- Broadcom announced it is incorporating the Cryptography Research DPA countermeasures across its line of set-top box platforms
- Rambus introduced a revolutionary LED light bulb and announced a business alliance with the Elite Group to help bring the bulb to market
- Unveiled the Rambus Imerz™ multi-media platform
- Quarterly revenue of $57.4 million; non-GAAP customer licensing income of $61.6 million
- Annual revenue of $234.1 million; non-GAAP customer licensing income of $246.7 million
- Fourth quarter GAAP diluted loss per share of $0.14; fourth quarter non-GAAP diluted income per share of $0.07
- Annual GAAP diluted loss per share of $1.21; annual non-GAAP diluted income per share of $0.17
Speech of Satish Rishi, Rambus’s CFO:
Customer licensing income for the fourth quarter was $61.6 million, within our guidance of $60 million to $66 million. Customer license income for the full year was $246.7 million. Revenue for the quarter was $57.4 million within our guidance of $57 million to $63 million. Revenue for the full year was $234.1 million. Pro forma expenses came in at $45.2 million for the quarter, well below our guidance of $49 million to $54 million as we continue to manage expenses tightly and drive towards delivering higher operating leverage. For the full year, pro forma expense was $202.9 million.
In addition, we reduced our run rate from $56.7 million in Q1 of 2012 to $45.2 million in Q4 or approximately 20% as we continue to drive leverage and improve our profitability. Pro forma net income was a gain of $8.3 million as compared to our guidance of $2 million and $9 million. Pro forma net income for the year was $19.9 million, where we improved profitability from $25 million in the first half of the year to $17.4 million in the second half. As you can see, our efforts to better manage a cost while continuing invest in key core drivers for the business has resulted in significant improvement in our financial results.
Now let’s shift to discussing additional details related to the fourth quarter and the full year. Customer licensing income for the quarter was $61.6 million. During our third quarter earnings call, we had mentioned that we had signed a patent purchase agreement with Elpida where we agreed to buy patents from them over four quarters. From an accounting perspective, the patent license agreement and the patent purchase agreement are considered to be linked and we only recognize a net amount as revenue which explains most of the difference in customer licensing income and revenue for the quarter.
Customer licensing income was relatively flat compared to the previous quarter. The previous quarter had a catch-up payment from Fujitsu, so excluding that, patent royalties were higher quarter-over-quarter. Customer licensing income for 2012 was $246.7 million, down approximately 22% year-over-year. The year-over-year decline was primarily due to one-time payments we received in 2011 when we signed companies like Freescale.com, a smartphone manufacturer and also due to a lower patent licensing from a variable royalty paying customers primarily in the DRAM segment.
For the quarter and for the year, the new businesses are approximately 10% of the total CLI. This was at the lower end of our expectations. And given the recent announcement we have made, we expect that percentage to grow in the coming quarters.
Pro forma operating expenses which exclude restructuring and impairment charges, stock-based compensation, amortization of intangible assets and retention bonuses were $45.2 million and sequentially flat to the previous quarter. These pro forma expenses include litigation expense of $2.1 million, down from $2.6 million in the prior period.
Pro forma operating expenses for the year were $203 million, down from $234 million in 2011 primarily due to lower litigation expenses and the cost reduction efforts we drove in the second half of 2012.
Compared with the prior quarter, pro forma engineering expenses were up approximately 11% primarily due to prototype of material costs and the MG&A expenses were down 12%, primarily due to lower litigation expenses along with the realization of benefits of cost reductions that we implemented in Q3 over a full quarter.
For the full year, pro forma engineering expenses increased approximately 18% relative to 2011 primarily due to investments in certain growth areas while MG&A expenses declined 34% primarily due to lower litigation expenses.
Pro forma, interest and other expenses were $3.4 million relative flat to the previous quarter. For the full year, pro forma interest and other expenses were $12.8 million, up 10% from 2011. For pro forma tax expenses we are using a flat rate of 36% on pro forma pretax income. Pro forma net income this quarter was $8.3 million as compared to $9 million last quarter. For the full year, pro forma net income was $19.9 million as compared to $46.3 million for 2011.
Overall cash defined as cash, cash equivalents and marketable securities was at $203 million, a decrease of $4 million from the previous quarter and a decrease of $86 million year-over-year. Cash flow from operations was an increase $2 million as compared to an increase of $11 million in the prior quarter. For the full year, cash flow from operations was a decrease of $18 million as compared to increase of $53 million in 2011.
Now let me shift to guidance. I want to reiterate that we remain committed to delivering on operating leverage and to the $30 million to $35 million reduction in annual spending that we’d communicated at the time we announced our restructuring activities last year.
As we continue to manage our investment opportunities and expenses going forward, we expect to show growth in the top line, profitability and a positive cash flow from operations. Now I’ll give you some thoughts regarding the first quarter of 2013. This guidance reflects our reasonable estimate and our actual results could differ materially from what I’m about to review.
For the first quarter, we expect customer licensing income to be between $60 million and $65 million and revenue to be between $58 million and $63 million. We expect pro forma operating expenses which exclude restructuring charges, stock-based comp, amortization of intangible assets and retention bonuses to be between $51 million and $46 million. These amounts include an estimate for litigation expenses of between $2 million to $3 million. Pro forma net income is expected to be between $4 million and $10 million.
I would like to close by saying that we had a solid quarter and are well positioned of our growth and improved profitability in 2013. We were within our guidance range for the period while continuing to deliver operating leverage. We remain focused on execution while investing in areas which will drive future revenue growth and profitability for the company. It’s an exciting time for Rambus as we’re well positioned to deliver value across all of our investment areas.