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, 1999
[ ] 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 - 62,759,301 shares as of August 5, 1999.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Page 1
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RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value amounts)
June 30, Dec. 31,
1999 1998
-------- --------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,347 $15,237
Accounts receivable, less allowances
of $281 and $134, respectively 4,044 726
Inventories 4,848 5,304
Prepaid expenses 179 170
Other current assets 101 94
--------- ---------
Total current assets 16,519 21,531
Property, plant and equipment, net 6,607 7,158
Intangible assets, net 5,088 4,658
--------- ---------
$28,214 $33,347
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 2,488 $ 2,535
Accrued liabilities 854 1,784
Accrued royalties 278 305
License rights -- 550
Deferred revenue 1,630 760
Common stock price adjustment 3,224 3,224
Promissory note and accrued interest, related party 7,458 7,127
--------- ---------
Total liabilities 15,932 16,285
--------- ---------
Stockholders' Equity:
Convertible preferred stock, $0.01 par value,
10,000 shares authorized: 9 and 10 shares
issued and outstanding, respectively; entitled
to $1,000 per share plus accrued and unpaid
dividends in liquidation 8,726 8,966
Common stock, $0.01 par value, 75,000 shares
authorized: 62,759 and 60,428 shares issued
and outstanding, respectively 628 604
Additional paid-in capital 165,944 165,433
Accumulated deficit (163,016) (157,941)
--------- ---------
Total stockholders' equity 12,282 17,062
--------- ---------
$28,214 $33,347
========= =========
See accompanying notes to consolidated financial statements.
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RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
(Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
-------- -------- -------- --------
Revenue:
Product sales $ 3,811 $ 5,727 $ 8,044 $10,000
License fees -- -- 500 --
Customer-sponsored research
and development 1,516 16 2,322 605
-------- -------- -------- --------
5,327 5,743 10,866 10,605
-------- -------- -------- --------
Costs and expenses:
Cost of product sales 2,112 3,545 4,529 6,171
Research and development 1,458 2,528 3,255 5,199
Customer-sponsored research
and development 1,490 14 2,296 515
Sales, general and administrative 2,467 2,021 4,909 3,928
-------- -------- -------- --------
7,527 8,108 14,989 15,813
-------- -------- -------- --------
Operating loss (2,200) (2,365) (4,123) (5,208)
Interest expense, related party (167) (167) (332) (332)
Other income, net 20 250 148 376
-------- -------- -------- --------
Net loss $(2,347) $(2,282) $(4,307) $(5,164)
======== ======== ======== ========
Loss per common share:
Net loss $(2,347) $(2,282) $(4,307) $(5,164)
Dividends on convertible
preferred stock (134) (261) (280) (361)
Accretion of discount on
convertible preferred stock (114) (659) (488) (879)
Gain on preferred stock settlement 579 -- 579 --
-------- -------- -------- --------
Net loss applicable to common shares $(2,016) $(3,202) $(4,496) $(6,404)
======== ======== ======== ========
Net loss per share $(0.03) $(0.08) $(0.07) $(0.17)
======== ======== ======== ========
Weighted average shares outstanding 60,966 37,954 60,698 37,950
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
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RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
(Amounts in thousands)
1999 1998
-------- --------
Cash flows from operating activities:
Net loss $(4,307) $(5,164)
Adjustments used to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 1,122 1,263
Changes in assets and liabilities:
Accounts receivable (3,317) 2,978
Inventories 456 801
Accounts payable and accrued liabilities (1,005) (1,191)
Accrued interest, related party 332 332
Deferred revenue 870 (389)
Other (14) 29
--------- ---------
Net cash used in operating activities (5,863) (1,341)
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (136) (706)
Intellectual property (866) (199)
--------- ---------
Net cash used in investing activities (1,002) (905)
--------- ---------
Cash flows from financing activities:
Payments on license rights payable (550) (550)
Issuance of capital stock, net of expenses -- 15,972
Preferred stock settlement (475) --
--------- ---------
Net cash provided by (used in) financing activities (1,025) 15,422
--------- ---------
Net increase (decrease) in cash and cash equivalents (7,890) 13,176
Cash and cash equivalents, beginning of period 15,237 6,193
--------- ---------
Cash and cash equivalents, end of period $ 7,347 $19,369
========= =========
See accompanying notes to consolidated financial statements.
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RAMTRON INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
- -----------------------------------------------------------------------------
NOTE 1. BASIS OF PRESENTATION AND MANAGEMENT OPINION
The accompanying consolidated financial statements at June 30, 1999 and 1998
and for the periods then ended have been prepared from the books and records
of the Company without audit. The statements reflect all normal recurring
adjustments which, in the opinion of management, are necessary for the fair
presentation of financial position, results of operations and cash flows for
the periods presented.
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, 1998. The
results of operations for the period ended June 30, 1999 are not necessarily
indicative of the operating results for the full year.
Effective upon commencement of trading on August 9, 1999, the Company's
outstanding shares of common stock were reduced from 62,759,301 to 12,551,860
as a result of the Company's reverse stock split effected on August 6, 1999.
See "PART I - ITEM 2 - Subsequent Events" herein. All references (unless
otherwise stated) herein are to the Company's shares of common stock on
June 30, 1999.
NOTE 2. NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS No. 130"). The purpose of SFAS No. 130 is to establish standards for
reporting and display of comprehensive income and its components (revenue,
expenses, gains, and losses) in a full set of general-purpose financial
statements. Comprehensive income is the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity
during a period except those resulting from investments by owners and
distributions to owners. The Company adopted SFAS No. 130 during the first
quarter of 1998. For the periods ended June 30, 1999 and 1998, the Company
did not have any material transactions that were required to be reported in
comprehensive income as compared to its net loss.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"). This statement is effective for financial statements for fiscal
years beginning after December 15, 1998. In general, SOP 98-5 requires costs
of start-up activities and organization costs to be expensed as incurred.
