RAMBUS INC
10-Q, 2000-05-11
SEMICONDUCTORS & RELATED DEVICES
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<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q
          (Mark One)

          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 2000

                                      OR

          [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934

                For the transition period from ______ to ______

                       Commission File Number: 000-22339


                                 RAMBUS  INC.
            (Exact name of registrant as specified in its charter)

<TABLE>
- --------------------------------------------------------------------------------
              Delaware                                      94-3112828
<S>                                                      <C>
- --------------------------------------------------------------------------------
   (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                        Identification No.)
- --------------------------------------------------------------------------------
</TABLE>

                                    ADDRESS
                  2465 Latham Street, Mountain View, CA 94040
              (Address of principal executive offices) (zip code)

      Registrant's telephone number, including area code: (650) 944-8000

     Indicate by check mark whether the registrant (1) has filed all reports
     required to be filed by Section 13 or 15(d) of the Securities Exchange Act
     of 1934 during the preceding 12 months (or for such shorter period that the
     Registrant was required to file such reports), and (2) has been subject to
     such filing requirements for the past 90 days.

                                 Yes [X]   No  [_]

     The number of shares outstanding of the registrant's Common Stock, par
     value $.001 per   share, was 23,933,900 as of March 31, 2000.
<PAGE>

                                  RAMBUS INC.
                                   FORM 10-Q

                                     INDEX


<TABLE>
<CAPTION>
                                                                                                    PAGE
                                                                                                    ----
<S>         <C>                                                                                     <C>
PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements:

            Consolidated Condensed Balance Sheets
            as of March 31, 2000 and September 30, 1999................................               1

            Consolidated Condensed Statements of Operations
            for the Three and Six Months Ended March 31, 2000 and March 31, 1999.......               2

            Consolidated Condensed Statements of Cash Flows
            for the Six Months Ended March 31, 2000 and March 31, 1999.................               3

            Notes to Unaudited Consolidated Condensed Financial Statements.............               4

Item 2.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations......................................................               8

Item 3.     Quantitative and Qualitative Disclosures about Market Risk.................              15

PART II.    OTHER INFORMATION

Item 1.     Legal Proceedings..........................................................              16

Item 4.     Submission of Matters to a Vote of Security Holders........................              16

Item 6.     Exhibits and Reports on Form 8-K...........................................              17

Signature   ...........................................................................              18
</TABLE>
<PAGE>

                        PART I -- FINANCIAL INFORMATION

Item 1.   Financial Statements.

                           RAMBUS INC. AND SUBSIDIARY
                     CONSOLIDATED CONDENSED BALANCE SHEETS
               (in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
                                                                              March 31,       September 30,
                                                                              ---------       -------------
                                                                                 2000              1999
                                                                                 ----              ----
                                                                              (Unaudited)
<S>                                                                           <C>             <C>
                                       ASSETS
Current assets:
  Cash and cash equivalents..........................................         $   7,512          $ 14,982
  Marketable securities..............................................            84,829            72,158
  Accounts receivable................................................             2,000             1,499
  Prepaid and deferred taxes.........................................             4,028             7,579
  Prepaids and other current assets..................................             2,513             2,260
                                                                              ---------          --------
     Total current assets............................................           100,882            98,478
Property and equipment, net..........................................             3,988             4,232
Marketable securities, less current portion..........................             1,015             5,658
Restricted cash......................................................             2,500             2,500
Deferred taxes, long-term............................................             2,204             4,123
Other assets.........................................................             3,718               782
                                                                              ---------          --------
     Total assets....................................................         $ 114,307          $115,773
                                                                              =========          ========
                                   LIABILITIES
Current liabilities:
  Accounts and taxes payable, accrued payroll and other liabilities..         $   7,890          $  4,425
  Deferred revenue...................................................            26,392            32,279
                                                                              ---------          --------
     Total current liabilities.......................................            34,282            36,704
Deferred revenue, less current portion...............................             8,611            17,505
                                                                              ---------          --------
     Total liabilities...............................................            42,893            54,209
                                                                              ---------          --------
                              STOCKHOLDERS' EQUITY
Convertible preferred stock, $.001 par value:
  Authorized: 5,000,000 shares
  Issued and outstanding:  no shares.................................                --                --
Common stock, $.001 par value:
  Authorized: 60,000,000 shares;
  Issued and outstanding:   23,933,900 shares at March 31, 2000
   and 23,702,668 shares at September 30, 1999.......................                24                24
Additional paid-in capital...........................................           253,478            78,574
Deferred stock-based compensation....................................              (689)               --
Accumulated deficit..................................................          (181,381)          (17,005)
Accumulated other comprehensive loss.................................               (18)              (29)
                                                                              ---------          --------
     Total stockholders' equity......................................            71,414            61,564
                                                                              ---------          --------
        Total liabilities and stockholders' equity...................         $ 114,307          $115,773
                                                                              =========          ========
</TABLE>


      See Notes to Unaudited Consolidated Condensed Financial Statements.

