Earnings per share of 14 cents; Revenue decline of 7% from the third quarter last year
Los Altos, California, United States
– 10/17/2005
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 third quarter of 2005.
Fully diluted earnings per share for the third quarter were 14
cents, compared to 10 cents in the third quarter last year and 5
cents in the previous quarter. Operating income for the third
quarter was $3.9 million, compared to $10.6 million in the third
quarter last year and $5.6 million in the previous quarter. Net
income for the third quarter of 2005 was $14.5 million as
compared to $10.4 million in the third quarter last year and $5.4
million in the previous quarter. The quarterly earnings per share
and net income reflect a pre-tax gain of $18.6 million resulting
from repurchases of notes during the quarter. Revenue for the
third quarter was $36.0 million, down 7% over the third quarter
last year and down 10% from the previous quarter.
“Our team executed very well in overcoming many of the
challenges we faced entering the third quarter,” said Harold
Hughes, president and chief executive officer at Rambus. “With
outstanding progress on patent license renewals and broader
customer engagements, we have solid momentum for revenue growth
as we finish out the year.”
Third quarter results reflected $8.0 million in contract
revenues, down 4% over the third quarter last year and up 48%
from the previous quarter. This sequential increase reflects
revenue generated from new contracts for XDR and FlexIO
interfaces and from a contract for high speed serial link
interfaces. Third quarter results include $28.0 million in
royalties, down 8% over the third quarter last year and down 19%
from the previous quarter. The decrease in royalties is primarily
due to fewer SDRAM and DDR-compatible royalty agreements
outstanding during the third quarter of 2005.
Total costs and expenses for the third quarter of 2005 were
$32.1 million compared with $28.1 million in the third quarter
last year and $34.4 million last quarter. $2.2 million of the
increase over the prior year period was due to litigation
expense. The remaining increase was primarily related to higher
costs in research and development including investments in the
India design center and digital core designs.
Rambus reported a pre-tax gain of $18.6 million on the
repurchase of $105 million face value of its zero coupon
convertible notes. The notes were repurchased for a total of $84
million in cash. Primarily as a result of this repurchase, cash
equivalents and marketable securities declined from $471 million
as of June 30, 2005 to $388 million. The decline was partially
offset by cash generated from operations of $3 million.
The earnings announcement call will be broadcast live on our
website www.rambus.com at 2:00 p.m. PDT 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 4027766. For international callers, the number is
719-457-0820. The replay will be available on our website
beginning at 5:00 p.m. PDT today.
This release contains forward-looking statements under the
Private Securities Litigation Reform Act of 1995, including our
CEO’s statements contained herein regarding momentum for revenue
growth for the remainder of the year . 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 revenues in Q4 from current customer discussions. Our
business generally is subject to a number of risks which are
described in our SEC filings including our 10-K and
10-Qs.
| Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
|||
| Three Months Ended | |||
| Sept 30, 2005 | June 30, 2005 | Sept 30, 2004 | |
| Revenues: | |||
| Contract revenues | $ 7,983 | $ 5,390 | $ 8,276 |
| Royalties | 28,031 | 34,595 | 30,483 |
| Total revenues | 36,014 | 39,985 | 38,759 |
| Costs and expenses: | |||
| Cost of contract revenues | 4,455 | 4,965 | 4,543 |
| Research and development | 10,598 | 9,934 | 8,841 |
| Marketing, general & administrative | 8,135 | 9,502 | 8,066 |
| Litigation expense | 8,898 | 9,980 | 6,661 |
| Total costs and expenses | 32,086 | 34,381 | 28,111 |
| Operating income | 3,928 | 5,604 | 10,648 |
| Interest and other income, net | 21,202 | 3,414 | 1,149 |
| Income before income taxes | 25,130 | 9,018 | 11,797 |
| Provision for income taxes | 10,634 | 3,658 | 1,410 |
| Net income | $ 14,496 | $ 5,360 | $ 10,387 |
| Net income per share – basic | $ 0.15 | $ 0.05 | $ 0.10 |
| Net income per share – diluted | $ 0.14 | $ 0.05 | $ 0.10 |
| Shares used in per share calculations: |
|||
| Basic | 99,944 | 99,596 | 101,875 |
| Diluted | 103,236 | 103,675 | 107,573 |
| Nine Months Ended | ||
| Sept 30, 2005 | Sept 30, 2004 | |
| Revenues: | ||
| Contract revenues | $ 19,972 | $ 18,704 |
| Royalties | 95,637 | 87,561 |
| Total revenues | 115,609 | 106,265 |
| Costs and expenses: | ||
| Cost of contract revenues | 15,024 | 14,734 |
| Research and development | 29,123 | 24,197 |
| Marketing, general & administrative | 26,994 | 21,820 |
| Litigation expense | 30,017 | 15,586 |
| Total costs and expenses | 101,158 | 76,337 |
| Operating income | 14,451 | 29,928 |
| Interest and other income, net | 26,745 | 7,452 |
| Income before income taxes | 41,196 | 37,380 |
| Provision for income taxes | 16,900 | 10,364 |
| Net income | $ 24,296 | $ 27,016 |
| Net income per share – basic | $ 0.24 | $ 0.27 |
| Net income per share – diluted | $ 0.23 | $ 0.24 |
| Shares used in per share calculations: |
||
| Basic | 99,939 | 101,781 |
| Diluted | 104,071 | 110,441 |
| Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
|||
| Sept 30, 2005 | June 30, 2005 | December 31, 2004 | |
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | $ 56,144 | $ 69,929 | $ 48,310 |
| Marketable securities | 88,973 | 101,470 | 89,483 |
| Accounts receivable | 1,329 | 1,667 | 1,435 |
| Prepaid and deferred taxes | 13,703 | 13,703 | 13,861 |
| Prepaids and other current assets | 5,168 | 5,481 | 4,094 |
| Total current assets | 165,317 | 192,250 | 157,183 |
| Property and equipment, net | 20,542 | 21,756 | 17,578 |
| Marketable securities, long-term |
242,906 | 299,325 | 98,567 |
| Restricted investments | 2,274 | 2,302 | 5,067 |
| Deferred taxes, long-term | 63,387 | 72,587 | 75,295 |
| Purchased intangible assets, net |
22,294 | 23,437 | 21,765 |
| Other assets | 8,210 | 10,744 | 1,269 |
| Total assets | $ 524,930 | $ 622,401 | $ 376,724 |
| Total cash, cash equivalents, and marketable securities |
$ 388,023 | $ 470,724 | $ 236,360 |
| Liabilities And Stockholders’ Equity |
|||
| Current liabilities: | |||
| Accounts payable and other current liabilities |
$ 19,415 | $ 24,811 | $ 17,444 |
| Deferred revenue | 4,963 | 8,035 | 19,271 |
| Total current liabilities | 24,378 | 32,846 | 36,715 |
| Convertible note |
195,000 | 300,000 | – |
| Deferred revenue, less current portion |
7,905 | 6,630 | 4,552 |
| Other long-term liabilities | 1,991 | 1,992 | – |
| Total liabilities | 229,274 | 341,468 | 41,267 |
| Stockholders’ equity: | |||
| Common Stock | 100 | 100 | 103 |
| Additional paid-in capital | 331,499 | 331,005 | 341,080 |
| Deferred stock-based compensation | – | (267) | – |
| Accumulated other comprehensive gain loss | (1,562) | (1,028) | (878) |
| Accumulated deficit | (34,381) | (48,877) | (4,848) |
| Total stockholders’ equity | 295,656 | 280,933 | 335,457 |
| Total liabilities and stockholders’ equity |
$ 524,930 | $ 622,401 | $ 376,724 |
