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 March 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission File Number 0-17739
RAMTRON INTERNATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 84-0962308
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1850 Ramtron Drive, Colorado Springs, CO 80921
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(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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes / / No /X/
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 - 22,137,776 as of May 12, 2003.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Page-1
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except par value and share amounts)
March 31, Dec. 31,
2003 2002
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 2,611 $ 3,222
Accounts receivable, less allowances
of $402 and $231, respectively 8,041 8,981
Inventories 6,869 8,952
Other current assets 256 232
--------- ---------
Total current assets 17,777 21,387
Property, plant and equipment, net 4,537 4,600
Intangible assets, net 14,098 14,150
Other assets 758 805
--------- ---------
Total assets $37,170 $40,942
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,238 $ 5,960
Accrued liabilities 1,294 1,147
Deferred revenue 1,400 2,778
--------- ---------
Total current liabilities 7,932 9,885
Deferred revenue 4,997 5,175
Long-term promissory notes net of
unamortized discount of $2,138 and $2,272 5,862 5,728
--------- ---------
Total liabilities 18,791 20,788
--------- ---------
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 authorized:
22,127,810 and 22,123,768 shares issued and
outstanding, respectively 221 221
Additional paid-in capital 234,547 234,517
Accumulated deficit (216,389) (214,584)
--------- ---------
Total stockholders' equity 18,379 20,154
--------- ---------
Total liabilities and stockholders' equity $37,170 $40,942
========= =========
See accompanying notes to consolidated financial statements.
Page-2
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
(Amounts in thousands, except per share amounts)
2003 2002
-------- --------
Revenue:
Product sales $ 9,941 $10,364
License and development fees 117 1,408
Royalties 103 69
Customer-sponsored research and development 850 783
-------- --------
11,011 12,624
-------- --------
Costs and expenses:
Cost of product sales 6,037 7,790
Provision for inventory write-off 1,227 60
Research and development 1,992 2,601
Customer-sponsored research and development 556 461
Sales, general and administrative 2,722 2,795
-------- --------
12,534 13,707
-------- --------
Operating loss (1,523) (1,083)
Interest expense, related party (105) (1)
Interest expense, other (181) (7)
Other income (expense), net 4 (21)
-------- --------
Net loss $(1,805) $(1,112)
======== ========
Loss per common share:
Net loss $(1,805) $(1,112)
Dividends on redeemable preferred stock -- (35)
Accretion of discount on redeemable preferred stock -- (6)
-------- --------
Net loss applicable to common shares $(1,805) $(1,153)
======== ========
Net loss per share - basic and diluted $ (0.08) $ (0.05)
======== ========
Weighted average shares outstanding 22,128 22,081
======== ========
See accompanying notes to consolidated financial statements.
Page-3
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
(Amounts in thousands)
2003 2002
-------- --------
Cash flows from operating activities:
Net loss $(1,805) $(1,112)
Adjustments used to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 475 458
Amortization of debt discount, related party 134 --
Provision for inventory write-off 1,227 60
Loss on abandonment of intangible assets 15 68
Gain on sale of equipment (11) --
Changes in assets and liabilities:
Accounts receivable 940 (778)
Inventories 856 (233)
Accounts payable and accrued liabilities (575) 109
Deferred revenue (1,556) (250)
Other 31 48
--------- ---------
Net cash used in operating activities (269) (1,630)
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (212) (305)
Proceeds from sale of assets 29 --
Intellectual property (181) (73)
--------- ---------
Net cash used in investing activities (364) (378)
--------- ---------
Cash flows from financing activities:
Proceeds from debenture -- 3,000
Issuance of capital stock 22 --
--------- ---------
Net cash provided by financing activities 22 3,000
--------- ---------
Net increase (decrease) in cash and cash equivalents (611) 992
Cash and cash equivalents, beginning of period 3,222 3,259
--------- ---------
Cash and cash equivalents, end of period $ 2,611 $ 4,251
========= =========
See accompanying notes to consolidated financial statements.
Page-4
RAMTRON INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
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NOTE 1. BASIS OF PRESENTATION AND MANAGEMENT OPINION
The accompanying consolidated financial statements at March 31, 2003 and
December 31, 2002 and for the three months ended March 31, 2003 and 2002 have
been prepared from the books and records of Ramtron International Corporation,
(the "Company"), without audit. The statements reflect all normal recurring
adjustments which, in the opinion of the Company's 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 Company's annual report on Form 10-K for the year ended December 31,
2002. The results of operations for the period ended March 31, 2003 are
not necessarily indicative of the operating results for the full year.
NOTE 2. REVENUE RECOGNITION
The Company has historically recorded all shipments to distributors as
deferred revenue until shipped to the end customer because the Company did not
believe it had adequate historical data to make a reasonable estimate of the
amount of future returns as required under Statement of Financial Accounting
Standard No. 48, "Revenue Recognition When Right of Return Exists". During
the first quarter of 2003, the Company concluded that it now has sufficient
shipment and return experience to allow for the recognition of revenue on
shipments to distributors at the time of shipment, along with a reserve for
estimated returns. Accordingly, during the first quarter of 2003, the Company
recognized an additional $1.3 million in product sales revenue that would have
been deferred prior to this change in estimate. The impact on gross margins
from this additional revenue was approximately $490,000 during the first
quarter of 2003.