                                       1
<PAGE>

                           RAMBUS INC. AND SUBSIDIARY
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                              Three Months Ended              Six Months Ended
                                                              ------------------              ----------------
                                                                   March 31,                      March 31,
                                                                   ---------                      ---------
                                                             2000             1999          2000             1999
                                                             ----             ----          ----             ----
<S>                                                       <C>               <C>          <C>               <C>
Revenues:
  Contract revenues.................................      $  12,191         $ 7,945      $  21,510         $15,893
  Royalties.........................................          3,503           1,914          6,133           4,540
                                                          ---------         -------      ---------         -------
     Total revenues.................................         15,694           9,859         27,643          20,433
                                                          ---------         -------      ---------         -------
Costs and expenses:
  Cost of contract revenues.........................          3,018           2,485          6,549           4,587
  Research and development..........................          2,900           2,498          5,124           5,587
  Marketing, general and administrative.............          5,064           3,293          8,463           6,263
  Employee stock-related compensation expense.......        171,085              --        171,085              --
                                                          ---------         -------      ---------         -------
     Total costs and expenses.......................        182,067           8,276        191,221          16,437
                                                          ---------         -------      ---------         -------
     Operating income (loss)........................       (166,373)          1,583       (163,578)          3,996
Other income, net...................................          1,167           1,657          2,164           2,669
                                                          ---------         -------      ---------         -------
     Income (loss) before income taxes..............       (165,206)          3,240       (161,414)          6,665
Provision for income taxes..........................          1,635           1,231          2,962           2,601
                                                          ---------         -------      ---------         -------
     Net income (loss)..............................      $(166,841)        $ 2,009      $(164,376)        $ 4,064
                                                          =========         =======      =========         =======

Net income (loss) per share - basic.................      $   (6.98)        $  0.09       $  (6.90)        $  0.18
                                                          =========         =======      =========         =======
Net income (loss) per share - diluted...............      $   (6.98)        $  0.08       $  (6.90)        $  0.16
                                                          =========         =======      =========         =======

Number of shares used in per share calculations:
  Basic.............................................         23,889          23,209         23,824          23,121
  Diluted...........................................         23,889          24,980         23,824          24,933
</TABLE>



      See Notes to Unaudited Consolidated Condensed Financial Statements.

                                       2
<PAGE>

                           RAMBUS INC. AND SUBSIDIARY
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                   Six Months Ended
                                                                                       March 31,
                                                                                       ---------
                                                                                 2000              1999
                                                                                 ----              ----
<S>                                                                           <C>               <C>
Cash flows from operating activities:
  Net income (loss)..................................................         $(164,376)        $   4,064
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
     Non-cash employee stock-related compensation....................           169,878                --
     Depreciation and amortization...................................             1,467             1,565
     Amortization of deferred compensation...........................               262                --
     Amortization of goodwill and other..............................               111              (696)
     Change in operating assets and liabilities:
        Accounts receivable..........................................              (501)              (91)
        Prepaid and deferred taxes...................................             5,470             3,980
        Prepaids and other current assets............................              (253)               93
        Other assets.................................................               287               (46)
        Accounts and taxes payable, accrued payroll and other
         liabilities.................................................             3,243               980
        Deferred revenue.............................................           (14,781)           (4,468)
                                                                              ---------         ---------
           Net cash provided by operating activities.................               807             5,381
                                                                              ---------         ---------
Cash flows from investing activities:
  Purchase of property and equipment.................................            (1,223)           (2,083)
  Purchases of marketable securities.................................          (490,433)         (757,041)
  Maturities of marketable securities................................           482,380           742,369
  Acquired technology rights.........................................            (1,334)               --
  Purchases of investments...........................................            (2,000)           (1,200)
  Sales of investments...............................................                --             2,822
                                                                              ---------         ---------
           Net cash used in investing activities.....................           (12,610)          (15,133)
                                                                              ---------         ---------
Cash flows from financing activities:
  Net proceeds from issuance of common stock.........................             4,297             1,803
  Principal payments on capital lease obligations....................                --              (101)
                                                                              ---------         ---------
           Net cash provided by financing activities.................             4,297             1,702
                                                                              ---------         ---------
Effect of exchange rates on cash and cash equivalents................                36               107
                                                                              ---------         ---------
Net decrease in cash and cash equivalents............................            (7,470)           (7,943)
Cash and cash equivalents at beginning of period.....................            14,982            25,798
                                                                              ---------         ---------
Cash and cash equivalents at end of period...........................         $   7,512         $  17,855
                                                                              =========         =========

Supplemental disclosure of cash flow information:
  Interest paid......................................................         $      --         $       8
  Taxes paid.........................................................         $     418         $     247
  Tax benefit of stock option exercises..............................         $      --         $   2,615
</TABLE>



      See Notes to Unaudited Consolidated Condensed Financial Statements.

                                       3
<PAGE>

                          RAMBUS INC. AND SUBSIDIARY
        NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


1.   Basis of Presentation


     The accompanying consolidated condensed financial statements include the
accounts of the Company and its wholly owned subsidiary, Rambus K.K., located in
Tokyo, Japan. All intercompany accounts and transactions have been eliminated in
the accompanying consolidated condensed financial statements.

     In the opinion of management, the consolidated condensed financial
statements include all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position and results of operations for
each interim period shown.  Interim results are not necessarily indicative of
results for a full year.

     The consolidated condensed financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission (SEC) applicable to interim financial information.  Certain
information and footnote disclosures included in financial statements prepared
in accordance with generally accepted accounting principles have been omitted in
these interim statements pursuant to such SEC rules and regulations.  The
information included in this Form 10-Q should be read in conjunction with the
consolidated financial statements and notes thereto, for the year ended
September 30, 1999, included in the Company's 1999 Annual Report on Form 10-K.

2.   Recent Accounting Pronouncements

     In October 1999, the Company adopted American Institute of Certified Public
Accountants (AICPA) Statement of Position No. 98-9 (SOP 98-9), Modification of
SOP 97-2, "Software Revenue Recognition."  SOP 98-9 amends SOP 97-2 to require
that an entity recognize revenue for multiple element arrangements by means of
the "residual method" when (1) there is no vendor-specific objective evidence
("VSOE") of the fair values of all the undelivered elements that are not
accounted for by means of long-term contract accounting, (2) VSOE of fair value
does not exist for one or more of the delivered elements, and (3) all revenue
recognition criteria of SOP 97-2 (other than the requirement for VSOE of the
fair value of each delivered element) are satisfied. Adoption of SOP 98-9 had no
material impact on the Company's results of operations.

