securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(396)
|
|
(396)
|
|||||||
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan
|
2,502
|
|
3
|
|
12,294
|
|
—
|
|
|
—
|
|
|
12,297
|
|||||||||
Repurchase and retirement of common stock under repurchase plan
|
(736
|
)
|
|
(1
|
)
|
|
17,555
|
|
(17,554
|
)
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
21,013
|
|
—
|
|
|
—
|
|
|
21,013
|
|||||||
Balances at December 31, 2016
|
111,054
|
|
111
|
|
1,181,230
|
|
(615,051
|
)
|
|
(13,508
|
)
|
|
552,782
|
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,862
|
)
|
|
—
|
|
|
(22,862
|
)
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,798
|
|
|
7,798
|
|
|||||
Unrealized gain on marketable securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
613
|
|
613
|
|||||||
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan
|
2,727
|
|
3
|
|
10,730
|
|
—
|
|
|
—
|
|
|
10,733
|
|||||||||
Repurchase and retirement of common stock under repurchase plan
|
(4,017
|
)
|
|
(4
|
)
|
|
(13,477)
|
|
(36,557
|
)
|
|
—
|
|
|
(50,038
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
27,403
|
|
—
|
|
|
—
|
|
|
27,403
|
|
||||||
Equity component of 1.375% convertible notes, net
|
—
|
|
|
—
|
|
|
33,913
|
|
|
—
|
|
|
—
|
|
|
33,913
|
|
|||||
Purchase of convertible note hedges
|
—
|
|
|
—
|
|
|
(33,523
|
)
|
|
—
|
|
|
—
|
|
|
(33,523
|
)
|
|||||
Issuance of warrants
|
—
|
|
|
—
|
|
|
23,173
|
|
|
—
|
|
|
—
|
|
|
23,173
|
|
|||||
Repurchase of 1.125% convertible notes
|
—
|
|
|
—
|
|
|
(16,651
|
)
|
|
—
|
|
|
—
|
|
|
(16,651
|
)
|
|||||
Cumulative effect adjustment from adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
38,243
|
|
|
—
|
|
|
38,243
|
|
|||||
Balances at December 31, 2017
|
109,764
|
|
110
|
|
1,212,798
|
|
(636,227
|
)
|
|
(5,097
|
)
|
|
571,584
|
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(157,957
|
)
|
|
—
|
|
|
(157,957
|
)
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,447)
|
|
(4,447)
|
|||||||
Unrealized loss on marketable securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(747
|
)
|
|
(747
|
)
|
|||||
Issuance of common stock upon exercise of options, equity stock and employee stock purchase plan
|
2,616
|
|
3
|
|
4,627
|
|
—
|
|
|
—
|
|
|
4,630
|
|||||||||
Repurchase and retirement of common stock under repurchase plan
|
(3,786
|
)
|
|
(4
|
)
|
|
(12,573
|
)
|
|
(37,456
|
)
|
|
—
|
|
|
(50,033
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
21,736
|
|
—
|
|
|
—
|
|
|
21,736
|
|||||||
Issuance of common stock in connection with the maturity of the 2018 Notes related to the settlement of the in-the-money conversion feature of the 2018 Notes
|
424
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Cumulative effect adjustment from adoption of ASU 2016-01
|
—
|
|
|
—
|
|
|
—
|
|
|
1,058
|
|
|
—
|
|
|
1,058
|
|
|||||
Cumulative effect adjustment from the adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
626,288
|
|
|
—
|
|
|
626,288
|
|
|||||
Balances at December 31, 2018
|
109,018
|
|
$
|
109
|
|
|
$
|
1,226,588
|
|
|
$
|
(204,294
|
)
|
|
$
|
(10,291
|
)
|
|
$
|
1,012,112
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(157,957
|
)
|
|
$
|
(22,862
|
)
|
|
$
|
6,820
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Stock-based compensation
|
21,736
|
|
|
27,403
|
|
|
21,013
|
|
|||
Depreciation
|
10,745
|
|
|
13,275
|
|
|
12,965
|
|
|||
Amortization of intangible assets
|
29,341
|
|
|
41,962
|
|
|
37,138
|
|
|||
Non-cash interest expense and amortization of convertible debt issuance costs
|
9,243
|
|
|
7,578
|
|
|
6,749
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
1,082
|
|
|
—
|
|
|||
Impairment of in-process research and development intangible asset
|
—
|
|
|
—
|
|
|
18,300
|
|
|||
Change in contingent consideration liability
|
—
|
|
|
—
|
|
|
(6,845
|
)
|
|||
Deferred tax (benefit) provision
|
79,954
|
|
|
39,535
|
|
|
(7,116
|
)
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
(1,196
|
)
|
|||
Non-cash restructuring
|
670
|
|
|
—
|
|
|
—
|
|
|||
Gain from sale of assets held for sale
|
(1,266
|
)
|
|
—
|
|
|
—
|
|
|||
Gain from sale of marketable equity security
|
(291
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on equity investment
|
67
|
|
|
—
|
|
|
—
|
|
|||
Loss from sale of property and property, plant and equipment
|
395
|
|
|
227
|
|
|
—
|
|
|||
Effect of exchange rate on assumed cash liability from acquisition
|
—
|
|
|
—
|
|
|
(1,558
|
)
|
|||
Change in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(24,933
|
)
|
|
(1,110
|
)
|
|
5,797
|
|
|||
Unbilled receivables
|
145,164
|
|
|
—
|
|
|
—
|
|
|||
Prepaid expenses and other assets
|
(4,084
|
)
|
|
4,354
|
|
|
(6,205
|
)
|
|||
Inventories
|
(1,856
|
)
|
|
473
|
|
|
1,748
|
|
|||
Accounts payable
|
(2,268
|
)
|
|
(651
|
)
|
|
2,373
|
|
|||
Accrued salaries and benefits and other accrued liabilities
|
(3,221
|
)
|
|
4,703
|
|
|
(1,519
|
)
|
|||
Income taxes payable
|
(14,550
|
)
|
|
861
|
|
|
(175
|
)
|
|||
Deferred revenue
|
228
|
|
|
607
|
|
|
7,313
|
|
|||
Net cash provided by operating activities
|
87,117
|
|
|
117,437
|
|
|
95,602
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(10,762
|
)
|
|
(9,385
|
)
|
|
(8,556
|
)
|
|||
Acquisition of intangible assets
|
(350
|
)
|
|
(120
|
)
|
|
—
|
|
|||
Purchases of marketable securities
|
(282,117
|
)
|
|
(102,497
|
)
|
|
(54,869
|
)
|
|||
Maturities of marketable securities
|
223,079
|
|
|
32,048
|
|
|
110,081
|
|
|||
Proceeds from sale of marketable securities
|
—
|
|
|
4,450
|
|
|
50,546
|
|
|||
Proceeds from sale of property and property, plant and equipment
|
10
|
|
|
33
|
|
|
113
|
|
|||
Proceeds from sale of assets held for sale
|
3,754
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of equity security
|
1,350
|
|
|
—
|
|
|
—
|
|
|||
Investment in privately-held company
|
(3,000
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of businesses, net of cash acquired
|
—
|
|
|
—
|
|
|
(202,523
|
)
|
|||
Net cash used in investing activities
|
(68,036
|
)
|
|
(75,471
|
)
|
|
(105,208
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of 1.375% convertible notes
|
—
|
|
|
172,500
|
|
|
—
|
|
|||
Issuance costs related to issuance of 1.375% convertible notes
|
—
|
|
|
(3,277
|
)
|
|
—
|
|
|||
Payments for convertible note hedges
|
—
|
|
|
(33,523
|
)
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
—
|
|
|
23,173
|
|
|
—
|
|
|||
Repayment of 1.125% convertible notes
|
(81,207
|
)
|
|
(72,257
|
)
|
|
—
|
|
|||
Proceeds received from issuance of common stock under employee stock plans
|
11,402
|
|
|
15,826
|
|
|
15,436
|
|
|||
Principal payments against financing lease obligation
|
(1,080
|
)
|
|
(860
|
)
|
|
(661
|
)
|
|||
Payment of additional purchase consideration from acquisition
|
—
|
|
|
—
|
|
|
(10,206
|
)
|
|||
Repurchase and retirement of common stock, including prepayment under accelerated share repurchase program
|
(50,033
|
)
|
|
(50,038
|
)
|
|
—
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
1,196
|
|
|||
Payments of taxes on restricted stock units
|
(6,766
|
)
|
|
(5,099
|
)
|
|
(3,064
|
)
|
|||
Net cash provided by (used in) financing activities
|
(127,684
|
)
|
|
46,445
|
|
|
2,701
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(989
|
)
|
|
2,139
|
|
|
(1,565
