Rambus: Fiscal 4Q11 Financial Results

(in US$ millions)	4Q10	4Q11	FY10	FY11
Revenues	90.9	83.4	323.4	312.4
*Growth*		-8%		*-12%*
Net income (loss)	33.1	(28.7)	150.9	(43.1)

Rambus Inc. reported financial results for the fourth quarter and year ended December 31, 2011.

GAAP Financial Results:
Revenue for the fourth quarter of 2011 was $83.4 million, down 17% sequentially from the third quarter of 2011 primarily due to recognition of various one-time royalty revenues during the third quarter of 2011 from licensing agreements with Freescale and a major smartphone and tablet manufacturer.

As compared to the fourth quarter of 2010, revenue was down 8% primarily due to a one-time recognition of royalty revenue during the fourth quarter of 2010 from a licensing agreement with Elpida. Revenue for the year ended December 31, 2011 was $312.4 million, down 3% over the same period of last year, primarily due to the one-time recognition of royalty revenue from the settlement agreement signed with Samsung in 2010 which was partially offset by the revenue recognized from licensing agreements with NVIDIA, Broadcom, Freescale and a major smartphone and tablet manufacturer in 2011.

Total operating costs and expenses for the fourth quarter of 2011 were $101.5 million, which included general litigation expenses of $16.8 million, $6.5 million of stock-based compensation expenses, $13.5 million for previous stock-based compensation restatement and related legal expenses, and retention bonuses and amortization expenses related to the acquisition of Cryptography Research Inc., or CRI, of $13.1 million. This is compared to total operating costs and expenses for the third quarter of 2011 of $89.5 million, which included general litigation expenses of $23.5 million, $7.2 million of stock-based compensation expenses, $0.8 million for previous stock-based compensation restatement and related legal expenses, and deal costs, retention bonuses and amortization expenses related to the acquisition of CRI of $12.7 million.

Total operating costs and expenses in the fourth quarter of 2010 were $48.0 million, which included general litigation expenses of $5.8 million, $7.3 million of stock-based compensation expenses, $0.8 million for previous stock-based compensation restatement and related legal expenses, and gain from the Samsung settlement of $10.3 million.

Total operating costs and expenses for the year ended December 31, 2011 were $313.9 million, which included a $6.2 million gain related to the Samsung settlement, $28.0 million of stock-based compensation expenses, $16.2 million for previous stock-based compensation restatement and related legal expenses, and deal costs, retention bonuses and amortization expenses related to the acquisition of CRI of $34.2 million. This is compared to total operating costs and expenses of $96.5 million for the same period of 2010, which included a $126.8 million gain related to the Samsung settlement, $30.5 million of stock-based compensation expenses and $4.2 million for previous stock-based compensation restatement and related legal expenses. General litigation expenses for the year ended December 31, 2011 were $61.0 million as compared to $22.7 million for the same period in 2010.

Net loss for the fourth quarter of 2011 was $28.7 million as compared to net income of $0.5 million in the third quarter of 2011 and net income of $33.1 million in the fourth quarter of 2010. Diluted net loss per share for the fourth quarter of 2011 was $0.26 as compared to net income per share of $0.00 in the third quarter of 2011 and net income per share of $0.29 in the fourth quarter of 2010.

Net loss for the year ended December 31, 2011 was $43.1 million as compared to net income of $150.9 million for the same period of 2010. Diluted net loss per share for the year ended December 31, 2011 was $0.39 as compared to net income per share of $1.30 for the same period of 2010.

Non-GAAP Financial Results:
Customer licensing income in the fourth quarter of 2011 was $84.5 million, down 8% sequentially from the third quarter of 2011 primarily due to various one-time payments of royalty revenue during the third quarter of 2011 from licensing agreements with Freescale Semiconductor Inc. and a major smartphone and tablet manufacturer. As compared to the fourth quarter of 2010, customer licensing income was down 17% primarily due to a one-time payment of royalty revenue during the fourth quarter of 2010 from the licensing agreement with Elpida Memory, Inc.

Customer licensing income for the year ended December 31, 2011 was $317.8 million, down 29% over the same period of last year, primarily due to the one-time payment from the settlement agreement signed with Samsung Electronics Co., Ltd. in 2010 which was partially offset by the royalties received from licensing agreements signed with NVIDIA Corporation, Broadcom, Freescale and a major smartphone and tablet manufacturer.

Total non-GAAP operating costs and expenses in the fourth quarter of 2011 were $66.4 million, which included general litigation expenses of $16.8 million. This is compared to total non-GAAP operating costs and expenses for the third quarter of 2011 of $66.8 million, which included general litigation expenses of $23.5 million. Total operating costs and expenses in the fourth quarter of 2010 were $48.7 million, which included general litigation expenses of $5.8 million. Total non-GAAP operating costs and expenses for the year ended December 31, 2011 were $233.8 million, which included general litigation expenses of $61.0 million. This is compared to $183.5 million in the same period of 2010, which included general litigation expenses of $22.7 million.

Non-GAAP net income in the fourth quarter of 2011 was $9.7 million as compared to $14.0 million in the third quarter of 2011 and $32.1 million in the fourth quarter of 2010. Non-GAAP diluted net income per share was $0.08 in the fourth quarter of 2011 as compared to $0.12 in the third quarter of 2011 and $0.28 in the fourth quarter of 2010.

Non-GAAP net income for the year ended December 31, 2011 was $46.3 million as compared to $165.7 million in the same period of 2010. Non-GAAP diluted net income per share for the year ended December 31, 2011 was $0.41 as compared to $1.43 for the same period of 2010.

Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of December 31, 2011 were $289.5 million, a decrease of approximately $3.3 million from September 30, 2011. During the fourth quarter of 2011, the company paid $10.9 million related to the settlement in the matter captioned Stuart J. Steele, et al. v. Rambus Inc., et al., related to stock option grants that were not correctly dated or accounted for prior to 2006, settling the claims against it and the individual defendants.

During the fourth quarter of 2011 and the year ended 2011, the company recorded an income tax provision of approximately $4.3 million and $17.3 million, respectively. As the company continues to maintain a full valuation allowance against its U.S. deferred tax assets, the company’s tax provision consists of primarily withholding taxes and current state and foreign taxes.

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