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities."  SFAS 133 establishes new standards of
accounting and reporting for derivative instruments and hedging activities.
SFAS 133 requires that all derivatives be recognized at fair value in the
statement of financial position, and that the corresponding gains or losses be
reported either in the statement of operations or as a component of
comprehensive income, depending on the type of hedging relationship that exists.
In July 1999, the Financial Accounting Standards Board issued SFAS No. 137 (SFAS
137), "Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of SFAS No. 133."  SFAS 137 deferred the effective date of
SFAS 133 until the first fiscal quarter beginning after June 15, 2000.  The
Company does not currently hold derivative instruments or engage in hedging
activities.  The Company expects the adoption of SFAS 133 and SFAS 137 will have
no material impact on its financial statements and related disclosures.

                                       4
<PAGE>

                          RAMBUS INC. AND SUBSIDIARY
       NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--
                                  (Continued)

3.   Comprehensive Income

     Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources, including foreign currency translation adjustments and
unrealized gains and losses on marketable securities.

     Comprehensive income (loss) is as follows (in thousands; unaudited):

<TABLE>
<CAPTION>
                                                             Three Months Ended               Six Months Ended
                                                                 March 31,                       March 31,
                                                                 ---------                       ---------
                                                             2000          1999              2000          1999
                                                             ----          ----              ----          ----
<S>                                                       <C>             <C>             <C>             <C>
Net income (loss)......................................   $(166,841)      $2,009          $(164,376)      $4,064
Other comprehensive income (loss):
      Foreign currency translation adjustments.........         (2)         (41)                36          107
      Unrealized gain (loss) on marketable
       securities......................................          36           --                (25)          --
                                                          ---------       ------          ---------       ------
Other comprehensive income (loss)......................          34          (41)                11          107

Total comprehensive income (loss)......................   $(166,807)      $1,968          $(164,365)      $4,171
                                                          =========       ======          =========       ======
</TABLE>

     Accumulated other comprehensive income (loss) presented in the accompanying
consolidated condensed balance sheets consists of cumulative foreign currency
translation adjustments and unrealized gains and losses on marketable
securities.

4.   Contingent Warrants, Common Stock Equivalents, and Options

  In January 1997, the Company granted a warrant to Intel Corporation for the
purchase of 1,000,000 shares of Rambus common stock (the "Intel warrant") at an
exercise price of $10.00 per share. The warrant will become exercisable only
upon the achievement of certain milestones by Intel relating to shipment volumes
of Rambus-based chipsets (the "Intel milestones").  At the time that the
achievement of the milestones becomes probable, a non-cash charge will be made
to the statement of operations based on the fair value of the warrant.

  In October 1998, the Company's Board of Directors authorized an incentive
program in the form of warrants on a total of up to 400,000 shares of Rambus
common stock (the "DRAM incentive warrants") to be issued to various Rambus
Direct DRAM partners upon the achievement of certain product qualification and
volume production targets.  The warrants, to be issued at the time the targets
are met, will have an exercise price of $10.00 per share and a life of five
years.  They will vest and become exercisable on the same basis as the Intel
warrant, which will result in a non-cash charge to the statement of operations
based on the fair value of the warrants at the time the achievement of the Intel
milestones becomes probable.  As of March 31, 2000, a total of 90,000 of these
warrants had been issued.

  In the fourth quarter of fiscal 1999, the Company granted to its Chief
Executive Officer and to its President a combined total of 500,000 Common Stock
Equivalents (CSEs) and to its employees approximately 540,000 options to
purchase Rambus common stock for $10.00 per share. Vesting of these CSEs and
options was contingent upon the achievement of key indicators of success for
Rambus. Vesting for a portion of these CSEs and options was contingent on an
increase in the price of Rambus common stock to greater than $200 per share for
30 consecutive days. This target was achieved by the end of the second quarter
of fiscal

                                       5
<PAGE>

                           RAMBUS INC. AND SUBSIDIARY
       NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--
                                  (Continued)

4.   Contingent Warrants, Common Stock Equivalents, and Options (continued)

2000, and resulted in a $171.1 million employee stock-related compensation
charge taken in the same quarter.  Except for a $1.2 million employer payroll
tax liability, this was a non-cash charge.  The remaining CSEs and options will
vest on the same basis as the Intel and DRAM incentive warrants, which will
result in another almost entirely non-cash charge to the statement of operations
based on the fair value of the CSEs and options at the time achievement of the
Intel milestones becomes probable.

5.   Income Taxes

  The Company recorded a provision for income taxes of $1.6 million and $3.0
million in the second quarter and first six months of fiscal 2000, respectively,
compared to a provision of $1.2 million and $2.6 million in the comparable
periods of fiscal 1999, respectively.  The estimated federal and state combined
rates on pretax income, excluding non-cash employee stock-related compensation
expense, for the first half of fiscal 2000 and fiscal 1999 were 35% and 39%,
respectively. The Company's effective tax rate differs from the statutory rate
due to the valuation allowance impact of timing differences related to the
recognition of contract revenues for tax and financial reporting purposes.

6.   Acquired Technology Rights

     In November 1999, the Company acquired rights to the intellectual property
assets of a network technology company for approximately $1.3 million in cash.
The value of these assets will be amortized over five years.  As a part of this
transaction, the Company also committed to provide certain key employees of the
acquired company with $1.8 million of deferred cash and stock-based
compensation, subject to vesting.  Such deferred compensation will be recognized
over the vesting terms, ranging from 2 to 4 years.  Research and development
expenses include approximately $230,000 and $373,000 of such acquisition-related
expenses in the second quarter and first six months of fiscal 2000,
respectively.

