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 June 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 - 37,004,290 shares as of August 11, 1997.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value amounts)
June 30, Dec. 31,
1997 1996
-------- --------
(Unaudited)
ASSETS
Current assets:
Cash $ 2,777 $ 3,182
Accounts receivable, less allowances
of $316 and $721, respectively 4,369 6,810
Inventories 6,097 7,342
Prepaid expenses 183 592
-------- --------
Total current assets $13,426 $17,926
Property, plant and equipment, net 8,195 8,697
Intangible assets, net 4,899 5,118
Other assets 21 21
-------- --------
$26,541 $31,762
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,229 $ 1,992
Accrued liabilities 1,175 1,202
Accrued royalties 696 612
License rights 550 1,100
Deferred revenue 1,116 863
Promissory note and accrued
interest, related party 3,328 --
-------- --------
Total current liabilities 9,094 5,769
Long-term promissory note and
accrued interest, related party -- 3,171
Long-term license rights 550 550
-------- --------
Total liabilities 9,644 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 - 37,004 and 36,997 shares issued
and outstanding, respectively 370 370
Additional paid-in capital 151,836 151,830
Accumulated deficit (135,309) (129,928)
-------- --------
Total Stockholders' Equity 16,897 22,272
-------- --------
$26,541 $31,762
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
(Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
Revenue:
Product sales $ 4,423 $ 6,415 $ 7,574 $ 10,848
License fees 2,000 5,000 2,000 5,000
Customer-sponsored research
and development 2 64 36 94
-------- -------- -------- --------
6,425 11,479 9,610 15,942
-------- -------- -------- --------
Costs and expenses:
Cost of product sales 3,289 4,748 5,782 8,107
Research and development 2,446 3,324 5,379 6,401
Customer-sponsored research
and development 2 58 32 85
Sales, general and administrative 2,297 2,760 4,234 4,913
-------- -------- -------- --------
8,034 10,890 15,427 19,506
-------- -------- -------- --------
Operating income (loss) (1,609) 589 (5,817) (3,564)
Interest expense, related parties (79) (78) (157) (157)
Other income 51 49 593 126
-------- -------- -------- --------
Net income (loss) $(1,637) $ 560 $ (5,381) $ (3,595)
======== ======== ======== ========
Net income (loss) per share $(0.04) $0.01 $(0.15) $(0.10)
======== ======== ======== ========
Weighted average shares 37,000 40,051 36,998 36,428
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
(Amounts in thousands)
1997 1996
-------- --------
Cash flows from operating activities:
Net loss $(5,381) $(3,595)
Adjustments used to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,302 1,455
Accrued compensation -- 1,630
Other (485) --
Changes in assets and liabilities:
Accounts receivable 2,832 (532)
Inventories 1,245 (2,159)
Deposits -- 3,779
Accounts payable and accrued liabilities (256) 1,423
Accrued interest, related parties 157 157
Deferred revenue 253 (1,378)
Other 339 (512)
-------- --------
Net cash provided by operating activities 6 268
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (417) (490)
Proceeds from sale of assets -- 7
-------- --------
Net cash used in investing activities (417) (483)
-------- --------
Cash flows from financing activities:
Issuance of common stock, net of expenses 6 159
-------- --------
Net cash provided by financing activities 6 159
-------- --------
Net decrease in cash and cash equivalents (405) (56)
Cash and cash equivalents, beginning of period 3,182 6,283
-------- --------
Cash and cash equivalents, end of period $ 2,777 $ 6,227
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
- ------------------------------------------------------------------------------
NOTE 1. BASIS OF PRESENTATION AND MANAGEMENT OPINION
The accompanying consolidated financial statements at June 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 six months ended June 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:
June 30, Dec. 31,
1997 1996
-------- --------
(in thousands)
(Unaudited)
Finished goods $3,082 $6,174
Work in process 2,849 1,055
Raw material 166 113
------- -------
Total $6,097 $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 June 30, 1997 under the Fund Credit Facility
were $2,600,000 and $728,000, 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 six
month periods ended June 30, 1997 and for the six months ended June 30, 1996
due to their antidilutive effect. Warrants and certain employee stock options
are included in weighted average shares for the three month period ended
June 30, 1996, as they are common stock equivalents and their effects are
dilutive.
