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, 2005
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
- ------------------------------------------------------------------------------
(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 the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). 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 - 22,420,126 shares as of May 6, 2005.
Page-1
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
(a) Consolidated Balance Sheets as of March 31, 2005 and
December 31, 2004 . . . . . . . . . . . . . . . . . . . . 3
(b) Consolidated Statements of Operations for the
Three Months ended March 31, 2005 and 2004 . . . . . . . 4
(c) Consolidated Statements of Cash Flows for the
Three Months ended March 31, 2005 and 2004 . . . . . . . 5
(d) Notes to Financial Statements . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 33
Item 4. Controls and Procedures . . . . . . . . . . . . . . . . . . . 34
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 36
Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Page-2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except par value and share amounts)
Mar. 31, Dec. 31,
2005 2004
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 3,812 $ 6,384
Restricted cash 48 219
Accounts receivable, less allowances
of $122 and $181, respectively 7,272 8,606
Inventories 6,599 5,769
Other current assets 428 441
--------- ---------
Total current assets 18,159 21,419
Property, plant and equipment, net 4,174 3,991
Goodwill, net 4,020 4,020
Intangible assets, net 3,892 3,797
Other assets 379 426
--------- ---------
Total assets $ 30,624 $ 33,653
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,926 $ 3,765
Accrued liabilities 1,659 2,957
Deferred revenue 1,224 1,350
Current portion of long-term promissory notes 250 250
Liabilities of discontinued operation 239 239
--------- ---------
Total current liabilities 6,298 8,561
Deferred revenue 4,697 4,986
Long-term promissory notes net of unamortized
discount of $1,024 and $1,151, respectively 5,067 4,914
--------- ---------
Total liabilities 16,062 18,461
--------- ---------
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 authorized;
22,420,126 and 22,380,126 shares issued and
outstanding, respectively 224 224
Additional paid-in capital 235,548 235,455
Accumulated deficit (221,210) (220,487)
--------- ---------
Total stockholders' equity 14,562 15,192
--------- ---------
Total liabilities and stockholders' equity $ 30,624 $ 33,653
========= =========
See accompanying notes to consolidated financial statements.
Page-3
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED March 31, 2005 AND 2004
(Unaudited)
(Amounts in thousands, except per share amounts)
2005 2004
--------- ---------
Revenue:
Product sales $ 12,494 $ 12,953
License and development fees 179 179
Royalties 231 208
Customer-sponsored research and development 125 142
--------- ---------
13,029 13,482
--------- ---------
Costs and expenses:
Cost of product sales, exclusive of provision for
inventory write-off and warranty charge 8,219 7,714
Provision for inventory write-off and warranty charge 872 60
Research and development 1,711 1,365
Customer-sponsored research and development 166 141
General and administrative 992 1,156
Sales and marketing 1,517 1,521
--------- ---------
13,477 11,957
--------- ---------
Operating income (loss) (448) 1,525
Interest expense, related party (81) (144)
Interest expense, other (210) (217)
Other income, net 16 5
--------- ---------
Income (loss) from continuing operations (723) 1,169
Loss from discontinued operation -- (333)
--------- ---------
Net income (loss) $ (723) $ 836
========= =========
Net income (loss) per share:
Basic:
Income (loss) from continuing operations $ (0.03) $ 0.05
Loss from discontinued operation -- (0.01)
--------- ---------
Total $ (0.03) $ 0.04
========= =========
Diluted:
Income (loss) from continuing operations $ (0.03) $ 0.05
Loss from discontinued operation -- (0.01)
--------- ---------
Total $ (0.03) $ 0.04
========= =========
Weighted average shares outstanding:
Basic 22,415 22,195
========= =========
Diluted 22,415 23,121
========= =========
See accompanying notes to consolidated financial statements.
Page-4
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(Unaudited)
(Amounts in thousands)
2005 2004
--------- ---------
Cash flows from operating activities:
Net income (loss) $ (723) $ 836
Adjustments used to reconcile net income
(loss) to net cash used in operating activities:
Loss from discontinued operation -- 333
Depreciation and amortization 328 342
Amortization of debt discount 127 196
Imputed interest on note payable 26 --
Provision for inventory write-off and warranty charge 872 60
Loss on abandonment of patents 13 13
Gain on disposition of equipment (149) (30)
Stock options issued for services 16 --
Changes in assets and liabilities:
Accounts receivable 1,334 (2,019)
Inventories (1,363) (95)
Accounts payable and accrued liabilities (2,476) (240)
Deferred revenue (415) (400)
Other 60 39
--------- ---------
Net cash used in operating activities (2,350) (965)
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (464) (11)
Proceeds from sale of assets 162 130
Change in restricted cash 171 207
Payments for intellectual property (168) (19)
Net cash used in discontinued operation -- (135)
--------- ---------
Net cash (used in) provided by investing
activities (299) 172
--------- ---------
Cash flows from financing activities:
Proceeds from line of credit -- 750
Principal payments on promissory notes -- (600)
Issuance of common stock 77 12
--------- ---------
Net cash provided by financing activities 77 162
--------- ---------
Net decrease in cash and cash equivalents (2,572) (631)
Cash and cash equivalents, beginning of period 6,384 4,798
--------- ---------
Cash and cash equivalents, end of period $ 3,812 $ 4,167
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 85 $ 43
========= =========
Cash paid for income taxes $ 60 $ --
========= =========
See accompanying notes to consolidated financial statements.
Page-5
RAMTRON INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
- ------------------------------------------------------------------------------
NOTE 1. BASIS OF PRESENTATION
The accompanying consolidated financial statements at March 31, 2005 and
December 31, 2004 and for the three months ended March 31, 2005 and 2004 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,
2004. The results of operations for the period ended March 31, 2005 are
not necessarily indicative of the operating results for the full year.
NOTE 2. RECLASSIFICATIONS
Certain 2004 balances have been reclassified to conform to the current year
presentation.
NOTE 3. NEW ACCOUNTING PRONOUNCEMENTS
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment." This
Standard addresses the accounting for transactions in which a company receives
employee services in exchange for (a) equity instruments of the Company or (b)
liabilities that are based on the fair value of the Company's equity
instruments or that may be settled by the issuance of such equity instruments.
This Standard also eliminates the ability to account for share-based
compensation transactions using Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and requires that such
transactions be accounted for using a fair-value-based method. The Standard is
effective for periods beginning after January 1, 2006. The Company is
currently assessing its valuation options allowed in this Standard. Even
though the Company has not quantified the dollar amount of this new accounting
standard, the result will have a negative impact on the Company's earnings
starting with the accounting period beginning January 1, 2006.
Page-6
NOTE 4. 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 to employees 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 income or 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, an
Amendment of FASB Statement No. 123," the Company's net income (loss) for the
three month periods ended March 31, 2005 and 2004 would have changed to the
following adjusted amounts:
Three Months Ended
March 31,
-------------------------
2005 2004
-------- --------
(in thousands, except per share amounts)
Net income (loss) as reported $ (723) $ 836
Stock-based employee compensation cost
included in net income (loss) as reported -- --
Stock-based employee compensation cost
that would have been included in net
income (loss) if the fair value method
has been applied to all awards 439 379
-------- --------
Pro forma net income (loss) as if the
fair value method had been applied to
all awards $(1,162) $ 457
======== ========
Net income (loss) per share:
Basic - as reported $ (0.03) $ 0.04
======== ========
Basic - pro forma $ (0.05) $ 0.02
======== ========
Diluted - as reported $ (0.03) $ 0.04
======== ========
Diluted - pro forma $ (0.05) $ 0.02
======== ========
Page-7
For disclosure purposes, the fair value of stock based compensation was
computed using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants during the three months ended
March 31, 2005 and 2004:
2005 2004
---------- ----------
Risk free interest rate 4.17% 3.00%
Expected dividend yield 0% 0%
Expected lives 4.0 years 4.0 years
Expected volatility 93% 109%
The weighted average fair value per share of shares granted during the three
months ended March 31, 2005 and 2004 was $2.65 and $2.36, respectively.