                                      6
<PAGE>

                          RAMBUS INC. AND SUBSIDIARY
       NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--
                                  (Continued)

7.   Net Income (Loss) Per Share

     Net income (loss) per share is computed in accordance with Financial
Accounting Standards Board Statement No. 128 (SFAS 128), "Earnings Per Share,"
which requires the presentation of basic and diluted net income (loss) per
share.  Basic net income (loss) per share is calculated using the weighted
average number of common shares outstanding during the period.  Diluted net
income per share is calculated using the weighted average number of common
shares and common stock equivalents outstanding during the period.  In periods
of net loss, common stock equivalents are excluded from the diluted loss per
share calculation since their effect is antidilutive.  In the three and six
months ended March 31, 2000, the numbers of common stock equivalents excluded
from diluted loss per share calculations because they are antidilutive are
3,125,712 and 2,567,030, respectively.  Net income (loss) per share is
calculated as follows (in thousands, except per share data; unaudited):

<TABLE>
<CAPTION>
                                                                   Three Months Ended            Six Months Ended
                                                                       March 31,                    March 31,
                                                               -----------------------       -----------------------
                                                                  2000          1999            2000          1999
                                                               ---------       -------       ---------       -------
<S>                                                            <C>             <C>           <C>             <C>
Net income (loss)..........................................    $(166,841)      $ 2,009       $(164,376)      $ 4,064
                                                               =========       =======       =========       =======
Weighted average common shares outstanding.................       23,889        23,209          23,824        23,121
Additional dilutive common stock equivalents...............           --         1,771              --         1,812
                                                               ---------       -------       ---------       -------
Diluted shares outstanding.................................       23,889        24,980          23,824        24,933
                                                               =========       =======       =========       =======
Net income (loss) per share - basic........................    $   (6.98)      $  0.09       $   (6.90)      $  0.18
                                                               =========       =======       =========       =======
Net income (loss) per share - diluted......................    $   (6.98)      $  0.08       $   (6.90)      $  0.16
                                                               =========       =======       =========       =======
</TABLE>

                                       7
<PAGE>

Item 2.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

     The forward-looking statements contained in this discussion and analysis
involve risks and uncertainties which could cause future actual results to
differ materially.  Such risks include market acceptance of the Company's
technology; systems companies' acceptance of Rambus ICs produced by the
Company's licensees; market acceptance of the products of systems companies
which have adopted the Company's technology; delays, lack of cost-
competitiveness or other problems in the introduction or performance of Rambus
ICs or products which include Rambus ICs including, but not limited to, RDRAMs,
Intel Rambus-based chipsets and the Sony PlayStation2; future dependence upon
the PC main memory market and Intel; the loss of any strategic relationships
with systems companies or licensees; announcements or introductions of new
technologies or products by the Company or the Company's competitors; delays,
lack of cost-competitiveness or other problems in the introduction or
performance of enhancements or future generations of the Company's current
technology or new products; fluctuations in the market price and demand for
DRAMs and logic ICs into which the Company's technology has been incorporated;
competitive pressures resulting in lower contract revenues or royalty rates;
changes in the Company's, licensees' and system companies' development and
product introduction schedules and levels of expenditure on research and
development and marketing; personnel changes, particularly those involving
engineering and technical personnel; costs associated with protecting the
Company's intellectual property; changes in Company strategies; foreign exchange
rate fluctuations or other changes in the international business climate; and
general economic trends.  A more detailed discussion of risks faced by the
Company is set forth in the Company's 1999 Annual Report on Form 10-K filed with
the SEC.

Results of Operations

     The following table sets forth, for the periods indicated, the percentage
of total revenues represented by certain items reflected in the Company's
consolidated condensed statements of operations and the percentage change of
such items between periods:

<TABLE>
<CAPTION>
                                                  Percent of Total Revenues,     Percent
                                                      Three Months Ended         Change
                                                          March 31,              2000 v.
                                                  --------------------------
                                                    2000              1999        1999
                                                  --------          --------    --------
<S>                                               <C>               <C>         <C>
Revenues:
   Contract revenues............................      77.7 %          80.6 %      53.4 %
   Royalties....................................      22.3            19.4        83.0
                                                  --------          ------
      Total revenues............................     100.0 %         100.0 %      59.2 %
                                                  ========          ======
Costs and expenses:
    Cost of contract revenues...................      19.2            25.2        21.4
    Research and development....................      18.5            25.3        16.1
    Marketing, general and administrative.......      32.3            33.4        53.8
    Employee stock-related compensation
     expense....................................   1,090.0              --           *
                                                  --------          ------
      Total costs and expenses..................   1,160.0            83.9           *
                                                  --------          ------
Operating income (loss).........................  (1,060.0)           16.1           *
Other income, net...............................       7.4            16.8       (29.6)
                                                  --------          ------
Income (loss) before income taxes...............  (1,052.6)           32.9           *
Provision for income taxes......................      10.4            12.5        32.8
                                                  --------          ------
Net income (loss)...............................  (1,063.0)%          20.4 %         * %
                                                  ========          ======
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                   Percent of Total Revenues,     Percent
                                                        Six Months Ended          Change
                                                           March 31,              2000 v.
                                                   --------------------------
                                                     2000              1999        1999
                                                   --------          --------    --------
<S>                                                <C>               <C>         <C>
Revenues:
   Contract revenues.............................     77.8 %           77.8%       35.3 %
   Royalties.....................................     22.2             22.2        35.1
                                                   -------           ------
      Total revenues.............................    100.0 %          100.0%       35.3 %
                                                   =======           ======
Costs and Expenses:
    Cost of contract revenues....................     23.7             22.4        42.8
    Research and development.....................     18.5             27.3        (8.3)
    Marketing, general and administrative........     30.6             30.7        35.1
    Employee stock-related compensation
     expense.....................................    618.9               --           *
                                                   -------           ------
      Total costs and expenses...................    691.7             80.4           *
                                                   -------           ------
Operating income (loss)..........................   (591.7)            19.6           *
Other income, net................................      7.8             13.0       (18.9)
                                                   -------           ------
Income (loss) before income taxes................   (583.9)            32.6           *
Provision for income taxes.......................     10.7             12.7        13.9
                                                   -------           ------
Net income (loss)................................   (594.6)%           19.9%          * %
                                                   =======           ======
</TABLE>
___________________
* Not meaningful

