RMBS » Topics » 15. Subsequent Events

This excerpt taken from the RMBS 10-Q filed Nov 7, 2007.

15. Subsequent Events

On October 22, 2007, the Company announced it had received notification from the staff of the NASDAQ Stock Market LLC (“Nasdaq”) stating the Company had regained compliance with all Nasdaq rules. Consequently, the review by the Board of Directors of Nasdaq of an earlier decision issued by the Nasdaq Listing and Hearing Review Council to suspend Rambus’ Common Stock has been closed and Rambus’ securities will continue to be listed on the Nasdaq Global Select Market.

On October 18, 2007 (amended on October 24 and 30, 2007) the Company commenced a tender offer to certain of its employees under which they would be allowed to increase the exercise price or choose a fixed period exercise term for certain options in order to avoid certain negative tax consequences under Section 409A of the Internal Revenue Code and similar state law. Options to purchase approximately 4.0 million shares of the Company’s Common Stock outstanding are eligible to participate in the tender offer. The Company is currently evaluating the impact this will have on its consolidated financial statements. The tender offer is scheduled to expire on November 15, 2007 (unless extended).

In 2007, the Company granted nonvested equity stock units (RSU’s) to certain officers and employees, totaling approximately 210,000 shares. These awards have a service condition, generally a service period of four years, as well as a performance condition contingent on filing of the Registration Statement on Form S-8 for the Company’s 2006 Equity Incentive Plan. The Company met this performance condition in October 2007, subsequent to the quarter end. These grants have a total fair value of approximately $3.9 million. A charge of approximately $1.0 million will be recorded in the fourth quarter of 2007 related to these grants.

On October 22, 2007, the Company entered into a termination agreement with John Danforth, its former Vice President and General Counsel. In connection with this agreement, the Company will record a compensation charge in the fourth quarter of 2007 of approximately $3.0 million for the cash portion of his severance. In addition, the Company extended Mr. Danforth’s time to exercise his vested stock options by approximately 12 months. The total non-cash compensation charge related to this extension is approximately $0.8 million.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements, including, without limitation, our expectations regarding revenues, expenses and results of operations. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future actual results to differ materially from our recent results or those projected in the forward-looking statements include, but are not limited to, those discussed in the “Special Note Regarding Forward-Looking Statements,” Part II, Item 1A, “Risk Factors,” and below. We assume no obligation to update the forward-looking statements or such risk factors.

Rambus, RDRAM, XDR, FlexIO and FlexPhase are trademarks or registered trademarks of Rambus Inc. Other trademarks that may be mentioned in this quarterly report on Form 10-Q are the property of their respective owners.

Industry terminology, used widely throughout this quarterly report, has been abbreviated and, as such, these abbreviations are defined below for your convenience:

 

Advanced Backplane

   ABP

Double Data Rate

   DDR

Dynamic Random Access Memory

   DRAM

Fully Buffered—Dual Inline Memory Module

   FB-DIMM

Gigabytes per second

   Gb/s

Graphics Double Data Rate

   GDDR

Input/Output

   I/O

Peripheral Component Interconnect

   PCI

Rambus Dynamic Random Access Memory

   RDRAM

Single Data Rate

   SDR

Synchronous Dynamic Random Access Memory

   SDRAM

eXtreme Data Rate

   XDR

From time to time we will refer to the abbreviated names of certain companies and, as such, have provided a chart to indicate the full names of those companies for your convenience.

 

Advanced Micro Devices Inc.

   AMD

ARM Holdings plc

   ARM

Cadence Design Systems, Inc.

   Cadence

Cisco Systems, Inc.

   Cisco

Elpida Memory, Inc.

   Elpida

Fujitsu Limited

   Fujitsu

GDA Technologies, Inc.

   GDA

Hewlett-Packard Company

   Hewlett-Packard

Hynix Semiconductor, Inc.

   Hynix

Infineon Technologies AG

   Infineon

Inotera Memories, Inc.

