Rambus Reports Third Quarter Financial Results (Revenue down 30%)

LOS ALTOS, Calif.—(BUSINESS WIRE)—October 23, 2008— Rambus Inc. (NASDAQ:RMBS), one of the world’s premier technology licensing companies specializing in high-speed memory architectures, today reported financial results for the third quarter of 2008.

Revenues for the third quarter of 2008 were $29.4 million, down 17.6% sequentially from the second quarter and down 29.5% over the third quarter of last year. Revenues for the nine months ended September 30, 2008 were $104.9 million, down 24.8% over the same period of last year.

“With the FTC restrictions on our royalties removed and annual savings of $17 million expected through our restructuring efforts, we are confident in our ability to pursue our strategic objectives,” said Harold Hughes, president and chief executive officer at Rambus. “Foremost among these is our steadfast commitment to investments in breakthrough technology, and efforts to protect and be fully compensated for our patented inventions.”

Total costs and expenses for the third quarter of 2008 were $60.0 million, which included $9.0 million of stock-based compensation expenses, $4.0 million of restructuring related expenses, $2.2 million of asset impairment expenses and $0.4 million for the previous stock-based compensation restatement and related legal expenses. This is compared to total costs and expenses of $52.6 million for the second quarter of 2008, which included $9.0 million of stock-based compensation expenses and $2.3 million of restatement and related legal expenses. General litigation expenses for the third quarter of 2008 were $15.7 million, an increase of $6.6 million from the second quarter of 2008.

As compared to the third quarter of last year, total costs and expenses increased from $58.2 million, which included $8.7 million of stock-based compensation expenses and $4.2 million of restatement and related legal expenses. General litigation expenses in the third quarter of 2008 increased $4.0 million from the third quarter of 2007.

Total costs and expenses for the nine months ended September 30, 2008 were $175.6 million, which included $28.5 million of stock-based compensation expenses, $4.0 million of restructuring-related expenses, $2.2 million of asset impairment expenses and $3.6 million for the previous stock-based compensation restatement and related legal expenses. This is compared to total costs and expenses of $177.5 million for the same period of 2007, which included $28.4 million of stock-based compensation expenses and $18.6 million of restatement and related legal expenses. General litigation expenses for the nine months ended September 30, 2008 were $38.0 million, an increase of $14.7 million from the same period in 2007.

Net loss for the third quarter of 2008 was $27.9 million compared to a net loss of $144.7 million in the second quarter of 2008 and a net loss of $6.5 million in the third quarter of 2007. Net loss per share for the third quarter of 2008 was $0.27 as compared to a net loss per share of $1.38 in the second quarter of 2008 and a net loss per share of $0.06 for the third quarter of 2007. Net loss for the nine months ended September 30, 2008 was $185.2 million as compared to a net loss of $13.1 million for the same period of 2007. Net loss per share for the nine months ended September 30, 2008 was $1.77 as compared to a net loss per share of $0.13 in the same period of 2007.

Cash, cash equivalents and marketable securities as of September 30, 2008 were $379.0 million, down approximately $15.2 million from June 30, 2008 and down approximately $61.9 million from December 31, 2007. During the third quarter of 2008, the Company repurchased approximately 0.6 million shares of common stock for an aggregate value of $10.0 million. During the first nine months of the year, the Company repurchased approximately 2.0 million shares of common stock for an aggregate value of $34.9 million and also paid out a net of $13.3 million related to the settlement of a class action lawsuit related to the timing of past stock option grants.

The conference call discussing third quarter results will be webcast live via the Rambus Investor Relations website ( http://investor.rambus.com) at 2:00 p.m. Pacific Time today. A replay will be available following the call on Rambus’ Investor Relations website and for one week at the following numbers: (888) 203-1112 (domestic) or (719) 457-0820 (international) with ID# 5134540.

About Rambus Inc.

Rambus is one of the world’s premier technology licensing companies specializing in the invention and design of high-speed memory architectures. Additional information is available at www.rambus.com.

RMBSFN

Press Release Financials		Rambus
		4440 El Camino Real
		Los Altos, CA 94022


Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

		September 30,		December 31,
			2008		2007


ASSETS

Current assets:
Cash and cash equivalents		$	106,786	$	119,391
Marketable securities			272,186		321,491
Accounts receivable			1,740		442
Unbilled receivables			690		1,478
Prepaids and other current assets			8,141		8,349
Deferred taxes			222		11,595
	Total current assets		389,765		462,746

Restricted cash			1,238		2,286
Deferred taxes, long-term			2,613		116,209
Intangible assets, net			8,040		13,441
Property and equipment, net			23,672		24,587
Goodwill			4,454		4,454
Other non-current assets			4,791		3,624
	Total assets	$	434,573	$	627,347

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable		$	9,091	$	11,283
Accrued payroll and related benefits			9,478		9,985
Accrued litigation expenses			13,636		26,234
Other accrued liabilities			5,467		5,894
Deferred revenue			2,329		2,756
	Total current liabilities		40,001		56,152

Long-term liabilities:
Convertible notes			160,000		160,000
Other long-term liabilities			3,824		4,111
	Total long-term liabilities		163,824		164,111

Total stockholders' equity:			230,748		407,084
	Total liabilities and stockholders' equity	$	434,573	$	627,347

Press Release Financials							Rambus
							4440 El Camino Real
							Los Altos, CA 94022


Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,

		2008			2007			2008			2007

Revenue:
Royalty revenue	$	25,793		$	35,327		$	91,174		$	118,263
Contract revenue		3,635			6,388			13,707			21,145
Total revenues		29,428			41,715			104,881			139,408

Costs and expenses:
Cost of contract revenues (1)		4,611			5,781			18,411			18,878
Research and development (1)		17,511			18,312			59,048			60,339
Marketing, general and administrative (1)		31,288			29,914			88,377			79,657
Restructuring costs (1)		4,024			-			4,024			-
Impairment of asset		2,158			-			2,158			-
Costs of restatement and related legal activities		392			4,169			3,564			18,631
Total costs and expenses		59,984			58,176			175,582			177,505


Operating loss		(30,556	)		(16,461	)		(70,701	)		(38,097	)

Interest and other income, net		2,704			5,645			10,207			16,496

Loss before income taxes		(27,852	)		(10,816	)		(60,494	)		(21,601	)

Provision for (benefit from) income taxes		92			(4,318	)		124,748			(8,495	)

Net loss	$	(27,944	)	$	(6,498	)	$	(185,242	)	$	(13,106	)

Net loss per share:
Basic	$	(0.27	)	$	(0.06	)	$	(1.77	)	$	(0.13	)
Diluted	$	(0.27	)	$	(0.06	)	$	(1.77	)	$	(0.13	)

Weighted-Average Shares used in computing per share amounts:
Basic		104,897			103,820			104,795			103,820
Diluted		104,897			103,820			104,795			103,820

(1) Total stock-based compensation expense for the three and nine month periods ended September 30, 2008 and September 30, 2007 are presented as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
		2008			2007			2008			2007

Cost of contract revenues	$	1,321		$	1,333		$	4,604		$	4,069
Research and development		3,326			3,190			10,997			9,821
Marketing, general and administrative		4,371			4,138			12,899			14,512
Restructuring costs		547			-			547			-

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