UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 1997
[ ] 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 0-17739
RAMTRON INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 84-0962308
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1850 Ramtron Drive, Colorado Springs, CO 80921
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (719) 481-7000
Indicate by check mark whether 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 Par Value, 37,122,630 shares as of November 7, 1997.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value amounts)
Sep. 30, Dec. 31,
1997 1996
-------- --------
(Unaudited)
ASSETS
Current assets:
Cash $ 3,475 $ 3,182
Accounts receivable, less allowances
of $209 and $721, respectively 3,251 6,810
Inventories 7,431 7,342
Prepaid expenses 230 592
-------- --------
Total current assets 14,387 17,926
Property, plant and equipment, net 8,412 8,697
Intangible assets, net 4,815 5,118
Other assets 21 21
-------- --------
$27,635 $31,762
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,099 $ 1,992
Accrued liabilities 1,460 1,202
Accrued royalties 399 612
License rights 550 1,100
Deferred revenue 999 863
Promissory note and accrued
interest, related party 4,810 --
-------- --------
Total current liabilities 11,317 5,769
Long-term promissory note and
accrued interest, related party -- 3,171
Long-term license rights 550 550
-------- --------
Total liabilities 11,867 9,490
-------- --------
Stockholders' Equity:
Preferred stock, $0.01 par value,
10,000 shares authorized - no shares issued -- --
Common stock, $0.01 par value, 75,000 shares
authorized - 37,114 and 36,997 shares issued
and outstanding, respectively 371 370
Additional paid-in capital 152,356 151,830
Accumulated deficit (136,959) (129,928)
-------- --------
Total Stockholders' Equity 15,768 22,272
-------- --------
$27,635 $31,762
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
(Amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
-------- -------- -------- --------
Revenue:
Product sales $ 3,584 $ 3,458 $11,158 $ 14,306
License fees 1,750 2,750 3,750 7,750
Customer-sponsored research
and development 80 61 116 155
-------- -------- -------- --------
5,414 6,269 15,024 22,211
-------- -------- -------- --------
Costs and expenses:
Cost of product sales 2,659 2,869 8,441 10,976
Research and development 2,279 3,867 7,658 10,268
Customer-sponsored research
and development 72 55 104 140
Sales, general and administrative 2,000 2,447 6,234 7,360
-------- -------- -------- --------
7,010 9,238 22,437 28,744
-------- -------- -------- --------
Operating income(loss) (1,596) (2,969) (7,413) (6,533)
Interest expense, related party (82) (80) (239) (237)
Other income 33 50 626 176
-------- -------- -------- --------
Net income (loss) $(1,645) $(2,999) $(7,026) $(6,594)
======== ======== ======== ========
Net income (loss) per share $(0.04) ($0.08) $(0.19) $(0.18)
======== ======== ======== ========
Weighted average shares 37,018 36,484 37,014 36,448
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
(Amounts in thousands)
1997 1996
-------- --------
Cash flows from operating activities:
Net loss $(7,026) $(6,594)
Adjustments used to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,898 2,149
Accrued compensation -- 2,847
Other (485) --
Changes in assets and liabilities:
Accounts receivable 3,949 (2,010)
Inventories (88) (3,569)
Deposits -- 4,164
Accounts payable and accrued liabilities 603 1,700
Accrued interest, related parties 239 237
Deferred revenue 136 (1,574)
Other 175 (265)
-------- --------
Net cash used in operating activities (599) (2,915)
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (1,035) (628)
Proceeds from sale of assets -- 7
-------- --------
Net cash used in investing activities (1,035) (621)
-------- --------
Cash flows from financing activities:
Proceeds from promissory
note, related party 1,400 --
Issuance of common stock, net of expenses 527 224
-------- --------
Net cash provided by financing activities 1,927 224
-------- --------
Net increase (decrease) in cash and cash equivalents 293 (3,312)
Cash and cash equivalents, beginning of period 3,182 6,283
-------- --------
Cash and cash equivalents, end of period $ 3,475 $ 2,971
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
- ------------------------------------------------------------------------------
NOTE 1. BASIS OF PRESENTATION AND MANAGEMENT OPINION
The accompanying consolidated financial statements at September 30, 1997 and
for the periods then ended have been prepared from the books and records of
the Company without audit. In the opinion of management, the accompanying
unaudited condensed consolidated financial statements reflect all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly
the consolidated financial position of the Company and its subsidiaries and
their results of operations and cash flows.