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
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.
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; (iv) 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 second quarter of 1997 decreased by 44% to $6.4 million from
$11.5 million in the respective period in 1996 and increased by 102% from the
immediately prior quarter of 1997. For the six months ended June 30, 1997,
revenues decreased by 40% to $9.6 million from $15.9 million for the first six
months of the prior year.
<PAGE>
Product sales revenue for the second quarter and six months ended June 30,
1997 decreased to $4.4 million and $7.6 million, respectively, representing
decreases of 31% for the quarter and 30% for the six month period over the
respective periods in 1996. Product revenues for the second quarter and six
month periods from a year ago totaled $7.6 million and $10.8 million,
respectively. Product revenues increased from the immediately prior quarter
of 1997 by 40%. The decrease in product sales revenue for the second quarter
and six months ended June 30, 1997 over the respective periods in 1996 were
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 June 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 existed
at the end of 1995 as a result of EDRAM production constraints during the last
half of 1995. Product sales revenue for the six month period ending June 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 remained
relatively unchanged at 91% and 9% for EDRAM and FRAM, respectively.
FRAM product revenues for the second quarter and six months ended June 30,
1997 decreased to $412,000 and $725,000, respectively, representing decreases
of 11% for the quarter and 27% for the six month period over the respective
periods in 1996. FRAM Product revenues increased from the immediately prior
quarter of 1997 by 32%. 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. Current FRAM revenues resulted completely from
FRAM products manufactured at the Company's fabrication facility in Colorado
Springs, Colorado.
EDRAM product revenues for the second quarter and six months ended June 30,
1997 decreased to $4.0 million and $6.8 million, respectively, representing
decreases of 33% for the quarter and 31% for the six month period compared
with the respective periods in 1996. EDRAM product revenues for the second
quarter and six month periods from a year ago totaled $6.0 million and $9.9
million, respectively. EDRAM Product revenues increased from the immediately
prior quarter of 1997 by 41%. The number of EDRAM units shipped in the second
quarter and six months ended June 30, 1997 decreased from the same periods in
1996 by 8% and 6%, respectively. Average selling prices during these same
periods decreased by 32% and 29%, respectively. EDRAM average selling prices
experienced only a minor decline during the second 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.
License fee revenues during the quarter and for the six months ended June 30,
1997 totaled $2.0 million and resulted from the achievement of milestones
pursuant to an existing license agreement with Fujitsu, Ltd. License fee
revenue for the three and six month periods ended June 30, 1996 totaled $5.0
million and resulted from the achievement of milestones pursuant to existing
license agreements with Hitachi, Ltd., Rohm Co., Ltd. and Fujitsu, Ltd.
<PAGE>
Cost of product sales as a percentage of product revenue during the quarter
and for the six months ended June 30, 1997 were 74% and 76%, respectively,
compared with 74% and 75% for the same periods in 1996. The Company
anticipates that cost of product sales as a percentage of product revenues
will decrease throughout the remainder of the year resulting from expected
favorable average selling prices and lower manufacturing costs. 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.
Research and development expenses for the second quarter and six months ended
June 30, 1997 decreased by 26% and 16%, respectively, as compared with the
same periods in 1996. The primary reason for the decrease in research and
development expense in the second quarter and six months ended June 30, 1997
resulted from the termination of the Company's employee incentive program
which existed during the respective periods in 1996 totaling approximately
$.6 million for the second quarter and $1.0 million for the six month period.
No such employee incentive program expense was recorded during the first six
months of 1997.
Sales, general and administrative ("SG&A") expenses for the second quarter and
the six month period ended June 30, 1997 decreased by 17% and 14%,
respectively, as compared with the same periods in 1996. The primary reason
for the decrease in SG&A expense in the second quarter and six months ended
June 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 $.7 million for the six
month period. No such employee incentive program expense was recorded during
the first six months of 1997. Lower withholding taxes on FRAM milestone
license fees during the second quarter and six month periods ended June 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 second quarter and six months ended
June 30, 1997 remained flat compared to the respective periods in 1996 as
there were no additional borrowings under the Company's line of credit with
the National Electrical Benefit Fund over the previous twelve months.
