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

Stock-based compensation expense. These expenses primarily relate to employee stock options, employee stock purchase plans, and employee non-vested equity stock and non-vested stock units. The Company excludes stock-based compensation expense from its non-GAAP measures primarily because such expenses are non-cash expenses that the Company does not believe are reflective of ongoing operating results. Additionally, given the fact that other companies may grant different amounts and types of equity awards and may use different option valuation assumptions, excluding stock-based compensation expense permits more accurate comparisons of the Company’s results with peer companies.

Acquisition-related transaction costs and retention bonus expense. These expenses include all direct costs of certain acquisitions and the current periods’ portion of any retention bonus expense associated with the acquisitions. The Company excludes these expenses in order to provide better comparability between periods.

Restructuring charges. These charges may consist of severance, contractual retention payments, exit costs and other charges and are excluded because such charges are not directly related to ongoing business results and do not reflect expected future operating expenses.

Amortization expense. The Company incurs expenses for the amortization of intangible assets acquired in acquisitions. The Company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from the Company’s prior acquisitions and have no direct correlation to the operation of the Company’s core business.

Non-cash interest expense on convertible notes. The Company incurs non-cash interest expense related to its convertible notes. The Company excludes non-cash interest expense related to its convertible notes to provide more accurate comparisons of the Company’s results with other peer companies and to more accurately reflect the Company’s ongoing operations.

Income tax adjustments. For purposes of internal forecasting, planning and analyzing future periods that assume net income from operations, the Company estimates a fixed, long-term projected tax rate of approximately 36 percent, which consists of estimated U.S. federal and state tax rates, and excludes tax rates associated with certain items such as withholding tax, tax credits and deferred tax asset valuation allowance. Accordingly, the Company has applied the 36 percent tax rate to its non-GAAP financial results for all periods to assist the Company’s planning for future periods. The Company has provided below a reconciliation of its GAAP provision for income taxes and GAAP effective tax rate to the assumed non-GAAP provision for income taxes and non-GAAP effective tax rate.

On occasion in the future, there may be other items, such as impairments and significant gains or losses from contingencies that the Company may exclude in deriving its non-GAAP financial measures if it believes that doing so is consistent with the goal of providing useful information to investors and management.

Forward-Looking Statements

This release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 including relating to Rambus’ expectations regarding revenue for the second quarter of 2015 and estimated, fixed, long-term projected tax rates. Such forward-looking statements are based on current expectations, estimates and projections, management’s beliefs and certain assumptions made by Rambus’ management. Actual results may differ materially. Rambus’ business generally is subject to a number of risks which are described more fully in Rambus’ periodic reports filed with the Securities and Exchange Commission. Rambus undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

About Rambus Inc.

Rambus brings invention to market. Our customizable IP cores, architecture licenses, tools, services, and training improve the competitive advantage of our customers’ products while accelerating their time-to-market. Rambus products and innovations capture, secure and move data. For more information, visit www.rambus.com.

RMBSFN

Rambus Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited)
		March 31, 2015				December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents		$	171,567			$	154,126
Marketable securities		146,194				145,983
Accounts receivable		6,541				6,001
Prepaids and other current assets		10,141				8,541
Deferred taxes		1,123				187
Total current assets		335,566				314,838
Intangible assets, net		83,049				89,371
Goodwill		116,899				116,899
Property, plant and equipment, net		61,577				64,023
Deferred taxes, long-term		447				536
Other assets		2,333				2,612
Total assets		$	599,871			$	588,279
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	5,697			$	6,962
Accrued salaries and benefits		10,477				14,840
Other accrued liabilities		11,855				12,856
Total current liabilities		28,029				34,658
Long-term liabilities:
Convertible notes, long-term		116,508				115,089
Long-term imputed financing obligation		38,974				39,063
Other long-term liabilities		10,418				7,847
Total long-term liabilities		165,900				161,999
Total stockholders’ equity		405,942				391,622
Total liabilities and stockholders’ equity		$	599,871			$	588,279