Certain information and disclosures normally included in financial statements
have been omitted under Securities and Exchange Commission regulations. It is
suggested that the accompanying financial statements be read in conjunction
with the annual report on Form 10-K for the year ended December 31, 1996. The
results of operations for the three and nine months ended September 30, 1997
are not necessarily indicative of the operating results for the full year.
NOTE 2. NEW ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standard Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings per
Share" ("SFAS No. 128"). SFAS No. 128 is effective for annual and interim
periods ending after December 15, 1997 and simplifies the computation of
earnings per share by replacing the presentation of primary earnings per share
with a presentation of basic earnings per share. SFAS No. 128 requires dual
presentation of basic and diluted earnings per share by entities with complex
capital structures. Basic earnings per share includes no dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution of securities that could share in
the earnings of an entity. The Company does not believe that its loss per
share calculations will be materially affected as a result of adopting SFAS
No. 128.
NOTE 3. INVENTORIES
Inventories consist of:
Sep. 30, Dec. 31,
1997 1996
-------- --------
(in thousands)
(Unaudited)
Finished goods $2,346 $6,174
Work-in-process 4,944 1,055
Raw material 141 113
------- -------
Total $7,431 $7,342
======= =======
<PAGE>
NOTE 4. PROMISSORY NOTE, RELATED PARTY
In September 1995, the Company and the National Electrical Benefit Fund (the
"Fund") entered into a Loan Agreement (the "Fund Credit Facility") pursuant
to which the Fund agreed to lend to the Company up to $12,000,000 bearing
interest at 12% and maturing in June 1998. The outstanding principal balance
and accrued interest as of September 30, 1997 under the Fund Credit Facility
were $4,000,000 and $810,000, respectively. The Fund Credit Facility is
secured by a first priority security lien on certain of the Company's assets
The Fund has the right to convert all or any portion of the amounts
outstanding under the Fund Credit Facility into common stock at any time or
times before maturity of the loan in June 1998 at a conversion price equal to
$10.5125 for each share of common stock.
NOTE 5. INCOME TAXES
The Company provides for income taxes pursuant to Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
The Company has determined that under SFAS No. 109, any previously
unrecognized tax benefits did not satisfy the realization criteria set forth
therein. A valuation allowance has therefore been recorded against the entire
net deferred tax asset.
NOTE 6. EARNINGS PER SHARE
Net loss per share is computed by dividing the net loss by the weighted
average number of shares of common stock outstanding during each period
presented. Certain warrants and employee stock options are common stock
equivalents; however, such warrants and certain employee stock options have
not been included in net loss per share calculations for the three and nine
month periods ended September 30, 1997 and 1996 due to their antidilutive
effect.
NOTE 7. CONTINGENCIES
Interference proceedings are continuing, challenging one of the Company's
issued US patents which pertains to an invention that the Company believes is
of fundamental importance to its business. In 1991, a three-way
"interference" contest was declared in the United States Patent and Trademark
Office (the "Patent Office") covering a patent which is owned by the Company.
This Patent covers a basic ferroelectric memory cell design that is of
fundamental importance to the Company's business interests in the United
States. An interference is declared in the Patent Office when two or more
parties each claim to have made the same invention. The interference
proceedings are therefore conducted to determine which party is entitled to
the patent rights corresponding to the invention. In the present interference
contest, the Company is the "senior" party, which means that it is in
possession of the issued US patent and retains all rights associated with such
patent. The other two parties involved in the interference are "junior"
parties, and each has the burden of proof of convincing the Patent Office by a
preponderance of the evidence that it was the first to invent the subject
matter of the invention and thus is entitled to the corresponding patent
rights. The Company and only one of the two claimant parties in the
interference proceedings filed briefs in this matter. Oral arguments were
presented before the Patent Office on March 1, 1996.
