Customer licensing income for the six months ended June 30, 2013 was $133.4 million as compared to $122.7 million in the same period of 2012, primarily due to recognition of one-time royalty revenue from LSI Corporation.

Total non-GAAP operating costs and expenses in the second quarter of 2013 were $47.7 million, 1% lower than the previous quarter. Non-GAAP general litigation expenses for the current quarter, which are included in the non-GAAP operating costs and expenses above, were $2.3 million. The prior quarter’s non-GAAP operating costs and expenses of $48.0 million included general litigation expenses of $2.0 million. Total non-GAAP operating costs and expenses in the second quarter of 2012 were $56.0 million, which included general litigation expenses of $4.5 million.

Total non-GAAP operating costs and expenses for the six months ended June 30, 2013 were $95.6 million as compared to $112.7 million in the same period of 2012 due primarily to lower general litigation expenses, lower headcount-related costs due to the restructuring in the second half of 2012 and lower consulting costs.

Non-GAAP net income in the second quarter of 2013 was $6.6 million as compared to non-GAAP net income of $13.4 million in the first quarter of 2013 and non-GAAP net loss of $1.1 million in the second quarter of 2012. Non-GAAP diluted net income per share was $0.06 in the second quarter of 2013 as compared to $0.11 in the first quarter of 2013 and diluted net loss per share of $0.01 in the second quarter of 2012. Non-GAAP net income for the six months ended June 30, 2013 was $20.0 million as compared to $2.5 million in the same period of 2012. Non-GAAP diluted net income per share was $0.17 for the six months ended June 30, 2013 as compared to non-GAAP diluted net income per share of $0.02 for the six months ended June 30, 2012.

Other Financial Highlights:

Cash, cash equivalents, and marketable securities as of June 30, 2013 were $205.6 million, a decrease of approximately $9.2 million as compared to March 31, 2013. During the second quarter of 2013, the Company used $16.7 million to pay retention bonuses related to the acquisition of Cryptography Research, Inc. and $4.3 million to pay the interest expense related to the Company’s convertible notes.

During the second quarter of 2013, the Company recorded an income tax provision of $4.7 million. 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 foreign withholding taxes.

Conference Call:

The Company will host a conference call at 2:00 p.m. PT today to discuss its financial results. The call, audio and slides will be available online at investor.rambus.com. A replay will be available following the call on the Rambus Investor Relations website for one week at the following numbers: (855) 859-2056 (domestic) or (404) 537-3406 (international) with ID# 18188767.

(1) Non-GAAP Financial Information:

In the commentary set forth above and in the financial statements included in this earnings release, the Company presents the following non-GAAP financial measures: customer licensing income, operating costs and expenses, operating income (loss) and net income (loss). In computing each of these non-GAAP financial measures, the following items were considered: other patent royalties received but not recognized as revenue, proceeds from sale of intellectual property, stock-based compensation expenses, acquisition-related transaction costs and retention bonus expense, amortization expenses, costs of restatement and related legal activities, restructuring charges, severance costs, non-cash interest expense and certain other one-time adjustments. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show investors, how the Company’s performance compares to other periods. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Reconciliation from GAAP to non-GAAP results is included in the financial statements contained in this release.

The Company’s non-GAAP financial measures reflect adjustments based on the following items:

Customer licensing income. Customer licensing income includes the Company’s measure of the total cash royalties received from its customers under its licensing agreements with them. In addition, customer licensing income includes other patent royalties received but not recognized as revenue and proceeds from sale of intellectual property. In both the first and second quarters of 2013, certain patent royalties received from a customer was not recognized as revenue as not all revenue recognition criteria were met during the period. Additionally, since the third quarter of 2011, the Company has received patent royalty payments from certain patent license agreements assumed in the acquisition of CRI which were treated as favorable contracts. Cash received from these acquired favorable contracts reduced the favorable contract intangible asset on the Company’s balance sheet. The Company has combined these cash royalty payments as customer licensing income to reflect the total amounts received from its customers.