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(109,592
|
)
|
|
90,550
|
|
|
(8,470
|
)
|
|||
Cash and cash equivalents at beginning of year
|
225,844
|
|
|
135,294
|
|
|
143,764
|
|
|||
Cash and cash equivalents at end of year
|
$
|
116,252
|
|
|
$
|
225,844
|
|
|
$
|
135,294
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
3,044
|
|
|
$
|
1,553
|
|
|
$
|
1,553
|
|
Income taxes, net of refunds
|
$
|
23,581
|
|
|
$
|
22,733
|
|
|
$
|
26,787
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Property, plant and equipment received and accrued in accounts payable and other accrued liabilities
|
$
|
8,225
|
|
|
$
|
1,092
|
|
|
$
|
576
|
|
•
|
For fixed-fee arrangements (including arrangements that include minimum guaranteed amounts), variable royalty arrangements that the Company has concluded are fixed in substance and the fixed portion of hybrid fixed/variable arrangements, the Company recognizes revenue upon control over the underlying IP use right transferring to the licensee, net of the effect of significant financing components calculated using customer-specific, risk-adjusted lending rates ranging between
3%
and
6%
, with the related interest income being recognized over time on an effective rate basis. Where a licensee has the contractual right to terminate a fixed-fee arrangement for convenience without any substantive penalty payable upon such termination, the Company applies the guidance in the New Revenue Standard to the duration of the contract in which the parties have present enforceable rights and obligations and only recognizes revenue for amounts that are due and payable.
|
•
|
For variable arrangements, the Company recognizes revenue based on an estimate of the licensee’s sale or usage of the IP during the period of reference, typically quarterly, with a true-up being recorded when the Company receives the actual royalty report from the licensee.
|
•
|
For the Company's contract and other revenue, revenue is recognized as services are performed on a percentage-of-completion basis, measured using the input method. Due to the nature of the work performed in these arrangements, the estimation of percentage-of-completion is complex and involves significant judgment. The key factor reviewed by the Company to estimate costs to complete each contract is the estimated man-days necessary to complete the project. If circumstances arise that change the original estimates of extent of progress toward completion, revisions to the estimates are made that may result in increases or decreases in estimated revenues or costs. Revisions are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known. The Company has adequate tools and controls in place, and substantial experience and expertise in timely and accurately tracking man-days incurred in completing customization and other professional services, and quantifying changes in estimates.
|
•
|
All fixed-fee arrangements result in cash being received after control over the underlying IP use right has transferred to the licensee, and over a period exceeding a year. As such, all these arrangements include a significant financing component. The Company calculates a customer-specific lending rate using a Daily Treasury Yield Curve Rate that changes depending on the date on which the licensing arrangement was entered into and the term (in years) of the arrangement, and takes into consideration a licensee-specific risk profile determined based on a review of the licensee’s “Full Company View” Dun & Bradstreet report obtained on the date the licensing arrangement was signed by the parties, with a risk premium being added to the Daily Treasury Yield Curve Rate considering the overall business risk, financing strength and risk indicators, as listed.
|
•
|
The Company recognizes revenue on variable fee licensing arrangements on the basis of estimates. In connection with the adoption of the New Revenue Standard, the Company has set up specific procedures and controls to ensure timely and accurate quantification of variable royalties, and implemented new systems to enable the preparation of the estimates and reporting of the financial information required by the New Revenue Standard.
|
|
As of
|
||||||
(In thousands)
|
December 31, 2018
|
|
January 1, 2018
|
||||
Unbilled receivables
|
$
|
673,616
|
|
|
$
|
818,371
|
|
Deferred revenue
|
19,566
|
|
|
20,737
|
|
•
|
Revenue recognized for certain patent and technology licensing arrangements has changed under the New Revenue Standard. Revenue for (i) fixed-fee arrangements (including arrangements that include minimum guaranteed amounts), (ii) variable royalty arrangements that the Company has concluded are fixed in substance and (iii) the fixed portion of hybrid fixed/variable arrangements is recognized upon control over the underlying IP use right transferring to the licensee rather than upon billing under ASC 605, net of the effect of significant financing components calculated using customer-specific, risk-adjusted lending rates and recognized over time on an effective rate basis. As a consequence of
|
•
|
Adoption of the New Revenue Standard resulted in revenue recognition being accelerated for variable royalties and the variable portion of hybrid fixed/variable patent and technology licensing arrangements. Under the New Revenue Standard, royalty revenue is being recognized on the basis of management’s estimates of sales or usage, as applicable, of the licensed IP in the period of reference, with a true-up being recorded in subsequent periods based on actual sales or usage as reported by licensees (rather than upon receiving royalty reports from licensees as was the case under ASC 605).
|
•
|
Adoption of the New Revenue Standard also resulted in revenue recognition being accelerated for certain professional services arrangements, including arrangements consisting of significant software customization or modification and development arrangements. Under the New Revenue Standard, such arrangements are accounted for based on man-days incurred during the reporting period as compared to estimated total man-days necessary for contract completion, as the customer either controls the asset as it is created or enhanced by us or, where the asset has no alternative use to us, we are entitled to payment for performance to date and expect to fulfill the contract - revenue recognition is no longer capped to the lesser of inputs in the period or accepted billable project milestones as was the case under ASC 605.
|
•
|
The Company applied the practical expedient whereby the Company primarily charges commission costs to expense when incurred because the amortization period would be one year or less for the asset that would have been recognized from deferring these costs.
|
•
|
The Company applied the practical expedient which allowed the Company to reflect the aggregate effect of all contract modifications occurring before the beginning of the earliest period presented when allocating the transaction price to performance obligations.
|
•
|
The Company applied the practical expedient to not assess a contract asset or contract liability for a significant financing component if the period between the customer's payment and the Company's transfer of goods or services is one year or less.
