Rambus

2016 ANNUAL REPORT

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 20, 2017

To our stockholders:

You are cordially invited to attend the 2017 Annual Meeting of Stockholders of Rambus Inc. The Annual

Meeting will be held on:

Date: Thursday, April 20, 2017

Time: 9:00 a.m., Pacific Time

Place: Attend the annual meeting online at www.virtualshareholdermeeting.com/RMBS2017.

The following matters will be voted on at the Annual Meeting:

1.

Election of three Class II directors;

2. Advisory vote to approve named executive officer compensation;

3. Advisory vote on the frequency of holding an advisory vote on named executive officer compensation;

4. Ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm; and

5.

Such other business as may properly come before the Annual Meeting or any adjournment or
postponement of the meeting.

We are not aware of any other business to come before the meeting.

These items of business are more fully described in the Proxy Statement which is available at

www.proxyvote.com. This notice, the Notice of Internet Availability, the 2016 Annual Report and our Proxy
Statement for our 2017 annual stockholder meeting and form of proxy are being made available to stockholders
on March 9, 2017.

Only stockholders of record as of February 22, 2017, may vote at the Annual Meeting. Whether or not you
plan to attend the meeting, please vote at www.proxyvote.com, call 1-800-690-6903 or complete, sign, date and
return the proxy card. Returning the proxy card does NOT deprive you of your right to attend the meeting and to
vote your shares at the meeting. The Proxy Statement explains proxy voting and the matters to be voted on in
more detail. Please read our Proxy Statement carefully. We look forward to your attendance at the Annual
Meeting.

By Order of the Board of Directors

Jae Kim
Senior Vice President, General Counsel and Secretary

Sunnyvale, California
March 9, 2017

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE AT
WWW.PROXYVOTE.COM, AS INSTRUCTED ON THE PROXY CARD OR THE NOTICE OF
INTERNET AVAILABILITY OF PROXY MATERIALS, CALL 1-800-690-6903, OR COMPLETE,
SIGN, DATE AND RETURN THE PROXY CARD AS PROMPTLY AS POSSIBLE

[THIS PAGE INTENTIONALLY LEFT BLANK]

RAMBUS INC.
PROXY STATEMENT
FOR
2017 ANNUAL MEETING OF STOCKHOLDERS

TABLE OF CONTENTS

General Information About The Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal One: Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information About Nominees and Other Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board of Directors Meetings and Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Sessions of the Independent Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Committees of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance/Nominating Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Identifying and Evaluating Nominees For Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consideration of Stockholder Nominees to the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Leadership Structure and Role in Risk Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transactions with Related Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Review, Approval or Ratification of Transactions with Related Persons . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Development Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal Two: Advisory Vote to Approve Named Executive Officer Compensation . . . . . . . . . . . . . . .
Proposal Three: Advisory Vote on the Frequency of an Advisory Vote on Named Executive Officer

Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal Four: Ratification of Appointment of Independent Registered Public Accounting Firm . . . .
Our History with PricewaterhouseCoopers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy on Audit Committee Pre-Approval of Audit and the Permissible Non-Audit Services of

Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Independence of PricewaterhouseCoopers LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity Compensation Plan Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners And Management . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Officers of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grants of Plan Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding Equity Awards at Fiscal Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Option Exercises and Stock Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Payments Upon Termination or Change-in-Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary of Director Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of the Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Review with Management
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Review and Discussions with the Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . .
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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RAMBUS INC.

PROXY STATEMENT

FOR

2017 ANNUAL MEETING OF STOCKHOLDERS

The Board of Directors of Rambus Inc. (“Rambus,” “we,” “us” or the “Company”) is providing these proxy
materials to you for use at our 2017 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on
Thursday, April 20, 2017 at 9:00 a.m. Pacific Time, and at any postponement or adjournment of the meeting. The
purpose of the Annual Meeting is described in the Notice of Annual Meeting of Stockholders.

The Annual Meeting will be held virtually via the Internet at www.virtualshareholdermeeting.com/RMBS2017.
You will be able to vote during the meeting.

Our principal executive offices are located at 1050 Enterprise Way, Suite 700, Sunnyvale, California 94089; our
telephone number is (408) 462-8000. The Notice of Internet Availability (the “Internet Notice”) was first mailed
on or about March 9, 2017 to stockholders of record as of February 22, 2017 and these proxy solicitation
materials combined with the Annual Report for the fiscal year ended December 31, 2016, including our Annual
Report on Form 10-K for the year ended December 31, 2016 (the “Form 10-K”) were first made available to you
on the Internet, on or about March 9, 2017. We maintain a website at www.rambus.com. The information on our
website is not a part of this Proxy Statement.

GENERAL INFORMATION ABOUT THE MEETING

Who May Attend . . . . . . . . . . . . . . . You may attend the Annual Meeting if you owned your shares, either as

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a stockholder of record or as a beneficial owner as described below, as
of the close of business on February 22, 2017 (the “Record Date”).

Stockholders of Record. If your shares are registered directly in your
name, then you are considered to be the stockholder of record with
respect to those shares, and we are sending these proxy materials
directly to you. Instructions on how to attend and participate via the
Internet, including how to demonstrate proof of stock ownership, are
posted at www.virtualshareholdermeeting.com/RMBS2017. Stockholders
may vote while attending the meeting on the Internet.

Beneficial Owners. If your shares are held in a stock brokerage account
or by a bank or other nominee, you are considered the beneficial owner
of shares held in “street name,” and your broker or nominee is
forwarding these proxy materials to you. Your broker or nominee is
considered to be the stockholder of record with respect to those shares.

Pursuant to the rules of the Securities and Exchange Commission (the
“SEC”), we have provided access to our proxy materials over the
Internet. Accordingly, the Internet Notice has been sent to our
stockholders of record and beneficial owners as of the Record Date.
Instructions on how to access the proxy materials over the Internet or to
request a printed copy by mail may be found on the Internet Notice. In
addition, the Internet Notice provides information on how stockholders
may request to receive proxy materials in printed form by mail or
electronically by email on an ongoing basis.

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Internet Notice . . . . . . . . . . . . . . . . .

By accessing the proxy materials on the Internet or choosing to receive
your future proxy materials by email, you will save us the cost of
printing and mailing documents to you and will reduce the impact of our
annual stockholders’ meetings on the environment. If you choose to
receive future proxy materials by email, you will receive an email next
year with instructions containing a link to those materials and a link to
the proxy voting site. If you choose to receive future proxy materials by
mail, you will receive a paper copy of those materials, including a form
of proxy. Your election to receive proxy materials by mail or email will
remain in effect until you notify us that you are changing or terminating
your request.

Who May Vote . . . . . . . . . . . . . . . . . You may vote at the Annual Meeting if you owned your shares, either as

Voting Your Proxy . . . . . . . . . . . . .

a stockholder of record or as a beneficial owner, as of the close of
business on the Record Date. As of that date, we had a total of
111,619,146 shares of common stock outstanding, which were held of
record by approximately 515 stockholders. You are entitled to one vote
for each share of our common stock that you own.

As of the Record Date, we had no shares of preferred stock outstanding.

Stockholders of Record. If you hold your shares in your own name as a
holder of record, you may instruct the proxy holders how to vote your
common stock by:

•

•

•

voting via the internet at www.proxyvote.com;

voting by telephone at 1-800-690-6903; or

voting by mail (if you requested printed copies of the proxy
materials to be mailed to you), by completing, signing, dating
and mailing the proxy card in the postage-paid envelope
provided.

Even if you vote your shares by proxy, you may also choose to attend
the Annual Meeting and vote your shares in person. If you provide
instructions in your completed proxy card, the proxy holders will vote
your shares in accordance with those instructions. If you sign and return
a proxy card without giving specific voting instructions, your shares will
be voted “FOR” all of the proposals described herein.

Beneficial Owners. If you are the beneficial owner of shares held in
street name, you have the right to direct your broker how to vote. Your
broker or nominee has enclosed with these materials or provided voting
instructions for you to use in directing the broker or nominee how to
vote your shares.

Discretionary Voting Power;
Matters to be Presented . . . . . . . . . We are not aware of any matters to be presented at the Annual Meeting

other than those described in this Proxy Statement. If any matters not
described in this Proxy Statement are properly presented at the meeting,
the proxy holders will use their own judgment to determine how to vote
your shares. If the meeting is adjourned or postponed, the proxy holders
can vote your shares on the new meeting date as well, unless you have
subsequently revoked your proxy.

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Changing Your Vote . . . . . . . . . . . .

Stockholders of Record. If you would like to change your vote you can
do so in the following ways:

•

•

•

•

deliver written notice of your revocation to our Corporate
Secretary prior to the Annual Meeting;

deliver a properly executed, later dated proxy prior to the
Annual Meeting;

vote again on a later date on the Internet or by telephone (only
your latest Internet or telephone proxy submitted prior to the
Annual Meeting will be counted); or

attend the Annual Meeting and vote at the meeting.

Please note that your attendance at the meeting in and of itself is not
enough to revoke your proxy.

Beneficial Owners. If you instructed a broker or nominee to vote your
shares following the directions originally included with these materials
or provided to you, you can change your vote only by following your
broker or nominee’s directions for doing so.

Cost of this Proxy Solicitation . . . . We will bear the cost of this proxy solicitation. In addition to soliciting

proxies by mail, our directors, officers and employees may solicit
proxies in person or by telephone. None of these individuals will receive
any additional or special compensation for doing this, but they may be
reimbursed for reasonable out-of-pocket expenses. We have also hired
Morrow & Sodali LLC to help us solicit proxies from brokers, bank
nominees and other institutional owners. We expect to pay Morrow &
Sodali LLC a fee of up to approximately $9,000 for its services, and we
will reimburse certain out-of-pocket expenses.

Meeting Quorum . . . . . . . . . . . . . . . The Annual Meeting will be held if a majority of our outstanding shares

of common stock entitled to vote are represented at the meeting or by
proxy.

Our Voting Recommendations . . . . When proxies are properly dated, executed and returned, the shares
represented by such proxies will be voted at the Annual Meeting in
accordance with the directions of the stockholder. However, if no
specific instructions are given, the shares will be voted in accordance
with the following recommendations of our Board of Directors:

•

•

•

•

“FOR” the election of Ronald Black, Penelope A. Herscher
and Eric Stang as Class II directors;

“FOR” the advisory vote to approve named executive officer
compensation, as disclosed in this Proxy Statement;

“FOR” the option of once every year as the frequency with
which stockholders are provided an advisory vote on named
executive officer compensation; and

“FOR” the ratification of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2017.

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Abstentions and Broker
Non-Votes . . . . . . . . . . . . . . . . . . . . . We treat shares that are voted “ABSTAIN” in person or by proxy as

being:

•

•

present for purposes of determining whether or not a quorum
is present at the Annual Meeting; and

entitled to vote on a particular subject matter at the Annual
Meeting.

In the election of directors, any vote you make that is “ABSTAIN” for
any nominee will not impact the election of that nominee. In tabulating
the voting results for the election of directors, only “FOR” and
“AGAINST” votes are counted.

For the other proposals, an “ABSTAIN” vote is the same as voting
against the proposal.

If you hold your common stock through a broker, the broker may be
prevented from voting shares held in your brokerage account on some
proposals (a “broker non-vote”) unless you have given the broker voting
instructions. Thus, if you hold your common stock through a broker, it is
critical that you cast your vote if you want it to count. If you hold your
common stock through a broker and you do not instruct your broker how
to vote on Proposals One, Two and Three, it will be considered a broker
non-vote and no votes will be cast on your behalf with respect to such
Proposals. Shares that are subject to a broker non-vote are counted for
purposes of determining whether a quorum exists but do not count for or
against any particular proposal.

Your broker will continue to have discretion to vote any uninstructed
shares on Proposal Four, the Ratification of the Appointment of the
Company’s Independent Registered Public Accounting Firm.

Stockholders may present proposals for action at a future annual meeting
only if they comply with the requirements of our bylaws and the proxy
rules established by the SEC.

Stockholder proposals, including nominations for the election of
directors, which are intended to be presented by such stockholders at our
2018 Annual Meeting of Stockholders must be received by us no later
than November 9, 2017 to be considered for inclusion in the proxy
statement and proxy card relating to that meeting.

In addition to the SEC rules, our bylaws establish an advance notice
procedure for proposals that a stockholder wants to have included in our
proxy statement relating to a meeting or to have brought before the
meeting. To be timely, a stockholder proposal must be received by the
Company’s Secretary/General Counsel at the principal executive offices
of the Company not later than the 45th day nor earlier than the 75th day
before the one-year anniversary of the date the Company’s proxy
statement was released to stockholders in connection with the previous

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Procedure for Submitting
Stockholder Proposals . . . . . . . . . . .

year’s annual meeting. However, if no annual meeting was held in the
previous year or if the date of the annual meeting is advanced by more
than 30 days prior to or delayed by more than 60 days after the one-year
anniversary of the date of the previous year’s annual meeting, then
notice must be received no earlier than the close of business on the 120th
day prior to such annual meeting and not later than the close of business
on the later of the 90th day prior to such annual meeting, or the tenth day
following the day on which public announcement of the date of such
annual meeting is first made.

Moreover, your notice must contain specific information concerning the
matters to be brought before the meeting. We urge you to read our
bylaws in full in order to understand the requirements of bringing a
proposal or nomination.

A copy of the full text of the bylaw provision relating to our advance
notice procedure may be obtained by writing to our Corporate Secretary
or by accessing a copy of our bylaws, which are publicly available at
http://www.sec.gov. All notices of proposals by stockholders, whether or
not included in proxy materials, should be sent to Rambus Inc., 1050
Enterprise Way, Suite 700, Sunnyvale, California 94089, Attention:
Secretary/General Counsel.

Communication With the Board of
Directors . . . . . . . . . . . . . . . . . . . . . . Our Board of Directors may be contacted by writing to them via regular

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mail at Board of Directors, Rambus Inc., 1050 Enterprise Way, Suite
700, Sunnyvale, California 94089. If you wish to contact our Board of
Directors or any member of the Audit Committee to report questionable
accounting or auditing matters you may do so anonymously by using
this mailing address and designating the communication as
“confidential.”

Our process for handling communications to our Board of Directors is as
follows:

Any stockholder communications that our Board of Directors receives
will first go to our Secretary/General Counsel, who will log the date of
receipt of the communication as well as (for non-confidential
communications) the identity of the correspondent in our stockholder
communications log.

Unless the communication is marked “confidential,” our Secretary/
General Counsel will review, summarize and, if appropriate, draft a
response to the communication. The summary and response will become
part of the stockholder communications log that our Secretary/General
Counsel maintains with respect to all stockholder communications.

Our Secretary/General Counsel will then forward the stockholder
communication to the member(s) of our Board of Directors (or
committee chair if the communication is addressed to a committee) for
review.

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Any stockholder communication marked “confidential” will be logged
by our Secretary/General Counsel as “received” but will not be
reviewed, opened or otherwise held by our Secretary/General Counsel.
Such confidential correspondence will be forwarded to the addressee(s).

Annual Meeting Attendance . . . . . . Members of our Board of Directors are invited but not required to attend

the Annual Meeting of Stockholders. The 2016 Annual Meeting of
Stockholders was attended by all of the members of our Board of
Directors.

“Householding” of Proxy
Materials . . . . . . . . . . . . . . . . . . . . . The SEC has adopted rules that permit companies and intermediaries
such as brokers to satisfy delivery requirements for proxy statements
with respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those stockholders. This
process, which is commonly referred to as “householding,” potentially
provides extra convenience for stockholders and cost savings for
companies. The Company and some brokers household proxy materials,
delivering a single proxy. If your proxy statement is being householded
and you would like to receive separate copies, or if you are receiving
multiple copies and would like to receive a single copy, please contact
Investor Relations at Rambus Inc., 1050 Enterprise Way, Suite 700,
Sunnyvale, California 94089, Attention: Secretary, or ir@rambus.com,
or place a collect call to the Company, at (408) 462-8000, and direct the
call to the Investor Relations Department.

Delivery of Proxy Materials . . . . . . To receive current and future proxy materials, such as annual reports,
proxy statements and proxy cards, in either paper or electronic form,
please contact Investor Relations at ir@rambus.com or
http://investor.rambus.com, or place a collect call to the Company, at
(408) 462-8000, and direct the call to the Investor Relations Department.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 20, 2017

The Notice and Proxy Statement, Annual Report to Stockholders and Form 10-K Combo
document are available at www.proxyvote.com. You are encouraged to access and review all of the
important information contained in the proxy materials before voting.

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PROPOSAL ONE:
ELECTION OF DIRECTORS

Our Board of Directors is currently composed of seven members who are divided into two classes with
overlapping two-year terms. As of the date of this proxy statement, we have four Class I directors and three
Class II directors, as noted under “Nominees” below. At each annual meeting of stockholders, a class of directors
is elected for a term of two years to succeed those directors whose terms expire on the annual meeting date. A
director serves in office until his or her respective successor is duly elected and qualified or until his or her death
or resignation. Any additional directorships resulting from an increase in the number of directors will be
distributed among the two classes so that, as nearly as possible, each class will consist of an equal number of
directors. Any vacancy occurring mid-term will be filled by a person selected by a majority of the other current
members of the Board of Directors. There is no family relationship between any of our directors.

Nominees . . . . . . . . . . . . . . . . Three Class II directors are to be elected at the Annual Meeting for a two-year

term ending in 2019. Based upon the recommendation of our Corporate
Governance/Nominating Committee, our Board has nominated: Ronald Black,
Penelope A. Herscher and Eric Stang for election as Class II directors.

If any of these nominees is unable or declines to serve as a director at the time
of the Annual Meeting, proxies will be voted for a substitute nominee or
nominees designated by the Board of Directors.

Vote Required . . . . . . . . . . . . The Company’s bylaws require that each director be elected by the majority of
votes cast with respect to such director in uncontested elections. The Board of
Directors, after taking into consideration the recommendation of the Corporate
Governance/Nominating Committee of the Board, will determine whether or
not to accept the pre-tendered resignation of any nominee for director, in an
uncontested election, who receives a greater number of votes “AGAINST” his
or her election than votes “FOR” such election. There are no cumulative voting
rights in the election of directors. Stockholders as of the Record Date may vote
their shares for or against some, all or none of the Class II nominees.

Information About Nominees
and Other Directors . . . . . . . The members of our Board of Directors have deep executive and board

leadership experience derived from their respective tenures as executives and
directors of technology companies of various sizes. The following table
contains information regarding the Class II nominees and other directors as of
February 22, 2017. This information includes the specific experience,
qualifications, attributes and skills that led to our Board of Directors’
conclusion that the person should serve as a director.

Incumbent Nominees for Class II Directors

Name

Age

Principal Occupation and Business Experience

Ronald Black, Ph.D.

. . . . . 53

Dr. Black has served as our chief executive officer and president since June
2012 and as a director since July 2012. Dr. Black was previously the
Managing Director of R.D. Black & Company, a consulting firm, since
August 2011. From September 2010 to August 2011, Dr. Black was the
Chief Executive Officer of MobiWire, formerly Sagem Wireless, a
privately-held mobile handset company headquartered near Paris, France
that offers products and services to original equipment manufacturers and
mobile network operators in the mobile phone marketplace. From June

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Penelope A. Herscher . . . . 56

2009 to October 2010, Dr. Black served as Chairman and CEO of UPEK,
Inc. Dr. Black currently serves as a board member of Energy Focus Inc, a
publicly held LED lighting technology developer, Ultratech, Inc., a publicly
held company that designs, builds and markets manufacturing systems of
the global technology industry, Microfabrica Inc., a privately held high
precision metal parts fabricator, and FlexEnable Limited, a privately held
producer of flexible electronics manufacturing platforms. From 2012 to
March 2015, Dr. Black served on the board of EnOcean GmbH, a German-
based company that manufactures and markets energy harvesting
technology, sensors, and radio frequency communication. From September
2010 to November 2012, he served as a board member of AuthenTec, Inc.,
which he joined following the AuthenTec-UPEK merger in September
2010 and from 2007 to 2013, he served as a board member of Inside
Contactless, a France-based company engaged in the semiconductors and
information technology industry. From September 2004 to June 2009, he
was chief executive officer of Wavecom S.A., a publicly traded French
wireless solutions company. Dr. Black holds a Bachelor of Science, a
Masters of Science, and a Ph.D. in materials science and engineering from
Cornell University in Ithaca, N.Y.

Dr. Black’s status as our chief executive officer, his record as a leader of
various technology companies, both domestic and foreign, and his deep
technical expertise led the Board of Directors to conclude that he should
serve as a director.

Ms. Herscher has served as a director since July 2006. She currently holds
the position of Executive Chairman of FirstRain, Inc., a custom-configured,
on-demand intelligence services firm, which she joined in 2005.
Ms. Herscher previously held the position of president and chief executive
officer of FirstRain, Inc., from 2004 to 2015, executive vice president and
chief marketing officer at Cadence Design Systems from 2002 to 2003, and
executive vice president and general manager, Design and Verification
Business during the second half of 2003. From 1996 to 2002, Ms. Herscher
was president and chief executive officer of Simplex Solutions, which was
acquired by Cadence in 2002. Before Simplex, she was an executive at
Synopsys for eight years and started her career as an R&D engineer with
Texas Instruments. She holds a B.A. with honors, M.A. in Mathematics
from Cambridge University in England. Ms. Herscher serves on the boards
of FirstRain, Lumentum Holdings, and Saxonix. She has also served on the
board of several non-profit institutions, including JDS Uniphase
Corporation, which split into two companies Lumentum Holdings and
Viavi Solutions.

Ms. Herscher’s experience as chief executive officer of technology
companies, the successful sale of a company under her leadership to a
larger technology company and her years of business and leadership
experience led the Board of Directors to conclude that she should serve as a
director.

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Name

Age

Principal Occupation and Business Experience

Eric Stang . . . . . . . . . . . . . 57

Mr. Stang has served as a director since July 2008 and has served as
Chairman of the Board since March 2013. Mr. Stang currently serves as
chairman, president and chief executive officer of Ooma, Inc., a cloudbased
communications and connected services company that went public in July
2015. He has held the position of Chairman since December 2014 and the
positions of President, chief executive officer and director since January
2009. Prior to joining Ooma, Mr. Stang served as a director, chief executive
officer and president of Reliant Technologies, Inc., a developer of medical
technology solutions for aesthetic applications, from 2006 to 2008.
Mr. Stang previously served as chief executive officer and president of
Lexar Media, Inc., a provider of solid state memory products from 2001 to
2006 and Chairman from 2004 to 2006. He currently serves on the board of
Invensense, Inc., a publicly traded motion sensing hardware and motion
processing technology company. Mr. Stang received his A.B. from Stanford
University and M.B.A. from the Harvard Business School. Mr. Stang also
serves on the boards of private companies.

Mr. Stang’s experience as chief executive officer of high technology
companies, his prior experience in the memory products market and his
years of business and leadership experience led the Board of Directors to
conclude that he should serve as a director.

The Board unanimously recommends that you vote “FOR” the election to the Board of Directors of each
of the nominees proposed above.

Incumbent Class I Directors Whose Terms Expire in 2018

Name

Age

Principal Occupation and Business Experience

J. Thomas Bentley . . . . . . . 67

E. Thomas Fisher

. . . . . . . 62

Mr. Bentley has served as a director since March 2005, and served as
Chairman of the Board from June 2011 to March 2013. He served as a
managing director at SVB Alliant (formerly Alliant Partners), a mergers
and acquisitions firm, since he co-founded the firm in 1990 until October
2005. Mr. Bentley holds a B.A. in Economics from Vanderbilt University
and an M.S. in Management from the Massachusetts Institute of
Technology. Mr. Bentley currently serves on the board of Nanometrics, Inc.

Mr. Bentley’s financial expertise and years of business and leadership
experience, including fifteen years as a co-founder of a financial advisory
firm, allow him to provide strategic guidance to us and led the Board of
Directors to conclude that he should serve as a director. In addition, our
Board of Directors’ determination that Mr. Bentley is the Audit Committee
“financial expert” lends further support to his financial acumen and
qualifications for serving on our Board of Directors.

Mr. Fisher has served as a director since January 2015. He is currently
senior vice president and chief technology officer of MapR Technologies.
From June 2011 to February 2017, Mr. Fisher served as senior vice
president and chief information officer (“CIO”) of Global Commercial
Cloud Services at Oracle Corporation. Prior to joining Oracle, Mr. Fisher
served as CIO and vice president of Cloud Computing at SuccessFactors,
Inc., now SAP, from April 2009 to June 2011. Prior to joining

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Charles Kissner.

. . . . . . . . 69

David Shrigley . . . . . . . . . 68

SuccessFactors, Mr. Fisher spent seven years at Qualcomm where he
served as CIO of CDMA Technologies. Before Qualcomm, he was vice
president and acting chief technology officer at eBay Inc. Mr. Fisher holds
a bachelor of arts degree from the University of North Carolina in
Charlotte.

Mr. Fisher’s experience as a technology officer of high technology
companies, his experience with cloud based products and services as well
as his business and leadership experience allow him to provide strategic
guidance to the Board and the Company, which led the Board of Directors
to conclude that he should serve as a director.

Mr. Kissner has served as a director since July 2012. He is currently the
Chairman of the Board of ShoreTel Inc., a business communications
systems company. From January 2007 to February 2015, he was Chairman
of Aviat Networks and from June 2010 to July 2011, Mr. Kissner was
Chairman and CEO. From 2010 to 2015, he served on the board of Meru
Networks, a technology leader in the enterprise wireless systems market.
From 1995 to 2006, he served as Chairman and CEO of Stratex Networks, a
global provider of wireless transmission solutions. Mr. Kissner previously
was Vice President and General Manager of M/A-COM, Inc., a
manufacturer of radio and microwave communications products, President
and CEO of Aristacom International, a communications software company,
Executive Vice President of Fujitsu Network Switching, Inc., and held a
number of executive positions at AT&T (now Alcatel-Lucent). He has also
served on a number of other public and private boards, as well as
not-for-profit boards such as the NPR Foundation and Angel Flight, Inc. He
currently serves as Chairman of non-profit KQED Public Media.
Mr. Kissner holds a Bachelor of Science degree from California State
Polytechnic University and a Master of Business Administration degree
from Santa Clara University.

Mr. Kissner’s experience as a director and executive of wireless technology
and networking companies and his years of business and leadership
experience led the Board of Directors to conclude that he should serve as a
director.

Mr. Shrigley has served as a director since October 2006. He was most
recently the Executive Chairman of Soil and Topography Information, Inc.
Mr. Shrigley was a member of the board of Wolfson Microelectronics plc, a
supplier of mixed-signal chips for the digital market from November 2006
to December 2008, and was its chief executive officer from March 2007.
He served as a general partner at Sevin Rosen Funds, a venture capital firm,
from 1999 to 2005. Prior to that, Mr. Shrigley held the position of executive
vice president, Marketing, Sales and Service at Bay Networks, a network
hardware company. Mr. Shrigley served in various executive positions at
Intel Corporation, including vice president and general manager of Asia
Pacific sales and marketing operations based in Hong Kong, and vice
president and general manager, corporate marketing. Mr. Shrigley holds a
B.S. in Business Administration from Franklin University.

Mr. Shrigley’s experience as a director and executive officer of high
technology companies, his experience in the venture capital industry and
his years of international business and leadership experience led the Board
of Directors to conclude that he should serve as a director.

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Board of Directors Meetings and
Committees . . . . . . . . . . . . . . . . . . . Our Board of Directors held a total of 12 meetings during 2016.

During 2016, each member of our Board of Directors attended 75% or
more of the meetings of the Board of Directors and of the committees,
if any, of which she or he was a member.

Director Independence . . . . . . . . . . Our Board of Directors has determined that each of the following
directors, constituting a majority of our Board of Directors, has no
material relationship with us (either directly as a partner, stockholder
or officer of an organization that has a relationship with us) and is
“independent” under the applicable NASDAQ and SEC rules: J.
Thomas Bentley, E. Thomas Fisher, Penelope A. Herscher, Charles
Kissner, David Shrigley and Eric Stang.

Currently, each of the committees of our Board of Directors is
composed of independent directors as follows:

Audit Committee:

Compensation
Committee:

J. Thomas Bentley (Chair)
Charles Kissner
David Shrigley

Charles Kissner (Chair)
E. Thomas Fisher
David Shrigley

Corporate Governance/
Nominating Committee:

Eric Stang (Chair)
Penelope A. Herscher

Corporate Development
Committee:

Penelope A. Herscher (Chair)
E. Thomas Fisher
David Shrigley

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Director Qualifications . . . . . . . . . . Except as may be required by rules promulgated by NASDAQ or the

SEC, there are currently no specific, minimum qualifications that
must be met by each candidate for our Board of Directors, nor are
there any specific qualities or skills that are necessary for one or more
of the members of our Board of Directors to possess. The Corporate
Governance/Nominating Committee considers a number of factors in
its assessment of the appropriate skills and characteristics of members
of the Board of Directors, as well as the composition of the Board of
Directors as a whole. These factors include the members’
qualification as independent, as well as consideration of judgment,
character, integrity, diversity, skills, and experience in such areas as
operations, technology, finance, and the general needs of the Board of
Directors and such other factors as the Corporate Governance/
Nominating Committee may consider appropriate. The Corporate
Governance/ Nominating Committee does not have a formal policy
with respect to diversity. However, the Board of Directors and the
Corporate Governance/Nominating Committee believe that it is
essential that the members of the Board of Directors represent diverse
viewpoints. In considering candidates for the Board of Directors, the
Board of Directors and the Corporate Governance/Nominating
Committee consider the entirety of each candidate’s credentials in the
context of the factors mentioned above.

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Corporate Governance
Principles . . . . . . . . . . . . . . . . . . . . . We are committed to maintaining the highest standards of business

Section 16(a) Beneficial Reporting
Compliance . . . . . . . . . . . . . . . . . . .

Executive Sessions of the
Independent Directors . . . . . . . . . .

conduct and corporate governance, which we believe are essential to
running our business efficiently, serving our stockholders’ interests and
maintaining our integrity in the marketplace. We have adopted a code of
business conduct and ethics for directors, officers and employees known
as the Code of Business Conduct and Ethics, which is available on our
website at http://investor.rambus.com/corporate-governance.cfm.

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Securities Exchange Act”) requires our executive officers, directors and
ten percent stockholders to file reports of ownership and changes in
ownership with the SEC. The same persons are required to furnish us
with copies of all Section 16(a) forms they file. Based on our review of
these forms, we believe that during fiscal 2016 all of our executive
officers, directors and ten percent stockholders complied with the
applicable filing requirements.

It is the policy of the Board of Directors to have executive sessions of
the independent directors at which only independent directors are
present, typically in conjunction with the regularly scheduled meetings
of the Board of Directors.

Committees of the Board of
Directors . . . . . . . . . . . . . . . . . . . . . . During 2016, our Board of Directors had four standing committees:

•

•

•

•

an Audit Committee,

a Compensation Committee,

a Corporate Governance/Nominating Committee, and

a Corporate Development Committee.

The following describes each committee, its function, its membership,
and the number of meetings held during 2016.

Each of the committees operates under a written charter adopted by our
Board of Directors. All of the current committee charters are available
on our website at http://investor.rambus.com/corporate-governance.cfm.

Audit Committee . . . . . . . . . . . . . . . Currently, the Audit Committee is composed of J. Thomas Bentley,

Charles Kissner and David Shrigley, with Mr. Bentley serving as Chair.
The Audit Committee oversees our corporate accounting and financial
reporting processes and internal control over financial reporting, as well
as our internal and external audits. The Audit Committee held 8
meetings during 2016. Its duties include:

• Reviewing our accounting and financial reporting processes

and internal control over financial reporting;

•

Providing oversight and review at least annually of our risk
management policies, including our investment policy;

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• Retaining the independent registered public accounting firm,

approving their fees, and providing oversight of
communication with them;

• Reviewing the plans, findings and performance of our internal

auditors;

• Reviewing our annual and quarterly financial statements and

related disclosure documents; and

• Overseeing special investigations into financial and other

matters, as necessary.

Our Board of Directors has determined that Mr. Bentley is the Audit
Committee “financial expert” and that Mr. Bentley, together with each
of Messrs. Kissner and Shrigley, has no material relationship with us
(either directly as a partner, stockholder or officer of an organization that
has a relationship with us) and is an “independent director” under the
applicable NASDAQ and SEC rules.

The Audit Committee’s role is detailed in the Audit Committee Charter,
which is available on our website at
http://investor.rambus.com/corporate-governance.cfm.

Compensation Committee . . . . . . . Currently, the Compensation Committee is composed of E. Thomas

Fisher, David Shrigley and Charles Kissner, with Mr. Kissner serving as
Chair. Our Board of Directors has determined that each of Messrs.
Fisher, Shrigley and Kissner are independent under the rules for
compensation committee independence under the applicable NASDAQ
and SEC rules. During 2016 and until February 2017, the Compensation
Committee consisted of E. Thomas Fisher, Penelope A. Herscher and
Charles Kissner, with Ms. Herscher serving as Chair. The Compensation
Committee reviews and determines all forms of compensation to be
provided to our executive officers, including the named executive
officers and directors of Rambus, including base compensation, bonuses,
and stock compensation. The Compensation Committee held 11
meetings during 2016. Its duties include:

• Annually reviewing and approving the Chief Executive

Officer (“CEO”) and other executive officers’ compensation in
the context of their performance, which includes reviewing
and approving their annual base salary, annual incentive
bonus, including the specific goals, targets, and amounts,
equity compensation, and any employment agreements, and
any other benefits, compensation or arrangements, as
applicable;

• Administering our stock option and equity incentive plans

pursuant to the terms of such plans and the authority delegated
by our Board of Directors, including: granting stock options,
performance units, stock appreciation rights, restricted stock,
restricted stock units (“RSUs”) or other equity compensation
to individuals eligible for such grants and amend such awards
following their grant; amending the plans; and delegating to

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appropriate executive officers of the Company the ability to
grant awards to non-executive officer employees of the
Company pursuant to specific guidelines;

• Adopting, amending and overseeing the administration of our

significant employee benefits programs;

• Reviewing external surveys to establish appropriate ranges of

compensation;

• Retaining and terminating any compensation consultant to

assist in the evaluation of CEO or executive officer or director
compensation, and approving the consultant’s fees and other
terms of service, as well as obtaining advice and assistance
from internal or external legal, accounting or other advisors;
and

• Conducting an annual assessment of the Company’s

engagement with compensation consultants retained by the
Board and/or management, as applicable, including the nature
and extent of services provided, the amount of fees paid and
who made or recommended the decision to retain the
compensation consultants.

The Compensation Committee uses Semler Brossy Consulting Group,
LLC (“SBCG”) to assist in evaluating executive and director
compensation, and has determined that SBCG is an independent
consultant under applicable NASDAQ rules.

A detailed description of the processes and procedures of the
Compensation Committee for considering and determining executive
and director compensation, including the role of SBCG, is provided in
the “Executive Compensation” section of this proxy statement.

The Compensation Committee’s role is detailed in the Compensation
Committee Charter, which is available on our website at
http://investor.rambus.com/corporate-governance.cfm.

Compensation Committee
Interlocks and Insider
Participation . . . . . . . . . . . . . . . . . . During 2016, there were no interlock relationships by our Compensation

Committee members. Please see the Compensation Discussion and
Analysis section of this Proxy Statement for further discussion.

Corporate Governance &
Nominating Committee . . . . . . . . . . Currently, the Corporate Governance/Nominating Committee is

composed of Eric Stang and Penelope A. Herscher, with Mr. Stang
serving as Chair. Our Board of Directors has determined that each of
Ms. Herscher and Mr. Stang are “independent” under applicable
NASDAQ and SEC rules. During 2016 and until February 2017, the
Corporate Governance/Nominating Committee consisted of David
Shrigley and Eric Stang, with Mr. Stang serving as Chair. The Corporate
Governance/Nominating Committee held 4 meetings during 2016.

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The Corporate Governance/Nominating Committee recommends and
approves Rambus’ Corporate Governance Guidelines. Its duties include:

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Evaluating and making recommendations to the Board of
Directors concerning the appointment of directors to
committees of the Board of Directors and the selection of
committee chairs;

Identifying best practices and recommending corporate
governance principles;

• Overseeing the evaluation of the Board of Directors; and

•

Proposing the slate of nominees for election to the Board of
Directors.

The Corporate Governance/Nominating Committee’s role is detailed in
the Corporate Governance/Nominating Committee Charter which is
available on our website at http://investor.rambus.com/corporate-
governance.cfm.

Identifying and Evaluating
Nominees For Directors . . . . . . . . . The Corporate Governance/Nominating Committee utilizes a variety of
methods for identifying and evaluating nominees for director, including
those discussed in the “Director Qualifications” section of this proxy
statement. In the event that vacancies on the Board of Directors are
anticipated, or otherwise arise, the committee will consider various
potential candidates for director. Candidates may come to the attention
of the committee through current members of the Board of Directors,
professional search firms, stockholders or other persons. The Corporate
Governance/Nominating Committee has from time to time retained third
parties to whom a fee is paid to assist it in identifying or evaluating
potential director nominees.

Consideration of Stockholder
Nominees to the Board . . . . . . . . . .

Stockholders may propose director candidates for general consideration
by the Corporate Governance/Nominating Committee by submitting in
proper written form the individual’s name, qualifications, and the other
information set forth below in “Consideration of Stockholder Nominees
to the Board” to the Secretary/General Counsel of the Company. The
Corporate Governance/Nominating Committee will evaluate any
candidates recommended by stockholders against the same criteria and
pursuant to the same policies and procedures applicable to the evaluation
of candidates proposed by directors or management.

Stockholders may nominate directors for election at an annual meeting
or at a special meeting at which directors are to be elected or re-elected,
provided that the advance notice requirements for director nominations
set forth in the Company’s bylaws have been met. As summarized
below, this advance notice provision requires a stockholder to give
timely notice of a director nomination in proper written form to Rambus
Inc., 1050 Enterprise Way, Suite 700, Sunnyvale, CA 94089, Attention:
Secretary/General Counsel.

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In order for a stockholder to give timely notice of a director nomination
for an annual meeting, the notice must be received by the Secretary/
General Counsel at the Company’s principal executive offices not later
than the 45th day nor earlier than the 75th day before the one-year
anniversary of the date the Company’s proxy statement was released to
stockholders in connection with the previous year’s annual meeting.
However, if no annual meeting was held in the previous year or if the
date of the annual meeting is advanced by more than 30 days prior to or
delayed by more than 60 days after the one-year anniversary of the date
of the previous year’s annual meeting, then notice must be received no
earlier than the close of business on the 120th day prior to such annual
meeting and not later than the close of business on the later of the 90th
day prior to such annual meeting, or the tenth day following the day on
which public announcement of the date of such annual meeting is first
made.

In order for a stockholder to give timely notice of a director nomination
for a special meeting at which directors are to be elected or re-elected,
the notice must be received by the Secretary/General Counsel at the
Company’s principal executive offices not later than the later of the 90th
day prior to such special meeting or the 10th day following the day on
which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board to be elected or
re-elected at such meeting.

To be in proper written form, a stockholder’s notice to the Secretary/
General Counsel of the Company must set forth the information required
by our bylaws, which we urge you to read in full in order to understand
the requirements for making a director nomination.

Board Leadership Structure and
Role in Risk Oversight . . . . . . . . . . Our Corporate Governance Guidelines require that the Chairperson of

the Board not be the CEO of the Company. In addition, while the
Chairperson works closely with the CEO and other members of our
management, the Chairperson is not part of management and does not
have an operating or external role or responsibility. The Board of
Directors considers it useful and appropriate to designate a Chairperson
to act as the presiding director at Board of Directors meetings, to call
and organize such meetings and manage the agenda thereof, and to
manage the affairs of the Board of Directors, including ensuring that the
Board of Directors is organized properly, functions effectively, and
meets its obligations and responsibilities. The Chairperson also acts as
the principal contact for the CEO and other members of the Board of
Directors and management, as appropriate, for matters requiring the
attention of the full Board of Directors. We believe that this leadership
structure is appropriate given the attention, time, effort, and energy that
the CEO is required to dedicate to his position in the current business
environment, and the high level of commitment required to serve as our
Chairperson.

The Board of Directors plays an integral role in our risk oversight
processes. The Board of Directors meets regularly to receive reports

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from its committees, as well as from management with respect to areas
of material risk to the Company, including legal, operational, financial
and strategic risks. In addition, the Audit Committee oversees and
reviews at least annually our risk management policies, including our
investment policies.

Transactions with Related
Persons . . . . . . . . . . . . . . . . . . . . . . . None.

Review, Approval or Ratification
of Transactions with Related
Persons . . . . . . . . . . . . . . . . . . . . . . . Our directors and executive officers are subject to our Code of Business

Conduct and Ethics, and our directors are guided in their duties by our
Corporate Governance Guidelines. Our Code of Business Conduct and
Ethics requires that our directors and executive officers avoid situations
where a conflict of interest might occur or appear to occur. In general,
our directors and executive officers should not have a pecuniary interest
in transactions involving us or a customer, licensee, or supplier of the
Company, unless such interest is solely a result of routine investments
made by the individual in publicly traded companies.

In the event that a director or executive officer is going to enter into a
related party transaction with a relative or significant other, or with a
business in which a relative or significant other is associated in any
significant role, the director or executive officer must fully disclose the
nature of the related party transaction to our Chief Financial Officer. For
directors and executive officers, such related party transaction then must
be reviewed and approved in advance by the Audit Committee. For other
conflicts of interest that may arise, the Code of Business Conduct and
Ethics advises our directors and executive officers to consult with our
General Counsel.

In addition, each director and officer is required to complete a Director
and Officer Questionnaire on an annual basis and upon any new
appointment, and provide quarterly updates, which requires disclosure of
any related-party transactions pertaining to the director or executive
officer. Our Board of Directors will consider such information in its
determinations of independence with respect to our directors under
applicable NASDAQ and SEC rules.

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Corporate Development
Committee . . . . . . . . . . . . . . . . . . . . Currently, the Corporate Development Committee is composed of

Penelope A. Herscher, E. Thomas Fisher, David Shrigley and Michael
Farmwald in his capacity as a board member emeritus, with
Ms. Herscher serving as Chair. During 2016 and until February 2017,
the Corporate Development Committee consisted of E. Thomas Fisher,
Charles Kissner and David Shrigley, with Mr. Kissner serving as Chair.
The Corporate Development Committee held 6 meetings during 2016.

The duties of the Corporate Development Committee are to:

• work with management to review and consider potential
strategic transactions that are consistent with our growth
strategy;

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•

•

review and advise management with respect to our growth
strategy; and

act as the liaison to the Board of Directors in connection with
the Committee’s and management’s activities in this regard.

The Corporate Development Committee’s role is detailed in the
Corporate Development Committee Charter which is available on our
website at http://investor.rambus.com/corporate-governance.cfm.

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PROPOSAL TWO:
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

We are asking our stockholders to provide an advisory vote to approve the compensation of our named executive
officers, including the Compensation Discussion and Analysis, the compensation tables and narrative disclosures
as described in this Proxy Statement. The Company currently holds such an advisory vote annually, and this
proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their
views on the compensation of our named executive officers.

Please see the Compensation Discussion and Analysis section of this Proxy Statement, the compensation tables
and the narrative disclosures that accompany the compensation tables for greater detail about our executive
compensation programs, including information about the fiscal year 2016 compensation of our named executive
officers.

We believe that our overall compensation program and philosophy support and help drive the Company’s long-
term value creation, business strategy and operating performance objectives. We are again asking our
stockholders to indicate their support for our named executive officer compensation as described in this proxy
statement by voting “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed
pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis,
compensation tables and narrative discussion is hereby APPROVED.”

While this say-on-pay vote is advisory and does not bind the Company to any particular action, the Board of
Directors and the Compensation Committee value your opinion. Accordingly, the Board of Directors and the
Compensation Committee will consider the outcome of this vote when making future compensation decisions for
the Company’s named executive officers.

Approval of this resolution requires the affirmative vote of the holders of a majority of the votes cast in person or
by proxy at the Annual Meeting.

The Board unanimously recommends a vote “FOR” the approval of the compensation of our named
executive officers, as disclosed in this Proxy Statement.

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PROPOSAL THREE:
ADVISORY VOTE ON THE FREQUENCY OF
AN ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

Pursuant to the Dodd-Frank Act, we also are asking our stockholders to provide their input with regard to the
frequency of future stockholder advisory votes on our executive compensation programs, such as Proposal Two
above. In particular, we are asking whether the advisory vote on executive compensation should occur once
every year, every two years or every three years.

After careful consideration, our Board of Directors has determined that an annual advisory vote on executive
compensation is the most appropriate alternative for Rambus. The Board of Directors’ determination was
influenced by the fact that the compensation of our named executive officers is evaluated, adjusted and approved
on an annual basis. As part of the annual review process, the Board of Directors believes that stockholder
sentiment should be a factor that is taken into consideration by the Board of Directors and the Compensation
Committee in making decisions with respect to executive compensation. By providing an advisory vote on
executive compensation on an annual basis, our stockholders will be able to provide us with direct input on our
compensation philosophy, policies and practices as disclosed in the proxy statement every year. In addition, we
consider this to be a good governance practice. We understand that our stockholders may have different views as
to what is the best approach for Rambus, and we look forward to hearing from our stockholders on this agenda
item every year. Accordingly, our Board of Directors recommends that the advisory vote on executive
compensation be held every year.

The option of one year, two years or three years that receives the highest number of votes cast will be the
frequency of the vote on the compensation of our named executive officers that has been approved by
stockholders on an advisory basis. While your vote is advisory and will not bind the Company to any particular
action, the Board of Directors and the Compensation Committee value the opinions of our stockholders and will
consider our stockholders’ vote. Nonetheless, the Board of Directors may decide that it is in the best interests of
our stockholders and Rambus to hold an advisory vote on executive compensation more or less frequently than
the option voted by our stockholders based on events and circumstances at such time.

The Board unanimously recommends a vote “FOR” the option of once every year as the frequency with
which stockholders are provided an advisory vote on named executive officer compensation.

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PROPOSAL FOUR:
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed PricewaterhouseCoopers LLP as the independent registered public
accounting firm to Rambus to audit our consolidated financial statements for the fiscal year ending December 31,
2017.

Although ratification by stockholders is not required by law, the Audit Committee has conditioned its
appointment of the independent registered public accounting firm upon the receipt of the affirmative vote of a
majority of the votes duly cast at the Annual Meeting.

Notwithstanding its selection, the Audit Committee, in its discretion, may hire a new independent registered
public accounting firm at any time during the year if the Audit Committee believes that such a change would be
in the best interest of Rambus and its stockholders.

Our History with
PricewaterhouseCoopers . . . . . . . . PricewaterhouseCoopers LLP (or its predecessor, Coopers & Lybrand

L.L.P.) has audited our financial statements since 1991. Representatives
of PricewaterhouseCoopers LLP are expected to be present at the Annual
Meeting to respond to appropriate questions and to make a statement if
they so desire.

Principal Accountant Fees and
Services . . . . . . . . . . . . . . . . . . . . . . The aggregate fees billed for professional accounting services by

PricewaterhouseCoopers LLP for the fiscal years ended December 31,
2016 and December 31, 2015 are as follows:

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Fiscal Year
Ended
December 31,
2016

$1,930,325
—
$
91,190
$
3,300
$

Fiscal Year
Ended
December 31,
2015

$1,361,292
25,000
$
63,705
$
3,300
$

Audit Fees (1)
. . . . . .
Audit-Related Fees (2)
Tax Fees (3) . . . . . . . .
. . .
All Other Fees (4)

Total Fees . . . . . . . . . .

$2,024,815

$1,453,297

(1) Audit Fees consist of fees for PricewaterhouseCoopers LLP’s
professional services rendered for the audit of the Company’s
consolidated annual financial statements and review of the interim
consolidated financial statements included in quarterly reports. Fees
relating to professional services rendered for the audits of the
effectiveness of internal control over financial reporting and statutory
audits in fiscal 2016 and 2015 are included under “Audit Fees.”
(2) Audit-Related Fees consist of fees related to work performed around

the deferred tax asset valuation release.

(3) Tax Fees primarily relate to tax compliance, tax study, and technical

tax advice in both years presented.

(4) All Other Fees consist of fees for products and services other than the
services described above. During fiscal 2016 and fiscal 2015, these
fees related to license PricewaterhouseCoopers LLP’s online
accounting and auditing research tool and disclosure checklist.

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Policy on Audit Committee
Pre-Approval of Audit and the
Permissible Non-Audit Services of
Independent Registered Public
Accounting Firm . . . . . . . . . . . . . . . The Audit Committee’s policy is to pre-approve 100% of all audit and
permissible non-audit services provided by the independent registered
public accounting firm. These services may include audit services, audit-
related services, tax services and other services. Pre-approval is generally
provided for up to one year and any pre-approval is detailed as to the
particular service or category of services and is generally subject to a
specific budget. The independent registered public accounting firm and
management are required to periodically report to the Audit Committee
regarding the extent of services provided by the independent registered
public accounting firm in accordance with this pre-approval, and the fees
for the services performed to date. The Audit Committee may also
pre-approve particular services on a case-by-case basis.

Independence of
PricewaterhouseCoopers LLP . . . . The Audit Committee has determined that the accounting advice and tax
services provided by PricewaterhouseCoopers LLP are compatible with
maintaining PricewaterhouseCoopers LLP’s independence.

Vote Required . . . . . . . . . . . . . . . . . The affirmative vote of a majority of the shares present and entitled to

vote at the Annual Meeting will be required to ratify the appointment of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm.

The Board unanimously recommends that you vote “FOR” the
ratification of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the fiscal year ending
December 31, 2017.

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2016 with respect to the shares of our

Common Stock that may be issued under our existing equity compensation plans.

(a)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Awards,
Options,
Warrants and
Rights

(b)
Weighted-
Average
Exercise Price
of Outstanding
Awards,
Options,
Warrants and
Rights

(c)
Number of
Securities
Remaining
Available for
Future
Issuance under
Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column a)

Plan Category

Equity Compensation Plans Approved by Security

Holders (1) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,871,889

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,871,889

$5.51

$5.51

8,757,011

8,757,011

(1) Data reflects our 2006 Equity Incentive Plan (the “2006 Plan”), our 2015 Equity Incentive Plan (the “2015

Plan”) and our 2015 Employee Stock Purchase Plan (the “2015 ESPP”).