  Revenues. Total revenues for the three and six months ended March 31, 2000
increased 59.2% and 35.3% to $15.7 million and $27.6 million, respectively, over
the comparable three- and six-month periods in the previous year. Contract
revenues increased 53.4% to $12.2 million (77.7% of total revenues) and 35.3% to
$21.5 million (77.8% of total revenues) in the second quarter and first six
months of fiscal 2000, respectively, over the comparable periods of fiscal 1999.
The majority of the increase in contract revenues during the second quarter
represents recognition of the remaining revenue on the DRAM portion of a
contract which was terminated by mutual consent due to the licensee's withdrawal
from the commodity DRAM market.  Such a termination results in the cancellation
of all obligations on RDRAM development for both parties.  Since all license and
engineering payments already received are nonrefundable, the balance of deferred
revenue on this contract was recognized upon termination in the second quarter.
Also contributing to the revenue increase for the first half of fiscal 2000 was
a change in management's estimate of certain contract revenue recognition
periods, which occurred in the fourth quarter of fiscal 1999.  Such periods are
initially estimated based upon management's judgment of the time over which the
Company has an obligation to support its licensees.  As the new generation of
Rambus technology went into production late in fiscal 1999, a more accurate
estimate of the remaining support period could be made.  To the extent the new
estimated periods were less than the original estimates, the amount of deferred
revenue recognized in the first half of fiscal 2000 was greater than in the
comparable period of fiscal 1999.  This increase was partially offset by the
ending of revenue recognition on contracts for which the contract period had
expired, including the Texas Instruments ("TI") DRAM contract.  Each of the four
quarters of fiscal 1999 included approximately $900,000 of contract revenue from
the TI DRAM contract.  This revenue was recognized on an accelerated basis due
to the sale of TI's DRAM business to Micron and was fully recognized by the end
of fiscal 1999.

  While the Company anticipates continuing to book additional contracts, it
expects that contract revenues will decline over time as the revenue recognition
periods expire for contracts booked

                                       9
<PAGE>

previously.  The Company's past success in signing licensees has reduced the
number of potential new licensees, which also contributes to the anticipated
decline in contract revenues.  However, in the short term, contract revenues may
temporarily increase due to accelerated revenue recognition related to a
combination of changes in management's estimates of contract revenue recognition
periods and pending mergers and product abandonments in the DRAM industry, which
could result in additional contract terminations by the Company.

  Royalties in the second quarter and first half of fiscal 2000 increased 83.0%
to $3.5 million (22.3% of total revenues) and 35.1% to $6.1 million (22.2% of
total revenues), respectively, from the comparable periods of fiscal 1999.  The
Company believes that much of its royalty revenue in each of these fiscal 2000
periods resulted from the game console business - both the relatively high
seasonal sales of Nintendo 64 systems and, in the second quarter, the first
shipments of Rambus ICs to Sony for the PlayStation2's March debut in Japan.
The Company expects Nintendo royalties to decrease seasonally over the next
quarter.  However, during the same period, the Company expects to recognize the
first significant royalties from the shipment of Rambus ICs for use in desktop
PCs and workstations as well as increasing royalties from the Sony PlayStation2.

  Because of the use of its technology in these new markets, the Company
believes that royalties will become an increasing portion of its revenues in the
future.  To date, a majority of the Company's royalties has been derived from
the sale of logic ICs incorporating Rambus ASIC cells (RACs) for use in game
consoles.  If the Company is successful in its strategy to penetrate the PC main
memory market segment, the Company expects that royalties from the sale of
RDRAMs will eventually account for the largest portion of royalties, since a PC
generally uses many more RDRAMs than does a game console.  The Company's royalty
revenue is largely a function of the adoption of Rambus technology by systems
companies and the acceptance of the systems companies' products by end users.
The markets addressed by systems companies using Rambus ICs, including those in
the game console and PC businesses, are characterized by extreme volatility,
frequent new product introductions and rapidly shifting consumer preferences,
and there can be no assurance as to the unit volumes of Rambus ICs that will be
purchased in the future or the level of royalty-bearing revenues that the
Company will receive due to these applications.  None of the systems companies
currently incorporating Rambus interface technology into their products is
contractually obligated to continue using Rambus ICs.  Given the concentration
of royalties from a limited number of sources, it is likely that royalties will
continue to vary greatly from quarter to quarter.

  As of March 31, 2000, the Company had 32 active licensees compared to 31 such
licensees at March 31, 1999.  Because all of the Company's revenues are derived
from its relatively small number of licensees, revenues tend to be highly
concentrated. In the second quarter and first six months of fiscal 2000, the
Company's top five licensees accounted for 64% and 54% of total revenues,
respectively.  During these same periods, Matsushita accounted for 32% and 20%
of total revenues, respectively; and NEC for 13% and 14%. The Company expects
that it will continue to experience significant revenue concentration for the
foreseeable future. However, the particular licensees which account for revenue
concentration may vary from period to period depending on the addition of new
contracts, the expiration of deferred revenue schedules under existing
contracts, and the volumes and prices at which the licensees sell Rambus ICs to
systems companies in any given period.

  To date, companies based in Japan, Korea and Taiwan have accounted for most of
the Company's revenues, and for the substantial majority of its international
revenues. In the second

                                      10
<PAGE>

quarter and first six months of fiscal 2000, international revenues comprised
80% and 75% of total revenues, respectively. The Company expects that revenues
derived from international licensees will continue to represent a significant
portion of its total revenues in the future. All of the revenues from
international licensees to date have been denominated in United States dollars.