|
|
Year Ended December 31, 2018
|
||||||||||
(In thousands)
|
As Reported
|
|
Effect of Change Higher/ (Lower)
|
|
Amounts under ASC 605
|
||||||
Consolidated Statement of Operations
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Royalties
|
$
|
130,452
|
|
|
$
|
172,769
|
|
|
$
|
303,221
|
|
Product revenue
|
38,690
|
|
|
707
|
|
|
39,397
|
|
|||
Contract and other revenue
|
62,059
|
|
|
(3,576
|
)
|
|
58,483
|
|
|||
Total revenue
|
$
|
231,201
|
|
|
$
|
169,900
|
|
|
$
|
401,101
|
|
|
|
|
|
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
||||||
Interest income and other income (expense), net
|
$
|
16,339
|
|
|
$
|
(27,235
|
)
|
|
$
|
(10,896
|
)
|
Provision for income taxes
|
$
|
87,329
|
|
|
$
|
—
|
|
|
$
|
87,329
|
|
Net loss
|
$
|
(157,957
|
)
|
|
$
|
142,665
|
|
|
$
|
(15,292
|
)
|
|
December 31, 2018
|
||||||||||
(In thousands)
|
As Reported
|
|
Effect of Change Higher/ (Lower)
|
|
Amounts under ASC 605
|
||||||
Consolidated Balance Sheet
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
Unbilled receivables
|
$
|
673,616
|
|
|
$
|
(673,616
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Deferred revenue
|
19,566
|
|
|
(1,243
|
)
|
|
18,323
|
|
|||
Deferred tax liabilities (included in other long-term liabilities)
|
18,960
|
|
|
(2,079
|
)
|
|
16,881
|
|
|||
Income taxes payable
|
93,670
|
|
|
(90,400
|
)
|
|
3,270
|
|
|||
|
|
|
|
|
|
||||||
Stockholders’ equity:
|
|
|
|
|
|
||||||
Accumulated deficit
|
(204,294
|
)
|
|
(483,623
|
)
|
|
(687,917
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income (loss) per share:
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(157,957
|
)
|
|
$
|
(22,862
|
)
|
|
$
|
6,820
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding - basic
|
108,450
|
|
|
110,198
|
|
|
110,162
|
|
|||
Effect of potential dilutive common shares
|
—
|
|
|
—
|
|
|
2,978
|
|
|||
Weighted-average common shares outstanding - diluted
|
108,450
|
|
|
110,198
|
|
|
113,140
|
|
|||
Basic net income (loss) per share
|
$
|
(1.46
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.06
|
|
Diluted net income (loss) per share
|
$
|
(1.46
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.06
|
|
Reportable Segment:
|
December 31,
2017 |
|
Impairment Charge of Goodwill
|
|
Effect of Exchange Rates (1)
|
|
December 31,
2018 |
||||||||
|
(In thousands)
|
||||||||||||||
MID
|
$
|
66,643
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
66,643
|
|
RSD
|
143,018
|
|
|
—
|
|
|
(2,483
|
)
|
|
140,535
|
|
||||
Total
|
$
|
209,661
|
|
|
$
|
—
|
|
|
$
|
(2,483
|
)
|
|
$
|
207,178
|
|
|
As of December 31, 2018
|
||||||||||
Reportable Segment:
|
Gross Carrying Amount
|
|
Accumulated Impairment Losses
|
|
Net Carrying Amount
|
||||||
|
(In thousands)
|
||||||||||
MID
|
$
|
66,643
|
|
|
$
|
—
|
|
|
$
|
66,643
|
|
RSD
|
140,535
|
|
|
—
|
|
|
140,535
|
|
|||
Other
|
21,770
|
|
|
(21,770
|
)
|
|
—
|
|
|||
Total
|
$
|
228,948
|
|
|
$
|
(21,770
|
)
|
|
$
|
207,178
|
|
Reportable Segment:
|
December 31,
2016 |
|
Addition to Goodwill (1)
|
|
Impairment Charge of Goodwill
|
|
Effect of Exchange Rates (2)
|
|
December 31,
2017 |
||||||||||
|
|
||||||||||||||||||
MID
|
$
|
66,643
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
66,643
|
|
RSD
|
138,151
|
|
|
803
|
|
|
—
|
|
|
4,064
|
|
|
143,018
|
|
|||||
Total
|
$
|
204,794
|
|
|
$
|
803
|
|
|
$
|
—
|
|
|
$
|
4,064
|
|
|
$
|
209,661
|
|
|
As of December 31, 2017
|
||||||||||
Reportable Segment:
|
Gross Carrying Amount
|
|
Accumulated Impairment Losses
|
|
Net Carrying Amount
|
||||||
|
|
||||||||||
MID
|
$
|
66,643
|
|
|
$
|
—
|
|
|
$
|
66,643
|
|
RSD
|
143,018
|
|
|
—
|
|
|
143,018
|
|
|||
Other
|
21,770
|
|
|
(21,770
|
)
|
|
—
|
|
|||
Total
|
$
|
231,431
|
|
|
$
|
(21,770
|
)
|
|
$
|
209,661
|
|
|
|
|
As of December 31, 2018
|
||||||||||
|
Useful Life
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
|
|
(In thousands)
|
||||||||||
Existing technology
|
3 to 10 years
|
|
$
|
258,903
|
|
|
$
|
(213,824
|
)
|
|
$
|
45,079
|
|
Customer contracts and contractual relationships
|
1 to 10 years
|
|
67,667
|
|
|
(54,410
|
)
|
|
13,257
|
|
|||
Non-compete agreements and trademarks
|
3 years
|
|
300
|
|
|
(300
|
)
|
|
—
|
|
|||
In-process research and development
|
Not applicable
|
|
1,600
|
|
|
—
|
|
|
1,600
|
|
|||
Total intangible assets
|
|
|
$
|
328,470
|
|
|
$
|
(268,534
|
)
|
|
$
|
59,936
|
|
|
|
|
As of December 31, 2017
|
||||||||||
|
Useful Life
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
|
|
(In thousands)
|
||||||||||
Existing technology
|
3 to 10 years
|
|
$
|
258,008
|
|
|
$
|
(191,554
|
)
|
|
$
|
66,454
|
|
Customer contracts and contractual relationships
|
1 to 10 years
|
|
68,794
|
|
|
(48,626
|
)
|
|
20,168
|
|
|||
Non-compete agreements and trademarks
|
3 years
|
|
300
|
|
|
(300
|
)
|
|
—
|
|
|||
In-process research and development
|
Not applicable
|
|
5,100
|
|
|
—
|
|
|
5,100
|
|
|||
Total intangible assets
|
|
|
$
|
332,202
|
|
|
$
|
(240,480
|
)
|
|
$
|
91,722
|
|
Years Ending December 31:
|
Amount
|
||
2019
|
$
|
20,177
|
|
2020
|
19,892
|
|
|
2021
|
12,975
|
|
|
2022
|
2,047
|
|
|
2023
|
1,526
|
|
|
Thereafter
|
1,719
|
|
|
Total amortizable purchased intangible assets
|
58,336
|
|
|
In-process research and development
|
1,600
|
|
|
Total intangible assets
|
$
|
59,936
|
|
|
For the Year Ended December 31, 2018
|
||||||||||||||
|
MID
|
|
RSD
|
|
Other
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Revenues
|
$
|
168,528
|
|
|
$
|
60,232
|
|
|
$
|
2,441
|
|
|
$
|
231,201
|
|
Segment operating expenses
|
94,999
|
|
|
53,177
|
|
|
14,560
|
|
|
162,736
|
|
||||
Segment operating income (loss)
|
$
|
73,529
|
|
|
$
|
7,055
|
|
|
$
|
(12,119
|
)
|
|
$
|
68,465
|
|
Reconciling items
|
|
|
|
|
|
|
|
|
(155,432
|
)
|
|||||
Operating loss
|
|
|
|
|
|
|
|
|
$
|
(86,967
|
)
|
||||
