Rambus Reports Third Quarter Financial Results

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(1) Total stock-based compensation expense for the three and nine month periods ended September 30, 2013 and September 30, 2012 are presented as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of revenue	$	7	$	5	$	12	$	20
Research and development	$	1,630	$	2,221	$	5,166	$	7,572
Marketing, general and administrative	$	1,726	$	2,863	$	6,707	$	10,438

Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (In thousands) (Unaudited)

	Three Months Ended									Nine Months Ended
	September 30, 2013			June 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012

Revenue	$	73,294		$	57,919		$	57,530		$	198,079		$	176,608
Adjustments:
Other patent royalties received	850			3,392			4,875			9,479			8,490
Gain from settlement	179			—			—			179			—
Total customer licensing income	$	74,323		$	61,311		$	62,405		$	207,737		$	185,098

Operating costs and expenses	$	64,229		$	52,175		$	104,630		$	181,829		$	263,015
Adjustments:
Other patent royalties received	—			965			—			2,250			—
Stock-based compensation	(3,363		)	(3,574		)	(5,089		)	(11,885		)	(18,030		)
Acquisition-related transaction costs and retention bonuses	(1,512		)	(3,385		)	(4,437		)	(8,909		)	(21,487		)
Amortization	(7,383		)	(6,997		)	(7,977		)	(21,420		)	(23,536		)
Reversal of one-time litigation costs	—			8,482			—			8,482			—
Restructuring charges	(1,129		)	—			(6,622		)	(3,335		)	(6,622		)
Impairment of goodwill and long-lived assets	(8,070		)	—			(35,471		)	(8,070		)	(35,471		)
Severance costs	—			—			—			(514		)	—
Gain from settlement	179			—			—			179			—
Costs of restatement and related legal activities	—			(2		)	(79		)	(19		)	(192		)
Non-GAAP operating costs and expenses	$	42,951		$	47,664		$	44,955		$	138,588		$	157,677

Operating income (loss)	9,065			5,744			(47,100		)	16,250			(86,407		)
Adjustments:
Other patent royalties received	850			2,427			4,875			7,229			8,490
Stock-based compensation	3,363			3,574			5,089			11,885			18,030
Acquisition-related transaction costs and retention bonuses	1,512			3,385			4,437			8,909			21,487
Amortization	7,383			6,997			7,977			21,420			23,536
Reversal of one-time litigation costs	—			(8,482		)	—			(8,482		)	—
Restructuring charges	1,129			—			6,622			3,335			6,622
Impairment of goodwill and long-lived assets	8,070			—			35,471			8,070			35,471
Severance costs	—			—			—			514			—
Costs of restatement and related legal activities	—			2			79			19			192
Non-GAAP operating income	$	31,372		$	13,647		$	17,450		$	69,149		$	27,421

Income (loss) before income taxes	$	579		$	(3,101	)	$	(54,233	)	$	(8,413	)	$	(106,652	)
Adjustments:
Other patent royalties received	850			2,427			4,875			7,229			8,490
Stock-based compensation	3,363			3,574			5,089			11,885			18,030
Acquisition-related transaction costs and retention bonuses	1,512			3,385			4,437			8,909			21,487
Amortization	7,383			6,997			7,977			21,420			23,536
Reversal of one-time litigation costs	—			(8,482		)	—			(8,482		)	—
Restructuring charges	1,129			—			6,622			3,335			6,622
Impairment of goodwill and long-lived assets	8,070			—			35,471			8,070			35,471
Severance costs	—			—			—			514			—
Costs of restatement and related legal activities	—			2			79			19			192
Impairment of investment	—			1,400			—			1,400			—
Non-cash interest expense on convertible notes	5,135			4,145			3,789			13,369			10,856
Non-GAAP income before income taxes	$	28,021		$	10,347		$	14,106		$	59,255		$	18,032
Non-GAAP provision for income taxes	10,088			3,725			5,078			21,332			6,491
Non-GAAP net income	$	17,933		$	6,622		$	9,028		$	37,923		$	11,541

Non-GAAP basic net income per share	$	0.16		$	0.06		$	0.08		$	0.34		$	0.10
Non-GAAP diluted net income per share	$	0.15		$	0.06		$	0.08		$	0.33		$	0.10
Weighted average shares used in non-GAAP per share calculation:
Basic	112,640			112,183			110,826			112,144			110,580
Diluted	116,052			116,162			117,738			115,833			117,569

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