Initial application of SOP 98-5 is reported as the cumulative effect of a
change in accounting principle. Adoption of SOP 98-5 did not have a material
impact on the Company's financial statements.
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In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133, as amended, is
effective for fiscal years beginning after June 15, 2000. SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. It also requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges allows
a derivative's gains and losses to offset related results on the hedged item
in the income statement, and requires that a company must formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. SFAS No. 133 may not be applied retroactively, and must be
applied to (i) derivative instruments and (ii) certain derivative instruments
embedded in hybrid contracts that were issued, acquired or substantively
modified after either January 1, 1998 or January 1, 1999. Management is
currently evaluating the effect SFAS No. 133 will have on the Company's
financial statements.
NOTE 3. INVENTORIES
Inventories consist of:
June 30, Dec. 31,
1999 1998
-------- --------
(in thousands)
(Unaudited)
Finished goods $2,557 $3,595
Work in process 2,291 1,660
Raw material -- 49
------ ------
Total $4,848 $5,304
====== ======
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 million bearing
interest at 12% per annum. The outstanding principal balance and accrued
interest as of June 30, 1999 under the Fund Credit Facility was $5.5 million
and $2.0 million, respectively. Pursuant to the terms of the Fund Credit
Facility, no additional borrowings were available to the Company under the
Fund Credit Facility subsequent to March 12, 1998. The Fund Credit Facility
was secured by a first priority lien on the Company's assets. The Fund had
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 at a conversion price equal to $10.5125 for each share of common
stock.
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On August 6, 1999, the Company and the Fund amended the terms of the Fund
Credit Facility. Pursuant to the terms of the amended credit facility (the
"Amended Credit Facility"), $1.5 million of accrued interest was reclassified
to principal, leaving an outstanding principal balance under the loan as of
August 6, 1999 of $7 million. The remaining accrued interest balance as of
August 6, 1999 of approximately $525,000 was paid in cash to the Fund at the
time of the amendment. The Amended Credit Facility bears interest at 8% per
annum, payable quarterly, with the first interest payment due January 31,
2000. The maturity date of the Amended Credit Facility is March 15, 2002.
No additional borrowings are available to the Company under the Amended Credit
Facility and the loan is secured by a first priority lien on substantially all
of the Company's assets. The Fund has the right to convert all or any portion
of the amounts outstanding under the Amended Credit Facility into common stock
at any time or times before maturity of the loan at a conversion price equal
to $1.00 for each share of common stock.
NOTE 5. INCOME TAXES
The Company recognizes deferred income tax assets and liabilities for the
expected future income tax consequences of temporary differences between the
financial reporting and tax basis of assets, liabilities and carryovers. The
Company also recognizes deferred tax assets for the expected future effects of
all deductible temporary differences, loss carryovers and tax credit
carryovers. Deferred tax assets are then reduced, if deemed necessary, by a
valuation allowance for the amount of any tax benefits which, more likely than
not, based on current circumstances, are not expected to be realized.
NOTE 6. EARNINGS PER SHARE
The Company calculates its earnings per share pursuant to Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128").
Under SFAS No. 128, basic earnings per share is computed by dividing reported
earnings available to common stockholders by weighted average shares
outstanding. Diluted earnings per share reflects the potential dilution
assuming the issuance of common shares for all dilutive potential common
shares outstanding during the period. As a result of the Company's net
losses, all potentially dilutive securities including warrants and stock
options, would be anti-dilutive and thus, excluded from diluted earnings per
share.
As of June 30, 1999, the Company had several financial instruments or
obligations that could create future dilution to the Company's common
shareholders and are not currently classified as outstanding common shares of
the Company. The following table details such instruments and obligations and
the common stock comparative for each. The common stock number is based on
specific conversion or issuance assumptions pursuant to the corresponding
terms of each individual instrument or obligation.
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Instrument or Obligation Common Stock
- -------------------------------------------------------------- ------------
(in thousands)
Warrants, 6,989,701 exercisable at $4.15 per share and
1,714,782 exercisable at $0.23 per share as of June 30, 1999 8,704
Stock options outstanding as of June 30, 1999
with a weighted average exercise price per
share of $5.81 4,058
Series A Convertible Preferred Stock, 8,878 shares
outstanding as of June 30, 1999 22,575(1)
Preferred stock warrants to purchase 1,742 shares
of Series A Convertible Preferred Stock with an
exercise price of $1,000 per share as of June 30, 1999 4,099(2)
Promissory note, related party, principal and
accrued interest as of June 30, 1999 totaling
$7,458,469 with a conversion price of $10.5125 709
------
Total 40,145
======
- -------------
(1) If all of the outstanding Preferred Stock had been converted pursuant to
the terms of the Preferred Stock agreement using the lowest trade price
during the 22-trading days prior to June 30, 1999, less the applicable
discount percentage of 15%, ($.425 per share), the total number of shares
of common stock required for such conversion, with applicable discount
and, including accrued dividends at June 30, 1999, would have been
22,575,444.
(2) If all of the outstanding Preferred Stock Warrants had been converted
pursuant to the terms of the Preferred Stock warrant agreements, and all
of such resulting Preferred Stock had been converted pursuant to the
terms of the Preferred Stock agreement using the lowest trade price
during the 22-trading days prior to June 30, 1999, less the applicable
discount percentage of 15%, ($.425 per share), the total number of shares
of common stock required for such conversion, with applicable discount,
at June 30, 1999, would have been 4,098,823.