NOTE 3. STOCK-BASED COMPENSATON
The Company accounts for employee stock-based compensation using the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25 ("APB
No. 25"), "Accounting for Stock Issued to Employees" and related
interpretations. All options granted under these plans have an exercise
price equal to the market value of the underlying common stock on the date of
grant, therefore no stock-based compensation is reflected in net loss. Had
compensation cost for these plans been determined consistent with SFAS No.
123, "Accounting for Stock-Based Compensation" as amended by SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure, and
Amendment of FASB Statement No. 123", the Company's net loss would have been
increased to the following adjusted amounts:
Page-5
Three Months Ended
March 31,
-------------------------
2003 2002
-------- --------
(in thousands, except per share amounts)
Net Loss Applicable to
Common Shares
As reported $(1,805) $(1,153)
Pro forma (2,144) (1,712)
Net Loss Per Share
As reported - basic and diluted $ (0.08) $ (0.05)
Pro forma - basic and diluted (0.10) (0.08)
For disclosure purposes, the fair value of stock based compensation was
estimated using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants during the three months ended
March 31, 2003 and 2002:
2003 2003
---------- ----------
Risk Free Interest Rate 4.00% 4.00%
Expected Dividend Yield 0% 0%
Expected Lives 4.0 years 4.0 years
Expected Volatility 110% 111%
The weighted average fair value of shares granted during the three months
ended March 31, 2003 and 2002 was $1.62 and $2.85, respectively.
NOTE 4. INVENTORIES
Inventories consist of:
March 31, Dec. 31,
2003 2002
--------- --------
(in thousands)
Finished goods $3,033 $3,783
Work in process 4,127 5,401
Obsolescence reserve (291) (232)
------ ------
Total $6,869 $8,952
====== ======
Page-6
NOTE 5. EARNINGS PER SHARE
The Company calculates its income (loss) per share pursuant to Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128").
Under SFAS No. 128, basic income per share is computed by dividing reported
income (loss) available to common stockholders by weighted average shares
outstanding. Diluted income (loss) per share reflects the potential
dilution assuming the issuance of common shares for all dilutive potential
common shares outstanding during the period. In periods where the Company
recorded a net loss, all potentially dilutive securities, including warrants
and stock options, would be anti-dilutive and thus, are excluded from diluted
income per share.
The following table sets forth the calculation of loss per common
share for the three months ended March 31, 2003 and 2002 (in thousands, except
per share amounts):
Three Months Ended
March 31,
2003 2002
-------- --------
Net loss applicable to common shares $(1,805) $(1,153)
======== ========
Common shares outstanding:
Historical common shares outstanding at
beginning of period 22,124 22,081
Weighted average common shares issued
during period 4 --
-------- --------
Weighted average common shares at
end of period - basic and diluted 22,128 22,081
======== ========
As of March 31, 2003, the Company had several equity 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 equivalent 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. These potential stock
issuances are excluded from earnings per share calculations because their
effect was anti-dilutive:
Three Months Three Months
Ended Ended
March 31, 2003 March 31, 2002
-------------- --------------
(in thousands)
Warrants 2,349 2,100
Options 4,360 3,729
Convertible preferred stock -- 225
Convertible debenture 1,327 --
Convertible debenture, related party 796 796
Page-7
NOTE 6. 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 proceeding, 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,
pending the ultimate outcome of the patent interference proceeding. 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 five 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. On February 2, 2000, the Court of Appeals vacated and
remanded the decision of the Patent Office for further proceedings. The
Company also filed complaints in Federal District Court in the District of
Columbia seeking a review of the decision of the Patent Office on the
remaining interference counts, which are still pending. 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. Under a
Patent Office decision on August 13, 2001, the Company was found to be the
first to invent, however, the Patent Office concluded that the enablement and
best-mode requirements for patent issuance had not been met by the Company.
In October 2001, both the Company and National filed a Request for
Reconsideration with the Patent Office. In November 2002, the Patent Office
informed the Company and National that it will not change its August 2001
decision. In December 2002, the Company appealed this decision to the
District Court of the District of Columbia.
Page-8
If the Company's patent rights that are the subject of the interference
proceeding are ultimately lost or significantly compromised and National or
another third party is successful in obtaining a patent covering the Company's
ferroelectric technology, the Company would be precluded from producing, using
or selling 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, and/or its licensees, 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
the interference proceeding 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.
NOTE 7. LONG-TERM DEBT
On March 14, 2002, the Company signed an agreement to issue $8.0 million
of 5 year, 5% fixed rate, convertible debentures to Infineon Technologies AG
("Infineon"), Halifax Fund ("Halifax"), managed by The Palladin Group, L.P.
and Bramwell Capital Corporation ("Bramwell"), managed by Cavallo Capital.
Prior to issuance of the convertible debentures, Infineon owned 4,430,005
shares of Ramtron's outstanding common stock, or 20% of its outstanding
shares, and 20% of the outstanding shares of the Company's subsidiary,
Enhanced Memory Systems, Inc. ("EMS"). On March 29, 2002, the Company issued
a $3 million debenture to Infineon. The Halifax and Bramwell debentures,
totaling $5 million, were issued on April 1, 2002. The debentures are
convertible into the Company's common stock at a fixed conversion price of
$3.769, which is equal to 110% of the five-day volume weighted average price
("VWAP") of the Company's common stock prior to the transaction signing. The
debentures issued to Halifax and Bramwell are secured by a Deed of Trust on
the Company's headquarters facility in Colorado Springs, Colorado. The
Infineon debenture is secured by a security interest the Company granted to
Infineon in certain of its accounts receivable and patents.