NOTE 5. INVENTORIES
Inventories consist of:
Mar. 31, Dec. 31,
2005 2004
--------- --------
(in thousands)
Finished goods $2,926 $3,973
Work in process 3,946 2,136
Obsolescence reserve (273) (340)
------- -------
$6,599 $5,769
======= =======
During the quarter ended March 31, 2005, the Company's FRAM Segment took a
provision for inventory write-downs of approximately $872,000 due to low
startup yields on our 0.35-micron manufacturing line. In connection with the
low yields, we recently discovered that under very unique application
conditions, one of our 0.35 products had an operating sensitivity that may
cause it to not perform as expected. The provision for inventory write-off
includes, among other things, actual and anticipated costs to re-screen our
existing inventory as well as potential warranty costs associated with product
that has been purchased by customers that may be subject to the re-screening
process.
NOTE 6. EARNINGS PER SHARE
We calculate income (loss) per share pursuant to Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128). Under SFAS
No. 128, basic net income (loss) per share is computed by dividing reported
net income (loss) available to common stockholders by weighted average shares
outstanding. Diluted net 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 we recorded a
net loss, all potentially dilutive securities, including warrants and stock
options, would be anti-dilutive and thus, are excluded from diluted loss per
share.
Page-8
The following table sets forth the calculation of net income (loss) per common
share for the three months ended March 31, 2005 and 2004 (in thousands, except
per share amounts):
Three Months Ended
March 31,
2005 2004
-------- --------
Net income (loss) $ (723) $ 836
======== ========
Common shares outstanding:
Historical common shares outstanding at
beginning of period 22,380 22,191
Weighted average common shares issued
during period 35 4
-------- --------
Weighted average common shares at
end of period - basic 22,415 22,195
Effect of other dilutive securities:
Options -- 673
Warrants -- 253
-------- --------
Weighted average common shares at
end of period - diluted 22,415 23,121
======== ========
Net income (loss) per share:
- basic $ (0.03) $ 0.04
======== ========
- diluted $ (0.03) $ 0.04
======== ========
As of March 31, 2005, we had several equity instruments or obligations that
could create future dilution to the Company's common stockholders and are not
currently classified as outstanding common shares of the Company. The
following table details the shares of common stock that are excluded from the
calculation of earnings per share (prior to the application of the treasury
stock method) due to their impact being anti-dilutive:
Three Months Three Months
Ended Ended
March 31, 2005 March 31, 2004
-------------- --------------
(in thousands)
Warrants 2,331 2,331
Options 4,995 4,500
Convertible debentures 1,203 1,592
Page-9
NOTE 7. CONTINGENCIES
PATENT INTERFERENCE PROCEEDING. On April 6, 2004, the Company and National
Semiconductor Corporation (National) entered into an agreement to settle
their long standing patent interference dispute, which began in 1991 as a
patent interference proceeding that was declared in the United States Patent
and Trademark Office (the Patent Office) in regard to one of our issued United
States patents. The patent involved covers a basic ferroelectric memory cell
design invention that we believe is of fundamental importance to its FRAM
business in the United States.
Under the terms of the settlement agreement Ramtron has abandoned four of the
five claims in its existing patent, two of National's patent applications
relating to the interference claims have been assigned to Ramtron and two
others were retained by National. National and Ramtron have agreed to
cross license any and all future patents that may mature from the four
applications at no additional cost to either company. As consideration for
the assigned patent applications and cross license provisions of the
agreement, Ramtron will pay National $2.5 million in equal annual installments
of $250,000 through 2013. At March 31, 2004, we recorded an intangible asset
and current and long-term debt of approximately $1,955,000, the present value
of the annual installment payments. We have not recorded an impairment of the
existing patents held for the technology in dispute as we believe, with the
assignments and cross-license arrangements discussed previously, we are in a
position now, insofar as our ability to use the technology in dispute is
concerned, that is at least as favorable as our position prior to this
resolution. In addition, we believe the amounts capitalized related to these
patents and licenses will be recovered through future cash flows.
The fifth remaining count of interference has been sent to a Special Master
for a final ruling. We believe our business would not be materially
affected by an adverse judgment by the Special Master on the remaining count
of interference. The disposition of this matter, expected in 2005, is not
expected to have a material adverse effect on our business, financial
condition or results of operations.
NOTE 8. LONG-TERM DEBT
On March 14, 2002, we signed an agreement to issue $8.0 million of 5 year, 5%
fixed rate, convertible debentures. 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, and is convertible at any time
up to the maturity date of March 28, 2007. The debentures are secured by a
Deed of Trust on our headquarters facility in Colorado Springs, Colorado and
by a security interest in certain of our accounts receivable and patents.
Page-10
In addition, 700,435, 5-year common stock warrants were issued to the
investors with an initial exercise price of $4.28 per share. The warrants
were valued using the Black-Scholes option pricing model with a resulting
total value of approximately $1,773,000 at March 28, 2002. 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
as of March 31, 2005 and December 31, 2004 as a result of the issuance of the
warrants is approximately $679,000 and $763,000, respectively.
As a result of the conversion terms of these debentures, a beneficial
conversion feature of $900,000 was created. This beneficial conversion
feature was recorded as an increase to additional paid-in capital and as a
debt discount to the outstanding debentures. This discount is being
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, 2005 and December 31, 2004 as a result of the beneficial
conversion feature is approximately $345,000 and $388,000, respectively.
The debentures contain covenants including, without limitation, achieving a
minimum amount of earnings before interest, taxes, depreciation and
amortization (EBITDA), as defined in the debenture agreements. As of June 30,
2003, the Company failed to meet the minimum EBITDA covenant under the
debenture agreements, which by the terms of the debentures became an event of
default on July 30, 2003 (the Default). On August 18, 2003, we entered into
a Waiver and Amendment to Debenture Agreement (the Waiver Agreement) with the
debenture holders. The Waiver Agreement provided for a waiver of the Default
as well as a waiver of all remaining EBITDA covenants during 2003. In
addition, the Waiver Agreement required that we make quarterly principal
payments to the debenture holders over the following six quarters. Through
December 31, 2004, we had made principal payments totaling approximately $3.5
million. To fulfill our Waiver Agreement obligations we made a final
quarterly principal payment of $125,000 on December 31, 2004. As of March 31,
2005 and December 31, 2004, $4,535,000 were outstanding on these debentures.
In addition, the Waiver Agreement provided for lowering the exercise price of
the 700,435 common stock warrants held by the debenture holders from $4.28 to
a price equal to 150% of the average closing bid price for the Company's
common stock for the 5-trading days immediately preceding the effective date
of the Waiver Agreement ($3.04) and an extension of the exercise period for
one year. The adjustment to the original terms of the warrants created an
additional non-cash increase to debt discount and additional paid-in capital
of approximately $179,000, which was recorded during the quarter ended
September 30, 2003 and is included in the unamortized debt discount balances
disclosed above. This increase to debt discount is being amortized into
interest expense over the remaining life of the debentures.
As of March 31, 2005, we were in compliance with all covenants of the
debentures.
Page-11
On April 6, 2004, we entered into an agreement to settle our long standing
patent interference proceeding with National Semiconductor Corporation (see
Note 7 of these Notes of Consolidated Financial Statements above). As a
result of the settlement, beginning April 2004, we are required to pay
National $250,000 annually through 2013. As of March 31, 2005, the present
value of this promissory note is $1,806,000, which is being discounted at
5.75%.
On March 31, 2003, we signed an agreement with Wells Fargo Business Credit,
Inc. to provide a secured $3.0 million revolving line of credit. The
credit facility provided for interest at a floating rate equal to the prime
lending rate plus 1.75% per annum and a term of 3 years. Security for the
credit facility included the Company's non-European accounts receivable and
inventories. As of March 31, 2005, there were no amounts outstanding on
this line of credit. On April 1, 2005, we terminated our agreement with Wells
Fargo Business Credit, Inc.
On April 1, 2005, we entered into a $4 million revolving secured credit
facility ("New Credit Facility") with Silicon Valley Bank, a subsidiary of
Silicon Valley Bancshares. The New Credit Facility provides for a $4 million
secured revolving credit facility. The New Credit Facility replaces the
existing $3.0 million line of credit with Wells Fargo Business Credit, Inc.