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NOTE 7. STOCKHOLDERS' EQUITY
PREFERRED STOCK PLACEMENT. In February 1998, the Company issued and sold in a
private placement 17,425 shares of Series A Convertible Preferred Stock
("Preferred Stock"), resulting in gross proceeds of approximately $17.4
million. Each share of Preferred Stock is entitled to receive cumulative
dividends at the rate of 6% per annum, payable in shares of Preferred Stock.
During the first six months of 1999, the Company recorded $280,000 in
dividends. Except for certain exceptions, the holders of the Preferred Stock
have no voting rights. The shares of Preferred Stock, including any accrued
dividends thereon, will automatically convert into common stock on the fifth
anniversary of the date of the original issuance to the extent any shares of
Preferred Stock remain outstanding at that time. Until September 1, 1998, the
Preferred Stock was convertible at a Conversion Price of $10.00. Thereafter,
subject to a maximum conversion price, as defined, the Conversion Price is
equal to the lowest trading price of the common stock for the 22-trading days
immediately preceding the conversion date, less a discount of 7% (beginning
September 1, 1998) and increasing by 1% per month to 15% (on or after May 1,
1999). The terms of the Preferred Stock included a cash redemption feature
which allowed the Company, at its option, in lieu of the issuance of common
stock, to honor such conversions through a cash payment.
Each purchaser of the Preferred Stock agreed to trading limitations for the
offer or sale of common stock resulting from the conversion of the Preferred
Stock. In addition, the purchasers of the Preferred Stock and their
affiliates agreed not to engage in any short sales, swaps, purchasing of puts,
or other hedging activities that involve the direct or indirect use of the
common stock to hedge their investment in the Preferred Stock; however, the
investor may write call options if the call exercise price is greater than the
effective Conversion Price on the day that the call is written. These hedging
restrictions do not apply to certain short sales within three days of
conversion in amounts not greater than the number of shares issuable upon
conversion.
The conversion discount of the Preferred Stock is considered to be an
additional preferred stock dividend. During the six month period ended
June 30, 1999, the Company recorded preferred stock non-cash imputed dividends
and accretion of discount totaling $280,000 and $488,000, respectively. The
imputed dividend and accretion of discount results from certain provisions of
the Company's Preferred Stock, whereby a dividend is to be paid to the holders
of the Preferred stock in additional shares of Preferred Stock, and the
conversion price of the Preferred Stock is determined by applying a discount,
which increased over a fourteen month period from 7% to a maximum of 15% by
May 1999. The discount computed at issuance of $3,075,000 was recorded as a
reduction of preferred stock and an increase to additional paid-in-capital.
The discount was recognized ratably as a non-cash deemed dividend over the
applicable fourteen month period. If shares were converted prior to the full
accretion, no additional discount was taken during the fourteen month period.
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On October 21, 1998, the Company suspended conversions of the Preferred Stock
because the Company had issued, from its authorized shares, the maximum number
of common shares available for such conversions (22,473,840 shares). No
further conversions of the Preferred Stock could be effected until the
Company's shareholders approved an authorization of additional common stock.
At the time of suspension of the Preferred Stock conversions, approximately
$8.9 million face value of Preferred Stock, plus accrued dividends, remained
outstanding.
As a partial consideration for placing the Preferred Stock securities, the
Company issued to the Placement Agents Preferred Stock warrants to acquire an
aggregate of 1,742 shares of Preferred Stock for an exercise price of $1,000
per share. Such warrants are exercisable for a period of five years for
shares of Preferred Stock.
NOTE 8. CONTINGENCIES
PATENT INTERFERENCE PROCEEDING. A patent interference proceeding, which was
declared in 1991 in the United States Patent and Trademark Office (the "Patent
Office") between the Company, National Semiconductor Corporation ("National")
and the Department of the Navy in regard to one of the Company's issued United
States patents, is continuing. The Patent involved covers a basic
ferroelectric memory cell design invention the Company believes is of
fundamental importance to its FRAM business 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 proceeding is
therefore conducted to determine which party is entitled to the patent rights
covering the invention. In the present interference contest, the Company is
the "senior" party, which means that it is in possession of the issued United
States Patent and retains all rights associated with such patent. The other
two parties involved in the interference are the "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. Only the
Company and National 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 National, one of the "junior" parties. The
other "junior" party, the Department of the Navy, 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 was issued
on November 19, 1998, again holding that all of the claims were patentable to
National. On January 9, 1999, the Company appealed the decision of the Patent
Office on one of the interference counts directly to the Court of Appeals for
the Federal Circuit. The Company also filed complaints in Federal District
Court seeking a review of the decision of the Patent Office on the remaining
interference counts. The Company remains in possession of the issued United
States 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.
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If the Company's patent rights that are the subject of the interference
proceeding are ultimately lost or significantly compromised, the Company would
be precluded from producing FRAM products in the United States using the
Company's existing design architecture, absent being able to obtain a suitable
license to exploit such rights. If such patent rights are ultimately awarded
to National, and if a license to such rights is not subsequently entered into
by the Company with National, National could use the patent to prevent the
manufacture, use or sale by the Company within the United States of any
products that come within the scope of such patent rights, which would include
all FRAM products as currently designed, and which would materially adversely
affect the Company. The Company has vigorously defended its patent rights in
this interference contest and will continue such efforts. The Company is
uncertain as to the ultimate outcome of the interference proceeding, as well
as to the resulting effects upon the Company's financial position or results
of operations.