   Inotera

Intel Corporation

   Intel

International Business Machines Corporation

   IBM

Joint Electron Device Engineering Council

   JEDEC

Juniper Networks, Inc.

   Juniper

Matsushita Electrical Industrial Co.

   Matsushita

Micron Technologies, Inc.

   Micron

Nanya Technology Corporation

   Nanya

NEC Electronics Corporation

   NECEL

Optical Internetworking Forum

   OIF

Qimonda AG (formerly Infineon’s DRAM operations)

   Qimonda

Peripheral Component Interconnect – Special Interest Group

  

PCI-SIG

Renesas Technology Corporation

   Renesas

S3 Graphics, Inc.

   S3 Graphics

Samsung Electronics Co., Ltd.

   Samsung

Sony Computer Electronics

   Sony

Spansion, Inc.

   Spansion

ST Microelectronics

   ST Micro

Synopsys Inc.

   Synopsys

Tessera Technologies, Inc.

   Tessera

Texas Instruments Inc.

   Texas Instruments

Toshiba Corporation

   Toshiba

Velio Communications

   Velio

 

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This excerpt taken from the RMBS 10-Q filed Oct 17, 2007.

15. Subsequent Events

In connection with the recently completed stock option investigation, the Board of Directors established a Special Litigation Committee (the “SLC”) to evaluate potential claims or other actions arising from the Company’s stock option granting activities. In August 2007, the SLC concluded its review of claims relating to stock option practices that are asserted in derivative actions against a number of the Company’s present and former officers and directors. The SLC determined that all claims should be terminated and dismissed against the named defendants in the derivative actions with the exception of claims against Ed Larsen, who served as Vice President, Human Resources from September 1996 until December 1999, and then Senior Vice President, Administration until July 2004. The SLC entered into settlement agreements with certain former officers of the Company. These settlements are conditioned upon the dismissal of the claims asserted against these individuals in the derivative actions. The aggregate value of the settlements to the Company exceeds $6.5 million in cash and equivalent value, as well as substantial additional value to the Company relating to the relinquishment of claims by these individuals to over 2.7 million stock options. On August 24, 2007, the written report setting out the findings of the SLC was filed with the U.S. District Court for the Northern District of California. The conclusions of the SLC are subject to review by the court.

On August 17, 2007, the Company was notified by the Nasdaq Listings Qualification Panel that it was given an extension until October 17, 2007 to become current on all of its delinquent SEC filings for fiscal periods in 2006 and 2007.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements, including, without limitation, our expectations regarding revenues, expenses and results of operations. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future actual results to differ materially from our recent results or those projected in the forward-looking statements include, but are not limited to, those discussed in the “Special Note Regarding Forward-Looking Statements,” Item 1A of Part II, “Risk Factors,” and below. We assume no obligation to update the forward-looking statements or such risk factors.

Rambus, RDRAM, XDR, FlexIO and FlexPhase are trademarks or registered trademarks of Rambus Inc. Other trademarks that may be mentioned in this quarterly report on Form 10-Q are the property of their respective owners.

Industry terminology, used widely throughout this quarterly report, has been abbreviated and, as such, these abbreviations are defined below for your convenience:

 

Advanced Backplane   ABP
Double Data Rate   DDR
Dynamic Random Access Memory   DRAM
Fully Buffered—Dual Inline Memory Module   FB-DIMM
Gigabytes per second   Gb/s
Graphics Double Data Rate   GDDR
Input/Output   I/O
Peripheral Component Interconnect   PCI
Rambus Dynamic Random Access Memory   RDRAM
Single Data Rate   SDR
Synchronous Dynamic Random Access Memory   SDRAM
eXtreme Data Rate   XDR

From time to time we will refer to the abbreviated names of certain companies and, as such, have provided a chart to indicate the full names of those companies for your convenience.