The New Credit Facility provides for interest at a floating rate equal to the
prime lending rate plus 0.50% per annum, a minimum interest rate of 6.00% per
year and a term of two years. Security for the credit facility includes all
of our assets except for our intellectual property, European receivables, and
real estate. The Credit Facility contains terms and covenants typically found
in such agreement and is subject to the terms of the definitive loan
agreement.
NOTE 9. 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.
Our continuing operations are conducted through two business segments, our
FRAM business and our DRAM business. Our FRAM business is our primary
business segment that develops, manufactures and sells ferroelectric
nonvolatile random access memory products and licenses the technology related
to such products. Our secondary business segment is our wholly owned
subsidiary, Mushkin Inc., which distributes high-speed DRAM module products in
the aftermarket through both direct, retail, and e-commerce sales channels.
The accounting policies for determining segment net income are the same used
in the consolidated financial statements. There are no internal sales between
segments.
Page-12
The following table presents segment information for the three months ended
March 31, 2005 and 2004.
2005 2004
----------------------------- -----------------------------
FRAM DRAM Total FRAM DRAM Total
----------------------------- -----------------------------
(in thousands)
Revenue:
Product sales $ 7,493 $ 5,001 $12,494 $ 8,427 $ 4,526 $12,953
License and
development fees 179 -- 179 179 -- 179
Royalties 231 -- 231 208 -- 208
Customer-sponsored
research and development 125 -- 125 142 -- 142
-------- -------- -------- -------- -------- --------
8,028 5,001 13,029 8,956 4,526 13,482
Costs and expenses 8,374 5,103 13,477 7,586 4,371 11,957
-------- -------- -------- -------- -------- --------
Segment income (loss) $ (346) $ (102) $ (448) $ 1,370 $ 155 $ 1,525
======== ======== ======== ======== ======== ========
Segment income excludes interest income, interest expense and miscellaneous
charges on a total basis of $(275,000) and $(356,000) in 2005 and 2004,
respectively, not allocated to business segments.
NOTE 10. 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 Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets (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 (SFAS No. 144)." At least
annually, we complete an analysis of the fair value of goodwill to determine
if there is an indicated impairment of our goodwill. The determination of
impairment of goodwill and other intangible assets requires significant
judgments and estimates.
There was no change in the carrying amount of goodwill for the three-month
period ended March 31, 2005.
Page-13
Included in intangible assets on the Company's Consolidated Balance Sheets are
intangible assets with determinable lives as follows:
March 31, December 31,
2005 2004
------------ ------------
(in thousands)
Amortizable intangible assets:
Patents $ 6,275 $ 6,124
Accumulated amortization (2,383) (2,327)
-------- --------
Total $ 3,892 $ 3,797
======== ========
Amortization expense for intangible assets for the three months ended
March 31, 2005 and 2004, was approximately $60,000 and $107,000, respectively.
Estimated amortization expense for intangible assets, is $252,000 annually in
2005 through 2009 and $2.6 million thereafter.
NOTE 11. DISCONTINUED OPERATION
During the first quarter of 2004, we committed to a plan to sell
substantially all of the remaining assets of EMS. The remaining assets
consisted primarily of EMS' patent portfolio. We completed the sale
of EMS' patent portfolio on April 20, 2004, the proceeds of which were
$1.5 million. Due to a write-down of the carrying value of the patent
portfolio to its estimated fair value at March 31, 2004, there was no gain or
loss recorded on the finalization of the sale. Pursuant to the terms of the
Security Agreement with Infineon, we were required to seek a release from
Infineon for the sale of EMS' patent portfolio. This release required that
all amounts due to Infineon in 2004 under the Waiver Agreement (see Note 8 of
these Notes of Consolidated Financial Statements above) be paid upon receipt
of the proceeds from the sale of EMS' patent portfolio.
In accordance with SFAS No. 144, our consolidated financial statements have
been recast to present this business as a discontinued operation.
Accordingly, the revenue, costs and expenses and assets and liabilities of the
discontinued operation have been excluded from the respective captions in the
Consolidated Statements of Operations and Balance Sheets and have been
reported in the various statements under the caption, "Loss from discontinued
operation," "Assets of discontinued operation" and "Liabilities of
discontinued operation" for all periods. In addition, certain of the Notes to
Consolidated Financial Statements have been recast for all periods to reflect
the discontinuance of this operation.
Page-14
Summary results for the discontinued operation are as follows (in thousands):
For the three months ended
March 31,
--------------------------
2005 2004
-------- --------
Operating results:
Revenue $ -- $ 295
Costs and expenses -- (264)
Impairment of patents -- (364)
-------- --------
Loss from discontinued
operation $ -- $ (333)
======== ========
Amounts included in the March 31, 2005 and December 31, 2004 Consolidated
Balance Sheets for the discontinued operation are as follows (in thousands):
March 31, December 31,
2005 2004
-------- ------------
Liabilities of discontinued operation:
Accounts payable $ 239 $ 239
======== ========
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS; FACTORS AFFECTING FUTURE RESULTS
The following discussion and analysis is intended to provide greater details
of the results of operations and financial condition of the Company. The
following discussion should be read in conjunction with our consolidated
financial statements and notes thereto and other financial data included
elsewhere herein. Certain statements under this caption constitute "forward-
looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, and, as such, are based on current expectations and are
subject to certain risks and uncertainties. The reader should not place undue
reliance on these forward-looking statements for many reasons including those
risks discussed under "Factors that May Affect Future Results" and elsewhere
in this document. Forward-looking statements may be identified by the use of
forward-looking words or phrases such as "will," "may," "believe," "expect,"
"intend," "anticipate," "could," "should," "plan," "estimate," and
"potential," or other similar words.
Page-15
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements requires us 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, we evaluate our estimates, including those related to bad
debts, inventories, long-lived assets, income taxes, and contingencies and
litigation. We base our 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. The Company's significant accounting policies are
discussed in Note 1 of the Notes to Consolidated Financial Statements included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2004; critical estimates inherent in these accounting policies are discussed
in the following paragraphs.
Revenue from product sales to direct customers is recognized upon shipment as
we generally do not have any post-shipment obligations or allow for any
acceptance provisions. In the event a situation occurs to create a post-
shipment obligation, we would defer revenue recognition until the specific
obligation was satisfied. We defer recognition of sales to distributors when
we are unable to make a reasonable estimate of product returns due to
insufficient historical product return information. The revenue recorded is
dependent upon estimates of expected customer returns and sales discounts.
Revenue from licensing programs is recognized over the period we are
required to provide services under the terms of the agreement. Revenue from
research and development activities that are funded by customers is
recognized as the services are performed.
Revenue from royalties is recognized upon the notification to us of shipment
of product from our technology license partners to direct customers.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS. While we maintain a stringent credit
approval process, significant judgments are made by management in assessing
our customers' ability to pay at the time of shipment. Despite this
assessment, from time to time, customers are unable to meet their payment
obligations. We continue to monitor customers' credit worthiness, and
use judgment in establishing the estimated amounts of customer receivables
that will ultimately not be collected. A significant change in the
liquidity or financial position of customers could have a material adverse
impact on our ability to collect accounts receivable and future operating
results.
INVENTORY VALUATION. We write-down our 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.
Page-16
LONG-LIVED ASSETS. We review the carrying values of 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.
GOODWILL. 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. We performed our annual goodwill impairment
testing as of December 31, 2004, and determined that no impairment existed
at that date. 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. We continue
to perform periodic and annual impairment analyses of goodwill resulting from
acquisitions. As a result of such impairment analyses, impairment charges
may be recorded and may have a material adverse impact on our financial
position and operating results. Additionally, we 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.
DEFERRED INCOME TAXES. We record 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 depends on our ability to generate
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.