(2) Our 2006 Plan was replaced by our approved 2015 Plan, but will continue to govern awards previously

granted under the 2006 Plan. Any shares forfeited, cancelled, exchanged, surrendered or terminated under
the terms of the 2006 Plan will become available for grant under the 2015 Equity Incentive Plan.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Under the proxy rules of the SEC, a person who directly or indirectly has or shares voting power or investment
power with respect to a security is considered a beneficial owner of the security. Voting power is the power to
vote or direct the voting of shares, and investment power is the power to dispose of or direct the disposition of
shares. Shares as to which voting power or investment power may be acquired within 60 days are also considered
as beneficially owned under the proxy rules.

The following table sets forth certain information as of February 22, 2017, regarding beneficial ownership of our
Common Stock by: (i) each person who is known to us to own beneficially more than five percent of our
Common Stock; (ii) each of our current directors; (iii) each of the named executive officers in the Summary
Compensation Table of this annual report; and (iv) the total for our current directors and current executive
officers as a group. The information on beneficial ownership in the table and the footnotes is based upon our
records and the most recent Schedule 13D or 13G filed by each such person or entity and information supplied to
us by such person or entity. Unless otherwise indicated, each person has sole voting power and sole investment
power with respect to all shares beneficially owned, subject to community property laws where applicable.
Shares subject to options which are exercisable within 60 days of February 22, 2017 are deemed to be
outstanding and to be beneficially owned by the person holding such options for the purpose of computing the
percentage ownership of such person, but are not deemed to be outstanding and to be beneficially owned for the
purpose of computing the percentage ownership of any other person.

Name or Group of Beneficial Owners

Number of
Shares
Beneficially
Owned

Options
Exercisable
in
60 days

BlackRock, Inc (2)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,264,323

—

Percentage
of Shares
Beneficially
Owned (1)

11.9%

55 East 52nd Street
New York, NY 10055
Waddell & Reed Financial (3)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,925,606

—

10.7%

6300 Lamar Avenue
Overland Park, KS 66202

The Vanguard Group (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,334,245

—

8.4%

100 Vanguard Boulevard
Malvern, PA 19355

PRIMECAP Management Company (5) . . . . . . . . . . . . . . . . . . . . . . . . . .

8,708,272

—

7.8%

177 E. Colorado Blvd., 11th Floor
Pasadena, CA 91105

Ronald Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rahul Mathur (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laura Stark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jae Kim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Satish Rishi (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Martin Pilling (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J. Thomas Bentley (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Thomas Fisher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Penelope A. Herscher (10)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charles Kissner (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David Shrigley (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eric Stang (13)
All current directors and executive officers as a group (12 persons) . . . .
Shares Outstanding as of February 22, 2017 . . . . . . . . . . . . . . . . . . . . . . .

1,158,054
0
271,259
35,849
277,513
0
167,262
35,284
52,582
81,092
67,679
100,561
2,247,135

1,088,856
0
196,247
19,988
202,000
0
20,000
21,666
20,000
40,000
20,000
40,000
1,668,757

1.0%
*
*
*
*
*
*
*
*
*
*
*
2.0%

111,619,146

(Less than 1%)

*
(1) Percentage of shares beneficially owned is based on 111,619,146 shares outstanding as of February 22,

2017.

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(2) As reported on Schedule 13G/A on January 17, 2017
(3) As reported on Schedule 13G/A on February 14, 2017. The Schedule 13G/A was filed jointly on behalf of
Ivy Investment Management Company, Waddell & Reed Financial Inc., Waddell & Reed Investment
Management Company, Waddell & Reed, Inc. and Waddell & Reed Financial Services, Inc. in connection
with the beneficial ownership of the Common Stock of Rambus Inc.

(4) As reported on Schedule 13G/A on February 13, 2017
(5) As reported on Schedule 13G/A on February 9, 2017.
(6) Mr. Mathur was appointed as Senior Vice President, Finance and Chief Financial Officer on October 3,

2016.

(7) Mr. Rishi retired from his position as Senior Vice President, Finance and Chief Financial Officer on

August 5, 2016. Includes 3,000 shares held in trust for which Mr. Rishi serves as a trustee.
(8) Mr. Pilling served as Interim Chief Financial Officer from August 5, 2016 to October 3, 2016.
(9)

Includes 127,262 shares held in trust for which Mr. Bentley serves as a trustee and 20,000 shares held in
partnership for which Mr. Bentley serves as a partner.

(10) Includes 32,582 shares held in trust for which Ms. Herscher serves as a trustee.
(11) Includes 41,092 shares held under an LLC for which Mr. Kissner serves as owner.
(12) Includes 4,300 shares gifted to foundation for which Mr. Shrigley serves as principal.
(13) Includes 60,561 shares held in trust for which Mr. Stang serves as a trustee.

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EXECUTIVE OFFICERS OF THE COMPANY

Information regarding our executive officers and their ages and positions as of February 22, 2017, is contained in
the table below. Our executive officers are appointed by, and serve at the discretion of, our Board of Directors.
There is no family relationship between any of our executive officers.

Ronald Black, Ph.D. . . . . . . . . . . . . .

53 President and Chief Executive Officer. Dr. Black has served as our
chief executive officer and president since June 2012 and as a
director since July 2012. Dr. Black was previously the Managing
Director of R.D. Black & Company, a consulting firm, since August
2011. From September 2010 to August 2011, Dr. Black was the
Chief Executive Officer of MobiWire, formerly Sagem Wireless, a
privately-held mobile handset company headquartered near Paris,
France that offers products and services to original equipment
manufacturers and mobile network operators in the mobile phone
marketplace. From June 2009 to October 2010, Dr. Black served as
Chairman and CEO of UPEK, Inc. Dr. Black currently serves as a
board member of Energy Focus Inc, a publicly held LED lighting
technology developer, Ultratech, Inc., a publicly held company that
designs, builds and markets manufacturing systems of the global
technology industry, Microfabrica Inc., a privately held high
precision metal parts fabricator, and FlexEnable Limited, a privately
held producer of flexible electronics manufacturing platforms. From
2012 to March 2015, Dr. Black served on the board of EnOcean
GmbH, a German-based company that manufactures and markets
energy harvesting technology, sensors, and radio frequency
communication. From September 2010 to November 2012, he
served as a board member of AuthenTec, Inc., which he joined
following the AuthenTec-UPEK merger in September 2010 and
from 2007 to 2013, he served as a board member of Inside
Contactless, a France-based company engaged in the
semiconductors and information technology industry. From
September 2004 to June 2009, he was chief executive officer of
Wavecom S.A., a publicly traded French wireless solutions
company. Dr. Black holds a Bachelor of Science, a Masters of
Science, and a Ph.D. in materials science and engineering from
Cornell University in Ithaca, N.Y.

Rahul Mathur

. . . . . . . . . . . . . . . . . .

43 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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Laura Stark . . . . . . . . . . . . . . . . . . . .

Jae Kim . . . . . . . . . . . . . . . . . . . . . . .

48 Senior Vice President, GM, Emerging Solutions Division. Ms. Stark
has served in her current position since July 2014. In addition to
leading the efforts of overall strategy, including M&A activities,
Ms. Stark leads our platform development efforts and long-range
research and development as well as oversees our information
technology function. From August 2012 to July 2014, she served as
our Senior Vice President, Corporate Strategy and M&A. From
April 2008 to August 2012, Ms. Stark served as Senior Vice
President, Corporate Development, from February 2005 to April
2008 as Senior Vice President, Platform Solutions and from October
2002 to February 2005 as vice president, Memory Interface
Division. Ms. Stark held various business and management
positions before becoming vice president, Memory Interface
Division in October 2002. Prior to joining us, Ms. Stark held
various positions in the semiconductor products division of
Motorola, a communications equipment company, during a six year
tenure, including technical sales engineer for the Apple sales team
and field application engineer for the Sun and SGI sales teams.
Ms. Stark holds a B.S. in Electrical Engineering from the
Massachusetts Institute of Technology.

46 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. In addition, in December 2016, Mr. Kim assumed
responsibility for our human resources and facilities functions. 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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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Our Compensation Discussion and Analysis (“CD&A”) is designed to provide our stockholders with an
understanding of our compensation program in effect for our named executive officers (“NEOs”) who consist of
the following executive officers:

• Ronald Black, Chief Executive Officer and President;

• Rahul Mathur, Senior Vice President, Finance and Chief Financial Officer;

• Laura Stark, Senior Vice President, GM, Emerging Solutions Division; and

•

Jae Kim, Senior Vice President, General Counsel and Secretary.

We have also included in our CD&A a discussion of the compensation paid to two other individuals who are
included as NEOs for 2016, but were not executive officers through the end of 2016. Satish Rishi, our former
Senior Vice President, Finance and Chief Financial Officer, retired from Rambus in August 2016. From August
to October 2016, Martin Pilling served as our interim Chief Financial Officer.

Unless otherwise noted, general references to NEOs in this CD&A exclude Mr. Mathur and Mr. Pilling as they
were NEOs for a short period in the later part of 2016. References to Mr. Rishi’s, Mr. Mathur’s and Mr. Pilling’s
service and compensation reflect the portion of 2016 for which each was employed with the Company.

Our CD&A is organized as follows: (i) Executive Summary, (ii) Our Compensation Philosophy — Pay for
Performance, (iii) NEO Compensation Process, (iv) Components of NEO Compensation, and (v) Other Policies
and Elements of NEO Compensation.

EXECUTIVE SUMMARY

2016 Business Performance

In 2016, we continued our transition from a pure IP licensing model to one that delivers increasing value to the
market through chips, customizable IP cores, software and services. In line with our growth strategy, we acquired
four businesses in 2016 in the fields of mobile payments, smart ticketing, memory buffer chips and SerDes IP
cores. We also continued to execute on our traditional patent licensing business by signing key license
agreements with AMD, Xilinx, and others, demonstrating our ability to extend our partnerships beyond the
DRAM industry. Key 2016 financial results included:

•

•

•

•

$337 million in annual revenue;

$109 million in pro-forma operating income;

32% operating margin; and

19% share price increase in 2016 and a 45% share price increase over the last three years.

Executive Compensation Highlights

• Our compensation mix favors performance-based compensation. Approximately 91% of our CEO’s

and on average approximately 74% of our NEOs’ total target compensation was subject to our financial
and/or share price performance in 2016.

• Our annual incentive compensation program is funded based on the achievement of an objective

performance target of pro-forma operating income. For 2016, annual incentive compensation under our
Corporate Incentive Plan (“CIP”) was funded at 105.8% of target as the Company’s 2016 performance
exceeded target.

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• To further align executive compensation with stockholder interests, approximately 52% of our CEO’s
and on average approximately 41% of our NEO’s 2016 long-term equity incentive awards consisted of
performance units, which become eligible for time-based vesting based on the achievement of an
objective performance goal of one-year operating margin. Based on our 2016 operating margin
performance, which exceeded target, 116.7% of the target number of performance units granted in
2016 became eligible for time-based vesting.

• The advisory vote on executive compensation at our 2016 annual meeting received approval from 97%

of the votes cast.

• We maintained high governance standards in our executive compensation practices, including best

practices with respect to minimum equity ownership guidelines, perquisites, compensation recovery,
independent compensation committee advisors and insider trading. See “Other Policies and Elements
of NEO Compensation” below.

OUR COMPENSATION PHILOSOPHY — PAY FOR PERFORMANCE

Our NEO compensation program is designed to align NEO compensation to business objectives and company
financial performance and to motivate NEOs to enhance long-term stockholder value. The objectives of our
executive compensation program are to attract, retain, motivate, and reward executives in order to enhance the
long-term profitability of the company, foster stockholder value creation, and align executives’ interests with
those of our stockholders. The principal components of our executive compensation program in 2016 were base
salary, annual cash incentive awards and long-term equity incentive awards.

To support our pay-for-performance philosophy, we believe that a substantial portion of total compensation for
our executives should be variable and dependent on company and individual performance. In 2016,
approximately 91% of our CEO’s and on average approximately 74% of our NEOs’ total target compensation
was subject to the Company’s financial and/or share price performance. The charts below show the percentage
amounts for salary, annual cash incentive awards, and long-term equity incentive awards for our CEO and other
NEOs, in other words, the mix of pay.

CEO

Average of All Other NEOs

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Perf.
Units
42%

Salary
9%

Bonus
11%

Stock
Options
18%

RSUs
20%

Variable Pay
91%

NEO COMPENSATION PROCESS

The Role of the Compensation Committee

Perf.
Units
22%

RSUs
21%

Variable Pay
74%

Stock
Options
9%

Salary
26%

Bonus
22%

The Compensation Committee is responsible for determining and approving CEO compensation, approving
compensation recommendations for NEOs, recommending to the Board changes to the non-employee director
compensation program, approving the overall levels of equity to be granted each year, and determining the
amount of funding that will be available for CIP, among other duties expressed in its charter. In performing these

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duties, the Compensation Committee evaluates the performance of the CEO, and reviews and evaluates the
existing NEO compensation programs. The Compensation Committee has the authority to obtain advice and
assistance from internal or external compensation consultants, attorneys, accountants, and other advisers. The
Board of Directors annually evaluates the independence of its members and has determined that each
non-executive member of the Board of Directors satisfies the relevant criteria for independence.

In 2016, the Compensation Committee considered multiple factors to ensure that compensation packages,
including Mr. Mathur’s new hire package, were consistent with our pay for performance philosophy and that we
remain competitive in the market for talent. Important factors considered in these decision-making processes
included Company performance, individual leadership and performance assessments, market compensation
levels, job scope, individual skills and experience, the relative importance of the individual’s role, internal pay
equity, historical pay levels, and equity holdings.

In 2016, the Compensation Committee reviewed comprehensive performance assessments of the NEOs and
conducted a review of the CEO’s performance. This assessment included an evaluation of pre-established
strategic objectives and review of direct feedback from managers, peers and subordinates. The Compensation
Committee also held an annual joint meeting with the full Board of Directors to review and discuss Company
leadership development, performance objectives and emergency and long-term succession planning.

The Role of the Independent Compensation Consultant

In 2016, the Compensation Committee continued to retain Semler Brossy Consulting Group, LLC (“SBCG”) to
assist in evaluating executive and director compensation, including Mr. Mathur’s new hire compensation
package (as further described below). In addition, SBCG prepared materials and analyses for the Compensation
Committee on CEO compensation. The Compensation Committee reviewed and approved CEO compensation,
and the CEO was not present for any voting or deliberations regarding CEO compensation. SBCG reports
directly to the Compensation Committee, and works collaboratively with management and the Compensation
Committee. Pursuant to SEC rules, the Compensation Committee has assessed the independence of SBCG, and
concluded that no conflict of interest exists that would prevent SBCG from independently representing the
Compensation Committee. SBCG does not perform other services for the Company, and will not do so without
the prior consent of the Compensation Committee. SBCG regularly meets with the Compensation Committee
outside the presence of management.

The Role of Management

Each year, the CEO and the head of Human Resources present to the Compensation Committee annual
performance reviews and compensation recommendations for the then-current NEOs, excluding the CEO.
Evaluation of CEO performance and compensation is determined by the Compensation Committee without the
presence or consultation of the CEO. Management personnel work with SBCG to prepare compensation
information and assessments for the Compensation Committee’s consideration.

In addition, once the Compensation Committee determines the amount of funding available for our CIP, the CEO
allocates this funding to each operating or business unit of the Company based on a measurement of each unit’s
achievement levels against the unit’s specific performance milestones in relation to the Company’s overall
performance targets, and recommends a specific CIP award for each NEO other than himself. The Compensation
Committee reviews and assesses the CEO’s proposed CIP award for each NEO.

Peer Group Comparisons

Each year, SBCG, together with senior members of our Human Resources department, defines and assesses the
appropriateness of a group of similarly situated companies, referred to as the Compensation Peer Group, for
purposes of assisting the Compensation Committee to determine whether the total compensation opportunity

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available to our NEOs is appropriate and competitive. The Compensation Committee reviews and approves the
Compensation Peer Group as recommended by management and SBCG. The Compensation Peer Group for fiscal
year 2016 compensation was approved by the Committee in July 2015 and consisted of 15 companies selected
based on a number of key attributes, including revenue, technological complexity, industry and business
characteristics, market capitalization and number of employees.

2016 Peers

Applied Micro Circuits Corporation
Cavium Networks, Inc.
DSP Group, Inc.
FormFactor, Inc.
Inphi Corporation

Integrated Device Technology, Inc. Monolithic Power Systems
InterDigital, Inc.
Lattice Semiconductor Corporation Semtech Corporation
M/A-Com Technology Solutions
MaxLinear, Inc.

Silicon Laboratories Inc.
Tessera Technologies, Inc.

Power Integrations Inc.

The Compensation Committee also reviewed data from the Radford Select Executive Compensation Report to
supplement the publicly available Compensation Peer Group data.

The Role of Our 2016 Advisory Vote on Executive Compensation

The advisory vote on executive compensation at our 2016 annual meeting was approved by 97% of the votes
cast. The Compensation Committee is committed to ensuring that the Company’s compensation programs are
consistent with the Company’s pay for performance philosophy and deliver appropriate results given Company
financial performance and business conditions. During the course of our 2016 proxy season, as we have in past
years, we continued to engage in ongoing discussions with institutional investors to gather input and feedback on
our executive compensation program. Stockholder feedback will remain an important input into the
Compensation Committee’s work on the compensation programs for the Company.

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COMPONENTS OF NEO COMPENSATION

The Company’s executive compensation program consists of the following components:

• Annual Base Salary

• Annual Cash Incentive Compensation — Corporate Incentive Plan

• Long Term Equity Incentive Compensation

Annual Base Salary

Salaries are provided to employees as compensation for services to the Company and to meet the objectives of
attracting and retaining the talent needed to run our Company. The Compensation Committee evaluates base
salaries for our NEOs on an annual basis. The Compensation Committee considers a number of factors, including
the NEO’s salary history, current compensation levels, responsibilities, experience, individual and Company
performance, and market information when determining and approving NEO salary increases. The Compensation
Committee also reviews potential changes in our CIP and equity when considering changes in base salary.

For 2016, the Compensation Committee approved an increase in the base salary for Mr. Rishi, who later retired
from the company in August of 2016, to reflect individual performance and based on a review of market
compensation levels. No other NEOs received increases in their base salary levels for 2016. Please see the
section “New CFO Compensation” for further discussion on how Mr. Mathur’s compensation was determined.

For 2017, the Compensation Committee approved increases in the base salary for Mr. Black to reflect individual
performance and a review of market compensation levels. Ms. Stark and Mr. Kim also received increases to their

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base salaries to reflect individual performance, increased responsibilities and a review of market compensation
levels. No other NEOs received increases in their base salary levels for 2017, as reflected below under the section
“2017 CIP”.

Annual Cash Incentive Compensation — Corporate Incentive Plan

2016 CIP

Our annual cash incentive compensation is designed to motivate and reward our NEOs for achieving our annual
financial and business objectives. Consistent with our approach in 2015, annual cash incentive bonuses with
respect to 2016 performance were based on the achievement of an objective performance goal of pro-forma
operating income. We chose this measure because we believe it provides a meaningful measure of core financial
performance and supports our short-term business objectives, which complements the measure of operating
margin that we use for our performance unit awards (discussed later under “Long Term Equity Incentive
Compensation”) that promotes growth and cost discipline.

Pro-forma operating income is a non-GAAP measure that consists of GAAP operating income, excluding stock-
based compensation expense, amortization expense, certain acquisition related expenses, retention bonuses,
restructuring expenses, impairment charges, non-cash interest expense and certain other one-time or
extraordinary expenses or credits. Other one-time or extraordinary expense or income items may be excluded
from pro-forma operating income as determined by the Compensation Committee.

To align payouts with Company performance, plan funding has a sliding scale that provides for annual incentive
bonus payouts greater than the target bonus if results are greater than target or less than the target bonus if results
are lower than the target. Our CIP funding can range from 0% to 200%. In accordance with the plan, our 2016
CIP was measured at mid-year based on estimated expectations of the full year’s achievement against the
performance target. The measurement resulted in a progress payment of 40% of the full year target payment.
Final payments for fiscal 2016 reflected actual Company performance in 2016, net of the mid-year performance
payment. The 2016 performance targets and results of pro-forma operating income were as follows:

Target

$103M

Actual
Performance

$109M

CIP Funding

105.8%

Individual CIP payouts for NEOs varied as identified below based on an assessment of individual performance
and the performance of his or her division, business unit or other area of responsibility. In 2016, our NEOs
participated in the 2016 CIP for their annual cash incentive compensation on the same terms as other participants.

Executive

2016 CIP Target

2016 CIP Payouts

2016
CIP Target

% of
Base Salary

Total 2016
CIP Payout

% of Total
Target CIP

Ronald Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rahul Mathur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laura Stark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jae Kim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Satish Rishi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Martin Pilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$618,000
$270,000
$300,000
$230,000
$280,000
$121,500

120% $653,844
105.8%
82% $ 71,415(1) 105.8%
132.1%
100% $396,360
165%
77% $379,546
100%(2)
82% $112,000(2)
100%(3)
45% $ 67,645(3)

(1) Reflects pro-rata payout for 3 months of employment in 2016 at target.
(2) Reflects first half bonus payment at target. Mr. Rishi retired from the Company in August 2016 and did not

receive a second half bonus payment under the 2016 CIP.

(3) Reflects pro-rata payout for approximately 7 months of employment in 2016 at target.

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2017 CIP

Our 2017 CIP will be structured in the same way as our 2016 CIP with Company performance tied to a
pre-established pro-forma operating income target in a similar manner as described above. Individual NEO 2017
CIP targets are as follows:

Executive

2017 Base
Salary

2017 CIP
Target

% of Base
Salary

% of Base
Salary
Increase
from 2016

CIP
Target
Increase
from 2016

Ronald Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rahul Mathur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laura Stark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jae Kim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$555,000
$330,000
$325,000
$330,000

$666,000
$270,000
$310,000
$270,000

120%
82%
95%
82%

7.8%
0%
8.3%
10%

7.8%
0%
3.3%
17.4%

Long Term Equity Incentive Compensation

Our equity incentives encourage the achievement of superior results over time and align the interests of our
executive officers and stockholders because the value of the equity incentives is based on the price of the
Company’s stock. Our equity awards are subject to vesting provisions to encourage executive officers to remain
employed with us. To determine annual equity awards with respect to a completed fiscal year, the Compensation
Committee reviews each then-current NEO’s performance and contribution during such year, as well as current
market information, external competitive circumstances, overall ownership and vesting schedules of existing
equity held by the NEO.

The Compensation Committee annually evaluates the structure of the equity compensation program to ensure
that grants appropriately support our strategic and financial objectives. NEO annual equity awards granted in
February 2016 represented a mix of stock options, RSUs and performance units as an incentive for share price
growth and financial performance. In determining the number of shares subject to these grants, the Compensation
Committee considered a number of factors, consistent with the approach described above, with a particular focus
on individual performance, our stock price and execution of our long-term growth strategy. Our 2016 equity
program for our CEO and other NEOs was designed to deliver equity awards as follows:

CEO . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other NEOs . . . . . . . . . . . . . . . . . . . . .

25%
20%

25%
40%

50%
40%

Stock Options

Time Based RSUs

Performance Units

The program was designed such that 75% of the value of the equity awards (options and performance units)
granted to our Chief Executive Officer in 2016 was subject to both the risk of the Company’s financial and stock
performance and 60% of the value of the equity awards (options and performance units) granted to our other
NEOs in 2016 was subject to both the risk of the Company’s financial and stock performance. Because he joined
the Company during the latter part of the 2016 performance period, Mr. Mathur was not granted performance
units at the time of hire but did receive options to purchase 60,000 shares of common stock of the Company and
80,000 restricted stock units. Please see the section “New CFO Compensation” for further discussion on how
Mr. Mathur’s compensation was determined.

With respect to performance unit awards, a target number of shares of our common stock subject to such units
was awarded to each of our NEOs and such units became eligible for time-based vesting based on the Company’s
operating margin for the fiscal year period in which the performance unit was awarded. We believe operating
margin is a key measure of both growth and cost discipline, which complements our annual CIP bonus plan’s
measure of pro-forma operating income. The ultimate number of shares that become eligible for time-based
vesting can range from 0% to 150% of target depending on performance relative to target over the applicable
period. Time-based vesting takes place after the performance level is achieved and determined to provide

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additional retention value. 100% of the shares that become subject to time-based vesting, vest on the third
anniversary of the date of grant, subject to continued service. The performance units are designed to reward
performance by linking grants to an objective Company performance measure while promoting employee
retention through subsequent time-based vesting. The 2016 performance unit targets and results of operating
margin were as follows:

Target

30%

Actual Performance

32%

Achievement

116.7%

As a result of these performance unit achievements, individual NEOs became eligible for time-based vesting in
the following share amounts: Mr. Black-233,400; Ms. Stark-28,432; and Mr. Kim-19,096. See “Separation
Agreement with Satish Rishi” below with respect to the treatment of Mr. Rishi’s performance units.

OTHER POLICIES AND ELEMENTS OF NEO COMPENSATION

Benefits

We do not provide any perquisites to NEOs that are not generally available to the broad employee population
with the exception of termination benefits and travel reimbursements to Dr. Black pursuant to his employment
agreement and termination benefits to the other NEOs based on change of control severance agreements. Our
NEOs are eligible to participate in our 401(k) plan, our health and welfare benefits, our Employee Stock
Purchase Plan and our User-Owned Personal Computing Devices reimbursement program on the same terms as
other eligible employees.

Stock Ownership Guidelines

Our executives are required to hold 50% of after-tax shares realized upon vesting or exercise of equity awards on
an after tax basis until they reach the required levels of 5x base salary for the CEO and 3x base salary for the
other executive officers. Our executives are required to achieve the required levels within five years of the date
such officer assumes their position. For purposes of these guidelines, ownership includes shares owned outright,
unvested restricted stock and restricted stock units, and the value of vested and unexercised stock options. As of
December 31, 2016, all of our NEOs were in compliance with this policy.

Hedging

As stated in our Code of Business Conduct and Ethics, all of our employees and directors are prohibited from
engaging in hedging transactions in Rambus shares, including short sales and purchases of put options.

Equity Grant Policy

Annual equity awards to then-current NEOs are granted on February 1st of each year or the first trading day
thereafter. Currently, awards granted consist of stock options, RSUs and performance units. Stock options are
priced at the fair market value on the date that the grant becomes effective while RSUs and performance units are
full value awards. The number of shares and key terms of the awards are approved by the Compensation
Committee prior to the scheduled award date, February 1st or the first trading day thereafter. On occasion, the
Compensation Committee approves other equity awards during the year in addition to the annual equity awards,
including, for example, in connection with Mr. Mathur’s hiring.

Compensation Recovery

The Compensation Committee reserves the right to reduce or withhold future compensation based on any
required restatement or adjustment, and to determine the extent to which recovery of prior compensation may be

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pursued in the event of future adjustments caused by fraud on the part of an executive of Rambus. The
Compensation Committee will adopt a policy that complies with the requirements of the Dodd-Frank Wall Street
Reform and Consumer Protection Act when such rules are promulgated.

Change of Control Payments

Outstanding equity awards for our NEOs, including our CEO, may vest upon a “double-trigger” termination in
the event of a change of control pursuant to change of control severance agreements with our executive officers
and our CEO’s employment agreement that governs certain change of control severance obligations applicable to
him. These agreements are designed to promote stability and retention of senior management prior to and
following a change of control and to align executive and stockholder interests by enabling executives to consider
corporate transactions that are in the best interests of the stockholders and other constituents of the Company
without undue concern over whether the transactions may jeopardize the executives’ own employment.

Dr. Black’s employment agreement with the Company includes, among other terms, certain payments for
Dr. Black in the event of his termination, a change of control of the Company, or both. The Compensation
Committee believed that including these provisions in Dr. Black’s employment agreement was appropriate given
the context of changes in the Company’s leadership at that time.

See “Executive Compensation Tables — Potential Payments Upon Termination or Change of Control” below for
a discussion of potential payments to our NEOs including our CEO.

Separation Agreement with Satish Rishi

Effective August 5, 2016, Mr. Rishi resigned from his position as Senior Vice President, Finance and Chief
Financial Officer. In connection with Mr. Rishi’s retirement, the Company and Mr. Rishi entered into a
separation agreement. Under the terms of the agreement, Mr. Rishi received (i) a lump sum payment of twelve
months of his base salary; (ii) vesting acceleration with respect to restricted stock units, performance units vested
and outstanding, unvested and in-the-money stock option grants previously granted to Mr. Rishi; in each case
reflecting vesting that would have occurred had Mr. Rishi continued providing services to the Company over the
six month period following his separation from the Company; and (iii) payment of COBRA premiums to
continue health insurance coverage for 12 months from his separation from the Company. The terms of the
separation agreement were the result of arm’s length negotiations between Mr. Rishi and the Company.

New CFO Compensation

Mr. Mathur was appointed Senior Vice President, Finance and Chief Financial Officer, effective October 3,
2016. Mr. Mathur’s new hire compensation package included (i) an annual salary of $330,000, (ii) a 2016
annualized CIP target of 82% of base salary, and (iii) a $50,000 hiring bonus. Mr. Mathur was also granted
options to purchase 60,000 shares of common stock of the Company and 80,000 restricted stock units. Because
he joined the Company during the latter part of the 2016 performance period, Mr. Mathur was not granted
performance units at the time of hire, but participated fully in the 2017 annual compensation cycle along with
then current NEOs in the manner described in this CD&A, including the grant of performance units.

In determining Mr. Mathur’s compensation, the Compensation Committee reviewed Compensation Peer Group
data and considered factors such as market compensation levels, job scope, individual skills and experience, the
relative importance of the individual’s role and historical pay levels for the position.

Tax Considerations

Under Section 162(m), a corporation cannot deduct compensation it pays to its Chief Executive Officer and
certain other executive officers in excess of $1 million unless such compensation is considered “qualified

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performance-based compensation” as defined in Section 162(m). Compensation that qualifies as “performance-
based” generally must meet the requirement that it is payable only upon attainment of pre-established, objective
performance goals under a plan that has been approved by the corporation’s stockholders. The Compensation
Committee considers the potential future effects of Section 162(m) when determining NEO compensation and
does approve compensation to our NEOs that does not satisfy the requirements of Section 162(m) when it
believes that other considerations outweigh the tax deductibility of the compensation. The Compensation
Committee intends to continue evaluating all of our executive compensation and may qualify such compensation
as performance based compensation under Section 162(m) to the extent applicable, and so long as the
Compensation Committee determines that doing so is in the Company’s best interests.

Compensation Program Risk Evaluation

The Compensation Committee annually reviews the elements of NEO compensation to determine whether any
portion of the overall program encourages excessive risk taking. The Committee’s current assessment is that
although the majority of compensation provided to our NEOs is performance-based, our compensation programs
do not encourage excessive or unnecessary risk taking. The Committee believes that the design of these
compensation programs encourages our NEOs to remain focused on both short-term and long-term strategic
goals.

COMPENSATION COMMITTEE REPORT

Our Compensation Committee, as of February 15, 2017, reviewed and discussed the Compensation Discussion
and Analysis with management and, based on such review and discussions, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this
report.

THE COMPENSATION COMMITTEE

Penelope A. Herscher (Chairperson)
E. Thomas Fisher
Charles Kissner

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EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

The following table shows NEO compensation information for 2014, 2015 and 2016.

Stock

Option

Non-Equity
Incentive Plan

All Other

Salary Awards(1) Awards(1) Compensation(2) Compensation(3)

Name and Title

Year

($)

($)

($)

($)

Ronald Black . . . . . . . . . . . . . . . . 2016 515,000 3,808,145 1,026,080
550,656
— 899,783

President and Chief Executive
Officer

2015 515,000 2,456,752
2014 515,000

653,844
610,000
624,180

($)

12,634
63,325
12,026

Total
($)

6,015,703
4,195,733
2,050,989

Rahul Mathur(4)

. . . . . . . . . . . . 2016 81,442

972,000

242,142

71,415

50,480(5) 1,417,479

Senior Vice President, Finance
and Chief Financial Officer

Laura Stark . . . . . . . . . . . . . . . . . 2016 300,000

Senior Vice President, GM,
Emerging Solutions Division

611,102
2015 299,167 1,021,254
2014 288,750

124,995
80,304
— 195,605

Jae Kim . . . . . . . . . . . . . . . . . . . . 2016 300,000
Senior Vice President,
2015 299,167
General Counsel and Secretary 2014 288,750

412,025
828,262

83,952
64,243
— 176,045

Satish Rishi(6) . . . . . . . . . . . . . . . 2016 203,622

611,102
2015 325,000 1,021,254
2014 325,000

124,995
80,304
— 195,605

Former Senior Vice President,
Finance and Chief Financial
Officer

396,360
322,838
240,000

379,546
217,140
220,000

112,000
381,376
395,000

9,870
47,350
9,720

9,870
35,589
9,720

1,442,327
1,770,913
734,075

1,185,393
1,444,401
694,515

349,150(7) 1,400,869
1,852,160
925,325

44,226
9,720

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Martin Pilling(8) . . . . . . . . . . . . . 2016 157,500

334,600

—

67,645

400

560,145

Former Interim Chief Financial
Officer

(1) Amounts shown do not reflect compensation actually received by the NEO. Instead, the amounts shown are

the aggregate grant date fair value computed in accordance with the provisions of FASB ASC Topic 718.
The assumptions used to calculate the value of stock and stock option awards are set forth under Note 12 of
the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year
ended December 31, 2016.

(2) Amounts for fiscal year 2016 consist of compensation earned for services rendered in fiscal year 2016 and
are based upon the achievement of certain targets under the 2016 Corporate Incentive Plan. The target and
achievement results were reviewed and approved by the Compensation Committee. The plan is further
described under “Compensation Discussion & Analysis — Components of NEO Compensation”

(3) The details of “All Other Compensation” for NEOs for 2016 are described in this Proxy Statement under
“Compensation Disclosure and Analysis” — “Other Policies and Elements of NEO Compensation.”
(4) Mr. Mathur was appointed as Senior Vice President, Finance and Chief Financial Officer on October 3,

2016.
(5)
Includes a $50,000 hiring bonus pursuant to Mr. Mathur’s Offer Letter, dated September 9, 2016.
(6) Mr. Rishi retired from his position as Senior Vice President, Finance and Chief Financial Officer on

(7)

August 5, 2016.
Includes compensation paid to Mr. Rishi pursuant to his Separation Agreement. See Compensation
Disclosure and Analysis” — “Other Policies and Elements of NEO Compensation,” “Satish Rishi
Separation Agreement” for a description of these benefits.

(8) Mr. Pilling served as Interim Chief Financial Officer from August 5, 2016 to October 3, 2016. Amounts

shown reflect Mr. Pilling’s seven months of employment in 2016.

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Grants of Plan Based Awards

The following table shows all plan-based awards granted to the NEOs during 2016. The option awards and the
unvested portion of the stock awards identified in the table below are also reported in the Outstanding Equity
Awards at 2016 Year End Table that follows.

All Other
Stock

All Other
Option
Awards;

Grant Date
Awards; Number of Exercise Fair Value
Number of Securities or Base
Shares or Underlying Price of

of
Stock &
Options Option Option

Stock

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)

Estimated Future Payments Under Units(2)

Equity Incentive Plan Awards

(#)

(2)
(#)

Awards Awards(3)
($/Sh)

($)

Name

Grant
Date

Approval
Date

Threshold
($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

Ronald
Black . . . . . . 2/1/2016 1/20/2016
2/1/2016 1/20/2016
2/1/2016 1/20/2016

Rahul
Mathur . . . . 11/1/2016 9/9/2016
11/1/2016 9/9/2016

Laura
Stark . . . . . . 2/1/2016 1/20/2016
2/1/2016 1/20/2016
2/1/2016 1/20/2016

Jae Kim . . . . 2/1/2016 1/20/2016
2/1/2016 1/20/2016
2/1/2016 1/20/2016

Satish
Rishi

. . . . . . 2/1/2016 1/20/2016
2/1/2016 1/20/2016
2/1/2016 1/20/2016

Martin
Pilling . . . . . 7/1/2016 7/1/2016

N/A

$618,000 $1,236,000

—

—

—

N/A

$270,000 $ 540,000

N/A

$300,000 $ 600,000

50%

100%

150%

—

—

—

—

—

—

50%

100%

150%

N/A

$230,000 $ 460,000

—

—

—

50%

100%

150%

N/A

$280,000 $ 560,000

—

—

—

50%

100%

150%

N/A

$121,500 $ 243,000

—

—

—

—
100,000
200,000

—
80,000

—
24,364
24,364

—
16,364
16,364

—
24,364
24,364

28,000

220,000

12.31

60,000

12.15

26,800

12.31

18,000

12.31

26,800

12.31

1,026,080
1,231,000
2,462,000

242,142
972,000

124,995
299,920
299,920

83,952
201,441
201,441

124,995
299,921
299,921

334,600

(1) Amounts shown are estimated payouts for fiscal year 2016 to NEOs based on the 2016 bonus targets under the
plan discussed under “Compensation Discussion & Analysis — Components of NEO Compensation.” Actual
bonuses received by these named executive officers for fiscal 2016 are reported in the Summary Compensation
for Fiscal Year 2016 table under the column entitled “Non-Equity Incentive Plan Compensation” and described
under “Compensation Discussion & Analysis — Executive Compensation Components.”

(2) The stock options, restricted stock units and performance units granted on February 1, 2016 were granted as
part of the Company’s regular performance review process. The stock options and restricted stock units will
vest based on the executive’s continued service to the Company through the applicable vesting dates. The
performance unit grants will become earned based upon the performance level achieved tied to the Company’s
operating margin for the fiscal year in which the performance unit was awarded and the executive’s continued
service to the Company through the applicable vesting date on the third anniversary of the date of grant.
(3) The value of a stock option, restricted stock unit or performance unit grant is based on the fair market value as
of the grant date of such award determined pursuant to FASB ASC Topic 718. The exercise price for all
options granted to the named executive officer is 100% of the fair market value of the shares on the grant date.
The restricted stock unit and performance unit grants are full value awards and do not have an exercise price.

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Outstanding Equity Awards at Fiscal Year-End

The following table shows all outstanding equity awards held by the NEOs as of December 31, 2016. Unvested
stock awards reported in the Grants of Plan Based Awards table above are also included in the table below.

Name
Ronald Black . . . . . . . . . . . . . . .

Rahul Mathur . . . . . . . . . . . . . .

Laura Stark . . . . . . . . . . . . . . . .

Jae Kim . . . . . . . . . . . . . . . . . . .

Satish Rishi

. . . . . . . . . . . . . . . .

Martin Pilling . . . . . . . . . . . . . .

# of Securities
Underlying
Unexercised
Options (#)
Exercisable
40,857
—
—
53,142
—
—
—
161,000
181,857
595,000
—
—
—
—
4,977
—
—
—
7,750
—
—
30,555
37,952
—
—
29,333
30,000
30,000
19,465
60,000
3,342
—
—
—
2,734
—
—
6,908
3,792
2,275
—
220
485
990
50,000
45,000
35,000
32,000
40,000
100,000
—

# of Securities
Underlying
Option
Unexercised
Exercise
Options (#)
Price ($)
Unexercisable
$12.31
179,143(2)
$ 0.00
—
$ 0.00
—
$11.26
66,858(5)
$ 0.00
—
$ 0.00
—
$ 0.00
—
69,000(9)
$ 8.76
8,143(10) $ 5.46
— (11) $ 5.76
297,500(12) $ 5.76
297,500(13) $ 5.76
60,000(14) $12.15
$ 0.00
—
$12.31
21,823(2)
$ 0.00
—
$ 0.00
—
$ 0.00
—
$11.26
9,750(5)
$ 0.00
—
$ 0.00
—
15,000(9)
$ 8.76
2,143(10) $ 5.46
55,000(17) $ 4.13
55,000(18) $ 4.13
— (19) $ 7.31
— (20) $20.93
— (21) $22.72
— (22) $ 8.55
— (23) $18.69
$12.31
14,658(2)
$ 0.00
—
$ 0.00
—
$ 0.00
—
$11.26
7,800(5)
$ 0.00
—
$ 0.00
—
13,500(9)
$ 8.76
1,072(10) $ 5.46
643(10) $ 5.46
—
$ 0.00
— (25) $ 5.63
— (25) $ 5.63
— (19) $ 7.31
— (10) $ 5.46
— (19) $ 7.31
— (20) $20.93
— (21) $22.72
— (26) $19.86
— (23) $18.69
$ 0.00
—

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—

—

—

—

—
—
—
—
—
—

Option
Expiration
Date
2/1/2026

# of Shares
or Units of
Stock That
Have Not
Vested (#)

Market Value
of Shares or
Units of Stock
that Have Not
Vested (1)($)
—
$
— 200,000(3) $2,754,000
— 100,000(4) $1,377,000
—
$
86,933(6) $1,197,067
86,933(7) $1,197,067
40,908(8) $ 563,303
—
$
—
$
—
$
—
$
—
$
—
$
80,000(15) $1,101,600
—
$
24,364(3) $ 335,492
24,364(4) $ 335,492
41,274(16) $ 568,343
—
$
17,000(7) $ 234,090
12,000(8) $ 165,240
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
16,364(3) $ 225,332
16,364(4) $ 225,332
33,441(16) $ 460,483
—
$
13,812(7) $ 190,191
9,750(8) $ 134,258
—
$
—
$
—
$
17,213
1,250(24) $
—
$
—
$
—
$
—
$
—
$
—
$
—
$
$
—
—
$
28,000(27) $ 385,560

2/2/2025
—
—
—
2/3/2024
2/1/2023
7/2/2022
7/2/2022
7/2/2022
11/1/2026
—
2/1/2026
—
—
—
2/2/2025
—
—
2/3/2024
2/1/2023
8/1/2022
8/1/2022
2/1/2022
2/1/2021
2/1/2020
2/2/2019
2/1/2017
2/1/2026
—
—
—
2/2/2025
—
—
2/3/2024
2/1/2023
2/1/2023
—
2/1/2021
8/2/2020
2/1/2022
2/1/2023
2/1/2022
2/1/2021
2/1/2020
2/1/2018
2/1/2017
—

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—

—
—
—

—

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(1) The market value is calculated using the closing price of our Common Stock of $13.77 on December 30,
2016 (the last trading day of 2016), as reported on The Nasdaq Global Select Market (NASDAQ),
multiplied by the unvested stock amount.

(2) The option was granted on February 1, 2016. Options representing 1/10th of the total shares granted vested

six months from the grant date and the remaining shares vest in equal monthly installments until they are
fully vested on February 1, 2020.

(3) The performance stock units were granted on February 1, 2016. The number of shares earned will range

between 0% to 150% of the target shares granted. Vesting takes place on the third anniversary of the grant
date based upon the performance level achieved relative to operating margin for fiscal year 2016 and
continued service through the applicable vest date.

(4) The restricted stock units were granted on February 1, 2016. 25% of the total shares granted will vest

annually until fully vested on February 2, 2020.

(5) The option was granted on February 2, 2015. Options representing 1/10th of the total shares granted vested

six months from the grant date and the remaining shares vest in equal monthly installments until they are
fully vested on February 2, 2019.

(6) The performance restricted stock units were granted on February 2, 2015. The number of shares earned was
106.25% of the target shares granted. Vesting will take place on the third anniversary of the grant date if
continued service is completed through the applicable vest date.

(7) The performance stock units were granted on February 2, 2015. The number of shares earned was 106.25%

of the target shares granted. Vesting will take place on the third anniversary of the grant date if continued
service is completed through the applicable vest date.

(8) The restricted stock units were granted on February 2, 2015. 25% of the total shares granted will vest

annually until fully vested on February 2, 2019.

(9) The option was granted on February 3, 2014. Options representing 1/10th of the total shares granted vested

six months from the grant date and the remaining shares vest in equal monthly installments until they are
fully vested on February 3, 2018.

(10) The option was granted on February 1, 2013. Options representing 1/10th of the total shares granted vested

six months from the grant date and the remaining shares vest in equal monthly installments until they are
fully vested on February 1, 2017.

(11) The option was granted on July 2, 2012. Options representing 1/10th of the total shares granted vested six
months from the grant date and the remaining shares vested in equal monthly installments until they were
fully vested on July 2, 2016.

(12) The performance option was granted on July 2, 2012. Shares subject to the option would have fully vested

on June 25, 2015 if Rambus’ common stock had previously attained a closing price on NASDAQ of $15.00
or more over any 60 consecutive trading day period. The performance milestone was not achieved by
June 25, 2015, therefore the option will become fully vested upon the subsequent date, if any, upon which
such performance milestone is achieved prior to June 25, 2017, and if such performance milestone is not
achieved prior to June 25, 2017, the option will terminate.

(13) The performance option was granted on July 2, 2012. Shares subject to the option would have fully vested
on June 25, 2015 if Rambus’ common stock had previously attained a closing price on NASDAQ over any
60 consecutive trading day period as follows: 20% will vest with a closing price of $16.00; 20% will vest
with a closing price of $17.00; 20% will vest with a closing price of $18.00; 20% will vest with a closing
price of $19.00; and 20% will vest with a closing price of $20.00. As the option did not vest in full or partial
by June 25, 2015, the option will vest in full or partial if and to the extent the related performance
milestones are achieved prior to June 25, 2017, and if the related performance milestones are not achieved
prior to June 25, 2017, the unvested portion of the option will terminate.

(14) The option was granted on November 1, 2016. Options representing 1/10th of the total shares granted vested
six months from the grant date and the remaining shares vest in equal monthly installments until they are
fully vested on November 1, 2020.

(15) The restricted stock units were granted on November 1, 2016. 25% of the total shares granted will vest

annually until fully vested on November 1, 2020.

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(16) The restricted stock units were granted on December 1, 2015. 25% of the total shares granted will vest

annually until fully vested on December 1, 2019.

(17) The performance option was granted on August 1, 2012. Shares subject to the option would have fully

vested on August 1, 2015 if Rambus common stock had previously attained a closing price on NASDAQ of
$15.00 or more over any 60 consecutive trading day period. The performance milestone was not achieved
by August 1, 2015, therefore the option will become fully vested upon the subsequent date, if any, upon
which such performance milestone is achieved prior to August 1, 2017, and if such performance milestone
is not achieved prior to August 1, 2017, the option will terminate.

(18) The performance option was granted on August 1, 2012. Shares subject to the option would have fully

vested on August 1, 2015 if Rambus common stock had previously attained a closing price on NASDAQ
over any 60 consecutive trading day period as follows: 20% will vest with a closing price of $16.00; 20%
will vest with a closing price of $17.00; 20% will vest with a closing price of $18.00; 20% will vest with a
closing price of $19.00; and 20% will vest with a closing price of $20.00. As the option did not vest in full
or partial by August 1, 2015, the option will vest in full or partial if and to the extent the related
performance milestones are achieved prior to August 1, 2017, and if the related performance milestones are
not achieved prior to August 1, 2017, the unvested portion of the option will terminate.

(19) The option was granted on February 1, 2012. Options representing 1/10th of the total shares granted vested

six months from the grant date and the remaining shares vest in equal monthly installments until they are
fully vested on February 1, 2016.

(20) The option was granted on February 1, 2011. Options representing 1/10th of the total shares granted vested

six months from the grant date and the remaining shares vest in equal monthly installments until they are
fully vested on February 1, 2016.

(21) The option was granted on February 1, 2010. Options representing 1/10th of the total shares granted vested

six months from the grant date and the remaining shares vest in equal monthly installments until they are
fully vested on February 1, 2015.

(22) The option was granted on February 2, 2009. Options representing 1/10th of the total shares granted vested
six months from the grant date and the remaining shares vested in equal monthly installments until they
were fully vested on February 2, 2014.

(23) The option was granted on February 1, 2007. Options representing 1/10th of the total shares granted vested
six months from the grant date and the remaining shares vested in equal monthly installments until they
were fully vested on February 1, 2012.

(24) The restricted stock units were granted on February 1, 2013. 25% of the total shares granted will vest

annually until fully vested on February 1, 2017.

(25) The option was granted on June 22, 2012 pursuant to the Company’s Offer to Exchange program. 1/3rd of

the total shares granted vested on June 22, 2013 and the remaining shares continued to vest in equal monthly
installments until they were fully vested on June 22, 2015.

(26) The option was granted on February 1, 2008. Options representing 1/10th of the total shares granted vested
six months from the grant date and the remaining shares vested in equal monthly installments until they
were fully vested on February 1, 2013.

(27) The restricted stock units were granted on July 1, 2016. 25% of the total shares granted will vest annually

until fully vested on July 1, 2020.

Each of the options and other equity awards reflected on the table above were issued under the 2006 Plan or the
2015 Plan, which are plans that were or are available to all of our employees.

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Option Exercises and Stock Vested

The following table shows all stock options exercised and value realized upon exercise, and all stock awards
vested and value realized upon vesting, by the NEOs during 2016.

Name

Option Awards

Stock Awards

Number of
Shares
Acquired on
Exercise (#)

Value Realized
on Exercise ($)

Number of
Shares
Acquired on
Vesting (#)

Value Realized
on Vesting(1)($)

Ronald Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rahul Mathur
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laura Stark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jae Kim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Satish Rishi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Martin Pilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
32,096
34,685
92,152
—

—
—
177,136
187,773
449,122
—

28,400
—
19,008
16,647
37,849
—

344,150
—
237,341
207,637
508,316
—

(1) The value realized equals the market value of our Common Stock on the vesting date multiplied by the

number of shares that vested.

Potential Payments Upon Termination or Change of Control

Equity Acceleration

In the event of a “change in control” or “merger” of the Company, as defined in the plans, each outstanding
option or equity award will be assumed or an equivalent option or right substituted by the successor company. In
the event that the successor company refuses to assume or substitute for the option or equity award, the
participant will fully vest in and have the right to exercise all of his or her options or stock appreciation rights,
including shares as to which such awards would not otherwise be vested or exercisable, all restrictions on
restricted stock will lapse, and, with respect to restricted stock units, performance shares and performance units,
all performance goals or other vesting criteria will be deemed achieved at target levels and all other terms and
conditions met. In addition, if an option or stock appreciation right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a change of control, the administrator of the plan will notify the
participant that the option or stock appreciation right will be fully vested and exercisable for a period of time
determined by the administrator, and the option or stock appreciation right will terminate upon the expiration of
such period.

The form of option agreement for the 2015 Plan and the 2006 Plan, provide that if a successor company assumes
outstanding options or awards or substitutes for options or awards with an equivalent award, then if following
such assumption or substitution the participant’s status as an employee or employee of the successor company, as
applicable, is terminated by the successor company as a result of an “Involuntary Termination” other than for
“Cause” within 12 months following the change in control, the option or award will immediately vest and
become exercisable as to 100% of the shares subject to the option or award.