In addition, 700,435 5-year common stock warrants were issued to the
investors with an exercise price of $4.28 per share. The warrants were valued
using the Black Scholes option pricing method with a resulting total value of
approximately $1,773,000. The following assumptions were used to value
these warrants: risk free interest rate of 4.93%, expected yield of 0%,
expected life of five years, and expected volatility of 113%. This amount is
accounted for as a discount to the outstanding debentures and is being
amortized over the remaining life of the debentures as a charge to interest
expense. The unamortized discount pertaining to the outstanding debentures
and warrants as of March 31, 2003 is approximately $1,418,000.
Page-9
As a result of the conversion terms of these debentures, a beneficial
conversion feature of $900,000 was created. This beneficial conversion
feature is recorded as an increase to additional paid-in-capital and as a debt
discount to the outstanding debentures. This discount will be amortized over
the remaining life of the debentures as a charge to interest expense. The
unamortized discount pertaining to the outstanding debentures as of
March 31, 2003 is approximately $720,000.
NOTE 8. SEGMENT INFORMATION
The Company's reportable segments are those that are based on the Company's
method of internal reporting, which generally segregates the strategic
business units based upon differences in products and distribution channels.
The Company's operations are conducted through three business segments. The
Company's FRAM business licenses, manufactures and distributes ferroelectric
nonvolatile random access memory products. EMS licenses, manufactures and
distributes high-speed DRAM products. The Company's wholly owned subsidiary,
Mushkin Inc. ("Mushkin"), distributes high-speed DRAM products in the
aftermarket through both direct and e-commerce sales channels.
The accounting policies for determining segment net income or loss are the
same used in the consolidated financial statements. There are no internal
sales between segments.
The following table presents segment information for the three months ended
March 31, 2003 and 2002.
2003 2002
------------------------------------ -------------------------------------
FRAM EMS Mushkin Total FRAM EMS Mushkin Total
------------------------------------ -------------------------------------
(in thousands)
Revenue:
Product sales $6,766 $ 460 $2,715 $ 9,941 $4,610 $ 358 $5,396 $10,364
License and
development fees 117 -- -- 117 1,408 -- -- 1,408
Royalties 103 -- -- 103 69 -- -- 69
Customer-sponsored
research and development 502 348 -- 850 37 746 -- 783
------ -------- ------ ------- ------- -------- ------ --------
7,488 808 2,715 11,011 6,124 1,104 5,396 12,624
Costs and expenses 6,257 3,607 2,670 12,534 5,663 2,738 5,306 13,707
------ -------- ------ -------- ------- -------- ------ --------
Operating income (loss) 1,231 (2,799) 45 (1,523) 461 (1,634) 90 (1,083)
Other 4 (8) -- (4) -- -- -- --
------ -------- ------ -------- ------- -------- ------ --------
Segment income (loss) $1,235 $(2,807) $ 45 $(1,527) $ 461 $(1,634) $ 90 $(1,083)
====== ======== ====== ======== ======= ======== ====== ========
Page-10
Segment income (loss) excludes interest income, interest expense and
miscellaneous charges on a total basis of $(278,000) and $(29,000) in 2003 and
2002, respectively, not allocated to business segments.
NOTE 9. GOODWILL AND OTHER INTANGIBLE ASSETS
Accounting for goodwill and intangible assets requires that goodwill no
longer be amortized but be tested for impairment at least annually at the
reporting unit level in accordance with SFAS No. 142. Recognized intangible
assets with determinable useful lives should be amortized over their useful
life and reviewed for impairment in accordance with Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." At least annually, the Company completes an analysis of
the fair value of its goodwill to determine if there is an indicated
impairment of its goodwill. The most recent analysis was completed as of
December 31, 2002. At December 31, 2002, there was no indicated impairment of
goodwill. There can be no assurance that future goodwill and long-lived asset
impairments will not occur.