<PAGE>
The Patent Office decided the interference on May 6, 1997, holding that all of
the claims were patentable to one of the "junior" parties. The other
"junior"party was not granted any patent claims pursuant to the interference
proceeding. On June 20, 1997, the Company filed a Request for Reconsideration
with the Patent Office concerning the interference decision. Pursuant to the
Request for Reconsideration, the Company requested that four separate issues
be reconsidered because from the Company's perspective they were either
ignored or misconstrued in the original decision. A decision on the Request
for Reconsideration is expected prior to the end of 1997.
The Company has the right and plans to appeal any adverse decision of the
Patent Office in Federal District Court and then to the Court of Appeals for
the Federal Circuit, if necessary. The Company remains in possession of the
issued US Patent and retains all rights associated with such patent while it
pursues its appeal options. The "junior" party has received no rights
associated with this patent decision and will not receive any such rights as
long as the appeal process continues. The Company has vigorously defended its
patent rights in this interference contest and will continue such efforts.
The Company remains uncertain as to the ultimate outcome of the above matter,
as well as the associated effect, if any, upon the Company's future financial
position and results of operations.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FACTORS AFFECTING FUTURE RESULTS
This quarterly report contains forward-looking statements. Except for
historical information, the matters discussed in this report are forward-
looking statements that are subject to certain risks and uncertainties that
could cause the actual results to differ materially from those projected. The
Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements which may be made to reflect
events or circumstances after the date hereof. Factors that could cause
actual results to differ materially include the following:(i) the timely
completion of the development and qualification for manufacturing of the
Company's new EDRAM and FRAM products; (ii) broader customer acceptance of its
EDRAM products and low-density FRAM products; (iii) acceptance of new high-
density FRAM products which may be developed; (iv) the Company's and its
alliance partners' ability to manufacture products on a cost-effective and
timely basis in the Company's own facility and through its alliance foundry
operations; (v) the availability of low cost manufacturing foundry resources
for specific FRAM and EDRAM products; (vi) the Company's ability to perform
under existing alliance agreements and to develop new alliance relationships;
(vii) the availability and related cost of future financing; (viii) the
retention of key personnel; (ix) the outcome of the patent interference
proceeding, and (x) factors not directly related to the Company, such as
competitive pressures on pricing, market conditions in general, competition,
technological progressions, product obsolescence and the changing needs of
potential customers and the semiconductor industry in general.
RESULTS OF OPERATIONS
Revenues for the third quarter of 1997 decreased by 14% to $5.4 million from
$6.3 million in the respective period in 1996. For the nine months ended
September 30, 1997, revenues decreased by 32% to $15.0 million from $22.2
million for the first nine months of the prior year.
<PAGE>
Product sales revenue for the third quarter and nine months ended
September 30, 1997 were $3.6 million and $11.2 million, respectively,
representing an increase of 4% for the quarter and a decrease of 22% for the
nine month period over the respective periods in 1996. Product revenues for
the third quarter and nine month periods from a year ago totaled $3.5 million
and $14.3 million, respectively. The decrease in product sales revenue for the
nine months ended September 30, 1997 over the respective period in 1996 was
primarily the result of an unusually high volume of EDRAM product shipments
during the first two quarters of 1996, although, declining average selling
prices on the Company's EDRAM products were also a contributor to lower sales
revenues during the periods ended September 30, 1997. The unusually high
volume of EDRAM product shipments during the first six months of 1996 resulted
from an increase in EDRAM product availability which enabled the Company to
fulfill, during the first two quarters of 1996, a substantial delinquent
customer backlog existing at the end of 1995. The delinquent customer backlog
at the end of 1995 resulted from EDRAM production constraints during the last
half of 1995. Product sales revenue for the nine month period ending
September 30, 1997 is made up primarily of EDRAM product sales with EDRAM
products accounting for 90% of such sales and FRAM products accounting for the
remaining 10%. The product mix for the respective period in 1996 was also
90% and 10% for EDRAM and FRAM, respectively.
