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Business Segments and Major Customers
9 Months Ended
Sep. 30, 2011
Business Segments and Major Customers 
Business Segments and Major Customers

11.     Business Segments and Major Customers

 

Prior to 2010, Rambus operated in a single industry segment, the design, development and licensing of memory and logic interfaces, lighting and optoelectronics, and other technologies. In 2010, the Company reorganized, and as a result, starting at the end of the fourth quarter of 2010, Rambus has two business groups:  Semiconductor Business Group (“SBG”) which focuses on the design, development and licensing of semiconductor technology, and New Business Group (“NBG”) which focuses on the design, development and licensing of lighting and display technologies, mobile, data security and other technologies. In addition, the Company acquired CRI during the second quarter of 2011 which is part of NBG.

 

The Company evaluates the performance of its segments based on segment operating income (loss). Segment operating income (loss) does not include the allocation of any corporate functions (including human resources, facilities, legal, finance, information technology, corporate development, general administration, corporate licensing and marketing expenses, corporate research and development expenses, and cost of restatement) to the segments. Certain expenses are not allocated to the operating segments because they are not considered in evaluating the segments’ operating performance. Such unallocated expenses include stock-based compensation expenses, depreciation and amortization expenses, and certain bonus and acquisition expenses which are managed at the corporate level. The “Reconciling Items” category includes these unallocated and corporate expenses.

 

The table below presents reported segment revenues, and reported segment operating income (loss).

 

 

 

For the Three Months Ended September 30, 2011

 

For the Nine Months Ended September 30, 2011

 

 

 

SBG

 

NBG

 

Total

 

SBG

 

NBG

 

Total

 

 

 

(In thousands)

 

Revenues

 

$

84,628

 

$

15,635

 

$

100,263

 

$

212,779

 

$

16,225

 

$

229,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain from settlement

 

$

—

 

$

—

 

$

—

 

$

6,200

 

$

—

 

$

6,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

75,456

 

$

9,271

 

$

84,727

 

$

190,101

 

$

2,568

 

$

192,669

 

Reconciling items

 

 

 

 

 

(73,991

)

 

 

 

 

(176,071

)

Total operating income

 

 

 

 

 

$

10,736

 

 

 

 

 

$

16,598

 

 

 

 

For the Three Months Ended September 30, 2010

 

For the Nine Months Ended September 30, 2010

 

 

 

SBG

 

NBG

 

Total

 

SBG

 

NBG

 

Total

 

 

 

(In thousands)

 

Revenues

 

$

31,668

 

$

75

 

$

31,743

 

$

232,207

 

$

262

 

$

232,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain from settlement

 

$

10,300

 

$

—

 

$

10,300

 

$

116,500

 

$

—

 

$

116,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss)

 

$

32,906

 

$

(1,601

)

$

31,305

 

$

321,166

 

$

(4,184

)

$

316,982

 

Reconciling items

 

 

 

 

 

(42,799

)

 

 

 

 

(132,983

)

Total operating income (loss)

 

 

 

 

 

$

(11,494

)

 

 

 

 

$

183,999

 

 

The Company’s chief operating decision maker (“CODM”) is the executive management team.   The CODM does not review information regarding assets on an operating segment basis. Additionally, the Company does not record intersegment revenue or expense.

 

The table below presents a reconciliation of reportable segment operating income (loss) to the Company’s consolidated income (loss) before income taxes.

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

(in thousands)

 

September 30, 2011

 

September 30, 2011

 

SBG operating income

 

$

75,456

 

$

190,101

 

NBG operating income

 

9,271

 

2,568

 

Unallocated amounts:

 

 

 

 

 

Corporate expenses

 

(44,602

)

(104,992

)

Unallocated expenses

 

(29,389

)

(71,079

)

Interest and other expense, net

 

(6,178

)

(17,991

)

Income (loss) before income taxes

 

$

4,558

 

$

(1,393

)

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

(in thousands)

 

September 30, 2010

 

September 30, 2010

 

SBG operating income

 

$

32,906

 

$

321,166

 

NBG operating loss

 

(1,601

)

(4,184

)

Unallocated amounts:

 

 

 

 

 

Corporate expenses

 

(25,260

)

(79,667

)

Unallocated expenses

 

(17,539

)

(53,316

)

Interest and other expense, net

 

(4,641

)

(13,656

)

Income (loss) before income taxes

 

$

(16,135

)

$

170,343

 

 

Three customers accounted for 25%, 25% and 12%, respectively, of revenue in the three months ended September 30, 2011. Four customers accounted for 47%, 12%, 11% and 10%, respectively, of revenue in the three months ended September 30, 2010. Four customers accounted for 30%, 11%, 11% and 11%, respectively, of revenue in the nine months ended September 30, 2011. One customer accounted for 72% of revenue in the nine months ended September 30, 2010.

 

Rambus licenses its technologies and patents to customers in multiple geographic regions. Revenue from customers in the following geographic regions was recognized as follows:

 

 

 

Three Months Ended
 September 30,

 

Nine Months Ended
 September 30,

 

(In thousands)

 

2011

 

2010

 

2011

 

2010

 

North America

 

$

54,559

 

$

5,025

 

$

82,655

 

$

15,801

 

Korea

 

24,641

 

14,853

 

68,859

 

166,732

 

Japan

 

19,899

 

11,819

 

76,149

 

49,692

 

Europe

 

997

 

11

 

1,011

 

151

 

Asia, Other

 

167

 

35

 

330

 

93

 

Total

 

$

100,263

 

$

31,743

 

$

229,004

 

$

232,469

 

 

In North America, the United States and Canada each represented more than 10% of the Company’s total consolidated revenue for the three months ended September 30, 2011. In North America, no single country other than the United States represented more than 10% of the Company’s total consolidated revenue for the nine months ended September 30, 2011 and the three months ended September 30, 2010. In North America, no single country represented more than 10% of the Company’s total consolidated revenue for the nine months ended September 30, 2010.

 

At September 30, 2011, of the $72.5 million of total property, plant and equipment, approximately $71.2 million were located in the United States, $1.3 million were located in India and an insignificant amount were located in other foreign locations. At December 31, 2010, of the $67.8 million of total property, plant and equipment, approximately $66.7 million were located in the United States, $1.0 million were located in India and $0.1 million were located in other foreign locations.