Interest and other income (expense), net
|
|
|
|
|
|
|
|
|
16,339
|
|
|||||
Loss before income taxes
|
|
|
|
|
|
|
|
|
$
|
(70,628
|
)
|
|
For the Year Ended December 31, 2017
|
||||||||||||||
|
MID
|
|
RSD
|
|
Other
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Revenues
|
$
|
280,704
|
|
|
$
|
96,663
|
|
|
$
|
15,729
|
|
|
$
|
393,096
|
|
Segment operating expense
|
86,044
|
|
|
50,010
|
|
|
33,860
|
|
|
169,914
|
|
||||
Segment operating income (loss)
|
$
|
194,660
|
|
|
$
|
46,653
|
|
|
$
|
(18,131
|
)
|
|
$
|
223,182
|
|
Reconciling items
|
|
|
|
|
|
|
(168,775
|
)
|
|||||||
Operating income
|
|
|
|
|
|
|
|
$
|
54,407
|
|
|||||
Interest and other income (expense), net
|
|
|
|
|
|
|
|
(13,418
|
)
|
||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
$
|
40,989
|
|
|
For the Year Ended December 31, 2016
|
||||||||||||||
|
MID
|
|
RSD
|
|
Other
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Revenues
|
$
|
239,843
|
|
|
$
|
76,175
|
|
|
$
|
20,579
|
|
|
$
|
336,597
|
|
Segment operating expenses
|
68,460
|
|
|
51,855
|
|
|
30,397
|
|
|
150,712
|
|
||||
Segment operating income (loss)
|
$
|
171,383
|
|
|
$
|
24,320
|
|
|
$
|
(9,818
|
)
|
|
$
|
185,885
|
|
Reconciling items
|
|
|
|
|
|
|
|
|
(152,243
|
)
|
|||||
Operating income
|
|
|
|
|
|
|
|
$
|
33,642
|
|
|||||
Interest and other income (expense), net
|
|
|
|
|
|
|
|
|
(11,005
|
)
|
|||||
Income before income taxes
|
|
|
|
|
|
|
$
|
22,637
|
|
|
As of December 31,
|
||||
Customer
|
2018
|
|
2017
|
||
Customer 1 (MID reportable segment)
|
12
|
%
|
|
*
|
|
Customer 2 (Other segment)
|
*
|
|
|
12
|
%
|
Customer 3 (MID reportable segment)
|
39
|
%
|
|
*
|
|
Customer 4 (MID and RSD reportable segment)
|
*
|
|
|
13
|
%
|
Customer 5 (RSD reportable segment)
|
*
|
|
|
11
|
%
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Customer A (MID and RSD reportable segments)
|
*
|
|
|
17
|
%
|
|
19
|
%
|
Customer B (MID reportable segment)
|
*
|
|
|
13
|
%
|
|
20
|
%
|
Customer C (MID reportable segment)
|
*
|
|
|
13
|
%
|
|
13
|
%
|
Customer D (MID reportable segment)
|
15
|
%
|
|
*
|
|
|
*
|
|
Customer E (MID and RSD reportable segments)
|
11
|
%
|
|
*
|
|
|
*
|
|
|
As of December 31, 2018
|
|||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Weighted Rate of Return
|
|||||||||
Money market funds
|
$
|
10,080
|
|
|
$
|
10,080
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2.23
|
%
|
U.S. Government bonds and notes
|
32,630
|
|
|
32,634
|
|
|
—
|
|
|
(4
|
)
|
|
2.28
|
%
|
||||
Corporate notes, bonds, commercial paper and other
|
183,998
|
|
|
184,095
|
|
|
—
|
|
|
(97
|
)
|
|
2.37
|
%
|
||||
Total cash equivalents and marketable securities
|
226,708
|
|
|
226,809
|
|
|
—
|
|
|
(101
|
)
|
|
|
|||||
Cash
|
51,056
|
|
|
51,056
|
|
|
—
|
|
|
—
|
|
|
|
|||||
Total cash, cash equivalents and marketable securities
|
$
|
277,764
|
|
|
$
|
277,865
|
|
|
$
|
—
|
|
|
$
|
(101
|
)
|
|
|
|
As of December 31, 2017
|
|||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Weighted Rate of Return
|
|||||||||
Money market funds
|
$
|
10,915
|
|
|
$
|
10,915
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1.16
|
%
|
U.S. Government bonds and notes
|
55,220
|
|
|
55,221
|
|
|
—
|
|
|
(1
|
)
|
|
1.12
|
%
|
||||
Corporate notes, bonds, commercial paper and other
|
195,073
|
|
|
195,204
|
|
|
—
|
|
|
(131
|
)
|
|
1.39
|
%
|
||||
Total cash equivalents and marketable securities
|
261,208
|
|
|
261,340
|
|
|
—
|
|
|
(132
|
)
|
|
|
|||||
Cash
|
68,168
|
|
|
68,168
|
|
|
—
|
|
|
—
|
|
|
|
|||||
Total cash, cash equivalents and marketable securities
|
$
|
329,376
|
|
|
$
|
329,508
|
|
|
$
|
—
|
|
|
$
|
(132
|
)
|
|
|
|
As of
|
||||||
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(Dollars in thousands)
|
||||||
Cash equivalents
|
$
|
64,868
|
|
|
$
|
157,676
|
|
Short term marketable securities
|
161,840
|
|
|
103,532
|
|
||
Total cash equivalents and marketable securities
|
226,708
|
|
|
261,208
|
|
||
Cash
|
51,056
|
|
|
68,168
|
|
||
Total cash, cash equivalents and marketable securities
|
$
|
277,764
|
|
|
$
|
329,376
|
|
|
Fair Value
|
|
Gross Unrealized Loss
|
||||||||||||
|
December 31,
2018 |
|
December 31,
2017 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||||
|
(In thousands)
|
||||||||||||||
Less than one year
|
|
|
|
|
|
|
|
||||||||
U.S. Government bonds and notes
|
$
|
32,630
|
|
|
$
|
42,581
|
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
Corporate notes, bonds and commercial paper
|
183,998
|
|
|
194,015
|
|
|
(97
|
)
|
|
(131
|
)
|
||||
Total Corporate notes, bonds, and commercial paper and U.S. Government bonds and notes
|
$
|
216,628
|
|
|
$
|
236,596
|
|
|
$
|
(101
|
)
|
|
$
|
(132
|
)
|
|
As of December 31, 2018
|
||||||||||||||
|
Total
|
|
Quoted Market Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
|
(In thousands)
|
||||||||||||||
Money market funds
|
$
|
10,080
|
|
|
$
|
10,080
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. Government bonds and notes
|
32,630
|
|
|
—
|
|
|
32,630
|
|
|
—
|
|
||||
Corporate notes, bonds, commercial paper and other
|
183,998
|
|
|
—
|
|
|
183,998
|
|
|
—
|
|
||||
Total available-for-sale securities
|
$
|
226,708
|
|
|
$
|
10,080
|
|
|
$
|
216,628
|
|
|
$
|
—
|
|
|
As of December 31, 2017
|
||||||||||||||
|
Total
|
|
Quoted Market Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
|
(In thousands)
|
||||||||||||||
Money market funds
|
$
|
10,915
|
|
|
$
|
10,915
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. Government bonds and notes
|
55,220
|
|
|
—
|
|
|
55,220
|
|
|
—
|
|
||||
Corporate notes, bonds, commercial paper and other
|
195,073
|
|
|
1,058
|
|
|
194,015
|
|
|
—
|
|
||||
Total available-for-sale securities
|
$
|
261,208
|
|
|
$
|
11,973
|
|
|
$
|
249,235
|
|
|
$
|
—
|
|
|
As of December 31, 2018
|
|
As of December 31, 2017
|
||||||||||||||||||||