The changes in the carrying amount of goodwill for the three months ended
March 31, 2003, by business segment are as follows:
Goodwill
Balance Changes Balance
as of During as of
January 1, the March 31,
2003 Period 2003
--------- -------- ---------
(in thousands)
FRAM $ 585 $ -- $ 585
EMS -- -- --
Mushkin 7,278 -- 7,278
-------- ------- --------
Total $7,863 $ -- $7,863
======== ======= ========
Included in other intangible assets on the Company's Consolidated Balance
Sheets are intangible assets with determinable lives as follows:
March 31, December 31,
2003 2002
------------- ------------
(in thousands)
Amortizable intangible assets:
Patents $8,100 $7,934
Product license fees 2,150 2,150
Process technology 1,983 1,983
Accumulated amortization (5,998) (5,780)
------- -------
Total $6,235 $6,287
======= =======
Page-11
Amortization expense for intangible assets for the three months ended
March 31, 2003 and 2002, was approximately $218,000 and $193,000,
respectively. Estimated amortization expense for intangible assets, is
$900,000 in 2003, $900,000 in 2004, $900,000 in 2005, $900,000 in 2006,
$900,000 in 2007 and $1.7 million thereafter.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS; FACTORS AFFECTING FUTURE RESULTS
This quarterly report contains statements under this caption that constitute
"forward-looking statements" under the Private Securities Litigation Act of
1995 and that are subject to certain risks and uncertainties. The Company's
actual results may differ significantly from the results discussed in such
forward-looking statements. Factors that might cause such a difference
include but are not limited to: (i) the timely completion of the development
and qualification for manufacturing of the Company's new FRAM products;
(ii) broader customer acceptance of its FRAM products; (iii) the Company's
ability to manufacture its products on a cost-effective and timely basis at
its alliance foundry partners; (iv) the Company's ability to perform under
existing alliance and joint development agreements and to develop new alliance
and foundry relationships; (v) our ability to introduce timely new
technologies and products and market acceptance of such technologies and
products; (vi) the success of our on-going cost-reduction efforts; (vii) the
timing and availability of manufacturing resources provided by our
manufacturing and alliance partners for the production of our products;
(viii) the alliance partners' willingness to continue development activities
as they relate to their license agreements with the Company; (ix)the loss of a
significant customer or delay in our customers' manufacturing programs;
(x) the availability and related cost of future financing; (xi) the retention
of key personnel; (xii) the outcome of the Company's patent interference
litigation proceedings; (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; and
(xiv) global economic and political conditions related to on-going military
actions against terrorism.
Additionally, recently enacted and proposed changes in the laws and
regulations affecting public companies, including the provisions of the
Sarbanes-Oxley Act of 2002 and rules proposed by the SEC and Nasdaq,
could result in increased costs to the Company as it evaluates the
implications of new rules and responds to their requirements. The new rules
could make it more difficult for the Company to obtain certain types of
insurance, including director and officer liability insurance, and the Company
may be forced to accept reduced policy limits and coverage or incur
substantially higher costs to obtain the same or similar coverage. The impact
of these events could also make it more difficult for the Company to attract
and retain qualified persons to serve on our board of directors, on committees
of our board of directors, or as executive officers. The Company is presently
evaluating and monitoring developments with respect to new and proposed rules
and cannot predict or estimate the dollar amount of the additional costs it
may incur or the timing of such costs.
Page-12
Since its inception, the Company has been primarily engaged in the research
and development of ferroelectric technology and the design, development and
commercialization of FRAM products and Enhanced-DRAM products. Since 1992,
revenue has been derived from the sale of the Company's FRAM and Enhanced-DRAM
products. The Company has also generated revenue under license and
development agreements entered into with a limited number of established
semiconductor manufacturers and involving the development of specific
applications of the Company's technologies. Accordingly, fluctuations in the
Company's revenues have resulted primarily from the timing of significant
product orders, the timing of the signing of and delivery under license and
development agreements, and the achievement of related performance milestones.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 2003 COMPARED TO THE QUARTER ENDED MARCH 31, 2002.
REVENUES. Total revenue for the quarter ended March 31, 2003 was $11.0
million, a decrease of $1.6 million, or 13%, from the quarter ended
March 31, 2002.
Revenue from product sales decreased $423,000, or 4%, for the quarter
ended March 31, 2003, as compared to the same period in 2002. FRAM product
revenues for the quarter ended March 31, 2003 increased $2.2 million to
$6.8 million, from the quarter ended March 31, 2002. Increased FRAM
product revenue is attributable to increases in shipments into the Ampy/ENEL
utility meter program of approximately $500,000, non-Ampy/ENEL customers of
approximately $700,000 and approximately $950,000 related to a change in our
estimate of returns from distributors. The Company has historically recorded
all shipments to distributors as deferred revenue until shipped to the end
customer because the Company did not believe it had adequate historical data
to make a reasonable estimate of the amount of future returns as required
under Statement of Financial Accounting Standard No. 48 ("FAS No. 48"),
"Revenue Recognition When Right of Return Exists". During the first quarter
of 2003, the Company concluded that it now has sufficient shipment and return
experience to allow for the recognition of revenue on shipments to
distributors at the time of shipment, along with a reserve for estimated
returns. Accordingly, during the first quarter of 2003, the Company
recognized an additional $950,000 in product sales revenue that would have
been deferred prior to this change in estimate. The impact on gross margins
from this additional revenue was approximately $450,000 during the first
quarter of 2003.
Shipments into the Ampy/ENEL program represented approximately 61% and 78% of
total FRAM product revenue for the periods ended March 31, 2003 and 2002,
respectively.
Page-13
Product revenues at the Company's Mushkin subsidiary decreased approximately
$2.7 million to $2.7 million during the three months ended March 31, 2003, or
50%, compared to the same period in 2002. Mushkin revenues during the three
month period ended March 31, 2002 were exceptionally high and resulted from
targeting high volume low margin business. During the quarter ended June 30,
2002 the Company began to focus on higher margin, lower volume opportunities.
Additionally, during the first quarter of 2003 Mushkin recognized $311,000 of
revenue related to a change in the estimated amount of distributor product
returns as discussed above. The impact on gross margins from this additional
revenue was approximately $40,000 during the first quarter of 2003.
Product revenues at the Company's EMS subsidiary were $460,000 and $358,000
for the three months ended March 31, 2003 and 2002, respectively. The Company
recently announced its intention to realign operations of its EMS subsidiary.