  In a few cases, the Company has received nonrefundable, prepaid royalties
which offset the earliest royalty payments otherwise due from the licensee.  As
of March 31, 2000, $5.0 million of such nonrefundable, prepaid royalties had
offset initial royalties, and the Company had a balance of $1.3 million
remaining to be offset against future royalties.

  Substantially all of the license fees, engineering service fees and
nonrefundable, prepaid royalties are bundled together as contract fees because
the Company generally does not provide or price these components separately.
The contracts also generally include rights to upgrades and enhancements.
Accordingly, Rambus recognizes contract revenues ratably over the period during
which post-contract customer support is expected to be provided.  The excess of
contract fees received over contract revenue recognized is shown on the
Company's balance sheet as deferred revenue. As of March 31, 2000, the Company's
deferred revenue was $35.0 million, substantially all of which is scheduled to
be recognized in varying amounts over the next four years.

  Engineering Costs.  Engineering costs, consisting of cost of contract revenues
and research and development expenses, increased 18.8% to $5.9 million (37.7% of
total revenue) and 14.7% to $11.7 million (42.2% of total revenue) in the second
quarter and first six months of fiscal 2000, respectively, over the comparable
periods of fiscal 1999. The increase in absolute dollars is primarily
attributable to engineering personnel added to support the launch of Rambus
technology into the PC main memory market, the Company's announced technology
roadmap improvements, and new initiatives in the communications market and chip-
to-chip connections.

  Cost of Contract Revenues.  Cost of contract revenues as a percentage of total
revenues decreased to 19.2% in the second quarter of fiscal 2000 from 25.2% in
the comparable period of fiscal 1999, and increased to 23.7% in the first half
of fiscal 2000 from 22.4% in the comparable period of fiscal 1999.  The decrease
in cost of contract revenues as a percentage of total revenues in the second
quarter of 2000 compared to 1999 was related to a reduction in the engineering
effort required to support the launch and ramp of Rambus technology into the PC
main memory market as well as to the effect of the increase in the Company's
revenues.  The slight increase in cost of contract revenues as a percentage of
total revenues in the first half of fiscal 2000 compared to the same period of
fiscal 1999 represents the effect of an increase in the first quarter due to the
launch and ramp of Rambus technology into the PC main memory market offset by
the second quarter decrease.  The Company believes that the level of cost of
contract revenues will fluctuate in the future, both in absolute dollars and as
a percentage of revenues, as new generations of Rambus ICs go through the normal
development and implementation phases.

  Research and Development. Research and development expenses as a percentage of
total revenues decreased to 18.5% in the second quarter of fiscal 2000 from
25.3% in the comparable period of fiscal 1999 due to the increase in the
Company's revenues.  However, the total amount of research and development
expenses increased during the quarter as the Company was able to shift
engineering resources from support of the ramp into the PC market to development
of technology roadmap improvements as well as new chip connection activities.
For the first half of fiscal 2000, research and development expenses as a
percentage of total revenues decreased to 18.5% from 27.3% in the comparable
period of fiscal 1999, primarily due to the increase in the Company's

                                      11
<PAGE>

revenues. Research and development expenses include approximately $230,000 and
$373,000 of acquisition-related costs in the second quarter and first six months
of fiscal 2000, respectively.  These acquisition costs relate to the Company's
November 1999 purchase of a small company which was developing a SerDes cell for
network applications.  The acquisition was accounted for as a purchase, which
resulted in goodwill and deferred compensation costs that are being amortized
over periods ranging from 2 to 5 years. The Company expects research and
development expenses to increase over time as it enhances and improves its
technology and applies it to new generations of ICs. The rate of increase of,
and the percentage of revenues represented by, research and development expenses
in the future will vary from period to period based on the research and
development projects underway and the change in engineering headcount in any
given period, as well as the rate of change in the Company's total revenues.

     Marketing, General and Administrative. Marketing, general and
administrative expenses increased 53.8% to $5.1 million and 35.1% to $8.5
million in the second quarter and first six months of fiscal 2000, respectively,
from the comparable periods of fiscal 1999.  The increase is primarily due to
the addition of administrative personnel to support legal enforcement of the
Company's patents and other intellectual property rights, rising legal fees
related to the patent infringement actions against Hitachi, and costs related to
the Company's 10th anniversary celebration.  Partially offsetting these
increases was a reduction of approximately $500,000 to a management bonus
accrual in the first quarter of fiscal 2000.  Management bonus expense is
recognized ratably throughout the year as it is earned, but a substantial
portion of the actual payments is based upon achievement of goals, which cannot
be determined until the end of the calendar year.  In this case, certain of the
goals were not achieved, which meant that the corresponding portion of the
accrued bonuses would not be paid and the accrual was reduced in the December
quarter. Marketing, general and administrative expenses represent 32.3% and
30.6% of total revenues for the three and six months ended March 31, 2000,
respectively, compared with 33.4% and 30.7% in the same periods of fiscal 1999.
The percentage of total revenues was relatively flat from the fiscal 1999
periods to the fiscal 2000 periods due to offsetting increases in marketing,
general and administrative expenses and in revenues.  The Company expects
marketing, general and administrative expenses to increase in the future as the
Company focuses additional resources upon marketing its technology, assisting
systems companies with adapting this technology to new generations of products,
and protecting its intellectual property rights through legal actions.  The rate
of increase of, and the percentage of revenues represented by, marketing,
general and administrative expenses in the future will vary from period to
period based on the trade shows, advertising and other sales and marketing
activities undertaken and the change in sales, marketing and administrative
headcount in any given period, as well as the rate of change in the Company's
total revenues.