(in thousands)
|
Face
Value
|
|
Carrying Value
|
|
Fair
Value
|
|
Face
Value
|
|
Carrying Value
|
|
Fair
Value
|
||||||||||||
1.375% Convertible Senior Notes due 2023
|
$
|
172,500
|
|
|
$
|
141,934
|
|
|
$
|
150,075
|
|
|
$
|
172,500
|
|
|
$
|
135,447
|
|
|
$
|
173,450
|
|
1.125% Convertible Senior Notes due 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
81,207
|
|
|
$
|
78,451
|
|
|
$
|
100,802
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Building
|
$
|
40,320
|
|
|
$
|
40,320
|
|
Computer software
|
26,127
|
|
|
18,424
|
|
||
Computer equipment
|
37,223
|
|
|
36,607
|
|
||
Furniture and fixtures
|
16,286
|
|
|
16,881
|
|
||
Leasehold improvements
|
10,824
|
|
|
10,110
|
|
||
Machinery
|
9,097
|
|
|
16,936
|
|
||
Construction in progress
|
429
|
|
|
1,831
|
|
||
|
140,306
|
|
|
141,109
|
|
||
Less accumulated depreciation and amortization
|
(83,278
|
)
|
|
(86,806
|
)
|
||
|
$
|
57,028
|
|
|
$
|
54,303
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Foreign currency translation adjustments
|
$
|
(10,040
|
)
|
|
$
|
(5,593
|
)
|
Unrealized gain (loss) on available-for-sale securities, net of tax
|
(251
|
)
|
|
496
|
|
||
Total
|
$
|
(10,291
|
)
|
|
$
|
(5,097
|
)
|
(Dollars in thousands)
|
As of December 31, 2018
|
|
As of December 31, 2017
|
||||
1.375% Convertible Senior Notes due 2023
|
$
|
172,500
|
|
|
$
|
172,500
|
|
1.125% Convertible Senior Notes due 2018
|
—
|
|
|
81,207
|
|
||
Total principal amount of convertible notes
|
172,500
|
|
|
253,707
|
|
||
Unamortized discount - 2023 Notes
|
(28,517
|
)
|
|
(34,506
|
)
|
||
Unamortized discount - 2018 Notes
|
—
|
|
|
(2,547
|
)
|
||
Unamortized debt issuance costs - 2023 Notes
|
(2,049
|
)
|
|
(2,547
|
)
|
||
Unamortized debt issuance costs - 2018 Notes
|
—
|
|
|
(209
|
)
|
||
Total convertible notes
|
$
|
141,934
|
|
|
$
|
213,898
|
|
Less current portion
|
—
|
|
|
78,451
|
|
||
Total long-term convertible notes
|
$
|
141,934
|
|
|
$
|
135,447
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
2023 Notes coupon interest at a rate of 1.375%
|
$
|
2,372
|
|
|
$
|
290
|
|
|
$
|
—
|
|
2023 Notes amortization of discount and debt issuance cost at an additional effective interest rate of 4.9%
|
6,486
|
|
|
768
|
|
|
—
|
|
|||
2018 Notes coupon interest at a rate of 1.125%
|
377
|
|
|
1,488
|
|
|
1,553
|
|
|||
2018 Notes amortization of discount and debt issuance cost at an additional effective interest rate of 5.5%
|
2,756
|
|
|
6,810
|
|
|
6,749
|
|
|||
Total interest expense on convertible notes
|
$
|
11,991
|
|
|
$
|
9,356
|
|
|
$
|
8,302
|
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||||
Contractual obligations (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Imputed financing obligation (2)
|
$
|
8,081
|
|
|
$
|
5,677
|
|
|
$
|
2,404
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Leases and other contractual obligations
|
20,548
|
|
|
5,999
|
|
|
5,117
|
|
|
5,193
|
|
|
3,271
|
|
|
968
|
|
||||||
Software licenses (3)
|
12,002
|
|
|
7,510
|
|
|
2,995
|
|
|
1,497
|
|
|
—
|
|
|
—
|
|
||||||
Convertible notes
|
172,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
172,500
|
|
||||||
Interest payments related to convertible notes
|
10,680
|
|
|
2,372
|
|
|
2,372
|
|
|
2,372
|
|
|
2,372
|
|
|
1,192
|
|
||||||
Total
|
$
|
223,811
|
|
|
$
|
21,558
|
|
|
$
|
12,888
|
|
|
$
|
9,062
|
|
|
$
|
5,643
|
|
|
$
|
174,660
|
|
(1)
|
The above table does not reflect possible payments in connection with uncertain tax benefits of approximately
$23.5 million
including
$21.4 million
recorded as a reduction of long-term deferred tax assets and
$2.1 million
in long-term income taxes payable, as of
December 31, 2018
. As noted below in Note 16, “Income Taxes,” although it is possible that some of the unrecognized tax benefits could be settled within the next
12 months
, the Company cannot reasonably estimate the outcome at this time.
|
(2)
|
With respect to the imputed financing obligation, the main components of the difference between the amount reflected in the contractual obligations table and the amount reflected on the Consolidated Balance Sheets are the interest on the imputed financing obligation and the estimated common area expenses over the future periods. The amount includes the amended Ohio lease and the amended Sunnyvale lease.
|
(3)
|
The Company has commitments with various software vendors for agreements generally having terms longer than
one
year.
|
|
Shares Available for Grant
|
Shares available as of December 31, 2015
|
11,173,545
|
Stock options granted
|
(500,000)
|
Stock options forfeited
|
1,081,107
|
Stock options expired under former plans
|
(412,467)
|
Nonvested equity stock and stock units granted (1) (2)
|
(5,316,675)
|
Nonvested equity stock and stock units forfeited (1)
|
1,279,858
|
Total shares available for grant as of December 31, 2016
|
7,305,368
|
Stock options granted
|
(558,426)
|
Stock options forfeited
|
1,978,042
|
Nonvested equity stock and stock units granted (1) (3)
|
(5,007,947)
|
Nonvested equity stock and stock units forfeited (1)
|
1,334,110
|
Total shares available for grant as of December 31, 2017
|
5,051,147
|
Increase in shares approved for issuance
|
5,500,000
|
Stock options granted
|
(711,479)
|
Stock options forfeited
|
877,803
|
Nonvested equity stock and stock units granted (1) (4)
|
(4,993,802)
|
Nonvested equity stock and stock units forfeited (1)
|
4,350,377
|
Total shares available for grant as of December 31, 2018
|
10,074,046
|
(1)
|
For purposes of determining the number of shares available for grant under the 2015 Plan against the maximum number of shares authorized, each restricted stock granted reduces the number of shares available for grant by
1.5
shares and each restricted stock forfeited increases shares available for grant by
1.5
shares.