Page-17
RESULTS OF OPERATIONS
OVERVIEW
We have been engaged primarily in the research and development of
ferroelectric technology and the design, development and commercialization of
FRAM products and the reselling of DRAM memory modules. Revenue has been
derived from the sale of our FRAM and DRAM products since 1992. We have also
generated revenue under license and development agreements for specific
applications of our technologies with a limited number of established
semiconductor manufacturers. Accordingly, fluctuations in our revenue have
resulted primarily from the timing of significant product orders, the timing
of the signing of license and development agreements, and the achievement of
related performance milestones.
Our continuing operations are conducted through two business segments, our
FRAM business and our DRAM business. Our FRAM business is our primary
business segment that develops, manufactures and sells ferroelectric
nonvolatile random access memory products and licenses the technology related
to such products. Our secondary business segment is our wholly owned
subsidiary, Mushkin Inc., which distributes high-speed DRAM module products in
the aftermarket through direct, retail, and e-commerce sales channels.
Our revenue was $13.0 million and $13.5 million for the three month periods
ended March 31, 2005 and 2004, respectively. We reported a net loss of
$723,000 for the first quarter of 2005, or a loss of $0.03 per diluted share,
compared with net income of $836,000 that included a loss from our
discontinued operation, or $0.04 per diluted share, for the first quarter of
2004.
For the three month periods ending March 31, 2005 and 2004, FRAM product sales
represented approximately 60% and 65% of total product sales revenue,
respectively, while DRAM product sales represented 40% and 35% for the same
periods. During these periods, product sales revenue accounted for
approximately 96% of total revenue, the remainder of which was generated
principally from license and development fees, royalties and customer-
sponsored research and development revenue.
First-quarter revenue from continuing operations decreased 3% to $13 million
from the same period a year ago. Product sales decreased 4% from the first
quarter of 2004, with total FRAM product sales decreasing 11%. Core FRAM, or
non-ENEL, product revenue was up 46% from a year ago, while ENEL product
revenue decreased 66% and represented 19% of total FRAM product revenue in the
first quarter of 2005. We shipped approximately 900,000 units into the ENEL
metering program during the quarter and approximately 7.4 million units to all
other customers.
Product revenue of $5.0 million at our Mushkin business unit increased
$475,000, or 10%, from the same quarter of 2004. DRAM product revenue
resulted from its substantial retail presence primarily through Fry's
Electronics (Fry's) and ABS Computer Technologies (ABS). Currently, Fry's and
ABS's sales represent approximately 72% of Mushkin's first quarter revenue,
compared to 70% for the same period in 2004.
Page-18
Our costs and expenses were $13.5 million during the three months ended
March 31, 2005, compared with $12.0 million for the same period in 2004.
Cost of product sales as a percentage of product revenue, including provision
for inventory write-off, were 73% and 60% for the three month periods ending
March 31, 2005 and 2004, respectively. Correspondingly, gross margin rates
were 27% and 40% for the same periods of 2005 and 2004. FRAM product gross
margins during the three months ending March 31, 2005 were 41%, compared with
54% during the same period of 2004.
During the quarter ended March 31, 2005, the Company's FRAM Segment took a
provision for inventory write-downs of approximately $872,000 due to low
startup yields on our 0.35-micron manufacturing line. In connection with the
low yields, we recently discovered that under very unique application
conditions, one of our 0.35 products had an operating sensitivity that may
cause it to not perform as expected. When we discovered the problem, we took
aggressive action to re-screen the product, which will result in a lower yield
for that device. The provision for inventory write-off includes, among other
things, actual and anticipated costs to re-screen our existing inventory as
well as potential warranty costs associated with product that has been
purchased by customers that may be subject to the re-screening process. The
reported loss for the first quarter of 2005 is primarily attributable to
provision for inventory write-off taken during the quarter.
DRAM product gross margins during the three months ending March 31, 2005 and
2004 were 7% and 15%, respectively.
QUARTER ENDED MARCH 31, 2005 COMPARED TO THE QUARTER ENDED MARCH 31, 2004.
REVENUE. Total revenue for the quarter ended March 31, 2005 was $13.0
million, a decrease of $453,000, or 3%, from the quarter ended March 31, 2004.
Product sales decreases in our FRAM product line resulted in a 4% decrease in
product revenue for the quarter ended March 31, 2005. Compared with the
quarter ended March 31, 2004, FRAM product revenue decreased 11% to $7.5
million. This decrease resulted primarily from a $2.8 million decrease in
revenue from ENEL. Shipments into the ENEL program were $1.4 million and $4.3
million, or approximately 19% and 51% of total FRAM product revenue for the
quarters ended March 31, 2005 and 2004, respectively. Reduced revenue from the
ENEL program resulted primarily from declining meter installation requirements
by ENEL as the program nears its expected completion.
Shipments to FRAM customers other than ENEL, or core FRAM customers, were $6.1
million and $4.1 million, or approximately 81% and 49% of total FRAM product
revenue for the quarters ended March 31, 2005 and 2004, respectively. This
46% increase over the same period in 2004 resulted primarily from increased
demand from an expanding customer base in our target markets for our portfolio
of stand alone memory and integrated FRAM products.
Page-19
DRAM product revenue increased approximately $475,000 to $5.0 million during
the three months ended March 31, 2005 compared to the same period in 2004 and
is primarily the result of stable economic conditions in the retail and OEM
markets Mushkin serves.
We recognized $179,000 in license and development fee revenue during the
quarters ended March 31, 2005 and 2004, respectively. License and development
fee revenues are the result of recognizing license fees over the term of the
license agreement, which is generally ten years.
We recognized royalty revenue of $231,000 and $208,000 in the quarters ended
March 31, 2005 and 2004, respectively. Royalty revenue in 2005 and 2004 is
attributable to FRAM licensing agreements with existing licensees.
Customer-sponsored research and development revenue is primarily attributable
to our technology development program with Texas Instruments. The
Company recognized customer-sponsored research and development revenue of
$125,000 and $142,000 during the quarters ended March 31, 2005 and 2004,
respectively. The amount of customer-sponsored research and development
revenue recognized during a given quarter depends upon the specific
programs we are working on, the development stage of each program, the
costs incurred during the quarter, and the amount of work remaining to
complete the program.
COST OF SALES. Overall cost of product sales, including inventory provision,
as a percentage of product revenue during the first quarter of 2005 was 73%
compared with 60% for the same period in 2004. Cost of sales associated with
our FRAM products increased during the quarter from 46% in 2004 to
approximately 59% in 2005. FRAM cost of sales increased due to low yields and
provisions for inventory write-off. Cost of sales as a percentage of product
revenue for our Mushkin subsidiary were 93% and 85% for the quarters ended
March 31, 2005 and 2004, respectively. This increase is attributable to
changes in the spot market pricing of DRAM components used to manufacture DRAM
products and a lower of cost or market inventory adjustment recorded in 2005.
RESEARCH AND DEVELOPMENT. Combined research and development expenses for the
quarter ended March 31, 2005 increased to $1.9 million, an increase of
$371,000, or 25%, compared with the same period in 2004. These expenses, as a
percentage of total sales were 14% in 2005, compared with 11% in 2004. The
increase in research and development expenses was the result of increased
expenses relating to design software maintenance contracts and increased
headcount.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for
the quarter ended March 31, 2005 decreased $164,000 to $992,000 compared with
the same period in 2004. This change is primarily the result of gains
recorded on asset sales, which we classify as part of general and
administrative expenses.
Page-20
SALES AND MARKETING EXPENSES. Sales and marketing expenses for the quarter
ended March 31, 2005 were $1.5 million, equivalent to the same period in 2004.
INTEREST EXPENSE, RELATED PARTY. Related party interest expense decreased
$63,000 to $81,000 for the quarter ended March 31, 2005, compared with
the same period in 2004, primarily due to $1.6 million in principal payments
made in 2004.
INTEREST EXPENSE, OTHER. Other interest expense decreased $7,000 to $210,000
for the three months ended March 31, 2005, primarily due to principal payments
made in 2004 offset by interest amortization relating to our National
Semiconductor Note.