 

Advanced Micro Devices Inc.   AMD
ARM Holdings plc   ARM
Cadence Design Systems, Inc.   Cadence
Cisco Systems, Inc.   Cisco
Elpida Memory, Inc.   Elpida
Fujitsu Limited   Fujitsu
GDA Technologies, Inc.   GDA
Hewlett-Packard Company   Hewlett-Packard
Hynix Semiconductor, Inc.   Hynix
Infineon Technologies AG   Infineon
Inotera Memories, Inc.   Inotera
Intel Corporation   Intel
International Business Machines Corporation   IBM
Joint Electron Device Engineering Council   JEDEC
Juniper Networks, Inc.   Juniper
Matsushita Electrical Industrial Co.   Matsushita
Micron Technologies, Inc.   Micron
Nanya Technology Corporation   Nanya
NEC Electronics Corporation   NECEL
Optical Internetworking Forum   OIF
Qimonda AG (formerly Infineon’s DRAM operations)   Qimonda
Peripheral Component Interconnect – Special Interest Group   PCI-SIG
Renesas Technology Corporation   Renesas
S3 Graphics, Inc.   S3 Graphics
Samsung Electronics Co., Ltd.   Samsung
Sony Computer Electronics   Sony
Spansion, Inc.   Spansion
ST Microelectronics   ST Micro
Synopsys Inc.   Synopsys
Tessera Technologies, Inc.   Tessera
Texas Instruments Inc.   Texas Instruments
Toshiba Corporation   Toshiba
Velio Communications   Velio

 

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This excerpt taken from the RMBS 10-Q filed Oct 17, 2007.

15. Subsequent Events

In connection with the recently completed stock option investigation, the Board of Directors established a Special Litigation Committee (the “SLC”) to evaluate potential claims or other actions arising from the Company’s stock option granting activities. In August 2007, the SLC concluded its review of claims relating to stock option practices that are asserted in derivative actions against a number of the Company’s present and former officers and directors. The SLC determined that all claims should be terminated and dismissed against the named defendants in the derivative actions with the exception of claims against Ed Larsen, who served as Vice President, Human Resources from September 1996 until December 1999, and then Senior Vice President, Administration until July 2004. The SLC entered into settlement agreements with certain former officers of the Company. These settlements are conditioned upon the dismissal of the claims asserted against these individuals in the derivative actions. The aggregate value of the settlements to the Company exceeds $6.5 million in cash and equivalent value, as well as substantial additional value to the Company relating to the relinquishment of claims by these individuals to over 2.7 million stock options. On August 24, 2007, the written report setting out the findings of the SLC was filed with the U.S. District Court for the Northern District of California. The conclusions of the SLC are subject to review by the court.

On August 17, 2007, the Company was notified by the Nasdaq Listings Qualification Panel that it was given an extension until October 17, 2007 to become current on all of its delinquent SEC filings for fiscal periods in 2006 and 2007.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements, including, without limitation, our expectations regarding revenues, expenses and results of operations. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future actual results to differ materially from our recent results or those projected in the forward-looking statements include, but are not limited to, those discussed in the “Special Note Regarding Forward-Looking Statements,” Part II, Item 1A, “Risk Factors,” and below. We assume no obligation to update the forward-looking statements or such risk factors.

Rambus, RDRAM, XDR, FlexIO and FlexPhase are trademarks or registered trademarks of Rambus Inc. Other trademarks that may be mentioned in this quarterly report on Form 10-Q are the property of their respective owners.

Industry terminology, used widely throughout this quarterly report, has been abbreviated and, as such, these abbreviations are defined below for your convenience:

 

Advanced Backplane   ABP
Double Data Rate   DDR
Dynamic Random Access Memory   DRAM
Fully Buffered—Dual Inline Memory Module   FB-DIMM
Gigabytes per second   Gb/s
Graphics Double Data Rate   GDDR
Input/Output   I/O
Peripheral Component Interconnect   PCI
Rambus Dynamic Random Access Memory   RDRAM
Single Data Rate   SDR
Synchronous Dynamic Random Access Memory   SDRAM
eXtreme Data Rate   XDR

From time to time we will refer to the abbreviated names of certain companies and, as such, have provided a chart to indicate the full names of those companies for your convenience.