Change of Control Severance Agreements

We have entered into change of control severance agreements with our executive officers, except our CEO who
has an employment agreement that governs certain change of control severance obligations applicable to him.
These agreements are designed to promote stability and retention of senior management prior to and following a
change of control and to align executive and stockholder interests by enabling executives to consider corporate
transactions that are in the best interests of the stockholders and other constituents of the company without undue
concern over whether the transactions may jeopardize the executives’ own employment.

Each agreement has an initial term of three years and will renew automatically for additional one-year terms
unless either party to the agreement provides the other with written notice of non-renewal at least 90 days prior to

42

the date of automatic renewal. If we terminate the executive’s employment without “Cause” or the executive
terminates his employment for “Good Reason”, and in each case, such termination occurs during a period
beginning three months before a change of control and ending 12 months following a change of control, then
subject to the executive signing and not revoking a separation agreement and release of claims and the
executive’s continued compliance with the terms of the At Will Employment, Confidential Information,
Invention Assignment, and Arbitration Agreement entered into between the executive and the Company, the
executive will receive: (i) a lump sum payment (less applicable withholding taxes) equal to 100% of the
executive’s annual base salary as in effect immediately prior to the executive’s termination date or, if greater, at
the level in effect immediately prior to the change of control; (ii) a lump sum payment (less applicable
withholding taxes) equal to 100% of the executive’s full bonus and commission for the year of termination at
target level as in effect immediately prior to the executive’s termination date, or, if greater, at the level in effect
immediately prior to the change of control; (iii) 100% of the executive’s then-outstanding and unvested equity
awards will become vested in full (and if the amount of the award to vest is determined based on the achievement
of performance criteria, then the equity awards will vest based on achievement at target levels for the relevant
performance period(s)); and (iv) if the executive elects continuation coverage pursuant to COBRA for executive
and his or her eligible dependents, the Company will reimburse the executive for the COBRA premiums for a
maximum period of 12 months.

CEO Employment Agreement

Dr. Black’s employment agreement with the Company provides that in the event the Company terminates
Dr. Black’s employment with the Company without “Cause” and such termination does not occur within the
three months prior to or 12 months following a change of control of the Company, Dr. Black will receive:
(i) continued payment (over 12 months) of one year of base salary and 100% of his target bonus, (ii) a monthly
$3,000 payment (in lieu of continued employee benefits) for a period of 12 months, and (iii) 12 months
additional vesting of all equity awards with a service based component (excluding awards with a performance-
based component if the performance metric has not been achieved by the termination date, provided that all such
awards are assumed by the successor company). In the event the Company terminates Dr. Black’s employment
with the Company without “Cause” or Dr. Black voluntarily terminates his employment for “Good Reason”, and
in either event, such termination occurs within three months prior to or 12 months following a change of control
of the Company, Dr. Black will receive: (i) continued payment (over 12 months) of 18 months of base salary and
150% of his target bonus, (ii) a monthly $3,000 payment (in lieu of continued employee benefits) for a period of
18 months, and (iii) 100% vesting of all equity awards with a service based component (excluding awards with a
performance-based component if the performance metric has not been achieved by the termination date, provided
that all such awards are assumed by the successor company). If equity awards are not assumed by the successor
company in a change of control transaction, the awards will be treated as described under “Equity Acceleration”
above.

Potential Change of Control Payments

The value of the benefits that would be payable to Dr. Black assuming a qualifying termination of employment
on December 31, 2016 is included in the chart below.

No Change of Control
Change of Control

. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .

$515,000
$772,500

$618,000
$927,000

$ 8,332,864
$10,059,853

$36,000
$54,000

$ 9,501,864
$11,813,353

Salary

Bonus

Equity

Benefits

Total

The value of the benefits that would be payable to our NEOs, except for our CEO, assuming a qualifying
termination of employment on December 31, 2016 is included in the chart below.

Rahul Mathur . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laura Stark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jae Kim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$330,000
$300,000
$300,000

$270,000
$300,000
$230,000

$1,198,800
$2,842,359
$1,473,394

$ 6,281
$21,224
$32,254

$1,805,081
$3,463,583
$2,036,648

Salary

Bonus

Equity

Benefits

Total

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Compensation of Directors

The following table shows compensation information for our non-employee directors for 2016.

Name

J. Thomas Bentley . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Thomas Fisher . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Penelope Herscher . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charles Kissner
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David Shrigley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eric Stang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fees Earned
or Paid in
Cash ($)

Stock
Awards
(1)($)

Total ($)

65,000
40,000
60,000
55,000(5)
40,000
75,000

160,024(2) 225,024
160,024(3) 200,024
160,024(4) 220,024
160,024(6) 215,024
160,024(7) 200,024
160,024(8) 235,024

(1) Amounts shown do not reflect compensation actually received by the non-employee directors. Instead, the

amounts shown are the aggregate grant date fair value computed in accordance with the provisions of FASB
ASC Topic 718. The assumptions used to calculate the value of stock and stock option awards are set forth
under Note 12 of the Notes to Consolidated Financial Statements included in our Annual Report on Form
10-K for the year ended December 31, 2016.

(2) Reflects the compensation costs to be recognized associated with a restricted stock unit award of 12,874

shares of Common stock made on October 3, 2016 with a fair value as of the grant date of $12.43 per share
disregarding forfeiture assumptions. Mr. Bentley also had options to purchase an aggregate of 20,000 shares
outstanding as of December 31, 2016.

(3) Reflects the compensation costs to be recognized associated with a restricted stock unit award of 12,874

shares of Common stock made on October 3, 2016 with a fair value as of the grant date of $12.43 per share
disregarding forfeiture assumptions. Mr. Fisher also had options to purchase an aggregate of 40,000 shares
outstanding as of December 31, 2016.

(4) Reflects the compensation costs to be recognized associated with a restricted stock unit award of 12,874

shares of Common stock made on October 3, 2016 with a fair value as of the grant date of $12.43 per share
disregarding forfeiture assumptions. Ms. Herscher also had options to purchase an aggregate of 20,000
shares outstanding as of December 31, 2016.
Includes $15,000 annual retainer for Mr. Kissner’s service as Chairman of the Company’s Corporate
Development Committee.

(5)

(6) Reflects the compensation costs to be recognized associated with a restricted stock unit award of 12,874

shares of Common stock made on October 3, 2016 with a fair value as of the grant date of $12.43 per share
disregarding forfeiture assumptions. Mr. Kissner also had options to purchase an aggregate of 40,000 shares
outstanding as of December 31, 2016.

(7) Reflects the compensation costs to be recognized associated with a restricted stock unit award of 12,874

shares of Common stock made on October 3, 2016 with a fair value as of the grant date of $12.43 per share
disregarding forfeiture assumptions. Mr. Shrigley also had options to purchase an aggregate of 20,000
shares outstanding as of December 31, 2016.

(8) Reflects the compensation costs to be recognized associated with a restricted stock unit award of 12,874

shares of Common stock made on October 3, 2016 with a fair value as of the grant date of $12.43 per share
disregarding forfeiture assumptions. Mr. Stang also had options to purchase an aggregate of 40,000 shares
outstanding as of December 31, 2016.

Summary of Director Plan

Annual Retainer. Each independent director receives an annual retainer of $40,000 in cash. The Chairpersons of
the Board and Audit Committee each receive an additional annual retainer of $25,000. The Chairperson of the
Compensation Committee receives an additional annual retainer of $20,000. The Chairperson of the Corporate
Development Committee, which oversees the Company’s acquisition and divestiture activity, beginning in 2016,
receives an additional annual retainer of $15,000. The Chairperson of the Corporate Governance and Nominating

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Committee receives an additional annual retainer of $10,000. Each annual retainer is paid in quarterly
installments. The annual retainers were not increased for 2016.

Annual Equity Grant. Each independent director receives an annual equity grant of such number of RSUs with an
approximate fair market value equal to $160,000 at the time of grant. The RSU grants vest in full at the end of a
one-year period, subject to the independent director continuing to serve through each applicable vesting date. If
the director discontinues service prior to the vesting of any RSU grant, the Compensation Committee may, in its
discretion, permit such grant to vest pro rata for the portion of the year during which such director served.

Initial Equity Grant. Any newly elected independent director joining our Board of Directors will receive an
initial option to purchase 40,000 shares of Common Stock when he or she is first elected as a member of the
Board. The term of such options will not exceed ten years. The option grants vest over a four-year period, with
one-eighth of shares subject to the option vesting six months after the date of grant and the remaining shares
vesting ratably each month thereafter, subject to the independent director continuing to serve through each
applicable vesting date.

Each of the options granted to our independent directors was issued under the 2006 Plan or the 2015 Plan, which
are plans that are available to all of our employees. As described under “Outstanding Equity Awards at Fiscal
Year End — Potential Payments Upon Termination or Change in Control,” the 2006 Plan and the 2015 Plan
provide for certain acceleration upon a “change in control” of the Company, as defined under such plans. In
addition, with respect to options and any other equity awards granted to non-employee directors that are assumed
or substituted for upon a change of control under the 2006 Plan or the 2015 Plan, if the non-employee director is
terminated other than upon a voluntary resignation, the options and other equity awards granted to such
non-employee director will fully vest and be exercisable with respect to 100% of the shares subject to such
options and other equity awards.

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Pursuant to stock ownership guidelines adopted by the Board in October 2006 and most recently updated in
January 2015, each independent director is expected to accumulate and hold an equivalent value of our Common
Stock of three times their annual total cash compensation and to achieve this by five years from the date that the
director joined the Board. Directors are expected to maintain this minimum amount of stock ownership
throughout their tenure on the Board. As of December 31, 2016, all of our directors met their ownership
requirements.

45

AUDIT COMMITTEE REPORT

This section shall not be deemed to be “soliciting material,” or to be “filed” with the SEC, is not subject to the
liabilities of Section 18 of the Securities Exchange Act and is not to be incorporated by reference into any filing
of Rambus under the Securities Act of 1933, as amended, or the Securities Exchange Act, regardless of date or
any other general incorporation language in such filing.

Report of the Audit
Committee . . . . . . . . . . . . . . .

Review with Management

. .

Review and Discussions with
the Independent Registered
Public Accounting Firm . . . .

Conclusion . . . . . . . . . . . . . . .

Respectfully submitted
by: . . . . . . . . . . . . . . . . . . . . . .

The following is the report of the Audit Committee of our Board of Directors
with respect to our audited financial statements for the fiscal year ended
December 31, 2016, which include our consolidated balance sheets as of
December 31, 2016 and 2015 and the related consolidated statements of
operations, comprehensive income (loss), stockholders’ equity and cash flows
for each of the fiscal years ended December 31, 2016, 2015 and 2014, and the
notes thereto.

The Audit Committee has reviewed and discussed our audited financial
statements and management’s report on internal control over financial reporting
with management.

The Audit Committee has discussed with PricewaterhouseCoopers LLP, our
independent registered public accounting firm, the matters required to be
discussed by the Statement on Auditing Standards No. 61, as amended, as
adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has also received written disclosures and the letter from
PricewaterhouseCoopers LLP required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent auditor’s
communications with us concerning independence, as may be modified or
supplemented, and has discussed with PricewaterhouseCoopers LLP its
independence from us.

Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that our audited financial statements be
included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2016 for filing with the SEC.

THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
J. Thomas Bentley (Chair)
Charles Kissner
David Shrigley

OTHER MATTERS

The Board does not know of any other matters to be presented at the Annual Meeting. If any additional matters
are properly presented or otherwise allowed to be considered at the Annual Meeting, the persons named in the
enclosed proxy will have discretion to vote shares they represent in accordance with their own judgment on such
matters.

It is important that your shares be represented at the meeting, regardless of the number of shares which you hold.
You are, therefore, urged to execute and return, at your earliest convenience, the accompanying proxy card in the
envelope which has been enclosed.

BY ORDER OF THE BOARD OF DIRECTORS

Sunnyvale, California
March 9, 2017

46

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016
or

For the transition period from

to

Commission file number: 000-22339

RAMBUS INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

1050 Enterprise Way, Suite 700
Sunnyvale, California
(Address of principal executive offices)

94-3112828
(I.R.S. Employer
Identification Number)

94089
(Zip Code)

Registrant’s telephone number, including area code:
(408) 462-8000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Common Stock, $.001 Par Value

Name of Each Exchange on Which Registered

The NASDAQ Stock Market LLC
(The NASDAQ Global Select Market)

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes È No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes ‘ No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes È No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not

contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. È

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act. (Check one):
Large accelerated filer È
Non-accelerated filer ‘ (Do not check if a smaller reporting company)

‘
Accelerated filer
Smaller reporting company ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant as of June 30, 2016 was
approximately $1.0 billion based upon the closing price reported for such date on The NASDAQ Global Select Market. For purposes of
this disclosure, shares of Common Stock held by officers and directors of the Registrant and persons that may be deemed to be affiliates
under the Act have been excluded. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
The number of outstanding shares of the Registrant’s Common Stock, $.001 par value, was 111,176,433 as of January 31, 2017.
DOCUMENTS INCORPORATED BY REFERENCE

Certain information is incorporated into Part III of this report by reference to the Proxy Statement for the Registrant’s annual meeting
of stockholders to be held on or about April 20, 2017 to be filed with the Securities and Exchange Commission pursuant to Regulation 14A
not later than 120 days after the end of the fiscal year covered by this Form 10-K.

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[THIS PAGE INTENTIONALLY LEFT BLANK]

TABLE OF CONTENTS

Note Regarding Forward-Looking Statements

PART I.

Item 1.

Business

Item 1A.

Risk Factors

Item 1B.

Unresolved Staff Comments

Item 2.

Item 3.

Item 4.

PART II.

Item 5.

Item 6.

Item 7.

Properties

Legal Proceedings

Mine Safety Disclosures

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Item 9.

Financial Statements and Supplementary Data

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.

Controls and Procedures

Item 9B.

Other Information

PART III

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

PART IV

Item 15.

Exhibits and Financial Statement Schedules

SIGNATURES

POWER OF ATTORNEY

INDEX TO EXHIBITS

2

4

5

11

27

27

27

27

28

28

30

30

54

55

55

55

56

57

57

57

57

57

57

58

58

117

117

118

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“Annual Report on Form 10-K”) contains forward-looking statements

within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. These forward-looking statements include, without limitation, predictions regarding the following
aspects of our future:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Success in the markets of our products and services or our customers’ products;

Sources of competition;

Research and development costs and improvements in technology;

Sources, amounts and concentration of revenue, including royalties;

Success in signing and renewing license agreements;

Terms of our licenses and amounts owed under license agreements;

Technology product development;

Dispositions, acquisitions, mergers or strategic transactions and our related integration efforts,
including our recent acquisition of Smart Card Software Ltd., the assets of Semtech Corporation’s
Snowbush IP group and Inphi Corporation’s Memory Interconnect Business;

Impairment of goodwill and long-lived assets;

Pricing policies of our customers;

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 lighting, memory, chip,
mobile payments, smart ticketing and security;

Deterioration of financial health of commercial counterparties and their ability to meet their obligations
to us;

Effects of security breaches or failures in our or our customers’ products and services on our business;

Engineering, sales and general and administration expenses;

Contract revenue;

Operating results;

International licenses, operations and expansion;

Effects of changes in the economy and credit market on our industry and business;

Ability to identify, attract, motivate and retain qualified personnel;

Effects of government regulations on our industry and business;

• Manufacturing, shipping and supply partners and/or sale and distribution channels;

•

Growth in our business;

• Methods, estimates and judgments in accounting policies;

•

•

•

•

•

•

Adoption of new accounting pronouncements;

Effective tax rates;

Restructurings and plans of termination;

Realization of deferred tax assets/release of deferred tax valuation allowance;

Trading price of our common stock;

Internal control environment;

2

•

•

•

•

•

•

•

•

The level and terms of our outstanding debt and the repayment or financing of such debt;

Protection of intellectual property;

Any changes in laws, agency actions and judicial rulings that may impact the ability to enforce
intellectual property rights;

Indemnification and technical support obligations;

Equity repurchase plans;

Issuances of debt or equity securities, which could involve restrictive covenants or be dilutive to our
existing stockholders;

Outcome and effect of potential future intellectual property litigation and other significant litigation;
and

Likelihood of paying dividends.

You can identify these and other forward-looking statements by the use of words such as “may,” “future,”
“shall,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,”
“continue,” “projecting” or the negative of such terms, or other comparable terminology. Forward-looking
statements also include the assumptions underlying or relating to any of the foregoing statements.

Actual results could differ materially from those anticipated in these forward-looking statements as a result

of various factors, including those set forth under Item 1A, “Risk Factors.” All forward-looking statements
included in this document are based on our assessment of information available to us at this time. We assume no
obligation to update any forward-looking statements.

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3

PART I

Rambus, XDRTM, CryptoFirewallTM, CryptoMediaTM, CryptoManagerTM, TruEdgeTM and MicroLens® are

trademarks, registered trademarks or copyrights of Rambus Inc. Other trademarks or copyrights that may be
mentioned in this Annual Report on Form 10-K are the property of their respective owners.

4

Item 1. Business

Rambus creates innovative hardware and software technologies, driving advancements from the data center

to the mobile edge. Our chips, customizable IP cores, patent licenses, software, services, and other innovations
improve the competitive advantage of our customers. We collaborate with the industry, partnering with leading
ASIC and SoC designers, foundries, IP developers, processor companies, EDA companies and validation labs.
Our innovations are integrated into a wide range of devices and systems, powering and securing diverse
applications, including Big Data, Internet of Things, mobile, consumer and media platforms.

While we have historically focused our efforts on the development of technologies for memory, SerDes and

other chip interfaces, we have expanded our portfolio of inventions and solutions to address chip and system
security, mobile payments and smart ticketing. We intend to continue our growth into new technology fields,
consistent with our mission to create value through our innovations and to make those technologies available
through the shipment of products, the provisioning of services, as well as our licensing business models. Key to
our efforts continues to be hiring and retaining world-class inventors, scientists and engineers to lead the
development and deployment of inventions and technology solutions for our fields of focus.

Our inventions and technology solutions are offered to our customers through patent, technology, software
and IP core licenses, as well as product sales and services. Today, our primary source of revenue is derived from
patent licenses, through which we provide our customers a license to use a certain portion of our broad portfolio
of patented inventions. Royalties from patent licenses accounted for 73%, 84% and 88% of our consolidated
revenue for the years ended December 31, 2016, 2015 and 2014, respectively.

Our strategy is to continue to augment our patent license business model to provide additional technology,

products and services while creating and leveraging strategic synergies to increase revenue. In support of our
strategy, we acquired four businesses in 2016 in the fields of mobile payments, smart ticketing, memory buffer
chips and SerDes IP cores. On January 25, 2016, our Security division completed the acquisition of Smart Card
Software, Ltd. (“SCS”), a privately-held company incorporated in the United Kingdom. Through this purchase
we acquired two complementary businesses: Bell Identification Ltd., a leader in mobile payments, and Ecebs
Ltd., a leading supplier of smart ticketing systems. We believe these businesses complement our security division
by allowing us to extend its foundational security technology to offer differentiated, value-added security
solutions to its customers.

On August 4, 2016, our Memory and Interfaces division completed the acquisition of all the assets of
Inphi’s Memory Interconnect Business. The acquisition included product inventory, customer contracts, supply
chain agreements and intellectual property. On August 5, 2016, our Memory and Interfaces division completed
the acquisition of the assets of Semtech’s Snowbush IP group. Snowbush IP, formerly part of Semtech’s Systems
Innovation Group, is a provider of silicon-proven, high-performance serial link solutions. We believe these
acquisitions strengthen our market position for memory buffer chip products and bolster our SerDes and IP
offerings enabling us to better address the needs of the server, networking and data center market.

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Organization

We have organized our business into four operational units:

• Memory and Interfaces (MID)

•

•

•

Security (RSD)

Emerging Solutions (ESD)

Lighting (RLD)

As of December 31, 2016, MID and RSD met quantitative thresholds for disclosure as reportable segments.

Results for ESD and RLD are shown under “Other.” For additional information concerning segment reporting,
see Note 6, “Segments and Major Customers,” of Notes to Consolidated Financial Statements of this Form 10-K.

5

Memory and Interfaces

There are four main areas of focus in our Memory and Interface Division: mobile memory, server-based

memory, serial link designs, and custom solutions. The primary markets for these technologies include:
(1) DRAM devices; (2) NAND devices; (3) System-on-Chip (SoC) devices; (4) silicon physical IP; and
(5) memory buffer chips. In these markets, memory interfaces, serial link transitions, processor and SoC
microarchitecture transitions or overall process technology node transitions provide opportunities. For plug-in
systems, there is a strong desire to reduce power consumption for both economic and environmental reasons
while still providing increased computing capability. At the chip level, it becomes increasingly difficult to
maintain signal integrity and power efficiency as data transfer speeds rise to support more powerful, multi-core
processors.

To address these challenges and enable the continued improvement of electronics systems, ongoing
innovation is required. The many contributions and patented innovations developed by Rambus scientists and
engineers have been, and continue to be, critical in addressing some of the most difficult chip and system
challenges. The foundations of MID are world-class memory architectures and high-performance serial link
technologies that are brought to market through three main business initiatives: (1) patent licensing; (2) silicon IP
core licensing; and (3) chipsets.

Patent Licensing

Our traditional patent licensing program remains our primary source of revenue. Our patent licenses provide

our customers a license to use a certain portion of our portfolio of patented inventions in the customer’s own
digital electronics products, systems or services. The licenses may also define the specific field of use where our
customers may use or employ our inventions in their products. License agreements are structured with fixed,
variable or a hybrid of fixed and variable royalty payments over certain periods ranging up to ten years. Leading
consumer product, industrial, semiconductor and system companies such as AMD, Broadcom, Cisco, Freescale,
Fujitsu, GE, IBM, Intel, LSI, Micron, Nanya, NVIDIA, Panasonic, Qualcomm, Renesas, Samsung, SK hynix,
STMicroelectronics, Toshiba and Xilinx have licensed our patents for use in their own products. The vast
majority of our patents were secured through our internal research and development efforts across all of our
business units.

Silicon IP Core Licensing

Our IP core licensing program offers a suite of memory and SerDes PHY solutions that are applicable to a

broad range of applications ranging from servers and networking to consumer and mobile. Due to the often
complex nature of implementing our technologies, we provide engineering services under certain of these
licenses to help our customers successfully integrate our technology solutions into their semiconductor and
system products. Licensees may also receive, in addition to their license agreements, patent licenses as necessary
to implement the technology in their products with specific rights and restrictions to the applicable patents
elaborated in their individual contracts. Our solutions are designed into systems bought by OEMs. We license
both directly to ASIC design houses and semiconductor foundries that, in turn, sell to OEMs, or to OEMs
directly.

Chip Sets

In the second half of 2016, we began to ship our first chips as a result of our acquisition of the Memory
Interconnect Business. Currently, we offer DDR2, DDR3 and DDR4 chipsets for RDIMM and LRDIMM server
modules that support the data center and enterprise server infrastructure markets.

We sell our semiconductor products directly and indirectly to module manufacturers and OEMs worldwide

through multiple channels, including our direct sales force and distributors. We operate direct sales offices in
Japan, Korea, Taiwan, China, and the United States and employ sales personnel that cover our direct customers
and manage our channel partners.

6

We operate a fabless business model and use third-party foundries and assembly and test manufacturing
contractors to manufacture, assemble and test our semiconductor products. We also inspect and test parts in our
U.S. based facilities. This outsourced manufacturing approach allows us to focus our resources on the design,
sale and marketing of our products. Outsourcing also allows us the flexibility needed to respond to new market
opportunities, simplifies our operations and significantly reduces our capital requirements.

Security

Security challenges are increasingly prevalent in a multitude of industries, including high-growth sectors

such as mobile and the data center, providing a variety of opportunities for our security technologies and
services. We believe robust security starts with the design of the SoC and continues through the manufacturing
supply chain to end-user applications. In line with this thinking, RSD offers a suite of products and services from
DPA countermeasures and cores to our CryptoManager™ solution, mobile payments and smart ticketing.

DPA Countermeasures and Cores

We own a portfolio of patented inventions and technology solutions that are needed for creating secure
tamper-resistant electronic devices and systems. These patented DPA countermeasures are critical in protecting
devices against side channel attacks such as differential power analysis, which involve monitoring the variations
in power consumption or electromagnetic emissions of a device. In addition, our hardware-based cores provide a
robust hardware-based solution to protect electronics systems from side-channel attacks, counterfeiting, piracy,
and other forms of attack.

For DPA countermeasures, our business model is to provide a combination of patent licenses, technology,

consulting services (training, evaluation, and design), and test equipment as well as DPA resistant cores and
software libraries. We are recognized worldwide for our expertise in this area, and our strategy is to strengthen
our offering beyond stand-alone patent licensing. We discovered the existence of SPA and DPA vulnerabilities in
the 1990s, and patented the fundamental techniques for preventing against this method of attack. DPA
protections are a critical security ingredient in tamper-resistant products, and are important or required for a
broad range of applications and devices (including smart cards, mobile devices, FPGAs, government/defense
applications, consumer set-top boxes, postage meters and security tokens).

In addition to the DPA countermeasures portfolio, we have developed technologies, expertise, advanced

designs, and development tools for building highly secure cryptographic semiconductor cores. We have
successfully deployed our semiconductor cores in two primary application areas where effective security is
valued and paid for by customers: content protection and anti-counterfeiting.

CryptoManager

As connected products, including mobile phones and IoT devices, have a fundamental need for security, a

robust security system is critical. Robust security starts with the design of the SoC and continues with the
manufacturing supply chain. The Rambus CryptoManager solution brings revolutionary security improvements
to the semiconductor chips and supply chains that enable our mobile world.

The CryptoManager platform provides chip and device companies with an advanced hardware root-of-trust

for their SoCs, as well as an Infrastructure Suite for end-to-end security throughout the SoC design and
manufacturing process. The CryptoManager platform has been developed with a services-based architecture that
enables a secure, two-way communication channel across the manufacturing stages. This fully integrated solution
is built on a foundation that simplifies, automates, and reduces costs for global enterprise IT, manufacturing, and
operations functions. The platform is designed to support the enablement of in-field provisioning and
downstream services, such as media, ticketing and mobile payments.

7

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Mobile Payments

NFC-based mobile payments offer many advantages to consumers, retailers and financial institutions alike.
For consumers, mobile wallets provide a convenient, “tap and go” frictionless commerce experience, seamlessly
integrating credit cards, loyalty points and gift cards, while leveraging enhanced security features like multi-
factor authentication and biometrics. For retailers, mobile wallets offer businesses the ability to engage users
with an immersive, in-app experience that bridges the gap from digital to physical with profile-based shopping to
offer customized recommendations and coupons to customers. Finally for banks, mobile wallets enhance
protection from fraud and greater customer engagement and loyalty.

Our technology adapts to any mobile payments ecosystem — whether card credentials are stored on the
device or in the cloud using host card emulation — and ensures security through tokenization. With our software,
customers can fulfill the role of a token service provider, securing transactions by removing vulnerable card data
from the payment network. Our mobile payment solutions are primarily offered to financial institutions through
software license agreements.

Smart Ticketing

Smart ticketing is changing the way people travel by bringing greater convenience and security to travelers

and transport operators alike. Through the use of smart cards and smart phones, travelers store their tickets
electronically, eliminating the need for traditional paper tickets and enabling users to simply tap their smart card
or device on a gate or validator to access their travel. Our smart ticketing technology combines back-office
processing and analytics systems with web portals, mobile applications and smart cards to deliver comprehensive
solutions to transport operators and local authorities. Data analytics enable improved profitability and
optimization of smart transport schemes through access to real-world travel data, with easy management of
transaction data to ensure accurate reimbursements. ITSO certified and interoperable with existing transport
providers, our smart ticketing solutions are easy to integrate across multiple modes of travel, simplifying
customer journeys at lower cost. Currently, our smart ticketing solutions are primarily offered to public transit
authorities in the United Kingdom and we are working to expand our offerings into the broader European Union.

Emerging Solutions

ESD encompasses our long-term research and development efforts in emerging technologies, including our
lensless smart sensor and smart data acceleration research programs as well as next-generation memory solutions
and cryogenic computing. ESD programs are generally at the research and pre-commercial stages and may
involve collaboration with government entities, universities and industry partners.

Lighting

The continued adoption of LED as a bright, reliable and energy-efficient light source creates significant
market opportunities in the field of general lighting. We have pioneered a light guide-based design that enables a
new level of styling, efficiency and control for LED lighting. Our innovations combine our TruEdge™ LED
Coupling (maximizing the amount of light emitted from the LED to a light guide) with our MicroLens® optics
(tiny 3D features that control how light is emitted from a light guide) to create efficient and cost-effective
fixtures. Our light guides are available as off-the-shelf or customized designs that are optimized to specific
customer and application requirements by varying the size, shape and density of the MicroLens optics.
Manufactured by our global lighting partners or at our state-of-the-art facility in Brecksville, Ohio, our light
guides can support both flat and curved designs in a broad range of high volume lighting applications. In
addition, complete fixture prototype designs that combine our optical innovations, design engineering and
manufacturing support services are also available to lighting system companies and fixture manufacturers
worldwide.

8

Competition

Our industries are intensely competitive and have been impacted by rapid technological change, short

product life cycles, cyclical market patterns, price erosion, increasing foreign and domestic competition and
market consolidation. We believe the principal competition for our technologies may come from our prospective
customers, some of whom are evaluating and developing products based on technologies that they contend or
may contend will not require a license from us. Some of our competitors use a system-level design approach
similar to ours, including activities such as board and package design, power and signal integrity analysis, and
thermal management. Many of these companies are larger and may have better access to financial, technical and
other resources than we possess.

To the extent that alternatives might provide comparable system performance at lower or similar cost to our

technologies, or are perceived to require the payment of no or lower royalties, or to the extent other factors
influence the industry, our customers and prospective customers may adopt and promote alternative technologies.
Even to the extent we determine that such alternative technologies infringe our patents, there can be no assurance
that we would be able to negotiate agreements that would result in royalties being paid to us without litigation,
which could be costly and the results of which would be uncertain. In the past, litigation has been and in the
future may be required to enforce and protect our intellectual property rights, as well as the substantial
investments undertaken to research and develop our innovations and technologies.

Research, Development and Employees

Our growth strategy will be substantially dependent on our ability to develop key innovations that meet the

future needs of a dynamic market. To this end, we continue to invest substantial funds in research and
development and have assembled a team of highly skilled inventors, engineers and scientists whose activities are
focused on continually developing new innovations within our chosen technology fields. Using this foundation of
innovations, our technical teams develop new solutions that enable increased performance, greater power
efficiency, increased levels of security, as well as other improvements and benefits. Our solution design and
development process is a multi-disciplinary effort requiring expertise in multiple fields across all of our
operational units.

As of December 31, 2016, we had approximately 540 employees in our engineering departments,
representing 70% of our total number of 767 employees. None of our employees are covered by collective
bargaining agreements. As noted, we believe our future success is dependent on our continued ability to identify,
attract, motivate and retain qualified personnel. In order to attract qualified employees, we have created an
environment and culture that encourages, fosters and supports research, development and innovation in
breakthrough technologies with significant opportunities for broad industry adoption. To date, we believe we
have been successful in recruiting qualified employees and that we have a good relationship with our employees.

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A significant number of our scientists and engineers spend all or a portion of their time on research and
development. For the years ended December 31, 2016, 2015 and 2014, research and development expenses were
$129.8 million, $111.1 million and $110.0 million, respectively. We expect to continue to invest substantial
funds in research and development activities. In addition, because our customer agreements often call for us to
provide engineering support, a portion of our total engineering costs are allocated to the cost of contract revenue.

Intellectual Property

We maintain and support an active program to protect our intellectual property, primarily through the filing

of patent applications and the defense of issued patents against infringement. As of December 31, 2016, our
technologies are covered by 1,989 U.S. and foreign patents, having expiration dates ranging from 2017 to 2038.
Additionally, we have 646 patent applications pending. Some of the patents and pending patent applications are
derived from a common parent patent application or are foreign counterpart patent applications. We believe our
patented innovations provide our customers with the ability to achieve improved performance, lower risk, greater
cost-effectiveness and other benefits in their products and services.

9

We have a program to file applications for and obtain patents in the United States and in selected foreign

countries where we believe filing for such protection is appropriate and would further our overall business
strategy and objectives. In some instances, obtaining appropriate levels of protection may involve prosecuting
continuation and counterpart patent applications based on a common parent application. In addition, we attempt
to protect our trade secrets and other proprietary information through agreements with current and prospective
customers, and confidentiality agreements with employees and consultants and other security measures. We also
rely on copyright, trademarks and trade secret laws to protect our intellectual property.

Corporate and Other Information

Rambus Inc. was founded in 1990 and reincorporated in Delaware in March 1997. Our principal executive
offices are located at 1050 Enterprise Way, Suite 700, Sunnyvale, California. Our website is www.rambus.com.
The inclusion of our website address in this report does not include or incorporate by reference into this report
any information on our website. You can obtain copies of our Forms 10-K, 10-Q, 8-K, and other filings with the
SEC, and all amendments to these filings, free of charge, from our website as soon as reasonably practicable
following our filing of any of these reports with the SEC. In addition, you may read and copy any material we
file with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Room 1580, Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy, and information statements, and
other information regarding registrants that file electronically with the SEC at www.sec.gov.

Information concerning our revenue, results of operations and revenue by geographic area is set forth in
Item 6, “Selected Financial Data,” in Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” and in Note 6, “Segments and Major Customers,” of Notes to Consolidated Financial
Statements of this Form 10-K, all of which are incorporated herein by reference. Information concerning
identifiable assets and segment reporting is also set forth in Note 6, “Segments and Major Customers,” of Notes
to Consolidated Financial Statements of this Form 10-K. Information on customers that comprise 10% or more of
our consolidated revenue and risks attendant to our foreign operations is set forth below in Item 1A, “Risk
Factors .”

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Item 1A. Risk Factors

RISK FACTORS

Because of the following factors, as well as other variables affecting our operating results, past financial
performance may not be a reliable indicator of future performance, and historical trends should not be used to
anticipate results or trends in future periods. See also “Note Regarding Forward-Looking Statements” at the
beginning of this report.

Risks Associated With Our Business, Industry and Market Conditions

The success of our business depends on sustaining or growing our licensing revenue and the failure to
achieve such revenue would lead to a material decline in our results of operations.

Our revenue consists mainly of patent and technology license fees paid for access to our patents, developed
technology and development and support services provided to our customers. Our ability to secure and renew the
licenses from which our revenues are derived depends on our customers adopting our technology and using it in
the products they sell. Once secured, license revenue may be negatively affected by factors within and outside
our control, including reductions in our customers’ sales prices, sales volumes, our failure to timely complete
engineering deliverables, and the terms of such licenses. In addition, our licensing cycle for new licensees as well
as renewals for existing licensees is lengthy, costly and unpredictable without any degree of certainty. We cannot
provide any assurance that we will be successful in signing new license agreements or renewing existing license
agreements on equal or favorable terms or at all. If we do not achieve our revenue goals, our results of operations
could decline.

We have traditionally operated in, and may enter other, industries that are highly cyclical and competitive.

Our target customers are companies that develop and market high volume business and consumer products

in semiconductors, computing, data centers, networks, tablets, handheld devices, mobile applications, gaming
and graphics, high-definition televisions, general lighting, cryptography and data security. The electronics
industry is intensely competitive and has been impacted by rapid technological change, short product life cycles,
cyclical market patterns, price erosion and increasing foreign and domestic competition. We are subject to many
risks beyond our control that influence whether or not we are successful in winning target customers or retaining
existing customers, including, primarily, competition in a particular industry, market acceptance of such
customers’ products and the financial resources of such customers. In particular, DRAM manufacturers, which
make up a significant part of our revenue, are prone to significant business cycles and have suffered material
losses and other adverse effects to their businesses, leading to industry consolidation from time-to-time that may
result in loss of revenues under our existing license agreements or loss of target customers. As a result of ongoing
competition in the industries in which we operate and volatility in various economies around the world, we may
achieve a reduced number of licenses or may experience tightening of customers’ operating budgets, difficulty or
inability of our customers to pay our licensing fees, lengthening of the approval process for new licenses and
consolidation among our customers. All of these factors may adversely affect the demand for our technology and
may cause us to experience substantial fluctuations in our operating results.

We face competition from semiconductor and digital electronics products and systems companies, other
semiconductor intellectual property companies that provide security cores and non-edge lit LED lighting options
that are available to the market. We believe the principal competition for our technologies may come from our
prospective customers, some of whom are evaluating and developing products based on technologies that they
contend or may contend will not require a license from us. Some of our competitors use a system-level design
approach similar to ours, including activities such as board and package design, power and signal integrity
analysis, and thermal management. Many of these companies are larger and may have better access to financial,
technical and other resources than we possess.

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To the extent that alternatives might provide comparable system performance at lower or similar cost to our

technologies, or are perceived to require the payment of no or lower royalties, or to the extent other factors
influence the industry, our customers and prospective customers may adopt and promote alternative technologies.
Even to the extent we determine that such alternative technologies infringe our patents, there can be no assurance
that we would be able to negotiate agreements that would result in royalties being paid to us without litigation,
which could be costly and the results of which would be uncertain.

In addition, our expansion into new markets subjects us to additional risks. We may have limited or no
experience in new products and markets, including our CryptoManager platform and new offerings that have
resulted from our acquisition of SCS in the mobile payment and smart ticketing solution spaces, and our
acquisitions of the assets of the Snowbush IP group and the Memory Interconnect Business, and our customers
may not adopt our new offerings. These and other new offerings may present new and difficult challenges, which
could negatively affect our operating results.

We may have to invest more resources in research and development than anticipated, which could increase
our operating expenses and negatively impact our operating results.

If new competitors, technological advances by existing competitors, and/or development of new

technologies or other competitive factors require us to invest significantly greater resources than anticipated in
our research and development efforts, our operating expenses could increase. If we are required to invest
significantly greater resources than anticipated in research and development efforts without an increase in
revenue, our operating results would decline. We expect these expenses to increase in the foreseeable future as
our technology development efforts continue.

Our revenue is concentrated in a few customers, and if we lose any of these customers through contract
terminations or acquisitions, our revenue may decrease substantially.

We have a high degree of revenue concentration. Our top five customers represented approximately 63%
and 65% of our revenues for the years ended December 31, 2016 and 2015, respectively. For both of the years
ended December 31, 2016 and 2015, revenues from Micron, Samsung and SK hynix each accounted for 10% or
more of our total revenue in each year. We extended our license agreement with Samsung in December 2013,
and we expect Samsung to continue to account for a significant portion of our licensing revenue. We also entered
into settlement agreements with each of SK hynix and Micron (which included Elpida, which Micron had
acquired in July 2013) in June 2013 and December 2013, respectively. In June 2015, we also extended our
license agreement with SK hynix. As a result of the renewal and such settlements, we expect each of Samsung,
SK hynix and Micron to account for a significant portion of our licensing revenue in the future. We expect to
continue to experience significant revenue concentration for the foreseeable future.

In addition, our license agreements are complex and some contain terms that require us to provide certain

customers with the lowest royalty rate that we provide to other customers for similar technologies, volumes and
schedules. These clauses may limit our ability to effectively price differently among our customers, to respond
quickly to market forces, or otherwise to compete on the basis of price. These clauses may also require us to
reduce royalties payable by existing customers when we enter into or amend agreements with other customers.
Any adjustment that reduces royalties from current customers or licensees may have a material adverse effect on
our operating results and financial condition.

We continue to negotiate with customers and prospective customers to enter into license agreements. Any
future agreement may trigger our obligation to offer comparable terms or modifications to agreements with our
existing customers, which may be less favorable to us than the existing license terms. We expect licensing fees
will continue to vary based on our success in renewing existing license agreements and adding new customers, as
well as the level of variation in our customers’ reported shipment volumes, sales price and mix, offset in part by
the proportion of customer payments that are fixed. In particular, under our license agreement with Samsung, the

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license fees payable by Samsung are subject to certain adjustments and conditions, and we therefore cannot
provide assurances that the revenues generated by this license will not decline in the future. In addition, some of
our material license agreements may contain rights by the customer to terminate for convenience, or upon certain
other events, such as change of control, material breach, insolvency or bankruptcy proceedings. If we are
unsuccessful in entering into license agreements with new customers or renewing license agreements with
existing customers, on favorable terms or at all, or if they are terminated, our results of operations may decline
significantly.

Our business and operations could suffer in the event of security breaches.

Attempts by others to gain unauthorized access to our information technology systems are becoming more

sophisticated. These attempts, which might be related to industrial or other espionage, include covertly
introducing malware to our computers and networks and impersonating authorized users, among others. We seek
to detect and investigate all security incidents and to prevent their recurrence, but in some cases, we might be
unaware of an incident or its magnitude and effects. While we have not identified any material incidents of
unauthorized access to date, the theft, unauthorized use or publication of our intellectual property and/or
confidential business information could harm our competitive position and reputation, reduce the value of our
investment in research and development and other strategic initiatives or otherwise adversely affect our business.
To the extent that any future security breach results in inappropriate disclosure of our customers’ confidential
information, we may incur liability.

Failures in our products and services or in the products of our customers, including those resulting from
security vulnerabilities, defects, bugs or errors, could harm our business.

Our products and services are highly technical and complex, and among our various businesses our products
and services are crucial to providing security, payment and other critical functions for our customers’ operations.
Our products and services have from time to time contained and may in the future contain undetected errors,
bugs defects or other security vulnerabilities. Some errors in our products and services may only be discovered
after a product or service has been deployed and used by customers, and may in some cases only be detected
under certain circumstances or after extended use. In addition, because the techniques used by hackers to access
or sabotage our products and services and other technologies change and evolve frequently and generally are not
recognized until launched against a target, we may be unable to anticipate, detect or prevent these techniques and
may not address them in our data security technologies. Any errors, bugs, defects or security vulnerabilities
discovered in our solutions after commercial release could adversely affect our revenue, our customer
relationships and the market’s perception of our products and services. We may not be able to correct any errors,
bugs, defects, security flaws or vulnerabilities promptly, or at all. Any breaches, defects, errors or vulnerabilities
in our products and services could result in:

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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;

financial liability to customers for breach of certain contract provisions, including indemnification
obligations;

loss of existing or potential customers;

delayed or lost revenue;

delay or failure to attain market acceptance;

negative publicity, which would harm our reputation; and

litigation, regulatory inquiries or investigations that would be costly and harm our reputation.

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Some of our revenue is subject to the pricing policies of our customers over whom we have no control.

We have no control over our customers’ pricing of their products and there can be no assurance that licensed
products will be competitively priced or will sell in significant volumes. Any premium charged by our customers
in the price of memory and controller chips or other products over alternatives must be reasonable. If the benefits
of our technology do not match the price premium charged by our customers, the resulting decline in sales of
products incorporating our technology could harm our operating results.

Our licensing cycle is lengthy and costly, and our marketing and licensing efforts may be unsuccessful.

The process of persuading customers to adopt and license our chip interface, lighting, data security, and
other technologies can be lengthy. Even if successful, there can be no assurance that our technologies will be
used in a product that is ultimately brought to market, achieves commercial acceptance or results in significant
royalties to us. We generally incur significant marketing and sales expenses prior to entering into our license
agreements, generating a license fee and establishing a royalty stream from each customer. The length of time it
takes to establish a new licensing relationship can take many months or even years. We may incur costs in any
particular period before any associated revenue stream begins, if at all. If our marketing and sales efforts are very
lengthy or unsuccessful, then we may face a material adverse effect on our business and results of operations as a
result of failure to obtain or an undue delay in obtaining royalties.

Future revenue is difficult to predict for several reasons, and our failure to predict revenue accurately may
result in our stock price declining.

Our lengthy license negotiation cycles could make our future revenue difficult to predict because we may

not be successful in entering into licenses with our customers on our anticipated timelines.

In addition, while some of our license agreements provide for fixed, quarterly royalty payments, many of

our license agreements provide for volume-based royalties, and may also be subject to caps on royalties in a
given period. The sales volume and prices of our customers’ products in any given period can be difficult to
predict. As a result, our actual results may differ substantially from analyst estimates or our forecasts in any
given quarter.

Furthermore, a portion of our revenue comes from development and support services provided to our
customers. Depending upon the nature of the services, a portion of the related revenue may be recognized ratably
over the support period, or may be recognized according to contract revenue accounting. Contract revenue
accounting may result in deferral of the service fees to the completion of the contract, or may result in the
recognition of service fees over the period in which services are performed on a percentage-of-completion basis.

We may not be successful in entering into new markets, and our new product offerings, such as our

acquisitions of SCS, the assets of the Snowbush IP group and the Memory Interconnect Business, our
CryptoManager platform and new offerings in the mobile credential and smart card solution spaces, may not be
adopted by our customers or potential customers. In addition, once we commercially launch our products, the
sales volume of and resulting revenue from such products in any given period will be difficult to predict.

We may fail to meet our publicly announced guidance or other expectations about our business, which would
likely cause our stock price to decline.

We provide guidance regarding our expected financial and business performance including our anticipated
future revenues and operating expenses. Correctly identifying the key factors affecting business conditions and
predicting future events is inherently an uncertain process.

Such guidance may not always be accurate or may vary from actual results due to our inability to meet our

assumptions and the impact on our financial performance that could occur as a result of the various risks and

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uncertainties to our business as set forth in these risk factors. We offer no assurance that such guidance will
ultimately be accurate, and investors should treat any such guidance with appropriate caution. If we fail to meet
our guidance or if we find it necessary to revise such guidance, even if such failure or revision is seemingly
insignificant, investors and analysts may lose confidence in us and the market value of our common stock could
be materially adversely affected.

We have in the past made and may in the future make acquisitions or enter into mergers, strategic
investments, sales of assets or other arrangements that may not produce expected operating and financial
results.

From time to time, we engage in acquisitions, strategic transactions and strategic investments, such as our
acquisitions of SCS, the assets of the Snowbush IP group and the Memory Interconnect Business. Many of our
acquisitions or strategic investments entail a high degree of risk, including those involving new areas of
technology and such investments may not become liquid for several years after the date of the investment, if at
all. Our acquisitions or strategic investments may not provide the advantages that we anticipated or generate the
financial returns we expect, including if we are unable to close any pending acquisitions. For example, for any
pending or completed acquisitions, we may discover unidentified issues not discovered in due diligence, and we
may be subject to liabilities that are not covered by indemnification protection or become subject to litigation.
Achieving the anticipated benefits of business acquisitions depends in part upon our ability to integrate the
acquired businesses in an efficient and effective manner. The integration of companies that have previously
operated independently may result in significant challenges, including, among others: retaining key employees;
successfully integrating new employees, business systems and technology; retaining customers of the acquired
business; minimizing the diversion of management’s and other employees’ attention from ongoing business
matters; coordinating geographically separate organizations; consolidating research and development operations;
and consolidating corporate and administrative infrastructures.

Our strategic investments in new areas of technology may involve significant risks and uncertainties,

including distraction of management from current operations, greater than expected liabilities and expenses,
inadequate return of capital, and unidentified issues not discovered in due diligence. These investments are
inherently risky and may not be successful.

In addition, we may record impairment charges related to our acquisitions or strategic investments. Any
losses or impairment charges that we incur related to acquisitions, strategic investments or sales of assets will
have a negative impact on our financial results and the market value of our common stock, and we may continue
to incur new or additional losses related to acquisitions or strategic investments.

We may have to incur debt or issue equity securities to pay for any future acquisition, which debt could
involve restrictive covenants or which equity security issuance could be dilutive to our existing stockholders.

From time to time, we may also divest certain assets, where we may be required to provide certain
representations, warranties and covenants to their buyers. While we would seek to ensure the accuracy of such
representations and warranties and fulfillment of any ongoing obligations, we may not be completely successful
and consequently may be subject to claims by a purchaser of such assets.

A substantial portion of our revenue is derived from sources outside of the United States and this revenue and
our business generally are subject to risks related to international operations that are often beyond our
control.

For the years ended December 31, 2016 and 2015, revenues received from our international customers
constituted approximately 64% and 60%, respectively, of our total revenue. We expect that future revenue
derived from international sources will continue to represent a significant portion of our total revenue.

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To the extent that customer sales are not denominated in U.S. dollars, any royalties which are based on a
percentage of the customers’ sales that we receive as a result of such sales could be subject to fluctuations in
currency exchange rates. In addition, if the effective price of licensed products sold by our foreign customers
were to increase as a result of fluctuations in the exchange rate of the relevant currencies, demand for licensed
products could fall, which in turn would reduce our royalties. We do not use financial instruments to hedge
foreign exchange rate risk.

We currently have international business operations in the United Kingdom and the Netherlands,

international design operations in Canada, India, Finland and France, and business development operations in
Japan, Korea, Singapore and Taiwan. Our international operations and revenue are subject to a variety of risks
which are beyond our control, including:

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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;

non-compliance with our code of conduct or other corporate policies;

natural disasters, acts of war, terrorism, widespread illness or security breaches;

export controls, tariffs, import and licensing restrictions and other trade barriers;

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;

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;

unanticipated changes in foreign government laws and regulations;

increased financial accounting and reporting burdens and complexities;

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;

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;

social, political and economic instability;

geopolitical issues, including changes in diplomatic and trade relationships; and

cultural differences in the conduct of business both with customers and in conducting business in our
international facilities and international sales offices.

We and our customers are subject to many of the risks described above with respect to companies which are

located in different countries. There can be no assurance that one or more of the risks associated with our
international operations will not result in a material adverse effect on our business, financial condition or results
of operations.

Weak global economic conditions may adversely affect demand for the products and services of our
customers.

Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about

global or regional economic and political conditions poses a risk as consumers and businesses may postpone
spending in response to tighter credit, negative financial news and declines in income or asset values, which
could have a material negative effect on the demand for the products of our customers in the foreseeable future.

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If our customers experience reduced demand for their products as a result of global or regional economic
conditions or otherwise, this could result in reduced royalty revenue and our business and results of operations
could be harmed.

If our counterparties are unable to fulfill their financial and other obligations to us, our business and results
of operations may be affected adversely.

Any downturn in economic conditions or other business factors could threaten the financial health of our
counterparties, including companies with whom we have entered into licensing and/or settlement agreements,
and their ability to fulfill their financial and other obligations to us. Such financial pressures on our
counterparties may eventually lead to bankruptcy proceedings or other attempts to avoid financial obligations
that are due to us. Because bankruptcy courts have the power to modify or cancel contracts of the petitioner
which remain subject to future performance and alter or discharge payment obligations related to pre-petition
debts, we may receive less than all of the payments that we would otherwise be entitled to receive from any such
counterparty as a result of bankruptcy proceedings.