  Employee Stock-Related Compensation Expense.  In the fourth quarter of fiscal
1999, the Company granted to its Chief Executive Officer and to its President a
combined total of 500,000 Common Stock Equivalents (CSEs) and to its employees
approximately 540,000 options to purchase Rambus common stock for $10.00 per
share.  Vesting of these CSEs and options was contingent upon the achievement of
key indicators of success for Rambus.  In order to tie employee rewards to an
increase in stockholder value, vesting for a portion of these CSEs and options
was contingent on an increase in the price of Rambus common stock to greater
than $200 per share for 30 consecutive days. This target was achieved by the end
of the second quarter of fiscal 2000, and resulted in a $171.1 million employee
stock-related compensation charge taken in the same quarter. Except for a $1.2
million employer payroll tax liability, this was a non-cash charge. The
remaining CSEs and options will vest on the same basis as the Intel and DRAM
incentive warrants, as discussed below in the section entitled "Contingent
Warrants, Common Stock Equivalents, and Options," which will result in another
almost

                                      12
<PAGE>

entirely non-cash charge to the statement of operations based on the fair value
of the CSEs and options at the time achievement of the Intel milestones becomes
probable.

  Other Income, Net.  Other income, net consists primarily of interest income
from the Company's short-term cash investments. Other income, net decreased to
$1.2 million (7.4% of total revenues) in the second quarter of fiscal 2000 from
$1.7 million (16.8% of total revenues) in the comparable period of fiscal 1999,
and to $2.2 million (7.8% of total revenues) in the first six months of fiscal
2000 from $2.7 million (13.0% of total revenues) in the comparable period of
fiscal 1999 primarily due to a nonrecurring gain on the sale of a security in
the second quarter of fiscal 1999.

  Provision for Income Taxes.  The Company recorded provisions for income taxes
of $1.6 million and $3.0 million in the second quarter and first six months of
fiscal 2000, respectively, compared to provisions of $1.2 million and $2.6
million in the comparable periods of fiscal 1999, respectively.  The estimated
federal and state combined rates on pretax income, excluding non-cash employee
stock-related compensation expense, for the first half of fiscal 2000 and fiscal
1999 were 35% and 39%, respectively. The Company's effective tax rate differs
from the statutory rate due to the valuation allowance impact of timing
differences related to the recognition of contract revenues for tax and
financial reporting purposes.

Contingent Warrants, Common Stock Equivalents, and Options

  In January 1997, the Company granted a warrant to Intel Corporation for the
purchase of 1,000,000 shares of Rambus common stock (the "Intel warrant") at an
exercise price of $10.00 per share. The warrant will become exercisable only
upon the achievement of certain milestones by Intel relating to shipment volumes
of Rambus-based chipsets (the "Intel milestones").  At the time that the
achievement of the milestones becomes probable, a non-cash charge will be made
to the statement of operations based on the fair value of the warrant.

  In October 1998, the Company's Board of Directors authorized an incentive
program in the form of warrants on a total of up to 400,000 shares of Rambus
common stock (the "DRAM incentive warrants") to be issued to various Rambus
Direct DRAM partners upon the achievement of certain product qualification and
volume production targets.  The warrants, to be issued at the time the targets
are met, will have an exercise price of $10.00 per share and a life of five
years.  They will vest and become exercisable on the same basis as the Intel
warrant, which will result in a non-cash charge to the statement of operations
based on the fair value of the warrants at the time the achievement of the Intel
milestones becomes probable.  As of March 31, 2000, a total of 90,000 of these
warrants had been issued.

  In the fourth quarter of fiscal 1999, the Company granted to its Chief
Executive Officer and to its President a combined total of 500,000 Common Stock
Equivalents (CSEs) and to its employees approximately 540,000 options to
purchase Rambus common stock for $10.00 per share.  Vesting of these CSEs and
options was contingent upon the achievement of key indicators of success for
Rambus.  In order to tie employee rewards to an increase in stockholder value,
vesting for a portion of these CSEs and options was contingent on an increase in
the price of Rambus common stock to greater than $200 per share for 30
consecutive days.  This target was achieved by the end of the second quarter of
fiscal 2000, and resulted in a $171.1 million employee stock-related
compensation charge taken in the same quarter. Except for a $1.2 million
employer payroll tax liability, this was a non-cash charge. The remaining CSEs
and options will vest on the same basis as the Intel and DRAM incentive
warrants, which will result in another almost entirely non-cash charge to the
statement of

                                      13
<PAGE>

operations based on the fair value of the CSEs and options at the time
achievement of the Intel milestones becomes probable.

  If these warrants, CSEs, and options were valued based upon a stock price of
$200, the charge could be $400 million or more.  The charge, when and if taken,
will be non-cash except for payroll tax liabilities, which would likely be more
than offset by cash received by the Company upon exercise of the warrants and
options.

Liquidity and Capital Resources

  As of March 31, 2000, the Company had cash and cash equivalents and marketable
securities of $95.9 million, including restricted cash of $2.5 million and a
long-term marketable securities component of $1.0 million.  As of the same date,
the Company had total working capital of $66.6 million, including a short-term
component of deferred revenue of $26.4 million. Deferred revenue represents the
excess of cash received from licensees over revenue recognized on license
contracts, and the short-term component represents the amount of this deferred
revenue the Company expects to recognize over the next twelve months. Without
the short-term component of deferred revenue, working capital would have been
$93.0 million as of March 31, 2000.

  The Company's operating activities provided net cash of $0.8 million in the
first six months of fiscal 2000 compared to net cash provided of $5.4 million in
the comparable period of fiscal 1999. In the fiscal 2000 period, net cash
provided by operating activities consisted mainly of net income adjusted for
non-cash items, and adjustments relating to income taxes, offset by a decrease
in deferred revenue.  The decrease in deferred revenue represents contract
revenues recognized in the period in excess of new contract billings.

  Net cash used in investing activities was $12.6 million in the first six
months of fiscal 2000 compared to $15.1 million in the comparable period of
fiscal 1999. Net cash used in investing activities in the fiscal 2000 period
consisted of net purchases of marketable securities, costs of acquired
technology rights and investments, and purchases of property and equipment.