 

Advanced Micro Devices Inc.   AMD
ARM Holdings plc   ARM
Cadence Design Systems, Inc.   Cadence
Cisco Systems, Inc.   Cisco
Elpida Memory, Inc.   Elpida
Fujitsu Limited   Fujitsu
GDA Technologies, Inc.   GDA
Hewlett-Packard Company   Hewlett-Packard
Hynix Semiconductor, Inc.   Hynix
Infineon Technologies AG   Infineon
Inotera Memories, Inc.   Inotera
Intel Corporation   Intel
International Business Machines Corporation   IBM
Joint Electron Device Engineering Council   JEDEC
Juniper Networks, Inc.   Juniper
Matsushita Electrical Industrial Co.   Matsushita
Micron Technologies, Inc.   Micron
Nanya Technology Corporation   Nanya
NEC Electronics Corporation   NECEL
Optical Internetworking Forum   OIF
Qimonda AG (formerly Infineon’s DRAM operations)   Qimonda
Peripheral Component Interconnect – Special Interest Group   PCI-SIG
Renesas Technology Corporation   Renesas
S3 Graphics, Inc.   S3 Graphics
Samsung Electronics Co., Ltd.   Samsung
Sony Computer Electronics   Sony
Spansion, Inc.   Spansion
ST Microelectronics   ST Micro
Synopsys Inc.   Synopsys
Tessera Technologies, Inc.   Tessera
Texas Instruments Inc.   Texas Instruments
Toshiba Corporation   Toshiba
Velio Communications   Velio

 

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This excerpt taken from the RMBS 10-K filed Sep 14, 2007.

18. Subsequent Events

Under IRC Section 409A (and, as applicable, under California and other state tax laws), repriced stock options vesting after December 31, 2004 (“409A Affected Options”) subject the option holder to a penalty tax. If the 409A affected options are amended to increase the exercise price to the market price on the actual grant date, these options would not be subject to taxation under IRC Section 409A. Under IRS regulations, these option agreements had to be completed by December 31, 2006 for anyone who was an executive officer when he or she received 409A affected options. Only one of the Company’s option holders was subject to the December 31, 2006 deadline and had his options amended to increase the exercise price.

Because virtually all holders of options for which the measurement dates and grant prices were adjusted in connection with the restatement (see Note 3, “Restatement of Consolidated Financial Statements”), were not involved in the original stock option granting process, the Company decided to compensate substantially all current and former non-executive employees for the 409A penalty taxes (grossed up for taxes on the compensation) imposed on them in 2006 for revised options that were exercised in 2006. Because the decision to assume the liability was not made by management and the Board of Directors until March 2007 the Company will record approximately $6.8 million of compensation expense in the first quarter of 2007. The Company has also notified all employees that it will not provide a similar benefit for 2007 and forward penalties that may be assessed by the IRS or the states.

In February 2007, the Compensation Committee approved the granting of 100,000 restricted stock units to Satish Rishi, the Company’s Chief Financial Officer. The restricted stock units will be granted as soon as practicable after the Company becomes current with its SEC filings and registers its 2006 Equity Incentive Plan under which these units would be granted.

In June 2007, an appellate court in Germany notified the Company that it had denied the Company’s appeal to reduce the amount owed for court costs related to Rambus’ European patent case with Infineon. The Company recorded its best estimate of the liability from this case in September 2006. Because the amount was subsequently adjusted and the financial statements had not yet been issued, the Company increased its accrual for these court costs for the year ended December 31, 2006 in connection with the appellate court’s ruling. (See Note 17, “Litigation and Asserted Claims” for more information).