This realignment will allow the Company to improve operational efficiency and
concentrate the Company's resources on its FRAM product business. As part of
the realignment, EMS reached an agreement with Hewlett Packard, its principal
customer, releasing the Company from future development and engineering costs
and product delivery requirements. The original terms of the development
contract, which included sales of the Company's ESRAM product, would have been
financially unfavorable to the Company given the contractual selling price of
the product relative to present and expected wafer foundry and manufacturing
costs. Under its revised agreement with Hewlett Packard, EMS will continue to
provide contract engineering and design services in support of the joint
product development program. EMS will also generate revenue from the product
development program it entered into with Infineon. The Company also plans to
continue seeking new opportunities and partnerships to exploit EMS' low-
latency intellectual property.
The Company recognized $117,000 and $1.4 million in license and development
fee revenue during the quarters ended March 31, 2003 and 2002, respectively.
The decline of $1.3 million resulted from recognizing the remaining revenue
related to the Company's Texas Instruments license and development agreement
during 2002. The Company continues to work with Texas Instruments on a
customer sponsored research and development basis.
The Company recognized royalty revenue of $103,000 in the quarter ended
March 31, 2003. In the same period of 2002, royalty revenue of $69,000
was recognized. Royalty income in 2003 and 2002 is attributable to FRAM
licensing agreements with existing licensees.
Customer-sponsored research and development revenue is primarily attributable
to the Company's technology development program with Texas Instruments and
product development programs with Hewlett Packard Co. and Infineon
Technologies AG. The Company recognized customer-sponsored research and
development revenue of $850,000 and $783,000 during the quarters ended
March 31, 2003 and 2002, respectively. The amount of customer sponsored
research and development revenue recognized during a given quarter is
dependent on the specific programs the Company is working on, the development
stage of each program, the costs incurred during the quarter and the amount of
work remaining to complete the program.
Page-14
COST OF SALES. Overall cost of product sales as a percentage of product
revenue during the first quarter of 2003 decreased from 76% to approximately
61% as compared with the same period in 2002. Cost of sales associated with
the Company's FRAM products decreased during the quarter from 63% in 2002 to
approximately 51% in 2003. FRAM cost of sales declined as the Company
improved manufacturing yields, shipped a more economical version of the
product used in the Ampy/ENEL metering program and realized cost reductions at
the Company's subcontract manufacturers. EMS cost of product sales increased
to 90%, for the quarter ended March 31, 2003 as compared to 49% during the
same period in 2002 due to a change in the product sales mix. EMS' sales
during the three months ended March 31, 2003 were primarily related to its new
ESRAM products which have experienced low yields. EMS product sales in the
three months ended March 31, 2002 were primarily from its high yielding low
cost 4 megabit product line. Cost of sales as a percentage of product revenue
for the Company's Mushkin subsidiary were 81% and 88% for the quarters ended
March 31, 2003 and 2002, respectively. This decrease is attributable to
changes in the focus of Mushkin sales to higher margin opportunities.
PROVISION FOR INVENTORY WRITE-DOWN. During the first quarter of 2003, the
Company increased its provision for excess and obsolete inventory by $1.3
million compared to $60,000 during the first quarter of 2002. The 2003 charge
primarily related to the realignment of the Company's EMS business due to poor
market conditions and the high costs of developing EMS' new products. As a
result, the Company believes it is unlikely existing inventories can be sold.
RESEARCH AND DEVELOPMENT. Combined research and development expenses for the
quarter ended March 31, 2003 decreased $514,000 to $2.5 million, a decrease of
17% as compared with the same period in 2002. This decline is primarily due
to decreased costs related to the development of new products at the Company's
EMS subsidiary.
SALES, GENERAL AND ADMINISTRATIVE EXPENSES. Sales, general and administrative
expenses for the quarter ended March 31, 2003 remained relatively flat at $2.7
million as compared to $2.8 million for the same period in 2002.
INTEREST EXPENSE, RELATED PARTY. Related party interest expense increased
$104,000 to $105,000 for the quarter ended March 31, 2003, as compared to the
same period in 2002, primarily due to increases in interest expense related to
the convertible debenture issued to Infineon in March 2002.
INTEREST EXPENSE, OTHER. Other interest expense increased $174,000 to
$181,000 for the three months ended March 31, 2003, primarily due to
interest expense related to convertible debentures issued to Halifax and
Bramwell in April 2002.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operations for the three months ended March 31, 2003 was
$269,000, a decrease of $1.4 million as compared to the same period in
2002. Cash used to fund operating losses, after non-cash charges, decreased
$561,000 for the three-month period ending March 31, 2003 as compared
to the same period in 2002. The decrease was due primarily to improved
operating results which reduced the operating loss (excluding provisions for
inventory write-off) between periods by $474,000.
Page-15
Accounts receivable decreases of $940,000 since the end of 2002 are primarily
attributable to collection of outstanding amounts due from a particular
Ampy/ENEL subcontractor who was delayed in paying the Company $2.6 million.
As of March 31, 2003, approximately 56% of the outstanding balance had been
collected and by April 30, 2003 96% of the outstanding balance was collected.
Inventories decreased $2.1 million during the three-month period ended
March 31, 2003. This decrease is the result of shipping FRAM product into the
Ampy/ENEL program that were built up during the fourth quarter of 2002 because
of a temporary slowdown of shipments into the Ampy/ENEL program.