PATENT INFRINGEMENT PROCEEDING. In October 1998, the Company filed a claim
for patent infringement in the United States District Court, Northern District
of California against NEC Corporation, NEC Electronics, Inc. and NEC USA, Inc.
(collectively "NEC"). The complaint claims that NEC infringed and continues
to infringe on certain patents of the Company by offering to sell and/or
selling NEC's Virtual Channel SDRAM products, and by actively inducing others
to infringe on such patents without authority or license from the Company.
The complaint seeks relief from NEC to cease its infringement activities and
requests damages be awarded to the Company resulting from the infringement
activities. The relief also asks for reimbursement of attorney's fees and
certain other relief the Court deems proper. NEC has responded by denying the
infringement claims brought against them by the Company. NEC also filed
certain counterclaims against the Company, which were subsequently retracted
or stayed by the court. On June 7, 1999, the Company announced that the
United States International Trade Commission (the "ITC") had begun an
investigation of the Company's complaint that NEC has infringed two of the
Company's fundamental DRAM patents. The Company has vigorously pursued its
rights pursuant to its intellectual property and will continue such efforts.
The Company is uncertain as to the ultimate outcome of the infringement
proceedings and the ITC investigation, as well as to the resulting effects
upon the Company's financial position or results of operations.
LITIGATION
NTC LIQUIDATING TRUST. The Company was listed as a defendant in a lawsuit
filed in October 1997, by the Trustee of the NTC liquidating Trust against
Brown Brothers Harriman, Citibank N.A. (the Company's stock transfer agent)
and the Company. The NTC Liquidating Trust was created under Colorado law, in
connection with implementation of Chapter 11 plans of liquidation for Oren
Benton, a former principal shareholder of the Company. The trustee's claim
was based on allegations that Benton and affiliated persons caused shares of
common stock of the Company to be converted, concealed, or wrongly transferred
in violation of the automatic stay in effect as of the Benton bankruptcy
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filing. On October 20, 1998, the United States Bankruptcy court for the
District of Colorado determined that the Trustee had not pled facts sufficient
to establish Benton's interest in the shares of common stock of Ramtron on the
date of his bankruptcy filing under non-bankruptcy law. As a consequence, the
court determined that the complaint was not sufficient to support a claim that
the Ramtron stock was property of the estate subject to an automatic stay.
The court ordered that all claims in the case be dismissed. On October 29,
1998, the Trustee filed an appeal to this decision and on November 9, 1998,
the court ordered that the Company and Citibank N.A. were dismissed without
prejudice from the appeal.
DEERE PARK. In November 1998, Deere Park Capital Management LLC ("Deere
Park"), a holder of the Company's Series A Convertible Preferred Stock
("Preferred Stock"), filed a lawsuit against the Company in the Court of
Chancery of the State of Delaware seeking a declaratory judgement and specific
performance of the Company's alleged obligation to convert a portion of Deere
Park's shares of Preferred Stock to common stock, as well as damages of $2.4
million plus costs and attorneys fees. On December 16, 1998, the Company
filed its answer denying the allegations of the complaint and asserting, among
other things, that the Company had fully performed its contractual obligations
with respect to the conversions alleged in the complaint. On January 20,
1999, Deere Park moved for permission to file an amended complaint. Shortly
thereafter, in early February 1999, Deere Park filed a second action against
the Company in the Court of Chancery for the State of Delaware. Like the
proposed amended complaint in its original lawsuit, Deere Park alleges in this
second action that the Company breached certain obligations to convert Deere
Park's shares of Preferred Stock; however, Deere Park's new complaint adds a
claim for relief and relies on different facts to support the claims asserted
therein. On February 23, 1999, the Company answered Deere Park's second
action by denying the substance of Deere Park's new allegations and raising
certain affirmative defenses that the Company previously had not raised.
Effective as of August 6, 1999, Deere Park dismissed all claims against the
Company with prejudice pursuant to the finalization of the Company's capital
restructuring.
TALISMAN. On January 29, 1999, Talisman Capital Opportunity Fund, LLC
("Talisman"), another holder of Preferred Stock, filed a suit against the
Company in the United States District Court for the Southern District of New
York, also alleging that the Company failed to honor its obligations to
convert shares of its Preferred Stock and seeking damages of over $1.5 million
plus costs and attorney's fees. In its answer served on February 22, 1999,
the Company denied the substance of Talisman's allegations and asserted
several affirmative defenses. On April 7, 1999, the Company entered into an
agreement with Talisman to settle the pending litigation. Pursuant to the
terms of a confidential settlement agreement, the Company agreed to make a
cash payment to Talisman in consideration for the cancellation of all
Talisman's remaining shares of Series A Preferred Stock. Accordingly,
Talisman's suit over the Company has been dismissed and Talisman is no longer
a holder of Series A Preferred Stock.
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NASDAQ LISTING REQUIREMENTS. The Company must maintain certain requirements
in order to remain listed on The Nasdaq Stock Market ("Nasdaq"). These
requirements include maintaining a specified level of net tangible assets, as
defined, market capitalization or net income. Additionally, the Company must
maintain a specified level of publicly traded shares, market value of the
publicly traded shares, minimum bid price, number of market makers and
shareholders. On December 2, 1998, the Company received notification from
Nasdaq that it failed to meet the Nasdaq listing requirements for minimum bid
price. The Company requested a meeting with Nasdaq with respect to this
issue and a meeting with Nasdaq was held on April 30, 1999. At the meeting,
the Company presented its plan for compliance and requested a listing
extension from Nasdaq until July 31, 1999. On June 18, 1999 Nasdaq responded
to the Company stating that on or before August 6, 1999, the Company must
evidence a closing bid price of no less than $1.00 per share; immediately
thereafter, the Company must evidence a closing bid price of at least $1.00
per share for a minimum of ten consecutive trading days. The Company must
also be able to demonstrate compliance with all requirements for continued
listing on The Nasdaq SmallCap Market. In the event the Company is unable to
meet the terms of this exception and is unable to obtain an exemption from
such requirements, the Company's securities will be delisted from The Nasdaq
Stock Market.