FRAM product revenues for the third quarter and nine months ended
September 30, 1997 decreased to $354,000 and $1,079,000, respectively,
representing decreases of 28% for the quarter and 27% for the nine month
period over the respective periods in 1996. The Company is continuing to
maintain its quarterly FRAM product revenues in the $300,000 to $500,000 range
until low cost volume foundry manufacturing can be obtained through its FRAM
alliance partners or from other production sources. All of the current years
and previous years FRAM revenue resulted from FRAM products manufactured at
the Company's fabrication facility in Colorado Springs, Colorado.
EDRAM product revenues for the third quarter and nine months ended
September 30, 1997 increased to $3.2 million for the quarter and decreased to
$10.1 million for the nine month period representing an increase of 9% for the
quarter and a decrease of 21% for the nine month period compared with the
respective periods in 1996. EDRAM product revenues for the third quarter and
nine month periods from a year ago totaled $3.0 million and $12.8 million,
respectively. The number of EDRAM units shipped in the third quarter and nine
months ended September 30, 1997 increased from the same periods in 1996 by 30%
and 11%, respectively. Average selling prices during these same periods
decreased by 17% and 30%, respectively, although EDRAM average selling prices
remained flat during the third quarter of the year from the immediately prior
quarter in 1997. Quarterly decreases in average selling prices of the
Company's 4-megabit EDRAM products are expected to continue throughout the
remainder of the year and into 1998 as the Company pursues the migration of
its EDRAM products to the 16-megabit and higher density levels. The Company's
EDRAM prices are subject to industry demand for such products and the prices
of competing products such as fast SRAM's, SDRAM's, burst EDO-DRAM's and other
specialty memories. A decreasing demand for the Company's 4-megabit EDRAM
products is expected to occur as 16-megabit products begin displacing such 4-
megabit products through 1998.
License fee revenues during the third quarter and for the nine months ended
September 30, 1997 totaled $1.75 million and $3.75 million, respectively,
resulting from the achievement of milestones pursuant to an existing license
agreement with Fujitsu, Ltd. License fee revenue for the three and nine month
periods ended September 30, 1996 totaled $2.75 million and $7.75 million,
respectively, resulting from the achievement of milestones during the nine
month period pursuant to existing license agreements with Hitachi, Ltd., Rohm
Co., Ltd., Fujitsu, Ltd. and Toshiba Corporation.
<PAGE>
Cost of product sales as a percentage of product revenue during the quarter
and for the nine months ended September 30, 1997 were 74% and 76%,
respectively, compared with 83% and 77% for the same periods in 1996. Cost of
product sales associated with the Company's EDRAM products decreased by 11% in
the third quarter of 1997 when compared with the respective period in 1996 due
to lower manufacturing costs from the Company's EDRAM foundry sources. Cost of
product sales associated with the Company's FRAM products remains high due
primarily to the introduction of new designs, low volume of manufacturing in
the Company's existing facility and the continued development of manufacturing
processes of such products. FRAM product cost of sales are expected to
decrease during 1998 as the Company begins selling products manufactured by
its FRAM alliance partners.
Research and development expenses for the third quarter and nine months ended
September 30, 1997 decreased by 41% and 25%, respectively, as compared with
the same periods in 1996. The primary reason for the decrease in research and
development expense in the third quarter and nine months ended September 30,
1997 resulted from the termination of the Company's employee incentive program
which existed during the respective periods in 1996 totaling approximately
$.7 million for the third quarter and $1.8 million for the nine month period.
No such employee incentive program expense was recorded during the first nine
months of 1997. The remaining reductions in research and development expenses
for the quarter and the nine months ended September 30, 1997 when compared
with the same periods in 1996 resulted primarily from a reduction in FRAM
alliance support activities and EDRAM foundry development costs.