Additionally, during the three months ended March 31, 2003, the Company
recorded a provision for inventory write-off of $1.3 million, primarily
related to the realignment of the Company's EMS business due to poor market
conditions and the high costs of developing EMS' new products. As a result,
the Company believes it is unlikely existing inventories can be sold.
Accounts payable and accrued liabilities decreased approximately $575,000
during the three months ended March 31, 2003, from $7.1 million at the end
of 2002 to $6.5 million at March 31, 2003. The decrease is primarily
related to reduced first quarter shipments of FRAM production wafers from the
Company's foundry partners as the Company depleted excess inventories built up
during the fourth quarter of 2002.
Deferred revenue decreased approximately $1.6 million from December 31, 2002.
This change is primarily related to a change in our estimate of returns from
distributors (refer to Results of Operations for further discussion) and
recognizing revenue on the Company's customer sponsored research and
development programs with Hewlett Packard and Infineon.
Cash used in investing activities was $364,000 for the three months ended
March 31, 2003, compared to $378,000 for the same period in 2002. Capital
expenditures were $212,000 in the three months ended March 31, 2003 compared
to $305,000 in the three-month period ended March 31, 2002. Equipment and
plant expenditures are expected to be minimal during the remainder of 2003.
During the three months ended March 31, 2003, $181,000 was expended for
intellectual property, compared to $73,000 for the same period in 2002.
During the three months ended March 31, 2003, net cash provided by financing
activities was $22,000 from the exercise of previously issued stock options.
$3.0 million of cash provided by financing activities during the three months
ended March 31, 2002 was primarily from the issuance of a $3 million, 5 year,
5% fixed rate, convertible debenture to Infineon.
Page-16
The Company is currently involved in a patent interference proceeding (see
Note 6 of Part I - "Contingencies"). If the Company is ultimately unsuccessful
in these proceedings, there would be no retroactive cash payment requirements
from the Company to the junior party as a result of such an adverse decision.
While the Company cannot accurately estimate the financial effects of such a
result, the Company believes that such a result could, depending on when a
final non-appealable judgment is ultimately rendered, materially adversely
affect the Company's FRAM product business and operating results and, thus,
have a materially adverse effect on the Company's financial condition as a
whole.
During the remainder of 2003, the Company will continue to receive cash from
product sales, a FRAM license milestone payment from an existing licensee and
ongoing Enhanced-DRAM customer-sponsored research and development programs.
In March 2003, the Company entered into a credit and security agreement with
Wells Fargo Business Credit, Inc. to provide a secured $3 million revolving
line of credit. The credit facility provides for interest at a floating rate
equal to the prime lending rate plus .50% per annum and a term of three years.
Security for the credit facility includes the Company's non-European accounts
receivable and inventories. The Company plans to use the credit facility for
working capital requirements. The Company has yet to borrow any funds under
this credit agreement.
The Company had $2.6 million in cash and cash equivalents at March 31, 2003.
The Company believes it has sufficient resources to fund its operations
through at least March 2004. In view of the Company's expected future working
capital requirements in connection with the design, manufacturing and sale of
its FRAM products, the Company's projected continuing research and
development expenditures, other operating expenditures and the potential
results of pending patent litigation, the Company may be required to seek
additional equity or debt financing. There is no assurance, however,
that the Company will be able to obtain such financing on terms acceptable to
the Company, or at all. Any issuance of common or preferred stock to obtain
additional funding would result in dilution of existing stockholders'
interests in Ramtron. The inability to obtain additional financing when
needed would have a material adverse effect on the business, financial
condition and operating results and could adversely affect the Company's
ability to continue its business operations.
Page-17
CONTRACTUAL COMMITMENTS. For more information on the Company's contractual
obligations on operating leases and contractual commitments, see Notes 5 and
6 of the Notes to Consolidated Financial Statements included in the Company's
2002 Form 10-K. At March 31, 2003, the Company's commitments under these
obligations were as follows (in thousands):
Operating NEBF Convertible
Leases Consulting Fee(1) Debentures Total
--------- --------------- ----------- -------
2003 $ 740 $ 65 $ -- $ 805
2004 745 80 -- 825
2005 19 80 -- 99
2006 15 80 -- 95
2007 -- 80 8,000 8,080
------ ---- ------ ------
Total $1,519 $385 $8,000 $9,904
====== ==== ====== ======
- -----------
(1) These consulting fees are required to be paid to NEBF as long as NEBF owns
at least 5% of the outstanding shares of the Company.
The Company's EMS subsidiary has entered into an agreement with its
subcontract assembly and test supplier. If the committed volume of 500,000
units under this agreement are not manufactured by the end of 2003, EMS may be
liable for $1.00 per unit for the volume shortfall.
CRITICAL ACCOUNTING POLICIES. The Company's discussion and analysis of its
financial condition and results of operations are based upon its consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires the Company to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. On an
on-going basis, the Company evaluates its estimates, including those related
to bad debts, inventories, long-lived assets, income taxes, and contingencies
and litigation. The Company bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions.
REVENUE RECOGNITION. Revenue from product sales to direct customers is
recognized upon shipment as the Company generally does not have any post-
shipment obligations or allow for any acceptance provisions. The Company
defers recognition of sales to distributors when it is unable to make a
reasonable estimate of product returns due to insufficient historical product
return information.