Other income during the first six months of 1997 increased by $467,000 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 June 30, 1997 was approximately $2.8 million,
representing a $.4 million decrease from December 31, 1996. The Company
generated a minimal amount of cash from operations during the first six months
of 1997 compared with the generation of approximately $.3 million from
operations for the respective period in 1996. Cash generated from a $2.8
million decrease in receivables and a $1.2 million decrease in inventories
offset cash used to fund net losses during the six month period ending
June 30, 1997. For the respective period in 1996, cash generated from the
application of supplier held manufacturing deposits partially offset cash used
for increases in inventories during the period. Approximately $.4 million was
<PAGE>
used in investing and financing activities during the six month period ended
June 30, 1997 compared with $.5 million for the respective period in 1996.
Cash used in investing and financing activities during the first six 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 and from 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. A minimal amount of cash
was generated from financing activities during the first six months of 1997.
For the respective period in 1996, approximately $.2 million was generated
from financing activities from the exercise of employee stock options. As of
June 30, 1997, the Company had working capital of approximately $4.3 million
and total stockholders' equity of $16.9 million.
The Company intends to finance its operations and working capital requirements
during the remainder of 1997 by relying on its existing cash resources as of
June 30, 1997 of $2.8 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 $4.4 million as of June 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 $9.4 million available to it under a credit facility as of
June 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.
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 expects to receive first commercial
engineering sample quantities of FRAM products from Rohm and Hitachi during
the third quarter and early part of the fourth quarter of 1997, respectively.
In addition, the Company expects to receive the first samples of its 16-
megabit ESDRAM by the end of the fourth quarter of 1997. 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.
<PAGE>
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 are in the process of negotiating an
extension to the original MOU which is to incorporate expanded terms from the
original MOU. The new agreement is expected to be completed during the third
quarter of 1997.
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.
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 - 3 None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 29, 1997, the Company held its 1997 Annual Meeting of Stockholders (the
"Annual Meeting") in Colorado Springs, Colorado. Proxies for the meeting were
solicited by the Board of Directors of the Company pursuant to Regulation 14A
under the Securities and Exchange Act of 1934. There was no solicitation in
opposition to the management's nominees as listed in the proxy statement, and
all such nominees were elected.
At the Annual Meeting, the Company's stockholders elected the following
persons as directors of the Company. The number of votes cast for each
director, as well as the number of votes withheld, are listed opposite each
director's name:
Name of Director Votes Cast for Director Votes Withheld
---------------- ----------------------- --------------
L. David Sikes 26,186,646 281,532
Greg B. Jones 25,867,492 600,686
William G. Howard 26,194,154 274,024
George J. Stathakis 26,193,999 274,179
William G. Tull 26,168,018 300,160
L.T. Womack 26,193,035 275,143
Michael L. Rothschild 26,169,768 298,410
ITEM 5 OTHER INFORMATION
In April 1997, the Company signed an agreement with Racom Systems, Inc.
("Racom") and Intag International Limited ("Intag") to significantly increase
the availability of Ramtron's ferroelectric random access memory (FRAM)
technology for use in radio frequency identification (RF/ID) markets and
applications. The agreement shall terminate upon the expiration of the last
to expire of any effective rights protecting the licensed technology. The
agreement replaces all existing licensing and supply agreements and
memorandums of understanding between the parties. Under the agreement, Racom
retained its rights to use Ramtron's ferroelectric random access memory
technology for use in RF/ID applications, and Racom's right to sublicense such
technology for manufacturing purposes has been limited to no more than five
(5) parties pursuant to Ramtron's approval of such sublicensees. As of
May 13, 1997, Racom has sublicensed to two separate companies. Under the
agreement, Racom was also granted unlimited sublicensing rights for design,
development and selling of RF/ID products with Ramtron's approval. Ramtron
has agreed to coordinate its own licensing activities of FRAM technology,
including the unrestricted licensing of FRAM technology for use in RF/ID
applications, with Racom, until such time as Racom completes its five (5) full
sublicensing agreements. Pursuant to the agreement, the Company also granted
to Intag the right to use the Company's ferroelectric random access memory
technology for use in RF/ID applications with no right to sublicense such
technology for manufacturing purposes but with unlimited sublicensing rights
for design, development and selling of RF/ID products with Ramtron's approval.