  Net cash provided by financing activities was $4.3 million in the first six
months of fiscal 2000 compared to $1.7 million in the comparable period of
fiscal 1999.  The primary source of net cash provided by financing activities
was sales of the Company's common stock pursuant to employee stock plans.

  The Company presently anticipates that existing cash balances will be adequate
to meet its cash needs for at least the next 12 months.

                                      14
<PAGE>

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

     The Company's exposure to market risk for changes in interest rates relates
primarily to its investment portfolio.  The Company places its investments with
high credit issuers and by policy limits the amount of credit exposure to any
one issuer.  As stated in its policy, the Company will ensure the safety and
preservation of its invested funds by limiting default risk and market risk.
The Company has no investments denominated in foreign country currencies and
therefore is not subject to foreign exchange risk.

  The Company mitigates default risk by investing in high credit quality
securities and by positioning its portfolio to respond appropriately to a
significant reduction in a credit rating of any investment issuer or guarantor.
The portfolio includes only marketable securities with active secondary or
resale markets to ensure portfolio liquidity.

  The table below presents the carrying value and related weighted average
interest rates for the Company's investment portfolio.  The carrying value
approximates fair value at March 31, 2000.

<TABLE>
<CAPTION>
                                                                             Average Rate
                                                                             of Return at
                                                              Carrying        March 31,
                                                               Value            2000
                                                           (in thousands)    (annualized)
  <S>                                                      <C>               <C>
  Investment portfolio:
  --------------------
  Cash equivalents                                            $ 1,173            6.2%
  Corporate notes and bonds...............................     15,885            5.6%
  Municipal notes and bonds...............................     22,429            3.5%
  United States government debt securities................     47,530            5.9%
                                                              -------

    Total investment portfolio............................    $87,017
                                                              =======
</TABLE>

                                      15
<PAGE>

                         PART II -- OTHER  INFORMATION


Item 1.  Legal Proceedings

   In January 2000, the Company filed suit in United States District Court
against Hitachi Ltd. for willful patent infringement.  The Company has
subsequently filed similar actions with the International Trade Commission and
in Germany.  The Company is seeking injunctions against the manufacture, use and
sale of certain Hitachi memory and microprocessor products that infringe Rambus
patents.  The Company is also seeking punitive damages from Hitachi.  Rambus
seeks to halt the importation, sale, manufacture and use of certain Hitachi
semiconductor products which directly or contributorily infringe four Rambus
patents.  The suit was filed after Hitachi failed to respond to repeated
requests by Rambus to conduct further discussions regarding a detailed
infringement analysis of Hitachi's non-RDRAM-compatible products, which was
presented to Hitachi by Rambus in 1999.


Item 4.  Submission of Matters to a Vote of Security Holders

   The Company's Annual Meeting of Stockholders was held on February 9, 2000
(the "Annual Meeting").  At the Annual Meeting, stockholders voted on two
matters:  (i) the election of four Class I directors for a term of two years
expiring in 2002, and (ii) the ratification of the appointment of
PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal
year ending September 30, 2000.  The stockholders elected management's nominees
as the Class I directors in an uncontested election and ratified the appointment
of the independent auditors by the following votes, respectively:

(i)   Election of Class I directors for a term of two years expiring in 2002:


                                              Votes For      Votes Withheld
                                              ----------     --------------

     Bruce Dunlevie                           19,871,937         40,192
     Charles Geschke                          19,871,495         40,634
     Mark Horowitz                            19,871,655         40,474
     David Mooring                            19,872,057         40,072

   The Company's Board of Directors is currently comprised of seven members who
are divided into two classes with overlapping two-year terms.  The term for
Class II directors (William Davidow, P. Michael Farmwald, and Geoff Tate) will
expire at the meeting of stockholders to be held in 2001.

(ii)  Ratification of appointment of PricewaterhouseCoopers LLP as independent
      auditors:


                    Votes For      Votes Against     Abstentions
                   -----------     -------------     -----------
                    19,877,644         20,598           13,887

                                      16
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

(a)   Exhibits

      27.    Financial Data Schedule

(b)   Reports on Form 8-K

      None.



Items 2, 3, and 5 are not applicable and have been omitted.

                                      17
<PAGE>

                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                   RAMBUS INC.



Date:    May 11, 2000              By:   /s/  Gary Harmon
      -------------------------        --------------------------------
                                       Gary Harmon
                                       Sr. Vice President, Finance,
                                       Chief Financial Officer and Secretary

                                       (Principal Financial and Accounting
                                       Officer and Duly Authorized Officer)

                                      18

<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMETNS.
</LEGEND>
<MULTIPLIER> 1,000

<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          SEP-30-2000
<PERIOD-START>                             OCT-01-1999
<PERIOD-END>                               MAR-31-2000
<CASH>                                           7,512
<SECURITIES>                                    84,829
<RECEIVABLES>                                    2,010
<ALLOWANCES>                                      (10)
<INVENTORY>                                          0
<CURRENT-ASSETS>                               100,882
<PP&E>                                          16,606
<DEPRECIATION>                                (12,618)
<TOTAL-ASSETS>                                 114,307
<CURRENT-LIABILITIES>                           34,282
<BONDS>                                              0
                                0
                                          0
<COMMON>                                            24
<OTHER-SE>                                      71,390
<TOTAL-LIABILITY-AND-EQUITY>                   114,307
<SALES>                                         27,643
<TOTAL-REVENUES>                                27,643
<CGS>                                            6,549
<TOTAL-COSTS>                                    6,549
<OTHER-EXPENSES>                               184,672
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                              (161,414)
<INCOME-TAX>                                     2,963
<INCOME-CONTINUING>                          (164,376)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 (164,376)
<EPS-BASIC>                                     (6.90)
<EPS-DILUTED>                                   (6.90)


</TABLE>


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