Sales, general and administrative ("SG&A") expenses for the third quarter
and the nine month period ended September 30, 1997 decreased by 18% and 15%,
respectively, as compared with the same periods in 1996. The primary reason
for the decrease in SG&A expense in the third quarter and nine months ended
September 30, 1997 resulted from the termination of the Company's employee
incentive program which existed during the respective periods in 1996 totaling
approximately $.5 million for the second quarter and $1.1 million for the nine
month period. No such employee incentive program expense was recorded during
the first nine months of 1997. Lower withholding taxes on FRAM milestone
license fees during the nine month periods ended September 30, 1997 when
compared to the respective period in 1996 were offset by increases in sales
and marketing costs associated with the Company's existing EDRAM products and
the announcement of its 16-megabit Enhanced Synchronous DRAM products.
Interest expense, related parties for the third quarter and nine months ended
September 30, 1997 remained flat compared to the respective periods in 1996.
Other income during the first nine months of 1997 increased by $450,000 over
the respective period in 1996 resulting primarily from the collection of a
receivable written off at the end of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash balance as of September 30, 1997 was approximately $3.5
million, representing a $.3 million increase from December 31, 1996. The
Company used approximately $.6 million of cash in operations during the first
nine months of 1997 compared with the use of approximately $2.9 million in
operations for the respective period in 1996. Cash generated from a $3.9
million decrease in receivables and from a $.8 million increase in liabilities
partially offset cash used to fund net losses during the nine month period
ending September 30, 1997. For the respective period in 1996, cash generated
from the application of supplier held manufacturing deposits and from an
increase in liabilities partially offset cash used for increases in
inventories and receivables during the period. Approximately $1.0 million was
used in investing and financing activities during the nine month period ended
September 30, 1997 compared with $.6 million for the respective period in
1996. Cash used in investing and financing activities during the first nine
<PAGE>
months of 1997 resulted primarily from increases in computer hardware and
software purchases used in the Company's FRAM and EDRAM research and
development activities, the purchase of equipment used in FRAM manufacturing
and from expenditures for office expansion. For the respective period in
1996, cash used in investing and financing activities resulted primarily from
purchases of equipment used in FRAM and EDRAM manufacturing. Cash in the
amount of $1.9 million was generated from financing activities during the
first nine months of 1997 resulting from borrowings totaling $1.4 million from
the Fund Credit Facility at the end of the third quarter and from the exercise
of employee stock options. For the respective period in 1996, approximately
$.2 million was generated from financing activities from the exercise of
employee stock options. As of September 30, 1997, the Company had working
capital of approximately $3.0 million and total stockholders' equity of $15.8
million.
The Company intends to finance its operations and working capital requirements
during the remainder of 1997 and into 1998 by relying on its existing cash
resources as of September 30, 1997 of $3.5 million, payments from existing and
future license and development agreements and from the sale of the Company's
products. The Company's accounts receivable balance of $3.3 million as of
September 30, 1997 includes a $2 million license fee from an existing licensee
with payment to be received during the fourth quarter of the current year. If
required, the Company also has $8.0 million available to it under a credit
facility as of September 30, 1997. Such credit facility agreement does not
contain any requirements for the Company to satisfy any performance criteria
or specific financial covenants other than those typically found in standard
commercial credit agreements in order for the Company to borrow amounts
pursuant to the credit facility.
The Company's future capital requirements include financing the growth of
working capital items such as accounts receivable and inventory, the purchase
of manufacturing equipment and the funding of ongoing research and development
efforts. The Company is continuing to pursue additional license and
development arrangements with third parties as a source of such capital. The
Company will also continue to seek reasonable sources of financing to satisfy
its future operating and working capital requirements, but has not yet
identified any specific new sources of such financing. There can be no
assurance, however, that such financing, if required, will be available or, if
available, will be on satisfactory terms to the Company.
OUTLOOK
The Company expects revenues will continue to be sporadic in the foreseeable
future until the Company's products gain wider market acceptance and can be
manufactured in increased volumes and in a more cost-effective manner. The
Company has historically depended and continues to depend on revenues from new
license arrangements and upon the achievement of milestones under the
Company's existing and new license agreements as the major contributor of
positive quarterly operating results. Such license revenue does not typically
occur on a consistent basis or in consistent amounts and is therefore expected
to create substantial fluctuations in the Company's future quarterly revenues
and results of operations.