|
(2)
|
Amount includes
300,003
shares that had been reserved for potential future issuance related to certain performance unit awards discussed under the section titled "Nonvested Equity Stock and Stock Units" below.
|
(3)
|
Amount includes
394,853
shares that had been reserved for potential future issuance related to certain performance unit awards discussed under the section titled "Nonvested Equity Stock and Stock Units" below.
|
(4)
|
Amount includes
525,965
shares that have been reserved for potential future issuance related to certain performance unit awards discussed under the section titled "Nonvested Equity Stock and Stock Units" below.
|
|
Options Outstanding
|
|
Weighted Average Remaining Contractual Term
|
|
|
||||||
|
Number of Shares
|
|
Weighted Average Exercise Price per Share
|
|
|
Aggregate Intrinsic Value
|
|||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||
Outstanding as of December 31, 2015
|
8,995,017
|
|
$
|
10.01
|
|
|
|
|
|
||
Options granted
|
500,000
|
|
$
|
12.29
|
|
|
|
|
|
||
Options exercised
|
(1,405,077)
|
|
$
|
7.27
|
|
|
|
|
|
||
Options forfeited
|
(1,081,107)
|
|
$
|
18.98
|
|
|
|
|
|
||
Outstanding as of December 31, 2016
|
7,008,833
|
|
$
|
9.34
|
|
|
|
|
|
||
Options granted
|
558,426
|
|
$
|
12.95
|
|
|
|
|
|
||
Options exercised
|
(1,278,856)
|
|
$
|
7.34
|
|
|
|
|
|
||
Options forfeited
|
(1,978,042)
|
|
$
|
10.68
|
|
|
|
|
|
||
Outstanding as of December 31, 2017
|
4,310,361
|
|
$
|
9.78
|
|
|
|
|
|
||
Options granted
|
711,479
|
|
$
|
12.84
|
|
|
|
|
|
||
Options exercised
|
(908,146)
|
|
$
|
6.70
|
|
|
|
|
|
||
Options forfeited
|
(877,803)
|
|
$
|
13.73
|
|
|
|
|
|
||
Outstanding as of December 31, 2018
|
3,235,891
|
|
$
|
10.25
|
|
|
4.01
|
|
$
|
1,675
|
|
Vested or expected to vest at December 31, 2018
|
3,205,109
|
|
$
|
10.22
|
|
|
3.97
|
|
$
|
1,675
|
|
Options exercisable at December 31, 2018
|
2,656,079
|
|
$
|
9.71
|
|
|
2.98
|
|
$
|
1,675
|
|
|
Options Outstanding
|
|
Options Exercisable
|
|||||||||||
Range of Exercise Prices
|
Number Outstanding
|
|
Weighted Average Remaining
Contractual Life (in years)
|
|
Weighted Average Exercise Price
|
|
Number Exercisable
|
|
Weighted Average Exercise Price
|
|||||
$4.13 – $5.39
|
53,584
|
|
3.6
|
|
$
|
4.43
|
|
|
53,584
|
|
$
|
4.43
|
|
|
$5.46 – $5.46
|
362,014
|
|
2.2
|
|
$
|
5.46
|
|
|
362,014
|
|
|
$
|
5.46
|
|
$5.63 – $5.76
|
324,773
|
|
1.0
|
|
$
|
5.71
|
|
|
324,773
|
|
$
|
5.71
|
|
|
$6.83 – $8.73
|
275,875
|
|
2.5
|
|
$
|
7.73
|
|
|
275,875
|
|
$
|
7.73
|
|
|
$8.76 – $8.76
|
540,878
|
|
3.1
|
|
$
|
8.76
|
|
|
540,878
|
|
$
|
8.76
|
|
|
$9.53 – $11.93
|
325,858
|
|
4.1
|
|
$
|
11.23
|
|
|
319,736
|
|
$
|
11.23
|
|
|
$11.93 – $12.31
|
433,488
|
|
5.4
|
|
$
|
12.23
|
|
|
289,796
|
|
$
|
12.27
|
|
|
$12.46 – $12.84
|
582,596
|
|
7.6
|
|
$
|
12.80
|
|
|
215,598
|
|
$
|
12.81
|
|
|
$13.60 – $21.95
|
274,025
|
|
4.3
|
|
$
|
16.00
|
|
|
211,025
|
|
$
|
16.71
|
|
|
$22.72 – $22.72
|
62,800
|
|
0.8
|
|
$
|
22.72
|
|
|
62,800
|
|
$
|
22.72
|
|
|
$4.13 – $22.72
|
3,235,891
|
|
4.0
|
|
$
|
10.25
|
|
|
2,656,079
|
|
$
|
9.71
|
|
|
Stock Option Plan for Years Ended December 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Stock Option Plan
|
|
|
|
|
|
Expected stock price volatility
|
24%-32%
|
|
24%-32%
|
|
34%-36%
|
Risk free interest rate
|
2.6%-2.8%
|
|
1.8%-2.0%
|
|
1.3%-1.7%
|
Expected term (in years)
|
5.8
|
|
5.3-5.4
|
|
5.4-6.1
|
Weighted-average fair value of stock options granted
|
$4.23
|
|
$4.09
|
|
$4.59
|
|
Employee Stock Purchase Plan for Years Ended December 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Employee Stock Purchase Plan
|
|
|
|
|
|
Expected stock price volatility
|
27%-34%
|
|
25%-27%
|
|
31%-33%
|
Risk free interest rate
|
2.05%-2.5%
|
|
0.98%-1.3%
|
|
0.41%-0.5%
|
Expected term (in years)
|
0.5
|
|
0.5
|
|
0.5
|
Weighted-average fair value of purchase rights granted under the purchase plan
|
$2.59
|
|
$3.07
|
|
$2.88
|
Nonvested Equity Stock and Stock Units
|
Shares
|
|
Weighted-Average
Grant-Date Fair Value
|
||
Nonvested at December 31, 2015
|
3,008,118
|
|
$
|
11.32
|
|
Granted
|
3,344,448
|
|
$
|
12.84
|
|
Vested
|
(789,864)
|
|
$
|
10.98
|
|
Forfeited
|
(699,646)
|
|
$
|
11.94
|
|
Nonvested at December 31, 2016
|
4,863,056
|
|
$
|
12.33
|
|
Granted
|
3,075,396
|
|
$
|
13.02
|
|
Vested
|
(1,216,476)
|
|
$
|
12.15
|
|
Forfeited
|
(860,627)
|
|
$
|
12.61
|
|
Nonvested at December 31, 2017
|
5,861,349
|
|
$
|
12.68
|
|
Granted
|
2,978,558
|
|
$
|
12.77
|
|
Vested
|
(1,713,930)
|
|
$
|
12.39
|
|
Forfeited
|
(2,266,842)
|
|
$
|
12.97
|
|
Nonvested at December 31, 2018
|
4,859,135
|
|
$
|
12.71
|
|
|
|
Employee
Severance
and Related Benefits
|
|
Facilities
|
|
Total
|
||||||
|
|
(In thousands)
|
||||||||||
Balance at December 31, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Charges
|
|
2,234
|
|
|
1,208
|
|
|
3,442
|
|
|||
Payments
|
|
(2,227
|
)
|
|
(226
|
)
|
|
(2,453
|
)
|
|||
Non-cash settlements
|
|
—
|
|
|
(670
|
)
|
*
|
(670
|
)
|
|||
Balance at December 31, 2018
|
|
$
|
7
|
|
|
$
|
312
|
|
|
$
|
319
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Domestic
|
$
|
(63,829
|
)
|
|
$
|
46,031
|
|
|
$
|
38,211
|
|
Foreign
|
(6,799
|
)
|
|
(5,042
|
)
|
|
(15,574
|
)
|
|||
|
$
|