NOTE 9. SEGMENT INFORMATION
Ramtron is engaged primarily in the design, development, manufacture and sale
of specialty high-performance semiconductor memory devices. Ramtron has two
principal businesses, ferroelectric nonvolatile random access memory ("FRAM")
technology and products, and high-speed DRAM products called Enhanced-DRAM
("EDRAM") products.
The accounting policies for determining segment net income (loss) are the same
used in the consolidated financial statements. There are no internal sales
between segments.
The following table represents segment information for the three months ended
June 30, 1999 and 1998.
1999 1998
------------------ ------------------
FRAM EDRAM FRAM EDRAM
-------- -------- -------- --------
(in thousands)
Product revenue $ 870 $2,940 $ 859 $4,868
Technology license and
development revenue -- -- -- --
Customer-sponsored research
and development revenue 1,516 -- 16 --
-------- -------- -------- --------
2,386 2,940 875 4,868
Operating costs 4,730 2,796 3,999 4,109
-------- -------- -------- --------
Operating profit (loss) (2,344) 144 (3,124) 759
Other (71) -- 23 (10)
-------- -------- -------- --------
Net profit (loss) $(2,415) $ 144 $(3,101) $ 749
======== ======== ======== ========
Page 13
<PAGE>
Net profit (loss) excludes interest income, interest expense and special
charges of ($76,000) and $70,000 in 1999 and 1998, respectively, not allocated
to business segments.
The following table represents segment information for the six months ended
June 30, 1999 and 1998.
1999 1998
------------------ ------------------
FRAM EDRAM FRAM EDRAM
-------- -------- -------- --------
(in thousands)
Product revenue $ 1,920 $6,123 $ 1,545 $8,455
Technology license and
development revenue 500 -- -- --
Customer-sponsored research
and development revenue 2,322 -- 605 --
-------- -------- -------- --------
4,742 6,123 2,150 8,455
Operating costs 8,641 6,347 8,352 7,461
-------- -------- -------- --------
Operating profit (loss) (3,899) (224) (6,202) 994
Other (71) 16 46 (10)
-------- -------- -------- --------
Net profit (loss) $(3,970) $ (208) $(6,156) $ 984
======== ======== ======== ========
Net profit (loss) excludes interest income, interest expense and special
charges of ($129,000) and $8,000 in 1999 and 1998, respectively, not allocated
to business segments.
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.
Words such as "expects," "plans," "anticipates," "believes," "estimates" and
variations of such words are intended to represent forward-looking statements.
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 might cause such a
difference include but are not limited to: (i) the timely completion of the
Page 14
<PAGE>
development and qualification for manufacturing of the Company's new EDRAM and
FRAM products; (ii) broader customer acceptance of its EDRAM and ESDRAM
products and low-density FRAM products; (iii) acceptance of new high-density
FRAM products, which may be developed; (iv) the Company's ability to
manufacture its products on a cost-effective and timely basis at its alliance
foundry operations; (v) the Company's ability to perform under existing
alliance agreements and to develop new alliance and foundry relationships;
(vi) the Company's alliance partners' willingness to continue development
activities under their license agreements with the Company; (vii) the effects
on the Company from the common stock price adjustment with respect to the
holders of common stock issued in a December 1997 private placement;
(viii) the effect on the Company from its obligations pursuant to its
outstanding Series A Convertible Preferred Stock; (ix) future potential
changes in the Company's capital structure; (x) the availability and related
cost of future financing; (xi) the retention of key personnel; (xii) the
ultimate outcomes of the Company's patent interference and patent infringement
proceedings, and (xiii) factors not directly related to the Company, such as
competitive pressures on pricing, marketing conditions in general,
competition, technological progression, product obsolescence and the changing
needs of potential customers and the semiconductor industry in general.
RESULTS OF OPERATIONS
Revenue for the second quarter of 1999 decreased by 7% to $5.3 million from
$5.7 million in the respective period in 1998. For the six months ended
June 30, 1999, revenue increased by 2% to $10.9 million from $10.6 million in
the respective period in 1998. Revenues for the quarter and six month periods
ended June 30, 1999 were comprised primarily from product sales and customer-
sponsored research and development activities. No license and development fee
revenues were recorded during the quarter. The Company recorded $500,000 of
license fee revenues during the six month period from the achievement of a
milestone pursuant to an existing license agreement. For the same periods in
1998, the Company did not record any such license and development fee
revenues. Customer-sponsored research and development revenues totaled $1.5
million and $2.3 million for the quarter and six month period, respectively,
and resulted primarily from FRAM process development activities with an
existing licensee.
Product sales revenues for the second quarter and six months ended June 30,
1999 were $3.8 million and $8.0 million, respectively, representing a
decrease of 33% for the quarter and a decrease of 20% for the six month
period over the respective periods in 1998. Product revenues for the second
quarter and six month periods from a year ago totaled $5.7 million and $10.0
million, respectively. Product sales revenue for the current year consists
primarily of EDRAM product sales with such products accounting for
approximately 77% of total product sales in the quarter and six month periods
and FRAM product sales accounting for the remaining 23%. For the same periods
in 1998, EDRAM products accounted for 85% of total product sales for the
quarter and six month period with FRAM product sales accounting for the
remaining 15%.
