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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, 2005September 30, 2005December 31, 2004
Revenues:
Contract revenues$6,904$7,983$6,038
Royalties34,68528,03132,571
Total revenues41,58936,01438,609
Costs and expenses:
Research and development11,84810,5988,430
Marketing, general & administrative9,4228,1357,608
Litigation expense8,2658,8987,470
Total costs and expenses34,27732,08629,020
Operating income7,3123,928>9,589
Interest and other income, net8,08421,202916
Income before income taxes15,39625,13010,505
Provision for income taxes6,01510,6343,962
Net income$ 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:
Basic99,68899,944102,380
Diluted103,561103,211109,017
Year Ended
December 31, 2005December 31, 2004
Revenues:
Contract revenues$ 26,876$ 24,742
Royalties130,322120,132
Total revenues157,198144,874
Costs and expenses:
Cost of contract revenues19,76620,246
Research and development40,97232,627
Marketing, general & administrative36,41629,427
Litigation expense38,28223,057
Total costs and expenses135,436105,357
Operating income21,76239,517
Interest and other income, net34,8308,368
Income before income taxes56,59247,885
Provision for income taxes22,91514,326
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:
Basic99,876101,931
Diluted103,993110,050
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, 2005September 30, 2005December 31, 2004
Assets
Current assets:
Cash and cash equivalents$ 42,391$ 56,144$ 48,310
Marketable securities118,41688,97389,483
Accounts receivable, net9541,3291,435
Prepaid and deferred taxes4,21913,70313,861
Prepaids and other current assets4,2355,1684,094
Total current assets170,215165,317157,183
Marketable securities, long-term194,583242,90698,567
Restricted investments2,2792,2745,067
Deferred taxes, long-term68,62663,38775,295
Purchased intangible assets, net23,65022,29421,765
Property and equipment, net18,89820,54217,578
Goodwill, net3,3153,315581
Other assets3,9534,895688
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 revenue9734,96319,271
Total current liabilities20,60724,37836,715
Notes payable160,000195,000–
Deferred revenue, less current portion8,3177,9054,552
Other long-term liabilities1,5921,991–
Total liabilities190,516229,27441,267
Stockholders’ equity:
Common Stock99100103
Additional paid-in capital327,524331,499341,080
Accumulated other comprehensive gain (loss)(1,647)(1,562)(878)
Accumulated deficit(30,973)(34,381)(4,848)
Total stockholders’ equity295,003295,656335,457
Total liabilities and stockholders’ equity$ 485,519$ 524,930$ 376,724

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