LOSS FROM DISCONTINUED OPERATION. During the three months ended March 31,
2004, we committed to a plan to sell substantially all of the remaining assets
of our subsidiary EMS. In accordance with SFAS No. 144, our consolidated
financial statements have been recast to present this business as a
discontinued operation. The $0.3 million operating loss in 2004 of the
discontinued operation is primarily the result of an impairment of the
carrying value of EMS' patent portfolio to its estimated fair value at
March 31, 2004. There was no activity in our discontinued operation during
the first quarter of 2005.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operations for the three months ended March 31, 2005
increased $1.4 million from the same period in 2004. The primary reason for
this increase is attributable to our loss for the quarter ended March 31, 2005
of $723,000 offset by our inventory provision of $872,000 compared to prior
year's quarter net income of $836,000.
Accounts receivable decreased $1.3 million from the prior year end, thus
increasing our cash flow from operating activities due primarily to a
corresponding decrease in FRAM and DRAM revenue for the prior quarter.
Offsetting the accounts receivable decrease was an increase in our inventory
of $1.4 million in anticipation of increased sales in the next quarter coupled
with a decrease of $2.5 million in accounts payable and accrued liabilities
primarily relating to payments made for management bonus and sales commissions
during the quarter ended March 31, 2005.
Cash used in investing activities was $299,000 for the three months ended
March 31, 2005 compared with cash provided by $172,000 for the same period in
2004. We purchased $464,000 of capital equipment during the quarter ended
March 31, 2005 compared to $11,000 in the same period in 2004. Also, our
payments for intellectual property increased by $149,000 compared to the same
period in 2004.
Page-21
Cash provided by financing activities during the three months ended March 31,
2005 decreased $85,000 from the same period in 2004 due primarily to a
decrease in proceeds from line of credit offset by principal payments on
promissory notes in the prior comparable quarter. We made a $250,000
principal payment in April 2005 relating to our note with National
Semiconductor Corporation and no further principal payments are due for the
remainder of 2005.
We entered into a credit and security agreement with Wells Fargo
Business Credit, Inc. to provide a secured $3 million revolving line of
credit. As of March 31, 2005, there were no amounts outstanding on this line
of credit. On April 1, 2005, we terminated our agreement with Wells Fargo
Business Credit, Inc.
On April 1, 2005, we entered into a $4 million revolving secured credit
facility ("New Credit Facility") with Silicon Valley Bank, a subsidiary of
Silicon Valley Bancshares. The New Credit Facility provides for a $4 million
secured revolving credit facility. The New Credit Facility replaces the
existing $3.0 million line of credit with Wells Fargo Business Credit, Inc.
The New Credit Facility provides for interest at a floating rate equal to the
prime lending rate plus 0.50% per annum, a minimum interest rate of 6.00% per
year and a term of two years. Security for the credit facility includes all
of the Company's assets except for its intellectual property, European
receivables, and real estate.
On April 6, 2004, we entered into an agreement to settle our long standing
patent interference proceeding with National Semiconductor Corporation (see
Note 7 of these Notes of Consolidated Financial Statements). As a result of
the settlement, beginning April 2004 we are required to pay National $250,000
annually through 2013.
In the future, the primary source of operating cash flows is expected to be
product sales from our FRAM and DRAM product lines.
We had $3.8 million in cash and cash equivalents at March 31, 2005. We
believe we have sufficient resources to fund our operations through at least
March 31, 2006. If this is not sufficient to meet our cash requirements, we
may use the credit facility mentioned above or any other financing source we
may obtain. In view of our expected future working capital requirements in
connection with the design, manufacturing and sale of our FRAM products, and
our projected expenditures, we may be required to seek additional equity or
debt financing. There is no assurance, however, that we will be able to
obtain such financing on terms acceptable to us, or at all. Any issuance of
common or preferred stock to obtain additional funding would result in
dilution of existing stockholders' interests in us. The inability to obtain
additional financing when needed would have a material adverse effect on our
business, financial condition and operating results and could adversely
affect our ability to continue our business operations.
Page-22
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
2004 Form 10-K. At March 31, 2005, the Company's commitments under these
obligations were as follows for the years ended December 31 (in thousands):
Operating NEBF Debt(2) Purchase
Leases Consulting Fee(1) Agreements Obligations(3) Total
--------- ----------------- ----------- -------------- --------
2005 $262 $ 45 $ 471 $ 3,384 $ 4,162
2006 193 60 498 -- 751
2007 52 60 4,842 -- 4,954
2008 56 60 250 -- 366
2009 -- 60 250 -- 310
After 2009 -- 60 1,000 -- 1,060
------ ------ ------ ------- -------
Total $563 $345 $7,311 $ 3,384 $11,603
====== ====== ====== ======= =======
- -----------
(1) These consulting fees are required to be paid to the National Electrical
Benefit Fund (NEBF) as long as NEBF owns at least 5% of the outstanding
shares of the Company.
(2) Includes required principal and interest payments for outstanding
debentures held by Infineon, Halifax and Bramwell, the National
Settlement and minimum interest charges related to our revolving line of
credit with Silicon Valley Bank.
(3) Our purchase obligations are amounts committed under legally enforceable
contracts or purchase orders for goods and services with defined terms
as to price, quantity, delivery and termination liability and are the
result of purchase orders placed but not yet fulfilled by Fujitsu, our
semiconductor wafer supplier.
OUTLOOK
We are engaged primarily in the research and development of ferroelectric
technology and the design, development and commercialization of FRAM products
and the reselling of DRAM memory modules. We derive revenue from the sale of
our FRAM and DRAM products. We also generate revenue under license and
development agreements for specific applications of our technologies with a
limited number of established semiconductor manufacturers. Accordingly,
fluctuations in our revenue have resulted primarily from the timing of
significant product orders, the timing of the signing of license and
development agreements, and the achievement of related performance milestones.
Product revenue for the second quarter ending June 30, 2005 is currently
anticipated to be between $12.5 million and $13.5 million. Other revenue for
the second quarter, including license and development fees, royalties and
customer-sponsored research and development, is expected to be approximately
$500,000.
Gross margin for the second quarter is currently anticipated to be between 34%
and 38%; operating expenses are expected to be between $4.2 million and $4.7
million.
Page-23
In 2005, we expect ENEL to contribute $5 million to $6 million in revenue,
down from $17 million in 2004. First quarter 2005 ENEL shipments were $1.4
million. We anticipate that second quarter ENEL revenue will increase over
the first quarter of 2005, and the balance of ENEL shipments will lower in the
third and fourth quarters of the year. We also expect some residual shipments
during the first quarter of 2006.
We have been able to significantly increase revenue from customers other than
ENEL, also called core FRAM revenue, which has contributed to an 80% compound
annual growth rate for core FRAM product revenue since the first quarter of
2003. As a result, we anticipate that our core FRAM product revenue in 2005
will grow between 25% and 35% over 2004.
For 2005, we anticipate that our DRAM revenue will remain flat with 2004
revenue. We are focusing our efforts on activities that may serve to improve
the product margins on DRAM sales by increasing our efforts to sell higher-end
memory modules to the PC enthusiast, gamer and over clocking markets. We
expect margin pressures to remain in the retail segment of Mushkin's business,
which makes it difficult to predict the level of future margin improvements,
if any.
FORWARD-LOOKING STATEMENTS
The following information should be read in conjunction with "Part I, Item 1.
Financial Statements," "Part I, Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations," and "Part I, Item 3.
