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Home > Press Releases > Corporate > Financial > Rambus Reports Fourth Quarter Earnings

Rambus Reports Fourth Quarter Earnings

Earnings per share of 9 cents; Revenue growth of 8% from the fourth quarter last year

Los Altos, California, United States – 01/19/2006
Rambus Inc. (Nasdaq: RMBS), one of the world’s premier technology licensing companies specializing in high-speed chip interfaces, today reported financial results for the fourth quarter of 2005. Fully diluted earnings per share for the fourth quarter were 9 cents, compared to 6 cents in the fourth quarter last year and 14 cents in the previous quarter. Operating income for the fourth quarter was $7.3 million, compared to $9.6 million in the fourth quarter last year and $3.9 million the previous quarter. Net income for the fourth quarter of 2005 was $9.4 million as compared to $6.5 million in the fourth quarter last year and $14.5 million in the previous quarter. The quarterly earnings per share and net income reflect a pre-tax gain of $5.4 million resulting from repurchases of notes during the quarter versus a pre-tax gain of $18.6 million in the third quarter relating to the repurchase of notes. Revenue for the fourth quarter was $41.6 million, up 7.7% over the fourth quarter last year and up 15.5% from the previous quarter.

“We are pleased with the results for the fourth quarter. We achieved record revenue and finished the year by signing an important patent licensing agreement with AMD for which payments will begin in 2006,” said Harold Hughes, president and chief executive officer at Rambus. “We built a strong foundation this past year with achievements that demonstrate the value of our technology and give us a solid start to the new year.”

Fourth quarter results reflected $6.9 million in contract revenues, up 14.3% over the fourth quarter last year and down 13.5% from the previous quarter. The sequential decrease reflects timing of deliverables under certain memory and serial link technology development contracts. Fourth quarter results include $34.7 million in royalties, up 6.5% over the fourth quarter last year and up 23.7% from the previous quarter. The sequential increase in royalties is primarily due to the first quarterly royalty payment of $5.9 million from Infineon under the license agreement announced in March 2005.

Total costs and expenses for the fourth quarter of 2005 were $34.3 million compared with $29.0 million in the fourth quarter last year and $32.1 million last quarter. Research and development expense, and marketing, general and administrative expenses, increased $3.4 million and $1.8 million respectively, compared with the fourth quarter of 2004. The increase in research and development expense reflects investment in research and development capability in the United States and Bangalore, while the increase in marketing, general and administrative expenses is a reflection of our commitment to a strong sales presence and a strong infrastructure to support our business as it grows.

Rambus reported a pre-tax gain of $5.4 million on the repurchase of $35 million face value of its zero coupon convertible notes during the quarter. The notes were repurchased for a total of $29 million in cash. Primarily as a result of the repurchase of the notes and the repurchase of approximately one million shares of common stock for $13 million, cash equivalents and marketable securities declined from $388 million as of September 30, 2005 to $355 million at year-end.

The earnings announcement call will be broadcast live on our website (www.rambus.com) at 2:00 p.m. PST today. Please log-on early if you do not already have the necessary software to listen to the call.

The conference call replay number is 888-203-1112 and the ID number is 4466070. For international callers, the number is 719-457-0820. The replay will be available on our website beginning at 5:00 p.m. PST today.

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including our CEO’s statements regarding prospects for 2006. Such forward-looking statements are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs, and certain assumptions made by the Company’s management. Actual results may differ materially. Among the reasons which could cause actual results to differ materially are the uncertainty of realizing any benefits in the new year from activities during 2005. Our business generally is subject to a number of risks which are described more fully in our SEC filings including our 10-K and 10-Qs.

Cost of contract revenues4,7424,4555,512

Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
December 31, 2005 September 30, 2005 December 31, 2004
Revenues:
Contract revenues $6,904 $7,983 $6,038
Royalties 34,685 28,031 32,571
Total revenues 41,589 36,014 38,609
Costs and expenses:
Research and development 11,848 10,598 8,430
Marketing, general & administrative 9,422 8,135 7,608
Litigation expense 8,265 8,898 7,470
Total costs and expenses 34,277 32,086 29,020
Operating income 7,312 3,928 >9,589
Interest and other income, net 8,084 21,202 916
Income before income taxes 15,396 25,130 10,505
Provision for income taxes 6,015 10,634 3,962
Net income $ 9,381 $ 14,496 $ 6,543
Net income per share – basic $ 0.09 $ 0.15 $ 0.06
Net income per share – diluted $ 0.09 $ 0.14 $ 0.06
Shares used in per share calculations:
Basic 99,688 99,944 102,380
Diluted 103,561 103,211 109,017
Year Ended
December 31, 2005 December 31, 2004
Revenues:
Contract revenues $ 26,876 $ 24,742
Royalties 130,322 120,132
Total revenues 157,198 144,874
Costs and expenses:
Cost of contract revenues 19,766 20,246
Research and development 40,972 32,627
Marketing, general & administrative 36,416 29,427
Litigation expense 38,282 23,057
Total costs and expenses 135,436 105,357
Operating income 21,762 39,517
Interest and other income, net 34,830 8,368
Income before income taxes 56,592 47,885
Provision for income taxes 22,915 14,326
Net income $ 33,677 $ 33,559
Net income per share – basic $ 0.34 $ 0.33
Net income per share – diluted $ 0.32 $ 0.30
Shares used in per share calculations:
Basic 99,876 101,931
Diluted 103,993 110,050
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, 2005 September 30, 2005 December 31, 2004
Assets
Current assets:
Cash and cash equivalents $ 42,391 $ 56,144 $ 48,310
Marketable securities 118,416 88,973 89,483
Accounts receivable, net 954 1,329 1,435
Prepaid and deferred taxes 4,219 13,703 13,861
Prepaids and other current assets 4,235 5,168 4,094
Total current assets 170,215 165,317 157,183
Marketable securities, long-term 194,583 242,906 98,567
Restricted investments 2,279 2,274 5,067
Deferred taxes, long-term 68,626 63,387 75,295
Purchased intangible assets, net 23,650 22,294 21,765
Property and equipment, net 18,898 20,542 17,578
Goodwill, net 3,315 3,315 581
Other assets 3,953 4,895 688
Total assets $ 485,519 $ 524,930 $ 376,724
Total cash, cash equivalents, and marketable securities $ 355,390 $ 388,023 $ 236,360
Liabilities And Stockholders’ Equity
Current liabilities:
Accounts payable and other current liabilities $ 19,634 $ 19,415 $ 17,444
Deferred revenue 973 4,963 19,271
Total current liabilities 20,607 24,378 36,715
Notes payable 160,000 195,000 –
Deferred revenue, less current portion 8,317 7,905 4,552
Other long-term liabilities 1,592 1,991 –
Total liabilities 190,516 229,274 41,267
Stockholders’ equity:
Common Stock 99 100 103
Additional paid-in capital 327,524 331,499 341,080
Accumulated other comprehensive gain (loss) (1,647) (1,562) (878)
Accumulated deficit (30,973) (34,381) (4,848)
Total stockholders’ equity 295,003 295,656 335,457
Total liabilities and stockholders’ equity $ 485,519 $ 524,930 $ 376,724

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