Rambus Reports Strong Fourth Fiscal Quarter Earnings

LOS ALTOS, Calif.--(BUSINESS WIRE)--Oct. 16, 2001--

Q4 earnings announcement call live on website (www.rambus.com) at 1:30 p.m. PDT. Conference call replay number 800-839-9318; replay also available on website. Replay available for one week, beginning at 4:00 p.m. PDT.

Rambus Inc. (Nasdaq:RMBS) today reported financial results for its fourth fiscal quarter ended and year-ended September 30, 2001. Pro forma earnings per share for the fourth fiscal quarter were 6 cents versus a consensus analysts' estimate of 4 cents. Pro forma earnings per share for the fiscal year were 30 cents versus 20 cents in the prior year. Revenue for the quarter was $27.9 million, up 4% over the same period last year and up 20% from the previous quarter. Revenue for the year-ended September 30, 2001 was $117.2 million, up 62% from the prior year.

In addition, the Rambus Inc. Board of Directors has authorized the repurchase of up to 5 million shares of the Company's common stock in open market transactions effective immediately and over an indefinite period.

Fourth fiscal quarter results include $25.1 million in royalties, up 27% from the previous quarter. This reflects strong growth in royalties associated with memory controllers partially offset by a decline in royalties associated with memory devices. Memory device royalties continue to be driven by the dramatic price drops in the industry.

Excluding acquisition-related costs, pro forma net income for the fourth fiscal quarter was $6.6 million (24% of revenues), compared to $10.2 million (38% of revenues) in the same period last year and $3.9 million (17% of revenues) in the previous quarter. Pro forma net income for the year was $31.8 million (27% of revenues) compared to $21.5 million (30% of revenues).

Operating expenses in the September 2001 quarter declined $1.8 million from last quarter. The decline was driven by a significant reduction in litigation costs. Costs associated with litigation were down to $6.8 million in the fourth fiscal quarter versus $8.8 million in the prior quarter. Operational expense controls offset previously planned increases in marketing expense. Overall, operating expenses were $19.4 million versus $21.2 million last quarter and $12.4 million in the same period last year, on a pro-forma basis.

``We are pleased to have strong profitability in this difficult business environment. These profits are the result of our innovations and our business model,'' said Geoff Tate, CEO of Rambus Inc. ``We are looking forward to outlining our newest inventions at the Rambus Developers Forum on Monday.'' There will be a webcast of the analyst portion of the Rambus Developers Forum available through www.rambus.com.

Rambus Inc. designs, develops and licenses high bandwidth chip-connection technology and provides the comprehensive engineering support necessary for a complete system solution. Rambus' technology and intellectual property are licensed to leading semiconductor suppliers including DRAM, controller and microprocessor manufacturers, ASIC developers, and foundries for use in computer, consumer and networking systems such as personal computers, workstations, servers, game consoles, set top boxes, digital HDTVs, printers, high-speed switches and routers.

This release and the conference call on today's date contain forward-looking statements regarding the Company's financial prospects, development plans, anticipated product shipment dates, relations with licensees and other third parties and various other matters. Actual results may differ materially. Among the reasons which could cause actual results to differ materially is the possibility of inadequate shipments of Rambus DRAMs and controllers for the Sony PlayStation2 and the PC main memory market, the continued deterioration in the DRAM market, the market response to these products, any delay in the development of Rambus-based products by licensees, any delay in the development and shipment of new Rambus products, any delay in the development and shipment of products compatible with Rambus products, a greater-than-expected response of the market to competing technology, a lack of progress on price and cost reduction by RDRAM suppliers, a lack of progress on signing new contracts for both RDRAM-compatible and SDRAM-compatible ICs, adverse litigation decisions and other factors which are available in our SEC filings including our 10-K and 10-Qs.

-0-

                              RAMBUS INC.  
            PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
  
               (in thousands, except per share amounts)
  
                              (unaudited)  
  
  
                       Three Months Ended             Year Ended  
                 Sept. 30,  June 30,  Sept. 30,  Sept. 30,  Sept. 30,  
                    2001      2001       2000       2001       2000  
Revenues:
  
Contract
  
 revenues          2,833   $  3,514   $  6,987   $ 21,797   $ 39,683  
  
Royalties         25,063     19,787     19,921     95,363     32,628  
                 -------   --------   --------   --------   --------  
  
Total
  
 revenues         27,896     23,301     26,908    117,160     72,311  
                 -------   --------   --------   --------   --------  
Costs and
  
 expenses:
  