Quantitative and Qualitative Disclosures About Market Risk" included in the
Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q and certain
information incorporated herein by reference contain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934. Forward-looking statements in this Quarterly Report on Form 10-Q
include, without limitation:
- The statements under the heading "Part 1, Item 1. Financial Statements
- Note 7" concerning (1) we believe our business would not be materially
affected by an adverse judgment by the Special Master on the remaining
count of interference which statements are subject to various risks and
uncertainties including the inaccuracy of our assessment on the impact of
receiving a judgment adverse to us on the remaining count of
interference;
- The statements under the heading "Part I, Item 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations - Results
Of Operations" regarding our expected (1) revenue from the ENEL metering
program and the significance of such revenue to our overall financial
performance, revenues and gross margin levels; (2)cost increases in DRAM
components used in Mushkin's DRAM modules and anticipated lower overall
sales volume, and possible lower selling prices at Mushkin; (3) level of
equipment and plant expenditures during 2005; (4) use of our credit
facility for working capital requirements; (5) source of operating cash
Page-24
flows from its FRAM and DRAM product lines; (6) sufficiency of cash
resources to fund our operations through at least March 31, 2006, which
statements are subject to various risks and uncertainties, including, but
not limited to, general economic conditions and conditions specific to
the semiconductor industry, the demand for Ramtron's products and the
products of its principal FRAM customer, order cancellations or reduced
bookings, product mix, competitive factors such as pricing pressures on
existing products and the timing and market acceptance of new product
introductions, Ramtron's ability to secure and maintain an appropriate
amount of low-cost foundry production capacity from its sole foundry
source in a timely manner, foundry partner's timely ability to
successfully manufacture products for Ramtron, foundry partner's ability
to supply increased orders for FRAM products in a timely manner using
Ramtron's proprietary technology, any disruptions of Ramtron's foundry or
test and assembly contractor relationships, the ability to continue
effective cost reductions, unexpected design and manufacturing
difficulties, and the timely development and introduction of new products
and processes;
- The statements under the heading "Part I, Item 3. Quantitative and
Qualitative Disclosures About Market Risk" regarding the Company's belief
that near-term changes in interest rates, currency exchange rate
fluctuations, inflation and other price pressures will not have a
material effect on future earnings, fair values or cash flows of the
Company, are subject to the risk, among other risks, that we have
inaccurately assessed the degree of expected change in interest rates,
currency exchange rates, inflation and price pressures.
FACTORS THAT MAY AFFECT FUTURE RESULTS
We reported a net loss of $723,000 for the first quarter of 2005. For the
quarter ended December 31, 2004, we had net income of $836,000. We have
historically incurred losses from operations since our inception and our
achievement of and continued profitability is uncertain.
Our ability to achieve and maintain our profitable operations is subject to
significant risks and uncertainties, including, but not limited to, our
ability to successfully sell our products at prices that are sufficient to
cover our operating costs, entering into additional license and research and
development arrangements and success in raising additional financing to fund
operations as necessary. There is no guarantee that we will be successful in
addressing such risks.
We recognized net income of $3.6 million in 2004. We incurred net losses
during 2003 of $9.5 million and $1.9 million in 2002. As of December 31,
2004, we had an accumulated deficit of $220.5 million. We have spent
substantial amounts of money in developing our FRAM and DRAM products and in
our efforts to develop commercial manufacturing capabilities for those
products. Our ability to increase revenue or achieve profitability in the
future will depend substantially on our ability to increase sales of our
products by gaining new customers and increasing our penetration of existing
customers, reduce manufacturing costs, significantly increase sales of
existing products and successfully introduce and sell new products.
Page-25
Fluctuations in our historical operating results, in part, have been due to
unpredictable product order flows, a limited customer base, manufacturing and
other fixed costs. These issues may impact us in the future. Factors
affecting the demand for our products include, the time required for
incorporating our products into customers' product designs, and the ability
of our customers' products to gain substantial market acceptance. These
factors also make it difficult for us to predict our future revenue. Because
we base our operating expenses on anticipated revenue trends, which results
in a substantial percentage of our expenses being fixed in the short term,
our difficulty in predicting future revenue could affect our ability to
achieve future profitability and result in fluctuations in operating results.
Factors that may cause our operating results to vary significantly in the
future include:
- - our ability to timely develop and qualify for manufacturing new FRAM
products;
- - customer acceptance of our products;
- - the timing and volume of customer orders;
- - our ability to manufacture our products on a cost-effective and timely
basis through alliance foundry operations and contract manufacturers and
the sensitivity of our production costs to the manufacturing yields
achieved by our strategic licensees and contract manufacturers; and
- - factors not directly related to us, such as market conditions,
competition, pricing pressures, technological developments, product
obsolescence, the availability of supplies and raw materials, and changing
needs of potential customers in the semiconductor industry in general.
Our products have achieved some market acceptance, and if our products do not
achieve continued growth in market acceptance, we may be unable to increase
our revenue.
Our success depends on the market acceptance of our FRAM and DRAM module
products and the time required to achieve market acceptance. If one or more
of our products fails to achieve market acceptance or if market acceptance is
delayed, our revenue may not increase and our cash flows and financial
condition could be harmed. We must design products that successfully address
customer requirements if our products are to be widely accepted by the
market. Potential customers will be reluctant to integrate our products into
their systems unless our products are reliable, available at competitive
prices, and address our customers' current systems requirements.
Additionally, potential customers need assurances that their demand for our
new products can be met in a timely manner.
We may not be able to replace our expected reduced revenue from ENEL in a
timely manner, which could significantly reduce our revenue; our anticipated
ENEL revenue may not be achieved.
Page-26
In 2004, 2003, and 2002, approximately 46%, 60%, and 74%, respectively, of
our FRAM product sales were generated from one customer, ENEL. Because our
FRAM customer base is concentrated, the anticipated reduced business from this
customer without a corresponding increase in revenue from core FRAM customers,
may result in significant decreases in our revenue, which would also harm our
cash flows, operating results and financial condition. In addition, there is
no assurance that our anticipated revenue from ENEL will be achieved.
If we do not continually develop new generations of FRAM and DRAM module
products that achieve broad market acceptance, we will be unable to compete
effectively.
Among other factors, our future success is dependent on our ability to
develop, manufacture and market FRAM and DRAM module products that address
customer requirements and compete effectively in the market with respect to
price, performance and reliability. If we do not compete effectively, we
could suffer price reductions, reduced revenue, reduced gross margin and
reduced market share. New product development, which includes both our
development of new products and the need to "design-in" such new products to
customers' systems, is time-consuming and costly. This new product
development requires a long-term forecast of market trends and customer
needs, and often a substantial commitment of capital resources, with no
assurance that products will be commercially viable.
In particular, we need to develop new product designs, new process technology
and continue ferroelectric materials development. Our current FRAM products
are designed at our Colorado Springs facility and manufactured at our
partner's manufacturing facilities using 0.5 and 0.35 micron manufacturing
processes. We believe that our ability to compete in the markets in which we
expect to sell our FRAM products will depend, in part, on our ability to
produce FRAM products in smaller feature sizes and also our ability to
effectively incorporate mixed-signal functions with our memory products. Our
inability to successfully produce FRAM products with analog and mixed-signal
functions would harm our ability to compete and our operating results.
Although we have recently developed mixed-signal products incorporating our
FRAM memory solutions to supplement our traditional memory product offerings,
we have a limited operating history in these markets and has had limited
success. If we fail to introduce new products in a timely manner or are
unable to successfully manufacture such products, or if our customers do not
successfully introduce new systems or products incorporating our products, or
market demand for our new products does not develop as anticipated, our
business, financial condition and results of operations could be seriously
harmed.
Our continued ability to generate revenue from the sale of DRAM products will
depend on our successful marketing of new DRAM module products with improved
price-performance characteristics, and we cannot provide any assurance that we
will be successful in accomplishing the foregoing.
Page-27
If we do not keep pace with rapid technological changes and frequent new
product introductions, our products may become obsolete, and we may not be
competitive.
The semiconductor memory industry is characterized by rapid technological
changes and product obsolescence, price erosion and variations in
manufacturing yields and efficiencies. To be competitive we need to
continually improve our products and keep abreast of new technology. Other
companies, many of which have greater financial, technological and research
and development resources than we do, are researching and developing
semiconductor memory technologies and product configurations that could
reduce or eliminate any future competitive advantages our products may
currently have. We cannot provide any assurance that our ferroelectric
technology will not be supplanted in the future by competing technology or
that we will have the technical capability and financial resources to be
competitive in the semiconductor industry with respect to the continued
design, development and manufacture of either FRAM or DRAM module products.
If we fail to protect our intellectual property, or if others use our
proprietary technology without authorization, our competitive position may
suffer.