Page 15
<PAGE>
EDRAM unit shipments decreased by approximately 39% and 27% during the quarter
and the six month period, respectively, and average selling prices remained
flat during the 1999 and 1998 comparative periods. The decrease in product
revenues for the quarter and six month period resulted primarily from a
decrease in the volume of 4-megabit EDRAM products sold to customers for use
in communications equipment and RAID disc controllers as these customers began
moving to higher density memory products which were unavailable from the
Company. The decrease in demand for the Company's 4-megabit EDRAM products is
expected to continue to occur in future periods as the Company's higher
density products become available in greater quantities and at competitive
prices. The Company anticipates that average selling prices of its 4-megabit
EDRAM products will experience downward price pressures during future periods.
The Company's EDRAM prices are subject to industry demand for such products
and the prices of competing specialty memories. The Company has historically
experienced a decline in EDRAM revenues during the third and fourth quarters
of the year. The Company does not currently have sufficient information to
predict whether this same decline in EDRAM revenues will occur during the
remainder of 1999.
FRAM product revenues for the second quarter and the six months ended June 30,
1999 increased to $870,000 and $1,920,000, respectively, representing
increases of 1% and 24%, respectively, over the same periods in 1998. Such
increases resulted from the increased availability of FRAM products from one
of the Company's foundry sources and from renewed sales and marketing
activities in response to increased FRAM product availability.
Cost of product sales as a percentage of product revenues during the quarter
and for the six months ended June 30, 1999 were 55% and 56%, respectively,
compared with 62% and 62%, respectively, for the same periods in 1998. The
decrease in cost of product sales as a percentage of product revenues in the
second quarter and the six months ended June 30, 1999 compared with the
respective periods in 1998 resulted primarily from lower costs of
manufacturing for the Company's FRAM and EDRAM products and relatively stable
average selling prices of those products. Cost of product sales associated
with the Company's FRAM products improved during the quarter resulting
primarily from the majority of FRAM products sold having been manufactured at
the Company's foundry supplier. Cost of product sales as a percentage of
product revenues for FRAM products is expected to continue to decrease in
future quarters as a larger volume of FRAM products sold will be manufactured
at the Company's alliance foundry manufacturing facilities and costs of
manufacturing are expected to decrease as volumes rise.
Research and development expenses (including customer-sponsored research and
development) increased by approximately $406,000 or 16% to $2.9 million
in the second quarter of 1999 when compared with the respective period in
1998, and for the six month period ended June 30, 1999, research and
development expenses decreased by $163,000 or 3% when compared with the
respective period in 1998. The Company has incurred increases in research
and development expenses during 1999 resulting from increased costs
associated with the design and development of the Company's 16-megabit
and 64-megabit Enhanced Synchronous DRAM ("ESDRAM") products and from costs
incurred to support customer-sponsored research and development activities in
FRAM process development. These increases in research and development
expenses during the six month period were partially offset by decreases in
expenses resulting from the cessation of FRAM production operations at the
Company's Colorado Springs FRAM fabrication facility, which ended during the
first quarter of 1999.
Page 16
<PAGE>
Sales, general and administrative ("SG&A") expenses for the second quarter
and the six month period ended June 30, 1999 increased by $446,000 (22%) and
by $981,000 (25%), respectively, as compared with the same periods in 1998.
The increases in SG&A expenses for the quarter and six-month periods resulted
primarily from financial advisory fees and legal and related expenses incurred
in connection with the Company's preferred stock restructuring efforts and
from an increase in foreign withholding taxes totaling $50,000 from the
recognition of $500,000 of license fee revenue during the first quarter of
1999. These increases were partially offset by decreased commission costs on
decreased product sales during the quarter and the six month period ended
June 30, 1999 as compared with the respective periods in 1998.
Interest expense, related party during the second quarter and for the six
months ended June 30, 1999 remained unchanged from the respective periods in
1998.
Other income during the second quarter and for the six months ended June 30,
1999 decreased by $230,000 and $228,000, respectively, over the respective
periods in 1998 and resulted primarily from decreases in interest earned on
cash balances.
During the quarter and the six month period ended June 30, 1999, the Company
recorded preferred stock non-cash imputed dividends and accretion of discount
totaling $248,000 and $768,000, respectively. The imputed dividend and
accretion of discount results from certain provisions of the Series A
Convertible Preferred Stock ("Preferred Stock") whereby a dividend is to be
paid to the holders of the Preferred Stock in additional shares of Preferred
Stock, and the conversion price of the Preferred Stock is determined by
applying a discount which increased over a fourteen month period from 7% to a
maximum of 15% in May 1999. The dividend is being recognized ratably pursuant
to all outstanding Preferred Stock. The discount was recognized ratably
as non-cash deemed dividend over the applicable fourteen month period (see
"Note 7").