If we are unable to attract and retain qualified personnel, our business and operations could suffer.

Our success is dependent upon our ability to identify, attract, compensate, motivate and retain qualified
personnel, especially engineers, senior management and other key personnel. The loss of the services of any key
employees could be disruptive to our development efforts or business relationships and could cause our business
and operations to suffer.

We are subject to various government restrictions and regulations, including on the sale of products and
services that use encryption technology and those related to privacy and other consumer protection matters.

Various countries have adopted controls, license requirements and restrictions on the export, import and use

of products or services that contain encryption technology. In addition, governmental agencies have proposed
additional requirements for encryption technology, such as requiring the escrow and governmental recovery of
private encryption keys. Restrictions on the sale or distribution of products or services containing encryption
technology may impact the ability of RSD to license its data security technologies to the manufacturers and
providers of such products and services in certain markets or may require RSD or its customers to make changes
to the licensed data security technology that is embedded in such products to comply with such restrictions.
Government restrictions, or changes to the products or services of RSD’s customers to comply with such
restrictions, could delay or prevent the acceptance and use of such customers’ products and services. In addition,
the United States and other countries have imposed export controls that prohibit the export of encryption
technology to certain countries, entities and individuals. Our failure to comply with export and use regulations
concerning encryption technology of RSD could subject us to sanctions and penalties, including fines, and
suspension or revocation of export or import privileges.

We are subject to a variety of laws and regulations in the United States, the European Union and other
countries that involve, for example, user privacy, data protection and security, content and consumer protection.
A number of proposals are pending before federal, state, and foreign legislative and regulatory bodies that could
significantly affect our business. Existing and proposed laws and regulations can be costly to comply with and
can delay or impede the development of new products, result in negative publicity, increase our operating costs
and subject us to claims or other remedies.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established

new disclosure and reporting requirements for those companies who use “conflict” minerals mined from the
Democratic Republic of Congo and adjoining countries in their products, whether or not these products are
manufactured by third parties. These requirements could affect the sourcing and availability of minerals that are

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used in the manufacture of our products. We have to date incurred costs and expect to incur significant additional
costs associated with complying with the disclosure requirements, including for example, due diligence in regard
to the sources of any conflict minerals used in our products, in addition to the cost of remediation and other
changes to products, processes, or sources of supply as a consequence of such verification activities.
Additionally, we may face reputational challenges with our customers and other stakeholders if we are unable to
sufficiently verify the origins of all minerals used in our products through the due diligence procedures that we
implement. We may also face challenges with government regulators and our customers and suppliers if we are
unable to sufficiently verify that the metals used in our products are conflict free.

Our operations are subject to risks of natural disasters, acts of war, terrorism, widespread illness or security
breach at our domestic and international locations, any one of which could result in a business stoppage and
negatively affect our operating results.

Our business operations depend on our ability to maintain and protect our facilities, computer systems and
personnel, which are primarily located in the San Francisco Bay Area in the United States, the United Kingdom,
the Netherlands, India and Australia. The San Francisco Bay Area is in close proximity to known earthquake
fault zones. Our facilities and transportation for our employees are susceptible to damage from earthquakes and
other natural disasters such as fires, floods and similar events. Should a catastrophe disable our facilities, we do
not have readily available alternative facilities from which we could conduct our business, so any resultant work
stoppage could have a negative effect on our operating results. We also rely on our network infrastructure and
technology systems for operational support and business activities which are subject to physical and cyber
damage, and also susceptible to other related vulnerabilities common to networks and computer systems. Acts of
terrorism, widespread illness, war and any event that causes failures or interruption in our network infrastructure
and technology systems could have a negative effect at our international and domestic facilities and could harm
our business, financial condition, and operating results.

We do not have extensive experience in manufacturing and marketing products and, as a result, may be
unable to sustain and grow a profitable commercial market for new and existing products.

We do not have extensive experience in creating, manufacturing and marketing products, including our
CryptoManager platform, our RLD product offerings and new offerings that have resulted from our acquisition
of SCS in the mobile credential and smart card solution spaces, and our acquisitions of the assets of the
Snowbush IP group and the Memory Interconnect Business. These and other new offerings may present new and
difficult challenges, and we may be subject to claims if customers of these offerings experience delays, failures,
non-performance or other quality issues. In particular, we may experience difficulties with product design,
qualification, manufacturing, marketing or certification that could delay or prevent our development, introduction
or marketing of new products. Although we intend to design our products to be fully compliant with applicable
industry standards, proprietary enhancements may not in the future result in full conformance with existing
industry standards under all circumstances.

If we fail to introduce products that meet the demand of our customers or penetrate new markets in which
we expend significant resources, our revenues will decrease over time and our financial condition could suffer.
Additionally, if we concentrate resources on a new market that does not prove profitable or sustainable, it could
damage our reputation and limit our growth, and our financial condition could decline.

We rely on a number of third-party providers for data center hosting facilities, equipment, maintenance and
other services, and the loss of, or problems with, one or more of these providers may impede our growth or
cause us to lose customers.

We rely on third-party providers to supply data center hosting facilities, equipment, maintenance and other

services in order to provide some of our services, including in our offerings of our advanced mobile payment
platform and smart ticketing platform, and have entered into various agreements for such services. The

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continuous availability of our service depends on the operations of those facilities, on a variety of network
service providers and on third-party vendors. In addition, we depend on our third-party facility providers’ ability
to protect these facilities against damage or interruption from natural disasters, power or telecommunications
failures, criminal acts, cyber-attacks and similar events. If there are any lapses of service or damage to a facility,
we could experience lengthy interruptions in our service as well as delays and additional expenses in arranging
new facilities and services. Even with current and planned disaster recovery arrangements, our business could be
harmed. Any interruptions or delays in our service, whether as a result of third-party error, our own error, natural
disasters, criminal acts, security breaches or other causes, whether accidental or willful, could harm our
relationships with customers, harm our reputation and cause our revenue to decrease and/or our expenses to
increase. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us
for any losses that we may incur. These factors in turn could further reduce our revenue, subject us to liability
and cause us to issue credits or cause us to lose customers, any of which could materially adversely affect our
business.

We rely on third parties for a variety of services, including manufacturing, and these third parties’ failure to
perform these services adequately could materially and adversely affect our business.

We rely on third parties for a variety of services, including our manufacturing supply chain partners and
third parties within our sales and distribution channels. Certain of these third parties are, and may be, our sole
manufacturer or sole source of production materials. If we fail to manage our relationship with these
manufacturers and suppliers effectively, or if they experience delays, disruptions, capacity constraints or quality
control problems in their operations, our ability to ship products to our customers could be impaired and our
competitive position and reputation could be harmed. In addition, any adverse change in any of our
manufacturers and suppliers’ financial or business condition could disrupt our ability to supply quality products
to our customers. If we are required to change our manufacturers, we may lose revenue, incur increased costs and
damage our end-customer relationships. In addition, qualifying a new manufacturer and commencing production
can be an expensive and lengthy process. If our third party manufacturers or suppliers are unable to provide us
with adequate supplies of high-quality products for any other reason, we could experience a delay in our order
fulfillment, and our business, operating results and financial condition would be adversely affected. In the event
these and other third parties we rely on fail to provide their services adequately, including as a result of errors in
their systems or events beyond their control, or refuse to provide these services on terms acceptable to us or at
all, and we are not able to find suitable alternatives, our business may be materially and adversely affected. In
addition, our orders may represent a relatively small percentage of the overall orders received by our
manufacturers from their customers. As a result, fulfilling our orders may not be considered a priority in the
event our manufacturers are constrained in their ability to fulfill all of their customer obligations in a timely
manner. If our manufacturers are unable to provide us with adequate supplies of high-quality products, or if we
or our manufacturers are unable to obtain adequate quantities of components, it could cause a delay in our order
fulfillment, in which case our business, operating results and financial condition could be adversely affected.

Warranty and product liability claims brought against us could cause us to incur significant costs and
adversely affect our operating results as well as our reputation and relationships with customers.

We may from time to time be subject to warranty and product liability claims with regard to product
performance and our services. We could incur losses as a result of warranty, support, repair or replacement costs
in response to customer complaints or in connection with the resolution of contemplated or actual legal
proceedings relating to such claims. In addition to potential losses arising from claims and related legal
proceedings, warranty and product liability claims could affect our reputation and our relationship with
customers. We generally attempt to limit the maximum amount of indemnification or liability that we could be
exposed to under our contracts, however, this is not always possible.

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Any failure in our delivery of high-quality technical support services may adversely affect our relationships
with our customers and our financial results.

Our customers depend on our support organization to resolve technical issues and provide ongoing

maintenance relating to our products and services. We may be unable to respond quickly enough to accommodate
short-term increases in customer demand for support services. Increased customer demand for these services,
without corresponding revenues, could increase costs and adversely affect our operating results. In addition, our
sales process is highly dependent on our offerings and business reputation and on positive recommendations
from our existing customers. Any failure to maintain high-quality technical support, or a market perception that
we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our solutions to
existing and prospective customers, and our business, operating results and financial position.

Certain software that we use in certain of our products is licensed from third parties and, for that reason, may
not be available to us in the future, which has the potential to delay product development and production or
cause us to incur additional expense, which could materially adversely affect our business, financial
condition, operating results and cash flow.

Some of our products and services contain software licensed from third parties. Some of these licenses may
not be available to us in the future on terms that are acceptable to us or allow our products to remain competitive.
The loss of these licenses or the inability to maintain any of them on commercially acceptable terms could delay
development of future offerings or the enhancement of existing products and services. We may also choose to
pay a premium price for such a license in certain circumstances where continuity of the licensed product would
outweigh the premium cost of the license. The unavailability of these licenses or the necessity of agreeing to
commercially unreasonable terms for such licenses could materially adversely affect our business, financial
condition, operating results and cash flow.

Certain software we use is from open source code sources, which, under certain circumstances, may lead to
unintended consequences and, therefore, could materially adversely affect our business, financial condition,
operating results and cash flow.

We use open source software in our services, including our advanced mobile payment platform and smart

ticketing platform, and we intend to continue to use open source software in the future. From time to time, there
have been claims challenging the ownership of open source software against companies that incorporate open
source software into their products or alleging that these companies have violated the terms of an open source
license. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open
source software or alleging that we have violated the terms of an open source license. Litigation could be costly
for us to defend, have a negative effect on our operating results and financial condition or require us to devote
additional research and development resources to change our solutions. In addition, if we were to combine our
proprietary software solutions with open source software in certain manners, we could, under certain open source
licenses, be required to publicly release the source code of our proprietary software solutions. If we
inappropriately use open source software, we may be required to re-engineer our solutions, discontinue the sale
of our solutions, release the source code of our proprietary software to the public at no cost or take other remedial
actions. There is a risk that open source licenses could be construed in a way that could impose unanticipated
conditions or restrictions on our ability to commercialize our solutions, which could adversely affect our
business, operating results and financial condition.

Our business and operating results could be harmed if we undertake any restructuring activities.

From time to time, we may undertake restructurings of our business, such as the restructuring and plan of

termination that we undertook in the fourth quarter of 2015. There are several factors that could cause
restructurings to have adverse effects on our business, financial condition and results of operations. These
include potential disruption of our operations, the development of our technology, the deliveries to our customers

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and other aspects of our business. Loss of sales, service and engineering talent, in particular, could damage our
business. Any restructuring would require substantial management time and attention and may divert
management from other important work. Employee reductions or other restructuring activities also would cause
us to incur restructuring and related expenses such as severance expenses. Moreover, we could encounter delays
in executing any restructuring plans, which could cause further disruption and additional unanticipated expense.

Risks Related to Capitalization Matters and Corporate Governance

The price of our common stock may continue to fluctuate.

Our common stock is listed on The NASDAQ Global Select Market under the symbol “RMBS.” The trading
price of our common stock has at times experienced price volatility and may continue to fluctuate significantly in
response to various factors, some of which are beyond our control. Some of these factors include:

•

•

•

•

•

•

•

•

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;

our signing or not signing new licenses and the loss of strategic relationships with any customer;

announcements of technological innovations or new products by us, our customers or our competitors;

changes in our strategies, including changes in our licensing focus and/or acquisitions of companies
with business models or target markets different from our own;

positive or negative reports by securities analysts as to our expected financial results and business
developments;

developments with respect to patents or proprietary rights and other events or factors;

new litigation and the unpredictability of litigation results or settlements; and

issuance of additional securities by us, including in acquisitions.

In addition, the stock market in general, and prices for companies in our industry in particular, have
experienced extreme volatility that often has been unrelated to the operating performance of such companies.
These broad market and industry fluctuations may adversely affect the price of our common stock, regardless of
our operating performance.

We have outstanding senior convertible notes in an aggregate principal amount totaling $138.0 million.

Because these notes are convertible into shares of our common stock, volatility or depressed prices of our
common stock could have a similar effect on the trading price of such notes. In addition, the existence of these
notes may encourage short selling in our common stock by market participants because the conversion of the
notes could depress the price of our common stock.

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We have been party to, and may in the future be subject to, lawsuits relating to securities law matters which
may result in unfavorable outcomes and significant judgments, settlements and legal expenses which could
cause our business, financial condition and results of operations to suffer.

We and certain of our current and former officers and directors, as well as our current auditors, were subject

from 2006 to 2011 to several stockholder derivative actions, securities fraud class actions and/or individual
lawsuits filed in federal court against us and certain of our current and former officers and directors. The
complaints generally alleged that the defendants violated the federal and state securities laws and stated state law
claims for fraud and breach of fiduciary duty. Although to date these complaints have either been settled or
dismissed, the amount of time to resolve any future lawsuits is uncertain, and these matters could require
significant management and financial resources. Unfavorable outcomes and significant judgments, settlements
and legal expenses in litigation related to any future securities law claims could have material adverse impacts on
our business, financial condition, results of operations, cash flows and the trading price of our common stock.

21

We are leveraged financially, which could adversely affect our ability to adjust our business to respond to
competitive pressures and to obtain sufficient funds to satisfy our future research and development needs, to
protect and enforce our intellectual property, and to meet other needs.

We have material indebtedness. In August 2013, we issued $138.0 million aggregate principal amount of

our 2018 Notes which remain outstanding. The degree to which we are leveraged could have negative
consequences, including, but not limited to, the following:

•

•

•

•

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;

our ability to obtain additional financing in the future for working capital, capital expenditures,
acquisitions, litigation, general corporate or other purposes may be limited;

a substantial portion of our cash flows from operations in the future may be required for the payment of
the principal amount of our existing indebtedness when it becomes due at maturity in August 2018; and

we may be required to make cash payments upon any conversion of the 2018 Notes, which would
reduce our cash on hand.

A failure to comply with the covenants and other provisions of our debt instruments could result in events of

default under such instruments, which could permit acceleration of all of our outstanding 2018 Notes. Any
required repurchase of the 2018 Notes as a result of a fundamental change or acceleration of the 2018 Notes
would reduce our cash on hand such that we would not have those funds available for use in our business.

If we are at any time unable to generate sufficient cash flows from operations to service our indebtedness
when payment is due, we may be required to attempt to renegotiate the terms of the instruments relating to the
indebtedness, seek to refinance all or a portion of the indebtedness or obtain additional financing. There can be
no assurance that we will be able to successfully renegotiate such terms, that any such refinancing would be
possible or that any additional financing could be obtained on terms that are favorable or acceptable to us.

Compliance with changing regulation of corporate governance and public disclosure may result in additional
expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure have
historically created uncertainty for companies such as ours. Any new or changed laws, regulations and standards
are subject to varying interpretations due to their lack of specificity, and as a result, their application in practice
may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in
continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to
disclosure and governance practices.

Our certificate of incorporation and bylaws, Delaware law, our outstanding convertible notes and certain
other agreements contain provisions that could discourage transactions resulting in a change in control,
which may negatively affect the market price of our common stock.

Our certificate of incorporation, our bylaws and Delaware law contain provisions that might enable our
management to discourage, delay or prevent a change in control. In addition, these provisions could limit the
price that investors would be willing to pay in the future for shares of our common stock. Pursuant to such
provisions:

•

•

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;

our board of directors is staggered into two classes, only one of which is elected at each annual
meeting;

22

•

•

•

•

•

stockholder action by written consent is prohibited;

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;

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;

our stockholders have no authority to call special meetings of stockholders; and

our board of directors is expressly authorized to make, alter or repeal our bylaws.

We are also subject to Section 203 of the Delaware General Corporation Law, which provides, subject to
enumerated exceptions, that if a person acquires 15% or more of our outstanding voting stock, the person is an
“interested stockholder” and may not engage in any “business combination” with us for a period of three years
from the time the person acquired 15% or more of our outstanding voting stock.

Certain provisions of our outstanding 2018 Notes could make it more difficult or more expensive for a third

party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of
such 2018 Notes will have the right, at their option, to require us to repurchase, at a cash repurchase price equal
to 100% of the principal amount plus accrued and unpaid interest on such 2018 Notes, all or a portion of their
2018 Notes. We may also be required to increase the conversion rate of such 2018 Notes in the event of certain
fundamental changes.

Unanticipated changes in our tax rates or in the tax laws and regulations could expose us to additional
income tax liabilities which could affect our operating results and financial condition.

We are subject to income taxes in both the United States and various foreign jurisdictions. Significant

judgment is required in determining our worldwide provision for income taxes and, in the ordinary course of
business, there are many transactions and calculations where the ultimate tax determination is uncertain. Our
effective tax rate could be adversely affected by changes in the mix of earnings in countries with differing
statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and
regulations as well as other factors. Our tax determinations are regularly subject to audit by tax authorities and
developments in those audits could adversely affect our income tax provision, and we are currently undergoing
such audits of certain of our tax returns. Although we believe that our tax estimates are reasonable, the final
determination of tax audits or tax disputes may be different from what is reflected in our historical income tax
provisions which could affect our operating results.

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Litigation, Regulation and Business Risks Related to our Intellectual Property

We have in the past, and may in the future, become engaged in litigation stemming from our efforts to protect
and enforce our patents and intellectual property and make other claims, which could adversely affect our
intellectual property rights, distract our management and cause substantial expenses and declines in our
revenue and stock price.

We seek to diligently protect our intellectual property rights and will continue to do so. While we are not
currently involved in intellectual property litigation, any future litigation, whether or not determined in our favor
or settled by us, would be expected to be costly, may cause delays applicable to our business (including delays in
negotiating licenses with other actual or potential customers), would be expected to tend to discourage future
design partners, would tend to impair adoption of our existing technologies and would divert the efforts and
attention of our management and technical personnel from other business operations. In addition, we may be
unsuccessful in any litigation if we have difficulty obtaining the cooperation of former employees and agents

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who were involved in our business during the relevant periods related to our litigation and are now needed to
assist in cases or testify on our behalf. Furthermore, any adverse determination or other resolution in litigation
could result in our losing certain rights beyond the rights at issue in a particular case, including, among other
things: our being effectively barred from suing others for violating certain or all of our intellectual property
rights; our patents being held invalid or unenforceable or not infringed; our being subjected to significant
liabilities; our being required to seek licenses from third parties; our being prevented from licensing our patented
technology; or our being required to renegotiate with current customers on a temporary or permanent basis.

From time to time, we are subject to proceedings by government agencies that may result in adverse
determinations against us and could cause our revenue to decline substantially.

An adverse resolution by or with a governmental agency could result in severe limitations on our ability to
protect and license our intellectual property, and could cause our revenue to decline substantially. Third parties
have and may attempt to use adverse findings by a government agency to limit our ability to enforce or license
our patents in private litigations, to challenge or otherwise act against us with respect to such government agency
proceedings.

Further, third parties have sought and may seek review and reconsideration of the patentability of inventions

claimed in certain of our patents by the U.S. Patent and Trademark Office (“USPTO”) and/or the European
Patent Office (the “EPO”). Any re-examination proceedings may be reviewed by the USPTO’s Patent Trial and
Appeal Board (“PTAB”). The PTAB and the related former Board of Patent Appeals and Interferences have
previously issued decisions in a few cases, finding some challenged claims of Rambus’ patents to be valid, and
others to be invalid. Decisions of the PTAB are subject to further USPTO proceedings and/or appeal to the Court
of Appeals for the Federal Circuit. A final adverse decision, not subject to further review and/or appeal, could
invalidate some or all of the challenged patent claims and could also result in additional adverse consequences
affecting other related U.S. or European patents, including in any intellectual property litigation. If a sufficient
number of such patents are impaired, our ability to enforce or license our intellectual property would be
significantly weakened and could cause our revenue to decline substantially.

The pendency of any governmental agency acting as described above may impair our ability to enforce or

license our patents or collect royalties from existing or potential customers, as any litigation opponents may
attempt to use such proceedings to delay or otherwise impair any pending cases and our existing or potential
customers may await the final outcome of any proceedings before agreeing to new licenses or to paying royalties.

Litigation or other third-party claims of intellectual property infringement could require us to expend
substantial resources and could prevent us from developing or licensing our technology on a cost-effective
basis.

Our research and development programs are in highly competitive fields in which numerous third parties
have issued patents and patent applications with claims closely related to the subject matter of our programs. We
have also been named in the past, and may in the future be named, as a defendant in lawsuits claiming that our
technology infringes upon the intellectual property rights of third parties. As we develop additional products and
technology, we may face claims of infringement of various patents and other intellectual property rights by third
parties. In the event of a third-party claim or a successful infringement action against us, we may be required to
pay substantial damages, to stop developing and licensing our infringing technology, to develop non-infringing
technology, and to obtain licenses, which could result in our paying substantial royalties or our granting of cross
licenses to our technologies. We may not be able to obtain licenses from other parties at a reasonable cost, or at
all, which could cause us to expend substantial resources, or result in delays in, or the cancellation of, new
products. Moreover, customers and/or suppliers of our products may seek indemnification for alleged
infringement of intellectual property rights. We could be liable for direct and consequential damages and
expenses including attorneys’ fees. A future obligation to indemnify our customers and/or suppliers may harm
our business, financial condition and operating results.

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If we are unable to protect our inventions successfully through the issuance and enforcement of patents, our
operating results could be adversely affected.

We have an active program to protect our proprietary inventions through the filing of patents. There can be

no assurance, however, that:

•

•

•

•

•

•

•

•

•

•

any current or future U.S. or foreign patent applications will be approved and not be challenged by
third parties;

our issued patents will protect our intellectual property and not be challenged by third parties;

the validity of our patents will be upheld;

our patents will not be declared unenforceable;

the patents of others will not have an adverse effect on our ability to do business;

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;

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;

new legal theories and strategies utilized by our competitors will not be successful;

others will not independently develop similar or competing chip interfaces or design around any
patents that may be issued to us; or

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.

If any of the above were to occur, our operating results could be adversely affected.

Furthermore, recent patent reform legislation, such as the Leahy-Smith America Invents Act, could increase
the uncertainties and costs surrounding the prosecution of any patent applications and the enforcement or defense
of our licensed patents. The federal courts, the USPTO, the Federal Trade Commission, and the U.S.
International Trade Commission have also recently taken certain actions and issued rulings that have been
viewed as unfavorable to patentees. While we cannot predict what form any new patent reform laws or
regulations may ultimately take, or what impact recent or future reforms may have on our business, any laws or
regulations that restrict or negatively impact our ability to enforce our patent rights against third parties could
have a material adverse effect on our business.

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In addition, our patents will continue to expire according to their terms, with expiration dates ranging from
2017 to 2038. Our failure to continuously develop or acquire successful innovations and obtain patents on those
innovations could significantly harm our business, financial condition, results of operations, or cash flows.

Our inability to protect and own the intellectual property we create would cause our business to suffer.

We rely primarily on a combination of license, development and nondisclosure agreements, trademark, trade

secret and copyright law and contractual provisions to protect our non-patentable intellectual property rights. If
we fail to protect these intellectual property rights, our customers and others may seek to use our technology
without the payment of license fees and royalties, which could weaken our competitive position, reduce our
operating results and increase the likelihood of costly litigation. The growth of our business depends in part on
the use of our intellectual property in the products of third party manufacturers, and our ability to enforce
intellectual property rights against them to obtain appropriate compensation. In addition, effective trade secret
protection may be unavailable or limited in certain foreign countries. Although we intend to protect our rights
vigorously, if we fail to do so, our business will suffer.

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Effective protection of trademarks, copyrights, domain names, patent rights, and other intellectual property

rights is expensive and difficult to maintain, both in terms of application and maintenance costs, as well as the
costs of defending and enforcing those rights. The efforts we have taken to protect our intellectual property rights
may not be sufficient or effective. Our intellectual property rights may be infringed, misappropriated, or
challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. In addition,
the laws or practices of certain countries do not protect our proprietary rights to the same extent as do the laws of
the United States. Significant impairments of our intellectual property rights, and limitations on our ability to
assert our intellectual property rights against others, could have a material and adverse effect on our business.

Third parties may claim that our products or services infringe on their intellectual property rights, exposing us
to litigation that, regardless of merit, may be costly to defend.

Our success and ability to compete are also dependent upon our ability to operate without infringing upon
the patent, trademark and other intellectual property rights of others. Third parties may claim that our current or
future products or services infringe upon their intellectual property rights. Any such claim, with or without merit,
could be time consuming, divert management’s attention from our business operations and result in significant
expenses. We cannot assure you that we would be successful in defending against any such claims. In addition,
parties making these claims may be able to obtain injunctive or other equitable relief affecting our ability to
license the products that incorporate the challenged intellectual property. As a result of such claims, we may be
required to obtain licenses from third parties, develop alternative technology or redesign our products. We cannot
be sure that such licenses would be available on terms acceptable to us, if at all. If a successful claim is made
against us and we are unable to develop or license alternative technology, our business, financial condition,
operating results and cash flows could be materially adversely affected.

We rely upon the accuracy of our customers’ recordkeeping, and any inaccuracies or payment disputes for
amounts owed to us under our licensing agreements may harm our results of operations.

Many of our license agreements require our customers to document the manufacture and sale of products
that incorporate our technology and report this data to us on a quarterly basis. While licenses with such terms
give us the right to audit books and records of our customers to verify this information, audits rarely are
undertaken because they can be expensive, time consuming, and potentially detrimental to our ongoing business
relationship with our customers. Therefore, we typically rely on the accuracy of the reports from customers
without independently verifying the information in them. Our failure to audit our customers’ books and records
may result in our receiving more or less royalty revenue than we are entitled to under the terms of our license
agreements. If we conduct royalty audits in the future, such audits may trigger disagreements over contract terms
with our customers and such disagreements could hamper customer relations, divert the efforts and attention of
our management from normal operations and impact our business operations and financial condition.

Any dispute regarding our intellectual property may require us to indemnify certain customers, the cost of
which could severely hamper our business operations and financial condition.

In any potential dispute involving our patents or other intellectual property, our customers could also
become the target of litigation. While we generally do not indemnify our customers, some of our agreements
provide for indemnification, and some require us to provide technical support and information to a customer that
is involved in litigation involving use of our technology. In addition, we may be exposed to indemnification
obligations, risks and liabilities that were unknown at the time of acquisitions, including with respect to our
acquisitions of SCS, the assets of the Snowbush IP group and the Memory Interconnect Business, and we may
agree to indemnify others in the future. Any of these indemnification and support obligations could result in
substantial expenses. In addition to the time and expense required for us to indemnify or supply such support to
our customers, a customer’s development, marketing and sales of licensed semiconductors, lighting, mobile
communications and data security technologies could be severely disrupted or shut down as a result of litigation,
which in turn could severely hamper our business operations and financial condition as a result of lower or no
royalty payments.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of December 31, 2016, we occupied offices in the leased facilities described below:

Number of
Offices
Under Lease

Location

Primary Use

6

United States

Sunnyvale, CA (Corporate
Headquarters)
Chapel Hill, NC
Brecksville, OH (2)

San Francisco, CA
Richardson, TX
Westlake Village, CA

Bangalore, India

Executive and administrative offices, research and development,
sales and marketing and service functions
Research and development
Research and development, prototyping and light manufacturing
facility
Research and development
Research and development
Research and development
Administrative offices, research and development and service
functions
Business development
Business development
Business development
Business development
Business development

Tokyo, Japan
Seoul, Korea
Shanghai, China
Taipei, Taiwan
Melbourne, Australia
Rotterdam, The Netherlands Administrative offices, research and development, sales and

East Kilbride, United
Kingdom
Toronto, Canada
Espoo, Finland

marketing and service functions
Administrative offices, research and development, sales and
marketing and service functions
Research and development
Research and development

1

1
1
1
1
1
1

1

1
1

Item 3. Legal Proceedings

We are not currently a party to any material pending legal proceeding; however, from time to time, we may

become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final
outcome of these ordinary course matters will not have a material adverse effect on our business, operating
results, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on us
because of defense and settlement costs, diversion of management resources and other factors.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Our Common Stock is listed on The NASDAQ Global Select Market under the symbol “RMBS.” The
following table sets forth for the periods indicated the high and low sales price per share of our common stock as
reported on The NASDAQ Global Select Market.

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Year Ended
December 31, 2016

Year Ended
December 31, 2015

High

Low

High

Low

$13.99
$13.97
$14.50
$14.39

$10.66
$11.13
$11.42
$11.44

$12.88
$15.49
$14.80
$14.07

$10.01
$12.44
$10.36
$ 9.86

The graph below compares the cumulative 5-year total return of holders of Rambus Inc.’s common stock

with the cumulative total returns of the NASDAQ Composite index and the RDG Semiconductor Composite
index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the
reinvestment of all dividends) from December 31, 2011 to December 31, 2016.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Rambus Inc., the NASDAQ Composite Index
and the RDG Semiconductor Composite Index

$250

$200

$150

$100

$50

$0

12/11

12/12

12/13

12/14

12/15

12/16

Rambus Inc.

NASDAQ Composite

RDG Semiconductor Composite

*$100 invested on 12/31/11 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

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Fiscal years ending:

Rambus Inc.
NASDAQ Composite
RDG Semiconductor Composite

12/11

12/12

12/13

12/14

12/15

12/16

100.00
100.00
100.00

64.50
116.41
101.55

125.43
165.47
137.33

146.89
188.69
170.90

153.51
200.32
153.05

182.38
216.54
206.30

The stock price performance included in this graph is not necessarily indicative of future stock price
performance.

Information regarding our securities authorized for issuance under equity compensation plans will be

included in Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters,” of this report on Form 10-K.

As of January 31, 2017, there were 521 holders of record of our common stock. Since many of the shares of
our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate
the total number of beneficial stockholders represented by these record holders.

We have never paid or declared any cash dividends on our common stock or other securities.

Share Repurchase Program

On January 21, 2015, our Board approved a share repurchase program authorizing the repurchase of up to an

aggregate of 20.0 million shares. Share repurchases under the plan may be made through the open market,
established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and
regulations. There is no expiration date applicable to the plan. After giving effect to the accelerated share
repurchase program detailed in the table below, we had remaining authorization to repurchase approximately
11.5 million shares.

We record stock repurchases as a reduction to stockholders’ equity. We record a portion of the purchase
price of the repurchased shares as an increase to accumulated deficit when the price of the shares repurchased
exceeds the average original proceeds per share received from the issuance of common stock.

Period

Cumulative shares repurchased as of December 31,

2015 (1)

April 1, 2016 — April 30, 2016 (1)

Cumulative shares repurchased as of December 31,

Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs

Maximum
Number of
Shares that
May Yet be
Purchased
Under the
Plans or
Programs

Total Number
of Shares
Purchased

Average Price
Paid per
Share

7,812,500
735,861

$11.70
$11.70

7,812,500
735,861

12,187,500
11,451,639

2016

8,548,361

8,548,361

(1)

In the fourth quarter of 2015, we entered into an accelerated share repurchase program with a financial
institution to repurchase an aggregate of $100.0 million of our common stock. We made an upfront payment
of $100.0 million pursuant to the accelerated share repurchase program and received an initial delivery
of 7.8 million shares which were retired. During the second quarter of 2016, the accelerated share
repurchase program was completed and we received an additional 0.7 million shares of our common stock,
which were retired, as the final settlement of the accelerated share repurchase program. The total shares of

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our common stock received and retired under the terms of the accelerated share repurchase program were
8.5 million, with an average price paid per share of $11.70. See Note 13, “Stockholders’ Equity,” of Notes
to Consolidated Financial Statements of this Form 10-K for further discussion.

Item 6. Selected Financial Data

The following selected consolidated financial data as of and for the years ended December 31, 2016, 2015,

2014, 2013 and 2012 was derived from our consolidated financial statements. The following selected
consolidated financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” and Item 8, “Financial Statements and Supplementary Data,”
and other financial data included elsewhere in this report. Our historical results of operations are not necessarily
indicative of results of operations to be expected for any future period.

Total revenue
Net income (loss)
Net income (loss) per share:
Basic
Diluted
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities
Total assets
Convertible notes
Stockholders’ equity

Years Ended December 31,

2016 (1) (2)

2015 (2) (3) (4)

2014 (2)

2013 (1) (2)

2012 (1)

$336,597
6,820
$

(In thousands, except per share amounts)
$ 234,051
$271,501
$296,558
$296,278
$ (33,748) $(134,336)
$ 26,201
$211,388

$
$

0.06
0.06

$
$

1.84
1.80

$
$

0.23
0.22

$
$

(0.30) $
(0.30) $

(1.21)
(1.21)

$172,182
$783,496
$126,167
$552,782

$287,706
$718,021
$119,418
$526,533

$300,109
$586,235
$113,045
$391,622

$387,662
$710,485
$270,782
$340,229

$ 203,330
$ 586,886
$ 146,630
$ 321,594

(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. The net loss for the years ended December 31, 2013 and
2012 included $17.8 million and $35.5 million, respectively, of impairment of goodwill and long-lived
assets.

(2) The net income (loss) for the years ended December 31, 2016, 2015, 2014 and 2013 included $0.6 million,
$2.0 million, $2.0 million, and $0.5 million, respectively, of gain from settlement which was reflected as a
reduction of operating costs and expenses.

(3) 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 $100.0 million paid under the accelerated share repurchase program as well as

the $174.5 million net impact of the reversal of the deferred tax asset valuation allowance.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of

1933 and Section 21E of the Securities Exchange Act of 1934 as described in more detail under “Note Regarding
Forward-Looking Statements.” Our forward-looking statements are based on current expectations, forecasts and
assumptions and are subject to risks, uncertainties and changes in condition, significance, value and effect. As a
result of the factors described herein, and in the documents incorporated herein by reference, including, in
particular, those factors described under “Risk Factors,” we undertake no obligation to publicly disclose any
revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing
this report with the Securities and Exchange Commission.

The following discussion and analysis should be read in conjunction with the consolidated financial

statements and related notes that are included elsewhere in this report.

30

Executive Summary

In 2016, we continued our transition from a pure IP licensing model to one that delivers increasing value to

the market through chips, customizable IP cores, software and services. In line with our growth strategy, we
acquired four businesses in 2016 in the fields of mobile payments, smart ticketing, memory buffer chips and
SerDes IP cores. We also continued to execute on our traditional patent licensing business by signing key license
agreements with AMD, Xilinx and others. Key 2016 financial results included:

•

•

•

•

Revenue of $336.6 million;

Total Operating Costs and Expenses of $303.0 million

Annual GAAP diluted net income per share of $0.06; and

Operating cash flows of $92.5 million

Business Overview

Rambus creates innovative hardware and software technologies, driving advancements from the data center

to the mobile edge. Our chips, customizable IP cores, patent licenses, software, services, and other innovations
improve the competitive advantage of our customers. We collaborate with the industry, partnering with leading
ASIC and SoC designers, foundries, IP developers, processor companies, EDA companies and validation labs.
Our innovations are integrated into a wide range of devices and systems, powering and securing diverse
applications, including Big Data, Internet of Things, mobile, consumer and media platforms.

While we have historically focused our efforts on the development of technologies for memory, SerDes and

other chip interfaces, we have expanded our portfolio of inventions and solutions to address chip and system
security, mobile payments and smart ticketing. We intend to continue our growth into new technology fields,
consistent with our mission to create value through our innovations and to make those technologies available
through the shipment of products, the provisioning of services, as well as our licensing business models. Key to
our efforts continues to be hiring and retaining world-class inventors, scientists and engineers to lead the
development and deployment of inventions and technology solutions for our fields of focus.

Our strategy is to continue to augment our patent license business model to provide additional technology,

products and services while creating and leveraging strategic synergies to increase revenue. In support of our
strategy, we acquired four businesses in 2016 in the fields of mobile payments, smart ticketing, memory buffer
chips and SerDes IP cores. On January 25, 2016, our Security division completed the acquisition of Smart Card
Software, Ltd. (“SCS”), a privately-held company incorporated in the United Kingdom, for a pound sterling
equivalent of $104.7 million in cash. Through this purchase we acquired two complementary businesses: Bell
Identification Ltd., a leader in mobile payments, and Ecebs Ltd., a leading supplier of smart ticketing systems.
We believe these businesses complement our security division by allowing us to extend our foundational security
technology to offer differentiated, value-added security solutions to its customers.

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On August 4, 2016, our Memory and Interfaces division completed the acquisition of all the assets of
Inphi’s Memory Interconnect Business for $90 million in cash. The acquisition included product inventory,
customer contracts, supply chain agreements and intellectual property. On August 5, 2016, our Memory and
Interfaces division completed the acquisition of the assets of Semtech’s Snowbush IP group for $32 million in
cash. Snowbush IP, formerly part of Semtech’s Systems Innovation Group, is a provider of silicon-proven, high-
performance serial link solutions. We believe these acquisitions strengthen our market position for memory
buffer chip products and bolster our SerDes and IP offerings enabling us to better address the needs of the server,
networking and data center market.

Organization

We have organized the business into four operational units: (1) Memory and Interfaces, or MID, which

focuses on the design, development, manufacturing through partnerships and licensing of technology and

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solutions that is related to memory and interfaces; (2) Security, or RSD, which focuses on the design,
development, deployment and licensing of technologies for chip, system and in-field application security, anti-
counterfeiting, smart ticketing and mobile payments; (3) Emerging Solutions, or ESD, which encompasses our
long-term research and development efforts in the area of emerging technologies; and (4) Lighting, or RLD,
which focuses on the design, development and licensing of technologies for advanced LED-based lighting
solutions. As of December 31, 2016, MID and RSD met quantitative thresholds for disclosure as reportable
segments. Results for ESD and RLD are shown under “Other.” For additional information concerning segment
reporting, see Note 6, “Segments and Major Customers,” of Notes to Consolidated Financial Statements of this
Form 10-K.

Revenue Sources

Our inventions and technology solutions are offered to our customers through patent, technology, software
and IP core licenses, as well as product sales and services. Today, our primary source of revenue is derived from
patent licenses, through which we provide our customers a license to use a certain portion of our broad portfolio
of patented inventions. The license provides our customers with a defined right to use our innovations in the
customer’s own digital electronics products, systems or services, as applicable. The licenses may also define the
specific field of use where our customers may use or employ our inventions in their products. License
agreements are structured with fixed, variable or a hybrid of fixed and variable royalty payments over certain
defined periods ranging for periods of up to ten years. Leading consumer product, industrial, semiconductor and
system companies such as AMD, Broadcom, Cisco, Freescale, Fujitsu, GE, IBM, Intel, LSI, Micron, Nanya,
NVIDIA, Panasonic, Qualcomm, Renesas, Samsung, SK hynix, STMicroelectronics, Toshiba and Xilinx have
licensed our patents, the majority of which we have produced organically, for use in their own products.
Royalties from patent licenses accounted for 73%, 84% and 88% of our consolidated revenue for the years ended
December 31, 2016, 2015 and 2014, respectively.

We also offer our customers technology licenses to support the implementation and adoption of our
technology in their products or services. Our customers include leading companies such as Eaton, GE, IBM,
Panasonic, Qualcomm, Samsung, Sony and Toshiba. Our technology license offerings include a range of
technologies for incorporation into our customers’ products and systems. We also offer a range of services as part
of our technology licenses which can include know-how and technology transfer, product design and
development, system integration, and other services. These technology license agreements may have both a fixed
price (non-recurring) component and ongoing use fees and in some cases, royalties. Further, under technology
licenses, our customers typically receive licenses to our patents necessary to implement these solutions in their
products with specific rights and restrictions to the applicable patents elaborated in their individual contracts with
us. Royalties from technology licenses accounted for 6%, 5% and 4% of our consolidated revenue for the years
ended December 31, 2016, 2015 and 2014, respectively.

The remainder of our revenue is contract services and other revenue, which includes our product sales, IP

core licenses, software licenses and related implementation, support and maintenance fees, and engineering
services fees. The timing and amounts invoiced to customers can vary significantly depending on specific
contract terms and can therefore have a significant impact on deferred revenue or account receivables in any
given period. Contract and other revenue accounted for 21%, 11% and 8% of our consolidated revenue for the
years ended December 31, 2016, 2015 and 2014, respectively.

Expenses

Engineering expenses continue to play a key role in our efforts to maintain product innovations. Our
engineering expenses for 2016 increased $40.5 million as compared to the same period in 2015 primarily due to
the business acquisitions during 2016. This includes increased headcount related expenses of $12.9 million,
increased cost of sales associated with sales of memory and security products and engineering services of
$10.3 million (which includes $2.3 million related to the purchase accounting adjustment for inventory fair value

32

step-up from the acquisition of the Memory Interconnect Business), increased amortization costs of $7.0 million,
increased expenses related to software design tools of $3.7 million, increased stock-based compensation expense
of $2.4 million, increased consulting costs of $2.5 million offset by decreased prototyping costs of $0.5 million.

Sales, general and administrative expenses for 2016 increased $24.6 million as compared to the same period

in 2015 primarily due to the business acquisitions during 2016. This includes increased headcount related
expenses of $6.1 million, increased amortization costs of $5.0 million, various acquisition related costs of
$3.1 million, increased stock-based compensation expense of $3.5 million, increased consulting costs of
$2.8 million, increased facilities costs of $1.4 million and increased travel costs of $1.3 million.

Intellectual Property

As of December 31, 2016, our semiconductor, lighting, security and other technologies are covered by 1,989

U.S. and foreign patents. Additionally, we have 646 patent applications pending. Some of the patents and
pending patent applications are derived from a common parent patent application or are foreign counterpart
patent applications. We have a program to file applications for and obtain patents in the United States and in
selected foreign countries where we believe filing for such protection is appropriate and would further our overall
business strategy and objectives. In some instances, obtaining appropriate levels of protection may involve
prosecuting continuation and counterpart patent applications based on a common parent application. We believe
our patented innovations provide our customers with the ability to achieve improved performance, lower risk,
greater cost-effectiveness and other benefits in their products and services.

Trends

There are a number of trends that may have a material impact on us in the future, including but not limited
to, the evolution of memory and SerDes technology, adoption of mobile payment, smart ticketing and security
solutions, adoption of LEDs in edge-lit general lighting, the use and adoption of our inventions or technologies
generally, industry consolidation, and global economic conditions with the resulting impact on sales of consumer
electronic systems.

We have a high degree of revenue concentration. Our top five customers for each reporting period
represented approximately 63% of our revenue for 2016 as compared to 65% in 2015 and 62% in 2014. For
2016, 2015 and 2014, revenue from Micron, Samsung and SK hynix each accounted for 10% or more of our total
revenue. While we expect Samsung, SK hynix and Micron to account for a significant portion of our ongoing
licensing revenue, the particular customers which account for revenue concentration have varied from
period-to-period as a result of the addition of new contracts, expiration of existing contracts, renewals of existing
contracts, industry consolidation and the volumes and prices at which the customers have recently sold to their
customers. These variations are expected to continue in the foreseeable future.

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Our revenue from companies headquartered outside of the United States accounted for approximately 64%

in 2016 as compared to 60% in 2015 and 63% in 2014. We expect that revenue derived from international
customers will continue to represent a significant portion of our total revenue in the future. To date, the majority
of the revenue from international customers has been denominated in U.S. dollars. However, to the extent that
such customers’ sales to their customers are not denominated in U.S. dollars, any revenue that we receive as a
result of such sales could be subject to fluctuations in currency exchange rates. In addition, if the effective price
of licensed products sold by our foreign customers were to increase as a result of fluctuations in the exchange
rate of the relevant currencies, demand for licensed products could fall, which in turn would reduce our revenue.
We do not use financial instruments to hedge foreign exchange rate risk. For additional information concerning
international revenue, see Note 6, “Segments and Major Customers,” of Notes to Consolidated Financial
Statements of this Form 10-K.

Our licensing cycle for new licensees as well as renewals for existing licensees is lengthy, costly and
unpredictable without any degree of certainty. We may incur costs in any particular period before any associated

33

revenue stream begins, if at all. Our lengthy license negotiation cycles could make our future revenue difficult to
predict because we may not be successful in entering into licenses with our customers in the amounts projected,
or on our anticipated timelines.

The semiconductor industry is intensely competitive and highly cyclical, limiting our visibility with respect

to future sales. To the extent that macroeconomic fluctuations negatively affect our principal customers, the
demand for our products and technology may be significantly and adversely impacted and we may experience
substantial period-to-period fluctuations in our operating results.

The royalties we receive from our semiconductor customers are partly a function of the adoption of our

technologies by system companies. Many system companies purchase semiconductors containing our
technologies from our customers and do not have a direct contractual relationship with us. Our customers
generally do not provide us with details as to the identity or volume of licensed semiconductors purchased by
particular system companies. As a result, we face difficulty in analyzing the extent to which our future revenue
will be dependent upon particular system companies.

Global demand for effective security technologies continues to increase. In particular, highly integrated
devices such as smart phones are increasingly used for applications requiring security such as mobile payments,
corporate information and user data. Our RSD operating segment is primarily focused on positioning its DPA
countermeasures, CryptoMedia™, CryptoFirewall™ and CryptoManager™ technology solutions, and the
introduction of in-field applications mobile payments and smart ticketing solutions to our offerings to capitalize
on these trends and growing adoption among technology partners and customers.

Engineering costs as well as sales, general and administrative expenses in the aggregate and as a percentage

of revenue increased in 2016 as compared to the prior year. In the near term, we expect these costs in the
aggregate to be higher as we intend to continue to make investments in the infrastructure and technologies
required to increase our product innovation in semiconductor, security, mobile payments, smart cards and other
technologies, including costs related to the various acquisitions. In addition, while we have not been involved in
material litigation since 2014, to the extent litigation is again necessary, our expectations on the amount and
timing of any future general and administrative costs is uncertain.

As a part of our overall business strategy, from time to time, we evaluate businesses and technologies for
potential acquisition that are aligned with our core business and designed to supplement our growth, including
the acquisitions of SCS, the assets of the Snowbush IP group and the Memory Interconnect Business. Similarly,
we evaluate our current businesses and technologies that are not aligned with our core business for potential
divestiture.

34

Results of Operations

The following table sets forth, for the periods indicated, the percentage of total revenue represented by

certain items reflected in our consolidated statements of operations:

Revenue:

Royalties
Contract and other revenue

Total revenue

Operating costs and expenses:

Cost of revenue*
Research and development*
Sales, general and administrative*
Restructuring charges
Impairment of in-process research and development

intangible asset

Change in contingent consideration liability
Gain from sale of intellectual property
Gain from settlement

Total operating costs and expenses

Operating income

Interest income and other income, net
Interest expense

Interest and other income (expense), net

Income before income taxes
Provision for (benefit from) income taxes

Net income

*

Includes stock-based compensation:

Cost of revenue
Research and development
Sales, general and administrative

Segment Results

Years Ended December 31,

2016

2015

2014

78.6% 88.6% 91.6%
8.4%
21.4% 11.4%

100.0% 100.0% 100.0%

19.9% 15.3% 14.1%
38.6% 37.5% 37.1%
28.3% 23.8% 25.2%
0.0%
1.2%

—%

5.4% —% —%
(2.0)% —% —%
—% (1.2)% (1.2)%
(0.2)% (0.7)% (0.6)%

90.0% 75.9% 74.6%

10.0% 24.1% 25.4%
0.3% (0.1)%
0.5%
(3.8)% (4.2)% (8.4)%

(3.3)% (3.9)% (8.5)%

6.7% 20.2% 16.9%
4.7% (51.0)% 8.1%

2.0% 71.2%

8.8%

0.0%
2.7%
3.5%

0.0%
2.3%
2.8%

0.0%
2.4%
2.5%

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Revenue from the MID reportable segment increased approximately $17.8 million to $239.8 million for the

year ended December 31, 2016 from $222.0 million for the year ended December 31, 2015. The increase was
primarily due to sales of memory products, including revenue from the Memory and Interfaces Business and
various new development projects, higher royalty revenue recognized from SK hynix and Xilinx, offset by lower
royalty revenue from AMD, IBM and Renesas.

Segment operating income from the MID reportable segment decreased approximately $2.8 million to
$171.4 million for the year ended December 31, 2016 from $174.2 million for the year ended December 31,
2015. The decrease was primarily due to an increase in cost of sales related to sales of memory products and
increased headcount related costs due to higher number of employees in 2016 primarily due to the acquisition of
the assets of the Snowbush IP group and Memory Interconnect Business.

35

Revenue from the RSD reportable segment increased approximately $25.7 million to $76.2 million for the

year ended December 31, 2016 from $50.5 million for the year ended December 31, 2015. The increase was
primarily due to higher revenue from security technology development projects, including revenue from the
acquisition of SCS, and higher royalty revenue from Qualcomm, Xilinx and various other customers, offset by
lower royalty revenue from Nagravision, Renesas and STMicroelectronics.

Segment operating income from the RSD reportable segment increased approximately $2.9 million to
$24.3 million for the year ended December 31, 2016 from $21.4 million for the year ended December 31, 2015.
The increase was primarily due to increase in revenue as discussed above, partially offset by increased headcount
related costs due to higher number of employees in 2016 primarily due to the SCS acquisition.

Revenue from the Other segment decreased approximately $3.2 million to $20.6 million for the year ended
December 31, 2016 from $23.8 million for the year ended December 31, 2015. The decrease was primarily due
to decreased sales of light guides and decreased revenue from lighting technology development projects.

Segment operating loss from the Other segment increased approximately $1.5 million to $9.8 million for the

year ended December 31, 2016 from $8.3 million for the year ended December 31, 2015. The increase was
primarily due to decreased revenue as discussed above and lack of gain from sale of intellectual property in 2016.