(70,628
|
)
|
|
$
|
40,989
|
|
|
$
|
22,637
|
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Expense at U.S. federal statutory rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Expense (benefit) at state statutory rate
|
(1.2
|
)
|
|
0.7
|
|
|
1.8
|
|
Withholding tax
|
(7.7
|
)
|
|
50.1
|
|
|
97.0
|
|
Foreign rate differential
|
(0.2
|
)
|
|
2.8
|
|
|
4.1
|
|
Research and development (“R&D”) credit
|
2.2
|
|
|
(3.9
|
)
|
|
(8.3
|
)
|
Executive compensation
|
(0.1
|
)
|
|
1.8
|
|
|
1.5
|
|
Stock-based compensation
|
(2.8
|
)
|
|
14.9
|
|
|
34.8
|
|
Foreign tax credit
|
7.7
|
|
|
(50.1
|
)
|
|
(97.0
|
)
|
Foreign derived intangible income deduction
|
14.8
|
|
|
—
|
|
|
—
|
|
Impact of corporate rate change on deferred taxes
|
—
|
|
|
50.6
|
|
|
—
|
|
Other
|
0.7
|
|
|
1.4
|
|
|
1.0
|
|
Valuation allowance
|
(158.0
|
)
|
|
52.5
|
|
|
—
|
|
|
(123.6
|
)%
|
|
155.8
|
%
|
|
69.9
|
%
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Depreciation and amortization
|
$
|
13,085
|
|
|
$
|
10,840
|
|
Other timing differences, accruals and reserves
|
8,272
|
|
8,766
|
||||
Deferred equity compensation
|
6,236
|
|
7,979
|
||||
Net operating loss carryovers
|
21,259
|
|
16,335
|
||||
Tax credits
|
253,890
|
|
157,051
|
||||
Total gross deferred tax assets
|
302,742
|
|
|
200,971
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Convertible debt
|
(207)
|
|
(791)
|
||||
Deferred revenue
|
(143,182)
|
|
—
|
|
|||
Total gross deferred tax liabilities
|
(143,389)
|
|
(791
|
)
|
|||
Total net deferred tax assets
|
159,353
|
|
|
200,180
|
|
||
Valuation allowance
|
(173,878
|
)
|
|
(50,911
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
(14,525
|
)
|
|
$
|
149,269
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Reported as:
|
|
|
|
||||
Non-current deferred tax assets
|
$
|
4,435
|
|
|
$
|
159,099
|
|
Non-current deferred tax liabilities
|
(18,960
|
)
|
|
(9,830
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
(14,525
|
)
|
|
$
|
149,269
|
|
|
Balance at Beginning of Period
|
|
Charged (Credited) to Operations
|
|
Charged to Other Account*
|
|
Valuation Allowance Release
|
|
Valuation Allowance Set up
|
|
Balance at End of Period
|
||||||||
Tax Valuation Allowance
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2016
|
$
|
20,717
|
|
|
—
|
|
|
2,812
|
|
|
—
|
|
|
—
|
|
|
$
|
23,529
|
|
Year ended December 31, 2017
|
$
|
23,529
|
|
|
—
|
|
|
5,855
|
|
|
—
|
|
|
21,527
|
|
|
$
|
50,911
|
|
Year ended December 31, 2018
|
$
|
50,911
|
|
|
—
|
|
|
9,238
|
|
|
—
|
|
|
113,729
|
|
|
$
|
173,878
|
|
*
|
Amounts not charged to operations are charged to other comprehensive income or deferred tax assets (liabilities).
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at January 1
|
$
|
22,652
|
|
|
$
|
21,925
|
|
|
$
|
20,836
|
|
Tax positions related to current year:
|
|
|
|
|
|
||||||
Additions
|
1,032
|
|
|
1,083
|
|
|
1,225
|
|
|||
Tax positions related to prior years:
|
|
|
|
|
|
||||||
Additions
|
115
|
|
|
16
|
|
|
256
|
|
|||
Reductions
|
(317
|
)
|
|
(372
|
)
|
|
(171
|
)
|
|||
Settlements
|
—
|
|
|
—
|
|
|
(221
|
)
|
|||
Balance at December 31
|
$
|
23,482
|
|
|
$
|
22,652
|
|
|
$
|
21,925
|
|
|
Dec. 31, 2018
|
|
Sept. 30, 2018
|
|
June 30, 2018
|
|
March 31, 2018
|
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
June 30, 2017
|
|
March 31, 2017
|
||||||||||||||||
|
(In thousands, except for per share amounts)
|
||||||||||||||||||||||||||||||
Total revenue (3)
|
$
|
68,563
|
|
|
$
|
59,754
|
|
|
$
|
56,458
|
|
|
$
|
46,426
|
|
|
$
|
101,891
|
|
|
$
|
99,134
|
|
|
$
|
94,720
|
|
|
$
|
97,351
|
|
Total operating costs and expenses
|
$
|
72,763
|
|
|
$
|
78,921
|
|
|
$
|
76,445
|
|
|
$
|
90,039
|
|
|
$
|
86,172
|
|
|
$
|
82,124
|
|
|
$
|
86,476
|
|
|
$
|
83,917
|
|
Operating income (loss) (3)
|
$
|
(4,200
|
)
|
|
$
|
(19,167
|
)
|
|
$
|
(19,987
|
)
|
|
$
|
(43,613
|
)
|
|
$
|
15,719
|
|
|
$
|
17,010
|
|
|
$
|
8,244
|
|
|
$
|
13,434
|
|
Net income (loss) (1) (3)
|
$
|
(2,018
|
)
|
|
$
|
(104,893
|
)
|
|
$
|
(15,357
|
)
|
|
$
|
(35,689
|
)
|
|
$
|
(36,168
|
)
|
|
$
|
7,695
|
|
|
$
|
2,605
|
|
|
$
|
3,006
|
|
Net income (loss) per share — basic (3)
|
$
|
(0.02
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
0.07
|
|
|
0.02
|
|
|
$
|
0.03
|
|
|
Net income (loss) per share — diluted (3)
|
$
|
(0.02
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
0.07
|
|
|
0.02
|
|
|
$
|
0.03
|
|
|
Shares used in per share calculations — basic (2)
|
108,826
|
|
|
107,897
|
|
|
107,737
|
|
|
109,358
|
|
|
109,737
|
|
|
109,555
|
|
|
110,060
|
|
|
111,464
|
|
||||||||
Shares used in per share calculations — diluted (2)
|
108,826
|
|
|
107,897
|
|
|
107,737
|
|
|
109,358
|
|
|
109,737
|
|
|
113,119
|
|
|
112,565
|
|
|
115,325
|
|
(1)
|
The net loss for the quarter ended September 30, 2018 included a $91.3 million impact of an increase in our deferred tax asset valuation allowance. The net loss for the quarter ended December 31, 2017 included a $21.5 million impact due to the recording of a deferred tax asset valuation allowance and $20.7 million related to re-measurement of deferred tax assets as a result of the tax law changes. Refer to Note 16, "Income Taxes" of Notes to Consolidated Financial Statements of this Form 10-K.