Rambus Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)
		Three Months Ended March 31,
		2015				2014
Revenue:
Royalties		$	66,963			$	73,637
Contract and other revenue		5,951				4,651
Total revenue		72,914				78,288
Operating costs and expenses:
Cost of revenue (1)		10,756				10,022
Research and development (1)		28,534				26,898
Sales, general and administrative (1)		18,502				18,820
Gain from sale of intellectual property		(2,260		)		(170		)
Gain from settlement		(510		)		(510		)
Restructuring charges		—				39
Total operating costs and expenses		55,022				55,099
Operating income		17,892				23,189
Interest income and other income (expense), net		132				13
Interest expense		(3,083		)		(9,926		)
Interest and other income (expense), net		(2,951		)		(9,913		)
Income before income taxes		14,941				13,276
Provision for income taxes		5,439				5,472
Net income		$	9,502			$	7,804
Net income per share:
Basic		$	0.08			$	0.07
Diluted		$	0.08			$	0.07
Weighted average shares used in per share calculation
Basic		115,336				113,590
Diluted		117,442				116,629
_________ (1) Total stock-based compensation expense for the three months ended March 31, 2015 and 2014 are presented as follows:
		Three Months Ended March 31,
		2015				2014
Cost of revenue		$	12			$	7
Research and development		$	1,767			$	1,311
Sales, general and administrative		$	1,987			$	1,581

Rambus Inc. Supplemental Reconciliation of GAAP to Non-GAAP Results (In thousands) (Unaudited)
		Three Months Ended
		March 31, 2015				December 31, 2014				March 31, 2014
Operating costs and expenses		$	55,022			$	54,455			$	55,099
Adjustments:
Stock-based compensation expense		(3,766		)		(3,535		)		(2,899		)
Acquisition-related transaction costs and retention bonus expense		(2		)		(6		)		(1,435		)
Amortization expense		(6,323		)		(6,323		)		(6,797		)
Restructuring charges		—				—				(39		)
Non-GAAP operating costs and expenses		$	44,931			$	44,591			$	43,929
Operating income		$	17,892			$	17,585			$	23,189
Adjustments:
Stock-based compensation expense		3,766				3,535				2,899
Acquisition-related transaction costs and retention bonus expense		2				6				1,435
Amortization expense		6,323				6,323				6,797
Restructuring charges		—				—				39
Non-GAAP operating income		$	27,983			$	27,449			$	34,359
Income before income taxes		$	14,941			$	14,676			$	13,276
Adjustments:
Stock-based compensation expense		3,766				3,535				2,899
Acquisition-related transaction costs and retention bonus expense		2				6				1,435
Amortization expense		6,323				6,323				6,797
Restructuring charges		—				—				39
Non-cash interest expense on convertible notes		1,559				1,536				6,242
Non-GAAP income before income taxes		$	26,591			$	26,076			$	30,688
GAAP provision for income taxes		5,439				6,835				5,472
Adjustment to GAAP provision for income taxes		4,134				2,552				5,576
Non-GAAP provision for income taxes		9,573				9,387				11,048
Non-GAAP net income		$	17,018			$	16,689			$	19,640
Non-GAAP basic net income per share		$	0.15			$	0.15			$	0.17
Non-GAAP diluted net income per share		$	0.14			$	0.14			$	0.17
Weighted average shares used in non-GAAP per share calculation:
Basic		115,336				115,024				113,590
Diluted		117,442				117,620				116,629

Supplemental Reconciliation of GAAP to Non-GAAP Effective Tax Rate (1)
		Three Months Ended
		March 31, 2015			December 31, 2014			March 31, 2014
GAAP effective tax rate		36	%		47	%		41	%
Adjustment to GAAP effective tax rate		—	%		(11)	%		(5)	%
Non-GAAP effective tax rate		36	%		36	%		36	%

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