Our future success and competitive position depend in part upon our ability
to obtain and maintain proprietary technology used in our products. We
protect our intellectual property rights through a combination of
patent, trademark, copyright and trade secret laws, as well as licensing
agreements and employee and third-party nondisclosure and assignment
agreements. We cannot be assured that any of our patent applications will be
approved or that any of the patents that we own will not be challenged,
invalidated or circumvented by others or be of sufficient scope or strength
to provide us with any meaningful protection or commercial advantage.
Policing the unauthorized use of our intellectual property is difficult, and
we cannot be certain that the steps we have taken will prevent the
misappropriation or unauthorized use of our technologies, particularly in
foreign countries where the laws may not protect our proprietary rights as
fully as in the United States. In addition, we cannot be certain that we
will be able to prevent other parties from designing and marketing FRAM-based
products or that others will not independently develop or otherwise acquire
the same or substantially equivalent technologies as ours.
We may be subject to intellectual property infringement claims that result in
costly litigation and could harm our business and ability to compete.
Page-28
Our industry is characterized by the existence of a large number of patents
and frequent claims and related litigation regarding patents and other
intellectual property rights. In particular, many leading semiconductor
memory companies have extensive patent portfolios with respect to
semiconductor memory technology, manufacturing processes and product designs.
We may be involved in litigation to enforce our patents or other intellectual
property rights, to protect our trade secrets and know-how, to determine the
validity of property rights of others, or to defend against claims of
invalidity. This type of litigation can be expensive, regardless of whether
we win or lose. Also, we cannot be certain that third parties will not make
a claim of infringement against us or against our semiconductor company
licensees or OEMs in connection with their use of our technology. Any
claims, even those without merit, could be time consuming to defend, result
in costly litigation and diversion of technical and management personnel, or
require us to enter into royalty or licensing agreements. These royalty or
licensing agreements, if required, may not be available to us on acceptable
terms or at all. A successful claim of infringement against us or one of our
semiconductor manufacturing licensees in connection with our use of our
technology could harm our business.
We depend on a small number of suppliers for the supply of our products.
Problems in their performance can seriously harm our financial results.
We currently rely on a single unaffiliated foundry at Fujitsu to manufacture
all of our products. Reliance on this foundry involves several risks,
including capacity constraints or delays in the timely delivery of our
products, reduced control over delivery schedules and the cost of our
products, manufacturing yields, quality assurance and the loss of production
due to seismic activity, weather conditions and other factors. Although we
continuously evaluate sources of supply and may seek to add additional
foundry capacity, there can be no assurance that such additional capacity can
be obtained at acceptable prices, if at all. The occurrence of any supply or
other problem resulting from these risks could have a material adverse effect
on our results of operations. We also rely on domestic and foreign
subcontractors for die assembly and testing of products, and is subject to
risks of disruption in adequate supply of such services and quality problems
with such services.
To address our wafer supply concerns, we plan to continue working on
expanding our primary foundry capability at Fujitsu and to acquire secondary
foundry capability. Even if we enter into a secondary foundry relationship
such manufacturing capacity is not likely to be available for at least 12 to
24 months after reaching an agreement due to significant effort required to
develop and qualify for manufacturing a FRAM technology process. Our
financial condition and results of operations could be materially adversely
affected by the loss of Fujitsu as a supplier or our inability to obtain
additional foundry capacity.
International sales comprise a significant portion of our product sales,
which exposes us to foreign political and economic risks.
Page-29
For fiscal 2004, 2003, and 2002, international sales comprised approximately
62%, 69% and 48%, respectively, of our net revenue. The increase in export
sales as a percentage of total sales is primarily the result of increasing
FRAM product sales primarily to Europe, Asia and Japan, in part, because of
increased offshore manufacturing activity by U.S.-based companies. We also
believe Europe, Asia and Japan are early adopters of new technologies. We
expect that international sales will continue to represent a significant
portion of our product sales in the future. As a result of the large foreign
component of our revenue, we are subject to a number of risks resulting from
such operations. Such risks include political and economic instability and
changes in diplomatic and trade relationships, foreign currency fluctuations,
unexpected changes in regulatory requirements, delays resulting from
difficulty in obtaining export licenses for certain technology, tariffs and
other barriers and restrictions, and the burdens of complying with a variety
of foreign laws. There can be no assurance that such factors will not
adversely impact our results of operations in the future or require us to
modify our current business practices.
Our business is subject to other risks generally associated with doing
business with foreign subcontractors including, but not limited to foreign
government regulations and political and financial unrest which may cause
disruptions or delays in shipments to our customers or access to our
inventories. Our business, financial condition and results of operations may
be materially adversely affected by these or other factors related to our
international operations.
We have been unable to fulfill all our FRAM customers' orders according to
the schedules originally requested due to constraints in our wafer supply.
Due to the lead time constraints in our wafer supply, from time to time we
have been unable to fulfill all our customers' orders according to the
schedules originally requested. Although we attempt to maintain an adequate
supply of wafers and communicate to our customers delivery dates that we
believe that we can reasonably expect to meet, our customers may not accept
the alternative delivery date or may cancel their outstanding orders.
Reductions in orders received or cancellation of outstanding orders results
in lower revenue and net income, and potentially excess inventories and
increased inventory reserves.
We must build products based on demand forecasts; if such forecasts are
inaccurate, we may incur significant losses.
We must order products and build inventory substantially in advance of
product shipments, and there is a risk that because demand for our products
is volatile and subject to fluctuation, we will forecast incorrectly and
produce excess or insufficient inventories of particular products. Our
customers' ability to reschedule or cancel orders without significant penalty
could adversely affect our liquidity, as we may be unable to adjust our
purchases from independent foundries to match such customer changes and
cancellations. We have in the past produced excess quantities of certain
products, which has had a material adverse effect on our results of
operations for such period. There can be no assurance that in the future we
will not produce excess quantities of any of our products. To the extent we
produce excess or insufficient inventories of particular products, our
results of operations could be adversely affected.
Page-30
The markets in which we participate are intensely competitive, and if we do
not compete successfully, our revenue and ability to maintain profitability
would suffer.
The semiconductor industry is intensely competitive and our FRAM and DRAM
module products face intense competition from numerous domestic and foreign
companies. We may be at a disadvantage in competing with many of our
competitors that have significantly greater financial, technical,
manufacturing and marketing resources, as well as more diverse product lines
that can provide cash flows counter-cyclical to fluctuations in semiconductor
memory operations.
Our ability to compete also depends on factors beyond our control, including
the rate at which customers incorporate our products into their own products,
our customers' success in selling their products, the successful protection
of our intellectual property, the success of competitors' products and
general market and economic conditions. Our competitors or customers may
offer new products based on new technologies, industry standards or end-user
or customer requirements, including products that have the potential to
replace or provide lower-cost or higher-performance alternatives to our
products. The introduction of new products by our competitors or customers
could render our existing and future products obsolete or unmarketable.
We compete in various markets with our FRAM strategic licensees and contract
manufacturers, which may reduce our product sales.
Our strategic licensees may market products which compete with our FRAM
products. Most of our strategic partners have the right to manufacture and
sell FRAM products for their own account with or without the payment of
royalties, depending upon the terms of their agreements with us. Because our
strategic licensees may manufacture and market FRAM products themselves, they
may give the development and manufacture of their own FRAM products a higher
priority than the development and manufacture of our products. Any delay in
market penetration by our products, or any competition in the marketplace
from FRAM products manufactured and marketed by our strategic licensees,
could reduce our product sales and harm our operating results.
We depend on a relatively small number of key personnel, and if we are unable
to attract additional personnel or retain our key personnel, our business
will suffer.
Our future success depends, among other factors, on the continued service of
our key technical and management personnel and on our ability to continue to
attract and retain qualified employees. We are particularly dependent on the
highly skilled design, process, materials and test engineers involved in the
development and manufacture of our FRAM products and processes. The
competition for these personnel is intense, and the loss of key employees,
including executive officers, or our inability to attract additional
qualified personnel in the future, could have both an immediate and a
long-term adverse effect on us. There can be no assurance that we can retain
them in the future. In addition, none of our employees have entered into
post-employment non-competition agreements with us and, therefore, our
employees are not contractually restricted from providing services to our
competitors.