In the third quarter of 2007, the Company reached a preliminary agreement in principle with the lead plaintiffs in the class action litigation related to the stock option investigation (see Note 17, “Litigation and Asserted Claims”). Because the complaints giving rise to the settlement of this litigation were filed in the third quarter of 2006 and the financial statements for that period had not yet been issued, the potential settlement amount of $18.0 million is recorded in the third quarter of 2006 in accordance with Statement of Financial Accounting Standards No. 5 “Accounting for Contingencies” (“SFAS 5”). This amount is included in the Company’s statement of operations in the line item “Costs of restatement and related legal activities.”

On August 17, 2007, the Company was notified by the Nasdaq Listings Qualification Panel that it was given an extension until October 17, 2007 to become current on all of its delinquent SEC filings for fiscal periods in 2006 and 2007.

 

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Table of Contents
This excerpt taken from the RMBS 10-Q filed Sep 14, 2007.

16. Subsequent Events

Under IRC Section 409A (and, as applicable, under California and other state tax laws), repriced stock options vesting after December 31, 2004 (“409A Affected Options”) subject the option holder to a penalty tax. If the 409A affected options are amended to increase the exercise price to the market price on the actual grant date, these options would not be

 

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subject to taxation under IRC Section 409A. Under IRS regulations, these option agreements had to be completed by December 31, 2006 for anyone who was an executive officer when he or she received 409A affected options. Only one of the Company’s option holders was subject to the December 31, 2006 deadline and had his options amended to increase the exercise price.

Because virtually all holders of options for which the measurement dates and grant prices were adjusted in connection with the restatement (see Note 3, “Restatement of Consolidated Financial Statements”) were not involved in the original stock option granting process, the Company decided to compensate substantially all current and former non-executive employees for the 409A penalty taxes (grossed up for taxes on the compensation) imposed on them in 2006 for revised options that were exercised in 2006. Because the decision to assume the liability was not made by management and the Board of Directors until March 2007 the Company will record approximately $6.8 million of compensation expense in the first quarter of 2007. The Company has also notified all employees that it will not provide a similar benefit for 2007 and forward penalties that may be assessed by the IRS or the states.

In February 2007, the Compensation Committee approved the granting of 100,000 restricted stock units to Satish Rishi, the Company’s Chief Financial Officer. The restricted stock units will be granted as soon as practicable after the Company becomes current with its SEC filings and registers its 2006 Equity Incentive Plan under which these units would be granted.

In June, 2007, an appellate court in Germany notified the Company that it had denied the Company’s appeal to reduce the amount owed for court costs related to Rambus’ European patent case with Infineon. The Company recorded its best estimate of the liability from this case in September 2006. Because the amount was subsequently adjusted and the financial statements had not yet been issued, the Company increased its accrual for these court costs as of September 30, 2006 in connection with the appellate court’s ruling. (See Note 14, “Litigation and Asserted Claims” for more information).

In the third quarter of 2007, the Company reached a preliminary agreement in principle with the lead plaintiffs in the class action litigation related to the stock option investigation (see Note 14, “Litigation and Asserted Claims”). Because the complaints giving rise to the potential settlement of this litigation were filed in the third quarter of 2006, and the financial statements for that period had not yet been issued, the potential settlement amount is being recorded as of September 30, 2006 in accordance with Statement of Financial Accounting Standards No. 5 “Accounting for Contingencies” (“SFAS 5”). This amount is included in the Company’s statement of operations in the line item “Costs of restatement and related legal activities” for the quarter ended September 30, 2006.

On August 17, 2007, the Company was notified by the Nasdaq Listings Qualification Panel that it was given an extension until October 17, 2007 to become current on all of its delinquent SEC filings for fiscal periods in 2006 and 2007.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements, including, without limitation, our expectations regarding revenues, expenses and results of operations, as well as the outcome of our stock option investigation and related litigation. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future actual results to differ materially from our recent results or those projected in the forward-looking statements include, but are not limited to, those discussed in the “Special Note Regarding Forward-Looking Statements,” Item 1A of Part II, “Risk Factors,” and below. We assume no obligation to update the forward-looking statements or such risk factors.