<PAGE>
The Company is continuing its efforts to improve existing internal
manufacturing capabilities and obtain commercial production of its FRAM
products through its alliance partners which the Company believes is essential
to its future profitability. The Company began to receive first commercial
engineering samples of FRAM products from Rohm during the third quarter and
expects to receive engineering samples of FRAM products from Hitachi during
the fourth quarter of this year. The Company has placed a 1.5 million piece
FRAM product production order with Rohm to meet the anticipated demand for
certain FRAM products during the first half of 1998. Delivery of such
products manufactured by Rohm is expected to begin during the first
quarter of 1998. In addition, the Company expects to receive the first
samples of its 16-megabit ESDRAM in January 1998. The Company is also
continuing its efforts to reduce the cost of its FRAM products as well as to
develop for commercialization additional high-density FRAM products. There
can be no assurance that the Company's foundry and alliance partners will be
able to achieve commercial production of the products currently in development
or in the periods presented above. If such commercial production is not
achieved or is not achieved in a timely manner, the Company's results of
operations could be materially adversely affected.
In February 1997, the Company and SGS-Thomson Microelectronics SA ("SGS-
Thomson") finalized a non-binding FRAM technology Memorandum of Understanding
(the "MOU"). Such MOU expired on June 30, 1997 pursuant to the terms of the
agreement. The Company and SGS-Thomson have negotiated an extension to the
original MOU which incorporates expanded terms from the original MOU and
extends the term of such MOU to March 31, 1998.
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Interference proceedings are continuing, challenging one of the Company's
issued US patents which pertains to an invention that the Company believes is
of fundamental importance to its business. In 1991, a three-way
"interference" contest was declared in the United States Patent and Trademark
Office (the "Patent Office") covering a patent which is owned by the Company.
This Patent covers a basic ferroelectric memory cell design that is of
fundamental importance to the Company's business interests in the United
States. An interference is declared in the Patent Office when two or more
parties each claim to have made the same invention. The interference
proceedings are therefore conducted to determine which party is entitled to
the patent rights corresponding to the invention. In the present interference
contest, the Company is the "senior" party, which means that it is in
possession of the issued US patent and retains all rights associated with such
patent. The other two parties involved in the interference are "junior"
parties, and each has the burden of proof of convincing the Patent Office by a
preponderance of the evidence that it was the first to invent the subject
matter of the invention and thus is entitled to the corresponding patent
rights. The Company and only one of the two claimant parties in the
interference proceedings filed briefs in this matter. Oral arguments were
presented before the Patent Office on March 1, 1996.
The Patent Office decided the interference on May 6, 1997, holding that all of
the claims were patentable to one of the "junior" parties. The other
"junior" party was not granted any patent claims pursuant to the
interference proceedings. On June 20, 1997, the Company filed a Request for
Reconsideration with the Patent Office concerning the interference decision.
Pursuant to the Request for Reconsideration, the Company requested that four
separate issues be reconsidered because from the Company's perspective they
were either ignored or misconstrued in the original decision. A decision on
the Request for Reconsideration is expected prior to the end of 1997.
<PAGE>
The Company has the right and plans to appeal any adverse decision of the
Patent Office in Federal District Court and then to the Court of Appeals for
the Federal Circuit, if necessary. The Company remains in possession of the
issued US Patent and retains all rights associated with such patent while it
pursues its appeal options. The "junior" party has received no rights
associated with this patent decision and will not receive any such rights as
long as the appeal process continues. The Company has vigorously defended its
patent rights in this interference contest and will continue such efforts.
The Company remains uncertain as to the ultimate outcome of the above matter,
as well as the associated effect, if any, upon the Company's future financial
position and results of operations.
<PAGE>
ITEMS 2 - 5 None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EX 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RAMTRON INTERNATIONAL CORPORATION
(Registrant)
November 13, 1997 /S/ Richard L. Mohr
Richard L. Mohr
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
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