Revenue from the MID reportable segment decreased approximately $4.3 million to $222.0 million for the

year ended December 31, 2015 from $226.3 million for the year ended December 31, 2014. The decrease was
primarily due to lower royalty revenue from AMD, Nanya, NVIDIA, Renesas and STMicroelectronics, offset by
higher royalty revenue from IBM and SK hynix.

Segment operating income from the MID reportable segment decreased approximately $11.3 million to
$174.2 million for the year ended December 31, 2015 from $185.5 million for the year ended December 31,
2014. The decrease was primarily due to decrease in revenue as discussed above and increased expenses related
to software design tools and increased prototyping costs.

Revenue from the RSD reportable segment increased approximately $1.2 million to $50.5 million for the

year ended December 31, 2015 from $49.3 million for the year ended December 31, 2014. The increase was
primarily due to higher revenue from security products, offset by lower royalty revenue from Qualcomm,
STMicroelectronics and a smartphone and tablet manufacturer.

Segment operating income from the RSD reportable segment remained relatively flat at $21.4 million for

the year ended December 31, 2015 as compared to $21.7 million for the year ended December 31, 2014.

Revenue from the Other segment increased approximately $2.9 million to $23.8 million for the year ended

December 31, 2015 from $20.9 million for the year ended December 31, 2014. The increase was primarily due to
increased lighting technology development projects and sales of light guides.

Segment operating loss from the Other segment decreased approximately $4.9 million to $8.3 million for

the year ended December 31, 2015 from $13.2 million for the year ended December 31, 2014. The decrease was
primarily due to increase in revenue as discussed above and lower prototyping costs.

Total Revenue
Royalties
Contract and other revenue

Total revenue

Years Ended December 31,

2016

2015

2014

(Dollars in millions)

2015 to 2016
Change

2014 to 2015
Change

$264.6
72.0

$262.4
33.9

$271.5
25.1

$336.6

$296.3

$296.6

0.8%
112.6%

13.6%

(3.4)%
35.3%

(0.1)%

36

Royalty Revenue

Patent Licenses

Our patent royalties decreased approximately $4.5 million to $244.4 million for the year ended

December 31, 2016 from $248.9 million for the same period in 2015. The decrease was primarily due to lower
royalty revenue from AMD, IBM, Renesas and STMicroelectronics, offset by higher royalty revenue recognized
from Qualcomm, SK hynix and Xilinx. Of the $244.4 million patent royalties for the year ended December 31,
2016, $21.2 million is related to past royalty revenue from settlement of past legal proceedings with SK Hynix
and Micron.

Our patent royalties decreased approximately $12.0 million to $248.9 million for the year ended

December 31, 2015 from $260.9 million for the same period in 2014. The decrease in 2015 was primarily due to
lower royalty revenue recognized from AMD, NVIDIA, Renesas, STMicroelectronics and a smartphone and
tablet manufacturer, offset by higher royalty revenue from IBM and SK hynix. Of the $248.9 million patent
royalties for the year ended December 31, 2015, $86.0 million is related to past royalty revenue from settlement
of past legal proceedings with SK hynix and Micron.

We are continuously in negotiations for licenses with prospective customers. We expect patent royalties will

continue to vary from period to period based on our success in adding new customers, renewing or extending
existing agreements, as well as the level of variation in our customers’ reported shipment volumes, sales price
and mix, offset in part by the proportion of customer payments that are fixed or hybrid in nature.

Technology Licenses

Royalties from technology licenses increased approximately $6.7 million to $20.2 million for the year ended

December 31, 2016 from $13.5 million for the same period in 2015. The increase was primarily due to higher
royalties from Eaton and various security technology license revenue, offset by lower royalties from Nagravision.

Royalties from technology licenses increased approximately $2.9 million to $13.5 million for the year ended

December 31, 2015 from $10.6 million for the same period in 2014. The increase was primarily due to higher
royalties from security and lighting technology license revenue, offset by lower royalties from XDR™ DRAM
associated with decreased shipments of the Sony PlayStation®3 product.

In the future, we expect technology royalties will continue to vary from period to period based on our

customers’ shipment volumes, sales prices, and product mix.

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Royalty Revenue by Reportable Segment

Royalty revenue from the MID reportable segment, which includes patent and technology license royalties,

decreased approximately $5.0 million to $212.7 million for the year ended December 31, 2016 from
$217.7 million for the same period in 2015. The decrease was primarily due to lower royalty revenue from AMD,
IBM and Renesas, offset by higher royalty revenue recognized from SK hynix and Xilinx.

Royalty revenue from the RSD reportable segment, which includes patent and technology license royalties,

increased $5.5 million to $46.9 million for the year ended December 31, 2016 from $41.4 million for the same
period in 2015. The increase was primarily due to higher royalty revenue from Qualcomm, Xilinx and various
other customers, offset by lower royalty revenue from Nagravision, Renesas and STMicroelectronics.

Royalty revenue from the Other segment increased $1.8 million to $5.1 million for the year ended

December 31, 2016 from $3.3 million for the same period in 2015. The increase was due to increased royalties
from technology licenses associated with increased shipments of lighting products.

37

Royalty revenue from the MID reportable segment decreased approximately $5.8 million to $217.7 million

for the year ended December 31, 2015 from $223.5 million for the same period in 2014. The decrease was
primarily due to lower royalty revenue from AMD, Nanya, NVIDIA, Renesas and STMicroelectronics, offset by
higher royalty revenue from IBM and SK hynix.

Royalty revenue from the RSD reportable segment decreased approximately $4.3 million to $41.4 million

for the year ended December 31, 2015 from $45.7 million for the same period in 2014. The decrease was
primarily due to lower royalty revenue from Qualcomm, STMicroelectronics and a smartphone and tablet
manufacturer.

Royalty revenue from the Other segment increased $1.0 million to $3.3 million for the year ended

December 31, 2015 from $2.3 million for the same period in 2014. The increase was due to increased royalties
from technology licenses associated with increased shipments of lighting products.

Contract and Other Revenue

Contract and other revenue consists of revenue from technology development and sale of memory, security
and lighting products. Contract and other revenue increased approximately $38.2 million to $72.0 million for the
year ended December 31, 2016 from $33.8 million for the same period in 2015. The increase was primarily due
to sales of memory products, including revenue from the Snowbush IP group and the Memory Interconnect
Business, and increased security technology development projects, including revenue from the acquisition of
SCS, offset by decreased sales of light guides.

Contract and other revenue increased approximately $8.8 million to $33.8 million for the year ended
December 31, 2015 from $25.0 million for the same period in 2014. The increase was primarily due to increased
revenue from security technology development projects and products as well as lighting technology development
projects and sales of light guides, offset by lower revenue from the sale of selected intellectual property.

We believe that contract and other revenue will fluctuate over time based on our ongoing technology
development, contractual requirements, the amount of work performed, the timing of completing engineering
deliverables, and the changes to work required, new technology development contracts booked in the future and
product sales.

Contract and Other Revenue by Reportable Segments

Contract and other revenue from the MID reportable segment increased $22.9 million to $27.2 million for

the year ended December 31, 2016 from $4.3 million for the same period in 2015, primarily due to sales of
memory products, including revenue from the Snowbush IP group and the Memory Interconnect Business, and
various new development projects. Contract and other revenue from the RSD reportable segment increased
approximately $20.2 million to $29.3 million for the year ended December 31, 2016 from $9.1 million for the
same period in 2015, primarily due to higher revenue from security technology development projects, including
revenue from the acquisition of SCS. Contract and other revenue from the Other segment decreased
approximately $5.0 million for the year ended December 31, 2016 from $20.5 million for the same period in
2015, primarily due to decreased sales of light guides and decreased revenue from lighting technology
development projects.

Contract and other revenue from the MID reportable segment increased approximately $1.4 million to
$4.3 million for the year ended December 31, 2015 from $2.9 million for the same period in 2014, primarily due
to new technology development contracts in 2015. Contract and other revenue from the RSD reportable segment
increased approximately $5.5 million to $9.1 million for the year ended December 31, 2015 from $3.6 million for
the same period in 2014, primarily due to higher revenue from security products. Contract and other revenue
from the Other segment increased approximately $1.9 million to $20.5 million for the year ended December 31,
2015 from $18.6 million for the same period in 2014, primarily due to increased lighting technology
development projects and sales of light guides.

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Engineering costs:

Engineering costs
Cost of revenue
Amortization of intangible assets

Total cost of revenue

Research and development
Stock-based compensation

Total research and development

Total engineering costs

Years Ended December 31,

2016

2015

2014

(Dollars in millions)

$ 37.4
29.7

$ 22.7
22.6

$ 19.1
22.9

67.1

120.6
9.2

129.8

45.3

104.3
6.8

111.1

42.0

102.8
7.2

110.0

$196.9

$156.4

$152.0

2015 to 2016
Change

2014 to 2015
Change

64.8%
31.2%

48.0%

15.7%
35.5%

16.9%

25.9%

19.0%
(1.1)%

8.1%

1.5%
(6.3)%

1.0%

2.9%

Engineering costs are allocated between cost of revenue and research and development expenses. Cost of
revenue reflects the portion of the total engineering costs which are specifically devoted to individual customer
development and support services, costs of memory, security and lighting products sold as well as amortization
expense related to various acquired intellectual property for patent licensing. The balance of engineering costs,
incurred for the development of applicable technologies, is charged to research and development. In a given
period, the allocation of engineering costs between these two components is a function of the timing of the
development and implementation schedules of individual customer contracts.

For the year ended December 31, 2016 as compared to the same period in 2015, total engineering costs
increased 25.9% primarily due to the business acquisitions during 2016. This includes increased headcount
related expenses of $12.9 million, increased cost of sales associated with sales of memory and security products
and engineering services of $10.3 million (which includes $2.3 million related to the purchase accounting
adjustment for inventory fair value step-up from the acquisition of the Memory Interconnect Business), increased
amortization costs of $7.0 million, increased expenses related to software design tools of $3.7 million, increased
stock-based compensation expense of $2.4 million, increased consulting costs of $2.5 million offset by decreased
prototyping costs of $0.5 million.

For the year ended December 31, 2015 as compared to the same period in 2014, total engineering costs

increased 2.9% primarily due to increased expenses related to software design tools of $3.5 million, increased
headcount related expenses of $2.1 million, increased bonus accrual expense of $1.5 million and increased cost
of sales associated with increased sales of light guides and security products and engineering services of
$1.5 million, offset by decreased accrual of retention bonuses of $1.5 million, decreased amortization costs of
$1.5 million and decreased equipment and software maintenance costs of $0.7 million.

In the near term, we expect engineering costs to be higher as we continue to make investments in the
infrastructure and technologies required to maintain our product innovation in semiconductor, lighting, security
and other technologies, including costs related to the acquisitions throughout the year.

Sales, general and administrative costs:

Sales, general and administrative costs
Sales, general and administrative costs
Stock-based compensation

Total sales, general and administrative costs

39

Years Ended December 31,

2016

2015

2014

(Dollars in millions)

2015 to 2016
Change

2014 to 2015
Change

$83.3
11.8

$62.3
8.3

$67.3
7.5

$95.1

$70.6

$74.8

33.8%
42.6%

34.9%

(7.5)%
10.7%

(5.6)%

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Sales, general and administrative expenses include expenses and costs associated with trade shows, public
relations, advertising, litigation, general legal, insurance and other sales, marketing and administrative efforts.
Litigation expenses have historically been a significant portion of our sales, general and administrative expenses.
Consistent with our business model, our licensing, sales and marketing activities aim to develop or strengthen
relationships with potential new and current customers. In addition, we work with current customers through
marketing, sales and technical efforts to drive adoption of their products that use our innovations and solutions,
by system companies. Due to the long business development cycles we face and the semi-fixed nature of sales,
general and administrative expenses in a given period, these expenses generally do not correlate to the level of
revenue in that period or in recent or future periods.

For the year ended December 31, 2016 as compared to 2015, total sales, general and administrative costs

increased 34.9% primarily due to the business acquisitions during 2016. This includes increased headcount
related expenses of $6.1 million, increased amortization costs of $5.0 million, various acquisition related costs of
$3.1 million, increased stock-based compensation expense of $3.5 million, increased consulting costs of
$2.8 million, increased facilities costs of $1.4 million and increased travel costs of $1.3 million.

For the year ended December 31, 2015 as compared to 2014, total sales, general and administrative costs
decreased 5.6% primarily due to decreased consulting costs of $3.1 million, decreased depreciation expense of
$1.3 million, decreased software and equipment maintenance costs of $0.9 million and decreased litigation costs
of $0.5 million, offset by increased headcount related expenses of $0.9 million and increased stock-based
compensation expense of $0.8 million.

In the future, sales, general and administrative costs will vary from period to period based on the trade
shows, advertising, legal, acquisition and other sales, marketing and administrative activities undertaken, and the
change in sales, marketing and administrative headcount in any given period. In the near term, we expect our
sales, general and administrative costs to be higher due to the acquisitions throughout the year.

Restructuring charges:

Restructuring charges

* NM — percentage is not meaningful

Years Ended December 31,

2016

2015

2014

2015 to 2016
Change

2014 to 2015
Change

(Dollars in millions)
$3.6

$0.0

$—

(100.0)%

NM*

During 2016, we did not initiate any restructuring programs.

During 2015, we initiated a restructuring program to reduce overall corporate expenses which is expected to

improve future profitability by reducing spending on sales, general and administrative programs and refining
some of our research and development efforts. As a result of the restructuring program, we recorded a charge of
$3.6 million during 2015 related primarily to the reduction in workforce.

Refer to Note 15, “Restructuring Charges,” of Notes to Consolidated Financial Statements of this

Form 10-K for further discussion.

Impairment of in-process research and development intangible asset:

Years Ended December 31,

2016

2015
(Dollars in millions)

2014

2015 to 2016
Change

2014 to 2015
Change

Impairment of in-process research and development

intangible asset

$18.3

$— $—

100.0%

0.0%

40

During the fourth quarter of 2016, we recorded a charge of $18.3 million related the impairment of

in-process research and development intangible asset acquired in the acquisition of Snowbush IP. The
impairment of this intangible asset resulted from a delay in the market served by this initiative. This delay will
not impact the short-term revenue expectations but will impact our revenue expectations several years into the
future. This impairment was partially offset by a $6.8 million reduction of acquisition purchased consideration
related to this product line.

During 2015 and 2014, we did not record a charge for the impairment of any intangible assets or goodwill.

Refer to Note 5 “Intangible Assets and Goodwill,” of Notes to Consolidated Financial Statements of this

Form 10-K for further discussion.

Change in contingent consideration liability:

Years Ended December 31,

2016

2015
(Dollars in millions)

2014

2015 to 2016
Change

2014 to 2015
Change

Change in contingent consideration liability

$(6.8)

$— $—

100.0%

0.0%

During the fourth quarter of 2016, we recorded a reduction in our contingent consideration liability of

$6.8 million resulting in a gain in our Consolidated Statements of Operations of this Form 10-K. See the
“Impairment of in-process research and development intangible asset” section discussed above for further details.

Gain from sale of intellectual property:

Gain from sale of intellectual property

During 2016, we did not sell any of our patent assets.

Years Ended December 31,

2016

2015

2014

2015 to 2016
Change

2014 to 2015
Change

(Dollars in millions)
$3.7

$3.5

$—

(100.0)%

4.4%

During 2013, we sold portfolios of our patent assets covering lighting technologies. As part of these
transactions, we received an initial upfront payment and expect to receive subsequent payments when the
purchaser of the patents is successful in licensing that portfolio. During 2015 and 2014, we received $3.7 million
and $3.4 million, respectively, from the purchaser of the patents related to this transaction which was recorded as
gain from sale of intellectual property. During 2016, we did not receive any payment from the purchaser of the
patents related to this transaction.

During 2014, we sold portfolios of our patent assets covering wireless and other technologies.

Gain from settlement:

Gain from settlement

Years Ended December 31,

2016

2015

2014

2015 to 2016
Change

2014 to 2015
Change

(Dollars in millions)
$2.0

$2.0

$0.6

(71.6)%

0.0%

The settlements with SK hynix and Micron are multiple element arrangements for accounting purposes. For

a multiple element arrangement, we are required to determine the fair value of the elements. We considered
several factors in determining the accounting fair value of the elements of the settlement with SK hynix and the

41

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settlement with Micron which included a third party valuation using an income approach (the “SK hynix Fair
Value” and “Micron Fair Value”, respectively). The total gain from settlement related to the settlements with SK
hynix and Micron was $1.9 million and $3.3 million, respectively. As of the end of the second quarter of 2016,
the total gain from settlement related to the settlements with SK hynix and Micron has been fully recognized.
During the years ended December 31, 2016, 2015 and 2014, we recognized $0.6 million, $2.0 million and
$2.0 million as gain from settlement, which represents the portion of the SK hynix Fair Value and Micron Fair
Value of the cash consideration allocated to the resolution of the antitrust litigation settlements. Refer to Note 18,
“Agreements with SK hynix and Micron,” of Notes to Consolidated Financial Statements of this Form 10-K for
further discussion.

Interest and other income (expense), net:

Interest income and other income (expense), net
Interest expense

Years Ended December 31,

2016

2015

2014

2015 to 2016
Change

2014 to 2015
Change

(Dollars in millions)
$ 1.2
(12.4)

$ 1.7
(12.7)

$ (0.3)
(24.8)

42.2%
2.7%

NM*
(50.0)%

(55.4)%

Interest and other income (expense), net

$(11.0) $(11.2) $(25.1)

(1.6)%

* NM — percentage is not meaningful

Interest income and other income (expense), net, consists primarily of interest income generated from
investments in high quality fixed income securities and any gains or losses from the re-measurement of our
monetary assets or liabilities denominated in foreign currencies. Additionally, in 2014, during our review of the
remaining fair value of our $0.6 million investment in the non-marketable equity security of a private company,
based on the information provided by the private company, we determined that there was a decrease in the
security’s fair value. The fair value of the non-marketable equity security was determined based on an income
approach, using level 3 fair value inputs, as it was deemed to be the most indicative of the security’s fair value.
Accordingly, we recorded an impairment charge for the entire remaining amount of $0.6 million related to our
investment in the non-marketable equity security in 2014.

Interest expense consists of interest expense associated with our imputed facility lease obligations on the

Sunnyvale and Ohio facilities and non-cash interest expense related to the amortization of the debt discount and
issuance costs on the 5% convertible senior notes due 2014 (the “2014 Notes”) and the 1.125% convertible senior
notes due 2018 (the “2018 Notes”), as well as the coupon interest related to these notes. Interest expense
increased in 2016 as compared to the same period in 2015 primarily due to the maturing of the 2018 Notes.
Interest expense decreased in 2015 as compared to the same period in 2014 primarily due to the repayment of the
2014 Notes in the second quarter of 2014. For the years ended December 31, 2016, 2015, and 2014, we
recognized $4.4 million, $4.5 million and $4.5 million, respectively, of interest expense in connection with the
imputed financing obligations in our statements of operations. We expect our non-cash interest expense to
increase steadily as the notes reach maturity. See Note 10, “Convertible Notes,” of Notes to Consolidated
Financial Statements of this Form 10-K for additional details.

Provision for (benefit from) income taxes:

Provision for (benefit from) income taxes

$15.8

$(151.2) $24.0

NM*

NM*

Effective tax rate

69.9% (251.0)% 47.9%

Years Ended December 31,

2016

2015

2014

(Dollars in millions)

2015 to 2016
Change

2014 to 2015
Change

* NM — percentage is not meaningful

42

Our effective tax rate for the year ended December 31, 2016 was different from the U.S. statutory tax rate
primarily due to income tax expense recognized from exercises and expiration of out-of-the-money fully vested
shares from our equity incentive plans. Our effective tax rates for the year ended December 31, 2015 was
different from the U.S. statutory tax primarily due to the release of the valuation allowance on our U.S. federal
and state deferred tax assets, offset by federal, state, and foreign taxes. Our effective tax rates for the years ended
December 31, 2014 were different from the U.S. statutory tax rate primarily due to the valuation allowance on
our U.S. deferred tax assets and foreign withholding and income taxes.

We recorded a provision for income taxes of $15.8 million for the year ended December 31, 2016, which
was primarily comprised of withholding taxes, other foreign taxes and current state taxes. For the year ended
December 31, 2016, we paid withholding taxes of $22.0 million. We recorded a benefit from income taxes of
$151.2 million for the year ended December 31, 2015, which was primarily comprised of tax benefit from the
release of the valuation allowance on U.S. deferred taxes offset by federal state and foreign taxes. For the year
ended December 31, 2015, we paid withholding taxes of $20.4 million. We recorded a provision for income taxes
of $24.0 million for the year ended December 31, 2014, which was primarily comprised of withholding taxes,
other foreign taxes and current state taxes. For the year ended December 31, 2014, we paid withholding taxes of
$19.4 million.

We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both

positive and negative. The realizability of our net deferred tax assets is dependent on our ability to generate
sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.
During the third quarter of 2015, we evaluated the realizability of our net deferred tax assets based on all
available evidence, both positive and negative, and determined that it was appropriate to release the valuation
allowance for our U.S. federal and other state deferred tax assets, in accordance with FASB ASC 740-10-30-16
to 25.

We emerged from a cumulative loss position over the previous three years during the first quarter of 2015.
The cumulative three-year pre-tax income is considered positive evidence which is objective and verifiable, and
thus, received significant weighting. The continued stability in our operations along with the increased visibility
into the adoption of our security technology in the third quarter of 2015 provided additional evidence to our
belief that we will generate sufficient taxable income in the future. Additional positive evidence considered by us
in our assessment included a lack of unused operating loss carryforwards in our history as well as anticipated
future benefits from our cost management. Negative evidence we considered included economic uncertainties
such as volatility of the semiconductor industry and uncertainties associated with the development of new
products that could impact our ability to generate a sustained level of future profits.

Liquidity and Capital Resources

Cash and cash equivalents
Marketable securities

Total cash, cash equivalents, and marketable securities

Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities

43

December 31,
2016

December 31,
2015

(In millions)

$135.3
36.9

$172.2

$143.8
143.9

$287.7

Years Ended December 31,

2016

2015

2014

$ 92.5
$(105.2)
5.8
$

(In millions)
$ 76.4
$ 1.1
$(87.8)

$ 76.5
$ (97.9)
$(163.0)

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Liquidity

We currently anticipate that existing cash, cash equivalents and marketable securities balances and cash
flows from operations will be adequate to meet our cash needs for at least the next 12 months. Additionally, the
majority of our cash and cash equivalents are in the United States. Our cash needs for the year ended
December 31, 2016 were funded primarily from cash collected from our customers.

We do not anticipate any liquidity constraints as a result of either the current credit environment or

investment fair value fluctuations. Additionally, we have the intent and ability to hold our debt investments that
have unrealized losses in accumulated other comprehensive gain (loss) for a sufficient period of time to allow for
recovery of the principal amounts invested. Additionally, we have no significant exposure to European sovereign
debt. We continually monitor the credit risk in our portfolio and mitigate our credit risk exposures in accordance
with our policies.

As a part of our overall business strategy, from time to time, we evaluate businesses and technologies for
potential acquisition that are aligned with our core business and designed to supplement our growth, including
the acquisitions of SCS, the assets of the Snowbush IP group and the Memory Interconnect Business.

To provide us with more flexibility in returning capital back to our shareholders, on January 21, 2015, our
Board authorized a share repurchase program authorizing the repurchase of up to an aggregate of 20.0 million
shares. In the fourth quarter of 2015, we entered into an accelerated share repurchase program to repurchase an
aggregate of $100.0 million of our common stock and received an initial delivery of 7.8 million shares. During
the second quarter of 2016, the accelerated share repurchase program was completed and we received an
additional 0.7 million shares of our common stock as the final settlement of the accelerated share repurchase
program. We may continue to tactically execute the share repurchase program from time to time.

As of December 31, 2016, there remained an outstanding authorization to repurchase approximately
11.5 million shares of our outstanding common stock under the current share repurchase program. See “Share
Repurchase Program” below.

Operating Activities

Cash provided by operating activities of $92.5 million for the year ended December 31, 2016 was primarily
attributable to the cash generated from customer licensing, software license and related implementation, support
and maintenance fees, product sales and engineering services fees. Changes in operating assets and liabilities for
the year ended December 31, 2016 primarily included a decrease in accrued salaries and benefits and other
liabilities mainly due to the payout of the Corporate Incentive Plan and increases in deferred revenue and
inventory.

Cash provided by operating activities of $76.4 million for the year ended December 31, 2015 was primarily

attributable to the cash generated from customer licensing. Additionally, there was a non-cash deferred tax
adjustment to reconcile net income to net cash provided by operating activities due to the release of the valuation
allowance on our U.S. deferred tax assets of approximately $174.5 million during the third quarter of 2015.
Changes in operating assets and liabilities for the year ended December 31, 2015 primarily included an increase
in accounts receivable arising from a renewal of a license agreement with a technology licensing customer in the
fourth quarter of 2015, an increase in prepaids and other current assets, and decrease in accrued salaries and
benefits and other liabilities.

Cash provided by operating activities of $76.5 million for the year ended December 31, 2014 was primarily
attributable to the cash generated from customer licensing. Changes in operating assets and liabilities for the year
ended December 31, 2014 primarily included a decrease in accrued salaries and benefits and other accrued
liabilities primarily due to the payment of retention bonuses and an increase in accounts receivable, offset by
increases in income taxes payable and deferred revenue.

44

Investing Activities

Cash used in investing activities of $105.2 million for the year ended December 31, 2016 primarily
consisted of cash paid for the acquisition of SCS of $92.6 million, net of cash acquired of $12.1 million, cash
paid for the acquisition of the Memory Interconnect Business of $90.0 million, cash paid for the acquisition of
the assets of the Snowbush IP group assets of $32.0 million, cash paid for purchases of available-for-sale
marketable securities of $54.9 million, $8.6 million paid to acquire property, plant and equipment, offset by
proceeds from the maturities and sales of available-for-sale marketable securities of $110.1 million and
$50.5 million, respectively.

Cash provided by investing activities of $1.1 million for the year ended December 31, 2015 primarily
consisted of proceeds from the maturities and sales of available-for-sale marketable securities of $112.7 million
and $48.4 million, respectively. This was partially offset by cash paid for purchases of available-for-sale
marketable securities of $157.8 million and $6.1 million paid to acquire property, plant and equipment. In
addition, we received $3.9 million from the sale of intellectual property and the sale of property, plant and
equipment.

Cash used in investing activities of $97.9 million for the year ended December 31, 2014 primarily consisted
of cash paid for purchases of available-for-sale marketable securities of $240.3 million, offset by proceeds from
the maturities and sales of available-for-sale marketable securities of $118.7 million and $25.0 million,
respectively. In addition, we paid $7.2 million to acquire property, plant and equipment. We also received
$5.9 million from the sale of intellectual property.

Financing Activities

Cash provided by financing activities was $5.8 million for the year ended December 31, 2016. We received

proceeds of $15.4 million from the issuance of common stock under equity incentive plans, offset by the
payment of the additional purchase consideration from the SCS acquisition of $10.2 million and $0.6 million in
principal payments made against the lease financing obligation.

Cash used in financing activities was $87.8 million for the year ended December 31, 2015 and was primarily

due to an aggregate payment of $100.0 million to Citibank, N.A., as part of our accelerated share repurchase
program. We also paid $0.1 million in fees related to the accelerated share repurchase program. We received
proceeds of $13.8 million from the issuance of common stock under equity incentive plans, paid $1.7 million due
to payments under installment payment arrangements to acquire fixed assets and paid $0.5 million related to the
principal payments against the lease financing obligation.

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Cash used in financing activities was $163.0 million for the year ended December 31, 2014. We repaid the
principal of the 2014 convertible senior notes amounting to $172.5 million, which became due in June 2014. We
also received proceeds of $11.1 million from the issuance of common stock under equity incentive plans, paid
$1.8 million due to payments under installment payment arrangements to acquire fixed assets and paid
$0.3 million related to the principal payments against the lease financing obligation.

Contractual Obligations

On December 15, 2009, we entered into a lease agreement for approximately 125,000 square feet of office

space located at 1050 Enterprise Way in Sunnyvale, California commencing on July 1, 2010 and expiring on
June 30, 2020. The office space is used for our corporate headquarters, as well as engineering, sales, marketing
and administrative operations and activities. We have two options to extend the lease for a period of 60 months
each and a one-time option to terminate the lease after 84 months in exchange for an early termination fee.
Pursuant to the terms of the lease, the landlord agreed to reimburse us approximately $9.1 million, which was
received by the year ended December 31, 2011. We recognized the reimbursement as an additional imputed

45

financing obligation as such payment from the landlord is deemed to be an imputed financing obligation. On
November 4, 2011, to better plan for future expansion, we entered into an amended lease for our Sunnyvale
facility for approximately an additional 31,000 square feet of space commencing on March 1, 2012 and expiring
on June 30, 2020. Additionally, a tenant improvement allowance to be provided by the landlord was
approximately $1.7 million. On September 29, 2012, we entered into a second amended Sunnyvale lease to
reduce the tenant improvement allowance to approximately $1.5 million. On January 31, 2013, we entered into a
third amendment to the Sunnyvale lease to surrender the 31,000 square-foot space from the first amendment back
to the landlord and recorded a total charge of $2.0 million related to the surrender of the amended lease.

On March 8, 2010, we entered into a lease agreement for approximately 25,000 square feet of office and

manufacturing areas, located in Brecksville, Ohio. The office space is used for RLD’s engineering activities
while the manufacturing space is used for the manufacturer of prototypes. This lease was amended on
September 29, 2011 to expand the facility to approximately 51,000 total square feet and the amended lease will
expire on July 31, 2019. We have an option to extend the lease for a period of 60 months.

We undertook a series of structural improvements to ready the Sunnyvale and Brecksville facilities for our

use. Since certain improvements to be constructed by us were considered structural in nature and we were
responsible for any cost overruns, for accounting purposes, we were treated in substance as the owner of the
construction project during the construction period. At the completion of each construction, we concluded that
we retained sufficient continuing involvement to preclude de-recognition of the building under the FASB
authoritative guidance applicable to the sale leasebacks of real estate. As such, we continue to account for the
building as owned real estate and to record an imputed financing obligation for our obligation to the legal
owners.

Monthly lease payments on the facility are allocated between the land element of the lease (which is
accounted for as an operating lease) and the imputed financing obligation. The imputed financing obligation is
amortized using the effective interest method and the interest rate was determined in accordance with the
requirements of sale leaseback accounting. For the years ended December 31, 2016, 2015 and 2014, we
recognized in our Consolidated Statements of Operations $4.4 million, $4.5 million and $4.5 million,
respectively, of interest expense in connection with the imputed financing obligation on these facilities. At
December 31, 2016 and 2015, the imputed financing obligation balance in connection with these facilities was
$38.9 million and $39.3 million, respectively, which was primarily classified under long-term imputed financing
obligation.

On June 29, 2009, we entered into an Indenture with U.S. Bank, National Association, as trustee, relating to

the issuance by us of $150.0 million aggregate principal amount of the 2014 Notes. On July 10, 2009, an
additional $22.5 million in aggregate principal amount of 2014 Notes were issued as a result of the underwriters
exercising their overallotment option. During the second quarter of 2014, we paid upon maturity the entire
$172.5 million in aggregate principal amount of the 2014 Notes. See Note 10, “Convertible Notes,” of Notes to
Consolidated Financial Statements of this Form 10-K for additional details.

On August 16, 2013, we entered into an Indenture with U.S. Bank, National Association, as trustee, relating

to the issuance by us of $138.0 million aggregate principal amount of the 2018 Notes. The aggregate principal
amount of the 2018 Notes as of December 31, 2016 and 2015 was $138.0 million, offset by unamortized debt
discount of and unamortized debt issuance costs of $10.9 million and $0.9 million, respectively, and
$17.1 million and $1.5 million, respectively, on the accompanying consolidated balance sheets. The unamortized
discount related to the 2018 Notes is being amortized to interest expense using the effective interest method over
the remaining 20 months until maturity of the 2018 Notes on August 15, 2018. See Note 10, “Convertible
Notes,” of Notes to Consolidated Financial Statements of this Form 10-K for additional details.

46

As of December 31, 2016, our material contractual obligations are as follows (in thousands):

Total

2017

2018

2019

2020

2021

Thereafter

Contractual obligations (1)
Imputed financing obligation (2)
Leases and other contractual obligations
Software licenses (3)
Convertible notes
Interest payments related to convertible

notes

Total

$ 22,220
10,837
24,255
138,000

$ 6,302
5,649
10,497
—

$

6,447
2,606
10,226
138,000

$ 6,602
1,432
3,532
—

$2,869
603
—
—

543
—
—

$—

$—

3,105

1,553

1,552

—

—

—

$198,417

$24,001

$158,831

$11,566

$3,472

$543

$ 4

4

—
—

—

(1) The above table does not reflect possible payments in connection with uncertain tax benefits of

approximately $21.9 million including $19.7 million recorded as a reduction of long-term deferred tax
assets and $2.2 million in long-term income taxes payable, as of December 31, 2016. 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 non-cancellable agreements generally having

terms longer than one year.

Share Repurchase Program

During the year ended December 31, 2016, we repurchased and retired 0.7 million shares of our common

stock under our share repurchase program.

On January 21, 2015, our Board approved a share repurchase program authorizing the repurchase of up to an

aggregate of 20.0 million shares. Share repurchases under the plan may be made through the open market,
established plans or privately negotiated transactions in accordance with all applicable securities laws, rules, and
regulations. There is no expiration date applicable to the plan.

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On October 26, 2015, we initiated an accelerated share repurchase program with Citibank, N.A. The
accelerated share repurchase program is part of the broader share repurchase program previously authorized by
our Board on January 21, 2015. Under the accelerated share repurchase program, we pre-paid to Citibank, N.A.,
the $100.0 million purchase price for our common stock and, in turn, we received an initial delivery of
approximately 7.8 million shares of our common stock from Citibank, N.A, in the fourth quarter of 2015, which
were retired and recorded as a $80.0 million reduction to stockholders’ equity. The remaining $20.0 million of
the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed
to our stock. The number of shares to be ultimately purchased by us was determined based on the volume
weighted average price of the common stock during the terms of the transaction, minus an agreed upon discount
between the parties. During the second quarter of 2016, the accelerated share repurchase program was completed
and we received an additional 0.7 million shares of our common stock as the final settlement of the accelerated
share repurchase program.

As of December 31, 2016, there remained an outstanding authorization to repurchase approximately

11.5 million shares of our outstanding common stock under the current share repurchase program.

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We record stock repurchases as a reduction to stockholders’ equity. We record a portion of the purchase
price of the repurchased shares as an increase to accumulated deficit when the price of the shares repurchased
exceeds the average original proceeds per share received from the issuance of common stock.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our

consolidated financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of
contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to
revenue recognition, investments, income taxes, litigation and other contingencies. We base our estimates on
historical experience and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates

used in the preparation of our consolidated financial statements.

Revenue Recognition

Overview

We recognize revenue when persuasive evidence of an arrangement exists, we have delivered the product or

performed the service, the fee is fixed or determinable and collection is reasonably assured. If any of these
criteria are not met, we defer recognizing the revenue until such time as all criteria are met. Determination of
whether or not these criteria have been met may require us to make judgments, assumptions and estimates based
upon current information and historical experience.

For arrangements that involve the delivery of more than one element, each license, service or product is

evaluated to determine whether it qualifies as a separate unit of accounting. This determination is based on
whether the deliverable has “stand-alone value” to the customer. The consideration that is fixed or determinable
is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. We
determine the relative selling price for a deliverable based on its best estimate of selling price (“BESP”). Except
for some revenue associated to the acquisition of Bell Identification Ltd., we have determined that vendor-
specific objective evidence of selling price for each deliverable is not available as it lacks a consistent number of
standalone sales and third-party evidence is not a practical alternative due to differences in its service offerings
compared to other parties and the availability of relevant third-party pricing information. We determined BESP
by considering our overall pricing objectives and market conditions. Significant pricing practices taken into
consideration include discounting practices, the size and volume of transactions, the customer demographic, the
geographic area where services are sold, price lists, go-to-market strategy, historical standalone sales and
contract prices. The determination of BESP is made through consultation with and approval by our management,
taking into consideration the go-to-market strategy. As the go-to-market strategies evolve, we may modify our
pricing practices in the future, which could result in changes in relative selling prices. In most cases, the relative
values of the undelivered components are not material to the overall arrangement and are typically delivered
within twelve months after the core product has been delivered. In such agreements, selling price is determined
for each component and any difference between the total of the separate BESP and total contract consideration
(i.e. discount) is allocated pro-rata across each of the components in the arrangement.

During the first quarter of 2016, we acquired Smart Card Software Ltd., which included Bell Identification

Ltd. and Ecebs Ltd., which transact mostly in software and hosted services (SaaS) arrangements, respectively.

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For software arrangements that include multiple elements, including software licenses, professional services and
maintenance services, we allocate and defer revenue for the undelivered items (typically only the maintenance
services) based on the fair value using vendor specific objective evidence (“VSOE”), and recognize the
difference between the total arrangement fee and the amount deferred for the undelivered item(s) as revenue.
VSOE of fair value of each maintenance element is based on the contractual stated renewal rate for that
maintenance element. When VSOE of fair value does not exist for undelivered items, the entire arrangement fee
is recognized ratably over the performance period. For hosted services arrangements, we recognize the
arrangements over the service obligation period.

Our revenue consists of royalty revenue and contract and other revenue derived from MID, RSD and RLD

operating segments. Royalty revenue consists of patent license and technology license royalties. Contract and
other revenue consists of software license fees, engineering fees associated with integration of our technology
solutions into our customers’ related support and maintenance, as well as sale of products.

During 2013, we expanded our business strategy of monetizing our patent portfolio to include the sale of
selected intellectual property. Our MID business continues to grow its patent portfolio and actively engages with
various external parties to monetize the patent portfolio and explore new revenue opportunities. As the sales of
such patents developed by our MID business unit under this expanded strategy represents a component of our
ongoing major or central operations, we record the related proceeds as revenue. We will recognize the revenue
when there is persuasive evidence of a sales arrangement, fees are fixed or determinable, delivery has occurred
and collectibility is reasonably assured. These requirements are generally fulfilled upon closing of the patent sale
transaction.

Royalty Revenue

We generally recognize royalty revenue upon notification by our customers and when deemed collectible.

The terms of the royalty agreements generally either require customers to give us notification and to pay the
royalties within a specified period or are based on a fixed royalty that is due within a specified period. Many of
our customers have the right to cancel their licenses. In such arrangements, revenue is only recognized to the
extent that is consistent with the cancellation provisions. Cancellation provisions within such contracts generally
provide for a prospective cancellation with no refund of fees already remitted by customers for products provided
and payment for services rendered prior to the date of cancellation. We have two types of royalty revenue:
(1) patent license royalties and (2) technology license royalties.

Patent licenses — We license our broad portfolio of patented inventions to companies who use these
inventions in the development and manufacture of their own products. Such licensing agreements may cover the
license of part, or all, of our patent portfolio. The contractual terms of the agreements generally provide for
payments over an extended period of time. For the licensing agreements with fixed royalty payments, we
generally recognize revenue from these arrangements as amounts become due. For the licensing agreements with
variable royalty payments which can be based on either a percentage of sales or number of units sold, we earn
royalties at the time that the customers’ sales occur. Our customers, however, do not report and pay royalties
owed for sales in any given quarter until after the conclusion of that quarter. As we are unable to estimate the
customers’ sales in any given quarter to determine the royalties due to us, we recognize royalty revenues based
on royalties reported by customers during the quarter and when other revenue recognition criteria are met.

In addition, we may enter into certain settlements of patent infringement disputes. The amount of
consideration received upon any settlement (including but not limited to past royalty payments, future royalty
payments and punitive damages) is allocated to each element of the settlement based on the fair value of each
element. In addition, revenues related to past royalties are recognized upon execution of the agreement by both
parties, provided that the amounts are fixed or determinable, there are no significant undelivered obligations and
collectability is reasonably assured. We do not recognize any revenues prior to execution of the agreement since
there is no reliable basis on which we can estimate the amounts for royalties related to previous periods or assess

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collectability. Elements that are related to royalty revenue in nature (including but not limited to past royalty
payments and future royalty payments) will be recorded as royalty revenue in the consolidated statements of
operations. Elements that are not related to royalty revenue in nature (including but not limited to punitive
damage and settlement) will be recorded as gain from settlement which is reflected as a separate line item within
the operating expenses section in the consolidated statements of operations.

Technology licenses — We develop proprietary and industry-standard products that we provide to our
customers under technology license agreements. These arrangements include royalties, which can be based on
either a percentage of sales or number of units sold. We earn royalties on such licensed products sold worldwide
by our customers at the time that the customers’ sales occur. Our customers, however, do not report and pay
royalties owed for sales in any given quarter until after the conclusion of that quarter. As we are unable to
estimate the customers’ sales in any given quarter to determine the royalties due to us, we recognize royalty
revenues based on royalties reported by customers during the quarter and when other revenue recognition criteria
are met.

Contract and Other Revenue

We recognize revenue from the sale of products upon shipment of the product to our customers, net of
accruals for estimated sales returns and allowances, which to date, have not been significant. However, some of
our sales are made through distributors under arrangements that allow for price protection or rights of return on
product unsold by the distributors. Product revenue on sales made through distributors with rights of return or
price protection is deferred until the distributors sell the product to end customers. Sales to distributors are
included in deferred revenue and we defer the related costs until sale to the end customers occurs. Price
protection rights allow distributors the right to a credit in the event of declines in the price of our product that
they hold prior to the sale to an end customer. In the event that we reduce the selling price of products held by
distributors, deferred revenue related to distributors with price protection rights is reduced upon notification to
the customer of the price change. Our sales to direct customers are made primarily pursuant to standard purchase
orders for delivery of products. We generally allow customers to cancel or change purchase orders within limited
notice periods prior to the scheduled shipment.

For software arrangements that include multiple elements, including software licenses, professional services

and maintenance services, we allocate and defer revenue for the undelivered items (typically only the
maintenance services) based on the fair value using vendor specific objective evidence (“VSOE”), and recognize
the difference between the total arrangement fee and the amount deferred for the undelivered item(s) as revenue.
VSOE of fair value of each maintenance element is based on the contractual stated renewal rate for that
maintenance element. When VSOE of fair value does not exist for undelivered items, the entire arrangement fee
is recognized ratably over the performance period.

For software arrangements, we use the percentage-of-completion method for contracts that involve the

implementation of software solutions and that qualify for percentage-of-completion revenue accounting (e.g.
software arrangements that contain a PCS element that has VSOE of fair value established and that have no
refund rights that would allow a customer refunds of fees paid under the arrangement). Revenue is recognized
based on man-days incurred during the reporting period as compared to the estimated total man-days necessary
for each contract, not to exceed the billable project acceptances received, with deferral of corresponding contract
costs, if applicable. Should a loss be anticipated on a contract, the full amount of the loss would be recorded
when the loss is determinable. Maintenance and support revenue includes post-implementation customer support
and the right to unspecified software updates and enhancements on a when and if available basis. We recognize
revenue from maintenance arrangements ratably over the period in which the services are provided.

For development contracts related to licenses of our solutions that involve significant engineering and
integration services, we use the proportional performance method. The measurement of progress to completion is
based on actual man-months incurred during the reporting period, not to exceed the billable project acceptances

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received. Contract costs are recognized as incurred. Maintenance and support revenue includes minimal hours of
post-implementation customer support that is recognized ratably over the support period.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable

intangible assets acquired in each business combination. Goodwill is not subject to amortization, but is subject to
at least an annual assessment for impairment, applying a fair-value based test. We perform our impairment
analysis of goodwill on an annual basis during the fourth quarter of the year unless conditions arise that warrant a
more frequent evaluation.

Goodwill is allocated to the various reporting units which are generally operating segments. The goodwill

impairment test involves a two-step process. In the first step, we compare the fair value of each reporting unit to
its carrying value. The fair values of the reporting units are estimated using an income or discounted cash flows
approach.

Under the income approach, we measure fair value of the reporting unit based on a projected cash flow

method using a discount rate determined by our management which is commensurate with the risk inherent in
our current business model. Our discounted cash flow projections are based on our annual financial forecasts
developed internally by management for use in managing our business. If the fair value of the reporting unit
exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the
reporting unit is less than the carrying value, we must perform the second step of the impairment test to measure
the amount of impairment loss. In the second step, the reporting unit’s fair value is allocated to all of the assets
and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that
calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired by a
market participant in a business combination. If the implied fair value of the reporting unit’s goodwill is less than
the carrying value, the difference is recorded as an impairment loss.

As of December 31, 2016, the fair value of the MID reporting unit, with $66.6 million of goodwill,

exceeded the carrying value of its net assets by approximately 299% and the fair value of the RSD reporting unit,
with $138.2 million of goodwill, exceeded the carrying value of its net assets by approximately 89%. Key
assumptions used to determine the fair value of the MID and RSD reporting units at December 31, 2016, were
the revenue growth rates for the forecast period and terminal year, terminal growth rates and discount rates.
Certain estimates used in the income approach involve information for new product lines with limited financial
history and developing revenue models which increase the risk of differences between the projected and actual
performance. The discount rate of 12% for MID and 16.5% for RSD is based on the reporting units’ overall risk
profile relative to other guideline companies, market adoption of our technology, the reporting units’ respective
industry as well as the visibility of future expected cash flows. The terminal growth rate applied to determine fair
value for both reporting units was 3%, which was based on historical experience as well as anticipated economic
conditions, industry data and long term outlook for the business. These assumptions are inherently uncertain.

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Given the current economic environment and the uncertainties regarding the impact on our business, there

can be no assurance that the estimates and assumptions made for purposes of our goodwill impairment testing in
the fourth quarter of 2016 will prove to be accurate predictions of the future. If our assumptions regarding
forecasted revenues or operating margin rates are not achieved, we may be required to record goodwill
impairment charges in future periods, whether in connection with the next annual impairment testing or prior to
that if any change constitutes a triggering event outside of the period when the annual goodwill impairment test is
performed. It is not possible at this time to determine if any such future impairment charge would result or, if it
does, whether such charge would be material. We believe that the assumptions and rates used in our impairment
test are reasonable. However, they are judgmental, and variations in any of the assumptions or rates could result
in materially different calculations of impairment amounts.

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Intangible Assets

Intangible assets are comprised of existing technology, customer contracts and contractual relationships, and

other definite-lived and indefinite-lived intangible assets. Identifiable intangible assets resulting from the
acquisitions of entities accounted for using the purchase method of accounting are estimated by management
based on the fair value of assets received. Identifiable definite-lived intangible assets are being amortized over
the period of estimated benefit using the straight-line method and estimated useful lives ranging from 1 to 10
years.

We amortize definite-lived assets over their estimated useful lives. We evaluate definite-lived and

indefinite-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of
an asset may not be recoverable. The carrying value is not recoverable if it exceeds the undiscounted cash flows
resulting from the use of the asset and its eventual disposition. Our estimates of future cash flows attributable to
our assets require significant judgment based on our historical and anticipated results and are subject to many
factors. Factors we consider important which could trigger an impairment review include significant negative
industry or economic trends, significant loss of clients, and significant changes in the manner of our use of the
acquired assets or the strategy for our overall business.

When we determine that the carrying value of the assets may not be recoverable based upon the existence of

one or more of the above indicators of impairment, we measure the potential impairment based on a projected
discounted cash flow method using a discount rate determined by our management to be commensurate with the
risk inherent in our current business model. An impairment loss is recognized only if the carrying amount of the
asset is not recoverable and exceeds its fair value. Different assumptions and judgments could materially affect
the calculation of the fair value of our assets.

Acquired indefinite-lived intangible assets related to our in-process research and development (“IPR&D”)

are capitalized and subject to impairment testing until completion or abandonment of the projects. Upon
successful completion of each project, we make a separate determination of useful life of the acquired indefinite-
lived intangible assets and the related amortization is recorded as an expense over the estimated useful life of the
specific projects. Indefinite-lived intangible assets are subject to at least an annual assessment for impairment,
applying a fair-value based test. Under the income approach, we measure fair value of the indefinite-lived
intangible assets based on a projected cash flow method using a discount rate determined by our management
which is commensurate with the risk inherent in our current business model. Our discounted cash flow
projections are based on our annual financial forecasts developed internally by our management for use in
managing our business. If the fair value of the indefinite-lived intangible assets exceeds its carrying value, the
indefinite-lived intangible assets are not impaired and no further testing is required. If the implied fair value of
the indefinite-lived intangible assets is less than the carrying value, the difference is recorded as an impairment
loss.

Income Taxes

As part of preparing our consolidated financial statements, we are required to calculate the income tax
expense or benefit which relates to the pretax income or loss for the period. In addition, we are required to assess
the realization of the deferred tax asset or liability to be included on the consolidated balance sheet as of the
reporting dates.

As of December 31, 2016, our consolidated balance sheet included net deferred tax assets, before valuation

allowance, of approximately $180.2 million, which consists of net operating loss carryovers, tax credit
carryovers, amortization, employee stock-based compensation expenses and certain liabilities, partially reduced
by deferred tax liabilities associated with the convertible debt instruments. As of December 31, 2016, we have a
valuation allowance of $23.5 million resulting in net deferred tax assets of $156.7 million.

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We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both

positive and negative. The realizability of our net deferred tax assets is dependent on our ability to generate
sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.

We emerged from a cumulative loss position over the previous three years during the first quarter of 2015.
The cumulative three-year pre-tax income is considered positive evidence which is objective and verifiable, and
thus, received significant weighting. The continued stability in our operations along with the increased visibility
into the adoption of our security technology in the third quarter of 2015 provided additional evidence to our
belief that we will generate sufficient taxable income in the future. Additional positive evidence considered by us
in our assessment included a lack of unused operating loss carryforwards in our history as well as anticipated
future benefits from our cost management. Negative evidence we considered included economic uncertainties
such as volatility of the semiconductor industry and uncertainties associated with the development of new
products that could impact our ability to generate a sustained level of future profits.

We maintain liabilities for uncertain tax positions within our long-term income taxes payable accounts and

as a reduction to existing deferred tax assets to the extent tax attributes are available to offset such liabilities.
These liabilities involve judgment and estimation and are monitored by us based on the best information
available including changes in tax regulations, the outcome of relevant court cases and other information.

Tax attributes related to stock option windfall deductions are not to be recognized until they result in a

reduction of cash taxes payable. The benefit of these excess tax benefits will be recorded to equity when they
reduce cash taxes payable. We will only recognize a tax benefit from stock-based awards in additional paid-in
capital if an incremental tax benefit is realized after all other tax attributes currently available have been utilized.
In addition, we have elected to account for the indirect effects of stock-based awards on other tax attributes, such
as the research tax credits, through the consolidated statement of operations as part of the tax effect of stock-
based compensation.