Page-31
Our business is subject to strict environmental regulations and legal
uncertainties, which could impose unanticipated requirements on our business
in the future and subject us to liabilities.
Federal, state and local regulations impose various environmental controls on
the discharge of chemicals and gases used in our strategic licensees' and
contract manufacturer manufacturing processes. Compliance with these
regulations can be costly. Increasing public attention has been focused on
the environmental impact of semiconductor operations. Any changes in
environmental rules and regulations may impose the need for additional
investments in capital equipment and the implementation of compliance
programs in the future. Any failure by us or our strategic licensees or
contract manufacturers to comply with present or future environmental rules
and regulations regarding the discharge of hazardous substances could subject
us to serious liabilities or cause us to suspend manufacturing operations,
which could seriously harm our business, financial condition and results of
operations.
Earthquakes, other natural disasters and power shortages or interruptions may
damage our business.
Some of our major contract manufacturers' facilities are located near major
earthquake faults. If a major earthquake or other natural disaster occurs
which damages those facilities or restricts their operations, our business,
financial condition and results of operations would be materially adversely
affected. Similarly, a major earthquake or other natural disaster near one or
more of our major suppliers, like the one that occurred near Fujitsu's
manufacturing facility in Iwate, Japan in May 2003, could disrupt the
operations of those suppliers, which could limit the supply of our products
and harm our business.
We have limited cash flows, and we may have limited ability to raise
additional funds to finance our operations and to meet required principal
payments to our lenders.
In view of our expected future working capital requirements in connection
with the manufacture and sale of our FRAM and DRAM module products, our
projected research and development and other operating expenditures, we may
be required to seek additional equity or debt financing. We cannot be sure
that any additional financing or other sources of capital will be available
to us on acceptable terms, or at all. The inability to obtain additional
financing when needed would have a material adverse effect on our business,
financial condition and operating results and could adversely affect our
ability to continue our business operations. If additional financing is
obtained, any issuance of common or preferred stock to obtain funding would
result in further dilution of our existing stockholders' interests.
Page-32
The majority of our revenue, expense and capital purchasing activities is
transacted in U.S. dollars. However, because a portion of our operations
consists of activities outside of the United States, we are considering
commencing certain transactions in other currencies, primarily the Japanese
yen. As part of our risk management strategy, we frequently evaluate our
foreign currency exchange risk by monitoring market data and external factors
that may influence exchange rate fluctuations. As a result, we may in the
future engage in transactions involving the short-term hedging of foreign
currencies, with maturities generally not exceeding two years to hedge
assets, liabilities, revenue and purchases dominated in foreign currencies.
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment." This
Standard addresses the accounting for transactions in which a company
receives employee services in exchange for (a) our equity instruments
or (b) liabilities that are based on the fair value of our equity instruments
or that may be settled by the issuance of such equity instruments. This
Standard also eliminates the ability to account for share-based compensation
transactions using Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and requires that such transactions be
accounted for using a fair-value-based method. The Standard is effective for
periods beginning after January 1, 2006. We are currently assessing our
valuation options allowed in this Standard. Even though we have not
quantified the dollar amount of this new accounting standard at this time,
the result will have a negative impact on our earnings starting with the
accounting period beginning January 1, 2006.
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, 2005 would have less
than a $100,000 effect on the Company's earnings or cash flows in 2005.
Page-33
The Company has a wholly owned subsidiary located in Japan. The operating
costs of this subsidiary are denominated in Japanese Yen, thereby creating
exposures to exchange rate variations. To date, this subsidiary has had only
limited operations and is expected to continue to have limited operations in
the foreseeable future, and, therefore, the Company does not believe any
changes in exchange rates will have a material effect on future earnings,
fair values or cash flows of the Company. The Company does not believe that
reasonably possible near-term variations in exchange rates will result in a
material effect on future earnings, fair values or cash flows of the Company,
and therefore, the Company has chosen not to enter into foreign currency
hedging instruments. There can be no assurance that such an approach will be
successful, especially in the event of a significant and sudden change in
Japanese currency valuation.
The Company recently formalized a process for FRAM wafer purchase price
adjustments related to fluctuations in Japanese Yen currency exchange rates
with its supplier, Fujitsu. Under this agreement, Ramtron's FRAM wafer
purchase price in US dollars will be adjusted quarterly to reflect the
previous quarter's average Japanese Yen to US dollar exchange rate. The
Company does not believe near-term variations in exchange rates that are
reasonably possible will result in a material effect on future earnings, fair
value, or cash flows of the Company; therefore, the Company has chosen not to
enter into foreign currency hedging instruments. There can be no assurance
that such an approach will be successful, especially in the event of a
significant and sudden change in Japanese currency valuation.
Average selling prices of the Company's products have not increased
significantly as a result of inflation during the past several years,
primarily due to intense competition within the semiconductor industry. The
effect of inflation on the Company's costs of production has been minimized
through improvements in production efficiencies. The Company anticipates
that these factors will continue to minimize the effects of any foreseeable
inflation and other price pressures within the industry and markets in which
the Company participates.
ITEM 4 - CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is
accumulated and communicated to management, including the Company's Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as
appropriate, to allow timely decisions regarding required disclosure. In
connection with the preparation of this Quarterly Report on Form 10-Q, as of
March 31, 2005, an evaluation was performed under the supervision and with
the participation of the Company's management, including the CEO and CFO, of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange
Act). Based on its assessment, management concluded that the Company
maintained effective internal control over financial reporting as of the end
of the period covered by this Quarterly Report on Form 10-Q.
Page-34
Management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in the Exchange Act
Rules 13a-15(f). Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures
may deteriorate. We continuously evaluate our internal controls and make
changes to improve them as necessary. Our intent is to maintain our
disclosure controls as dynamic systems that change as conditions warrant.
Remediation Steps to Address Material Weaknesses Reported for the period ended
December 31, 2004 - Under the supervision and with the participation of
management, including the principal executive officer and the principal
financial officer, our management has evaluated the effectiveness of its
internal control over financial reporting as of December 31, 2004 based on the
criteria established in a report entitled Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on its assessment, management concluded that the Company
did not maintain effective internal control over financial reporting as of
December 31, 2004 because of the following material weaknesses: (1) Company
policies and procedures did not require matching of customer order documents
with shipping and invoice documents prior to recording revenue, nor were
appropriate information technology access controls present as part of the
authorization of revenue process. The absence of these controls could have
resulted in misstatements to revenue and accounts receivable, and (2) Company
policies and procedures did not provide for adequate controls over the
approval of cash disbursements at its Mushkin subsidiary. The absence of
these controls could have resulted in misstatement and misclassification of
recorded costs and expenses.
We implemented the following controls subsequent to December 31, 2004 to
correct the identified material weaknesses in the internal control over
financial reporting, discussed above.
(a) Information technology access controls were modified to ensure proper
segregation of duties at our headquarters.
(b) A new ERP system was purchased and installed at Mushkin. Access security
to ensure proper segregation of duties was developed as part of the
implementation plan and reviewed by management.
(c) Two signatures are now required for all checks written from Mushkin's
accounts.
Page-35
(d) The three way matching of accounts payable is now performed at the
Company's headquarters and not at Mushkin.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Information required by this item is incorporated by reference from the
information contained under the caption "Part I, Item 3, Legal Proceedings"
in the Company's Form 10-K for the year ended December 31, 2004 as filed with
the Securities and Exchange Commission.
ITEMS 2-5 - NONE
ITEM 6 - EXHIBITS
(a) Exhibits:
10.1 Credit Facility between Silicon Valley Bank, Ramtron
International Corporation and Mushkin Inc. dated
April 1, 2005.
31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive
Officer.
31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial
Officer.
32.1 Certification Pursuant to 18 U.S.C. Section 1350 of Principal
Executive Officer.
32.2 Certification Pursuant to 18 U.S.C. Section 1350 of Principal
Financial Officer.
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 9, 2005 /s/ Eric A. Balzer
-------------------------
Eric A. Balzer
Chief Financial Officer
(Principal Accounting Officer)
Page-36