Revenue from licensing programs is recognized over the period the Company is
required to provide services under the terms of the agreement. Revenue from
research and development activities that are funded by customers are
recognized as the services are performed, generally, as contractual
milestones are met. In situations where the Company licenses its technology
and also provides development assistance, the Company records the total
proceeds to be received as revenue over the longer licensing period.
Page-18
Revenue from royalties is recognized upon the shipment of product from the
Company's technology license partners to direct customers.
SIGNIFICANT POLICIES AFFECTED BY JUDGMENTS AND ESTIMATES. The Company
believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its
consolidated financial statements.
The Company generally records product sales revenue upon shipment to the
customer or distributor. Product sales revenue in a given period is reduced
by an estimated allowance for expected product returns based on historical
information. The revenue recorded by the Company in each reporting period is
dependent on estimates of product return rates. Changes in return rate
estimates could result in revisions to the amount of product revenue
recognized in a given period.
The Company records license and customer sponsored research and development
revenue on arrangements entered into with customers. The revenue recorded by
the Company in each reporting period is dependent upon estimates regarding
the cost of projects and the achievement of milestones. Changes in estimates
regarding these matters could result in revisions to the amount of revenue
recognized on these arrangements.
While the Company maintains a stringent credit approval process, significant
judgments are made by management in connection with assessing our customers'
ability to pay at the time of shipment. Despite this assessment, from time
to time, our customers are unable to meet their payment obligations. The
Company continues to monitor our customers' credit worthiness, and use our
judgment in establishing the estimated amounts of customer receivables, which
will ultimately not be collected. A significant change in the liquidity or
financial position of our customers could have a material adverse impact on
the collectibility of our accounts receivable and our future operating
results.
The Company writes down its inventory for estimated obsolescence or lack of
marketability for the difference between the cost of inventory and the
estimated market value based upon assumptions about future demand and market
conditions. If actual market conditions are less favorable than those
projected by management, additional inventory write-downs may be required.
The Company reviews the carrying values of its long-lived assets whenever
events or changes in circumstances indicate that such carrying values may not
be recoverable. Under current standards, the assets must be carried at
historical cost if the projected cash flows from their use will recover their
carrying amounts on an undiscounted basis and without considering interest.
However, if projected cash flows are less than their carrying value, the
long-lived assets must be reduced to their estimated fair value.
Considerable judgment is required to project such cash flows and, if
required, estimate the fair value of the impaired long-lived asset. The
estimated future cash flows are based upon, among other things, assumptions
about expected future operating performance and may differ from actual cash
flows. There can be no assurance that future long-lived asset impairments
will not occur.
Page-19
Goodwill represents the excess of the purchase price over the fair
value of identifiable net tangible and intangible assets acquired in a
business combination. Goodwill is required to be tested for impairment
annually, or more frequently if events or changes in circumstances indicate
that goodwill may be impaired. The Company performed its annual goodwill
impairment testing as of December 31, 2002, and determined that no impairments
existed at those dates. This assessment requires estimates of future revenue,
operating results and cash flows, as well as estimates of critical valuation
inputs such as discount rates, terminal values and similar data. The Company
will continue to perform periodic and annual impairment analyses of goodwill
resulting from its acquisitions. As a result of future periodic, at least
annual, impairment analyses, impairment charges may be recorded and may have a
material adverse impact on the financial position and operating results of the
Company. Additionally, the Company may make strategic business decisions in
future periods which impact the fair value of goodwill, which could result in
significant impairment charges. There can be no assurance that future
goodwill impairments will not occur.
The Company records deferred tax assets and liabilities for the estimated
future tax effects of temporary differences between the tax basis of assets
and liabilities and amounts recorded in the consolidated financial
statements, and for operating loss and tax credit carryforwards. Realization
of the recorded deferred tax assets is dependent upon the Company generating
sufficient taxable income in the appropriate tax jurisdiction in future years
to obtain benefit from the reversal of net deductible temporary differences
and from tax credit and operating loss carryforwards. A valuation allowance
is provided to the extent that management deems it more likely than not that
the net deferred tax assets will not be realized. The amount of deferred tax
assets considered realizable is subject to adjustment in future periods if
estimates of future taxable income are changed.
NEW ACCOUNTING STANDARDS
In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 146, "Accounting for Exit or Disposal Activities," ("SFAS No. 146"). SFAS
No. 146 addresses the recognition, measurement and reporting of costs that are
associated with exit and disposal activities, including restructuring
activities that are currently accounted for pursuant to the guidance set forth
in EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity." SFAS No. 146 will
be effective for exit or disposal activities that are initiated after
December 31, 2002. The Company adopted SFAS No. 146 on January 1, 2003.
There was no material impact on the Company's financial position or results of
operations from the adoption of SFAS. No. 146.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN No. 45"). FIN No. 45 requires
a liability to be recognized at the time a company issues a guarantee for the
fair value of the obligations assumed under certain guarantee agreements.
Additional disclosures about guarantee agreements are also required in the
Page-20
interim and annual financial statements, including a roll forward of the
entity's product warranty liabilities. The provisions for initial recognition
and measurement of guarantee agreements are effective on a prospective basis
for guarantees that are issued or modified after December 31, 2002. The
Company adopted FIN No. 45 on January 1, 2003. There was no material impact
on the Company's financial position or results of operations from the adoption
of FIN No. 45.