Cost of
  
 contract
  
 revenues          1,894      2,692      2,666      9,863     12,093  
Research and
  
 development       4,814      4,601      3,299     17,319     10,699  
Marketing,
  
 general &
  
 administrative    5,846      5,131      5,011     21,238     17,344  
Litigation
  
 expense           6,808      8,762      1,461     27,140      3,796  
                 -------   --------   --------   --------   --------  
Total costs
  
 and expenses     19,362     21,186     12,437     75,560     43,932  
                 -------   --------   --------   --------   --------  
Operating
  
 income            8,534      2,115     14,471     41,600     28,379  
Other income       1,986      2,317      1,254      8,931      4,714  
                 -------   --------   --------   --------   --------  
Pro forma
  
 income before
  
 income taxes     10,520      4,432     15,725     50,531     33,093  
Provision
  
 for income
  
 taxes             3,893        572      5,504     18,696     11,583  
                 -------   --------   --------   --------   --------  
Pro forma
  
 net income        6,627   $  3,860   $ 10,221   $ 31,835   $ 21,510  
                 =======   ========   ========   ========   ========  
Pro forma net
  
 income per
  
 share - basic      0.07   $   0.04   $   0.10   $   0.32   $   0.22  
                 =======   ========   ========   ========   ========  
Pro forma net
  
 income per
  
 share
  
 - diluted          0.06   $   0.04   $   0.09   $   0.30   $   0.20  
                 =======   ========   ========   ========   ========  
Shares used
  
 in per share
  
 calculation:
  
Basic            100,190     99,969     98,001     99,456     96,487  
Diluted          103,001    102,889    110,049    107,277    107,775  
  
  
Notes:
  
  
1.  Pro forma income shown above excludes the effect of amortization
  
    of goodwill and other acquisition-related intangibles of $221K in
  
    the three months ended 9/30/01, $221K in the three months ended
  
    6/30/01, $221K in the three months ended 9/30/00, $885K in the
  
    year ended 9/30/01 and $802K in the year ended 9/30/00, one-time
  
    employee compensation expenses of $171 million in the year ended
  
    9/30/00; and one-time tax adjustment of $38 million in the three
  
    months and year ended 9/30/00.
  
  
2.  This pro forma information is not prepared in accordance with
  
    generally accepted accounting principles.
  
  
3.  A reconciliation from pro forma net income to the reported results
  
    is shown on the next table.
  
  
                              RAMBUS INC.
  
      RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS
  
               (in thousands, except per share amounts)
  
                              (unaudited)
  
  
                    Three Months                   Ended Year Ended
  
               Sept. 30,   June 30,  Sept. 30,   Sept. 30,   Sept. 30,
  
                  2001       2001        2000       2001        2000
  
Pro forma
  
 net income    $  6,627  $  3,860   $  10,221  $  31,835    $  21,510
  
Acquisition
  
-related
  
 expenses          (221)     (221)       (221)      (885)        (802)
  
Employee
  
 compensation
  
 expense             --        --          --         --     (171,085)
  
  
Tax benefit          75        68          77        320          702
  
  
Tax adjustment       --        --      43,548         --       43,548
  
               --------  --------   ---------  ---------    ---------
  
Net income
  
 (loss)        $  6,481  $  3,707   $  53,625  $  31,270    $(106,127)
  
               ========  ========   =========  =========    =========
  
  
Pro forma
  
 net income
  
 per share
  
 - basic       $   0.07  $   0.04   $    0.10  $    0.32    $    0.22
  
Acquisition
  
-related
  
 expenses         (0.01)    (0.00)      (0.00)     (0.01)       (0.00)
  
Employee
  
 compensation
  
 expense             --        --          --         --        (1.77)
  
Tax adjustment       --        --        0.45         --         0.45
  
               --------  --------   ---------  ---------    ---------
  
Net income
  
 (loss)
  
 per share
  
 - basic       $   0.06  $   0.04   $    0.55  $    0.31    $   (1.10)
  
               ========  ========   =========  =========    =========
  
  
Pro forma
  
 net income
  
 per share
  
 - diluted     $   0.06  $   0.04   $    0.09  $    0.30    $    0.20
  
Acquisition
  
-related
  
 expenses         (0.00)    (0.00)      (0.00)     (0.01)       (0.00)
  
Employee
  
 compensation
  
 expense             --        --          --         --        (1.59)
  
Tax adjustment       --        --        0.40         --         0.40
  
Difference
  
 in share
  
 count*              --        --          --         --        (0.11)
  
               --------  --------   ---------  ---------    ---------
  
  
Net income
  
 (loss)
  
 per share
  
 - diluted     $   0.06  $   0.04   $    0.49  $    0.29    $   (1.10)
  
               ========  ========   =========  =========    =========
  
  
  
*   Difference in share count results from the inclusion of equivalent
  
    shares representing outstanding stock options and warrants in
  
    periods with profits and exclusion of such equivalent shares in
  
    periods with losses.
  
  
                              RAMBUS INC.
  