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents balance as of June 30, 1999 was
approximately $7.3 million, representing a $7.9 million decrease from
December 31, 1998. The Company used approximately $6.0 million in operations
during the first six months of 1999 compared with a use of $1.3 million in
operations for the respective period in 1998. The use of $6.0 million in
operations during the six month period ended June 30, 1999 resulted
primarily from (i) the funding of losses of $3.2 million (net of $1.1 million
in non-cash adjustments), (ii) an increase in accounts receivable of $3.3
million, and (iii) the reduction in accounts payable and accrued liabilities
totaling $1.0 million. Such uses of cash during the six month period were
partially offset by a $456,000 decrease in inventories. The increase in
accounts receivable resulted primarily from an increase in product sales and
Page 17
<PAGE>
from a $1.0 million receivable from a FRAM license partner associated with
customer-sponsored research and development activities. The decrease in
inventories of $456,000 resulted from inventory management measures taken by
the Company during the quarter associated with the Company's EDRAM and FRAM
products. Approximately $1.0 million was used in investing activities during
the six months ended June 30, 1999 compared with $0.9 million in the
respective period in 1998. Such use of cash in 1999 resulted primarily from
capitalized filing fees and legal costs associated with the Company's FRAM and
EDRAM patent activities. Approximately $1.0 million was used in financing
activities during the six months ended June 30, 1999 compared with a source of
cash during the same period in 1998 of $15.4 million. The use of cash during
1999 resulted from a payment of $550,000 for certain purchased license rights
associated with the Company's ferroelectric technology and a payment of
$475,000 in connection with a settlement with one of the Company's preferred
stockholders. As of June 30, 1999, the Company had working capital of
approximately $587,000 and total stockholders' equity of $12.3 million.
The Company intends to finance its operations and working capital requirements
during the remainder of 1999 and into 2000 by relying on its existing cash and
cash equivalent resources (as of June 30, 1999 of $7.3 million), payments from
existing and future license and development agreements, and from continued
sales of the Company's FRAM and EDRAM products.
In April 1999, the Company entered into an agreement with Talisman Capital
Opportunity Fund, LLC ("Talisman"), a holder of the Company's outstanding
preferred stock, to settle pending litigation. The Company made a cash
payment to Talisman in consideration for the cancellation of all Talisman's
remaining shares of preferred stock. The settlement of the Talisman
litigation did not materially adversely effect the Company's liquidity (see
"ITEM 1 - LEGAL PROCEEDINGS").
The Company's future capital requirements include financing the growth of
working capital items such as accounts receivable and inventory, the funding
of continued research and development efforts, the costs associated with
currently existing and any future patent infringement and interference
proceedings, and the costs associated with the Company's capital
restructuring, which includes the potential payment to preferred stockholders
of up to $3.2 million. If such a payment to preferred stockholders is
required pursuant to the terms of the Company's capital restructuring plan,
the Company's cash position could be materially compromised and its ability to
carry out its current business plans may be materially adversely affected.
The Company is continuing to pursue additional license and development
arrangements with third parties to partially satisfy its future capital
requirements. 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.
Page 18
<PAGE>
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 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 and increase
commercial production and sales of its EDRAM products and low-density FRAM
products, decrease the cost of producing such products and develop and
commercialize new high and low-density FRAM products and enhancements to its
existing FRAM and EDRAM products.
There can be no assurance that all of the Company's foundry and alliance
partners will be able to achieve commercial production of the products
currently in development. 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.
YEAR 2000
The Company utilizes software and related technologies throughout its business
and relies on suppliers of services and materials that will be affected by the
date change in the year 2000 or prior. The Year 2000 issue exists because
many computer systems and applications currently use two-digit fields to
designate a year. As the century date change occurs, date sensitive systems
will recognize the year 2000 as 1900, or not at all. This inability to
recognize the year 2000 may cause systems to process critical financial and
operational information incorrectly. The Company has initiated a Year 2000
project to address the Year 2000 issues as they relate to the Company.
The Company's Year 2000 project is being managed by a team of internal staff.
The team's activities are designed to ensure that there are no adverse effects
on the Company's operations and that transactions with customers, vendors and
financial institutions are fully supported. The Company has had formal
communications with vendors, customers and financial institutions to ensure
that those parties have appropriate plans to remediate Year 2000 issues as
such issues interface with the Company's systems or otherwise effect the
Company. The Company has completed the assessment, testing, contingency
planning and substantially all of the remediation phases of its Year 2000
project and will continue to re-test and remediate Year 2000 sensitive systems
and operations throughout the remainder of 1999 and beyond, as required. The
Company believes, based on progress to date, that the costs of complying with
the Year 2000 issues will not have a material effect on the Company's
financial position. The Company believes that the estimated total cost of
compliance for Year 2000 will be less than $250,000.
Page 19
<PAGE>
The Company determined that certain of its software and hardware required
replacement or updating so that its systems would operate properly with
respect to dates in the periods prior to the year 2000 and beyond. The
Company does not currently use any third-party custom written software in its
operations and, therefore, does not believe that a significant exposure exists
in Year 2000 compliance as the majority of its software is issued with
frequent updates, which have or are expected to address the Year 2000
compliance issue. The Company believes that with its updates to existing
software and purchases of new software and the replacement or modification to
certain non-compliant hardware, the Year 2000 issue will not pose a
significant operational problem for the Company's systems. However, if such
updates, replacements or modifications are not effectively made or made in a
timely manner, the Year 2000 issue could have a material impact on the
operations of the Company. The Company believes that its primary exposure
from the Year 2000 issue lies with major suppliers and subcontractors not
achieving Y2K compliance. Failure to properly address these exposures for
Year 2000 compliance could result in delays in product deliveries during the
period immediately following December 31, 1999. The Company believes that its
most reasonably likely worst case scenario would be that one or several of its
subcontractors are unable to supply product or services to the Company for an
extended period of time. Such failure to supply product or services,
depending on the length of delay, could exhaust the Company's product
inventories and, therefore, cause delays in product shipments to the Company's
customers.
The Company has assessed and continues to assess the extent to which its
operations are vulnerable from interactions with its vendors, customers and
financial institutions should those organizations fail to properly remediate
their systems. While the Company believes its planning efforts are adequate
to address its Year 2000 concerns, there can be no guarantee that the systems
of other companies on which the Company's systems and operations rely will be
converted on a timely basis and will not have a material adverse effect on the
Company's business, results of operations and financial condition. The
Company believes that it has no exposure to contingencies related to the Year
2000 issue for the products it manufactures and sells.