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN No. 46"). This interpretation clarifies
existing accounting principles related to the preparation of consolidated
financial statements when the equity investors in an entity do not have the
characteristics of a controlling financial interest or when the equity at risk
is not sufficient for the entity to finance its activities without additional
subordinated financial support from others parties. FIN No. 46 requires a
company to evaluate all existing arrangements to identify situations where a
company has a "variable interest" (commonly evidenced by a guarantee
arrangement or other commitment to provide financial support) in a "variable
interest entity" (commonly a thinly capitalized entity) and further determine
when such variable interests require a company to consolidate the variable
interest entities' financial statements with its own. The Company is required
to perform this assessment by September 30, 2003 and consolidate any variable
interest entities for which it will absorb a majority of the entities'
expected losses or receive a majority of the expected residual gains.
Management has not yet performed this assessment, however it is not aware of
any material variable interest entities that it may be required to
consolidate.
OUTLOOK
The Company expects revenues will continue to be variable in the foreseeable
future until the Company's products gain wider market acceptance, the Company
reduces its dependence on certain key customers for product revenues, there is
increased stability in world-wide DRAM markets, new products are developed and
the Company's products can be manufactured in increased volumes and in a more
cost-effective manner.
The Company is continuing its efforts to improve and increase commercial
production and sales of its FRAM and DRAM module products, decrease the cost
of producing such products and develop and commercialize new FRAM and DRAM
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.
Page-21
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact the financial
position, results of operations or cash flows of the Company due to adverse
changes in financial and commodity market prices and rates. The Company is
exposed to market risk in the areas of changes in United States interest rates
and changes in foreign currency exchange rates as measured against the United
States dollar. These exposures are directly related to its normal operating
activities. The Company currently has no derivative financial instruments.
Interest payable on the Company's convertible debentures is fixed at 5% over
the term of the debentures. As such, changes in interest rates will not
affect future earnings or cash flows.
The Company manages interest rate risk by investing its excess cash in cash
equivalents bearing variable interest rates, which are tied to various market
indices. The Company does not believe that near-term changes in interest
rates will result in a material effect on future earnings, fair values or cash
flows of the Company. The net effect of a 10% change in interest rates on
outstanding cash and cash equivalents at March 31, 2003 would have less
than an $100,000 effect on the Company's earnings or cash flows.
ITEM 4 - CONTROLS AND PROCEDURES
Within 90 days of the filing of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the disclosure controls and
procedures of the Company as defined in Exchange Act Rule 13(a)-14. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
have determined that such controls and procedures are effective. There have
been no significant changes in the Company's internal controls or other
factors that could significantly affect these controls, nor any significant
deficiencies or material weaknesses in such controls requiring corrective
actions, subsequent to the date of their evaluation.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
While there have been no material developments during the first quarter of
2003 in any previously reported litigation, see Note 6 of Part I for a current
description of on-going litigation.
ITEMS 2-5 - NONE
Page-22
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
4.1 Credit and Security Agreement between Registrant, Enhanced
Memory Systems, Inc. and Mushkin Inc. and Wells Fargo Business
Credit, Inc. dated March 31, 2003.
4.2 Revolving Note between Registrant and Wells Fargo Business
Credit, Inc. dated March 31, 2003.
4.3 Revolving Note between Enhanced Memory Systems, Inc. and Wells
Fargo Business Credit, Inc. dated March 31, 2003.
4.4 Revolving Note between Mushkin Inc. and Wells Fargo Business
Credit, Inc. dated March 31, 2003.
4.5 Guaranty by Registrant of Enhanced Memory Systems, Inc. for
the benefit of Wells Fargo Business Credit, Inc. dated
March 31, 2003.
4.6 Guaranty by Registrant of Mushking Inc. for the benefit of
Wells Fargo Business Credit, Inc. dated March 31, 2003.
99.1 Certification of Principal Financial Officer pursuant to
18 U.S.C. SECTION 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Principal Executive Officer pursuant to
18 U.S.C. SECTION 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
On February 27, 2003, the Registrant filed a report on Form 8-K. The
items reported were Item 5 - "Other Events" and Item 7 - "Financial
Statements and Exhibits."
On April 14, 2003, the Registrant filed a report on Form 8-K. The
items reported were Item 5 - "Other Events" and Item 7 - "Financial
Statements and Exhibits."
On May 2, 2003, the Registrant filed a report on Form 8-K. The
items reported were Item 5 - "Other Events" and Item 7 - "Financial
Statements and Exhibits."
Page-23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RAMTRON INTERNATIONAL CORPORATION
(Registrant)
May 14, 2003 /S/ LuAnn D. Hanson
-------------------------
LuAnn D. Hanson
Chief Financial Officer
(Principal Accounting Officer)
Page-24
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATIONS FOR FORM 10-Q
I, William W. Staunton, III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ramtron
International Corporation.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
Page-25
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
/S/ William W. Staunton, III
- ----------------------------
William W. Staunton, III
Chief Executive Officer
Date: May 14, 2003
Page-26
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATIONS FOR FORM 10-Q
I, LuAnn D. Hanson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ramtron
International Corporation.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
Page-27
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
/S/ LuAnn D. Hanson
- ----------------------------
LuAnn D. Hanson
Chief Financial Officer
Date: May 14, 2003
Page-28