                 CONSOLIDATED STATEMENTS OF OPERATIONS
  
               (in thousands, except per share amounts)
  
  
  
                       Three Months                 Ended Year Ended
  
                 Sept. 30, June 30, Sept. 30,      Sept. 30, Sept. 30,
  
                  2001      2001      2000            2001      2000
  
             (unaudited)(unaudited)(unaudited)
  
Revenues:
  
Contract
  
 revenues      $  2,833  $   3,514  $   6,987   $  21,797  $  39,683
  
Royalties        25,063     19,787     19,921      95,363     32,628
  
               --------  ---------  ---------    --------  ---------
  
Total
  
 revenues        27,896     23,301     26,908     117,160     72,311
  
               --------  ---------  ---------    --------  ---------
  
Costs and
  
 expenses:
  
  
Cost of
  
 contract
  
 revenues         1,894      2,692      2,666       9,863     12,093
  
Research
  
 and
  
 development      5,035      4,822      3,520      18,204     11,501
  
Marketing,
  
 general &
  
 administrative  12,654     13,893      6,472      48,378     21,140
  
  
Employee
  
 compensation
  
 expense             --        --          --          --    171,085
  
               --------  ---------  ---------    --------  ---------
  
  
  
Total costs
  
 and expenses    19,583     21,407     12,658      76,445    215,819
  
               --------  ---------  ---------    --------  ---------
  
  
Operating
  
 income
  
 (loss)           8,313      1,894     14,250      40,715   (143,508)
  
Other
  
 income           1,986      2,317      1,254       8,931      4,714
  
               --------  ---------  ---------    --------  ---------
  
  
Income (loss)
  
 before
  
 income taxes    10,299      4,211     15,504      49,646   (138,794)
  
Provision
  
 for income
  
 taxes
  
 (benefit)        3,818        504    (38,121)     18,376    (32,667)
  
               --------  ---------  ---------    --------  ---------
  
Net income
  
 (loss)        $  6,481  $   3,707  $  53,625    $ 31,270  $(106,127)
  
               ========  =========  =========    ========  =========
  
Net income
  
 (loss)
  
 per share
  
 - basic       $   0.06  $    0.04  $    0.55    $   0.31  $   (1.10)
  
               ========  =========  =========    ========  =========
  
Net income
  
 (loss)
  
 per share
  
 - diluted     $   0.06  $    0.04  $    0.49    $   0.29  $   (1.10)
  
               ========  =========  =========    ========  =========
  
Shares used
  
 in per share
  
 calculation:
  
Basic           100,190     99,969    98,001       99,456     96,487
  
Diluted         103,001    102,889   110,049      107,277     96,487
  
  
                              RAMBUS INC.
  
                      CONSOLIDATED BALANCE SHEETS
  
                            (in thousands)
  
  
                         September 30,  June 30,  September 30,
  
                              2001        2001        2000
  
                                       (unaudited)
  
ASSETS
  
Current assets:
  
 Cash and
  
  cash equivalents       $  44,195    $  57,741    $  63,093
  
 Marketable
  
  securities                85,700       77,743       59,127
  
 Accounts
  
  receivable                 2,368        6,099           68
  
 Prepaid and
  
  deferred taxes            21,384       27,054       17,661
  
 Prepaids and
  
  other current assets       3,319        3,143        2,988
  
                         ---------    ---------    ---------
  
 Total current assets      156,966      171,780      142,937
  
Property and
  
 equipment, net             15,862       16,466        6,724
  
Marketable
  
 securities,
  
 less current portion       12,057        5,467        7,548
  
Restricted cash             13,605        5,564        2,500
  
Deferred taxes,
  
 long-term                  49,904       49,571       55,404
  
Other assets                 8,744        8,729        4,518
  
                         ---------    ---------    ---------
  
Total assets             $ 257,138    $ 257,577    $ 219,631  
                         =========    =========    =========
  
Total cash,
  
 cash equivalents
  
 and marketable
  
 securities              $ 155,557    $ 146,515    $ 132,268
  
  
LIABILITIES AND
  
 STOCKHOLDERS' EQUITY
  
Current liabilities:
  
Accounts payable
  
 and other
  
 current liabilities     $   7,977    $  10,308    $   9,032
  
Current portion
  
 of deferred revenue        14,398       15,727       24,155
  
                         ---------    ---------    ---------
  
Total current
  
 liabilities                22,375       26,035       33,187
  
  
Deferred revenue,
  
 less current portion       24,058       27,132       24,122  
                         ---------    ---------    ---------
  
Total liabilities           46,433       53,167       57,309  
                         ---------    ---------    ---------
  
Stockholders' equity:
  
Common stock                   100          100          97
  
Additional
  
 paid-in capital           302,259      302,878     285,885
  
Deferred
  
 stock-based
  
 compensation                 (461)        (488)       (571)
  
Accumulated deficit        (91,861)     (98,343)   (123,132)
  
Accumulated
  
 other comprehensive
  
 gain                          668          263          43
  
                         ---------    ---------    ---------
  
Total stockholders'
  
 equity                    210,705      204,410      162,322
  
                         ---------    ---------    ---------
  
Total liabilities
  
 and stockholders'
  
 equity                  $ 257,138    $ 257,577    $ 219,631
  
                         =========    =========    =========
  
  
    
Contact:  
     Rambus Inc.
       Sr. Vice President, Finance & CFO
       Bob Eulau, 650/947-5000
        or
       Rambus Investor Relations
       Susan Berry, 650/947-5050