The above discussion regarding costs, risks and completion dates for the Year
2000 is based on the Company's best estimates given information that is
currently available and is subject to change. As the Company proceeds with
this project, it may discover that actual results will differ materially from
any estimates provided.
MARKET RISK
There have been no material changes in market risk related to the Company's
financial instruments since December 31, 1998.
Page 20
<PAGE>
SUBSEQUENT EVENTS
On July 20, 1999, the Company held a Special Meeting of stockholders at which
the following proposals, 1A and 1B, were approved by a majority of the
outstanding shares voted.
PROPOSAL 1A:
- -----------
Amend and restate the Company's Certificate of Designation, Preferences,
Rights and Limitations relating to the Company's Series A Convertible
Preferred Stock so as to amend the terms of the outstanding Series A
Convertible Preferred Stock to provide for, among other things, (i) a fixed
rather than variable rate of conversion to Common Stock, (ii) a limited cash
exchange option, (iii) redemption at the option of the Company on or after
July 31, 2000, (iv) mandatory redemption on July 31, 2002, (v) a dividend of
11% per annum (which may increase under certain circumstances), and (vi) fixed
dividend payment dates. Proposal 1A would only be adopted if Proposal 1B was
also approved by stockholders of the Company.
PROPOSAL 1B:
- -----------
Amend the Company's Certificate of Incorporation to effect a reverse stock
split of the Company's Common Stock, whereby each five shares of Common Stock
would be combined, converted and changed into one share of Common Stock.
Proposal 1B would only be adopted if Proposal 1A was also approved by
stockholders of the Company.
A third proposal to provide the Company's board of directors the authority to
effect, at the board's discretion, a reverse stock split in any of eight
ratios was defeated.
On August 6, 1999, a majority of the Preferred Stockholders reached an
agreement to restate the terms of the Company's Series A Convertible Preferred
Stock. The Preferred Stockholders have until the close of business on
August 16, 1999 to select from three options pursuant to the restructuring,
which include a limited cash redemption offer, conversion to common stock at a
conversion price of $0.75 per share of common stock or the retention of the
amended Series A Convertible Preferred Stock with a new three year term and a
fixed conversion at $1.00 per share. In addition, as part of the
restructuring, the Company entered into an agreement to amend the scheduled
maturity date of an August 31, 1995 Loan Agreement with the National
Electrical Benefit Fund to March 15, 2002 and to modify certain price
adjustment terms of a December 1997 investment agreement with certain entities
advised by Dimensional Fund Advisors (the "DFA Entities"). The modification
of the DFA Entities agreements included the issuance of one-year notes to the
DFA Entities for a $3.2 million obligation currently owed to the DFA Entities,
convertible in whole or in part to shares of common stock at a conversion
price of $1.00.
Page 21
<PAGE>
As a part of these restructuring activities, the Company also initiated a
1-for-5 reverse split of its common stock, which became effective after the
close of trading on The Nasdaq Stock Market on August 6, 1999. Subsequent to
the reverse split, the Company had approximately 12.6 million common shares
outstanding.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
In November 1998, Deere Park Capital Management LLC ("Deere Park"), a holder
of the Company's Series A Convertible Preferred Stock ("Preferred Stock"),
filed a lawsuit against the Company in the Court of Chancery of the State of
Delaware seeking a declaratory judgement and specific performance of the
Company's alleged obligation to convert a portion of Deere Park's shares of
Preferred Stock to common stock, as well as damages of $2.4 million plus costs
and attorneys fees. On December 16, 1998, the Company filed its answer
denying the allegations of the complaint and asserting, among other things,
that the Company had fully performed its contractual obligations with respect
to the conversions alleged in the complaint. On January 20, 1999, Deere Park
moved for permission to file an amended complaint. Shortly thereafter, in
early February 1999, Deere Park filed a second action against the Company in
the Court of Chancery for the State of Delaware. Like the proposed amended
complaint in its original lawsuit, Deere Park alleged in this second action
that the Company breached certain obligations to convert Deere Park's shares
of Preferred Stock; however, Deere Park's new complaint added a claim for
relief and relied on different facts to support the claims asserted therein.
On February 23, 1999, the Company answered Deere Park's second action by
denying the substance of Deere Park's new allegations and raising certain
affirmative defenses that the Company previously had not raised. On August 6,
1999, Deere Park dismissed all claims against the Company with prejudice
pursuant to the finalization of the Company's preferred stock restructuring.
On January 29, 1999, Talisman Capital Opportunity Fund, LLC ("Talisman"),
another holder of Preferred Stock, filed a suit against the Company in the
United States District Court for the Southern District of New York, also
alleging that the Company failed to honor its obligations to convert
shares of its Preferred Stock and seeking damages of over $1.5 million plus
costs and attorney's fees. In its answer served on February 22, 1999, the
Company denied the substance of Talisman's allegations and asserted several
affirmative defenses. On April 7, 1999, the Company entered into an agreement
with Talisman to settle the pending litigation. Pursuant to the terms of a
confidential settlement agreement, the Company agreed to make a cash payment
to Talisman in consideration for the cancellation of all Talisman's remaining
shares of Series A Preferred Stock. Accordingly, Talisman's suit over the
Company has been dismissed and Talisman is no longer a holder of Series A
Preferred Stock.
ITEMS 2 - 4 NONE
Page 22
<PAGE>
ITEM 5 - Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
On May 4, 1999, the Registrant filed a report on Form 8-K.
The item 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, 1999 /S/ Richard L. Mohr
Richard L. Mohr
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
Page 23
<PAGE>
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