Under the agreement, Ramtron's licensees and/or their current or future
sublicensees shall grant a license back to the Company on any improvements
developed by such licensees and/or sublicensees concerning ferroelectric
technology. The parties to the agreement have agreed to share, with certain
limitations, future licensing and royalty revenues associated with such
ferroelectric RF/ID licensing activities.
<PAGE>
In April 1997, the Company entered into a two-phase, nonexclusive agreement
with ULVAC Japan, Ltd. ("ULVAC"), a semiconductor equipment company, for the
joint development of equipment that will optimize the integration and
the ability to manufacture advanced ferroelectrics and semiconductor
capacitors. Under Phase I of the agreement, the parties will develop a
ferroelectric capacitor using ULVAC equipment to achieve optimal performance
of the capacitor. ULVAC will supply certain ULVAC brand equipment to the
Company at a significantly reduced price for use in the development of such
ferroelectric capacitor. Under Phase II of the agreement, ULVAC shall furnish
certain additional ULVAC brand equipment (to remain owned by ULVAC unless
purchased by Ramtron at the end of the four year term of the agreement) to the
Company for use in evaluations, experiments and prototype manufacturing.
Ramtron and ULVAC will jointly own all title in any improvements, enhancements
or inventions made by either party under the agreement.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 3.1 Certificate of Designation to Certificate of
Incorporation
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on May 6, 1997.
Reported was "Item 5 - Other Events."
The Company filed a report on Form 8-K on May 30, 1997.
Reported was "Item 5 - Other Events."
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)
August 13, 1997 /S/ Richard L. Mohr
Richard L. Mohr
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
EXHIBIT 3.1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "RAMTRON INTERNATIONAL CORPORATION", FILED IN THIS OFFICE
ON THE EIGHTEENTH DAY OF JUNE, A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/S/ Edward J. Freel
-----------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8523427
DATE: 06-23-97
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 6/18/97
971201530-2026110
CERTIFICATE OF ELIMINATION
OF
SERIES C CONVERTIBLE PERFORMANCE RIGHT
PREFERRED STOCK
OF
RAMTRON INTERNATIONAL CORPORATION
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
RAMTRON INTERNATIONAL CORPORATION (hereinafter called the "Corporation"), a
Delaware corporation, does hereby certify:
THAT, pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, as amended, of the Corporation, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, said Board of
Directors, at a meeting held on May 29, 1997, duly adopted the following
resolutions cancelling the designation of the Series C Convertible Performance
Right Preferred Stock and all such previously designated preferred stock shall
from this date forward be treated as authorized but unissued preferred stock
with no specific designation.
RESOLVED that none of the authorized shares of Series C Convertible
Performance Right Preferred Stock of the Company is outstanding;
FURTHER RESOLVED that none of the authorized shares of Series C Convertible
Performance Right Preferred Stock will be issued subject to the Certificate of
Designations, Preferences, Rights and Limitations of Series C Convertible
Performance Right Preferred Stock filed with the Delaware Secretary of State
on December 10, 1993 with respect to the Series C Convertible Performance
Right Preferred Stock;
FURTHER RESOLVED that the Company's officers are hereby authorized and
directed to execute and file with the Delaware Secretary of State a
Certificate pursuant to the provisions of Section 151(g) of the General
Corporation Law of the State of Delaware for the purposes of eliminating from
the Certificate of Incorporation of the Company all references to the Series C
Convertible Performance Right Preferred Stock; and
FURTHER RESOLVED that the Company's officers are hereby authorized and
directed to perform any acts, including the payment of any and all expenses,
and to execute and deliver any and all documents that they deem necessary or
appropriate to carry out all of the foregoing resolutions.
<PAGE>
IN WITNESS WHEREOF, Ramtron International Corporation has caused this
Certificate of Elimination of Series C Convertible Performance Right Preferred
Stock to be duly executed by the undersigned this 9th day of June 1997.
RAMTRON INTERNATIONAL CORPORATION
/S/ L. David Sikes
- ------------------------------------
L. David Sikes
Chairman and Chief Executive Officer
ATTEST:
/S/ Richard L. Mohr
- -----------------------------------
Richard L. Mohr
Secretary
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