The calculation of our tax liabilities involves uncertainties in the application of complex tax law and

regulations in a multitude of jurisdictions. Although ASC 740 Income Taxes, provides further clarification on the
accounting for uncertainty in income taxes, significant judgment is required by us. If the ultimate resolution of
tax uncertainties is different from what is currently estimated, it could materially affect income tax expense.

Stock-Based Compensation

We maintained stock plans covering a broad range of potential equity grants including stock options,
nonvested equity stock and equity stock units and performance based instruments. In addition, we sponsor an
Employee Stock Purchase Plan (“ESPP”), whereby eligible employees are entitled to purchase Common Stock
semi-annually, by means of limited payroll deductions, at a 15% discount from the fair market value of the
Common Stock as of specific dates.

The accounting guidance for share-based payments requires the measurement and recognition of

compensation expense in our statement of operations for all share-based payment awards made to our employees,
directors and consultants including employee stock options, nonvested equity stock and equity stock units, and
employee stock purchase grants. Stock-based compensation expense is measured at grant date, based on the
estimated fair value of the award, reduced by an estimate of the annualized rate of expected forfeitures, and is
recognized as expense over the employees’ expected requisite service period, generally using the straight-line
method. In addition, the accounting guidance for share-based payments requires the benefits of tax deductions in
excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating
cash flow as prescribed under previous accounting rules. Our forfeiture rate represents the historical rate at which
our stock-based awards were surrendered prior to vesting. The accounting guidance for share-based payments
requires forfeitures to be estimated at the time of grant and revised on a cumulative basis, if necessary, in
subsequent periods if actual forfeitures differ from those estimates. See Note 12, “Equity Incentive Plans and

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Stock-Based Compensation,” of Notes to Consolidated Financial Statements of this Form 10-K for more
information regarding the valuation of stock-based compensation.

Recent Accounting Pronouncements

See Note 3, “Recent Accounting Pronouncements,” of Notes to Consolidated Financial Statements of this

Form 10-K for a full description of recent accounting pronouncements including the respective expected dates of
adoption.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risks, primarily arising from the effect of interest rate fluctuations on
our investment portfolio. Interest rate fluctuation may arise from changes in the market’s view of the quality of
the security issuer, the overall economic outlook, and the time to maturity of our portfolio. We mitigate this risk
by investing only in high quality, highly liquid instruments. Securities with original maturities of one year or less
must be rated by two of the three industry standard rating agencies as follows: A1 by Standard & Poor’s, P1 by
Moody’s and/or F-1 by Fitch. Securities with original maturities of greater than one year must be rated by two of
the following industry standard rating agencies as follows: AA- by Standard & Poor’s, Aa3 by Moody’s and/or
AA- by Fitch. By corporate investment policy, we limit the amount of exposure to $15.0 million or 10% of the
portfolio, whichever is lower, for any single non-U.S. Government issuer. A single U.S. Agency can represent up
to 25% of the portfolio. No more than 20% of the total portfolio may be invested in the securities of an industry
sector, with money market fund investments evaluated separately. Our policy requires that at least 10% of the
portfolio be in securities with a maturity of 90 days or less. We may make investments in U.S. Treasuries, U.S.
Agencies, corporate bonds and municipal bonds and notes with maturities up to 36 months. However, the bias of
our investment portfolio is shorter maturities. All investments must be U.S. dollar denominated. Additionally, we
have no significant exposure to European sovereign debt.

We invest our cash equivalents and marketable securities in a variety of U.S. dollar financial instruments

such as U.S. Treasuries, U.S. Government Agencies, commercial paper and corporate notes. Our policy
specifically prohibits trading securities for the sole purposes of realizing trading profits. However, we may
liquidate a portion of our portfolio if we experience unforeseen liquidity requirements. In such a case, if the
environment has been one of rising interest rates we may experience a realized loss, similarly, if the environment
has been one of declining interest rates we may experience a realized gain. As of December 31, 2016, we had an
investment portfolio of fixed income marketable securities of $121.2 million including cash equivalents. If
market interest rates were to increase immediately and uniformly by 1.0% from the levels as of December 31,
2016, the fair value of the portfolio would decline by approximately $0.1 million. Actual results may differ
materially from this sensitivity analysis.

The fair value of our convertible notes is subject to interest rate risk, market risk and other factors due to the

convertible feature. The fair value of the convertible notes will generally increase as interest rates fall and
decrease as interest rates rise. In addition, the fair value of the convertible notes will generally increase as our
common stock price increases and will generally decrease as our common stock price declines in value. The
interest and market value changes affect the fair value of our convertible notes but do not impact our financial
position, cash flows or results of operations due to the fixed nature of the debt obligation.

We invoice the majority of our customers in U.S. dollars. Although the fluctuation of currency exchange

rates may impact our customers, and thus indirectly impact us, we do not attempt to hedge this indirect and
speculative risk. Our overseas operations consist primarily of international business operations in the Netherlands
and the United Kingdom, design centers in Canada, India, Finland and France and small business development
offices in Australia, Japan, Korea and Taiwan. We monitor our foreign currency exposure; however, as of
December 31, 2016, we believe our foreign currency exposure is not material enough to warrant foreign currency
hedging.

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Item 8. Financial Statements and Supplementary Data

See Item 15 “Exhibits and Financial Statement Schedules” of this Form 10-K for required financial

statements and supplementary data.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed

in the reports we file or submit pursuant to the Securities and Exchange Act of 1934 as amended (“Exchange
Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of
the Securities and Exchange Commission, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated

the effectiveness of the design and operation of our disclosure controls and procedures as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this report. Based on
this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31,
2016, our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial
reporting is the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial
Officer, and effected by our board of directors, management and other personnel, 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, and includes those policies and procedures that:

(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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer

and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2016. In making this assessment, our management used the criteria set

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forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”). Based on the results of this assessment, management has concluded
that, as of December 31, 2016, our internal control over financial reporting was effective based on the criteria in
Internal Control — Integrated Framework (2013) issued by the COSO.

The Company’s management has excluded SCS and the Memory Interconnect Business from its assessment

of internal control over financial reporting as of December 31, 2016, because they were acquired by the
Company in purchase business combinations during 2016. Combined total assets and revenues of these
acquisitions represent approximately 4% and 10%, respectively, of the related consolidated financial statement
amounts as of and for the year ended December 31, 2016.

The effectiveness of our internal control over financial reporting as of December 31, 2016 has been audited

by PricewaterhouseCoopers, LLP, an independent registered public accounting firm, as stated in their report
which appears herein.

Changes in Internal Control Over Financial Reporting

There was no change in internal control over financial reporting during the last fiscal quarter that has

materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information responsive to this item is incorporated herein by reference to our Proxy Statement for our

2017 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K. The information under the heading “Our Executive Officers” in Part I, Item 1 of this Annual Report
on Form 10-K is also incorporated herein by reference.

We have a Code of Business Conduct and Ethics for all of our directors, officers and employees. Our Code
of Business Conduct and Ethics is available on our website at http://investor.rambus.com/corporate-governance-
document.cfm?DocumentID=8379. To date, there have been no waivers under our Code of Business Conduct and
Ethics. We will post any amendments or waivers, if and when granted, of our Code of Business Conduct and
Ethics on our website.

Item 11. Executive Compensation

The information responsive to this item is incorporated herein by reference to our Proxy Statement for our

2017 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

The information responsive to this item is incorporated herein by reference to our Proxy Statement for our

2017 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information responsive to this item is incorporated herein by reference to our Proxy Statement for our

2017 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K.

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Item 14. Principal Accountant Fees and Services

The information responsive to this item is incorporated herein by reference to our Proxy Statement for our

2017 annual meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K.

57

Item 15. Exhibits and Financial Statement Schedules

(a) (1) Financial Statements

PART IV

The following consolidated financial statements of the Registrant and Report of PricewaterhouseCoopers

LLP, Independent Registered Public Accounting Firm, are included herewith:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2016 and 2015

Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2016, 2015

and 2014

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2016, 2015 and 2014

Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014

Notes to Consolidated Financial Statements

Consolidated Supplementary Financial Data (unaudited)

(a) (2) Financial Statement Schedule

All schedules are omitted because they are not applicable or the required information is shown in the

Consolidated Financial Statements or the notes thereto.

Page

59

60

61

62

63

64

65

116

58

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Rambus Inc.:

In our opinion, the accompanying consolidated financial statements listed in the index appearing under Item

15(a)(1) present fairly, in all material respects, the financial position of Rambus Inc. and its subsidiaries at
December 31, 2016 and December 31, 2015, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in
the United States of America. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2016, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in Management’s Report on Internal Control over Financial Reporting under Item 9A.
Our responsibility is to express opinions on these financial statements and on the Company’s internal control over
financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and
whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (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 receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

As described in Management’s Report on Internal Control over Financial Reporting, management has
excluded Smart Card Software Limited (“SCS”) and the Memory Interconnect Business from its assessment of
internal control over financial reporting as of December 31, 2016 because they were acquired by the Company in
separate purchase business combinations during the fiscal year ended December 31, 2016. We have also
excluded SCS and the Memory Interconnect Business from our audit of internal control over financial reporting.
SCS and the Memory Interconnect Business are wholly owned subsidiaries, whose total assets and total revenues
represent 4% and 10%, respectively, of the related consolidated financial statement amounts as of and for the
year ended December 31, 2016.

San Jose, California
February 17, 2017

/s/ PricewaterhouseCoopers LLP

59

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RAMBUS INC.

CONSOLIDATED BALANCE SHEETS

Current assets:

ASSETS

Cash and cash equivalents
Marketable securities
Accounts receivable
Prepaids and other current assets
Inventories

Total current assets

Intangible assets, net
Goodwill
Property, plant and equipment, net
Deferred tax assets
Other assets

Total assets

LIABILITIES & STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
Accrued salaries and benefits
Deferred revenue
Other current liabilities

Total current liabilities
Convertible notes, long-term
Long-term imputed financing obligation
Deferred tax liabilities
Other long-term liabilities

Total liabilities

Commitments and contingencies (Notes 11 and 17)

Stockholders’ equity:

Convertible preferred stock, $.001 par value:

December 31,

2016

2015

(In thousands, except shares
and per share amounts)

$ 135,294
36,888
21,099
17,867
5,633

$ 143,764
143,942
16,408
10,396
1,080

216,781
132,388
204,794
58,442
168,342
2,749

315,590
64,266
116,899
56,616
162,485
2,165

$ 783,496

$ 718,021

$

9,793
14,177
16,932
10,399

51,301
126,167
38,029
11,600
3,617

230,714

$

4,096
12,278
5,780
6,212

28,366
119,418
38,625
—
5,079

191,488

Authorized: 5,000,000 shares; Issued and outstanding: no shares at

December 31, 2016 and December 31, 2015

—

—

Common Stock, $.001 par value:

Authorized: 500,000,000 shares; Issued and outstanding: 111,053,734

shares at December 31, 2016 and 109,287,591 shares at December 31,
2015

Additional paid in capital
Accumulated deficit
Accumulated other comprehensive income (loss)

Total stockholders’ equity

Total liabilities and stockholders’ equity

111
1,181,230
(615,051)
(13,508)

109
1,130,368
(604,317)
373

552,782

526,533

$ 783,496

$ 718,021

See Notes to Consolidated Financial Statements

60

RAMBUS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Revenue:

Royalties
Contract and other revenue

Total revenue

Operating costs and expenses:

Cost of revenue*
Research and development*
Sales, general and administrative*
Restructuring charges
Impairment of in-process research and development intangible asset
Change in contingent consideration liability
Gain from sale of intellectual property
Gain from settlement

Total operating costs and expenses

Operating income

Interest income and other income (expense), net
Interest expense

Interest and other income (expense), net

Income before income taxes

Provision for (benefit from) income taxes

Net income

Net income per share:

Basic

Diluted

Weighted average shares used in per share calculations:

Basic

Diluted

*

Includes stock-based compensation:

Cost of revenue
Research and development
Sales, general and administrative

Years Ended December 31,

2016

2015

2014

(In thousands, except per share amounts)

$264,614
71,983

$ 262,415
33,863

$271,521
25,037

336,597

296,278

296,558

67,090
129,844
95,145
—
18,300
(6,845)
—
(579)

45,344
111,110
70,554
3,576
—
—
(3,686)
(2,040)

41,947
110,025
74,770
39
—
—
(3,529)
(2,040)

302,955

224,858

221,212

33,642
1,740
(12,745)

(11,005)

22,637
15,817

71,420
1,224
(12,413)

75,346
(276)
(24,820)

(11,189)

(25,096)

60,231
(151,157)

50,250
24,049

6,820

$ 211,388

$ 26,201

0.06

0.06

$

$

1.84

1.80

$

$

0.23

0.22

110,162

114,814

114,318

113,140

117,484

117,624

$

$

$

$
56
9,165
$
$ 11,792

$
$
$

63
6,762
8,271

$
$
$

44
7,216
7,470

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

RAMBUS INC.

Net income
Other comprehensive income (loss):

Foreign currency translation adjustment
Unrealized gain (loss) on marketable securities, net of tax

Total comprehensive income (loss)

See Notes to Consolidated Financial Statements

Years Ended December 31,

2016

2015

2014

$ 6,820

(In thousands)
$211,388

$26,201

(13,485)
(396)

9
766

—
(97)

$ (7,061) $212,163

$26,104

62

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

RAMBUS INC.

Balances at December 31, 2013
Net income
Unrealized loss on marketable

securities, net of tax

Issuance of common stock upon

exercise of options, equity stock
and employee stock purchase plan

Stock-based compensation

Balances at December 31, 2014
Net income
Foreign currency translation

adjustment

Unrealized gain on marketable

securities, net of tax

Issuance of common stock upon

exercise of options, equity stock
and employee stock purchase plan

Repurchase and retirement of

common stock under repurchase
plan, including prepayment under
accelerated share repurchase
program

Stock-based compensation
Tax shortfall from stock option

forfeitures

Balances at December 31, 2015
Net income
Foreign currency translation

adjustment

Unrealized loss on marketable

securities, net of tax

Issuance of common stock upon

exercise of options, equity stock
and employee stock purchase plan

Repurchase and retirement of

common stock under repurchase
plan

Stock-based compensation

Common Stock

Shares

Amount

Additional
Paid-in
Capital

Accumulated
Deficit

(In thousands)

Accumulated
Other
Comprehensive
Gain (Loss)

Total

113,459

—

—

$113
—

—

$1,128,148

—

—

1,703
—

115,162

—

—

—

2
—

115
—

—

—

10,557
14,730

1,153,435

—

—

—

1,938

2

13,075

$(787,727)
26,201

$

(305)
—

$ 340,229
26,201

—

—
—

(761,526)
211,388

—

—

—

(97)

(97)

—
—

(402)
—

9

766

10,559
14,730

391,622
211,388

9

766

—

13,077

(7,812)
—

(8)

—

(45,926)
15,096

(54,179)
—

(5,312)

—

—

109,288

—

—

—

—

109
—

—

—

1,130,368

—

—

—

2,502

3

12,294

(604,317)
6,820

—

—

—

(736)
—

(1)

—

17,555
21,013

(17,554)
—

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—
—

—

373
—

(100,113)
15,096

(5,312)

526,533
6,820

(13,485)

(13,485)

(396)

(396)

—

—
—

12,297

—
21,013

Balances at December 31, 2016

111,054

$111

$1,181,230

$(615,051)

$(13,508)

$ 552,782

See Notes to Consolidated Financial Statements

63

RAMBUS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

Net income
Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation
Depreciation
Amortization of intangible assets
Non-cash interest expense and amortization of convertible debt issuance

costs

Impairment of in-process research and development intangible asset
Change in contingent consideration liability
Impairment of investment in non-marketable equity security
Deferred tax (benefit) provision
Excess tax benefits from stock-based compensation
Non-cash restructuring
Gain from sale of intellectual property and property, plant and equipment, net
Effect of exchange rate on assumed cash liability from acquisition
Change in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable
Prepaids and other assets
Inventories
Accounts payable
Accrued salaries and benefits and other accrued liabilities
Deferred revenue
Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property, plant and equipment
Purchases of marketable securities
Maturities of marketable securities
Proceeds from sale of marketable securities
Proceeds from sale of intellectual property and property, plant and equipment, net
Acquisition of businesses, net of cash acquired

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds received from issuance of common stock under employee stock plans
Payments under installment payment arrangement
Principal payments against financing lease obligation
Payment of additional purchase consideration from acquisition
Repurchase and retirement of common stock, including prepayment under

accelerated share repurchase program

Excess tax benefits from stock-based compensation
Repayment of senior convertible notes

Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental disclosure of cash flow information:
Cash paid during the period for:

Interest
Income taxes, net of refunds

Non-cash investing and financing activities:

Years Ended December 31,

2016

2015

2014

(In thousands)

$

6,820

$ 211,388

$ 26,201

21,013
12,965
37,138

6,749
18,300
(6,845)
—
(7,116)
(1,196)
—
—
(1,558)

5,797
(6,205)
1,748
2,373
(4,758)
7,313
92,538

(8,556)
(54,869)
110,081
50,546
113
(202,523)
(105,208)

15,436
—
(661)
(10,206)

15,096
12,379
25,074

6,372
—
—
—

(172,706)
(747)
583
(3,670)
—

(10,407)
(1,042)
(3,412)
(2,621)
(2,952)
3,107
76,442

(6,132)
(157,811)
112,721
48,380
3,933
—
1,091

14,730
13,625
26,618

14,763
—
—
600
2,310
(481)
—
(3,529)
—

(3,750)
476
(2,907)
2,006
(17,862)
3,667
76,467

(7,204)
(240,281)
118,735
24,986
5,859
—
(97,905)

13,783
(1,717)
(478)
—

11,079
(1,773)
(322)
—

—
1,196
—
5,765
(1,565)
(8,470)
143,764
$ 135,294

(100,113)
747
—
(87,778)
(117)
(10,362)
154,126
$ 143,764

—
481
(172,500)
(163,035)
(97)
(184,570)
338,696
$ 154,126

1,553
$
$ 26,787

1,553
$
$ 21,679

5,861
$
$ 20,691

Property, plant and equipment received and accrued in accounts payable and other

accrued liabilities

Re-measurement of investment upon initial public offering

$
$

576
$
— $

240
1,264

$
$

548
—

See Notes to Consolidated Financial Statements

64

RAMBUS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Formation and Business of the Company

Rambus Inc. (the “Company” or “Rambus”) was incorporated in California in March 1990 and
reincorporated in Delaware in March 1997. In addition to licensing, the Company is creating new business
opportunities through offering products and services where its goal is to perpetuate strong company operating
performance and long-term stockholder value. The Company generates revenue by licensing its inventions and
solutions, selling its semiconductor products and providing services to market-leading companies.

While the Company has historically focused its efforts on the development of technologies for memory,
SerDes and other chip interfaces, the Company has expanded its portfolio of inventions and solutions to address
chip and system security, mobile payments and smart ticketing. The Company intends to continue its growth into
new technology fields, consistent with its mission to create value through its innovations and to make those
technologies available through the shipment of products, the provision of services, as well as the Company’s
licensing business models. Key to its efforts continues to be hiring and retaining world-class inventors, scientists
and engineers to lead the development and deployment of inventions and technology solutions for its fields of
focus.

2. Summary of Significant Accounting Policies

Financial Statement Presentation

The accompanying consolidated financial statements include the accounts of Rambus and its wholly owned
subsidiaries. All intercompany accounts and transactions have been eliminated in the accompanying consolidated
financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior year balances were reclassified to conform to the current year’s presentation. None of these
reclassifications had an impact on reported net income or cash flows for any of the periods presented. Refer to
Note 9 “Balance Sheet Details” and Note 10 “Convertible Notes” for details.

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Revenue Recognition

Overview

Rambus recognizes revenue when persuasive evidence of an arrangement exists, Rambus has delivered the
product or performed the service, the fee is fixed or determinable and collection is reasonably assured. If any of
these criteria are not met, Rambus defers recognizing the revenue until such time as all criteria are met.
Determination of whether or not these criteria have been met may require the Company to make judgments,
assumptions and estimates based upon current information and historical experience.

For arrangements that involve the delivery of more than one element, each license, service or product is

evaluated to determine whether it qualifies as a separate unit of accounting. This determination is based on

65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

whether the deliverable has “stand-alone value” to the customer. The consideration that is fixed or determinable
is then allocated to each separate unit of accounting based on the relative selling price of each deliverable.
Rambus determines the relative selling price for a deliverable based on its best estimate of selling price
(“BESP”). Except for some revenue associated to the acquisition of Bell Identification Ltd., Rambus has
determined that vendor-specific objective evidence of selling price for each deliverable is not available as it lacks
a consistent number of standalone sales and third-party evidence is not a practical alternative due to differences
in its service offerings compared to other parties and the availability of relevant third-party pricing information.
Rambus determined BESP by considering its overall pricing objectives and market conditions. Significant
pricing practices taken into consideration include discounting practices, the size and volume of transactions, the
customer demographic, the geographic area where services are sold, price lists, go-to-market strategy, historical
standalone sales and contract prices. The determination of BESP is made through consultation with and approval
by management, taking into consideration the go-to-market strategy. As the go-to-market strategies evolve,
Rambus may modify its pricing practices in the future, which could result in changes in relative selling prices. In
most cases, the relative values of the undelivered components are not material to the overall arrangement and are
typically delivered within twelve months after the core product has been delivered. In such agreements, selling
price is determined for each component and any difference between the total of the separate BESP and total
contract consideration (i.e. discount) is allocated pro-rata across each of the components in the arrangement.

During the first quarter of 2016, the Company acquired Smart Card Software Ltd., which included Bell

Identification Ltd. and Ecebs Ltd. which transact mostly in software and hosted services (SaaS) arrangements,
respectively. For software arrangements that include multiple elements, including software licenses, professional
services and maintenance services, Rambus allocates and defers revenue for the undelivered items (typically only
the maintenance services) based on the fair value using vendor specific objective evidence (“VSOE”), and
recognizes the difference between the total arrangement fee and the amount deferred for the undelivered item(s)
as revenue. VSOE of fair value of each maintenance element is based on the contractual stated renewal rate for
that maintenance element. When VSOE of fair value does not exist for undelivered items, the entire arrangement
fee is recognized ratably over the performance period. For hosted services arrangements, Rambus recognizes the
arrangements over the service obligation period.

During 2016, the Company renamed its Cryptography Research Division (“CRD”) organization to the
Rambus Security Division (“RSD”) and its Lighting and Display Technologies Division (“LDT”) organization to
Rambus Lighting Division (“RLD”). Rambus’ revenue consists of royalty revenue and contract and other
revenue derived from Memory and Interface Division (“MID”), RSD and RLD operating segments. Royalty
revenue consists of patent license and technology license royalties. Contract and other revenue consists of
software license fees, engineering fees associated with integration of Rambus’ technology solutions into its
customers’ related support and maintenance, as well as sale of products.

During 2013, the Company expanded its business strategy of monetizing its patent portfolio to include the
sale of selected intellectual property. The Company’s MID business continues to grow its patent portfolio and
actively engages with various external parties to monetize the patent portfolio and explore new revenue
opportunities. As the sales of such patents developed by the MID business unit under this expanded strategy
represents a component of the Company’s ongoing major or central operations, the Company records the related
proceeds as revenue. The Company will recognize the revenue when there is persuasive evidence of a sales
arrangement, fees are fixed or determinable, delivery has occurred and collectibility is reasonably assured. These
requirements are generally fulfilled upon closing of the patent sale transaction.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

Royalty Revenue

Rambus generally recognizes royalty revenue upon notification by its customers and when deemed
collectible. The terms of the royalty agreements generally either require customers to give Rambus notification
and to pay the royalties within a specified period or are based on a fixed royalty that is due within a specified
period. Many of Rambus’ customers have the right to cancel their licenses. In such arrangements, revenue is only
recognized to the extent that is consistent with the cancellation provisions. Cancellation provisions within such
contracts generally provide for a prospective cancellation with no refund of fees already remitted by customers
for products provided and payment for services rendered prior to the date of cancellation. Rambus has two types
of royalty revenue: (1) patent license royalties and (2) technology license royalties.

Patent licenses — Rambus licenses its broad portfolio of patented inventions to companies who use these

inventions in the development and manufacture of their own products. Such licensing agreements may cover the
license of part, or all, of Rambus’ patent portfolio. The contractual terms of the agreements generally provide for
payments over an extended period of time. For the licensing agreements with fixed royalty payments, Rambus
generally recognizes revenue from these arrangements as amounts become due. For the licensing agreements
with variable royalty payments which can be based on either a percentage of sales or number of units sold,
Rambus earns royalties at the time that the customers’ sales occur. Rambus’ customers, however, do not report
and pay royalties owed for sales in any given quarter until after the conclusion of that quarter. As Rambus is
unable to estimate the customers’ sales in any given quarter to determine the royalties due to Rambus, it
recognizes royalty revenues based on royalties reported by customers during the quarter and when other revenue
recognition criteria are met.

In addition, Rambus may enter into certain settlements of patent infringement disputes. The amount of

consideration received upon any settlement (including but not limited to past royalty payments, future royalty
payments and punitive damages) is allocated to each element of the settlement based on the fair value of each
element. In addition, revenues related to past royalties are recognized upon execution of the agreement by both
parties, provided that the amounts are fixed or determinable, there are no significant undelivered obligations and
collectability is reasonably assured. Rambus does not recognize any revenues prior to execution of the agreement
since there is no reliable basis on which it can estimate the amounts for royalties related to previous periods or
assess collectability. Elements that are related to royalty revenue in nature (including but not limited to past
royalty payments and future royalty payments) will be recorded as royalty revenue in the consolidated statements
of operations. Elements that are not related to royalty revenue in nature (including but not limited to punitive
damage and settlement) will be recorded as gain from settlement which is reflected as a separate line item within
the operating expenses section in the consolidated statements of operations.

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Technology licenses — Rambus develops proprietary and industry-standard products that it provides to its
customers under technology license agreements. These arrangements include royalties, which can be based on
either a percentage of sales or number of units sold. Rambus earns royalties on such licensed products sold
worldwide by its customers at the time that the customers’ sales occur. Rambus’ customers, however, do not
report and pay royalties owed for sales in any given quarter until after the conclusion of that quarter. As Rambus
is unable to estimate the customers’ sales in any given quarter to determine the royalties due to Rambus, it
recognizes royalty revenues based on royalties reported by customers during the quarter and when other revenue
recognition criteria are met.

Contract and Other Revenue

Product revenue is recognized upon shipment of product to customers, net of accruals for estimated sales

returns and allowances, which to date, have not been significant. However, some of the Company’s sales are

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

made through distributors under arrangements that allow for price protection or rights of return on product unsold
by the distributors. Product revenue on sales made through distributors with rights of return or price protection is
deferred until the distributors sell the product to end customers. Sales to distributors are included in deferred
revenue and the Company defers the related costs until sale to the end customers occurs. Price protection rights
allow distributors the right to a credit in the event of declines in the price of the Company’s product that they
hold prior to the sale to an end customer. In the event that the Company reduces the selling price of products held
by distributors, deferred revenue related to distributors with price protection rights is reduced upon notification to
the customer of the price change. The Company’s sales to direct customers are made primarily pursuant to
standard purchase orders for delivery of products. The Company generally allows customers to cancel or change
purchase orders within limited notice periods prior to the scheduled shipment.

For software arrangements that include multiple elements, including software licenses, professional services

and maintenance services, Rambus allocates and defers revenue for the undelivered items (typically only the
maintenance services) based on the fair value using vendor specific objective evidence (“VSOE”), and
recognizes the difference between the total arrangement fee and the amount deferred for the undelivered item(s)
as revenue. VSOE of fair value of each maintenance element is based on the contractual stated renewal rate for
that maintenance element. When VSOE of fair value does not exist for undelivered items, the entire arrangement
fee is recognized ratably over the performance period.

For software arrangements, the Company uses the percentage-of-completion method for contracts that

involve the implementation of software solutions and that qualify for percentage-of-completion revenue
accounting (e.g. software arrangements that contain a PCS element that has VSOE of fair value established and
that have no refund rights that would allow a customer refunds of fees paid under the arrangement). Revenue is
recognized based on man-days incurred during the reporting period as compared to the estimated total man- days
necessary for each contract, not to exceed the billable project acceptances received, with deferral of
corresponding contract costs, if applicable. Should a loss be anticipated on a contract, the full amount of the loss
would be recorded when the loss is determinable. Maintenance and support revenue includes post-
implementation customer support and the right to unspecified software updates and enhancements on a when and
if available basis. The Company recognizes revenue from maintenance arrangements ratably over the period in
which the services are provided.

For development contracts related to licenses of its solutions that involve significant engineering and
integration services, the Company uses the proportional performance method. The measurement of progress to
completion is based on actual man-months incurred during the reporting period, not to exceed the billable project
acceptances received. Contract costs are recognized as incurred. Maintenance and support revenue includes
minimal hours of post-implementation customer support that is recognized ratably over the support period.

Cost of Revenue

Cost of revenue includes cost of professional services, materials, including cost of wafers processed by

third-party foundries, cost associated with packaging and assembly, test and shipping, cost of personnel,
including stock-based compensation, and equipment associated with manufacturing support, logistics and quality
assurance, warranty cost, amortization of developed technology, amortization of step-up values of inventory,
write down of inventories, amortization of production mask costs, overhead and an allocated portion of
occupancy costs.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable

intangible assets acquired in each business combination. Goodwill is not subject to amortization, but is subject to

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at least an annual assessment for impairment, applying a fair-value based test. The Company performs its
impairment analysis of goodwill on an annual basis during the fourth quarter of the year unless conditions arise
that warrant a more frequent evaluation.

Goodwill is allocated to the various reporting units which are generally operating segments. The goodwill

impairment test involves a two-step process. In the first step, the Company compares the fair value of each
reporting unit to its carrying value. The fair values of the reporting units are estimated using an income or
discounted cash flows approach.

Under the income approach, the Company measures fair value of the reporting unit based on a projected

cash flow method using a discount rate determined by its management which is commensurate with the risk
inherent in its current business model. The Company’s discounted cash flow projections are based on its annual
financial forecasts developed internally by management for use in managing its business. If the fair value of the
reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair
value of the reporting unit is less than the carrying value, the Company must perform the second step of the
impairment test to measure the amount of impairment loss. In the second step, the reporting unit’s fair value is
allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a
hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit
was being acquired by a market participant in a business combination. If the implied fair value of the reporting
unit’s goodwill is less than the carrying value, the difference is recorded as an impairment loss.

The Company performed its annual goodwill impairment analysis as of December 31, 2016 and determined

that the fair value of the reporting units with goodwill exceeded their carrying values.

Intangible Assets

Intangible assets are comprised of existing technology, customer contracts and contractual relationships, and

other definite-lived and indefinite-lived intangible assets. Identifiable intangible assets resulting from the
acquisitions of entities accounted for using the purchase method of accounting are estimated by management
based on the fair value of assets received. Identifiable definite-lived intangible assets are being amortized over
the period of estimated benefit using the straight-line method and estimated useful lives ranging from 1 to 10
years.

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Acquired indefinite-lived intangible assets related to the Company’s in-process research and development
(“IPR&D”) are capitalized and subject to impairment testing until completion or abandonment of the projects.
Upon successful completion of each project, the Company makes a separate determination of the useful life of
the acquired indefinite-lived intangible assets and the related amortization is recorded as an expense over the
estimated useful life of the specific projects. Indefinite-lived intangible assets are subject to at least an annual
assessment for impairment, applying a fair-value based test. Under the income approach, the Company measures
fair value of the indefinite-lived intangible assets based on a projected cash flow method using a discount rate
determined by its management which is commensurate with the risk inherent in its current business model. The
Company’s discounted cash flow projections are based on its annual financial forecasts developed internally by
management for use in managing its business. If the fair value of the indefinite-lived intangible assets exceeds its
carrying value, the indefinite-lived intangible assets are not impaired and no further testing is required. If the
implied fair value of the indefinite-lived intangible assets is less than the carrying value, the difference is
recorded as an impairment loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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Inventories

Inventories are stated at the lower of cost or market. Cost is computed using standard cost, which

approximates actual cost, on a first-in, first-out basis. Inventories are reduced for write downs based on periodic
reviews for evidence of slow-moving or obsolete parts. The write-down is based on comparison between
inventory on hand and estimated future sales for each specific product. Once written down, inventory write
downs are not reversed until the inventory is sold or scrapped. Inventory write downs are also established when
conditions indicate that the net realizable value is less than cost due to physical deterioration, obsolescence,
changes in price level or other causes.

Property, Plant and Equipment

Property, plant and equipment include computer equipment, computer software, machinery, leasehold
improvements, furniture and fixtures and buildings. Computer equipment, computer software, machinery, and
furniture and fixtures are stated at cost and generally depreciated on a straight-line basis over an estimated useful
life of 3, 3 to 5, 2 or 7, and 3 years, respectively. The Company undertook a series of structural improvements to
ready the Sunnyvale and Brecksville facilities for its use. The Company concluded that its requirement to fund
construction costs and responsibility for cost overruns resulted in the Company being considered the owner of the
buildings during the construction period for accounting purposes. Upon completion of construction, the Company
concluded that it retained sufficient continuing involvement to preclude de-recognition of the buildings under the
Financial Accounting Standards Board (“FASB”) authoritative guidance applicable to sale leaseback for real
estate. As such, the Company continues to account for the buildings as owned real estate and to record an
imputed financing obligation for its obligation to the legal owners. The buildings will be depreciated on a
straight-line basis over an estimated useful life of approximately 39 years. See Note 9, “Balance Sheet Details,”
and Note 11, “Commitments and Contingencies,” for additional details. Leasehold improvements are amortized
on a straight-line basis over the shorter of their estimated useful lives or the initial terms of the leases. Upon
disposal, assets and related accumulated depreciation are removed from the accounts and the related gain or loss
is included in the results from operations.

Definite-Lived and Indefinite-Lived Asset Impairment

The Company evaluates definite-lived and indefinite-lived assets (including property, plant and equipment

and intangible assets) for impairment whenever events or changes in circumstances indicate the carrying value of
an asset group may not be recoverable. The carrying value is not recoverable if it exceeds the undiscounted cash
flows resulting from the use of the asset group and its eventual disposition. The Company’s estimates of future
cash flows attributable to its asset groups require significant judgment based on its historical and anticipated
results and are subject to many factors. Factors that the Company considers important which could trigger an
impairment review include significant negative industry or economic trends, significant loss of clients, and
significant changes in the manner of its use of the acquired assets or the strategy for its overall business.

When the Company determines that the carrying value of the asset groups may not be recoverable based
upon the existence of one or more of the above indicators of impairment, the Company measures the potential
impairment based on a projected discounted cash flow method using a discount rate determined by the Company
to be commensurate with the risk inherent in the Company’s current business model. An impairment loss is
recognized only if the carrying amount of the asset group is not recoverable and exceeds its fair value. The
impairment charge is recorded to reduce the pre-impairment carrying amount of the assets based on the relative
carrying amount of those assets, though not to reduce the carrying amount of an asset below its fair value.
Different assumptions and judgments could materially affect the calculation of the fair value of the assets. During

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2016, the Company recognized an impairment of its IPR&D intangible asset of $18.3 million. See Note 5,
“Intangible Assets and Goodwill” for further details. During 2015, the Company did not recognize any
impairment of its definite-lived and indefinite-lived assets.

Income Taxes

Income taxes are accounted for using an asset and liability approach, which requires the recognition of
deferred tax assets and liabilities for expected future tax events that have been recognized differently in Rambus’
consolidated financial statements and tax returns. The measurement of current and deferred tax assets and
liabilities is based on provisions of the enacted tax law and the effects of future changes in tax laws or rates are
not anticipated. A valuation allowance is established when necessary to reduce deferred tax assets to amounts
expected to be realized based on available evidence.

In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the
application of complex tax regulations. As a result, the Company reports a liability for unrecognized tax benefits
resulting from uncertain tax positions taken or expected to be taken in its tax return. The Company considers
many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic
adjustments and which may not accurately anticipate actual outcomes.

Stock-Based Compensation and Equity Incentive Plans

The Company maintained stock plans covering a broad range of equity grants including stock options,
nonvested equity stock and equity stock units and performance based instruments. In addition, the Company
sponsors an Employee Stock Purchase Plan (“ESPP”), whereby eligible employees are entitled to purchase
Common Stock semi-annually, by means of limited payroll deductions, at a 15% discount from the fair market
value of the Common Stock as of specific dates.

The Company determines compensation expense associated with restricted stock units based on the fair
value of its common stock on the date of grant. The Company determines compensation expense associated with
stock options based on the estimated grant date fair value method using the Black-Scholes Merton valuation
model. The Company generally recognizes compensation expense using a straight-line amortization method over
the respective vesting period for awards that are ultimately expected to vest. Accordingly, stock-based
compensation expense for 2016, 2015 and 2014 has been reduced for estimated forfeitures. When estimating
forfeitures, the Company considers voluntary termination behaviors as well as trends of actual option forfeitures.
The Company will only recognize a tax benefit from stock-based awards in additional paid-in capital if an
incremental tax benefit is realized after all other tax attributes currently available have been utilized. In addition,
the Company has elected to account for the indirect effects of stock-based awards on other tax attributes, such as
the research tax credits, through the consolidated statement of operations as part of the tax effect of stock-based
compensation.

Cash and Cash Equivalents

Cash equivalents are highly liquid investments with original maturity of three months or less at the date of

purchase. The Company maintains its cash balances with high quality financial institutions. Cash equivalents are
invested in highly-rated and highly-liquid money market securities and certain U.S. government sponsored
obligations.

Marketable Securities

Available-for-sale securities are carried at fair value, based on quoted market prices, with the unrealized

gains or losses reported, net of tax, in stockholders’ equity as part of accumulated other comprehensive income

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(loss). The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts
to maturity, both of which are included in interest and other income, net. Realized gains and losses are recorded
on the specific identification method and are included in interest and other income, net. The Company reviews its
investments in marketable securities for possible other than temporary impairments on a regular basis. If any loss
on investment is believed to be a credit loss, a charge will be recognized in operations. In evaluating whether a
credit loss on a debt security has occurred, the Company considers the following factors: 1) the Company’s intent
to sell the security, 2) if the Company intends to hold the security, whether or not it is more likely than not that
the Company will be required to sell the security before recovery of the security’s amortized cost basis and 3)
even if the Company intends to hold the security, whether or not the Company expects the security to recover the
entire amortized cost basis. Due to the high credit quality and short term nature of the Company’s investments,
there have been no material credit losses recorded to date. The classification of funds between short-term and
long-term is based on whether the securities are available for use in operations or other purposes.

Fair Value of Financial Instruments

The carrying value of cash equivalents, accounts receivable and accounts payable approximate their fair

values due to their relatively short maturities as of December 31, 2016 and 2015. Marketable securities are
comprised of available-for-sale securities that are reported at fair value with the related unrealized gains and
losses included in accumulated other comprehensive income (loss), a component of stockholders’ equity, net of
tax. Fair value of the marketable securities is determined based on quoted market prices. The fair value of the
Company’s convertible notes fluctuates with interest rates and with the market price of the stock, but does not
affect the carrying value of the debt on the balance sheet.

Research and Development

Costs incurred in research and development, which include engineering expenses, such as salaries and
related benefits, stock-based compensation, depreciation, professional services and overhead expenses related to
the general development of Rambus’ products, are expensed as incurred. Software development costs are
capitalized beginning when a product’s technological feasibility has been established and ending when a product
is available for general release to customers. Rambus has not capitalized any software development costs since
the period between establishing technological feasibility and general customer release is relatively short and as
such, these costs have not been material.

Computation of Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated by dividing the net income (loss) by the weighted average
number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated by
dividing the earnings (loss) by the weighted average number of common shares and potentially dilutive securities
outstanding during the period. Potentially dilutive common shares consist of incremental common shares issuable
upon exercise of stock options, employee stock purchases, restricted stock and restricted stock units, and shares
issuable upon the conversion of convertible notes. The dilutive effect of outstanding shares is reflected in diluted
earnings per share by application of the treasury stock method. This method includes consideration of the
amounts to be paid by the employees, the amount of excess tax benefits that would be recognized in equity if the
instrument was exercised and the amount of unrecognized stock-based compensation related to future services.
No potential dilutive common shares are included in the computation of any diluted per share amount when a net
loss is reported.

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Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period

from transactions and other events and circumstances from non-owner sources, including foreign currency
translation adjustments and unrealized gains and losses on marketable securities. Other comprehensive income
(loss), net of tax, is presented in the consolidated statements of comprehensive income (loss).

Credit Concentration

As of December 31, 2016 and 2015, the Company’s cash, cash equivalents and marketable securities were
invested with various financial institutions in the form of corporate notes, bonds and commercial paper, money
market funds, U.S. Treasuries, U.S. Government Agencies, and municipal bonds and notes. The Company’s
exposure to market risk for changes in interest rates relates primarily to its investment portfolio. The Company
places its investments with high credit issuers and, by investment policy, attempts to limit the amount of credit
exposure to any one issuer. As stated in the Company’s investment policy, it will ensure the safety and
preservation of the Company’s invested funds by limiting default risk and market risk. The Company has no
investments denominated in foreign country currencies and therefore is not subject to foreign exchange risk from
these assets.

The Company mitigates default risk by investing in high credit quality securities and by positioning its

portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or
guarantor. The portfolio includes only marketable securities with active secondary or resale markets to enable
portfolio liquidity.

The Company’s accounts receivable are derived from revenue earned from customers located in the U.S.

and internationally. See Note 6, “Segments and Major Customers” for further details.

Foreign Currency Translation and Remeasurement

The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into
U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries
are translated using rates that approximate those in effect during the period. Gains and losses from these
translations are recognized in foreign currency translation included in Accumulated Other Comprehensive Gain
(Loss) in the consolidated statements of stockholders’ equity. The Company’s subsidiaries that use the U.S.
dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end
of each period, and inventories, property and nonmonetary assets and liabilities at historical rates. Additionally,
foreign currency transaction gains and losses are included in interest income and other (income) expense, net, in
the consolidated statements of operations and were not material in the periods presented.

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Business Combinations

The Company accounts for acquisitions of business using the purchase method of accounting, which
requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed at
their acquisition date fair values. While the Company uses its best estimates and assumptions to accurately value
assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where
applicable, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement
period, which may be up to one year from the acquisition date, the Company may record adjustments to the
assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the
measurement period or final determination of the values of assets acquired or liabilities assumed, whichever
comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

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Accounting for business combinations requires management to make significant estimates and assumptions,
especially at the acquisition date including the Company’s estimates for intangible assets, contractual obligations
assumed and pre-acquisition contingencies where applicable. Although, the Company believes the assumptions
and estimates made in the past have been reasonable and appropriate, they are based in part on historical
experience and information obtained from the management of the acquired companies and are inherently
uncertain. Critical estimates in valuing certain of the intangible assets the Company acquired include future
expected cash flows from product sales, customer contracts and acquired technologies, expected costs to develop
IPR&D into commercially viable products and estimated cash flows from the projects when completed and
discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of
such assumptions, estimates or actual results.

Litigation

Rambus may be involved in certain legal proceedings. Based upon consultation with outside counsel
handling its defense in these matters and an analysis of potential results, if Rambus believes that a loss arising
from such matters is probable and can be reasonably estimated, Rambus records the estimated liability in its
consolidated financial statements. If only a range of estimated losses can be determined, Rambus records an
amount within the range that, in its judgment, reflects the most likely outcome; if none of the estimates within
that range is a better estimate than any other amount, Rambus records the low end of the range. Any such accrual
would be charged to expense in the appropriate period. Rambus recognizes litigation expenses in the period in
which the litigation services were provided.

3. Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

(“ASU”) No. 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment,” which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the
amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of
goodwill. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019.
Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the
impact that this guidance will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the

Definition of a Business.” The amendment seeks to clarify the definition of a business with the objective of
adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or
disposals) of assets or businesses. The definition of a business affects many areas of accounting including
acquisitions, disposals, goodwill and consolidation. This ASU is effective for interim and annual reporting
periods beginning after December 15, 2017, including interim periods within those periods. The amendments
should be applied prospectively on or after the effective dates. The Company is currently evaluating the impact
that this guidance will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15 which amends the guidance on the classification of

certain cash receipts and payments in the statement of cash flows. This ASU is effective for annual and interim
reporting periods beginning after December 15, 2017 and is applied retrospectively. Early adoption is permitted
including adoption in an interim period. The Company is currently evaluating the impact that this guidance will
have on its financial condition and results of operations.

In June 2016, the FASB issued ASU No. 2016-13. The purpose of this ASU is to require a financial asset
measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating

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to available-for-sale debt securities should be recorded through an allowance for credit losses. This ASU is
effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently
evaluating the impact that this guidance will have on its financial condition and results of operations.

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment

Accounting.” This ASU affects entities that issue share-based payment awards to their employees. The ASU is
designed to simplify several aspects of accounting for share-based payment award transactions, which include
the income tax consequences, classification of awards as either equity or liabilities, classification on the
statement of cash flows and forfeiture rate calculations. The Company will adopt this ASU on its effective date
of January 1, 2017. The adoption of this ASU is not expected to have a material impact on the Company’s
consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases.” This ASU requires lessees to recognize

right-of-use assets and liabilities for operating leases, initially measured at the present value of the lease
payments, on the balance sheet. In addition, it requires lessees to recognize a single lease cost, calculated so that
the cost of the lease is allocated over the lease term, generally on a straight-line basis. This ASU will become
effective for the Company in the first quarter of fiscal year 2019, and requires adoption using a modified
retrospective approach. The Company is evaluating the impact of adopting this new accounting standard update
on its consolidated financial statements and related disclosures and anticipates this new guidance will materially
impact the Company’s financial statements given the Company has a significant number of operating leases.

In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory (Topic
330),” which applies to inventory that is measured using first-in, first-out (“FIFO”) or average cost. Under the
updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable
value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of
completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured
using last-in, last-out (“LIFO”). This ASU is effective for annual and interim periods beginning after
December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an
interim or annual reporting period. The Company will adopt this ASU on its effective date of January 1, 2017.
The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial
statements.

In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs,”
which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a
direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU
requires retrospective adoption and is effective for financial statements issued for fiscal years beginning after
December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted. The Company
adopted this ASU in the first quarter of 2016 on a retrospective basis. Refer to Note 10, “Convertible Notes” for
further details.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)

which amended the existing accounting standards for revenue recognition. The core principle of the new
guidance is for companies to recognize revenue to depict the transfer of goods or services to customers in
amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange
for those goods or services. The new guidance also will result in enhanced disclosures about revenue, provide
guidance for transactions that were not previously addressed comprehensively (for example, service revenue and
contract modifications) and improve guidance for multiple element arrangements. Subsequently, the FASB has
issued the following standards related to ASU No. 2014-09: ASU No. 2016-10, Revenue from Contracts with

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Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU No. 2016-12, Revenue from
Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU
No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.
The Company must adopt ASU 2016-10, ASU 2016-12 and ASU 2016-20 with ASU 2014-09 (collectively, the
“new revenue standards”).

The new revenue standards may be applied retrospectively to each prior period presented (full retrospective

method) or retrospectively with the cumulative effect recognized as of the date of initial application (the
modified retrospective method). The new revenue standards become effective for the Company on January 1,
2018. The Company currently anticipates adopting the new revenue standards using the full retrospective
method. While the Company is still in the process of completing its analysis on the impact this guidance will
have on its consolidated financial statements and related disclosures, the Company expects the impact to be
material.

4. Earnings Per Share

The following table sets forth the computation of basic and diluted income per share:

Net income per share:
Numerator:

Net income

Denominator:

For the Years Ended December 31,

2016

2015

2014

$

6,820

$211,388

$ 26,201

Weighted-average common shares outstanding — basic
Effect of potential dilutive common shares

110,162
2,978

114,814
2,670

114,318
3,306

Weighted-average common shares outstanding — diluted

113,140

117,484

117,624

Basic net income per share

Diluted net income per share

$

$

0.06

0.06

$

$

1.84

1.80

$

$

0.23

0.22

For the years ended December 31, 2016, 2015 and 2014, options to purchase approximately 2.2 million,
2.5 million and 5.6 million shares, respectively, were excluded from the calculation because they were anti-
dilutive after considering proceeds from exercise, taxes and related unrecognized stock-based compensation
expense. These shares do not include the Company’s 5% convertible senior notes due 2014 (the “2014 Notes”)
and 1.125% convertible senior notes due 2018 (the “2018 Notes”). The par amount of convertible notes is
payable in cash equal to the principal amount of the notes plus any accrued and unpaid interest and then the
“in-the-money” conversion benefit feature at the conversion price above $19.31 and $12.07, respectively, per
share is payable in cash, shares of the Company’s common stock or a combination of both. Refer to Note 10,
“Convertible Notes” for more details.

5. Intangible Assets and Goodwill

In the fourth quarter of 2016 and 2015, the Company performed its annual goodwill impairment analysis for
the MID and RSD reporting units, which are the only reporting units with goodwill. The Company estimated the
fair value of the reporting units using the income approach which was determined using Level 3 fair value inputs.
The utilization of the income approach to determine fair value requires estimates of future operating results and

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cash flows discounted using an estimated discount rate. Cash flow projections are based on management’s
estimates of revenue growth rates and operating margins, taking into consideration industry and market
conditions.

As of December 31, 2016, the fair value of the MID reporting unit, with $66.6 million of goodwill,

exceeded the carrying value of its net assets by approximately 299% and the fair value of the RSD reporting unit,
with $138.2 million of goodwill, exceeded the carrying value of its net assets by approximately 89%. Key
assumptions used to determine the fair value of the MID and RSD reporting units at December 31, 2016, were
the revenue growth rates for the forecast period and terminal year, terminal growth rates and discount rates.
Certain estimates used in the income approach involve information for new product lines with limited financial
history and developing revenue models which increase the risk of differences between the projected and actual
performance. The discount rate of 12% for MID and 16.5% for RSD is based on the reporting units’ overall risk
profile relative to other guideline companies, market adoption of the Company’s technology, the reporting units’
respective industry as well as the visibility of future expected cash flows. The terminal growth rate applied to
determine fair value for both reporting units was 3%, which was based on historical experience as well as
anticipated economic conditions, industry data and long term outlook for the business. These assumptions are
inherently uncertain.