|
(2)
|
The quarterly financial information includes the impact of the accelerated share repurchase program as follows: 0.7 million shares in the quarter ended June 30, 2018 and 3.1 million shares repurchased in the quarter ended March 31, 2018 and 0.8 million shares in the quarter ended December 31, 2017 and 3.2 million shares repurchased in the quarter ended June 30, 2017. Refer to Note 13, "Stockholders' Equity" of Notes to Consolidated Financial Statements of this Form 10-K.
|
(3)
|
Total revenue, operating loss, net loss and net loss per share for the quarters ended December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018 reflect the impact from the adoption of ASC 606. See Note 3, “Recent Accounting Pronouncements,” of Notes to Consolidated Financial Statements of this Form 10-K for further discussion.
|
Exhibit Number
|
|
Description of Document
|
3.1(1)
|
|
|
3.2(2)
|
|
|
3.3(3)
|
|
|
4.1(4)
|
|
|
4.3(5)
|
|
|
10.1(6)
|
|
|
10.2(7)*
|
|
|
10.4(8)*
|
|
|
10.5(8)*
|
|
|
10.6(8)*
|
|
|
10.7(9)*
|
|
|
10.8(10)*
|
|
|
10.9(10)*
|
|
|
10.10(9)*
|
|
|
10.11(11)
|
|
|
10.12(12)**
|
|
|
10.13(12)**
|
|
|
10.14(13)
|
|
|
10.15(14)
|
|
|
10.16(14)
|
|
|
10.17(15)**
|
|
|
10.18(16)**
|
|
|
10.19(17)**
|
|
|
10.20(17)**
|
|
|
10.21(17)**
|
|
|
10.22(18)**
|
|
|
10.23(19)
|
|
|
10.24(20)
|
|
|
10.25(5)
|
|
|
10.26(5)
|
|
|
12.1(21)
|
|
|
21.1
|
|
|
23.1
|
|
|
24
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101.INS±
|
|
XBRL Instance Document
|
101.SCH±
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL±
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB±
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE±
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF±
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
*
|
|
Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.
|
**
|
|
Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
|
±
|
|
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
|
|
(1)
|
|
Incorporated by reference to the Form 10-K filed on December 15, 1997.
|
|
|
|
(2)
|
|
Incorporated by reference to the Form 10-Q filed on May 4, 2001.
|
|
|
|
(3)
|
|
Incorporated by reference to the Form 8-K filed on April 30, 2013.
|
|
|
|
(4)
|
|
Incorporated by reference to the Form S-1/A (file no. 333-22885) filed on April 24, 1997.
|
|
|
|
(5)
|
|
Incorporated by reference to the Form 8-K filed on November 17, 2017.
|
|
|
|
(6)
|
|
Incorporated by reference to the Form S-1 (file no. 333-22885) filed on March 6, 1997.
|
|
|
|
(7)
|
|
Incorporated by reference to the Form 8-K filed on March 9, 2015.
|
|
|
|
(8)
|
|
Incorporated by reference to the Form 8-K filed on April 30, 2014.
|
|
|
|
(9)
|
|
Incorporated by reference to the Form 8-K filed on April 27, 2018.
|
|
|
|
(10)
|
|
Incorporated by reference to the Form 10-Q filed on July 23, 2015.
|
|
|
|
(11)
|
|
Incorporated by reference to the Form 10-K filed on February 26, 2010.
|
|
|
|
(12)
|
|
Incorporated by reference to the Form 10-Q filed on May 3, 2010.
|
|
|
|
(13)
|
|
Incorporated by reference to the Form 10-K filed on February 24, 2012.
|
|
|
|
(14)
|
|
Incorporated by reference to the Form 8-K filed on October 29, 2018.
|
|
|
|
(15)
|
|
Incorporated by reference to the Form 10-Q/A filed on January 13, 2014.
|
|
|
|
(16)
|
|
Incorporated by reference to the Form 10-Q filed on July 29, 2013.
|
|
|
|
(17)
|
|
Incorporated by reference to the Form 10-K filed on February 21, 2014.
|
|
|
|
(18)
|
|
Incorporated by reference to the Form 10-Q filed on July 23, 2015.
|
|
|
|
(19)
|
|
Incorporated by reference to the Form 10-Q filed on July 22, 2016.
|
|
|
|
(20)
|
|
Incorporated by reference to the Form 8-K filed on September 21, 2016.
|
|
|
|
(21)
|
|
Incorporated by reference to the Form S-3 filed on June 22, 2009.
|
|
|
|
RAMBUS INC.
|
|
|
|
By:
|
/s/ RAHUL MATHUR
|
|
Rahul Mathur
|
|
Senior Vice President, Finance and Chief Financial Officer
|
Signature
|
Title
|
Date
|
|
|
|
/s/ LUC SERAPHIN
|
Chief Executive Officer, President and Director (Principal Executive Officer)
|
February 22, 2019
|
Luc Seraphin
|
|
|
|
|
|
/s/ RAHUL MATHUR
|
Senior Vice President, Finance and Chief Financial Officer (Principal Financial Officer)
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February 22, 2019
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Rahul Mathur
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/s/ KEITH JONES
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Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)
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February 22, 2019
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Keith Jones
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/s/ ERIC STANG
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Chairman of the Board of Directors
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February 22, 2019
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Eric Stang
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/s/ ELLIS THOMAS FISHER
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Director
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February 22, 2019
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Ellis Thomas Fisher
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/s/ EMIKO HIGASHI
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Director
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February 22, 2019
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Emiko Higashi
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/s/ CHARLES KISSNER
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Director
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February 22, 2019
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Charles Kissner
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/s/ DAVID SHRIGLEY
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Director
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February 22, 2019
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David Shrigley
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/s/ SANJAY SARAF
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Director
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February 22, 2019
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Sanjay Saraf
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1.
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I have reviewed this Annual Report on Form 10-K of Rambus Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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February 22, 2019
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By:
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/s/ Luc Seraphin
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Name:
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Luc Seraphin
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Title:
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Chief Executive Officer and President
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1.
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I have reviewed this Annual Report on Form 10-K of Rambus Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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February 22, 2019
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By:
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/s/ Rahul Mathur
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Name:
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Rahul Mathur
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Title:
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Senior Vice President, Finance and Chief Financial Officer
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By:
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/s/ Luc Seraphin
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Name:
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Luc Seraphin
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Title:
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Chief Executive Officer and President
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By:
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/s/ Rahul Mathur
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Name:
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Rahul Mathur
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Title:
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Senior Vice President, Finance and Chief Financial Officer
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