Rambus, RDRAM, XDR, FlexIO and FlexPhase are trademarks or registered trademarks of Rambus Inc. Other trademarks that may be mentioned in this quarterly report on Form 10-Q are the property of their respective owners.

 

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Industry terminology, used widely throughout this quarterly report, has been abbreviated and, as such, these abbreviations are defined below for your convenience:

 

Advanced Backplane    ABP
Double Data Rate    DDR
Dynamic Random Access Memory    DRAM
Fully Buffered—Dual Inline Memory Module    FB-DIMM
Gigabytes per second    Gb/s
Graphics Double Data Rate    GDDR
Input/Output    I/O
Peripheral Component Interconnect    PCI
Rambus Dynamic Random Access Memory    RDRAM
Single Data Rate    SDR
Synchronous Dynamic Random Access Memory    SDRAM
eXtreme Data Rate    XDR

From time to time we will refer to the abbreviated names of certain companies and, as such, have provided a chart to indicate the full names of those companies for your convenience.

 

Advanced Micro Devices Inc.    AMD
ARM Holdings plc    ARM
Cadence Design Systems, Inc.    Cadence
Cisco Systems, Inc.    Cisco
Elpida Memory, Inc.    Elpida
Fujitsu Limited    Fujitsu
GDA Technologies, Inc.    GDA
Hewlett-Packard Company    Hewlett-Packard
Hynix Semiconductor, Inc.    Hynix
Infineon Technologies AG    Infineon
Inotera Memories, Inc.    Inotera
Intel Corporation    Intel
International Business Machines Corporation    IBM
Joint Electron Device Engineering Council    JEDEC
Juniper Networks, Inc.    Juniper
Matsushita Electrical Industrial Co.    Matsushita
Micron Technologies, Inc.    Micron
Nanya Technology Corporation    Nanya
NEC Electronics Corporation    NECEL
Optical Internetworking Forum    OIF
Qimonda AG (formerly Infineon’s DRAM operations)    Qimonda
Peripheral Component Interconnect – Special Interest Group    PCI-SIG
Renesas Technology Corporation    Renesas
S3 Graphics, Inc.    S3 Graphics
Samsung Electronics Co., Ltd.    Samsung
Sony Computer Electronics    Sony
Spansion, Inc.    Spansion
ST Microelectronics    ST Micro
Synopsys Inc.    Synopsys
Tessera Technologies, Inc.    Tessera
Texas Instruments Inc.    Texas Instruments
Toshiba Corporation    Toshiba
Velio Communications    Velio

 

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This excerpt taken from the RMBS 10-K filed Feb 21, 2006.

16.    Subsequent Events

 

Effective January 13, 2006, at the request of Geoffrey Tate, Chairman of the Board of Rambus, Mr. Tate entered into an agreement with the Rambus, pursuant to which Mr. Tate agreed to cancel an aggregate of (i) 665,000 unvested options to purchase common stock of the Rambus and (ii) 500,000 unvested common stock equivalents of the Rambus held by him. This action was taken by Mr. Tate unilaterally in connection with his wishing to conform his compensation going forward as a non-employee Board member of Rambus to Rambus’ current policies with respect to Board and executive compensation.

 

On January 23, 2006, Rambus announced that its Board of Directors approved an increase in the authorization under the Rambus’ stock repurchase program, which has been in effect since October 2001. Rambus is authorized to repurchase up to an additional five million shares of its outstanding common stock over an undefined period of time, depending on market conditions, share price and other factors. This is in addition to the remaining current authorization for 1.5 million shares. The repurchases may be made on the open market, in block trades or otherwise and may include derivative transactions. The program may be suspended or discontinued at any time.

 

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RAMBUS INC. AND SUBSIDIARIES

 

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