As of December 31, 2015, the fair value of the MID reporting unit, with $19.9 million of goodwill,

exceeded the carrying value of its net assets by approximately 226% and the fair value of the RSD reporting unit,
with $97.0 million of goodwill, exceeded the carrying value of its net assets by approximately 45%. Key
assumptions used to determine the fair value of the MID and RSD reporting units at December 31, 2015, were
the revenue growth rates for the forecast period and terminal year, terminal growth rates and discount rates.
Certain estimates used in the income approach involve information for new product lines with limited financial
history and developing revenue models which increase the risk of differences between the projected and actual
performance. The discount rate of 13% for MID and 20% for RSD is based on the reporting units’ overall risk
profile relative to other guideline companies, market adoption of the Company’s technology, the reporting units’
respective industry as well as the visibility of future expected cash flows. The terminal growth rate applied to
determine fair value for both reporting units was 3%, which was based on historical experience as well as
anticipated economic conditions, industry data and long term outlook for the business. These assumptions are
inherently uncertain.

It is reasonably possible that the businesses could perform significantly below the Company’s expectations
or a deterioration of market and economic conditions could occur. This would adversely impact the Company’s
ability to meet its projected results, which could cause the goodwill in any of its reporting units or intangible
assets in any of its asset groups to become impaired. Significant differences between these estimates and actual
cash flows could materially affect the Company’s future financial results. If the reporting units are not successful
in commercializing new business arrangements, if the businesses are unsuccessful in signing new license
agreements or renewing its existing license agreements, or if the Company is unsuccessful in managing its costs,
the revenue and income for these reporting units could adversely and materially deviate from their historical
trends and could cause goodwill or intangible assets to become impaired. If the Company determines that its
goodwill or intangible assets are impaired, it would be required to record a non-cash charge that could have a
material adverse effect on its results of operations and financial position.

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RAMBUS INC.

Goodwill

The following tables present goodwill information for each of the reportable segments for the years ended

December 31, 2016 and December 31, 2015:

Reportable Segment:

MID
RSD

Total

December 31,
2015

Addition to
Goodwill (1)

Impairment
Charge of
Goodwill

Effect of
Exchange
Rates (2)

December 31,
2016

$ 19,905
96,994

$46,738
46,903

(In thousands)
$—
—

—
(5,746)

$ 66,643
138,151

$116,899

$93,641

$—

(5,746)

$204,794

(1) The additions to goodwill are a result of the acquisitions of Smart Card Software Limited (“SCS”) during
the first quarter of 2016, and Inphi’s Memory Interconnect Business and the assets of the Snowbush IP
group during the third quarter of 2016. See Note 19, “Acquisitions” for further details.
(2) Effect of exchange rates relates to foreign currency translation adjustments for the period.

Reportable Segment:

MID
RSD
Other

Total

Reportable Segment:

MID
RSD

Total

Reportable Segment:

MID
RSD
Other

Total

As of December 31, 2016

Gross
Carrying
Amount

$ 66,643
138,151
21,770

Accumulated
Impairment
Losses

(In thousands)
$ —
—
(21,770)

Net
Carrying
Amount

$ 66,643
138,151
—

$226,564

$(21,770)

$204,794

December 31,
2014

Addition to
Goodwill

Impairment
Charge of
Goodwill

$ 19,905
96,994

$116,899

$—
—

$—

$—
—

$—

December 31,
2015

$ 19,905
96,994

$116,899

As of December 31, 2015

Gross
Carrying
Amount

$ 19,905
96,994
21,770

Accumulated
Impairment
Losses

$ —
—
(21,770)

Net
Carrying
Amount

$ 19,905
96,994
—

$138,669

$(21,770)

$116,899

78

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

Intangible Assets

The components of the Company’s intangible assets as of December 31, 2016 and December 31, 2015 were

as follows:

Useful Life

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

As of December 31, 2016

Existing technology (1)
Customer contracts and contractual relationships (1)
Non-compete agreements and trademarks
In-process research and development (2)

3 to 10 years
1 to 10 years
3 years
Not applicable

$256,656
65,109
300
5,100

(In thousands)
$(156,577)
(37,900)
(300)
—

$100,079
27,209
—
5,100

$

Total intangible assets

$327,165

$(194,777)

$132,388

(1)

(2)

Includes intangible assets from the acquisitions of SCS, Inphi’s Memory Interconnect Business, and the
assets of the Snowbush IP group. See Note 19, “Acquisitions” for further details.
Includes intangible assets from the acquisitions of Inphi’s Memory Interconnect Business and the assets of
the Snowbush IP group. See Note 19, “Acquisitions” for further details. The in-process research and
development assets are accounted for as indefinite-lived intangible assets until the underlying projects are
completed or abandoned.

As of December 31, 2015

Useful Life

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Existing technology
Customer contracts and contractual relationships
Non-compete agreements

3 to 10 years
1 to 10 years
3 years

$185,321
31,093
300

(In thousands)
$(127,028)
(25,120)
(300)

$58,293
5,973
—

Total intangible assets

$216,714

$(152,448)

$64,266

During the fourth quarter of 2016, the Company recorded a charge of $18.3 million related to the
impairment of some of the in-process research and development intangible asset of the original $21.8 million
acquired in the acquisition of the assets of the Snowbush IP group. The impairment of this intangible asset
resulted from a delay in the market served by this initiative. This delay will not impact the short-term revenue
expectations but will impact the Company’s revenue expectations several years into the future.

Included in customer contracts and contractual relationships are favorable contracts which are acquired
software and service agreements where the Company has no performance obligations. Cash received from these
acquired favorable contracts reduce the favorable contract intangible asset. During 2016 and 2015, the Company
received $5.9 million and $0.1 million related to the favorable contracts, respectively. As of December 31, 2016
and 2015, the net balance of the favorable contract intangible assets was $3.6 million and zero, respectively. The
estimated useful life is based on expected payment dates related to the favorable contracts.

The Company did not purchase any intangible assets in 2016 except for those intangible assets acquired in
the acquisitions during the year. See Note 19, “Acquisitions” for further details. The Company did not purchase
any intangible assets in 2015 and 2014.

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RAMBUS INC.

During the years ended December 31, 2016 and 2015, the Company did not sell any intangible assets.

During the year ended December 31, 2014, the Company sold portfolios of its intellectual property covering
wireless and other technologies for $4.4 million and the related gain was recorded as gain from sale of
intellectual property and revenue in the consolidated statements of operations.

Amortization expense for intangible assets for the years ended December 31, 2016, 2015, and 2014 was

$37.1 million, $25.1 million, and $26.6 million, respectively. The estimated future amortization expense of
intangible assets as of December 31, 2016 was as follows (amounts in thousands):

Years Ending December 31:

2017
2018
2019
2020
2021
Thereafter

Amount

$ 44,391
28,880
19,144
18,505
12,241
9,227

$132,388

6. Segments and Major Customers

Operating segments are based upon Rambus’ internal organization structure, the manner in which its
operations are managed, the criteria used by its Chief Operating Decision Maker (“CODM”) to evaluate segment
performance and availability of separate financial information regularly reviewed for resource allocation and
performance assessment.

During 2016, the Company renamed its Cryptography Research Division organization to the Rambus
Security Division (“RSD”) and its Lighting and Display Technologies Division (“LDT”) to the Rambus Lighting
Division (“RLD”). The Company determined its CODM to be the Chief Executive Officer and determined its
operating segments to be: (1) Memory and Interface Division (“MID”), which focuses the design, development,
manufacturing through partnerships and licensing of technology and solutions that is related to memory and
interfaces; (2) RSD, which focuses on the design, development and licensing of technologies for chip and system
security, anti-counterfeiting, smart ticketing and mobile payments; (3) ESD, which encompasses our long-term
research and development efforts in the area of emerging technologies; and (4) RLD, which focuses on the
design, development and licensing of technologies for lighting.

For the year ended December 31, 2016, MID and RSD were considered reportable segments as they met the
quantitative thresholds for disclosure as reportable segments. The results of the remaining operating segments are
shown under “Other”.

The Company evaluates the performance of its segments based on segment operating income (loss), which

is defined as revenue minus segment operating expenses. Segment operating expenses are comprised of direct
operating expenses.

Segment operating expenses do not include sales, general and administrative expenses and the allocation of

certain expenses managed at the corporate level, such as stock-based compensation, amortization, and certain
bonus and acquisition costs. The “Reconciling Items” category includes these unallocated sales, general and
administrative expenses as well as corporate level expenses.

80

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

The tables below present reported segment operating income (loss) for the years ended December 31, 2016,

2015 and 2014:

Revenues
Segment operating expenses

For the Year Ended December 31, 2016

MID

RSD

Other

Total

(In thousands)

$239,843
68,460

$76,175
51,855

$ 20,579
30,397

$ 336,597
150,712

Segment operating income (loss)

$171,383

$24,320

$ (9,818)

$ 185,885

Reconciling items

Operating income
Interest and other income (expense), net

Income before income taxes

Revenues
Segment operating expense

(152,243)

$ 33,642
(11,005)

$ 22,637

For the Year Ended December 31, 2015

MID

RSD

Other

Total

(In thousands)

$221,968
47,780

$50,497
29,056

$ 23,813
32,147

$ 296,278
108,983

Segment operating income (loss)

$174,188

$21,441

$ (8,334)

$ 187,295

Reconciling items

Operating income
Interest and other income (expense), net

Income before income taxes

Revenues
Segment operating expenses

(115,875)

$ 71,420
(11,189)

$ 60,231

For the Year Ended December 31, 2014

MID

RSD

Other

Total

(In thousands)

$226,303
40,816

$49,330
27,608

$ 20,925
34,106

$ 296,558
102,530

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Segment operating income (loss)

$185,487

$21,722

$(13,181)

$ 194,028

Reconciling items

Operating income
Interest and other income (expense), net

Income before income taxes

(118,682)

$ 75,346
(25,096)

$ 50,250

The Company’s CODM does not review information regarding assets on an operating segment basis.

Additionally, the Company does not record intersegment revenue or expense.

81

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

Accounts receivable from the Company’s major customers representing 10% or more of total accounts

receivable at December 31, 2016 and December 31, 2015, respectively, was as follows:

Customer

Customer 1 (MID reportable segment)
Customer 2 (Other segment)
Customer 3 (MID reportable segment)
Customer 4 (RSD reportable segment)
Customer 5 (RSD reportable segment)

As of December 31,

2016

2015

13%
12%
*
*
17%

16%
27%
28%
21%
*

* Customer accounted for less than 10% of total accounts receivable in the period

Revenue from the Company’s major customers representing 10% or more of total revenue for the years

ended December 31, 2016, 2015 and 2014 were as follows:

Customer A (MID and RSD reportable segments)
Customer B (MID reportable segment)
Customer C (MID reportable segment)

* Customer accounted for less than 10% of total revenue in the period

Years Ended December 31,

2016

2015

2014

19%
20%
13%

20%
19%
13%

20%
16%
13%

Revenue from customers in the geographic regions based on the location of contracting parties is as follows:

South Korea
USA
Japan
Europe
Canada
Singapore
Asia-Other

Total

Years Ended December 31,

2016

2015

2014

$129,542
121,209
30,215
16,031
3,478
17,908
18,214

(In thousands)
$115,486
118,278
29,687
9,616
214
16,312
6,685

$107,441
109,060
30,454
21,349
7,119
12,980
8,155

$336,597

$296,278

$296,558

At December 31, 2016, of the $58.4 million of total property, plant and equipment, approximately

$55.0 million were located in the United States, $1.3 million were located in India and $2.1 million were located
in other foreign locations. At December 31, 2015, of the $56.6 million of total property, plant and equipment,
approximately $55.2 million were located in the United States, $1.3 million were located in India and
$0.1 million were located in other foreign locations.

7. Marketable Securities

Rambus invests its excess cash and cash equivalents primarily in U.S. government-sponsored obligations,
commercial paper, corporate notes and bonds, money market funds and municipal notes and bonds that mature
within three years. As of December 31, 2016 and 2015, all of the Company’s cash equivalents and marketable
securities have a remaining maturity of less than one year.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

All cash equivalents and marketable securities are classified as available-for-sale. Total cash, cash

equivalents and marketable securities are summarized as follows:

(Dollars in thousands)

Money market funds
U.S. Government bonds and notes
Corporate notes, bonds, commercial paper and other

Total cash equivalents and marketable securities

Cash

Total cash, cash equivalents and marketable

As of December 31, 2016

Fair Value

$ 10,681
48,292
62,178

Amortized
Cost

$ 10,681
48,291
62,199

121,151
51,031

121,171
51,031

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Weighted
Rate of
Return

$—

1
—

1

—

$ —
—
(21)

(21)
—

0.41%
0.39%
0.66%

securities

$172,182

$172,202

$

1

$ (21)

(Dollars in thousands)

Money market funds
U.S. Government bonds and notes
Corporate notes, bonds, commercial paper and other

Total cash equivalents and marketable securities

Cash

Total cash, cash equivalents and marketable

As of December 31, 2015

Fair Value

$ 77,804
14,110
160,823

Amortized
Cost

$ 77,804
14,142
160,979

252,737
34,969

252,925
34,969

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Weighted
Rate of
Return

$—
—
—

—
—

$ —

(32)
(156)

(188)
—

0.12%
0.48%
0.45%

securities

$287,706

$287,894

$—

$(188)

Available-for-sale securities are reported at fair value on the balance sheets and classified as follows:

Cash equivalents
Short term marketable securities

Total cash equivalents and marketable securities

Cash

As of

December 31,
2016

December 31,
2015

(Dollars in thousands)

$ 84,263
36,888

121,151
51,031

$108,795
143,942

252,737
34,969

Total cash, cash equivalents and marketable securities

$172,182

$287,706

The Company continues to invest in highly rated quality, highly liquid debt securities. As of December 31,
2016, these securities have a remaining maturity of less than one year. The Company holds all of its marketable
securities as available-for-sale, marks them to market, and regularly reviews its portfolio to ensure adherence to
its investment policy and to monitor individual investments for risk analysis, proper valuation, and unrealized
losses that may be other than temporary.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

The estimated fair value of cash equivalents and marketable securities classified by the length of time that
the securities have been in a continuous unrealized loss position at December 31, 2016 and 2015 are as follows:

Less than one year
U.S. Government bonds and notes
Corporate notes, bonds and commercial paper

Total Corporate notes, bonds, and commercial
paper and U.S. Government bonds and notes

Fair Value

Gross Unrealized Loss

December 31,
2016

December 31,
2015

December 31,
2016

December 31,
2015

(In thousands)

$18,395
54,377

$ 14,110
145,563

$—

(21)

$ (32)
(156)

$72,772

$159,673

$ (21)

$(188)

The gross unrealized loss at December 31, 2016 and 2015 was not material in relation to the Company’s
total available-for-sale portfolio. The gross unrealized loss can be primarily attributed to a combination of market
conditions as well as the demand for and duration of the U.S. government-sponsored obligations and corporate
notes and bonds. The Company has no intent to sell, there is no requirement to sell and the Company believes
that it can recover the amortized cost of these investments. The Company has found no evidence of impairment
due to credit losses in its portfolio. Therefore, these unrealized losses were recorded in other comprehensive
income (loss). However, the Company cannot provide any assurance that its portfolio of cash, cash equivalents
and marketable securities will not be impacted by adverse conditions in the financial markets, which may require
the Company in the future to record an impairment charge for credit losses which could adversely impact its
financial results.

See Note 8, “Fair Value of Financial Instruments,” for discussion regarding the fair value of the Company’s

cash equivalents and marketable securities.

8. Fair Value of Financial Instruments

The fair value measurement statement defines fair value as the price that would be received from selling an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
When determining fair value, the Company considers the principal or most advantageous market in which the
Company would transact, and the Company considers assumptions that market participants would use when
pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance.

The Company’s financial instruments are measured and recorded at fair value, except for cost method
investments and convertible notes. The Company’s non-financial assets, such as goodwill, intangible assets, and
property, plant and equipment, are measured at fair value when there is an indicator of impairment and recorded
at fair value only when an impairment charge is recognized.

Fair Value Hierarchy

The fair value measurement statement requires disclosure that establishes a framework for measuring fair
value and expands disclosure about fair value measurements. The statement requires fair value measurement be
classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for

identical, unrestricted assets or liabilities.

84

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RAMBUS INC.

The Company uses unadjusted quotes to determine fair value. The financial assets in Level 1 include money

market funds.

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or

indirectly, for substantially the full term of the asset or liability.

The Company uses observable pricing inputs including benchmark yields, reported trades, and broker/dealer

quotes. The financial assets in Level 2 include U.S. government bonds and notes, corporate notes, commercial
paper and municipal bonds and notes.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value

measurement and unobservable (i.e., supported by little or no market activity).

The financial assets in Level 3 previously included a cost investment whose value is determined using

inputs that are both unobservable and significant to the fair value measurements, as discussed below.

The Company reviews the pricing inputs by obtaining prices from a different source for the same security on

a sample of its portfolio. The Company has not adjusted the pricing inputs it has obtained. The following table
presents the financial instruments that are carried at fair value and summarizes the valuation of its cash
equivalents and marketable securities by the above pricing levels as of December 31, 2016 and 2015:

Money market funds
U.S. Government bonds and notes
Corporate notes, bonds, commercial paper and other

Total available-for-sale securities

Money market funds
U.S. Government bonds and notes
Corporate notes, bonds, commercial paper and other

Total available-for-sale securities

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As of December 31, 2016

Quoted
Market
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In thousands)

$ 10,681
48,292
62,178

$10,681
—
303

$ —

48,292
61,875

$121,151

$10,984

$110,167

$—
—
—

$—

As of December 31, 2015

Quoted
Market
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In thousands)

$ 77,804
14,110
160,823

$77,804
—
1,264

$ —

14,110
159,559

$252,737

$79,068

$173,669

$—
—
—

$—

The Company monitors its investments for other-than-temporary impairment and records appropriate
reductions in carrying value when necessary. The Company monitors its investments for other-than-temporary

85

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

losses by considering current factors, including the economic environment, market conditions, operational
performance and other specific factors relating to the business underlying the investment, reductions in carrying
values when necessary and the Company’s ability and intent to hold the investment for a period of time which
may be sufficient for anticipated recovery in the market. Any other-than-temporary loss is reported under
“Interest and other income (expense), net” in the consolidated statement of operations. During the years ended
December 31, 2016 and 2015, the Company recorded no other-than-temporary impairment charges on its
investments. For the year ended December 31, 2014, the Company recorded impairment charges related to its
non-marketable equity security of a private company as described below.

The Company made an investment of $2.0 million in a non-marketable equity security of a private company
during 2009. Prior to the second quarter of 2013, the Company had not recorded any impairment charges related
to this investment as there had been no events that caused a decrease in its fair value below the carrying cost.
During the year ended December 31, 2014, as part of its periodic evaluation of the fair value of the investment in
the non-marketable equity security, and based on the information provided by the private company at that time,
the Company determined that there was a decrease in the security’s fair value. The fair value of the
non-marketable equity security was determined based on an income approach, using level 3 fair value inputs, as
it was deemed to be the most indicative of the security’s fair value. Accordingly, the Company recorded
impairment charges of $0.6 million within interest income and other income (expense), net, in the consolidated
statements of operations during 2014.

In October 2015, the previously written down private company’s stock became publicly traded and as a
result, the investment in this equity security was classified as an available-for-sale security and was re-measured
to fair value, resulting in a $1.3 million increase in marketable securities and accumulated other comprehensive
income at the time of re-measurement.

During the years ended December 31, 2016 and 2015, there were no transfers of financial instruments

between different categories of fair value.

The following table presents the financial instruments that are not carried at fair value but which require fair

value disclosure as of December 31, 2016 and 2015:

(in thousands)

As of December 31, 2016

As of December 31, 2015

Face
Value

Carrying
Value

Fair
Value

Face
Value

Carrying
Value

Fair
Value

1.125% Convertible Senior Notes due 2018

138,000

126,167

173,961

138,000

119,418

156,292

The fair value of the convertible notes at each balance sheet date is determined based on recent quoted
market prices for these notes which is a level 2 measurement. As discussed in Note 10, “Convertible Notes,” as
of December 31, 2016, the convertible notes are carried at their face value of $138.0 million, less any
unamortized debt discount and unamortized debt issuance costs. The carrying value of other financial
instruments, including accounts receivable, accounts payable and other payables, approximates fair value due to
their short maturities.

Information regarding the Company’s goodwill and long-lived assets balances are disclosed in Note 5,

“Intangible Assets and Goodwill”.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

9. Balance Sheet Details

Inventories

Inventories consist of the following:

Raw materials
Work in process
Finished goods

Property, Plant and Equipment, net

Property, plant and equipment, net is comprised of the following:

Building
Computer software
Computer equipment
Furniture and fixtures
Leasehold improvements
Machinery
Construction in progress

Less accumulated depreciation and amortization

As of
December 31,

2016

2015

(In thousands)

3,773
616
1,244

597
74
409

$5,633

$1,080

As of December 31,

2016

2015

(In thousands)

$ 40,320
20,922
36,608
15,140
7,176
17,406
1,075

$ 40,320
20,012
31,224
13,943
7,098
11,037
637

138,647
(80,205)

124,271
(67,655)

$ 58,442

$ 56,616

As of December 31, 2016 and 2015, for the Sunnyvale and Brecksville facilities, the Company had
capitalized $40.3 million in building based on the estimated fair value of the portion of the unfinished spaces,
capitalized interest on the unfinished spaces and construction costs related to the build-out of the facilities. See
Note 11, “Commitments and Contingencies” for additional details.

Depreciation expense for the years ended December 31, 2016, 2015 and 2014 was $13.0 million,

$12.4 million and $13.6 million, respectively.

Accumulated Other Comprehensive Gain (Loss)

Accumulated other comprehensive gain (loss) is comprised of the following:

Foreign currency translation adjustments
Unrealized gain (loss) on available-for-sale securities, net of tax

Total

87

As of
December 31,

2016

2015

(In thousands)
$(13,392) $ 95
278
(116)

$(13,508) $373

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

10. Convertible Notes

The Company adopted ASU 2015-03 during the first quarter of 2016. Pursuant to the guidance in ASU
2015-03, the Company has reclassified unamortized debt issuance costs associated with the Company’s 2018
Notes in the previously reported Consolidated Balance Sheet as of December 31, 2015, as follows:

(In thousands)

Other assets
Convertible notes, long-term

As presented
December 31, 2015

Reclassifications

As adjusted
December 31, 2015

$
3,648
$120,901

$(1,483)
$(1,483)

$
2,165
$119,418

The Company’s convertible notes are shown in the following table.

(Dollars in thousands)

1.125% Convertible Senior Notes due 2018
Unamortized discount
Unamortized debt issuance costs

Total convertible notes

Less current portion

Total long-term convertible notes

As of
December 31,
2016

As of
December 31,
2015

$138,000
(10,913)
(920)

$138,000
(17,099)
(1,483)

$126,167

$119,418

—

—

$126,167

$119,418

1.125% Convertible Senior Notes due 2018. On August 16, 2013, the Company issued $138.0 million
aggregate principal amount of 1.125% convertible senior notes pursuant to an indenture (the “Indenture”) by and
between the Company and U.S. Bank, National Association as the trustee. The 2018 Notes will mature on
August 15, 2018 (the “Maturity Date”), subject to earlier repurchase or conversion. In accounting for the 2018
Notes at issuance, the Company separated the 2018 Notes into liability and equity components pursuant to the
accounting standards for convertible debt instruments that may be fully or partially settled in cash upon
conversion. As of the date of issuance, the Company determined that the liability component of the 2018 Notes
was $107.7 million and the equity component of the 2018 Notes was $30.3 million. The fair value of the liability
component was estimated using an interest rate for a similar instrument without a conversion feature. The
unamortized discount related to the 2018 Notes is being amortized to interest expense using the effective interest
method over five years through August 2018.

The Company will pay cash interest at an annual rate of 1.125% of the principal amount at issuance, payable

semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2014. The
Company incurred transaction costs of approximately $3.6 million related to the issuance of 2018 Notes. In
accounting for these costs, the Company allocated the costs to the liability and equity components in proportion
to the allocation of proceeds from the issuance of the 2018 Notes to such components. Transaction costs
allocated to the liability component of $2.8 million were recorded as deferred offering costs and are being
amortized to interest expense using the effective interest method over five years (the expected term of the debt).
The transaction costs allocated to the equity component of $0.8 million were recorded as additional paid-in
capital. The 2018 Notes are the Company’s general unsecured obligations, ranking equally in right of payment to
all of Rambus’ existing and future senior unsecured indebtedness, including the 2014 Notes, and senior in right
of payment to any of the Company’s future indebtedness that is expressly subordinated to the 2018 Notes.

The 2018 Notes are convertible into shares of the Company’s common stock at an initial conversion rate of

82.8329 shares of common stock per $1,000 principal amount of 2018 Notes, subject to adjustment in certain

88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

events. This is equivalent to an initial conversion price of approximately $12.07 per share of common stock.
Holders may surrender their 2018 Notes for conversion prior to the close of business day immediately preceding
May 15, 2018 only under the following circumstances: (1) during any calendar quarter commencing after the
calendar quarter ending on December 31, 2013 (and only during such calendar quarter), if the closing sale price
of the common stock for 20 days or more trading days (whether or not consecutive) during a period of 30 days
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more
than 130% of the conversion price per share of common stock on the last trading day of the preceding calendar
quarter; (2) during the five business day period after any five consecutive trading day period (the ‘‘measurement
period’’) in which the trading price (as defined below) per $1,000 principal amount of notes for each trading day
of the measurement period was less than 98% of the product of the closing sale price of the Company’s common
stock and the conversion rate on each such trading day; (3) upon the occurrence of specified distributions to
holders of the Company’s common stock; or (4) upon the occurrence of specified corporate events. On or after
May 15, 2018 until the close of business on the second scheduled trading day immediately preceding the
Maturity Date, holders may convert their notes at any time, regardless of the foregoing circumstances. If a holder
elects to convert its 2018 Notes in connection with certain fundamental changes, as that term is defined in the
Indenture, that occur prior to the Maturity Date, the Company will, in certain circumstances, increase the
conversion rate for 2018 Notes converted in connection with such fundamental changes by a specified number of
shares of common stock.

Upon conversion of the 2018 Notes, the Company will pay cash up to the aggregate principal amount of the

notes to be converted and pay or deliver, as the case may be, cash, shares of the Company’s common stock or a
combination of cash and shares of the Company’s common stock, at the Company’s election, in respect of the
remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the
notes being converted, as specified in the Indenture.

The Company may not redeem the 2018 Notes at its option prior to the Maturity Date, and no sinking fund

is provided for the 2018 Notes.

Upon the occurrence of a fundamental change, holders may require the Company to repurchase for cash all

or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be
repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The following events are considered events of default under the Indenture which may result in the

acceleration of the maturity of the 2018 Notes:

(1) default in the payment when due of any principal of any of the notes at maturity, upon redemption or

upon exercise of a repurchase right or otherwise;

(2) default in the payment of any interest, including additional interest, if any, on any of the notes, when the

interest becomes due and payable, and continuance of such default for a period of 30 days;

(3) the Company’s failure to deliver cash or cash and shares of the Company’s common stock (including

any additional shares deliverable as a result of a conversion in connection with a make-whole fundamental
change, as defined in the Indenture) when required by the Indenture;

(4) default in the Company’s obligation to provide notice of the occurrence of a fundamental change, make-

whole fundamental change or distribution to holders of the Company’s common stock when required by the
Indenture;

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RAMBUS INC.

(5) the Company’s failure to comply with any of the Company’s other agreements in the notes or the
Indenture (other than those referred to in clauses (1) through (4) above) for 60 days after the Company’s receipt
of written notice to the Company of such default from the trustee or to the Company and the trustee of such
default from holders of not less than 25% in aggregate principal amount of the 2018 Notes then outstanding;

(6) the Company’s failure to pay when due the principal of, or acceleration of, any indebtedness for money

borrowed by the Company or any of the Company’s material subsidiaries in excess of $40 million principal
amount, if such indebtedness is not discharged, or such acceleration is not annulled, for a period of 30 days after
written notice thereof is delivered to the Company by the trustee or to the Company and the trustee by the holders
of 25% or more in aggregate principal amount of the notes then outstanding without such failure to pay having
been cured or waived, such acceleration having been rescinded or annulled (if applicable) and such indebtedness
not having been paid or discharged; and

(7) certain events of bankruptcy, insolvency or reorganization relating to the Company or any of the

Company’s material subsidiaries (as defined in the Indenture).

If an event of default, other than an event of default described in clause (7) above with respect to the

Company, occurs and is continuing, either the trustee or the holders of at least 25% in aggregate principal amount
of the notes then outstanding may declare the principal amount of, and accrued and unpaid interest, including
additional interest, if any, on the notes then outstanding to be immediately due and payable. If an event of default
described in clause (7) above occurs with respect to the Company, the principal amount of and accrued and
unpaid interest, including additional interest, if any, on the notes will automatically become immediately due and
payable.

5% Convertible Senior Notes due 2014. On June 29, 2009, the Company issued $150.0 million aggregate

principal amount of 5% convertible senior notes due June 15, 2014. As of the date of issuance, the Company
determined that the liability component of the 2014 Notes was approximately $92.4 million and the equity
component was approximately $57.6 million. On July 10, 2009, an additional $22.5 million of the 2014 Notes
were issued as a result of the underwriters exercising their overallotment option. As of the date of issuance of the
$22.5 million 2014 Notes, the Company determined that the liability component was approximately
$14.3 million, and the equity component was approximately $8.2 million. The unamortized discount related to
the 2014 Notes was being amortized to interest expense using the effective interest method over five years
through June 2014.

The Company paid cash interest at an annual rate of 5% of the principal amount at issuance, payable semi-

annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2009. During 2014,
the Company paid approximately $4.3 million of interest related to the 2014 Notes. During 2013, the Company
paid approximately $8.6 million of interest related to the 2014 Notes. Issuance costs were approximately
$5.1 million of which $3.2 million is related to the liability portion, which is being amortized to interest expense
over five years (the expected term of the debt), and $1.9 million is related to the equity portion. The 2014 Notes
were the Company’s general unsecured obligation, ranking equal in right of payment to all of the Company’s
existing and future senior indebtedness and were senior in right of payment to any of the Company’s future
indebtedness that was expressly subordinated to the 2014 Notes.

The 2014 Notes were convertible into shares of the Company’s Common Stock at an initial conversion rate

of 51.8 shares of Common Stock per $1,000 principal amount of 2014 Notes. This was equivalent to an initial
conversion price of approximately $19.31 per share of common stock. Holders could have surrendered their 2014
Notes for conversion prior to March 15, 2014 only under the following circumstances: (i) during any calendar

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

quarter beginning after the calendar quarter ending September 30, 2009, and only during such calendar quarter, if
the closing sale price of the Common Stock for 20 days or more trading days in the period of 30 days consecutive
trading days ending on the last trading day of the immediately preceding calendar quarter exceeded 130% of the
conversion price in effect on the last trading day of the immediately preceding calendar quarter, (ii) during the
five business day period after any 10 days consecutive trading day period in which the trading price per $1,000
principal amount of 2014 Notes for each trading day of such 10 days consecutive trading day period was less
than 98% of the product of the closing sale price of the Common Stock for such trading day and the applicable
conversion rate, (iii) upon the occurrence of specified distributions to holders of the Common Stock, (iv) upon a
fundamental change of the Company as specified in the Indenture governing the 2014 Notes, or (v) if the
Company calls any or all of the 2014 Notes for redemption, at any time prior to the close of business on the
business day immediately preceding the redemption date. On and after March 15, 2014, holders may convert
their 2014 Notes at any time until the close of business on the third business day prior to the maturity date,
regardless of the foregoing circumstances.

Upon conversion of the 2014 Notes, the Company would have paid (i) cash equal to the lesser of the
aggregate principal amount and the conversion value of the 2014 Notes and (ii) shares of the Company’s
Common Stock for the remainder, if any, of the Company’s conversion obligation, in each case based on a daily
conversion value calculated on a proportionate basis for each trading day in the 20 days trading day conversion
reference period as further specified in the Indenture.

The Company was not able to redeem the 2014 Notes at its option prior to June 15, 2012. At any time on or

after June 15, 2012, the Company had the right, at its option, to redeem the 2014 Notes in whole or in part for
cash in an amount equal to 100% of the principal amount of the 2014 Notes to be redeemed, together with
accrued and unpaid interest, if any, if the closing sale price of the Common Stock for at least 20 days of the 30
days consecutive trading days immediately prior to any date the Company gives a notice of redemption was
greater than 130% of the conversion price on the date of such notice.

Upon the occurrence of a fundamental change, holders could have required the Company to repurchase
some or all of their 2014 Notes for cash at a price equal to 100% of the principal amount of the 2014 Notes being
repurchased, plus accrued and unpaid interest, if any. In addition, upon the occurrence of certain fundamental
changes, as that term is defined in the Indenture, the Company would have, in certain circumstances, increased
the conversion rate for the 2014 Notes converted in connection with such fundamental changes by a specified
number of shares of Common Stock, not to exceed 15.5401 per $1,000 principal amount of the 2014 Notes.

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The following events were considered “Events of Default” under the Indenture which would have resulted

in the acceleration of the maturity of the 2014 Notes:

(1) default in the payment when due of any principal of any of the 2014 Notes at maturity, upon

redemption or upon exercise of a repurchase right or otherwise;

(2) default in the payment of any interest, including additional interest, if any, on any of the 2014 Notes,
when the interest becomes due and payable, and continuance of such default for a period of 30 days;

(3)

the Company’s failure to deliver cash or cash and shares of Common Stock (including any additional
shares deliverable as a result of a conversion in connection with a make-whole fundamental change)
when required to be delivered upon the conversion of any 2014 Note;

(4) default in the Company’s obligation to provide notice of the occurrence of a fundamental change when

required by the Indenture;

(5)

the Company’s failure to comply with any of its other agreements in the 2014 Notes or the Indenture
(other than those referred to in clauses (1) through (4) above) for 60 days after the Company’s receipt

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

of written notice to the Company of such default from the trustee or to the Company and the trustee of
such default from holders of not less than 25% in aggregate principal amount of the 2014 Notes then
outstanding;

(6)

the Company’s failure to pay when due the principal of, or acceleration of, any indebtedness for money
borrowed by the Company or any of its subsidiaries in excess of $30 million principal amount, if such
indebtedness is not discharged, or such acceleration is not annulled, by the end of a period of ten days
after written notice to the Company by the trustee or to the Company and the trustee by the holders of
at least 25% in aggregate principal amount of the 2014 Notes then outstanding; and

(7) certain events of bankruptcy, insolvency or reorganization relating to the Company or any of its

material subsidiaries (as defined in the Indenture).

If an event of default, other than an event of default in clause (7) above with respect to the Company occurs

and is continuing, either the trustee or the holders of at least 25% in aggregate principal amount of the 2014
Notes then outstanding may declare the principal amount of, and accrued and unpaid interest, including
additional interest, if any, on the 2014 Notes then outstanding to be immediately due and payable. If an event of
default described in clause (7) above occurs with respect to the Company the principal amount of and accrued
and unpaid interest, including additional interest, if any, on the 2014 Notes will automatically become
immediately due and payable.

During the second quarter of 2014, the Company paid upon maturity the entire $172.5 million in aggregate

principal amount of the 2014 Notes.

Additional paid-in capital at December 31, 2016 and December 31, 2015 includes $93.4 million for each

year related to the equity component of the notes.

As of December 31, 2016, none of the conversion conditions were met related to the 2018 Notes. Therefore,

the classification of the entire equity component for the 2018 Notes in permanent equity is appropriate as of
December 31, 2016.

Interest expense related to the notes for the years ended December 31, 2016, 2015 and 2014 was as follows:

2018 Notes coupon interest at a rate of 1.125%
2018 Notes amortization of discount and debt issuance cost at an additional

effective interest rate of 5.5%

2014 Notes coupon interest at a rate of 5%
2014 Notes amortization of discount at an additional effective interest rate of 11.7%

Total interest expense on convertible notes

Years Ended December 31,

2016

2015

2014

(in thousands)
$1,567

$ 1,567

$1,553

6,749
—
—

6,372
—
—

6,019
3,929
8,744

$8,302

$7,939

$20,259

11. Commitments and Contingencies

On December 15, 2009, the Company entered into a lease agreement for approximately 125,000 square feet

of office space located at 1050 Enterprise Way in Sunnyvale, California commencing on July 1, 2010 and
expiring on June 30, 2020. The office space is used for the Company’s corporate headquarters, as well as
engineering, sales, marketing and administrative operations and activities. The annual base rent for these leases

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

includes certain rent abatement and increases annually over the lease term. The Company has two options to
extend the lease for a period of 60 months each and a one-time option to terminate the lease after 84 months in
exchange for an early termination fee. Pursuant to the terms of the lease, the landlord agreed to reimburse the
Company approximately $9.1 million, which was received by the year ended December 31, 2011. The Company
recognized the reimbursement as an additional imputed financing obligation as such payment from the landlord
is deemed to be an imputed financing obligation. On November 4, 2011, to better plan for future expansion, the
Company entered into an amended lease for its Sunnyvale facility for approximately an additional
31,000-square-foot space commencing on March 1, 2012 and expiring on June 30, 2020. Additionally, a tenant
improvement allowance to be provided by the landlord was approximately $1.7 million. On September 29, 2012,
the Company entered into a second amended Sunnyvale lease to reduce the tenant improvement allowance to
approximately $1.5 million. On January 31, 2013, the Company entered into a third amendment to the Sunnyvale
lease to surrender the 31,000 square-foot space from the first amendment back to the landlord and recorded a
total charge of $2.0 million related to the surrender of the amended lease.

On March 8, 2010, the Company entered into a lease agreement for approximately 25,000 square feet of

office and manufacturing areas, located in Brecksville, Ohio. The office area is used for the RLD group’s
engineering activities while the manufacturing area is used for the manufacture of prototypes. This lease was
amended on September 29, 2011 to expand the facility to approximately 51,000 total square feet and the
amended lease will expire on July 31, 2019. The Company has an option to extend the lease for a period of 60
months.

The Company undertook a series of structural improvements to ready the Sunnyvale and Brecksville
facilities for its use. Since these improvements were considered structural in nature and the Company was
responsible for any cost overruns, for accounting purposes, the Company was treated in substance as the owner
of each construction project during the construction period. At the completion of each construction, the Company
concluded that it retained sufficient continuing involvement to preclude de-recognition of the building under the
FASB authoritative guidance applicable to the sale leasebacks of real estate. As such, the Company continues to
account for the buildings as owned real estate and to record an imputed financing obligation for its obligations to
the legal owners.

Monthly lease payments on these facilities are allocated between the land element of the lease (which is

accounted for as an operating lease) and the imputed financing obligation. The imputed financing obligation is
amortized using the effective interest method and the interest rate was determined in accordance with the
requirements of sale leaseback accounting. For the years ended December 31, 2016, 2015 and 2014, the
Company recognized in its Consolidated Statements of Operations $4.4 million, $4.5 million, and $4.5 million,
respectively, of interest expense in connection with the imputed financing obligation on these facilities. At
December 31, 2016 and 2015, the imputed financing obligation balance in connection with these facilities was
$38.9 million and $39.3 million, respectively, which was primarily classified under long-term imputed financing
obligation.

As of December 31, 2016 and 2015, the Company had capitalized $40.3 million in property, plant and
equipment based on the estimated fair value of the portion of the pre-construction shell, construction costs related
to the build-out of the facilities and capitalized interest during construction period. At the end of the initial lease
term, should the Company decide not to renew the lease, the Company would reverse the equal amounts of the
net book value of the building and the corresponding imputed financing obligation.

On June 29, 2009, the Company entered into an Indenture with U.S. Bank, National Association, as trustee,

relating to the issuance by the Company of $150.0 million aggregate principal amount of the 2014 Notes. On

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RAMBUS INC.

July 10, 2009, an additional $22.5 million in aggregate principal amount of 2014 Notes were issued as a result of
the underwriters exercising their overallotment option. During the second quarter of 2014, the Company paid
upon maturity the entire $172.5 million in aggregate principal amount of the 2014 Notes.

On August 16, 2013, the Company entered into an Indenture with U.S. Bank, National Association, as
trustee, relating to the issuance by the Company of $138.0 million aggregate principal amount of the 2018 Notes.
The aggregate principal amount of the 2018 notes as of December 31, 2016 and 2015 was $138.0 million, offset
by unamortized debt discount and unamortized debt issuance costs of $10.9 million and $0.9 million,
respectively, and $17.1 million and $1.5 million, respectively, on the accompanying consolidated balance sheets.
The unamortized discount related to the 2018 Notes is being amortized to interest expense using the effective
interest method over the remaining 20 months until maturity of the 2018 Notes on August 15, 2018. The
unamortized debt issuance costs relate to the adoption of ASU 2015-03 during the first quarter of 2016. See Note
10, “Convertible Notes,” for additional details.

As of December 31, 2016, the Company’s material contractual obligations are as follows (in thousands):

Total

2017

2018

2019

2020

2021

Thereafter

Contractual obligations (1)
Imputed financing obligation (2)
Leases and other contractual obligations
Software licenses (3)
Convertible notes
Interest payments related to convertible

notes

Total

$ 22,220
10,837
24,255
138,000

$ 6,302
5,649
10,497
—

$

6,447
2,606
10,226
138,000

$ 6,602
1,432
3,532
—

$2,869
603
—
—

3,105
$198,417

1,553
$24,001

1,552
$158,831

—
$11,566

—
$3,472

$—

543
—
—

—
$543

$—

4

—
—

—
$ 4

(1) The above table does not reflect possible payments in connection with uncertain tax benefits of

approximately $21.9 million including $19.7 million recorded as a reduction of long-term deferred tax
assets and $2.2 million in long-term income taxes payable, as of December 31, 2016. 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 non-cancellable agreements generally

having terms longer than one year.

Rent expense was approximately $3.8 million, $2.7 million and $2.6 million for the years ended

December 31, 2016, 2015 and 2014, respectively.

Indemnifications

From time to time, the Company indemnifies certain customers as a necessary means of doing business.
Indemnification covers customers for losses suffered or incurred by them as a result of any patent, copyright, or
other intellectual property infringement or any other claim by any third party arising as result of the applicable
agreement with the Company. The Company generally attempts to limit the maximum amount of indemnification
that the Company could be required to make under these agreements to the amount of fees received by the
Company, however, this is not always possible. The fair value of the liability as of December 31, 2016 and 2015
is not material.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

12. Equity Incentive Plans and Stock-Based Compensation

Stock Option Plans

The Company has two stock option plans under which grants are currently outstanding: the 2006 Equity

Incentive Plan (the “2006 Plan”) and the 2015 Equity Incentive Plan (the “2015 Plan”). On April 23, 2015, the
Company’s stockholders approved the 2015 Plan, which authorizes 4,000,000 shares for future issuance plus the
number of shares that remained available for grant under the 2006 Plan as of the effective date of the 2015 Plan.
The 2015 Plan became effective and replaced the 2006 Plan on April 23, 2015. The 2015 Plan was the
Company’s only plan for providing stock-based incentive awards to eligible employees, executive officers,
non-employee directors and consultants as of December 31, 2016. Grants under all plans typically have a
requisite service period of 60 months or 48 months, have straight-line vesting schedules and expire not more than
10 years from date of grant. No further awards will be made under the 2006 Plan, but the 2006 Plan will continue
to govern awards previously granted under it. In addition, any shares subject to stock options or other awards
granted under the 2006 Plan that on or after the effective date of the 2015 Plan are forfeited, cancelled,
exchanged or surrendered or terminate under the 2006 Plan will become available for grant under the 2015 Plan.
The Board will periodically review actual share consumption under the 2015 Plan and may make a request for
additional shares as needed.

The 2006 Plan was approved by the stockholders in May 2006. The 2006 Plan, as amended, provides for the
issuance of the following types of incentive awards: (i) stock options; (ii) stock appreciation rights; (iii) restricted
stock; (iv) restricted stock units; (v) performance shares and performance units; and (vi) other stock or cash
awards. This plan provides for the granting of awards at less than fair market value of the common stock on the
date of grant, but such grants would be counted against the numerical limits of available shares at a ratio of 1.5 to
1.0. The Board of Directors reserved 8,400,000 shares in March 2006 for issuance under this plan, subject to
stockholder approval. Upon stockholder approval of this Plan on May 10, 2006, the 1997 Stock Option Plan (the
“1997 Plan”) was replaced and the 1999 Non-statutory Stock Option Plan (the “1999 Plan”) was terminated.
There are no outstanding options from the 1997 Plan or 1999 Plan as of December 31, 2016. On April 30, 2009
and April 26, 2012, stockholders approved an additional 6,500,000 shares on each date for issuance under the
2006 Plan. Additionally, on April 24, 2014, stockholders approved an additional 10,000,000 shares for issuance
under the 2006 Plan. Those who were eligible for awards under the 2006 Plan included employees, directors and
consultants who provide services to the Company and its affiliates. These options typically have a requisite
service period of 60 months or 48 months, have straight-line vesting schedules, and expire ten years from date of
grant.

As of December 31, 2016, 7,305,368 shares of the 35,400,000 shares approved under the plans remain

available for grant. The 2015 Plan is now the Company’s only plan for providing stock-based incentive
compensation to eligible employees, directors and consultants.

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RAMBUS INC.

A summary of shares available for grant under the Company’s plans is as follows:

Shares available as of December 31, 2013

Increase in shares approved for issuance
Stock options granted
Stock options forfeited
Stock options expired under former plans
Nonvested equity stock and stock units granted (1)
Nonvested equity stock and stock units forfeited (1)

Total shares available for grant as of December 31, 2014

Increase in shares approved for issuance
Stock options granted
Stock options forfeited
Stock options expired under former plans
Nonvested equity stock and stock units granted (1) (2)
Nonvested equity stock and stock units forfeited (1)

Total shares available for grant as of December 31, 2015

Stock options granted
Stock options forfeited
Stock options expired under former plans
Nonvested equity stock and stock units granted (1) (3)
Nonvested equity stock and stock units forfeited (1)

Shares
Available for
Grant

2,527,428
10,000,000
(2,370,313)
1,400,349
(373,043)
(585,753)
125,560

10,724,228
4,000,000
(362,335)
1,624,823
(657,878)
(4,537,797)
382,504

11,173,545
(500,000)
1,081,107
(412,467)
(5,316,675)
1,279,858

Total shares available for grant as of December 31, 2016

7,305,368

(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 238,980 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 300,003 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.

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RAMBUS INC.

General Stock Option Information

The following table summarizes stock option activity under the stock option plans for the years ended
December 31, 2016, 2015 and 2014 and information regarding stock options outstanding, exercisable, and vested
and expected to vest as of December 31, 2016.

Options Outstanding

Weighted
Average
Exercise
Price per
Share

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

Number of
Shares

(Dollars in thousands, except per share amounts)

Outstanding as of December 31, 2013

Options granted
Options exercised
Options forfeited

Outstanding as of December 31, 2014

Options granted
Options exercised
Options forfeited

Outstanding as of December 31, 2015

Options granted
Options exercised
Options forfeited

Outstanding as of December 31, 2016

Vested or expected to vest at December 31, 2016
Options exercisable at December 31, 2016

$11.32
11,377,146
2,370,313
$ 9.63
(905,464) $ 6.93
(1,400,349) $16.13

11,441,646
362,335

$10.73
$11.27
(1,184,141) $ 7.42
(1,624,823) $17.22

8,995,017
500,000

$10.01
$12.29
(1,405,077) $ 7.27
(1,081,107) $18.98

7,008,833

$ 9.34

6,880,321
4,752,346

$ 9.34
$10.05

5.0

4.9
4.3

$37,202

$36,603
$23,812

During the years ended December 31, 2016, 2015 and 2014, no stock options that contain a market

condition were granted. During the year ended December 31, 2012, 1,795,000 stock options that contain a market
condition were granted. These options vest in three years if specified stock prices are achieved. As of
December 31, 2016 and 2015, there were 1,135,000 and 1,315,000, respectively, stock options outstanding that
require the Company to achieve minimum market conditions in order for the options to become exercisable. The
fair values of the options granted with a market condition were calculated using a binomial valuation model,
which estimates the potential outcome of reaching the market condition based on simulated future stock prices.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for in-the-money

options at December 31, 2016, based on the $13.77 closing stock price of Rambus’ Common Stock on
December 31, 2016 on the NASDAQ Global Select Market, which would have been received by the option
holders had all option holders exercised their options as of that date. The total number of in-the-money options
outstanding and exercisable as of December 31, 2016 was 5,849,154 and 3,617,874, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

The following table summarizes the information about stock options outstanding and exercisable as of

December 31, 2016:

Range of Exercise Prices

$4.13 – $5.39
$5.46 – $5.46
$5.49 – $5.63
$5.76 – $5.76
$6.83 – $8.73
$8.76 – $8.76
$9.18 – $12.30
$12.31 – $18.69
$19.16 – $22.72
$23.60 – $23.60

$4.13 – $23.60

Options Outstanding

Options Exercisable

Weighted
Average
Remaining
Contractual
Life (in years)

Weighted
Average Exercise
Price

Number
Exercisable

Weighted
Average Exercise
Price

5.0
5.5
2.5
5.5
4.0
6.8
7.5
5.2
1.0
1.3

5.0

$ 4.33
$ 5.46
$ 5.63
$ 5.76
$ 7.72
$ 8.76
$11.29
$14.82
$20.47
$23.60

$ 9.34

109,740
669,387
546,887
600,119
644,421
608,983
351,337
534,347
686,500
625

4,752,346

$ 4.77
$ 5.46
$ 5.63
$ 5.76
$ 7.70
$ 8.76
$11.13
$16.42
$20.47
$23.60

$10.05

Number
Outstanding

651,904
706,814
548,630
1,195,119
667,795
945,290
708,832
897,324
686,500
625

7,008,833

Employee Stock Purchase Plans

During the year ended December 31, 2016, the Company had one employee stock purchase plan, the 2015

Employee Stock Purchase Plan (“2015 ESPP”). During the year ended December 31, 2015, the Company had
two employee stock purchase plans, the 2015 ESPP and the 2006 Employee Stock Purchase Plan (“2006 ESPP”).
During the year ended December 31, 2014, the Company had one employee stock purchase plan, the 2006 ESPP.

On April 23, 2015, the Company’s stockholders approved the 2015 ESPP which reserves 2,000,000 shares

of the Company’s common stock for purchase. The 2006 ESPP remained in effect until the Company’s
November 2, 2015 offering period, at which time the 2015 ESPP became effective.

In March 2006, the Company adopted the 2006 ESPP, as amended, and reserved 1,600,000 shares, subject

to stockholder approval which was received on May 10, 2006. On April 26, 2012, an additional 1,500,000 shares
were approved by stockholders. On September 27, 2013, the Company filed a Registration Statement on Form
S-8, registering 1,500,000 additional shares under the ESPP in connection with the commencement of the next
subscription period under the ESPP. On April 24, 2014, the Company held its 2014 Annual Meeting of
Stockholders where an amendment to the ESPP to increase the number of shares of common stock reserved for
issuance under the ESPP by 1,500,000 shares was approved.

Employees generally will be eligible to participate in the plan if they are employed by Rambus for more
than 20 hours per week and more than five months in a fiscal year. Both the 2015 ESPP and 2006 ESPP (when it
was in effect) provide for six month offering periods, with a new offering period commencing on the first trading
day on or after May 1 and November 1 of each year. Under the plans, employees may purchase stock at the lower
of 85% of the beginning of the offering period (the enrollment date), or the end of each offering period (the
purchase date). Employees generally may not purchase more than the number of shares having a value greater
than $25,000 in any calendar year, as measured at the purchase date.

The Company issued 548,357 shares at a weighted average price of $9.34 per share during the year ended
December 31, 2016. The Company issued 544,391 shares at a weighted average price of $9.36 per share during

98

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

the year ended December 31, 2015. The Company issued 596,188 shares at a weighted average price of $8.25 per
share during the year ended December 31, 2014. As of December 31, 2016, 1,451,643 shares under the ESPP
remain available for issuance.

Stock-Based Compensation

Stock Options

During the years ended December 31, 2016, 2015 and 2014, Rambus granted 500,000, 362,335 and
2,370,313 stock options, respectively, with an estimated total grant-date fair value of $2.3 million, $1.7 million
and $10.1 million, respectively. During the years ended December 31, 2016, 2015 and 2014, Rambus recorded
stock-based compensation related to stock options of $4.1 million, $7.2 million and $9.3 million, respectively.

As of December 31, 2016, there was $4.5 million of total unrecognized compensation cost, net of expected

forfeitures, related to unvested stock-based compensation arrangements granted under the stock option plans.
This cost is expected to be recognized over a weighted-average period of 1.3 years. The total fair value of options
vested for the years ended December 31, 2016, 2015 and 2014 was $28.4 million, $41.4 million and
$55.3 million, respectively.

The total intrinsic value of options exercised was $8.0 million, $6.8 million and $4.4 million for the years

ended December 31, 2016, 2015 and 2014, respectively. Intrinsic value is the total value of exercised shares
based on the price of the Company’s Common Stock at the time of exercise less the proceeds received from the
employees to exercise the options.

During the years ended December 31, 2016, 2015 and 2014, proceeds from employee stock option exercises

totaled approximately $10.2 million, $8.8 million and $6.3 million, respectively.

Employee Stock Purchase Plans

During the years ended December 31, 2016, 2015 and 2014, Rambus recorded stock-based compensation

related to the ESPP of $1.6 million, $1.6 million and $2.6 million, respectively. The compensation expense
related to the ESPP for the year ended December 31, 2014 included compensation expense related to the increase
in shares available for the ESPP which was approved by shareholders during the 2014 Annual Meeting of
Stockholders. As of December 31, 2016, there was $0.7 million of total unrecognized compensation cost related
to stock-based compensation arrangements granted under the ESPP. That cost is expected to be recognized over
four months.

There were no tax benefits realized as a result of employee stock option exercises, stock purchase plan
purchases, and vesting of equity stock and stock units for the years ended December 31, 2016, 2015 and 2014.

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Valuation Assumptions

Rambus estimates the fair value of stock options using the Black-Scholes-Merton model (“BSM”). The
BSM model determines the fair value of stock-based compensation and is affected by Rambus’ stock price on the
date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These
variables include expected volatility, expected life of the award, expected dividend rate, and expected risk-free
rate of return. The assumptions for expected volatility and expected life are the two assumptions that
significantly affect the grant date fair value. If actual results differ significantly from these estimates, stock-based
compensation expense and Rambus’ results of operations could be materially impacted.

99

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

The fair value of stock awards is estimated as of the grant date using the BSM option-pricing model
assuming a dividend yield of 0% and the additional weighted-average assumptions as listed in the following
tables:

The following table presents the weighted-average assumptions used to estimate the fair value of stock

options granted that contain only service conditions in the periods presented.

Stock Option Plans

Expected stock price volatility
Risk free interest rate
Expected term (in years)

Weighted-average fair value of stock options granted

Stock Option Plans for Years Ended December 31,

2016

2015

2014

34%-36%
1.3%-1.7%
5.4-6.1
$4.59

41%
1.2%
6.0
$4.59

40%-44%
2.1%-2.2%
6.0-6.1
$4.26

During the year ended December 31, 2012, the Company granted 1,795,000 stock options that contain a
market condition. The fair values of the options granted with a market condition were calculated using a binomial
valuation model, which estimates the potential outcome of reaching the market condition based on simulated
future stock prices. The weighted average fair value associated with these market condition options was
immaterial.

Employee Stock Purchase Plan

Expected stock price volatility
Risk free interest rate
Expected term (in years)

Employee Stock Purchase Plan for Years Ended December 31,

2016

2015

2014

31%-33%
0.41%-0.5%
0.5

34%-42%
0.1%-0.3%
0.5

39%-44%
0.0%-0.1%
0.02-0.5

Weighted-average fair value of purchase rights granted

under the purchase plan

$2.88

$3.06

$3.57

Expected Stock Price Volatility: Given the volume of market activity in its market traded options, Rambus

determined that it would use the implied volatility of its nearest-to-the-money traded options. The Company
believes that the use of implied volatility is more reflective of market conditions and a better indicator of
expected volatility than historical volatility. If there is not sufficient volume in its market traded options, the
Company will use an equally weighted blend of historical and implied volatility.

Risk-free Interest Rate: Rambus bases the risk-free interest rate used in the BSM valuation method on
implied yield currently available on the U.S. Treasury zero-coupon issues with an equivalent term. Where the
expected terms of Rambus’ stock-based awards do not correspond with the terms for which interest rates are
quoted, Rambus uses an approximation based on rates on the closest term currently available.

Expected Term: The expected term of options granted represents the period of time that options granted are
expected to be outstanding. The expected term was determined based on historical experience of similar awards,
giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of
future employee behavior. The expected term of ESPP grants is based upon the length of each respective
purchase period.

Nonvested Equity Stock and Stock Units

The Company grants nonvested equity stock units to officers, directors and employees. For the year ended

December 31, 2016, 2015 and 2014, the Company granted nonvested equity stock units totaling 3,344,448,

100

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

2,865,878 and 390,502 shares, respectively, under the 2015 Plan and the 2006 Plan. These awards have a service
condition, generally a service period of four years, except in the case of grants to directors, for which the service
period is one year. The nonvested equity stock units were valued at the date of grant giving them a fair value of
approximately $42.9 million, $33.3 million and $4.1 million, respectively. During the first quarters of 2016 and
2015, the Company granted performance unit awards to certain Company executive officers with vesting subject
to the achievement of certain performance conditions. The ultimate number of performance units that can be
earned can range from 0% to 150% of target depending on performance relative to target over the applicable
period. The shares earned will vest on the third anniversary of the date of grant. The Company’s shares available
for grant has been reduced to reflect the shares that could be earned at 150% of target. During the years ended
December 31, 2016 and 2015, the Company recorded $2.8 million and $1.1 million, respectively, of stock-based
compensation expense related to these performance unit awards.

For the years ended December 31, 2016, 2015 and 2014, the Company recorded stock-based compensation

expense of approximately $15.3 million, $6.3 million and $2.8 million, respectively, related to all outstanding
equity stock grants. Unrecognized stock-based compensation related to all nonvested equity stock grants, net of
an estimate of forfeitures, was approximately $37.1 million at December 31, 2016. This cost is expected to be
recognized over a weighted average period of 2.8 years.

The following table reflects the activity related to nonvested equity stock and stock units for the three years

ended December 31, 2016:

Nonvested Equity Stock and Stock Units

Nonvested at December 31, 2013

Granted
Vested
Forfeited

Nonvested at December 31, 2014

Granted
Vested
Forfeited

Nonvested at December 31, 2015

Granted
Vested
Forfeited

Nonvested at December 31, 2016

Weighted-
Average
Grant-Date Fair
Value

$ 8.56
$10.40
$ 9.85
$ 7.69

$ 9.23
$11.62
$ 9.94
$10.64

$11.32
$12.84
$10.98
$11.94

$12.33

Shares

629,649
390,502
(262,580)
(83,707)

673,864
2,865,878
(276,622)
(255,002)

3,008,118
3,344,448
(789,864)
(699,646)

4,863,056

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13. Stockholders’ Equity

Share Repurchase Program

In October 2001, the Company’s Board of Directors (the “Board”) approved a share repurchase program of

its common stock, principally to reduce the dilutive effect of employee stock options. Under this program, the
Board approved the authorization to repurchase up to 19.0 million shares of the Company’s outstanding common
stock over an undefined period of time. On February 25, 2010, the Board approved a new share repurchase
program authorizing the repurchase of up to an additional 12.5 million shares.

101

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

For the year ended December 31, 2014, the Company did not repurchase any shares of its common stock
under its share repurchase program. As of December 31, 2014, the Company had repurchased a cumulative total
of approximately 26.3 million shares of its common stock with an aggregate price of approximately
$428.9 million since the commencement of the program in 2001. As of December 31, 2014, there remained an
outstanding authorization to repurchase approximately 5.2 million shares of the Company’s outstanding common
stock.

On January 21, 2015, the Company’s Board approved a new share repurchase program authorizing the
repurchase of up to an aggregate of 20.0 million shares. Share repurchases under the plan may be made through
the open market, established plans or privately negotiated transactions in accordance with all applicable
securities laws, rules, and regulations. There is no expiration date applicable to the plan. This new stock
repurchase program replaced the previous program approved by the Board in February 2010 and canceled the
remaining shares outstanding as part of the previous authorization.

On October 26, 2015, the Company initiated an accelerated share repurchase program with Citibank, N.A.
The accelerated share repurchase program is part of the broader share repurchase program previously authorized
by the Company’s Board on January 21, 2015. Under the accelerated share repurchase program, the Company
pre-paid to Citibank, N.A., the $100.0 million purchase price for its common stock and, in turn, the Company
received an initial delivery of approximately 7.8 million shares of its common stock from Citibank, N.A, which
were retired and recorded as a $80.0 million reduction to stockholders’ equity. The remaining $20.0 million of
the initial payment was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed
to the Company’s stock. The number of shares to be ultimately purchased by the Company was determined based
on the volume weighted average price of the common stock during the terms of the transaction, minus an agreed
upon discount between the parties. During the second quarter of 2016, the accelerated share repurchase program
was completed and the Company received an additional 0.7 million shares of its common stock as the final
settlement of the accelerated share repurchase program. There were no other repurchases of the Company’s
common stock during 2016.

As of December 31, 2016, there remained an outstanding authorization to repurchase approximately
11.5 million shares of the Company’s outstanding common stock under the current share repurchase program.

The Company records stock repurchases as a reduction to stockholders’ equity. The Company records a

portion of the purchase price of the repurchased shares as an increase to accumulated deficit when the price of
the shares repurchased exceeds the average original proceeds per share received from the issuance of common
stock. During the year ended December 31, 2016, the cumulative price of $17.6 million was recorded as an
increase to accumulated deficit.

14. Benefit Plans

Rambus has a 401(k) Profit Sharing Plan (the “401(k) Plan”) qualified under Section 401(k) of the Internal

Revenue Code of 1986. Each eligible employee may elect to contribute up to 60% of the employee’s annual
compensation to the 401(k) Plan, up to the Internal Revenue Service limit. Rambus, at the discretion of its Board
of Directors, may match employee contributions to the 401(k) Plan. The Company matches 50% of eligible
employee’s contribution, up to the first 6% of an eligible employee’s qualified earnings. For the years ended
December 31, 2016, 2015 and 2014, Rambus made matching contributions totaling approximately $2.0 million,
$2.1 million and $1.9 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

15. Restructuring Charges

The 2015 Plan

During 2015, the Company initiated a restructuring program to reduce overall corporate expenses which is
expected to improve future profitability by reducing spending on sales, general and administrative programs and
refining some of its research and development efforts (“the 2015 Plan”). In connection with this restructuring
program, the Company initiated a plan of termination resulting in a reduction of 8% of the Company’s
headcount. The Company estimated that it would incur a cash payout related to the reduction in force of
approximately $3.0 million, which is related to severance and termination benefits. The estimated non-cash
expense was expected to be approximately $1.0 million. During the year ended December 31, 2015, the
Company recorded a charge of $3.6 million related primarily to the reduction in workforce, of which $1.4 million
was related to the MID reportable segment, $0.1 million was related to the RSD reportable segment, $1.2 million
was related to the Other segment and $0.9 million was related to corporate support functions. The 2015 Plan was
completed in 2016.

The following table summarizes the 2015 Plan restructuring activities during the years ended December 31,

2016 and 2015:

Balance at December 31, 2014
Charges
Payments
Non-cash settlements

Balance at December 31, 2015
Payments

Balance at December 31, 2016

Employee
Severance
and Related Benefits

Facilities

Total

(In thousands)

$ —
2,993
(1,765)
—

$ 1,228
(1,228)

$ —

$ —
583
—
(583)*

$ —
—

$ —

$ —
3,576
(1,765)
(583)

$ 1,228
(1,228)

$ —

* The non-cash charge of $583 thousand is related to the write down of fixed assets related to the Other segment.

16. Income Taxes

Income before taxes consisted of the following:

Domestic
Foreign

Years Ended December 31,

2016

2015

2014

$ 38,211
(15,574)

(In thousands)
$58,498
1,733

$49,173
1,077

$ 22,637

$60,231

$50,250

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RAMBUS INC.

The provision for (benefit from) income taxes is comprised of:

Federal:

Current
Deferred

State:

Current
Deferred

Foreign:

Current
Deferred

Years Ended December 31,

2016

2015

2014

(In thousands)

$22,115
(2,198)

$ 20,497
(170,798)

$19,386
2,337

884
(271)

1,275
(5,988)

609
(1,933)

713
—

443
25

1,640
(27)

$15,817

$(151,157)

$24,049

The differences between Rambus’ effective tax rate and the U.S. federal statutory regular tax rate are as

follows:

Expense at U.S. federal statutory rate
Expense (benefit) at state statutory rate
Withholding tax
Foreign rate differential
Research and development (“R&D”) credit
Executive compensation
Stock-based compensation
Foreign tax credit
Other
Valuation allowance

Years Ended December 31,

2016

2015

2014

35.0% 35.0% 35.0%
(1.5)
1.8
34.1
97.0
0.4
4.1
(2.3)
(8.3)
0.5
1.5
5.3
34.8
(34.1)
(97.0)
(0.6)
1.0
(287.8)
—

1.0
38.6
2.5
(6.1)
0.2
1.4
(38.7)
0.6
13.4

69.9% (251.0)% 47.9%

104

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RAMBUS INC.

The components of the net deferred tax assets are as follows:

Deferred tax assets:

Depreciation and amortization
Other liabilities and reserves
Deferred equity compensation
Net operating loss carryovers
Tax credits

Total gross deferred tax assets

Convertible debt

Total net deferred tax assets

Valuation allowance

As of December 31,

2016

2015

(In thousands)

$ 22,174
12,442
17,426
11,439
120,660

184,141
(3,870)

180,271
(23,529)

$ 30,019
7,227
23,176
11,746
117,078

189,246
(6,044)

183,202
(20,717)

Net deferred tax assets

$156,742

$162,485

Reported as:

Non-current deferred tax assets
Non-current deferred tax liabilities

Net deferred tax assets

As of December 31,

2016

2015

(In thousands)

$168,342
(11,600)

$162,485
—

$156,742

$162,485

In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes
(Topic 740),” to simplify the presentation of deferred income taxes. The amendments in this update require that
deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. This
ASU is effective for financial statements issued for fiscal years beginning after December 15, 2016 and interim
periods within those fiscal years. Early adoption is permitted. The Company has early adopted this ASU as of
December 31, 2015 on a prospective basis.

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Management periodically evaluates the realizability of its net deferred tax assets based on all available
evidence, both positive and negative. The realizability of the Company’s net deferred tax assets is dependent on
its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to
fully utilize these assets. Management evaluated the realizability of its net deferred tax assets based on all
available evidence, both positive and negative, in determining that it was appropriate to release the valuation
allowance for the Company’s U.S. federal and other state deferred tax assets of $174.5 million during the third
quarter of 2015 in accordance with FASB ASC 740-10-30-16 to 25.

The Company emerged from a cumulative loss position over the previous three years during the first quarter

of 2015. The cumulative three-year pre-tax income is considered positive evidence which is objective and
verifiable, and thus, received significant weighting. The continued stability in the Company’s operations along
with the increased visibility into the adoption of its security technology in the third quarter of 2015 provided
additional evidence to the Company’s belief that it will generate sufficient taxable income in the future.
Additional positive evidence considered by management in its assessment included a lack of unused operating
loss carryforwards in the Company’s history as well as anticipated future benefits from its cost management.

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RAMBUS INC.

Negative evidence management considered included economic uncertainties such as volatility of the
semiconductor industry and uncertainties associated with the development of new products that could impact the
Company’s ability to generate a sustained level of future profits.

Upon considering the relative impact of all evidence during the third quarter of 2015, both negative and

positive, and the weight accorded to each, the Company concluded that it was more likely than not that its
deferred tax assets would be realizable with the exception of primarily its California deferred tax assets that have
not met the “more likely than not” realization threshold criteria. As a result, the Company released the related
valuation allowance against such deferred tax assets which is included as a component of the benefit from
income taxes in the accompanying consolidated statement of operations. The Company continues to maintain a
deferred tax asset valuation allowance of $23.5 million as of December 31, 2016.

The following table presents the tax valuation allowance information for the years ended December 31,

2016, 2015 and 2014:

Tax Valuation Allowance
Year ended December 31, 2014
Year ended December 31, 2015
Year ended December 31, 2016

Balance at
Beginning
of Period

Charged
(Credited)
to
Operations

Charged
to Other
Account*

Valuation
Allowance
Release

Balance at
End of
Period

$192,823
$193,874
$ 20,717

—
—
—

1,051
1,299
2,812

— $193,874
(174,456) $ 20,717
— $ 23,529

* Amounts not charged to operations are charged to other comprehensive income or deferred tax assets

(liabilities).

As of December 31, 2016, Rambus had California and other state net operating loss carryforwards of

$274.6 million and $99.7 million, respectively. As of December 31, 2016, Rambus had federal research and
development tax credit carryforwards of $36.5 million, alternative minimum tax credits of $2.5 million, and
foreign tax credits of $120.3 million. As of December 31, 2016, Rambus had California research and
development tax credit carryforwards of $24.7 million. These carryforward amounts included $38.2 million of
federal tax credits and $98.2 million of California net operating losses for which no deferred tax asset has been
recognized because they relate to excess tax benefits from stock-based compensation tax deductions. The excess
tax benefits will be recorded to additional paid-in capital when they reduce cash taxes payable. The federal
foreign tax credits and research and development credits begin to expire in 2020 and 2018, respectively.
Approximately $55 million of federal foreign tax credits expire in 2020. The California net operating losses
began to expire in 2016, and $3.2 million expired during the year. Additionally, $64.5 million of California net
operating loss is expected to expire in 2017. The federal alternative minimum tax credits and the California
research and development credits carry forward indefinitely.

In the event of a change in ownership, as defined under federal and state tax laws, Rambus’ net operating
loss and tax credit carryforwards could be subject to annual limitations. The annual limitations could result in the
expiration of the net operating loss and tax credit carryforwards prior to utilization.

As of December 31, 2016, the Company had $21.9 million of unrecognized tax benefits including
$19.7 million recorded as a reduction of long-term deferred tax assets and $2.2 million recorded in long term
income taxes payable. If recognized, $2.2 million would be recorded as an income tax benefit in the consolidated
statements of operations. As of December 31, 2015, the Company had $20.8 million of unrecognized tax benefits
including $18.6 million recorded as a reduction of long-term deferred tax assets and $2.2 million recorded in

106

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RAMBUS INC.

long term income taxes payable. If recognized, $2.2 million would be recorded as an income tax benefit in the
consolidated statements of operations. It is reasonably possible that a reduction of up to $0.2 million of existing
unrecognized tax benefits could occur in the next 12 months.

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the years

ended December 31, 2016, 2015 and 2014 is as follows (amounts in thousands):

Balance at January 1
Tax positions related to current year:

Additions

Tax positions related to prior years:

Additions
Reductions
Settlements

Balance at December 31

Years Ended December 31,

2016

2015

2014

$20,836

$19,903

$18,794

1,225

1,186

1,134

256
(171)
(221)

—
(35)
(218)

531
(556)
—

$21,925

$20,836

$19,903

Rambus recognizes interest and penalties related to uncertain tax positions as a component of the income tax
provision (benefit). At December 31, 2016 and 2015, an immaterial amount of interest and penalties are included
in long-term income taxes payable.

Rambus files income tax returns for the U.S., California, India, the U.K., the Netherlands and various other
state and foreign jurisdictions. The U.S. federal returns are subject to examination from 2013 and forward. The
California returns are subject to examination from 2010 and forward. In addition, any R&D credit carryforward
or net operating loss carryforward generated in prior years and utilized in these or future years may also be
subject to examination. The India returns are subject to examination from fiscal year ending March 2012 and
forward. The Company is currently under examination by California for the 2010 and 2011 tax years. The
Company’s India subsidiary is under examination by the Indian tax administration for tax years beginning with
2011, except for 2014, which was assessed in the Company’s favor. These examinations may result in proposed
adjustments to the income taxes as filed during these periods. Management regularly assesses the likelihood of
outcomes resulting from income tax examinations to determine the adequacy of their provision for income taxes
and believes their provision for unrecognized tax benefits is adequate.

At December 31, 2016, no deferred taxes have been provided on undistributed earnings of approximately
$6.7 million from the Company’s international subsidiaries since these earnings have been, and under current
plans will continue to be, indefinitely reinvested outside the United States. It is not practicable to determine the
amount of the unrecognized tax liability at this time.

17. Litigation and Asserted Claims

Rambus is not currently a party to any material pending legal proceeding; however, from time to time,
Rambus may become involved in legal proceedings or be subject to claims arising in the ordinary course of its
business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently
believes that the final outcome of these ordinary course matters will not have a material adverse effect on our
business, operating results, financial position or cash flows. Regardless of the outcome, litigation can have an
adverse impact on the Company because of defense and settlement costs, diversion of management resources and
other factors.

107

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RAMBUS INC.

The Company records a contingent liability when it is probable that a loss has been incurred and the amount

is reasonably estimable in accordance with accounting for contingencies.

18. Agreements with SK hynix and Micron

SK hynix

On June 11, 2013, Rambus, SK hynix and certain related entities of SK hynix entered into a settlement
agreement, pursuant to which the parties have agreed to release all claims against each other with respect to all
outstanding litigation between them. Pursuant to the settlement agreement, Rambus and SK hynix entered into a
semiconductor patent license agreement on June 11, 2013, under which SK hynix licenses from Rambus
non-exclusive rights to certain Rambus patents and has agreed to pay Rambus cash amounts over the next five
years. Under the license agreement, Rambus has granted to SK hynix (i) a paid-up perpetual patent license for
certain identified SK hynix DRAM products and (ii) a five-year term patent license to all other DRAM and other
semiconductor products.

In June 2015, the Company signed an amendment that extends its current agreement with SK hynix for an

additional six years for use of Rambus memory-related patented innovations in SK hynix semiconductor
products. The Company signed the original agreement with SK hynix for a five-year term in June 2013. Under
the amendment, SK hynix has agreed to continue to pay the Company an average quarterly cash payment of
$12.0 million which equates to $432.0 million from the signing of the amendment through the term of the
agreement ending July 1, 2024, provided that (a) for each of the six full calendar quarters immediately following
July 1, 2015, SK hynix will pay the Company a quarterly cash payment of $16.0 million, and (b) in addition,
after December 1, 2017, SK hynix will have the option to make six quarterly cash payments of $8.0 million upon
six months written notice. In addition, SK hynix has the option to renew the agreement for an additional three-
year extension under the existing rate structure.

The agreements with SK hynix are considered a multiple element arrangement for accounting purposes. For a

multiple element arrangement under the applicable accounting rules, the Company is required to identify specific
elements of the arrangement and then determine when those elements should be recognized. The Company
identified three elements in the arrangement: antitrust litigation settlement, settlement of past infringement, and
license agreement. The Company considered several factors in determining the accounting fair value of the
elements of the SK hynix agreements which included a third party valuation using an income approach (collectively
the “SK hynix Fair Value”). The inputs and assumptions used in this accounting valuation were from a market
participant perspective and included projected customer revenue, royalty rates, estimated discount rates, useful lives
and income tax rates, among others. The development of a number of these inputs and assumptions in the model
requires a significant amount of management judgment and discretion, and is based upon a number of factors,
including the selection of industry comparables, market growth rates and other relevant factors. Changes in any
number of these assumptions may have a substantial impact on the SK hynix Fair Value as assigned to each
element. These inputs and assumptions represent management’s best estimates at the time of the transaction. The
following estimates do not reflect any agreement (expressed or implied) reached between the parties on the values
attributed to any aspect of this transaction. The estimated SK hynix Fair Value is determined as follows:

(in millions)

Antitrust litigation settlement
Settlement of past infringement
License agreement

Total SK hynix Fair Value

108

Estimated SK
hynix Fair Value

$

4.0
280.0
250.0

$534.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

The total original consideration of $240.0 million (as per the terms of the agreements with SK hynix) takes

into account the court ruling in May 2013 that $250.0 million should be applied as a credit against the court’s
March 2009 award to Rambus in the SK hynix litigation. Using the accounting guidance from multiple element
revenue arrangements, the Company allocated the consideration to each element using the estimated SK hynix
Fair Value of the elements which include antitrust litigation settlement, settlement of past infringement, and
license agreement as shown in the table above. The following allocations do not reflect any agreement (expressed
or implied) reached between the parties on the values attributed to any aspect of this transaction, but instead,
reflect only what is required as disclosure under the applicable accounting rules. Based on the estimated SK
hynix Fair Value, the total consideration of $240.0 million was allocated to the following elements:

(in millions)

Antitrust litigation settlement
Settlement of past infringement
License agreement

Total original consideration

Allocated
Consideration

$

1.9
125.8
112.3

$240.0

The consideration of $528.0 million (including the impact of the June 2015 amendment to the agreement

and assuming no adjustments to the payments under the terms of the agreements) will be recognized in the
Company’s financial statements until 2024 as follows:

• $526.1 million as “royalty revenue” which represents the allocated consideration related to the settlement
of past infringement ($125.8 million) from the resolution of the infringement litigation and the patent
license agreement ($400.3 million); and

• $1.9 million as “gain from settlement” which represents the allocated consideration related to the

resolution of the antitrust litigation.

During the years ended December 31, 2016 and 2015, the Company received cash consideration of
$64.0 million and $56.0 million, respectively, from SK hynix. The amounts were allocated between royalty
revenue ($63.9 million in 2016 and $55.3 million in 2015) and gain from settlement ($0.1 million in 2016 and
$0.7 million in 2015) based on the elements’ SK hynix Fair Value.

The cash receipts and remaining future cash receipts from the agreements with SK hynix are expected to be
recognized as follows assuming no adjustments to the payments under the terms of the agreements (and assuming
the option to make the lower payments begins with payments made during the middle of 2018):

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Received
in

Estimated to Be Received in

2013

2014

2015

2016

2017

2018

2019

2020

2021 and
thereafter

$23.6
0.4

$47.3
0.7

$55.3
0.7

$63.9

$48.0
0.1 —

$40.0
—

$32.0
—

$48.0
—

$168.0
—

$24.0

$48.0

$56.0

$64.0

$48.0

$40.0

$32.0

$48.0

$168.0

Total
Estimated
Cash
Receipts

$526.1
1.9

$528.0

(in millions)
Royalty revenue
Gain from settlement

Total

Micron

On December 9, 2013, Rambus, Micron and certain related entities of Micron entered into a settlement
agreement, pursuant to which the parties have agreed that they will release all claims against each other with

109

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

respect to all outstanding litigation between them and certain other potential claims. Pursuant to the settlement
agreement, Rambus and Micron entered into a semiconductor patent license agreement on December 9, 2013.
Under the license agreement, Rambus has granted to Micron and its subsidiaries and certain affiliated entities
(i) a paid-up perpetual patent license for certain identified Micron DRAM products and (ii) a seven-year term
patent license to other memory and semiconductor products.

The agreements with Micron are considered a multiple element arrangement for accounting purposes. For a
multiple element arrangement under the applicable accounting rules, the Company is required to identify specific
elements of the arrangement and then determine when those elements should be recognized. The Company
identified three elements in the arrangement: antitrust litigation settlement, settlement of past infringement, and
license agreement. The Company considered several factors in determining the accounting fair value of the
elements of the Micron agreements which included a third party valuation using an income approach
(collectively the “Micron Fair Value”). The inputs and assumptions used in this accounting valuation were from
a market participant perspective and included projected customer revenue, royalty rates, estimated discount rates,
useful lives and income tax rates, among others. The development of a number of these inputs and assumptions
in the model requires a significant amount of management judgment and discretion, and is based upon a number
of factors, including the selection of industry comparables, market growth rates and other relevant factors.
Changes in any number of these assumptions may have a substantial impact on the Micron Fair Value as
assigned to each element. These inputs and assumptions represent management’s best estimates at the time of the
transaction. The following estimates do not reflect any agreement (expressed or implied) reached between the
parties on the values attributed to any aspect of this transaction. The estimated Micron Fair Value is determined
as follows:

(in millions)

Antitrust litigation settlement
Settlement of past infringement
License agreement

Total Micron Fair Value

Estimated Micron
Fair Value

$

8.0
235.0
440.0

$683.0

The total consideration of $280.0 million (as per the terms of the agreements with Micron) takes into
account the court ruling in January 2013 that Rambus’ patents-in-suit are unenforceable against Micron in the
Micron litigation, but which was pending appeal at the time of settlement. Using the accounting guidance from
multiple element revenue arrangements, the Company allocated the consideration to each element using the
estimated Micron Fair Value of the elements which include antitrust litigation settlement, settlement of past
infringement, and license agreement as shown in the table above. The following allocations do not reflect any
agreement (expressed or implied) reached between the parties on the values attributed to any aspect of this
transaction, but instead, reflect only what is required as disclosure under the applicable accounting rules. Based
on the estimated Micron Fair Value, the total consideration of $280.0 million was allocated to the following
elements:

(in millions)

Antitrust litigation settlement
Settlement of past infringement
License agreement

Total consideration

110

Allocated
Consideration

$

3.3
96.3
180.4

$280.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

The consideration of $280.0 million (assuming no adjustments to the payments under the terms of the

agreements) will be recognized in the Company’s financial statements until 2020 as follows:

• $276.7 million as “royalty revenue” which represents the allocated consideration related to the settlement

of past infringement ($96.3 million) from the resolution of the infringement litigation and the patent
license agreement ($180.4 million); and

• $3.3 million as “gain from settlement” which represents the allocated consideration related to the

resolution of the antitrust litigation.

During the years ended December 31, 2016 and 2015, the Company received cash consideration of

$40.0 million and $40.0 million, respectively, from Micron. The amounts were allocated between royalty revenue
($39.5 million in 2016 and $38.7 million in 2015) and gain from settlement ($0.5 million in 2016 and
$1.3 million in 2015) based on the elements’ Micron Fair Value.

The remaining $154.5 million is expected to be paid in successive quarterly payments of $10.0 million,

concluding in the fourth quarter of 2020.

The cash receipts and remaining future cash receipts from the agreements with Micron are expected to be

recognized as follows assuming no adjustments to the payments under the terms of the agreements:

Received
in

Estimated to Be Received in

2013

2014

2015

2016

2017

2018

2019

2020

Total
Estimated
Cash
Receipts

$5.3 $38.7
1.3

0.2

$38.7
1.3

$39.5

$40.0
0.5 —

$40.0
—

$40.0
—

$34.5
—

$276.7
3.3

$5.5 $40.0

$40.0

$40.0

$40.0

$40.0

$40.0

$34.5

$280.0

(in millions)
Royalty revenue
Gain from settlement

Total

19. Acquisitions

Smart Card Software Ltd.

On January 25, 2016, the Company completed its acquisition of Smart Card Software Ltd. (“SCS”), a
privately-held company incorporated in the United Kingdom, by acquiring all issued and outstanding shares of
capital stock of SCS. Pursuant to the merger agreement on January 25, 2016, SCS was merged into Rambus, Inc.
The transaction was denominated in British pounds. Under the terms of the merger agreement, the total
consideration in U.S. dollar equivalent was $104.7 million which included the purchase price of $92.6 million
paid on January 25, 2016 and additional purchase consideration to be paid in the fourth quarter of 2016 originally
totaling $12.1 million and comprised of $11.6 million in cash, $4.0 million in working capital, offset by
$3.5 million in liabilities assumed from SCS. Subsequently, the additional purchase consideration, ultimately
amounting to $10.2 million was paid in the fourth quarter of 2016. Of the purchase price, approximately
$17.1 million of the consideration was deposited into an escrow account to fund indemnification obligations and
other contractual provisions, with releases of portions of the escrow at various intervals through 18 months. SCS
is a leader in mobile payments and a leading supplier of smart ticketing systems, which includes Bell
Identification Ltd. and Ecebs Ltd. SCS is part of the RSD reporting unit. This acquisition will complement the
Company’s RSD reporting unit by allowing the Company to leverage its foundational security technology to
offer differentiated, value-added security solutions to its customers. During the year ended December 31, 2016,
the Company incurred approximately $2.0 million in external acquisition costs in connection with the acquisition
which were expensed as incurred.

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RAMBUS INC.

The fair value of the assets acquired has been determined primarily by using valuation methods that
discount the expected future cash flows to present value using estimates and assumptions determined by
management. The Company performed a valuation of the net assets acquired as of the January 25, 2016 closing
date. The total consideration from the business combination was allocated as follows:

Cash
Accounts receivable
Property and equipment
Other tangible assets
Identified intangible assets
Goodwill
Accounts payable and accrued liabilities
Deferred income taxes
Deferred revenue

Total

Total

(in thousands)
$ 12,056
6,563
524
1,462
59,700
46,903
(5,996)
(15,556)
(1,313)

$104,343

The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of

new and complementary technologies of the Company and the assembled workforce of SCS. This goodwill is not
expected to be deductible for tax purposes.

The identified intangible assets assumed in the acquisition of SCS were recognized as follows based upon

their estimated fair values as of the acquisition date:

Existing technology
Customer contracts and contractual relationships (1)

Total

Estimated
Weighted
Average Useful
Life

(in years)
6
6

Total

(in thousands)
$24,600
35,100

$59,700

(1)

Includes favorable contracts of $8.3 million with an estimated useful life of 5 years. The favorable contracts
are acquired software and service agreements where the Company has no performance obligations. Cash
received from these acquired favorable contracts reduces the favorable contract intangible asset.

Inphi Memory Interconnect Business

On August 4, 2016, the Company completed its acquisition of all the assets of Inphi’s Memory Interconnect

Business (“Memory Interconnect Business”) from Inphi Corporation for $90 million in cash. The acquisition
includes all assets of the Memory Interconnect Business including product inventory, customer contracts, supply
chain agreements and intellectual property. Of the purchase price, approximately $11.3 million of the
consideration was deposited into an escrow account to fund indemnification obligations and other contractual
provisions, to be released 12 months after the closing date. This acquisition will complement the MID reporting
unit by allowing the Company to strengthen its market position for memory buffer chip products and execute on
programs that meet the needs of the server, networking and data center market. During the year ended
December 31, 2016, the Company incurred approximately $0.7 million in external acquisition costs in connection
with the acquisition which were expensed as incurred.

112

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

The fair value of the assets acquired has been determined primarily by using valuation methods that
discount the expected future cash flows to present value using estimates and assumptions determined by
management. The Company performed a valuation of the net assets acquired as of the August 4, 2016 closing
date. The total consideration from the business combination was allocated as follows:

Inventory
Property and equipment
Other tangible assets
Identified intangible assets
Goodwill
Accounts payable and accrued liabilities
Deferred revenue

Total

Total

(in thousands)
$ 6,300
4,543
206
50,222
32,723
(3,527)
(467)

$90,000

The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of

new and complementary technologies of the Company and the assembled workforce of the acquired business.
This goodwill is expected to be deductible for tax purposes.

The identified intangible assets assumed in the acquisition of the acquired business were recognized as

follows based upon their estimated fair values as of the acquisition date:

Existing technology
Customer contracts and contractual relationships
In-process research and development

Total

Estimated
Weighted
Average
Useful Life

(in years)
5
6
Not applicable

Total

(in thousands)
$44,900
3,722
1,600

$50,222

In-process research and development (“IPR&D”) consists of one project, primarily relating to the
development of process technologies to manufacture the next generation buffer chip product. The project is
expected to be completed over the next 4 years. The acquired IPR&D will not be amortized until completion of
the related product which is determined by when the underlying projects reach technological feasibility and
commence commercial production. Upon completion, the IPR&D project will be amortized over its useful life
which is expected to range between 5 years and 7 years.

Snowbush IP Assets

On August 5, 2016, the Company completed its acquisition of the assets of Semtech Corporation’s
Snowbush IP group for $32.0 million in cash. Snowbush IP, formerly part of Semtech’s Systems Innovation
Group, is a provider of silicon-proven, high-performance serial link solutions. The Snowbush IP assets have been
integrated into the MID reporting unit to bolster its SerDes and IP offerings, addressing critical needs of the
server, networking and data center market. During the year ended December 31, 2016, the Company incurred
approximately $0.7 million in external acquisition costs in connection with the acquisition which were expensed
as incurred.

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RAMBUS INC.

The fair value of the assets acquired has been determined primarily by using valuation methods that
discount the expected future cash flows to present value using estimates and assumptions determined by
management. The Company performed a valuation of the net assets acquired as of the August 5, 2016 closing
date. The total consideration from the business combination was allocated as follows:

Property and equipment
Identified intangible assets
Goodwill
Deferred revenue

Total

Total

(in thousands)

$

911
25,189
14,015
(1,270)

$38,845

The goodwill arising from the acquisition is primarily attributed to synergies related to the combination of
new and complementary technologies of the Company and the assembled workforce of the Snowbush IP assets.
This goodwill is expected to be deductible for tax purposes.

The identified intangible assets assumed in the acquisition of the Snowbush IP assets were recognized as

follows based upon their estimated fair values as of the acquisition date:

Existing technology
Customer contracts and contractual relationships
In-process research and development

Total

Estimated
Weighted
Average
Useful Life

(in years)
5
2
Not applicable

Total

(in thousands)
$ 2,600
789
21,800

$25,189

IPR&D consists of four projects, primarily relating to the development of SerDes and IP process

technologies. The projects are expected to be completed over the next 1.5 years. The acquired IPR&D will not be
amortized until completion of the related products which is determined by when the underlying projects reach
technological feasibility and commence commercial production. Upon completion, each IPR&D project will be
amortized over its useful life, each of which is expected to range between 4 years and 6 years. Subsequent to the
acquisition, the Company impaired $18.3 million of in-process research and development intangible asset. See
Note 5, “Intangible Assets and Goodwill” for further details.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RAMBUS INC.

Unaudited Pro Forma Combined Consolidated Financial Information

The following unaudited pro forma financial information presents the combined results of operations for the

Company and SCS, the Memory Interconnect Business and the Snowbush IP assets as if the acquisitions had
occurred on January 1, 2015. The unaudited pro forma financial information has been prepared for comparative
purposes only and does not purport to be indicative of the actual operating results that would have been recorded
had the acquisitions actually taken place on January 1, 2015, and should not be taken as indicative of future
consolidated operating results. Additionally, the unaudited pro forma financial results do not include any
anticipated synergies or other expected benefits from the acquisitions (unaudited, in thousands, except per share
amounts):

Revenue
Net income
Net income per share — diluted

Years Ended December 31,

2016

2015

$364,443
5,727
$
0.05
$

$374,036
$188,852
1.61
$

Pro forma earnings for 2016 were adjusted to exclude $3.4 million of acquisition-related costs incurred in

2016. Consequently, pro forma earnings for 2015 were adjusted to include these costs.

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Supplementary Financial Data

RAMBUS INC.
CONSOLIDATED SUPPLEMENTARY FINANCIAL DATA
Quarterly Statements of Operations
(Unaudited)

Dec 31,
2016

Sept. 30,
2016

June 30,
2016

March 31,
2016

Dec. 31,
2015

Sept. 30,
2015

June 30,
2015

March 31,
2015

(In thousands, except for per share amounts)
$ 97,559 $ 89,855 $ 76,501 $ 72,682 $ 76,773 $ 73,779 $ 72,812 $ 72,914

Total revenue

Total operating costs and

expenses (1)

$ 97,035 $ 78,039 $ 64,493 $ 63,388 $ 56,439 $ 56,139 $ 57,258 $ 55,022

Operating income

$

524 $ 11,816 $ 12,008 $

9,294 $ 20,334 $ 17,640 $ 15,554 $ 17,892

Net income (loss) (2)

$ (3,445) $ 4,511 $

3,876 $

1,878 $ 12,992 $182,033 $

6,861 $

9,502

Net income (loss) per
share — basic

Net income (loss) per
share — diluted

Shares used in per share

$

$

(0.03) $

0.04 $

0.04 $

0.02 $

0.12 $

1.56

0.06 $

0.08

(0.03) $

0.04 $

0.03 $

0.02 $

0.11 $

1.52

0.06 $

0.08

calculations — basic (3)

110,788

110,214

109,904

109,733

111,476

116,444

116,027

115,336

Shares used in per share

calculations —
diluted (3)

110,788

113,723

112,061

112,252

113,388

119,542

120,939

117,442

(1) The quarterly financial information includes $18.3 million of impairment of in-process research and

development intangible asset and a reduction of operating expenses due to the change in the contingent
consideration liability of $6.8 million in the quarter ended December 31, 2016. Refer to Note 5, “Intangible
Assets and Goodwill” of Notes to Consolidated Financial Statements of this Form 10-K. The quarterly
financial information also includes restructuring charges of $3.6 million in the quarter ended December 31,
2015. Refer to Note 15, “Restructuring Charges” of Notes to Consolidated Financial Statements of this
Form 10-K.

(2) The quarterly financial information includes the following amount related to benefit from income taxes

related to the deferred tax asset valuation allowance reversal as follows: $174.5 million in the quarter ended
September 30, 2015. Refer to Note 16, “Income Taxes” of Notes to Consolidated Financial Statements of
this Form 10-K.

(3) 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, 2016 and 7.8 million shares repurchased in the
quarter ended December 31, 2015. Refer to Note 13, “Stockholders’ Equity” of Notes to Consolidated
Financial Statements of this Form 10-K.

116

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

RAMBUS INC.

By:

/S/ RAHUL MATHUR

Rahul Mathur
Senior Vice President, Finance and Chief
Financial Officer

Date: February 17, 2017

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby

constitutes and appoints Ronald Black and Rahul Mathur as his true and lawful agent, proxy and attorney-in-fact,
with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all
capacities, to (i) act on, sign, and file with the Securities and Exchange Commission any and all amendments to
this Annual Report on Form 10-K, together with all schedules and exhibits thereto, (ii) act on, sign, and file such
certificates, instruments, agreements and other documents as may be necessary or appropriate in connection
therewith, and (iii) take any and all actions that may be necessary or appropriate to be done, as fully for all
intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such
agent, proxy and attorney-in-fact or any of his substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ RONALD BLACK
Ronald Black

/s/ RAHUL MATHUR
Rahul Mathur

/s/ ERIC STANG
Eric Stang

/s/ J. THOMAS BENTLEY
J. Thomas Bentley

/s/ ELLIS THOMAS FISHER
Ellis Thomas Fisher

/s/ PENELOPE HERSCHER
Penelope Herscher

/s/ CHARLES KISSNER
Charles Kissner

/s/ DAVID SHRIGLEY
David Shrigley

Chief Executive Officer, President
and Director (Principal Executive
Officer)

Senior Vice President, Finance and
Chief Financial Officer (Principal
Financial and Accounting Officer)

February 17, 2017

February 17, 2017

Chairman of the Board of Directors

February 17, 2017

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Director

February 17, 2017

Director

February 17, 2017

Director

February 17, 2017

Director

February 17, 2017

Director

February 17, 2017

117

Exhibit
Number

2.1(1)

3.1(2)

3.2(3)

3.3(4)

4.1(5)

4.2(6)

10.1(7)

10.2(8)*

INDEX TO EXHIBITS

Description of Document

Purchase Agreement, dated January 25, 2016, by and between Rambus Inc. and the shareholders
of Smart Card Software Ltd.

Amended and Restated Certificate of Incorporation of Registrant filed May 29, 1997.

Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant
filed June 14, 2000.

Amended and Restated Bylaws of Registrant dated April 25, 2013.

Form of Registrant’s Common Stock Certificate.

Indenture between Rambus Inc. and U.S. Bank, National Association, dated as of August 16,
2013 (including the form of 1.125% Convertible Senior Note due 2018 therein).

Form of Indemnification Agreement entered into by Registrant with each of its directors and
executive officers.

Form of Change of Control Severance Agreement, Agreement entered into by Registrant with
each of its named executive officers other than its chief executive officer.

10.3(9)*

1997 Stock Plan (as amended and restated as of April 4, 2007) and related forms of agreements.

10.4(10)*

2006 Equity Incentive Plan, as amended.

10.5(10)*

Forms of agreements under the 2006 Equity Incentive Plan, as amended.

10.6(10)*

2006 Employee Stock Purchase Plan as amended.

10.7(11)*

2015 Equity Incentive Plan.

10.8(12)*

Form of Restricted Stock Unit Agreement (2015 Equity Incentive Plan).

10.9(12)*

Form of Stock Option Agreement (2015 Equity Incentive Plan).

10.10(11)*

2015 Employee Stock Purchase Plan.

10.11(13)

Triple Net Space Lease, dated as of December 15, 2009, by and between Registrant and MT SPE,
LLC.

10.12(14)** Settlement Agreement, dated January 19, 2010, among Registrant, Samsung Electronics Co., Ltd,

Samsung Electronics America, Inc., Samsung Semiconductor, Inc. and Samsung Austin
Semiconductor, L.P.

10.13(14)** Semiconductor Patent License Agreement, dated January 19, 2010, between Registrant and

Samsung Electronics Co., Ltd.

10.14(15)

First Amendment of Lease, dated November 4, 2011, by and between Registrant and MT SPE,
LLC.

10.15(16)

Employment Agreement between the Company and Ronald Black, dated as of June 22, 2012.

10.16(17)** Settlement Agreement, dated June 11, 2013, among Registrant, SK hynix and certain SK hynix

affiliates.

10.17(18)** Semiconductor Patent License Agreement, dated June 11, 2013, between Registrant and SK

hynix.

10.18(19)** Settlement Agreement, dated December 9, 2013, between Rambus Inc., Micron Technology, Inc.,

and certain Micron affiliates.

118

10.19(19)** Semiconductor Patent License Agreement, dated December 9, 2013, between Rambus, Inc. and

Micron Technology, Inc.

10.20(19)** Amendment to Semiconductor Patent License Agreement, dated December 30, 2013, by and

between Rambus Inc. and Samsung Electronics Co., Ltd.

10.21(20)** Amendment 1 to Semiconductor Patent License Agreement, dated June 17, 2015, by and between

Rambus Inc. and SK hynix Inc.

10.22(21)

Master Agreement, dated October 26, 2015, by and between Rambus Inc. and Citibank, N.A.

10.23(22)

Asset Purchase Agreement, dated June 29, 2016, by and between Rambus Inc., Bell ID Singapore
Ptd Ltd, Inphi Corporation and Inphi International Pte. Ltd.

10.24(23)

Separation Agreement, dated August 5, 2016 by and between Rambus Inc. and Satish Rishi.

10.25(24)

Offer Letter, dated September 9, 2016, by and between Rambus Inc. and Rahul Mathur.

12.1(25)

Computation of ratio of earnings to fixed charges.

21.1

23.1

24

31.1

31.2

32.1

32.2

Subsidiaries of Registrant.

Consent of Independent Registered Public Accounting Firm.

Power of Attorney (included in signature page).

Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

119

F
o
r
m
1
0
-
K

Incorporated by reference to the Form 10-Q filed on April 22, 2016.
Incorporated by reference to the Form 10-K filed on December 15, 1997.
Incorporated by reference to the Form 10-Q filed on May 4, 2001.
Incorporated by reference to the Form 8-K filed on April 30, 2013.
Incorporated by reference to the Form S-1/A (file no. 333-22885) filed on April 24, 1997.
Incorporated by reference to the Form 8-K filed on August 16, 2013.
Incorporated by reference to the Form S-1 (file no. 333-22885) filed on March 6, 1997.
Incorporated by reference to the Form 8-K filed on March 9, 2015.
Incorporated by reference to the Form 10-K filed on September 14, 2007.

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10) Incorporated by reference to the Form 8-K filed on April 30, 2014.
(11) Incorporated by reference to the Form 8-K filed on April 28, 2015.
(12) Incorporated by reference to the Form 10-Q filed on July 23, 2015.
(13) Incorporated by reference to the Form 10-K filed on February 26, 2010.
(14) Incorporated by reference to the Form 10-Q filed on May 3, 2010.
(15) Incorporated by reference to the Form 10-K filed on February 24, 2012.
(16) Incorporated by reference to the Form 8-K filed on June 25, 2012.
(17) Incorporated by reference to the Form 10-Q/A filed on January 13, 2014.
(18) Incorporated by reference to the Form 10-Q filed on July 29, 2013.
(19) Incorporated by reference to the Form 10-K filed on February 21, 2014.
(20) Incorporated by reference to the Form 10-Q filed on July 23, 2015.
(21) Incorporated by reference to the Form 10-K filed on February 19, 2016.
(22) Incorporated by reference to the Form 10-Q filed on July 22, 2016.
(23) Incorporated by reference to the Form 10-Q filed on October 28, 2016.
(24) Incorporated by reference to the Form 8-K filed on September 21, 2016.
(25) Incorporated by reference to the Form S-3 filed on June 22, 2009.

120